EXHIBIT10.2

 

SECURITY AGREEMENT

 

By this Security Agreement (this “Agreement”), dated as of November 28, 2018
(the “Effective Date”), Body and Mind Inc. (the “Secured Party”) and Green Light
District Holdings, Inc. (the “Debtor”) in consideration of the mutual covenants
and agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
represent, warrant, covenant and agree as follows.

 

ARTICLE I

 

RECITALS AND DEFINITIONS

 

1.01 Note. Debtor and Secured Party are parties to that certain Note dated of
November 28, 2018 (as amended, modified, supplemented, restated, replaced or
extended, the “Note”). It was a condition to Secured Party lending the funds
referenced in the Note that the Debtor execute and deliver this Security
Agreement to the Secured Party.

 

1.02 Definitions. Certain terms used herein shall have the meaning ascribed to
such terms as set forth in Schedule 1 attached hereto.

 

1.03 Rules of Construction. Section headings are used for convenience only and
shall have no interpretative effect or impact. All the defined terms, if defined
in the singular or present tense, shall retain such specified meaning if used in
the plural or past tense, and if defined in the plural or past tense, shall
retain the specified meaning if used in the singular or present tense. Whenever
this Agreement refers to a number of days, such number shall refer to calendar
days unless business days are specified.

 

1.04 Uniform Commercial Code. Capitalized terms not defined in this Agreement
shall have the meanings ascribed to them by the Uniform Commercial Code in the
State of Nevada (the “UCC”). All accounting terms used herein without definition
shall have the meanings assigned to them as determined by generally accepted
accounting principles.

 

ARTICLE II

 

AGREEMENT

 

2.01 Security Interest. As security for the prompt and complete payment and
performance of all of the Obligations, whether or not any instrument or
agreement relating to any Obligation specifically refers to this Agreement or
the security interest created hereunder, Debtor hereby assigns, pledges and
grants to Secured Party a lien on and continuing security interest in,
assignment and pledge of and charge over, the Collateral.

 

2.02 Care of Collateral. Secured Party shall have no liability or duty on
account of loss of or damage to the Collateral, to collect any income accruing
on the Collateral, or to preserve rights against parties with prior interests in
the Collateral. Debtor is responsible for responding to notices concerning the
Collateral. While Secured Party is not required to take any actions with respect
to the Collateral, if action is needed, in Secured Party’s sole discretion, to
preserve and maintain the Collateral, Debtor authorizes Secured Party to take
such actions.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

To induce Secured Party to enter into this Agreement, Debtor hereby represents
and warrants to Secured Party that:

 

3.01 State of Incorporation, Legal Name and Identification Number. Debtor’s name
as it appears in official filings in the state of organization, the type of
entity of Debtor, organizational identification number issued by Debtor’s state
of organization or a statement that no such number has been issued, Debtor’s
state of organization, the location of Debtor’s chief executive office,
principal place of business, and the locations of its books and records
concerning the Collateral are set forth on Schedule 1 hereto.

    

3.02 Good Standing. Debtor is a corporation duly incorporated, legally existing
and in good standing under the laws of its jurisdiction, has the power to own
its property and to carry on its business and is duly qualified to do business
and is in good standing in each jurisdiction in which it does business.

 

3.03 Authority. Debtor has full power and authority to enter into this
Agreement, to execute and deliver all documents and instruments required
hereunder and to incur and perform the obligations provided for herein, all of
which have been duly authorized by all necessary and proper corporate action,
and no consent or approval of any Person which has not been obtained is required
as a condition to the validity or enforceability hereof or thereof. All books
and records pertaining to the Collateral are located at the Business Premises
and Debtor will not change the location of such books and records without the
prior written consent of Secured Party, which consent shall not be unreasonably
withheld.

 

3.04 Binding Agreements. This Agreement has been duly and properly executed by
Debtor, constitutes the valid and legally binding obligation of Debtor and is
fully enforceable against Debtor in accordance with its terms, subject only to
laws affecting the rights of creditors generally and application of general
principles of equity.

 

3.05 No Conflicting Agreements. The execution, delivery and performance by
Debtor of this Agreement will not violate (i) any provision of applicable
Governmental Requirements or any order, rule or regulation of any Governmental
Authority; (ii) any award of any arbitrator; (iii) the articles of incorporation
or bylaws of Debtor, or similar documents; or (iv) any indenture, contract,
agreement, mortgage, deed of trust or other document or instrument by which
Debtor is bound.

 

3.06 Litigation. There are no judgments, injunctions or similar orders or
decrees, claims, actions, suits or proceedings pending or, to the knowledge of
Debtor, threatened against or affecting Debtor or any property of Debtor, which
could reasonably be expected to have a Material Adverse Effect, and Debtor is
not in default with respect to any judgment, order, writ, injunction, decree,
rule or regulation of any court or any Governmental Authority, which could
reasonably be expected to have a Material Adverse Effect.

 

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3.07 Title to Properties. Debtor is the legal and beneficial owner of all of the
Collateral, free and clear of all Liens other than Permitted Liens. No financing
statement or similar document or instrument covering any of the Collateral is on
file in any public office or land or financing records except for financing
statements in favor of Secured Party and financing statements relating to
Permitted Liens.

  

3.08 Valid Security Interest. This Agreement creates, in favor of Secured Party,
a valid security interest in the Collateral, subject only to Permitted Liens,
securing the payment and performance of the Obligations. Upon the making of the
filings described in Section 8.01 and the filing of any continuation statements
required by the UCC, Secured Party will have as security for the Obligations a
valid and perfected first priority Lien on all the Collateral which may be
perfected by filing UCC financing statements, free of all other Liens, claims
and rights of third parties, except for Permitted Liens. Except for the filing
of the UCC financing statements referred to above, no action is necessary, and
no additional approval of any third party is required, to create, perfect or
protect the security interests created in the Collateral.

 

3.09 Licenses and Permits. Debtor has duly obtained and now holds all material
licenses, permits, certifications, approvals and the like required by
Governmental Requirements or necessary to conduct its business, and each remains
valid and in full force and effect.

 

3.10 Commercial Purpose. This Agreement and the transactions contemplated by the
Loan Documents do not constitute a “consumer transaction” as defined in the
Uniform Commercial Code. None of the Collateral was or will be purchased or held
primarily for personal, family or household purposes.

 

3.11 Patents, Trademarks, etc. Debtor owns, possesses or has the right to use
all patents, patent rights, licenses, trademarks, trade names, trade name
rights, copyrights and franchises related to the Collateral and necessary to
conduct its business, without any known conflict with the right of any other
person.

 

3.12 Survival. All representations and warranties contained in or made in
connection with this Agreement and the other Loan Documents shall survive the
execution and delivery of this Agreement.

 

ARTICLE IV

 

AFFIRMATIVE COVENANTS

 

Debtor covenants and agrees with Secured Party that, until the security interest
created herein is discharged pursuant to Section 7.14, Debtor will perform and
fulfill each of the following:

 

3.01 Existence, Continuation of Business and Compliance with Laws. Maintain its
existence as a corporation in good standing; continue its business operations as
now being conducted; and comply with all Governmental Requirements applicable to
it, its business and its operations.

 

4.02 Extraordinary Loss. Promptly notify Secured Party in writing of any event
causing extraordinary loss or depreciation of the value of Debtor’s assets.

 

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4.03 Conferences with Officers and Others. At all times, permit Secured Party,
its agents, advisors and representatives to (a) access all of Debtor’s
properties, (b) discuss Debtor’s business with any officers and employees of
Debtor, and (c) review and inspect the Collateral.

 

4.04 Maintenance. Use, operate and maintain the Collateral in accordance with
good industry practice and in compliance with all Governmental Requirements.

 

4.05 Defend Collateral. Except for Permitted Liens, maintain the Liens and
security interests provided for hereunder as valid and perfected first priority
Liens and security interests in the Collateral in favor of Secured Party until
this Agreement and the security interests hereunder shall be terminated pursuant
to Section 7.14 hereof. Debtor hereby agrees to: (a) use commercially reasonable
efforts to defend the Collateral against the claims of all Persons and entities;
and (b) safeguard and protect all Collateral for the account of Secured Party.

 

4.06 Further Assurances and Corrective Instruments. Promptly make, execute,
acknowledge and deliver, all such additional instruments and to take such
further acts as Secured Party may reasonably request to: (a) protect, maintain
and preserve the Collateral and Secured Party’s security interest in the
Collateral; and (b) protect, vest in and assure to Secured Party its rights or
remedies hereunder and the perfection and priority of its rights herein,
including in necessary, without limitation, placing legends on Collateral or on
books and records pertaining to Collateral stating that Secured Party has a
security interest therein.

 

4.07 Loan Documents. Debtor will perform and fulfill each of the covenants in
the Loan Documents that is applicable to Debtor.

 

ARTICLE V

 

NEGATIVE COVENANTS

 

Debtor covenants and agrees with Secured Party that, until the security interest
created herein is discharged pursuant to Section 7.14, Debtor will not, without
Secured Party’s prior written consent, or except as otherwise permitted by the
Loan Documents:

 

5.01 Liens. Create, incur, assume or permit to exist, directly or indirectly,
any Lien upon any of Debtor’s properties or assets, now or hereafter owned by
Debtor, other than Permitted Liens;

 

5.02 Sale of Assets; Acquisitions. Sell, assign, transfer, convey or lease any
interest in the Collateral outside of the ordinary course of business, or
purchase or otherwise acquire all or substantially all of the assets of any
other Person, or any shares of stock of or similar interest in, any other Person
or Persons, or purchase or otherwise acquire any other assets outside the
ordinary course of business or as otherwise permitted under the Loan Documents;

  

5.03 Change of Name or Structure. Change the name, organizational structure,
jurisdiction of organization, chief executive office or address of Debtor; or

 

5.04 Financing Statements. File, or allow to be filed, any financing statement
or amendment or termination statement with respect to any financing statement
filed in favor of Secured Party without the prior written consent of Secured
Party, subject to such Debtor’s rights under Section 9-509(d)(2) of the UCC.

 

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ARTICLE VI

 

EVENTS OF DEFAULT

 

The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

 

6.01 Occurrence of an Event of Default. An “Event of Default” under any other
Loan Document.

 

6.02 Security Interest. This Agreement or any other security agreement, pledge,
or other similar document, agreement or instrument granting a security interest
in, pledge of or charge over the assets of Debtor in favor of Secured Party,
after delivery thereof shall, for any reason except to the extent permitted by
the terms thereof, cease to create a valid and perfected Lien on any of the
assets and collateral purported to be covered thereby, or Debtor shall so state
in writing or Debtor or any other Person shall take or agree to take any action
threatening the validity, perfection or priority of any such security interest.

 

6.03 Attachment by Creditors. Any assets of Debtor shall be attached, levied
upon, seized or repossessed, or come into the possession of a trustee, receiver
or other custodian and a determination by Secured Party, in good faith but in
its sole discretion, that the same could reasonably be expected to have a
Material Adverse Effect.

 

6.04 Other Default. Debtor fails to comply with or to perform any other term,
obligation, covenant, or condition contained in any other agreement between
Debtor and Secured Party.

 

ARTICLE VII

 

RIGHTS AND REMEDIES

 

7.01 Rights and Remedies of Secured Party. Upon and after the occurrence and
during the continuance of an Event of Default, Secured Party may, without notice
or demand, exercise in any jurisdiction the following rights and remedies, in
addition to the rights and remedies available under the other Loan Documents or
at law or in equity, all such rights and remedies being available to Secured
Party and being cumulative:

 

 

(a) Declare all Obligations to be immediately due and payable without
presentment, demand for payment, protest or notice of any kind, all of which are
hereby expressly waived.

 

 

 

 

(b) Institute any proceeding or proceedings to enforce the Obligations and any
Liens of Secured Party.

 

 

 

 

(c) Take possession of the Collateral, and enter upon any premises on which the
Collateral or any part thereof may be situated and remove the same therefrom
without any liability for suit, action or other proceeding, Debtor HEREBY
WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH RESPECT
TO REPOSSESSION OF COLLATERAL, and require Debtor, at Debtor’s expense, to
assemble and deliver the Collateral to such place or places as Secured Party may
designate.

 

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(d) Operate, manage and control the Collateral, or permit the Collateral or any
portion thereof to remain idle or store the same, and collect all revenues
therefrom and sell or otherwise dispose of any or all of the Collateral upon
such terms and under such conditions as Secured Party, in its sole discretion,
may determine, and purchase or acquire any of the Collateral at any such sale or
other disposition, all to the extent permitted by applicable Governmental
Requirements.

 

 

 

 

(e) Enforce Debtor’s rights against account debtors and other Obligors.

 

 

 

 

(f) Without notice to Debtor, any such notice being expressly waived by Debtor,
to set-off and appropriate and apply any and all deposits, and any other
indebtedness or claims at any time held or owing by Secured Party on account of
Debtor, against the Obligations, as Secured Party may elect in its sole
discretion, although such obligations, liabilities and claims may be contingent
or unmatured. Secured Party shall notify Debtor of any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of Secured Party to set-off
and appropriate are in addition to the other rights and remedies which Secured
Party may have hereunder, under any other Loan Document, or at law or in equity.

 

 

 

 

(g) To enforce Debtor’s rights against account debtors and other parties
obligated on Collateral, including, but not limited to, the right to: (i) notify
any or all account debtors and other parties obligated on Collateral to make
payments directly to Secured Party, and to take any or all action with respect
to Collateral as Secured Party shall determine in its sole discretion,
including, without limitation, the right to demand, sue for and receive any
money or property at any time due, on account thereof, compromise and settle
with any Person liable thereon, and extend the time of payment or otherwise
change the terms thereof; and (ii) require Debtor hold in trust for Secured
Party and transmit to Secured Party, all items of payment constituting
Collateral or proceeds of Collateral.

  

7.02 Power of Attorney. Debtor hereby irrevocably constitutes and appoints
Secured Party, with full power of substitution, as its true and lawful attorney
in fact with full irrevocable power and authority in the place, stead, and name
of Debtor, in the discretion of Secured Party, upon the occurrence and during
the continuation of any Event of Default, for the purpose of carrying out and
implementing the terms of this Agreement and each other Loan Document, to take
any and all necessary or appropriate action and to execute and deliver any and
all documents and instruments which may be necessary or appropriate to
accomplish the purposes of this Agreement and, hereby gives Secured Party the
power and right, on behalf of Debtor, without notice to or assent by Debtor, to
do the following:

 

 

(a) to ask, demand, collect, and receive any and all moneys due and to become
due under any Collateral; to execute proofs of and endorse and collect any
checks, drafts, notes, acceptances or other Instruments for the payment of
moneys due under any Collateral and to file any claim and loss; or to take any
other action or proceeding deemed appropriate by Secured Party for the purpose
of collecting and to file any claim or to take any other action or proceeding;

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(b) to pay or discharge claims, charges or liens levied or placed on or
threatened against the Collateral (other than the Permitted Liens);

 

 

 

 

(c) to direct any party liable for any payment under any of the Collateral to
make payment directly to Secured Party or as Secured Party shall direct, and to
receive payments in respect of or arising out of any Collateral;

 

 

 

 

(d) to adjust and compromise any claims under insurance policies;

 

 

 

 

(e) to sign and indorse any invoices, drafts against debtors, assignments,
verifications and notices in connection with accounts and other Documents
constituting or relating to the Collateral;

 

 

 

 

(f) to commence and prosecute, defend, settle, compromise, or adjust any suits,
actions or proceedings to related to the Collateral and to enforce any other
right in respect of any Collateral;

    

 

(g) generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof;

 

 

 

 

(h) to communicate in its own name with any party to any agreement with regard
to the assignment hereunder of the right, title and interest of Debtor in and
under the agreements and other matters relating thereto;

 

 

 

 

(i) to undertake at Secured Party’s option, at any time, and at Debtor’s
expense, all acts and things which Secured Party deems necessary or advisable,
in its sole discretion, to carry out and enforce this Agreement, all as fully
and effectively as Debtor might do; and

 

All acts of said attorney or designee are hereby ratified and approved by Debtor
and said attorney or designee shall not be liable for any acts of commission or
omission nor for any error of judgment or mistake of fact or law, except in the
case of gross negligence or willful misconduct. This power of attorney is
coupled with an interest and is irrevocable so long as any of the Obligations
remain unpaid or unperformed and until the security interest created herein is
discharged pursuant to Section 8.14.

 

6.03 Notice of Disposition of Collateral and Disclaimer of Warranties. It is
mutually agreed that commercial reasonableness and good faith require Secured
Party to give Debtor no more than five (5) business days prior written notice of
the time and place of any public or private disposition of Collateral, and that
it is commercially reasonable for Secured Party to disclaim all warranties which
arise with respect to the disposition of the Collateral.

 

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7.04 Reinstatement. To the extent that any payment made or received with respect
to the Obligations is subsequently invalidated, set aside, or required to be
repaid to any Person by any Governmental Requirement, then the Obligations
intended to be satisfied by such payment shall be revived and shall continue as
if such payment had not been received.

 

ARTICLE VIII

 

MISCELLANEOUS

 

8.01 Financing Statements. Debtor authorizes Secured Party to file financing
statements, continuation statements, amendments, and other similar documents and
instruments covering the Collateral and containing such legends as Secured Party
shall deem necessary or desirable to perfect or protect Secured Party’s interest
in the Collateral, including financing statements as indicate or describe the
Collateral as “all assets” or “all personal property.” Debtor agrees to pay all
taxes, fees and costs (including reasonable attorneys’ fees) paid or incurred by
Secured Party in connection with the preparation, filing or recordation thereof.
Debtor authorizes Secured Party to file to file a photocopy of this Agreement in
substitution for a financing statement, as Secured Party may deem appropriate,
and to execute in Debtor’s name such financing statements and amendments thereto
and continuation statements which may require Debtor’s signature. Debtor waives
receipt of any such financing statements that are registered by Secured Party
and any confirmation of registration.

 

8.02 Performance for Debtor. Debtor agrees and hereby authorizes that Secured
Party may, in Secured Party’s sole discretion, but is not obligated to, advance
funds on behalf of Debtor, without prior notice to Debtor, in order to insure
Debtor’s compliance with any covenant, warranty, representation or agreement of
Debtor made in or pursuant to this Agreement or any of the Loan Documents.
Debtor shall pay to Secured Party upon demand all such advances made by Secured
Party. All such advances shall be deemed to be included in the Obligations and
secured by the security interest granted Secured Party hereunder.

 

8.03 Expenses. In any Event of Default, Debtor shall pay all costs and expenses
of Secured Party, including without limitation, attorneys’ fees, incurred in
connection with the enforcement and administration of this Security Agreement,
and the making and repayment of the Obligations.

 

8.04 Applications of Payments and Collateral. Except as may be otherwise
specifically provided in the Loan Documents, all Collateral and proceeds of
Collateral coming into Secured Party’s possession after the occurrence of an
Event of Default and all payments made by Debtor may be applied by Secured Party
to any of the Obligations, as Secured Party shall determine in its sole but
reasonable discretion.

    

8.05 Waivers by Secured Party. Neither any failure nor any delay on the part of
Secured Party in exercising any right, power or remedy shall operate as a waiver
thereof.

 

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8.06 Waivers by Debtor. Debtor hereby waives, to the extent the same may be
waived under applicable law: (a) notice of acceptance of this Agreement; (b) all
claims, causes of action and rights of Debtor against Secured Party on account
of actions taken or not taken by Secured Party in the exercise of Secured
Party’s rights or remedies; (c) all claims of Debtor for failure of Secured
Party to comply with any requirement of applicable law relating to enforcement
of Secured Party’s rights or remedies; (d) all rights of redemption of Debtor
with respect to the Collateral; (e) in the event Secured Party seeks to
repossess any or all of the Collateral by judicial proceedings, any bond(s) or
demand(s) for possession which otherwise may be necessary or required; (f)
presentment, demand for payment, protest and notice of non-payment and all
exemptions; (g) any and all other notices or demands which by applicable law
must be given to or made upon Debtor by Secured Party; (h) settlement,
compromise or release of the obligations of any one or more Persons primarily or
secondarily liable upon any of the Obligations; (i) all rights of Debtor to
demand that Secured Party release account debtors from further obligation to
Secured Party; and (j) substitution, impairment, exchange or release of any
Collateral for any of the Obligations. Debtor agrees that Secured Party may
exercise any or all of its rights and/or remedies hereunder, under the Loan
Documents and under applicable Governmental Requirements, from time to time, in
any order, alternatively, successively or concurrently, without resorting to and
without regard to any Collateral or sources of liability with respect to any of
the Obligations.

 

8.07 Modifications. No modification, amendment or waiver of any provision of the
Loan Documents, shall be effective unless the same shall be in writing signed by
both parties.

 

8.08 Notices. All notices, demands, and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing by personal delivery, U.S. Mail (certified mail, return receipt
requested), or by email and U.S. Mail (certified mail, return receipt
requested), at the addresses set forth below:

 

 

If to Debtor:

Green Light District Holdings, Inc.

3411 East Anaheim Street

Long Beach, CA 90804

Email: David@Showgrow.com

 

 

 

 

 

 

 

If to Secured Party:

 

Body and Mind Inc.

750 – 1095 West Pender Street

Vancouver, BC

V6E 2M6

Attn: Leonard Clough

Email: Len@altuscapital.ca

 

 

All notices shall be deemed given upon receipt. Any party from time to time may
change such party’s address or other information for the purpose of notices to
that party by giving notice specifying such change to the other party

 

8.09 Survival; Successors and Assigns. All covenants, agreements,
representations and warranties made herein shall continue in full force and
effect until the security interest created herein is discharged pursuant to
Section 8.14, and shall be binding on the successors and assigns of each party.
All covenants, agreements, representations and warranties by Debtor shall inure
to the benefit of Secured Party, its successors and assigns. Debtor may not
assign this Agreement or any of its rights hereunder without the prior written
consent of Secured Party.

 

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8.10 Applicable Law and Consent to Jurisdiction. This Agreement, and the
application or interpretation hereof, shall be governed exclusively by the terms
of this Agreement and by the Laws of the State of Nevada. The Parties
irrevocably submit to the nonexclusive jurisdiction and venue of the State and
Federal courts located in Clark County, Nevada in any action or proceeding
arising out of this Agreement.

 

8.11 Severability. If any term, provision or condition, or any part thereof, of
this Agreement or any of the Loan Documents shall for any reason be found or
held invalid or unenforceable by any court or governmental agency of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of such term, provision or condition nor any other term, provision or condition,
and this Agreement and the Loan Documents shall survive and be construed as if
such invalid or unenforceable term, provision or condition had not been
contained therein.

 

8.12 Merger and Integration. This Agreement contains the entire agreement of the
parties hereto with respect to the matters covered and the transactions
contemplated hereby, and no other agreement, statement or promise made by any
party hereto, or by any employee, officer, agent or attorney of any party
hereto, which is not contained herein shall be valid or binding.

 

8.13 Counterparts; Facsimile and Electronic Signatures. This Security Agreement
may be executed in any number of counterparts confirmed by signatures
transmitted by facsimile or e-mail, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.

 

8.14 Discharge. Upon: (a) the complete and irrevocable payment and performance
in full of the Obligations (other than contingent Obligations for which no claim
has been made); (b) the termination and discharge of the Loan Documents; and (c)
such time as there exists no commitment by Secured Party which could give rise
to any Obligations (other than contingent Obligations for which no claim has
been made), this Agreement shall be terminated, the security interest in the
Collateral shall be released, and Secured Party shall execute and deliver such
releases and discharges of the security interests created hereby as Debtor may
reasonably request in writing, the cost and expense of which shall be paid by
Debtor.

 

8.15 Indemnity. Debtor agrees to pay, indemnify and save and hold harmless
Secured Party and each of its directors, officers, partners, managers, members,
shareholders, employees, agents, affiliates and advisors (each, an “Indemnified
Party”) from and against any and all claims, damages, losses, penalties,
liabilities, judgments, suits, proceedings, taxes, costs and expenses
(including, without limitation, fees and disbursements of counsel) which may at
any time (including, without limitation, at any time following the payment of
the Obligations or any Loan Document) be imposed on, incurred by or asserted
against any such Indemnified Party, in any way relating to, in connection with
or arising out of this Agreement, the other Loan Documents and the transactions
contemplated hereby and thereby and any claim, investigation, subpoena,
litigation, proceeding or otherwise related to or arising out of this Agreement
or any other Loan Document or any transaction contemplated hereby or thereby
(but in any case excluding any such claims, damages, losses, liabilities, costs
or expenses incurred by reason of the gross negligence or willful misconduct of
any Indemnified Party). The obligations of Debtor under this paragraph shall
survive the payment in full of the Loan Agreement and the other Loan Documents
and the termination or release of this Agreement.

 

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8.16 Rights Absolute. All rights of Secured Party and the pledge, assignment,
charge and security interest hereunder, and all obligations of Debtor hereunder,
shall be absolute and unconditional, irrespective of:

 

 

(a) any lack of validity or enforceability of any Loan Document or any other
agreement or instrument relating thereto;

 

 

 

 

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from any Loan Document, including, without limitation,
any increase in the Obligations;

 

 

 

 

(c) any taking, exchange, release or non-perfection of any other collateral, or
any taking, release, amendment or waiver of or consent to departure from any
guaranty, surety or support agreement for all or any of the Obligations;

     

 

(d) any manner of application of collateral or proceeds thereof, to all or any
of the Obligations, or any manner of sale or other disposition of any collateral
for all or any of the Obligations or any other assets of any principal,
guarantor or surety;

 

 

 

 

(e) any change, restructuring or termination of the corporate or company
structure or existence of Debtor or any affiliate thereof; and

 

 

 

 

(f) any other circumstance that might otherwise constitute a defense available
to, or a discharge of, Debtor or any affiliate of Debtor, any other Person
liable for the Obligations or a third party guarantor or grantor of a security
interest.

 

8.17 Headings. The headings and sub‑headings contained in the titling of this
Agreement are intended to be used for convenience only and shall not be used or
deemed to limit or diminish any of the provisions hereof.

 

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

 

 

DEBTOR:

 

 

 

 

 

Green Light District Holdings, Inc.,

 

a Delaware corporation

 

        By:  /s/ David Barakett

 

Name:

David Barakett     Title:

CEO

         

 

SECURED PARTY:

 

 

 

 

 

Body and Mind Inc.

 

 

 

 

 

 

By:

/s/ Leonard Clough

 

 

Name:

Leonard Clough

 

 

Title:

CEO

 

  

 

   

 

SCHEDULE 1

 

TO SECURITY AGREEMENT

 

“Bankruptcy Code” means the United States Bankruptcy Code, as amended from time
to time.

 

“Business Premises” means Debtor’s chief executive office as indicated on
Schedule 1 attached hereto.

 

“Collateral” means all of Debtor’s right, title and interest, whether now owned
or existing or hereinafter acquired or arising, and wheresoever located, in, to,
and under, the property owned by Debtor, which property is further described as
(i) assets, goods, personal property and real property of Debtor; (ii) Accounts;
(iii) General Intangibles; (iv) Documents; (v) Instruments; (vi) Inventory;
(vii) Equipment, appliances, materials, supplies inventory, furnishings,
fixtures and other property used or usable in connection with Debtor (viii) all
Distributions; (ix) copyrights, patents, trademarks and intellectual property
licenses; (x) books and records pertaining to any Collateral; (xi) money and
property of any kind from time to time in the possession or under the control of
Debtor; and (xii) any licenses.

 

Notwithstanding the foregoing, “Collateral” shall not include “Excluded Assets”
(as defined below) until such time as the prohibitions causing such property to
be Excluded Assets have terminated (howsoever occurring); upon the termination
of such prohibitions, Secured Party will be deemed to automatically have and at
all times from and after the date hereof to have had, without the taking of any
action or delivery of any instrument, a security interest in such Excluded
Assets, and Debtor agrees to take all actions necessary in the reasonable
judgment of Secured Party, if any, to perfect such security interest.

 

“Loan Documents” shall mean this Agreement, the Note, and all other documents
related thereto.

 

“Event of Default” means any of the events described in Article VI hereof.

 

“Excluded Assets” means any contract, agreement, permit or license (together
with the Equipment, Fixtures or Goods subject to any such contract, agreement,
permit or license) to the extent that Debtor is validly prohibited from granting
a security interest in such contract, agreement, permit or license (and the
Equipment, Fixtures or Goods subject thereto) pursuant to the terms thereof, but
only to the extent that such prohibition is not invalidated under the UCC.

 

“Governmental Authority” means any domestic or foreign nation or government, any
state, provincial, territorial, divisional, county, regional, municipal, city or
other political subdivision thereof, any native, tribal or aboriginal
government, corporation, association or other entity, any court, tribunal,
arbitrator, agency, department, commission, board, bureau, regulatory authority
or other entity or instrumentality exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government or
Governmental Requirements or the management or administration of real property
interests, and any securities exchange or securities regulatory authority.

 

 

   

 

“Governmental Requirement” means all laws, statutes, rules, regulations, codes,
ordinances, zoning and land use restrictions, treaties, promulgations, plans,
injunctions, judgments, orders, decrees, rulings, permits, licenses and
authorizations issued by a Governmental Authority.

 

“Indebtedness” shall include all items which would properly be included in the
liability section of a balance sheet or in a footnote to a financial statement
in accordance with shall mean generally accepted accounting principles in the
United States of America in effect from time to time, and shall also include all
contingent liabilities.

 

“Lien” means any mortgage, deed of trust, debenture, indenture, pledge, charge,
hypothecation, assignment for security purposes, deposit arrangement, control
arrangement, preferential right, option, production payment, royalty,
encumbrance, financing statement, lien (statutory or otherwise), right of
set-off, claim or charge of any kind, or other security interest or collateral
arrangement or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention transaction, any lease
transaction in the nature thereof and any secured transaction under the Uniform
Commercial Code of any jurisdiction.

 

“Material Adverse Effect” means: (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of Debtor; (b) a material impairment of Debtor’s ability to
perform their obligations under the Loan Documents to which they are parties or
of the Secured Party’s ability to enforce the Obligations.

 

“Obligations” shall mean the any obligation of Debtor under the Note.

 

“Obligor” shall mean individually and collectively, Debtor and each endorser,
guarantor and surety of the Obligations; any person who is primarily or
secondarily liable for the repayment of the Obligations, or any portion thereof;
and any person who has granted security for the repayment of any of the
Obligations.

 

“Permitted Liens” means:

 

 

(a) the interests of lessors under operating leases and licensors under license
agreements;

 

 

 

 

(b) purchase money Liens or the interests of lessors under capital leases or
operating leases to the extent that such Liens or interests secure purchase
money Indebtedness and so long as: (i) such Lien attaches only to the asset
purchased or acquired and the proceeds thereof; and (ii) such Lien only secures
the Indebtedness that was incurred to acquire the asset purchased or acquired;

 

 

 

 

(c) Liens arising by operation of Law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money;

 

 

 

 

(d) Liens on amounts deposited to secure Debtor’s obligations in connection with
worker’s compensation or other unemployment insurance;

 

 

(e) Liens on amounts deposited to secure Debtor’s obligations in connection with
the making or entering into of bids, tenders, or leases in the ordinary course
of business and not in connection with the borrowing of money;

 

 

 

 

(f) licenses of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business;

 

 

 

 

(g) Liens granted in the ordinary course of business;

 

 

 

 

(h) other Liens which do not secure indebtedness for borrowed money or letters
of credit and as to which the aggregate amount of the obligations secured
thereby does not exceed $10,000; and

 

 

 

 

(i) any other Obligations from Debtor to Secured Party, together with all Liens
granted to Debtor in connection with such.

  

 

   

  

SCHEDULE 1

TO SECURITY AGREEMENT

 

Debtor’s name as it appears in official filings in the state of organization

Green Light District Holdings, Inc.

The type of entity of Debtor

Domestic Corporation

Organizational identification number issued by Debtor’s state of organization or
a statement that no such number has been issued,

 

___________________________

Debtor’s state of organization

Delaware

The location of Debtor’s chief executive office, principal place of business,
and the locations of its books and records concerning the Collateral

Green Light District Holdings, Inc.

3411 East Anaheim Street

Long Beach, CA 90804