lowell_ex109






Exhibit 10.9



 


Execution
Version





 



ASSET PURCHASE AGREEMENT

 



BY AND AMONG

 



THE HACIENDA COMPANY, LLC,

 



BRAND NEW CONCEPTS, LLC,

 



LFCO, LLC,

 



LOWELL FARMS, LLC,

 



LFHMP, LLC,

 



LFLC, LLC,

 



INDUS LF LLC,

 



AND

 



INDUS HOLDINGS,
INC.

 



FEBRUARY 25, 2021

 


 

 










 










 



TABLE OF CONTENTS

 



Page

 


	


ARTICLE I PURCHASE AND SALE

	


2


	

Section
1.1

	


Initial Assets.

	


2


	

Section
1.2

	


Regulated Assets.

	


4


	

Section
1.3

	


Closings.

	


5


	

Section
1.4

	


Purchase Price; Closing Payments and Deliveries.

	


5


	

Section
1.5

	


Tax Withholding.

	


9


	

Section
1.6

	


Tax Classification and Reporting.

	


9


	


ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE
SELLERS

	


9


	

Section
2.1

	


Organization and Related Matters.

	


9


	

Section
2.2

	


Authorization and Enforceability.

	


10


	

Section
2.3

	


Ownership of Sellers.

	


10


	

Section
2.4

	


Conflicts; Consents of Third Parties.

	


11


	

Section
2.5

	


Financial Statements.

	


11


	

Section
2.6

	


No Undisclosed Liabilities.

	


11


	

Section
2.7

	


Absence of Certain Developments.

	


12


	

Section
2.8

	


Taxes.

	


13


	

Section
2.9

	


Tangible Personal Property; Title; Sufficiency of
Assets.

	


14


	

Section
2.10

	


Intellectual Property.

	


15


	

Section
2.11

	


Contracts.

	


16


	

Section
2.12

	


Compliance with Laws; Permits.

	


19


	

Section
2.13

	


Employee Benefits.

	


19


	

Section
2.14

	


Labor.

	


20


	

Section
2.15

	


Litigation.

	


21


	

Section
2.16

	


Environmental Matters.

	


22


	

Section
2.17

	


Insurance.

	


22


	

Section
2.18

	


Real Property Leases.

	


22


	

Section
2.19

	


Receivables; Payables; Inventory.

	


23


	

Section
2.20

	


Customers, Suppliers and Service Providers.

	


23


	

Section
2.21

	


Related Party Transactions.

	


24


	

Section
2.22

	


Brokers Fees.

	


24


	

Section
2.23

	


Investment Representations.

	


24


	

Section
2.24

	


No Misrepresentation.

	


25


	


ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER

	


25


	

Section
3.1

	


Organization.

	


25


	

Section
3.2

	


Authorization and Enforceability.

	


25


	

Section
3.3

	


Conflicts; Consent of Third Parties.

	


26


	

Section
3.4

	


Base Share Consideration.

	


26


	

Section
3.5

	


Brokers Fees.

	


26


	

Section
3.6

	


No Proceedings.

	


26


	

Section
3.7

	


Taxes.

	


26


	


ARTICLE IV COVENANTS

	


26


	

Section
4.1

	


Further Assurances; Pendleton Lease; Litigation Support; Name
Change.

	


26


	

Section
4.2

	


Share Registration; Seller Financial Information.

	


27


	
 

	
 

	
 







 




 

i








 






 


	

Section
4.3

	


Transfer Restrictions.

	


31


	

Section
4.4

	


Mail; Payments; Receivables; Record Retention.

	


31


	

Section
4.5

	


Public Announcements.

	


32


	

Section
4.6

	


Tax Covenants.

	


32


	

Section
4.7

	


Confidentiality.

	


33


	

Section
4.8

	


Bulk Sales Laws.

	


33


	

Section
4.9

	


Release.

	


33


	

Section
4.10

	


Employees and Employee Benefits.

	


34


	


ARTICLE V CONDITIONS TO SECOND CLOSING; TERMINATION

	


35


	

Section
5.1

	


Conditions to Obligations of the Parties.

	


35


	

Section
5.2

	


Conditions to Obligations of the Purchaser.

	


35


	

Section
5.3

	


Termination.

	


36


	


ARTICLE VI INDEMNIFICATION

	


36


	

Section
6.1

	


Survival.

	


36


	

Section
6.2

	


Indemnity Obligations of the Sellers.

	


37


	

Section
6.3

	


Indemnity Obligations of the Purchaser.

	


37


	

Section
6.4

	


Indemnification Procedures.

	


38


	

Section
6.5

	


Certain Limitations.

	


39


	

Section
6.6

	


Certain Determinations.

	


40


	

Section
6.7

	


Release of Escrow Shares.

	


40


	

Section
6.8

	


Exclusive Remedy.

	


40


	

Section
6.9

	


Treatment of Indemnification Payments.

	


41


	


ARTICLE VII MISCELLANEOUS

	


41


	

Section
7.1

	


The Representative.

	


41


	

Section
7.2

	


Expenses.

	


42


	

Section
7.3

	


Governing Law; Jurisdiction; Venue.

	


42


	

Section
7.4

	


Entire Agreement; Amendments and Waivers.

	


42


	

Section
7.5

	


Section Headings.

	


42


	

Section
7.6

	


Notices.

	


42


	

Section
7.7

	


Severability.

	


43


	

Section
7.8

	


Binding Effect; Assignment; Third-Party Beneficiaries.

	


43


	

Section
7.9

	


Counterparts.

	


44


	

Section
7.10

	


Remedies Cumulative.

	


44


	

Section
7.11

	


Exhibits and Schedules.

	


44


	

Section
7.12

	


Interpretation.

	


44


	

Section
7.13

	


Arm’s Length Negotiations.

	


44


	

Section
7.14

	


Construction.

	


45


	

Section
7.15

	


Specific Performance.

	


45


	

Section
7.16

	


Waiver of Jury Trial.

	


45


	


ARTICLE VIII CERTAIN DEFINITIONS

	


45


	

Section
8.1

	


Definitions.

	


45






 




Exhibit
A:  


Escrow
Agreement







Exhibit
B:   


Management Services
Agreement







Exhibit
C:  


Second Closing Bill
of Sale







Exhibit
D:     


Second Closing
Assignment and Assumption Agreement







Exhibit
E:       


Form of Closing
Statement






 




 

ii








 










 



ASSET PURCHASE AGREEMENT

 


THIS
ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of
February 25, 2021, is by and
among The Hacienda Company, LLC, a California limited liability company
(“THC”), Brand New
Concepts, LLC, a California limited liability company
(“BNC”), LFCO, LLC, a
California limited liability company (“LFCO”), Lowell Farms LLC,
a California limited liability company
(“Lowell”),
LFHMP, LLC, a California limited liability company
(“LFHMP”),
LFLC, LLC, a California limited liability company
(“LFLC,”
and together with THC, BNC, LFCO, Lowell, and LFHMP, the
“Sellers,”
and each, a “Seller”),
Indus LF LLC, a California limited liability company (the “Purchaser”), and Indus
Holdings, Inc., a British Columbia corporation (the
“Parent”). The Sellers,
the Purchaser and the Parent are sometimes referred to herein
collectively as the “Parties,” and each
individually as a “Party.” Capitalized terms
used and not otherwise defined herein have the meanings assigned to
them in ARTICLE
VIII.

 


WHEREAS, the
Sellers are engaged in the business of the processing, manufacture
and distribution of products containing cannabis, for both
medicinal and recreational uses, and related products, in each case
within the State of California (the “Business”);

 


WHEREAS, BNC holds
the following licenses for the manufacture and distribution of
cannabis (a) a Provisional Manufacturing License – Adult and
Medicinal Cannabis Products (the “Manufacturer License”),
issued by the Manufactured Cannabis Safety Branch of the California
Department of Public Health, (b) an Adult-Use and Medicinal –
Distributor Provisional License (the “Distributor License”)
issued by the California Bureau of Cannabis Control
(“BCC”)
and (c) provisional licenses from the City of Los Angeles
Department of Cannabis Regulation (the “DCR”): in the following
classes: Medical Distributor, J080; Medical Manufacturer Level 1,
J083, Adult-Use Distributor, J090, and Adult-Use Manufacturer Level
1, J093 (the “DCR
Licenses” and, together with the Manufacturer License
and the Distributor License, the “BNC Cannabis
Licenses”);

 


WHEREAS, BNC
previously submitted applications to the DCR to modify the DCR
Licenses to reflect the ownership of BNC set forth on Schedule I (the
“Pending
Applications”);

 


WHEREAS, after
acceptance of the Pending Applications by the DCR, BNC shall submit
an additional application to modify DCR Licenses to list the
Purchaser as the sole owner of BNC (the “Amended DCR
Applications”);

 


WHEREAS, on the
First Closing Date, the Parties desire for the Purchaser to
purchase the Initial Assets and assume the First Closing Assumed
Liabilities, in each case, subject to the terms and conditions set
forth herein; and

 


WHEREAS, on the
Second Closing Date, the Sellers will convey to the Purchaser,
without further consideration, the Regulated Assets, and the
Purchaser will assume the Second Closing Assumed Liabilities, in
each case, subject to the terms and conditions set forth
herein.

 


NOW,
THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein and other good and
valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the Parties agree as follows:


 




 

1








 










 



ARTICLE I



PURCHASE AND SALE

 

Section
1.1 Initial
Assets.

 


(a) Acquisition of Initial Assets.
On the terms and conditions set forth herein, on the First Closing
Date, the Sellers shall sell, assign, transfer, convey and deliver
to the Purchaser, and the Purchaser shall purchase from the
Sellers, free and clear of all Liens (other than Permitted Liens),
all of the Sellers’ right, title and interest in, to and
under all of the assets, properties and rights of every kind and
nature, whether real, personal or mixed, tangible or intangible,
wherever located, which relate to, or are used or held for use in
connection with, the Business except for the Regulated Assets and
the Excluded Assets (collectively, the “Initial Assets”),
including the following:

 

(i) all accounts
receivable;

 

(ii) all
finished goods, raw materials, work in progress, packaging,
supplies, parts and other inventory (“Inventory”);

 

(iii) all
of the Assumed Contracts;

 

(iv) all
Intellectual Property Rights;

 

(v) all Tangible
Personal Property;

 

(vi) to
the extent their transfer is permitted by Law, all Permits (other
than the BNC Cannabis Licenses) which are held by the Sellers and
required for the conduct of the Business as currently conducted or
for the ownership and use of the Assets;

 

(vii) all
Books and Records;

 

(viii) all
Actions and rights of recovery available to the Sellers against
third parties (including insurers) with respect to the Business,
the Assets or the Assumed Liabilities, whether arising by way of
direct claim, counterclaim or otherwise;

 

(ix) all
prepaid expenses, credits, advance payments, rights to refunds,
rights of set-off, rights of recoupment and deposits (including all
deposits and other security provided by the Sellers or their
Affiliates under the Assumed Contracts);

 

(x) all insurance
benefits and proceeds and rights thereto, whether liquidated or
contingent; and

 

(xi) all
goodwill and the going concern value of the Business.

 

(b) Excluded Assets.
Notwithstanding the foregoing, the Initial Assets shall not include
the Regulated Assets or any of following assets (all such assets
listed in clauses
(i) to (v)
below, other than the BNC Equity, collectively the
“Excluded
Assets”):

 

(i) any Equity
Interests held by any of the Sellers;

 

(ii) Contracts
that are not Assumed Contracts (the “Excluded Contracts”),
provided that the Purchaser may, at its option, by notice to the
Sellers, assume any such Contract with effect from the First
Closing Date, whereupon such contract will deemed to be an Assumed
Contract;

 




 

2








 





 

(iii) all
Employee Benefit Plans and assets attributable
thereto;

 

(iv) the
Sellers’ corporate organization records, such as minute
books, seals and similar items; and

 

(v) the rights which
accrue or will accrue to the Sellers under this Agreement and the
other Transaction Documents.

 

(c) First Closing Assumed
Liabilities. Subject to the terms and conditions set forth
herein, effective as of the First Closing, the Purchaser shall
assume and agree to pay, perform and discharge only the following
Liabilities of the Sellers (collectively, the “First Closing Assumed
Liabilities” and, together with the Second Closing
Assumed Liabilities, the “Assumed
Liabilities”):

 

(i) up to $208,000 in
ordinary course trade payables (represented by the line items
“Indus” and “WCA,” reduced by amounts owed
to Affiliates of the Purchaser, on the closing funds flow
statement);

 

(ii) obligations
arising under the Assumed Contracts after the First Closing (other
than any such Liabilities that are based on, arise from or relate
to (A) any breach, default or violation thereof by a Seller on or
prior to the First Closing Date or (B) any breach, default or
violation of the Management Services Agreement by a Seller);
and

 

(iii) ordinary
course payroll obligations accrued from February 20, 2021 through
the First Closing Date with respect to the Group III Employees in
the amount set forth on Schedule I to the Closing Statement (the
“Assumed Payroll
Amount”).

 

(d) Excluded Liabilities.
Notwithstanding any other provision in this Agreement to the
contrary, the Purchaser shall not assume and shall not be
responsible to pay, perform or discharge any Liabilities of the
Sellers or any of their Affiliates of any kind or nature
whatsoever, whether presently in existence or arising hereafter,
other than the Assumed Liabilities (the “Excluded Liabilities”).
The Sellers shall be solely responsible for all Excluded
Liabilities and shall, and shall cause each of their Affiliates to,
pay and satisfy in due course all Excluded Liabilities. Without
limiting the generality of the foregoing, the Excluded Liabilities
shall include the following:

 

(i) Cash in the Reserve
Account in the approximate amount of $2,160,834;

 

(ii) all
Liabilities of the Sellers arising or incurred in connection with
the negotiation, preparation, investigation and performance of this
Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby;

 

(iii) all
Liabilities for Indemnified Taxes;

 

(iv) all
Liabilities in respect of any pending or threatened
Action;

 

(v) all product
Liabilities or similar claims for injury to a Person or property
with respect to products sold or manufactured by any Seller or its
Affiliates or contractors prior to the First Closing, including any
such Liability or claim which arises out of or is based upon any
express or implied representation, warranty, agreement or guaranty,
any theory of strict liability, by reason of the improper
performance or malfunctioning of a product, improper design or
manufacture, failure to adequately warn of hazards, other product
defects or any other theory;

 



 

3







 





 

(vi) all
Liabilities of any Seller arising under or in connection with any
Employee Benefit Plan providing benefits to any present or former
employee of the Sellers and, except for the Assumed Payroll Amount
and as expressly set forth in Section 4.10, any other
Liabilities of the Sellers for any present or former employees,
officers, directors, independent contractors or consultants,
including any Liabilities associated with any claims for wages,
bonuses, accrued vacation, workers’ compensation, severance,
retention, termination or other payments, including all Liabilities
under the Workers Adjustment and Retraining Notification Act (the
“WARN
Act”) or similar state Laws;

 

(vii) all
Environmental Claims and all other Liabilities under Environmental
Laws arising out of or relating to any actions or omissions of the
Sellers or any facts, circumstances or conditions existing on or
prior to the First Closing;

 

(viii) all
Liabilities to indemnify, reimburse or advance amounts to any
present or former officer, director, employee or agent of any
Seller (including with respect to any breach of fiduciary
obligations by same);

 

(ix) all
Liabilities under the Excluded Contracts or any other Contracts,
(A) which are not validly and effectively assigned to the Purchaser
pursuant to this Agreement; (B) which do not conform to the
representations and warranties with respect thereto contained in
this Agreement; or (C) to the extent such Liabilities arise out of
or relate to a breach by any Seller of (i) such Contracts prior to
the First Closing or (ii) the Management Services
Agreement;

 

(x) all Indebtedness of
any Seller and/or the Business and all Liabilities associated
therewith;

 

(xi) all
Liabilities arising out of, in respect of or in connection with the
failure by any Seller or any of its Affiliates to comply with any
Law or Order;

 

(xii) all
Liabilities of the Sellers arising from the operation or conduct of
the Business or the Assets prior to the First Closing that are not
within the items expressly assumed by the Purchaser pursuant to
Section
1.1(c);

 

(xiii) all
Liabilities of any Seller to the extent arising out of the
operation or conduct by such Seller of any activities or business
other than the Business; and

 

(xiv) except
as expressly assumed pursuant to Section 1.1(c), all matters
described on the Disclosure Schedule.

 

Section
1.2 Regulated
Assets.

 

(a) Acquisition of Regulated
Assets. On the Second Closing Date, the Sellers shall,
without further consideration, assign, transfer, convey and deliver
to the Purchaser, and the Purchaser shall accept from the Sellers,
free and clear of all Liens (other than Permitted Liens), all of
the Sellers’ right, title and interest in, to and under all
of the assets, properties and rights set forth below (collectively,
the “Regulated
Assets”):

 

(i) the BNC Equity;
and

 

(ii) all
cannabis and cannabis products, including work in process and
finished good inventory and related assets subject to the BNC
Cannabis Licenses.


 




 

4








 





 

(b) Second Closing Assumed
Liabilities. Subject to the terms and conditions set forth
herein, effective as of the Second Closing, the Purchaser shall
assume and agree to pay, perform and discharge any Liabilities
related to the Regulated Assets arising from and after the date of
this Agreement that are not based on and do not arise from or
relate to (i) any breach, default or violation of any Seller prior
to the date hereof of any Law or Contract or (ii) any breach,
default or violation of any Seller from and after the date hereof
of the Management Services Agreement.

 

Section
1.3 Closings.

 

(a) First Closing. The closing of
the transactions set forth in Section 1.1 (the
“First
Closing”) shall take place at the offices of Akerman
LLP, 1251 Avenue of the Americas, 37th Floor, New York,
New York 10020, or at such other place as shall be agreed to among
the Parties, at 10:00 a.m. Pacific time on the date hereof (the
“First Closing
Date”).

 

(b) Second Closing. The closing of
the transactions set forth in Section 1.2 (the
“Second
Closing”) shall take place at the offices of Akerman
LLP, 1251 Avenue of the Americas, 37th Floor, New York,
New York 10020, or at such other place as shall be agreed to among
the Parties, as soon as practicable (and in any event within three
Business Days) following the satisfaction or waiver of the
applicable conditions set forth in ARTICLE V, or on such other
date as the Purchaser and THC may mutually agree upon (the
“Second Closing
Date”).

 

Section
1.4 Purchase
Price; Closing Payments and Deliveries.

 

(a) The aggregate
consideration to be paid by the Purchaser for the Assets shall
consist of $4,100,000 in cash (the “Base Cash Consideration”)
and 22,643,678 Parent Shares (the “Base Share
Consideration”).

 

(b) At least one
Business Day prior to the First Closing Date, the Sellers shall
have prepared and delivered to the Purchaser a statement (the
“Closing
Statement”) signed by an authorized representative of
THC setting forth the Sellers’ calculation as of the First
Closing Date of the amounts specified on Schedules I and II to
Exhibit
E.

 

(c) At least one
Business Day prior to the First Closing Date, the Sellers shall
have prepared and delivered to the Purchaser a certificate (the
“Closing Payoff
Certificate”) signed by an authorized representative
of THC, which shall set forth the amount of all outstanding
Indebtedness as of immediately prior to the First Closing, and
instructions regarding the payoff or discharge of all such
Indebtedness consistent with the payoff letters delivered pursuant
to Section
1.4(e)(vi).

 

(d) At the First
Closing (or at the time of termination of employment, in the case
of paragraph (ii)(B) below),

 

(i) the Purchaser
shall:

 

(A) pay from the Base
Cash Consideration (I) the amount of all Indebtedness as provided
in the Closing Payoff Certificate and (II) the sum of the amounts
under the caption “Paid by Purchaser” on Schedule I to
the Closing Statement, estimated to be approximately $241,128, in
accordance with the payment instructions annexed to the Closing
Statement;

 

(B) issue to THC, to be
further allocated among the Sellers (other than any Seller that is
not an “accredited investor” (as defined in Rule 501(a)
of Regulation D under the Securities Act)) as THC determines, a
number of Parent Shares equal to the Base Share Consideration minus
the Escrow Shares (the “Closing Share
Consideration”);

 




 

5








 





 

(C) deposit with the
Escrow Agent the Escrow Shares in accordance with the terms of an
escrow agreement by and among the Purchaser, THC and the Escrow
Agent, in substantially the form attached hereto as Exhibit A (the
“Escrow
Agreement”); and

 

(D) pay to THC, for
deposit into the Reserve Account, an amount equal to (I) the Base
Cash Consideration, minus (II) the sum of the amounts of
Indebtedness paid pursuant to the preceding clause (i)(A)(I), minus
(III) the sum of the amounts set forth under the caption
“Paid by Purchaser” on Schedule I to the Closing
Statement pursuant to the preceding clause (i)(A)(II), minus (IV)
the sum of the amounts set forth on Section 2.5(b) of the
Disclosure Schedule, if any, minus (V) the sum of the outstanding
and projected accrued vacation costs set forth on Schedule II to
the Closing Statement for the Group III Employees minus (VI) 50% of
the fees and expenses of the Escrow Agent under the Escrow
Agreement minus (VII) $53,919 (the “Closing Cash
Consideration”); and

 

(ii) the
Sellers shall pay from the Reserve Fund, to the extent not
previously paid, state and city Taxes in the approximate amount of
$1,068,822 set forth under the caption “Paid by
Sellers” on Schedule I to the Closing Statement (it being
understood that all other Taxes of Sellers shall remain Excluded
Liabilities and, except as otherwise provided in the Management
Services Agreement with respect to non-income Taxes, shall be paid
by the Sellers from the Reserve Fund).

 

(e) At the First
Closing, the Sellers shall deliver (or caused to be delivered) the
following to the Purchaser:

 

(i) a bill of sale in
form and substance satisfactory to the Purchaser (the
“First Closing Bill
of Sale”) and duly executed by each of the Sellers,
transferring the Initial Assets to the Purchaser;

 

(ii) an
assignment and assumption agreement in form and substance
satisfactory to the Purchaser (the “First Closing Assignment and
Assumption Agreement”) and duly executed by each of
the Sellers, effecting the assignment to and assumption by the
Purchaser of the First Closing Assumed Liabilities;

 

(iii) (A)
an assignment agreement in form and substance satisfactory to the
Purchaser (the “Intellectual Property Assignment
Agreement”) and duly executed by each applicable
Seller, transferring all of such Sellers’ rights, titles and
interests in and to registered Intellectual Property (other than
domain names) to the Purchaser, (B) a domain name transfer
agreement in form and substance satisfactory to the Purchaser (the
“Domain Name
Transfer Agreement”) and duly executed by each
applicable Seller, transferring all of such Sellers’ rights,
titles and interests in and to the domain names used in the
Business to the Purchaser and (C) information sufficient to
transfer control over social media accounts used in the business or
incorporating any of the trademarks used in the Business to
Purchaser;

 

(iv) the
Escrow Agreement, duly executed by THC and the Escrow
Agent;

 

(v) the Management
Services Agreement, duly executed by BNC and THC;

 




 

6








 





 


(vi) payoff
letters from the applicable lenders with respect to all outstanding
Indebtedness of Sellers and evidence reasonably satisfactory to the
Purchaser that all Liens (other than Permitted Liens) affecting the
Assets will be released upon the consummation of the First Closing
(including, where applicable, UCC termination statements authorized
to be filed by the Purchaser upon the consummation of the First
Closing);

 


(vii) evidence
reasonably satisfactory to the Purchaser that all Consents set
forth in Section
2.4 of the Disclosure Schedule shall have been made or
obtained;

 


(viii) an
opinion of Eisner, LLP with respect to the due authorization of
this Agreement and the other Transaction Documents, and the
transactions contemplated hereby and thereby, and the
non-contravention of this Agreement and the other Transaction
Documents, and the transactions contemplated hereby and thereby,
with Seller’s organizational documents and with such
additional contracts as are specified by Purchaser and
Sellers;

 


(ix) undertakings
from (A) Beehouse Lowell, LLC, Beehouse Lowell B, LLC and Moorland
Lowell, LLC (collectively, the “Lead Investors”) and (B)
the sole manager of THC not to liquidate any of the Sellers unless
adequate provision is made for the payment and satisfaction of
their Liabilities, including any Liabilities under ARTICLE VI;

 


(x) (A) general
releases of BNC by the Lead Investors and (B) releases of the
Purchaser and the Parent by the Lead Investors with respect to all
Liabilities of the Sellers to which Purchaser or Parent might
otherwise succeed;

 


(xi) evidence
that each Seller has obtained an irrevocable “tail”
insurance policy (the “Tail Policies”) with
respect to products liability for a period of three (3) years
following the Closing Date;

 


(xii) a
certificate of non-foreign status as described in Treasury
Regulation Section 1.1445-2(b)(2) for each Seller; and

 


(xiii) certificates,
signed by an authorized officer of each Seller, dated as of the
First Closing Date, attaching certified copies of the
organizational documents of each Seller and resolutions of each
Seller’s board of managers and/or members, as applicable,
approving this Agreement and the transactions contemplated hereby
on behalf of each such Seller.

 


(f) At the First
Closing, the Purchaser shall deliver the following to the
Sellers:

 


(i) the First Closing
Bill of Sale, the First Closing Assignment and Assumption
Agreement, the Intellectual Property Assignment Agreement and the
Domain Name Transfer Agreement, each duly executed by the
Purchaser;

 


(ii) the
Management Services Agreement, duly executed by the Purchaser;
and

 


(iii) the
Escrow Agreement, duly executed by the Purchaser.

 


(g) At the First
Closing, BNC and the Purchaser shall disclose the interest of the
Purchaser under the Management Services Agreement to the BCC as
required by BCC regulations;

 




 

7








 





 

(h) At the Second
Closing, the Sellers shall deliver (or caused to be delivered) the
following to the Purchaser:

 

(i) a bill of sale in
the form attached as Exhibit C (the
“Second Closing Bill
of Sale”), duly executed by each of the Sellers,
transferring the Regulated Assets (other than Regulated Assets
owned by BNC) to the Purchaser;

 

(ii) an
assignment and assumption agreement in form and substance in the
form attached as Exhibit D (the “Second Closing Assignment and
Assumption Agreement”) and duly executed by each of
the Sellers, effecting the assignment to and assumption by the
Purchaser of the Second Closing Assumed Liabilities;

 

(iii) a
membership interest assignment or other instrument of transfer
reasonably acceptable to Purchaser transferring the BNC Equity to
Purchaser;

 

(iv) (A)
general releases of BNC by the Lead Investors and the Sellers and
(B) releases of the Purchaser and the Parent by the Lead Investors
and the Sellers with respect to all Liabilities of the Sellers to
which Purchaser or Parent might otherwise succeed; and

 

(v) such other
documents, instruments or certificates as shall be reasonably
requested by the Purchaser or its counsel to effectuate the
transactions contemplated by this Agreement to be consummated at or
in connection with the Second Closing.

 

(i) Until the Closing
Liabilities and any unsatisfied Indebtedness are satisfied in full,
cash held in the Reserve Account will be used by the Sellers solely
for the purpose of paying the Liabilities set forth under the
caption “Seller Post-Closing” on Schedule I to the
Closing Statement and other Closing Liabilities and any unsatisfied
Indebtedness. Following the First Closing, the Sellers will report
disbursements from the Reserve Account to the Purchaser and will
provide the Purchaser with such other information regarding the
satisfaction of the Closing Liabilities as the Purchaser may
reasonably request. Sellers shall maintain at their sole expense
accounting infrastructure and support sufficient to, and shall,
account for post-closing disbursements, severance, Taxes for which
Sellers are responsible in accordance with Section 4.6(b), pending civil
claims and other Closing Liabilities.

 

(j) At the Second
Closing, the Purchaser shall deliver (or caused to be delivered)
the following to the Sellers:

 

(i) the Second Closing
Bill of Sale, duly executed by the Purchaser;

 

(ii) the
Second Closing Assignment and Assumption Agreement, duly executed
by the Purchaser; and

 

(iii) such
other documents, instruments or certificates as shall be reasonably
requested by the Sellers or their counsel to effectuate the
transactions contemplated by this Agreement to be consummated at or
in connection with the Second Closing.

 

(k) THC shall allocate
the Closing Cash Consideration among the Sellers and the Closing
Share Consideration among the Selling Shareholders in such manner
as THC may determine and the Purchaser shall have no liability
therefor.


 




 

8








 





 

Section
1.5 Tax Withholding.

 


 Notwithstanding
anything in this Agreement to the contrary, the Purchaser shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any Person such amounts as it
is required to deduct and withhold from such Person with respect to
the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any provision of any Law
relating to Taxes. To the extent that amounts are so withheld by
the Purchaser and remitted to the appropriate Governmental
Authority, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to such Person in respect of
which such deduction and withholding was made by the Purchaser. The
Purchaser shall furnish to the Person in respect of which such
withholding was made reasonably satisfactory evidence of the
remittance of any such Taxes to the appropriate Governmental
Authority.

 

Section
1.6 Tax
Classification and Reporting.

 

(a) The parties intend
that the transactions contemplated by this Agreement shall
qualify under
Section 368(a)(1)(C) and related Treasury Regulations as a
“triangular” type C reorganization, among other
requirements, involving the acquisition of substantially all of the
assets in exchange for an amount of voting stock of Parent equal to
eighty percent of the THC gross assets in fair market value terms
(before liabilities). As such, neither party (nor the THC members)
will report the transactions as constituting a taxable asset
acquisition of a trade or business by Purchaser.

 

(b) Accordingly,
the First Closing and Second Closing are integral parts of the plan
of reorganization of THC that shall be treated as a single
integrated transaction for U.S. federal income tax purposes, which
qualifies as a tax-free reorganization under Section 368(a)(1)(C),
notwithstanding the temporal separation of the various closing
events, which is necessitated by regulatory approval requirements.
In the event of a delay or failure of the Second Closing to occur,
the parties will to the extent possible continue to characterize
the transaction as a reorganization qualifying under Section
368(a)(1)(C). Any arrangements made by the Parties to address, or
in response to, the failure of the Second Closing to
occur shall be given its normal and regular tax
effect governed by the form and substance of
such other arrangements, including but not limited to
a license, contractual joint venture, or otherwise, as
the case may be.

 



ARTICLE II



REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 


The
Sellers jointly and severally represent and warrant to the
Purchaser that the following statements are true, correct and
complete.

 

Section
2.1 Organization
and Related Matters.

 

(a) Each Seller is duly
organized, validly existing and in good standing under the Laws of
the State of California. Each Seller has all requisite company
power and authority to own, lease and operate its properties and to
carry on the Business and to own and use the Assets. Each Seller is
a U.S. person within the meaning of Rule 902 of Regulation S under
the Securities Act.

 

(b) Except for
THC’s ownership of the other Sellers or as set forth in
Section 2.1(b) of
the Disclosure Schedule, no Seller has any Subsidiaries or owns any
equity interest in any other Person.


 




 

9








 





 

Section
2.2 Authorization
and Enforceability.

 


 Each Seller
has all requisite company power and authority to execute and
deliver this Agreement and each other Transaction Documents to
which such Seller is or will be a party and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance by each Seller of each of the Transaction
Documents to which such Seller is or will, pursuant to the terms of
this Agreement, become a party has been or will be (as applicable)
duly authorized by all necessary action on the part of each such
Seller and its direct and/or indirect equity owners, and no other
proceedings or actions on the part of any such Seller or any direct
and/or indirect equity owners of any Seller are necessary to
authorize the execution, delivery and performance by the Sellers of
this Agreement and the other Transaction Documents. This Agreement
and the other Transaction Documents to which each Seller is or
will, pursuant to the terms of this Agreement, become a party have
been or will be (as applicable) duly and validly executed and
delivered by such Seller and, assuming due authorization, execution
and delivery by the other parties thereto (other than the Sellers),
constitute legal, valid and binding obligations of such Seller,
enforceable against such Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Laws affecting
creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at Law or in
equity).

 

Section
2.3 Ownership
of Sellers.

 

(a) Section 2.3(a) of the
Disclosure Schedule sets forth all of the outstanding Equity
Interests in THC and the record holders and beneficial owners
thereof. Except as set forth in Section 2.3(a) of the
Disclosure Schedule, there are no voting agreements, voting trusts,
proxies, registration rights agreements, equity holder agreements
or other Contracts with respect to any of the Equity Interests of
THC.

 

(b) Section 2.3(b) of the
Disclosure Schedule sets forth all of the outstanding Equity
Interests in each of the Sellers other than THC. Except as set
forth in Section
2.3(b) of the Disclosure Schedule, there are no voting
agreements, voting trusts, proxies, registration rights agreements,
equity holder agreements or other Contracts with respect to any of
the Equity Interests of any Seller other than THC.

 

(c) Except as set forth
in Section 2.3(a)
and Section 2.3(b)
of the Disclosure Schedule, no equity or voting interests in any
Seller are authorized, issued, reserved for issuance or
outstanding. No current or former equity owner of any Seller or any
other Person is contesting (whether or not pursuant to any Action)
the legal or beneficial ownership of the outstanding Equity
Interests of any Seller or any distributions or contributions
relating thereto or asserting that Equity Interests other than
those set forth on Section
2.3(a) and Section
2.3(b) of the Disclosure Schedule are or should be
outstanding. All of the outstanding Equity Interests of each Seller
have been duly authorized and validly issued and were not issued in
violation of any preemptive or other rights. No Person is a party
to any outstanding or authorized option, warrant, right (including
any preemptive right), subscription, claim of any character,
Contract, obligation, convertible or exchangeable securities, or
other commitments, contingent or otherwise, pursuant to which any
Seller is or may become obligated to issue, deliver or sell, or
cause to be issued, delivered or sold, Equity Interests in any
Seller or any securities convertible into, exchangeable or
exercisable for, or evidencing the right to subscribe for or
acquire, any Equity Interests in any Seller.







 

10








 





 

Section
2.4 Conflicts;
Consents of Third Parties.

 


 Except as set
forth in Section
2.4 of the Disclosure Schedule, the execution and delivery
of this Agreement and the other Transaction Documents to which each
Seller is a party, the consummation of the transactions
contemplated hereby and thereby, and compliance by such Seller with
the provisions hereof and thereof do not and will not: (a) conflict
with, or result in the breach of, any provision of the Governing
Documents of such Seller; (b) in any material respect,
conflict with, violate, result in the breach or termination of,
constitute a default under, modify the rights of any party under,
result in an acceleration of or create in any party the right to
accelerate, terminate, modify or cancel any Contract to which such
Seller is a party or by which such Seller or any of the properties
or assets of such Seller are bound, or require a Consent from any
Person in order to avoid any such conflict, violation, breach,
termination, default, modification or acceleration; (c) violate any
Law or Order applicable to such Seller, the Business or the Assets;
or (d) result in the creation of any Lien upon any of
the properties or assets of any Seller. Except as set forth in
Section 2.4 of the
Disclosure Schedule, no Consent, Order, waiver, declaration or
filing with, or notification to any Governmental Authority is
required on the part of any Seller in connection with the
execution, delivery and performance of this Agreement or the other
Transaction Documents or the compliance by any Seller with any of
the provisions hereof or thereof. True, correct and complete copies
of the Governing Documents of each Seller have been made available
to the Purchaser and there are no claims that any such Governing
Document is invalid or unenforceable in whole or in part or that
such Governing Documents are not a complete statement of the rights
and obligations of the Sellers and their respective members or
other equity owners with respect to governance matters involving
the Sellers, including the matters addressed in this Section 2.4.

 

Section
2.5 Financial
Statements.

 

(a) Included in
Section 2.5(a) of
the Disclosure Schedule are true and complete copies of (i) the
consolidated balance sheets of THC as of December 31, 2020 (the
“Balance Sheet
Date” and the balance sheet as of such date the
“Balance
Sheet”) and December 31, 2019 and the related
consolidated statements of income and retained earnings,
member’s equity and cash flows of THC for the fiscal years
then ended, and (ii) the consolidated balance sheet of THC as at
January 31, 2021 (together with all the statements set forth in
clause (i),
including the related notes and schedules thereto, the
“Financial
Statements”). The Financial Statements: (i) fairly
present, in all material respects, the financial position, results
of operations, members’ equity, and retained earnings of THC
and the other Sellers on a consolidated basis and the changes in
the financial position of THC and the other Sellers on a
consolidated basis as of the times and for the applicable periods
indicated therein, (ii) were prepared in good faith from the Books
and Records of THC and the other Sellers, and (iii) except for
assets, liabilities, results of operations, equity or retained
earnings of the prior Subsidiaries of Sellers, do not reflect any
assets, liabilities, results of operations, equity or retained
earnings of (A) any other Person or (B) any business operations
other than the Business.

 

(b) Since the Balance
Sheet Date, except as set forth on Section 2.5(b) of the
Disclosure Schedule, (i) no Seller has made any distribution of
cash or property to any Person other than another Seller, and (ii)
no cash or other property of any Seller has been used to acquire
Excluded Assets or to satisfy Liabilities that would, if they
remained outstanding as of the Closing Date, (A) constitute
Indebtedness, (B) constitute Closing Liabilities or (C) constitute
Excluded Liabilities.

 

Section
2.6 No
Undisclosed Liabilities.

 


  Sellers
have no Liabilities (and there is no basis for any present or
future Action against any Seller giving rise to any Liability)
except (a) to the extent specifically reflected and accrued
for or specifically reserved against in the Balance Sheet, and (b)
for current Liabilities incurred subsequent to the Balance Sheet
Date in the Ordinary Course of Business (none of which results
from, arises out of, relates to, is in the nature of, or was caused
by any breach of contract, breach of warranty, tort, infringement,
or violation of Law).

 




 

11








 





 

Section
2.7 Absence
of Certain Developments.

 


  Except
as set forth in Section
2.7 of the Disclosure Schedule (arranged in subsections
corresponding to the subsections set forth below), since the
Balance Sheet Date, the Sellers have conducted the Business in the
Ordinary Course of Business, there has not been any Material
Adverse Change, and the Sellers have not:

 

(a) failed to maintain
the Assets in substantially the same condition as on the Balance
Sheet Date (ordinary wear and tear excluded);

 

(b) suffered any
damage, destruction or loss, whether or not covered by insurance,
with respect to the Assets of more than $25,000 for any single loss
or $50,000 in the aggregate for any related losses;

 

(c) made any change in
the rate, timing, vesting, or funding of compensation, commission,
bonus, or other direct or indirect remuneration payable or paid, or
agreed or orally promised to pay, conditionally or otherwise, any
bonus, incentive, retention, or other compensation, retirement,
welfare, fringe or severance benefit, or vacation pay, to or in
respect of any manager, officer or Employee, other than increases
in the Ordinary Course of Business in the base wages or salaries of
Employees other than officers or managers;

 

(d) made any change in
accounting or Tax principles or methods, entered into a settlement
of any Tax controversy, or filed any amendment of any Tax
Return;

 

(e) except for the
transactions contemplated by this Agreement and the other
Transaction Documents, entered into or amended any Business
Contract;

 

(f) acquired any assets
or sold, assigned, transferred, conveyed, leased, or otherwise
disposed of any assets, except for: (i) any obsolete or worn out
property, (ii) assets or property having a value not exceeding
$25,000; or (iii) Inventory acquired, sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the Ordinary Course of
Business;

 

(g) canceled, written
off, or compromised any debt or claim except for discounts in the
Ordinary Course of Business;

 

(h) entered into,
amended, renewed, terminated, or permitted to lapse any Contract or
transaction with any of their Affiliates, or paid to or received
from any of their Affiliates any amount;

 

(i) made or committed
to make any capital expenditures or capital additions or
improvements: (i) in excess of $25,000 individually or $50,000 in
the aggregate; or (ii) outside the Ordinary Course of
Business;

 

(j) entered into any
prepaid transactions or otherwise accelerated revenue recognition
or the sales for periods prior to the First Closing;

 

(k) materially changed
their policies or practices with respect to the payment of accounts
payable or other current liabilities or the collection of accounts
receivable (including any acceleration or delay or deferral of the
payment or collection thereof) or materially failed to maintain the
level and quality of its Inventory;

 

(l) amended any of
their Governing Documents, failed to maintain their existence as
limited liability companies or failed to qualify or maintain their
qualifications in any jurisdictions in which the Sellers are
required to be qualified to conduct the Business as a foreign
entity;

 




 

12








 





 

(m) adopted any plan of
merger, consolidation, reorganization, liquidation, or dissolution,
filed a petition in bankruptcy under any provisions of foreign,
federal or state bankruptcy Law or consented to the filing of any
bankruptcy petition against them under any similar
Law;

 

(n) incurred or
guaranteed any Liabilities other than in the Ordinary Course of
Business or any Lien (other than a Permitted Lien);

 

(o) written up or down
(or failed to write up or down) the value of any Assets, except in
the Ordinary Course of Business in accordance with the Accounting
Principles;

 

(p) introduced any
material change with respect to the Business, including with
respect to the products or services it sells, the areas in which
such products or services are sold, its methods of manufacturing or
distributing its products, the levels of Inventory that it
maintains or its marketing techniques; or

 

(q) entered into any
agreements or commitments to do or perform in the future any
actions referred to in this Section 2.7 (or disclosed an
intent to do so).

 

Section
2.8 Taxes.

 

(a) The Sellers have
timely filed with the appropriate taxing authorities all Tax
Returns that they were required to file. All such Tax Returns are
complete and correct in all material respects. All Taxes owed by
any Seller (whether or not shown on any Tax Return) have been paid.
Except as set forth in Section 2.8(a) of the
Disclosure Schedule, no Seller is the beneficiary of any extension
of time within which to file any Tax Return. No written claim has
ever been made by an authority with respect to any Seller in a
jurisdiction in which such Seller does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no
Liens on any of the assets of any Seller that have arisen in
connection with any failure (or alleged failure) to pay any Tax on
or prior to the due date for the payment of such Tax.

 

(b) Each Seller has
withheld and paid to the appropriate taxing authority or other
Governmental Authority all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, member, or other third
party.

 

(c) No Seller has
waived or extended any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to the assessment,
payment or collection of any Tax.

 

(d) No deficiency or
proposed adjustment which has not been settled or otherwise
resolved for any amount of Taxes has been asserted or assessed by
any taxing authority against any Seller. There has not been any
audit, examination or written notice of potential examination of
any Tax Returns filed by any Seller.

 

(e) There is no Action,
examination, investigation, audit or claim for refund in progress,
pending, or, to the Knowledge of the Sellers, proposed or
threatened (and no Seller has within the past five (5) years
received written notice of any such threatened Action, examination,
investigation or audit) against or with respect to any Seller
regarding Taxes.

 

(f) No Seller has been
a member of an affiliated group (as defined in Section 1504 of the
Code), filed or been included in a combined, consolidated or
unitary income Tax Return, or is a partner, member, owner or
beneficiary of any entity treated as a partnership or a trust for
Tax purposes. No Seller has Liability for Taxes of any Person under
Treasury Regulations Section 1.1502-6 or similar state or local
Laws, as a successor or transferee, by contract or otherwise. No
Seller is a party to or bound by any agreement the principal
purpose of which is the allocation or sharing of
Taxes.

 




 

13








 





 

(g) Complete and
correct copies of all income and sales Tax Returns filed by or with
respect to all of the Sellers for taxable periods since inception
have been delivered or made available to the
Purchaser.

 

(h) No Seller has
participated in any reportable transaction as contemplated in
Treasury Regulations Section 1.6011-4. All applicable Sellers have
disclosed on their federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the
Code.

 

(i) No Seller is
subject to Tax in, nor does any Seller have a permanent
establishment in, any foreign jurisdiction.

 

(j) THC is, and has
been since the effective date of January 1, 2017 of such election,
a corporation for U.S. Federal and state and local income tax
purposes. Each Seller other than THC is, and has been since
Seller's formation, classified as a disregarded entity for U.S.
federal and state and local income tax purposes.

 

(k) No Seller has
claimed deductions in computing taxable income for expenses that
are not allowed under Section 280E of the Code, including but not
limited to employee salaries, utility costs, health insurance
premiums, marketing and advertising costs, repairs and maintenance,
rental fees, and payments to independent contractors.

 

(l) No Seller has
capitalized expenses otherwise described as nondeductible under
Section 280E of the Code as part of inventory cost and realized
such amounts as a deduction for cost of goods sold to reduce 
gross income and resulting taxable income (or to create or increase
a net operating loss).

 

(m) THC has not
deferred any employment Taxes under the authority of IRS Notice
2020-65 authorizing the deferral of certain payroll tax
obligations.

 

Section
2.9 Tangible
Personal Property; Title; Sufficiency of Assets.

 

(a) The Sellers have
good and valid title, free and clear of all Liens other than
Permitted Liens, to all of the Assets. Sellers exclusively own, and
upon the consummation of the First Closing the Purchaser shall
exclusively own, all of the initial Assets and all goodwill
associated therewith or derived therefrom. Sellers exclusively own,
and upon the consummation of the Second Closing the Purchaser shall
exclusively own, all of the Regulated Assets and all goodwill
associated therewith or derived therefrom. The Assets and the Real
Property Leases are adequate and suitable for the purposes for
which they are presently being used and are sufficient for the
operation of the Business as currently conducted by the Sellers. No
direct or indirect equity owner of any Seller (other than another
Seller), has any interest in the Assets, the Business or any other
business currently or previously conducted under the name
“Lowell Farms” or any derivative thereof, except, in
the case of the holders of equity interests in THC, for such equity
interests (none of which provide any such holder with an interest
in the Assets, the Business or any other business currently or
previously conducted under the name “Lowell Farms” or
any derivative thereof).

 

(b) All of
Sellers’ material tangible personal property
(“Tangible Personal
Property”) is in good operating condition, ordinary
wear and tear excepted.

 




 

14








 





 

Section
2.10 Intellectual
Property.

 

(a) The Business
Intellectual Property includes all Intellectual Property Rights
used in the Business as currently conducted by the Sellers. The
Sellers own or have the right to use all Owned Intellectual
Property and the Licensed Intellectual Property that is reasonably
necessary to conduct the Business as currently conducted, including
the design, development, manufacture, use, import, marketing, and
sale of any product, technology or service. The Sellers have good,
valid and marketable title to the Owned Intellectual Property, free
and clear of any and all Liens except any Permitted Liens. No Owned
Intellectual Property is subject to any Order, settlement agreement
or Contract that restricts in any manner the use, transfer,
licensing or enforcing thereof by the Sellers or may affect the
validity, use or enforceability thereof.

 

(b) Section 2.10(b)(i) of the
Disclosure Schedule sets forth a true, complete and correct list of
all Intellectual Property Registrations, including domain name
registrations, and such list includes for each Intellectual
Property Registration, as applicable: the title, mark, design or
domain name; the record owner; the jurisdiction by or in which it
has been issued, registered, or filed or, in the case of a domain
name, the registry on which it is maintained; the patent,
registration, or application serial number; the issue,
registration, or filing date; and the current status. Section 2.10(b)(ii) of the
Disclosure Schedule sets forth a true, complete and correct list of
all material unregistered Trademarks and service marks that are
Owned Intellectual Property. Section 2.10(b)(iii) of the
Disclosure Schedule sets forth a true, complete and correct list of
each corporate, trade or fictitious name under which the Business
has been conducted at any time in the three (3) years prior to the
First Closing. Each Intellectual Property Registration is valid and
subsisting, and, as of the date of this Agreement, all necessary
registration, maintenance and renewal fees in connection with such
Intellectual Property Registrations have been paid and all
necessary documents and certificates in connection with such
Intellectual Property Registrations have been filed with the
relevant Patent, Copyright, or Trademark office or other
Governmental Authority for the purposes of maintaining such
Intellectual Property Registrations. Section 2.10(b)(iv) of the
Disclosure Schedule sets forth a true, complete and correct list of
all social media accounts currently used in the Business or
incorporating any of the trademarks included in the Owned
Intellectual Property.

 

(c) Section 2.10(c) of the
Disclosure Schedule sets forth a true, complete and correct list of
written agreements (other than ordinary course licenses of
commercially available software that, in each case, does not exceed
license fees of Twenty-Five Thousand Dollars ($25,000) in the
aggregate), pursuant to which the use by a Seller of any
Intellectual Property Rights of another Person is permitted by that
Person (collectively, the “Intellectual Property
Licenses”). True and complete copies of the
Intellectual Property Licenses have been provided to the Purchaser
by the Sellers. The Intellectual Property Licenses are valid,
binding and enforceable between the applicable Seller and the other
parties thereto and are in full force and effect. There is no
material default under any Intellectual Property License by any
Seller or, to the Knowledge of the Sellers, any other party
thereto, and no event has occurred that, with the lapse of time or
the giving of notice or both, would constitute a default
thereunder. The Sellers have obtained and possess valid licenses to
use all of the software programs present on the computers and other
software-enabled electronic devices that they own or lease for
their employees’ use in connection with the
Business.

 

(d) Except as provided
for in Section
2.10(d) of the Disclosure Schedule, no Seller has granted
any license of or right to use, or authorized the retention of any
rights to use or joint ownership of, any Owned Intellectual
Property to any Person. Section 2.10(d) of the
Disclosure Schedule contains a complete and correct list of all
Contracts or rights under which any Seller has granted to others a
license, covenant not to sue, or any right to use or exploit any
Owned Intellectual Property.

 




 

15








 





 

(e) The operation of
the Business as currently conducted by the Sellers, including the
design, development, use, branding, advertising, promotion,
marketing, manufacture, and sale of any product, technology or
service of the Business, does not infringe or misappropriate any
Intellectual Property Rights of any Person, or constitute unfair
competition or trade practices under the Laws of any jurisdiction
in which a Seller operates. No Seller has received notice from any
Person claiming that such operation or any act, any product,
technology or service or Owned Intellectual Property infringes or
misappropriates any Intellectual Property Rights of any Person,
violates any right of any Person (including any right to privacy or
publicity), or constitutes unfair competition or trade practices
under the Laws of any jurisdiction.

 

(f) There is no written
claim or demand of any Person pertaining to, or any proceeding
which is pending or, to the Knowledge of the Sellers, threatened,
that challenges the rights of any Seller in respect of any Owned
Intellectual Property. To the Knowledge of the Sellers, no Person
is infringing or misappropriating any Owned Intellectual
Property.

 

(g) Neither this
Agreement nor the transactions contemplated by this Agreement will
result in (i) any third party being granted rights or access to any
Owned Intellectual Property, (ii) any Seller or the Purchaser
losing any right to any Owned Intellectual Property or under any
Intellectual Property Licenses, or (iii) the Purchaser being
obligated to pay any royalties or other amounts to any third party
in excess of those payable by Sellers prior to the First Closing
pursuant to any Intellectual Property License.

 

(h) There has, to the
Knowledge of Sellers, been no unauthorized access or limitation of
access, use, intrusion or breach of security affecting any
Information Technology.

 

(i) Each Seller is and
at all times has been in material compliance with its privacy
policies and security standards and any applicable Laws and
contractual obligations pertaining to personal and payment card
information of all individuals whose information any Seller
receives, processes and/or shares with others, including, without
limitation, CCPA, CalOPPA, and PCI-DSS. Each Seller takes
reasonable measures to ensure that such information is protected
against theft and unauthorized access, use, modification,
disclosure, or other misuse. True and complete copies of all
current and historical privacy policies of the Business have been
provided to the Purchaser. All data which has been collected,
stored, maintained or otherwise used by any Seller has been
collected, stored, maintained and used in accordance with all
applicable Laws, rules, regulations, guidelines, Contracts, privacy
policy notice requirements, and data security breach requirements
in all material respects. The transfer of data relating to the
transactions contemplated by the Transaction Documents will not
breach any privacy statements or other consumer-facing disclosures
of Sellers or Laws related to privacy or personal information
maintained by Sellers in any material respect.

 

Section
2.11 Contracts.

 

(a) Section 2.11(a) of the
Disclosure Schedule sets forth a correct, complete and accurate
list (organized by subsection) as of the date hereof of each of the
following Contracts and arrangements to which (x) any Seller is a
party and for which the period of performance has not yet expired
or been terminated (each Contract or arrangement set forth or
required to be set forth on Section 2.11(a) of the
Disclosure Schedule pursuant to this clause (x) is referred to
herein as a “Business Contract”) or
(y) a Seller is intended to be a party that are currently under
active negotiation, which Contracts under negotiation are
separately identified on Section 2.11(a) of the
Disclosure Schedule:

 




 

16








 





 

(i) all Contracts
relating to (A) equipment or other capital expenditures or (B)
other purchases or sales of material, supplies, maintenance, or
other assets or properties or services in excess, in each case, of
$25,000 individually or $100,000 in the aggregate;

 

(ii) all
Contracts involving a loan (other than accounts receivable owing
from trade debtors in the Ordinary Course of Business), advance to
(other than travel and entertainment advances to the employees of
the Sellers extended in the Ordinary Course of Business), or
investment in, any Person or any Contract relating to the making of
any such loan, advance or investment;

 

(iii) all
Contracts evidencing Indebtedness of any Seller or granting or
evidencing a Lien on any property or asset of any
Seller;

 

(iv) all
Contracts with customers and suppliers listed in Section 2.20(a) of the
Disclosure Schedule;

 

(v) all Contracts with
brokers or under which any Seller otherwise incurs any Liability
for commissions;

 

(vi) all
leases of tangible personal property with annual payments in excess
of $10,000 individually or $50,000 in the aggregate;

 

(vii) any
management service, consulting, financial advisory or any other
similar type of Contract;

 

(viii) all
Contracts with investment or commercial banks;

 

(ix) all
Contracts limiting the ability of any Seller to engage in any line
of business or to compete with any Person or in any geographical
area or to solicit or offer employment to or hire any
Person;

 

(x) all Contracts
between or among any Seller, on the one side, and any other Seller
or any Related Party of any Seller, on the other side;

 

(xi) all
Contracts (including letters of intent) (A) involving any merger,
consolidation, sale of assets or similar business combination
transaction, whether or not enforceable, or (B) relating to the
acquisition by any Seller of any operating business or business
line or the capital stock or other equity interests or assets of
any other Person pursuant to which any Seller has continuing
obligations;

 

(xii) (A)
all Contracts involving any joint strategic alliance, co-marketing,
co-promotion, co-packaging, joint development or similar
arrangement, (B) all Contracts involving any joint venture,
partnership or similar arrangement and (C) all operating
agreements, shareholders agreements or similar
arrangements;

 

(xiii) all
Contracts involving any resolution or settlement of any actual or
threatened Action or other dispute during the past two years or
which have ongoing obligations;

 

(xiv) all
Contracts that contain any “take or pay” provisions,
minimum purchase provisions, exclusive purchase or sale provisions,
“most favored nations” provisions, required rebate
provisions, or exclusive rights to use or acquire any of a
Seller’s assets or properties;

 




 

17








 





 

(xv) all
Contracts (A) for the employment or engagement of any officer,
individual employee or other Person on a full-time, part-time or
consulting basis who cannot be dismissed immediately without notice
and without liability or obligation of any kind whatsoever, other
than accrued base salary, (B) requiring bonus payments, severance
payments or payments upon a change-in-control or (C) pursuant to
which any Person other than the Sellers is entitled to any portion
of the proceeds from the transactions contemplated by this
Agreement;

 

(xvi) all
Contracts imposing confidentiality or indemnification obligations
on any Seller, other than such provisions entered into in the
Ordinary Course of Business pursuant to agreements with
distributors and other customers and suppliers;

 

(xvii) all
Contracts relating to the provision of Information Technology, data
or internet-related products or services and not entered into in
the Ordinary Course of Business;

 

(xviii) all
collective bargaining agreements or other agreements with any labor
union;

 

(xix) all
Contracts that involve the performance of services for, or delivery
of goods or materials to, any Seller of an amount or value in
excess of $100,000 during any twelve (12) month
period;

 

(xx) all
Contracts containing a grant by any Seller to a Person of any right
relating to or under the Business Intellectual Property or any
grant to a Seller of any right relating to or under the
Intellectual Property of any Person;

 

(xxi) all
powers of attorney granted to any Person;

 

(xxii) all
Contracts granting exclusive sales, distribution, marketing or
other exclusive rights, rights of first refusal, rights of first
negotiation or similar rights or terms to any Person;
and

 

(xxiii) all
Contracts other than as set forth above to which any Seller is a
party or by which any of its assets or businesses are bound that
are material to the Business.

 

(b) True and complete
copies of the Business Contracts have been provided to the
Purchaser by the Sellers. All of the Business Contracts are and
shall, following the First Closing (and, for any Contracts that are
Regulated Assets, the Second Closing), be enforceable by the
Purchaser and binding on the other parties thereto and shall not be
subject to any claims, charges, setoffs or defenses. No Seller is
in material default, and no event has occurred which, with the
giving of notice or the passage of time or both, would constitute a
material default, by any Seller under any such Business Contract.
To the Sellers’ Knowledge, no other party to any Business
Contract is in material default, and no event has occurred which,
with the giving of notice or the passage of time or both, would
constitute a material default, by any such other party under any
such Business Contract. Each Business Contract, together with any
other Business Contracts with the other party thereto, constitutes
the entirety of the business relationship between the Sellers and
such other party. There are no disputes pending (and no Seller has
received notice of any dispute) under any Business
Contract.

 




 

18








 





 

Section
2.12 Compliance
with Laws; Permits.

 

(a) The Sellers are,
and have at all times been, in material compliance with all Laws
(including Marijuana Laws other than Federal Marijuana Laws). No
Seller has received notice from any Governmental Authority or any
other Person of any failure to comply with any Law applicable to
the conduct of the Business or the ownership and use of the Assets,
and to the Knowledge of the Sellers, there has been no failure by
any Seller to comply with any such Law. To the Knowledge of the
Sellers, there is no investigation by a Governmental Authority
pending or threatened (and no Seller has previously received notice
of any such pending or threatened investigation) against any Seller
related to the conduct of the Business or the ownership and use of
the Assets.

 

(b) Section 2.12(b) of the
Disclosure Schedule contains a complete and accurate list of each
Permit that is held by any Seller. Each such Permit held by any
Seller is valid and in full force and effect. Except as set forth
in Section 2.12(b)
of the Disclosure Schedule, (i) each Seller is, and has been, in
compliance in all material respects with all of the terms and
requirements of each of its Permits, (ii) no event has occurred or
circumstance exists that may result in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification to,
any Permit; (iii) no Seller has received any notice or from any
Governmental Authority or any other Person regarding (A) any actual
or potential violation of any Permit or (B) any actual or potential
revocation, withdrawal, suspension, cancellation, termination of or
modification of any Permit; and (iv) all applications for renewal
and other filings required to have been made with respect to the
Sellers’ Permits have been duly made on a timely basis with
the appropriate Governmental Authorities. The Permits identified in
Section 2.12(b) of
the Disclosure Schedule collectively constitute all of the Permits
necessary to enable the Sellers to conduct and operate the Business
and to own and use the Assets as currently conducted, owned and
used in compliance with all Laws (including Marijuana Laws other
than Federal Marijuana Laws).

 

Section
2.13 Employee
Benefits.

 


 Section 2.13 of the Disclosure
Schedule sets forth each Employee Benefit Plan in which any
employee or any spouse or dependent of any employee participates
and the Sellers have provided or made available to the Purchaser,
to the extent applicable, complete and correct copies of each such
Employee Benefit Plan. Neither any Seller, nor any ERISA Affiliate,
sponsors, maintains or contributes to, or has ever sponsored,
maintained or contributed to (or been obligated to sponsor,
maintain or contribute to), or has any direct, indirect or
contingent liability with respect to (i) any “multiemployer
plan”, as that term is defined in Section 3(37) or 4001(a)(3)
of ERISA; (ii) any “employee benefit plan” subject to
Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code;
or (iii) any employee benefit plan, program, policy or arrangement
covering employees outside of the United States or subject to the
laws of any jurisdiction other than the United States. None of the
Employee Benefit Plans provides severance, life insurance, medical
or other welfare benefits (within the meaning of Section 3(1) of
ERISA) to any current or former employee of a Seller or any ERISA
Affiliate, or to any other person, after his or her retirement or
other termination of employment or service, and neither any Seller,
nor any ERISA Affiliate, has ever represented, promised or
contracted to any employee or former employee, or to any other
person, that such benefits would be provided, except to the extent
required by Part 6 of Subtitle B of Title I of ERISA or Section
4980B(f) of the Code. Each Employee Benefit Plan is, and at all
times since inception has been, maintained, administered, operated
and funded in accordance with its terms and in material compliance
with ERISA, the Code and all other applicable Laws.


 




 

19








 





 

Section
2.14 Labor.

 

(a) Section 2.14(a) of the
Disclosure Schedule contains a true and complete listing of each
employee that is providing services to any Seller as of the date of
this Agreement, his or her current rate of annual base salary or
hourly rate, current wages or compensation, fiscal year 2021 bonus
target, if any, job title, employment status, work location and
credited service date, and date of hire. Section 2.14(a) of the
Disclosure Schedule also contains a true and complete listing of
each independent contractor who has provided any service to any
Seller within the twelve (12) month period immediately preceding
the date of this Agreement or who is otherwise engaged in
substantial part in providing services to the Business (excluding,
however, any independent contractor providing services through an
entity by which such worker is employed on a W-2 basis) and
describing the fee arrangement pertaining to such independent
contractor. Each Seller has complied in all material respects with
its payment obligations to all employees in respect of all wages,
salaries, commissions, bonuses, profit sharing, benefits, vacation
pay and other compensation due and payable to such employees under
any policy, practice, Contract, program or applicable requirements
of Law.

 

(b) Except as set forth
in Section 2.14(b)
of the Disclosure Schedule, the Sellers have and have always been
in compliance in all material respects with all applicable Laws
respecting employment, including those Laws concerning
discrimination or harassment prohibitions, terms and conditions of
employment, termination of employment, wages, overtime
compensation, pay cards, payroll stubs, classification as exempt
and non-exempt, span of hours, occupational safety and health,
employee whistle-blowing, immigration, employee privacy including
the use of biometric data, disability and related accommodations,
pay equity, background checks, leaves of absence, drug testing, use
of lawful substances, protecting paid sick leave and vacation,
training obligations, payment of expenses, and classification of
employees, consultants and independent contractors. The Sellers
maintain appropriate written policies ensuring compliance and upon
onboarding, and all employees of Sellers receive and acknowledge
receipt of such applicable policies.

 

(c) Except as set forth
in Section 2.14(c)
of the Disclosure Schedule, no employee of any Seller is receiving
any long-term disability benefits. Each Seller has properly
classified independent contractors and employees in compliance with
all Laws, and has paid or remitted all Taxes required to be paid
related to such independent contractors and employees. Except as
set forth in Section
2.14(c) of the Disclosure Schedule, each Seller has properly
classified employees as exempt or nonexempt from the minimum wage
and overtime requirements of the federal Fair Labor Standards Act
and applicable state wage and hour laws. No Seller has received any
notice from any Governmental Authority disputing either the exempt
classification of any employees of any Seller or the classification
of any independent contractors as independent contractors rather
than employees. Each Seller maintains current employee files
containing evidence of hours worked for non-exempt employees,
together with accurate pay records for all employees. Each Seller
maintains current employee files containing proof of work
eligibility to the extent required by Law.

 

(d) No allegations of
sexual misconduct have been made against any officer or
senior-level employee of any Seller, and no Seller has entered into
any settlement agreements related to allegations of sexual
misconduct by an officer or senior-level employee of any
Seller.

 

(e) Each Seller has
completed and retained in accordance with Immigration and
Naturalization Service regulations Form I-9 and any successor and
related forms for all of its employees to the extent required by
Law.

 




 

20








 





 

(f) Each Seller has
established, implemented and complied with commercially reasonable
policies, practices and procedures to protect the health and safety
of its employees and independent contractors, and otherwise
mitigate liability and ensure each Seller’s compliance with
Law, in connection with COVID-19. No Seller has received any
written notification or, to the Knowledge of the Sellers, oral
notification, alleging that any employee or contractor has any
claim against any Seller, or that any Seller otherwise has any
Liability to any employee or independent contractor, in each case,
in connection with COVID-19.

 

(g) The consummation of
the transactions contemplated by the Transaction Documents will
not: (i) cause to arise any bonus, incentive, deferred
compensation, severance, termination, retention, change of control,
equity option, equity appreciation, equity purchase, phantom equity
or other compensation plan, program, arrangement, agreement, policy
or understanding, whether written or oral, that provides or may
provide benefits or compensation to any employees of any Seller;
(ii) result in (A) an increase in the amount of compensation or
benefits of any of the employees of any Seller or (B) the
acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any employees
of any Seller; or (iii) result in a violation of or an
impermissible accrual or allocation under applicable Laws, except,
with respect to clauses
(i) and (ii), to the extent (and in the
amounts) set forth in Section 2.14(g) of the
Disclosure Schedule.

 

(h) Except as set forth
on Section 2.14(h)
of the Disclosure Schedule, all employees of the Sellers are
employed on an at-will basis and may be terminated without advance
notice or the payment of severance.

 

(i) To the Knowledge of
the Sellers, no current employee or independent contractor of any
Seller is subject to any agreement with or obligation to any third
party that (i) restricts the employee or independent contractor
from competing with, or soliciting actual or potential business
from any Person or entity; (ii) restricts the employee or
independent contractor from soliciting any current or former
employees of any Person or entity; or (iii) limits the
employee’s or independent contractor’s ability to
perform the employee’s regular duties on behalf of any
Seller.

 

(j) No Seller is a
party to or bound by any collective bargaining agreement, nor has
any Seller experienced any strike or material grievance, claim of
unfair labor practices, or other collective bargaining dispute. No
Seller has committed any material unfair labor practice. To the
Sellers’ Knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor
union with respect to any Seller’s employees, and no such
effort has occurred within the past 3 years. No Seller has planned,
announced or implemented any employee layoffs, reductions in force,
early retirement programs, severance programs, or other programs or
efforts concerning termination of employment of employees (other
than routine employee terminations for cause), including any such
measures requiring notice under the WARN Act or similar state
Laws.

 

(k) The Sellers’
physical areas and websites accessible to the public are in
compliance in all material respects with all Laws that require that
such areas to accommodate members of the public with
disabilities.

 

Section
2.15 Litigation.

 


  Except
as set forth in Section
2.15 of the Disclosure Schedule, there is not now and there
has never been any Action pending or, to the Knowledge of the
Sellers, threatened (and no Seller has received notice of any such
threatened Action) against (a) any Seller or (b) to the extent
related to or affecting the Business, the Assets or the Assumed
Liabilities, any of the officers, managers, directors or employees
of any Seller before any Governmental Authority, and there is no
basis for any such Action. Except as set forth in Section 2.15 of the Disclosure
Schedule, no Seller has engaged in any Action relating to or
affecting the Business, the Assets or the Assumed Liabilities to
recover monies due it or for damages sustained by it. No Seller is
subject to any Order.

 




 

21








 





 

Section
2.16 Environmental
Matters.

 


 (a) The
Sellers are in compliance with all applicable Environmental Laws,
including the possession of all Permits required under
Environmental Laws and compliance with such Permits, (b) to the
Knowledge of the Sellers, no Hazardous Materials are present in, on
or under the land and the improvements, ground water and surface
water at the real property subject to the Leases, (c) the Sellers
do not use, store, treat or transport Hazardous Materials at any
location where the Business is conducted, except for Hazardous
Materials in quantities customarily used, stored, or disposed of in
the ordinary course of the Business and in all cases in full
compliance with all Environmental Laws and Permits, and (d) the
Sellers have not received any written notice of any actual or
alleged noncompliance with or Liability under any Environmental Law
or Permit. The Sellers have provided to the Purchaser complete
copies of all environmental audits, reports and other documents
relating to Environmental Laws or Environmental Claims within the
Sellers’ possession or control relating to the Business or
the Assets.

 

Section
2.17 Insurance.

 


  Section
2.17 of the Disclosure Schedule includes a complete and
correct list and description, including policy number, coverage and
deductible, of all insurance policies owned by the Sellers relating
to the Business, the Assets or the Assumed Liabilities, complete
copies of which policies have been provided to the Purchaser by the
Sellers. Such policies are in full force and effect, all premiums
due thereon have been paid and no Seller is in default thereunder.
Such insurance policies are of the type and in the amounts
customarily carried by Persons conducting a business similar to the
Business and are sufficient for compliance with all applicable Laws
and Contracts to which any Seller is a party or by which it is
bound. No Seller has received any notice of cancellation or intent
to cancel or increase or intent to increase premiums with respect
to such insurance policies nor, to the Knowledge of the Sellers, is
there any basis for any such action. Section 2.17 of the Disclosure
Schedule also contains a list of all pending and prior claims made
to any insurance company by any Seller and any instances of a
denial of coverage by any insurance company.

 

Section
2.18 Real
Property Leases.

 


 
No Seller owns or, except as set forth in Section 2.18 of the Disclosure
Schedule, has ever owned any Real Property, nor is any Seller party
to any agreement to purchase any Real Property. Section 2.18 of the Disclosure
Schedule sets forth a true, correct and complete list of all Real
Property and interests in Real Property leased, subleased or
licensed by any Seller as lessor, lessee, sublessor, sublessee,
licensor or licensee (such leases, subleases, licenses and
sublicenses required to be set forth, the “Leases”). The description
in Schedule 2.18
shall include (i) the address of each parcel of leased Real
Property; (ii) the use of each leased Real Property; and (iii) a
true, complete and correct list of all leases, subleases, licenses
or other occupancy agreements and any assignments, amendments,
modifications, side letters, estoppels, consents and other
agreements relating thereto. True, correct and complete copies of
the Leases have been made available to the Purchaser by the
Sellers. The Sellers are currently in possession of the leased Real
Property, and no sublease, license or other right of occupancy of
or use by a third party affects any of the premises subject to the
Leases. All of the Leases are valid, binding and in full force and
effect. Sellers have valid leasehold interests in all the Leases
free and clear of any and all Liens, except for Permitted Liens,
and there exists no default or event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a default
under any of the Leases on the part of any Seller or, to the
Knowledge of the Sellers, any other party thereto. Except as set
forth in Section
2.18 of the Disclosure Schedule, to the Knowledge of the
Sellers, the premises that are the subject of the Leases are in
good operating condition (ordinary wear and tear excepted) and are
adequate for the purposes for which they are being
used.

 




 

22








 





 

Section
2.19 Receivables;
Payables; Inventory.

 

(a) The accounts
receivable reflected on the Balance Sheet or arising after the date
thereof have arisen in bona fide arm’s-length transactions in
the Ordinary Course of Business, and, subject to the allowance for
doubtful accounts, if any, set forth in the Balance Sheet, all such
accounts receivable are valid and binding obligations of the
account debtors without any counterclaims, setoffs or other
defenses thereto. All such reserves, allowances and discounts were
and are adequate and consistent in extent with the reserves,
allowances and discounts previously maintained by the Sellers in
the Ordinary Course of Business and determined in accordance with
the Accounting Principles. A list as of the date three (3) days
prior to the date hereof, prepared by Sellers in good faith after
due inquiry, showing to Sellers’ Knowledge of all accounts
receivable and the number of days each such account receivable has
been outstanding is included in Section 2.19(a) of the
Disclosure Schedule.

 

(b) All accounts
payable reflected on the Balance Sheet or arising after the date
thereof are the result of bona fide transactions in the Ordinary
Course of Business and have been paid or are not yet due and
payable. A complete list of all accounts payable as of the date
three (3) days prior to the date hereof, showing the number of days
each such Account Payable has been outstanding, is included in
Section 2.19(b) of
the Disclosure Schedule.

 

(c) The Inventory of
the Sellers is in the physical possession of the Sellers or in
transit to or from a customer or supplier of the Sellers, and no
Inventory has been pledged as collateral or otherwise is subject to
any Lien (other than Permitted Liens), or is held on consignment
from others. The Inventory consists of a quality and quantity
useable and salable in the Ordinary Course of Business, is in
quantities reasonably sufficient for the normal operation of the
Business in the Ordinary Course of Business, and is reflected on
the Balance Sheet in accordance with the Accounting
Principles.

 

Section
2.20 Customers,
Suppliers and Service Providers.

 

(a) Section 2.20(a) of the
Disclosure Schedule sets forth (i) each customer representing five
percent (5%) or more of the aggregate sales of the Sellers for each
of fiscal year 2019 and 2020 (each, a “Material Customer”) and
the amount of consideration paid by each Material Customer during
such period; and (ii) each supplier representing five percent (5%)
or more of the aggregate purchases of the Sellers for each of
fiscal year 2019 and 2020 (each, a “Material Supplier”) and
the amount of purchases from each Material Supplier during such
periods.

 

(b) No Material
Customer or Material Supplier has cancelled, terminated, materially
reduced or otherwise adversely modified or threatened to cancel,
terminate, materially reduce, or otherwise materially adversely
modify, its relationship with any Seller. No Seller has been
advised or has any reason to believe that any such customer or
supplier may cancel, terminate, materially reduce, or otherwise
materially adversely modify, its relationship with any Seller as a
result of the transactions contemplated hereby. To the Knowledge of
the Sellers, no Material Customer has made a material complaint to
any Seller that has not been resolved.

 

(c) The Contacts and
other arrangements between Sellers and their customers and
suppliers have been negotiated and maintained on an
arms’-length basis. Sellers have no actual knowledge that the
transactions contemplated hereby will have an adverse impact on the
relationship between any Seller, on the one hand, and any material
customer, supplier or service provider of any Seller, on the other
hand, or the terms and conditions on which business is conducted
between such Seller and any such other Person.


 




 

23








 





 

Section
2.21 Related
Party Transactions.

 


  Except
as described in Section
2.21 of the Disclosure Schedule, no Seller has loaned or
borrowed any amounts to or from, and no Seller has any outstanding
Indebtedness or other similar obligations to or from, any Related
Party of any Seller. Except as described in Section 2.21 of the Disclosure
Schedule, no Related Party of any Seller (i) has owned any direct
or indirect interest of any kind in, or controlled or has been a
manager, director, officer, employee or partner of, or consultant
to, or lender to or borrower from or has had the right to
participate in the profits of, any Person which is or was (A) a
competitor, supplier, distributor, customer, landlord, tenant,
creditor or debtor of the Business, (B) engaged in a business
related to the Business or (C) a participant in any transaction to
which a Seller has been a party or (ii) has been a party to any
Contract with respect to the Business or engaged in any transaction
or business with respect to the Business. No Seller has any
Contract or understanding with any officer, manager, director,
employee, member, shareholder or partner of any Seller that
relates, directly or indirectly, to the subject matter of any
Transaction Document or the consideration payable thereunder or
that contains any terms, provisions or conditions relating to the
entry into or performance of any Transaction Document by any
Seller.

 

Section
2.22 Brokers
Fees.

 


 No Seller has
any Liability to pay any fees, commissions or other amounts to any
investment banker, broker, finder or agent with respect to the
transactions contemplated by this Agreement.

 

Section
2.23 Investment
Representations.

 

(a) Each Seller that
acquires any portion of the Base Share Consideration (each a
“Selling
Shareholder”) is an “accredited investor”
(as defined in Rule 501(a) of Regulation D under the Securities
Act) and is knowledgeable, sophisticated and experienced in
financial and business matters, in making, and is qualified to
make, decisions with respect to investments in shares, including
investments in securities issued by the Parent and comparable
entities, has the ability to bear the economic risks of an
investment in the Parent Shares. Each Selling Shareholder
understands that its investment in the Base Share Consideration
involves a significant degree of risk, including a risk of total
loss of each Selling Shareholder’s investment, and each
Selling Shareholder has full cognizance of and understands all of
the risk factors related to each Selling Shareholder’s
acquisition of the Base Share Consideration.

 

(b) Each Selling
Shareholder has, in connection with its decision to acquire its
Base Share Consideration, relied solely upon the representations
and warranties of the Parent contained herein. Each Selling
Shareholder has had an opportunity to (i) ask questions and receive
answers from representatives of the Parent concerning the merits
and risks of investing in the Parent Shares, (ii) access to
information about the Parent and its financial condition, results
of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment and (iii) the
opportunity to obtain such additional information that the Parent
possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with
respect to the investment. Each Selling Shareholder has undertaken
an independent analysis of the merits and risks of an investment in
the Parent Shares based on its own financial circumstances. Each
Selling Shareholder understands that nothing in this Agreement or
any other materials presented to each Selling Shareholder in
connection with the acquisition of the Base Share Consideration
constitutes legal, tax or investment advice. Each Selling
Shareholder has consulted such legal, tax and investment advisors
as it, in its sole discretion, has deemed necessary or appropriate
in connection with its acquisition of the Base Share
Consideration.

 

(c) Each Selling
Shareholder shall acquire Parent Shares for its own account for
investment only and with no present intention of distributing any
Parent Shares or entering into any arrangement or understanding
with any other persons regarding the distribution of any Parent
Shares, provided that this representation and warranty shall not
limit any Selling Shareholder’s right to sell pursuant to the
Resale Registration Statement. No Selling Shareholder will,
directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any Parent Shares except in compliance
with the Securities Act and applicable state securities laws. Each
Selling Shareholder acknowledges that Rule 144 under the Securities
Act is not available for the resale of Parent Shares and will not
be available for such resale until Parent has become a registrant
under the Securities Act and has met all of the requirements of
Rule 144(i). Notwithstanding the foregoing, nothing in this
provision is meant to prevent such Seller from liquidating or
distributing the Parent Shares to its equityholders in accordance
with applicable Securities Laws.

 




 

24








 





 

(d) Each Selling
Shareholder has completed or caused to be completed a resale
registration statement questionnaire provided for use in
preparation of the Resale Registration Statement, and the answers
thereto are true and correct in all material respects as of the
date hereof and will be true and correct in all material respects
as of the effective date of the Resale Registration Statement, and
each Selling Shareholder will notify the Parent immediately of any
material change in any such information until such time as such
Selling Shareholder has sold all of its Base Share Consideration or
until the Parent is no longer required to keep the Resale
Registration Statement effective. All other written information
furnished to the Parent by or on behalf of each Selling Shareholder
expressly for inclusion in the Resale Registration Statement will
be true and correct in all material respects as of the date such
other written information is provided and will be true and correct
as of the effective date of the Resale Registration Statement and
each Selling Shareholder will notify the Parent immediately of any
material change in any such other written information until such
time as Selling Shareholder has sold all of its Base Share
Consideration or until the Parent is no longer required to keep the
Resale Registration Statement effective.

 

(e) Each Selling
Shareholder understands that the Base Share Consideration is being
offered to it in reliance upon specific exemptions from the
registration requirements of the Securities Act and state
securities laws and that the Parent is relying upon the truth and
accuracy of, and each Selling Shareholder’s compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of the Selling Shareholders set forth herein in
order to determine the availability of such exemptions and the
eligibility of each Selling Shareholder to acquire the Base Share
Consideration.

 

Section
2.24 No
Misrepresentation.

 


  No
representation or warranty of the Sellers contained in this
Agreement or any other Transaction Document or in the Disclosure
Schedule hereto or in any certificate or other instrument furnished
to the Purchaser in connection herewith contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading.

 



ARTICLE III



REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER

 


The
Parent and the Purchaser represent and warrant to the Sellers that
the following statements are true, correct and
complete.

 

Section
3.1 Organization.

 


  Each of
the Parent and the Purchaser is duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its
organization or formation, and has all requisite limited liability
company or corporate power and authority to own, lease and operate
its properties and to carry on its business. Each of the Parent and
the Purchaser is duly qualified or authorized to do business as a
foreign company and is in good standing under the Laws of each
jurisdiction in which the conduct of its business or the ownership
of its properties requires such qualification or
authorization.

 

Section
3.2 Authorization
and Enforceability.

 


  The
execution, delivery and performance of this Agreement and all
Transaction Documents to which either the Parent or the Purchaser
is a party has been duly authorized by all necessary action by or
on behalf of the Parent or the Purchaser, as applicable. Each of
the Parent and the Purchaser has full corporate or company power
and authority to execute and deliver this Agreement and each other
Transaction Document to which it is a party, and to perform its
obligations hereunder and thereunder. This Agreement and each
Transaction Document to which the Parent or the Purchaser is or
will be a party, has been or will be duly and validly executed and
delivered and constitutes the valid and legally binding obligation
of the Parent or the Purchaser, as applicable, enforceable against
the Parent or the Purchaser in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium
and similar Laws affecting creditors’ rights and remedies
generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a
proceeding at Law or in equity).

 




 

25








 





 

Section
3.3 Conflicts;
Consent of Third Parties.

 


  Neither
the execution and the delivery by the Parent and the Purchaser of
this Agreement and the other Transaction Documents to which the
Parent or the Purchaser is a party, nor the consummation of the
transactions contemplated hereby and thereby on the part of the
Parent and the Purchaser, will, with or without the passage of time
or the giving of notice (a) conflict with, or result in the breach
of, any provision of the Governing Documents of the Parent or the
Purchaser or (b) conflict with, violate, result in the breach or
termination of, or constitute a default under, result in an
acceleration of, or create in any party the right to accelerate,
terminate, modify or cancel, any Contract to which the Parent or
the Purchaser is a party or by which the Parent or the Purchaser or
their respective properties or assets are bound.

 

Section
3.4 Base
Share Consideration.

 


 Upon
issuance, the Base Share Consideration will be duly authorized and
validly issued, fully paid and non-assessable and will not have
been issued in violation of applicable Law (it being understood
that no representation or warranty is made by Parent or Purchaser
with respect to any Federal Marijuana Law) or any preemptive right,
right of first refusal or similar right of any Person to subscribe
for or purchase securities of the Parent.

 

Section
3.5 Brokers
Fees.

 


  Neither
the Parent nor the Purchaser has any Liability to pay any fees,
commissions or other amounts to any broker, finder or agent with
respect to the transactions contemplated by this
Agreement.

 

Section
3.6 No
Proceedings.

 


  No
suit, action or other proceeding is pending before any Governmental
Authority seeking to restrain or prohibit the Parent or the
Purchaser from entering into this Agreement or the performance of
any obligation hereunder.

 

Section
3.7 Taxes.

 


  The
Parent and the Purchaser have timely filed with the appropriate
taxing authorities all Tax Returns that they were required to file.
All such Tax Returns are complete and correct in all material
respects. All Taxes owed by the Parent and the Purchaser (whether
or not shown on any Tax Return) have been paid. No written claim
has ever been made by an authority with respect to the Parent or
the Purchaser in a jurisdiction in which such the Parent or the
Purchaser does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. Except as described in Schedule 3.7, there has not
been any audit, examination or written notice of potential
examination of any Tax Returns filed by the Parent or the
Purchaser.

 



ARTICLE IV



COVENANTS

 

Section
4.1 Further
Assurances; Pendleton Lease; Litigation Support; Name
Change.

 

(a) If any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request;
provided,
however, that
neither the Parent nor the Purchaser shall be required to incur any
material out-of-pocket expense in connection therewith. The Sellers
shall and shall cause their Affiliates to reasonably cooperate with
the Purchaser to encourage each lessor, licensor, customer,
supplier or other business associate of the Business to maintain
the same business relationships with the Business after the First
Closing as it maintained with the Business prior to the First
Closing. After the acceptance of the Pending Applications by the
DCR, BNC and the Purchaser shall submit the Amended DCR Application
to the DCR.

 




 

26








 





 

(b) Without limitation
of Section 4.1(a),
Sellers shall use their reasonable best efforts to cause Beachwood
Industries LLC (the “Beachwood”) and, to the
extent necessary, the master landlord with respect to the Pendleton
Property to (i) consent to the deemed assignment (by virtue of the
change of control of BNC at the Second Closing) of BNC’s
occupancy and other rights under the lease agreement dated January
1, 2018 (the “Pendleton Lease”) between
Beachwood and BNC related to the premises currently used by BNC at
11618 Pendleton Street, Sun Valley, California 91352 (the
“Pendleton
Property”), without modification thereof except as
described in clause (iii) below, (ii) raise no objection to
BNC’s continued occupancy of the full premises (in excess of
11,000 square feet) (the “BNC Premises”) currently
occupied by BNC at the Pendleton Property during the period of the
Management Services Agreement and (iii) amend the Pendleton Lease
to cover the BNC Premises at the same price per square foot charged
under the Pendleton Lease for the 7,657 square feet reflected in
the Pendleton Lease as being leased to BNC. Clauses (i) through
(iii) of the preceding sentence are referred to collectively as the
“Pendleton Lease
Assignment Condition”. If (x) Beachwood or the master
landlord with respect to the Pendleton Property at any time objects
to, interferes with or seeks to interfere with BNC’s
occupancy of all or any portion of the BNC Premises, or if for any
reason BNC, under Purchaser’s supervision pursuant to the
Management Services Agreement, is unable to fully and peaceably
enjoy the use of the full BNC Premises or (y) Beachwood and, to the
extent necessary, the master landlord with respect to the Pendleton
Property have not consented to the deemed assignment of the
Pendleton Lease, covering the full BNC Premises, by the date the
Amended DCR Applications are accepted by the DCR, Sellers shall,
without duplication of recovery pursuant to Section 6.7, be liable to
Purchaser for liquidated damages in the amount of $500,000 (payable
pursuant to the methodology set forth in Section 6.4(c)) and the
Purchaser may relocate all or any portion of the operation of the
Regulated Assets to a different location. The foregoing liquidated
damages provision, and the provisions of Section 6.7, shall not be
affected by the exclusion of the Master Services Agreement from the
definition of “Transaction Documents” for purposes of
Article
VI.

 

(c) Following the First
Closing, in the event and for so long as the Purchaser actively is
involved in, contesting or defending against any Action in
connection with any fact, situation, circumstances, status,
condition, activity, practice, plan, occurrence, event, incident,
action, Tax matter, failure to act, or transaction involving the
Business which occurred or existed prior to the First Closing, the
Sellers shall and shall cause their Affiliates to reasonably
cooperate with the Purchaser and the Purchaser’s counsel in
such involvement, contest or defense, and provide such testimony
and access to its books and records as shall be reasonably
necessary in connection with such contest or defense, all at the
sole reasonable cost and expense of the Purchaser (unless the
Purchaser is entitled to indemnification therefor
hereunder).

 

(d) Within ten (10)
days after the First Closing, the Sellers shall file a certificate
of amendment to the certificate of formation of Lowell, and take
all other action reasonably necessary, to change the name of Lowell
to another name that does not include
“Lowell”.

 

Section
4.2 Share
Registration; Seller Financial Information.

 

(a) The Parent shall
prepare and file with the Securities and Exchange Commission (the
“SEC”)
a registration statement (the “Resale Registration
Statement”) on Form S-1 (or any other available form)
relating to the resale of the Base Share Consideration by the
Selling Shareholders. The Parent shall use its commercially
reasonable best efforts to (i) file the Resale Registration
Statement by the later of ninety (90) days after the First Closing
Date or forty-five (45) days after the provision by the Sellers of
the Seller Financial Information and (ii) subject to receipt of
necessary information from the Selling Shareholders, cause the SEC
to declare the Resale Registration Statement effective as promptly
as is reasonably practicable. The Parent shall promptly prepare and
file with the SEC such amendments and supplements to the Resale
Registration Statement and the prospectus used in connection
therewith (the “Prospectus”) as may be
necessary to keep the Resale Registration Statement effective until
the earlier of (A) two (2) years after the First Closing Date or
(B) such time as the remaining Base Share Consideration has become
eligible for resale without any volume limitations or other
restrictions pursuant to Rule 144 under the Securities Act. The
Parent may amend the Resale Registration Statement on Form S-3 at
any time it is eligible to do so.

 




 

27








 





 

(b) For not more than
ninety (90) days in any twelve (12) month period, the Parent may
suspend the use of any Prospectus included in the Resale
Registration Statement contemplated by this Section in the event
that the Parent determines in good faith that such suspension is
necessary to (A) delay the disclosure of material non-public
information concerning the Parent, the disclosure of which at the
time is not, in the good faith opinion of the Parent in the best
interests of the Parent or (B) amend or supplement the Resale
Registration Statement or the related Prospectus so that the Resale
Registration Statement or Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading (an
“Allowed
Delay”); provided, that the Parent shall promptly (I)
notify THC in writing of the commencement of an Allowed Delay, but
shall not (without the prior written consent of THC) disclose to
THC or any other Selling Shareholder any material non-public
information giving rise to an Allowed Delay, (II) advise THC in
writing to cease all sales under the Resale Registration Statement
until the end of the Allowed Delay, and (III) use commercially
reasonable efforts to terminate an Allowed Delay as promptly as is
reasonably practicable.

 

(c) The Parent shall
use commercially reasonable efforts to effect the registration of
the Base Share Consideration in accordance with the terms hereof,
and pursuant thereto the Parent will, as expeditiously as
possible:

 

(i) prepare and file
with the SEC such amendments and post-effective amendments to the
Resale Registration Statement and the related Prospectus as may be
necessary to keep the Resale Registration Statement effective for
the period in which the Resale Registration Statement is required
to be kept effective and to comply with the provisions of the
Securities Act and the Exchange Act with respect to the
distribution of all of the Base Share Consideration covered
thereby;

 

(ii) provide
copies to and permit any counsel designated by THC to review the
Resale Registration Statement and all amendments and supplements
thereto no fewer than three (3) days prior to their filing with the
SEC;

 

(iii)  furnish
to each Selling Shareholder (A) promptly after the same is prepared
and filed with the SEC, if requested by the Selling Shareholder,
one (1) copy of any Resale Registration Statement and any amendment
thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and each letter written by or on
behalf of the Parent to the SEC or the staff of the SEC, and each
item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any
portion of any thereof which contains information for which the
Parent has sought confidential treatment), and (B) such number of
copies of a Prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as the
Selling Shareholder may reasonably request in order to facilitate
the disposition of the Base Share Consideration owned by the
Selling Shareholder;

 

(iv) use
commercially reasonable efforts to (A) prevent the issuance of any
stop order or other suspension of effectiveness and, (B) if such
order is issued, obtain the withdrawal of any such order at the
earliest practical moment;

 

(v) use commercially
reasonable efforts to register or qualify or cooperate with any
Selling Shareholder and its counsel in connection with the
registration or qualification of the Base Share Consideration for
offer and sale under the securities or blue sky laws of such
jurisdictions requested by such Selling Shareholder and do any and
all other commercially reasonable acts or things necessary or
advisable to enable the distribution in such jurisdictions of the
Base Share Consideration covered by the Resale Registration
Statement; provided, however, that the Parent shall
not be required in connection therewith or as a condition thereto
to (A) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this provision, (B)
subject itself to general taxation in any jurisdiction where it
would not otherwise be so subject but for this Section 4.2(b)(v), or (C) file
a general consent to service of process in any such
jurisdiction;

 




 

28








 





 

(vi) promptly
notify THC, upon discovery that, or upon the happening of any event
as a result of which, the Prospectus includes an untrue statement
of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and
promptly prepare, file with the SEC and furnish to such holder a
supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing;

 

(vii) use
commercially reasonable efforts to comply with all applicable rules
and regulations of the SEC under the Securities Act and the
Exchange Act in connection with the Shelf Registration Statement;
and

 

(viii) with
a view to making available to the Selling Shareholders the benefits
of Rule 144 (or its successor rule) and any other rule or
regulation of the SEC that may at any time permit the Selling
Shareholders to sell shares included in the Base Share
Consideration to the public without registration, the Parent
covenants and agrees from and after the date it becomes registered
and for so long as it remains registered under the Exchange Act, to
(A) file with the SEC in a timely manner all reports and other
documents required of the Parent under the Exchange Act and (B)
furnish to each Selling Shareholder upon request, as long as such
Selling Shareholder owns any Base Share Consideration, (I) a
written statement by the Parent that it has complied with the
reporting requirements of the Exchange Act, (II) a copy of the
Parent’s most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, and (III) such other information as may be
reasonably requested in order to avail such Selling Shareholder of
any rule or regulation of the SEC that permits the selling of any
such Base Share Consideration without registration.

 

(d) In the event that
the SEC for any reason limits the number of Parent Shares that may
be included and sold by the Selling Shareholders in the Resale
Registration Statement, the Parent shall reduce the number of
Parent Shares included in the Resale Registration Statement on
behalf of the Selling Shareholders accordingly (such portion shall
be allocated pro rata among the Selling Shareholders) (such
excluded shares, the “Reduction Securities”).
The Parent shall not be liable for any Losses in connection with
the exclusion of such Reduction Securities or in connection with
any delay in the effectiveness of the Resale Registration Statement
arising from any interactions between the Parent and the SEC with
respect to the number of Parent Shares that may be included and
sold by the Selling Shareholders in the Resale Registration
Statement. The Parent shall use commercially reasonable efforts to
register the Reduction Securities for resale as soon as is
reasonably practicable pursuant to a new registration statement
covering the Reduction Securities (or such portion thereof as the
SEC will allow to be registered for resale at such time) for an
offering to be made on a continuous basis pursuant to Rule
415.

 

(e) The Parent shall
bear all expenses in connection with the procedures in clauses (a) through
(d) of this
Section 4.2 and the
registration of the Base Share Consideration on behalf of the
Selling Shareholders pursuant to the Resale Registration Statement,
other than fees and expenses, if any, of counsel or other advisers
to the Selling Shareholders or underwriting discounts, brokerage
fees and commissions incurred by the Selling Shareholders, if any
in connection with the offering of the Base Share Consideration on
behalf of the Selling Shareholders pursuant to the Resale
Registration Statement or any new registration statement(s)
covering the Reduction Securities.

 




 

29








 





 

(f) If required by
applicable securities Laws, the rules or policies of any applicable
stock exchange or the Parent, each Seller covenants and agrees to
execute, deliver and file or assist, including by way of providing
requisite information to, the Parent in filing or in causing the
filing of such disclosure documents, reports, undertakings and
other documents with respect to or in connection with the issuance
of the Base Share Consideration and the completion of any
associated transactions as may be required by any securities
commission, stock exchange or other regulatory authority pursuant
to applicable securities Laws or rule or policies or as they may
otherwise require.

 

(g) Each Selling
Shareholder agrees that it will not effect any disposition of the
Base Share Consideration that would constitute a sale within the
meaning of the Securities Act or pursuant to any applicable state
securities laws, except as contemplated in the Resale Registration
Statement referred to in this Section 4.2 or as otherwise
permitted by Law, and will promptly notify the Parent of any
changes in the information set forth in the Resale Registration
Statement regarding such Selling Shareholder or its plan of
distribution.

 

(h) The Sellers shall
provide to Parent as promptly as practicable such financial
statements and other information concerning the Sellers’ and
their business affairs (including the Seller Financial Information)
as Parent may reasonably require, and shall direct that their
counsel and accountants cooperate with Parent’s counsel and
accountants, in connection with the preparation of the Resale
Registration Statement or any other securities filings made by
Parent after the First Closing that require information regarding
the Sellers. Without limitation of the foregoing, the Sellers shall
provide to Parent (i) on or prior to March 31, 2021 (it being
understood that time is of the essence), unaudited financial
statements, prepared in accordance with GAAP, for the fiscal years
of the Sellers ended December 31, 2020 and 2019, and shall respond
promptly to inquiries of the Parent or its auditor related thereto,
(ii) on or prior to April 23, 2021 (it being understood that time
is of the essence), unaudited financial statements, prepared in
accordance with GAAP, for the fiscal quarters of the Sellers ended
March 31, 2021 and March 31, 2020 and (iii) by the dates specified
in the preceding clauses (i) and (ii), for the periods referenced,
(x) such additional financial information of the Sellers as may be
required under Regulations S-K and S-X and published guidance to be
included in a registration statement on Form S-1 under the
Securities Act (assuming no financial results of Sellers are
reflected in any Parent financial statements included in such
filing and that no such information is permitted to be deferred
under Rule 3-05(b)(4)(i)(B) of Regulation S-X or any similar rule
or published guidance), provided that any such information that
would otherwise be required to be audited may be unaudited, and (y)
to the extent reasonably requested by Parent, assistance in the
preparation of management’s discussion and analysis and other
relevant narrative discussions of Sellers’ business,
financial condition, results of operations and cash flows. None of
the information supplied, or to be supplied, by the Sellers for
inclusion in the Resale Registration Statement or any other
securities filings shall contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading. If any
event occurs with respect to any Seller, or any change occurs with
respect to the information provided by any Seller, that causes any
such information to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading, the
Sellers shall notify Parent promptly of such event or change and
supplement such information so that it does not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not
misleading.

 




 

30








 





 

Section
4.3 Transfer
Restrictions.

 

(a) Each Selling
Shareholder acknowledges that the Base Share Consideration may only
be disposed of in compliance with applicable Law, including
Canadian and United States state and federal securities laws. In
connection with any transfer of the Base Share Consideration other
than pursuant to an effective registration statement or to an
Affiliate of a Selling Shareholder, the Parent may require the
transferor thereof to provide to the Parent an opinion of counsel
selected by the transferor and reasonably acceptable to the Parent,
the form and substance of which opinion shall be reasonably
satisfactory to the Parent, to the effect that such transfer does
not require registration of such transferred Base Share
Consideration under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms
of this Section
4.3.

 

(b) Each Selling
Shareholder acknowledges that the securities constituting the Base
Share Consideration shall have attached to them, whether through
the electronic deposit system of CDS Clearing and Depository
Services Inc., entered into a direct registration or other
electronic book-entry system, or on any certificates that may be
issued, the following legends:

 


THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 


UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY
MUST NOT TRADE THE SECURITY BEFORE JUNE 26, 2021.

 

(c) Each Selling
Shareholder agrees with the Parent (i) that such Selling
Shareholder will sell any Base Share Consideration pursuant to
either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an
exemption therefrom, (ii) that if any Base Share Consideration is
sold pursuant to a registration statement, it will be sold in
compliance with the plan of distribution set forth therein, (iii)
that if, after the effective date of the registration statement,
such registration statement ceases to be effective and the Parent
has provided notice to such Selling Shareholder to that effect,
such Selling Shareholder will sell Base Share Consideration only in
compliance with an exemption from the registration requirements of
the Securities Act; and acknowledges that the removal of the
restrictive legend from the Base Share Consideration due to the
effectiveness of a registration statement is predicated upon the
Parent’s reliance upon this Agreement.

 

Section
4.4 Mail;
Payments; Receivables; Record Retention.

 


  From
and after the First Closing, the Sellers shall refer to the
Purchaser all customer, supplier, employee or other inquiries or
correspondence received by any of them or any of their Affiliates
relating to the conduct of the Business after the First Closing
Date, the Assets or the Assumed Liabilities. From and after the
First Closing, the Sellers shall remit to the Purchaser all
payments and invoices received by any of them or any Affiliates
thereof that relate to the Business, the Assets (including accounts
receivable) or the Assumed Liabilities within five Business Days
after receipt thereof. From and after the First Closing, the
Purchaser shall remit to the Sellers all payments and invoices
received by it or any Affiliate thereof that relate to the Excluded
Assets or the Excluded Liabilities within five Business Days after
its receipt thereof. Each Party agrees, on behalf of itself and its
Affiliates, that for a period of not less than six (6) years
following the First Closing Date, it shall not destroy or otherwise
dispose of any of the Books and Records relating to the Assets, the
Excluded Assets, the Assumed Liabilities, the Excluded Assets or
the Business with respect to periods prior to the First Closing and
shall make such Books and Records available to one another for any
lawful purpose upon reasonable prior written notice. Each Party
shall have the right to destroy all or part of such books and
records after the sixth anniversary of the First Closing Date or,
at an earlier time by giving each other party hereto 10 days’
prior written notice of such intended disposition and by offering
to deliver to the other Party, at the other Party’s expense,
custody of such books and records as such first party may intend to
destroy. This Section
4.4 is not intended to alter the normal rules of discovery
in connection with any dispute among the Parties.

 




 

31








 





 

Section
4.5 Public
Announcements.

 


 Unless
otherwise required by applicable Law, the Sellers shall not, and
the Sellers shall cause their Affiliates, agents, professionals and
other representatives not to, make any disclosure or public
announcements in respect of this Agreement or the transactions
contemplated hereby (including price and terms) or otherwise
communicate with any news media without the prior written consent
of the Purchaser, provided that the Sellers may make disclosures to
their equity holders of the material terms of this Agreement
without the consent of the Purchaser provided that such disclosures
are made on a confidential basis with respect to any material
aspect of this Agreement that has not become publicly available
(without a breach of the confidentiality provisions of this
Agreement by Sellers).

 

Section
4.6 Tax
Covenants.

 

(a) All transfer, sales
and use, value added, registration, documentary, stamp and similar
Taxes (including any penalties, interest, additions to Tax and
costs and expenses relating to such Taxes, but excluding any
transfer gains Taxes), whether for real or personal property,
imposed in connection with the transaction that occurs pursuant to
this Agreement or the other Transaction Documents (collectively,
“Transfer
Taxes”) shall be borne by the Sellers. The Sellers
shall, at their sole expense, timely file any Tax Return or other
document with respect to any Transfer Taxes (and the Purchaser
shall reasonably cooperate with respect thereto as
necessary).

 

(b) All Taxes and Tax
Liabilities with respect to the income or operations of the
Business or the ownership of the Assets that relate to any Straddle
Period shall be apportioned between the Sellers and the Purchaser
as follows: (i) in the case of ad valorem or other property Taxes,
on a per diem basis; and (ii) in the case of income, sales and use
and withholding Taxes, employment Taxes, or other Taxes based on or
measured by income, receipts or profits, as determined from the
closing of the books and records of the Sellers and the Business as
of 11:59 p.m. on the Closing Date.

 

(c) After the First
Closing Date, the Purchaser and the Sellers shall furnish or cause
to be furnished to each other, upon request, as promptly as
practicable, such information and assistance (including access to
books, records, work papers and Tax Returns for Pre-Closing
Periods) relating to the Business or the Assets as is reasonably
necessary for the preparation of any Tax Return, claim for refund
or audit, and the prosecution or defense of any claim, suit or
proceeding relating to any proposed Tax adjustment (it being
understood that Sellers shall, at their sole expense, be
responsible to prepare all post-Closing Tax Returns of Sellers).
Upon reasonable notice, the Sellers and the Purchaser shall make
their employees and facilities available on a mutually convenient
basis to provide reasonable explanation of any documents or
information provided hereunder. Any request for information or
documents pursuant to this Section 4.6(c) shall be made by
the requesting party in writing. The other party hereto shall
promptly (and in no event later than 30 days after receipt of the
request) provide the requested information. The requesting party
shall indemnify the other party for any out-of-pocket expenses
incurred by such party in connection with providing any information
or documentation pursuant to this Section 4.6(c). Any information
obtained under this Section 4.6(c) shall be kept
confidential, except as otherwise reasonably may be necessary in
connection with the filing of Tax Returns or claims for Tax refunds
or in conducting any Tax audit, dispute or contest.

 




 

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Section
4.7 Confidentiality.

 


 Each Seller
shall, and shall cause its Affiliates to, hold in confidence (and
not disclose or provide access to any other Person) any and all
information, whether written or oral, concerning the Business,
except to the extent that such Seller can show that such
information (i) is generally available to and known by the public
through no fault of such Seller or any of its respective Affiliates
or representatives; or (ii) is required to be disclosed by judicial
or administrative process or by other requirements of Law. If any
Seller or any of its Affiliates or representatives are compelled to
disclose any information by judicial or administrative process or
by other requirements of Law, such Seller shall promptly notify the
Purchaser in writing and shall disclose or permit disclosure of
only that portion of such information which such Seller is advised
by its counsel in writing is legally required to be disclosed;
provided, however, that such Seller shall use its best efforts to
obtain an appropriate protective order or other reasonable
assurance that confidential treatment will be accorded such
information. In the event a breach or threatened breach of this
Section 4.7, the
Purchaser and each of its Affiliates or their respective successors
and assigns, in addition to other rights and remedies existing in
their favor, shall be entitled to specific performance, injunctive
and other equitable relief from a court of competent jurisdiction
in order to enforce, or prevent any violations of, the provisions
hereof (without posting a bond or other surety) and shall be
entitled to be indemnified with respect thereto by
Sellers.

 

Section
4.8 Bulk
Sales Laws.

 


  The
Parties hereby waive compliance with the provisions of any bulk
sales, bulk transfer or similar Laws of any jurisdiction
(collectively, “Bulk
Sales Laws”) that may otherwise be applicable with
respect to the sale of any or all of the Assets to the Purchaser,
it being understood that any Liabilities arising out of the failure
of Sellers to comply with the requirements and provisions of any
Bulk Sales Laws of any jurisdiction which would not otherwise
constitute Assumed Liabilities shall be treated as Excluded
Liabilities.

 

Section
4.9 Release.

 


 Sellers, on
behalf of themselves and their Affiliates, and the predecessors,
successors and assigns of the foregoing (collectively, the
“Releasors”), hereby
unconditionally release (i) the Purchaser, the Parent and their
Affiliates, (ii) BNC, (iii) the directors, officers, employees,
managers, members, partners, direct and indirect investors,
advisors, agents and other representatives of the Purchaser, the
Parent and their Affiliates and BNC and (iv) the predecessors,
successors, assigns, heirs, executors, administrators and personal
representatives of the foregoing (collectively, the
“Releasees”) from and
against any and all claims, causes of actions, damages, judgments,
expenses and other Liabilities, at law or in equity, that Releasors
may have in any capacity against Releasees as of the date hereof or
to which any Releasee might otherwise succeed as a result of the
transactions contemplated by the Transaction Documents
(collectively, the “Released Claims”),
provided that insofar as the Purchaser, the Parent, their
Affiliates and the Releasees related to the foregoing are
concerned, such release is limited to Released Claims related to,
arising from or in connection with the Business. Notwithstanding
the foregoing, the Sellers’ rights under the Transaction
Documents are excluded from the Released Claims. The Sellers, on
behalf of the Releasors, agree to, upon the request of any
Releasee, release or reduce any claim asserted against a third
party that would be a Released Claim if asserted by a Seller
against a Releasee to discharge the third party claim asserted
against such Releasee. The Sellers, on behalf of Releasors, hereby
agree that this agreement shall apply to all unknown or
unanticipated Released Claims as well as those known and
anticipated, and upon advice of counsel, the Sellers hereby
knowingly waive all rights and protections under California Civil Code
Section 1542, which reads as follows:

 


“A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”


 




 

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Section
4.10 Employees and Employee
Benefits.

 

(a) On the First
Closing Date or as promptly thereafter as is practicable, the
Purchaser shall extend offers of employment to the Group I
Employees. From and after the First Closing, the Purchaser shall
have the right, but not the obligation, at any time or from time to
time to extend offers to any other employees of the Business that
the Purchaser so chooses. All such offers of employment shall be on
such terms as the Purchaser determines in its sole discretion and
the Sellers shall use their good faith efforts to encourage such
employees to accept such offers. Employees of the Business who
accept the Purchaser’s offer of employment are referred to as
“Transferring
Employees”.

 

(b) Except as consented
to in writing by the Purchaser, the Sellers shall and shall cause
their Affiliates to terminate the employment, on or about March 1,
2021, of the Group I Employees and Group II Employees. The Sellers
shall be responsible to issue (and shall be liable for) final
paychecks to the Group I Employees and Group II Employees, which
shall include salary/wages and accrued vacation through the
termination date, and to make all related payroll Tax deposits, on
the termination date. The Purchaser shall not assume any Liability
under any of the Employee Benefit Plans.

 

(c) The Sellers shall
and shall cause their Affiliates to terminate (i) any contractual
provisions or other restrictions that would otherwise prevent any
employees of the Business from becoming an employee of the
Purchaser or its Affiliates and (ii) any confidentiality or other
obligations to the extent they would prevent any employees who
accept employment with the Purchaser from using or transferring to
the Purchaser or its Affiliates any information related to the
Business.

 

(d) Unless required by
applicable Law, any offer of employment by the Purchaser to an
employee of the Business who is not actively at work as of the
First Closing Date due to an approved leave of absence will be
effective on the date following the First Closing Date on which
such individual returns to active employment, so long as such date
is within six (6) months following the date hereof. If any such
employee who is on an approved leave of absence as of the Closing
Date does not return to active employment within such six (6)-month
period, then the Sellers will continue to employ such employee or
terminate such employee at the Sellers’ sole
expense.

 

(e) Except as otherwise
provided in the Management Services Agreement with respect to the
Group III Employees or as otherwise expressly provided in this
Section 4.10, the
Sellers shall be solely responsible for, and the Purchaser shall
have no obligations whatsoever for, any compensation or other
amounts payable to any current or former employee, officer,
director, independent contractor, or consultant of the Business,
including hourly pay, commission, bonus, salary, accrued vacation,
fringe, pension or profit sharing benefits, or severance pay for
any period relating to their service with the Sellers, and the
Sellers shall pay all such amounts to all entitled persons on or
prior to their termination date. Payroll for the Group III
Employees for the period in which the First Closing occurs shall be
administered in accordance with the historical practices of the
Sellers and the payment of accrued vacation shall not be required
to be made to the Group III Employees by reason of the occurrence
of the First Closing. Upon termination of the Management Services
Agreement, (i) if the Pendleton Lease Assignment Condition has been
satisfied, the Purchaser shall be responsible for all severance and
termination costs for the Group III Employees and (ii) if the
Pendleton Lease Assignment Condition has not been satisfied, then
(x) the Sellers shall be responsible for all severance and
terminations costs (other than unpaid wages and accrued vacation)
for the Group III Employees and (y) the Purchaser shall reimburse
the Sellers for the accrued and projected vacation costs for the
Group III Employees reserved by the Purchaser pursuant to
Section
1.4(d)(i)(D)(V).

 

(f) The Purchaser will
cooperate reasonably with the Sellers to provide notices of
termination to the Group III Employees required by the WARN Act and
similar state Laws provided that neither Beachwood nor the master
landlord with respect to the Pendleton Property objects to,
interferes with or seeks to interfere with BNC’s occupancy of
all or any portion of the BNC Premises and BNC, under
Purchaser’s supervision pursuant to the Management Services
Agreement, is able to fully and peaceably enjoy the use of the full
BNC Premises. For the avoidance of doubt, the Sellers shall retain
responsibility for providing any notices required under the WARN
Act or similar state Laws.

 




 

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(g) The Sellers shall
remain solely responsible for the satisfaction of all claims for
medical, dental, life insurance, health accident, or disability
benefits brought by or in respect of current or former employees,
officers, directors, independent contractors, or consultants of the
Business or the spouses, dependents, or beneficiaries thereof,
which claims, in the case of Transferring Employees, relate to
conditions or events occurring prior to the commencement of their
employment (if any) with the Purchaser, provided that in the case
of the Group III Employees, the Purchaser shall be responsible for
such claims which relate to conditions or events occurring
following the First Closing Date to the extent provided under the
Management Services Agreement. The Sellers also shall remain solely
responsible for all worker’s compensation claims of any
current or former employees, officers, directors, independent
contractors, or consultants of the Business, which claims, in the
case of Transferring Employees, relate to conditions or events
occurring prior to the commencement of their employment (if any)
with the Purchaser, provided that in the case of the Group III
Employees, the Purchaser shall be responsible for worker’s
compensation claims which relate to conditions or events occurring
following the First Closing Date to the extent provided under the
Management Services Agreement. The Sellers shall pay, or cause to
be paid, all such amounts for which they are responsible to the
appropriate persons as and when due.

 

(h) Nothing in this
Agreement or the other Transaction Documents confers upon any
Employee any rights or remedies of any nature or kind whatsoever
under or by reason of this Section 4.10. Nothing in this
Agreement or the other Transaction Documents shall limit the right
of the Purchaser to terminate or reassign any Employee after such
Employee becomes an employee of the Purchaser, or to change the
terms and conditions of his or her employment in any
manner.

 



ARTICLE V



CONDITIONS TO SECOND CLOSING; TERMINATION

 

Section
5.1 Conditions
to Obligations of the Parties.

 


  The
respective obligations of each Party to effect the Second Closing
are subject to the satisfaction on or prior to the Second Closing
Date of the following conditions, any or all of which may be waived
in writing by a Party with respect only to itself, in whole or in
part, to the extent permitted by applicable Law:

 

(a) the Amended DCR
Applications shall have been approved by the DCR; and

 

(b) no Governmental
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, or
Order (whether temporary, preliminary or permanent), other than any
Federal Marijuana Law, that remains in effect and has the effect of
making the Second Closing illegal or otherwise prohibiting
consummation of the Second Closing.

 

Section
5.2 Conditions
to Obligations of the Purchaser.

 


  The
obligations of the Purchaser and the Parent to effect the Second
Closing are subject to the satisfaction at or prior to the Second
Closing Date of the following conditions, any or all of which may
be waived in writing by the Purchaser, in whole or in part, to the
extent permitted by applicable Law:

 

(a) (i) the Fundamental
Reps of the Sellers shall have been true, correct and complete in
all respects as of the Closing Date and shall be true, correct and
complete in all respects as of the Second Closing Date and (ii) all
other representations and warranties of the Sellers contained in
this Agreement and the other Transaction Documents (A) that are
qualified by the terms “material”,
“materiality” or “material adverse effect”
shall have been true, correct and complete in all respects as of
the Closing Date and shall be true, correct and complete in all
respects as of the Second Closing Date as if made as of the Second
Closing Date (or, with respect to such representations and
warranties which specifically relate to an earlier date, at and as
of such earlier date instead) and (B) that are not qualified by the
terms “material”, “materiality” or
“material adverse effect” shall have been true, correct
and complete in all material respects as of the Closing Date and
shall be true, correct and complete in all material respects as of
the Second Closing Date as if made as of the Second Closing Date
(or, with respect to such representations and warranties which
specifically relate to an earlier date, at and as of such earlier
date instead), provided that the condition in this clause (ii)
shall apply only if reasonably anticipated Losses from all breaches
of and inaccuracies in such other representations and warranties
exceed, in the aggregate, the value of the remaining Escrow Shares,
net of any other then pending claims;

 




 

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(b) the Sellers and the
other signatories to the First Closing deliverables shall have
performed and satisfied in all material respects all covenants and
agreements required by the Transaction Documents and such
deliverables to be performed and satisfied by such Persons at or
prior to the Second Closing;

 

(c) no Action shall be
pending or threatened before any Governmental Authority seeking to
restrain any Seller or prohibit the Second Closing or seeking
damages against any Party as a result of the consummation of this
Agreement; and

 

(d) the Purchaser shall
have received a certificate executed by the Sellers to the effect
that the conditions set forth in Section 5.2(a), Section 5.2(b) and (with
respect to the Sellers) Section 5.2(c) have been
satisfied.

 

Section
5.3 Termination.

 

(a) The Purchaser shall
have the right, in its sole discretion, to terminate the
transactions to be consummated at the Second Closing by notice to
THC as follows:

 

(i) if any of the
representations and warranties of the Sellers shall not be true and
correct, or if the Sellers or the other signatories to the First
Closing deliverables have failed to perform any covenants or
agreements on the part of such Persons set forth in the Transaction
Documents and such deliverables such that the conditions to the
Second Closing set forth in Section 5.2(a) or Section 5.2(b) would not be
satisfied as of the Second Closing Date and such breaches or the
failures are not cured by the earlier of the Outside Date or thirty
(30) days after written notice thereof is delivered to THC;
or

 

(ii) if
the Second Closing shall not have been consummated on or prior to
the first anniversary of the date of this Agreement (such date, the
“Outside
Date”) and neither the Purchaser nor the Parent shall
have breached in any material respect its obligations under this
Agreement or the Management Services Agreement in any manner that
shall have been the proximate cause of the failure to effect the
Second Closing on or before the Outside Date.

 

(b) For the avoidance
of doubt, the termination of the transactions to be consummated at
the Second Closing shall not have any impact on the transactions
consummated at the First Closing or on any of the other rights or
remedies of the Parties hereunder or under any of the other
Transaction Documents or closing deliverables.

 



ARTICLE VI



INDEMNIFICATION

 

Section
6.1 Survival.

 


  All
representations and warranties contained in this Agreement shall
survive until the date which is one year after the First Closing
Date; provided,
however, that (a)
the representations and warranties stated in Section 2.8, Section 2.16 and Section 3.7 shall survive for
the full period of all applicable statutes of limitations (giving
effect to any waiver, mitigation or extension thereof), (b) the
representations and warranties stated in Section 2.12 shall survive
until the second anniversary of the First Closing and (c) the
representations and warranties stated in Section 2.1, Section 2.2, Section 2.3, Section 2.5(a) (solely as to
the current asset and current liability portions of the Balance
Sheet only) and (b), Section 2.9(a), Section 2.21, Section 2.22, Section 3.1, Section 3.2, Section 3.4 or Section 3.5 (collectively, the
“Fundamental
Reps”) shall survive indefinitely. The covenants and
agreements of any Party set forth in this Agreement or any of the
other Transaction Documents shall survive and remain in full force
and effect until fully performed. In the event that an Indemnified
Party shall deliver written notice of a claim for indemnification
to an Indemnifying Party prior to the expiration of any applicable
survival period set forth above, then such claim shall survive the
expiration of such survival period until the final resolution
thereof. The foregoing survival period limitations shall not apply
to any claim based upon fraud, intentional misrepresentation or
willful misconduct.

 




 

36








 





 

Section
6.2 Indemnity
Obligations of the Sellers.

 


  The
Sellers (other than BNC) covenant and agree to and shall, jointly
and severally, defend, indemnify and hold harmless the Purchaser,
the Parent, their Affiliates and their respective directors,
officers, employees, managers, members, partners, advisors, agents
and other representatives (collectively, the “Purchaser Indemnitees”)
from and against, and to pay or reimburse the Purchaser Indemnitees
for, any and all claims, Liabilities, obligations, losses, fines,
costs, proceedings or damages, including all reasonable fees and
disbursements of counsel incurred in the investigation or defense
of any of the same or in asserting any of their respective rights
hereunder (collectively, “Losses”), based on,
resulting from, arising out of or relating to:

 

(a) any breach of any
representation or warranty of any Seller contained in the
Transaction Documents (other than the Fundamental
Reps);

 

(b) any breach by a
Seller of any of the Fundamental Reps;

 

(c) any breach of or
failure to perform any covenant or agreement of the Sellers or any
of them or any of their Affiliates contained in the Transaction
Documents or any other closing deliverables or the failure to
fulfill any obligation in respect thereof;

 

(d) any Excluded
Liability (including for the avoidance of doubt any Indebtedness,
Indemnified Taxes or Closing Liabilities) or Excluded Asset and any
amount required to be set forth on Section 2.5(b) of the
Disclosure Schedule;

 

(e) any damages
(including any liquidated damages) to which Purchaser becomes
entitled pursuant to Section 4.1(b) or Section 6.7; and

 

(f) any item set forth
in Section 6.2(f)
of the Disclosure Schedule.

 

Section
6.3 Indemnity
Obligations of the Purchaser.

 


  The
Parent and the Purchaser covenant and agree to and shall, jointly
and severally, defend, indemnify and hold harmless the Sellers and
their respective directors, officers, employees, managers, members,
partners, advisors, agents and other representatives (collectively,
the “Seller
Indemnitees”) from and against, and to pay or
reimburse Seller Indemnitees for, any and all any and all Losses
based on, resulting from, arising out of or relating
to:

 

(a) any breach of any
representation or warranty of the Purchaser contained in the
Transaction Documents (other than the Fundamental Reps and the
representations and warranties set forth in Section 3.7);

 

(b) any breach by the
Purchaser of any of the Fundamental Reps or the representations and
warranties set forth in Section 3.7; and

 

(c) any breach of or
failure to perform any covenant or agreement of the Parent or the
Purchaser or any of their Affiliates contained in the Transaction
Documents or any other closing deliverables or the failure to
fulfill any obligation in respect thereof.

 


 




 

37








 





 

Section
6.4 Indemnification
Procedures.

 

(a) Third Party Claims. In the case
of any claim asserted by a third party (a “Third Party Claim”)
against a party entitled to indemnification under this Agreement
(the “Indemnified
Party”), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the
“Indemnifying
Party”) promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought.
If the Indemnifying Party provides a written notice to the
Indemnified Party within 30 days after its receipt of notice of
such claim that it will indemnify and hold the Indemnified Parties
harmless from all Losses related to such Third Party Claim, the
Indemnified Party shall permit the Indemnifying Party (at the
expense of such Indemnifying Party) to assume the defense of such
Third Party Claim or any litigation with a third party resulting
therefrom; provided, however, that (i) the counsel for the
Indemnifying Party who shall conduct the defense of such claim or
litigation shall be subject to the reasonable approval of the
Indemnified Party, (ii) the Indemnified Party may participate in
such defense at such Indemnified Party’s expense, (iii) the
failure by any Indemnified Party to give notice of a Third Party
Claim to the Indemnifying Party as provided herein shall not
relieve the Indemnifying Party of its indemnification obligation
under this Agreement except and only to the extent that, as a
result of such failure to give notice, the defense against such
claim is materially impaired, and (iv) the fees and expenses
incurred by the Indemnified Party prior to the assumption of a
Third Party Claim hereunder by the Indemnifying Party shall be
borne by the Indemnifying Party. Except with the prior written
consent of the Indemnified Party, no Indemnifying Party, in the
defense of any Third Party Claim, shall consent to entry of any
judgment or enter into any settlement that provides for injunctive
or other nonmonetary relief affecting the Indemnified Party, that
does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a general
release from any and all liability with respect to such Third Party
Claim or that includes any admission of wrongdoing by the
Indemnified Party. Notwithstanding anything herein to the contrary,
the Indemnifying Party shall not be entitled to assume (or, if
applicable, to maintain) control of the defense against a Third
Party Claim if (1) the claim for indemnification relates to or
arises in connection with any criminal or quasi criminal
proceeding, action, indictment, allegation or investigation; (2)
the claim seeks an injunction, specific performance or any other
equitable or non-monetary relief against the Indemnified Party; (3)
the Indemnified Party reasonably believes an adverse determination
with respect to the Third Party Claim would be materially
detrimental to or materially injure the Indemnified Party’s
reputation or future business prospects; (4) the Indemnified Party
has been advised by counsel that a reasonable likelihood exists of
a conflict of interest between the Indemnifying Party and the
Indemnified Party; or (5) the Indemnifying Party fails to
vigorously prosecute or defend such claim. If the Indemnifying
Party does not accept the defense of a Third Party Claim within 30
days after receipt of the written notice thereof from the
Indemnified Party described above, the Indemnified Party shall have
the full right to defend against any such claim or demand. In any
event, the Indemnifying Party and the Indemnified Party shall
reasonably cooperate in the defense of any Third Party Claim and
the records of each shall be reasonably available to the other with
respect to such defense.

 

(b) Non-Third Party Claims. With
respect to any claim for indemnification hereunder which does not
involve a Third Party Claim, the Indemnified Party will give the
Indemnifying Party written notice of such claim. The Indemnifying
Party may acknowledge and agree by notice to the Indemnified Party
in writing to satisfy such claim within 30 days of receipt of
notice of such claim from the Indemnified Party. If the
Indemnifying Party shall dispute such claim, the Indemnifying Party
shall provide written notice of such dispute to the Indemnified
Party within such 30 day period. If the Indemnifying Party shall
fail to provide written notice to the Indemnified Party within 30
days of receipt of notice from the Indemnified Party that the
Indemnifying Party either acknowledges and agrees to pay such claim
or disputes such claim, the Indemnifying Party shall be deemed to
have acknowledged and agreed to pay such claim in full and to have
waived any right to dispute such claim.

 




 

38








 





 

(c) Escrow Claims. Upon any claim
for indemnification in favor of a Purchaser Indemnitee being
determined (whether by way of an Order of a Governmental Authority
or a settlement or agreement between the Purchaser and THC, on
behalf of the Sellers), the Purchaser and THC shall instruct the
Escrow Agent to release to the Purchaser a number of Escrow Shares
having a value equal to the amount of such indemnification claim.
To the extent there are insufficient Escrow Shares remaining in
escrow to satisfy any such claim in favor of a Purchaser
Indemnitee, subject to the limitations in Section 6.5, Sellers shall be
liable for the direct payment thereof.

 

(d) Escrow Shares. For purposes of
Section 5.2(a) and
Article VI, and for
any other matter arising hereunder that requires the Escrow Shares,
or any of the, to be valued, the Escrow Shares shall be deemed to
have a value equal to $1.74 per share.

 

Section
6.5 Certain
Limitations.

 


 The
indemnification provided for in Section 6.2 and Section 6.3 shall be subject to
the following limitations:

 

(a) The Sellers shall
not be liable to the Purchaser Indemnitees for indemnification
under Section
6.2(a) until the aggregate amount of all Losses in respect
of indemnification under Section 6.2(a) exceeds
$200,000, exclusive of claims or groups of related claims for
Losses not exceeding $10,000 (the “Deductible”), in which
case the Sellers shall be liable under Section 6.2(a) only for such
Losses that exceed the Deductible. The Purchaser shall not be
liable to Seller Indemnitees for indemnification under Section 6.3(a) until the
aggregate amount of all Losses in respect of indemnification under
Section 6.3(a)
exceeds the Deductible, in which case the Purchaser shall be liable
under Section
6.3(a) only for such Losses that exceed the
Deductible.

 

(b) The Purchaser
Indemnitees shall not be entitled to indemnification pursuant to
Section 6.2(a) with
respect to aggregate Losses in excess of an amount equal to
$4,350,000 (the “General Cap”). The
Purchaser Indemnitees shall not be entitled to indemnification
pursuant to Section
6.2(b) or Section
6.2(c) with respect to aggregate Losses in excess of an
amount equal to $43,500,000. Seller Indemnitees shall not be
entitled to indemnification pursuant to Section 6.3(a) with respect to
aggregate Losses in excess of the General Cap. Seller Indemnitees
shall not be entitled to indemnification pursuant to Section 6.3(b) or Section 6.3(c) with respect to
aggregate Losses in excess of an amount equal to
$43,500,000.

 

(c) Notwithstanding
anything to the contrary in this Agreement or any other Transaction
Document, there shall be no deductible, cap or other limitation or
restriction on, and nothing herein shall impair, any claim based
upon fraud, intentional misrepresentation or willful
misconduct.

 

(d) The Purchaser
Indemnitees will not be indemnified, and the Sellers will have no
liability hereunder, for (i) any Losses to the extent of any amount
with respect thereto that is set forth on the Closing Statement,
the Closing Payoff Certificate or Section 2.5(b) of the
Disclosure Schedule and taken into account as a deduction in
determining the Closing Cash Consideration or (ii) any Losses
constituting punitive damages except to the extent actually awarded
to a third party.

 

(e) The amount of any
Losses for which indemnification is provided under Section 6.2 or Section 6.3 shall be reduced by
(i) any amounts that are actually recovered by the Indemnified
Party from any third party with respect to such Losses and (ii) any
insurance proceeds or other cash receipts or source of
reimbursement that are actually received by an Indemnified Party
with respect to such Losses (net of reasonable costs of recovery or
collection and any retention or deductible related to an insurance
claim in respect of Losses thereof); provided, however, that no Indemnified
Party shall have any obligation to claim, seek or otherwise obtain
any such third party recoveries or insurance proceeds or other
reimbursement to which it may be entitled.

 




 

39








 





 

(f) With respect to any
claim brought by a the Purchaser Indemnitee against any Seller
relating to this Agreement, the Sellers expressly waive any right
of subrogation, contribution, advancement, indemnification or other
claim against any the Purchaser Indemnified Party with respect to
any amounts owed by any Seller to any the Purchaser
Indemnitee.

 

Section
6.6 Certain
Determinations.

 


 Notwithstanding
anything to the contrary contained in this Agreement, for the sole
purpose of determining any Losses with respect to any claim for
breach of any representation or warranty that is subject to
indemnification hereunder (and not for purposes of determining
whether there is a breach of any such representation or warranty),
each representation and warranty in any of the Transaction
Documents shall be read without regard and without giving effect to
the term(s) “material” or “Material Adverse
Effect” or similar qualifiers as if such words were deleted
from such representation and warranties. The right to
indemnification, payment of Losses of an Indemnified Person or for
other remedies based on any representation, warranty, covenant or
agreement contained in or made pursuant to any of the Transaction
Documents shall not be affected by any investigation conducted with
respect to, or any knowledge acquired (or capable of being
acquired) at any time with respect to the accuracy or inaccuracy
of, compliance with, or performance or fulfillment of, any such
representation, warranty, covenant or agreement.

 

Section
6.7 Release
of Escrow Shares.

 


  On the
9-month anniversary of the First Closing, provided the Second
Closing has occurred, THC and the Purchaser shall instruct the
Escrow Agent to release the remaining Escrow Shares to THC. If the
Second Closing Date does not occur prior to the 9-month anniversary
of the First Closing Date, THC and the Purchaser shall instruct the
Escrow Agent to continue to hold Escrow Shares having a value of
$500,000 (the “Second Closing Escrow
Shares”) until the Second Closing occurs or is
terminated pursuant to Section 5.3. In the event the
Second Closing occurs after the 9-month anniversary of the First
Closing and the Pendleton Lease Assignment Condition has been
satisfied, the Second Closing Escrow Shares shall be released to
the Sellers. In the event the Second Closing does not occur and is
terminated pursuant to Section 5.3 or the Second
Closing occurs but the Pendleton Lease Assignment Condition has not
been satisfied by such time, Sellers shall, without duplication of
recovery pursuant to Section 4.1(b), be liable to
Purchaser for liquidated damages in the amount of $500,000. The
number of Escrow Shares to be released to the Sellers on any date
for the release of Escrow Shares provided for above shall be
reduced by a number of Escrow Shares having an aggregate value
equal to the amount of any indemnity claim asserted by a Purchaser
Indemnitee pursuant to this ARTICLE VI that has not been
resolved as of such release date. Promptly, and in any event not
later than three (3) Business Days, following the resolution of any
indemnity claim with respect to which Escrow Shares are withheld on
a release date, the Purchaser and THC shall instruct the Escrow
Agent to release to THC the portion of the Escrow Shares that were
withheld on the basis of such claim and that are not required to be
used to satisfy such claim (provided that if there are then other
indemnity claims pending against the Escrow Shares, such Escrow
Shares shall continue to be withheld to the extent required to
secure satisfaction of such other indemnity claims and shall be
released in the same manner upon the resolution of such other
indemnity claims, and provided further that, if the Second Closing
Date does not occur prior to the 9-month anniversary of the First
Closing Date, notwithstanding the resolution of any such indemnity
claim, the Escrow Agent shall continue to hold the Second Closing
Escrow Shares until the Second Closing occurs or is terminated
pursuant to Section
5.3). Escrow Shares released to THC shall be allocated among
the Selling Shareholders in such manner as THC may determine and
the Purchaser shall have no liability therefor.

 

Section
6.8 Exclusive
Remedy.

 


  Except
(a) for a party’s right to specific performance or
injunctive relief under Section 7.15 or in any other
Transaction Document, and (b) claims with respect to fraud,
intentional misrepresentation or willful misconduct, the parties
hereto acknowledge and agree that the remedies provided for in this
ARTICLE VI shall be
the sole and exclusive remedies for any breach of the
representations and warranties or covenants contained in this
Agreement and the other Transaction Documents or any claims
relating to this Agreement or the other Transaction Documents. The
Sellers hereby waive, to the fullest extent permitted by applicable
Law, any and all rights, claims, and causes of action for
contribution, subrogation or indemnification by or against
BNC.

 




 

40








 





 

Section
6.9 Treatment
of Indemnification Payments.

 


  All
indemnification payments made under this Agreement shall be treated
by the Parties as an adjustment to the Purchase Price to the extent
permitted by applicable Law.

 



ARTICLE VII



MISCELLANEOUS

 

Section
7.1 The
Representative.

 

(a) Each Seller other
than THC hereby irrevocably appoints THC as the sole and exclusive
representative of such Seller regarding any matter relating to or
arising under this Agreement, the other Transaction Documents and
the transactions contemplated hereby and thereby.

 

(b) Each Seller other
than THC hereby appoints THC as such Seller’s true and lawful
attorney-in-fact and agent, with full powers of substitution and
resubstitution. This power of attorney, all authority hereby
conferred and the powers, immunities and rights to indemnification
granted to THC hereunder are granted and shall be irrevocable
and shall not be terminated by any act of any Seller, by operation
of applicable Law, whether by death, disability, protective
supervision, bankruptcy, liquidation, incompetence or any other
event. All actions taken by THC under any of the Transaction
Documents shall be binding upon each Seller and each such
Seller’s successors as if expressly confirmed and ratified in
writing by such Seller, and all defenses which may be available to
any Seller to contest, negate or disaffirm the action of THC taken
in good faith under any of the Transaction Documents are waived.
Without limitation of the foregoing, any notice provided to THC
shall be deemed to have been provided to each Seller. THC shall
promptly deliver to each Seller any notice received by THC
concerning this Agreement. Without limiting the generality of the
foregoing, THC has full power and authority, on behalf of each
Seller and each Seller’s successors and assigns, to:
(i) interpret the terms and provisions of the Transaction
Documents and the documents to be executed and delivered by such
Seller in connection herewith and therewith, (ii) execute and
deliver and receive deliveries of all agreements, certificates,
statements, notices, approvals, extensions, waivers, undertakings,
amendments, and other documents required or permitted to be given
in connection with the consummation of the Transaction Documents
and the transactions contemplated hereunder and thereunder,
(iii) receive service of process in connection with any claims
under this Agreement, (iv) agree to, negotiate, enter into
settlements and compromises of, assume the defense of claims, and
demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of THC for the
accomplishment of the foregoing, (v) give and receive notices
and communications, and (vi) take all actions necessary or
appropriate in the judgment of THC on behalf of the Sellers in
connection with the Transaction Documents. THC shall be entitled
to: (i) rely upon any signature of a Seller believed by it to
be genuine and (ii) reasonably assume that a signatory has
proper authorization to sign on behalf of the applicable
Seller.

 

(c) The Purchaser may
rely exclusively, without independent verification or
investigation, upon all decisions, communications or writings made,
given or executed by THC in connection with this Agreement and the
transactions contemplated hereby. the Purchaser is entitled to deal
exclusively with THC on all matters relating to this Agreement and
the transactions contemplated hereby. Any action taken or not taken
or decisions, communications or writings made, given or executed by
THC, for or on behalf of any Seller, shall be deemed an action
taken or not taken or decisions, communications or writings made,
given or executed by such Seller. Any notice or communication
delivered by the Purchaser to THC shall be deemed to have been
delivered to all Sellers. The Purchaser shall be entitled to
disregard any decisions, communications or writings made, given or
executed by any Seller in connection with this Agreement and the
transactions contemplated hereby unless the same is made, given or
executed by THC.

 




 

41








 





 

Section
7.2 Expenses.

 


  Except
as otherwise provided in this Agreement and the Transaction
Documents, including Section 4.6(a), each of the
Parties shall bear its own fees, costs and expenses (including
legal, accounting, consulting and investment advisory fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.

 

Section
7.3 Governing
Law; Jurisdiction; Venue.

 


  This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of California (without giving effect to
any choice or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
California). Without intending to limit the provisions set forth in
Section 7.15, the
Parties agree, on behalf of themselves, the Purchaser Indemnitees
and the Seller Indemnitees, that any dispute or Action based on,
arising out of, or relating to this Agreement or any other
Transaction Documents or closing deliverables or any breach thereof
(a “Dispute”), shall be
resolved by arbitration in accordance with the then-applicable
Commercial Arbitration
Rules of the American Arbitration Association
(“AAA
Rules”; see
www.adr.org). The arbitration shall be conducted in the City of Los
Angeles, California by one sole arbitrator. The sole arbitrator
shall be appointed in accordance with the AAA Rules. The arbitrator
shall follow the then-applicable ICDR Guidelines for Arbitrators Concerning
Exchanges of Information in managing and ruling on requests
for discovery. The sole arbitrator, by accepting appointment, shall
undertake to exert her or his best efforts to conduct the process
so as to issue an award within six (6) months of her or his
appointment, but failure to meet that timetable shall not affect
the validity of the award. The sole arbitrator shall decide the
Dispute in accordance with the substantive law of the State of
California, without regard to the conflict of laws rules thereof,
and shall not award any damages, fees, cost, expenses or any other
amounts that the Parties have agreed to exclude pursuant to this
Agreement. The award of the sole arbitrator may be entered in any
court of competent jurisdiction.

 

Section
7.4 Entire Agreement;
Amendments and Waivers.

 


  This
Agreement (including the schedules and exhibits hereto) represents
the entire understanding and agreement between the Parties with
respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived,
only by written instrument making specific reference to this
Agreement signed by the Purchaser, in the case of an amendment,
supplement, modification or waiver sought to be enforced against
the Parent or the Purchaser, or THC, in the case of an amendment,
supplement, modification or waiver sought to be enforced against a
Seller. The waiver by any Party of a breach of any provision of
this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any Party to exercise,
and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or remedy by such Party preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by
Law.

 

Section
7.5 Section
Headings.

 


  The
section headings of this Agreement are for reference purposes only
and are to be given no effect in the construction or interpretation
of this Agreement.

 

Section
7.6 Notices.

 


  All
notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered, if personally delivered; (b) on
the next Business Day after dispatch, if sent postage pre-paid by
nationally recognized, overnight courier guaranteeing next Business
Day delivery; (c) if sent by e-mail of a PDF document, the date
when sent by email sent to the email address for the sender stated
in this Section 7.6
(provided that receipt of such email is subsequently acknowledged
or such notice sent by email is subsequently delivered by another
method in accordance with this Section 7.6), or (d) on the
third day after the date mailed, by certified or registered mail,
return receipt requested, postage prepaid. Such communications must
be sent to the respective Parties at the following addresses (or at
such other address for a Party as shall be specified in a notice
given in accordance with this Section 7.6):

 




 

42








 






 


	

If to a
Seller, to:


 


such
Seller in care of


Christopher
Jordan


11618
Pendleton St.


Sun
Valley, CA 91352


Email:
chrisj@thehacienda.co


 

	
 


	

With a
copy (which shall not constitute notice) to:


 


Eisner
LLP9601 Wilshire Blvd., 7th Floor


Beverly
Hills, CA 90210


Attn:
Wesley Morrow>


Email:
wmorrow@eisnerlaw.com


 

	
 


	

If to
the Purchaser, to:


 


Indus
LF LLC


Indus
Holding Company


19
Quail Run Circle


Salinas,
California 93907


Attn:
Mark Ainsworth


Email:
mark@indusholdingco.com


 


With a
copy (which shall not constitute notice) to:


 


Akerman
LLP


1251
Avenue of the Americas, 37th Floor


New
York, New York 10020


Attn:
Kenneth G. Alberstadt


Email:
Kenneth.alberstadt@akerman.com

	
 






 

Section
7.7 Severability.

 


  If any
provision of this Agreement is invalid, illegal or unenforceable,
the balance of this Agreement shall remain in effect. Upon such
determination that any term or other provision is invalid, illegal
or unenforceable, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent
possible.

 

Section
7.8 Binding
Effect; Assignment; Third-Party Beneficiaries.

 


  This
Agreement shall be binding upon and shall inure to the benefit of
the Parties and their respective successors and permitted assigns;
provided, however, that no Party may assign its rights and/or
obligations hereunder without the consent of the other Parties.
Notwithstanding the foregoing, the Parent or the Purchaser may
assign its rights and obligations pursuant to this Agreement, in
whole or in part, in connection with any disposition or transfer of
all or any portion of the Parent or the Purchaser or its business
in any form of transaction without the consent of any of the other
Parties. In addition, the Parent or the Purchaser may assign any or
all of its rights pursuant to this Agreement to any lender to the
Parent or the Purchaser as collateral security without the consent
of any of the other Parties. Except as provided in ARTICLE VI with respect to
Persons entitled to indemnification thereunder, nothing in this
Agreement shall create or be deemed to create any third party
beneficiary rights in any Person.

 




 

43








 





 

Section
7.9 Counterparts.

 


  This
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile,
portable document format or other electronic means shall be
effective as delivery of a manually executed counterpart to this
Agreement.

 

Section
7.10 Remedies
Cumulative.

 


  Except
as otherwise provided herein, no remedy herein conferred upon a
Party hereto is intended to be exclusive of any other remedy. No
single or partial exercise by a Party hereto of any right, power or
remedy hereunder shall preclude any other or further exercise
thereof.

 

Section
7.11 Exhibits
and Schedules.

 


  The
exhibits and schedules referred to herein are attached hereto and
incorporated herein by this reference. The disclosure schedule
delivered by the Sellers to the Parent and the Purchaser in
connection with the execution of this Agreement (the
“Disclosure
Schedule”) shall be arranged to correspond to the
specific sections and subsections of this Agreement. Any
information disclosed in one Section of the Disclosure Schedule
shall be deemed to be disclosed in all other Sections of the
Disclosure Schedule where (i) an express reference thereto is made
or (ii) the information on the face of such disclosure is
sufficient to alert a reasonable person of its applicability to
such other Sections of the Disclosure Schedule. Nothing in the
Disclosure Schedule will be deemed adequate to disclose an
exception to a representation or warranty made herein, unless the
Disclosure Schedule identifies the exception with particularity and
describes the relevant facts in detail. The mere listing (or
inclusion of a copy) of a document or other item in the Disclosure
Schedule will not be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement (unless the
representation or warranty pertains to the existence of the
document or other item itself).

 

Section
7.12 Interpretation.

 


  When a
reference is made in this Agreement to an article, section,
paragraph, clause, schedule or exhibit, such reference shall be
deemed to be to this Agreement unless otherwise indicated. The text
of all schedules is incorporated herein by reference. Whenever the
words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.” As used herein, words in the singular will be
held to include the plural and vice versa (unless the context
otherwise requires), words of one gender shall be held to include
the other gender (or the neuter) as the context requires, and the
terms “hereof”, “herein”, and
“herewith” and words of similar import will, unless
otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement. The
phrases “delivered,” “provided” or
“made available” shall mean that the document or
information referred to has been posted to the Dropbox electronic
data site established by the Sellers titled “Project Leo
– DD” at least three (3) Business Days prior to the
First Closing Date. The Parties intend that each representation,
warranty and covenant contained herein will have independent
significance. If any party has breached or violated, or if there is
an inaccuracy in, any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject
matter or any adjustment with respect thereto (regardless of the
relative levels of specificity) which the party has not breached or
violated, or in respect of which there is not an inaccuracy or with
respect to which there has been an adjustment, will not detract
from or mitigate the fact that the party has breached or violated,
or that there is an inaccuracy in, the first representation,
warranty or covenant.

 

Section
7.13 Arm’s
Length Negotiations.

 


  Each
Party herein expressly represents and warrants to all other Parties
hereto that (a) said Party has had the opportunity to seek and has
obtained the advice of its own legal, tax and business advisors
before executing this Agreement; and (b) this Agreement is the
result of arm’s length negotiations conducted by and among
the Parties and their respective counsel.

 




 

44








 





 

Section
7.14 Construction.

 


  The
Parties agree and acknowledge that they have jointly participated
in the negotiation and drafting of this Agreement. In the event of
an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumptions or burdens of proof shall arise favoring any
Party by virtue of the authorship of any of the provisions of this
Agreement.

 

Section
7.15 Specific
Performance.

 


  Each
Party acknowledges and agrees that the other Parties would be
damaged irreparably in the event any provision of this Agreement is
not performed in accordance with its specific terms or otherwise is
breached, and therefore a Party shall be entitled to injunctive
relief to prevent breaches of the provisions of this Agreement and
to enforce specifically this Agreement and the terms and provisions
hereof (without posting a bond or other surety) in addition to any
other remedy to which such Party may be entitled, at law or in
equity. No limitation herein shall restrict any Party from seeking
and obtaining equitable relief.

 

Section
7.16 Waiver
of Jury Trial.

 


  EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATED TO THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 



ARTICLE VIII



CERTAIN DEFINITIONS

 

Section
8.1 Definitions.

 

(a) For purposes of
this Agreement, the following terms shall have the meanings
specified in this Section
8.1:

 


“Accounting Principles”
means GAAP, subject only to the exceptions to GAAP set forth on
Schedule 2.5(a),
and, to the extent consistent with GAAP and such scheduled
exceptions, the accounting methods, policies, principles and
procedures practiced by Sellers in preparing the Financial
Statements.

 


“Action” means any
judicial, administrative or arbitral actions, suits, proceedings
(public or private), claims, hearings, investigations, charges,
complaints, demands or governmental proceedings.

 


“Affiliate” means, with
respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such
Person, and in the case of any natural Person shall include all
relatives and family members of such Person.

 


“Assets” means the Initial
Assets and the Regulated Assets.

 


“Assumed Contracts” means
the Contracts set forth in Section 1.1(a)(iv) of the
Disclosure Schedule and the rights (but not any obligations) of any
Seller under employment agreements, consulting agreements or
restrictive covenants agreements relating to confidentiality of
information, non-solicitation, non-competition, assignment of
inventions and the return of assets included in the Assets, which
rights shall, from and after the First Closing, be for the benefit
and enforceable by the Purchaser. Notwithstanding the foregoing,
the Beachwood Vehicle Leases will not constitute Assumed Contracts
until Beachwood has consented to the assignment of the Beachwood
Vehicle Leases to Purchaser at the direct cost of the underlying
financing obligation to Beachwood and then only if such consent is
given in writing within 30 days of the First Closing.

 


“BNC Equity” means the
outstanding Equity Interests in BNC.

 




 

45








 






 


“Beachwood Vehicle Leases”
means the four vehicle leasing agreements between Beachwood and BNC
listed on Section 1.4(d)(vii) of the Disclosure
Schedule.

 


“Books and Records” means
all books and records of the Business, including books of account,
ledgers and general, financial and accounting records, machinery
and equipment maintenance files, customer lists, customer
purchasing histories, price lists, distribution lists, supplier
lists, production data, quality control records and procedures,
customer complaints and inquiry files, research and development
files, records and data (including all correspondence with any
Governmental Authority), sales material and records (including
pricing history, total sales, terms and conditions of sale, sales
and pricing policies and practices), strategic plans, internal
financial statements, marketing and promotional surveys, material
and research and files relating to the Business, the Assets or the
Assumed Liabilities.

 


“Business Day” means any
day of the year on which national banking institutions in the City
of New York are open to the public for conducting business and are
not required or authorized to close.

 


“Business Intellectual
Property” means, collectively, the Owned Intellectual
Property and the Licensed Intellectual Property.

 


“Closing Liabilities”
means all unpaid Liabilities of the Business as of the Closing,
including Tax Liabilities (as determined in accordance with
Section 4.6(b)),
professional fees, broker fees, the cost of the Tail Policies,
final payroll and accrued vacation liabilities to the Group I and
Group II payable by the Sellers pursuant to Section 4.10, and all retention
bonuses, sale bonuses and other amounts due or to become due to
employees (and related Tax costs) as a consequence of the Closing,
but excluding Indebtedness, trade payables owed to the Purchaser or
its Affiliates, amounts set forth under the caption “Paid by
Purchaser” on Schedule I to the Closing Statement, accrued
vacation liabilities for the Group III Employees and Assumed
Liabilities.

 


 “Code”
means the Internal Revenue Code of 1986, as amended.

 


“Consent” means any
consent, approval, authorization, waiver, permit, grant, franchise,
concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or
notice to, any Person, including any Governmental
Authority.

 


“Contract” means any
contract, agreement, indenture, note, bond, loan, mortgage,
license, instrument, lease, understanding, purchase order,
commitment or other arrangement or agreement, whether written or
oral.

 


“COVID Related Deferrals”
means any Tax liabilities, indebtedness or other amounts or
Liabilities for or allocable to any taxable period ending on or
prior to the Closing Date the payment of which is deferred, on or
prior to the Closing Date, to a taxable period (or portion thereof)
beginning after the Closing Date pursuant to the CARES Act or any
other Law or executive order or presidential memorandum (including
the presidential memorandum described in IRS Notice 2020-65)
related to, or in response to the economic or other effects of,
COVID-19.

 


“DOL” means the United
States Department of Labor.

 


“Employee Benefit Plan”
means any employee benefit plan (as defined in Section 3(3) of
ERISA), and any bonus, profit sharing, savings, pension,
retirement, scheme, fund, deferred compensation, medical, dental,
vision, life or accidental dismemberment, disability, accident,
sick pay, sick leave, accrued leave, vacation, paid time off,
holiday, termination, severance, incentive, commission,
post-retirement health or welfare benefit, stock option, stock
purchase, restricted stock, equity compensation, stock appreciation
right, performance share, performance share unit, restricted stock
unit, or other fringe benefit plan, agreement, policy or
arrangement (whether or not subject to ERISA and whether written or
unwritten, insured or self-insured) that is or has been maintained,
sponsored or contributed to by any Seller or any ERISA Affiliate,
or to which any Seller or any ERISA Affiliate has or could have
Liability.

 




 

46








 






 


“Environmental Claim”
means any Action, Order, lien, fine, penalty, or, as to each, any
settlement or judgment arising therefrom, by or from any Person
alleging Liability of whatever kind or nature (including Liability
or responsibility for the costs of enforcement proceedings,
investigations, cleanup, governmental response, removal or
remediation, natural resources damages, property damages, personal
injuries, medical monitoring, penalties, contribution,
indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to any
Hazardous Materials; or (b) any actual or alleged non-compliance
with any Environmental Law or term or condition of any
Environmental Permit.

 


“Environmental Laws” means
any and all Laws relating to the environment or natural resources
or the protection of human health and safety with respect to the
foregoing.

 


“Equity Interest” means,
with respect to any Person, (i) any capital stock, partnership or
membership interest, unit of participation or other similar
interest (however designated) in such Person and (ii) any option,
warrant, purchase right, conversion right, exchange right or other
Contract which would entitle any other Person to acquire any such
interest in such Person or otherwise entitle any other Person to
share in the equity, profits, earnings losses or gains of such
Person, including stock appreciation, phantom stock, profit
participation or other similar rights.

 


“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

 


“ERISA Affiliate” means
each Person or entity under common control with any Seller within
the meaning of Section 414(b), (c), (m) or (o) of the Code and the
regulations issued thereunder.

 


“Escrow Agent” means
Odyssey Trust Company.

 


“Escrow Shares” means
5,000,000 Parent Shares.

 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 


“Federal Marijuana Laws”
means The Federal Comprehensive Drug Abuse Prevention and Control
Act of 1970, the Controlled Substances Act of 1910 (21 U.S.C.
§ 801 et seq.), and any other U.S. federal Law the violation
of which is predicated upon a violation of the foregoing as it
applies to marijuana.

 


“Governing Documents”
means, with respect to any particular entity: (i) if a corporation,
the articles or certificate of incorporation and the bylaws; (ii)
if a general partnership, the partnership agreement and any
statement of partnership; (iii) if a limited partnership, the
limited partnership agreement and the certificate of limited
partnership; (iv) if a limited liability company, the articles of
organization and operating agreement; (v) if another type of
Person, any other charter or similar document adopted or filed in
connection with the creation, formation or organization of the
Person; (vi) all equityholders’ agreements, voting
agreements, voting trust agreements, joint venture agreements,
registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person
or relating to the rights, duties and obligations of the
equityholders of any Person; and (vii) any amendment or supplement
to any of the foregoing.

 


“Governmental Authority”
means any government or quasi-governmental entity, or political
subdivision thereof, whether federal, state, county, municipal,
city, national, provincial or municipal, or any authority, agency
or commission entitled to exercise any administrative, executive,
judicial, legislative, police, regulatory or Tax authority or
power, or any court, arbitrator (public or private) or tribunal (or
any department, bureau or division thereof).

 




 

47








 






 


“Group I Employees” means
the employees of the Sellers listed under the caption “Group
I” on Schedule II to the Closing Statement.

 


“Group II Employees” means
the employees of the Sellers listed under the caption “Group
II” on Schedule II to the Closing Statement.

 


“Group III Employees”
means the employees of the Sellers listed under the caption
“Group III” on Schedule II to the Closing
Statement.

 


“Hazardous Material(s)”
means any substance, material or waste that is regulated,
classified or otherwise characterized under or pursuant to any
Environmental Laws as “hazardous,” “toxic,”
“pollutant,” “contaminant,”
“radioactive,” “medical waste,”
“biohazard” or words of similar meaning or effect,
including petroleum and its by-products, asbestos, polychlorinated
biphenyls, radon, mold or other fungi, and urea formaldehyde
insulation.

 


“Indebtedness” of any
Person means, without duplication, (i) the principal of and premium
(if any) in respect of (A) indebtedness of such Person for money
borrowed (which shall include, in the case of Sellers, the
outstanding balances of any corporate credit card accounts) and (B)
indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as
the deferred purchase price of property or services, all
conditional sale obligations of such Person and all obligations of
such Person under any title retention agreement (but excluding
trade accounts payable arising in the Ordinary Course of Business
that either (x) are not more than 60 days past due or (y) are set
forth under the caption “Paid by Sellers” on Schedule I
to the Closing Statement); (iii) all obligations of such Person
under leases that would be required to be capitalized in accordance
with the Accounting Principles consistently applied (including any
such liabilities that are not capitalized); (iv) all obligations of
such Person under any letter of credit, banker’s acceptance
or similar credit transaction or any book overdraft; (v) all
obligations of such Person under interest rate cap, swap, collar or
similar transactions or currency hedging transactions; (vi) the
liquidation value of all redeemable preferred securities of such
Person; (vii) any accrued interest, penalties and other obligations
relating to the foregoing; (viii) all obligations of the type
referred to in clauses (i) through (vii) of any Persons for the
payment of which such Person is responsible or liable, directly or
indirectly, as obligor, guarantor, surety or otherwise, including
guarantees of such obligations; and (ix) all obligations of the
type referred to in clauses (i) through (viii) of other Persons
secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person).
Indebtedness shall also include any pre-payment penalties,
“breakage costs,” redemption fees, premiums and similar
amounts.

 


“Indemnified Taxes” means,
without duplication, (a) all Taxes (or the non-payment thereof) of
Sellers or any of their Affiliates (other than BNC) for any and all
tax periods, (b) all Taxes of BNC for any and all Pre-Closing Tax
Periods, including any Taxes attributable to the portion of a
Straddle Period ending on and including the First Closing Date (as
determined in accordance with Section 4.6(b)), (c) all Taxes
of any member of an affiliated group of which any Seller (including
BNC) or any predecessor is or was a member on or prior to the
Closing Date, including pursuant to Treasury Regulation
§1.1502-6 (or any analogous or similar state, local, or
foreign Law or regulation), (d) any and all Taxes of any Person
imposed on any Seller (including BNC) as a transferee or successor,
by Contract or pursuant to any Law, rule, regulation, or otherwise,
(e) any COVID Related Deferrals, (f) all Taxes imposed on any
Seller or for which any Seller may be liable, as a result of any
transaction contemplated by this Agreement or the other Transaction
Documents (including the employer-share of any employment Taxes on
any compensatory payments due or made on or before the Closing
Date) and (g) all Transfer Taxes,1 in each case
except to the extent such Taxes are set forth on the Closing
Statement or Section
2.5(b) of the Disclosure Schedule and reduce the Closing
Cash Consideration.

 


1 Quantification of
Transfer Taxes pending by Sellers.

 




 

48








 






 


“Information Technology”
means computer systems, other equipment or hardware (including
computers, screens, servers, workstations, routers, hubs, switches,
networks, data communications lines and telecommunications systems)
and computer software used in, or held for use in, the operation of
the Business

 


“Intellectual Property
Registrations” means any issuance, registration or
application by or with any Governmental Authority or authorized
private registrar in any jurisdiction with respect to Owned
Intellectual Property.

 


“Intellectual Property
Rights” means any and all proprietary and intellectual
property rights, in any jurisdiction, including those rights in and
to (A) inventions and discoveries (whether or not patentable or
reduced to practice), improvements thereto, and invention
disclosures (“Inventions”), (B) patents
and patent applications (including applications or registrations
for industrial design, mask works and statutory Invention
registrations), together with extensions, reissuances, divisionals,
provisionals, continuations, continuations-in-part and
reexaminations thereof (“Patents”), (C)
trademarks, trademark applications and registrations, service
marks, brand names, certification marks, trade dress, slogans,
symbols, logos, trade names and corporate names, fictitious names,
domain names and social media accounts, together with the goodwill
associated therewith (in each case, whether registered or
unregistered) (“Trademarks”), (D)
copyrights, published and unpublished works of authorship, whether
copyrightable or not (including software and related algorithms),
moral rights and rights equivalent thereto, including the rights of
attribution, assignation and integrity (in each case, whether
registered or unregistered) (“Copyrights”), (E) all
trade secrets and confidential business information including, but
not limited to, confidential ideas, technical data, customer lists,
pricing and cost information, marketing plans, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, (F) all proprietary breeds,
cultivars, varietals and germplasm, (G) all other intellectual or
industrial property or proprietary rights of any kind, including
but not limited to any tradenames, (H) all applications to
register, registrations and renewals, substitutions or extensions
of the foregoing and (I) all copies and tangible embodiments of the
foregoing.

 


“Inventory” means all raw
materials, work-in-process, semi-finished goods, finished goods and
merchandise, spare parts, labelling, packaging and other supplies
related thereto.

 


“IRS” means the United
States Internal Revenue Service.

 


“Knowledge of the
Sellers,” or “Sellers’
Knowledge,” or words of similar effect, regardless of
case, means the actual knowledge of Christopher Jordan or Hannah
Buchan after due inquiry.

 


“Law” means any law,
statute, standard ordinance, code, treaty, resolution,
promulgation, rule or regulation of a Governmental Authority,
including the common law, and any order, judgment, writ,
injunction, decree or other determination of an arbitrator or court
or other Governmental Authority. Any reference to any federal,
state, local, or foreign Law shall be deemed also to refer to all
rules and regulations promulgated thereunder.

 


“Liability” means any
liability, obligation or commitment of any nature whatsoever
(whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated,
matured or unmatured, or due or to become due, or otherwise),
including any liability for Taxes.

 


“Licensed Intellectual
Property” means those Intellectual Property Rights
licensed to a Seller.

 




 

49








 






 


“Lien” means any lien
(including any Tax lien), pledge, mortgage, deed of trust, security
interest, claim, demand, lease, charge, option, warrant, call,
right of first refusal, easement, servitude, transfer restriction
or any other encumbrance, restriction or limitation
whatsoever.

 


“Management Services
Agreement” means a management services agreement among
THC, BNC and the Purchaser, substantially in the form attached
hereto as Exhibit
B, pursuant to which the Purchaser shall provide
administrative and management services to THC and BNC to enable THC
and BNC to continue to conduct the Business activities specified
therein at the Licensed Facility pending approval of the conveyance
to the Purchaser of the BNC Equity Interests.

 


“Marijuana Law” means any
Law relating to the farming, growth, manufacturing, production,
processing, extraction, packaging, sale or distribution of any
marijuana or marijuana-related product, including any cannabidiol
product.

 


“Material Adverse Effect”
or “Material Adverse
Change” means any change, event, circumstance or
effect that, individually or in the aggregate with all other
changes, events, circumstances and effects, has had or would
reasonably be expected to have a material adverse effect on the
Business, the Assets or the Assumed Liabilities or on the ability
of Sellers to consummate the transactions contemplated hereby,
provided that changes, events, circumstances and effects relating
to the matters described in clauses (a) through (e) below shall not
be considered in determining whether a “Material Adverse
Effect” has occurred: (a) any changes in financial, banking
or securities markets in general (including any disruption of such
markets); (b) the outbreak or escalation of hostilities involving
the United States, the declaration by the United States of a
national emergency or war or the occurrence of any other national
or international calamity or crisis, including an act of terrorism
involving the United States; (c) changes after the date hereof in
Law, or the interpretation thereof; (d) the disclosure of the
fact that Sellers are selling or the Purchaser is acquiring the
Business and the Assets; and (e) the failure, in and of
itself, of the Business to achieve any projected or forecasted
results (provided that this clause (e) shall not prevent a
determination that any change or effect underlying any such failure
has resulted, or could reasonably be expected to result, in a
Material Adverse Effect); which, in the case of clauses (a) through
(c), is not specific to Sellers and does not disproportionately
affect Sellers or the Business relative to the other businesses in
the industries and geographic regions in which Sellers
operate.

 


“Order” means any order,
judgment, award, decision, decree, injunction, ruling, writ or
assessment of any Governmental Authority.

 


“Ordinary Course of
Business” means, with respect to any action, that such
action (a) is consistent in nature, scope and magnitude with
the past practices of the Business and is taken in the ordinary
course of the normal, day-to-day operations of the Business; and
(b) is similar in nature, scope and magnitude to actions
customarily taken in the ordinary course of the normal, day-to-day
operations of other Persons that are in the same line of business
as the Business. No violation of Law or breach of Contract, or any
indemnity, infringement or other obligations with respect thereto,
shall be deemed in the Ordinary Course of Business.

 


“Owned Intellectual
Property” means, collectively, those Intellectual
Property Rights owned by Sellers.

 


“Parent Shares” means
subordinate voting shares of Parent.

 




 

50








 






 


“Permits” means all
permits, approvals, registrations, certifications, clearances,
consents, concessions, grants, franchises, licenses and other
evidence of authority issued or granted to, conferred upon or
otherwise created for any Seller by any Governmental Authority or
any third party organization or pursuant to Law.

 


“Permitted Liens” means
(i) Liens for Taxes which are not yet due and payable or which are
being contested in good faith by appropriate proceedings as
disclosed herein, (ii) Liens of record to secure landlords, lessors
or renters under any leased Real Property that would be disclosed
by an accurate survey or inspection of such Real Property and (iii)
Liens in favor of carriers, warehousemen, mechanics and materialmen
to secure claims for labor, materials or supplies or other similar
items for amounts not yet delinquent or are being contested in good
faith to the extent adequate reserves have been made on the January
31, 2021 balance sheet included in the Financial Statements or
otherwise disclosed to Purchaser as of the First Closing
Date.

 


“Person” means any
individual, corporation, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated
organization, Governmental Authority or other entity.

 


“Post-Closing Sellers”
means each of Sellers except for BNC.

 


“Pre-Closing Tax Period”
means any taxable period or portion thereof ending on or before the
First Closing Date (including the portion of any Straddle Period
ending on the First Closing Date).

 


“Real Property” means real
property, together with all easements, licenses, interests and all
of the rights arising out of the ownership thereof or appurtenant
thereto and all buildings, structures, facilities, fixtures and
other improvements thereon.

 


“Related Party” means as
to any Person (a) any Affiliate, (b) any Person that directly or
indirectly owns, or in which such Person directly or indirectly
owns, more than five percent (5%) of any class of capital stock or
other equity interest of such Person or any Affiliate of such
Person, (c) when referring to a legal entity, any officer, manager,
director, employee, member, shareholder or partner of such legal
entity, (d) when referring to a trust, any trustee or beneficiary
of such trust, (e) any parent, spouse, sibling or child of any
individual described in clauses (a) through (d) above, and (f) any
trust for the benefit in whole or in part of such Person and/or any
individual described in clause (e) above.

 


“Release” means any actual
or threatened release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, migration or
leaching into the indoor or outdoor environment, or into or out of
any property.

 


“Remedial Action” means
any investigation, monitoring, clean-up, containment, response,
removal, remedial compliance or other action relating to the
remediation of any Hazardous Material or any violation of
Environmental Law.

 


“Reserve Account” means an
account established by Sellers which shall, immediately prior to
the First Closing, hold all of Sellers’ available cash
balances, estimated to be approximately $2,160,834, less any
amounts used prior to the First Closing to satisfy sales and excise
Taxes and the accounts payable set forth under the caption
“Paid by Sellers” on Schedule I to the Closing
Statement.

 


“Securities Act” means the
Securities Act of 1933, as amended.

 




 

51








 






 


“Seller Financial
Information” means all audited and unaudited financial
statements of Sellers required to be included (or incorporated by
reference) in the Resale Registration Statement and all audited and
unaudited financial statements of Sellers required to be included
in any form, report or other document required to be filed after
the First Closing by the Parent as a registrant or prospective
registrant (or the filer or a pending registration statement) under
Section 12(g) of the Securities Exchange Act, together with all
applicable audit reports and Consents.

 


“Straddle Period” means
any taxable year or other taxable period beginning on or before and
ending after the First Closing Date.

 


“Subsidiary” means, with
respect to any Person, any corporation, limited liability company,
partnership, association, or other business entity of which (a) if
a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the
time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a
combination thereof or (b) if a limited liability company,
partnership, association, or other business entity (other than a
corporation), a majority of partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof and for this purpose, a Person or
Persons owns a majority ownership interest in such a business
entity (other than a corporation) if such Person or Persons shall
be allocated a majority of such business entity’s gains or
losses or otherwise control the managing director, managing member,
general partner or other managing Person of such limited liability
company, partnership, association, or other business
entity.

 


“Tax” or
“Taxes”
means any federal, state, provincial, local or foreign income,
alternative minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits,
windfall profits, gross receipts, value added, sales, use, goods
and services, excise, transfer, conveyance, mortgage, registration,
stamp, documentary, recording, premium, severance, environmental
(including taxes under Section 59A of the Code or any
analogous or similar provision of any state, local or foreign Law
or regulation), real property, personal property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers’
compensation, payroll, health care, or withholding tax, including
any estimated tax, any customs duties or tariffs, including from
imports prior to the First Closing that have not been liquidated,
any Liabilities for unclaimed property, and any other tax, duty or
similar governmental charge or assessment or deficiency, including
any interest, penalties or additions attributable to the
foregoing.

 


“Tax Return” means any
return, report, declaration, form, claim for refund or information
return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment
thereof.

 


“Transaction Documents”
means this Agreement and each other agreement, document, instrument
or certificate contemplated by this Agreement to be executed in
connection with the transactions contemplated hereby, provided that
the Management Services Agreement shall not be deemed to be a
Transaction Document for purposes of Article VI.

 


“Treasury Regulations”
means the regulations promulgated under the Code, including
temporary and proposed regulations.

 


 




 

52








 





 

(b) Each of the
following terms is defined in the Section set forth opposite such
term:

 


	


Term

	


Section


	

AAA
Rules

	

Section
7.3


	

Agreement

	

Preamble


	

Allowed
Delay

	

Section
4.2(b)


	

Amended
DCR Applications

	

Recitals


	

Assumed
Liabilities

	

Section
1.1(c)


	

Balance
Sheet

	

Section
2.5


	

Balance
Sheet Date

	

Section
2.5


	

Base
Cash Consideration

	

Section
1.4(a)


	

Base
Share Consideration

	

Section
1.4(a)


	

BCC

	

Recitals


	

Beachwood

	

Section
4.1(b)


	

BNC

	

Preamble


	

BNC
Cannabis Licenses

	

Recitals


	

BNC
Premises

	

Section
4.1(b)


	

Bulk
Sales Laws

	

Section
4.8


	

Business

	

Recitals


	

Business
Contracts

	

Section
2.11(a)


	

Closing
Cash Consideration

	

Section
1.4(d)(i)(D)


	

Closing
Payoff Certificate

	

Section
1.4(c)


	

Closing
Share Consideration

	

Section
1.4(d)(i)(B)


	

Closing
Statement

	

Section
1.4(b)


	

DCR

	

Recitals


	

DCR
Licenses

	

Recitals


	

Deductible

	

Section
6.5(a)


	

Disclosure
Schedule

	

Section
7.11


	

Dispute

	

Section
7.3


	

Distributor
License

	

Recitals


	

Domain
Name Transfer Agreement

	

Section
1.4(e)(iii)


	

Escrow
Agreement

	

Section
1.4(i)(C)


	

Excluded
Assets

	

Section
1.1(b)


	

Excluded
Contracts

	

Section
1.1(b)(ii)


	

Excluded
Liabilities

	

Section
1.1(d)


	

Financial
Statements

	

Section
2.5


	

First
Closing

	

Section
1.3(a)


	

First
Closing Assignment and Assumption Agreement

	

Section
1.4(e)(ii)


	

First
Closing Assumed Liabilities

	

Section
1.1(c)


	

First
Closing Bill of Sale

	

Section
1.4(e)(i)


	

First
Closing Date

	

Section
1.3(a)


	

Fundamental
Reps

	

Section
6.1


	

General
Cap

	

Section
6.5(b)


	

Indemnified
Party

	

Section
6.4(a)


	

Indemnifying
Party

	

Section
6.4(a)


	

Initial
Assets

	

Section
1.1(a)


	

Intellectual
Property Assignment Agreement

	

Section
1.4(e)(iii)


	

Intellectual
Property Licenses

	

Section
2.10(c)


	

Inventory

	

Section
1.1(a)(ii)







 




 

53








 






 


	

Lead
Investors

	

Section
1.4(e)(ix)


	

Leases

	

Section
2.18


	

LFCO

	

Preamble


	

LFHMP

	

Preamble


	

Losses

	

Section
6.2


	

Lowell

	

Preamble


	

Manufacturer
License

	

Recitals


	

Material
Customer

	

Section
2.20(a)


	

Material
Supplier

	

Section
2.20(a)


	

Outside
Date

	

Section
5.3(a)(ii)


	

Parent

	

Preamble


	

Party

	

Preamble


	

Pending
Applications

	

Recitals


	

Pendleton
Lease

	

Section
4.1(b)


	

Pendleton
Lease Assignment Condition

	

Section
4.1(b)


	

Pendleton
Property

	

Section
4.1(b)


	

Prospectus

	

Section
4.2(a)


	

Purchaser

	

Preamble


	

Purchaser
Indemnitees

	

Section
6.2


	

Reduction
Securities

	

Section
4.2(d)


	

Regulated
Assets

	

Section
1.2(a)


	

Releasees

	

Section
4.9


	

Released
Claims

	

Section
4.9


	

Releasors

	

Section
4.9


	

Resale
Registration Statement

	

Section
4.2(a)


	

Second
Closing

	

Section
1.3(b)


	

Second
Closing Assignment and Assumption Agreement

	

Section
1.4(h)(ii)


	

Second
Closing Bill of Sale

	

Section
1.4(h)(i)


	

Second
Closing Date

	

Section
1.3(b)


	

Second
Closing Escrow Shares

	

Section
6.7


	

SEC

	

Section
4.2(a)


	

Seller

	

Preamble


	

Seller
Indemnitees

	

Section
6.3


	

Sellers

	

Preamble


	

Selling
Shareholder

	

Section
2.23(a)


	

Tail
Policies

	

Section
1.4(e)(xi)


	

Tangible
Personal Property

	

Section
2.9(b)


	

THC

	

Preamble


	

Third
Party Claim

	

Section
6.4(a)


	

Transfer
Taxes

	

Section
4.6(a)


	

Transferring
Employees

	

Section
4.10(a)


	

WARN
Act

	

Section
1.1(d)(v)







 


* * * *
*





 

54








 






 


 IN WITNESS
WHEREOF, this Asset Purchase Agreement has been executed by or on
behalf of each of the Parties as of the day first written
above. 

 


	
 

	
 

	


THE SELLER PARTIES:


 


THE
HACIENDA COMPANY, LLC


 


By: 
/s/ Hannah
Buchan                                        




Name: Hannah
Buchan


Title:
Sole Manager



 


BRAND
NEW CONCEPTS, LLC


 


By: 
/s/ Hannah
Buchan                                        


Name:
Hannah
Buchan


Title:
Sole
Manager


 


LFCO,
LLC


 


By: 
/s/ Hannah
Buchan                                        


Name:
Hannah
Buchan


Title:
Sole
Manager


 


LOWELL
FARMS, LLC


 


By: 
/s/ Hannah
Buchan                                        


Name:
Hannah
Buchan


Title:
Sole
Manager


 


LFHMP,
LLC


 


By: 
/s/ Hannah
Buchan                                        


Name:
Hannah
Buchan


Title:
Sole
Manager


 


LFLC,
LLC


 


By: 
/s/ Hannah
Buchan                                        


Name:
Hannah
Buchan


Title:
Sole
Manager







 




[Signature Page to Asset Purchase
Agreement]








 






 


	
 

	
 

	


PURCHASER:


 


INDUS
LF LLC


 


By: 
/s/ Mark Ainsworth
                                       


Name:
Mark Ainsworth



Title:
Chief Executive Officer



 



PARENT:


 


INDUS
HOLDINGS, INC.


 


By: 
/s/ Mark Ainsworth
                                      


Name:
Mark
Ainsworth


Title:
Chief
Executive Officer







 


 


 


 


 


 


 


 


 


 


 


 


 


 




[Signature Page to Asset Purchase
Agreement]








 










 



Exhibit A



Escrow Agreement


 


[See
attached.]


 


 


 


 


 


 


 


 


 



 







 






 



ESCROW AGREEMENT

 


 

 



THIS ESCROW AGREEMENT (this “Agreement”) is made as of the
25th day
of February, 2021.

 



BY AND AMONG:

 


INDUS LF LLC, a California limited
liability company (“Purchaser”),

 


 

 


THE HACIENDA COMPANY, a California
limited liability company (“THC”)

 



AND:

 


ODYSSEY TRUST COMPANY, a trust company
incorporated under the laws of Alberta (the “Escrow Agent”).

 


 



RECITALS:




A.

Purchaser and THC
are parties to that certain Asset Purchase Agreement (the
“APA”), dated as
of the date hereof, by and among Purchaser, THC, Brand New
Concepts, LLC, a California limited liability company
(“BNC”), LFCO,
LLC, a California limited liability company (“LFCO”), Lowell Farms LLC, a
California limited liability company (“Lowell”), LFHMP, LLC, a California
limited liability company (“LFHMP”), LFLC, LLC, a California
limited liability company (“LFLC,” and together with THC, BNC,
LFCO, Lowell, and LFHMP, the “Sellers,” and each, a
“Seller”) Indus
Holdings, Inc., a British Columbia corporation (the
“Parent”),
pursuant to which the Sellers will convey the Assets to Purchaser
in return for the Base Share Consideration and Base Cash
Consideration, as more fully described therein.






 




B.

The Base Share
Consideration consists of 22,643,678 subordinate voting shares of
Parent.






 




C.

Pursuant to the
terms of the APA, THC has agreed to place 5,000,000 shares of the
Base Share Consideration (the “Escrow Shares”) in escrow with the
Escrow Agent, to be released in accordance with the terms and
conditions set forth herein.






 




D.

The parties have
requested that the Escrow Agent act as escrow agent in connection
with the escrow of the Escrow Shares and in accordance with the
terms of this Agreement.






 



NOW THEREFORE in consideration of the premises and mutual
representations, warranties, covenants and agreements hereinafter
set forth and other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties
hereby agree as follows:


 




1.

Capitalized
Terms






Capitalized terms
used in this Agreement, including the recitals hereto, and not
defined shall have the meanings given to such terms in the
APA.


 




 

A-1








 






 

 




2.

Appointment
of Escrow Agent






 




(a)

Purchaser and THC
hereby appoint the Escrow Agent to act as the escrow agent in
accordance with the terms and conditions of this Agreement, and the
Escrow Agent hereby agrees to act in accordance with the terms and
conditions of this Agreement. For the purposes of this Agreement,
all references herein to “Escrow Agent” will mean Odyssey
Trust Company acting in the capacity of escrow agent hereunder or
any other person that replaces Odyssey Trust Company as escrow
agent hereunder pursuant to the provisions hereof.






 




(b)

Purchaser and THC
shall each pay fifty percent (50%) of the (i) Escrow Agent fees as
laid out in Schedule A, plus (ii) any expenses reasonably incurred
by the Escrow Agent in connection with this Agreement, for acting
as escrow agent (the “Escrow
Fees”).






 




3.

Deposit
of Escrow Shares






 


THC
agrees with Purchaser that the Escrow Shares will be delivered
directly to the Escrow Agent to be deposited into escrow and
released in accordance with the terms of this Escrow
Agreement.


 


The
Escrow Agent will accept the Escrow Shares upon their delivery and
will hold them and administer them in accordance with the
provisions of this Agreement.


 




4.

Escrow
Release






The
Escrow Agent shall not release any Escrow Shares until it receives
joint written notice from Purchaser and THC to release the Escrow
Shares (or any portion thereof).

 


Upon
receipt of such signed written notice the Escrow Agent shall be
entitled to and shall deliver such shares as so
directed.


 


THC, on
behalf of the Sellers, agrees not to sell, transfer, create any
Lien on or otherwise dispose of any of the Escrow Shares until they
are released by the Escrow Agent pursuant to this
Agreement.


 




5.

Rights
of Escrow Agent






 


The
acceptance by the Escrow Agent of its duties and obligations under
this Agreement is subject to the following terms and conditions,
which shall govern and control the rights, duties, liabilities and
immunities of the Escrow Agent:


 




(a)

The Escrow Agent
shall be entitled to act and rely upon (and shall not be liable for
so acting and relying upon) any resolution, affidavit, direction,
notice, request, waiver, consent, receipt, declaration,
certificate, receipt, opinion, report, statement or other paper or
document purported to be delivered pursuant to this Agreement and
shall not be required to inquire as to the veracity, accuracy or
adequacy thereof or be bound by any notice or direction to the
contrary by any person other than a person entitled to give such
notice;






 


 




 

A-2








 






 

 




(b)

The Escrow Agent
shall not be required to make any determination or decision with
respect to the validity of any claim made by any party or of any
denial thereof but shall be entitled to rely conclusively on the
terms hereof and the documents tendered to it in accordance with
the terms hereof;






 




(c)

The Escrow Agent
shall have no duties except those which are expressly set forth
herein. It is understood and agreed that the Escrow Agent is not
acting as a trustee or in any fiduciary capacity, that the duties
of the Escrow Agent hereunder are purely administrative in nature
and it shall not be liable for any error of judgment, or for any
act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything it may do or refrain from
doing in connection herewith. Purchaser and THC shall not hold the
Escrow Agent liable for any loss or injury to them;






 




(d)

Except for failure
to comply with the terms of this Agreement, the Escrow Agent, its
partners, associates, employees and agents shall incur no
liabilities hereunder or in connection herewith for anything
whatsoever and Purchaser and THC hereby release the Escrow Agent
from any actions, causes of action, claims, demands, damages,
losses, costs, liabilities, penalties and expenses whatsoever,
whether arising directly or indirectly, by way of statute,
contract, tort or otherwise;






 




(e)

Upon the Escrow
Agent’s delivery of the Escrow Shares (or part thereof) in
accordance with the provisions of this Agreement, the Escrow Agent
shall be automatically and immediately released from all
obligations under this Agreement to any party hereto and to any
other person with respect to the Escrow Shares (or such part that
is delivered);






 




(f)

The Escrow Agent
shall not be bound by any notice of a claim or demand with respect
thereto, or any waiver, modification, amendment, termination or
rescission of this Agreement, unless received by it in writing and
signed by Purchaser and THC and, if its duties herein are affected,
unless it shall have given its prior written consent
thereto;






 




(g)

The Escrow Agent
shall have the right, if in its sole discretion it deems it
necessary or desirable, to retain such independent counsel or other
advisors as it reasonably may require for the purpose of
discharging or determining its duties, obligations or rights
hereunder, and may act and rely on the advice or opinion so
obtained;






 




(h)

The Escrow Agent
shall have the right, if in its sole discretion it deems it
necessary or desirable, to seek advice and directions from a court
of competent jurisdiction with respect to its duties and
obligations hereunder;






 




(i)

The duties and
obligations of the Escrow Agent shall at all times be subject to
the orders or directions of a court of competent jurisdiction;
and






 




(j)

The Escrow Agent is
not a party to, and is not bound by, the APA and shall not, by
reason of signing this Agreement, assume any responsibility or
liability for any transaction or agreement between Purchaser and
THC, other than the performance of its obligations under this
Agreement, notwithstanding any reference herein to such other
transactions or agreements.






 


 




 

A-3








 






 

 




6.

Interpleader






 


The
Escrow Agent may, in its sole discretion, deliver the Escrow Shares
into court by way of interpleader if any person, whether or not a
party hereto, sues or threatens to sue the Escrow Agent in
connection with the Escrow Shares or the actions or omissions of
any of the parties hereunder including the Escrow Agent or if the
Escrow Agent is unable or unwilling to continue acting and there is
no replacement under Section 7 within 30 days after the written
notice of resignation in section 7 or in the event of any
disagreement or apparent disagreement between the parties hereto
resulting in conflicting claims or demands with respect to the
Escrow Shares or if any of the parties hereto, including the Escrow
Agent, are in or appear to be in disagreement about the
interpretation of this Agreement or about the rights and
obligations of the Escrow Agent or the propriety of an action
contemplated by the Escrow Agent under this Agreement. Upon the
Escrow Agent making such delivery, the Escrow Agent shall be
released from all its duties and obligations under this
Agreement.


 




7.

Resignation
of Escrow Agent






The
Escrow Agent may at any time upon giving at least 30 days written
notice to Purchaser and THC resign as Escrow Agent in favour of any
person, firm or corporation named and agreed to by Purchaser and
THC within such 30 days or, failing such agreement, in favour of
any corporate trustee licensed to do business in the province of
Alberta that the Escrow Agent may name in such notice which agrees
in writing with the other parties hereto to be bound by this
Agreement as Escrow Agent. The Escrow Agent will deliver the Escrow
Shares to the new Escrow Agent and shall then be released from all
its duties and obligations under this Agreement but shall remain
entitled to the benefit of Section 8.

 




8.

Indemnification






 




(a)

Indemnity. In consideration of the
premises and of the Escrow Agent agreeing to act hereunder,
Purchaser and THC agree to save, defend and keep harmless and fully
indemnify the Escrow Agent, its partners, associates, employees and
agents, and their respective heirs, executors, administrators,
successors and assigns, from and against all losses, costs,
liabilities, charges, suits, demands, claims, damages (including
consequential damages) and expenses of any nature which the Escrow
Agent, its successors or assigns, may at any time hereafter bear,
sustain, suffer or be put to for or by any reason of or on account
of its acting as escrow agent or anything in any matter relating
thereto or by reason of the Escrow Agent’s compliance with
the terms hereof. Notwithstanding any other provision of this
Agreement, the Escrow Agent’s liability shall be limited, in
the aggregate, to the amount of fees paid to the Escrow Agent under
this Agreement, provided that the foregoing shall not apply to any
liability arising from the Escrow Agent’s bad faith, fraud,
wilful misconduct or gross negligence.






 




(b)

Not Obliged to Defend. Without
restricting the foregoing indemnity, if proceedings are taken by
arbitration or in any court respecting the Escrow Shares, the
Escrow Agent shall not be obliged to defend or otherwise
participate in any such proceedings until it shall have such
security as the Escrow Agent determines, in its sole discretion, to
be adequate for its costs in such proceedings in addition to the
indemnity set out above.






 


 




 

A-4








 






 

 




(c)

Survival. The provisions of Sections
8(a) and 8(b) will survive the resignation or removal of the Escrow
Agent or the termination of this Agreement.






 




(d)

Not to Expend Own Funds. None of the
provisions contained in this Agreement shall require the Escrow
Agent to expend or to risk its own funds or otherwise to incur
financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers unless funded and
indemnified as aforesaid.






 




9.

Expenses






 




(a)

Expenses. The Escrow Agent shall be
entitled to be reimbursed for all documented expenses reasonably
incurred in connection with acting hereunder, including without
limitation, legal fees paid by the Escrow Agent in respect of this
Agreement, such expenses and fees to be borne as provided in
Section 2(b).






 




(b)

Survival. The provisions of Sections
9(a) will survive the resignation or removal of the Escrow Agent or
the termination of this Agreement.






 




10.

General






 




(a)

Notices. Any notice, certificate,
consent, determination or other communication required or permitted
to be given or made under this Agreement shall be in writing and
shall be effectively given and made if (i) delivered personally,
(ii) sent by prepaid courier service or mail, or (iii) sent by
email or other similar means of electronic communication, in each
case to the applicable address set out below:






 


If to Purchaser


 


Attention:


Email:


 


With a
copy (which shall not constitute notice) to:


 


Akerman
LLP


666
Fifth Avenue, 20th Floor


New
York, NY 10103


Attention: Kenneth
G. Alberstadt


Email:
Kenneth.alberstadt@akerman.com


 


If to
THC


 


Attention:


Email:


 


If to
the Escrow Agent:


 


Odyssey
Trust Company


#1230,
300 5th
Avenue SW


Calgary, Alberta
T2P 3C4


Attention:
Corporate Trust


Email:
dsander@odysseytrust.com


 


 




 

A-5








 






 

 


Any
such communication so given or made shall be deemed to have been
given or made and to have been received on the day of delivery if
delivered, or on the day of emailing or sending by other means of
recorded electronic communication, provided that such day in either
event is a Business Day and the communication is so delivered,
emailed, or sent prior to 4:30pm (at the place of receipt) on such
day. Otherwise, such communication shall be deemed to have been
given and made and to have been received on the next following
Business Day. Any such communication sent by mail shall be deemed
to have been given and made and to have been received on the fifth
Business Day following the mailing thereof; provided however that
no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication
given or made in any other manner shall be deemed to have been
given or made and to have been received only upon actual
receipt.

 


Any
party may from time to time change its address under this Section
10(a) by notice to the other parties given in the manner provided
by this Section.


 




(b)

Time of Essence. Time shall be of the
essence of this Agreement in all respects.






 




(c)

Further Assurances. Each party shall
promptly do, execute, deliver, or cause to be done, executed and
delivered all further acts, documents and things in connection with
this Agreement that another party may reasonably require for the
purposes of giving effect to this Agreement.






 




(d)

Successors and Assigns. This Agreement
shall enure to the benefit of, and be binding on, the parties and
their respective successors and permitted assigns. No party may
assign or transfer, whether absolutely, by way of security or
otherwise, all or any part of its respective rights or obligations
under this Agreement without the prior consent of the other
parties.






 




(e)

Amendment. No amendment of this
Agreement will be effective unless made in writing and signed by
all of the parties.






 




(f)

Entire Agreement. This Agreement
constitutes the entire agreement between the parties pertaining to
the subject matter of this Agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether
oral or written. There are no conditions, warranties,
representations or other agreements between the parties in
connection with the subject matter of this Agreement (whether oral
or written, express or implied, statutory or otherwise) except as
specifically set out in this Agreement.






 




(g)

Waiver. A waiver of any default, breach,
or non-compliance under this Agreement is not effective unless in
writing and signed by the parties to be bound by the waiver. No
waiver shall be inferred from or implied by any failure to act or
delay in acting by a party in respect of any default, breach or
non-observance or by anything done or omitted to be done by another
party. The waiver by a party of any default, breach, or
non-compliance under this Agreement shall not operate as a waiver
of that party’s rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether
of the same or any other nature).






 


 




 

A-6








 






 

 




(h)

Severability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such prohibition or unenforceability and shall be severed from the
balance of this Agreement, all without affecting the remaining
provisions of this Agreement or affecting the validity or
enforceability of such provision in any other
jurisdiction.






 




(i)

Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable in that
Province and shall be treated, in all respects, as an Alberta
contract.






 




(j)

Counterparts. This Agreement may be
executed by the parties in separate counterparts (by original or
facsimile signature) each of which when so executed and delivered
shall be deemed to be an original, and all such counterparts shall
together be construed as one and the same document.






 




(k)

Termination. This Agreement may be
terminated at any time by and upon the receipt of the Escrow Agent
of a written notice of termination executed by Purchaser directing
the payment of the amounts then held by the Escrow Agent under and
pursuant to this Agreement and such termination will be effective
immediately after compliance by the Escrow Agent with such
direction. This Agreement shall automatically terminate if and when
all of the Escrow Shares shall have been distributed by the Escrow
Agent in accordance with this Agreement.






 




(l)

Third Party Determination. Purchaser and
THC hereby represent to the Escrow Agent that, except as otherwise
provided in this Agreement, any account to be opened by, or
interest to be held by, the Escrow Agent, in connection with this
Agreement, for or to the credit of Purchaser or THC, is not
intended to be used by or on behalf of any third party other than
the beneficiaries as expressly provided in this
Agreement.






 




11.

Privacy






 


The
parties acknowledge that federal and/or provincial legislation that
addresses the protection of individuals’ personal information
(collectively, “Privacy
Laws”) applies to certain obligations and activities
under this Agreement. Notwithstanding any other provision of this
Agreement, neither party shall take or direct any action that would
contravene, or cause the other to contravene, applicable Privacy
Laws. Purchaser and THC shall, prior to transferring or causing to
be transferred personal information to the Escrow Agent, obtain and
retain required consents of the relevant individuals to the
collection, use and disclosure of their personal information, or
shall have determined that such consents either have previously
been given upon which the parties can rely or are not required
under the Privacy Laws. The Escrow Agent shall use
commercially-reasonable efforts to ensure that its services
hereunder comply with Privacy Laws. Specifically, the Escrow Agent
agrees: (i) to have a designated chief privacy officer; (ii) to
maintain policies and procedures to protect personal information
and to receive and respond to any privacy complaint or inquiry;
(iii) to use personal information solely for the purposes of
providing its services under or ancillary to this Indenture and to
comply with applicable laws and not to use it for any other purpose
except with the consent of or direction from Purchaser, THC, or the
individual involved or as permitted by Privacy Laws; (iv) not to
sell or otherwise improperly disclose personal information to any
third party; and (v) to employ administrative, physical and
technological safeguards to reasonably secure and protect personal
information against loss, theft, or unauthorized access, use or
modification.


 


 




 

A-7








 






 

 




12.

Right
Not to Act






The
Escrow Agent shall retain the right not to act and shall not be
liable for refusing to act if, due to a lack of information or for
any other reason whatsoever, the Escrow Agent, in its sole
judgment, acting reasonably, determines that such act might cause
it to be in non-compliance with any applicable anti-money
laundering or anti-terrorist legislation, regulation or guideline.
Further, should the Escrow Agent, in its sole judgment, acting
reasonably, determine at any time that its acting under this
Agreement has resulted in its being in non-compliance with any
applicable anti-money laundering or anti-terrorist legislation,
regulation or guideline, then it shall have the right to resign on
10 days prior written notice sent to all parties hereby provided
that: (i) the Escrow Agent’s written notice shall describe
the circumstances of such non-compliance; and (ii) that if such
circumstances are rectified to the Escrow Agent’s
satisfaction within such 10 day period, then such resignation shall
not be effective.

 


 


[Signature
Page Follows]


 




 

A-8








 






IN WITNESS WHEREOF the parties have
executed and delivered this Agreement on the day and year first
above written.


 


 


INDUS
LF LLC


 


Per:
__________________________________________________


Authorized
Signatory


 


THE
HACIENDA COMPANY, LLC


 


Per:
__________________________________________________


Authorized
Signatory


 


 


ODYSSEY
TRUST COMPANY


 


Per:
__________________________________________________


Authorized
Signatory


 


Per:
__________________________________________________


Authorized
Signatory


 


 


 


 




 

A-9








 










 



Exhibit B



Management Services Agreement


 


[See
attached.]


 


 


 


 


 


 


 


 


 



 







 






 



MANAGEMENT SERVICES AGREEMENT


 


This
Management Services Agreement (this “Agreement”)
is made and entered into as of the 25th day of February,
2021 (the “Effective
Date”) by and between Indus LF LLC, a California limited liability
company (the “Service
Provider”), and The
Hacienda Company, LLC, a California limited liability company
(“Hacienda”),
and its wholly owned subsidiary, Brand New Concepts, LLC, a
California limited liability company (“BNC”,
and collectively with Hacienda referred to as the
“Company”)
(each individually a “Party”
and collectively referred to as the “Parties”).
Capitalized terms used and not otherwise defined herein have the
meanings assigned to them in the Asset Purchase Agreement dated on
or about the date hereof among the Parties and the other
signatories thereto (the “Purchase
Agreement”).


 



RECITALS


 


WHEREAS, the
Company holds applicable temporary permits and licenses (the
“Licenses”)
to process, manufacture and distribute cannabis and cannabis
products at its facility located at 11618 Pendleton Street, Sun
Valley, California (the “Facility”)
issued by the City of Los Angeles Department of Cannabis Regulation
(“LADCR”),
the State of California Bureau of Cannabis Control
(“BCC”),
and the State of California Department of Public Health,
Manufactured Cannabis Branch (“CDPH”);


 


WHEREAS, Service
Provider, including Service Provider’s Affiliates, is engaged
in the processing, manufacture and distribution of cannabis
products and related administrative and management activities, and
has the capacity to manage and administer the operations of the
Company and to furnish the Company with appropriate managerial,
consulting and administrative, technological, financial and other
support services; and


 


WHEREAS, the
Company desires to retain Service Provider to provide certain
advisory, consulting, administrative, operational, financial and
management services to the Company, as well as to provide Company
with those services necessary and appropriate for the day-to-day
administration and management of the Company’s operations,
and Service Provider desires to provide such services to Company,
all upon the terms and conditions hereinafter set
forth.


 


NOW
THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the receipt and sufficiency of
which is acknowledged, the Parties hereby agree as
follows:


 

1. Incorporation.
The foregoing Recitals are incorporated in and made a part of this
Agreement to the same extent as if herein set forth in
full.

 

2. Definitions.
As used in this Agreement (including the Recitals), the following
terms have the following meanings:

 


“Affiliate”
of a Person means any other Person that directly or indirectly,
through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, this Person.


 


 




 

B-1








 






 

 


“Business
Activities” means the processing and manufacture of
cannabis products by the Company at the Facility and all activities
and business operations directly related thereto.


 


“Control”
(and with correlative meanings, the terms “Controlled
by” and “under common Control with”) means,
regarding any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of another Person, whether through the ownership of voting
securities, by contract, or otherwise.


 


“Law”
means any statute, law, ordinance, regulation, rule, code,
constitution, treaty, common law, order, writ, judgment,
injunction, decree, or other requirement or rule of law of any
governmental authority.


 


“Permitted
Subcontractor” means any Person, subcontractors,
Affiliates of Service Provider, consultants, independent
contractors, agents or representatives, other than Service
Provider’s employees, engaged by Service Provider to perform
any of the Services hereunder.


 


“Person”
means any individual, partnership, corporation, trust, limited
liability entity, unincorporated organization, association,
governmental authority, or any other entity.


 


“Service
Period” means the period of time beginning the
Effective Date and continuing until the termination or expiration
of this Agreement in accordance with the terms of this
Agreement.


 


“Service Provider
Equipment” means any equipment, systems, cabling, or
facilities or other tangible personal property conveyed to Service
Provider under the Purchase Agreement or provided by Service
Provider and used directly or indirectly in the provision of the
Services.


 


“Service Provider
Personnel” means all employees and Permitted
Subcontractors, if any, engaged by Service Provider to perform the
Services.


 


“Service Provider
Expenses” shall mean all direct and indirect costs
incurred by the Service Provider and/or Service Provider Personnel
in connection with the Services including, without limitation, (i)
costs of products and/or services of third-parties delivered to the
Company or the Service Provider and/or their respective personnel,
(ii) fees and disbursements of auditors, attorneys and other
advisors or consultants, (iii) costs of any outside services of
independent contractors such as printers, couriers, business
publications or similar services and (iv) all other reasonable
expenses actually incurred, directly or indirectly, by the Service
Provider and/or Service Provider Personnel in rendering the
Services.


 


 




 

B-2








 






 

 

3. Services.

 

(a) Subject to the
limitations and terms and conditions of this Agreement, during the
Service Period, the Company irrevocably appoints Service Provider
to act as the sole and exclusive manager of the Facility and the
Business Activities conducted at the Facility, and as the exclusive
agent for the Company for all matters related to the administration
and management of all Business Activities and the operations of the
Facility and the Company during the Service Period. Beginning on
the commencement of the Service Period, and until the expiration or
termination of this Agreement, the Company shall not manage the
Facility or the Business Activities itself without the services of
Service Provider pursuant to this Agreement. Service Provider shall
have the right to use employees of Service Provider or its
Affiliates not located at the Facility to provide services to the
Company. Prior to the expiration or termination of this Agreement,
the Company agrees that, without the prior and express consent of
Service Provider, the Company shall not, directly or indirectly,
(i) enter into any discussions, negotiations, arrangements,
understandings or agreements with any person or entity other than
Service Provider or any Service Provider Affiliate regarding such
person or entity assisting the Company in the operation or
management of the Facility or the Business Activities, or (ii)
operate or manage the Facility or the Business Activities itself
without the services of Service Provider during the Service
Period.

 

(b) In furtherance of
Section 3(a), during the Service Period, the Company retains
Service Provider to provide all administrative, financial, and
operating services for the Company’s Business Activities at
the Facility, and such other services and activities as are
reasonably required in order to conduct the Business Activities and
to maintain and/or retain the Licenses and all other approvals of
any governmental authority to conduct such Business Activities (the
“Services”).

 

(c) The Services
provided by Service Provider during the Service Period shall
include: (i) the maintenance of applicable regulatory and legal
compliance (with the involvement and assistance of the Company, as
required) , (ii) obtaining adequate insurance coverage and bonding
(as deemed necessary) for the Business Activities pursuant to this
Agreement, (iii) securing and maintaining adequate banking needs
for the Business Activities, (iv) all contracting associated with
the Business Activities; (v) all finance and accounting activities
necessary to conduct the Business Activities or to perform the
Services; (vi) all human relations and employment matters,
including the hiring, termination or promotion of employees, agents
or consultants deemed necessary by Service Provider to conduct the
Business Activities or perform the Services; (vii) the operation of
the Company’s Business Activities; (vii) the training,
supervision, management and operation of all software, hardware and
equipment for the operation of the Business Activities; (ix)
records retention and storage requirements; and (x) all payroll
activities necessary to operate the Business Activities, including
but not limited to the retention of a third-party payroll provider
if Service Provider deems such retention reasonably necessary to
perform the Services and maintain the Business Activities, as well
as the payment of compensation to all Service Provider Personnel
and the administration of the payment on behalf of the Company of
all Company employees, including, if applicable, withholding of
income taxes, and the payment and withholding of social security
and other payroll taxes, unemployment insurance, workers’
compensation insurance payments, and disability benefits. Nothing
contained herein shall require Service Provider to provide any
services for the Company not otherwise related to the Business
Activities, nor shall Service Provider have no authority or
responsibility for the Company’s business operations or
obligations not expressly provided for in this
Agreement.

 


 




 

B-3








 






 

 

(d) Service Provider
shall prepare, or cause to be prepared, all Tax Returns (excluding
income and franchise Tax Returns) required to be filed by the
Company relating to any taxable periods all or a portion of which
fall within the Service Period, including, without limitation, Tax
Returns relating to state and local cannabis excise taxes, gross
receipts taxes, sales taxes, and payroll and other
employment-related taxes, and for the avoidance of doubt, including
any such Tax Returns required to be filed after the last day of the
Service Period (each, a “Service Period Tax
Return”). All taxes owed by the Company with respect
to each Service Period Tax Return shall be paid by the Service
Provider. The Company shall give to Service Provider (or its
designated Affiliate or Service Provider Personnel) all appropriate
authority necessary for them to act as the Company’s
Attorney-in-Fact under a power of attorney, for such purposes, and
to the extent permitted by Law. Each Party shall be responsible for
the preparation, filing and payment of its own income and franchise
taxes.

 

(e) Service Provider
shall manage all cash receipts and disbursements relating to the
conduct of the Business Activities during the Service
Period.

 

(f) Service Provider
shall be responsible for and shall negotiate directly on
Company’s behalf, as permitted by applicable law, such
contractual arrangements with third parties as are reasonably
necessary and appropriate for Company’s Business Activities
during the Service Period. Notwithstanding the foregoing, in no
event shall Service Provider enter into any contract or agreement
that would have obligations of the Company that would extend beyond
the Term and Service Provider shall indemnify and hold harmless the
Company for any and all liabilities under any contract or agreement
which it causes Company to enter into, other than any liabilities
arising due to a breach by the Company of its obligations
hereunder.

 

(g) Service Provider
shall establish and maintain credit and billing and collection
policies and procedures, and shall exercise reasonable efforts to
pay all expenses arising in respect of the Service Period in a
timely manner.

 

(h) Service Provider
shall cause all finished goods inventory to be sold and transferred
on Metrc to Cypress Manufacturing Company, a licensed affiliate of
Service Provider (“Cypress”), in accordance with
applicable Law, including, but not limited to, California Business
and Professions Code Section 26000 et seq, promptly following completion
of production for a purchase price equal to the direct costs and
expenses incurred by the Company or Service Provider on its behalf
in producing such inventory. All sales of finished goods inventory
and accounts receivable and revenues arising therefrom shall be for
the account of Cypress. Cypress shall directly receive (or shall be
entitled to payment to it upon receipt) all receipts and revenues
relating to all Business Activities in respect of the Service
Period, and shall be authorized to open and maintain any bank
accounts necessary to deposit all revenues resulting from the
Business Activities. Service Provider shall utilize the bank
accounts, as described in the preceding sentence, for the purpose
of receiving revenues of the Business Activities and paying
expenses and liabilities relating to the Business Activities at all
times. The Company and Service Provider shall cooperate in all
banking and cash management issues consistent with the provision of
this Agreement, as Service Provider shall deem necessary or
appropriate.

 


 




 

B-4








 






 

 

(i) Upon request by the
Services Provider, the Company shall grant Service Provider
Personnel additional (and if requested exclusive) signing authority
on Company operating bank accounts and other financial accounts
and/or irrevocably (during the Term of this Agreement) direct in
writing, as necessary, the bank(s) and other financial institutions
at which the Company maintains accounts to transfer electronically
all such amounts in the Company’s accounts which are
necessary to make any payment required by Service Provider to
provide the Services or otherwise due to Service Provider pursuant
to this Agreement. For the avoidance of doubt the Service Provider
shall have no right to any consideration under the Purchase
Agreement or any accounts holding such amounts as compensation for
the services provided by Service Provider hereunder.

 

(j) Service Provider
shall, at Company’s sole cost and expense, (i) manage and
direct the defense of all claims, actions, proceedings or
investigations against Company or any of its employees, to the
extent relating to the conduct of the Business Activities during
the Service Period, and (ii) manage and direct the initiation and
prosecution of all claims, actions, proceedings or investigations
brought by Company relating to the conduct of the Business
Activities against any person other than Service
Provider.

 

4. Company
Obligations. In addition to all other requirements described
in this Agreement, the Company shall:

 

(a) cooperate with
Service Provider in all matters relating to the Services and
appoint at least one (1) Company employee or representative, or
additional Company employees or representatives upon the reasonable
request of Service Provider, to serve as the primary contact(s) to
Service Provider with respect to this Agreement and the Services
provided hereunder and who will have the authority to act on behalf
of the Company with respect to the matters pertaining to this
Agreement (each, a “Company
Contact”). The name and contact details of the Company
Contact should be provided to Service Provider in the form of a
written communication and any updates to the Company Contact should
be provided promptly in writing;

 

(b) provide Service
Provider or Service Provider’s Affiliate, including but not
limited to any officers, directors, managers, employees,
consultants, agents or representatives of Service Provider or
Service Provider’s Affiliate, with such access (including
computer access) to the Facility and Company property or other
facilities as may be requested by Service Provider and shall
designate Service Provider Personnel as authorized personnel to any
company contracted to provide security, accounting, data
management, payroll or other services to the Company;

 

(c) respond promptly to
any Service Provider request to provide direction, information,
approvals, authorizations, assistance or decisions that Service
Provider requests in connection with this Agreement;

 

(d) provide, or ensure
access to, such information, records, materials or documentation as
Service Provider may request or deem necessary in order to perform
the Services in a timely manner, and ensure that said information,
records, materials or documentation is complete and accurate in all
material respects; and

 


 




 

B-5








 






 

 

(e) obtain and
maintain, or provide all assistance Service Provider deems
necessary to obtain and maintain, all necessary licenses and
consents to operate the Company’s business and for Service
Provider to perform the Services, and to comply with all applicable
Laws in relation to the Services during the Term of this
Agreement.

 

5. Exclusivity.
During the Term of this Agreement, Service Provider shall serve as
Company’s sole and exclusive manager and provider of the
Services, and Company shall not, without first obtaining the
express written consent of Service Provider, engage any other
person or entity to furnish Company with any of the Services or
Business Activities, any policies or procedures for the conduct of
the Business Activities, or any of the financial or other services
provider hereunder by Service Provider.

 

6. Term;
Termination.

 

(a) Term. The Term of this
Agreement commences on the Effective Date and terminates one (1)
year from the Effective Date (the “Initial
Term”), and shall thereafter renew for one (1)
additional one (1) year term (the “Renewal
Term”) unless the Service Provider provides notice of
nonrenewal at least thirty (30) days before the end of the Initial
Term, or unless and until earlier terminated as provided under this
Agreement (the Initial Term and the Renewal Terms collectively
referred to as the “Term”).

 

(b) Termination Rights. This
Agreement may be terminated:

 

(i) by either Party
upon written Notice to the other Party if the other Party (the
“Defaulting
Party”): (A) materially breaches this Agreement and
said breach is not cured within thirty (30) days following the
Defaulting Party’s receipt of written notice of such breach;
or (B) if the Defaulting Party (1) becomes insolvent or is
generally unable to pay, or fails to pay, its debts as they become
due; (2) files or has filed against it, a petition for voluntary or
involuntary bankruptcy or otherwise becomes subject, voluntarily or
involuntarily, to any proceeding under any domestic or foreign
bankruptcy or insolvency law; (3) seeks reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition, or other relief with respect to it or its debts; (4)
makes or seeks to make a general assignment for the benefit of its
creditors; or (5) applies for or has a receiver, trustee,
custodian, or similar agent appointed by order of any court of
competent jurisdiction to take charge of or sell any material
portion of its property or business;

 

(ii) by
mutual written agreement of the Parties;

 

(iii) upon
the completion of the Second Closing; or

 

(iv) upon
any termination of the transactions to be consummated at the Second
Closing pursuant to Section 5.3(a) of the Purchase
Agreement.

 

(c) Effect of Termination or
Expiration. Upon the expiration or termination of this
Agreement for any reason:

 


 




 

B-6








 






 

 

(i) Service Provider
shall promptly remove any Service Provider Equipment located at the
Company’s Facility or any other premises utilized to provide
the Services or to conduct the Business Activities unless said
Service Provider Equipment is provided to the Company pursuant to a
separate agreement still in effect; and

 

(ii) Service
Provider shall be responsible for all direct and indirect costs and
expenses incurred in the conduct of the Business Activities in
accordance with this Agreement during the Service Period, and
Service Provider shall be entitled to all receipts and other
revenues from the conduct of the Business Activities through the
date of termination, whenever received, and immediately upon
termination of this Agreement for any reason, the Company shall
transfer, assign and deliver to Service Provider all cannabis and
cannabis products, including cannabis feedstock, work in process
and any remaining finished goods inventory not previously
transferred, and any accounts receivable and other current assets
and rights to payment or revenues of the Company from the conduct
of the Business Activities during the Service Period.

 

7. Application of
Revenues; Payment of Expenses.

 

(a) Application of Revenues. The
Parties agree that all revenues from the Company’s sale of
inventory to Cypress shall be applied to pay all costs incurred in
the production of such inventory and other costs, if any, incurred
by the Company during the Service Period, except as otherwise
provided in Section 3(d) (“Service Period Costs and
Expenses”).

 

(b) Service Period Expenses. In the
event the revenues described in Section 7(a) are insufficient to
pay all Service Period Costs and Expenses, the Service Provider
shall be responsible for any shortfall.

 

(c) Security Interest. In order to
secure the performance of the Company’s obligations under
this Agreement, the Company hereby grants Service Provider a
security interest in and to any or all of the following collateral:
all tangible and intangible assets of the Company, as more full set
forth on Schedule I hereto. Service Provider and the Company agree
that this Agreement constitutes a Security Agreement under the
California Uniform Commercial Code. Service Provider shall have the
right to file a UCC-1 financing statement documenting any security
interest granted to Service Provider, and the Company shall
cooperate with Service Provider in any such filing such
UCC-1.

 

8. Records and
Recordkeeping.

 

(a) Access to Information. Company
hereby authorizes and grants to Service Provider full and complete
access to all information, instruments and documents relating to
Company which may be reasonably requested by Service Provider to
perform its obligations hereunder, and shall disclose and make
available to Service Provider, including any Service Provider
Affiliates, employees, officers, agents or representatives, for
review copying and retention, all relevant books, agreements,
papers and records of Company.

 

(b) At all times during
and after the Term, all business records and information including
but not limited to, all books of account and general administrative
records and all information generated under or contained in the
management information systems pertaining to Company, relating to
the business and activities of the Service Company, shall be and
remain the sole property of Service Provider After termination of
this Agreement, Company will have reasonable access during normal
business hours to the business records relating to the Business
Activities for purposes of preparing income tax and other business
filings.

 


 




 

B-7








 






 

 

(c) Company shall at
all times during the Term, and at all times thereafter, make
available to Service Provider for inspection by its authorized
representatives, during regular business hours, at the principal
place of business of Company, any of Company’s records
requested by Service Provider.

 

(d) To the extent
required by any applicable Law, Service Provider shall at all times
during and after the Term, provide to the LADCR, BCC or CDPH any
requested records in Service Provider’s possession custody or
control, relating to the Business Activities.

 

9. Confidential
Information.

 

(a) Scope of Confidential
Information. From time to time during the Term, either Party
(as the “Disclosing
Party”) may disclose or make available to the other
Party (as the “Receiving
Party”) information about its business affairs,
products, confidential intellectual property, trade secrets,
third-party confidential information, and other sensitive or
proprietary information; with such information, as well as the
terms of this Agreement, whether orally or in written, electronic
or other form or media, and whether or not marked or otherwise
identified as “confidential” constitutes
“Confidential Information” hereunder. Confidential
Information excludes information that, at the time of disclosure:
(i) is or becomes generally available to and known by the public
other than as a result of, directly or indirectly, any breach of
this Agreement by Receiving Party; (ii) is or becomes available to
the Receiving Party on a non-confidential basis from a third-party
source, provided that such third-party is not and was not
prohibited from disclosing such Confidential Information; (iii) was
known by or in the possession of Receiving Party before being
disclosed by or on behalf of Disclosing Party; or (iv) was or is
independently developed by Receiving Party without reference to or
use of, in whole or in part, any of Disclosing Party’s
Confidential Information. For the avoidance of doubt, (x)
“Confidential Information” does not include information
with respect to the Business or the Assets conveyed to Service
Provider at the First Closing, which shall be governed by the
Purchase Agreement, and (y) the books and records owned by Service
Provider pursuant to Section 8(b) of this Agreement shall be
Service Provider’s Confidential Information. Upon the
consummation of the Second Closing or earlier termination of this
Agreement, this Section 9 shall terminate as to Service Provider
and the Company shall convey all Company Confidential Information
to Service Provider and be bound by the confidentiality provisions
in the Purchase Agreement with respect thereto.

 

(b) Protection of Confidential
Information. Receiving Party shall, for three (3) years from
the receipt of such Confidential Information: (i) protect and
safeguard the confidentiality of Disclosing Party’s
Confidential Information with at least the same degree of care as
Receiving Party would protect its own Confidential Information, but
in no event with less than a commercially reasonable degree of
care; (ii) not use Disclosing Party’s Confidential
Information, or permit it to be accessed or used, for any purpose
other than to exercise its rights or perform its obligations under
this Agreement; and (iii) not disclose any such Confidential
Information to any Person, except: (A) to Receiving Party’s
employees, agents, representatives, officers or directors who need
to know the Confidential Information to assist Receiving Party, or
act on its behalf, to exercise its rights or perform its
obligations under this Agreement; or (B) pursuant to applicable
federal, state, or local law, regulation or a valid order issued by
a court or governmental authority of competent jurisdiction,
provided that Receiving Party shall first provide Disclosing Party
with: (i) prompt Notice of such requirement so that Disclosing
Party may seek, at its sole cost and expense, a protective order or
other remedy; and (ii) reasonable assistance, at Disclosing
Party’s sole cost and expense, in opposing such disclosure or
seeking a protective order or other limitations on disclosure. On
the expiration or termination of the Agreement, the Receiving Party
shall promptly return to the Disclosing Party all copies, whether
in written, electronic, or other form or media, of the Disclosing
Party’s Confidential Information, or destroy all such
Confidential Information and certify in writing to the Disclosing
Party that such Confidential Information has been
destroyed.

 


 




 

B-8








 






 

 

10. Representations and
Warranties.

 

(a) The Company’s Representations
and Warranties. The Company represents and warrants to
Service Provider that: (i) it is duly organized, validly existing,
and in good standing in the jurisdiction of its incorporation,
organization or formation, as applicable; (ii) it is duly qualified
to do business and is in good standing in every jurisdiction in
which such qualification is required for purposes of this
Agreement, except where the failure to be so qualified, in the
aggregate, would not reasonably be expected to adversely affect its
ability to perform its obligations under this Agreement; (iii) it
has the full right, power and authority to enter into this
Agreement, to grant the rights and licenses granted under this
Agreement and to perform its obligations under this Agreement; (iv)
the execution of this Agreement by its representative whose
signature is set forth at the end hereof has been duly authorized
by all necessary action of the Party; (v) when executed and
delivered by each of the Parties, this Agreement, including and
together with any related exhibits, schedules, attachments and
appendices will constitute the legal, valid, and binding obligation
of the Company, enforceable against the Company in accordance with
its terms, except as may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws and
equitable principles related to or affecting creditors’
rights generally or the effect of general principles of equity; and
(vi) to the best of its knowledge it is in material compliance with
all Laws and contracts applicable to this Agreement and the
operation of its business.

 

(b) Service Provider’s
Representations and Warranties. Service Provider represents
and warrants to the Company that: (i) it is duly organized, validly
existing, and in good standing in the jurisdiction of its
incorporation, organization or formation, as applicable; (ii) it is
duly qualified to do business and is in good standing in every
jurisdiction in which such qualification is required for purposes
of this Agreement, except where the failure to be so qualified, in
the aggregate, would not reasonably be expected to adversely affect
its ability to perform its obligations under this Agreement; (iii)
it has the full right, power and authority to enter into this
Agreement, to grant the rights and licenses granted under this
Agreement and to perform its obligations under this Agreement; (iv)
the execution of this Agreement by its representative whose
signature is set forth at the end hereof has been duly authorized
by all necessary action of the Party; (v) when executed and
delivered by each of the Parties, this Agreement, including and
together with any related exhibits, schedules, attachments and
appendices will constitute the legal, valid, and binding obligation
of Service Provider, enforceable against Service Provider in
accordance with its terms, except as may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws and equitable principles related to or affecting
creditors’ rights generally or the effect of general
principles of equity; and (vi) the execution, delivery and
performance of this Agreement by Service Provider will not violate,
conflict with, require consent under or result in any breach or
default under: (A) any of Service Provider’s organizational
documents; (B) any applicable Law; or (C) with or without notice or
lapse of time or both, the provisions of any other contracts
applicable to this Agreement and the operation of its
business.

 

(c) Except as expressly
stated in this Section 10, (i) each Party hereby disclaims all
warranties, either express, implied, statutory or otherwise under
this Agreement, and (ii) Service Provider specifically disclaims
all implied warranties of merchantability, fitness for a particular
purpose, title and non-infringement.

 


 




 

B-9








 






 

 

11. Indemnification.

 

(a) Service Provider
Indemnification. The Company shall indemnify, defend, and hold
harmless Service Provider and the other Purchaser Indemnitees (each
a, “Service Provider
Indemnified Party”) against any and all losses,
damages, liabilities, deficiencies, claims, actions, judgments,
settlements, interest, awards, penalties, fines, costs, or expenses
of whatever kind, including reasonable attorneys’ fees and
the costs of enforcing any right to indemnification under this
Agreement and the cost of pursuing any insurance providers,
incurred by a Service Provider Indemnified Party (collectively,
“Service Provider
Indemnified Party Losses”), arising out of or
resulting from any Action of a third party or the Company arising
out of or occurring in connection with the Company’s gross
negligence, willful misconduct, breach of this Agreement or
violation of Law.

 

(b) Company
Indemnification. Service Provider shall indemnify, defend, and hold
harmless the Company and the other Seller Indemnitees (each a,
“Company Indemnified
Party”) against any and all losses, damages,
liabilities, deficiencies, claims, actions, judgments, settlements,
interest, awards, penalties, fines, costs, or expenses of whatever
kind, including reasonable attorneys’ fees and the costs of
enforcing any right to indemnification under this Agreement and the
cost of pursuing any insurance providers, incurred by a Company
Indemnified Party (collectively, “Company Indemnified
Party Losses”), arising out of or resulting from any
Action of a third party or Service Provider, any other loss or
liability arising out of or occurring in connection with Service
Provider’s operating of the Facility or the Business
Activities on or after the Effective Date, and any taxes and other
losses or liabilities incurred by Hacienda with respect to any
Service Period Tax Returns (whether or not such taxes were shown as
due and owing on such Service Period Tax Returns).

 

(c) Except for any
claims that may be available to the Parties for specific
performance, injunctive relief or similar equitable remedies, the
indemnification provided for in this Section 11 constitutes the
sole remedy of the Parties for any matter based on, arising out of
or related to this Agreement. The foregoing shall not prejudice the
rights of any Party under the Purchase Agreement, and in the event
of any conflict between this Agreement and Article VI of the
Purchase Agreement, said Article VI shall control.

 

12. Limitation of
Liability.

 


NEITHER
PARTY SHALL BE LIABLE FOR ANY LOSS OF USE, REVENUE OR PROFIT OR FOR
ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY,
PUNITIVE, OR ENHANCED DAMAGES, ARISING OUT OF OR RELATING TO ANY
BREACH OF THIS AGREEMENT OR IN CONNECTION WITH ANY OTHER CLAIM FOR
DAMAGES HEREUNDER, WHETHER OR NOT THE POSSIBILITY OF SUCH DAMAGES
HAD BEEN DISCLOSED IN ADVANCE OR WAS FORESEEABLE, REGARDLESS OF THE
LEGAL OR EQUITABLE THEORY (CONTRACT, TORT OR OTHERWISE) UPON WHICH
THE CLAIM IS BASED, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED
OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.

 


 




 

B-10








 






 

 

13. Relationship of the
Parties. The relationship between the Parties is that of
independent contractors. Nothing contained in this Agreement shall
be construed as creating any agency, partnership, franchise,
business opportunity, joint venture, or other form of joint
enterprise, employment or fiduciary relationship between the
parties, and neither party shall have authority to contract for or
bind the other party in any manner whatsoever. If any provision of
this Agreement is deemed to create a franchise or business
opportunity relationship between the Parties, then the Parties
shall negotiate in good faith to modify this Agreement so as to
effect the Parties’ original intent as closely as possible in
a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as a reseller agreement and not
a franchise or business opportunity agreement.

 

14. Insurance.
During the Term, Service Provider shall, at its own expense,
maintain, and carry insurance in full force and effect that
includes, but is not limited to, commercial general liability
(including product liability) with limits no less than One Million
Dollars and 00/100 ($1,000,000.00) for each occurrence and Two
Million Dollars and 00/100 ($2,000,000.00) in the aggregate with
financially sound and reputable insurers. Upon the Company’s
request, Service Provider shall provide the Company with a
certificate of insurance for all insurance coverage required by
this Section 14(a), and shall not do anything to invalidate such
insurance.

 

15. Force
Majeure. Any delay or failure of either Party to perform its
obligations under this Agreement will be excused to the extent that
the delay or failure was caused directly by an event beyond such
Party’s reasonable control (which events may include, but not
be limited to natural disasters, embargoes, explosions, riots,
pandemics, wars or acts of terrorism) (each, a “Force Majeure
Event”). A Party shall give the other Party prompt
written notice of any event or circumstance that is reasonably
likely to result in a Force Majeure Event, and the anticipated
duration of such Force Majeure Event. An affected Party shall use
all diligent efforts to end the Force Majeure Event, ensure that
the effects of any Force Majeure Event are minimized, and resume
full performance under this Agreement.

 

16. No Conflicts;
Consents. Each Party hereby represents and warrants to the
other Party that the execution, delivery and performance by such
first Party of this Agreement and the documents to be delivered
hereunder, and the consummation of the transactions contemplated
hereby, do not and will not: (a) violate or conflict with the
articles of incorporation or organization, by-laws or other
organizational documents applicable to such Party; (b) violate or
conflict with any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to such Party; (c) conflict with, or
result in (with or without notice or lapse of time or both) any
violation of, or default under, or give rise to a right of
termination, acceleration or modification of any obligation or loss
of any benefit under any contract or other instrument to which such
Party is a party; (d) result in the creation or imposition of any
encumbrance or lien on or any assets of such Party (except in the
case of the Company, in favor of Service Provider) ; or (e) in the
case of such Party, require the consent, to the extent said consent
has not been disclosed herein and obtained independently in
writing, of any entity or individual who is not a Party to this
Agreement. Nothing in this Agreement shall limit the Parties’
rights and obligations under the Purchase Agreement.

 


 




 

B-11








 






 

 

17. Miscellaneous.

 

(a) Interpretation. For the
purposes of this Agreement, (i) the words “include”,
“includes”, and “including” are deemed to
be followed by the words “without limitation”; (ii) the
word “or” is not exclusive; (iii) the words
“herein”, “hereof”, “hereby”,
“hereto”, and “hereunder” refer to this
Agreement as a whole; (iv) words denoting the singular have a
comparable meaning when used in the plural, and vice-versa; and (v)
words denoting any gender include all genders. Unless the context
otherwise requires, references in this Agreement: (x) to sections,
exhibits and schedules, mean the sections of, and exhibits and
schedules attached to, this Agreement; (y) to an agreement,
instrument or other document means such agreement, instrument, or
other document as amended, supplemented, and modified from time to
time to the extent permitted by the provisions thereof; and (z) to
a statute means such statute as amended from time to time and
includes any successor legislation thereto and any regulations
promulgated thereunder. The Parties drafted this Agreement without
regard to any presumption or rule requiring construction or
interpretation against the Party drafting an instrument or causing
any instrument to be drafted. The exhibits, schedules, attachments
and appendices referred to herein are an integral part of this
Agreement to the same extent as if they were set forth verbatim
herein.

 

(b) Notices. All notices, requests,
consents, claims, demands, waivers, and other communications under
this Agreement (each, a “Notice”,
and with the correlative meaning, “Notify”)
must be in writing and addressed to the other Party at its address
set forth on the signature page (or to such other address that the
receiving Party may designate from time to time in accordance with
this Section 18(b)). Unless otherwise agreed herein or required by
applicable Law, all Notices must be delivered by personal delivery,
nationally recognized overnight courier or certified or registered
mail (in each case, return receipt requested, postage prepaid),
facsimile or e-mail (with confirmation of transmission). Except as
otherwise provided in this Agreement, a Notice is effective only
(i) on receipt by the receiving Party, and (ii) if the Party giving
the Notice has complied with the requirements of this
Section.

 

(c) Entire Agreement. This
Agreement, including any exhibits or schedules attached or
referenced hereto, constitutes the entire agreement between the
Parties and set out all the covenants, promises, warranties,
representations, conditions and agreements between the Parties in
connection with the subject matter of this Agreement and supersede
all prior agreements, understandings, negotiations and discussions,
whether oral or written, pre-contractual or otherwise. There are no
covenants, promises, warranties, representations, conditions or
other agreements, whether oral or written, pre-contractual or
otherwise, express, implied or collateral, between the parties in
connection with the subject matter of this Agreement except as
specifically set forth in this Agreement.

 

(d) No Third-Party Beneficiaries.
This Agreement is for the sole benefit of the Parties hereto and
their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit, or remedy of
any nature whatsoever, under or by reason of this
Agreement.

 


 




 

B-12








 






 

 

(e) Successors and Assigns. This
Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective successors and permitted
assigns. Neither Party may assign its rights or obligations
hereunder without the prior written consent of the other Party,
which consent shall not be unreasonably withheld or delayed;
provided, that, upon prior written notice to the other Party,
either Party may assign the Agreement to an Affiliate of such Party
or to a successor of all or substantially all of the assets of such
Party through merger, reorganization, consolidation or acquisition.
No assignment shall relieve the assigning Party of any of its
obligations hereunder. Any attempted assignment, transfer or other
conveyance in violation of the foregoing shall be null and
void.

 

(f) Headings. The headings in this
Agreement are for reference only and shall not affect the
interpretation of this Agreement.

 

(g) Amendment and Modification;
Waiver. This Agreement may only be amended, modified or
supplemented by an agreement in writing signed by each Party
hereto. No waiver by any Party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and
signed by the Party so waiving. Except as otherwise set forth in
this Agreement, no failure to exercise, or delay in exercising, any
rights, remedy, power or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or
privilege.

 

(h) Severability. If any term or
provision of this Agreement is held to be invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Except as otherwise provided
herein, upon such determination that any term or other provision is
invalid, illegal or unenforceable, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in a
mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

(i) Dispute Resolution. Without
intending to limit the rights of the Parties to seek specific
performance, injunctive relief or similar equitable remedies, the
Parties agree, on behalf of themselves, the Purchaser Indemnitees
and the Seller Indemnitees, that any dispute or Action based on,
arising out of, or relating to this Agreement or any breach thereof
(a “Dispute”), shall be
resolved by arbitration in accordance with the then-applicable
Commercial Arbitration
Rules of the American Arbitration Association
(“AAA
Rules”; see
www.adr.org). The arbitration shall be conducted in the City of Los
Angeles, California by one sole arbitrator. The sole arbitrator
shall be appointed in accordance with the AAA Rules. The arbitrator shall
follow the then-applicable ICDR
Guidelines for Arbitrators Concerning Exchanges of
Information in managing and ruling on requests for
discovery. The sole arbitrator, by accepting appointment, shall
undertake to exert her or his best efforts to conduct the process
so as to issue an award within six (6) months of her or his
appointment, but failure to meet that timetable shall not affect
the validity of the award. The sole arbitrator shall decide the
Dispute in accordance with the substantive law of the State of
California, without regard to the conflict of laws rules thereof,
and shall not award any damages, fees, cost, expenses or any other
amounts that the Parties have agreed to exclude pursuant to this
Agreement. The award of the sole arbitrator may be entered in any
court of competent jurisdiction.

 


 




 

B-13








 






 

 

(j) Governing Law. This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of California (without giving effect to any
choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
California).

 

(k) WAIVER OF JURY TRIAL. THE
PARTIES HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE DOCUMENTS OR AGREEMENTS CONTEMPLATED HEREBY, OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THOSE DOCUMENTS OR
AGREEMENTS, PRESENT OR FUTURE, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.

 

(l) Electronic
Signatures;Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed an original,
but all of which together constitute one and the same instrument.
An executed copy of this Agreement may be executed and delivered by
facsimile or other electronic signature (including portable
document format) by any of the Parties and the receiving Parties
may rely on the receipt of such document so executed and delivered
electronically or by facsimile as if the original had been
received.

 

(m) Competing Interests. Service
Provider or any Affiliate of Service Provider is entitled to have,
and nothing in this Agreement shall be construed to restrict
Service Provider or any Affiliate of Service Provider from having
any other business interests including those that may be
competitive to the Company.

 

(n) Regulatory Compliance. This
Agreement is subject to strict requirements for ongoing regulatory
compliance by the Parties hereto, including without limitation,
requirements that the Parties take no action in violation of
applicable Law or the guidance or instruction of the applicable
regulatory authorities. The Parties acknowledge and understand that
the applicable Laws and/or the requirements of the applicable
regulatory authorities are subject to change and are evolving and
continues to do so. If necessary or desirable to comply with the
legal and regulatory requirements, the Parties hereby agree to (and
to cause their respective Affiliates and related parties and
representatives to) use their respective commercially reasonable
best efforts to take all actions reasonably requested to ensure
compliance with such legal and regulatory requirements, including,
without limitation, negotiating in good faith to amend, restate,
amend and restate, supplement or otherwise modify this Agreement to
reflect terms that most closely approximate the Parties’
original intentions but are responsive to and compliance with such
legal and regulatory requirements to promptly respond to any
informational requests, supplemental disclosure requirements or
other correspondence from all regulatory requirements and, to the
extent permitted by applicable Law, keep the other Party fully and
promptly informed as to any such requests, requirements or
correspondence.

 


 


 



[SIGNATURES ON FOLLOWING PAGE]


 




 

B-14








 






 

 


IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the Effective Date.


 


 



INDUS LF LLC


 


By:
____________________


      Name:


      Title:


 


 



THE HACIENDA COMPANY, LLC


 


By:
____________________


      Name:


      Title:


 


 



BRAND NEW CONCEPTS, LLC


 


By:
____________________


      Name:


      Title:


 




 

B-15








 






Schedule
I


 



Collateral


 


The
collateral consists of all of the Company’s right, title and
interest in, to and under or arising out of each and every asset,
tangible and intangible, including, without limitation, each and
all of the following, whether now existing or hereafter arising and
wherever located, but in all cases excluding any consideration
received under the Purchase Agreement or any account holding the
relevant proceeds thereof:


 



(i)            

all of the
Company’s Goods including, without limitation:






 

(a)           
all inventory including, without limitation, all raw materials,
work in process, finished goods, supplies, incidentals and
packaging materials; and


 

(b)           
all machinery and equipment (including, without limitation, all
manufacturing, warehouse, and office machinery and equipment),
fixtures, trade fixtures, appliances, engineering drawings and
diagrams, tools and tooling (including any rights in respect of
tools or tooling in the possession of others), computer and other
data processing equipment, furniture, office, production or data
processing supplies on hand or in transit, other miscellaneous
supplies and other tangible property of any kind now owned or
hereafter acquired by the Company or in which the Company now has
or may hereafter acquire any right, title or interest, including,
without limitation, all such property located in any store, plant,
warehouse, office or other space leased, owned or occupied by the
Company and all of the Company’s interest in all leasehold
improvements and any and all additions thereto, substitutions
therefor and replacements thereof, together with all attachments,
components, parts and accessories installed thereon or affixed
thereto;


 



(ii)            

all of the
Company’s
Accounts;    







 



(iii)            

all of the
Company’s licenses, Instruments, Documents, Chattel Paper,
Deposit Accounts, Investment Property and General Intangibles
(including, without limitation, software);






 



(iv)            

all of the
Company’s patents, trademarks and copyrights (and any
supplements thereto), together with






 

(a)           
all inventions, processes, production methods, proprietary
information, know-how and trade secrets used or useful in the
business of the Company, all trade names, service marks, logos,
copyrights and the like owned or used by the Company and used or
useful in the business of the Company and goodwill relating to the
same; and all licenses or other agreements granted to the Company
with respect to any of the foregoing, in each case whether now or
hereafter owned or used, all information, customer lists,
identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and
automatic machinery software and programs, and the like pertaining
to the operations by the Company in, on or about any of its plants
or warehouses, all field repair data, sales data and other
information relating to sales or service of products now or
hereafter manufactured on or about any of its plants; and all
accounting information pertaining to operations in, on or about any
of its plants and all media in which or on which any of the
information or knowledge or data or and all computer programs used
for the compilation or printout of such information, knowledge,
records or data, and


 


 




 

B-16








 






 

 


(b)           all
contract rights, General Intangibles (including, without
limitation, payment intangibles and software) and other property
rights of any nature whatsoever arising out of or in connection
with the foregoing;


 



(v)            

all of the
Company’s customer lists and records of the business, all
property from time to time described in any financing statement
(UCC-1) or similar notice filing naming Service Provider as secured
party and all property of Company in the possession of Service
Provider; and






 



(vi)            

all additions,
accessions, replacements, substitutions or improvements and all
products and proceeds (including, without limitation, proceeds of
insurance), of any and all collateral described in clauses (i)
through (v) above.






 


“Accounts”,
“Chattel
Paper”, “Deposit Account”,
“Document”,
“General
Intangible”, “Goods”,
“Instrument” and
“Investment
Property” shall have the respective meanings given to
them in the California Uniform Commercial Code-Secured
Transactions.


 


 


 




 

B-17








 










 



Exhibit C



Second Closing Bill of Sale


 


[See
attached.]


 


 


 


 


 


 


 



 







 






 



SECOND CLOSING BILL OF SALE


 


THIS
SECOND CLOSING BILL OF SALE (this “Bill of Sale”) is made
effective as of __________ ___, 2021 (the “Effective Date”), and is
entered into by and among The Hacienda Company, a California
limited liability company (“THC”), Brand New
Concepts, LLC, a California limited liability company
(“BNC”), LFCO, LLC, a
California limited liability company (“LFCO”), Lowell Farms LLC,
a California limited liability company (“Lowell”), LFHMP, LLC, a
California limited liability company (“LFHMP”), LFLC, LLC, a
California limited liability company (“LFLC”, and together with
THC, BNC, LFCO, Lowell, and LFHMP, the “Transferors”, and each a
“Transferor”), and Indus
LF LLC, a California limited liability company (“Transferee”).


 


WHEREAS, the
Transferors, Transferee, and Indus Holdings, Inc., a British
Columbia corporation, are parties to that certain Asset Purchase
Agreement dated as of February [●], 2021 (the
“APA”)
(all capitalized terms used herein, but not specifically defined
herein, shall have the meanings given to such terms in the
APA).


 


WHEREAS, the
Transferors and Transferee desire to enter into this Bill of Sale
to perfect the conveyance of the Regulated Assets to Transferee, as
more fully set forth herein and in the APA.


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:


 


1.           Transfer
of Assets. Each Transferor hereby grants, assigns,
transfers, conveys, and delivers to Transferee all of such
Transferor’s right, title and interest in and to the
Regulated Assets. None of the Transferors are granting, assigning,
transferring, conveying or delivering any Excluded Assets to
Transferee, nor shall anything in this Bill of Sale or the APA be
deemed to constitute a grant, assignment, transfer, conveyance or
delivery of any such Transferor’s right, title or interest in
and to the Excluded Assets. Transferee hereby accepts the Regulated
Assets.


 


2.           APA
to Control. This Bill of Sale is subject to the terms and
conditions of the APA, and in the event of any conflict between the
terms of this Bill of Sale and the terms of the APA, the APA shall
control.


 


3.           Miscellaneous.


 

(a)           
This Bill of Sale, the APA, and each of the documents, instruments
and agreements delivered in connection thereto constitute the
entire agreement between the Transferors and Transferee with
respect to the subject matter of this Bill of Sale and supersede
all prior agreements and understandings, both oral and written,
between the Transferors and Transferee with respect to the subject
matter of this Bill of Sale.


 


 







C-1








 






 

 


(b)           This
Bill of Sale may be executed in several counterparts, each of which
shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument. Signed counterparts of
this Bill of Sale may be delivered by facsimile or by portable
document format (.pdf) image and shall be deemed originals for all
purposes hereunder.


 

(c)           
Sections 7.3 and 7.16 of the APA are incorporated herein by
reference, mutatis
mutandis, as if fully set forth herein.


 


 


 


 


 


 


 


 


 


 


 


 


 


 


[Signature
Page Follows]







C-2








 






 


This
Bill of Sale is made and effective as of the Effective
Date.

 


	
 

	
 

	


TRANSFERORS:


 


THE
HACIENDA COMPANY, LLC


By:
_______________________________



Name:


Title:


 


BRAND
NEW CONCEPTS, LLC


By:
_______________________________



Name:


Title:


 


LFCO,
LLC


By:
_______________________________



Name:


Title:


 


LOWELL
FARMS, LLC


By:
_______________________________



Name:


Title:


 


LFHMP,
LLC


By:
_______________________________



Name:


Title:


 


LFLC,
LLC


By:
_______________________________



Name:


Title:


 







 




[Signature
Page to Bill of Sale]

C-3








 






 


 


	
 

	
 

	


TRANSFEREE:


 


INDUS
LF LLC


By:
_______________________________



Name:


Title:


 







 


 


 


 


 


 


 


 


 


 


 


 


 






 




[Signature Page to Bill of
Sale]

C-4








 










 



Exhibit D



Second Closing Assignment and Assumption Agreement


 


[See
attached.]


 


 


 


 


 


 


 


 


 



 







 






 



SECOND CLOSING ASSUMPTION AGREEMENT


 


This
Second Closing Assumption Agreement (this “Agreement”) is made
effective as of __________
___, 2021 (the “Effective Date”), and is
entered into by and among The Hacienda Company, a California
limited liability company (“THC”), Brand New
Concepts, LLC, a California limited liability company
(“BNC”), LFCO, LLC, a
California limited liability company (“LFCO”), Lowell Farms LLC,
a California limited liability company (“Lowell”), LFHMP, LLC, a
California limited liability company (“LFHMP”), LFLC, LLC, a
California limited liability company (“LFLC”, and together with
THC, BNC, LFCO, Lowell, and LFHMP, the “Transferors”, and each a
“Transferor”), and Indus
LF LLC, a California limited liability company (“Transferee”).


 


WHEREAS, the
Transferors, Transferee, and Indus Holdings, Inc., a British
Columbia corporation, are parties to that certain Asset Purchase
Agreement dated as of February [●], 2021 (the
“APA”)
(all capitalized terms used herein, but not specifically defined
herein, shall have the meanings given to such terms in the
APA).

 


WHEREAS, the
Transferors and Transferee desire to enter into this Agreement to
perfect the assumption of the Second Closing Assumed Liabilities by
Transferee, as more fully set forth herein and in the
APA.

 


NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

1. Assumption of Second Closing Assumed
Liabilities. Transferee hereby assumes all of the Second
Closing Assumed Liabilities. Transferee shall not hereby be deemed
to have assumed any of the Excluded Liabilities.

 

2. APA to Control. This Agreement
is subject to the terms and conditions of the APA, and in the event
of any conflict between the terms of this Agreement and the terms
of the APA, the APA shall control.

 

3. Miscellaneous.

 

(a) This Agreement, the
APA, and each of the documents, instruments and agreements
delivered in connection thereto constitute the entire agreement
between the Transferors and Transferee with respect to the subject
matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the Transferors and
Transferee with respect to the subject matter of this
Agreement.

 

(b) This Agreement may
be executed in several counterparts, each of which shall be deemed
to be an original, and all of which together shall be deemed to be
one and the same instrument. Signed counterparts of this Agreement
may be delivered by facsimile or by portable document format (.pdf)
image and shall be deemed originals for all purposes
hereunder.

 

(c) Sections 7.3 and
7.16 of the APA are incorporated herein by reference, mutatis mutandis, as if fully set forth
herein.

 


[Signature
Page Follows]

 




 

D-1








 






 


This
Agreement is made effective as of the Effective Date.

 


	
 

	
 

	


TRANSFERORS:


 


THE
HACIENDA COMPANY, LLC


By:
_______________________________



Name:


Title:


 


BRAND
NEW CONCEPTS, LLC


By:
_______________________________



Name:


Title:


 


LFCO,
LLC


By:
_______________________________



Name:


Title:


 


LOWELL
FARMS, LLC


By:
_______________________________



Name:


Title:


 


LFHMP,
LLC


By:
_______________________________



Name:


Title:


 


LFLC,
LLC


By:
_______________________________



Name:


Title:


 


	
 

	
 

	

 



TRANSFEREE:


 


INDUS
LF LLC


By:
_______________________________



Name:


Title:


 







 

 


 


 




[Signature Page to Assumption
Agreement]

D-2








 










 



Exhibit E



Closing Statement


 


[See
attached.]


 


 


 


 


 


 


 


 



 







 






 



CLOSING STATEMENT


 


February
25, 2021


 


This
Closing Statement is being delivered pursuant to Section 1.4(b) of
that certain Asset Purchase Agreement,
dated as of the date hereof (the “APA”), by and among the The Hacienda Company,
LLC, a California limited liability company
(“THC”), Brand New Concepts, LLC, a California
limited liability company, LFCO, LLC, a California limited
liability company, Lowell Farms LLC, a California limited liability
company, LFHMP, LLC, a California limited liability company, LFLC,
LLC, a California limited liability company, Indus LF LLC, a
California limited liability company (“Purchaser”), and Indus
Holdings, Inc., a British Columbia corporation (“Parent”). Capitalized
terms used and not otherwise defined herein have the meanings
assigned to them in the APA.


 


The
undersigned, solely in her capacity as manager of THC, does hereby
certify to Purchaser and Parent that set forth in: (a) Schedule I
hereto is a list of the Closing Liabilities, separated by (i) all
amounts to be paid by Purchaser (with payment instructions) at the
First Closing, (ii) all amounts to be paid by the Sellers at the
First Closing, and (iii) an estimate of the Liabilities to be paid
by the Sellers after the First Closing; and (b) Schedule II
hereto is the outstanding and projected accrued vacation costs for
the Group I, Group II and Group III Employees.


 


 



[Signature Page Follows]


 

 


 

 


 

 




 

E-1








 






 


OF IN
WITNESS WHEREOF, the undersigned has executed this Closing
Statement as of the date set forth above.

 


 


________________________________


Name:


Title:


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 

E-2