Execution Version

 

EQUITY PURCHASE AGREEMENT

 

This Equity Purchase Agreement (this “Agreement”) is entered into as of December 18, 2025, by and among (i) Parma Holdco LLC, a Nevada limited liability company (“Buyer”), (ii) Green Leaf Medical of Virginia, LLC, a Virginia limited liability company (the “Company”), (iii) Green Leaf Medical, LLC, a Delaware limited liability company (the “Member”), (iv) The Cannabist Company Holdings Inc., a British Columbia corporation (“Cannabist”), and (v) Millstreet Credit Fund LP (“Millstreet”), solely for the purposes of Section 6.10, Section 6.11 and the last sentence of Section 4.1. Buyer, the Company, the Member and Cannabist are collectively referred to herein as the “Parties”, and individually as a “Party”.

 

RECITALS

 

WHEREAS, the Company is engaged in the business of cultivating, producing, manufacturing, distributing and selling cannabis in the Commonwealth of Virginia;

 

WHEREAS, the Member owns beneficially and of record all of the issued and outstanding equity interests of the Company as of the date hereof (the “Equity”);

 

WHEREAS, Buyer desires to purchase from the Member, and the Member desires to sell to Buyer, all of the Equity; and

 

WHEREAS, Cannabist will derive substantial economic and other direct and indirect benefits from the transactions contemplated hereby.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and intending to be legally bound, the Parties hereby agree as follows:

 

ARTICLE I

 

Section 1.1          Certain Definitions.  Capitalized terms used but not otherwise defined herein have the meanings set forth below.

 

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.

 

“Affiliated Group” means a group of Persons that elects, is required to, or otherwise files a Tax Return or pays a Tax as an affiliated group, consolidated group, combined group, unitary group, or other group recognized by applicable Tax Law.

 

“Business Day” means any day other than a Saturday or Sunday or a day on which banks in New York, New York are required or authorized by Law to close.

 

“Buyer Group” means Buyer and its subsidiaries and Affiliates (including, following the Closing, the Company).

 

“Buyer Indemnified Parties” means the Buyer Group, their respective Affiliates and the direct and indirect equityholders, managers, members, partners, officers, directors, employees, agents, representatives, successors, beneficiaries and assigns thereof.

 

“Cboe” means Cboe Canada.

 

“Closing Cash” means cash of the Company (other than Restricted Cash) determined in accordance with GAAP as of 12:01 a.m. Eastern Time on the Closing Date.

 

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

 

“Company Group” means the Company, the Member and Cannabist, or any of their respective Affiliates, or any one of them.

 

“Company’s Knowledge” or “knowledge of the Company” means the knowledge, after reasonable investigation, of David Hart, Jesse Channon, Derek Watson and, solely with respect to Sections 3.9, 3.11, 3.16 and 3.17, David Sirolly.

 

“Contract” means any written or oral contract, lease, license, commitment, sales order, purchase order, agreement, indenture, mortgage, note, bond, instrument, plan or other comparable document.

 

“Cultivation Facility” means the facility for the cultivation, processing of marijuana and marijuana products located at 2804 Decatur St., Units 30 and 31, Richmond, Virginia.

 

“Environmental Laws” means, whenever in effect, all Laws and similar provisions having the force or effect of Law, all Permits and all contractual obligations concerning public health and safety, worker health and safety, climate change, habitats and wildlife, biodiversity or pollution or protection of the environment or natural resources, including with respect to emissions, discharges, releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, marketing, labeling, registration, notification, packaging, import, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

 

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

 

“ERISA Affiliate” means any Person that, together with the Company, is or was (at any relevant time) treated as a single employer under Section 414 of the Code.

 

“Escrow Agent” means Western Alliance Bank.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Federal Cannabis Laws” means any U.S. federal Laws, civil, criminal or otherwise, as such relate, either directly or indirectly, to the cultivation, harvesting, production, distribution, sale and 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. § 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.

 

“Free Cash” means the cash held by the Company which may be distributed to the Member in compliance with applicable Law and all Company Contracts.

 

“Final Closing Cash Payment” means an amount of cash equal to (a) $130,000,000, (b) plus Final Cash, (c) (i) plus, the amount, if any, that Final Working Capital is greater than Target Working Capital or (ii) minus the amount, if any, that Final Working Capital is less than Target Working Capital, in each case, determined in accordance with, and subject to, Section 2.4, (d) minus Final Indebtedness, (e) minus Final Transaction Expenses, (f) minus Final Transaction Payments, (g) minus Offset Escrow Amount and (h) minus Deposit Escrow Amount.

 

“Fundamental Representations” means the representations and warranties set forth in Section 3.1 (Organization; Authorization), Section 3.3 (Capitalization), Section 3.8 (Tax Matters), Section 3.12 (Brokerage), Section 3.18 (Affiliated Transactions), and Section 3.22 (Organization; Authorization).

 

“GAAP” means United States generally accepted accounting principles, consistently applied.

 

“GDPR” means EU General Data Protection Regulation (GDPR): Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, together with any guidance or implementing regulations promulgated by qualified data protection authorities or individual EU member states.

 

“Governmental Entity” means any federal, state, county, city, town, municipal, local or foreign government authority, or any entity exercising executive, legislative, judicial, regulatory, Tax or administrative functions of or pertaining to government of the United States, or any other country, including any political subdivision, zoning authority or regulatory authority thereof, and any department, court arbitrator, agency or official of any of the foregoing.

 

“Hazardous Materials” means any substance, waste, or material which is regulated by or may give rise to standards of conduct or liability pursuant to Environmental Laws or any Permits thereunder, including petroleum and any byproduct or derivative thereof, asbestos, polychlorinated biphenyls, urea formaldehyde, volatile and semi-volatile organic compounds, toxic mold, per- and polyfluoroalkyl substances, and any substance, waste or material that is defined or regulated as hazardous or toxic or corrosive, flammable, explosive, infectious, radioactive, or carcinogenic.

 

“Indebtedness” means, without duplication, the aggregate dollar amount of: (a) all indebtedness of the Company for borrowed money, including all fees and interest accrued thereon, whether or not recorded as debt on the books and records of the Company, (b) all liabilities of the Company evidenced by a note, bond, debenture or other debt security, including all interest accrued thereon, (c) all lease obligations of the Company that under GAAP are required to be capitalized, (d) all liabilities under letters of credit, bankers’ acceptances or similar instruments, (e) all liabilities of the Company secured by a Lien on any assets of the Company (other than Permitted Liens), (f) the cost to service any deferred revenue, (g) any deferred purchase price liabilities related to past acquisitions, (h) liabilities owed to any Person with respect to any severance, bonus, incentive or deferred compensation arrangements, retiree welfare benefits, defined benefit plans, or pension plans, (i) the employer portion of any payroll or other employment Taxes that are attributable to any amounts described in clause (h) whether or not payable on the Closing Date, (j) all unpaid Taxes for any Pre-Closing Tax Period (including the portion of any Straddle Period prior to the Closing Date as determined in accordance with Section 6.3(c)), (k) all liabilities in connection with tenant improvements or other capital expenditure, (l) guarantees of the obligations described in clauses (a) through (k) above of any other Person, in each case, outstanding as of the Closing, (m) all liabilities arising from any breach of any of the foregoing, and (n) for clauses (a) through (m), all accrued interest, fees, premiums, penalties, indemnities, costs, expenses and/or other amounts due in respect of any of the foregoing; provided, that Indebtedness shall not include any Transaction Expenses.

 

“Indemnified Taxes” means, without duplication, any liability for: (a) Taxes of the Member, (b) Taxes of the Company (other than Transfer Taxes) for any Pre-Closing Tax Period, or portion of any Straddle Period ending on the Closing Date, (c)  Taxes of any Person imposed on the Company as a transferee or successor, by Contract or pursuant to any Law, which Taxes relate to an event or transaction occurring before the Closing, (d) Taxes of any member of an affiliated, consolidated, combined or unitary group of which any member of the Company Group (or any predecessor thereof) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. Law, and (e) the Member’s share of Transfer Taxes.  Indemnified Taxes shall exclude Taxes to the extent included in (A) the Transaction Expenses paid or deposited as of the Closing Date under Section 2.5(c)(i)(C), or (B) the Transaction Payments paid or deposited as of the Closing Date under Section 2.5(c)(i)(D).

 

“Indenture” means that Amended and Restated Trust Indenture, dated as of May 29, 2025, by and among Cannabist, The Cannabist Company Holdings (Canada) Inc., and Odyssey Trust Company, as supplemented by that First Supplemental Indenture, dated as of May 29, 2025.

 

“Initial Closing Cash Payment” means an amount of cash equal to (a) $130,000,000, (b) plus Estimated Cash, (c) (i) plus, the amount, if any, that Estimated Working Capital is greater than Target Working Capital or (ii) minus the amount, if any, that Estimated Working Capital is less than Target Working Capital, in each case, determined in accordance with, and subject to, Section 2.3, (d) minus Estimated Indebtedness, (e) minus Estimated Transaction Expenses, (f) minus Estimated Transaction Payments, (g) minus Deposit Escrow Amount and (h) minus Offset Escrow Amount.

 

“Insider” means an officer, director, manager, equityholder, employee or Affiliate of the Company Group (other than equityholders of Cannabist in their capacity as public company stockholders) or any natural person related by marriage or adoption to any such natural person or any entity in which any such Person owns any beneficial interest.

 

“Intellectual Property” means all worldwide: (a) patents, industrial designs, and utility models, and applications for any of the foregoing, and patentable subject matter, whether or not the subject of any application, and all reissues, reexaminations, divisions, divisionals, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and all patents, applications, documents and filings claiming priority to or serving as a basis for priority thereof; (b) trademarks, service marks, certification marks, trade names, trade dress, logos, slogans, tag lines, and other source or business identifiers or designators of origin (all whether registered or not), all applications and registrations for any of the foregoing, all renewals and extensions thereof, and all common law rights in and goodwill associated with any of the foregoing (collectively, “Trademarks”); (c) uniform resource locators, Internet domain names and numbers, social media accounts, websites and any registrations and applications for any of the foregoing; (d) works of authorship, copyrights, mask work rights, database rights, and design rights, all whether registered or unregistered, applications and registrations for any of the foregoing, renewals and extensions thereof, all moral rights associated with any of the foregoing, and all economic rights of authors and inventors, however denominated, associated with any of the foregoing; (e) computer software and databases, including source code and object code, development tools, comments, user interfaces, menus, buttons and icons, and all files, data, scripts, application programming interfaces, manuals, design notes, programmers’ notes, architecture, algorithms and other items and documentation related thereto or associated therewith, and any derivative works, foreign language versions, fixes, upgrades, updates, enhancements, new versions, previous versions, new releases and previous releases thereof; and all media and other tangible property necessary for the delivery or transfer thereof (collectively, “Software”); (f) trade secrets and other proprietary and confidential information, including inventions (whether or not patentable), invention disclosures, ideas, developments, improvements, know-how, designs, drawings, algorithms, source code, methods, processes, techniques, formulae, research and development, compilations, compositions, manufacturing and production processes, devices, technical data, specifications, reports, analyses, data analytics, customer lists, supplier lists, pricing and cost information and business and marketing plans and proposals; and (g) any rights recognized under applicable Law that are equivalent or similar to any of the foregoing.

 

“Intermediate Representations” means the representations and warranties set forth in Section 3.4(a)-(c) (Financial Statements), Section 3.7 (Assets), Section 3.16(b) and (c) (Compliance with Laws; Permits) and Section 3.19 (Indebtedness).

 

“IT Assets” means Software, systems, servers, computers, hardware, firmware, middleware, networks, data communications lines, routers, hubs, switches and all other information technology equipment, and all associated documentation, in each case, used or held for use in the operation of the business of the Company.

 

“Law” means any law, statute, regulation, ordinance, rule, common law, Order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any Governmental Entity, including state, federal and foreign criminal and civil laws and/or related regulations and the Virginia Cannabis Laws, but excluding Federal Cannabis Laws.

 

“Leased Real Property” means all leasehold, subleasehold, licensed estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company.

 

“Leasehold Improvements” means all buildings, structures, improvements and fixtures, building systems and equipment, and all components thereof, located on any Leased Real Property which are owned or leased by Company, regardless of whether title to such buildings, structures, improvements or fixtures are subject to reversion to the landlord or other third party upon the expiration or termination of the lease for such Leased Real Property.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, lien (statutory or otherwise), security interest, encumbrance, charge, easement, right-of-way, encroachment, covenant, condition, restriction, or any other title defect, option, right of first refusal, right of first offer or restriction on transfer, use, voting, receipt of income or distribution or any other attribute of ownership.

 

“Loss” means any loss, liability, damage, contingency, judgment, fine, penalty, deficiency, claim, demand (whether or not arising out of a Third Party Claim), including any loss of benefit and the reasonable fees, costs and expenses of attorneys, accountants, consultants, investigators, experts and other professionals and any other amounts paid in respect of the investigation, defense, assertion or settlement of any claim or the enforcement of any rights under this Agreement, including the fees, costs and expenses incurred in respect of any audit, examination or controversy; provided, however, that Loss shall exclude (a) punitive or exemplary damages, and (b) consequential, special and indirect damages, except, in each case, to the extent that any such damages or losses are required to be paid to a third party pursuant to a Third Party Claim.

 

“Malicious Code” means any (a) back door, time bomb, drop dead device, or other Software routine designed to disable a computer program automatically with the passage of time or under the positive control of a Person other than the user of the program; (b) virus, Trojan horse, worm, or other Software routines or hardware components designed to permit unauthorized access, to disable, erase, or otherwise harm Software, hardware, or data; or (c) similar program.

 

“Material Adverse Effect” means any state of facts, change, development, event, effect, circumstance, condition or occurrence that, individually or in the aggregate, has or would reasonably be expected to have, a material adverse effect on the business, properties, assets (whether tangible or intangible), liabilities (including contingent liabilities), condition (financial or otherwise), results of operations of the Company or that would reasonably be expected to, directly or indirectly, prevent or materially impair or delay the ability of the Company or the Member to perform its obligations under this Agreement or any of the other Transaction Agreements, provided, however, that “Material Adverse Effect” shall not include any state of facts, change, development, event, effect, circumstance, condition or occurrence directly or indirectly arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial, banking, or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (v) acts of war (whether or not declared), armed hostilities, or terrorism, or the escalation or worsening thereof; (vi) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof; (vii) any natural or man-made disaster, acts of God, or pandemic; (viii) the announcement, pendency, or completion of the transactions contemplated by this Agreement, (ix) any change resulting from compliance with the terms of, or any actions taken (or not taken) by any Party pursuant to or in accordance with, this Agreement; except in the case of clause (ii) through (vii) of the foregoing, to the extent such event, occurrence, fact, condition or change has had or would be reasonably expected to have a disproportionate impact on the Company compared to other participants engaged in the industry in which the Company operates.

 

“Offset Escrow Amount” means an amount equal to $12,500,000.

 

“Order” means any judgment, decision, decree, order, settlement, injunction, writ, stipulation, determination, charge, ruling or award (whether judicial, administrative, arbitral or regulatory) of any Governmental Entity or arbitrator.

 

“Ordinary Course of Business” means the ordinary course of business, consistent with past practice during the twelve-month period prior to the Closing Date.  “Ordinary Course of Business” shall not include any actions taken in anticipation and negotiation of this Agreement or the Closing.

 

“Owned Intellectual Property” means all Intellectual Property owned or purported to be owned by the Company.

 

“Permits” means all licenses, permits, certificates, exemptions, consents, waivers, concessions, variances, authorizations, approvals, registrations and similar privileges or rights to operate or conduct any business granted by any Governmental Entity, including the Marijuana Permits.

 

“Permitted Liens” means (a) Liens for current Taxes, assessments or other governmental charges not yet due and payable or being contested in good faith by appropriate proceedings, and (b) mechanics’, carriers’, workers’, repairers’ and other similar Liens arising or incurred in the ordinary course of business for obligations that are not overdue or are being contested in good faith by appropriate proceedings.

 

“Person” means any natural person, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, entity, arbitrator or Governmental Entity.

 

“Personal Information” means information that, alone or in combination with other information, is capable of identifying an individual or household or can be used to contact an individual, or serve advertisements to an individual, including name; Social Security number; government-issued identification numbers; health or medical information, including health insurance information; financial account information; passport numbers; user names/email addresses in combination with a password or security code that would allow access to an online account; unique biometric identifiers (e.g., fingerprints, retinal scans, face scans, or DNA profile); employee ID numbers; date of birth; digital signature; and Internet Protocol (IP) addresses; or any other data that constitutes personal information, personally identifiable information (PII), personal data, protected health information (PHI) or any similar term under applicable Law.

 

“Pre-Closing Tax Period” means any taxable period of the Company that ends on or before the Closing Date and the portion of any Straddle Period up to and including the Closing Date.

 

“Privacy and Security Requirements” means, to the extent applicable to the Company, (a) any Laws regulating the Processing of Protected Data, including Section 5 of the Federal Trade Commission Act, GDPR, all Laws and other legal requirements governing privacy, data security, data or security breach notification, all state Laws related to unfair or deceptive trade practices, the California Consumer Privacy Act and any implementing regulations therein, the Fair Credit Reporting Act, the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, all Laws related to online privacy policies, the Telephone Consumer Protection Act, all Laws related to faxes, telemarketing, and text messaging, Executive Order 1147 of February 28, 2024, on “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern;” and the Health Insurance Portability and Accountability Act; (b) the Payment Card Industry Data Security Standard issued by the PCI Security Standards Council, as it may be amended from time to time (“PCI DSS”); (c) all Contracts between the Company and any Person that is applicable to the PCI DSS and/or the Processing of Protected Data; and (d) all policies and procedures applicable to the Company relating to the PCI DSS and/or the Processing Protected Data, including, without limitation, all website and mobile application privacy policies and internal information security procedures.

 

“Proceeding” means any complaint, demand, action, claim, counterclaim, suit, charge, grievance, mediation, inquiry, arbitration, audit, hearing, investigation, litigation or other proceeding of any nature (whether civil, criminal, administrative, judicial or investigative, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity, government official, mediator or arbitrator.

 

“Process” means the creation, collection, use (including for the purposes of sending telephone calls, text messages and emails), storage, maintenance, processing, recording, distribution, transfer, transmission, receipt, import, export, protection, safeguarding, access, disposal or disclosure or other activity regarding data (whether electronically or in any other form or medium), and all equivalent meanings under applicable Privacy and Security Requirements.

 

“Protected Data” means (a) Personal Information and (b) any other data the Company is required by Law, Contract or privacy policy to safeguard and/or keep confidential or private, including all such data transmitted to the Company by customers of the Company or Persons that interact with the Company.

 

“Real Estate Leases” shall mean the leases set forth on Schedule 3.9(a)(vii).

 

“Restricted Cash” means (i) the amount of any security deposits (or similar items) on hand with third parties (including any security deposits under any Real Estate Leases), vendor deposits, cash securing letters of credit cash deposits, cash collateralizing any obligation or liability, cash in reserve or escrow accounts, custodial cash and cash subject to a lockbox, dominion, control or similar agreement or otherwise subject to any legal or contractual restriction on the ability to freely transfer or use such cash for any lawful purpose, and (ii) cash of the Company that is (a) legally required by applicable Law or a binding Order of a Governmental Entity to be held in a segregated account and not available for use in the Ordinary Course of Business or for repatriation (including by dividend or distribution) to the Company or its Affiliates, or (b) contractually required to remain in a segregated account under a written agreement with a third party expressly prohibiting the withdrawal, use, or repatriation of such cash for any purpose other than satisfaction of the specific obligation that is the subject of such segregation.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Security Breach” means any (a) security breach or breach of Personal Information under applicable Privacy and Security Requirements; (b) unauthorized access, acquisition, use, disclosure, modification, deletion, or destruction of information (including Protected Data); or (c) unauthorized interference with system operations of IT Assets, including any phishing incident or ransomware attack.

 

“Seller Indemnified Parties” means Cannabist, the Member, their respective Affiliates and the direct and indirect equityholders, managers, members, partners, officers, directors, employees, agents, representatives, successors, beneficiaries and assigns thereof.

 

“Software” has the meaning set forth in the definition of “Intellectual Property”.

 

“Straddle Period” means any taxable period of the Company that includes (but does not end on) the Closing Date.

 

“Target Working Capital” means an amount equal to $7,500,000.

 

“Tax” (and, with correlative meaning, “Taxes,” “Taxable” and “Taxing”) means any net or gross income, net or gross receipts, net or gross proceeds, capital gains, capital stock, sales, use, user, leasing, lease, transfer, natural resources, premium, ad valorem, value added, franchise, profits, gaming, license, capital, withholding, payroll or other employment, estimated, goods and services, severance, excise, stamp, fuel, interest equalization, registration, recording, occupation, premium, turnover, personal property (tangible and intangible), real property, unclaimed or abandoned property (whether or not considered a tax under applicable Law), alternative or add-on, windfall or excess profits, environmental, social security, disability, unemployment or other tax or customs duties, together with any interest, penalties, or additions with respect thereto, and any interest in respect of such penalties or additions.

 

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto (including, for the avoidance of doubt, FinCEN Form 114), and any amendments, submitted to (or required under applicable Laws to be submitted to) a Governmental Entity.

 

“Tax Sharing Agreement” means any agreement including any provision pursuant to which the Company is obligated to indemnify any Person for, or otherwise pay, any Tax of another Person, or share any Tax benefit with another Person.

 

“Trademarks” has the meaning set forth in the definition of “Intellectual Property”.

 

“Transaction Agreements” means this Agreement, the Disclosure Schedules, the Transition Services Agreement, the officers’ certificates, the secretary’s certificate and such other documents, certificates and agreements contemplated by any of the foregoing.

 

“Transaction Expenses” means the fees, costs and expenses (including the fees, costs and expenses of legal counsel, investment bankers, brokers and other advisors) incurred or otherwise payable by or on behalf of any member of the Company Group in connection with or related to the sales process, the preparation, negotiation, documentation and execution of this Agreement and the other agreements contemplated hereby, the performance of each such Party’s obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, in each case whenever due and payable.

 

“Transaction Payments” means the aggregate amount of any change in control, success, transaction, retention, severance or other similar bonuses or amounts payable by, or liabilities of, the Company arising from or that otherwise may be triggered by the transactions contemplated by this Agreement (including the employer portion of any employment or payroll Taxes related thereto).

 

“Treasury Regulations” means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation Section shall be interpreted to include any final or temporary revision of or successor to that Section regardless of how numbered or classified.

 

“TSX” means the Toronto Stock Exchange.

 

“VA Locations” means the Company’s five retail locations (each with a dispensary permit) and one retail location under development in the Commonwealth of Virginia identified on Schedule 2.6 to this Agreement.

 

“Virginia Cannabis Laws” means the marijuana establishment Laws of any jurisdictions within the Commonwealth of Virginia to which the Virginia Company is, or may at any time become, subject, and the rules and regulations adopted by the Cannabis Control Authority or any other state or local Governmental Entity with authority to regulate any marijuana operation (or proposed marijuana operation).

 

“Working Capital” means an amount equal to current assets of the Company less current liabilities of the Company, in each case measured as of 12:01 a.m. Eastern Time on the Closing Date and in accordance with the methodologies and guidelines set forth on Exhibit A; provided, however, Working Capital shall not include (i) Cash; (ii) Tax assets or liabilities; (iii) any current assets or current liabilities that relate to or arise from any intercompany or other related party transactions or any transactions with any Affiliate of the Member, including intercompany receivables and payables or (iv) any amounts included in the calculation of Indebtedness, Transaction Expenses or Transaction Payments. Working Capital shall be determined in accordance with the GAAP and the methodologies and guidelines set forth on Exhibit A, and may be a negative amount.

 

Section 1.2          Other Defined Terms.  The following terms are defined in the sections indicated.

 

ARTICLE II

 

Section 2.1          Purchase and Sale.  Subject to the terms and conditions set forth herein, at the Closing, the Member shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase from the Member, all of the Equity, free and clear of all Liens, which Equity shall comprise all of the issued and outstanding equity interests of the Company such that immediately after the consummation of such purchase and sale the Company shall be a wholly-owned subsidiary of Buyer.

 

Section 2.2          Purchase Price.  The aggregate consideration (to be delivered in the manner described in Section 2.5(c) and subject to Section 2.4(d)) for the Equity to be purchased by Buyer hereunder shall be an aggregate amount equal to (a) the Final Closing Cash Payment, plus (b) the Offset Escrow Amount, plus (c) Deposit Escrow Amount (collectively, the “Purchase Price”).

 

Section 2.3          Estimated Closing Statement. At least three (3) Business Days prior to the scheduled Closing Date, Cannabist shall prepare and deliver to Buyer (i) an estimated balance sheet as of the Closing Date (prepared in accordance with GAAP and the methodologies and guidelines set forth on Exhibit A) and (ii) a statement (“Estimated Closing Statement”) setting forth its reasonable estimate of: (a) Closing Cash (“Estimated Cash”), (b) Working Capital (“Estimated Working Capital”), provided that if Estimated Working Capital is determined to be in excess of $1,000,000 greater than the Target Working Capital, Estimated Working Capital shall be deemed to be an amount equal to the Target Working Capital plus $1,000,000, (c) the aggregate amount of Indebtedness of the Company as of immediately prior to the Closing (“Estimated Indebtedness”), (d) the aggregate amount of Transaction Expenses (“Estimated Transaction Expenses”), (e) the aggregate amount of Transaction Payments (“Estimated Transaction Payments”), and (f) the resulting calculation of the Initial Closing Cash Payment.  Cannabist and its representatives shall review and consult with Buyer regarding the balance sheet and Estimated Closing Statement, and Cannabist shall consider all comments reasonably made by Buyer and its representatives with respect to the balance sheet and Estimated Closing Statement.

 

Section 2.4           Post-Closing Adjustment.

 

(a)          Within 60 calendar days after the Closing Date, Buyer will deliver to Cannabist a revised balance sheet as of the Closing Date (prepared in accordance with GAAP and the methodologies and guidelines set forth on Exhibit A) and a statement (the “Closing Statement”) setting forth Buyer’s calculation of the following items (each, a “Closing Item”):  (i) Closing Cash (as finally determined pursuant to this Section 2.4, “Final Cash”), (ii) Working Capital (as finally determined pursuant to this Section 2.4, “Final Working Capital”), provided that if Final Working Capital is determined to be in excess of $1,000,000 greater than the Target Working Capital, Final Working Capital shall be deemed to be an amount equal to the Target Working Capital plus $1,000,000; (iii) the aggregate amount of Indebtedness of the Company as of immediately prior to the Closing (as finally determined pursuant to this Section 2.4, “Final Indebtedness”); (iv) the aggregate amount of Transaction Expenses (as finally determined pursuant to this Section 2.4, “Final Transaction Expenses”), (v) the aggregate amount of Transaction Payments (as finally determined pursuant to this Section 2.4, “Final Transaction Payments”), and (vi) the resulting calculation of the Final Closing Cash Payment.

 

(b)        Cannabist shall have 30 calendar days to deliver a written notice (an “Objection Notice”) to the Buyer setting forth Cannabist’s computation of any or all of the Closing Items, as the case may be, and such information, arguments and support used in preparing such computation, after which time any undisputed Closing Items shall be final, conclusive and binding on the Parties.  If Cannabist timely disputes any Closing Item, Buyer and Cannabist shall, for a period of 20 calendar days after the delivery of the Objection Notice, use commercially reasonable and good faith efforts to attempt to resolve their differences in respect thereof; provided, that at any time after such 20 day period, either Buyer or Cannabist may elect to have Kroll, or such other qualified nationally recognized accounting firm chosen by Buyer and reasonably acceptable to Cannabist that has not performed services for any of Buyer or the Company Group (the “Valuation Firm”) resolve any Closing Items that remain in dispute. If Kroll is unable or unwilling to serve as the Valuation Firm hereunder, Buyer and Cannabist shall jointly select another nationally recognized independent accounting firm.  If Buyer and Cannabist are unable to agree upon such firm within ten (10) days, either party may request that the American Arbitration Association (AAA) select the Valuation Firm, and the appointment will be binding on the Parties. Cannabist and the Buyer shall each make a submission to the Valuation Firm within thirty (30) days after the Valuation Firm’s engagement, which submission shall contain a computation of the Closing Items and information, arguments, and support for such computation.  The Valuation Firm shall have thirty (30) days to review the Parties’ submissions. The determination of the Valuation Firm shall be final, conclusive and binding on the Parties, absent manifest error, and shall be enforceable as an arbitration award in any court of competent jurisdiction under the Federal Arbitration Act or its state law equivalents.  All fees and expenses relating to the work, if any, to be performed by the Valuation Firm will be borne by Buyer and the Member, respectively, in the proportion that the aggregate dollar amount of the disputed Closing Items submitted to the Valuation Firm by Buyer or Cannabist that are unsuccessfully disputed by it (as finally determined by the Valuation Firm) bears to the aggregate dollar amount of disputed Closing Items submitted by Buyer and Cannabist.  Except as provided in the preceding sentence, all other costs and expenses incurred by Buyer and Cannabist in connection with resolving any dispute hereunder before the Valuation Firm will be borne by the Party incurring such cost and expense.  The Valuation Firm shall determine only those Closing Items submitted to the Valuation Firm and its determination will be based upon and consistent with the terms and conditions of this Agreement.  The determination by the Valuation Firm will be based solely on presentations with respect to such disputed Closing Items by Buyer and Cannabist to the Valuation Firm and not on the Valuation Firm’s independent review.  Buyer and Cannabist shall use their commercially reasonable efforts to make their respective presentations as promptly as practicable following submission to the Valuation Firm of the disputed Closing Items (but in no event later than 15 days after engagement of the Valuation Firm), and each of Buyer and Cannabist will be entitled, as part of its presentation, to respond to the presentation of the other and any questions and requests of the Valuation Firm.  Each Party agrees to use commercially reasonable efforts to facilitate a prompt resolution by the Valuation Firm and shall not unreasonably withhold or delay to provide information reasonably requested by the Valuation Firm.  In deciding any matter, the Valuation Firm (i) will be bound by the provisions of this Section 2.4 and (ii) absent manifest error, may not assign a value to any disputed Closing Item greater than the greatest value for such Closing Item claimed by either Buyer or Cannabist or less than the smallest value for such Closing Item claimed by Buyer or Cannabist.  Notwithstanding anything to the contrary contained herein, at any time Buyer and Cannabist may agree to settle any Closing Item dispute, including any dispute submitted to the Valuation Firm, which agreement shall be in writing and final, conclusive and binding upon all of the Parties with respect to the subject matter of any such dispute so resolved; provided, that Buyer and Cannabist shall provide a copy of such agreement to the Valuation Firm and shall instruct the Valuation Firm not to resolve such dispute, it being agreed that if the Valuation Firm nonetheless resolves such dispute for any reason, the agreement of Buyer and Cannabist shall control.

 

(c)          If the Final Closing Cash Payment exceeds the Initial Closing Cash Payment (such excess amount, if any, the “Excess Amount”), then Buyer shall promptly pay, or cause to be paid, an amount in cash equal to the Excess Amount to the Member.

 

(d)          If the Final Closing Cash Payment is less than the Initial Closing Cash Payment (such shortfall amount, if any, the “Shortfall Amount”), then, (i) first, the Shortfall Amount shall be disbursed from the Offset Escrow Amount then existing in the Escrow Account to Buyer, then (ii) second, solely to the extent the Shortfall Amount exceeds the amount remaining in the Escrow Account, the Member shall promptly pay, or cause to be paid, an amount in cash equal to the remaining Shortfall Amount to Buyer.

 

(e)         Within five (5) days after the determination of the Final Closing Cash Payment, Buyer and the Member shall deliver a joint written instruction to the Escrow Agent instructing it to distribute from the Offset Escrow Amount then existing in the Escrow Account (i) to Buyer, the amount, if any, payable to Buyer under Section 2.4(d)(i) and (ii) to the Member, $1,000,000, less any amounts, if any, payable to Buyer under Section 2.4(d)(i).

 

Section 2.5           Closing Transactions.

 

(a)          Closing.  Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall be consummated via electronic transmission of executed signature pages to the applicable Transaction Agreement on the date that is no later than three (3) Business Days after the last of the conditions to Closing set forth in Article VII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time or on such other date as the Company and Buyer may mutually agree upon in writing.  The day on which the Closing takes place shall be referred to as the “Closing Date”.

 

(b)          Company Closing Deliveries.  At or prior to the Closing, the Company, Member or Cannabist, as applicable, shall deliver to Buyer, each in form and substance satisfactory to Buyer:

 

(i)           membership interest powers with respect to the Equity, in each case, duly executed by the Member;

 

(ii)         evidence that all required consents, waivers and deliverables necessary, as reasonably determined by Buyer, under Cannabist’s (A) 9.25% senior notes due December 31, 2028 and (B) 9.0% senior secured convertible senior notes due December 31, 2028 (collectively, the “Notes”), including, without limitation, evidence that the requirements under Section 7.15(a)(ii) of the Indenture have been satisfied, have been delivered or received, as applicable;

 

(iii)        duly-executed customary Lien and guarantor release documentation from any holders of security interests on the Equity or any assets of the Company held on behalf of the holders of Notes (the “Noteholders”) evidencing release and termination of all Liens on the Equity or any assets of the Company and release of any guarantees by the Company and/or the Member in respect thereof (“Lien Releases”);

 

(iv)        a certificate, dated as of the Closing Date and signed by a duly authorized officer of the Company, certifying (A) copies of the articles of organization (certified from the Secretary of State of the Commonwealth of Virginia) and the limited liability company operating agreement of the Company (collectively, the “Company Governing Documents”) and (B) a copy of the written resolutions duly adopted by the Member of the Company necessary to approve this Agreement, the transactions contemplated hereby and the performance of the Company in respect thereof;

 

(v)         a certificate of good standing (or the equivalent thereof) for the Company issued by the Secretary of State of the Commonwealth of Virginia;

 

(vi)         resignations of all officers of the Company and evidence of the termination of all Contracts with Insiders set forth on Schedule 3.18;

 

(vii)        evidence that the consents, notices and authorizations set forth on Schedule 3.2 have been obtained;

 

(viii)       a certificate, dated as of the Closing Date and signed by a duly authorized officer of the Company, that each of the conditions set forth in Section 7.2(a), Section 7.2(b), and Section 7.2(c) have been satisfied;

 

(ix)         properly completed and executed IRS Form W-9 (i) identifying the Company as an entity that is disregarded as separate from its owner within the meaning of Treasury Regulations Section 301.7701-2(c)(2)(i), and (ii) certifying that the owner of the Company, Cannabist, is a “United States person” within the meaning of Code Section 7701(a)(30)(C) (pursuant to Code Section 7874(b)) and Code Section 1445(f)(3) and is exempt from U.S. backup withholding;

 

(x)          evidence that the Virginia Transaction Approval has been obtained;

 

(xi)         evidence of the termination of the Contracts set forth on Schedule 2.5(b)(xi);

 

(xii)        the Escrow Agreement, duly executed by Member and the Escrow Agent;

 

(xiii)     duly executed payoff and release letters from the applicable payees of Transaction Expenses as set forth on the Estimated Closing Statement;

 

(xiv)      a transition services agreement in the form attached hereto as Exhibit B, duly executed by the Company and Cannabist (the “Transition Services Agreement”);

 

(xv)       estoppel certificates and consents from each of the landlords under the leases located at each of (A) 11190 W. Broad Street, Glen Allen, Virginia; (B) 3100 W Carey Street, Richmond, Virginia; (C) 4346 South Laburnum Avenue, Richmond, Virginia; (D) 2804 Decatur Street, Units 30 & 31, Richmond, Virginia; and (E) 401 Southpark Boulevard, Colonial Heights, VA 23834; and

 

(xvi)       such other documents or instruments as Buyer reasonably requests at least two (2) Business Days prior to the Closing Date and that are reasonably necessary to consummate the transactions contemplated by this Agreement.

 

(c)          Buyer Closing Deliveries.

 

(i)          At or prior to the Closing as set forth below, Buyer (or an Affiliate of Buyer) shall pay or issue (or cause to be paid or issued), as applicable:

 

(A)          to the Member, the Initial Closing Cash Payment;

 

(B)          to the Escrow Agent, the Offset Escrow Amount;

 

(C)          to the applicable payees as set forth on the Estimated Closing Statement, the Estimated Transaction Expenses; and

 

(D)          to the applicable payees as set forth on the Estimated Closing Statement, the Estimated Transaction Payments.

 

(ii)          At or prior to the Closing, Buyer (or an Affiliate of Buyer) shall deliver to the Company:

 

(A)          a certificate, dated as of the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied;

 

(B)          the Escrow Agreement, duly executed by Buyer;

 

(C)          the Transition Services Agreement, duly executed by Buyer;

 

(D)          such other documents or instruments as Cannabist reasonably requests at least two (2) Business Days prior to the Closing Date and that are reasonably necessary to consummate the transactions contemplated by this Agreement; and

 

(E)          instruction to the Escrow Agent, in accordance with the Escrow Agreement, to release the Deposit Escrow Amount to Cannabist.

 

The payments and issuances to be made by Buyer pursuant to Section 2.5(c)(i) shall be made to the accounts (including wire instructions) and in the amounts designated in writing by the applicable payees (including payees in connection with the Purchase Price, Transaction Expenses, Transaction Payments and Indebtedness) no later than two (2) Business Days prior the Closing, as memorialized in the funds flow to be mutually agreed to by Buyer and Cannabist prior to the Closing (the “Funds Flow”), which Funds Flow shall include wire instructions and all other reasonable information requested by Buyer.  Notwithstanding the foregoing, all payments of the Transaction Payments shall be paid by depositing the amount in the applicable payroll account of the Company or its Affiliates and such amounts shall be remitted by the Company or its Affiliates, as applicable, net of applicable withholding Taxes to the applicable payee.

 

Section 2.6          Offset Escrow Amount. At Closing, Buyer shall deposit the Offset Escrow Amount with the Escrow Agent into the Escrow Account. The Offset Escrow Amount shall be maintained in the Escrow Account by the Escrow Agent and administered and payable in accordance with this Agreement and the Escrow Agreement. Subject to Section 2.4(d) or Section 6.2(d), the Offset Escrow Amount (together with all interest and income accrued thereon) shall be released to Cannabist on the date that is nine (9) months following the Closing Date (the “Offset Release Date”); provided that any amounts in the Escrow Account under dispute pursuant to Section 2.4(b) and Section 6.2 shall not be released until such dispute is resolved in writing between the Parties or otherwise finally determined in accordance with this Agreement. No later than the Offset Release Date, Cannabist and Buyer shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to, release the applicable funds in the Escrow Account to Cannabist.

 

Section 2.7          Tax Withholding.  Notwithstanding anything herein to the contrary, Buyer and the Company, as applicable, shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any Person such amounts that Buyer or the Company (or any Affiliate thereof), as applicable, shall determine in good faith it is required to deduct and withhold from such Person under the Code and the rules and regulations promulgated thereunder, or any other provision of applicable Tax Law; provided, however, that if Buyer or the Company (or any Affiliate thereof), as applicable, becomes aware of any such requirement to deduct or withhold, Buyer shall use its reasonable efforts to notify the Member of any amounts the Company intends to deduct or withhold under this Section 2.7 prior to so deducting or withholding and shall cooperate in good faith with the Member to minimize or eliminate such deduction or withholding to the maximum extent permitted by applicable Law, provided that failure to make such notification shall not affect the right of Buyer and the Company to make such deduction or withholding.  To the extent that amounts are so withheld by Buyer or the Company, such withheld amounts, to the extent paid over to the applicable Governmental Entity in such manner as may be required by applicable Law, 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 Buyer or the Company, as applicable.

 

ARTICLE III

 

As an inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, the Company, Cannabist and the Member hereby represent and warrant to Buyer that the following representations and warranties are true and correct as of the date hereof (except as to any representations and warranties that specifically relate to an earlier date, in which case such representations and warranties were true and correct as of such earlier date) except as set forth in the disclosure schedules delivered by the Company, Cannabist and the Member to the Buyer as of the date of this Agreement (the “Disclosure Schedules”):

 

Section 3.1           Organization; Authorization.  The Company is a limited liability company duly formed, validly existing and in good standing under the Laws of Virginia.  The Company has full power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted.  Neither the character of the Company’s properties or the nature of the Company’s businesses requires the Company to qualify to do business as a foreign entity in any jurisdiction.  The Company is not in default under and has not violated any provision of the Company Governing Documents.  The Company has the full power and authority to execute and deliver each agreement contemplated hereby to which it is a party and to consummate the transactions contemplated hereby and thereby.  The Member has duly approved this Agreement and all other agreements contemplated hereby to which the Company is a party and has duly authorized the execution and delivery of this Agreement and all other agreements contemplated hereby to which the Company is a party and the consummation of the transactions contemplated hereby and thereby.  No other proceedings on the part of the Company are necessary to approve and authorize the execution and delivery of the agreements contemplated hereby to which it is a party and the consummation of the transactions contemplated hereby and thereby.  All agreements contemplated hereby to which the Company is a party have been duly executed and delivered by the Company and constitute the valid and binding agreements of the Company enforceable against the Company in accordance with their terms, except as such may be limited by bankruptcy, insolvency, reorganization or other Laws affecting creditors’ rights generally and by general equitable principles.

 

Section 3.2           Non-contravention.

 

(a)          Except as set forth on Schedule 3.2 of the Disclosure Schedules, the execution, delivery and performance by the Company, the Member and Cannabist of this Agreement and the other Transaction Agreements to which any of them will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of the Company, the Member or Cannabist; (b) conflict with or result in a violation or breach of any provision of any Law or Order applicable to the Member or the Company; (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Company, the Member or Cannabist is a party or by which any of them are bound or to which any of their respective properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business of the Company; or (d) result in the creation or imposition of any lien other than Permitted Lien on any properties or assets of the Company. Other than the Virginia Transaction Approval, no other consent, approval, Permit, Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Member or the Company in connection with the execution and delivery of this Agreement and the other Transaction Agreements to which the Member is or will be a party, and the consummation of the transactions contemplated hereby and thereby.

 

Section 3.3           Capitalization.

 

(a)          Except as set forth on Schedule 3.3(a) of the Disclosure Schedules, the Company is, and has been since its formation, a limited lability company with a single member. Schedule 3.3(a) of the Disclosure Schedules sets forth the issued and outstanding equity interests of the Company, the names of the record and beneficial owners thereof and the number of equity interests held by such owners.  All Equity was validly issued in compliance with applicable Law and any requirements set forth in the Company Governing Documents and has been duly authorized and approved.  All Equity is fully paid and non-assessable.  No Equity is subject to any preemptive rights, rights of first refusal or restrictions on transfer.  The Member owns of record and beneficially 100% of the Equity free and clear of all Liens (other than any restrictions under applicable securities Laws) and the Equity constitutes all of the issued and outstanding equity interests of the Company.  Upon consummation of the transactions contemplated herein in accordance with the terms hereof, the Buyer will hold good and marketable title to all of the Equity of the Company, free and clear of any Liens whatsoever, other than Liens resulting from acts, events, or circumstances solely within the control of the Buyer and restrictions under applicable securities Laws.  There are no outstanding or authorized options, warrants, Contracts, calls, puts, rights to subscribe, conversion rights or other similar rights to which the Company is a party, or which are binding upon the Company providing for the issuance, disposition or acquisition of any equity interests of the Company (other than this Agreement).  There are no outstanding or authorized equity appreciation, phantom interests, profits interests or similar rights with respect to the Company.  Other than the Company Governing Documents, there are no shareholder or equityholder agreements, voting trusts, proxies or other Contracts or understandings with respect to the voting of the Equity.  The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of the Equity.  No former direct or indirect holder of any equity interests of the Company has any claim or rights against the Company that remains unresolved or to which the Company has or may have any liability, and, to the Company’s Knowledge, no such claim is threatened.  The Company has no obligation to make any investment (in the form of a loan, capital contribution or otherwise) in any Person.

 

(b)         The Company has no, and has never had, any subsidiaries and does not own (and has not owned or held) any equity interests of any other Person or any other interest in any other Person or any rights to acquire any such equity interests or other interest.

 

Section 3.4           Financial Statements and Related Matters.

 

(a)       Attached as Schedule 3.4(a) to the Disclosure Schedules are the following financial statements (collectively, the “Financial Statements”): (i) the unaudited balance sheet of the Company as of September 30, 2025 (the “Latest Balance Sheet” and the date thereof, the “Latest Balance Sheet Date”), and the related statement of profit and loss for the nine-month period then ended, and (ii) the unaudited balance sheet of the Company of the Company as of December 31, 2024 and December 31, 2023 and the related statement of profit and loss for each of the 12-month periods then ended.  Each Financial Statement: (A) is true, accurate and complete in all material respects, does not omit to state any fact necessary to make the statements contained therein in light of the circumstances in which they were made, not misleading, and was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated, (B) is consistent with the books and records of the Company (which, in turn, are accurate and complete in all material respects), (C) presents fairly in all material respects the financial condition of the Company as of the respective dates thereof and the operating results of the Company for the periods covered thereby and (D) does not reflect any transactions which are not bona fide transactions.

 

(b)          Except as set forth on Schedule 3.4(b), the Company has no liabilities or obligations of any nature whatsoever (whether accrued, absolute, known, unknown, matured, unmatured, fixed, contingent, liquidated, unliquidated or otherwise), and there is no existing condition, fact or set of circumstances that has resulted in or would reasonably be expected to result in any such liabilities or obligations except for: (i) performance obligations under Contracts described on Schedule 3.9(a) (or under Contracts entered into in the Ordinary Course of Business which, because of the dollar thresholds set forth in Section 3.9(a), are not required to be described on Schedule 3.9(a), none of which involves non-performance or a breach), (ii) liabilities reflected (and adequately reserved for) on the face of the Latest Balance Sheet and (iii) liabilities of the type set forth on the face of the Latest Balance Sheet which have arisen after the date of the Latest Balance Sheet in the Ordinary Course of Business (none of which is a liability for breach of Contract or involves a tort, infringement, claim, lawsuit, warranty or environmental, health or safety matter), none of which individually or in the aggregate is material to the business, results of operations or financial condition of the Company.

 

(c)         The Company has established and adhered to a system of internal accounting controls which are designed to provide assurance regarding the reliability of financial reporting.  There has never been (i) any material deficiency or weakness in the system of internal accounting controls used by the Company except as set forth on Schedule 3.4(c), (ii) any fraud by any of the Company’s, managers, directors, officers, employees or independent contractors, (iii) any wrongdoing that involves any manager, director, officer, employee or independent contractor of the Company who has or had a role in the preparation of financial statements or the internal accounting controls used by the Company or (iv) any claim or allegation regarding any of the foregoing.

 

(d)         The inventories and raw materials of the Company, including those reflected in the Financial Statements, are of a quantity and quality usable and saleable in the Ordinary Course of Business within a reasonable period of time and without discount outside of the Ordinary Course of Business, are merchantable and fit and sufficient for their particular purpose and are reasonable in kind and amount in light of the normal needs of the Company.  None of the inventory of the Company is subject to any consignment, bailment, warehousing or similar Contract.

 

(e)         All accounts receivable related to wholesale sale of goods recorded in the Financial Statements (i) are collectable, consistent with historical collections patterns and subject to allowances for doubtful accounts, (ii) to the Company’s Knowledge, are enforceable against the payor thereof and (iii) have not been offset against obligations of any other party, in each case, in all material respects.