Exhibit 10.5

 

SECURITY AGREEMENT

 

This Security Agreement (the “Agreement”) is made and effective March 31, 2014,

 

BETWEEN: Canada Cannabis Corp. (the "Secured Party"), a corporation organized
and existing under the laws of the Province of Ontario, with its head office
located at:      

100 Rutherford Rd. South

Brampton, Ontario L6W 3J5

    AND: 2393245 Ontario Inc. c.o.b. Growlite Canada (the "Debtor"), a
corporation organized and existing under the laws of the Province of Ontario,
with its head office located at:      

155 Caster Avenue

Woodbridge, Ontario L4L 5Y8

 

For value received, the undersigned Debtor, promises to pay to the order of
Canada Cannabis Corp., together with any other holder of this Loan (“Secured
Party”), 3,000,000, with interest at the rate of 2% per annum. Payment shall be
made in successive equal quarterly installments of 15,000. Each such Installment
is payable on the 1stday of each quarter, commencing on July 1, 2014.

 

Recitals

 

WHEREAS, the Secured Party has extended to the Debtor a certain loan as
evidenced by a certain loan agreement, in the original principal amount equal to
3,000,000 dated on even date herewith (the "Loan"); and

 

WHEREAS, the Debtor wishes to grant a first priority security interest in and to
all of the Debtor’s tangible and intangible personal property pursuant to the
terms hereof;

 

NOW, THEREFORE, for and in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
covenant and agree as follows:

 

1. 1. DEFINITIONS

 

The following terms shall have the meanings herein specified unless the context
otherwise requires. Such definitions shall be equally applicable to the singular
and plural forms of the terms defined:

 

"Contracts" shall mean all contracts between the Debtor and one or more
additional parties.

 

"Contract Rights" shall mean all rights of the Debtor (including, without
limitation, all rights to payment) under each Contract.

 

"Copyrights" shall mean any Canadian copyright to which the Debtor now or
hereafter has title, as well as any application for a Canadian copyright
hereafter made by the Debtor.

 

 
 

 

"Equipment" shall mean any "equipment," now or hereafter owned by Debtor and, in
any event, shall include, but shall not be limited to, all machinery, equipment,
furnishings, fixtures and vehicles now or hereafter owned by the Debtor and any
and all additions, substitutions and replacements of, any of the foregoing,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto.

 

"General Intangibles" shall have the meaning assigned that term under Canadian
Law as in effect on the date hereof in the Province of Ontario.

 

"Goods" shall have the meaning assigned that term under Canadian Law as in
effect on the date hereof in the Province of Ontario.

 

"Inventory" shall mean all raw materials, work in process, and finished
inventory of the Debtor of every type or description and all documents of title
covering such inventory, and shall specifically include all "inventory" as such
term is defined in Canadian Law as in effect on the date hereof in the Province
of Ontario, now or hereafter owned by the Debtor.

 

"Marks" shall mean any trademarks and service marks now held or hereafter
acquired by the Debtor, which are registered in the Canadian Patent and
Trademark Office, as well as any unregistered marks used by the Debtor in the
Canadian and trade dress, including logos and/or designs, in connection with
which any of these registered or unregistered marks are used.

 

"Obligations" shall mean: (i) all indebtedness, obligations and liabilities
(including, without limitation, guarantees and other contingent liabilities) of
the Debtor to the Secured Party, including but not limited to the Loan; (ii) any
and all sums advanced by the Secured Party in order to preserve the Collateral
or preserve its security interest in the Collateral; and (iii) in the event of
any proceeding for the collection or enforcement of any indebtedness,
obligations or liabilities of the Debtor referred to in clause (i), after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of retaking, holding, preparing for sale or lease, selling or otherwise
disposing or realizing on the Collateral, or of any exercise by the Collateral
Agent of its rights hereunder, together with reasonable attorneys' fees and
court costs.

 

"Patents" shall mean any Canadian patent to which the Debtor now or hereafter
has title, as well as any application for a Canadian patent now or hereafter
made by Debtor.

 

"Proceeds" shall have the meaning assigned that term under Canadian Law as in
effect in the Province of Ontario on the date hereof or under other relevant law
and, in any event, shall include, but not be limited to, (i) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to the
Secured Party or the Debtor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority and (iii) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral.

 

"Receivables" shall mean any "account" as such term is defined in Canadian Law
as in effect on the date hereof in the Province of Ontario, now or hereafter
owned by Debtor and, in any event, shall include, but shall not be limited to,
all of the Debtor's rights to payment for goods sold or leased or services
performed by the Debtor, whether now in existence or arising from time to time
hereafter, including, without limitation, rights evidenced by an account, Loan,
contract, security agreement, or other evidence of indebtedness or security,
together with (i) all security pledged, assigned, hypothecated or granted to or
held by the Debtor to secure the foregoing; (ii) all of the Debtor's right,
title and interest in and to any goods, the sale of which gave rise thereto;
(iii) all guarantees, endorsements and indemnifications on, or of, any of the
foregoing; (iv) all powers of attorney for the execution of any evidence of
indebtedness or security or other writing in connection therewith; (v) all
books, records, ledger cards and invoices relating thereto; (vi) all evidences
of the filing of financing statements and other statements and the registration
of other instruments in connection therewith and amendments thereto, notices to
other creditors or secured parties, and certificates from filing or other
registration officers; (vii) all credit information, reports and memoranda
relating thereto and (viii) all other writings related in any way to the
foregoing.

 

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1. 2. GRANT OF SECURITY INTEREST

 

  A. A.           The Debtor does hereby grant to the Secured Party a continuing
security interest of first priority in all of the right, title and interest of
the Debtor in, to and under all of the following property whether now existing
or hereafter created or arising:

 

  i. i.            All of the right, title and interest of the Debtor in, to and
under all of the tangible and intangible property owned or possessed by the
Debtor, including but not limited to the following, whether now existing or
hereafter from time to time acquired: (a) each and every Receivable from
services rendered by the Debtor or any business owned or operated by the Debtor;
(b) all Contracts related to any business activities of the Debtor and any
business owned by the Debtor, together with all Contract Rights arising
thereunder; (c) all Inventory; (d) all Equipment; (e) all Marks, together with
the registrations and right to all renewals thereof, and the goodwill of the
business of the Debtor symbolized by the Marks; (f) all Patents and Copyrights
created at or used by the Debtor; (g) all computer programs of the Debtor and
all intellectual property rights therein and all other proprietary information
of the Debtor, including, but not limited to, trade secrets; (h) all other
Goods, General Intangibles, Chattel paper, Documents and Instruments of the
Debtor; and (i) all Proceeds, accessions and products of any and all of the
foregoing; (all of the above, collectively, the "Collateral").         i.
ii.           The security interest of the Creditor under this Agreement extends
to all Collateral of the kind described in preceding clause (a) which the Debtor
may acquire at any time during the continuation of this Agreement.

 

  A. B.            The Debtor hereby constitutes and appoints the Secured Party
its true and lawful attorney, irrevocably, with full power after the occurrence
of an Event of Default (in the name of the Debtor or otherwise) to act, require,
demand, receive, compound and give acquittance for any and all monies and claims
for monies due or to become due to the Debtor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Secured Party may deem to be necessary or advisable in the premises,
which appointment as attorney is coupled with an interest.

 

1. 3.  DEBTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Debtor represents and warrants to, and covenants with, the Secured Party,
which representations, warranties and covenants shall survive execution and
delivery of this Agreement, as follows:

 

  A. A.            All filings, registrations and recordings necessary or
appropriate to create, preserve, protect and perfect the security interest
granted by the Debtor to the Secured Party hereby in respect of the Collateral
have been accomplished and the security interest granted to the Secured Party
pursuant to this Agreement in and to the Collateral constitutes a valid and
enforceable perfected security interest therein superior and prior to the rights
of all other Persons therein and subject to no other Liens and is entitled to
all the rights, priorities and benefits afforded by Canadian law or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests. The Secured Party is, and as to Collateral acquired by it from time
to time after the date hereof the Secured Party will be, the owner of all
Collateral free from any Lien or other right, title or interest of any, and the
Debtor shall defend the Collateral against all claims and demands of all Persons
at any time claiming the same or any interest therein adverse to the Secured
Party. There is no financing statement covering or purporting to cover any
interest of any kind in the, and so long as the Obligations remain unpaid, the
Debtor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by the Debtor.

 

 3 

 

 

  A. B.            The Debtor has full right, power and authority to execute and
deliver this Security Agreement and to grant the security interest in the
Collateral as provided herein.         A. C.            The execution, delivery
and performance of this Security Agreement has been duly authorized by all
necessary corporate action. This Security Agreement has been duly executed and
delivered by the Debtor and constitutes the legal, valid and binding obligation
of the Debtor enforceable against the Debtor in accordance with its terms,
except as may be limited by bankruptcy, reorganization, insolvency, moratorium,
or other similar laws from time to time in effect affecting creditor's rights
generally and by principles governing the availability of equitable remedies,
and the grant of the security interest in the Collateral existing on the date
hereof constitutes, and, as to subsequently acquired Collateral, will
constitute, a valid and perfected first and prior security interest, superior to
the rights of any other person, in and to the Collateral.         A. D.
           All Assets held on the date hereof by the Debtor are located at the
address first set forth above and shall not be removed from such location. The
Debtor agrees that all Inventory and Equipment now held or subsequently acquired
by it shall be kept at such address or at the Secured Parties address.        
A. E.            This Agreement is made with full recourse to the Debtor and
pursuant to and upon all the warranties, representations, covenants and
agreements on the part of the Debtor contained herein.         A. F.
           The Debtor will keep and maintain at its own cost and expense
satisfactory and complete records of its Receivables and Contracts, including,
but not limited to, the originals of all documentation (including each Contract)
with respect thereto, records of all payments received, all credits granted
thereon, all merchandise returned and all other dealings therewith, and
following default hereunder, the Debtor will make the same available to the
Secured Party for inspection, at the Debtor's own cost and expense, at any and
all reasonable times upon demand.         A. G.            Upon the occurrence
of an Event of Default and if the Secured Party so directs, the Debtor agrees
(i) to cause all payments on account of the Receivables and Contracts to be made
directly to such account as Secured Party shall request and (ii) that the
Secured Party may, at its option, directly notify the obligors with respect to
any Receivables and/or under any Contracts to make payments with respect thereto
as provided in preceding clause (i). Without notice to or assent by the Debtor,
the Secured Party may apply any or all amounts then in, or thereafter deposited
in any account designated by Secured Party. The costs and expenses (including,
without limitation, attorneys' fees) of collection, whether incurred by the
Debtor or the Secured Party, shall be borne by the Debtor.         A. H.
           Debtor shall not rescind or cancel any indebtedness evidenced by any
Receivable or under any Contract, or modify any term thereof or make any
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any dispute, claim, suit or legal proceeding relating thereto, or sell
any Receivable or Contract, or interest therein. The Debtor will duly fulfill
all obligations on its part to be fulfilled under or in connection with the
Receivables and Contracts and will do nothing to impair the rights of the
Secured Party in the Receivables or Contracts.         A. I.            Debtor
will promptly pay when due all taxes and assessments upon the Collateral or for
its own use and operation or upon this Security Agreement or upon the Loans
evidencing the Obligations.

 

 4 

 

 

  A. J.            Other than in the ordinary course of Debtor’s business,
Debtor shall not sell, transfer, lease, or otherwise dispose of any of the
Collateral or any interest therein, or offer to do so, without the prior written
consent of the Secured Party.         A. K.            The Debtor will do
nothing to impair the rights of the Secured Party in the Collateral. The Debtor
will at all times keep its Inventory and Equipment insured in favor of the
Secured Party, at its own expense, to the Secured Party's reasonable
satisfaction against fire, theft and all other risks to which such Collateral
may be subject; all policies or certificates with respect to such insurance
shall be endorsed to the Secured Party's satisfaction for the benefit of the
Secured Party (including, without limitation, by naming the Secured Party as
loss payee) and deposited with the Secured Party. If the Debtor shall fail to
insure such Inventory and Equipment to the Secured Party's reasonable
satisfaction, or if the Debtor shall fail to so endorse and deposit all policies
or certificates with respect thereto, the Collateral Agent shall have the right
(but shall be under no obligation) to procure such insurance and the Debtor
agrees to reimburse the Secured Party for all costs and expenses of procuring
such insurance. The Secured Party may apply any proceeds of such insurance when
received by it toward the payment of any of the Obligations to the extent the
same shall then be due. The Debtor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of the Debtor to
pay its Obligations shall in no way be affected or diminished by reason of the
fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to the Debtor.         A. L.            The Debtor
agrees to assign and deliver to the Secured Party such financing statements, in
form acceptable to the Secured Party, as the Secured Party may from time to time
reasonably request or as are necessary or desirable in the opinion of the
Secured Party to establish and maintain a valid, enforceable, first priority
security interest in the Collateral as provided herein and the other rights and
security contemplated herein, all in accordance with Canadian Law as enacted in
any and all relevant jurisdictions or any other relevant law. The Debtor will
pay any applicable filing fees and related expenses. The Debtor authorizes the
Secured Party to file any such financing statements without the signature of the
Debtor. The Debtor hereby constitutes and appoints the Secured Party its
attorney in fact for the purpose of carrying out the provisions of this Security
Agreement and taking any action and executing any instrument which the Secured
Party may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest.

 

1. 4. DEFAULT

 

The Debtor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of applicable law then in effect, the Collateral Agent, in addition to any
rights now or hereafter existing under applicable law, shall have all rights as
a secured creditor under Canadian Law in all relevant jurisdictions and may:

 

  A. A.            Declare all Obligations secured hereunder, or any of them
(notwithstanding any provision thereof), to be immediately due and payable
without demand or notice.         A. B.            Personally, or by agents or
attorneys, immediately retake possession of the Collateral or any part thereof,
from the Debtor or any other Person who then has possession of any part thereof
with or without notice or process of law, and for that purpose may enter upon
the Debtor's premises where any of the Collateral is located and remove the same
and use in connection with such removal any and all services, supplies, aids and
other facilities of the Debtor;         A. C.            Instruct the obligor or
obligors on any agreement, instrument or other obligation (including, without
limitation, the Receivables) constituting the Collateral to make any payment
required by the terms of such instrument or agreement directly to the Secured
Party;

 

 5 

 

 

  A. D.            Sell, assign or otherwise liquidate, or direct the Debtor to
sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
and         A. E.            Take possession of the Collateral or any part
thereof, by directing the Debtor in writing to deliver the same to the Secured
Party at any place or places designated by the Secured Party, in which event the
Debtor shall at its own expense: (i) forthwith cause the same to be moved to the
place or places so designated by the Secured Party and there delivered to the
Secured Party, (ii) store and keep any Collateral so delivered to the Secured
Party at such place or places pending further action by the Secured Party as
provided herein, and (iii) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; it being
understood that the Debtor's obligation so to deliver the Collateral is of the
essence of this Agreement and that, accordingly, upon application to a court
having jurisdiction, the Collateral Agent shall be entitled to a decree
requiring specific performance by the Debtor of said obligation.         A. F.
           Any Collateral repossessed by the Secured Party under or pursuant
hereto, and any other Collateral whether or not so repossessed by the Secured
Party, may be sold, assigned, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at the place
of sale the property to be sold, and in general in such manner, at such time or
times, at such place or places and on such terms as the Secured Party may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Secured Party or after any overhaul or repair which the Secured Party shall
determine to be commercially reasonable.         A. G.            Except as
otherwise provided in this Agreement, THE DEBTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE
SECURED PARTY'S TAKING POSSESSION OR THE SECURED PARTY'S DISPOSITION OF ANY OF
THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and the Debtor hereby further
waives, to the extent permitted by law: All damages occasioned by such taking of
possession except any damages which are the direct result of the Secured Party's
gross negligence or willful misconduct; All other requirements as to the time,
place and terms of sale or other requirements with respect to the enforcement of
the Secured Party's rights hereunder; and All rights of redemption,
appraisement, valuation, stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any portion thereof, and the
Debtor, for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws. Any sale of,
or the grant of options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest, claim and demand,
either at law or in equity, of the Debtor therein and thereto, and shall be a
perpetual bar both at law and in equity against the Debtor and against any and
all Persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through and under the Debtor.        
A. H.          Charge Debtor with all expenses of retaking, holding, preparing
for sale, selling, collecting, filing applicable actions, including but not
limited to attorney fees and costs.         A. I.            The proceeds of any
Collateral obtained or disposed of pursuant hereto shall be applied as follows:

 

  i. i.            To the payment of any and all expenses and fees (including,
without limitation, reasonable attorneys' fees) incurred by the Secured Party in
obtaining, taking possession of, removing, insuring, repairing, storing and
disposing of Collateral and any and all amounts incurred by the Secured Party in
connection therewith;

 

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  i. ii.           Next, any surplus then remaining to the payment of the
Obligations in the following order of priority: (a) all interest accrued and
unpaid; (b) the principal amount owing on the Loans; (c) the fees than owing to
the Agent; and (d) all other Obligations then owing; and         i. iii.
          If the Total Commitment is then terminated and no other Obligation is
outstanding, any surplus then remaining shall be paid to the Debtor, subject,
however, to the rights of the holder of any then existing Lien of which the
Secured Party has actual notice (without investigation); it being understood
that the Debtor shall remain liable to the extent of any deficiency between the
amount of the proceeds of the Collateral and the aggregate amount of the sums
referred to in this Article 4.

 

  A. J.            No failure or delay on the part of the Secured Party or any
holder of any Loan in exercising any right, power or privilege hereunder and no
course of dealing between the Debtor and the Secured Party or the holder of any
Obligation shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the Secured
Party or the holder of any Obligation would otherwise have. No notice to or
demand on the Debtor in any case shall entitle the Debtor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Secured Party or the holder of any Obligation to any
other or further action in any circumstances without notice or demand.        
A. K.            In case the Secured Party shall have instituted any proceeding
to enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Secured
Party, then and in every such case the Debtor, the Secured Party and each holder
of any of the Obligations shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the Secured
Party shall continue as if no such proceeding had been instituted.

 

1. 5. INDEMNITY

 

  A. A.            The Debtor agrees to indemnify, reimburse and hold the
Secured Party, the holder of any Loan, and their respective officers, directors,
employees, representatives and agents (hereinafter in this Section referred to
individually as "Indemnitee" and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses or disbursements (including, without
limitation, reasonable attorneys' fees and expenses) of whatsoever kind or
nature which may be imposed on, asserted against or incurred by any of the
Indemnities in any way relating to or arising out of this Agreement or the
documents executed in connection herewith and therewith or in any other way
connected with the administration of the transactions contemplated hereby and
thereby or the enforcement of any of the terms of or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition or use of the Collateral, the violation of the laws of any country,
province or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person, or for property
damage) or any contract claim; provided, however, that no Indemnitee shall be
indemnified pursuant to this Section for expenses to the extent caused by the
gross negligence or willful misconduct of such Indemnitee. The Debtor agrees
that upon written notice by any Indemnitee of any assertion that could give rise
to an expense, the Debtor shall assume full responsibility for the defense
thereof. Each Indemnitee agrees to use its best efforts to promptly notify the
Debtor of any such assertion of which such Indemnitee has knowledge.

 

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  A. B.            Without limiting the application of this Article 5, the
Debtor agrees to pay, or reimburse the Secured Party for (if the Secured Party
shall have incurred fees, costs or expenses because the Debtor shall have failed
to comply with its obligations under this Agreement), any and all fees, costs
and expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Secured Party's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral, premiums for insurance with respect to the
Collateral and all other fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Secured Party's interest
therein, whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.         A. C.            Without limiting the application of this
Article 5, the Debtor agrees to pay, indemnify and hold each Indemnitee harmless
from and against any expenses which such Indemnitee may suffer, expend or incur
in consequence of or growing out of any misrepresentation by the Debtor in this
Agreement or in any statement or writing contemplated by or made or delivered
pursuant to or in connection with this Agreement.         A. D.            If
and to the extent that the obligations of the Debtor under this Article 5 are
unenforceable for any reason, Debtor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.

 

1. 6. NOTICES

 

Any notice or demand upon any party shall be in writing and shall be deemed to
have been received when personally delivered or when mailed through the Canadian
Postal Service, postage prepaid, return receipt requested, or when shipped by
private express carrier, shipment charges prepaid, to the party to whom delivery
shall be made at the addresses mentioned above.

 

1. 7. NO WAIVER

 

No delay on the part of the Secured Party in exercising any of its rights,
remedies, powers and privileges hereunder or under applicable law or partial or
single exercise thereof, shall constitute a waiver thereof. None of the terms
and conditions of this Security Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by the Debtor and
the Secured Party.

 

1. 8. LIABILITIES

 

The rights, powers and remedies of the Secured Party herein provided are
cumulative and not exclusive of any rights, powers or remedies which the Secured
Party would otherwise have. The Debtor shall indemnify the Secured Party and
save harmless the Secured Party from and against any liability, cost (including
reasonable attorneys' fees) or damage which it may incur in connection with this
Security Agreement and the security interest granted hereby, including, without
limitation, any such liability, cost or damage it may incur in connection with
the exercise, performance or preservation of any of its rights, powers and
remedies set forth herein or otherwise available under law (except for any
liability, cost or damage arising from the Secured Party's gross negligence or
willful misconduct).

 

 8 

 

 

1. 9. BINDING AGREEMENT

 

This Security Agreement shall be binding upon the Debtor and its successors and
assigns and shall inure to the benefit of the Secured Party and its successors
and assigns, provided, however, the Debtor may not, without the prior written
consent of the Secured Party, assign any of its rights or obligations hereunder
to any person or entity. All agreements, representations and warranties made
herein by the Debtor shall survive the execution and delivery of this Security
Agreement.

 

This Security Agreement is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon.

 

1. 10. GOVERNING LAW

 

This Security Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of Canada in
the Province of Ontario. This Security Agreement is intended to take effect as a
sealed instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
executed and delivered as of the date first above written.

 

Canada Cannabis Corp.   2393245 Ontario Inc. c.o.b. Growlite Canada       /s/
Ben Ward   /s/ Silvio Serrano Authorized Signature   Authorized Signature      
Ben Ward President & CEO   Silvio Serrano President Print Name and Title   Print
Name and Title

 

 

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