Document:

bmmj_ex101.htm

EXHIBIT 10.1
  
 BODY AND MIND INC.
 750 – 1095 West Pender Street
 Vancouver, BC
 V6E 2M6
  
 November 28, 2018
    
 Attention: David Barakett
  
 Dear Mr. Barakett:
  
 Re: Acquisition of Green Light District Holdings, Inc. 
  
 The purpose of this binding interim agreement (the “Agreement”) between Body and Mind Inc. (“BAM”), Green Light District Holdings Inc. (“GLDH”) and David Barakett (“Barakett”) (collectively, the “Parties”) is to outline the terms of a transaction whereby BAM would acquire 100% of the issued and outstanding common shares of GLDH in connection with the issuance of convertible notes (the “Transaction”).
  
 The matters described in this Agreement are intended to be binding on each of the Parties, and this Agreement constitutes a complete statement of the matters described herein. Upon the execution of this Agreement by the Parties, the matters described herein will constitute legally binding and enforceable covenants and agreements of the Parties, which are given in consideration of the premises and mutual covenants hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which each Party hereby acknowledges. All figures are in United States Dollars unless otherwise stated.
  
 1. Definitive Agreement
  
 1.1 The Parties agree to negotiate in good faith toward the execution and delivery of a definitive agreement or such similar form of transaction agreement, as applicable (the “Definitive Agreement”), within fourteen (14) days of the execution and delivery of this Agreement by the Parties (the “Outside Date”) and to apply for and obtain all necessary acceptances, consents, approvals and orders, including without limitation, shareholder approvals, consents and approvals of securities regulatory authorities and any other relevant governmental agency or similar regulatory authority or other entity, as legal counsel for the Parties may advise are necessary or desirable for the closing of the Transaction (the ”Closing”) on or before the date of Closing (the “Closing Date”). The Definitive Agreement will incorporate the terms and conditions of this Agreement and such other terms and conditions as may be agreed to by the Parties, and will contain representations, warranties and covenants customary for a transaction of the nature and type contemplated herein; provided that, until the Definitive Agreement is executed and delivered, this Agreement will exist and continue in full force and effect, unless terminated in accordance with the terms set out herein.
  
 2. The Parties
  
 2.1 BAM is a public company incorporated under the laws of Nevada. The common shares of BAM (the “BAM Common Shares”) are currently listed on the Canadian Securities Exchange (“CSE”).
  
 2.2 GLDH is a private company incorporated under the laws of Delaware and holds a number of subsidiaries and assets relating to the production and sale of cannabis listed in Schedule A attached hereto (the “GLDH Assets”). The common shares of GLDH (the “GLDH Common Shares”) are not currently listed on any stock exchange.
  
 2.3 Upon signing definitive agreements as set forth in that certain mediation term sheet dated November 15, 2018 (the “Settlement Agreement”) attached hereto as Schedule “B”, Barakett will own at least 89.75% of the issued and outstanding GLDH Common Shares (the “Barakett Shares”). Barakett intends to acquire the remaining 10.25% of the issued and outstanding GLDH Common Shares prior to the Closing, and in such event, such shares shall be included within the Barakett Shares. 
    
  	 
	 
	 
 
	 

    
 3. The Transaction
  
 3.1 Subject to the terms and conditions herein, GLDH shall issue senior secured convertible notes (the “Notes”) to BAM in the aggregate amount of $5,200,000 (the “Principal Amount”) for an aggregate purchase price of $5,200,000 (the “Purchase Price”). The Notes shall be secured with a General Security Agreement and UCC-1 Financing Statement in all U.S. states where GLDH has assets. 
  
 3.2 The Principal Amount outstanding shall bear interest from the date of issuance of the Notes (the “Issue Date”) on the unpaid Principal Amount at a rate equal to 20% per annum (the “Interest”). The entire Principal Amount and all other monies which may from time to time be owing hereunder or pursuant to the Notes shall be repayable to BAM two (2) years from the Issue Date unless converted by BAM in accordance with Section 3.3.
  
 3.3 The Principal Amount and accrued Interest shall, at the sole discretion of BAM be convertible (“Conversion”) into the Barakett Shares, resulting in BAM acquiring 100% of the Barakett Shares (the “Acquired Shares”), and any additional shares acquired by Barakett.
  
 3.4 Barakett shall provide a personal guarantee to BAM for the Notes.
  
 3.5 Upon execution of this Agreement, BAM shall advance funds to GLDH (“Bam AP Advance”) via additional loan to cover the payables which is estimated at $300,000 which shall be repaid to BAM from the Dividend Purchase Price set forth in Section 6.
  
 3.6 Trip Hoffman, from BAM, will be appointed to an executive role at GLDH and will be a signatory on all payments made from GLDH.
  
 4. Use of Proceeds
  
 4.1 The Purchase Price will only be used by GLDH as follows, unless otherwise agreed to in writing by BAM:
  
  	  
	(a)	$3,400,000 will be used to satisfy the “Note Payoff Amount” as referenced in that certain mediation term sheet dated November 15, 2018 (the “Settlement Agreement”) attached hereto as Schedule B;
	  
	  
	  

	  
	(b)	$450,000 will be used to terminate the “ongoing Warrant rights in GLDH”, as defined in the Settlement Agreement, currently held by Guapo Capital Group LLC;
	  
	  
	  

	  
	(c)	$1,300,000 will be used to purchase all the rights and interests in the “Pollo location” as defined in the Settlement Agreement from SJK Services LLC; and
	  
	  
	  

	  
	(d)	$50,000 will be applied to working capital of GLDH.

  
  	 
	 
	 
 
	 

  
 5. Earn-Out Shares
  
 5.1 As further consideration for the Note, BAM shall issue to Barakett, BAM Common Shares (the “Earn Out Shares”) based on the CSE listed 5 day VWAP of BAM’s shares and at the USD / CAD exchange rate at closing on November 27, 2018. Barakett will be eligible to receive Earn Out Shares for a period of 12 months, or 365 days from the opening of the San Diego dispensary. BAM Common Shares had a 5 day VWAP of CAD $0.7439 and USD / CAD exchange rate of 1.3296. BAM agrees to issue up to a maximum consideration of $6,297,580 or CAD $8,373,263, payable in shares, to a maximum of 11,255,899 shares. The Earn Out Shares will be issued on the following basis:
     
  	  
	(a)	upon GLDH obtaining all of (i) the Long Beach Recreational License; (ii) the San Diego Medical License; (iii) the San Diego Recreational License; and (iv) the San Diego State License (“Milestone I”), the issuance of Earn Out Shares to Barakett totalling 5,627,950 shares (or 50% of the total Earn Out Shares);
	  
	  
	  

	  
	(b)	upon GLDH achieving total attributable revenues of at least $3,300,000 over a period of three consecutive months from each of the Long Beach dispensary, the San Diego dispensary and Las Vegas Showgrow (“Milestone II”), the issuance of Earn Out Shares to Barakett totalling 4,502,360 (40%); and
	  
	  
	  

	  
	(c)	prior to the completion of Milestone I and Milestone II, and upon completion of a certain audit (the “Audit”) showing no taxes outstanding or any unknown material liabilities for GLDH, the issuance of Earn Out Shares to Barakett totalling 1,125,589 shares (10%).

     
 6. Dividend 
  
 6.1 GLDH believes it is entitled to receive a dividend and Barakett is entitled to receive loan repayment from Showgrow Nevada in an amount not less than $1,300,000 (collectively the “Dividend Purchase Price”). The Dividend Purchase Price will be treated in the following manner:
  
  	  
	(a)	Barakett will be limited to receiving $150,000 upon receipt of the Dividend Purchase Price and will entitled the remaining balance of the Dividend Purchase Price after:

  
  	  
	(i)	Applicable taxes pertaining to the Dividend Purchase Price have been withheld by GLDH; and
	  
	  
	  

	  
	(ii)	The BAM AP Advance is repaid in full; and
	  
	  
	  

	  
	(iii)	Audit is complete; and
	  
	  
	  

	  
	(iv)	Half of the professional fees and audit costs of the restructuring is deducted; and
	  
	  
	  

	  
	(v)	Any costs beyond the BAM AP Advance, not disclosed at closing, are paid in full.

  
 7. Employment Agreement
  
 7.1 BAM agrees to enter into an employment agreement at the Closing with Barakett, with the terms of such employment agreement to be negotiated by the Parties acting reasonably. 
  
 8. Board of Directors
  
 8.1 In connection with the Transaction, and after receiving satisfactory audit results, but in no event later than twelve (12) weeks following the Closing, Barakett will be entitled to nominate one person to occupy a seat on the board of directors of BAM. 
  
 9. Advisory Fee
  
 9.1 Pursuant to the Transaction the Parties acknowledge that BAM shall pay an advisory fee to Canaccord Genuity Corp. in the form of cash or equity or a combination of both in accordance with CSE policies. 
    
  	 
	 
	 
 
	 

  
 10. Representations and Warranties
  
 10.1 Mutual Representations and Warranties. Each Party represents and warrants to the other party, that: 
        
  	  
	(a)	such Party is duly organized, validly existing, and in good standing under the laws of the place of its establishment or incorporation;
	  
	  
	  

	  
	(b)	such Party has taken all action necessary to authorize it to enter into this Agreement and perform its obligations under this Agreement;
	  
	  
	  

	  
	(c)	this Agreement will constitute the legal, valid and binding obligations of such party; and
	  
	  
	  

	  
	 (d)
	 neither the execution of this Agreement nor the performance of such Party’s obligations hereunder will conflict with, result in a breach of, or constitute a default under any provision of the organizational documents of such Party, or of any law, rule, regulation, authorization or approval of any government entity, or of any agreement to which it is a party or by which it is bound. 

    
 10.2 Representations and Warranties of Barakett. Barakett represents and warrants to BAM that, to the best of his knowledge after reasonable inquiry:
  
  	  
	(a)	he is the registered and beneficial owner of the Barakett Shares, has good and marketable title to the Barakett Shares, and holds the Barakett Shares free of all encumbrances and upon completion of the transactions contemplated by this Agreement, BAM will have good and valid title to the Barakett Shares, free and clear of all encumbrances;
	  
	  
	  

	  
	(b)	the Settlement Agreement is in good standing, is in full force and effect and is enforceable by Barakett in accordance with its terms in all material respects;
	  
	  
	  

	  
	(c)	except as disclosed to BAM, GLDH owns and possess and has good and marketable title to the GLDH Assets, and on Closing the GLDH Assets will be free and clear of all liens, charges, mortgages, pledges, security interests, encumbrances, or other claims whatsoever;
	  
	  
	  

	  
	(d)	except for BAM’s right under this Agreement, no person has any written or oral agreement, option or warrant or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming such for the purchase of any of the Barakett Shares;
	  
	  
	  

	  
	(e)	GLDH is in good standing with respect to the filing of all tax returns required under applicable law;
	  
	  
	  

	  
	(f)	GLDH has legal title to the ShowGrow brand and is in possession of federal trademarks;
	  
	  
	  

	  
	(g)	GLDH has obtained the additional 17% voting interest in the San Diego dispensary, totalling 60% total voting control; and
	  
	  
	  

	  
	(h)	Barakett has disclosed all material agreements in GLDH.
	  
	  
	  

	  
	(i)	GLDH has obtained ROFR waivers from the owners of San Diego dispensary.

  
  	 
	 
	 
 
	 

  
 11. Conditions Precedents
  
 11.1 Mutual Conditions Precedents. The obligations of the Parties hereto to complete the transactions contemplated by this Agreement are subject to the fulfillment, on or before Closing of each of the following conditions precedent, each of which may only be waived with the mutual consent of the Parties hereto:
   
  	  
	(a)	no applicable law shall be in effect that makes the consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or enjoins the Parties hereto from consummating this Agreement, and the transactions contemplated herein;
	  
	  
	  

	  
	(b)	the Settlement Agreement being in good standing, in full force and effect and enforceable by Barakett in accordance with its terms in all material respects; and

        
 	  
	(c)	all required third party consents and regulatory approvals shall have been obtained and remain in force at the time of Closing.
	  
	  
	  

	  
	(d)	Barakett agrees to act in good faith and provide reasonable efforts to remedy events that arise through his own fault.

  12. Covenants and Agreements
  
 12.1 Confidentiality. All of the information, records, books and data to which each Party and/or their respective representatives are given access as set forth above including, but not limited to, that which relates to the terms of any draft of the Definitive Agreement and the terms, conditions and existence of this Agreement and all discussions between the Parties (the “Confidential Information”), will be used by such Party solely for the purpose of analyzing the Transaction and the Parties hereto and will be treated on a confidential basis. Each of the Parties covenants to each other that they will not at any time, other than in accordance with the terms of this Agreement, disclose the Confidential Information of the other to any person or entity without the prior written approval of the disclosing Party, or use any such Confidential Information for any purpose, other than for the specific purpose of evaluating and negotiating the terms of the Transaction, unless specifically pre-approved in writing by the disclosing Party, subject to required disclosure to regulatory authorities and as otherwise required by the rules of any stock exchange which may be applicable. None of the Parties will make any public announcement concerning the Transaction or related negotiations without the other Parties’ prior written approval (such approval not to be unreasonably withheld), except as may be required by law or the policies of any stock exchange in circumstances where prior consultation with the other Party is not practicable and a copy of such announcement is provided to the other Party. 
  
 12.2 Transaction Fees and Expenses. Each of the Parties hereto agree that, whether or not the Transaction outlined herein are consummated, it will pay its own and its representatives fees and expenses, including any fee for advice or opinions incurred in connection with the negotiation, preparation, execution and delivery of this Agreement, and the Definitive Agreement and any other agreements, documents, opinions or valuations contemplated thereby
  
 12.3 Publicity. BAM, GLDH and Barakett shall not, without the prior written consent of the other Party, make any public announcement concerning the nature, existence or content of this Agreement, the content and status of any discussion between BAM, GLDH and Barakett, or any other documents or communications concerning the Transaction unless such disclosure is required by applicable law or stock exchange rules or policies (in which case the Party so advised will promptly notify the other Parties.
  
 12.4 Good Faith. From and after the date of this Agreement, the Parties will negotiate in a timely manner and in good faith to settle terms of the Definitive Agreement. Such agreement will contain normal and usual representations, warranties, covenants and conditions as applicable to similar commercial transactions in Canada. BAM will not instigate negotiations for a similar transaction with a third party. The Parties will work in good faith to assure timely receipt of all approvals referred to in the Conditions Precedent and will provide access to all documents, records and individuals reasonably necessary for each Party to complete its due diligence investigations.
  
 12.5 Normal Course. Except as contemplated herein, GLDH and Barakett shall continue to conduct their businesses and affairs in the ordinary and normal course and agree not to enter into or terminate any material contracts or transactions or to incur any liabilities, other than in the ordinary course, with respect to their respective business, without first obtaining the prior written consent of BAM. 
  
  	 
	 
	 
 
	 

     
 13. Further Assurances
  
 13.1 Each Party shall from time to time promptly execute and deliver and take all further action reasonably necessary or appropriate to give effect to the provisions and intent of this Agreement and to complete the transactions contemplated by this Agreement.
      
 14. Termination
  
 14.1 Except as otherwise provided, this Agreement shall terminate upon the written agreement of the Parties.
  
 14.2 All obligations of the Parties which expressly or by their nature survive termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding termination of this Agreement until they are fully satisfied or by their nature expire. No Party shall by reason of termination of this Agreement be relieved of any obligation or liability towards any other party accrued under this Agreement before termination, and all those obligations and liabilities shall remain enforceable until they are fully satisfied by their nature expire. 
  
 15. Time is of the Essence
  
 15.1 Time is of the essence of this Agreement. 
  
 16. Assignment
  
 16.1 Neither Party may assign their rights or obligations under this Agreement without the prior written consent of the other Party acting reasonably. 
  
 17. Counterparts
  
 17.1 This Agreement may be executed and delivered by the Parties in one or more counterparts, each of which when so executed and delivered will be an original, and those counterparts will together constitute one and the same instrument.
  
 18. Governing Law
  
 18.1 This Agreement will be governed by the laws of the State of Nevada. 
   
  	 
	 
	 
 
	 

    
 IN WITNESS WHEREOF the Parties have executed this Agreement as of the date set out above
  
  	 BODY AND MIND INC.
	
	 	 	 
	 Per:
	 /s/ Leonard Clough 	
	  
	 Authorized Signatory 
	 
	 		 
	 GREEN LIGHT HOLDINGS INC.
	 
	  
		  

	 Per:
	 /s/ David Barakett
	  

	  
	 Authorized Signatory
	  

	  
	  
	  

	 DAVID BARAKETT
	  

	  
	  
	  

	 Per:
	 /s/ David Barakett
	  

	  
	 Authorized Signatory 
	  

    
  	 
	 
	 
 
	 

    
 SCHEDULE “A”
  
 GLDH ASSETS
  
  	 Location
	 License Status

	 3411 E. Anaheim, Long Beach
 “ShowGrow Long Beach”
	 Local License #MJ21704932 issued for medicinal sales.
 Adult-use sales application awaiting approval. 
  
 State
 Medicinal Temp License M10-18-0000275-TEMP
 Adult-use application submittal pending local application submission and approval.

	 4850 S. Fort Apache, Las Vegas
 “ShowGrow Las Vegas”
	 State of Nevada Medical Marijuana Dispensary Registration Certificate
  #30914996098749071147 Expires 6/30/2019
 State of Nevada Retail Marijuana Store License #21647298952036123142 Expires 6/30/2019

	 7625 Carroll Rd., San Diego
	 Conditional Use Permit – approved through planning staff; awaiting approval from planning commission 

  
 Trademark ShowGrow, Serial No. 87975172 and Serial No. 87058685 
  
 AFFILIATED MANAGEMENT ENTITIES – 100% owned by Green Light 
 (to be restructured)
  
 SG Logistics, LLC
 Green Light District Management, LLC
 Green Light Security, LLC
 Green Light Staffing, LLC
 Green Light District Leasing, LLC
  
  	 
	 
	 
 
	 

      
 SCHEDULE “B”
  
 SETTLEMENT AGREEMENT
  
 [see attached]bmmj_ex102.htm

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.

  
  	 
	-5-
	 
 
	 

    
  	  
	(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;

 	 
	-6-
	 
 
	 

    
 	  
	(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.
   	 
	-7-
	 
 
	 

  
 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.
   	 
	-8-
	 
 
	 

  
 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.
  
  	 
	-9-
	 
 
	 

    
 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.
   	 
	-10-
	 
 
	 

  
 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.
  
 [Remainder of this page intentionally blank]
  
  	 
	-11-
	 
 
	 

   
 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

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