EXHIBIT 10.3

 

LOAN AGREEMENT

 

This Loan Agreement is made as of November 28th, 2018 (the “Loan Agreement”)

 

Between:

 

AUSTRALIS CAPITAL INC., having an office Suite 190, 376 East Warm Springs Road,
Las Vegas, Nevada, USA 89119, an Alberta corporation

 

(the “Lender”)

 

And:

 

BODY AND MIND INC., having an office at 750 – 1095 West Pender Street

Vancouver, BC V6E 2M6, a Nevada corporation

 

(the “Borrower”)

 

WHEREAS:

 

A. The Lender has agreed to advance USD $4,000,000 to the Borrower; and

 

B. The parties wish to record the terms and conditions of the loan, which will
be made pursuant to the terms of this Agreement.

 

NOW THEREFORE in consideration of the premises and the conditions and provisions
contained herein, the receipt and adequacy of which consideration are hereby
duly acknowledged, the Parties hereto agree as follows:

 

1. Definitions and Interpretation

 

1.1 Definitions. In this Agreement the following words and phrases shall have
the following meanings:

 

(a) “Applicable Securities Laws” means, collectively, and as the context may
require, the securities legislation having application and the rules, policies,
notices and orders issued by securities regulatory authorities having
application in the circumstances;

 

 

(b) “Business Day” means any day, other than a Saturday, Sunday or statutory
holiday in Vancouver, British Columbia or Las Vegas, Nevada.

 

 

(c) “Event of Default” means any of the events of default described in Section
5.

 

 

(d) “Existing Warrants” means 16,000,000 common share purchase warrants which
were issued by the Borrower to the Lender on November 2, 2018.

 

 

(e) “Governmental Authority” means: (i) any federal, provincial, state, county,
municipal or local government or governmental body, including any department,
agency, commission, board or other authority thereof, exercising any statutory,
regulatory, expropriation or taxing authority; (ii) any quasi-governmental body
acting under the valid authority of any of the foregoing; and (iii) any
domestic, foreign or international judicial, quasi-judicial or administrative
court, tribunal, commission, board, panel or arbitrator having competent
jurisdiction over the Borrower.

   

   

   

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(f) “Indebtedness” means without duplication: (i) all obligations for borrowed
money, or with respect to advances of any kind; (ii) all obligations evidenced
by bonds, debentures, notes or similar instruments, or mandatorily redeemable or
exchangeable stock; (iii) all obligations upon which interest charges are
customarily paid; (iv) all obligations under conditional sale or other title
retention agreements relating to property; (v) all obligations in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business and excluding installments
of premiums payable with respect to policies of insurance contracted for in the
ordinary course of business); (vi) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on property, whether or not the
Indebtedness secured thereby has been assumed; (vii) all guaranties of
Indebtedness of others, (viii) all obligations, contingent or otherwise, in
respect of letters of credit and letters of guaranty; (ix) all obligations,
contingent or otherwise, in respect of bankers’ acceptances; and (x) any other
contingent or off-balance sheet transactions.

 

 

(g) “Lien” means any mortgage, pledge, charge, assignment, security interest,
hypothec, lien or other encumbrance, including, without limitation, any
agreement to give any of the foregoing, or any conditional sale or other title
retention agreement.

 

 

(h) “Loan” means the loan provided by the Lender to the Borrower in accordance
with this Agreement.

 

 

(i) “Material Adverse Effect” means a fact, circumstance, change or event that
(individually or in the aggregate with all such other facts, circumstances,
changes or events) is materially adverse to the business, operations, results of
operations, cash flow, revenue, assets, liabilities, obligations (whether
absolute, accrued, conditional or otherwise) or condition (financial or
otherwise) of the Borrower and its subsidiaries on a consolidated basis, other
than a change, event, violation, inaccuracy or circumstance:

 

 

(i) relating to the global economy or securities markets in general;

 

 

 

 

(ii) resulting from conditions affecting the cannabis industry as a whole;

 

 

 

 

(iii) resulting from general economic, financial, currency exchange, securities
or commodity market conditions in Canada; or

 

 

 

 

(iv) resulting from the rate at which Canadian dollars or United States dollars
can be exchanged for any foreign currency;

 

(j) “Performance Share” means the Borrower’s common shares issued to Barakett as
part of the earn-out shares as defined in the Body and Mind Agreement with Green
Light District Holdings Inc dated November 27, 2018.

 

 

(k) “Permitted Indebtedness” means

 

 

(i) any amounts owing to the Lender by the Borrower;

 

 

 

 

(ii) Master Promissory Note totalling US $1,000,000 at 8% which is comprised of
6 security agreements with an effective date of November 2, 2019, commencing on
Feb. 14, 2019 with a maturity date of Feb. 14, 2020;

 

 

 

 

(iii) any Indebtedness which is postponed and subordinated to the Loan to the
satisfaction of the Lender;

 

 

 

 

(iv) trade payables and normal accruals of the Borrower in the ordinary course
of business not yet due and payable or with respect to which the Borrower is
contesting in good faith the amount or validity thereof by appropriate
proceedings and then only to the extent that the Borrower has established
adequate reserves therefor, if required under GAAP;

 

   

   

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(v) reimbursement obligations for reasonable travel and normal course of
business expenses; and

 

 

 

 

(vi) any extension, renewal or replacement of the foregoing on equivalent terms.

 

(l) “Principal” means the principal amount outstanding on the Loan from time to
time.

 

 

(m) “Public Record” means information which has been publicly filed at
www.sedar.com by the Borrower under Applicable Securities Laws.

 

1.2 Captions and Section Numbers. The headings and section references in this
Agreement are for convenience of reference only and do not form a part of this
Agreement and are not intended to interpret, define or limit the scope, extent
or intent of this Agreement or any provision thereof.

 

1.3 Extended Meanings. The words “hereof”, “herein”, “hereunder” and similar
expressions used in any clause, paragraph or section of this Agreement shall
relate to the whole of this Agreement and not to that clause, paragraph or
section only, unless otherwise expressly provided.

 

1.4 Number and Gender. Whenever the singular or masculine or neuter is used in
this Agreement, the same shall be construed to mean the plural or feminine or
body corporate where the context of this Agreement or the parties hereto so
require.

 

1.5 Section References and Schedules. Any reference to a particular “article”,
“section”, “subsection” or other subdivision is to the particular article,
section or other subdivision of this Agreement and any reference to a schedule
by letter shall mean the appropriate schedule attached to this Agreement and by
such reference the appropriate schedule is incorporated into and made part of
this Agreement.

 

1.6 Governing Law. This Agreement and all matters arising hereunder shall be
governed by, construed and enforced in accordance with the laws in the Province
of British Columbia and the federal laws of Canada, applicable therein, and all
disputes arising under this Agreement shall be referred to the Courts of British
Columbia.

 

1.7 Severability of Clauses. In the event that any provision of this Agreement
or any part thereof is invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

1.8 Currency. All sums of money to be paid or calculated pursuant to this
Agreement shall be paid or calculated in currency of United States dollars.

 

2. Loan

 

2.1 Amount of Loan. In reliance upon the representations and warranties
contained herein and subject to the terms and conditions of this Agreement, the
Lender will lend to the Borrower the principal sum of $4,000,000. The loan shall
be made in a single advance to the Borrower, or may be advanced on behalf of the
Borrower to such third party as may be directed by the Borrower in writing.

 

2.2 Interest. The Borrower agrees to pay to the Lender interest on the
outstanding Principal (including any portion thereof comprised of interest that
has been capitalized in accordance with this Section 2.2), at a rate of fifteen
percent (15%) per annum, calculated on the basis of a three hundred and
sixty-five (365) or three hundred sixty-six (366) day year (as the case may be)
for the actual number of days elapsed, accruing and payable at the end of each
six month period following the date of this Agreement (each, a “Payment Period”)
in arrears. For each Payment Period, the Borrower will elect, by providing the
Lender with written notice of such election no later than 10 Business Days prior
to the end of such Payment Period, to either pay the interest in cash or to pay
the interest entirely in kind. In the event that the Borrower fails to make an
election for a Payment Period as required above, it will be deemed to have
elected to pay interest for the relevant period entirely in kind. All interest
that is payable by the Borrower in cash will be due on the first Business Day
following the end of the relevant Payment Period. All interest that is payable
by the Borrower in kind will be capitalized and added to the outstanding
Principal on the first Business Day following the end of the relevant Payment
Period.

 

   

   

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2.3 Repayment of the Loan. The Loan, including all accrued and unpaid interest,
shall be repayable in full on that date which is 24 months following the date of
this Agreement.

 

2.4 Accelerated Payment. Notwithstanding anything else to the contrary herein
contained, the outstanding balance of the Loan, including all accrued and unpaid
interest thereon and any other amounts owing to the Lender hereunder, shall be
repaid by the Borrower to the Lender upon a notice of an Event of Default being
issued by the Lender to the Borrower and failing payment of the same forthwith,
the Lender may then proceed to enforce payment thereof by exercising any right,
power or remedy permitted by this Agreement, or by law in such manner as the
Lender may elect, without presentation, protest or further demand, or notice of
any kind, all of which are hereby expressly waived.

 

2.5 Prepayment. The Borrower may, at its sole discretion, prepay the Loan at any
time, in whole but not in part. In the event that the Borrower elects to repay
the Loan during the first year of the term of the Loan then the Borrower shall
pay to the Lender a prepayment fee equal to 5% of the prepayment amount and the
Borrower will pay interest on the original principal amount of the Loan at the
rate provided in Section 2.2 up to the end of the first year of the term of the
Loan. Any prepaid amount may not be reborrowed.

 

2.6 Conversion on Default. In the event that the Borrower defaults on repayment
of Loan at maturity, the Lender may, at it sole discretion, elect to convert the
Loan, including all accrued and unpaid interest thereon, into common shares of
the Borrower at a price per share equal to the minimum price permitted under the
policies of the Canadian Securities Exchange (or if the Borrower is not listed
on the Canadian Securities Exchange, then on such other stock exchange on which
the Borrower’s common shares may then be listed).

 

3. Security and Other Consideration

 

3.1 Security Documents. As security for the timely repayment of the Loan and the
due and punctual payment and performance of this Agreement and all other
liabilities and obligations of the Borrower to the Lender under, arising out of
or from this Agreement, the Borrower shall deliver to the Lender on or before
the advance of the Loan, the following documents, each in form and content
satisfactory to the Lender:

 

(a) a promissory note, in the form attached to this Agreement as Schedule “A”;

 

 

(b) a general security agreement governed by the laws of Nevada to be granted by
the Borrower in favour of the Lender over all present and after-acquired
personal property of the Borrower; and

 

 

(c) such other security, documents or instruments which the Lender, acting
reasonably, may require from time to time.

 

3.2 Shares. As additional consideration for the Loan, the Borrower will issue to
the Lender upon advance of the Loan 1,105,083 common shares of the Borrower (the
“Shares”) at a deemed price of CAD $0.72 per Share registered in the name of the
Lender.

 

3.3 Warrant Coverage. As additional consideration for the Loan, the Borrower
will issue to the Lender 0.4337 Share purchase warrants (the “Warrants”) for
each Performance Share issued by the Borrower at an exercise price equal to
closing price of the Borrowers Shares on the date prior to the announcement of
the Loan, or otherwise at the lowest price permitted under the policies of the
Canadian Securities Exchange. The certificate representing the Warrants will be
in the form appended hereto as Schedule “B” and registered in the name of the
Lender. The Warrants will expire two years from the date of issuance.

 

   

   

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3.4 Amendment to Commercial Advisory Agreement. Upon advance of the Loan, the
Borrower agrees to amend the terms of the Commercial Advisory Agreement between
the Borrower and Australis Capital (Nevada) Inc., a wholly-owned subsidiary of
the Lender, to provide that effective December 1, 2018 the monthly payment
payable by the Borrower thereunder will be increased to $16,500.

 

3.5 Exercise of Existing Warrants. The Lender agrees that within five Business
Days of the date of this Agreement, the Lender will exercise that number of the
Existing Warrants that would result in the Borrower receiving $1,200,000 based
on the Canadian dollar to U.S. dollar foreign exchange rate in effect on the
date of exercise.

 

4. Representations and Warranties

 

4.1 Representations and Warranties of the Borrower. The Borrower represents and
warrants to the Lender as follows, with the intent that the Lender will rely
thereon in entering into this Agreement and in concluding the transactions
contemplated hereby:

 

(a) the Borrower is a valid and subsisting corporation under the laws of the
state of Nevada and is qualified or registered to transact business in each
jurisdiction in which failure to be so qualified or registered would reasonably
be expected to constitute a Material Adverse Effect;

 

 

(b) the Borrower has the corporate power and capacity to enter into this
Agreement and to perform all of its obligations hereunder. The execution and
delivery of this Agreement, and the consummation by the Borrower of the
transactions hereunder, has been duly authorized by all necessary corporate
action on the part of the Borrower (including the approval of the board of
directors of the Borrower) and no other proceedings on the part of the Borrower
are or will be necessary to authorize this Agreement or the transactions
contemplated hereunder;

 

 

(c) this Agreement has been duly executed and delivered by the Borrower and is a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject to applicable bankruptcy or
similar laws affecting enforcement of creditors’ rights generally and to the
extent that equitable remedies such as specific performance and injunction are
in the discretion of the court from which they are sought;

 

 

(d) each of the execution and delivery of this Agreement and all documents
contemplated hereunder, the performance by the Borrower of its obligations
hereunder or thereunder and the consummation of the transactions contemplated
hereby, do not and will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under (whether after
notice or lapse of time or both), (i) any statute, rule or regulation applicable
to the Borrower; (ii) the constating documents or resolutions of the Borrower
which are in effect at the date hereof; (iii) any debt instrument, material
agreement, mortgage, indenture, contract, agreement, instrument, lease or other
document to which the Borrower is a party or by which it is bound; or (iv) any
judgment, decree or order binding the Borrower or the property or assets of the
Borrower;

 

 

(e) to the Borrower’s knowledge, (i) there is no civil, administrative,
regulatory, criminal or investigative action or proceeding, or arbitration or
other dispute settlement procedure, pending or threatened against the Borrower
by or before any Governmental Authority; and (ii) no event has occurred that
would reasonably be expected to give rise to any such action, proceeding or
procedure where the same would in each case reasonably be expected to constitute
a Material Adverse Effect;

 

   

   

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(f) there is no judgment, decree, award or order of any Governmental Authority
outstanding against (and binding upon) the Borrower that has or is reasonably
expected to constitute a Material Adverse Effect or which prohibits or
materially impairs the conduct of the Borrower’s business as currently
conducted.

 

 

(g) to the best of the knowledge of the Borrower, no person, firm or corporation
acting or purporting to act at the request of the Borrower is entitled to any
brokerage, agency or finder’s fee in connection with the transactions described
herein, except as disclosed to the Lender;

 

 

(h) the Borrower is a “reporting issuer” in the provinces of British Columbia
and Ontario and the Borrower’s common shares are listed on the Canadian
Securities Exchange under the symbol “BAMM”;

 

 

(i) as of the date hereof, the authorized capital of the Borrower consists of
900,000,000 common shares with a par value of $0.0001, of which 63,885,898
Common Shares are issued and outstanding as fully paid and non-assessable.
Additionally, the Company has a commitment to issue an aggregate of 282,000
Common Shares, an aggregate of contingently issuable Common shares, 26,106,820
share purchase warrants and 4,025,000 stock options as previously disclosed to
the Lender and, except as disclosed in the Public Record, no person has any
right, agreement or option, present or future, contingent or absolute, or any
right capable of becoming such a right, agreement or option, pre-emptive,
contractual or otherwise, for the issue or allotment of any unissued shares in
the capital of the Borrower or any other security convertible into or
exchangeable for any such shares, or to require the Borrower to purchase, redeem
or otherwise acquire any of the issued and outstanding shares in its capital
other;

 

 

(j) the Public Record complies in all material respects with the requirements of
Applicable Securities Laws;

 

 

(k) the Public Record and all financial, marketing, sales and operational
information provided to the Lender are true and correct in all material respects
and do not contain any misrepresentations (as such term is defined in the
Applicable Securities Laws);

 

 

(l) the financial statements filed by the Borrower on its Public Record or
supplied by the Borrower to the Lender have been prepared in accordance with
Canadian generally accepted accounting principles, international financial
reporting standards or in conformity with accounting principles generally
accepted in the United States of America, as applicable; contain no
misrepresentations; present fairly, fully and correctly, in all material
respects, the financial position and all material liabilities (accrued,
absolute, contingent or otherwise) of the Borrower, as of the date thereof; and
there have been no adverse material changes (as defined in Applicable Securities
Laws) in the financial position of the Borrower since the date thereof and the
business of the Borrower has been carried on in the usual and ordinary course
consistent with past practice since the date thereof;

 

 

(m) the auditors of the Borrower who audited the financial statements of the
Borrower for the most recent financial year-end and who provided their audit
report thereon are independent public accountants as required under Applicable
Securities Laws and there has never been a reportable event (within the meaning
of National Instrument 51-102) with the present auditors of the Borrower;

 

 

(n) the Borrower has complied and will comply fully with the requirements of all
applicable corporate and securities laws and administrative policies and
directions, including, without limitation, the Applicable Securities Laws in
relation to the issue and trading of its securities and in all matters relating
to the Loan;

   

   

   

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(o) other than in respect of certain United States federal laws relating to the
cultivation, distribution or possession of marijuana in the United States as
disclosed in the continuous disclosure documents of the Borrower, the Borrower
is in compliance in all material respects with all applicable laws in the
jurisdictions in which it carries on business and which may materially affect
the Borrower, has not received a notice of non-compliance, nor knows of, nor has
reasonable grounds to know of, any facts that could give rise to a notice of
non-compliance with any such laws, regulations and statutes, and is not aware of
any pending change or contemplated change to any applicable law or regulation or
governmental position that would materially affect the business of the Borrower
or the business or legal environment under which the Borrower operates;

 

 

(p) the Borrower has not caused or permitted the release, in any manner
whatsoever, of any pollutants, contaminants, chemicals or industrial toxic or
hazardous waste or substances (collectively, the “Hazardous Substances”) on or
from any of its properties or assets nor has it received any notice that it is
potentially responsible for a clean-up site or corrective action under any
applicable laws, statutes, ordinances, by-laws, regulations, or any orders,
directions or decisions rendered by any government, ministry, department or
administrative regulatory agency relating to the protection of the environment,
occupational health and safety or otherwise relating to dealing with Hazardous
Substances;

 

 

(q) all operations conducted by the Borrower on the properties of the Borrower
have been conducted and are currently conducted in all material respects in
accordance with good engineering practices and any applicable material workers’
compensation, and health, safety and workplace laws, regulations and policies;

 

 

(r) the Borrower has all licences, permits, approvals, consents, certificates,
registrations and other authorizations (collectively the “Permits”) under all
applicable laws and regulations, other than in respect of certain United States
federal laws relating to the cultivation, distribution or possession of
marijuana in the United States as disclosed in the continuous disclosure
documents of the Borrower, necessary for the operation of the businesses carried
on or proposed to be commenced by the Borrower and each Permit is valid,
subsisting and in good standing and the Borrower is not in default or breach in
any material respect of any Permit, and to the best of the knowledge of the
Borrower, no proceeding is pending or threatened to revoke or limit any Permit;

 

 

(s) to the Borrower’s knowledge, information and belief, none of the directors
or officers of the Borrower is or has been ever been subject to prior
regulatory, criminal or bankruptcy proceedings in Canada or elsewhere;

 

 

(t) there is not presently, and will not be until the Closing, any material
change or change in any material fact relating to the Borrower which has not
been disclosed to the public;

 

 

(u) to the best of the Borrower’s knowledge, the Borrower is not in default in
the observance of performance of any terms, covenant, obligation to be performed
by the Borrower, under any material instrument, document, agreement, or
arrangement (including memorandums of understanding or joint venture agreements)
to which the Borrower or its subsidiaries is a party or otherwise bound and all
such material instruments, contracts, agreements, or arrangements (including
memorandums of understanding or joint venture agreements) are in good standing
and no event has occurred which with notice or lapse of time or both would
constitute such a default by the Borrower or, to the best of the Borrower’s
knowledge, any other party;

 

 

(v) the Borrower is not a party to any actions, suits or proceedings which could
materially affect its business or financial condition, and to the best of the
Borrower’s knowledge no such actions, suits or proceedings are contemplated or
have been threatened;

 

   

   

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(w) there are no judgments against the Borrower which are unsatisfied, nor are
there any consent decrees or injunctions to which the Borrower is subject;

 

 

(x) no order ceasing, halting or suspending trading in securities of the
Borrower nor prohibiting the sale of such securities has been issued to and is
outstanding against the Borrower or, to the knowledge of the Borrower, any of
its directors, officers or promoters or against any other companies that have
common directors, officers or promoters and to the knowledge of the Borrower no
investigations or proceedings for such purposes are pending or threatened;

 

 

(y) the Borrower has filed, or is in the process of filing, all federal,
provincial, local and foreign tax returns which are required to be filed, or
have requested extensions thereof, and has or intends to pay all taxes required
to be paid by the Borrower, including its subsidiaries and any other assessment,
fine or penalty levied against the Borrower and/or its subsidiaries, or any
amounts due and payable to any governmental authority, to the extent that any of
the foregoing is due and payable;

 

 

(z) the Borrower has established on its books and records reserves which are
adequate for the payment of all taxes not yet due and payable and there are no
liens for taxes on the assets of the Borrower, except for taxes not yet due, and
there are no audits of any of the tax returns of which are known by the
Borrower’s management to be pending, and there are no claims which have been or
may be asserted relating to any such tax returns which, if determined adversely,
would result in the assertion by any governmental agency of any deficiency which
would have a material adverse effect on the properties, business or assets of
the Borrower;

 

 

(aa) the Borrower owns or possesses adequate rights to use all material patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
proprietary rights and other intellectual property necessary for the business of
the Borrower now conducted to the knowledge of the Borrower, without any
conflict with or infringement of the rights of others. the Borrower has received
no communication alleging that the Borrower has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity;

 

 

(bb) the Borrower does not have any loans or other indebtedness outstanding
which has been made to any of its shareholders, officers, directors or
employees, past or present, or any person not dealing at “arm’s length” (as such
term is used in the Income Tax Act (Canada));

 

 

(cc) the Borrower will not take any action which would be reasonably expected to
result in the delisting or suspension of its common shares on or from the
Canadian Securities Exchange or on or from any stock exchange, market or trading
or quotation facility on which its common shares are listed or quoted and the
Borrower will comply, in all material respects, with the rules and regulations
thereof;

 

 

(dd) the Borrower has and will have filed all documents that are required to be
filed under the continuous disclosure provisions of the Applicable Securities
Laws, including annual and interim financial information and annual reports,
press releases disclosing material changes and material change reports; and

 

 

(ee) the Borrower has no Indebtedness other than Permitted Indebtedness.

 

4.2 Representations and Warranties of the Lender. The Lender represents and
warrants to the Borrower as follows, with the intent that the Borrower will rely
thereon in entering into this Agreement and in concluding the transactions
contemplated hereby:

 

(a) the Lender is a valid and subsisting corporation under the laws of Alberta,
Canada;

 

   

   

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(b) the Lender is neither a U.S. Person not acquiring the Shares or Warrants for
the account of a U.S. Person or for resale in the United States and the Lender
confirms that the Shares and Warrants have not been offered to the Lender and
that this Agreement has not been signed in the United States;

 

 

(c) the Shares and Warrants have not been and will not be registered under the
U.S. Securities Act and may not be offered or sold in the United States or to
any U.S. Person, except pursuant to applicable exemptions from United States
federal and state registration requirements;

 

 

(d) the Lender has the corporate power and capacity to enter into this Agreement
and to perform all of its obligations hereunder. The execution and delivery of
this Agreement and the consummation by the Lender of the transactions hereunder
have been duly authorized by all necessary corporate action on the part of the
Lender;

 

 

(e) this Agreement has been duly executed and delivered by the Lender and is a
legal, valid and binding obligation of the Lender, enforceable against the
Lender in accordance with its terms, subject to applicable bankruptcy or similar
laws affecting enforcement of creditors’ rights generally and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought;

 

 

(f) each of the execution and delivery of this Agreement and all documents
contemplated hereunder, the performance by the Lender of its obligations
hereunder or thereunder and the consummation of the transactions contemplated
hereby, do not and will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under (whether after
notice or lapse of time or both), (i) any statute, rule or regulation applicable
to the Lender; (ii) the constating documents or resolutions of the Lender which
are in effect at the date hereof; (iii) any debt instrument, material agreement,
mortgage, indenture, contract, agreement, instrument, lease or other document to
which the Lender is a party or by which it is bound; or (iv) any judgment,
decree or order binding the Lender or the property or assets thereof;

 

 

(g) the Lender is acquiring the Shares and Warrants as principal within the
meaning of Applicable Securities Laws, for its own account and not for the
benefit of any other person, for investment only and not with a view to the
resale or distribution of all or any of the the Shares and Warrants;

 

 

(h) the Lender acknowledges that no securities commission, agency, Governmental
Authority, stock exchange or other regulatory body has reviewed or passed on the
merits of the the Shares and Warrants and there are risks associated with the
acquisition of the Shares and Warrants;

 

 

(i) the Lender acknowledges that the certificates representing the Shares and
Warrants (and any shares issued upon exercise of the Warrants) will bear the
following legends:

 

 

“THE SECURITIES REPRESENTED HEREBY [FOR THE WARRANTS ADD: AND ANY SECURITIES
ISSUABLE UPON CONVERSION THEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE U.S. SECURITIES ACT AND SUCH LAWS COVERING SUCH SECURITIES,
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING
THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE U.S. SECURITIES ACT AND SUCH LAWS.
THE SECURITIES REPRESENTED BY THE CERTIFICATEHEREBY CANNOT BE THE SUBJECT OF
HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH
THE U.S. SECURITIES ACT.

 

 

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE [FOUR MONTHS PLUS ONE DAY FROM THE DISTRIBUTION
DATE]”

 

   

   

- 10 -

 

(j) the Lender understands the political, economic and other business risks of
its investment, including the fact that cannabis is currently registered as a
Schedule 1 drug under the Controlled Substances Act in the United States of
America;

 

 

(k) the Lender is not acting jointly or in concert with any other person in
connection with its purchase of securities of the Borrower, and is not a party
to any agreement, commitment or understanding with any other person for the
acquisition or holding of securities of the Borrower, whether by the Borrower,
such other person, or other third party;

 

 

(l) the Lender acknowledges that there are restrictions under Applicable
Securities Laws on the Lender’s ability to resell the Shares and Warrants and
that it has been advised to consult its own legal advisors with respect to the
particulars of such resale restrictions, and that it is the Lender’s sole
responsibility to find out what those restrictions are and to comply with them;

 

 

(m) the Lender has not taken any action which will or may result in the
Borrower, or any its directors, officers, employees or agents breaching any
regulatory or legal requirements of any jurisdiction in connection with the
purchase and sale of the Shares and Warrants hereunder;

 

 

(n) the Lender acknowledges that there may be material tax consequences to the
Lender from the transactions contemplated by this Agreement under Canadian
federal, provincial or local laws or foreign laws, and the Borrower makes no
representations regarding the tax consequences to the Lender;

 

 

(o) to the best of the knowledge of the Lender, the acquisition of the Shares
and Warrants has not been made through or as a result of, and the distribution
of the Shares and Warrants is not being accompanied by, any form of
advertisement, including, without limitation, in printed public media, radio,
television, internet or telecommunications, including electronic display, or as
part of a general solicitation;

 

 

(p) none of the funds the Lender is advancing to the Borrower pursuant to this
Agreement are, to the knowledge of the Lender, proceeds obtained or derived,
directly or indirectly, as a result of illegal activities. The funds which will
be advanced by the Lender to the Borrower hereunder will not represent proceeds
of crime for the purposes of the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada) (the “PCMLTFA”) and the Lender acknowledges
that the Borrower may in the future be required by law to disclose the Lender’s
name and other information relating to this Agreement and the Lender’s
subscription hereunder, on a confidential basis, pursuant to the PCMLTFA. To the
best of the Lender’s knowledge (i) none of the funds to be provided by the
Lender are being tendered on behalf of a person who has not been identified to
the Lender, and (ii) the Lender will promptly notify the Borrower if the Lender
discovers that any of such representations cease to be true, and to provide the
Borrower with appropriate information in connection therewith;

 

 

(q) to the best of the knowledge of the Lender, no person, firm or corporation
is entitled to any brokerage, agency or finder’s fee in connection with the
transactions described herein, except as disclosed to the Borrower;

   

   

   

- 11 -

   

(r) the Lender acknowledges that no prospectus has been filed by the Borrower
with any securities commission or similar authority, in connection with the
issuance of the Shares and Warrants, and the issuance and the sale of the the
Shares and Warrants is subject to such sale being exempt from the prospectus
requirements under Applicable Securities Laws and accordingly:

 

 

(i) the Lender is restricted from using certain civil remedies available under
such legislation;

 

 

 

 

(ii) the Lender may not receive information that might otherwise be required to
be provided to it under such legislation; and

 

 

 

 

(iii) the Borrower is relieved from certain obligations that would otherwise
apply under such legislation.

 

5. Covenants

 

5.1 Covenants of the Borrower. So long as any portion of the Loan is
outstanding, the Borrower hereby covenants and agrees with the Lender as
follows:

 

(a) to pay the Loan in accordance with the provisions of this Agreement;

 

 

(b) to not commit any Event of Default and upon becoming aware of the occurrence
of any Event of Default or the existence of any condition or any event which,
but for the giving of notice or lapse of time, or both, would constitute an
Event of Default, to immediately notify the Lender thereof and promptly do
everything reasonably possible to cause such Event of Default or condition or
event to be eliminated as quickly as possible;

 

 

(c) to maintain its corporate existence and all licences and authorizations from
regulatory and governmental authorities or agencies required in order to permit
it to carry on its business, diligently carry on and conduct its business only
in the ordinary course and in a proper, efficient and business-like manner;

 

 

(d) to, upon the request of the Lender, permit the Lender, for the purposes of
this Agreement or any other agreement or document herein provided for, by its
agents, employees and representatives, to examine during normal business hours
and without unreasonable disruptions, all relevant books of account, records,
reports and other papers of the Borrower, and to make copies thereof and to take
extracts therefrom, provided that all such information shall be held
confidential by the Lender unless reasonably required by the Lender in the
exercise of its rights under this Agreement;

 

 

(e) at all times comply in all material respects with all applicable laws,
rules, governmental restrictions, regulations, guidelines or directives,
including all codes of conduct;

 

 

(f) not to lend money to or invest money in any person, whether by loan,
acquisition of shares, acquisition of debt obligations or in any other manner
whatsoever or guarantee, endorse or otherwise become surety for or upon the
obligations of any other person except by endorsement of negotiable instruments
for deposit or collection in the ordinary course of its business;

 

 

(g) not to create, assume or permit to exist any lien on any of its assets,
other than as disclosed to the Lender in writing in connection with the
Permitted Indebtedness; and

 

 

(h) not to convey, sell, lease, transfer or otherwise dispose of any of its
assets unless otherwise agreed to in writing by the Lender, except for
dispositions made in the ordinary course of business.

 

5.2 Failure to Perform. If the Borrower fails to perform any covenant set out in
this Agreement, the Lender may, at its discretion, but need not, perform any
such covenant capable of being performed by it and may, in the Lender’s
discretion, but need not, make any payments or incur expenditures for such
purpose, but no such performance of payment shall be deemed to relieve the
Borrower from any default under this Agreement; if the Lender performs any such
covenant or incurs any such expenditures, all costs incurred by the Lender in
connection therewith shall be added to the Principal.

 

   

   

- 12 -

 

6. Default

 

6.1 Events of Default. For the purposes of this Agreement, any one or more of
the following events shall constitute Events of Default:

 

(a) if the Borrower shall make default in any material way in the observance or
performance of something required to be done or some covenant or condition
required to be observed or performed in this Agreement and such default
continues for a period of 10 days following the date upon which written notice
of default is given to the Borrower by the Lender;

 

 

(b) if any representation or warranty herein given by the Borrower or any
director or officer thereof is untrue in any material respect and continues to
be untrue for a period of 30 days following the date upon which written notice
of default is given to the Borrower by the Lender;

 

 

(c) if an order is made or a resolution is passed for the winding-up of the
Borrower, or if a petition shall be filed for the winding–up of the Borrower;

 

 

(d) if the Borrower defaults under the provisions of any instrument, security,
indenture or document in respect of indebtedness for money borrowed from any
person or default in the payment of any Indebtedness of the Borrower for money
borrowed from any person when due or which for any reason has become due and
payable prior to the express maturity date;

 

 

(e) if the Borrower shall commit any act of bankruptcy or shall become insolvent
or shall make an assignment or proposal under a bankruptcy act or a general
assignment for the benefit of its creditors or a bulk sale of its assets, or if
a bankruptcy petition shall be filed or presented against the Borrower;

 

 

(f) if a receiver, receiver-manager, trustee, custodian, liquidator or similar
agent is appointed for the Borrower or for any of the Borrower’s property;

 

 

(g) if any execution, sequestration, extent or any other process of any court
shall become enforceable against the Borrower or if a distress or analogous
process shall be levied upon the property of the Borrower;

 

 

(h) if the Borrower shall cease or threaten to cease to carry on its business or
the title to any material assets of the Borrower is jeopardized or impaired; and

 

 

(i) if the Borrower makes default in observing or performing any of the
agreements or covenants, which are material in the reasonable determination of
the Lender, contained in any lease, licence, debenture, deed of trust or
agreement whereby any property or rights of the Borrower may become liable for
forfeiture or where any such lease, licence, debenture, deed of trust or
agreement would be subject to termination and such default continues for five
(5) days after written notice to the Borrower from the Lender.

 

6.2 Remedies Upon Default. Upon the occurrence of an Event of Default, the
Lender may immediately enforce its remedies to the full extent permitted by
applicable law, under this Agreement and for any of such purposes may commence
such legal action or proceedings as, in its sole discretion, it may deem
expedient all without any notice, presentation, further demand, protest, notice
of protest, or any other action, notice of all of which are hereby expressly
waived by the Borrower except to the extent set forth herein.

 

   

   

- 13 -

     

7. General Provisions

 

7.1 Notices. Unless otherwise expressly provided in this Agreement, any notice
or other communication to be given under this Agreement (a “notice”) shall be in
writing addressed as follows:

 

 

 

To the Lender:

 

 

 

 

 

 

 

Australis Capital Inc.

Suite 190, 376 East Warm Springs Road,

Las Vegas, Nevada, USA

89119

 

 

 

 

 

 

Attention:

Scott Dowty

 

 

Email:

scott@ausacap.com

 

 

 

 

 

 

To the Borrower:

 

 

 

 

 

 

 

Body and Mind Inc.

750 – 1095 West Pender Street

Vancouver, BC

V6E 2M6

 

 

 

 

 

 

Attention:

Leonard Clough

 

 

Email:

 len@altuscapital.ca

 

 

or to such other address as any of the parties may designate by notice given to
the others.

 

Each notice shall be personally delivered to the addressee or sent by means of
electronic transmission to the addressee and: (i) a notice which is personally
delivered shall, if delivered on a Business Day, be deemed to be given and
received on that day and, in any other case, be deemed to be given and received
on the first Business Day following the day on which it is delivered; and (ii) a
notice which is sent by means of electronic transmission shall be deemed to be
given and received on the first Business Day following the day on which it is
sent.

 

7.2 Time of Essence. Time is hereby expressly made of the essence of this
Agreement with respect to the performance by the parties of their respective
obligations under this Agreement.

 

7.3 Binding Effect. This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.

 

7.4 Entire Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and shall supersede all
previous expectations, understandings, communications, representations and
agreements whether verbal or written between the parties with respect to the
subject matter hereof.

 

7.5 Further Assurances. Each of the parties hereto hereby covenants and agrees
to execute such further and other documents and instruments and do such further
and other things as may be necessary or desirable to implement and carry out the
intent of this Agreement.

 

7.6 Assignment. None of the parties may assign or transfer their respective
rights under this Agreement, nor may the Borrower transfer any portion of the
Loan, except that the Lender may assign its rights under this Agreement upon the
occurrence of an Event of Default.

 

   

   

- 14 -

 

7.7 Waiver and Amendment. No indulgence or forbearance by the Lender hereunder
shall be deemed to constitute a waiver of the Lender’s rights to insist on
performance in a full and in a timely manner of all covenants of the Borrower
hereunder and any such waiver, in order to be binding upon the Lender, must be
express and in writing and signed by the Lender, and then such waiver shall be
effective only in the specific instance and for the purpose for which it is
given, and no waiver of any provision, condition or covenant shall be deemed to
be a waiver of the Lender’s right to require full and timely compliance with the
same provision, condition or covenant thereafter, or with any other provision,
covenant or condition of this Agreement at any time. No amendment to this
Agreement shall be valid unless it is evidenced by a written agreement executed
by all of the parties hereto.

 

7.8 Counterparts and Facsimile Signatures. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement. This Agreement will
be considered fully executed when all parties have executed an identical
counterpart, notwithstanding that all signatures may not appear on the same
counterpart. This Agreement may be executed and delivered by facsimile or other
electronic signature and shall be binding on all parties hereto as if executed
by original signature and delivered personally.

 

   

   

- 15 -

 

In witness whereof the parties hereto have executed this Agreement as of the day
and year first above written.

 

AUSTRALIS CAPITAL INC.

 

 

/s/ Michael Carlotti

 

Authorized Signatory

 

 

 

BODY AND MIND INC.

 

 

 

/s/ Leonard Clough

 

Authorized Signatory

 

  

   

   

- 16 -

 

SCHEDULE “A”

 

FORM OF PROMISSORY NOTE

 

PROMISSORY NOTE

 

$4,000,000

 

November 28, 2018

   

FOR VALUE RECEIVED, BODY AND MIND INC., a Nevada corporation (the “Borrower”)
hereby acknowledges itself indebted and promises to pay to or to the order of
AUSTRALIS CAPITAL INC., an Alberta Corporation (“Lender”) having a office at
Suite 190, 376 East Warm Springs Road, Las Vegas, Nevada, USA 89119, or such
other address as the Lender directs, the principal sum of $4,000,000 of lawful
money of the United States (the “Loan”) together with accrued interest, on the
terms provided in the Loan Agreement dated November 28, 20178 between the
Borrower and the Lender (the “Loan Agreement”).

 

Unless the term of the Loan is sooner determined in accordance with the Loan
Agreement (as defined herein), on that date which is 24 months following the
initial advance of the Loan made by the Lender to the Borrower, the Borrower
shall pay the Lender the outstanding principal balance of the Loan, together
with all interest which has accrued thereon at the rate set out above calculated
as aforesaid and then remains unpaid.

 

The Borrower agrees that:

 

(a) the records of the Lender with respect to advances, payments, repayments,
prepayments, the unpaid principal balance of the Loan and amounts owing on
account of interest will be conclusive and binding on the Borrower hereunder
absent manifest error;

 

 

(b) this Note will be governed by and construed in accordance with the laws of
the Province of British Columbia and the federal laws of Canada applicable
therein;

 

 

(c) this Note will be dated for reference purposes only November 28, 2018;

 

 

(d) this Note is given pursuant to the Loan Agreement and all amendments thereto
and replacement thereof, from time to time;

 

 

(e) in the event of any conflict between then terms of this Note and the Loan
Agreement, the Loan Agreement shall govern; and

 

 

(f) all words and phrases used herein and defined in the Loan Agreement will
have the meaning given to them therein unless otherwise defined herein.

 

   

   

- 17 -

  

The Borrower hereby waives presentment and demand for payment, protest and
notice of protest and notice of dishonour and non-payment.

 

EXECUTED by the Borrower as of the date first written above.

 

BODY AND MIND INC.

 

  

Per:

 

 

 

 

Authorized Signatory

 

 

   

   

  

SCHEDULE “B”

 

FORM OF WARRANT CERTIFICATE

 

[see attachment]

 

 

 

 

 

 

 

 

 

 

   

   

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE ·, 2019.

 

THE SECURITIES REPRESENTED HEREBY AND ANY SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED FOR RESALE, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING
TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE U.S.
SECURITIES ACT.

 

THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON IN
THE UNITED STATES UNLESS THIS WARRANT AND SECURITIES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE
APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS
DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

 

THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE AFTER 5:00 PM
(VANCOUVER TIME) ON ·, 2020.

 

BODY AND MIND, INC.

 

(Incorporated under the laws of the State of Nevada)

 

Certificate Number: ·

·Warrants to Purchase

 

COMMON SHARE PURCHASE WARRANTS

 

THIS IS TO CERTIFY THAT, for value received, AUSTRALIS CAPITAL INC. of Suite
190, 376 East Warm Springs Road, Las Vegas, Nevada, USA 89119, (the “Holder”) is
entitled to subscribe for and purchase up to · fully paid and non-assessable
common shares without par value (collectively the “Shares” and individually, a
“Share”) in the capital of Body and Mind, Inc. (the “Company”) at any time on or
before 5:00 p.m. Vancouver time on ·, 2020, (the “Expiry Date”), at a price of ·
per Share, subject, however, to the provisions and upon the Terms and Conditions
attached hereto as Schedule “A”.

 

   

   

- 2 -

   

The rights represented by this Warrant Certificate may be exercised by the
Holder, in whole or in part (but not as to a fraction of a Share) by surrender
of this Warrant Certificate (properly endorsed as required), together with a
Warrant Exercise Form in the form attached hereto as Appendix “B”, duly
completed and executed, to the Company at 750 - 1095 West Pender Street,
Vancouver, British Columbia V6E 2M6 (Attention: Chief Executive Officer), or
such other address as the Company may from time to time in writing direct,
together with a certified cheque or bank draft payable to or to the order of the
Company in payment of the purchase price of the number of Shares subscribed for.
The Holder is advised to read “Instruction to Holders” attached hereto as
Appendix “A” for details on how to complete the Warrant Exercise Form (as such
term is defined in Schedule “A”).

 

[REST OF PAGE INTENTIONALLY LEFT BLANK]

 

   

   

- 3 -

    

IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be
executed by its duly authorized officer, this · day of ·

 

BODY AND MIND INC.

 

Per:

 

 

 

 

Authorized Signatory

 

   

   

   

SCHEDULE “A”

 

TERMS AND CONDITIONS

ATTACHED TO COMMON SHARE PURCHASE WARRANTS

ISSUED BY BODY AND MIND, INC.

(the “Company”)

 

Each Warrant of the Company, whether single or part of a series, is subject to
these Terms and Conditions as they were at the date of issue of the Warrant.

 

Part 1

 

DEFINITIONS AND INTERPRETATION

 

1.1 Definitions

 

1.1 In these Terms and Conditions, except as otherwise expressly provided
herein, the following words and phrases will have the following meanings:

 

(a) “Company” means Body and Mind, Inc. and includes any successor corporations;
(b) “Company’s auditor” means the accountant duly appointed as auditor of the
Company; (c) “Exercise Price” means SYMBOL \u9679\h\s\16 \* MERGEFORMATper Share
or as may be adjusted as per Part 5; (d) “Expiry Date” means the date defined as
such on the face page of the Warrant Certificate; (e) “Expiry Time” means 5:00
p.m. Vancouver time on the Expiry Date; (f) “Holder” means the registered holder
of a Warrant; (g) “person” means an individual, corporation, partnership,
trustee or any unincorporated organization, and words importing persons have a
similar meaning; (h) “Shares” or “shares” means the common shares in the capital
of the Company as constituted at the date of issue of a Warrant and any shares
resulting from any event referred to in Part 5; (i) “Warrant” means a warrant as
evidenced by the certificate, one (1) Warrant entitles the holder to purchase
one (1) common share of the Company (subject to adjustment) on or before the
Expiry Date at the Exercise Price set forth on the Warrant Certificate; (j)
“Warrant Certificate” means the certificate evidencing the Warrant; (k) “Warrant
Exercise Form” means Appendix “B” hereof; and (l) “Warrant Transfer Form” means
Appendix “C” hereof.

 

7.10 Interpretation

 

1.2 In these Terms and Conditions, except as otherwise expressly provided
herein:

 

(a) the words “herein”, “hereof”, and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Part,
clause, subclause or other subdivision; (b) a reference to a Part means a Part
of these Terms and Conditions and the symbol § followed by a number or some
combination of numbers and letters refers to the section, paragraph or
subparagraph of these Terms and Conditions so designated; (c) the headings are
for convenience only, do not form a part of these Terms and Conditions and are
not intended to interpret, define or limit the scope, extent or intent of these
Terms and Conditions or any of its provisions; (d) all dollar amounts referred
to herein are expressed in Canadian funds; (e) time will be of the essence
hereof; and (f) words importing the singular number include the plural and vice
versa, and words importing the masculine gender include feminine and neuter
genders.

 

7.11 Applicable Law

 

   

   

- 2 -

 

1.3 The Warrants will be construed in accordance with the laws of the Province
of British Columbia and the laws of Canada applicable thereto and will be
treated in all respects as legal contracts under the laws of the Province of
British Columbia.

 

Part 2

 

ISSUE OF WarrantS

 

7.12 Additional Warrants

 

2.1 The Company may at any time and from time to time issue Warrants or grant
options or similar rights to purchase shares in its capital.

 

7.13 Issue in Substitution for Lost Warrants

 

2.2 In case a Warrant Certificate will become mutilated, lost, destroyed or
stolen, the Company in its discretion may issue and deliver a new Warrant
Certificate of like date and tenor as the one mutilated, lost, destroyed or
stolen in exchange for, and in place of, and upon cancellation of such mutilated
Warrant Certificate, or in lieu of and in substitution for such lost, destroyed
or stolen Warrant Certificate, and the Warrants represented by such substituted
Warrant Certificate will be entitled to the benefit hereof and rank equally in
accordance with its terms with all other Warrants of the same issue. The Company
may charge a reasonable fee for the issuance and delivery of a new Warrant
Certificate.

 

2.3 The applicant for the issue of a new Warrant Certificate pursuant hereto
will bear the cost of the issue thereof and in the case of loss, destruction or
theft furnish to the Company such evidence of ownership, and of loss,
destruction or theft of the Warrant Certificate so lost, destroyed or stolen as
will be satisfactory to the Company in its discretion; and such applicant may
also be required to furnish indemnity in amount and form satisfactory to the
Company in its discretion and will pay the reasonable charges of the Company in
connection therewith.

 

7.14 Holder not a Shareholder

 

2.4 The holding of a Warrant will not constitute the Holder a shareholder of the
Company, nor entitle the Holder to any right or interest in respect thereof,
except as expressly provided in the Warrant Certificate.

 

Part 3

 

OWNERSHIP AND TRANSFER OF Warrant

 

7.15 Exchange of Warrants

 

3.1 A Warrant Certificate in any authorized denomination, upon compliance with
the reasonable requirements of the Company, may be exchanged for a Warrant
Certificate(s) in any other authorized denomination of the same issue entitling
the Holder to purchase an equal aggregate number of Shares at the same Exercise
Price and on the same terms as the Warrant Certificate so exchanged.

 

3.2 Warrants may be exchanged only with the Company. Any Warrants tendered for
exchange will be surrendered to the Company and cancelled.

 

3.3 The Warrants are transferable on the terms and conditions contained herein
and by the Holder completing and submitting to the Company a completed and duly
executed Warrant Transfer Form.

 

7.16 Charges for Exchange

 

3.4 On exchange of Warrants, the Company, except as otherwise herein provided,
may charge a reasonable fee for each new Warrant Certificate issued, and payment
of any transfer taxes or governmental or other charges required to be paid will
be made by the party requesting such exchange.

 

7.17 Ownership of Warrants

 

3.5 The Company may deem and treat the Holder of a Warrant as the absolute owner
of such Warrant for all purposes and will not be affected by any notice or
knowledge to the contrary.

 

7.18 Notice to Holder

 

3.6 Unless herein otherwise expressly provided, any notice to be given hereunder
to a Holder will be deemed to be validly given, if mailed to the address of the
Holder as set out on the Warrant Certificate. Any notice so given will be deemed
to have been received five days from the date of mailing to the Holder or any
market intermediary then holding the Warrants of the Holder in any trust
account.

 

   

   

- 3 -

 

Part 4

 

EXERCISE OF WarrantS

 

7.19 Method of Exercise of Warrants

 

4.1 The right to purchase Shares conferred by a Warrant may be exercised by the
Holder surrendering the Warrant Certificate, together with a duly completed and
executed Warrant Exercise Form and a certified cheque or bank draft payable to,
or to the order of Company at the address as set out on the Warrant Certificate,
for the purchase price applicable at the time of surrender in respect of the
shares subscribed for in lawful money of Canada to the Company at the address as
set out on the Warrant Exercise Form.

 

7.20 Effect of Exercise of Warrants

 

4.2 Upon surrender and payment as aforesaid, the shares so subscribed for will
be deemed to have been issued, and the Holder will be deemed to have become the
holder of such shares on the date of such surrender and payment, and such shares
will be issued at the Exercise Price as may be adjusted in the events and in the
manner described herein.

 

4.3 Within 10 business days after surrender and payment as aforesaid, the
Company will forthwith cause to be delivered to the person in whose name the
shares are directed to be registered as specified in such Warrant Exercise Form,
or if no such direction is given, the Holder, a certificate for the appropriate
number of shares not exceeding those which the Holder is entitled to purchase
pursuant to the Warrant Certificate surrendered.

 

7.21 Subscription for Less than Entitlement

 

4.4 The Holder may purchase a number of shares less than the number which the
Holder is entitled to purchase pursuant to the surrendered Warrant Certificate.
In the event of any purchase of a number of shares less than the number which
can be purchased pursuant to this Warrant Certificate, the Holder, upon exercise
thereof, will, in addition to certificates representing shares issued on such
exercise, and be entitled to receive a new Warrant Certificate in respect of the
balance of the shares which the Holder was entitled to purchase pursuant to the
surrendered Warrant Certificate but which were not then purchased.

 

7.22 Warrants for Fractions of Shares

 

4.5 To the extent that the Holder is entitled to receive on the exercise or
partial exercise thereof a fraction of a share, such right may be exercised in
respect of such fraction only in combination with another Warrant which in the
aggregate will entitle the Holder to receive a whole number of shares.

 

7.23 Expiration of Warrants

 

4.6 After the Expiry Date, all rights under the Warrants will wholly cease and
terminate, and the Warrants will thereupon be void and of no effect.

 

7.24 Exercise Price

 

4.7 The price per share which must be paid to exercise a Warrant is the Exercise
Price, as may be adjusted in the events and in the manner described herein.

 

Part 5

 

Adjustments

 

7.25 Adjustments

 

5.1 If and whenever the Shares will be subdivided into a greater or consolidated
into a lesser number of shares, or in the event of any payment by the Company of
a stock dividend (other than a dividend paid in the ordinary course), or in the
event that the Company conducts a rights offering to its shareholders, the
exercise price will be decreased or increased proportionately as the case may
be. Upon any such subdivision, consolidation, payment of a stock dividend or
rights offering, the number of shares deliverable upon the exercise of a Warrant
and the exercise price of the Warrant will be increased or decreased
proportionately as the case may be.

 

   

   

- 4 -

 

5.2 In case of any reclassification of the capital of the Company, or in the
case of the merger, reorganization or amalgamation of the Company with, or into
any other company (including, for greater certainly, any triangular or
three-cornered amalgamation to which the Company is party) or of the sale of
substantially all of the property and assets of the Company to any other company
(in each case, a “Corporate Event”), each Warrant will, after such Corporate
Event, confer the right to purchase that number of shares or other securities or
property of the Company or of the company resulting from such Corporate Event,
or to which such sale will be made, as the case may be, which the Holder would
then hold if the Holder had exercised the Holder’s rights under the Warrant
before the Corporate Event; and in any such case, if necessary, appropriate
adjustments will be made in the application of the provisions set forth in this
Part 5 with respect to the rights and interest thereafter of the Holders to the
end that the provisions set forth in this Part 5 will thereafter correspondingly
be made applicable as nearly as may reasonably be in relation to any Shares or
other securities or property thereafter deliverable on the exercise of a
Warrant.

 

5.3 In case of any Corporate Event which results in Warrants becoming
exercisable for shares, securities or other property of a corporate entity other
than the Company, such corporate entity may elect to deliver to the Holder a new
warrant certificate in the name of such corporate entity reflecting the terms of
the Warrants, as adjusted pursuant to Section 5.2, and upon receipt of such
replacement warrant certificate this Warrant Certificate will be deemed
cancelled.

 

5.4 The adjustments provided for in this Part 5 are cumulative.

 

7.26 Determination of Adjustments

 

5.5 If any question will at any time arise with respect to any adjustments to be
made under this Part 5, such question will be conclusively determined by the
Company’s auditor, or, if the Company’s auditor declines to so act, any other
chartered accountant in Vancouver, British Columbia that the Company may
designate (acting reasonably) and who will have access to all appropriate
records, and such determination will be binding upon the Company and the Holder.

 

7.27 Resale Restrictions

 

5.6 This Warrant and the Shares to be issued upon its exercise have not been and
will not be registered under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”), or the securities laws of any state of the
United States. This Warrant may not be exercised in the United States, or by or
for the account or benefit of a U.S. person or a person in the United States,
unless (i) the Shares are registered under the U.S. Securities Act and the
applicable laws of any such state, or (ii) an exemption from such registration
requirements is available, and (iii) the holder has complied with the
requirements set forth in the Warrant Exercise Form attached hereto as Appendix
B. “United States” and “U.S. person” are as defined in Regulation S under the
U.S. Securities Act (“Regulation S”).

 

5.7 Any Shares issued upon exercise of this Warrant in the United States, or to
or for the account or benefit of a U.S. person or a person in the United States,
will be “restricted securities”, as defined in Rule 144(a)(3) under the U.S.
Securities Act. The certificates representing such Shares, as well as all
certificates issued in exchange or in substitution therefor, until such time as
is no longer required under the applicable requirements of the U.S. Securities
Act, or applicable state securities laws, will bear, on the face of such
certificate, the following legends:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE
OFFERED FOR RESALE, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION OR EXCLUSION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE
SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN
COMPLIANCE WITH THE U.S. SECURITIES ACT.

 

Part 6

 

COVENANTS BY THE COMPANY

 

7.28 Reservation of Shares

 

   

   

- 5 -

 

6.1 The Company will reserve, and there will remain unissued out of its
authorized capital, a sufficient number of shares to satisfy the rights of
purchase provided for in all Warrants from time to time outstanding.

 

Part 7

 

restriction on exercise

 

7.29 Compliance with Securities Laws

 

7.1 Notwithstanding any provision to the contrary contained herein, no Shares
will be issued pursuant to the exercise of any Warrant if the issuance of such
securities would constitute a violation of the securities laws of any applicable
jurisdiction, and the certificates evidencing the Shares thereby issued may bear
such legend as may, in the opinion of legal counsel to the Company, be necessary
in order to avoid a violation of any securities laws of any applicable
jurisdiction or to comply with the requirements of any stock exchange on which
the Shares of the Company are listed, provided that, at any time, in the opinion
of legal counsel to the Company, such legends are no longer necessary in order
to avoid a violation of any such laws, or the holder of any such legended
certificate, at that holder’s expense, provides the Company with evidence
satisfactory in form and substance to the Company (which may include an opinion
of legal counsel satisfactory to the Company) to the effect that such holder is
entitled to sell or otherwise transfer such Shares in a transaction in which
such legends are not required, such legended certificate may thereafter be
surrendered to the Company in exchange for a certificate which does not bear
such legend.

 

Part 8

 

MODIFICATION OF TERMS, SUCCESSORS

 

7.30 Modification of Terms and Conditions for Certain Purposes

 

8.1 From time to time the Company may, subject to the provisions of the Warrant
Certificate, when so directed by the Holders, modify the terms and conditions
hereof, for any one or more or all of the following purposes:

 

(a) adding to the provisions hereof such additional covenants and enforcement
provisions as, in the opinion of counsel for the Company, are necessary or
advisable in the circumstances; (b) making such provisions not inconsistent
herewith as may be necessary or desirable with respect to matters or questions
arising hereunder or for the purpose of obtaining a listing or quotation of
Warrants on any stock exchange or house; (c) adding to or altering the
provisions hereof in respect of the registration of Warrants making provision
for the exchange of Warrant Certificates of different denominations; and making
any modification in the form of Warrant Certificates which does not affect the
substance thereof; (d) for any other purpose not inconsistent with the terms
hereof, including the correction or rectification of any ambiguities, defective
provisions, errors or omissions herein; and (e) to evidence any succession of
any corporation and the assumption by any successor of the covenants of the
Company herein and in the Warrants contained as provided hereafter in this Part
8.

 

7.31 Company may Amalgamate on Certain Terms

 

8.2 Nothing herein contained will prevent any amalgamation or merger of the
Company with or into any other company, or the sale of the property or assets of
the Company to any company lawfully entitled to acquire the same; provided
however that the company formed by such merger or amalgamation or which acquires
by conveyance or transfer all or substantially all the properties and assets of
the Company will be a company organized and existing under the laws of Canada or
of the United States of America or any Province, State, District or Territory
thereof, which will, simultaneously with such amalgamation, merger, conveyance
or transfer, assume the due and punctual performance and observance of all the
covenants and conditions hereof to be performed or observed by the Company and
will succeed to and be substituted for the Company, and such changes in
phraseology and form (but not in substance) may be made in the Warrant
Certificate as may be appropriate in view of such amalgamation, merger or
transfer.

 

7.32 Additional Financings

 

8.3 Nothing herein contained will prevent the Company from issuing any other
securities or rights with respect thereto during the period within which a
Warrant is exercisable, upon such terms as the Company may deem appropriate.

[End of Schedule “A”]

 

   

   

 

APPENDIX “A”

 

INSTRUCTIONS TO HOLDER

 

TO EXERCISE:

 

To exercise Warrants, the Holder must complete, sign and deliver the Warrant
Exercise Form, attached as Appendix “B” and deliver the Warrant Certificate(s)
to the Company, indicating the number of common shares to be acquired.

 

TO TRANSFER:

 

To transfer Warrants, the Holder must complete, sign and deliver the Warrant
Transfer Form, attached as Appendix “C” and deliver the Warrant Certificate(s)
to the Company. The Company may require such other certificates or opinions to
evidence compliance with applicable securities legislation in Canada.

 

To transfer Warrants, the Warrant Holder’s signature on the Warrant Transfer
Form must be guaranteed by an authorized officer of a chartered bank, trust
company or an investment dealer who is a member of a recognized stock exchange.

 

GENERAL:

 

If forwarding any documents by mail, registered mail must be employed.

 

If the Warrant Exercise Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person acting in a
fiduciary or representative capacity, the Warrant Certificate must also be
accompanied by evidence of authority to sign satisfactory to the Company.

 

The address of the Company is:

 

Body and Mind, Inc.

750 - 1095 West Pender Street

Vancouver, BC V6E 2M6

 

Attention: Chief Executive Officer

 

[End of Appendix “A”]

 

   

   

 

APPENDIX “B”

 

WARRANT EXERCISE FORM

 

TO: Body and Mind, Inc.

 

750 - 1095 West Pender Street

Vancouver, BC V6E 2M6

 

Attention: Chief Executive Officer

 

The undersigned Holder of the within Warrants hereby subscribes for ____________
common shares (the “Shares”) of BODY AND MIND, INC. (the “Company”) pursuant to
the within Warrants on the terms and price specified in the Warrants. This
subscription is accompanied by a certified cheque or bank draft payable to or to
the order of the Company for the whole amount of the purchase price of the
Shares.

 

The undersigned hereby directs that the Shares be registered as follows:

 

 

NAME(S) IN FULL

 

ADDRESS(ES)

 

NUMBER OF SHARES

 

As at the time of exercise hereunder, the undersigned Holder represents,
warrants and certifies as follows (check one):

 

¨

(A) the undersigned holder at the time of exercise of the Warrant is not in the
United States, is not a “U.S. person” as defined in Regulation S under the
United States Securities Act of 1933, as amended (the “U.S. Securities Act”),
and is not exercising the Warrant for the account or benefit of a U.S. person or
a person in the United States (as defined in Regulation S), and did not execute
or deliver this exercise form in the United States; OR

 

 

 

¨

(B) the undersigned holder is resident in the United States, is a U.S. person,
or is exercising the Warrant for the account or benefit of a U.S. person or a
person in the United States (a “U.S. Holder”), and is an “accredited investor”,
as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (a “U.S.
Accredited Investor”), and has completed the U.S. Accredited Investor Status
Certificate in the form attached to this exercise form; OR

 

 

 

¨

(C) if the undersigned holder is a U.S. Holder, the undersigned holder has
delivered to the Company and the Company’s transfer agent an opinion of counsel
of recognized standing (which will not be sufficient unless it is in form and
substance satisfactory to the Company) or such other evidence satisfactory to
the Company to the effect that with respect to the Shares to be delivered upon
exercise of the Warrant, the issuance of such securities has been registered
under the U.S. Securities Act and applicable state securities laws, or an
exemption from the registration requirements of the U.S. Securities Act and
applicable state securities laws is available.

 

Note: Certificates representing common shares will not be registered or
delivered to an address in the United States unless box (B) or (C) immediately
above is checked.

 

If the undersigned Holder has indicated that the undersigned Holder is a U.S.
Accredited Investor by marking box (B) above, the undersigned Holder
additionally represents and warrants to the Company that:

 

1 the undersigned Holder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Shares, and the undersigned is able to bear the economic risk
of loss of his or her entire investment;

 

   

   

- B2 -

 

2. the undersigned is: (i) purchasing the Shares for his or her own account or
for the account of one or more U.S. Accredited Investors with respect to which
the undersigned is exercising sole investment discretion, and not on behalf of
any other person; (ii) is purchasing the Shares for investment purposes only and
not with a view to resale, distribution or other disposition in violation of
United States federal or state securities laws; and (iii) in the case of the
purchase by the undersigned of the Shares as agent or trustee for any other
person or persons (each a “Beneficial Owner”), the undersigned holder has due
and proper authority to act as agent or trustee for and on behalf of each such
Beneficial Owner in connection with the transactions contemplated hereby;
provided that: (x) if the undersigned holder, or any Beneficial Owner, is a
corporation or a partnership, syndicate, trust or other form of unincorporated
organization, the undersigned holder or each such Beneficial Owner was not
incorporated or created solely, nor is it being used primarily to permit
purchases without a prospectus or registration statement under applicable law;
and (y) each Beneficial Owner, if any, is a U.S. Accredited Investor; and

 

3. the undersigned has not exercised the Warrants as a result of any form of
general solicitation or general advertising (as such terms are used in Rule 502
of Regulation D under the U.S. Securities Act), including advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar media, or broadcast over radio, television, the Internet or other
form of telecommunications, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising.

 

The undersigned acknowledges and agrees that:

 

1. the Company has provided to the undersigned the opportunity to ask questions
and receive answers concerning the terms and conditions of the offering, and the
undersigned has had access to such information concerning the Company as the
undersigned has considered necessary or appropriate in connection with the
undersigned’s investment decision to acquire the Shares;

 

2. if the undersigned decides to offer, sell or otherwise transfer any of the
Shares, the undersigned must not, and will not, offer, sell or otherwise
transfer any of such Shares directly or indirectly, unless:

 

(a) the sale is to the Company;

 

 

(b) the sale is made outside the United States in a transaction meeting the
requirements of Rule 904 of Regulation S under the U.S. Securities Act and in
compliance with applicable local laws and regulations;

 

 

(c) the sale is made pursuant to the exemption from the registration
requirements under the U.S. Securities Act provided by Rule 144 thereunder, if
available, and in accordance with any applicable state securities or “blue sky”
laws; or

 

 

(d) the Shares are sold in a transaction that does not require registration
under the U.S. Securities Act or any applicable state laws and regulations
governing the offer and sale of securities, and

 

the undersigned has prior to such sale pursuant to subsection (c) or (d),
furnished to the Company an opinion of counsel of recognized standing in form
and substance satisfactory to the Company to such effect;

 

3. the Shares are “restricted securities” under applicable federal securities
laws and that the U.S. Securities Act and the rules of the United States
Securities and Exchange Commission provide in substance that the undersigned may
dispose of the Shares only pursuant to an effective registration statement under
the U.S. Securities Act or an exemption therefrom;

 

4. the Company has no obligation to register any of the Shares;

 

5. the certificates representing the Shares (and any certificates issued in
exchange or substitution for the Shares) will bear a legend stating that such
securities have not been registered under the U.S. Securities Act or the
securities laws of any state of the United States, and may not be offered for
sale or sold unless registered under the U.S. Securities Act and the securities
laws of all applicable states of the United States, or unless an exemption from
such registration requirements is available;

 

   

   

- B3 -

 

6. the legend may be removed by delivery to the registrar and transfer agent and
the Company of an opinion of counsel, of recognized standing in form and
substance satisfactory to the Company, that such legend is no longer required
under applicable requirements of the U.S. Securities Act or state securities
laws;

 

7. the financial statements of the Company have been prepared in accordance with
Canadian generally accepted accounting principles or International Financial
Reporting Standards, which differ in some respects from United States generally
accepted accounting principles, and thus may not be comparable to financial
statements of United States companies;

 

8. there may be material tax consequences to the undersigned of an acquisition
or disposition of the Shares;

 

9. funds representing the subscription price for the Shares which will be
advanced by the undersigned to the Company upon exercise of the Warrants will
not represent proceeds of crime for the purposes of the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) (the “PCMLA”) or the United
States Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”), and the undersigned
acknowledges that the Company may in the future be required by law to disclose
the undersigned’s name and other information relating to this exercise form and
the undersigned’s subscription hereunder, on a confidential basis, pursuant to
the PCMLA or the PATRIOT Act. No portion of the subscription price to be
provided by the undersigned (i) has been or will be derived from or related to
any activity that is deemed criminal under the laws of the United States of
America, Canada, or any other jurisdiction, or (ii) is being tendered on behalf
of a person or entity who has not been identified to or by the undersigned, and
it shall promptly notify the Company if the undersigned discovers that any of
such representations cease to be true and provide the Company with appropriate
information in connection therewith; and

 

10. the undersigned consents to the Company making a notation on its records or
giving instructions to any transfer agent of the Company in order to implement
the restrictions on transfer set forth and described in this Warrant Exercise
Form.

 

In the absence of instructions to the contrary, the securities or other property
will be issued in the name of or to the holder hereof and will be sent by first
class mail to the last address of the holder appearing on the register
maintained for the Warrants.

 

DATED this _________ day of _______________, 20_____.

 

In the presence of:

 

Signature of Witness Signature of Holder

 

Witness’s Name Name and Title of Authorized Signatory for the Holder

 

Please print below your name and address in full.

 

Legal Name

 

Address

 

   

   

- B4 -

 

INSTRUCTIONS FOR SUBSCRIPTION

 

The signature to the subscription must correspond in every particular with the
name written upon the face of the Warrant Certificate without alteration. If the
registration in respect of the certificates representing the Shares to be issued
upon exercise of the Warrants differs from the registration of the Warrant
Certificates the signature of the registered holder must be guaranteed by an
authorized officer of a Canadian chartered bank, or of a major Canadian trust
company, or by a medallion signature guarantee from a member recognized under
the Signature Medallion Guarantee Program, or from a similar entity in the
United States, if this exercise form is executed in the United States, or in
accordance with industry standards

 

In the case of persons signing by agent or attorney or by personal
representative(s), the authority of such agent, attorney or representative(s) to
sign must be proven to the satisfaction of the Company.

 

If the Warrant Certificate and the form of subscription are being forwarded by
mail, registered mail must be employed.

 

   

   

- B5 -

 

U.S. ACCREDITED INVESTOR STATUS CERTIFICATE

 

In connection with the exercise of certain outstanding warrants of BODY AND
MIND, INC. (the “Company”) by the holder, the holder hereby represents and
warrants to the Company that the holder, and each beneficial owner (each a
“Beneficial Owner”), if any, on whose behalf the holder is exercising such
warrants, satisfies one or more of the following categories of Accredited
Investor (please write “W/H” for the undersigned holder, and “B/O” for each
beneficial owner, if any, on each line that applies):

 

_____

(1)

 

Any bank as defined in Section 3(a)(2) of the United States Securities Act of
1933, as amended (the “U.S. Securities Act”), or any savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the U.S.
Securities Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to Section 15 of the U.S. Securities
Exchange Act of 1934; any insurance company as defined in Section 2(a)(13) of
the U.S. Securities Act; any investment company registered under the U.S.
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the U.S.
Small Business Investment Act of 1958; any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of US$5,000,000; any employee benefit plan within the
meaning of the U.S. Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan has
total assets in excess of US$5,000,000, or, if a self-directed plan, with
investment decisions made solely by persons that are “accredited investors” (as
such term is defined in Rule 501 of Regulation D of the U.S. Securities Act);

_____

(2)

 

Any private business development company as defined in Section 202(a)(22) of the
U.S. Investment Advisers Act of 1940;

_____

(3)

 

Any organization described in Section 501(c)(3) of the U.S. Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of US$5,000,000;

_____

(4)

 

Any trust with total assets in excess of US$5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person (being defined as a person who has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the prospective investment);

_____

(5)

 

A natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of purchase, exceeds US$1,000,000 (for the purposes
of calculating net worth, (i) the person’s primary residence shall not be
included as an asset; (ii) indebtedness that is secured by the person’s primary
residence, up to the estimated fair market value of the primary residence at the
time of this certification, shall not be included as a liability (except that if
the amount of such indebtedness outstanding at the time of this certification
exceeds the amount outstanding 60 days before such time, other than as a result
of the acquisition of the primary residence, the amount of such excess shall be
included as a liability); and (iii) indebtedness that is secured by the person’s
primary residence in excess of the estimated fair market value of the primary
residence shall be included as a liability);

     

   

   

- B6 -

 

_____

(6)

 

A natural person who had annual gross income during each of the last two full
calendar years in excess of US$200,000 (or together with his or her spouse in
excess of US$300,000) and reasonably expects to have annual gross income in
excess of US$200,000 (or together with his or her spouse in excess of
US$300,000) during the current calendar year, and no reason to believe that his
or her annual gross income will not remain in excess of US$200,000 (or that
together with his or her spouse will not remain in excess of US$300,000) for the
foreseeable future;

_____

(7)

 

Any director or executive officer of the Company; or

_____

(8)

 

Any entity in which all of the equity owners meet the requirements of at least
one of the above categories – if this alternative is selected you must identify
each equity owner and provide statements from each demonstrating how they
qualify as an accredited investor.

 

[End of Appendix “B”]

 

   

   

 

APPENDIX “C”

 

WARRANT TRANSFER FORM

 

TO:  Body and Mind, Inc.

 

750 - 1095 West Pender Street

 

Vancouver, BC V6E 2M6

 

Attention: Chief Executive Officer

 

FOR VALUE RECEIVED, the undersigned holder (the “Transferor”) of the within
Warrants hereby sells, assigns and transfers to _______________________________
(the “Transferee”), ________________ Body and Mind, Inc. (the “Company”)
registered in the name of the undersigned on the records of the Company and
irrevocably appoints ________________ the attorney of the undersigned to
transfer the said securities on the books or register with full power of
substitution.

 

The undersigned hereby directs that the Warrants hereby transferred be issued
and delivered as follows:

 

 

NAME IN FULL

 

ADDRESS

 

NUMBER OF WARRANTS

 

The Transferor hereby certifies that (check either A or B):

 

____

(A) the transfer of the Warrants is being completed pursuant to an exemption
from the registration requirements of the United States Securities Act of 1933,
as amended (the “U.S. Securities Act”), in which case the Transferor has
delivered or caused to be delivered by the Transferee a written opinion of U.S.
legal counsel of recognized standing in form and substance satisfactory to the
Company to the effect that the transfer of the Warrants is exempt from the
registration requirements of the U.S. Securities Act; or

 

 

 

_____

(B) the transfer of the Warrants is being made in reliance on Rule 904 of
Regulation S under the U.S. Securities Act, and certifies that:

 

 

(1) the undersigned is not an “affiliate” (as defined in Rule 405 under the U.S.
Securities Act) of the Company (except solely by virtue of being an officer or
director of the Company) or a “distributor”, as defined in Regulation S, or an
affiliate of a “distributor”;

 

 

 

 

(2) the offer of such securities was not made to a person in the United States
and either (a) at the time the buy order was originated, the buyer was outside
the United States, or the seller and any person acting on its behalf reasonably
believe that the buyer was outside the United States or (b) the transaction was
executed on or through the facilities of a designated offshore securities market
within the meaning of Rule 902(b) of Regulation S under the U.S. Securities Act,
and neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States;

 

 

 

 

(3) neither the seller nor any affiliate of the seller nor any person acting on
their behalf engaged in any directed selling efforts in connection with the
offer and sale of the Warrants;

 

 

 

 

(4) the sale is bona fide and not for the purpose of “washing off” the resale
restrictions imposed because the Warrants are “restricted securities” (as such
term is defined in Rule 144(a)(3) under the U.S. Securities Act);

 

   

   

- C2 -

 

 

(5) the Transferor does not intend to replace the securities sold in reliance on
Rule 904 of the U.S. Securities Act with fungible unrestricted securities; and

 

 

 

 

(6) the contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S, is part
of a plan or a scheme to evade the registration provisions of the U.S.
Securities Act.

 

Unless otherwise specified, terms used herein have the meanings given to them by
Regulation S under the U.S. Securities Act. If Option B is checked, the Company
may, in its sole discretion, require the Transferor or the Transferee to furnish
a written opinion of U.S. legal counsel or other documentation acceptable to the
Company to the effect that the transfer of the Warrants is excluded from the
registration requirements of the U.S. Securities Act.

 

DATED this _________ day of _______________, 201_____.

 

Signature of Warrant Holder

Signature Guaranteed

 

INSTRUCTIONS FOR TRANSFER

 

Signature of the Warrant Holder must be the signature of the person appearing on
the face of this Warrant Certificate.

 

If the Transfer Form is signed by a trustee, executor, administrator, curator,
guardian, attorney, officer of a corporation or any person acting in a fiduciary
or representative capacity, the certificate must be accompanied by evidence of
authority to sign satisfactory to the Company.

 

The signature on the Transfer Form must be guaranteed by a chartered bank or
trust company, or a member firm of an acceptable Medallion Signature Guarantee
Program (STAMP, SEMP, MSP). the stamp must bear the words “Signature Medallion
Guaranteed”.

 

In the United States of America, signature guarantees must be done by members of
a Medallion Signature Guarantee Program only. Signature guarantees are not
accepted from Treasury Branches, Credit Unions or Caisses Populaires unless they
are members of an acceptable Medallion Program.

 

If the Transferor is in a jurisdiction that does not have a Medallion Signature
Guarantee Program, then the Transferor will provide such other documentation as
reasonably required by the Company or its transfer agent, as applicable.

 

   

   

- C3 -

 

TRANSFEREE ACKNOWLEDGMENT

 

The Transferee acknowledges and agrees that the Warrants may not be offered,
sold, pledged or otherwise transferred in the absence of: (a) an effective
registration statement under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”), relating thereto; or (b) an exemption from
the registration requirements of the U.S. Securities Act. Each Warrant
Certificate, and each certificate representing Shares issuable upon exercise
thereof, shall contain a legend on the face thereof, in the appropriate form,
setting forth the restrictions on transfer referred to in the Warrant
Certificate, unless in the opinion of counsel for the holder thereof (which
counsel shall be reasonably satisfactory to the Company), the securities
represented thereby are not, at such time, required by law to bear such legend,
or in the case of the Shares, are transferred pursuant to an effective
registration statement under the U.S. Securities Act. The holder acknowledges
and agrees that the Warrants represented by this Warrant Certificate, and the
Shares issuable upon exercise thereof, constitute “restricted securities” under
the U.S. Securities Act.

 

Any certificate issued at any time in exchange or substitution for any
certificate bearing a restrictive legend shall also bear such legend unless in
the opinion of counsel for the holder thereof (which counsel shall be reasonably
satisfactory to the Company), the securities represented thereby are not, at
such time, required by law to bear such legend.

 

In connection with this transfer the undersigned transferee (the “Transferee”)
certifies that the Transferor or Transferee is delivering a written opinion of
U.S. legal counsel acceptable to the Company to the effect that this transfer of
Warrants has been registered under the U.S. Securities Act or is exempt from
registration thereunder.

 

DATED the 27 day of November, 2018

 

 

 

 

In the presence of:

 

(Signature of Transferee)

 

 

(Witness)

 

(Name of Transferee – Please print)

 

(Name of Witness – Please print)

 

(Capacity of Authorized Representative)

 

The Warrants and the Shares issuable upon exercise of the Warrants shall only be
transferable in accordance with applicable laws. The Warrants may only be
exercised in the manner required by the Warrant Certificate and the Warrant
Exercise Form attached thereto. Any securities acquired pursuant to this
exercise of Warrants shall be subject to applicable hold periods and any
certificate representing such securities may bear restrictive legends.

 

[End of Appendix “C”]