EXHIBIT 10.9

 

LITIGATION LOAN

 

THIS LITIGATION LOAN AND SECURITY AGREEMENT (the “Loan Agreement”) is made and
entered into as this day of June 19, 2019 (the “Effective Date”), by and between
Green Light District Holdings, Inc., a Delaware corporation (the “Borrower”),
and Body and Mind Inc., a Nevada corporation (the “Lender”).

 

RECITALS:

 

WHEREAS, the Borrower desires to obtain a secured loan from the Lender in the
principal amount of Two Hundred Thousand Dollars ($200,000.00) (the “Loan
Amount”) to fund certain litigation expenses of the Borrower; and

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein and
for other good and valuable consideration, the sufficiency and receipt of which
is hereby acknowledged, the parties hereto agree as follows:

 

1. Loan.

 

(a) Upon the terms and subject to the conditions hereof, on the Effective Date,
the Lender agrees to make a loan to the Borrower (the “Loan”), in the principal
amount of the Loan Amount. The Loan is not revolving in nature and may not be
repaid and reborrowed.

 

(b) The Loan made hereunder is evidenced by a promissory note, a copy of which
is attached hereto as Schedule I (as the same may be amended, modified, renewed
or extended, the “Promissory Note”), duly executed by an authorized signatory of
the Borrower and dated as of the date hereof.

 

(c) The Loan Amount shall be used as a litigation advance immediately paid to
Borrower’s attorney client trust account and utilized solely in connection with
litigating “Green Light District Holdings, Inc. v. GBS Nevada Partners, LLC,
Case No. A-19-788150-B” pending in the Eighth Judicial District Court, Clark
County, Nevada (the “Case”).

 

(d) Interest on the principal amount of the Loan outstanding from time to time
shall accrue from the date hereof until repaid in full at an annual rate equal
to twelve percent (12%), compounded quarterly. Interest on the Loan shall be
computed on the basis of a three hundred sixty-five (365) day year and the
actual number of days elapsed in the period during which such interest accrues.
Interest on the Loan shall be due and payable on the Maturity Date as set forth
in Section 2.

 

(e) The performance of the Borrower of its obligations under this Loan Agreement
and the Promissory Note attached hereto as Schedule I are secured pursuant to a
certain Security Agreement by and between Borrower and Lender dated as the date
hereof and in the form attached hereto as Schedule II (the “Security
Agreement”); and (the Security Agreement and the Loan Agreement, together with
the Promissory Note and each other agreement, instrument or document designated
by the Borrower and the Lender as a “Loan Document”, collectively, as each may
be amended, modified, renewed or extended, the “Loan Documents”).

 

  

  

 

2. Payment Terms.

 

(a) Payment at Maturity. The principal amount of the Loan and all interest
accrued thereon will be due either (a) within thirty (30) calendar days of the
date in which the Case is settled; or (b) on the 36 month anniversary of the
Effective Date, whichever is sooner (the “Maturity Date”).

 

(b) Place of Payment. All payments to be made to the Lender hereunder shall be
made in the lawful money of the United States in immediately available funds.
Payments of principal and interest shall be delivered to the Lender at the
address to be specified by the Lender to the Borrower by prior written notice.

 

(c) Prepayment. The Borrower may, but shall have no obligation to, prepay, in
whole or in part, all or any portion of the principal amount of, and accrued
interest on the Loan without being subject to any pre-payment penalty. Any
prepayment shall be accomplished by the payment of all accrued and unpaid
interest owed hereunder.

 

(d) Release and Satisfaction Upon Complete Payment. Upon Lender’s receipt of
complete payment of the entire principal amount and all accrued interest on the
loan, Lender shall timely execute an acknowledgement of release and satisfaction
of the Loan Documents and surrender the Note as cancelled.

 

(e) Withholding Taxes. If any withholding taxes are or become payable in respect
of principal, interest or any other amount payable by the Borrower under this
Loan Agreement or the Promissory Note, (i) all such amounts payable by the
Borrower shall be increased by the amount of the withholding taxes, (ii) the
Borrower shall make such additions, (iii) the Borrower shall pay the full amount
required to be paid to the relevant taxing authority or other authority in
accordance with applicable law, and (iv) Borrower and Lender shall cooperate and
use commercially reasonable efforts to obtain a refund of any such withholding
taxes, and all amounts received in connection therewith shall be paid to the
Borrower.

 

3. Conditions Precedent. The agreement of Lender to make the Loan requested to
be made on the Effective Date is subject to the satisfaction, or waiver by
Lender immediately prior to or concurrently with the making of the Loan, of the
following conditions precedent:

 

(a) Loan Documents. Lender shall have received a complete and duly executed copy
of each Loan Document, in each case satisfactory in form and substance to the
Lender in its sole discretion.

 

(b) Financing Statements. The Lender shall have received (i) financing
statements in form appropriate for filing in the appropriate jurisdiction, (ii)
results of lien searches conducted in the appropriate jurisdiction, and (iii)
all other filings in respect of the Collateral (as defined below) as deemed
appropriate by Lender. Lender acknowledges receipt and/or waives receipt of same
on or before the Effective Date.

 

(c) Compliance with this Agreement. Borrower shall have performed and complied
with all of its agreements and conditions set forth or contemplated herein in
all material respects that are required to be performed or complied with by
Borrower on or before the Effective Date.

 

  

  

 

(d) No Default. No Event of Default shall have occurred and be continuing on the
Effective Date, or would exist after giving effect to the Loans, on the
Effective Date.

 

4. Grant of Security Interest.

 

(a) Security Interest. The Borrower, as security for its obligations under the
Loan Agreement, including the due and punctual payment in full of the Loan
Amount and all accrued interest thereon, hereby grants, mortgages, pledges,
assigns, transfers, sets over, conveys and delivers to the Lender a security
interest in and to all of the Borrower’s right, title and interest in the
“Collateral” as such term is defined in the Security Agreement attached hereto
as Schedule II.

 

(b) Termination and Release. The security interests granted under the Security
Agreement shall terminate when the entire Loan Amount plus any accrued and
unpaid interest thereon has been paid in full and all rights in the Collateral
shall revert to Borrower. Any termination of Lender’s lien in the Collateral
shall be at Borrower’s sole cost and expense.

 

(c) Further Assurances. Without limiting the foregoing, until the time when the
entire Loan Amount and all accrued and unpaid interest thereon has been paid in
full, Borrower will deliver, or cause to be executed and delivered, to Lender
such documents, agreements and instruments, and will take or cause to be taken
such further actions which may be required by any requirement of law or which
Lender may, from time to time, reasonably request to carry out the terms and
conditions of this Loan Agreement and the other Loan Documents and to ensure
perfection and priority of the liens created or intended to be created by the
Loan Documents, all in form and substance reasonably satisfactory to Lender and
all at the expense of the Borrower.

 

5. Events of Default.

 

(a) Definition. For purposes of this Loan Agreement, an “Event of Default” shall
be deemed to have occurred if:

 

(i) Borrower fails to pay the Loan Amount, plus all accrued interest thereon
(unless such interest has been forgiven), to the Lender on or prior to the
Maturity Date;

 

(ii) Borrower fails to perform or observe any covenant set forth in Section 6;

 

(iii) Borrower shall (a) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator or similar
fiduciary of itself or of all or a substantial part of its property, (b) admit
in writing its inability, or be generally unable, to pay its debts as they
become due, (c) make a general assignment for the benefit of creditors, (d)
commence a voluntary case under any state or federal bankruptcy or receivership
laws (as now or hereafter in effect), (e) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (f) acquiesce to
any petition filed against it in any involuntary case under such bankruptcy
laws, or (g) take any action for the purpose of effecting any of the foregoing;

 

(iv) any lien created hereunder or provided for under any Loan Document for any
reason ceases to be or is not a valid and perfected lien having a first priority
interest; or

 

  

  

 

(v) termination or breach by the Borrower of any of the Loan Documents (other
than this Agreement) or if Borrower any other party attempts to terminate,
challenges the validity of, or its liability under, any Loan Document.

 

(b) Extension. The Borrower hereby expressly agrees that this Loan Agreement, or
any payment hereunder, may be extended from time to time and that the Lender may
accept security for this Loan Agreement or release security for this Loan
Agreement, all without in any way affecting the liability of the Borrower
hereunder.

 

6. Covenants.

 

(a) Until the Maturity Date, and thereafter until payment in full of the Loan
Amount and all accrued interest thereon (unless forgive in accordance with this
Agreement), Borrower agrees that it shall, unless Lender shall otherwise consent
in writing:

 

(i) provide Lender information regarding Borrower’s financial condition,
prospects and business as and when reasonably requested by Lender;

 

(ii) assist Lender in perfecting and protecting its security interests and liens
under the Loan Documents and reimburse Lender for related costs it reasonably
incurs to protect its security interests and liens;

 

(iii) promptly upon knowledge thereof, provide Lender notice of any material
loss of, or damage to, any of the Collateral, or of any material adverse change
in any of the Collateral; and

 

(iv) take any action as reasonably requested by Lender to carry out the intent
of the Loan Documents.

 

(b) Until the Maturity Date, and thereafter until payment in full of the Loan,
Borrower agrees that it shall not, unless Lender shall otherwise consent in
writing:

 

(i) create, incur, assume or in any manner become liable in respect of
(including, without limitation, through assumption, endorsement or guaranty), or
suffer to exist any indebtedness other than the Loan

 

(ii) merge or consolidate or amalgamate with or into any other entity or take
any other action having a similar effect, or make any acquisition of any entity;

 

(iii) declare, pay or make any dividend or distribution on the equity interests
of the Borrower to any party other than Lender;

 

(iv) have instituted against Borrower any involuntary proceeding or case seeking
to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency or reorganization
or relief or protection of debtors or seeking the entry of an order for relief,
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its assets, rights, revenues or property.

 

  

  

 

7. Rights and Remedies.

 

(a) Upon the occurrence and during the continuation of an Event of Default, the
Lender may, in addition to any other rights or remedies provided for hereunder
or by applicable law, do any one or more of the following:

 

(i) declare all or any portion of the principal of, and any and all accrued and
unpaid interest on, the Loan to be immediately due and payable, whereupon the
same shall become and be immediately due and payable and the Borrower shall be
obligated to repay all of such obligations in full, without presentment, demand,
protest or further notice or other requirements of any kind, all of which are
hereby expressly waived by the Borrower;

 

(ii) make any payments and do any acts it considers necessary to protect the
Collateral and/or its security interest in the Collateral;

 

(iii) terminate this Loan Agreement or any of the other Loan Documents as to any
future liability or obligation of the Lender, but without affecting any of the
Lender’s liens in the Collateral; and

 

(iv) exercise all other rights and remedies available to Lender under the Loan
Documents or under applicable law, or in equity.

 

The foregoing to the contrary notwithstanding, upon the occurrence of an Event
of Default described in Section 5(a)(iii), in addition to the remedies set forth
above, without any notice to Borrower or any other person or entity or any act
by the Lender, the full unpaid principal amount of the Loan and all accrued and
unpaid interest thereon, shall automatically become and be immediately due and
payable and the Borrower shall automatically be obligated to repay all of such
amounts in full, without presentment, demand, protest or notice or other
requirement of any kind, all of which are expressly waived by Borrower.

 

(b) The rights and remedies of the Lender under this Loan Agreement and the
other Loan Documents shall be cumulative. The Lender shall have all other rights
and remedies as provided under applicable law or in equity. No exercise by the
Lender of one right or remedy shall be deemed an election, and no waiver by the
Lender of any Event of Default shall be deemed a continuing waiver. No delay by
the Lender in enforcing any rights hereunder shall constitute a waiver, election
or acquiescence by it in the absence of a written waiver signed by the Lender.

 

8. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Loan Agreement may be amended only with the prior written
consent of the Lender and the Borrower.

 

9. NO ASSIGNMENT OR TRANSFER. BORROWER SHALL NOT sell, assign, transfer, pledge,
hypothecate, mortgage or otherwise encumber this Loan Agreement or any of its
rights OR OBLIGATIONS hereunder or herein without the prior written consent of
LENDER, which SHALL NOT BE UNREASONABLY WITHHELD. lender shall be permitted to
transfer and assign its rights under this loan agreement WITHOUT THE PRIOR
WRITTEN CONSENT OF BORROWER. This Agreement is binding on Borrower's and
Lender’s successors and assignees.

 

  

  

 

10. Fees and Expenses. Each party shall pay any and all fees, costs and
expenses, including attorneys’ fees, incurred by the party in connection with
this Loan Agreement and the Promissory Note and the negotiation, execution and
performance hereof; provided that the Borrower shall bear and pay all fees,
costs and expenses, including attorneys’ fees, incurred by Lender in (i) the
collection of any amounts owed under this Loan Agreement or any other Loan
Document, (ii) the perfection of any security interests or liens in favor of
Lender on the Collateral, or (iii) the enforcement of this Loan Agreement or any
other Loan Document.

 

11. Notices. All notices, requests and other communications made or given in
connection with this Loan Agreement or any other Loan Document shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the party that is to be
addressed, or by reputable overnight carrier, or registered or certified mail,
return receipt requested, or by e-mail or telecopy with the original forwarded
by first-class mail, in all cases, with charges prepaid.

 

12. Governing Law. All questions concerning the construction, validity and
interpretation of this Loan Agreement will be governed by and construed in
accordance with the domestic laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California.

 

13. Waiver of Presentment, Demand and Dishonor. The Borrower hereby waives
presentment for payment, protest, demand, notice of protest, notice of
nonpayment and diligence with respect to this Loan Agreement, and waives and
renounces all rights to the benefits of any statute of limitations or any
moratorium, appraisement, exemption, or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the United States Bankruptcy
Code, both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the amounts owned under this Loan
Agreement and any and all extensions, renewals, and modifications hereof.

 

14. Business Days. If any payment is due, or any time period for giving notice
or taking action expires, on a day which is a Saturday, Sunday, or legal holiday
in the State of California, the payment shall be due and payable on, and the
time period shall automatically be extended to, the next business day
immediately following such Saturday, Sunday, or legal holiday, and interest
shall continue to accrue at the required rate hereunder until any such payment
is made.

 

15. Indemnification. Borrower agrees to indemnify, defend and hold the Lender
harmless against: (a) all obligations, demands, claims, and liabilities
(collectively, “Claims”) claimed or asserted by any other party in connection
with the making of the Loan or the repayment or collection thereof; and (b) all
losses or expenses in any way suffered, incurred, or paid by the Lender as a
result of, following from or arising from the making of the Loan or the
repayment or collection thereof (including reasonable attorneys’ fees and
expenses), except for Claims and/or losses directly caused by the Lender’s gross
negligence or willful misconduct as determined in a final, non-appealable
judgment of a court of competent jurisdiction.

 

  

  

 

16. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER IRREVOCABLY WAIVES
ALL RIGHTS TO A TRIAL BY JURY IN ANY SUIT, ACTION, OR OTHER PROCEEDING
INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

 

17. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY AND
EXCLUSIVELY SUBMITS ITSELF TO THE JURISDICTION OF THE STATE COURTS OF THE STATE
OF CALIFORNIA LOCATED IN THE COUNTY OF LOS ANGELES, FOR THE PURPOSES OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS LOAN
AGREEMENT, THE SUBJECT MATTER HEREOF OR ANY OTHER LOAN DOCUMENT. IN NO EVENT
SHALL A CLAIM BE ADJUDICATED IN FEDERAL DISTRICT COURT. IN THE EVENT THAT EITHER
PARTY COMMENCES A CLAIM IN FEDERAL DISTRICT COURT OR MOVES TO REMOVE SUCH ACTION
TO FEDERAL DISTRICT COURT, THE PARTIES HEREBY MUTUALLY AGREE TO STIPULATE TO A
DISMISSAL OF SUCH FEDERAL CLAIM WITH PREJUDICE. EACH OF THE BORROWER AND THE
LENDER, TO THE EXTENT PERMITTED BY APPLICABLE LAW, HEREBY WAIVES, AND AGREES NOT
TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE
JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE
FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THIS LOAN AGREEMENT OR THE SUBJECT MATTER HEREOF OR ANY OTHER
LOAN DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURT. EACH PARTY AGREES THAT
ITS SUBMISSION TO JURISDICTION IS MADE FOR THE EXPRESS BENEFIT OF THE OTHER
PARTY. FINAL JUDGMENT AGAINST A PARTY IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (A) BY SUIT,
ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE
CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS OR LIABILITY
OF THE OBLIGOR THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR
PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.

 

18. Usury Laws. It is the intention of the Borrower and the Lender to conform
strictly to all applicable usury laws now or hereafter in force, and any
interest payable under this Loan Agreement shall be subject to reduction to the
amount not in excess of the maximum legal amount allowed under the applicable
usury laws as now or hereafter construed by the courts having jurisdiction over
such matters. The aggregate of all interest (whether designated as interest,
service charges, points, or otherwise) contracted for, chargeable, or receivable
under this Loan Agreement shall under no circumstances exceed the maximum legal
rate upon the unpaid principal balance of this Loan Agreement remaining unpaid
from time to time. If such interest does exceed the maximum legal rate, it shall
be deemed a mistake and such excess shall be canceled automatically and, if
theretofore paid, rebated to the Borrower or credited on the principal amount of
this Loan Agreement, or if this Loan Agreement has been repaid, then such excess
shall be rebated to the Borrower.

 

  

  

 

19. Binding Effect. This Loan Agreement and all rights and powers granted hereby
will bind and inure to the benefit of the parties hereto and their respective
permitted successors and permitted assigns.

 

20. Severability. The provisions of this Loan Agreement and the Promissory Note
are deemed to be severable, and the invalidity or unenforceability of any
provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.

 

21. Integration. The Loan Documents contain the entire instrument governing the
parties with respect to the subject matter hereof and supersedes all prior
instruments or understandings, written or oral, in respect thereof.

 

22. Counterparts. This Loan Agreement may be executed in any number of
counterparts (including by facsimile transaction), all of which taken together
shall constitute one and the same instrument, and any of the parties hereto may
execute this Loan Agreement by signing any such counterpart.

 

IN WITNESS WHEREOF, the Borrower has executed and delivered this Loan Agreement
(Limited Recourse) on the date first above written.

 

Body and Mind Inc.

LENDER:

   

/s/ Robert Hasman

Name:

Robert Hasman Title: Authorized Signatory    

Date:

June 20, 2019

 

 

Green Light District Holdings, Inc.

BORROWER:

   

/s/ David Barakett

Name:

David Barakett

 Title:

Authorized Signatory

    

Date:

June 20, 2019

 

 

  

  

 

Schedule I to EXHIBIT E

 

PROMISSORY NOTE

 

FOR VALUE RECEIVED, Green Light District Holdings, Inc., a Delaware Corporation
(the “Borrower”), does hereby promise to pay to the order of Body and Mind Inc.,
a Nevada corporation (the “Lender”), in lawful money of the United States of
America in immediately available funds, an amount equal to the Loan Amount (as
defined in the Loan Agreement), and to pay interest on the unpaid principal
amount of the Loan Amount (unless such interest is forgiven as set forth in the
Loan Agreement) from time to time outstanding hereunder in the amount set forth
in the Loan Agreement, in like money, at such times as set forth in the Loan
Agreement. Reference is made to the Loan Agreement dated as of the date hereof,
by and between the Borrower and the Lender, to which this Promissory Note is
attached as Schedule I (as amended, supplemented, restated, renewed, extended or
otherwise modified, the “Loan Agreement”).

 

The Borrower and any and all endorsers of this Promissory Note and all other
parties now or hereafter liable hereon severally waive grace, demand,
presentment for payment, protest, notice of any kind not expressly provided for
in the Loan Agreement or this Promissory Note (including, but not limited to,
notice of dishonor or notice of protest) and diligence in collecting and
bringing suit against any party hereto and agree to the extent permitted by
applicable law (i) to all extensions and partial payments, with or without
notice, (ii) to any substitution, exchange or release of any security now or
hereafter given for this Promissory Note, and (iii) to the release of any party
primarily or secondarily liable hereon. The non-exercise by the holder of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.

 

This Promissory Note may be delivered in portable document format (.pdf) by
facsimile or electronic mail.

 

This Promissory Note is the Promissory Note referred to in the Loan Agreement,
and is entitled to the benefits of, and is secured by the security interests
granted in, the Loan Agreement.

 

In the event of a conflict between this Promissory Note and the Loan Agreement,
the provisions of the Loan Agreement will govern.

 

THIS PROMISSORY NOTE SHALL NOT BE SOLD, TRANSFERRED OR ASSIGNED, IN WHOLE OR IN
PART, EXCEPT, IN THE CASE OF THE LENDER, TO ITS AFFILIATE UNDER COMMON CONTROL.
AS EXPRESSLY PERMITTED BY THE LOAN AGREEMENT. THIS PROMISSORY NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA
(WITHOUT REGARD FOR CONFLICTS OF LAWS PRINCIPLES) APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF CALIFORNIA.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

  

  

 

[SIGNATURE PAGE TO PROMISSORY NOTE]

 

IN WITNESS WHEREOF, the Borrower has executed this Promissory Note as of the
date first set forth above.

 

 

BORROWER:

 

 

 

 

Green Light District Holdings, Inc.

 

    By:/s/ David Barakett

 

Name:

David Barakett  Title:Authorized Signatory 

 

  

  

 

Schedule II to Exhibit E

 

SECURITY AGREEMENT

 

This security agreement (the “Security Agreement”), effective as of June 19,
2019 (the “Effective Date”), is made and entered into by and between Green Light
District Holdings, Inc., a Delaware Corporation (the “Borrower”), The Airport
Collective, Inc., a California Non-Profit Mutual Benefit Corporation
(hereinafter “Guarantor”) (Borrower and Guarantor shall collectively be referred
to as, the “Guarantors”), and Body and Mind Inc., a Nevada corporation (“Secured
Party”).

 

WHEREAS, contemporaneously herewith, Secured Party and Borrower are entering
into the Loan Agreement (the “Agreement”) and Promissory Note (the “Note”),
pursuant to which Borrower shall borrow Two Hundred Thousand Dollars ($200,000)
from Secured Party;

 

WHEREAS, as a condition to the Agreement, the Secured Party requires Guarantors
to enter into this Security Agreement to grant Secured Party a security interest
in the Collateral (as defined herein) in order to secure Borrower’s obligations
under the Agreement and the Note;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties hereto agree as follows.

 

1. Grant of Security Interest. As collateral security for payment in full by
Borrower of all amounts due under the Agreement, the Note and the other
obligations to be performed under this Security Agreement, the Agreement and the
Note (collectively, the “Obligations”), Borrower hereby grants to Secured Party
a security interest in and on all of Borrower’s right, title, and interest in
and to all of the following collateral, whether now owned or hereafter acquired
or existing (the “Borrower’s Collateral”), and Guarantor, Airport Collective
Inc., hereby grants to Secured Party a security interest in and on all of
Guarantor’s right, title, and interest in and to all of the following collateral
that is utilized in connection with a commercial cannabis retail business
located at 3411 East Anaheim Street, Long Beach, California 90802, whether now
owned or hereafter acquired or existing (the “Guarantor’s Collateral”,
collectively with the Borrower’s Collateral shall be referred to as
“Collateral”):

 

a. All Equipment, as defined in the California Uniform Commercial Code (the
“UCC”), including, without limitation, equipment in all of its forms wherever
located, including, without limitation, all machinery and other goods,
furniture, furnishings, fixtures, office supplies, and all other similar types
of tangible personal property and all parts thereof and all accessions thereto,
together with all parts, fittings, special tools, alterations, substitutions,
replacements, and accessions thereto (any and all such equipment, parts, and
accessions being the “Borrower’s Equipment”);

 

b. All Inventory, as defined in the UCC, including, without limitation,
inventory in all of its Forms, wherever located, including, but not limited to:
(i) all raw materials and work in progress, finished goods, and materials used
or consumed in manufacture or production; (ii) goods in which each Guarantor has
an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which each Guarantor has an interest or
right as consignee); and (iii) goods which are returned to or repossessed by
each Guarantor, and all accessions thereto and products thereof and all
documents and documents of title relating to or covering any of the foregoing or
any other assets (“Documents”) (any and all such inventory, accessions,
products, and Documents being the “Inventory”);

 

  

  

 

c. All Accounts as defined in the UCC, including without limitation, accounts
receivable, cash or cash equivalents, contract rights, chattel paper,
instruments, acceptances, drafts, general intangibles, payment intangibles,
letter-of-credit rights, commercial torts claims, commercial claims, deposit
accounts, consignments, promissory notes and other obligations of any kind,
whether or not arising out of or in connection with the sale or lease of goods
or the rendering of services, together with all ledger sheets, files, records,
and documents relating to any of the foregoing, including all computer records,
programs, storage media, and computer software useful or required in connection
therewith (the “Receivables”), and all rights now or hereafter existing in and
to all security agreements, leases, and other contracts securing or otherwise
relating to any such Receivables, and any and all such leases, security
agreements, and other contracts (the “Related Contracts”);

 

d. All rights under all contracts or agreements to which each Guarantor is a
party (other than contracts or agreements entered into which by their terms
expressly prohibit the granting of any lien, charge, claim, or encumbrance of
any nature whatsoever (“Lien”) thereon; Borrower shall use commercially
reasonable efforts to ensure that all contracts and agreements entered into by
each Guarantor during the term of this Agreement permit the attachment of the
Lien provided for under this Agreement);

 

e. All right, title, and interest, in, to, and under, any accounts or deposit
accounts maintained by each Guarantor at any bank or other financial
institution;

 

f. All right, title, and interest, in, to, and under, any local or state
licenses, permits or authorizations required for each Guarantor to conduct its
business;

 

g. General intangibles as defined in the UCC, including without limitation,
payment intangibles, software, good will, and tax refunds;

 

h. All other personal property of each Guarantor, including, without limitation,
all other goods, documents, instruments, general intangibles, money, accounts,
and chattel paper; and

 

i. All proceeds of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property of the types described in clauses
(a) through (g) of this paragraph 1) and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payees
thereof), or any indemnity, warranty, or guaranty, payable by reason of loss or
damage to, or otherwise with respect to any of the foregoing items.

 

j. As further security, at Secured Party’s election, Secured Party may record a
lien on certain real property utilized in connection with each Guarantor’s
business.

 

  

  

 

Subject to any prior secured interest in the Collateral, the Collateral secures
the prompt and complete payment when due of the outstanding principal and
interest under the Agreement and the Note.

 

2. Representations and Warranties. Guarantors represent and warrant to Secured
Party as follows:

 

a. Guarantors have full power and authority to execute, deliver, and perform
this Security Agreement, which has been duly authorized by all necessary and
proper corporate action.

 

b. This Security Agreement has been duly executed and delivered, and constitutes
the legal, valid, and binding obligation of Guarantors, enforceable in
accordance with its terms.

 

c. No effective security agreement, financing statement, equivalent security or
Lien instrument, or continuation security agreement covering all or any part of
the Collateral is on file or of record in any public office.

 

d. Guarantors have good title to and is the lawful owner of the Collateral, free
from all claims, liens, encumbrances, charges, or security interests whatsoever
except as otherwise granted by this Security Agreement.

 

e. All of the Equipment and Inventory: (i) were acquired in Guarantors’ ordinary
course of business; (ii) are in Guarantors’ exclusive possession and control;
(iii) are to be maintained and preserved by Guarantors in the same condition,
repair, and working order as when new, ordinary wear and tear excepted; (iv)
shall promptly be repaired, replaced, and otherwise improved by Guarantors
promptly following any material loss or damage, provided that Secured Party
shall be notified of such material loss or damage; (v) shall be located at
Guarantors’ principal place of business; (vi) in the event that the location of
the Equipment or Inventory changes, Guarantors shall promptly provide notice to
the Secured Party of such location change; (vii) shall be open to inspection by
Secured Party during normal business hours; (viii) shall not be sold, assigned,
leased, mortgaged, transferred, or otherwise disposed of by Guarantors, except
in the ordinary course of business; and (ix) shall not become a part of or to be
affixed to any real property of any person.

 

f. All of Guarantor’s material Related Contracts are in full force and effect,
and Guarantors and, to Guarantors’ knowledge, the other contracting parties to
each such Related Contract have performed in all material respects their
respective obligations under each such Related Contract.

 

g. This Security Agreement creates a valid Lien and security interest in the
Collateral, securing the payment of all amounts due under the Agreement and the
Note, and, upon the filing of the related financing statement(s) in accordance
with this Security Agreement, the Lien will be perfected, enforceable in
accordance with its terms.

 

  

  

 

h. No authorization, approval, or other action by, and no notice to or filing
with, any governmental or regulatory agency or authority is required: (i) for
the grant by Guarantors of the security interest granted hereby; (ii) for the
execution, delivery, or performance of this Security Agreement by Borrower; or
(iii) for the perfection of or the exercise by Secured Party of its rights and
remedies hereunder.

 

3. Covenants. Guarantors covenants and agrees that, until the Obligations are
irrevocably satisfied in full or otherwise discharged:

 

a. Guarantors shall, at Guarantors’ sole expense, promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary in order to perfect and protect any security interest granted hereby
or to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral, including, without limitation,
providing, executing, filing, and/or recording any notice, financing statement,
statement, instrument, document, or agreement necessary to create, preserve,
continue, perfect, or validate any security interest granted hereunder or which
is necessary to exercise or enforce the Secured Party’s rights hereunder with
respect to such security interest.

 

b. The Secured Party is authorized to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of Guarantors where permitted by law in a form
as determined to be appropriate by Secured Party. A carbon, photographic, or
other reproduction of this Security Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.

 

c. Guarantors shall keep the Collateral insured for the benefit of the Secured
Party against fire, theft, and such other hazards, and in amounts and with such
insurance underwriters, as are prudent and customary in Guarantors’ industry.

 

d. Guarantors shall defend the Collateral against all claims and demands of all
persons (other than Secured Party) claiming an interest therein.

 

e. Guarantors shall not sell, assign, convey, grant, create, or suffer to exist
any lien, claim, security interest, or encumbrance upon the Collateral in favor
of any person other than the Secured Party.

 

f. Guarantors shall not otherwise transfer or dispose of any Collateral
(“Transfer”), except for a Transfer, other than a security interest, made in the
ordinary course of business for reasonably equivalent value.

 

  

  

 

4. Remedies. Upon the happening of an Event of Default, as defined in the
Agreement and the Note, the Secured Party shall have, in addition to all other
rights and remedies provided in this Security Agreement or otherwise, all the
rights and remedies of a secured party on default under the UCC, including
without limitation the right to take possession of the Collateral, and for that
purpose the Secured Party may, so far as Guarantors can give authority therefor,
enter upon any premises upon which Collateral may be situated and remove, take
and carry away the same. Without limiting the generality of the foregoing, the
Secured Party may immediately, without demand or performance and without notice
of intention to sell or of time or place of sale or of redemption or other
notice or demand whatsoever to Guarantors, all of which are hereby expressly
waived, and without advertisement, sell the Collateral, or any part thereof, at
public or private sale or otherwise, at any of Secured Party’s offices or
elsewhere, for cash, on credit, or for future delivery and upon such other terms
as Secured Party may deem commercially reasonable, and after deducting from the
proceeds of sale or other disposition of the Collateral all expenses (including
all reasonable expenses for legal services), shall apply the residue of such
proceeds toward the payment of the Obligations and other liabilities of
Guarantors, Borrower remaining liable for any deficiency remaining unpaid after
such application. If notice of any sale or other disposition is required by law
to be given, Guarantors hereby agrees that a notice sent at least two (2) days
before the time of any intended public sale or of the time after which any
private sale or other disposition of the Collateral is to be made, shall be
reasonable notice of such sale or other disposition. The Secured Party, in its
discretion, may in its name or in the name of Guarantors, demand, sue for,
collect, and receive any money, receivables, or proceeds included in the
Collateral and extend the time of payment or otherwise modify any of the terms
of or release Guarantors under any such Collateral, without thereby incurring
responsibility to or discharging or otherwise affecting any liability of
Guarantors. Guarantors shall pay to the Secured Party on demand any and all
attorney’s fees reasonably and necessarily incurred or paid by the Secured Party
in protecting or enforcing the Obligations and the other rights of the Secured
Party under this Security Agreement, including its right to take possession of
and realize on Collateral.

 

5. Power of Attorney. Guarantors authorize the Secured Party and does hereby
make, constitute, and appoint the Secured Party and agents of the Secured Party
with full power of substitution, as Guarantors’ true and lawful attorney-in-fact
with power, in its own name or in the name of Guarantors, upon the occurrence
and continuance of any Event of Default, as defined in the Agreement and the
Note, to endorse any notes, checks, drafts, money orders, or other instruments
of payment (including, payments under or in respect of any policy of insurance)
in respect of the Collateral that may come into possession of the Secured Party;
to sign and endorse any documents relating to the Collateral; to pay or
discharge taxes, liens, security interests, or other encumbrances at any time
levied or placed on or threatened against the Collateral; to grant, collect,
receipt for, compromise, settle, and sue for sums due in respect of the
Collateral; and generally, to do at the Secured Party’s option and at
Guarantors’ expense, at any time, or from time to time all acts and things which
the Secured Party deems necessary to protect, preserve, and realize upon the
Collateral and Guarantors’ security interests therein in order to effect the
intent of this Security Agreement, as fully and effectually as Guarantors might
or could do; and Guarantors hereby ratify all that said attorney shall do or
cause to be done by virtue hereof. THIS POWER OF ATTORNEY IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE FOR AS LONG AS ANY OF THE OBLIGATIONS SHALL BE
OUTSTANDING. Guarantors agree that any reasonable fees, costs, and expense
incurred by the Secured Party pursuant to the foregoing authorization shall
become part of the Obligations and be secured by the Collateral.

 

  

  

 

6. Term of Security Agreement. The term of this Security Agreement shall
commence on the date hereof and continue in full force and effect until all of
the Obligations have been fully and indefeasibly paid and performed and such
payment and performance has been acknowledged in writing by the Secured Party.
At such time, this Security Agreement shall terminate, Secured Party shall
release its security interests hereunder (and deliver and sign appropriate UCC
termination statements), and the Collateral shall be reassigned to Guarantors.

 

7. Indemnity and Expenses.

 

a. Borrower agrees to jointly and severally, indemnify Secured Party from and
against any and all claims, losses, and liabilities arising out of or resulting
from this Security Agreement (including, without limitation, enforcement of this
Security Agreement), except claims, losses, or liabilities resulting from
Secured Party’s gross negligence or willful misconduct.

 

b. Guarantor agrees to, jointly and severally, will upon demand pay to Secured
Party the amount of any and all expenses, including the reasonable fees and out
of pocket disbursements of its outside legal counsel and of any experts and
agents, which Secured Party may incur in connection with: (i) filing or
recording fees incurred in connection with this Security Agreement; (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral; (iii) the exercise or enforcement
of any of the rights of Secured Party; or (iv) the material failure by
Guarantors to perform or observe any of the provisions hereof. Secured Party
shall not be liable to Guarantors for damages as a result of delays, temporary
withdrawals of the Equipment from service, or other causes other than those
caused by Secured Party’s gross negligence or willful misconduct.

 

8. Miscellaneous.

 

a. Continuing Security Interest; Transfer of the Note. This Security Agreement
shall create a continuing security interest in the Collateral and shall: (a)
remain in full force and effect until payment in full of all amounts due under
the Note and Agreement; (b) be binding upon Guarantors, their successors and
assigns; and (c) inure to the benefit of Secured Party and its successors,
transferees, and assigns. Upon the payment in full of all amounts due under the
Note, the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Guarantors. Upon any such termination, Secured Party
will, at Guarantors’ expense, execute and deliver to Guarantors such UCC
termination statements and such other documentation as Guarantors shall
reasonably request to affect the termination and release of the Liens on the
Collateral.

 

b. No Third-Party Beneficiaries. This Security Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.

 

c. Succession and Assignment. This Security Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign the Note, this Security Agreement, or
any of the rights, interests, or obligations thereunder or hereunder without the
prior written approval of the other party.

 

  

  

 

d. Entire Agreement. This Security Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they have related in any way to the subject
matter hereof.

 

e. Counterparts. This Security Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

 

f. Headings. The section headings contained in this Security Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Security Agreement.

 

g. Notices. Each notice, request, demand, consent, confirmation or other
communication under this Agreement shall be in writing and delivered in person
or sent by electronic mail or facsimile or registered or certified mail, return
receipt requested and postage prepaid, to the applicable party at its current
address or email address or facsimile number or at such other address or email
address or facsimile number as any party hereto may designate as its address for
communications hereunder by notice so given. Such notices shall be deemed
effective on the day on which delivered or sent if delivered in person or sent
by electronic mail or facsimile (with answerback confirmation received), or on
the third (3rd) business day after the day on which mailed, if sent by
registered or certified mail.

 

h. Consent to Jurisdiction; Waiver of Jury Trial. SECURED PARTY AND GUARANTORS
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF
CALIFORNIA SITTING IN LOS ANGELES COUNTY, IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT. SECURED PARTY AND
GUARANTORS HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT TO SUCH SUIT,
ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH STATE COURTS.
SECURED PARTY AND GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND
SECURED PARTY AND GUARANTORS EACH FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE GUARANTORS AND THE SECURED PARTY HEREBY IRREVOCABLY
WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH GUARANTORS
AND THE SECURED PARTY ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS.

 

i. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California (without
reference to conflict of law principles).

 

  

  

 

j. Equitable Remedies. In the event of any actual or prospective breach or
default by either party, the other party shall be entitled to equitable relief,
including remedies in the nature of injunction and specific performance. All
remedies hereunder are cumulative and not exclusive, and nothing herein shall be
deemed to prohibit or limit either party from pursuing any other remedy or
relief available at law or in equity for any actual or prospective breach or
default, including the recovery of damages.

 

k. Amendments and Waivers. No amendment of any provision of this Security
Agreement shall be valid unless the same shall be in writing and signed by both
Guarantors and Secured Party. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.

 

l. Severability. Any term or provision of this Security Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

 

m. Construction. The parties have participated jointly in the negotiation and
drafting of this Security Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Security Agreement shall be construed as
if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Security Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement
effective as of the Effective Date.

 

Body and Mind Inc.

(“Secured Party”)

 

Green Light District Holdings, Inc.

(“Borrower”)

 

 

 

 

 

 

 

By:

/s/ Robert Hasman

 

By:

/s/ David Barakett

 

Name:

Robert Hasman

 

Name:

David Barakett

 

Title:

Authorized Signatory

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

Dated:

June 20, 2019

 

Dated:

June 20, 2019

 

 

 

 

 

 

 

 

 

 

Airport Collective, Inc.

(“Guarantor”)

 

 

 

 

 

 

 

 

 

 

By:

/s/ David Barakett

 

 

 

 

Name:

David Barakett

 

 

 

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

 

 

 

Dated:

June 20, 2019