lowell_ex104





  Exhibit
10.4






 



DEBENTURE AND WARRANT PURCHASE AGREEMENT

 


This
Debenture and Warrant Purchase Agreement (this “Agreement”),
dated as of April 10, 2020, is entered into by and among Indus
Holding Company, a Delaware corporation (the “Company”),
Indus Holdings, Inc. (“Parent”) and
the parties listed on Schedule I attached hereto
(each a “Purchaser”
and, collectively, the “Purchasers”),
as such Schedule I
may be amended from time to time in accordance with Section 9 hereof.

 



RECITALS

 


A.           On
the terms and subject to the conditions set forth herein, each
Purchaser is willing to purchase from the Company, and the Company
is willing to issue and sell to such Purchaser, a senior secured
convertible debenture in the principal amount set forth opposite
such Purchaser’s name on Schedule I hereto and to
transfer the related warrant to purchase certain equity securities
of Parent listed opposite such Purchaser’s name on
Schedule I
hereto.

 


B.           Capitalized
terms not otherwise defined herein shall have the meaning set forth
in the form of Debenture (as defined below) attached hereto as
Exhibit A;
provided however that
“Required
Purchasers” shall have the meaning given to the
defined term “Required Holders” in such
Debenture.

 


C.           All
references to $ shall mean United States dollars unless otherwise
indicated.

 


NOW
THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and conditions set forth
below, the parties hereto, intending to be legally bound, hereby
agree as follows:

 


1. The Debentures and Warrants.

 


(a) Issuance of Debentures. Subject
to all of the terms and conditions hereof, the Company agrees to
issue and sell to each of the Purchasers, and each of the
Purchasers severally agrees to purchase, a senior secured
convertible debenture in the form of Exhibit A hereto (each, a
“Debenture”
and, collectively, the “Debentures”)
in the principal amount set forth opposite the respective
Purchaser’s name on Schedule I hereto. The
aggregate principal amount for all Debentures issued hereunder
shall not be less than $10,000,000 (the “Minimum
Amount”) and shall not exceed $15,700,000 (the
“Maximum
Amount”). The Debentures shall be convertible into
Class C Common Shares (the “Company
Shares”) of the Company in accordance with their terms
pursuant to the Amended Certificate of Incorporation (as defined
below). The Company Shares shall be redeemable for subordinate
voting shares of Parent (the “Voting
Shares”) in accordance with their terms pursuant to
the Amended Certificate of Incorporation and the Support Agreement
(as defined below). Payment for the Debentures shall consist of
cash by wire transfer of immediately available funds.

 


(b) Transfer of
Warrant. Subject
to the terms and conditions of this Agreement, and in consideration
for the purchase by the Purchasers of the Debentures and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Parent agrees to issue to Company and
Company agrees to transfer to each Purchaser, a warrant
substantially in the form attached hereto as Exhibit B (each a
“Warrant” and
collectively, the “Warrants”).
The Warrants issued and transferred pursuant to this Section 1(b) shall be
exercisable for Voting Shares as provided in such Warrants, with
each such Warrant exercisable, at an exercise price of $0.28 per
Voting Share, for a number of Voting Shares equal to (x) the
principal amount of the Debenture purchased by such Purchaser
divided by (y) $0.20 (subject to adjustment as set forth in the
Warrant). The Debentures and the
Warrants, taken together, constitute an “investment
unit” for purposes of Section 1273(c)(2) of the
Internal Revenue Code of 1986, as amended (the
“Code”).
In accordance with Sections 1273(c)(2)(A) and 1273(b)(2) of the
Code, the issue price of the investment unit is the purchase price
of the Debentures, a portion thereof equal to $0.0235 times the
number of shares underlying the Warrants representing the fair
market value of the Warrants. Accordingly, the fair market value of
the Warrants shall be treated as “original issue
discount” that will accrue over the term of the Debentures as
additional interest for federal income tax purposes. Unless
otherwise required by Applicable Law, the parties shall not take
any position inconsistent with that allocation on any tax return or
for any other tax purpose.

 



 







 





 


(c) Closing. The sale and purchase
of Debentures and the Warrants shall take place at a closing (the
“Initial
Closing”) to be held on April 10, 2020 or such other
date that is mutually agreeable to the Company and the Purchasers
investing in the Company at the Initial Closing (the
“Initial
Closing Date”), and on which not less than the Minimum
Amount is subscribed for and purchased, by remote electronic
exchange of executed documents and funds, or, at such other place
and time as the Company and the Purchasers may determine. At the
Initial Closing, the Company shall deliver a Debenture and Warrant
to each of the Purchasers against receipt by the Company of the
corresponding purchase price set forth on Schedule I hereto (the “Purchase
Price”). The Company may conduct one or more
additional closings (each, an “Additional
Closing” and, collectively, the “Additional
Closings”; and, together with the Initial Closing, the
“Closings” and
each, a “Closing”) to
be held within 45 days of the Initial Closing or by such earlier
date on which Debentures and Warrants in the aggregate principal
amount equal to the Maximum Amount shall have been purchased, at
such place and time as the Company and the Purchaser(s)
participating in such Additional Closing (each an
“Additional
Purchaser”) may determine (each, an
“Additional
Closing Date” and collectively, the
“Additional Closing
Dates”; and, together with the Initial Closing Date,
the “Closing Dates”
and each, a “Closing
Date”). At each Additional Closing, the Company shall
deliver a Debenture and Warrant to each of the Additional
Purchasers participating in such Additional Closing against receipt
by the Company of the corresponding Purchase Price. Each Debenture
shall be convertible into Company Shares in accordance with its
terms and shall be registered in such Purchaser’s name in
Company's records. All such sales made at any Additional Closings
shall be made on the terms and conditions set forth in this
Agreement provided that (i) the representations and warranties of
the Company and Parent set forth in Section 2 hereof shall speak as
of the Initial Closing and neither the Company nor Parent shall
have any obligation to update any disclosure related thereto, and
(ii) the representations and warranties of each Additional
Purchaser set forth in Section 3 hereof shall speak as
of the date of such Additional Closing. This Agreement, including
without limitation, Schedule I, shall be amended to
include any Additional Purchasers without the consent of the
parties hereto, including any Purchaser, upon the execution by any
such Additional Purchaser of a counterpart signature page hereto.
Any Debentures purchased by Additional Purchasers shall be deemed
to be “Debentures,” for all purposes under this
Agreement and any such Additional Purchasers shall be deemed to be
“Purchasers” for all purposes under this
Agreement.

 


2. Representations and Warranties of the Company
and Parent. The Company and Parent, on a joint and several
basis, represent and warrant to each Purchaser, subject to Section
9(l) below that, except as set forth in the Disclosure Schedule, as
of the Initial Closing Date:

 


(a) Organization, Good Standing,
etc. Each of the Company, Parent and their respective
Subsidiaries (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization and has the requisite corporate
power and authority to own, lease and operate its properties and
carry on its business as now conducted. For purposes of this
Section 2,
“Subsidiaries”
means, collectively, Cypress Manufacturing Company and each other
corporation, limited liability company, partnership, association,
trust or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50%
of the ordinary voting power (or, in the case of a partnership,
more than 50% of the general partnership interests) are, as of such
date, owned by the Company or Parent.

 


(b) Authority. The execution,
delivery and performance by the Company and Parent of this
Agreement, the collateral documents in substantially the form
attached to this Agreement as Exhibit C (the
“Collateral
Documents”), the Voting Agreement in substantially the
form attached to this Agreement as Exhibit D (the
“Voting
Agreement”) and each Warrant and each Debenture (each,
together with the Support Agreement (as defined below), a
“Transaction
Document” and, collectively, the “Transaction
Documents”) and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the
issuance of the Warrants by Parent, the transfer of the Warrants by
the Company and the redemption of the Company Shares for the Voting
Shares pursuant to the Amended Certificate of Incorporation and the
Support Agreement dated as of April 29, 2019 between the Company
and Parent (the “Support
Agreement”), are within the corporate power of the
Company and Parent and have been duly authorized by all necessary
corporate actions on the part of the Company and
Parent.

 


(c) Enforceability. Each
Transaction Document executed, or to be executed, by the Company or
Parent has been, or shall be, duly executed and delivered by the
Company or Parent, as applicable, and constitutes, or shall
constitute, a legal, valid and binding obligation of the Company or
Parent, as applicable, enforceable against the Company or Parent,
as applicable, in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors’ rights
generally and general principles of equity.

 


(d) Capitalization.

 


(i) The authorized
capital of the Company consists, immediately prior to the Initial
Closing and after giving effect to the Eighth Amended and Restated
Certificate of Incorporation of the Company, in substantially the
form attached hereto as Exhibit E (the
“Amended
Certificate of Incorporation”), of (i) 224,000,000
Class A Common Shares, $0.001 par value per share (the
“Class A
Shares”), 16,447,591 of which are issued and
outstanding immediately prior to the Initial Closing, (ii)
40,000,000 Class B Common Shares, $0.001 par value per share (the
“Class B
Shares”), 16,376,140 of which are issued and
outstanding immediately prior to the Initial Closing, and (iii)
157,000 Class C Common Shares, $0.001 par value per share (the
“Class C
Shares”), none of which are issued and outstanding
immediately prior to the Initial Closing. The Company has reserved
16,376,140 Class A Shares for issuance to Parent upon the
redemption of Class B Shares for Voting Shares; 1,073,250 Class A
Shares for issuance to Parent upon the issuance of Voting Shares by
Parent to officers, directors, employees and consultants of Parent
and its Subsidiaries (the “Company
Group”) pursuant to the Company’s 2016 Stock
Incentive Plan, duly adopted by the board of directors of the
Company, all of which are issuable upon the exercise of options
that were assumed by Parent, approved by the board of directors of
Parent (the “Parent Board”)
and the stockholders of Parent and are currently outstanding and
exercisable for the purchase of Class A Shares (with no Class A
Shares or other capital stock remaining available for issuance to
officers, directors, employees and consultants of the Company Group
pursuant to the Company’s 2016 Stock Plan); and 8,205,932
Class A Shares for issuance to Parent upon the issuance of Voting
Shares by Parent to officers, directors, employees and consultants
of the Company Group pursuant to its 2019 Stock Incentive Plan,
duly adopted by the Parent Board and approved by the Parent
stockholders, of which options to purchase 1,893,375 Voting Shares
have been granted and are currently outstanding or
issued.

 



 







 





 


(ii) The
authorized capital of Parent consists, immediately prior to the
Initial Closing, of (i) an unlimited number of Super Voting Shares,
without par value (the “Super Voting
Shares”), 202,590 of which are issued and outstanding
immediately prior to the Initial Closing, and (ii) an unlimited
number of Voting Shares, 16,447,591 of which are issued and
outstanding immediately prior to the Initial Closing. Parent has
reserved 8,205,932 Voting Shares for issuance to officers,
directors, employees and consultants of the Company Group pursuant
to its 2019 Stock and Incentive Plan, duly adopted by the Parent
Board and approved by Parent’s stockholders (the
“Stock
Plan”). Of such reserved Voting Shares, options to
purchase 1,893,375 Voting Shares have been granted and are
currently outstanding or issued, and 6,312,557 Voting Shares remain
available for issuance to officers, directors, employees and
consultants of the Company Group pursuant to the Stock Plan. In
addition to the Voting Shares reserved for issuance pursuant to the
Stock Plan, 1,073,250 Voting Shares have been reserved for issuance
pursuant to grants pursuant to the Company’s 2016 Stock
Option Plan that have been assumed by Parent.

 


(e) Non-Contravention. The
execution and delivery by each of the Company and Parent of this
Agreement and each of the Transaction Documents to which it is a
party and the performance and consummation of the transactions
contemplated hereby and thereby do not and will not
(i) violate the charter or bylaws of the Company or Parent or
any material judgment, order, writ, decree, statute, rule or
regulation applicable to the Company or Parent;
(ii) materially violate any provision of, or result in the
material breach or the acceleration of, or entitle any Person to
accelerate (whether after the giving of notice or lapse of time or
both), any material mortgage, indenture, agreement, instrument or
contract to which the Company, Parent or any of their respective
Subsidiaries is a party or by which it is bound; or
(iii) result in the creation or imposition of any security
interest, mortgage, pledge, lien, claim, charge or other
encumbrance in, of, or on any material property or asset of the
Company, Parent or any of their respective Subsidiaries
(collectively the “Liens” and
individually, a “Lien”) (other
than any Lien arising under the Transaction Documents) or the
suspension, revocation, impairment, forfeiture, or nonrenewal of
any material permit, license, authorization or approval applicable
to the Company, Parent or any of their respective Subsidiaries,
their respective business or operations, or any of their respective
assets or properties.

 


(f) Approvals. No consent,
approval, order or authorization of, or registration, declaration
or filing with, any Governmental Authority or other Person
(including, without limitation, the shareholders of any Person) is
required by the Company or Parent in connection with the execution
and delivery of this Agreement and the Debentures and Warrants
issued hereunder and the performance and consummation of the
transactions contemplated hereby except for filings required under
Applicable Securities Legislation. All approvals required by the
stockholders of the Company, Parent or their respective
Subsidiaries under any Applicable Law (other than filings and
notifications permitted to be made following the Closing under
Applicable Securities Legislation) or listing or exchange on which
Parent’s securities are traded relating to this Agreement and
the transactions contemplated hereby and by the other Transaction
Documents, including, without limitation, the issuance of
Debentures and Warrants and the exchange of the Company securities
for Parent securities pursuant to the Support Agreement, have been
obtained prior to the Initial Closing and no further approvals are
required.

 


(g) Litigation. No actions
(including, without limitation, derivative actions), suits,
proceedings or investigations are pending or, to the knowledge of
the Company or Parent, threatened against the Company, Parent or
any of their respective Subsidiaries at law or in equity in any
court or before any other Governmental Authority which (i) if
adversely determined would (alone or in the aggregate) have a
Material Adverse Effect or (ii) seeks to enjoin, either
directly or indirectly, the execution, delivery or performance by
the Company or Parent of this Agreement or the Debentures and
Warrants issued thereunder or the Transaction Documents or the
transactions contemplated thereby.

 


(h) Title. The Company, Parent and
each of their respective Subsidiaries owns and has good title in
fee simple to, or a valid leasehold interest in, all its real
properties and good title to its other material assets and
properties as reflected in the most recent Financial Statements
delivered by the Company and Parent pursuant to this Section 2 (except those assets
and properties disposed of in the ordinary course of business since
the date of such Financial Statements) and all material assets and
properties acquired by the Company, Parent or any of their
respective Subsidiaries after such date (except those disposed of
in the ordinary course of business). Such assets and properties are
not subject to any Lien except as for Permitted Encumbrances (as
defined pursuant to the Collateral Documents) and those Liens
disclosed in the Financial Statements.

 


(i) Intellectual Property. The
Company, Parent and each of their respective Subsidiaries owns or
possesses sufficient legal rights to all material patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, processes and other intellectual property
rights necessary for its business as now conducted without any
conflict with, or infringement of the rights of,
others.

 


(j) Financial Statements. The
consolidated unaudited financial statements of the Company, Parent
and their respective Subsidiaries for the nine-month period ended
September 30, 2019 (the “Financial
Statements”) which have been delivered to the
Purchasers, (i) are in accordance with the books and records
of the Company, Parent and their respective Subsidiaries, which
have been maintained in accordance with good business practice;
(ii) have been prepared in conformity with IFRS in all
material respects; and (iii) fairly present in all material
respects the financial position of the Company, Parent and their
respective Subsidiaries on a consolidated basis as of the dates
presented therein and the results of operations, changes in
financial positions or cash flows, as the case may be, for the
periods presented therein. Neither the Company, Parent nor any of
their respective Subsidiaries has any liabilities required to be
shown on the face of a balance prepared in accordance with IFRS and
which are material in the aggregate to the Company, Parent and
their respective Subsidiaries, taken as a whole, except for (i)
liabilities disclosed in the Financial Statements, (ii) liabilities
incurred in the ordinary course of business subsequent to the date
of the Financial Statements, (iii) liabilities for performance
under contracts subsequent to the date of the Financial Statements
(other than liabilities arising from the breach of any such
contracts prior to the date of the Financial Statements) and (iv)
liabilities listed on Schedule 2.

 



 







 





 


(k) Indebtedness. Except pursuant
to that certain Loan Agreement, dated as of March 13, 2020, by and
among Parent, the Company, Cypress Manufacturing Company and
certain of the Purchasers party thereto (the “Loan
Agreement”) or as set forth on Schedule 2, neither the Company
nor Parent has any Indebtedness (as hereinafter defined).
“Indebtedness”
means, with respect to the Company or Parent, obligations with
respect to principal, accrued and unpaid interest, penalties,
premiums and any other fees, expenses and breakage costs on and
other payment obligations arising under any (i) indebtedness for
borrowed money, (ii) indebtedness issued in exchange for or in
substitution for borrowed money, (iii) obligations evidenced by any
note, bond, debenture or other debt security or similar instrument
or contract and (iv) guarantees of the types of obligations
described in clauses (i) though (iii) above.

 


(l)  No Material Adverse Effect.
Since December 31, 2019, no event has occurred and no condition has
arisen which has had or would reasonably be expected to have a
Material Adverse Effect. As used herein, “Material Adverse
Effect” means a material adverse effect on the
business, assets, operations or financial condition of the Company,
Parent and their respective Subsidiaries, taken as a whole,
provided that there shall be excluded from any determination of
Material Adverse Effect (A) changes or economic or political
conditions generally affecting the industries in which Company,
Parent and their respective Subsidiaries operate; (B) changes in
economic, capital market, financial market, regulatory or political
conditions of the United States generally; (C) any failure by the
Company, Parent or any of their respective Subsidiaries to meet any
internal projections or forecasts or revenue or earnings
predictions for any past, current or future period (provided,
however, that any event or change that caused or contributed to
such failure to meet any internal projections or forecasts or
revenue or earnings predictions shall not be excluded under this
clause (C)); (D) changes in law or regulation or any official
interpretation thereof; (D) changes in GAAP or any interpretation
thereof by a recognized accounting body; or (E) acts of God, war,
an outbreak of pandemic disease, terrorism, calamities, national or
international political conditions, including engagement in
hostilities (whether commenced before, on or after the date hereof,
and whether or not pursuant to the declaration of a state of
emergency or war), or similar events; except to the extent matters
described in clauses (A) or (B) above have materially
disproportionately and adversely affected the Company, Parent and
their respective Subsidiaries, taken as a whole, as compared to
similarly situated businesses (including with respect to geographic
area) in the industry in which the Company, Parent and their
respective Subsidiaries operate.

 


(m) Cannabis Representations and
Warranties.

 


(i) Each of the
Company’s, Parent’s and their respective
Subsidiaries’ current directors and officers, and to the
knowledge of the Company and Parent, each of the Company’s,
Parent’s and their respective Subsidiaries’ current
members, limited or general partners and equity holders, is not
disqualified from owning an equity interest in a commercial
cannabis business licensed for cultivation, manufacturing, retail
and/or distribution under the California Medical and Adult Use
Cannabis Regulation and Safety Act (“MAUCRSA”), and
each director, officer and those designated as an
“Owner” (as defined under Section 5003 of the Bureau of
Cannabis Control Regulations) would not be disqualified from
holding such license(s) in connection with its ownership pursuant
to California Business and Professions Code Sections 480, 26053 or
26057(b) or any other similar Applicable Law.

 


(ii) Neither
the Company, Parent nor any of their respective Subsidiaries or
their respective directors, managers, officers and members have any
interests in a commercial cannabis business licensed to operate as
a testing laboratory to perform testing of cannabis
goods.

 


(iii) The
products cultivated, manufactured, distributed and/or sold and, to
the knowledge of the Company and Parent, the third party products
marketed, sold and/or distributed by the Company, Parent and their
respective Subsidiaries, are not the subject of any pending
approval consent or other actions before any federal, state,
municipal, foreign, or other court, judicial body, administrative
agency, commission, governmental or regulatory authority or similar
body responsible for enforcing or overseeing compliance with
MAUCRSA and applicable local rules, regulations and ordinances, in
each case, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company or Parent or prevent, materially delay or materially impair
the consummation of the transactions contemplated by this
Agreement.

 


(iv) None
of the Company, Parent nor any of their respective Subsidiaries
conducts any cannabis-related activities nor engages in business in
any jurisdiction where such activities are not expressly authorized
by Applicable Law. Each of the Company, Parent and their respective
Subsidiaries comply in all material respects with such Applicable
Laws and have all permits necessary for the conduct of such
regulated cannabis activities.

 


(n) Taxes. Each of Company and
Parent has filed on a timely basis all Tax returns, elections and
reports that are required to be filed by it under Applicable Law
and has paid, collected, withheld and remitted all Taxes and
remittances shown thereon to be due and payable, collectible or
remittable by it under Applicable Law, and all other Taxes, fees or
other charges imposed on it or any of its property by any
Governmental Authority, except Taxes that are being contested in
good faith by appropriate proceedings. To knowledge of Company or
Parent, no tax liens have been filed and no claim is being
asserted, with respect to any such Tax, fee or other
charge.

 


(o) Status as a U.S. Corporation.
Parent is treated as a domestic corporation for U.S. federal income
tax purposes pursuant to Section 7874(b) of the Code.

 



 







 





 


3. Representations and Warranties of
Purchasers. Each Purchaser, severally and not jointly,
represents and warrants to the Company and Parent as
follows:

 


(a) Binding Obligation. Such
Purchaser has the legal capacity, corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The Transaction Documents constitute valid and binding
obligations of such Purchaser, enforceable in accordance with their
terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of
equity.

 


(b) Securities Law Compliance. Such
Purchaser has been advised that the Debentures, the Warrants and
the underlying securities have not been registered under the
Securities Act, or any Applicable Securities Law, and, therefore,
cannot be resold unless they are registered under the Securities
Act and Applicable Securities Law or unless an exemption from such
registration requirements is available. Such Purchaser is aware
that neither the Company nor Parent is under any obligation to
effect any such registration with respect to the Debentures, the
Warrants or the underlying securities or to file for or comply with
any exemption from registration. Such Purchaser is further aware
that Parent would not qualify as a “foreign private
issuer” within the meaning of Securities Exchange Act Rule
3b-4 if foreign private issuer status were determined as of the
Initial Closing Date. Such Purchaser, if an entity, has not been
formed solely for the purpose of making this investment. Such
Purchaser is purchasing the Debentures to be acquired by such
Purchaser hereunder for the Purchaser’s own account for
investment, not as a nominee or agent, and not with a view to, or
for resale of the Debenture, Warrant or the underlying securities
in connection with, the distribution thereof, and such Purchaser
has no present intention of selling, granting any participation in,
or otherwise distributing the same. The residency of the Purchaser
(or, in the case of a partnership or corporation, such
entity’s principal place of business) is correctly set forth
beneath such Purchaser’s name on Schedule I hereto.

 


(c) Accredited Investor. Such
Purchaser has such knowledge and experience in financial and
business matters that such Purchaser is capable of evaluating the
merits and risks of such investment, is able to incur a complete
loss of such investment without impairing such Purchaser’s
financial condition and is able to bear the economic risk of such
investment for an indefinite period of time. Such Purchaser is an
“accredited investor” as such term is defined in
Rule 501 of Regulation D under the Securities Act and
will submit to the Company or Parent such further assurances of
such status as may be reasonably requested by the
Company.

 


(d) Access to Information. Such
Purchaser acknowledges that the Company has given such Purchaser
access to the records and accounts of the Company and to all
information in its possession relating to the Company, has made its
officers and representatives available for interview by such
Purchaser, and has furnished such Purchaser with all documents and
other information required for such Purchaser to make an informed
decision with respect to the purchase of the
Debentures.

 


(e) Cannabis Representations and
Warranties. Such Purchaser is not disqualified from owning
an equity interest in a commercial cannabis business licensed for
cultivation, manufacturing, retail and/or distribution under
MAUCRSA. Such Purchaser if designated as an “Owner” (as
defined under Section 5003 of the Bureau of Cannabis Control
Regulations) would not be disqualified from holding such license(s)
in connection with its ownership pursuant to California Business
and Professions Code Sections 480, 26053 or 26057(b) or any other
similar Applicable Law.

 


4. Conditions to Closing of the Purchasers.
Each Purchaser’s obligations at the applicable Closing are
subject to the fulfillment, on or prior to the applicable Closing
Date, of all of the following conditions, any of which may be
waived in whole or in part by the Required Purchasers (as defined
above):

 


(a) Representations and Warranties.
The representations and warranties made by the Company in
Section 2
hereof shall be true and correct in all material respects on the
Initial Closing Date.

 


(b) Governmental Approvals and
Filings. Except for any notices required or permitted to be
filed after the Closing Date with certain federal and state
securities commissions, the Company shall have obtained all
governmental approvals required in connection with the lawful sale
and issuance of the Debentures and Warrants.

 


(c) Legal Requirements. At each
Closing, the sale and issuance by the Company and the purchase by
the Purchasers of the Debentures shall not violate any Applicable
Law or regulation to which Parent, the Company or any of its
Subsidiaries is subject.

 


(d) Transaction Documents. The
Company shall have duly executed and delivered to such Purchaser
this Agreement, the Collateral Documents, the Voting Agreement and
the Debentures and Warrants issued to such Purchaser at the
applicable Closing hereunder.

 


(e) Initial Aggregate Purchase. The
Company shall have received subscriptions for the purchase of the
Debentures in an aggregate principal amount of no less than the
Minimum Amount by the Initial Closing Date.

 



 







 





 


(f) CEO Matters. Robert Weakley
shall have resigned as CEO effective immediately following the
Closing and Mark Ainsworth shall have been appointed interim
CEO.

 


(g) Board Matters. George Allen
shall have been appointed to the Company’s board of
directors.

 


(h) Permits. The Company and its
Subsidiaries shall have received the permits necessary for
operation of the California greenhouse other than for head
house.

 


(i) Option Plan Increase. Parent
shall have increased the number of shares available for issuance
pursuant to the Stock Plan to 8,205,932.

 


5. Conditions to Obligations of the
Company. The Company’s obligation to issue and sell
the Debentures at the Initial Closing and at each Additional
Closing, as applicable, is subject to the fulfillment, on or prior
to the applicable Closing Date, of the following conditions, any of
which may be waived in whole or in part by the
Company:

 


(a) Representations and Warranties.
The representations and warranties made by the applicable
Purchasers in Section
3 hereof shall be true and correct on the applicable Closing
Date.

 


(b) Governmental Approvals and
Filings. Except for any notices required or permitted to be
filed after the Closing Date with certain federal and state
securities commissions, the Company shall have obtained all
governmental approvals required in connection with the lawful sale
and issuance of the Debentures and Warrants.

 


(c) Legal Requirements. At each
Closing, the sale and issuance by the Company and the purchase by
the applicable Purchasers of the Debentures shall not violate any
Applicable Law or regulation to which Parent, the Company or any of
its Subsidiaries is subject.

 


(d) Purchase Price. Each Purchaser
shall have delivered to the Company the Purchase Price in respect
of the Debenture being purchased by such Purchaser referenced in
Section 1(a)
hereof.

 


(e) Weakley Termination Agreement.
The severance agreement between the Company and Robert Weakley
shall have been released from escrow and shall be in full force and
effect.

 


(f) Super Voting Shares. The
agreement between the Board and Robert Weakley with respect to the
Company’s outstanding Super Voting Shares shall have been
modified to permit the voting of such Super Voting Shares in
accordance with the Voting Agreement.

 


6. Further Agreements.

 


(a) Negative Covenants. Until all
of the principal and interest under the Debentures has been paid in
full or converted in accordance with the terms of the Debentures,
neither the Company nor Parent shall take the following actions
without the prior written consent of the Required
Purchasers:

 


(i) Incur any
Indebtedness (excluding the amounts outstanding under Debentures),
except for Indebtedness (A) between Parent or any of its
Subsidiaries (collectively, the “Company
Group”), on the one hand, and any member of the
Company Group or a wholly owned subsidiary of a member of the
Company Group, on the other, (B) pursuant to credit lines secured
by the Company’s receivables, (C) pursuant to vendor
equipment financing, (D) of up to $1,000,000 incurred for the
purpose of financing the payment of insurance premiums, (E) in an
aggregate amount not to exceed $500,000 and (F) used to repay or
prepay the Debentures (I) in full following an Event of Default (as
defined in the Debentures) if such Event of Default has not been
waived by the Required Purchasers and the exercise of remedies with
respect thereto is not subject to a written deferral by the
Required Purchasers of at least 60 days from the date such
Indebtedness is incurred or (II) in full or in part to the extent
repayment or prepayment is expressly provided for in the
Transaction Documents.

 



 







 





 


(ii) Prior
to the second anniversary of the Initial Closing Date, enter into a
transaction or series of related transactions which would
constitute a Change of Control (as defined in the Debentures),
except for a Change of Control that is the result of a financing
transaction permitted by the Transaction Documents.

 


(iii) Acquire
all or substantially all of the assets of any Person or acquire
equity interests in any Person that would cause such Person to be a
Subsidiary of Parent or the Company (each, an “Acquisition”),
in each case other than the Acquisition of a Subsidiary permitted
to be formed hereunder.

 


(iv) Other
than in connection with an Acquisition, or the extent financed with
Indebtedness permitted hereunder, acquire any assets (excluding
inventory, supplies and equipment acquired the ordinary course of
business), including any other Person or any equity or debt
securities of any other Person (in each case other than a
Subsidiary permitted to be formed hereunder), for consideration in
excess of $1,000,000 (including any Indebtedness assumed as
purchase consideration in connection with such
transaction).

 


(v) Enter into any line
of business in which the Company is not engaged as of the Initial
Closing and that is not reasonably related to or a reasonable
extension of any line of business in which the Company is engaged
as of the Initial Closing.

 


(vi) Amend
the certificate of incorporation, bylaws or other charter document
of Company, Parent or their respective Subsidiaries in a manner
that would materially and adversely affect the Debentures, the
Warrants or the Company Shares or Voting Shares issuable upon
conversion or exercise thereof.

 


(vii) Liquidate,
dissolve or wind-up the business and affairs of the Company, Parent
or their respective Subsidiaries or consent to any of the
foregoing.

 


(viii) Purchase
or redeem (or permit any subsidiary to purchase or redeem) or pay
or declare any dividend or make any distribution on, any shares of
capital stock of the Company, Parent or their respective
Subsidiaries other than (i) redemptions of Class B Common Stock and
Class C Common Stock of the Company pursuant to the Amended
Certificate of Incorporation, (ii) dividends or other distributions
payable on the Common Stock solely in the form of additional shares
of Common Stock and (iii) repurchases of stock from former
employees, officers, directors, consultants or other persons who
performed services for the Corporation or any subsidiary in
connection with the cessation of such employment or service at no
greater than the original purchase price thereof.

 


(ix) Create,
or hold capital stock in, any Subsidiary that is not wholly owned
(either directly or through one or more other Subsidiaries) by the
Company or Parent (other than the Company itself); create or permit
any Subsidiary to create any Subsidiary unless such additional
Subsidiary enters into a guaranty of Parent’s obligations
with respect to the Debentures and enters into a security agreement
comparable to the Collateral Documents securing such additional
Subsidiary’s obligations under such guaranty in form and
substance reasonably satisfactory to the Required Purchasers; or
cause or permit any direct or indirect Subsidiary of Parent (other
than the Company pursuant to the Support Agreement) to issue any
shares of any class or series of capital stock, or sell, transfer
or otherwise dispose of any capital stock, of any Subsidiary of
Parent (other than to another Subsidiary permitted hereunder and
other than redemptions of Class B Common Stock and Class C Common
Stock of the Company pursuant to the Amended Certificate of
Incorporation) or sell, lease, transfer, exclusively license or
otherwise dispose (in a single transaction or series of related
transactions) of all or substantially all of the assets of a
Subsidiary (other than to another Subsidiary permitted
hereunder).

 


(x) Allow Liquidity to be less than $3,000,000 at any
time prior to the 18-month anniversary of the Initial Closing.
“Liquidity” shall mean, at any time, the aggregate
amount of cash and cash equivalents (other than restricted cash)
held at such time by the Company, Parent and their respective
Subsidiaries reduced by the amount of any judgments that are not
subject to a stay on execution (either by court order or agreement
with the counterparty) and either (A) have been outstanding for 30
days or more or (B) have been ordered to be paid;
provided
that, the amount of Debentures
available to be issued under this Agreement shall not constitute
“Liquidity”.

 


(b) [reserved]

 


(c) Repayment
of Loan. No later than two (2)
business days following the Initial Closing, the Company shall have
wired into an escrow account designated by the parties to the Loan
Agreement the outstanding principal and accrued interest thereon
outstanding as of such date.

 



 







 





 

 
(d) Delaware Franchise
Taxes; Amended Certificate of Incorporation. No later than two (2) business days following
the Initial Closing, the Company shall have paid all outstanding
franchise taxes due and owing by the Company to the Delaware
Department of State. No later
than April 17, 2020, the Company shall have filed the
Amended Certificate of Incorporation with the Secretary of State of
Delaware.

 


(e) 5014309
Ontario Inc. Parent agrees and
covenants that 5014309 Ontario Inc. has no assets and carries on no
business as of the Initial Closing and, at any time while any
amounts are outstanding under the Debentures, shall not carry on
any business activities. Neither the Company or Parent or
any of their respective Subsidiaries shall make any transfers of
assets to 5014309 Ontario Inc. at any time while any amounts are
outstanding under the Debentures.

 


(f) Further
Assurances. Each
Purchaser agrees and covenants that at any time and from time to
time it shall promptly execute and deliver to the Company such
further instruments and documents and take such further action as
the Company may reasonably require in order to carry out the full
intent and purpose of this Agreement and to comply with Applicable
Securities Laws or other applicable
regulatory approvals.

 


7. Tax
Matters.

 


(a) Taxes.

 


(i) Any and all
payments by or on account of any obligation of the Company under
the Debentures shall be made free and clear of and without
reduction or withholding for any taxes; provided that if the
Company is required by Applicable Law to deduct or withhold any
Taxes from such payment, then:

 


(A) If such tax is an
Indemnified Tax, the amount payable by the Company shall be
increased so that after making all required deductions or
withholdings, each Purchaser receives an amount equal to the amount
it would have received had no such deduction or withholdings been
made; and

 


(B) The Company shall
make such deductions, timely pay the full amount deducted to the
relevant Governmental Authority in accordance with Applicable Law,
and provide each Purchaser with official receipts or other evidence
satisfactory to such Purchaser for each payment.

 


(ii) Without
duplication, each of the Company and Parent jointly and severally
agrees to indemnify each Purchaser upon demand for the full amount
of Indemnified Taxes payable or paid by such Purchaser or required
to be withheld or deducted from a payment to such Purchaser and any
liability (including penalties, interest and reasonable expenses
and any Indemnified Taxes imposed on any amount taxable under this
Section 7(a)(ii)) arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.
Indemnification payments due to any Purchaser under this Section
7(a)(ii) shall be made within thirty (30) days from the date such
Purchaser makes written demand therefor. A certificate as to the
amount of such payment or liability delivered to the Company by a
Purchaser shall be conclusive absent manifest error.

 


(b) Purchaser Status for U.S. Tax
Purposes.

 


(i) Any Purchaser that
is entitled to an exemption from or reduction of withholding Tax
with respect to payments made under any Debenture shall deliver to
the Company, at the time or times reasonably requested by the
Company, such properly completed and executed documentation
reasonably requested by the Company as will permit such payments to
be made without withholding or at a reduced rate of withholding. In
addition, any Purchaser, if reasonably requested by the Company,
shall deliver such other documentation prescribed by Applicable Law
or reasonably requested by the Company as will enable the Company
to determine whether or not such Purchaser is subject to backup
withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other
than such documentation set forth in Section 7(b)(ii)(A), (B) and
(D) below) shall not be required if in the Purchaser’s
reasonable judgment such completion, execution or submission would
subject such Purchaser to any material unreimbursed cost or expense
or would materially prejudice the legal or commercial position of
such Purchaser.

 



 







 





 


(ii) Without
limiting the generality of the foregoing:

 


(A) any Purchaser that
is a U.S. Person shall deliver to the Company on or prior to the
date on which such Purchaser becomes a Purchaser under this
Agreement (and from time to time thereafter upon the reasonable
request of the Company), executed originals of IRS Form W-9
certifying that such Purchaser is exempt from U.S. Federal backup
withholding tax;

 


(B) any non-U.S.
Purchaser shall, to the extent it is legally entitled to do so,
deliver to the Company (in such number of copies as shall be
requested by the Company) on or prior to the date on which such
non-U.S. Purchaser becomes a Purchaser under this Agreement (and
from time to time thereafter upon the reasonable request of the
Company), whichever of the following is applicable

 

i) in the case of a
non-U.S. Purchaser claiming the benefits of an income tax treaty to
which the United States is a party (x) with respect to payments of
interest under any Debenture, executed originals of IRS Form W-8BEN
or IRS Form W-8BEN-E (or applicable successor thereto) establishing
an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty
and (y) with respect to any other applicable payments under any
Debenture, IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable
successor thereto) establishing an exemption from, or reduction of,
U.S. federal withholding Tax pursuant to the “business
profits” or “other income” article of such tax
treaty;

 

ii)
executed originals
of IRS Form W-8ECI;

 

iii)
in the case of a
non-U.S. Purchaser claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially to the effect that such non-U.S.
Purchaser is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, a “10 percent shareholder” of
the Company within the meaning of Section 881(c)(3)(B) of the Code,
or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance
Certificate”) and (y) executed originals of IRS Form W-8BEN
or IRS Form W-8BEN-E (or applicable successor thereto);
or

 

iv)
to the extent a
non-U.S. Purchaser is not the beneficial owner of payments made to
it, executed originals of IRS Form W-8IMY and a U.S. Tax Compliance
Certificate by such non-U.S. Purchaser, accompanied by IRS Form
W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable
successor thereto), a U.S. Tax Compliance Certificate, IRS Form
W-9, and/or other certification documents from each beneficial
owner, as applicable; provided that if the non-U.S. Purchaser is a
partnership or other tax transparent entity for U.S. federal income
tax purposes and one or more direct or indirect partners of such
foreign Purchaser are claiming the portfolio interest exemption,
such foreign Purchaser may provide a U.S. Tax Compliance
Certificate on behalf of each such direct and indirect partner or
beneficial owners.

 


(C) any non-U.S.
Purchaser shall, to the extent it is legally entitled to do so,
deliver to the Company (in such number of copies as shall be
requested by the Company) on or prior to the date on which such
non-U.S. Purchaser becomes a Purchaser under this Agreement (and
from time to time thereafter upon the reasonable request of the
Company), executed originals of any other form prescribed by
applicable law or reasonably requested by the Company as a basis
for claiming exemption from or a reduction in U.S. Federal
withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit the
Company to determine the withholding or deduction required to be
made; and

 


(D) if a payment made
to a Purchaser under any Debenture would be subject to U.S. federal
withholding Tax imposed by FATCA if such Purchaser were to fail to
comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the
Code, as applicable), such Purchaser shall deliver to Company at
the time or times prescribed by law and at such time or times
reasonably requested by Company such documentation prescribed by
Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i)
of the Code) and such additional documentation reasonably requested
by Company as may be necessary for compliance with FATCA and to
determine that such Purchaser has complied with such
Purchaser’s obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Solely for
purposes of this clause (D) “FATCA” shall include any
amendments made to FATCA after the date of this
Agreement.

 


(E) Each Purchaser
agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall
promptly update such form or certification or notify the Company in
writing of its legal inability to do so.

 



 







 





 


8. Lock-Up. Each Purchaser hereby agrees
that it will not, without the prior written consent of the Required
Purchasers, during the one year period commencing on the date of
the Initial Closing, (a) sell, offer to sell, pledge,
mortgage, hypothecate, encumber, dispose of or engage in any
similar transaction, directly or indirectly, the Debentures, the
Warrants or the securities issuable upon exercise, conversion or
exchange thereof or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Debentures, the
Warrants or the securities issuable upon exercise, conversion or
exchange thereof; provided, however, that a Purchaser may transfer
any such Debentures, the Warrants or the securities issuable upon
exercise, conversion or exchange thereof to an affiliate of such
Purchaser provided that such transferee agrees to be bound by the
provisions of this Section 8.

 


9. Miscellaneous.

 


(a) Waivers and Amendments. Any
provision of this Agreement, the Warrants and the Debentures may be
amended, waived or modified only upon the written consent of the
Company, Parent and the Required Purchasers. Any amendment or
waiver effected in accordance with this paragraph shall be binding
upon all of the parties hereto. Notwithstanding the foregoing, this
Agreement may be amended to add a party as a Purchaser hereunder in
connection with Additional Closings without the consent of any
other Purchaser, by delivery to the Company of a counterparty
signature page to this Agreement, together with a supplement to
Schedule
I hereto. Such
amendment shall take effect at the Additional Closing and such
party shall thereafter be deemed a “Purchaser” for all
purposes hereunder and Schedule I hereto shall be
updated to reflect the addition of such Purchaser.

 


(b) Governing Law and
Venue.

 


(i) This Agreement and
all actions arising out of or in connection with this Agreement
shall be governed by and construed in accordance with the internal
laws of Delaware, without regard to its rules governing the
conflict of laws.

 


(ii) Each
Party hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of any Delaware
State court or Federal court of the United States of America
sitting in Delaware, in Wilmington, and any appellate court from
any thereof, in any action or proceeding arising out of or relating
to this Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each party hereto
hereby irrevocably and unconditionally (a) agrees not to commence
any such action or proceeding except in such courts; (b) agrees
that any claim in respect of any such action or proceeding may be
heard and determined in such courts; (c) waives any objection or
defense which it may now or hereafter have based on personal
jurisdiction; (d) waives any objection which it may now or
hereafter have to the laying of venue of any such action or
proceeding in any such court; and (e) waives the defense of an
inconvenient forum to the maintenance of such action or proceeding
in any such court. Each Party hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Each Party hereto irrevocably
consents to service of process in the manner provided for notices
in Section
9(g).

 


(iii) EACH
PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN ANY OF THE
PARTIES (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THIS AGREEMENT,
THE OTHER TRANSACTION DOCUMENTS, THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY OR THE RELATIONSHIPS ESTABLISHED AMONG THE
PARTIES HEREUNDER OR THEREUNDER.

 


(c) Survival. The representations and warranties
made herein shall survive the execution and delivery of this
Agreement until the first anniversary of the Initial
Closing.

 


(d) Successors and Assigns. This
Agreement may not be assigned, conveyed or transferred by any
Purchaser without the prior written consent of the Company;
provided, however, a
Purchaser that is a partnership, corporation, trust, joint venture,
unincorporated organization or other entity may transfer its rights
under this Agreement to an affiliate without the prior written
consent of the Company. This Agreement may not be assigned,
conveyed or transferred by the Company without the prior written
consent of the Required Purchasers, provided that the Company may
assign this without the consent of any Purchaser to an acquiror of
all or a substantial portion of the Company’s business and
assets (however structured). Subject to the foregoing, the rights
and obligations of the Company and each Purchaser under this
Agreement shall be binding upon and benefit their respective
permitted successors, assigns, heirs, administrators and
transferees. The terms and provisions of this Agreement are for the
sole benefit of the parties hereto and their respective permitted
successors and assigns, and are not intended to confer any
third-party benefit on any other Person. In addition, the Company
shall maintain a register (the "Register") for the
recordation of the names and addresses of each Purchaser and each
other Person receiving any assignment permitted hereunder, and the
principal amount (and stated interest) owing thereto under the
Debentures.  The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the
Company, Parent, each Purchaser and each other Person receiving any
assignment permitted hereunder shall treat each Person listed in
the Register pursuant to the terms hereof as a lender for all
purposes of this Agreement, notwithstanding notice to the
contrary.  No purported transfer of any interest in the
Debentures shall be effective except upon recordation in the
Register.  The Register shall be available for inspection by
each Purchaser and each other Person receiving any assignment
permitted hereunder, at any reasonable time and from time to time
upon reasonable prior notice.  The parties intend that this
Section 9(d) shall
be interpreted and administered such that the Debentures are at all
times maintained in “registered form” within the
meaning of Sections 163(f), 165(g), 871(h)(2), 881(c)(2) and 4701
of the Code.


 


(e) No Stockholder Rights. Until
and only to the extent that the Debentures shall have been duly
converted into or the Warrants shall have been exercised for
capital stock of Parent, (i) nothing contained in this Agreement,
the Warrants or the Debentures shall be construed as conferring
upon any Purchaser the right to vote or to consent or to receive
notice as a stockholder in respect of meetings of stockholders for
the election of directors of Parent or any other matters or any
rights whatsoever as a stockholder of Parent and (ii) no dividends
shall be payable or accrued in respect of the Debentures or the
Warrants or the shares obtainable thereunder.

 



 







 





 


(f) Entire Agreement. This
Agreement together with the other Transaction Documents constitute
and contain the entire agreement among the Company and Purchasers
and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter
hereof.

 


(g) Notices. All notices or other
communications required or permitted hereunder shall in writing and
faxed, emailed, mailed or delivered to each party as follows: (i)
if to a Purchaser, at such Purchaser’s address, email address
or facsimile number set forth in Schedule I, or at such other
address as such Purchaser shall have furnished the Company in
writing along with a copy (which shall not constitute notice), to
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 44 Montgomery
Street, 36th Floor, San
Francisco, CA 94104, adthorpe@mintz.com (Attention: Andrew Thorpe),
or (ii) if to the Company, at 19 Quail Run Circle, Salinas, CA
93907, steve@indusholdingco.com (Attention: Steve Neil), or at such
other address as the Company shall have furnished to the Purchasers
in writing along with a copy (which shall not constitute notice) to
Akerman LLP, 666 Fifth Avenue, 20th Floor, New York,
New York 10103, kenneth.alberstadt@akerman.com
(Attention: Kenneth G. Alberstadt). All such notices and
communications shall be deemed effectively given the earlier of (i)
when received, (ii) when delivered personally, (iii) upon being
delivered by facsimile or email (with receipt of appropriate
confirmation), (iv) one business day after being deposited with an
overnight courier service of recognized standing or (v) four days
after being deposited in the U.S. mail, first class with postage
prepaid.

 


(h) Separability of Agreements;
Severability. Unless otherwise expressly provided herein,
the rights of each Purchaser hereunder are several rights, not
rights jointly held with any of the other Purchasers. Any
invalidity, illegality or limitation on the enforceability of the
Agreement or any part thereof, by any Purchaser whether arising by
reason of the law of the respective Purchaser’s domicile or
otherwise, shall in no way affect or impair the validity, legality
or enforceability of this Agreement with respect to other
Purchasers. If any provision of this Agreement shall be judicially
determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby and the Company and the
Required Purchasers will in good faith agree upon an enforceable
provision that most nearly gives effect to the intent of the
invalid, illegal or unenforceable provision.

 


(i) Expenses. The Company shall
reimburse a single counsel to Geronimo Central Valley Opportunity
Fund, LLC and Merida Capital Partners (the “Lead
Investors”) for reasonable out-of-pocket legal fees
incurred in connection with the negotiation of this Agreement and
the other Transaction Documents. Such expenses shall be deducted by
the Lead Investors from the principal amount otherwise payable for
the Debentures purchased by such Lead Investor.

 


(j) Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same agreement. Facsimile copies of signed signature pages
shall be deemed executed originals.

 


(k) Currency. Unless otherwise
specified, all dollar amounts referred to in this Agreement mean
the lawful currency of the United States.

 


(l) Acknowledgement regarding Excluded
Laws. The Parties hereto agree and acknowledge that no Party
makes, will make, or shall be deemed to make or have made any
representation or warranty of any kind regarding the compliance of
this Agreement or any Debenture with Excluded Laws. No party hereto
shall have any right of rescission or amendment arising out of or
relating to any non-compliance with Excluded Laws.

 


(m) Disclosure. The parties hereto
hereby consent to the disclosure of the substance of this Agreement
in any news release or other disclosure document required by
Applicable Law and to the public filing of this Agreement on the
System for Electronic Document Analysis and Retrieval (SEDAR) as
may be required pursuant to Applicable Law; provided, however, that
any such news release or disclosure shall be provided to counsel
for the Investors in advance of any public filing and any comments
thereto shall be considered in good faith.

 


10. Defined Terms. The following terms shall
have the ma

 


(a) “Applicable
Law” means, in relation to any Person, property,
transaction or event, all applicable provisions of: (a) statutes,
laws (including common law), rules, regulations, decrees,
ordinances, codes, proclamations, treaties, declarations or orders
of any Governmental Authority; (b) any consents or approvals of any
Governmental Authority; and (c) any orders, decisions, advisory or
interpretative opinions, injunctions, judgments, awards, decrees
of, or agreements with, any Governmental Authority, in each case
applicable to or binding upon such Person, property, transaction or
event. Notwithstanding the foregoing, the definition of Applicable
Law excludes any Excluded Laws.

 


(b) “Applicable Securities
Legislation” means (i) applicable U.S. federal and
state securities laws, including rules, regulations, policies and
instruments and (ii) applicable Canadian securities laws, including
the rules, regulations, policies and instruments in each of the
provinces and territories of Canada.

 



 







 





 


(c) “Code” means
the Internal Revenue Code of 1986 and, as applicable, the Treasury
Regulations promulgated thereunder, or, if applicable, any
successor laws.

 


(d)  “Excluded
Laws” means any (a) statutes, laws (including common
law), rules, regulations, decrees, ordinances, codes,
proclamations, treaties, declarations or orders of any U.S. federal
Governmental Authority; (b) any consents or approvals of any U.S.
federal Governmental Authority; and (c) any orders, decisions,
advisory or interpretative opinions, injunctions, judgments,
awards, decrees of, or agreements with, any U.S. federal
Governmental Authority, in each case (with respect to the foregoing
clauses (a), (b) and (c)), which apply or relate, directly or
indirectly, to the cultivation, harvesting, production,
trafficking, distribution, processing, extraction, sale and/or
possession of cannabis, marijuana or related substances or products
containing or relating to the same, including, without limitation,
the prohibition on drug trafficking under 21 U.S.C. § 841(a),
et seq., the conspiracy statute under 18 U.S.C.. § 371 and 21
U.S.C. § 846, the bar against aiding and abetting the conduct
of an offense under 18 U.S.C. § 2, the bar against misprision
of a felony (concealing another's felonious conduct) under 18
U.S.C. § 4, the bar against being an accessory after the fact
to criminal conduct under 18 U.S.C. § 3, and federal money
laundering statutes under 18 U.S.C. §§ 1956, 1957, and
1960 and the regulations and rules promulgated under any of the
foregoing; provided that Section 280E of the Internal Revenue Code
of 1986, as amended, shall not be an Excluded Law.

 


(e) “Excluded
Taxes” means, with respect to any Person, (a) any
Taxes, however denominated, imposed on or measured by the such
Person’s overall capital or net income (including franchise
Taxes, branch profits or similar Taxes imposed on such Person in
lieu of net income Taxes) (i) by a jurisdiction by reason of such
Person being organized under such jurisdiction’s Applicable
Laws, being a resident of, or having its principal office, or any
lending office in, such jurisdiction, or (ii) that are Other
Connection Taxes, (b) any U.S. federal withholding Taxes imposed on
amounts payable to or for the account of such Purchaser with
respect to an applicable interest in the Loan pursuant to the
Applicable Law in effect on the date on which (i) such Purchaser
acquires such interest in the Loan or (ii) such Purchaser changes
its lending office, except in each case to the extent that,
pursuant to Section 7(a), amounts with respect to such Taxes were
payable either to such Purchaser’s assignor immediately
before such Purchaser became a party hereto or to such Purchaser
immediately before it changed its lending office, (c) Taxes
attributable to such Purchaser’s failure to comply with
Section 7(b), or (d) any U.S. federal withholding Taxes imposed
under FATCA.

 


(f) “FATCA” means
(a) Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply
with), any current or future regulations promulgated thereunder or
official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code, (b) any treaty,
law, regulation or other official guidance enacted in any other
jurisdiction, or relating to an intergovernmental agreement between
the United States and any other jurisdiction with the purpose (in
either case) of facilitating the implementation of (a) above, or
(c) any agreement pursuant to the implementation of paragraphs
(a) or (b) above with the IRS, the United States government or any
governmental or taxation authority in the United
States.

 


(g) “Governmental
Authority” means: (a) any government, parliament or
legislature, any regulatory or administrative authority, agency,
commission or board and any other statute, rule or regulation
making entity having jurisdiction in the relevant circumstances;
(b) any Person acting within and under the authority of any of the
foregoing or under a statute, rule or regulation thereof; and (c)
any judicial, administrative or arbitral court, authority, tribunal
or commission having jurisdiction in the relevant
circumstances.

 


(h) “Indemnified
Taxes” means, (a) Taxes, other than Excluded Taxes,
imposed on or with respect to any payment made by the Company or
Parent hereunder or under any Debenture; and (b) to the extent not
otherwise described in (a) and other than Excluded Taxes, any and
all present or future stamp, court, recording, filing, intangible,
documentary or similar Taxes or any other excise or property Taxes,
charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement or registration of,
or performance under, or from the receipt or perfection of a
security interest under or otherwise with respect to this
Agreement.

 


(i) “Other Connection
Taxes” means, with respect to any Person, Taxes
imposed as a result of a present or former connection between such
Person and the jurisdiction imposing such Tax (other than
connections arising from such Person having executed, delivered,
become a party to, performed its obligations under, received
payments under, received or perfected a security interest under,
engaged in any transaction pursuant to, or enforced its rights
under the Debenture).

 


(j) “Person” means
an individual, legal or natural person, corporation, company, firm,
body corporate, partnership, joint venture, Governmental Authority,
unincorporated organization, trust, association, estate or other
entity.

 


(k) “Taxes” means any and all present
or future income, stamp or other taxes, levies, imposts, duties,
deductions, charges, fees or withholdings imposed, levied, withheld
or assessed by any Governmental Authority, together with any
interest, additions to tax or penalties imposed thereon and with
respect thereto.

 


(Signature
Pages Follow)

 



 







 






 

 


In Witness Whereof, the parties have
caused this Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the date and year first
written above.

 

 


	

 

	
COMPANY: 

	

 


	

 

	
Indus
Holding Company

	

 


	

 

	

 

	

 

	

 


	

	
By:  

	
/s/ Robert
Weakley

	

 


	

 

	

Name: 


	
Robert
Weakley

	

 


	

 

	

Title: 


	CEO	

 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 





Signature page to Debenture
and Warrant Purchase
Agreement]








 





 


 

 


In Witness Whereof, the parties have
caused this Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the date and year first
written above.

 

 





	

 

	
PARENT: 

	

 


	

 

	
Indus
Holdings, Inc.

	

 


	

 

	

 

	

 

	

 


	

	
By:  

	
/s/ Robert
Weakley


	

 


	

 

	

Name:


	
Robert
Weakley


	

 


	

 

	

Title:


	CEO