EXHIBIT 10.3

 

SECURITY AGREEMENT

 

THIS AGREEMENT, made this 19th day of August 2019, under the laws of the State
of Nevada

 

BETWEEN MEDIFARM I LLC (herein called the “Secured Party”) whose address is 2040
Main Street, Suite 225, Irvine CA 92614 and PICKSY RENO, LLC (herein called the
“Debtor”), whose address is 1901 Camino Carlos Rey, North Las Vegas, NV 89031.

 

WITNESSETH:

 

To secure:

 

i) The payment of an indebtedness of the Debtor to the Secured Party in the
amount of Four Million Two Hundred Thousand ($4,200,000) Dollars,

 

ii) Any other indebtedness or liability of the Debtor to the Secured Party
hereafter arising, including all future advances or loans which may be made by
Secured Party to Debtor, (all hereinafter called the “obligations”).

 

iii) All costs and expenses incurred by the Secured Party in the collection of
the foregoing, including reasonable attorney’s fees and other expenses for
pursuing, searching for, receiving, taking, keeping, storing, advertising, and
selling the collateral. If the Debtor shall default, after written notice and a
10 day cure period in the performance of any of the provisions of this agreement
on the Debtor’s part to be performed, Secured Party may perform same for the
Debtor’s account and any monies expended in so doing shall be chargeable with
interest to the Debtor and added to the indebtedness.

 

Debtor hereby grants and conveys to the Secured Party, a security interest in,
and mortgages to the Secured Party, the following collateral:

 

(1) All of the Assets (as defined in the Asset Purchase Agreement) the Debtor
has acquired from Secured Party pursuant that certain Asset Purchase Agreement
of even date herewith (the “Asset Purchase Agreement”). The Debtor and Secured
Party have agreed that all of the obligations of this agreement will be secured
by the Assets.

 

(2) All proceeds thereof, if any,

 

(3) All substitutions, replacements and accessions thereto

 

DEBTOR WARRANTS, COVENANTS AND AGREES AS FOLLOWS:

 

i) To pay and perform all of the obligations secured by this Agreement according
to their terms.

 

ii) To defend the title to the collateral granted Secured Party against all
persons and against all claims and demands whatsoever, which collateral, except
for the security interest granted hereby, is lawfully owned by the Debtor and is
now free and clear of any and all liens, security interests, claims, charges,
encumbrances, taxes and assessments except as may be set forth in the schedule
attached hereto.

 

iii) On demand of the Secured Party to do the following: furnish further
assurance of title, execute any written agreement or do any other acts
reasonably necessary to effectuate the purposes and provisions of this
Agreement, execute any instrument or statement required by law or otherwise in
order to perfect, continue or terminate the security interest of the Secured
Party in the collateral and pay all filing fees in connection therewith.

 

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iv) To retain possession of the collateral during the existence of this
Agreement and not to sell, exchange, assign, loan, deliver, lease, mortgage or
otherwise dispose of same, except in the ordinary course of business without the
written consent of the Secured Party.

 

v) To keep the collateral free and clear of all liens, charges, encumbrances,
taxes and assessments.

 

vi) To pay, when due, all taxes, assessments and license fees relating to the
collateral.

 

vii) To keep the collateral, at Debtor’s own cost and expense, in good repair
and condition and not to misuse, abuse, waste or allow it to deteriorate except
for normal wear and tear and to make same available for inspection by the
Secured Party at all reasonable times.

 

viii) To keep the collateral insured against loss by fire (including extended
coverage), theft and other hazards as the Secured Party may reasonably require.
Policies shall be in such form and in an aggregate amount equal to or exceeding
the principal balance due under the Promissory Note at the time such policy is
issued or renewed and with such companies as the Secured Party may approve, such
approval not to be unreasonably withheld. Policies shall be obtained from
responsible insurers authorized to do business in Nevada. Certificates of
insurance or policies, payable to the respective parties as their interest may
appear, shall be deposited with the Secured Party who is authorized, but under
no duty, to obtain such insurance upon failure of the Debtor to do so after
written notice to Debtor and a 10-day cure period thereafter. Debtor shall give
immediate written notice to the Secured Party and to insurers of loss or damage
to the collateral and shall promptly file proofs of loss with insurers. Debtor
hereby assigns to the Secured Party all sums which may become payable under such
insurance, including return premiums and dividends, as additional security for
the indebtedness, but such assignment may only be exercised by Secured Party if
Debtor is in default and 10 days have passed since notice of such default was
given to Debtor by Secured Party and such default remains substantially uncured.
Any other return premiums and/or dividends shall be paid to Debtor.

 

ix) To immediately notify the Secured Party in writing of any change in or
discontinuance of Debtor’s place or places of business.

 

DEFAULT:

 

i) The following shall constitute a default by Debtor:

 

a. Failure to pay the principal or any installment of principal on the
indebtedness when due and to then cure such failure after 10 days written notice
thereof by Secured Party to Debtor.

 

b.Failure by Debtor to comply with or perform any provision of this agreement,
after notice and a 10-day cure period.

 

c. False or misleading written material representations or warranties made or
given by Debtor in connection with this agreement to Secured Party.

 

d. Subjection of the collateral to levy of execution or other judicial process.

 

e. Commencement of any insolvency proceeding by or against the Debtor or of any
guarantor of or surety for the Debtor’s obligations which is not dismissed or
otherwise disposed of within 60 days of commencement.

 

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ii) Upon any default of the Debtor and at the option of the Secured Party, the
obligations secured by this Agreement shall, after written notice thereof by
Secured Party to Debtor and the passage of 10 days’ time without such default
being substantially cured, immediately become due and payable in full and the
Secured Party shall have all the rights, remedies and privileges with respect to
repossession, retention and sale of the collateral and disposition of the
proceeds as are accorded to a Secured Party by the applicable sections of the
Uniform Commercial Code as enacted in Nevada respecting “Default”, in effect as
of the date of this Security Agreement.

 

GENERAL PROVISIONS:

 

i) Debtor consents to any extension of time or payment.

 

ii) All items of collateral shall remain personal property, not become part of
the freehold regardless of the manner of affixation and be kept at Debtor’s
places of business in Las Vegas, Nevada, except in the ordinary course of
business.

 

iii) The Debtor shall remain liable for any deficiency resulting from a
commercially reasonable sale of collateral, and Debtor shall pay any such
deficiency forthwith on demand and upon presentment of proof of the deficiency
amount.

 

iv) The Uniform Commercial Code as enacted in the State of Nevada shall govern
the rights, duties and remedies of the parties and any provisions herein
declared invalid under any law shall not invalidate any other provision of this
agreement. In addition to its statutory rights, the Secured Party may:

 

(1) require Debtor to assemble the collateral and make it available to the
Secured Party at a place to be designated by the Secured Party, reasonably
convenient to both parties;

 

(2) unless the collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured Party
will give Debtor reasonable notice of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. The requirements of reasonable notice will be
met if such notice is mailed, postage prepaid, to the address of the Debtor
shown above, at least three business days before the time of sale or
disposition.

 

5. In addition to any rights granted to Secured Party under the Uniform
Commercial Code as enacted in the State of Nevada, in the event of an unremedied
default by the Debtor, Secured Party may elect to take over the operations of
the Debtor in its Las Vegas, Nevada location and continue to operate said
business under the licenses granted by DOT (as defined in the Asset Purchase
Agreement). Such election shall be deemed to be full satisfaction of Debtor’s
obligations to Secured Party hereunder and under the Note (as defined in the
Asset Purchase Agreement).

 

6. Any waiver of or acquiescence in any default by the Debtor, or failure of the
Secured Party to insist upon strict performance by the Debtor of any warranties
or agreements in this Agreement, shall not constitute a waiver of any subsequent
or other default or failure, except as provided otherwise at law or in equity.

 

7. The terms, warranties and agreements herein contained shall bind and inure to
the benefit of the respective parties hereto, and any legal representatives,
successors and assignees.

 

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8. Secured Party may assign this agreement only upon written approval of Debtor,
which approval shall not be unreasonably withheld and if assigned the assignee
shall be entitled, upon notifying the Debtor, to performance of all of Debtor’s
obligations and agreements hereunder and the assignee shall be entitled to all
of the rights and remedies of the Secured Party hereunder. Notwithstanding the
foregoing, Secured Party may not assign its rights to elect to take over the
operations of the Debtor in its Reno, Nevada location and continue to operate
said business under the licenses granted by NV DOT (as defined in the Asset
Purchase Agreement) without the express prior written approval of the assignee
by the NV DOT.

 

9. The Secured Party is hereby authorized to file a Financing Statement as
executed by Debtor.

 

10. Miscellaneous Provisions

 

a. Save and except for the Asset Purchase Agreement, this Agreement supersedes
any and all other agreements, either oral or in writing, between the parties
hereto with respect to the subject matter hereof, and no other agreement,
statement, or promise relating to the subject matter of this Agreement which is
not contained herein shall be valid or binding.

 

b. This Agreement shall be binding on the heirs, executors, administrators,
legal representatives, successors, and assigns of the respective parties.

 

c. The validity of this Agreement and any of its terms or provisions, as well as
the rights and duties of the parties hereunder, shall be governed by the laws of
the State of Nevada. This Agreement is made, and is performable, in Washoe
County, Nevada.

 

d. This Agreement may only be amended by the mutual agreement of the parties
herein in a properly executed written instrument specifically referencing this
Agreement.

 

e. The headings used in this Agreement are used for administrative purposes only
and do not constitute substantive matter to be considered in construing the
terms of this Agreement.

 

f. Wherever the context shall so require, all words herein in the male gender
shall be deemed to include the female or neuter gender, all singular words shall
include the plural, and all plural words shall include the singular.

 

g. Except as specifically provided otherwise herein, any and all notices or
other communications required or permitted by this Agreement or by law to be
delivered to, served on, or given to any party to this Agreement by any other
party to this Agreement shall be in writing and shall be deemed properly
delivered, given, or served when personally delivered to the party to whom it is
directed, or in lieu of personal service, when deposited in the United States
mail, first-class postage prepaid, certified mail, return receipt requested, at
the hereafter indicated addresses for notice. Any party may change his, her, or
its address for the purposes of this Paragraph by giving written notice of the
change to all other parties in the manner provided in this Paragraph. The
parties’ addresses for notice hereunder shall be as set forth on the first page
of this Agreement.

 

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h. Any signatory to this Agreement who is the prevailing party in any legal
proceeding against any other signatory under or with relation to this Agreement
or the transaction(s) contemplated herein shall be additionally entitled to
recover Court costs and reasonable attorneys’ fees from the non-prevailing
party.

 

i. This Agreement may be executed in multiple counterparts, each of which shall
be an original, but all of which, when taken together, shall constitute but one
Agreement.

 

[Signature page follows]

 

IN WITNESS WHEREOF, the Parties have respectively signed and sealed these
presents the day and year first above written.

 

PICKSY RENO, LLC

 

MEDIFARM I LLC

 

 

     

By:

/s/ Stacie Jackson  By:/s/ Derek Peterson  

 

   

Name:

Stacie Jackson

 Name:

Derek Peterson

 

 

 

 

 

 

 

Title:

Manager

 

Title:

Manager

 

 

 

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