Exhibit 10.1
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of January 31, 2022 (the “Effective Date”), among GOODNESS GROWTH HOLDINGS, INC. (formerly known as Vireo Health International, Inc.), a British Columbia corporation (“Parent”), the other Borrowers (as defined in the hereinafter-defined Credit Agreement and including, for the avoidance of doubt, Vireo Charm City (as defined in the Credit Agreement)), the Lenders (as defined in the Credit Agreement) party hereto, and CHICAGO ATLANTIC ADMIN, LLC, a Delaware limited liability company, as administrative agent (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”) and as collateral agent (in such capacity, together with its successors and assigns in such capacity, “Collateral Agent”, and together with Administrative Agent, collectively, “Agents” and each, an “Agent”).
RECITALS
WHEREAS, reference is made to that certain Credit Agreement dated as of March 25, 2021, as amended by that certain Omnibus First Amendment to Credit Agreement and Security Agreement dated as of November 1, 2021 (the “First Amendment”), that certain Second Amendment to Credit Agreement dated as of November 18, 2021 (the “Second Amendment”; the Credit Agreement, as amended by the First Amendment and the Second Amendment, the “Existing Credit Agreement”), and this Amendment (the Existing Credit Agreement, as amended by this Amendment, and as further amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement), among the Borrowers party thereto, the other Credit Parties from time to time party thereto, the Lenders from time to time party thereto and Agents; and
WHEREAS, the Credit Parties have requested that the Agents and the Lenders agree to amend certain provisions of the Credit Agreement, and, subject to the terms and conditions of this Amendment, the Agents and the Lenders have agreed to such request;
NOW, THEREFORE, in consideration of the terms and mutual covenants set forth in this Amendment, the receipt and sufficiency which is hereby acknowledged by the parties, the parties, intending to be legally bound, agree as follows:
Documents. The term “Borrower” and “Borrowers” as used in the Credit Agreement and the other Credit Documents shall be deemed to include Vireo Charm City.
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IN WITNESS WHEREOF. the parties hereto have set their hands and seals on the Effective Date.
BORROWERS:
GOODNESS GROWTH HOLDINGS, INC.
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALH, INC.
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALTH OF MINNESOTA, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALTH OF NEW YORK LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
MARYMEDLLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
RESURGENT BIOSCIENCES, INC.
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALTH OF PUERTO RICO, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
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VIREO HEALTH DE PUERTO RICO LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
XAAS AGRO, INC.
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALTH OF NEVADA I, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
MJ DISTRIBUTING C201, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
MJ DISTRIBUTING P132, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALTH OF ARIZONA, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
,
ELEPHANT HEAD FARM, LLC
(signed)Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
RETAIL MANAGEMENT ASSOCIATES. LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
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VIREO HEALTH OF MASSACHUSETTS, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VERDANT GROVE, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
MAYFLOWER BOTANICALS INC.
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO HEALTH OF NEW MEXICO, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
VIREO OF CHARM CITY, LLC
(signed) Kyle Kingsley
Name: Kyle Kingsley Title:Authorized Officer
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ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
CHICAGO ATLANTIC ADMIN, LLC
By: Name: John Mazarakis
Title:Authorized Person
LENDERS:
CHICAGO ATLANTIC REAL ESTATE
FINANCE, INC.
By: Name: John Mazarakis
Title: Co-President
CHICAGO ATLANTIC CREDIT COMPANY, LLC
By: Name: John Mazarakis
Title: Authorized Person
THIRD AMENDMENT TO CREDIT AGREEMENT
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ANNEX A
AMENDED CREDIT AGREEMENT AND SCHEDULES
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EXECUTION VERSION
CREDIT AGREEMENT
by and among
VIREO HEALTH INTERNATIONAL, INC.
AND CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
as Borrowers,
the Persons from time to time party hereto as Guarantors, the Lenders from time to time party hereto
and
CHICAGO ATLANTIC ADMIN, LLC,
as Administrative Agent and Collateral Agent Dated as of March 25, 2021
GREEN IVY CAPITAL, LLC,
as Lead Arranger
As amended by that certain Omnibus First Amendment to Credit Agreement and Security Agreement dated November 1, 2021, and that certain Second Amendment to Credit Agreement dated as of November 18, 2021; and that certain Third Amendment to Credit Agreement dated as of January 31, 2022.
NOTICE: THIS COMPOSITE CREDIT AGREEMENT IS NOT THE ACTUAL CONTRACT AMONG THE PARTIES. THE COMPOSITE REPRESENTS A GOOD FAITH EFFORT OF COUNSEL FOR THE AGENTS TO STATE THE TERMS OF THE CREDIT AGREEMENT AS AMENDED THROUGH THE LATEST AMENDMENT SET FORTH ABOVE. THE OPERATIVE LEGAL DOCUMENT CONSISTS OF THE CREDIT AGREEMENT TOGETHER WITH ALL AMENDMENTS THERETO.
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TABLE OF CONTENTS
Pages
ARTICLE I DEFINITIONS2
SECTION 1.01Defined Terms 2 SECTION 1.02Other Interpretive Provisions 227 SECTION 1.03Accounting Terms and Principles 228 SECTION 1.04Rounding 229 SECTION 1.05References to Agreements, Laws, Etc 229 SECTION 1.06Times of Day 229 SECTION 1.07Timing of Payment of Performance 229 SECTION 1.08Corporate Terminology 229 ARTICLE II AMOUNT AND TERMS OF LOANS 229 SECTION 2.01Loans 229
SECTION 2.02Disbursement of Funds; Original Issue Discount. 230 SECTION 2.03Payment of Loans; Evidence of Debt. 231 SECTION 2.04Interest. 232 SECTION 2.05Multiple Borrowers 233 SECTION 2.06Borrower Representative 233 ARTICLE III MANDATORY REDUCTION OF COMMITMENTS 234
SECTION 3.01Mandatory Reduction of Commitments 234
ARTICLE IV PAYMENTS 234
SECTION 4.01Voluntary Prepayments 234 SECTION 4.02Mandatory Prepayments. 234 SECTION 4.03Payment of Obligations; Method and Place of Payment. 236 SECTION 4.04Taxes 237
SECTION 4.05Computations of Interest and Fees. 240 SECTION 4.06Maximum Interest. 240 ARTICLE V CONDITIONS PRECEDENT TO LOANS 241
SECTION 5.01Closing DateInitial Delayed Draw Term Loan 241 SECTION 5.02Loans Made after Closing Date 245 ARTICLE VI GUARANTEE247
SECTION 6.01Guarantee 247 SECTION 6.02Right of Contribution 248 SECTION 6.03No Subrogation 248
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SECTION 6.04Modification of the Guarantor Obligations 249 SECTION 6.05Guarantee Absolute and Unconditional 249 SECTION 6.06Reinstatement 250
SECTION 6.07Payments 250
SECTION 6.08Taxes 250 ARTICLE VII REPRESENTATIONS, WARRANTIES AND AGREEMENTS 250 SECTION 7.01Status 250
SECTION 7.02Power and Authority 250 SECTION 7.03No Violation 251 SECTION 7.04Litigation, Labor Controversies, Etc 251 SECTION 7.05Use of Proceeds; Regulations U and X 251 SECTION 7.06Approvals, Consents, Etc 251 SECTION 7.07Investment Company Act 252 SECTION 7.08Accuracy of Information. 252 SECTION 7.09Financial Condition; Financial Statements 252 SECTION 7.10Tax Returns and Payments 252 SECTION 7.11Benefit Plans 253 SECTION 7.12Subsidiaries 253 SECTION 7.13Intellectual Property; Licenses, Etc 253 SECTION 7.14Environmental Warranties 254 SECTION 7.15Ownership of Properties 255 SECTION 7.16No Default 255 SECTION 7.17Solvency 255 SECTION 7.18 Locations of Offices, Records and Collateral 255 SECTION 7.19 Compliance with Laws and Permits; Authorizations. 256 SECTION 7.20 No Material Adverse Effect 256 SECTION 7.21 Contractual or other Restrictions 256 SECTION 7.22 Collective Bargaining Agreements 256 SECTION 7.23 Insurance 257 SECTION 7.24 Evidence of other Indebtedness 257 SECTION 7.25 Deposit Accounts and Securities Accounts 257 SECTION 7.26 Absence of any Undisclosed Liabilities 257 SECTION 7.27 Material Contracts and Regulatory Matters 257 SECTION 7.28 Anti-Terrorism Laws 257 SECTION 7.29 Conduct of Business 258
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SECTION 7.30Transactions with Affiliates.258
SECTION 7.31Canadian Securities Law Matters. 258
ARTICLE VIII AFFIRMATIVE COVENANTS 259
SECTION 8.01Financial Information, Reports, Notices and Information 259 SECTION 8.02Books, Records and Inspections 262 SECTION 8.03Maintenance of Insurance 263 SECTION 8.04Payment of Taxes 263 SECTION 8.05Maintenance of Existence; Compliance with Laws, Etc 263 SECTION 8.06Environmental Compliance. 263 SECTION 8.07Maintenance of Properties 264 SECTION 8.08Additional Credit Parties 265 SECTION 8.09Use of Proceeds 265 SECTION 8.10Further Assurances 266 SECTION 8.11Collateral Access Agreements 266 SECTION 8.12Bank Accounts. 266 SECTION 8.13Sanctions; Anti-Corruption Laws. 267 SECTION 8.14Regulatory Matters 267 SECTION 8.15Annual Lender Meeting. 268 SECTION 8.16Canadian Securities Law Matters. 268 SECTION 8.17 Post-Closing Matters. 268 ARTICLE IX NEGATIVE COVENANTS 268
SECTION 9.01Limitation on Indebtedness 269 SECTION 9.02Limitation on Liens 270 SECTION 9.03Consolidation, Merger, Etc 272 SECTION 9.04Permitted Dispositions 272 SECTION 9.05Investments 274
SECTION 9.06ERISA 275
SECTION 9.07Restricted Payments 275 SECTION 9.08Payments and Modification of Certain Agreements. 276 SECTION 9.09Sale and Leaseback 2; Build-to-Suit Lease 76 SECTION 9.10Transactions with Affiliates 276 SECTION 9.11Restrictive Agreements, Etc 277 SECTION 9.12Hedging Agreements 277
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SECTION 9.13Changes in Business and Fiscal Year 277
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SECTION 9.15Operations of Parent 278
ARTICLE X EVENTS OF DEFAULT 278
SECTION 10.01Listing of Events of Default 278 SECTION 10.02Remedies Upon Event of Default 281 SECTION 10.03Right to Cure Certain Covenant Violations 281 ARTICLE XI AGENTS282
SECTION 11.01Appointment 282 SECTION 11.02Delegation of Duties 283 SECTION 11.03Exculpatory Provisions 283 SECTION 11.04Reliance by Agents 283 SECTION 11.05Notice of Default 284 SECTION 11.06Non-Reliance on Agents and other Lenders 284 SECTION 11.07Indemnification 285 SECTION 11.08Agent in Its Individual Capacity 285 SECTION 11.09Successor Agents 285 SECTION 11.10Agents Generally 285
SECTION 11.11Restrictions on Actions by Secured Parties; Sharing of
Payments. 286 SECTION 11.12Agency for Perfection 287 SECTION 11.13Enforcement by Agents 287 SECTION 11.14Credit Parties Not Beneficiaries 287 SECTION 11.15Intercreditor and Subordination Agreements 287 ARTICLE XII MISCELLANEOUS 287
SECTION 12.01Amendments and Waivers 287 SECTION 12.02Notices and Other Communications; Facsimile Copies. 288 SECTION 12.03No Waiver; Cumulative Remedies 289 SECTION 12.04Survival of Representations and Warranties 289 SECTION 12.05Payment of Expenses and Taxes; Indemnification 289
SECTION 12.06Successors and Assigns; Participations and Assignments;
Replacement of Lenders. 290 SECTION 12.07Pledge of Loans 293 SECTION 12.08Adjustments; Set-off 294 SECTION 12.09Counterparts 294
SECTION 12.10Severability 295
SECTION 12.11Integration 295
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SECTION 12.12GOVERNING LAW 295
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SECTION 12.13Submission to Jurisdiction; Waivers 295 SECTION 12.14Acknowledgments 296 SECTION 12.15WAIVERS OF JURY TRIAL 296
SECTION 12.16Confidentiality 296 SECTION 12.17Press Releases, Etc 298 SECTION 12.18Releases of Guarantees and Liens 298 SECTION 12.19USA Patriot Act 299 SECTION 12.20No Fiduciary Duty 299 SECTION 12.21Authorized Officers 299 SECTION 12.22Subordination of Intercompany Indebtedness 299 SECTION 12.23Electronic Communication 299 SECTION 12.24Original Issue Discount 2100 SECTION 12.25Tax Treatment 2100 ARTICLE XIII ADDITIONAL COVENANTS AND AGREEMENTS. 2100
SECTION 13.01Cannabis Laws 2100
SCHEDULES
Schedule 1.01Commitments
Schedule 2.01(c)Delayed Draw Term Loans Draw Schedule Schedule 7.04Litigation, Labor Controversies, Etc.
Schedule 7.11Benefit Plans
Schedule 7.12Subsidiaries
Schedule 7.13Intellectual Property, Licenses, Etc. Schedule 7.14Environmental Warranties
Schedule 7.15Ownership of Properties
Schedule 7.18Locations of Offices, Records and Collateral Schedule 7.19Regulatory Licenses
Schedule 7.21Contractual or other Restrictions Schedule 7.22Collective Bargaining Agreements Schedule 7.24Evidence of other Indebtedness
Schedule 7.25Deposit Accounts and Securities Accounts Schedule 7.27Material Contracts and Regulatory Matters Schedule 7.29Sales Tracking Software
Schedule 9.02Permitted Liens
Schedule 9.05Investments
Schedule 9.10Transactions with Affiliates Schedule 12.02General (Addresses for Notices)
EXHIBITS
Exhibit AForm of Assignment and Acceptance
Exhibit BForm of Compliance Certificate
Exhibit CForm of Credit Agreement Joinder Exhibit D Form of Note
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of March 25, 2021, is among VIREO HEALTH INTERNATIONAL, INC., aGOODNESS GROWTH HOLDINGS, INC. (f/k/a Vireo Health International, Inc.), a corporation existing under the laws of the Province of British Columbia (“Parent”), VIREO HEALTH, INC., a Delaware corporation (“Vireo Health”), VIREO HEALTH OF MINNESOTA, LLC, a Minnesota limited liability company (“Vireo Minnesota”), VIREO HEALTH OF NEW YORK LLC, a New York limited liability company (“Vireo NY”), MARYMED LLC, a Maryland limited liability company (“MaryMed”), RESURGENT BIOSCIENCES, INC., a Delaware corporation (“Resurgent”), VIREO HEALTH OF PUERTO RICO, LLC, a Delaware limited liability company (“Vireo PR”), VIREO HEALTH DE PUERTO RICO LLC, a Puerto Rico limited liability company (“Vireo de Puerto Rico”), XAAS AGRO, INC., a Puerto Rico limited liability company (“Xaas”), VIREO HEALTH OF NEVADA I, LLC, a Nevada limited liability company (“Vireo Nevada”), MJ DISTRIBUTING C201, LLC, a Nevada limited liability company (“MJ C201”), MJ DISTRIBUTING P132, LLC, a Nevada limited liability company (“MJ P132”), VIREO HEALTH OF ARIZONA, LLC, a Delaware limited liability company (“Vireo Arizona”), ELEPHANT HEAD FARM, LLC, an Arizona limited liability company (“Elephant Head”), RETAIL MANAGEMENT ASSOCIATES, LLC, an Arizona limited liability company (“Retail Management”), VIREO HEALTH OF MASSACHUSETTS, LLC, a Delaware limited liability company (“Vireo Massachusetts”), VERDANT GROVE, LLC, a Delaware limited liability company (“Verdant Grove”), MAYFLOWER BOTANICALS, INC., a Massachusetts corporation (“Mayflower”), VIREO HEALTH OF NEW MEXICO, LLC, a Delaware limited liability company (“Vireo NM;” together with Parent, Vireo Health, Vireo Minnesota, Vireo NY, MaryMed, Resurgent, Vireo PR, Vireo de Puerto Rico, Xaas, Vireo Nevada, MJ C201, MJ P132, Vireo Arizona. Elephant Head, Retail Management, Vireo Massachusetts, Verdant Grove, Mayflower, Vireo NM and each other Subsidiary of Parent that becomes a borrower hereunder pursuant to Section 8.08, each, a “Borrower” and collectively, jointly and severally, “Borrowers”), any Subsidiaries of Parent hereto that are Guarantors or become Guarantors hereunder pursuant to Section 8.08, the lenders from time to time party hereto (each, a “Lender” and, collectively, the “Lenders”), CHICAGO ATLANTIC ADMIN, LLC, a Delaware limited liability company (“Chicago Atlantic”), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Administrative Agent”) and Chicago Atlantic, as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns in such capacity, “Collateral Agent”, and together with Administrative Agent, each, an “Agent” and collectively, “Agents”).
RECITALS
WHEREAS, Borrowers have requested that the Lenders extend to Borrowers certain Loans and Commitments to make Loans in the aggregate principal amount of up to $46,000,000 commencing on the Closing Date; and
WHEREAS, the Lenders have agreed to provide the Loans and the Commitments to make Loans, in each case subject to the terms and conditions contained in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:
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ARTICLE I
Definitions
SECTION 1.01 Defined Terms. As used herein, the following terms shall have the meanings specified in this Section 1.01 unless the context otherwise requires:
“Acquired Business” shall mean the entity or assets acquired by any Borrower or a Subsidiary in an Acquisition, whether before or after the date hereof.
“Acquisition” shall mean any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person (other than a Person that is a Subsidiary immediately prior to such Acquisition), or of any line of business or division of a Person (other than a Person that is a Subsidiary immediately prior to such Acquisition), (b) the acquisition of in excess of 50.00% of the capital stock, partnership interests, membership interests or equity of any Person (other than a Person that is a Subsidiary), or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary), provided that a Credit Party is the surviving entity.
“Administrative Agent” shall have the meaning set forth in the Preamble.
“Administrative Questionnaire” shall mean a questionnaire completed by each Lender, in a form approved by Administrative Agent, in which such Lender, among other things, (a) designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Credit Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with such Lender’s compliance procedures and Applicable Laws, including federal and state securities laws and (b) designates an address, facsimile number, electronic mail address or telephone number for notices and communications with such Lender.
“Affiliate” shall mean, with respect to any Person, (a) any Person which, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, or (b) any Person who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition only, control of a Person shall mean the power, direct or indirect, to (x) vote 30.00% or more of the Capital Stock or other form of ownership interest having ordinary voting power for the election of directors (or the comparable equivalent) of such Person or (y) direct or cause the direction of the management and policies of such Person, in each case whether through the ownership of any Capital Stock, by contract or otherwise. No Agent or Lender shall be an Affiliate of any Consolidated Company for purposes of this Agreement or any other Credit Document.
“Agents” shall have the meaning set forth in the Preamble.
“Agreement” shall mean this Credit Agreement, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Aggregate Commitment” shall mean $30,200,00085,200,000, as such amount may be increased pursuant to Section 2.01(bf).
“ALTA” shall mean the American Land Title Association.
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“Amortization Amount” shall mean an amount equal to 1.50% of the aggregate principal amount of all Loans made by the Lenders (but excluding, for the avoidance of doubt, all PIK Interest that is paid in kind and deemed to be a part of the principal amount of the Loans pursuant to Section 2.04(b)).
“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to any Credit Party or any of its Subsidiaries from time to time concerning or relating to bribery or corruption, including the United States Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public Officials Act (Canada) and other similar anti-corruption legislation in other jurisdictions.
“Anti-Terrorism Laws” shall have the meaning set forth in Section 7.28.
“Applicable Laws” shall mean, subject to the carve-outs and acknowledgments contained in Section 13.01, as to any Person, any law (including common law), statute, regulation, ordinance, rule, order, policy, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority or determination of an arbitrator, in each case applicable to or binding on such Person or any of its property, products, business, assets or operations or to which such Person or any of its property, products, business, assets or operations is subject.
“Applicable Securities Legislation” shall mean all applicable securities laws of each of the Reporting Jurisdictions and the respective rules and regulations under such laws together with applicable published fee schedules, prescribed forms, policy statements, national or multilateral instruments, orders, blanket rulings and other applicable regulatory instruments of the securities regulatory authorities in any of the Reporting Jurisdictions.
“Application Event” shall have the meaning set forth in Section 4.02(d).
“Applicable Fiscal Period” shall mean the period of three consecutive fiscal months ending at the end of each prescribed fiscal month.
“Approved Fund” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“Arranger” shall mean Green Ivy Capital, LLC, a Delaware limited liability company, in its capacity as lead arranger hereunder.
“Arizona Natural” shall mean Arizona Natural Remedies, Inc., an Arizona non-profit corporation.
“Assignment and Acceptance” shall mean an assignment and acceptance substantially in the form of Exhibit A.
“Attributable Indebtedness” shall mean, on any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear as a liability on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“Authorized Officer” shall mean, with respect to any Credit Party, the president, the chief financial officer, the chief operating officer, the secretary, the treasurer or any other senior officer of such Credit
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Party, but, in any event, with respect to financial matters, the chief financial officer of such Credit Party or such other senior officer of such Credit Party designated as such by the applicable Credit Party in writing.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230. “Benefited Lender” shall have the meaning set forth in Section 12.08(a).
“BIA” shall mean the Bankruptcy and Insolvency Act (Canada), as amended from time to time.
“Board” shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Board of Directors” shall mean the board of directors, board of managers or other equivalent governing body of a Person.
“Borrower” and “Borrowers” shall have the meanings set forth in the Preamble. “Borrower Representative” shall mean Parent.
“Budget” shall have the meaning set forth in Section 8.01(g).
“Business” shall mean: the business of cultivating, producing, processing, packaging and marketing cannabis products for distribution and sale; all ancillary activities related to the foregoing including conducting or facilitating research regarding the properties or efficacy of cannabis products, data collection or analysis related to the foregoing; and similar activities.
“Business Day” shall mean any day excluding Saturday, Sunday and any day that shall be in Chicago, Illinois a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close.
“Canadian Credit Party” shall mean any Credit Party organized and existing under the federal laws of Canada or any province or territory thereof.
“Canadian Pension Plans” shall mean, with respect to any Canadian Credit Party, all plans or arrangements that are pension plans required to be registered under Canadian federal or provincial law and that are administered or contributed to by such Credit Party for any of its employees or former employees located in Canada or any province or territory thereof, but does not include the Canada Pension Plan or the Quebec Pension Plan as maintained by the Government of Canada or the Province of Quebec, respectively.
“Canadian Security Agreement” shall mean that certain General Security Agreement dated as of the Closing Date, by and among each Canadian Credit Party and Collateral Agent for the benefit of the Secured Parties.
“Capital Expenditures” shall mean, for any specified period, the sum of, without duplication, all expenditures made, directly or indirectly, by the Consolidated Companies during such period, determined
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on a consolidated basis in accordance with GAAP, that are or should be reflected as additions to property, plant or equipment or similar items reflected in the consolidated statement of cash flows and balance sheet of the Consolidated Companies, or have a useful life of more than one year.
“Capital Stock” shall mean any and all shares, interests, participations, units or other equivalents (however designated) of capital stock of a corporation, membership interests in a limited liability company, partnership interests of a limited partnership, any and all equivalent ownership interests in a Person and any and all warrants, rights or options to purchase any of the foregoing.
“Capitalized Lease Obligations” shall mean, as applied to any Person, all obligations under Capitalized Leases of such Person or any of its Subsidiaries, in each case taken at the amount thereof accounted for as liabilities on the balance sheet (excluding the footnotes thereto) of such Person in accordance with GAAP.
“Capitalized Leases” shall mean, as applied to any Person, all leases of property that have been or should be, in accordance with GAAP, recorded as capitalized leases on the balance sheet of such Person or any of its Subsidiaries, on a consolidated basis; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability on the balance sheet (excluding the footnotes thereto) of such Person in accordance with GAAP.
“Cash Equivalents” shall mean:
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| (f) | mutual funds investing primarily in assets described in clauses (a) through (d) of |
this definition.
“Cash Interest Rate” shall mean a per annum rate equal to the greater of (a) the Prime Rate plus 10.375% and (b) 13.625%.
“Casualty Event” shall mean the damage, destruction or condemnation, as the case may be, of property of any Person or any of its Subsidiaries.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980.
“Charm City Acquisition” shall mean the Acquisition by Vireo Charm City of substantially all of the assets of Charm City Seller pursuant to the Charm City Acquisition Agreement.
“Charm City Acquisition Agreement” shall mean that certain Asset Purchase Agreement, dated as of July 8, 2021, by and among Vireo Charm City, Charm City Seller, Arcarius, LLC, a Maryland limited liability company, and Bryan Hill (solely with respect to the obligations set forth in Section 9.10 thereof).
“Charm City Intercreditor Agreement” shall mean that certain Intercreditor and Collateral Sharing Agreement dated as of November 19, 2021, between Collateral Agent and Charm City Seller and acknowledged and agreed to by Parent and Vireo Charm City.
“Charm City Note” shall mean that certain Secured Promissory Note in the principal amount of
$2,000,000 dated November 19, 2021, issued by Vireo Charm City to Charm City Seller in connection with the Charm City Acquisition.
“Charm City Pledge Agreement” shall mean that certain Pledge Agreement dated as of November 19, 2021, by and between Vireo Health, Vireo Charm City and Charm City Seller.
“Charm City Seller” shall mean Charm City Medicus, LLC, a Maryland limited liability company.
“Change in Cannabis Law” shall mean any change in Applicable Law, including U.S. Federal Cannabis Law and U.S. State Cannabis Law, (a) that would make it unlawful for any Agent or Lender to
(i) perform any of its obligations hereunder or under any other Credit Document, or (ii) to fund or maintain the Loans, (b) pursuant to which any Governmental Authority has enjoined any Agent or Lender from (i) performing any of its obligations hereunder or under any other Credit Document, or (ii) funding or maintaining the Loans, or (c) that would result in any business activity conducted by any Credit Party being a Restricted Cannabis Activity, and such result described in this clause (c) would have a Material Adverse Effect.
“Change in Law” shall mean (a) the adoption of any law, rule, regulation or treaty after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the interpretation, implementation or application thereof by any Governmental Authority after the date of this Agreement or
(c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives issued thereunder or in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel
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Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the day enacted, adopted, issued or implemented.
“Change of Control” shall mean an event or series of events by which (a) on or after March 31, 2023, there is a report filed with any securities commission or securities regulatory authority in Canada, disclosing that any offeror (as such term is defined in section 1.1 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids) has acquired beneficial ownership (within the meaning of the Securities Act) of, or the power to exercise control or direction over, or securities convertible into, any Voting Stock of Parent, that together with the offeror’s securities (as such term is defined in section 1.1 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids) in relation to any Voting Stock of Parent, would constitute Voting Stock representing more than 30.00% of the total voting power attached to all Voting Stock of Parent then outstanding; (b) there is consummated any amalgamation, consolidation, statutory arrangement (involving a business combination) or merger of Parent (i) in which Parent is not the continuing or surviving corporation or (ii) pursuant to which any Voting Stock would be reclassified, changed or converted into or exchanged for cash, securities or other property, other than (in each case) an amalgamation, consolidation, statutory arrangement or merger of Parent in which the holders of the Voting Stock immediately prior to the amalgamation, consolidation, statutory arrangement or merger have, directly or indirectly, more than 50.10% of the Voting Stock of the continuing or surviving corporation immediately after such transaction; (c) there occurs any other change of Control of Parent as it exists as at the date of this Agreement; (d) during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; (e) except as permitted by Section 9.03 or 9.04, Parent shall cease to own and control, beneficially and of record, 100.00% of the Capital Stock of each other Borrower; and
(f) except as permitted by Section 9.03, 9.04 or 9.13, any Borrower shall cease to own and control,
directly or indirectly, free and clear of all Liens or other encumbrances (other than Liens created pursuant to any Credit Document), (i) at least the percentage of the Capital Stock of each of its Subsidiaries held by such Borrower on the Closing Date and (ii) 100.00% of the Capital Stock of each of its Subsidiaries formed or acquired after the Closing Date. ; provided, however, that the acquisition of the Voting Stock of Parent by another Person that has been disclosed to Administrative Agent as of the Third Amendment Effective Date pursuant to the agreement referenced in the proviso of Section 7.29 shall not be a Change of Control.
“Chicago Atlantic” shall have the meaning set forth in the Preamble.
“Claims” shall have the meaning set forth in the definition of Environmental Claims. “Closing Date” shall mean March 25, 2021.
“Code” shall mean the Internal Revenue Code of 1986, and the Treasury Regulations promulgated and rulings issued thereunder.
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“Collateral” shall mean any assets of any Credit Party or other assets upon which Collateral Agent has been, or has purportedly been, granted a Lien in connection with this Agreement or any other Credit Document.
“Collateral Access Agreements” shall mean a collateral access agreement in form and substance reasonably satisfactory to Collateral Agent between Collateral Agent and any lessor, warehouseman, processor, bailee, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in, any Credit Party’s books and records or assets.
“Collateral Agent” shall have the meaning set forth in the Preamble. “Collateral Assignee” shall have the meaning set forth in Section 12.06(d).
“Collections” shall mean all cash, checks, credit card slips or receipts, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of the Credit Parties.
“Commitment” shall mean the obligation of the Lenders to make the Loans hereunder, in each case in the Dollar amounts set forth beside such Lender’s name under the applicable heading on Schedule
1.01 or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such amounts may be changed from time to time pursuant to the terms of this Agreement. On the Closing Date, the total of the Commitments for all Lenders shall be $26,000,000 as set forth on Schedule 1.01.
“Communications” shall mean, collectively, any notice, demand, communication, information, document or other material that any Credit Party provides to Administrative Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to Administrative Agent or any Lender by means of electronic communications pursuant to Section 12.23, including through the Platform.
“Compliance Certificate” shall mean a certificate duly completed and executed by an Authorized Officer of Parent substantially in the form of Exhibit B, together with such changes thereto or departures therefrom as Administrative Agent may from time to time reasonably request or approve for the purpose of monitoring the Credit Parties’ compliance with the financial covenants contained herein or certain other calculations, or as otherwise agreed to by Administrative Agent.
“Confidential Information” shall have the meaning set forth in Section 12.16.
“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes.
“Consolidated Adjusted EBITDA” shall mean, for a specified period, (a) the net income or loss of the Consolidated Companies, plus (b) to the extent deducted in determining net Income for such period, the sum of, without duplication, (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization expense, (iv) charges, costs, losses and expenses related to asset dispositions permitted under this Agreement or discontinued operations, (v) non-cash write-downs of assets, (vi) (A) fees, costs and expenses paid in cash in connection with the closing of the Loan Documents, (B) pre-opening costs and expenses in connection with the opening of any retail, cultivation or processing location and (C) other extraordinary or non-recurring charges, costs and expenses, (vii) Judgments and costs and expenses incurred in connection with such Judgments and (vii) non-cash compensation expense in respect of stock option plans or other equity compensation plans, minus (c) to the extent included in determining net
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income for such period, the sum of, without duplication, (i) any income or gains from asset dispositions or discontinued operations, (ii) any extraordinary or non-recurring gains and (iii) non-cash write-ups of assets, in the case of each of the foregoing in clauses (a) through (c), for such period and as determined in accordance with GAAP consistently applied; provided that the aggregate amount of add-backs permitted pursuant to clause (a)(vi) shall not exceed $20,000,000 for any consecutive 12-month period.
“Consolidated Companies” shall mean Parent and its Subsidiaries on a consolidated basis in accordance with GAAP.
“Consolidated Fixed Charge Coverage Ratio” shall mean, with respect to the Consolidated Companies as of each applicable date of determination: (a) Consolidated Adjusted EBITDA for the Applicable Fiscal Period, plus the aggregate amount of GAAP rent expense of the Consolidated Companies owed to third parties for the Applicable Fiscal Period, less the sum of (i) all Unfinanced Capital Expenditures made in the Applicable Fiscal Period (excluding Capital Expenditures funded from Borrowers’ internally-generated cash flow in an aggregate amount of up to $12,500,000 during the term of this Agreement), plus (ii) all cash Taxes due and payable by the Consolidated Companies in the Applicable Fiscal Period (without benefit of any refund), plus (iii) all cash distributions paid, and other distributions made, by the Consolidated Companies during the Applicable Fiscal Period, divided by (b) the sum of (i) the aggregate principal amount of the Indebtedness of the Consolidated Companies (including the principal or amortization component of any Attributable Indebtedness) that was paid or scheduled to be paid during the Applicable Fiscal Period plus (ii) the aggregate of amount of the interest payments (including the interest component of any payments in respect to Capitalized Lease Obligations) of the Consolidated Companies due and payable during the Applicable Fiscal Period, plus (iii) the aggregate amount of GAAP rent expense of the Consolidated Companies owed to third parties during the Applicable Fiscal Period, in the case of each of the foregoing in clauses (a) and (b), as determined in accordance with GAAP consistently applied.
“Contingent Liability” shall mean, for any Person, any agreement, undertaking or arrangement by which such Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Capital Stock of any other Person. The amount of any Person’s obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby.
“Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound other than the Obligations.
“Control” shall mean, as to any Person, (a) the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: (i) cast, or control the casting of, more than 50.00% of the maximum number of votes that might be cast at a general meeting of such Person; (ii) appoint or remove all, or the majority, of the directors or other equivalent officers of such Person; (iii) give directions with which the directors or other equivalent officers of such Person are obliged to comply; or (iv) to direct or cause the direction of the management or policies of a Person; and/or (b) the holding beneficially of more than 50.00% of the issued Capital Stock of such Person.
“Control Agreement” shall mean a pledge, collateral assignment, control agreement or bank consent letter, in form and substance reasonably satisfactory to Collateral Agent, executed and delivered
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by the applicable Credit Party, Collateral Agent, and the applicable securities intermediary or bank, which agreement is sufficient to give Collateral Agent “control” over each of such Credit Party’s securities accounts, deposit accounts or investment property, as the case may be.
“Copyright Security Agreements” shall mean any and all copyright security agreements entered into by the Credit Parties in favor of Collateral Agent (as required by the Agreement or any other Credit Document).
“Credit Agreement Joinder” shall mean a joinder substantially in the form of Exhibit C.
“Credit Documents” shall mean (a) this Agreement, the Security Documents, any Notes, the Charm City Intercreditor Agreement, any other subordination or intercreditor agreements in favor of any Agent with respect to this Agreement and (b) any other document or agreement executed by any Credit Party, or by any Borrower on behalf of the Credit Parties, or any of them, and delivered to any Agent or Lender in connection with any of the foregoing or the Obligations.
“Credit Parties” shall mean, collectively, Borrowers and Guarantors, and “Credit Party” shall mean any of the Credit Parties, individually.
“CSE” shall mean the Canadian Securities Exchange and its successors.
“Default” shall mean any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.
“Default Rate” shall mean a rate per annum equal to the sum of (a) (i) with respect to the Dispensary Loans, the Dispensary Loan Cash Interest Rate, or (ii) with respect to the other Loans, the Cash Interest Rate plus (b) 8.00%, plus (bc) (i) with respect to the Dispensary Loans, the Dispensary Loan PIK Interest Rate, or (ii) with respect to the other Loans, the PIK Interest Rate.
“Delayed Draw Term Loan Maturity Date” shall mean April 30, 2023 (the “Delayed Draw Term Loan Initial Maturity Date”); provided, however, that, at Borrowers’ election, the Delayed Draw Term Loan Initial Maturity Date may be extended to April 30, 2024, so long as (a) Borrowers deliver written notice to Administrative Agent of their intent to extend the Delayed Draw Term Loan Maturity Date at least 30 days prior to the Delayed Draw Term Loan Initial Maturity Date, (b) no Default or Event of Default exists and (c) Borrowers pay to Administrative Agent, for the account of Agents and the Lenders, on the Delayed Draw Term Loan Initial Maturity Date, all fees, costs and expenses due to such Persons as of the Delayed Draw Term Loan Initial Maturity Date and an extension fee equal to
$1,375,000.
“Delayed Draw Term Loan Initial Maturity Date” shall have the meaning set forth in the definition of Delayed Draw Term Loan Maturity Date.
“Delayed Draw Term Loans” shall mean the aggregate amount of $55,000,000 provided by Lenders on or after the Third Amendment Initial Funding Date as provided in Sections 2.01(c), 2.01(d) and 2.01(e).
“Delayed Draw Term Loan Make-Whole Amount” shall mean, with respect to any prepayment of the Delayed Draw Term Loans, or repayment in connection with an acceleration of such Loans, during the period commencing on the Third Amendment Initial Funding Date and ending on (and including) the Delayed Draw Term Loan Maturity Date, an amount equal to the greater of (a) the sum of all payments
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of interest on such Loans that would be due during such period after the date of such prepayment or repayment, if no prepayment or repayment of such Loans was made on or prior to the Delayed Draw Term Loan Maturity Date, and (b) 3.00% of the aggregate amount of such Loans being prepaid or repaid.
“Designated Jurisdiction” shall mean any country or territory to the extent that such country or territory is the subject of any Sanction.
“Dispensary Loans” shall mean the aggregate amount of $4,200,000 provided by Lenders to Borrowers on or about November 18, 2021, on the terms described in the Second Amendment, a portion of the proceeds of which shall bewere used by Borrowers to finance the Charm City Acquisition.
“Dispensary Loan Cash Interest Rate” shall mean a per annum rate equal to 15.00%.
“Dispensary Loan Make WholeMake-Whole Amount” shall mean, with respect to any prepayment of the Dispensary Loans, or repayment in connection with an acceleration of the Dispensarysuch Loans, prior to the Dispensary Loan Maturity Date, (a) if such prepayment or repayment occurs on or prior to the second anniversary of the closing date of the Dispensary LoansNovember 18, 2023, an amount equal to the greater of (i) the result of (A) the sum of all payments of interest on the Dispensarysuch Loans that would be due after the date of such prepayment or repayment prior to the second anniversary of such closing date, if nothrough November 18, 2023, if no prepayment or repayment of the Dispensarysuch Loans was made prior to such date minus (B) the amount of interest paid or prepaid at the Dispensary Loan Cash Interest Rate on such amount through the date of the prepayment, and (ii) 3.00% of the aggregate amount of the Dispensarysuch Loans being prepaid or repaid, and (b) if such prepayment or repayment occurs after the second anniversary of such closing dateNovember 18, 2023, 3.00% of the aggregate amount of the Dispensarysuch Loans being prepaid or repaid; provided, however, that if the Delayed Draw Term Loan Initial Maturity Date is extended as provided in the definition of Delayed Draw Term Loan Maturity Date, the amount to be paid pursuant to this clause (b) shall be the greater of (i) the sum of all payments of interest on such Loans that would be due after the date of such prepayment or repayment through the Dispensary Loan Maturity Date, if no prepayment or repayment of such Loans was made prior to such date, and (ii) 3.00% of the aggregate amount of such Loans being prepaid or repaid.
“Dispensary Loan Maturity Date” shall mean November 29, 2024. “Dispensary Loan PIK Interest Rate” shall mean the rate of 2.00% per annum.
“Disposition” shall mean, with respect to any Person, any sale, transfer, lease, contribution or other conveyance (including by way of merger or amalgamation) of, or the granting of options, warrants or other rights to, any of such Person’s or their respective Subsidiaries’ assets (including Capital Stock of Subsidiaries) to any other Person in a single transaction or series of transactions.
“Disqualified Capital Stock” shall mean any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock after the Secured Parties are paid in full), pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock or in connection with a transaction that would constitute an Event of Default under Section 10.01(j) after the Secured Parties are paid in full), in whole or in part, (c) provides for the scheduled payment of dividends in cash or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital Stock, in each case, prior to the date that is 91 days after the
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Dispensary Loan Maturity Date; provided that if such Capital Stock is issued by Parent pursuant to a plan for the benefit of employees of Parent or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by such Person in order to satisfy applicable statutory or regulatory obligations.
“Dollars” and “$” shall mean dollars in lawful currency of the United States. “Elephant Head” shall have the meaning set forth in the Preamble.
“Environmental Claims” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations (other than internal reports prepared by the Credit Parties (a) in the ordinary course of such Person’s business or
(b) as required in connection with a financing transaction or an acquisition or disposition of real estate) or proceedings relating to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (collectively, “Claims”), including (i) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the Release or threatened Release of Hazardous Materials or arising from alleged injury or threat of injury to health or safety (to the extent relating to the exposure to Hazardous Materials) or the environment.
“Environmental Law” shall mean any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect, and any binding judicial or administrative interpretation thereof, including any binding judicial or administrative order, consent decree or judgment, relating to the protection of the environment or human health or safety (to the extent relating to exposure to Hazardous Materials). For avoidance of doubt, Environmental Law does not include U.S. State Cannabis Laws, U.S. Federal Cannabis Laws, or any Applicable Law regulating the use of Cannabis products by consumers.
“Environmental Permit” shall have the meaning set forth in Section 7.14(a)(ii).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, and the regulations promulgated thereunder.
“Event of Default” shall have the meaning set forth in Section 10.01.
“Excluded Accounts” shall mean any deposit account that is used solely to fund payroll or employee benefits, so long as the applicable Credit Party does not deposit or maintain funds in any such account in excess of amounts necessary to fund current payroll liabilities, payroll taxes or other wage and employee benefit payments.
“Excluded Issuances” shall mean (a) the issuance of Capital Stock (other than Disqualified Capital Stock) by Parent to members of the management, employees or directors of any Credit Party and
(b) the issuance of Capital Stock of Parent (other than Disqualified Capital Stock) upon the exercise of any warrants or options issued by Parent on or prior to the Closing Date.
“Excluded Subsidiary” shall mean (a) 1776 Hemp, LLC, a Delaware limited liability company and wholly-owned by Vireo Health, so long as such Person has no operations or Indebtedness and the only asset held by such Subsidiary is HEMP-G-000084, the license provided to such Person pursuant to New York’s Industrial Hemp Agricultural Research Pilot Program, (b) Ohio Medical Solutions, Inc., an Ohio
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limited liability company, so long as 100.00% of the Capital Stock of such Person is sold on or before June 30, 2021, (c) 844 East Tallmadge LLC, an Ohio limited liability company, so long as 100.00% of the Capital Stock of such Person is sold on or before June 30, 2021, (d) each Person that (i) would be a Subsidiary of a Consolidated Company under the definition of Subsidiary if it were not an Excluded Subsidiary and (ii) has no assets, no Indebtedness and no operations, and (e) any other Person in which Parent does not hold any ownership interest, but that may be a Consolidated Company solely for accounting purposes (in accordance with GAAP).
“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case,
“Executive Order” shall have the meaning set forth in Section 7.28.
“Extraordinary Receipts” shall mean any cash received by or paid to or for the account of any Consolidated Company not in the ordinary course of business, including: (a) proceeds of Judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action to the extent not used to pay any corresponding cause of action or to reimburse a Consolidated Company for amounts previously expended, (b) indemnification payments received by any Consolidated Company to the extent not used or anticipated to be used to pay any corresponding liability or reimburse such Consolidated Company for the payment of any such liability, (c) any purchase price adjustment (other than a working capital adjustment) received in connection with any purchase agreements, (d) tax refunds, and (e) pension plan reversions, net of Taxes paid or payable with respect to such amounts.
“FATCA” shall mean 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 Treasury Regulations thereunder or official interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above), and any intergovernmental agreements (together with any Applicable Laws implementing such agreements) implementing the foregoing.
“Federal Funds Rate” means, for any period, a fluctuating per annum interest rate (rounded upwards, if necessary, to the nearest 1/100 of one percentage point) for each day during such period equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such
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transactions received by Administrative Agent from three federal funds brokers of recognized standing selected by Administrative Agent.
“Fees” shall mean all fees payable pursuant to, or referred to in, this Agreement. “Financial Covenant” shall have the meaning set forth in Section 10.03.
“Financial Covenant Cure Period” shall have the meaning set forth in Section 10.03.
“Financial Covenant Equity Cure” shall have the meaning set forth in Section 10.03. “Financial Covenant Event of Default” shall mean an Event of Default under Section 10.01(c)
as a result of Borrower’s failure to comply with any Financial Performance Covenant. “Financial Performance Covenants” shall mean the covenants set forth in Section 9.14.
“Foreign Lender” shall mean a Lender that is resident or organized under the laws of a jurisdiction other than that in which a Borrower is resident for tax purposes.
“Future Loan Purchase Ratio” shall mean a ratio to be negotiated between Borrowers and Lenders, in any case not less than 97.00%.
“GAAP” shall mean generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), including the FASB Accounting Standards Codification™, which are applicable to the circumstances as of the date of determination, subject to Section 1.03.
“Governmental Authority” shall mean the government of the United States, any foreign country or any multinational or supranational authority, or any state, commonwealth, protectorate or political subdivision thereof, and any entity, body or authority exercising executive, legislative, taxing, judicial, regulatory or administrative functions of or pertaining to government, including the Pension Benefit Guaranty Corporation and other administrative bodies or quasi-governmental entities established to perform the functions of any such agency or authority.
“Guarantee Obligations” shall mean, as to any Person, any Contingent Liability of such Person or other obligation of such Person guaranteeing or intended to guarantee any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof; provided that the term “Guarantee Obligations” shall not include endorsements of instruments for deposit or collection in the ordinary course of business and consistent with past practice (unless a departure from past practice coincides with an industry-wide departure from past practice or results from a new technological development or custom) or customary and
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reasonable indemnity obligations in effect on the Closing Date, entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than with respect to Indebtedness). The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith and reasonable business judgment.
“Guarantor Obligations” shall have the meaning set forth in Section 6.01(a).
“Guarantors” shall mean (a) each direct or indirect Subsidiary of Parent (other than any Borrower or any Excluded Subsidiary) and (b) any other Person that provides a guarantee for the payment and performance of the Obligations pursuant to an agreement reasonably acceptable to Administrative Agent after the Closing Date pursuant to Section 8.08.
“Hazardous Materials” shall mean (a) any petroleum or petroleum products, radioactive materials, friable asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing regulated levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “waste”, “recycled materials”, “sludge”, “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of similar import, under any applicable Environmental Law; and (c) any other chemical, waste, recycled material, material or substance, which is prohibited, limited or regulated by any Environmental Law.
“Hedging Agreement” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Hostile Acquisition” shall mean the acquisition of the capital stock or other Capital Stock of a Person through a tender offer or similar solicitation of the owners of such capital stock or other Capital Stock which has not been approved (prior to such acquisition) by resolutions of the board of directors of such Person or by similar action if such Person is not a corporation, and, if such acquisition has been so approved, as to which such approval has not been withdrawn.
“Indebtedness” shall mean, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
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| (e) | all Attributable Indebtedness; |
| (h) | all Guarantee Obligations of such Person in respect of any of the foregoing; |
provided that Indebtedness shall not include (w) prepaid or deferred revenue arising in the ordinary course of business on customary terms, (x) purchase price holdbacks arising in the ordinary course of business and on customary terms in respect of a portion of the purchase price of an asset to satisfy warranties or other unperformed obligations of the seller of such asset, (y) endorsements of checks or drafts arising in the ordinary course of business and consistent with past practice (unless a departure from past practice coincides with an industry-wide departure from past practice or results from a new technological development or custom), and (z) preferred Capital Stock to the extent not constituting Disqualified Capital Stock.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or another entity not disregarded for tax purposes) in which such Person is a general partner or a joint venture (whether partner or member), except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall be deemed to be equal to the lesser of (x) the aggregate unpaid amount of such Indebtedness and (y) the fair market value of the property encumbered thereby as determined by such Person in good faith and reasonable business judgment.
“Indemnified Liabilities” shall have the meaning set forth in Section 12.05.
“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.
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“Information Certificate” shall mean that certain Information Certificate dated as of the Closing Date and executed by Borrowers in favor of Collateral Agent and Lenders.
“Insolvency Event” shall mean, with respect to any Person, including any Lender, such Person or such Person’s direct or indirect parent company (a) makes a proposal under the BIA or becomes the subject of a bankruptcy, insolvency or examinership proceeding (including any proceeding under any Insolvency Legislation), or regulatory restrictions, (b) has had a receiver, examiner, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it or has called a meeting of its creditors, (c) admits in writing its inability, or be generally unable, to pay its debts as they become due or cease material operations of its present business, (d) commits an act of bankruptcy or becomes insolvent (such terms having the respective meanings ascribed thereto in the BIA), (e) is adjudicated insolvent or bankrupt by a court of competent jurisdiction, (f) admits the material allegations of a petition or application filed with respect to it in any bankruptcy, reorganization or insolvency proceeding, (g) takes any corporate action for the purpose of effecting any of the foregoing, (h) with respect to a Lender, such Lender is unable to perform hereunder due to the application of Applicable Law, or (i) in the good faith determination of Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment of a type described in clauses (a) or (b), provided that an Insolvency Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Governmental Authority or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Insolvency Legislation” shall mean legislation in any applicable jurisdiction relating to reorganization, arrangement, compromise or re adjustment of debt, dissolution or winding up, or any similar legislation, and specifically includes the BIA, the Companies’ Creditors Arrangement Act (Canada), the Winding Up and Restructuring Act (Canada), the U.S. Bankruptcy Code and any similar legislation under Applicable Law.
“Intercompany Indebtedness” shall have the meaning set forth in Section 12.22.
“Investment” shall mean, relative to any Person: (a) any loan, advance or extension of credit made by such Person to any other Person, including the purchase by such first Person of any bonds, notes, debentures or other debt securities of any such other Person; (b) the incurrence of Contingent Liabilities for the benefit of any other Person; (c) acquisition of any Capital Stock or other investment held by such Person in any other Person; and (d) any contribution made by such Person to any other Person. The amount of any Investment at any time shall be the original principal or capital amount thereof less all returns of principal or equity thereon made on or before such time and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such Investment.
“IP Rights” shall have the meaning set forth in Section 7.13.
“Judgment” shall mean any judgment or order for the payment of money, fine, enforcement penalty, or a settlement of any lawsuit or arbitration proceeding, or other disputed claim or enforcement action.
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“Lender” and “Lenders” shall have the meanings set forth in the Preamble.
“Lien” shall mean any mortgage, pledge, security interest, hypothecation, charge, claim, assignment for collateral purposes, lien (statutory or other) or similar encumbrance, and any easement, right-of-way, license, restriction (including zoning restrictions), defect, exception or irregularity in title or similar charge or encumbrance (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof); provided that in no event shall an operating lease entered into in the ordinary course of business and on customary terms or any precautionary UCC filings or PPSA registrations made pursuant thereto by an applicable lessor or lessee, be deemed to be a Lien.
“Liquidity” shall mean the sum, for the Credit Parties, of unrestricted cash and Cash Equivalents, in each case, which is held in a deposit account set forth on Schedule 7.25 and subject to a Control Agreement, other than those deposit accounts which are Excluded Accounts.
“Loans” shall mean, collectively, the amounts advanced by Lenders to Borrowers pursuant to Section 2.01, including the Dispensary Loans and the Delayed Draw Term Loans, plus the aggregate amount of interest at the PIK Interest Rate and the Dispensary Loan PIK Interest Rate added to such amounts pursuant to Section 2.04(b).
“Make-Whole Amount” shall mean, with respect to any prepayment of the Loans (other than the Dispensary Loans or the Delayed Draw Term Loans), or repayment in connection with an acceleration of thesuch Loans prior to the Maturity Date, (a) if such prepayment or repayment occurs on or prior to the first anniversary of the ClosingDelayed Draw Term Loan Initial Maturity Date, an amount equal to the greater of (i) the result sum of all payments of interest on such Loans that would be due during such period after the date of such prepayment or repayment, if no prepayment or repayment of such Loans was made on or prior to the Delayed Draw Term Loan Initial Maturity Date, and (ii) 3.00% of the aggregate amount of such Loans being prepaid or repaid and (b) if such prepayment or repayment occurs after the Delayed Draw Term Loan Initial Maturity Date, 3.00% of the aggregate amount of such Loans being prepaid or repaid; provided, however, that if the Delayed Draw Term Loan Initial Maturity Date is extended as provided in the definition of Delayed Draw Term Loan Maturity Date, the amount to be paid pursuant to this clause (b) shall be the greater of (Ai) the sum of all payments of interest on thesuch Loans that would be due after the date of such prepayment or repayment prior to the first anniversary of the Closingthrough the Maturity Date, if no prepayment or repayment of such Loans was made prior to such date minus (B) the amount of interest paid or prepaid at the Cash Interest Rate on such amount through the date of the prepayment, and (ii) 3.00% of the aggregate amount of the Loans being prepaid or repaid, and (b) if such prepayment or repayment occurs after the first anniversary of the Closing Date, 3.00% of the aggregate amount of thesuch Loans being prepaid or repaid.
“Maryland Real Property” shall mean the Real Property of MaryMed located at 12418 Massey Road, Massey, Maryland 21650.
“MaryMed” shall have the meaning set forth in the Preamble.
“Massachusetts Real Property” shall mean the Real Property of Vireo Massachusetts located at 487 Mashapaug Road, Holland, MA, 01521.
“Material Adverse Effect” shall mean a material adverse effect on (a) the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise), results of operations or performance of Parent and its Subsidiaries taken as a whole, (b) the validity or enforceability of this Agreement, any other Credit Document or any Warrant Agreement, (c) the ability of any Credit Party to
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perform its obligations under any Credit Document or any Warrant Agreement to which it is a party, (d) the rights or remedies of the Secured Parties or the Lenders hereunder or thereunder, or (e) the priority of any Liens granted to Collateral Agent in or to any Collateral (other than as a result of voluntary and intentional discharge of the Lien by Collateral Agent).
“Material Contracts” shall mean (a) any agreement evidencing, securing or pertaining to any Indebtedness, or any guaranty thereof, in a principal amount exceeding $500,000, (b) any real property lease where annual rent exceeds $250,000, (c) any operating lease where annual rentals exceed $250,000,
“Material Credit Party” shall mean at any point of determination any Credit Party and its direct and indirect Subsidiaries, which account for, individually or in the aggregate, more than 10.00% of the annual aggregate revenue of the Consolidated Companies as measured on a trailing 12-month basis.
“Material Regulatory License” shall mean any Regulatory License designated on Schedule 7.19 by Borrowers as material, as such Schedule may be supplemented or updated in accordance with Section 8.01(i)(viii).
“Maturity Date” shall mean March 31, 2024.
“Mayflower” shall have the meaning set forth in the Preamble. “MJ C201” shall have the meaning set forth in the Preamble. “MJ P132” shall have the meaning set forth in the Preamble.
“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business.
“Mortgage” shall mean each mortgage, deed of trust, or deed to secure debt, trust deed or other security document granted by any applicable Credit Party to Collateral Agent for the benefit of the Secured Parties in respect of any Real Property owned or leased by such Credit Party, in such form as agreed between such Credit Party and Collateral Agent.
“Net Cash Proceeds” shall mean, as applicable, (a) with respect to any Disposition by a Person, cash and cash equivalent proceeds received by or for such Person’s account, net of (i) fees, costs and expenses paid to third parties (other than Affiliates) and relating to such Disposition, (ii) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than Indebtedness assumed by the purchaser of such asset) that is required to be, and is, repaid in connection with such Disposition, (iii) net income taxes to be paid in connection with such Disposition and (iv) sale, use or other transactional taxes paid or payable by such Person as a result of such Disposition, (b) with respect to any condemnation or taking of such assets by eminent domain proceedings of a Person, cash and cash equivalent proceeds received by or for such Person’s account (whether as a result of payments made under any applicable insurance policy therefor or in connection with condemnation proceedings or otherwise), net of (i) fees, costs and expenses paid to third parties (other than Affiliates) in connection with the collection of such proceeds, awards or other payments and (ii) taxes paid or payable by such Person as a result of such casualty, condemnation or taking, and (c) with respect to any offering of Capital Stock of a Person or the
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issuance of any Indebtedness by a Person, cash and cash equivalent proceeds received by or for such Person’s account, net of (i) legal, underwriting, and other fees, costs and expenses paid to third parties (other than Affiliates) and incurred as a result thereof, (ii) transfer taxes paid by such Person or such Subsidiary in connection therewith and (iii) net income taxes to be paid in connection therewith.
“Non-Core Assets” shall mean the assets identified on Schedule 9.04.
“Note” shall mean a promissory note (or amended and restated promissory note) substantially in the form of Exhibit D.
“Notice of Control” shall have the meaning set forth in Section 8.12(b).
“Obligations” shall mean (a) with respect to each Borrower, all obligations (monetary or otherwise, whether absolute or contingent, matured or unmatured) of such Borrower arising under or in connection with any Credit Document or any Warrant Agreement, including all original issue discount, fees, costs, expenses (including fees, costs and expenses incurred during the pendency of any proceeding of the type described in Section 10.01(h), whether or not allowed or allowable in such proceeding) and premiums payable under any Credit Document, the principal of and interest (including interest accruing during the pendency of any proceeding of the type described in Section 10.01(h), whether or not allowed or allowable in such proceeding) on the Loans, all indemnification obligations and all obligations to pay or reimburse any Secured Party for paying any costs or expenses under any Credit Document, and(b) all other fees to be paid to any Agent or Arranger under the Credit Documents or otherwise, or (bc) with respect to each Credit Party other than Borrowers, all obligations (monetary or otherwise, whether absolute or contingent, matured or unmatured) of such Credit Party arising under or in connection with any Credit Document, all indemnification obligations and all obligations to pay or reimburse any Secured Party for paying any costs or expenses under any Credit Document.
“OFAC” shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.
“OID” shall have the meaning set forth in Section 12.24.
“Organization Documents” shall mean, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate of incorporation, constitution or articles of formation or organization and operating agreement (if relevant); and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and, if applicable, any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).
“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording,
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filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 12.06).
“Parent” shall have the meaning set forth in the Preamble. “Participant” shall have the meaning set forth in Section 12.06(c).
“Participant Register” shall have the meaning set forth in Section 12.06(c)(ii).
“Patent Security Agreements” shall mean any patent security agreements entered into by a Credit Party in favor of Collateral Agent (as required by the Agreement or any other Credit Document), in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Patriot Act” shall mean, collectively, the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), and the Proceeds of Crime (money laundering) and Terrorist Financing Act (Canada).
“Payment Date” shall mean the last Business Day of each calendar month.
“Permits” shall mean, with respect to any Person, any permit, approval, authorization, license, registration, certificate, concession, grant, franchise, variance or permission from, and any other Contractual Obligations with, any Governmental Authority, in each case whether or not having the force of law and applicable to or binding upon such Person or any of its property or operations or to which such Person or any of its property or operations is subject.
“Permitted Acquisition” shall mean any Acquisition with respect to which all of the following conditions shall have been satisfied:
| (a) | the Acquired Business is engaged in the Business; |
| (b) | such Acquisition shall not be a Hostile Acquisition; |
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8.01(a) or 8.01(b) after giving effect to such Acquisition on a pro forma basis, and Parent shall have delivered to Administrative Agent a Compliance Certificate evidencing such compliance;
| (f) | such Acquisition would not reasonably be expected to cause a Material Adverse |
Effect; and
| (g) | Parent shall have delivered any additional information or other materials relating |
to such Acquisition, including financial statements of the Acquired Business and the documents evidencing such Acquisition (each in form and substance reasonably satisfactory to Administrative Agent) that have been reasonably requested by Administrative Agent.
“Permitted Liens” shall have the meaning set forth in Section 9.02.
“Person” shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority.
“Phoenix Licenses” meansshall mean the Marijuana Establishment License Registration Certificate ID No. 00000093ESRF39774783, and Medical Marijuana Dispensary Registration Certificate ID NO. 000000028DCGV00174888 and all licenses, permits, permissions and other authorizations relating to the Phoenix Licenses-related cannabis operations of the Borrowers issued by the Arizona Department of Health Services or any other governmental agency.
“Phoenix Assets” meansshall mean collectively: the Phoenix Licenses; all cannabis and non-cannabis inventory, equipment, fixtures and all other personal property located at the dispensary; the management rights related to the Phoenix Licenses, and all real property leases, zoning entitlements, product or licensing agreements and all material revenue producing contracts (including all material vendor and service contracts) related to the Borrowers’ Phoenix Licenses-related cannabis operations, including retail dispensary and cultivation operations.
“PIK Interest Rate” shall mean the rate of 2.75% per annum. “Platform” shall have the meaning set forth in Section 12.23.
“PPSA” shall mean the Personal Property Security Act (British Columbia) or any other applicable Canadian federal or provincial statute pertaining to the granting, perfecting, priority or ranking of Liens on personal property, and any successor statutes, together with any regulations thereunder, in each case as in effect from time to time, and any reference to any particular section of the PPSA shall be construed to also refer to any successor section thereto.
“Prime Rate” shall mean, for any date of determination, a floating rate equal to the rate publicly quoted from time to time in The Wall Street Journal’s “Bonds, Rates & Yields” table as the “prime rate”. The Prime Rate shall be determined on the first Business Day of each month for such month.
“Promotional Rights” shall have the meaning set forth in Section 12.16.
“Qualified Capital Stock” shall mean any Capital Stock that is not Disqualified Capital Stock. “Real Property” shall mean, with respect to any Person, all right, title and interest of such Person
(including any leasehold estate) in and to a parcel of real property owned, leased or operated by such
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Person together with, in each case, all improvements and appurtenant fixtures, equipment, personal property, easements and other property and rights incidental to the ownership, lease or operation thereof.
“Recipient” shall mean (a) Administrative Agent and (b) any Lender.
“[REDACTED]” shall mean [REDACTED] required by [REDACTED] in order for [REDACTED] in effect in [REDACTED], to [REDACTED].
“Red Barn” shall mean Red Barn Growers, a New Mexico non-profit corporation. “Register” shall have the meaning set forth in Section 12.06(b)(iii).
“Regulation D” shall mean Regulation D of the Board as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
“Regulation U” shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Regulation X” shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Regulatory Licenses” shall mean (a) each Permit listed on Schedule 7.19 and (b) each Permit required to be held by any Consolidated Company, or that any Consolidated Company must have rights to use, to conduct its Business in compliance with Applicable Laws.
“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the directors, officers, employees, agents, trustees, advisors of such Person and any Person that possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.
“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, depositing, disposing, emanating or migrating of Hazardous Materials in the environment.
“Replacement Lender” shall mean one or more substitute Lenders reasonably acceptable to Administrative Agent.
“Reporting Jurisdictions” shall mean (a) all of the jurisdictions in Canada in which Parent is a “reporting issuer”, including as of the date hereof, the Provinces of British Columbia, Alberta, and Ontario and (b) if Parent’s Capital Stock is listed and posting for trading on the New York Stock Exchange or Nasdaq, the applicable reporting jurisdictions in the United States.
“Required Lenders” shall mean, at any time when there is more than one Lender, at least two Lenders having Loans and unused Commitments representing greater than 50.00% of the sum of the aggregate Loans and unused Commitments at such time, or at any time when there is only one Lender, such Lender.
“Rescindable Amount” shall have the meaning set forth in Section 4.03(d).
“Restricted Cannabis Activities” shall mean, in connection with the cultivation, distribution, sale and possession of cannabis and related products: (a) any activity that is not permitted under applicable
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U.S. State Cannabis Laws; (b) notwithstanding compliance with applicable U.S. State Cannabis Laws, any activity which a Governmental Authority asserts is unlawful under U.S. Federal Cannabis Law and the applicable Person is enjoined from conducting such activity; (c) distribution and sale of cannabis and related products to minors that is not approved under a U.S. State Cannabis Law; (d) payments to criminal enterprises, gangs, cartels and Persons subject to Sanctions; (e) non-compliance with anti-terrorism laws and other Applicable Law relating to money-laundering; (f) diversion of cannabis and related products from states where it is legal under U.S. State Cannabis Law to other states; (g) use of activities permitted under U.S. State Cannabis Law as a cover or pretext for the trafficking of other controlled substances or illegal drugs or other illegal activity; (h) the commission, or making threats, of violence and the use of firearms in violation of Applicable Law; (i) drugged driving and other adverse public health consequences associated with the use of cannabis and related products; (j) growing cannabis and related products on public lands; and (k) directly or indirectly, aiding, abetting or otherwise participating in a common enterprise with any Person or Persons in such activities.
“Restricted Debt” shall mean (a) the Indebtedness of any Credit Party existing on the Closing Date and listed on Schedule 7.24, and (b) any other Indebtedness the repayment of which is expressly subordinated and made junior to the payment in full of the Obligations and contains terms and conditions (including terms relating to interest, fees, repayment and subordination) satisfactory to Agents.
“Restricted Payment” shall mean, with respect to any Person, (a) the declaration or payment of any dividend on, or the making of any payment or distribution on account of, or setting apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any class of Capital Stock of such Person or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or the making of any other distribution in respect thereof, either directly or indirectly, whether in cash or property, (b) any payment of a management fee (or other fee of a similar nature) or any reimbursable costs and expenses related thereto by such Person to any holder of its Capital Stock or any Affiliate thereof and (c) the payment or prepayment of principal of, or premium or interest on, any Indebtedness subordinate to the Obligations.
“Resurgent” shall have the meaning set forth in the Preamble.
“Retail Management” shall have the meaning set forth in the Preamble.
“S&P” shall mean Standard & Poor’s Ratings Services or any successor by merger or consolidation to its business.
“Sales Tracking Software” shall mean any “seed-to-sale” tracking, point-of-sale, or other inventory or sales reporting software used by the Credit Parties.
“Sanction(s)” shall mean all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, (b) the Canadian government, or (c) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.
“SEC” shall mean the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Second Amendment” shall mean that certain Second Amendment to Credit Agreement dated as of November 18, 2021, among Borrowers, the Lenders party thereto and Agents.
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“Secured Parties” shall mean, collectively, (a) the Lenders, (b) Agents, (c) the beneficiaries of each indemnification obligation undertaken by any Credit Party under the Credit Documents, (d) any successors, endorsees, transferees and assigns of each of the foregoing to the extent any such transfer or
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assign is permitted by the terms of this Agreement and (e) any other holder of any Obligation or Secured Obligation (as defined in any applicable Security Document).
“Security Agreements” shall mean, collectively, the U.S. Security Agreement and the Canadian Security Agreement.
“Security Documents” shall mean, collectively, as applicable, the Security Agreements, security under 427 of the Bank Act (Canada) executed by the Canadian Credit Parties, the Collateral Access Agreements, the Control Agreements, the Patent Security Agreements, the Trademark Security Agreements, the Copyright Security Agreements, each Mortgage, and each other instrument or document executed and delivered pursuant to this Agreement or any of the Security Documents to guarantee or secure any of the Obligations.
“Solvency Certificate” shall mean a solvency certificate, duly executed and delivered by the chief financial officer of Parent to Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent.
“Solvent” shall mean:
“Subsequent Funding Dates” shall mean the date of funding of each Loan, if any, that occurs after the Closing Date.
“Subsidiary” of any Person shall mean and include (a) any corporation more than 30.00% of whose Voting Stock having by the terms thereof power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any partnership, limited liability company, association, joint venture or other entity in which such Person directly or indirectly through one or more Subsidiaries has more than (i) a 30.00% equity interest measured by either vote or value at
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the time or (ii) a 30.00% general partnership interest at the time. Unless otherwise expressly provided, all references herein to a Subsidiary shall mean a Subsidiary of Parent and shall exclude all Subsidiaries that are Excluded Subsidiaries.
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” shall mean the date on which the Loans and the other Obligations (other than Unasserted Contingent Obligations) shall have been paid in full in cash in accordance with the terms of this Agreement.
“Third Amendment” shall mean that certain Third Amendment to Credit Agreement dated as of the Third Amendment Effective Date, among Borrowers, the Lenders and Agents.
“Third Amendment Effective Date” shall mean January 26, 2022.
“Third Amendment Initial Funding Date” shall mean the date on which all of the conditions to closing and funding set forth in Section 5.01 have been satisfied, or waived in accordance with Section 12.01, which date is expected to be on or about March 1, 2022.
“Total Credit Exposure” shall mean, as of any date of determination (a) with respect to each Lender, (i) prior to the termination of the Commitments, the sum of such Lender’s Commitment plus the outstanding principal amount of such Lender’s Loans or (ii) upon the termination of the Commitments, the outstanding principal amount of such Lender’s Loans and (b) with respect to all Lenders, (i) prior to the termination of the Commitments, the sum of all of the Lenders’ Commitments plus the aggregate outstanding principal amount of all Loans and (ii) upon the termination of the Commitments, the aggregate outstanding principal amount of all Loans.
“Trademark Security Agreements” shall mean the Trademark Security Agreements made in favor of Collateral Agent and the Lenders by each applicable Credit Party and any trademark security agreement entered into after the Closing Date (as required by the Agreement or any other Credit Document), in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Transactions” shall mean the funding of the Loans pursuant hereto and the use of the proceeds thereof and all other transactions contemplated by or described in the Credit Documents.
“Treasury Regulations” shall mean the United States Treasury regulations promulgated under the Code.
“U.S.” and “United States” shall mean the United States of America.
“U.S. Bankruptcy Code” shall mean the United States Bankruptcy Code (11 U.S.C. Section 101
et seq.).
“U.S. Credit Party” shall mean any Credit Party organized and existing under the laws of the United States or any state or subdivision thereof.
“U.S. Federal Cannabis Law” shall mean any federal laws of the United States treating cannabis and related products as illegal or as controlled substances.
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“U.S. Person” shall mean any person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Security Agreement” shall mean that certain Security Agreement dated as of the Closing Date, by and among each Credit Party party thereto and Collateral Agent for the benefit of the Secured Parties.
“U.S. State Cannabis Law” shall mean any law enacted by any state of the United States which legalizes cannabis and related products in some form and which implements strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of cannabis and related products.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 4.04(f)(ii)(B)(3). “UCC” shall mean the Uniform Commercial Code as from time to time in effect in the state of
Illinois and any other applicable jurisdiction.
“Unasserted Contingent Obligations” shall mean, at any time, Obligations for taxes, costs, indemnifications, reimbursements, damages and other liabilities in respect of which no assertion of liability (whether oral or written) and no claim or demand for payment or indemnification (whether oral or written) has been made or threatened.
“Unfinanced Capital Expenditures” shall mean, as to any Borrower, a Capital Expenditure not funded with (a) the proceeds of Indebtedness or (b) the proceeds of the issuance of Capital Stock.
“Verdant Grove” shall have the meaning set forth in the Preamble. “Vireo Arizona” shall have the meaning set forth in the Preamble.
“Vireo Charm City” shall mean Vireo of Charm City, LLC, a Maryland limited liability company.
“Vireo de Puerto Rico” shall have the meaning set forth in the Preamble.
“Vireo Health” shall have the meaning set forth in the Preamble.
“Vireo Massachusetts” shall have the meaning set forth in the preamble.
“Vireo Minnesota” shall have the meaning set forth in the Preamble.
“Vireo Nevada” shall have the meaning set forth in the Preamble.
“Vireo NM” shall have the meaning set forth in the Preamble.
“Vireo NY” shall have the meaning set forth in the Preamble.
“Vireo PR” shall have the meaning set forth in the Preamble.
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“Voting Stock” shall mean, with respect to any Person, shares of such Person’s Capital Stock having the right to vote for the election of directors (or Persons acting in a comparable capacity) of such Person under ordinary circumstances.
“Warrant Agreements” shall mean, collectively, those certain Warrant Agreements executed by the Borrowers party thereto for the issuance of Warrant Shares to, or as directed by, Administrative Agent, each Lender, each Participant and any designee thereof, in form and substance satisfactory to Administrative Agent and Lenders.
“Warrant Shares” shall have the meaning set forth in the Warrant Agreements. “Withholding Agent” shall mean any Credit Party and Administrative Agent. “Xaas” shall have the meaning set forth in the Preamble.
SECTION 1.02 Other Interpretive Provisions. With reference to this Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:
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such provision shall be understood to mean that such Agent or such Lender may take or refrain to take such action in its sole and absolute discretion.
SECTION 1.03 Accounting Terms and Principles. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, applied in a consistent manner. No change in the accounting principles used in the preparation of any financial statement hereafter adopted by Parent or any of its Subsidiaries shall be given effect for purposes of measuring compliance with any provision of Article IX, including Section 9.14, or otherwise in this Agreement unless Parent, Administrative Agent and Required Lenders agree in writing to modify such provisions to reflect such changes in GAAP and, unless such provisions are modified, all financial statements, Compliance Certificates and similar documents provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to in Article IX shall be made, without giving effect to any election under Accounting Standards Codification 825-10 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Credit Party or any Subsidiary of any Credit Party at “fair value”. A breach of a Financial Performance Covenant shall be deemed to have occurred as of any date of determination by Administrative Agent or Required Lenders as of the last day of any specified measurement period, regardless of when the financial statements reflecting such breach are delivered to any Agent. Anything in this Agreement to the contrary notwithstanding, any obligation of a Person under a lease (whether existing as of the Closing Date or entered into after the Closing Date) that is not (or would not be) required to be classified and accounted for as a capital lease on the balance sheet of such Person under GAAP as in effect on the Closing Date shall not be treated as a Capitalized Lease Obligation solely as a result of (x) the adoption of any changes in, or (y) changes in the application of, GAAP after the Closing Date.
SECTION 1.04 Rounding. Any financial ratios required to be maintained or complied with by the Credit Parties pursuant to this Agreement (or required to be satisfied in order for a specific action to
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be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
SECTION 1.05 References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including this Agreement and each of the other Credit Documents) and other Contractual Obligations shall be deemed to include all subsequent amendments, restatements, amendment and restatements, extensions, supplements, renewals and other modifications thereto, but only to the extent that such amendments, restatements, amendment and restatements, extensions, supplements, renewals and other modifications are permitted by the terms hereof and thereof; and (b) references to any Applicable Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, implementing or interpreting such Applicable Law and any successor or replacement statutes and regulations.
SECTION 1.06 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to the time in Chicago, Illinois.
SECTION 1.07 Timing of Payment of Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment or performance shall extend to the immediately succeeding Business Day. All payments required hereunder shall be paid in immediately available funds unless otherwise expressly provided herein.
SECTION 1.08 Corporate Terminology. Any reference to officers, shareholders, stock, shares, directors, boards of directors, corporate authority, articles of incorporation, bylaws or any other such references to matters relating to a corporation made herein or in any other Credit Document with respect to a Person that is not a corporation shall mean and be references to the comparable terms used with respect to such Person.
ARTICLE II
Amount and Terms of Loans
SECTION 2.01 Loans. Subject to and upon the terms and conditions herein set forth, each Lender having a Commitment shall, severally (and not jointly), make one or more Loans to Borrowers, which Loans (x) when aggregated with each other Loan made hereunder (but excluding, for the avoidance of doubt, all PIK Interest that is paid in kind and deemed to be a part of the principal amount of the Loans), shall be in an amount not to exceed the Aggregate Commitment and (y) for each Lender, when aggregated with each other Loan made by such Lender hereunder (but excluding, for the avoidance of doubt, all PIK Interest that is paid in kind to such Lender and deemed to be a part of the principal amount of the Loans), shall be in an amount not to exceed, for each Lender, such Lender’s Commitment, as follows:
| (a) | on the Closing Date, Loans in the aggregate amount of $26,000,000; |
| (b) | on November 18, 2021, the Dispensary Loans; |
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discretion; provided that: (i) on the Third Amendment Initial Funding Date, Borrowers may draw an additional amount equal to the fees and expenses paid or to be paid by Borrowers to Agents, Arranger and the Lenders on or prior to such date; (ii) the aggregate amount to be advanced on one other Subsequent Funding Date pursuant to this Section 2.01(c) may, at the option of Borrowers, be increased to $5,000,000; (iii) the draw amounts on Schedule 2.01(c) shall be reduced by an aggregate amount equal to the sum of each amount in excess of $3,000,000 advanced pursuant to each of clauses (i) and (ii) above, such reduction to be applied in inverse chronological order until such aggregate amount is exhausted; and (iv) the aggregate amount to be advanced on one Subsequent Funding Date (which may be the same as the Subsequent Funding Date referred to in clause (ii) above) pursuant to this Section 2.01(c) may, at the option of Borrowers, be increased by an additional $3,000,000;
(c) Each Loan may be repaid or prepaid in accordance with the provisions hereof, but once repaid or prepaid may not be reborrowed.
SECTION 2.02 Disbursement of Funds; Original Issue Discount.
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made on such Subsequent Funding Date in the manner provided below no later than 2:00 p.m. on such Subsequent Funding Date.
SECTION 2.03 Payment of Loans; Evidence of Debt.
(a) Borrowers agree to pay to Administrative Agent, for the benefit of the Lenders,
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resulting from each Loan made by such lending office of such Lender from time to time, including the amounts of principal and interest payable and paid to such lending office of such Lender from time to time under this Agreement.
(iii) the amount of any sum received by Administrative Agent from Borrowers and each Lender’s share thereof. Notwithstanding the foregoing, in no event may any Lender request a Note more than four times in any calendar year.
SECTION 2.04 Interest.
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Applicable Law, at the Default Rate, which Default Rate shall accrue from the date of such Event of Default (regardless of the date of notice of the imposition of the Default Rate) until waived in writing and shall be payable on demand and paid (i) with respect to interest accruing at the PIK Interest Rate or the Dispensary PIK Interest Rate, in kind, and (ii) otherwise, in cash.
| (e) | All computations of interest hereunder shall be made in accordance with Section |
4.05.
SECTION 2.05Multiple Borrowers.
SECTION 2.06 Borrower Representative. Each Borrower, by its execution of this Agreement, irrevocably appoints the Borrower Representative to act on its behalf as its agent in relation to the Credit Documents and irrevocably authorizes:
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executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice, instruction or other communication given or made by Borrower Representative or given to Borrower Representative under any Credit Document on behalf of another Borrower (whether or not known to any other Borrower and whether occurring before or after such other Borrower became a Borrower under any Credit Document) shall be binding for all purposes on such Borrower as if such Borrower had expressly agreed, executed, made, given or concurred with it or received the relevant notice, demand or other communication. In the event of any conflict between any notices or other communications of Borrower Representative and any other Borrower, those of Borrower Representative shall prevail.
SECTION 2.07 Fees.
ARTICLE III
Mandatory Reduction of Commitments
SECTION 3.01 Mandatory Reduction of Commitments. The Commitments shall be permanently reduced by the amount of each Loan made on the Closing Date and on each Subsequent Funding Date thereafter.
ARTICLE IV
Payments
SECTION 4.01 Voluntary Prepayments.
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SECTION 4.02 Mandatory Prepayments.
| (a) | Types of Mandatory Prepayments. |
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| (iv) | fourth, ratably to pay interest due in respect of the outstanding Loans |
until paid in full,
| (vi) | sixth, to pay any other Obligations, and |
Applicable Law.
SECTION 4.03 Payment of Obligations; Method and Place of Payment.
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with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation.
SECTION 4.04 Taxes.
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Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Administrative Agent.
| (f) | Status of Lenders. |
| (ii) | Without limiting the generality of the foregoing, |
| (2) | executed copies of IRS Form W-8ECI; |
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Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Parent and Administrative Agent in writing of its legal inability to do so.
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rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 4.04(g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
SECTION 4.05 Computations of Interest and Fees. All interest and fees shall be computed on the basis of the actual number of days occurring during the period for which such interest or fee is payable over a year comprised of 365 days. For the purposes of the Interest Act (Canada) or any successor or similar legislation, whenever any interest or fee under this Agreement is calculated using a rate based on a period other than a calendar year or similar expression, such interest rate, fee or other amount shall be determined pursuant to such calculation, when expressed as an annual rate, is equivalent to such rate as determined multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends and divided by the number of days comprising such other period. Each determination by Administrative Agent of an interest rate and Fees hereunder shall be presumptive evidence of the correctness of such rates and Fees, absent manifest error. Payments due on a day that is not a Business Day shall (except as otherwise required by Administrative Agent) be made on the immediately preceding Business Day and such reduction of time shall not be included in computing interest and fees in connection with that payment.
SECTION 4.06 Maximum Interest.
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provided that, notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender receives an amount in excess of the maximum permitted by the Criminal Code (Canada) or other Applicable Law, then Borrowers shall be entitled, by notice in writing to such Lender, to obtain reimbursement from such Lender in an amount equal to the excess, and pending reimbursement, the amount of the excess shall be deemed to be an amount payable by such Lender to Borrowers and shall be promptly paid to Borrowers.
Any amount or rate of interest referred to in this Agreement shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that any Loan remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro-rated over that period of time and otherwise be pro-rated over the period from the earlier of the date of advance and the Closing Date to the relevant Maturity Date, the Dispensary Loan Maturity Date or the Delayed Draw Term Loan Maturity Date, as applicable, and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by Administrative Agent shall be conclusive for the purposes of that determination.
ARTICLE V
Conditions Precedent to Loans
SECTION 5.01 Closing DateInitial Delayed Draw Term Loans. The obligation of each Lender to make the Delayed Draw Term Loans on the ClosingThird Amendment Initial Funding Date as provided for hereunder is subject to the fulfillment, to the satisfaction of Agents and each Lender, of each of the following conditions precedent on or before the ClosingThird Amendment Initial Funding Date, unless any such condition is waived in accordance with Section 12.01:
| (ii) | an amendment to each of the NotesMortgages; |
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| (iv) | the Warrant Agreements; |
| (v) | the Information Certificate; |
(iv)(vi) thea ratification and confirmation of any other Security Documents; and if reasonably required by Administrative Agent.
(vii) each other Credit Document.
| (c) | (b) CollateralLien Searches; UCC and PPSA Filings. |
| (d) | (c) Legal Opinions. |
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which certificates shall provide that each Secured Party may conclusively rely thereon until it shall have received a further certificate of an Authorized Officer of the applicable Person canceling or amending the prior certificate of such Person as provided in Section 8.01(l).
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| (k) | (n) No Default, Representations and Warranties and No Injunctions. |
| (i) | No Default or Event of Default shall have occurred and be continuing. |
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valid and enforceable first priority Lien in favor of Collateral Agent for the benefit of itself and the other Secured Parties;
SECTION 5.02 Loans Made after Closing Date. The obligation of each Lender to make the Loans on each Subsequent Funding Date (other than the Third Amendment Initial Funding Date) as provided for hereunder is subject to the fulfillment, to the satisfaction of each Agent and each Lender, of each of the following conditions precedent on or before such Subsequent Funding Date, unless any such condition is waived in accordance with Section 12.01:
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| (f) | No Default, Representations and Warranties and No Injunctions. |
| (i) | No Default or Event of Default shall have occurred and be continuing; |
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representations and warranties had been made on and as of the Subsequent Funding Date (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof));
ARTICLE VI
Guarantee
SECTION 6.01 Guarantee.
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amounts are allowed or allowable in any Insolvency Event. Each Guarantor’s guarantee hereunder constitutes a guarantee of payment and not of collection.
SECTION 6.02 Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 6.03. The provisions of this Section
6.02 shall in no respect limit the obligations and liabilities of any Guarantor to the Secured Parties, and each Guarantor shall remain liable to the Secured Parties for the full amount guaranteed by such Guarantor hereunder.
SECTION 6.03 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by any Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of any Secured Party against any Borrower or any other Credit Party or any collateral security or guarantee or right of offset held by any Secured Party for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from any Borrower or any other Credit Party in respect of payments made by such Guarantor under this guarantee, in each case, until after the Termination Date occurs. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time on or prior to the Termination Date, such amount shall be held by such Guarantor for the benefit of Secured Parties,
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segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to Collateral Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to Collateral Agent, if required), to be applied against the Obligations, whether matured or unmatured, as Collateral Agent may determine in accordance with Section 4.02(d).
SECTION 6.04 Modification of the Guarantor Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Guarantor Obligations made by any Secured Party may be rescinded by such Secured Party and any of the Guarantor Obligations continued, and the Guarantor Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered, subordinated or released by any Secured Party, and this Agreement and the other Credit Documents, and any other documents executed and delivered in connection therewith may be amended, amended and restated, supplemented or otherwise modified or terminated, in whole or in part, as Agents (or Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by any Secured Party for the payment of the Guarantor Obligations may be sold, exchanged, waived, surrendered, subordinated or released. No Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Guarantor Obligations or for this Agreement or any other Credit Document or any property subject thereto.
SECTION 6.05 Guarantee Absolute and Unconditional. Each Guarantor waives to the fullest extent permitted by Applicable Law any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Secured Party upon this Agreement or acceptance of the guarantee contained in this Article VI. The Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Article VI and all dealings between any Borrower or any other Credit Party, on the one hand, and the Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Article VI. Each Guarantor, to the fullest extent permitted by Applicable Law, waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Borrower or any other Credit Party with respect to the Obligations. Each Guarantor waives, to the fullest extent permitted by law, any right such Guarantor may now have or hereafter acquire to revoke, rescind, terminate or limit (except as expressly provided herein) the guarantee set forth in this Article VI or any of its obligations hereunder. Each Guarantor understands and agrees, to the fullest extent permitted by Applicable Law, that the guarantee set forth in this Article VI shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity, enforceability or avoidability of this Agreement or any other Credit Document, any of the Guarantor Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Borrower or any other Person against any Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Borrower or any Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Borrower with respect to any Obligations, or of such Guarantor under this guarantee, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against any Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Guarantor Obligations or any right of offset with respect thereto, and any failure by any Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from any Borrower, any
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other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Secured Party against any Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.
SECTION 6.06 Reinstatement. The guarantee set forth in this Article VI shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Guarantor Obligations is rescinded or must otherwise be restored or returned by any Secured Party, including upon the insolvency, bankruptcy, examinership, dissolution, liquidation or reorganization of any Borrower or any other Credit Party, or upon or as a result of the appointment of a receiver, examiner, intervenor or conservator of, or trustee or similar officer for, any Borrower or any other Credit Party or any substantial part of its property, or otherwise, all as though such payments had not been made.
SECTION 6.07 Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to Administrative Agent, for the benefit of the Lenders, without set-off or counterclaim in Dollars in accordance with Section 4.03(c).
SECTION 6.08 Taxes. Each payment of the Guarantor Obligations will be made by each Guarantor subject to the same provisions as are set forth in Section 4.04.
ARTICLE VII
Representations, Warranties and Agreements
In order to induce the Lenders to enter into this Agreement and continue the Loans as provided for herein, the Credit Parties make the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans:
SECTION 7.01 Status. Each Credit Party (a) is a duly organized or formed and validly existing limited liability company or other registered entity in good standing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is engaged and (b) has duly qualified and is authorized to do business and is in good standing in all jurisdictions where it does business or owns assets, except, in the case of this clause (b), where the failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect.
SECTION 7.02 Power and Authority. Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed and delivered the Credit Documents to which it is a party and such Credit Documents constitute the legal, valid and binding obligation of such Credit Party enforceable against each Credit Party that is a party thereto in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium, examinership, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
SECTION 7.03 No Violation. None of (a) the execution, delivery and performance by any Credit Party of the Credit Documents to which it is a party and compliance with the terms and provisions
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thereof, (b) the consummation of the Transactions, or (c) the consummation of the other transactions contemplated hereby or thereby on the relevant dates therefor will (i) contravene any applicable provision of any material Applicable Law of any Governmental Authority or the policies of the CSE, (ii) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of any Credit Party (other than Liens created under the Credit Documents) pursuant to, (A) the terms of any material indenture, loan agreement, lease agreement, mortgage or deed of trust, or (B) any other Material Contract of any Consolidated Company, in the case of any of clauses (A) and (B) to which any Credit Party is a party or by which it or any of its property or assets is bound or violate any provision of the Organization Documents or Permit of any Credit Party, except with respect to any conflict, breach or contravention or default (but not creation of Liens) referred to in clause (ii), to the extent that such conflict, breach, contravention or default could not reasonably be expected to have a Material Adverse Effect.
SECTION 7.04 Litigation, Labor Controversies, Etc. There is no pending or, to the knowledge of any Credit Party, threatened, litigation, action, proceeding or labor controversy (including strikes, lockouts or slowdowns against the Credit Parties or any of their respective Subsidiaries pending or, to the knowledge of any Credit Party, threatened) (a) which could reasonably be expected to have a Material Adverse Effect, (b) which purports to affect the legality, validity or enforceability of any Credit Document or the Transactions or (c) relating to any Indebtedness or purported Indebtedness of any Credit Party or any Subsidiary. There is no outstanding judgment rendered by any court or tribunal against any Credit Party or any Subsidiary. Except as set forth on Schedule 7.04, there are no actions or proceedings pending, or to the knowledge of any Obligor threatened, against any Obligor before any court or administrative agency in which amounts in dispute exceed $25,000 as of the Closing Date, the Third Amendment Effective Date or the Third Amendment Initial Funding Date, and no Credit Party has any knowledge or belief or any pending, threatened or imminent governmental investigations or claims, complaints, actions or prosecutions involving any Credit Party as of the Closing Date, the Third Amendment Effective Date or the Third Amendment Initial Funding Date.
SECTION 7.05 Use of Proceeds; Regulations U and X. The proceeds of the Loans are intended to be and shall be used solely for the purposes set forth in and permitted by Section 8.09. No Credit Party is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of the Loans will be used to purchase or carry margin stock or otherwise for a purpose which violates, or would be inconsistent with Regulation U or Regulation X.
SECTION 7.06 Approvals, Consents, Etc. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, the CSE or other Person, and no consent or approval under any contract or instrument (other than (a) those that have been duly obtained or made and which are in full force and effect, or if not obtained or made, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (b) the filing of UCC financing statements, PPSA registrations and other equivalent filings for foreign jurisdictions, and (c) the filings or other actions necessary to perfect Liens under the Credit Documents) is required for the consummation of the Transactions or the due execution, delivery or performance by any Credit Party of any Credit Document to which it is a party, or for the due execution, delivery or performance of the Credit Documents, in each case by any of the Credit Parties party thereto. There does not exist any judgment, order, injunction or other restraint issued or filed with respect to the transactions contemplated by the Credit Documents, the consummation of the Transactions, the making of the Loans or the performance by the Credit Parties or any of their respective Subsidiaries of their Obligations under the Credit Documents.
SECTION 7.07 Investment Company Act. No Credit Party is, or will be after giving effect to the Transactions and the transactions contemplated under the Credit Documents, an “investment company”
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or a company “controlled” by a Person required to be registered as an “investment company”, within the meaning of the Investment Company Act of 1940.
SECTION 7.08 Accuracy of Information.
SECTION 7.09 Financial Condition; Financial Statements. The tax returns and financial statements delivered to Administrative Agent present fairly in all material respects the financial position and results of operations of Parent and its Subsidiaries at the respective dates of such information and for the respective periods covered thereby, subject in the case of unaudited financial information, to changes resulting from normal year-end audit adjustments and to the absence of footnotes. The tax returns, financial statements and all of the balance sheets, all statements of income and of cash flow and all other financial information furnished pursuant to Section 8.01 have been and will for all periods following the Closing Date be prepared in accordance with GAAP consistently applied. All of the financial information to be furnished pursuant to Section 8.01 will present fairly in all material respects the financial position and results of operations of Parent and its Subsidiaries at the respective dates of such information and for the respective periods covered thereby, subject in the case of unaudited financial information, to changes resulting from normal year-end audit adjustments and to the absence of footnotes. None of the Credit Parties or any of their respective Subsidiaries has any Indebtedness or other material obligations or liabilities, direct or contingent that, either individually or in the aggregate, has had or would reasonably be expected to have, a Material Adverse Effect.
SECTION 7.10 Tax Returns and Payments. Each Credit Party and its Subsidiaries has timely filed or caused to be timely filed all material Tax returns and reports required to have been filed (and all such Tax returns are true, complete and correct in all material respects) and has paid or caused to be paid all material Taxes required to have been paid by it that are due and payable, except Taxes (or any requirement to file Tax returns with respect thereto) that are being contested in good faith by appropriate proceedings and for which the Credit Party or such Subsidiary, as applicable, has set aside on its books
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adequate reserves in accordance with GAAP. There are no proposed or pending tax assessments, deficiencies, audits or other proceedings with respect to any material amount of Taxes. None of the Credit Parties nor any of their Subsidiaries has ever “participated” in a “reportable transaction” within the meaning of Section 1.6011-4 of the Treasury Regulations. None of the Credit Parties nor any of their Subsidiaries is a party to any tax sharing or similar agreement. No Lien has been filed and no material claim is being asserted, with respect to any such Tax, fee, or other charge.
SECTION 7.11 Benefit Plans.
(b) No Credit Party sponsors, contributes to or administers any Canadian Pension Plans. Except as would not reasonably be expected to have a Material Adverse Effect: (i) all obligations of each Credit Party (including fiduciary, contribution, funding, investment and administration obligations) required to be performed in connection with any employee benefit plans and any funding agreements therefor under the terms thereof and applicable statutory and regulatory requirements, have been performed or satisfied in a timely and proper fashion and in compliance with Applicable Law and the terms of the applicable employee benefit plan; (ii) there have been no improper withdrawals or applications of the assets of any Credit Party’s employee benefit plans; (iii) there are no outstanding disputes concerning the assets or liabilities of any Credit Party’s employee benefit plans; and (iv) no Credit Party has a contingent liability with respect to any post-employment or post-retirement benefits under an employee benefit plans and all post-employment and post-retirement liabilities, if any, under any employee benefit plans have been properly identified in the financial statements of the Credit Parties.
SECTION 7.12 Subsidiaries. None of the Credit Parties has any Subsidiaries other than the Subsidiaries listed on Schedule 7.12. Schedule 7.12 sets forth (a) a list of the Capital Stock issued by each Credit Party and each Subsidiary thereof, and the legal name and jurisdiction of formation of each Subsidiary if such Subsidiary is not a party to the Security Agreement, (b) the number of shares of each class of Capital Stock of such Credit Party or such Subsidiary that is outstanding, (c) for Parent, all owners of at least five percent (5%) of the Parent’s Capital Stock, calculated on an as-converted, issued-and-outstanding basis, (d) for each other Credit Party and each Subsidiary, the record and beneficial owners of such Capital Stock, (e) the percentage of outstanding shares or units of each class owned (directly or indirectly) by such owners and (f) whether such Capital Stock is certificated or non-certificated. No Consolidated Company owns any Capital Stock in Arizona Natural or Red Barn.
SECTION 7.13 Intellectual Property; Licenses, Etc. Each Credit Party and each of its Subsidiaries owns, or possesses the right to use, all of the trademarks, service marks, trade names, Internet domain names, copyrights and copyrightable works, patents, inventions, trade secrets, know-how, proprietary computer software, franchises, intellectual property licenses and other intellectual property rights, including all registrations and applications to register any of the foregoing and all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof (collectively, the “IP Rights”) that are necessary for the operation of their respective businesses. Except as specifically set forth on Schedule 7.04, the conduct and operations of the businesses of each Credit Party and each of its Subsidiaries do not infringe, misappropriate, dilute, or otherwise violate in any material respect any intellectual property owned by
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any other Person, no other Person has challenged in writing or questioned any right, title or interest of any Credit Party or any of its Subsidiaries in any IP Rights of such Credit Party or Subsidiary, and no Credit Party or Subsidiary thereof has received a written challenge from any other Person contesting the use of any IP Rights owned by such Credit Party or Subsidiary or the validity or enforceability of such IP Rights. Except as specifically set forth on Schedule 7.04, no claim or litigation regarding any of the foregoing is pending or, to the knowledge of such Credit Party threatened. Schedule 7.13 is a complete and accurate list of (i) all IP Rights registered or pending registration with the United States Copyright Office or the United States Patent and Trademark Office and owned by each Credit Party and each of its Subsidiaries as of the Closing Date and the Third Amendment Initial Funding Date and (ii) all material license agreements or similar arrangements granting IP Rights of another Person to any Credit Party or any of its Subsidiaries, other than software license agreement for “off-the-shelf” or “click-through” agreements. As of the Closing Date and the Third Amendment Initial Funding Date, none of the IP Rights owned by any Credit Party or any of its Subsidiaries is subject to any licensing agreement, other than (i) non-exclusive licenses granted to customers in the ordinary business, or (ii) except as set forth on Schedule 7.13.
SECTION 7.14 Environmental Warranties.
| (a) | Except as set forth in Schedule 7.14: |
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SECTION 7.15 Ownership of Properties. Set forth on Schedule 7.15 is a list of all of the Real Property owned or leased by any of the Credit Parties as of the Closing Date and the Third Amendment Initial Funding Date, indicating in each case whether the respective property is owned or leased, the identity of the owner or lessor and the location of the respective property. Each Credit Party owns (a) in the case of owned Real Property, good and valid fee simple title to such Real Property, (b) in the case of owned personal property, good and valid title to such personal property, and (c) in the case of leased Real Property or material leased personal property, valid and enforceable (except as may be limited by bankruptcy, insolvency, examinership, moratorium, fraudulent conveyance or other laws applicable to creditors’ rights generally and by generally applicable equitable principles, whether considered in an action at law or in equity) leasehold interests (as the case may be) in such leased property, in each case, free and clear in each case of all Liens or claims, except for Permitted Liens.
SECTION 7.16 No Default. None of the Credit Parties or any of their respective Subsidiaries is in default or material breach under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, have a Material Adverse Effect. On the Closing Date, the Third Amendment Effective Date and the Third Amendment Initial Funding Date, after giving effect to the Transactions, none of the Credit Parties or any of their respective Subsidiaries is in default under or with respect to any Contractual Obligation in respect of Indebtedness or purported Indebtedness.
SECTION 7.17 Solvency. On the Closing Date, the Third Amendment Effective Date and the Third Amendment Initial Funding Date, after giving effect to the Transactions and the other transactions related thereto, the Consolidated Companies are Solvent.
SECTION 7.18 Locations of Offices, Records and Collateral. The address of the principal place of business and chief executive office of each Credit Party is, and the books and records of each Credit Party and all of its Chattel Paper (as defined in the UCC) and records of Accounts (as defined in the UCC) are maintained exclusively in the possession of such Credit Party at, the address of such Credit
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Party specified in Schedule 7.18 (or, after the ClosingThird Amendment Initial Funding Date, at such other address permitted by Section 4.3(a)(i) of the U.S. Security Agreement). Schedule 7.15 specifies all Real Property of each Credit Party, and indicates whether each location specified therein is leased or owned by such Credit Party. Except as otherwise agreed by Administrative Agent, each leased location of a Credit Party that is leased from Innovative Industrial Properties, Inc. or an Affiliate thereof shall be subject to a Collateral Access Agreement to be provided by the landlord of such leased location in favor of Collateral Agent.
SECTION 7.19 Compliance with Laws and Permits; Authorizations.
SECTION 7.20 No Material Adverse Effect. Since December 31, 2019, (a) there has been no Material Adverse Effect, and (b) there has been no circumstance, event or occurrence, and no fact is known to the Credit Parties that could reasonably be expected to result in a Material Adverse Effect.
SECTION 7.21 Contractual or other Restrictions. Other than the Credit Documents, as set forth in Schedule 7.21 and to the extent permitted by Section 9.11, no Credit Party or any of its Subsidiaries is a party to any agreement or arrangement or subject to any Applicable Law that limits its ability to pay dividends to, or otherwise make Investments in or other payments to any Credit Party, that limits its ability to grant Liens in favor of Collateral Agent or that otherwise limits its ability to perform the terms of the Credit Documents. Set forth on Schedule 7.21 is a complete and accurate list of all Governmental Authorities regulating the cultivation, processing or sale of cannabis with which any Credit Party makes any regulatory or administrative filings.
SECTION 7.22 Collective Bargaining Agreements; Officers. Set forth on Schedule 7.22 is a complete and accurate list of (a) all collective bargaining or similar agreements between or applicable to any Credit Party or any of its Subsidiaries and any union, labor organization or other bargaining agent in respect of the employees of any Credit Party or any of its Subsidiaries and (b) all executive officers,
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directors and managers, as applicable, of the Credit Parties as of the ClosingThird Amendment Initial Funding Date.
SECTION 7.23 Insurance. The properties of each Credit Party are insured as required by Section 8.03. As of the Closing Date, the Third Amendment Effective Date and the Third Amendment Initial Funding Date, all premiums with respect thereto that are due and payable have been duly paid and no Credit Party has received or has knowledge of any notice of violation or cancellation thereof and each Credit Party has complied in all material respects with the requirements of such policy.
SECTION 7.24 Evidence of other Indebtedness. Schedule 7.24 is a complete and correct list of each credit agreement, loan agreement, indenture, purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, any Credit Party or Subsidiary outstanding on the Closing Date and the Third Amendment Initial Funding Date which will remain outstanding after the ClosingThird Amendment Initial Funding Date (other than this Agreement and the other Credit Documents), in each case, in excess of $250,000 and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement as of the Closing Date and the Third Amendment Initial Funding Date is correctly described in Schedule 7.24. The aggregate principal amount of all Indebtedness of (and all commitments for extensions of credit to) the Credit Parties and their Subsidiaries which is not disclosed on Schedule 7.24 by reason of the disclosure threshold set forth in the immediately preceding sentence does not exceed $500,000.
SECTION 7.25 Deposit Accounts and Securities Accounts. Set forth in Schedule 7.25 is a list as of the Closing Date and, on and after the Third Amendment Initial Funding Date, the Third Amendment Initial Funding Date of all of the deposit accounts and securities accounts of each Credit Party, including, with respect to each bank or securities intermediary at which such accounts are maintained by such Credit Party (a) the name and location of such Person and (b) the account numbers of the deposit accounts or securities accounts maintained with such Person.
SECTION 7.26 Absence of any Undisclosed Liabilities. There are no material liabilities of any Credit Party of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in any such liabilities, other than those liabilities (a) provided for or disclosed in the most recent financial statements delivered pursuant to Section 8.01 or (b) that would not, individually or in the aggregate, reasonably be expected to constitute a Material Adverse Effect.
SECTION 7.27 Material Contracts and Regulatory Matters.
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SECTION 7.28 Anti-Terrorism Laws. No Credit Party or any Subsidiary is in violation of any Law relating to terrorism or money laundering (collectively, “Anti-Terrorism Laws”), including the Patriot Act and Executive Order No. 13224 on Terrorism Financing, effective September 24, 2001 (the “Executive Order”). No Credit Party, Subsidiary or agent acting or benefiting in any capacity in connection with the Loans is (a) a Person that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order, (c) a Person with whom any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order, or (e) a Person that is named as a “specially designated national and blocked person” on the most current list published by the United States Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list. No Credit Party or Subsidiary or, to the Credit Parties’ knowledge, other agents acting or benefiting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in the preceding sentence, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in any property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Anti-Terrorism Laws.
SECTION 7.29 Conduct of Business. Parent does not engage in any business other than the direct and indirect ownership of the other Borrowers, the organizational actions required to maintain its existence and ownership of the other Borrowers and the payment and performance of the Obligations; provided, however, that Parent may enter into an agreement in connection with the confidential arrangement with another Person that has been disclosed to Administrative Agent as of the Third Amendment Effective Date. Parent does not directly own any assets other than its ownership of the other Borrowers. Schedule 7.29 sets forth all Sales Tracking Software of the Credit Parties.
SECTION 7.30 Transactions with Affiliates. Except as set forth on Schedule 9.10, there are no existing or proposed agreements, arrangements, understandings or transactions between any Credit Party and any of the officers, members, managers, directors, stockholders, parents, holders of other Capital Stock, employees or Affiliates (other than Subsidiaries that are Credit Parties) of any Credit Party or any members of their respective immediate families, and none of the foregoing Persons are directly or indirectly indebted to or have any direct or indirect ownership, partnership, or voting interest in any Affiliate of any Credit Party or any Person with which any Credit Party has a business relationship or which competes with any Credit Party.
SECTION 7.31 Canadian Securities Law Matters.
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ARTICLE VIII
Affirmative Covenants
The Credit Parties hereby covenant and agree that on the Closing Date and thereafter, until the Loans, together with interest, Fees and all other Obligations incurred hereunder (other than Unasserted Contingent Obligations) are paid in full in accordance with the terms of this Agreement:
SECTION 8.01 Financial Information, Reports, Notices and Information. Any notice, financial statement, report or information required to be furnished pursuant to any clause of this Section 8.01 may be furnished by posting the contents of such notice, or such financial statement, report or other information, in a report, notice, proxy statement, registration statement, prospectus, release or other statement on EDGAR, any successor website maintained by the Securities and Exchange Commission or Parent’s website, and any such notice, financial statement, report or other information shall be deemed furnished on the date Parent notifies Administrative Agent of such posting. Subject to the foregoing, the Credit Parties will furnish Administrative Agent and each Lender copies of the following notices, financial statements, reports or information:
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thereto, (iii) in the case of each Compliance Certificate delivered concurrently with the financial information pursuant to clause (a) above, specifying any change in the identity of the Subsidiaries as at the end of such fiscal year from the Subsidiaries provided to the Lenders on the Closing Date or the most recent fiscal year, as the case may be, and (iv) in the case of each Compliance Certificate delivered concurrently with the financial information pursuant to clause (a) above, including (A) updated Schedules 7.15 and 7.25 (if applicable) and (B) a written supplement substantially in the form of Schedules 1 through 8, as applicable, to the U.S. Security Agreement, in each case, with respect to any additional assets and property acquired by any Credit Party after the date hereof, all in reasonable detail.
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| (xii) | notice of receipt of any rejection or non-renewal of a Material |
Regulatory License;
SECTION 8.02 Books, Records and Inspections. Each of the Credit Parties will, and will cause each of their respective Subsidiaries to, maintain proper books of record and account, in which entries that are full, true and correct in all material respects and are in conformity with GAAP (subject to normal year-end adjustments pursuant to the audit required under Section 8.01(b)) consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Credit Parties or such Subsidiary, as the case may be. Each of the Credit Parties will, and will cause each of their respective Subsidiaries to, permit Administrative Agent and its representatives and independent contractors authorized by Administrative Agent to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with the chief executive officer, the chief financial officer, the chief operating officer, the chief administrative officer or general counsel of Parent, all at the expense of the Credit Parties; provided that such visits or inspections shall be at reasonable times during normal business hours, upon reasonable advance notice to the Credit Parties, but not more often than one time
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per year (except that none of the limitations in this proviso shall apply if an Event of Default then exists); and provided, further, that each such representative or independent contractor shall agree to keep any information obtained pursuant to any of the foregoing actions confidential as provided in Section 12.16. Any information obtained by Administrative Agent pursuant to this Section 8.02 may be shared with Collateral Agent or any Lender upon the request of such Secured Party, provided such information shall be subject to Section 12.16.
SECTION 8.03 Maintenance of Insurance. The Credit Parties will, and will cause each of their respective Subsidiaries to, at all times maintain in full force and effect, with insurance companies that the Credit Parties believe (in their reasonable business judgment) are financially sound and reputable at the time the relevant coverage is placed or renewed, insurance in at least such amounts and against at least such risks (and with such risk retentions) as deemed reasonably necessary or advisable by the Borrowers in their reasonable discretion; and will furnish to Collateral Agent for further delivery to the Lenders, upon written request from Collateral Agent, information presented in reasonable detail as to the insurance so carried, including (i) endorsements to (A) all “All Risk” policies naming Collateral Agent, on behalf of the Secured Parties, as lender loss payee and (B) all general liability and other liability policies naming Collateral Agent, on behalf of the Secured Parties, as additional insured and (ii) legends providing that no cancellation, material reduction in amount or material change in insurance coverage thereof shall be effective until at least 30 days (10 days with respect to failure to pay premium) after written notice to Collateral Agent thereof.
SECTION 8.04 Payment of Taxes. The Credit Parties will timely pay and discharge, and will cause each of their respective Subsidiaries to timely pay and discharge, all Taxes, assessments and governmental charges or levies imposed upon them or upon their income or profits, or upon any properties belonging to it, prior to the date on which such Tax, assessment or governmental charge is due, and all lawful claims that, if unpaid, could reasonably be expected to become a Lien having priority over Collateral Agent’s Liens (other than Permitted Liens) or an otherwise material Lien upon any properties of the Credit Parties or any of their respective Subsidiaries; provided that none of the Credit Parties or any of their respective Subsidiaries shall be required to pay any such Tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings that stays execution and as to which such Credit Party has maintained adequate reserves with respect thereto in accordance with GAAP.
SECTION 8.05 Maintenance of Existence; Compliance with Laws, Etc. Each Credit Party will, and will cause its Subsidiaries to, (a) preserve and maintain in full force and effect its organizational existence (except in a transaction permitted by Section 9.03), (b) preserve and maintain its good standing under the laws of its state or jurisdiction of incorporation, organization or formation, and each state or other jurisdiction where such Person is qualified, or is required to be so qualified, to do business as a foreign entity, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect, and (c) comply in all material respects with all Applicable Laws, rules, regulations and orders, including compliance with safety regulations applicable to any Borrower or any of its Subsidiaries.
SECTION 8.06 Environmental Compliance.
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in good faith and by proper proceedings and as to which such Credit Party has maintained adequate reserves with respect thereto in accordance with GAAP.
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conducting such environmental audits and testing as is reasonably necessary, including subsurface sampling of soil and groundwater, the cost for which shall be payable by the Credit Parties.
SECTION 8.07 Maintenance of Properties. Each Credit Party will, and will cause its Subsidiaries to, maintain, preserve, protect and keep its properties and assets in good working order and condition (ordinary wear and tear excepted and subject to casualty, condemnation and dispositions permitted pursuant to Section 9.04), and make necessary repairs, renewals and replacements thereto and will maintain and renew as necessary all licenses, Permits (including the Material Regulatory Licenses) and other clearances necessary to use and occupy such properties and assets, in each case so that the business carried on by such Person may be properly conducted at all times, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
SECTION 8.08 Additional Credit Parties. Any direct or indirect Subsidiary formed or acquired after the Closing Date (including by division of any existing limited liability company pursuant to a “plan of division” under the Delaware Limited Liability Company Act), and any Subsidiary that is no longer an Excluded Subsidiary pursuant to the terms of the definition thereof, shall be subject to the following requirements:
(x) all the Capital Stock of each Subsidiary held by a Credit Party, and (y) any promissory notes executed
after the Closing Date evidencing Indebtedness owing to any Credit Party in an amount of $250,000 or more for any one promissory note or $500,000 in the aggregate for all such promissory notes, in each case, to the extent not automatically constituting Collateral under the Security Agreement; and
| (b) | the Credit Parties and each Subsidiary shall otherwise comply with Section 8.10. |
SECTION 8.09 Use of Proceeds. The proceeds of the Loans funded on the Closing Date shall be used (i) to pay the transaction fees, costs and expenses incurred directly in connection with the Transactions and (ii) for any lawful Business purpose of any Credit Party, including general working capital purposes, in each case, to the extent consistent with the terms of the Credit Documents and Applicable Law. The remaining Loans to be funded on the Subsequent Funding Dates (if any) shall be used for any lawful Business purpose of any Credit Party, including general working capital purposes, in each case, to the extent consistent with the terms of the Credit Documents and Applicable Law.;
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provided, however, that (x) a portion of the Dispensary Loans shall be used to finance the Charm City Acquisition, (y) the Delayed Draw Term Loans advanced pursuant to Sections 2.01(c) and 2.01(d) shall be used solely for working capital and other general corporate purposes and (z) the Delayed Draw Term Loans advanced pursuant to Section 2.01(e) shall be used solely for payment of [REDACTED], in each case, to the extent consistent with the terms of the Credit Documents and Applicable Law.
SECTION 8.10 Further Assurances.
flood zone determination issued by a national certification agency to Collateral Agent indicating the flood zone for such Real Property, together with evidence that the mortgagee under such Mortgage carries flood insurance reasonably satisfactory to Collateral Agent if such Real Property is located in a special flood hazard area, (iv) a zoning report and environmental site assessment reflecting such Real Property’s compliance with Applicable Law and (v) if requested by Collateral Agent, an opinion of local counsel to the applicable Credit Party(ies) in form and substance reasonably satisfactory to Collateral Agent.
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SECTION 8.11 Collateral Access Agreements. The Credit Parties shall obtain a Collateral Access Agreement for any leased location to the extent contemplated by Section 7.18.
SECTION 8.12 Bank Accounts.
SECTION 8.13 Sanctions; Anti-Corruption Laws.
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“Canadian Party”), to take action or refrain from taking any action, to the extent such provisions would otherwise contravene, or require any notification to the Attorney General of Canada under the Foreign Extraterritorial Measures (United States) Order, 1992, by any such Canadian Party and this Agreement, including Sections 7.19 and Section 8.14 shall be limited and interpreted accordingly.
SECTION 8.14 Regulatory Matters. The Credit Parties shall ensure that all Material Regulatory Licenses remain in full force and effect in all material respects.
SECTION 8.15 Annual Lender Meeting. Borrowers will participate in a meeting of the Lenders not more frequently than once each year, subsequent to the filing of Parent’s annual report on Form 10-K, to be held via teleconference at a time selected by Administrative Agent and reasonably acceptable to the Lenders and Parent. The purpose of this meeting shall be to present the Credit Parties’ previous fiscal years’ financial results.
SECTION 8.16 Canadian Securities Law Matters. Parent shall (a) maintain the listing and posting for trading of its subordinate voting shares on the CSE unless such Capital Stock is listed and posting for trading on the New York Stock Exchange or Nasdaq, in which case it shall maintain such listing and posting on such exchange, (b) maintain its status as a “reporting issuer”, or, if Parent’s Capital Stock is listed and posting for trading on the New York Stock Exchange or Nasdaq, the equivalent thereof in the United States, and, in each case not in default (beyond any notice and cure period) of the requirements of the Applicable Securities Legislation in the Reporting Jurisdictions, and (c) obtain the acceptance of the CSE for the listing and posting of the Warrant Shares if required under the policies of the CSE unless Parent’s Capital Stock is listed and posting for trading on the New York Stock Exchange or Nasdaq, in which case it shall obtain the acceptance of such exchange for the listing and posting of the Warrant Shares if required under the policies of such exchange.
SECTION 8.17 Post-Closing Matters. The On or before July 1, 2022 (or such later date to which Administrative Agent agrees in its discretion), the Credit Parties shall deliver the following to Agents, in form and substance satisfactory to Agents:
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Notes reflecting the Dispensary Loans and the addition of Vireo Charm City as a Borrower, duly executed by an Authorized Officer of each Borrower and Vireo Charm City; and
(iv)duly-executed signatures to a Collateral Access Agreement for each leased location of Borrowers required to be subject thereto pursuant to Section 7.18.
ARTICLE IX
Negative Covenants
The Credit Parties hereby covenant and agree that until the Loans, together with interest, Fees and all other Obligations incurred hereunder (other than Unasserted Contingent Obligations) are paid in full in accordance with the terms of this Agreement:
SECTION 9.01 Limitation on Indebtedness. Each Credit Party will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee, suffer to exist or otherwise become directly or indirectly liable, contingently or otherwise with respect to any Indebtedness, except for:
| (a) | Indebtedness in respect of the Obligations; |
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| (d) | Indebtedness in connection with any sale-leaseback transaction permitted by |
Section 9.09;
$10,000,000 in respect of each such surety bond, performance bond and similar instrument or (ii)
$25,000,000 in respect of all such surety bonds, performance bonds and similar instruments in the aggregate; and
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| (o) | obligations under Hedging Agreements permitted under Section 9.12; and |
SECTION 9.02 Limitation on Liens. Each Credit Party will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of any such Person (including its Capital Stock), whether now owned or hereafter acquired, except for the following (collectively, the “Permitted Liens”):
| (a) | Liens securing payment of the Obligations; |
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benefits, or to secure performance of tenders, statutory obligations, bids, leases or other similar obligations (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety, appeal or performance bonds;
8.12 have been complied with; and
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Notwithstanding anything to the contrary set forth in this Section 9.02, in no event shall any Credit Party create, incur, assume or suffer to exist any Lien (other than Liens in favor of Collateral Agent pursuant to the Credit Documents) upon the rights of any Credit Party or Subsidiary under any Material Contract or any accounts receivable, Collections or proceeds arising thereunder or with respect thereto.
SECTION 9.03 Consolidation, Merger, Etc. Except for the transactions set forth on Schedule 9.03, each Credit Party will not, and will not permit any of its Subsidiaries, to liquidate or dissolve, consolidate with, amalgamate with or into, or merge into or with, any other Person; provided that (a) any Credit Party or Subsidiary of any Credit Party may liquidate or dissolve voluntarily into, and may merge or amalgamate with and into, any Borrower (so long as such Borrower is the surviving entity), (b) any Guarantor may liquidate or dissolve voluntarily into, and may merge or amalgamate with and into any other Guarantor organized under the laws of the same jurisdiction, (c) the assets or Capital Stock of any Credit Party (other than Parent) may be purchased or otherwise acquired by any Borrower, (d) the assets or Capital Stock of any Guarantor may be purchased or otherwise acquired by any other Credit Party, (e) any Borrower or other Credit Party with de minimis, or no, assets and operations may be administratively dissolved upon 30 days’ prior notice to Administrative Agent, so long as such assets are acquired by a Borrower or other Credit Party in connection therewith or are disposed of as permitted by Section 9.04; (f) any Credit Party may consolidate with, amalgamate with or into, or merge into or with, any other Person in connection with a transaction permitted by Section 9.05(g), provided that (i) such Credit Party is the surviving entity and (ii) unless Administrative Agent otherwise agrees in its discretion, such Person was organized under the laws of (A) the United States of America or one of its states or (B) Canada or one of its provinces.
SECTION 9.04 Permitted Dispositions. Each Credit Party will not, and will not permit any of its Subsidiaries, to make a Disposition, or enter into any agreement to make a Disposition, of such Credit Party’s or such Subsidiary’s assets (including accounts receivable and Capital Stock of Subsidiaries) to any Person in one transaction or a series of related transactions unless such Disposition:
| (c) | is for fair market value and the following conditions are met: |
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| (iii) | Borrowers apply any Net Cash Proceeds arising therefrom pursuant to |
Section 4.02(a)(ii);
| (d) | is a sale of Inventory (as defined in the UCC) in the ordinary course of business; |
| (g) | is otherwise permitted by Section 9.03, 9.05(d) or 9.05(h); |
| (i) | consists of the granting of Permitted Liens; |
| (j) | consists of a Disposition of cash or Cash Equivalents; |
| (o) | is a sale, transfer, or other disposition of the Phoenix Assets. |
Notwithstanding anything to the contrary set forth in this Section 9.04, except with respect to any sale, transfer, or other disposition of the Phoenix Assets, in no event shall any Credit Party sell, transfer, assign or otherwise dispose of (other than in connection with the grant of a Lien in favor of Collateral
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Agent pursuant to the Credit Documents) any of its rights under or in respect of any accounts receivable, Collections or proceeds arising thereunder or with respect thereto other than as permitted under clause (c)(i)(B) above.
SECTION 9.05 Investments. Each Credit Party will not, and will not permit any of its Subsidiaries to, purchase, make, incur, assume or permit to exist any Investment in any other Person, including the formation, creation or acquisition of any Subsidiary, except:
| (b) | Investments in cash and Cash Equivalents; |
| (g) | Permitted Acquisitions; |
| (j) | Guarantee Obligations to the extent permitted by Section 9.01(f); |
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business and securing Contractual Obligations of a Credit Party, in each case to the extent constituting a Permitted Lien; and
| (n) | obligations under Hedging Agreements permitted under Section 9.12. |
provided that no Investment otherwise permitted under clauses (d)(ii), (f), (g) or (k) shall be permitted to be made if, at the time of making any such Investment, any Default or Event of Default has occurred and is continuing or would result therefrom.
SECTION 9.06 ERISA.
SECTION 9.07 Restricted Payments. Each Credit Party will not, and will not permit any of its Subsidiaries, to make any Restricted Payment, or make any deposit for any Restricted Payment, other than:
SECTION 9.08 Payments and Modification of Certain Agreements. Each Credit Party will not, and will not permit any of its Subsidiaries to:
(a)Except as expressly permitted by Section 9.07, make any payment on account of
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payment is not permitted at such time under the subordination terms and conditions applicable thereto or
(ii) any other Restricted Debt if any Default or Event of Default has occurred and is continuing or would result therefrom.
SECTION 9.09 Sale and Leaseback; Build-to-Suit Lease. Each Credit Party will not, and will not permit any of its Subsidiaries, directly or indirectly, to engage in any sale-leaseback, build-to-suit lease, synthetic lease or similar transaction after the Closing Date with respect to any property of any Credit Party or any Subsidiary thereof; provided, however, that a Credit Party may enter into (a) simultaneous sale and leaseback transactions of any Real Property owned by such Credit Party or any improvement owned by such Credit Party located on Real Property owned by another Person and (b) any other lease of Real Property that creates Attributable Indebtedness on the part of any Credit Party, in each case so long as (w) such Real Property is not, or such improvement is not located on, the Maryland Mortgaged Property, (x) no Maryland Mortgaged Property shall be subject to any Lien as a result of such transaction or lease, (y) no Default or Event of Default has occurred and is continuing or would result from such transaction or lease, and (z) if such Credit Party transfers any right, title or interest in any Real Property or improvement in connection with such transaction or lease, such Credit Party shall receive 100.00% cash consideration in an amount not less than the fair market value of such Real Property or improvement.
SECTION 9.10 Transactions with Affiliates. Except as set forth on Schedule 9.10, each Credit Party will not, and will not permit any of its Subsidiaries, to enter into or cause or permit to exist any arrangement, transaction or contract (including for the purchase, lease or exchange of property or the rendering of services) with any Affiliate (other than arrangements, transactions or contracts solely among the Credit Parties) except (a) on fair and reasonable terms no less favorable to such Credit Party or such Subsidiary than it could obtain in an arm’s-length transaction with a Person that is not an Affiliate, (b) any transaction expressly permitted under Section 9.01(f), 9.03, 9.05(d), 9.05(h), 9.05(j), 9.05(k) or 9.07,
| (d) | transactions among Subsidiaries that are not Credit Parties in the ordinary course of business. |
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SECTION 9.11 Restrictive Agreements, Etc. Each Credit Party will not, and will not permit any of its Subsidiaries, to enter into any agreement (other than a Credit Document) prohibiting:
The foregoing prohibitions shall not apply to customary restrictions of the type described in clause (a) above (which do not prohibit the Credit Parties from complying with or performing the terms of this Agreement and the other Credit Documents) which are contained in any agreement, (i) for the creation or assumption of any Lien on the sublet or assignment of any leasehold interest of any Credit Party or any of its Subsidiaries entered into in the ordinary course of business, (ii) for the assignment of any contract or licensed intellectual property entered into by any Credit Party or any of its Subsidiaries in the ordinary course of business or (iii) for the transfer of any asset pending the close of the sale of such asset pursuant to a Disposition permitted under this Agreement.
SECTION 9.12 Hedging Agreements. Each Credit Party other than Parent will not, and will not permit any of its Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which Parent is exposed in the conduct of their business or the management of their liabilities. Solely for the avoidance of doubt, each of the Credit Parties acknowledges that a Hedging Agreement entered into for speculative purposes or of a speculative nature (which shall be deemed to include any Hedging Agreement under which Parent is or may become obliged to make any payment (a) in connection with the purchase by any third party of any common stock or any Indebtedness or (b) as a result of changes in the market value of any common stock or any Indebtedness) is not a Hedging Agreement entered into in the ordinary course of business to hedge or mitigate risks.
SECTION 9.13 Changes in Business and Fiscal Year.
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SECTION 9.14 Financial Covenants.
|
Period |
Amount |
|
July 31, 2022 – SeptemberApril 30, 20222023 – June 30, 2023 |
$1,000,000 |
|
OctoberJuly 31, 2022 – December 31, 20222023 – September 30, 2023 |
$1,500,000 |
|
JanuaryOctober 31, 2023 – MarchDecember 31, 2023 |
$2,000,000 |
|
April 30January 31, 20232024 |
$2,500,000 |
|
May 31, 2023February 29, 2024 and the last day of each calendar month thereafter |
$3,000,000 |
|
Period |
Ratio |
|
OctoberJuly 31, 2022 – December 31, 20222023 – September 30, 2023 |
0.50 to 1.00 |
|
JanuaryOctober 31, 2023 and the last day of each calendar month thereafter |
1.00 to 1.00 |
SECTION 9.15 Operations of Parent. Parent will not hold any assets or engage in any business other than as set forth in Section 7.29.
ARTICLE X
Events of Default
SECTION 10.01Listing of Events of Default.Each of the following events or occurrences described in this Section 10.01 shall constitute an “Event of Default”:
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| (j) | Change of Control. Any Change of Control shall occur. |
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SECTION 10.02Remedies Upon Event of Default. If any Event of Default under Section 10.01(h) shall occur for any reason, whether voluntary or involuntary, all of the outstanding principal amount of the Loans and other Obligations shall automatically be due and payable and any Commitments shall be terminated, in each case, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Credit Party. If any Event of Default (other than any Event of Default under Section 10.01(h)) shall occur for any reason, whether voluntary or involuntary, and be continuing, Administrative Agent may, and upon the direction of Required Lenders, Administrative Agent shall, declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and any Commitment shall be terminated, whereupon the full unpaid amount of such Loans and other Obligations that shall be so declared due and payable shall be and become immediately due and payable, in each case, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Credit Party. The Lenders and Collateral Agent shall have all other rights and remedies available at law or in equity or pursuant to any Credit Documents.
SECTION 10.03Right to Cure Certain Covenant Violations. Notwithstanding anything to the contrary contained in Section 10.01(c), if Borrowers fail to comply with the requirements of any covenant set forth in Section 9.14(b) or Section 9.14(c) (each, a “Financial Covenant”), then from the end of the calendar month for which such non-compliance occurred until the 120th calendar day after the date on which financial statements are required to be delivered pursuant to Section 8.1(a) (each such period, a “Financial Covenant Cure Period”), Parent shall be entitled to endeavor to raise equity on such terms as Parent’s Board of Directors may approve (so long as such terms are not in violation of any Credit Document) in an amount that, if added to EBITDA for the relevant testing period, would have
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been sufficient to cause compliance with such Financial Covenant for such period (each, a “Financial Covenant Equity Cure”), and provided, that:
For the avoidance of doubt, nothing in this Section 10.03 shall prevent any Borrower from receiving capital contributions in an aggregate amount in excess of the amount sufficient to cause compliance with the applicable Financial Covenant for the relevant testing period; provided that such excess shall not be added to EBITDA for the purpose of calculating compliance with such Financial Covenant or any other purpose.
ARTICLE XI
Agents
SECTION 11.01Appointment.Each Lender (and, if applicable, each other Secured Party) hereby appoints Chicago Atlantic as its Collateral Agent under and for purposes of each Credit
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Document, and hereby authorizes Collateral Agent to act on behalf of such Lender (or if applicable, each other Secured Party) under each Credit Document, and, in the absence of other written instructions from the Lenders pursuant to the terms of the Credit Documents received from time to time by Collateral Agent, to exercise such powers hereunder and thereunder as are specifically delegated to or required of Collateral Agent by the terms hereof and thereof, together with such powers as may be incidental thereto. Each Lender (and, if applicable, each other Secured Party) hereby appoints Chicago Atlantic as its Administrative Agent under and for purposes of each Credit Document and hereby authorizes Administrative Agent to act on behalf of such Lender (or, if applicable, each other Secured Party) under each Credit Document and, in the absence of other written instructions from the Lenders pursuant to the terms of the Credit Documents received from time to time by Administrative Agent, to exercise such powers hereunder and thereunder as are specifically delegated to or required of Administrative Agent by the terms hereof and thereof, together with such powers as may be incidental thereto. Each Lender (and, if applicable, each other Secured Party) hereby designates and appoints each Agent as the agent of such Lender. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender or other Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against any Agent. Anything contained in any of the Credit Documents to the contrary notwithstanding, each Credit Party, Administrative Agent, Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Security Agreement or any other Security Documents, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Agents, on behalf of the Secured Parties in accordance with the terms hereof, and all powers, rights and remedies under the Security Documents may be exercised solely by Agents, and (ii) in the event of a foreclosure by any of Agents on any of the Collateral pursuant to a public or private sale or other disposition, any Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and each Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations (including Obligations owed to any other Secured Party) as a credit on account of the purchase price for any Collateral payable by such Agent at such sale or other disposition.
SECTION 11.02Delegation of Duties. Each Agent may execute any of its duties under this Agreement and the other Credit Documents by or through agents or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys in fact selected by it with reasonable care.
SECTION 11.03Exculpatory Provisions. Neither any Agent nor any of their respective officers, directors, employees, agents, attorneys in fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Credit Document (except to the extent that any of the foregoing are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence, bad faith or willful misconduct) or (b) responsible in any manner to any of the Lenders or any other Secured Party for any recitals, statements, representations or warranties made by any Credit Party or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by Agents under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document or for any failure of any Credit Party or other Person to perform its obligations hereunder or thereunder.
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Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party.
SECTION 11.04Reliance by Agents. Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Credit Parties), independent accountants and other experts selected by such Agent. Agents may deem and treat the payee of any note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with Agents. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of Required Lenders (or, if so specified by this Agreement, all or other requisite Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agents shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans and all other Secured Parties.
SECTION 11.05Notice of Default. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder, except with respect to any Default or Event of Default in the payment of principal, interest and fees required to be paid to Administrative Agent for the account of the Lenders unless Administrative Agent has received notice from a Lender or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless Collateral Agent has received notice from a Lender or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that an Agent receives such a notice, such Agent shall give notice thereof to the other Agent and the Lenders. Each Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until each Agent shall have received such directions, Agents may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as such Agent shall deem advisable in the best interests of the Secured Parties.
SECTION 11.06Non-Reliance on Agents and other Lenders. Each Lender (and, if applicable, each other Secured Party) expressly acknowledges that neither Agents, Arranger, nor any of their respective officers, directors, employees, agents, attorneys in fact or Affiliates have made any representations or warranties to it and that no act by any Agent or Arranger hereafter taken, including any review of the affairs of a Credit Party or any Affiliate of a Credit Party, shall be deemed to constitute any representation or warranty by any Agent or Arranger to any Lender or any other Secured Party. Each Lender (and, if applicable, each other Secured Party) represents to Agents and Arranger that it has, independently and without reliance upon any Agent, Arranger or any other Lender or any other Secured Party, and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, operations, property, financial and other condition and creditworthiness of the Credit Parties and their Affiliates and made its own decision to make its Loans hereunder. Each Lender (and, if applicable, each other Secured Party) also represents that it will, independently and without reliance upon any Agent, Arranger or any other Lender or any other Secured
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Party, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Credit Parties and their Affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by any Agent or Arranger hereunder, Agents and Arranger shall not have any duty or responsibility to provide any Lender or any other Secured Party with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Credit Party or any Affiliate of a Credit Party that may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys in fact or Affiliates.
SECTION 11.07Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Credit Parties and without limiting the obligation of the Credit Parties to do so), ratably according to their respective Total Credit Exposure in effect on the date on which indemnification is sought under this Section 11.07 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Total Credit Exposure immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Credit Documents, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence, bad faith or willful misconduct. The agreements in this Section 11.07 shall survive the payment of the Loans and all other amounts payable hereunder.
SECTION 11.08Agent in Its Individual Capacity. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Credit Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it, each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender”, “Lenders”, “Secured Party” and “Secured Parties” shall include each Agent in its individual capacity.
SECTION 11.09Successor Agents. Either Agent may resign as Agent upon 20 days’ notice to the Lenders, such other Agent and Borrowers. If either Agent shall resign as such Agent in its applicable capacity under this Agreement and the other Credit Documents, then Required Lenders shall appoint a successor agent, which successor agent shall, unless an Event of Default shall have occurred and be continuing, be subject to approval by Parent (which approval shall not be unreasonably withheld, delayed or conditioned), whereupon such successor agent shall succeed to the rights, powers and duties of such Agent in its applicable capacity, and the term “Administrative Agent” or “Collateral Agent”, as the case may be, shall mean such successor agent effective upon such appointment and approval, and the former Agent’s rights, powers and duties as Agent in its applicable capacity shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any holders of the Loans. If no applicable successor agent has accepted appointment as such Agent in its applicable capacity by the date that is 20 days following such retiring Agent’s notice of resignation, such retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of such Agent hereunder until such time, if any, as Required
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Lenders appoint a successor agent as provided for above. After any retiring Agent’s resignation as Administrative Agent or Collateral Agent, as applicable, the provisions of this Article XI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement and the other Credit Documents.
SECTION 11.10Agents Generally. Except as expressly set forth herein, no Agent shall have any duties or responsibilities hereunder in its capacity as such. Arranger shall not have any obligations or duties whatsoever in such capacity under this Agreement or any other Credit Document and shall incur no liability hereunder or thereunder in such capacity, but Arranger and its Related Parties shall have the benefit of the indemnities provided for hereunder.
SECTION 11.11Restrictions on Actions by Secured Parties; Sharing of Payments.
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and (ii) except as specifically set forth herein, such Secured Party shall not have any right to be notified of, consent to, direct, require or be heard with respect to, any action taken or omitted in respect of the Collateral or under any Credit Document.
SECTION 11.12Agency for Perfection. Collateral Agent hereby appoints each other Secured Party as its agent and as sub-agent for the other Secured Parties (and each Secured Party hereby accepts such appointment) for the purpose of perfecting all Liens with respect to the Collateral, including with respect to assets which, in accordance with Article VIII or Article IX, as applicable, of the Uniform Commercial Code of any applicable state can be perfected only by possession or control. Should any Secured Party obtain possession or control of any such Collateral, such Secured Party shall notify Collateral Agent thereof, and, promptly upon Collateral Agent’s request therefor shall deliver possession or control of such Collateral to Collateral Agent and take such other actions as agent or sub-agent in accordance with Collateral Agent’s instructions to the extent, and only to the extent, so authorized or directed by Collateral Agent.
SECTION 11.13Enforcement by Agents. All rights of action under this Agreement, the Notes and the other Credit Documents shall be instituted, maintained, pursued or enforced by Agents. Any suit or proceeding instituted by any Agent in furtherance of such enforcement shall be brought in such Agent’s name without the necessity of joining any of the other Lenders. In any event, the recovery of any judgment by any Agent shall be for the ratable benefit of all Secured Parties, subject to the reimbursement of expenses and costs of such Agent.
SECTION 11.14Credit Parties Not Beneficiaries. The provisions of this Article XI are solely for the benefit of Agents and Lenders, may not be enforced by any Credit Party, and may be modified or waived without the approval or consent of the Credit parties.
SECTION 11.15Intercreditor and Subordination Agreements. Lenders hereby (a) authorize each Agent to execute and deliver any intercreditor agreement or subordination agreement on behalf of Agents and Lenders and to perform its obligations thereunder and (b) agree to be bound by the provisions of such documents.
ARTICLE XII
Miscellaneous
SECTION 12.01Amendments and Waivers. Neither this Agreement nor any other Credit Document, nor any terms hereof or thereof, may be amended, supplemented, modified or waived except
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in accordance with the provisions of this Section 12.01. Required Lenders may, or, with the prior written consent of Required Lenders, Administrative Agent may, from time to time, enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or the Credit Parties hereunder or thereunder, waive, on such terms and conditions as Required Lenders or Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences or consent to any acts or omissions of the Credit Parties hereunder or under any other Credit Document that, but for such consent, would constitute a Default or Event of Default hereunder or thereunder; provided that no such waiver, amendment, supplement, modification, consent or waiver shall directly or indirectly:
Notwithstanding the foregoing, no amendment, modification or supplement of this Agreement or any other Credit Document shall be effective without the consent of the Credit Parties unless otherwise expressly provided in this Agreement or such other Credit Document.
SECTION 12.02Notices and Other Communications; Facsimile Copies.
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communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, five Business Days after deposit in the mails, postage prepaid; and (C) if delivered by electronic mail (which form of delivery is subject to the provisions of Section 12.02(c)), when delivered if prior to 5:00 p.m. on a Business Day, and if after 5:00 p.m. on a Business Day, on the next following Business Day. In addition to the foregoing, to be effective, electronic mail notice must originate from an electronic mail address approved by all parties with at least 10 days’ advance written notice to allow parties to allow their systems to properly recognize and allow for delivery of such messages.
SECTION 12.03No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 12.04Survival of Representations and Warranties. All representations and warranties made hereunder and in the other Credit Documents shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.
SECTION 12.05Payment of Expenses and Taxes; Indemnification. Each Borrower agrees (a) to pay or reimburse each Agent and Arranger for all their costs and expenses reasonably incurred (but limited, in the case of legal fees and expenses of each Agent and Arrangers, to the reasonable fees, charges and disbursements of one primary counsel for Agents and Arranger, taken as a whole, and, if deemed reasonably necessary by Administrative Agent, one local counsel to such Persons,
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taken as a whole, in any relevant jurisdiction) in connection with due diligence in respect of the transactions contemplated by this Agreement, the development, preparation and execution of, and any amendment, supplement, or modification to, this Agreement and the other Credit Documents, including in connection with an initial syndication, and any other documents prepared in connection herewith or therewith, and the consummation, monitoring, oversight and administration of the transactions contemplated hereby and thereby, (b) to pay or reimburse each Lender and each Agent for all their costs and expenses reasonably incurred (but limited, in the case of legal fees and expenses of each Lender and each Agent, to the reasonable fees, charges and disbursements of (i) a single primary counsel to Agents and Lenders, taken as a whole, (ii) a single local counsel to Agents and Lenders, taken as a whole, in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and (iii) in the event of any actual or potential conflict of interest, one additional counsel for each party subject to such conflict) in connection with the exercise, enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents, or in connection with the Loans made hereunder, including all such costs and expenses incurred during any workout, restructuring or negotiations in respect of such Loans, (c) to pay, indemnify, and hold harmless each Lender and Agents from any and all Other Taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Credit Documents and any such other ocuments, (d) to pay or reimburse Administrative Agent for all reasonable fees, costs and expenses incurred in exercising its rights under Section 8.15 and (e) to pay, indemnify and hold harmless each Lender, Arranger and Agents and their respective Related Parties from and against any and all other liabilities, obligations, losses, damages, fines, fees, penalties, actions, judgments, suits, and reasonable costs, expenses or disbursements of any kind or nature whatsoever, including reasonable fees, disbursements and other charges of counsel (but limited, in the case of such fees, disbursements and other charges, to the reasonable fees, disbursements and other charges of (i) one primary counsel to all Indemnitees (taken as a whole), (ii) if deemed reasonably necessary by Agents, of a single local counsel in each appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnitees (taken as a whole) and (iii) solely in the case of an actual or potential conflict of interest, one additional counsel to each group of similarly situated affected Indemnitees in each applicable jurisdiction), with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Credit Documents and any such other documents, including any of the foregoing relating to a breach by any Credit Party of any representation or warranty in any Credit Document or the violation of, noncompliance with or liability under, any Environmental Law or any actual or alleged presence of Hazardous Materials applicable to the operations of each Credit Party, any of their respective Subsidiaries or any of their Real Property (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”); provided that the Credit Parties shall not have any obligation hereunder to Agents, Arranger or any Lender nor any of their Related Parties with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of the party to be indemnified as determined by a final and non-appealable decision of a court of competent jurisdiction. The agreements in this Section 12.05 shall survive repayment of the Loans and all other amounts payable hereunder and termination of this Agreement. To the fullest extent permitted by Applicable Law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against any Lender, any Agent and their respective Related Parties, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Loans or the use of the proceeds thereof. None of the Lenders, Agents, Arranger or any of their respective Related Parties shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby,
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except to the extent any such damages arose from the gross negligence or willful misconduct of such Lender, Agent, Arranger or Related Person as determined by a final and non-appealable decision of a court of competent jurisdiction.
SECTION 12.06Successors and Assigns; Participations and Assignments; Replacement of Lenders.
| (i) | Assignments shall be subject to the following additional conditions: |
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$3,500; provided that only one such fee shall be payable in connection with simultaneous assignments to two or more Approved Funds;
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(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) Borrowers, Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (iv) no such Participant may be a Credit Party or an Affiliate of a Credit Party. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and, as between such Lender, the Credit Parties, Agents and the other Lenders, to approve any amendment, modification, consent or waiver of any provision of this Agreement or any other Credit Document; provided that, notwithstanding the foregoing, such agreement or instrument may provide that (x) if such Participant is an Affiliate of such Lender, the Participant may, as between itself and such Lender (but not as between such Lender, Agents, the Credit Parties and the other Lenders), approve any amendment, modification, consent or waiver of any provision of this Agreement or any other Credit Document and (y) such Lender will not, without the consent of the Participant agree to any amendment, modification, consent or waiver described in clause (i) of the first proviso to Section
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Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
12.06. Notwithstanding the foregoing, Lender shall remain responsible for all obligations and liabilities arising hereunder or under any other Credit Document, and, except as otherwise expressly set forth in any applicable pledge or assignment, nothing herein is intended or shall be construed to impose any obligations upon or constitute an assumption by a Collateral Assignee thereof.
SECTION 12.07Pledge of Loans. The Credit Parties hereby acknowledge that the Lenders and their Affiliates may pledge the Loans as collateral security for loans to the Lenders or their Affiliates. The Credit Parties shall, to the extent commercially reasonable, cooperate with the Lenders and their Affiliates to effect such pledges at the sole cost and expense of such Lender. Notwithstanding the foregoing, no pledge shall release the Lender party thereto from any of its obligations hereunder.
SECTION 12.08Adjustments; Set-off.
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for the credit or the account of any Credit Party, as the case may be. Each Lender agrees promptly to notify Parent and Agents after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.
SECTION 12.09Counterparts.
SECTION 12.10Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 12.11Integration. This Agreement, the other Credit Documents and the Warrant Agreements represent the agreement of the Credit Parties, Agents and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by any party hereto or thereto relative to the subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
SECTION 12.12GOVERNING LAW. THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS (UNLESS EXPRESSLY PROVIDED OTHERWISE THEREIN) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO CONFLICTS OF LAW PROVISIONS WHICH WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
SECTION 12.13Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:
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District of Illinois, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Credit Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Illinois State court or, to the extent permitted by Applicable Laws, in such federal court. Each of the parties 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 Applicable Laws. Nothing in this Agreement or any other Credit Document or otherwise shall affect any right that Administrative Agent, Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Credit Document against any Credit Party or its properties in the courts of any jurisdiction in connection with the exercise of any rights under any Security Document or the enforcement of any judgment;
SECTION 12.14Acknowledgments. Each Credit Party hereby acknowledges that:
SECTION 12.15WAIVERS OF JURY TRIAL.THE CREDIT PARTIES, AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
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JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 12.16Confidentiality. Each Agent and Lender shall hold all non-public information relating to any Credit Party or any Subsidiary of any Credit Party obtained pursuant to the requirements of this Agreement or in connection with such Lender’s evaluation of whether to become a Lender hereunder (“Confidential Information”) confidential in accordance with its customary procedure for handling confidential information of this nature and (in the case of a Lender that is a bank) in accordance with safe and sound banking practices (it being understood that each such Agent or Lender that becomes a party to this Agreement after the Closing Date will be informed of the confidential nature of such information and bound by this Section 12.16); provided that Confidential Information may be disclosed by any Agent or Lender:
| (b) | if and to the extent required pursuant to legal or regulatory process; |
| (e) | in connection with: |
| (i) | the establishment of any special purpose funding vehicle with respect to |
the Loans,
| (ii) | any pledge permitted under Section 12.07; |
| (f) | to any rating agency; |
| (g) | with the consent of Parent; or |
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provided that in the case of clause (e) hereof, the Person to whom Confidential Information is so disclosed is advised of and has been directed to comply with the provisions of this Section 12.16. The applicable Agent or Lender shall endeavor to provide prior notice to Parent of any disclosure permitted under clauses (a), (b), (f) or (h) and a reasonable opportunity to obtain a protective order from the Person to whom Confidential Information is to be provided, in each case, if the circumstances of such disclosure so allow and only if permitted under Applicable Law; provided, however, that the failure to provide, or endeavor to provide, any such notice or to provide a reasonable opportunity to obtain a protective order shall not be deemed a default or breach of this Agreement by any Secured Party.
Notwithstanding the foregoing, each Agent and each Lender shall have the right to publicize, for general marketing and related promotional purposes, their relationship to the Credit Parties and the fact that they have extended the Loans to the Credit Parties (the “Promotional Rights”) with the consent of Parent, which consent shall not be unreasonably withheld, delayed or conditioned, and, in connection therewith, each Credit Party hereby grants to each Agent and each Lender a royalty free, non-exclusive limited license to use such Credit Party’s name and logos, now existing or hereafter acquired, in any literature, advertisements, websites, promotional or other marketing materials now or hereafter used by such Agent or Lender.
Notwithstanding the foregoing, no Agent or Lender shall have any obligation to keep information confidential if such information: (i) is or becomes public from a source other than an Agent or a Lender, or one of an Agent’s or a Lender’s Affiliates, consultants or legal or financial advisors in breach of this Agreement, (ii) is, was or becomes known on a non-confidential basis to or discovered by an Agent, any Lender or any of their Affiliates, consultants or legal or financial advisors independently from communications by or on behalf of any Credit Party, or (iii) is independently developed by an Agent without use of such confidential information, provided that, the source of such information was not known to be bound by a confidentiality agreement with (or subject to any other contractual, legal or fiduciary obligation of confidentiality to) the relevant Credit Party.
EACH AGENT AND EACH LENDER ACKNOWLEDGES THAT CONFIDENTIAL INFORMATION (AS DEFINED IN THIS SECTION 12.16) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING ANY CREDIT PARTY AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMMERCIALLY REASONABLE COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL INFORMATION, INCLUDING WAIVERS AND AMENDMENTS, FURNISHED BY THE CREDIT PARTIES OR ANY AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE CREDIT PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE CREDIT PARTIES AND AGENTS THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE
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INFORMATIONTHATMAYCONTAINMATERIALNON-PUBLICINFORMATIONIN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
SECTION 12.17Press Releases, Etc. Except if and to the extent required by Applicable Law, each Credit Party will not, and will not permit any of its respective Subsidiaries, directly or indirectly, to publish any press release or other similar public disclosure or announcements (including any marketing materials) regarding this Agreement, the other Credit Documents, or any of the Transactions, without the consent of Administrative Agent, which consent shall not be unreasonably withheld.
SECTION 12.18Releases of Guarantees and Liens. Notwithstanding anything to the contrary contained herein or in any other Credit Document, Collateral Agent is hereby irrevocably authorized by each Secured Party (without requirement of notice to or consent of any Secured Party) to take any action requested by Borrowers having the effect of releasing any Liens on Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Credit Document or that has been consented to in accordance with Section 12.01 or (ii) under the circumstances described in Section 12.18(b).
SECTION 12.19USA Patriot Act. Each Lender hereby notifies each Credit Party that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Credit Parties, which information includes the name and address of each Credit Party and other information that will allow such Lender to identify each Credit Party in accordance with the Patriot Act. Each Credit Party agrees to provide all such information to the Lenders upon request by any Agent at any time, whether with respect to any Person who is a Credit Party on the Closing Date or who becomes a Credit Party thereafter.
SECTION 12.20No Fiduciary Duty. Each Credit Party, on behalf of itself and its Subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Credit Parties, their respective Subsidiaries and Affiliates, on the one hand, and Agents, Arranger, the Lenders and their respective Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of Agents, Arranger, the Lenders or their respective Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications.
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SECTION 12.21Authorized Officers. The execution of any certificate requirement hereunder by an Authorized Officer shall be considered to have been done solely in such Authorized Officer’s capacity as an officer of the applicable Credit Party (and not individually). Notwithstanding anything to the contrary set forth herein, each of the Secured Parties shall (a) be entitled to rely and act on any certificate, notice or other document delivered by or on behalf of any Person purporting to be an Authorized Officer of a Credit Party unless such Secured Party shall have received prior written notice to the contrary from Parent and (b) have no duty to inquire as to the actual incumbency or authority of such Person.
SECTION 12.22Subordination of Intercompany Indebtedness. The Credit Parties hereby agree that all present and future Indebtedness of any Credit Party to any other Credit Party (“Intercompany Indebtedness”) shall be subordinate and junior in right of payment and priority to the Obligations, and each Credit Party agrees not to make, demand, accept or receive any payment in respect of any present or future Intercompany Indebtedness, including any payment received through the exercise of any right of setoff, counterclaim or cross claim, or any collateral therefor, unless and until such time as the Obligations shall have been indefeasibly paid in full; provided that, so long as no Default or Event of Default shall have occurred and be continuing and no Default or Event of Default shall be caused thereby and such Indebtedness is expressly permitted hereunder, the Credit Parties may make and receive such payments in respect of Intercompany Indebtedness as shall be customary in the ordinary course of the Credit Parties’ business. Without in any way limiting the foregoing, in any Insolvency Event, or any receivership, liquidation, reorganization, dissolution or other similar proceedings relative to any Credit Party or to its businesses, properties or assets, the Lenders shall be entitled to receive payment in full of all of the Obligations before any Credit Party shall be entitled to receive any payment in respect of any present or future Intercompany Indebtedness.
SECTION 12.23Electronic Communication. Each Credit Party agrees that Administrative Agent may, but shall not be obligated to, make the Communications available to the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”). The Platform is provided “as is” and “as available.”
SECTION 12.24Original Issue Discount. The Credit Parties, Administrative Agent and the Lenders, as applicable, agree (i) that the Notes are debt for federal income Tax purposes, (ii) that the Notes and the Warrant Agreements issued to the Lenders constitute a single debt instrument for purposes of Sections 1271 through 1275 of the Code and the Treasury Regulations thereunder (pursuant to Treasury Regulations Section 1.1275-2(c)), that such debt instrument is issued with original issue discount (“OID”), and that such debt instrument is described in Treasury Regulations Section 1.1272-1(c)(2) and therefore is governed by the rules set out in Treasury Regulations Section 1.1272-1(c), including Section 1.1272-1(c)(5), and is not governed by the rules set out in Treasury Regulations Section 1.1275-4, (iii) that the Lenders shall have 30 days to review and approve any calculation by the Credit Parties regarding the amount of OID for any accrual period on the Notes and the Warrant Agreements, as applicable, such approval not to be unreasonably withheld, (iv) not to file any Tax Return, report or declaration inconsistent with the foregoing, unless otherwise required by Applicable Law and (v) any such OID shall constitute principal for all purposes under this Agreement.
SECTION 12.25Tax Treatment. Borrowers and the Lenders agree that the Loans are indebtedness of Borrowers for U.S. federal income Tax purposes. Each party to this Agreement agrees not to take any Tax position inconsistent with such Tax characterization and shall not report the transactions arising under this Agreement in any manner other than the issuance of debt obligations on all applicable Tax returns unless otherwise required by a final determination within the meaning of Section 1313(a) of the Code (or a similar final determination under applicable state or local Law).
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SECTION 12.26Trading of Parent Capital Stock. Each of the Lenders hereby represents and warrants that, as of the Closing Date, such Lender has not sold any Capital Stock of Parent in the 10 Business Days prior to the Closing Date.
ARTICLE XIII
Additional Covenants and Agreements.
SECTION 13.01Cannabis Laws. Agents and the Credit Parties acknowledge that although certain U.S. State Cannabis Laws have legalized the cultivation, distribution, sale and possession of cannabis and related products, (a) the nature and scope of U.S. Federal Cannabis Laws may result in circumstances where activities permitted under U.S. State Cannabis Laws may contravene U.S. Federal Cannabis Laws and (b) engagement in Restricted Cannabis Activities may contravene U.S. Federal Cannabis Laws. Accordingly, for the purpose hereof, each representation, covenant and other provision hereof relating to compliance with Applicable Law will be subject to the following: (i) engagement in any activity that is permitted by U.S. State Cannabis Laws but contravenes U.S. Federal Cannabis Laws, and in respect of which the applicable Government Authorities have agreed, or are bound by Applicable Law (e.g., the proposed Secure and Fair Enforcement (SAFE) Banking Act (H.R. 1595) and the proposed Clarifying Law Around Insurance of Marijuana (CLAIM) Act (H.R. 4074 and Senate Bill 2201)), to forego or have otherwise suspended prosecution and enforcement of such U.S. Federal Cannabis Laws will not, in and of itself, be deemed to be non-compliance with Applicable Law; (ii) engagement in any Restricted Cannabis Activity will be deemed to be non-compliance with Applicable Law; and (iii) if any Change in Cannabis Law results in the business activities of any Credit Party becoming Restricted Cannabis Activities, such Change in Cannabis Law will be deemed to have had a Material Adverse Effect. Nothing contained in this Agreement shall require the Credit Parties to violate any provision of U.S. State Cannabis Laws or attending regulations, as applicable.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.
BORROWERS:
VIREO HEALTH INTERNATIONAL, INC.
By:
Name: Title:
VIREO HEALTH, INC.
By:
Name: Title:
VIREO HEALTH OF MINNESOTA, LLC
By:
Name: Title:
VIREO HEALTH OF NEW YORK LLC
By:
Name: Title:
MARYMED LLC
By:
Name: Title:
RESURGENT BIOSCIENCES, INC.
By:
Name: Title:
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VIREO HEALTH OF PUERTO RICO, LLC
By:
Name: Title:
VIREO HEALTH DE PUERTO RICO LLC
By:
Name: Title:
XAAS AGRO, INC.
By:
Name: Title:
VIREO HEALTH OF NEVADA I, LLC
By:
Name: Title:
MJ DISTRIBUTING C201, LLC
By:
Name: Title:
MJ DISTRIBUTING P132, LLC
By:
Name: Title:
VIREO HEALTH OF ARIZONA, LLC
By:
Name: Title:
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ELEPHANT HEAD FARM, LLC
By:
Name: Title:
RETAIL MANAGEMENT ASSOCIATES, LLC
By:
Name: Title:
VIREO HEALTH OF MASSACHUSETTS, LLC
By:
Name: Title:
VERDANT GROVE, LLC
By:
Name: Title:
MAYFLOWER BOTANICALS INC.
By:
Name: Title:
VIREO HEALTH OF NEW MEXICO, LLC
By:
Name: Title:
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ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
CHICAGO ATLANTIC ADMIN, LLC
By: Name: Andreas Bodmeier
Title:Partner
LENDERS:
CHICAGO ATLANTIC FUND, LLC
By: Chicago Atlantic Advisers, LLC its investment manager
By: Name: Andreas Bodmeier
Title: Partner
CHICAGO ATLANTIC FUND QP, LLC
By: Chicago Atlantic Advisers, LLC its investment manager
By: Name: Andreas Bodmeier
Title: Partner
CHICAGO ATLANTIC CREDIT COMPANY, LLC
By: Name: Andreas Bodmeier
Title: Partner
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Commitments
|
Lender |
Commitment |
Pro Rata Portion |
|
Chicago Atlantic Real Estate Finance, Inc. |
$17,218,014.75 |
20.2089375% |
|
Chicago Atlantic Credit Company, LLC |
$67,981,985.25 |
79.7910625% |
|
TOTAL |
$85,200,000.00 |
100.0000000% |
Notice Addresses for each Lender on the Third Amendment Initial Funding Date:
Chicago Atlantic Real Estate Finance, Inc. Chicago Atlantic Credit Company, LLC c/o Chicago Atlantic Admin, LLC
420 N Wabash Ave, Ste 500
Chicago, IL 60611 Attention: Loan Department
Email: [REDACTED] and [REDACTED]
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Addresses for Notices
If to any Credit Party:
Vireo Health International, Inc
207 South Ninth Street
Minneapolis, MN 55402
Attention: CEO
Email: [REDACTED]
with copies to:
Vireo Health International, Inc.
207 South Ninth Street
Minneapolis, MN 55402
Attention: General Counsel
Email: [REDACTED]
and to:
DLA Piper LLP (US)
51 John F. Kennedy Parkway, Suite 120 Short Hills, NJ 07078-2704
Attention: Kira Mineroff
Email: [REDACTED]
If to Administrative Agent or Collateral Agent:
Chicago Atlantic Admin, LLC
420 N Wabash Ave, Ste 500
Chicago, IL 60611
Attention: Loan Department
Email: [REDACTED]
with a copy to (not to constitute Service):
Kilpatrick Townsend & Stockton LLP
1100 Peachtree Street NE, Suite 2800
Atlanta, GA 30309
Attention: Shannon C. Baxter
Email: [REDACTED]
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