NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS PROMISSORY NOTE (THIS “NOTE”) AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT SUBORDINATION AGREEMENT (AS DEFINED BELOW). ANY HOLDER OF THIS NOTE ACKNOWLEDGES THAT THE OBLIGATIONS HEREUNDER ARE SUBORDINATE TO THE LOANS, DEBT AND OTHER OBLIGATIONS UNDER THE LOAN DOCUMENTS (AS DEFINED BELOW) AS SET FORTH IN THE SUBORDINATION AGREEMENT, THAT THE SENIOR LENDER IS AN EXPRESS THIRD PARTY BENEFICIARY OF SECTION 12 HEREOF, THAT THE RIGHTS AND REMEDIES OF ANY HOLDERS ARE EXPRESSLY LIMITED BY THE PROVISIONS OF THIS NOTE AND THE SUBORDINATION AGREEMENT AND THAT THIS NOTE MAY NOT BE AMENDED, MODIFIED OR RESTATED WITHOUT THE PRIOR WRITTEN CONSENT OF THE SENIOR LENDER.
$25,000,000 October 11, 2022 (the “Issue Date”)
FOR VALUE RECEIVED (which shall include, but not be limited to, the assignment by each Minority Member of 1 Common Unit pursuant to that certain Assignment of Membership Interests of even date herewith (such assignment of membership interests, the “Assignment”)) on and from the Note Effective Date, TERRASCEND NJ LLC, a New Jersey limited liability company (“Borrower”), hereby promises to pay BWH NJ LLC, a New Jersey limited liability company and BLUE MARBLE VENTURES LLC, a New Jersey limited liability company (each a “Minority Member” and together, the “Minority Members” or “Lender”), in lawful money of the United States of America and/or pursuant to a Canadian Parent Share Issuance, the principal sum equal to Twenty Five Million Dollars ($25,000,000) (the “Loan”) due and payable on the Trigger Date and in the manner set forth below.
The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the full extent permitted by law.
“Canadian Parent Share Issuance” shall mean the issuance by TerrAscend Corp., an Ontario corporation (the “Canadian Parent”), of shares of its common stock (the “Common Shares”) to Minority Members in satisfaction of any Unpaid Amount. The number of shares to be so issued shall be determined by dividing the Unpaid Amount by the average closing price of the Common Shares on the OTCQX (or any other stock exchange on which the Common Shares are then solely or primarily traded) on the five trading days immediately following the date of the Canadian Parent Share Issuance. The Canadian Parent Share Issuance shall be made pursuant to a stock issuance agreement in customary form to be negotiated in good faith by the parties and entered into prior to the Canadian Parent Share Issuance. Canadian Parent has agreed to undertake any and all steps to accomplish the registration of the Common Shares so that all Common Shares issued hereunder shall be fully registered and freely tradeable by Minority Members, without restriction of any kind. Notwithstanding anything to the contrary set forth herein, in no event shall the number of shares issued in the Canadian Parent Share Issuance exceed 19.99% of the total outstanding Common Shares of the Canadian Parent, based on the number of Common Shares outstanding on the date of the Canadian Parent Share Issuance, unless approved by the shareholders of the Canadian Parent.
“Loan Agreement” shall mean that certain Loan Agreement dated as of October 11, 2022, by and between TerrAscend NJ LLC, a New Jersey limited liability company, HMS Hagerstown, LLC, a Delaware limited liability company, HMS Processing, LLC, a Maryland limited liability company, HMS Health, LLC, a Maryland limited liability company (each as a “Borrower”), TerrAscend Corp., an Ontario corporation, TerrAscend USA, Inc., a Delaware corporation, Well and Good Inc., a Delaware corporation, and WDB Holding MD, Inc., a Maryland corporation (each as a “Guarantor”), and Senior Lender (as amended, modified, supplemented and/or amended and restated from time to time).
“Loan Agreement Event of Default” shall mean “Event of Default” as defined in the Loan Agreement.
“Loan Documents” shall have the meaning ascribed to that term in the Loan Agreement. “Majority Member” shall mean Well and Good Inc., a Delaware corporation.
“NJ Mortgage” shall mean that certain second priority mortgage executed and delivered by Borrower in favor of Minority Members in respect of (a) certain parcel of real property located at 130 Old Denville Road, Boonton, New Jersey 07005, and (b) that certain parcel of real property located at 55 South Main Street, Phillipsburg, New Jersey 08865, each as more particularly described in NJ Mortgage, and all appurtenances thereto.
“Note Effective Date” shall mean the date in which the following conditions are satisfied:
“Trigger Date” shall mean the first date on which Senior Lender has either (i) accelerated the loan evidenced by the Loan Agreement or (ii) taken affirmative action to exercise its right under the Senior Mortgage to foreclose on (or to exercise a power of sale contained in) the Senior Mortgage (as defined in the Subordination Agreement) in respect of a Loan Agreement Event of Default that remains uncured following the expiration of any applicable grace or cure period.
[Signature page follows]
IN WITNESS WHEREOF, Borrower and Parent have executed this Promissory Note as of the date first set forth above.
TERRASCEND NJ LLC,
a New Jersey limited liability company
By: /s/ Keith Stauffer
Name: Keith Stauffer Title: Authorized Officer
an Ontario corporation
By: /s/ Keith Stauffer
Name: Keith Stauffer
Title: Chief Financial Officer