Document:

ex103.htm

Exhibit 10(iii)

SECURITY AGREEMENT

	
1.  

	
Grant.  On this   day of May, 2012, Nexia Holdings, Inc., a Utah corporation with its principal place of business at 59 West 100 South, second floor, Salt Lake City, Utah 84101and Green Endeavors, Inc., a Utah corporation with its principal place of business at 59 West 10 South, second Floor, Salt Lake City, Utah 84101 (hereinafter called “Debtors”), for valuable consideration, the receipt of which is acknowledged, grants to Richard D.  Surber, a Utah resident with his principal place of business at 59 West 100 south, second floor, Salt Lake City, Utah 84101 and the CEO and President of Debtors,  (hereinafter called “Secured Party”) a security interest in and mortgages to Secured Party, the following described property and interests in property of Debtor (hereinafter called the “Collateral”):

All inventory, equipment, fixtures, stock ownership, including but not limited to the shares held by Green Endeavors, Inc. in Landis Salon Inc., Lands Salons II, Inc., Landis Salons III Inc. and ownership rights in Landis Experience Center LLC, and any other intangible property and all tangible personal property held by, granted to or owned by the Debtor or that is hereafter acquired by the debtor subject only to purchase money liens held by sellers or grantors of the Debtor.

To secure payment of the following obligations of Debtor to Secured Party (all hereinafter called the “Obligations”):

	
1.  

	
All obligations and liabilities of Debtor to Secured Party (including without limitation all debts, claims and indebtedness of Secured Party) whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to time hereafter owing, due or payable, however evidenced, created, incurred, acquired or owing and however arising, or by oral agreement or operation of law or otherwise, including the numerous guaranty of debts of the Debtors or their related parties by the Secured Party in his personal capacity including but not limited to:

Bank of America Credit Card account ending with ****;

Bank of America Credit Card account ending with ****;

American Express Credit Card account ending with *****;

American Express Credit Card account ending with *****;

American Express Credit Card account ending with *****;

Chase Credit Card account ending with ****;

Bank of America Credit Card account ending with ****;

American Express Credit Card account ending with *****;

Chevron Gas credit account;

Wells Fargo Visa Credit Card account ending with ****;

Capita One Credit Card account ending with ****;

American Express Credit Card account ending with *****;

Citibank Credit Card account ending with ****;

The Home Depot credit card account ending with ****;

Cyprus Credit Union-vehicle loan;

American Express Credit Card account ending with *****;

US Bank Visa Credit Card account ending with ****

US Bank Visa Credit Card account ending with ****;

American Express Credit Card account ending with *****;

American Express Credit Card account ending with *****;

(CREDIT CARD NUMBERS HAVE BEEN REDACTED)

Wasatch Capital Corporation loan with Midland;

Wasatch Capital Corporation loan with Keybank;

Downtown Development Corporation loan with Cyprus Credit Union;

Chase, Larry H Miller loan for Chrysler/Dodge motor vehicle

Chase Bank line of credit secured by residence of Secured Party;

Lease Agreement of Landis Salons, Inc.;

Promissory Note by Landis Experience Center with William and Nina Wolfson;

and for all unpaid compensation owed to Secured Party by Debtors in an amount of $585,512 as of December 31, 2010 or for any such unpaid compensation incurred thereafter.

 

 

  

  

  

	
2.  

	
Warranties and Covenants of Debtor.  Debtor warrants and covenants that:

	
a.  

	
Except for the security interest granted hereby, Debtor is the owner of the Collateral free from any adverse lien, security interest or encumbrance, except as disclosed to the Secured Party, which include Deeds of Trust that secure real property held by subsidiaries of Debtor; and Debtor will defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein.

	
b.  

	
No Financing Statement covering any of the Collateral or any proceeds thereof is on file in any public office.  The Debtor shall immediately notify the Secured Party in writing of any change in name, address, identity or corporate structure from that shown in this Agreement and shall also upon demand furnish to the Secured Party such further information and shall execute and deliver to Secured Party such financing statements and other documents in form satisfactory to Secured Party and shall do all such acts and things as Secured Party may at any time or from time to time reasonably request or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Obligations, subject to no adverse liens or encumbrances; and Debtor will pay the cost of filing the same or filing or recording this agreement in all public offices wherever filing or recording is deemed by Secured Party to be necessary or desirable.  A carbon, photographic or other reproduction of this agreement is sufficient as a financing statement.

	
c.  

	
Debtor will not sell or offer to sell, assign, pledge, lease or otherwise transfer or encumber the Collateral or any interest therein, outside of the normal course of business for the Debtor, without the prior consent of Secured Party.

	
d.  

	
Debtor shall keep the Collateral at all times insured against risks of loss or damage by fire (including so-called extended coverage), theft and such of the casualties as Secured Party may reasonable require, all in such amounts, under such forms of policies, upon such terms, for such periods and written by such companies or underwriters as Secured Party may approve, losses in all cases to be payable to Secured Party and Debtor as their interests may appear.  All policies of insurance shall provide that Secured Party’s interest therein shall not be invalidated by the act, omission or neglect of anyone other than Secured Party and for at least ten days prior written notice of cancellation to Secured Party.  Debtor shall furnish Secured Party with certificates of such insurance or other evidence satisfactory to Secured Party as to compliance with the provisions of this paragraph.  Secured Party may act as attorney for Debtor in making, adjusting and settling claims under and cancelling such insurance and endorsing Debtor’s name on any drafts drawn by insurers of the Collateral.

	
e.  

	
Debtor will keep the Collateral free from any adverse lien, security interest or encumbrance and in good order and repair, shall not waste or destroy the Collateral or any part thereof, and shall not use the Collateral in violation of any statute, ordinance or policy of insurance thereon.  Secured Party may examine and inspect the Collateral at any reasonable time or times, wherever located.

	
f.  

	
Debtor will pay promptly when due all taxes and assessments upon the Collateral or for its use of operation or upon this Agreement or upon any note or notes evidencing the Obligations.

	
3.  

	
Additional Rights of Parties.  At its option, Secured Party may discharge taxes, liens or security interests or other encumbrances at time levied or placed on the Collateral, may place and pay for insurance on the Collateral upon failure by the Debtor, after having been requested to do so, to provide insurance satisfactory to the Secured Party, and may pay for the maintenance, repair, and preservation of the Collateral.  To the extent permitted by applicable law, Debtor agrees to reimburse Secured Party on demand for any payment made, or any expense incurred by Secured Party pursuant to the foregoing authorization.  Until default Debtor may have possession of the Collateral and use it in any lawful manner not inconsistent with this agreement and not inconsistent with any policy of insurance thereon.

	
4.  

	
Events of Default.  Debtor shall be in default under this agreement upon the occurrence of any of the following events or conditions, namely:  (a)  default in the payment or performance of any of the Obligations or of any covenants or liabilities contained or referred to herein or in any of the Obligations; (b)  any warranty, representation or statement made or furnished to Secured Party by or on behalf of Debtor proving to have been false in any material respect when made or furnished; (c) loss, theft, substantial damage, destruction sale or encumbrance to any of the Collateral, or the making of any levy, seizure or attachment thereof or thereon;  (d) dissolution, termination of existence, filing by Debtor or by any third party against Debtor of any petition under any Federal bankruptcy statue, insolvency, business failure, appointment of a receiver of any part of the property of, or assignment for the benefit of creditors by, Debtor; or (e) the occurrence of an event of default in any agreement between Debtor and/or Secured Party and its related entities.

	
5.  

	
Remedies.  UPON DEFAULT AND AT ANY TIME THEREAFTER, SECURED PARTY MAY DECLARE ALL OBLIGATIONS SECURED HEREBY IMMEDIATELY DUE AND PAYABLE AND SHALL HAVE THE REMIDIES OF A SECURED PARTY UNDER THE UNIFORM COMMERCIAL CODE OF THE STATE OF UTAH, including without limitation the right to take immediate and exclusive possession of the Collateral, or any part thereof, and for that purpose may, so far as Debtor can give authority therefor, with or without judicial process, enter (if this can be done without breach of the peace), upon any premises on which the Collateral or any part thereof may be situated and remove the same therefrom (provided that if the Collateral is affixed to real estate, such removal shall be subject to the conditions stated in the Uniform Commercial Code of the State of Utah); and the Secured Party shall be entitled to hold, maintain, preserve and prepare the Collateral for sale, until disposed of, or may propose to retain the Collateral subject to Debtor’s right of redemption in satisfaction of the Debtor’s Obligations as provided in the UCC of the State of Utah.  Secured party without removal may render the Collateral unusable and dispose of the Collateral on the Debtor’s premises.  Secured Party may require Debtor to assemble the Collateral and make it available to Secured Part for possession at a place to be designated by Secured Party which is reasonably convenient to both parties.  Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party will give Debtor at least 5 days’ notice of the time and place of public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made.  The requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of Debtor shown at the beginning of this agreement at least ten days before the time of the sale or disposition.  Secured Party may buy at any public sale.  The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and reasonable attorney’s fees and legal expenses incurred by Secured Party, shall be applied in satisfaction of the Obligations secured hereby.  The Secured Party will account to the Debtor for any surplus realized on such disposition and the Debtor shall remain liable for any deficiency.  The remedies of the Secured Party hereunder are cumulative and the exercise of any one or more of the remedies provided for herein or under the Uniform Commercial Code of the State of Utah shall not be construed as a waiver of any of the other remedies of the Secured Party so long as any part of the Debtor’s Obligation remains unsatisfied.

 

  

  

  

 

 

	
6.  

	
General.  No waiver by Secured Party of any default shall operate as a waiver of any other default or of the same default on a future occasion.  All rights of Secured Party hereunder shall inure to the benefit of its successors and assigns; and all obligation of Debtor shall bind its successors or assigns.  This agreement shall become effective when it is signed by Debtor.

All rights of the Secured Party in, to and under this agreement and in and to the Collateral shall pass to and may be exercised by any assignee thereof.  The Debtor agrees that if the Secured Party gives notice to the Debtor of an assignment of said rights, upon such notice the liability of the Debtor to the assignee shall be immediate and absolute.  The Debtor will not set up any claim against the Secured Party as a defense, counterclaim or set-off to any action brought by any such assignee for the unpaid balance owed hereunder or for the possession of the Collateral, provided that Debtor shall not waive hereby any right of action to the extent that waiver thereof is expressly made unenforceable under applicable law.

If any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this agreement.

	
Secured Party:

	
Debtor:

	
Richard D. Surber

	
Nexia Holdings, Inc.

	
By:  /s/ Richard Surber

	
By:  /s/ Adrienne Bernstein

	  	
Its:   Director

	  	
 

Debtor:

	  	
Green Endeavors, Inc.

	  	
By:  /s/ Logan Fast

	  	
Its   Vice President.srer_ex101.htm

EXHIBIT 10.1

 

GENERAL CANNABIS, INC.

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

COMMON STOCK PURCHASE WARRANT

THIS IS TO CERTIFY that, for value received, Crystal Research Associates, LLC (the “Holder”) is entitled, subject to the terms and conditions set forth herein, to purchase from General Cannabis, Inc., (f/k/a LC Luxuries Ltd.), a Nevada corporation (the “Company”) up to Two Hundred Fifty Thousand (250,000) fully paid and nonassessable shares of common stock of the Company (the “Warrant Securities”) at the initial price of $4.00 per share but subject to adjustment as provided in Section 3 below, (the “Exercise Price”), upon payment by cashier’s check or wire transfer of the Exercise Price for such shares of the Common Stock to the Company at the Company’s offices.

This Warrant is being issued to Holder as consideration under that certain Letter of Agreement between Holder and the Company dated October 5, 2010.

1.           Exercisability.  This Warrant may be exercised in whole or in part at any time, or from time to time, between the date hereof and October 5, 2014 by presentation and surrender hereof to the Company of a notice of election to purchase duly executed and accompanied by payment by check or wire transfer of the Exercise Price..

2.           Manner of Exercise.  In case of the purchase of less than all the Warrant Securities, the Company shall cancel this Warrant upon the surrender hereof and shall execute and deliver a new warrant of like tenor for the balance of the Warrant Securities.  Upon the exercise of this Warrant, the issuance of certificates for securities, properties or rights underlying this Warrant shall be made forthwith (and in any event within five (5) business days thereafter) without charge to the Holder including, without limitation, any tax that may be payable in respect of the issuance thereof: provided, however, that the Company shall not be required to pay any tax in respect of income or capital gain of the Holder.

  

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If and to the extent this Warrant is exercised, in whole or in part, the Holder shall be entitled to receive a certificate or certificates representing the Warrant Securities so purchased, upon presentation and surrender to the Company of the form of election to purchase attached hereto duly executed, and accompanied by payment of the purchase price.

3.           Adjustment in Number of Shares.

(A)           Adjustment for Reclassifications.  In case at any time or from time to time after the issue date the holders of the Common Stock of the Company (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefore, other or additional stock or other securities or property (including cash) by way of stock split, spin-off, reclassification, combination of shares or similar corporate rearrangement (exclusive of any stock dividend of its or any subsidiary’s capital stock), then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property which such Holder would hold on the date of such exercise if on the issue date he had been the holder of record of the number of shares of Common Stock of the Company called for on the face of this Warrant and had thereafter, during the period from the issue date, to and including the date of such exercise, retained such shares and/or all other or additional stock and other securities and property receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period.  In the event of any such adjustment, the Exercise Price shall be adjusted proportionally.

(B)           Adjustment for Reorganization, Consolidation, Merger.  In case of any reorganization of the Company (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Warrant) after the issue date, or in case, after such date, the Company (or any such other corporation) shall consolidate with or merge into another corporation or convey all or substantially all of its assets to another corporation, then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities or property to which such Holder would be entitled had the Holder exercised this Warrant immediately prior thereto, all subject to further adjustment as provided herein; in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

4.           No Requirement to Exercise.  Nothing contained in this Warrant shall be construed as requiring the Holder to exercise this Warrant.

5.           No Stockholder Rights.  Unless and until this Warrant is exercised, this Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company, or to any other rights whatsoever except the rights herein expressed, and, no dividends shall be payable or accrue in respect of this Warrant.

 

  

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6.           Exchange.  This Warrant is exchangeable upon the surrender hereof by the Holder to the Company for new warrants of like tenor representing in the aggregate the right to purchase the number of Warrant Securities purchasable hereunder, each of such new warrants to represent the right to purchase such number of Warrant Securities as shall be designated by the Holder at the time of such surrender.

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it and reimbursement to the company of all reasonable expenses incidental thereto, and upon surrender and cancellation hereof, if mutilated, the Company will make and deliver a new warrant of like tenor and amount, in lieu hereof.

7.           Elimination of Fractional Interests.  The Company shall not be required to issue certificates representing fractions of securities upon the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of fractional interests.  All fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of securities, properties or rights receivable upon exercise of this Warrant.

8.           Reservation of Securities.  The Company shall at all times reserve and keep available out of its authorized shares of Common Stock or other securities, solely for the purpose of issuance upon the exercise of this Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise hereof.  The Company covenants and agrees that, upon exercise of this Warrant and payment of the Principal Value, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder.

9.           Notices to Holder.  If at any time prior to the expiration of this Warrant or its exercise, any of the following events shall occur:

(a)           the Company shall take a record of the holders of any class of its securities for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or

(b)           the Company shall offer to all the holders of a class of its securities any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option or warrant to subscribe therefor; or

(c)           a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed.

 

  

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then, in any one or more said events, the Company shall give written notice of such event to the Holder at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholder entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale.  Such notice shall specify such record date or the date of closing the transfer books, as the case may be.

10.           Transferability.  This Warrant may not be transferred or assigned by the Holder without the express written consent of the Company.

11.           Informational Requirements.  The Company will transmit to the Holder such information, documents and reports as are generally distributed to stockholders of the Company concurrently with the distribution thereof to such stockholders.

12.           Notice.  Notices to be given to the Company or the Holder shall be deemed to have been sufficiently given if delivered personally or sent by overnight courier or messenger, or by facsimile transmission.  Notices shall be deemed to have been received on the date of personal delivery or facsimile transmission.  The address of the Company and of the Holder shall be as set forth in the Company’s books and records.

13.           Consent to Jurisdiction and Service.  The Company consents to the jurisdiction of any court of the State of California, and of any federal court located in California, in any action or proceeding arising out of or in connection with this Warrant.  The Company waives personal service of any summons, complaint or other process in connection with any such action or proceeding and agrees that service thereof may be made at the location provided in Section 12 hereof, or, in the alternative, in any other form or manner permitted by law.  Orange County, California shall be proper venue.

14.           Successors.  All the covenants and provisions of this Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective legal representatives, successors and assigns.

15.           Attorneys Fees.  Should either party commence any action, suit or proceeding to enforce this Warrant or any term or provision hereof, then in addition to any other damages or awards that may be granted to the prevailing party, the prevailing party shall be entitled to have and recover from the other party such prevailing party’s reasonable attorneys’ fees and costs incurred in connection therewith.

16.           Governing Law.  THIS WARRANT SHALL BE GOVERNED, CONSTRUED AND INTERPRETED UNDER THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO THE RULES GOVERNING CONFLICTS OF LAW.

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by the signature of its Chief Executive Officer and to be delivered in Newport Beach, California.

	
Dated: April 13, 2011

	
General Cannabis, Inc.,

	 
	  	
a Nevada corporation

	 
	  	  	 
	  	
/s/  James Pakulis

	 
	  	
By:  James Pakulis

	 
	  	
Its:  Chief Executive Officer

	 

Acknowledged:

Crystal Research Associates, LLC

	
/s/  signature illegible

	
By:

	  
	
Its:

	  

 

  

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[FORM OF ELECTION TO PURCHASE]

The undersigned, the holder of the attached Warrant, hereby irrevocably elects to exercise the purchase right represented by this Warrant Certificate for, and to purchase securities of General Cannabis, Inc. and herewith makes payment of $__________ therefor, and requests that the certificates for such securities be issued in the name of, and delivered to ___________________, whose address is ______________________________.

Dated: ____________________, 20___

	  	  	  
	  	
By:

	  
	  	
Its:

	  
	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate)

	  	  	  
	  	  	  
	  	
(Insert Social Security or Other

	  	
Identifying Number of Holder)

 

  

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