EX-10.27 30 exhibit1027.htm EX-10.27 Document
Exhibit 10.27
ASCEND WELLNESS HOLDINGS, LLC (the “Company”)
CONVERTIBLE NOTES OFFERING
INSTRUCTIONS
After carefully reading in their entirety (1) the Convertible Note Purchase Agreement, (2) the Schedule, Forms and Exhibits attached to and incorporated in the Convertible Note Purchase Agreement, as listed below and (3) the Fourth Amended and Restated Limited Liability Company Agreement of the Company, a person or entity wishing to subscribe for a Convertible Note of the Company and to lend funds to the Company is asked to complete the steps referenced on the following page.
Investors with questions regarding this investment may contact Sarah Levy, 1411 Broadway, 16th Floor, New York, NY 10018, slevy@awholdings.com.
Upon acceptance of your Convertible Note Purchase Agreement by the Company in accordance with the terms thereof, copies of all submitted documents countersigned by the Company and a signed completed original Note will be returned to you.
The following are the Schedules, Form and Exhibits attached to and incorporated in the Convertible Note Purchase Agreement by reference and deemed to be a part hereof:
Schedule I-Schedule of Purchasers
Exhibit A-Form of Note
Exhibit B-Risk Factors
Exhibit C-Term Sheet
Exhibit D-Wire Instructions
Form A-Canadian Accredited Investor Status Certificate
Form B-International Jurisdiction Certificate
Form C-U.S. Accredited Investor Certificate
Form D-W-8BEN and W-8BEN-E
Form E-W-9


HAVE YOU COMPLETED THIS SUBSCRIPTION AGREEMENT PROPERLY?
The following items in this Subscription Agreement (as defined herein) must be completed. Please initial each box.
All Investors
All Investors (as defined herein) must complete the information in the boxes on pages i and ii.
All Investors must sign the execution page of this Subscription Agreement on page i.
All Investors must provide payment in immediately available funds to the Company via the wire instructions provided on Exhibit D.
U.S. Investors
Investors who are in the United States, a U.S. Person or purchasing securities for the account or benefit of a person or persons that is/are in the United States or U.S. Persons must complete the U.S. Accredited Investor Certificate in Form C and a W-9 set out in Form E.
Non-U.S. Investors
Investors relying on the “Accredited Investor” exemption under Section 2.3 of National Instrument 45-106 – Prospectus Exemptions of the Canadian Securities Administrators (“NI 45-106”) (except those that are not resident in a province of Canada and not otherwise subject to Canadian Securities Laws (as defined herein)) must complete the Canadian Accredited Investor Status Certificate in Form A, indicating which category is applicable and sign on page A-5.
Investors relying on categories (j), (k) or (l) of the “Accredited Investor” exemption (and that do not meet the higher financial asset threshold set out in category (j.1) of Form A) must complete Exhibit “I” to Form A and sign on page A-7.
Investors resident outside of Canada and the United States must complete Form B.
Investors who are not: (i) in the United States; (ii) a U.S.Person; or (iii) purchasing for the benefit of a person or persons that is/are in the United States or U.S. Persons must complete a W-8BEN or W-8BEN-E, as applicable, as set out in Form D.


ASCEND WELLNESS HOLDINGS, LLC
SUBSCRIPTION AGREEMENT FOR CONVERTIBLE NOTES
TO: ASCEND WELLNESS HOLDINGS, LLC (THE “COMPANY”)
The undersigned, on its own behalf and, if applicable, on behalf of a Disclosed Principal (as defined herein) for whom it is acting hereunder (the “Investor”), hereby irrevocably subscribes for and agrees to purchase convertible notes of the Company (each a “Note”) set out below. The Investor agrees to be bound by the terms and conditions set forth in the attached Convertible Note Purchase Agreement, as summarized in the attached Term Sheet, attached as Exhibit C, including, without limitation, the terms, representations, warranties, covenants, certifications and acknowledgements set forth in the applicable Schedules, Form and Exhibits attached thereto. The Investor further agrees, without limitation, that the Company may rely upon the Investor’s representations, warranties, covenants, certifications and acknowledgments contained in such documents.
SUBSCRIPTION AND INVESTOR INFORMATION
Please print all information (other than signatures), as applicable, in the space provided below
Investor Information and Signature
(Name of Investor)
By:Aggregate Subscription Amount:US$
Authorized Signature
(the “Subscription Amount”)
If the Investor is signing as agent or trustee for a principal (a “Disclosed Principal”) and is not purchasing as trustee or agent for accounts fully managed by it, so as to be deemed to be purchasing as principal pursuant to NI 45-106 complete the following:
(Official Capacity or Title – if the Investor is not an individual)
(Name of individual whose signature appears above if different than the name of the Investor printed above.)
(Name of Disclosed Principal)
(Investor’s Residential Address, including Municipality and Province)
(Residential Address of Disclosed Principal)
(Telephone Number of Disclosed Principal)
(Investor's Telephone Number)(Email Address)
(Account Reference, if applicable)
The Investor hereby provides the following registration and delivery instructions in connection with the physical settlement of the Notes being purchased hereunder.
Accepted:
ASCEND WELLNESS HOLDINGS, LLC
By:
Name:Abner Kurtin
Its:CEO & Founder
Date:_______________, 2021


Account Registration Information:
Delivery Instructions:
(Name)(Name)
(Account Reference, if applicable)(Account Reference, if applicable)
(Address, including Postal Code)(Address, including Postal Code)
(Telephone Number)(Fax Number)
(Contact Name)
Number and kind of securities of the Company held, directly or indirectly, or over which control or direction is exercised by the Investor, if any:
State whether Investor is an Insider of the Company (as such term is defined in the Securities Act (Ontario)):
YesNo
State whether Investor is a Registrant (as such term is defined in the Securities Act (Ontario)):
YesNo
Execution by the Investor above shall constitute an irrevocable offer and agreement by the Investor to subscribe for the securities described herein on the terms and conditions herein set out. The Company shall be entitled to rely on the delivery of a PDF or facsimile copy of this subscription or a copy delivered by other electronic means, and acceptance by the Company of such PDF, facsimile or copy delivered by other electronic means shall be legally effective to create a valid and binding agreement between the Investor and the Company in accordance with the terms and conditions hereof.
THE COMPANY IS NOT A REPORTING ISSUER IN ANY JURISDICTION AND THE NOTES WILL BE SUBJECT TO AN INDEFINITE HOLD PERIOD.


ASCEND WELLNESS HOLDINGS, LLC
CONVERTIBLE NOTE PURCHASE AGREEMENT
This CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of January ___, 2021 (this “Agreement”), is entered into by Ascend Wellness Holdings, LLC, a Delaware limited liability company (together with its permitted successors and assignees, the “Company”) and the persons listed on Schedule I attached hereto (the “Investors”).
PRELIMINARY STATEMENT
The Company is conducting a round of financing, raising up to $30,000,000, or such greater amount as may be determined by the Company, in the form of convertible notes (each individually a “Note” and collectively, the “Notes”, with each registered owner of a Note being sometimes referred to as a “Holder”) that can be converted into equity securities of the Company as more specifically set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of their mutual covenants set forth herein, the Company and the Investors agree as follows:
1.Authorization of Notes. Prior to the Initial Closing (as defined in Section 3.1), the Company shall have authorized the issuance and sale of Notes of not more than Thirty Million Dollars ($30,000,000) in original principal amount, or such greater amount as may be determined by the Company in its sole discretion. The Notes shall be convertible into equity securities of the Company, all as set forth herein, and subject to the provisions of, the form of Note attached as Exhibit A and incorporated herein.
2.Sale and Issuance of Notes. At the Initial Closing, and thereafter at one or more subsequent Closings, the Company shall sell and issue to each Investor, and each Investor shall purchase and acquire from the Company, upon the terms and conditions set forth herein, a Note in the original principal amount as set forth on the Signature Page (defined below) of such Investor attached hereto (which amount shall thereafter be entered by the Company on Schedule I opposite such Investor’s name) at a purchase price equal to such original principal amount, which shall be for an amount not less than $100,000. Each Investor’s obligations hereunder with respect to the purchase of a Note shall be several, and not joint.
3.Closing of Sale of Notes.
3.1Closings. The closings with respect to the transactions contemplated hereby (each a “Closing”) shall take place on one or more dates (each a “Closing Date”) as may be determined by the Company either (i) until the Company shall have effectuated Closings for not more than $30,000,000 in original principal amount of the Notes (or such greater amount as may be determined by the Company in its sole discretion), or (ii) until the Board of Managers of the Company (the “Board of Managers”) shall have determined, in its sole discretion, that the offering of the Notes made by this Agreement shall have terminated. The Initial Closing shall take place on the date hereof (the “Initial Closing”).
Each Closing shall be held at the offices of the Company or remotely via the exchange of documents and signatures. Each Investor who desires to purchase a Note shall subscribe hereto by completing, executing and delivering to the Company the Subscription Agreement for Convertible Notes attached to this Agreement (each, a “Signature Page”) and the applicable accredited investor questionnaire attached hereto as Form A, Form B, and Form C, together with payment by check drawn on good funds or by wire transfer of immediately available funds of the original principal amount of the Note so purchased.
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In addition Investors who are in the United States, a U.S. Person (as such term is defined in Rule 902(k) of Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”) or purchasing securities for the account or benefit of a person or persons that is/are in the United States or U.S. Persons must complete a W-9 as attached as Form E. Investors who are not: (i) in the United States; (ii) a U.S. Person; or (iii) purchasing for the benefit of a person or persons that is/are in the United States or U.S. Persons must complete a W-8BEN (individuals) or W-8BEN-E (entities), as applicable, set out in Form D.
As each Closing is completed, the Signature Pages of Investors purchasing Notes at such Closing shall be attached to this Agreement, and Schedule I shall be amended accordingly. The Company may accept or reject, in whole or in part and at its sole discretion, any offer by an Investor to purchase a Note.
3.2Issuance and Delivery of Notes. As of the date of each Closing, the Company shall issue and deliver to each Investor an executed Note in the form of Exhibit A in the original principal amount as set forth on the Signature Page of such Investor delivered to the Company hereunder (which amount shall thereafter be entered by the Company on Schedule I opposite such Investor’s name). The rights of each Investor with respect to such Investor’s Note shall be as set forth in the Note and this Agreement.
4.Conversion and Repayment of Notes. In accordance with the terms and conditions set forth in the Notes, the entire amount of outstanding principal and accrued interest under each Note shall be converted or repaid as follows:
4.1Go-Public Transaction. From and after the date hereof, in the event that the Company completes a Go-Public Transaction (as defined below) prior to the Maturity Date (as defined in the Notes), all Notes, including all accrued and unpaid interest thereon less applicable withholding tax, shall automatically and simultaneously with the closing thereof be converted (which such conversion shall be mandatory as to all Notes outstanding at the time of such Go-Public Transaction) into equity securities of the Company issued in connection with the Go-Public Transaction (the “Go-Public Security”), with such numbers of Go-Public Securities of the Company issued on the basis of a price equal to the lesser of: (a) (i) in the event the Go-Public Transaction occurs on or before 12 months from the Closing Date, a 20% discount to the issue price of the Go-Public Securities; (ii) in the event the Go-Public Transaction occurs after 12 months from the Closing Date, but before the Maturity Date, a 25% discount to the issue price of the Go-Public Securities; and (b) the equivalent per share price applicable to Common Units issued at the Maturity Conversion Price (as defined in Section 4.2 below). As used herein, a “Go-Public Transaction” shall be defined as the closing of: (i) a transaction resulting in the business or assets of the Company being listed (directly or indirectly) on the Canadian Securities Exchange or any other recognized securities exchange (the “Stock Exchange”), including but not limited to an initial public offering, plan of arrangement, amalgamation, reverse take-over or other business combination pursuant to which the securities of the Company (or any resulting issuer or parent thereof) are listed on the Stock Exchange; and (ii) a concurrent financing of the Company’s equity securities for aggregate gross proceeds of greater than or equal to $20,000,000.
4.2Maturity. If the Company does not consummate a Go-Public Transaction prior to the Maturity Date then, upon the election of the Holder of a Note, (i) the outstanding principal amount, together with accrued and unpaid interest, on such Note shall be paid in full in cash on the Maturity Date, or (ii) the outstanding principal amount, together with accrued and unpaid interest (less applicable withholding tax), on such Note shall convert into Common Units at a price per Common Unit of $3.00 per unit, adjusted appropriately for unit splits, unit dividends and similar recapitalization events after the date hereof (the “Maturity Conversion Price”).
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4.3Change of Control. In the event that the Company effects a Change of Control (as defined below) prior to the Maturity Date, other than in connection with a Go-Public Transaction, then within 30 days following the consummation of a Change of Control, the Company shall make an offer in writing to each of the Holders (the “Change of Control Offer”) to, at each such Holders’ election, either: (i) purchase the Notes in cash from such Holders for cash at 102% of the principal amount thereof and the accrued and unpaid interest thereon; or (ii) convert the outstanding principal amount together with accrued and unpaid interest (less applicable withholding tax) of the Note at a price equal to 95% of the Maturity Conversion Price. Notwithstanding the foregoing, if 90% or more of the principal amount of the Notes outstanding on the date of the giving of notice of the Change of Control have been tendered to the Company pursuant to an offer made to the Holders, the Company will have the right to redeem all the remaining Notes for cash at 102% of the principal amount thereof and the accrued and unpaid interest thereon. As used herein, a “Change of Control” shall mean, other than in connection with the Go-Public Transaction: (i) any transaction (whether by purchase, merger or otherwise) whereby a person or persons acting jointly or in concert directly or indirectly acquires the right to cast, at a general meeting of shareholders of the Company, more than 50% of the votes that may be ordinarily cast at a general meeting; (ii) the Company’s amalgamation, consolidation or merger with or into any other person or any merger or amalgamation of another person into the Company, unless in each case the holders of voting securities of the Company immediately prior to such amalgamation, consolidation or merger hold securities representing 50% or more of the voting control or direction in the Company or the successor entity upon completion of such amalgamation, consolidation or merger; or (iii) any conveyance, transfer, sale lease or other disposition of all or substantially all of the Company’s and the Company’s subsidiaries’ assets and properties, taken as a whole, to another arm’s length person.
4.4Related Documents. In all events of conversion of Notes and as a condition thereto, each Holder agrees to execute all documents executed by members of the Company holding similar equity to which the Note is converted.
5.Representations and Warranties of the Company. The Company hereby represents and warrants to the Investors as follows:
5.1Organization. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware; and has all requisite company power and authority to own and lease its property and to carry on its business as presently conducted and as proposed to be conducted.
5.2Authorization of this Agreement and the Notes. The execution, delivery and performance by the Company of this Agreement and the Notes and of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding agreement of the Company that is enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. As of the date of issue thereof, each of the Notes will constitute a valid and binding obligation of the Company that is enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. The execution, delivery and performance of this Agreement and the Notes, and the compliance with the provisions hereof and thereof by the Company, will not (i) conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute (with due notice or lapse of
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time, or both) a default (or give rise to any right of termination, cancellation or acceleration) under (A) any agreement, document, instrument, contract, written understanding or arrangement, note, indenture, mortgage or lease to which the Company is a party or under which the Company or any of its assets is bound or affected, (B) the Company’s Certificate of Formation, or (C) the Company’s limited liability company agreement; or (ii) result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company.
5.3Consents and Approvals. No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body (other than filings required to be made under applicable federal or state securities laws) is required for the valid authorization, execution, delivery and performance by the Company of this Agreement or the Notes. The Company has obtained all other consents that are necessary to permit the consummation of the transactions contemplated hereby.
5.4Sole Representations. Except as expressly set forth in this Section 5, the Company makes no other representation or warranty in connection with the transactions contemplated by this Agreement.
6.Use of Proceeds. The Company is expected to use the proceeds from the sale of the Notes for general corporate purposes including working capital, business development and acquisitions.
7.Representations and Warranties of the Investors. Each of the Investors, severally and not jointly, represents and warrants to the Company as follows:
7.1Authorization. The Investor has full power and authority to enter into this Agreement which, when executed and delivered by the Investor, will constitute the valid and legally binding obligation of the Investor, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
7.2Purchase for Investment. The Investor is purchasing the Note, and if and when the Note is converted will acquire equity securities of the Company, for investment for the account of the Investor and not for the account of any other person, and not with a view toward resale or other distribution thereof. The Investor understands that the Note being purchased has not been, and when issued the equity securities issuable upon conversion will not be, registered under the Securities Act and applicable state securities laws and, therefore, cannot be resold unless subsequently registered under the Securities Act and applicable state securities laws or unless an exemption from such registration is available. The Investor further understands and agrees that, until so registered or transferred pursuant to the provisions of Rule 144 under the Securities Act, the Note and all certificates evidencing any of the equity securities, whether upon initial issuance or upon any transfer thereof, shall bear a legend, prominently stamped or printed thereon, reading substantially as follows:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY ONLY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE ACT AND SUCH LAWS. ADDITIONAL CONDITIONS ARE IMPOSED BY THIS SECURITY AND THE AGREEMENT PURSUANT TO WHICH THIS
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SECURITY WAS SOLD, AND THE COMPANY MAY REFUSE TO THE TRANSFER OF THIS SECURITY UNLESS SUCH CONDITIONS ARE FULFILLED.
The Investor understands and agrees that the Company does not have any present intention and is under no obligation to register the Note or the equity securities issuable upon conversion, whether upon initial issuance or upon any transfer thereof under the Securities Act and applicable state securities laws, and that Rule 144 may not be available as a basis for exemption from registration. The Investor acknowledges and agrees that the Company may condition the transfer of the Note, or the equity securities, upon the receipt of an opinion, satisfactory in form and substance to the Company and from counsel satisfactory to the Company, in each of such instances in the sole discretion of the Company, that such proposed transfer shall not result in the violation of any federal or state securities law.
7.3Receipt of Information. The Investor or such Investor’s representative, during the course of this transaction and prior to the purchase of the Note being purchased by the Investor hereunder, has had the opportunity to ask questions of and receive answers from representatives of the Company concerning the terms and conditions of the offering of the Notes and the business of the Company; and to obtain any additional information or documents relative to the Company, its business and an investment in the Company necessary to verify the accuracy of information provided by the Company relative to the business of the Company. The Investor or the Investor’s representative has received and read or reviewed, and is familiar with, this Agreement, the form of the Note and all such additional information and documents provided to the Investor.
7.4Materials Incorporated by Reference. The Investor acknowledges receipt of the Fourth Amended and Restated Limited Liability Company Agreement of the Company and the Risk Factors as set forth on Exhibit B attached hereto (the “Risk Factors”), and acknowledges having read and understood the terms and provisions of both of the foregoing, including, without limitation, all Risk Factors relating to the Company’s involvement in the cannabis industry. The Investor hereby further acknowledges and agrees that the Risk Factors do not reflect all of the risks involved in an investment in the Company.
7.4Sophistication of Investor. The Investor or the Investor’s representative is capable of evaluating the merits and risks of the purchase of the Notes. The Investor has the capacity to protect his or her own interests in connection with the purchase of the Notes by reason of the Investor’s business or financial experience or the business or financial experience of the Investor’s representative (who is unaffiliated with and who is not compensated by the Company or any affiliate, directly or indirectly).
7.5Risk of Investment. The purchase of a Note by the Investor is consistent with his or her general investment objectives. The Investor understands that the purchase of the Notes involves a high degree of risk and there is now no established market for the Company’s Notes or equity and there is no assurance that any public market for the Notes or such equity will develop. The Investor has no present need for liquidity in connection with the funds being tendered by such Investor hereunder. The Investor can bear the economic risks of this investment and can afford a complete loss of his, her or its investment.
7.6Accredited Investor. The Investor has completed and delivered to the Company herewith the applicable accredited investor questionnaire attached hereto as Form A, Form B and Form C, acknowledging, among other matters, that he, she or it is an “Accredited Investor,” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act (or similar affirmation of accreditation under Canadian or other applicable laws).
7.7No Commissions. No person or entity has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or claim against or upon the Company or
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the Investor for any commission, fee or other compensation as a finder or broker because of any act or omission by the Investor or by any agent of the Investor.
7.8No General Solicitation. Neither the Investor, nor any of its officers, managers, members, employees, agents, advisors or partners, has either directly or indirectly, including through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Notes.
7.9Residence. If the Investor is an individual, then the Investor resides in the state or province identified in the address of the Investor set forth on the Signature Page; if the Investor is a partnership, corporation, limited liability company or other entity, then the office of the Investor’s principal place of business is identified in the address of the Investor set forth on the Signature Page.
7.10Authorization of the Company. Each Investor hereby appoints, and shall appoint, any person(s) designated by the Board of Managers as the Investor’s true and lawful proxy and attorney, with the power to act alone and with full power of substitution:
(a)to receive the Notes, to execute in the Investor’s name and on its behalf all closing receipts and required documents, and to complete and correct any errors or omissions in any form or document provided by the Investor, including this Agreement and the attachments hereto, in connection with the subscription for the Notes;
(b)to extend such time periods and to waive, in whole or in part, any representations, warranties, covenants, conditions or other terms for the Investor’s benefit contained in this Agreement or any ancillary or related document;
(c)to terminate, prior to the Initial Closing, this Agreement if any condition precedent is not satisfied, in such manner and on such terms and conditions as the Company in its sole discretion may determine, acting reasonably;
(d)to vote all voting securities of the Company held by the Investor in respect of the Notes prior to the conversion date thereof; and
(e)to execute and deliver on behalf of the Investor all documents, instruments, and agreements necessary or requested by the Company or its underwriters, including any customary lock-up agreement in a Go-Public Transaction.
EACH INVESTOR HEREBY GRANTS TO THE COMPANY OR ITS DESIGNEE AN IRREVOCABLE PROXY AND POWER OF ATTORNEY TO VOTE ALL VOTING SECURITIES OF THE COMPANY NOW OR HEREAFTER OWNED OR CONTROLLED BY EACH OF THEM AT ANY ANNUAL OR SPECIAL MEETING OF THE MEMBERS OR STOCKHOLDERS OF THE COMPANY, OR BY WRITTEN CONSENT IN LIEU OF SUCH A MEETING. EACH INVESTOR ACKNOWLEDGES AND AGREES THAT THE PROXY AND POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION IS COUPLED WITH AN INTEREST AND SHALL SURVIVE THE DEATH, DISABILITY, INCAPACITY, DISSOLUTION, BANKRUPTCY, INSOLVENCY OR TERMINATION OF SUCH INVESTOR AND THE TRANSFER OF ALL OR ANY PORTION OF SUCH INVESTOR’S SHARES AND SHALL EXTEND TO SUCH INVESTOR’S HEIRS, SUCCESSORS, ASSIGNS, AND PERSONAL REPRESENTATIVES
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8.Closing Conditions; Covenants of the Company.
8.1Conditions to Obligations of the Investors. It shall be a condition precedent to the obligations of any Investor to be performed at the Initial Closing or at the subsequent Closing in which such Investor participates that:
(i)Investors received all documents which they may reasonably have requested in connection with such transactions.
(ii)All representations and warranties of the Company shall be accurate, correct and complete on the date hereof.
(iii)There shall have been no material adverse change in the financial condition of the Company between the date of the Signature Page for such Investor and the date of the Closing in which such Investor shall participate.
8.2Conditions to Obligations of the Company. It shall be a condition precedent to the obligations of the Company hereunder to be performed at the Initial Closing or at any subsequent Closing that:
(i)The Company shall have received the check, wire transfer or other funds or consideration described in Section 3 to be delivered to the Company in consideration of the issuance of the Notes at such closing.
(ii)All representations and warranties of the Investors shall be accurate, correct and complete on the date of the Closing in which such Investors participate.
(iii)Notwithstanding anything in this Agreement to the contrary, the Company has absolute discretion as to whether or not to accept an investment from the Investor.
9.Miscellaneous.
9.1Successors and Assigns. Except as otherwise expressly provided herein, this Agreement shall bind and inure to the benefit of the Company, the Investors, the respective permitted successors and assigns of the Investors and the permitted successors and assigns of the Company. The Company is authorized to assign this Agreement in the event of sale, merger, consolidation, reorganization, share exchange, or similar transaction, involving all or substantially all of its assets or equity, provided the assignee agrees in writing to be bound by the provisions of this Purchase Agreement. The Holder may only assign this Agreement, as provided in the Note or otherwise, upon the prior written consent of the Company and by surrender of the Note at the principal office of the Company, duly endorsed by, or accompanied by a written instrument of transfer duly executed by, the registered Holder or his attorney duly authorized in writing, as specified therein.
9.2Notices. All notices, offers, acceptances, requests and other communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered, sent by confirmed fax transmission or electronic mail, or mailed by certified or registered mail to the Company and the Investors at the addresses set forth in their signature lines. If personally delivered or sent by confirmed fax transmission or electronic mail, such notice shall be deemed received upon such delivery, if mailed by overnight courier such notice shall be deemed received one (1) day after such mailing, and if mailed by certified or registered mail, such notice shall be deemed received three (3) days after such mailing. Each party is responsible to update its own address in the manner prescribed above.
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9.3Entire Agreement. This Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire agreement among the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings, whether written or oral, with respect thereto.
9.4Changes. Any term of this Agreement or the Notes may be amended and the observance of any term of this Agreement or the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the outstanding principal amount of all Notes; provided, however, that (i) no such waiver, amendment or modification shall reduce the aforesaid percentage of the principal amount of Notes the holders of which are required to consent to any waiver, amendment or modification, and (ii) no such amendment may increase the funding obligations of any Investors hereunder without such Investor’s written consent thereto. Any amendment approved in the manner set forth above shall be binding on all holders of Notes. Neither this Agreement nor any provisions hereof may be waived, amended or modified orally, but only by a signed statement in writing.
9.5Counterparts. This Agreement may be executed in any number of counterparts all of which together shall constitute one and the same instrument. The execution and delivery to the Company of a Signature Page in the form annexed to this Agreement by any Investor who shall previously have been furnished the final form of this Agreement (other than Schedule I) shall constitute the execution and delivery of this Agreement by such Investor. All exhibits, schedules and annexes attached hereto are part of this Agreement and are incorporated herein by reference. Electronic and fax signatures shall be deemed and accepted as originals.
9.6Severability. 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, and such unenforceable provision shall be interpreted to the fullest extent permitted by law.
9.7Governing Law. This Agreement and any dispute arising under or related to this Agreement or the Notes shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its conflict of laws provisions. Any dispute arising under or related to this Agreement shall be brought before a single arbitrator appointed by the American Arbitration Association (“AAA”) under the auspices and commercial arbitration rules of the AAA to be held in the Commonwealth of Massachusetts.
9.8Nouns and Pronouns. Whenever the context may require, the singular form of nouns and pronouns shall include the plural and vice versa and pronouns referencing a specific gender or entity shall include all genders and entities. The section headings throughout this Agreement are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction or meaning of the provisions of this Agreement.
9.9Currency. All dollar amounts in this Agreement and documents relating hereto, including the symbol “$”, are expressed in United States dollars.
[Signature Page to Follow]
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COUNTERPART SIGNATURE PAGE
TO
CONVERTIBLE NOTE PURCHASE AGREEMENT
IN WITNESS WHEREOF, the Company and the Investors have executed this Agreement as of the date first above written.
ASCEND WELLNESS HOLDINGS, LLCInvestors
By:
Name:Abner KurtinSee Subscription Agreement
Title:CEO & Founder
Address:1411 Broadway, 16th Floor, New
York, NY 10018


ASCEND WELLNESS HOLDINGS, LLC
CONVERTIBLE NOTE PURCHASE AGREEMENT
SCHEDULE I
(To be completed by the Company)
Name and Address of InvestorPrincipal Amount of Note
Purchased		Date of Note
[●]$[●][●]


EXHIBIT A
Form of Note
THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
ASCEND WELLNESS HOLDINGS, LLC
CONVERTIBLE NOTE
$[_______]Boston, MA
_____________, 2021
Ascend Wellness Holdings, LLC, a Delaware limited liability company (the “Company”), for value received, hereby promises to pay to [_____________], [an individual / a [entity type] with a notice address at _______________________________ (the “Holder”), the principal amount of [___________] dollars ($[_________]) (such amount, or such portion there of which remains outstanding from time to time hereunder subsequently referred to as the “Principal Amount”), together with simple interest accruing at the rate of: (a) eight percent (8%) per annum from the Closing Date for this Note (as defined below) through and including the twelve (12) month anniversary of the Closing Date for this Note, (b) ten percent (10%) per annum from the date following such twelve (12) month anniversary through and including the fifteen (15) month anniversary of the Closing Date for this Note, and (c) thirteen percent (13%) per annum from the date following such fifteen (15) month anniversary and thereafter; which interest will be “paid-in-kind” and added to the outstanding principal amount and be computed on the basis of a three hundred sixty five (365) day year. Notwithstanding anything to the contrary, in the event this Note is converted in accordance with the Purchase Agreement prior to the twelve (12) month anniversary of this Note, the interest payable hereunder will be calculated as of the twelve (12) month anniversary of this Note. Interest paid to non-US Persons may be subject to US withholding tax.
This Note is one of a series of convertible notes (the “Notes”) issued pursuant to the Convertible Note Purchase Agreement, dated as of January , 2021 (the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement. All the Notes are pari passu such that all Notes rank equally and no payments shall be made under this Note unless a pro rata payment is simultaneously made under all other Notes.
The following is a statement of the rights of the Holder of this Note and the conditions to which this Note is subject, and to which the Holder, by the acceptance of this Note, agrees:
1.Maturity Date; Conversion. Subject to conversion as determined pursuant to the terms and conditions of the Purchase Agreement, a single payment of the then outstanding Principal Amount, plus accrued interest thereon determined in accordance with the first paragraph of this Note, shall be due and payable twenty-four (24) months from the Closing Date for this Note (the “Maturity Date”), unless earlier


converted in accordance with the Purchase Agreement. This Note may be converted into equity interests of the Company as provided in the Purchase Agreement.
2.Default. Any of the following events shall constitute an “Event of Default”, unless waived by holders of a majority of the aggregate principal amount outstanding on all Notes (the “Majority Holders”): (i) the Company’s execution of a general assignment for the benefit of creditors; (ii) the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more; (iii) the appointment of a receiver or trustee to take possession of substantially all of the property or assets of the Company or (iv) the Company’s failure to pay any amounts owing hereunder when due.
Upon the occurrence and during the continuance of an Event of Default:
(a)The Holder shall have all rights and remedies granted to it under this Note and the Purchase Agreement. All such rights and remedies and the exercise thereof shall be cumulative. No exercise of any such rights and remedies shall be deemed to be exclusive or constitute an election of remedies.
(b)Payment of the outstanding Principal Amount, together with all accrued and unpaid interest thereon determined in accordance with the first paragraph of this Note, shall, at the option of the Majority Holders, become immediately due and payable without notice or demand.
No Event of Default may be waived or shall be deemed to have been waived except by an express notice delivered by the Majority Holders to the Company in accordance with Section 8 below, and any such waiver shall be applicable only to the specific Event(s) of Default expressly identified in such notice and shall not be deemed to apply to any other or subsequent Event of Default. The Majority Holders may grant or withhold any such waiver in the sole exercise of their discretion, and may condition such waiver upon the payment by the Company of a premium or the acceptance of other terms and conditions under this Note or the Purchase Agreement. No course of dealing by the Holder or the failure, forbearance or delay by the Majority Holders in exercising any of their rights or remedies under this Note or the Purchase Agreement shall operate as a waiver of any Event of Default or of any right of the Holder hereunder. Notwithstanding anything contained herein or the Purchase Agreement to the contrary, upon an Event of Default pursuant to Section 2(ii), this Note shall be automatically due and payable without any action or notice by the Holder.
3.Treatment of Note. To the extent permitted by generally accepted accounting principles, the Company will treat, account and report this Note as debt and not equity for accounting purposes and with respect to any returns filed with federal, state or local tax authorities.
4.Prepayment. The Principal Amount and accrued interest will not be prepaid without the written consent of the Holder hereof except as provided in the Purchase Agreement.
5.Representations, Warranties and Acknowledgements of the Holder. By accepting this Note, the Holder hereby: (i) represents and warrants that it is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”); (ii) represents and warrants that the Notes and the related conversion equity securities (together, the “Securities”) are being or will be acquired by it for the purpose of investment and not with a view to distribution; (iii) agrees that it will not sell or transfer any of the Securities without registration under applicable federal and state securities laws, or the availability of exemptions therefrom; (iv) acknowledges that the documents evidencing the Securities will each bear a restrictive legend stating that the Securities represented thereby have not been registered under applicable federal and state securities laws and referring to restrictions on


their transferability and sale; (v) acknowledges that it currently has, and had immediately prior to its receipt of the offer of sale from the Company, alone or with the assistance of its professional advisors, such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of this investment; (vi) acknowledges that an investment in the Securities involves a high degree of risk; (vii) acknowledges that it is able to bear the economic risk of this investment; (viii) acknowledges that it had the opportunity to ask questions of, and receive answers from, management of the Company concerning the terms and conditions of this investment; and (ix) acknowledges that it has received such information as it deems necessary to enable it to make its investment decision.
6.No Membership Rights. Nothing contained in this Note shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a member in respect of meeting of members for the election of Board of Managers or any other matters or any rights whatsoever as a member of the Company; and no dividends shall be payable or accrued in respect of this Note or the interest represented hereby or the Securities obtainable hereunder upon conversion until, and only to the extent that, this Note shall have been so converted in accordance with the terms of the Purchase Agreement.
7.Recourse. The Holder agrees that no officers, managers or members of the Company shall have any personal liability with respect to the obligations of the Company under this Note, the Purchase Agreement or any other agreements related to this Note.
8.Notice. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be delivered in accordance with Section 9.2 of the Purchase Agreement.
9.Waiver and Amendment. Any provision of this Note may be amended, waived or modified only upon the written consent of the Company and the Majority Holders as provided in the Purchase Agreement.
10.Restrictions on Transfer of this Note. No transfers of the Note or any portion hereof may be made by the Holder without the prior written consent of the Company, which consent may be withheld in the Company’s sole discretion. Notwithstanding the foregoing (i) a Holder may transfer this Note to any of its “affiliates” (as defined in Rule 405 promulgated under the Securities Act) without the consent of the Company and (ii) following the occurrence and during the continuance of an Event of Default, the Holder may transfer this Note to any person without the consent of the Company, in each case so long as the transferee is an Accredited Investor. The rights and obligations of the Company and the Holder shall be binding upon and benefit their respective successors, permitted assigns, heirs, administrators and permitted transferees.
11.Payment. Any cash payments of the Principal Amount will be made by check or wire transfer in immediately available United States funds sent to the Holder at the address or to the account furnished to the Company for that purpose.
12.Governing Law; Jurisdiction. The provisions of Section 9.7 of the Purchase Agreement shall apply to this Note.
13.Headings; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except where otherwise indicated, all references herein to Sections refer to Sections hereof. All words used in this Note will be construed to be of such gender or number as the circumstances require.
[Signature Page to Follow]


IN WITNESS WHEREOF, the Company has executed this Note as an instrument under seal as of the date and year first written above.
ASCEND WELLNESS HOLDINGS, LLC
By:
Name:Abner Kurtin
Its:CEO & Founder


EXHIBIT B
RISK FACTORS
Legal and Political Risks
Cannabis remains illegal under federal law.
Cannabis is a Schedule-I controlled substance and is illegal under federal law. It remains illegal under United States federal law to grow, cultivate, sell or possess cannabis for any purpose or to assist or conspire with those who do so. Additionally, 21 U.S.C. 856 makes it illegal to “knowingly open, lease, rent, use, or maintain any place, whether permanently or temporarily, for the purpose of manufacturing, distributing, or using any controlled substance.” Even in those states in which the use of cannabis has been authorized, its use remains a violation of federal law. Any person that is connected to the cannabis industry, including, but not limited to, an Investor and other investors in the Company, may be at risk of federal criminal prosecution and civil liability. Any investments could also be subject to civil or criminal forfeiture and a total loss. Since federal law criminalizing the use of cannabis is not preempted by state laws that legalize its use, strict enforcement of federal law regarding cannabis would likely result in the Company’s inability to proceed with its business plan and a possible total loss of the Investor’s investment. Additionally, pursuant to 26 U.S. Code § 280E, any business engaged in the trafficking of a controlled substance may be prohibited from making certain deductions or obtaining certain tax credits.
Some courts may determine that contracts relating to cultivation and sale of cannabis legal under state law are unenforceable on the grounds that such activities are illegal under federal law and therefore void as a matter of public policy. This could substantially impact the rights of parties making or defending claims involving the Company and any lender or member of the Company.
Due to the federal illegality of cannabis and the charged political climate surrounding the cannabis industries of various states, political risks are inherent in the cannabis industry. It remains to be seen whether policy changes at the federal level will have a chilling effect on the cannabis industry.
Rescission of the “Cole Memo.”
On January 4, 2018, then-Attorney General Sessions rescinded the previously issued memoranda from the Justice Department which de-prioritized the enforcement of federal law against marijuana users and businesses who comply with state cannabis laws (the “Cole Memo”), adding uncertainty to the question of how the Federal government will now choose to enforce federal laws regarding cannabis. Attorney General Sessions issued a memorandum to all United States Attorneys in which Attorney General Sessions affirmatively rescinded the Cole Memo as to cannabis enforcement, calling such guidance “unnecessary.”
Attorney General Sessions’ one-page memorandum was vague in nature, stating that federal prosecutors should use established principals in setting their law enforcement priorities. Under


previous administrations, the U.S. Department of Justice indicated that those users and suppliers of medical cannabis who complied with state laws, which required compliance with certain criteria, would not be prosecuted. As a result, it is now unclear if the Justice Department will seek to enforce the Controlled Substances Act against those users and suppliers who comply with state cannabis laws. If such enforcement occurs, the federal government may raid the Company, seize all of its equipment and inventory, and arrest all of its officers, directors, managers, and members.
The FinCEN Memo could be rescinded.
Due to the categorization of marijuana as a Schedule I drug in the Controlled Substances Ace (“CSA”), federal law also makes it illegal for financial institutions that depend on the Federal Reserve's money transfer system to take any proceeds from marijuana sales as deposits. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses under the United States Currency and Foreign Transactions Reporting Act of 1970 (the “Bank Secrecy Act”). Therefore, under the Bank Secrecy Act, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be charged with money laundering or conspiracy. Therefore, under the Bank Secrecy Act, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be charged with money laundering or conspiracy.
The Department of the Treasury, Financial Crimes Enforcement Network issued a memo (the “FinCEN Memo”), dated February 14, 2014, which de-prioritizes enforcement of the Bank Secrecy Act against financial institutions and cannabis related businesses which utilize them. This memo appears to be a standalone document, and is presumptively still in effect.
At any time, the Department of the Treasury, Financial Crimes Enforcement Network could elect to rescind the FinCEN Memo. This would make it more difficult for the Company to access the U.S. banking system and conduct financial transactions, which would have a material adverse effect on the Company Business (defined below). Enforcement of the Bank Secrecy Act against the Company would also be made more likely by the rescission of the FinCEN Memo. This would subject the Company’s officers, directors, managers and members to potential criminal prosecution, and would have a material adverse effect on the Company Business.
Even with the FinCEN Memo in place, prosecution of the Company for violations of the Bank Secrecy Act remains possible, as the FinCEN Memo is only prosecutorial guidance and does not have the force of law.
The 2015 Appropriations Rider must be reauthorized every year to provide any protections.
In 2014, Congress passed a spending bill (the “2015 Appropriations Bill”) containing a provision (the “Appropriations Rider”) blocking federal funds and resources allocated under the 2015 Appropriations Bill from being used to “prevent such States from implementing their own State [medical marijuana] law”. The Appropriations Rider seemed to have prohibited the federal government from interfering with the ability of states to administer their medical cannabis laws,


although it did not codify federal protections for medical cannabis patients and producers. Moreover, despite the Appropriations Rider, the Justice Department maintains that it can still prosecute violations of the federal cannabis ban and continue cases already in the courts.
Additionally, the Appropriations Rider must be re-enacted every year. The Appropriations Rider was extended in the Consolidated Appropriations Act of 2019 (the “2020 Act”), which was signed by President Trump on December 20, 2019 and funded the departments of the federal government through the fiscal year ending September 30, 2020. Congress passed and President Trump signed a Continuing Resolution that extends the 2020 Act through December 11, 2020. In signing the 2020 Act, President Trump issued a signing statement noting that the Act “provides that the Department of Justice may not use any funds to prevent implementation of medical marijuana laws by various States and territories,” and further stating “I will treat this provision consistent with the President’s constitutional responsibility to faithfully execute the laws of the United States.” While the signing statement can fairly be interpreted to mean that the executive branch intends to enforce the CSA and other federal laws prohibiting the sale and possession of medical marijuana, the President did issue a similar signing statement in 2017 and no federal enforcement actions followed. On February 11, 2020, as both he and former President Obama have done in the past, President Trump submitted a budget request to Congress that omitted the language of the Appropriations Rider.
The Company’s proposed business is dependent on laws pertaining to the cannabis industry, and further legislative development is not guaranteed.
The Company’s business plan involves the cultivation, distribution, manufacture, storage, transportation and/or sale of medical and adult use cannabis products in compliance with applicable state law, but in violation of federal law (generally referred to herein as the “Company Business”). Continued development of the cannabis industry is dependent upon continued legislative and regulatory authorization of cannabis at the state level. Any number of factors could slow or halt progress in this area. Further progress is not assured. While there may be ample public support for legislative action, numerous factors impact the legislative and regulatory process. Any one of these factors could slow or halt business operations relating to cannabis or the current tolerance for the use of cannabis by consumers, which would negatively impact the Company Business.
The cannabis industry faces strong opposition.
Many believe that several large, well-funded businesses may have a strong economic opposition to the cannabis industry. The Company believes that the pharmaceutical industry does not want to cede control of any product that could generate significant revenue. For example, medical cannabis will likely adversely impact the existing market for the current “cannabis pill” sold by mainstream pharmaceutical companies. Further, the medical cannabis industry could face a material threat from the pharmaceutical industry should cannabis displace other drugs or encroach upon the pharmaceutical industry’s products. The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses that of the medical and retail cannabis industries. Any inroads the pharmaceutical industry made in halting or impeding the cannabis industry could have a detrimental impact on the Company Business.


The legality of cannabis could be reversed in one or more states of operation.
The voters or legislatures of states in which cannabis has been legalized could potentially repeal applicable laws which permit both the operation of medical and retail cannabis businesses. These actions might force the Company to cease the Company Business.
Enforceability of contracts.
It is a fundamental principle of law that a contract will not be enforced if it involves a violation of law or public policy. Notwithstanding that cannabis related businesses operate pursuant to the laws of states in which such activity is legal under state law, judges have on a number of occasions refused to enforce contracts for the repayment of money when the loan was used in connection with activities that violate federal law, even if there is no violation of state law. There remains doubt and uncertainty that the Company will be able to legally enforce contracts it enters into if necessary. As the Company cannot be assured that it will have a remedy for breach of contract, the Company and its members must bear the risk of the uncertainty in the law. If borrowers fail or refuse to repay loans and the Company is unable to legally enforce its contracts, the Company may suffer substantial losses for which it has no legal remedy.
Risk of criminal prosecutions for money laundering.
One possible repercussion for members and other investors in the Company is a prosecution for violation of federal money laundering statutes, specifically U.S.C.A. § 1956 and § 1957. Because these statutes criminalize certain transactions involving the proceeds of activity which is itself criminal, it is possible that investors in the Company could be subject to prosecution for investing in, obtaining dividends from, or otherwise transacting with the Company. While there have been no recent prosecutions of investors in cannabis-related businesses for violation of either § 1956 or § 1957, this could change along with federal enforcement priorities.
Risk of civil asset forfeiture.
Because the cannabis industry remains illegal under federal law, any property owned by participants in the cannabis industry which is either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture. Even if the owners of the property were never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture.
Risk of RICO prosecution or civil liability.
The Racketeer Influenced Corrupt Organizations Act (“RICO”) criminalizes the use of any profits from certain defined “racketeering” activities in interstate commerce. While intended to provide an additional cause of action against organized crime, due to the fact that cannabis is illegal under U.S. federal law, the production and sale of cannabis qualifies cannabis related businesses as “racketeering” as defined by RICO. As such, all officers, managers and owners in a cannabis


related business could be subject to criminal prosecution under RICO, which carries substantial criminal penalties.
RICO can create civil liability as well: persons harmed in their business or property by actions which would constitute racketeering under RICO often have a civil cause of action against such “racketeers,” and can claim triple their amount of estimated damages in attendant court proceedings. The Company as well as its officers, managers and owners could all be subject to civil claims under RICO.
Legal uncertainty.
Laws and regulations affecting the medical and retail cannabis industry are constantly changing, which could detrimentally affect the Company’s proposed operations. Local, state and federal cannabis laws and regulations are broad in scope and subject to evolving interpretations, which could require the Company to incur substantial costs associated with compliance or alter its business plan. For example, adult use cannabis regulations in Massachusetts have been substantially amended multiple times. In addition, violations of these laws, or allegations of such violations, could disrupt the Company Business and result in a material adverse effect on its operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to the Company’s proposed business, including, but not limited to, regulations or laws impacting the amount of production that the Company is authorized to produce. The Company cannot predict the nature of any future laws, regulations, interpretations or applications, nor can the Company determine what effect additional governmental regulations or administrative policies and procedures, if promulgated, could have on the Company Business.
Business Risks
Economic environment; pandemic.
The Company’s operations could be affected by the economic context should the unemployment level, interest rates or inflation reach levels that influence consumer trends and consequently, impact the Company’s sales and profitability. As well, general demand for banking services and alternative banking or financial services cannot be predicted and future prospects of such areas might be different from those predicted by the Company’s management.
Additionally, a serious pandemic or a natural disaster could severely disrupt global, national and/or regional economies. The current outbreak of the COVID-19 novel and highly contagious coronavirus has resulted in health and other government authorities requiring the closure of offices or other businesses, including office buildings, retail stores and other commercial venues and has resulted in a general economic decline, all of which could have an adverse effect on the Company’s revenue or ability to operate its business. No assurance can be given as to the effect of these events on the Company’s operations.
The Company Business is dependent on the acquisition and retention of various licenses.


The Company Business is dependent on obtaining various licenses from various municipalities and the state licensing agencies. There can be no assurance that any or all licenses necessary to operate the Company Business will be obtained. If a licensing body were to determine the Company had violated the applicable rules and regulations, there is a risk the licenses granted could be revoked, which would prevent the operation of the Company Business. Further, there is no guarantee the Company will be able to obtain any additional licenses necessary to expand the Company Business.
The Company’s management team or other owners could be disqualified from ownership in the Company.
The Company Business is in a highly regulated industry in which many states have enacted extensive rules for ownership of a participant company. The Company’s managers or other owners (which could include the members of the Company) could become disqualified from having an ownership stake in the Company under relevant laws and regulations of applicable state and/or local regulators, if the applicable manager or owner is convicted of a certain type of felony or fails to meet the requirements for owning equity in a company like the Company.
The Company may have difficulty accessing the service of banks and bankruptcy protections, which may make it difficult for them to operate or unwind.
Since the use of cannabis is illegal under federal law, there is a compelling argument that banks cannot lawfully accept for deposit funds from businesses involved with cannabis. Consequently, businesses involved in the cannabis industry often have trouble finding a bank willing to accept their business. The inability to open bank accounts may make it difficult for the Company to operate and the reliance on cash can result in a heightened risk of theft. Additionally, some courts have denied cannabis businesses bankruptcy protection, thus, making it very difficult for lenders to recoup their investments.
The Company will not have full access to federal intellectual property protections.
The United States Patent and Trademark Office does not allow trademarks directly related to cannabis and cannabis products to be registered due to the illegal nature of the business and products under federal law. While patent protection for inventions related to cannabis and cannabis products is available, there are substantial difficulties faced in the patent process by cannabis related businesses. There can be no assurances that any proprietary business processes, patents, copyrights or trademarks that may be issued to a cannabis business will offer any degree of protection.
Insurance risks.
In the United States, many cannabis related companies are subject to a lack of adequate insurance coverage including, without limitation, general coverage for cultivating cannabis and traditional commercial insurance covering dispensary transit. In addition, many insurance companies may deny claims for any loss relating to cannabis for reasons such as it is illegal under federal law, a contract for an illegal item is unenforceable or there can be no insurable interest in an illegal item.


Product liability in cannabis-related companies.
Many cannabis related companies are subject to strict product liability laws where a cannabis related retailer who sells a defective product to a consumer is subject to liability for any harm that befalls that consumer due to the defect. For example, a retailer who sells cannabis infused products could be held liable if that product was tainted in the manufacturing process or inadequately labeled and a consumer subsequently fell ill, even if the retailer had nothing to do with the manufacturing process. Any suit against any cannabis related business could adversely affect the Company and cause substantial losses for the Company. This area of law is unsettled and there is very little statutory or case law regarding cannabis and products liability.
Risks associated with young industries.
The cannabis industries in those states which have legalized such activity are not yet well- developed, and many aspects of these industries’ development and evolution cannot be accurately predicted. While the Company has attempted to identify many risks specific to the cannabis and hemp industries, prospective investors should carefully consider that there are probably other risks that the Company has not foreseen or not mentioned in this document, which may cause prospective members to lose some, or all, of such prospective member’s investment. Given the limited history, it is difficult to predict whether this market will continue to grow or whether it can be maintained. For example, as a result of the Company’s limited operating history in a new industry, it is difficult to discern meaningful or established trends with respect to the purchase activity of the Company’s customers.
The Company expects that the market will evolve in ways which may be difficult to predict. For example, the Company anticipates that over time it will reach a point in most markets where the Company has achieved a market penetration such that investments in new customer acquisition are less productive and the continued growth of the Company’s revenue will require more focus on increasing the rate at which the Company’s existing customers purchase products. In the event of these or any other changes to the market, the Company’s continued success will depend on the Company’s ability to successfully adjust the Company’s strategy to meet the changing market dynamics. If the Company is unable to successfully adapt to changes in the Company’s markets, the Company’s business, financial condition and results of operations could suffer a material negative impact.
Possible shrinkage or lack of growth in the industry.
If no additional states, U.S. territories or countries allow the legal use of cannabis , or if one or more jurisdictions which currently allow it were to reverse position, the Company may not be able to grow, or the market for the Company’s products and services may decline. There can be no assurance that the number of jurisdictions which allow the use of cannabis will grow, and if it does not, there can be no assurance that the existing jurisdictions will not reverse position and disallow such use. If either of these events were to occur, not only would the growth of the Company’s business be materially impacted in an adverse manner, but the Company may experience declining revenue as the market for the Company’s products and services declines.


Product risks.
The Company’s product line is in a new and unique product category and there can be no guarantee the product will be appealing to consumers, or will be a success commercially. Cannabis products have not been recognized as safe by the Food and Drug Administration, for example. As with any product, there is the possibility that a claim could be brought against the Company if any consumer has a negative reaction to the product.
Illiquid investment, restrictions on transfer.
The Common Units are subject to legal and other restrictions on transfer and are investments for which no liquid market exists. As a consequence, a member may not be able to sell his, her or its Common Units if a member desired to do so, or to realize what he, she or it perceives to be its fair value in the event of a sale or liquidation. There is no market for the Common Units and it should not be assumed that a public market will develop. The Common Units may not be resold, transferred or otherwise disposed of by any holder except in compliance with applicable securities laws and the transfer restrictions contained in the Purchase Agreement and the Operating Agreement. Accordingly, Investors in this offering may not be able to liquidate their investment in the Company, or pledge the investment as collateral, and should consider their investment to be long-term.
Indemnification.
The Operating Agreement provides that under certain circumstances the managers and officers of the Company and/or others may be indemnified by the Company for any liabilities or losses arising out of activities in connection with the Company. Indemnification under such provision could reduce or deplete the assets of the Company.
Member may lose the right to hold the underlying equity securities.
A member may encounter an event (such as a criminal conviction) that would disqualify the member from owning equity in a licensed cannabis business, and thereby trigger the relevant provisions of the Operating Agreement. Additionally, aside from as provided for in the Subscription Agreement and the Operating Agreement, events, including a change in control of the Company, a liquidation or an event of insolvency, could occur prior to the time that a member is able to receive the benefit of any liquidation from a sale of the Company or a sale of Common Units.
Unitholders may owe taxes in excess of cash distributions from the Company.
Notwithstanding applicable provisions in the Operating Agreement, members may become subject to income tax liability for Company income in excess of the cash they actually receive from the Company. For example, if the Company borrows money, a member’s share of Company revenues used to pay principal on the loan will be included in its taxable income from the Company and will not be deductible; income from operations may be accrued by the Company in one tax year,


although payment is not actually received until the following year; taxable income or gain may be allocated to a member of the Company if there is a deficit in its capital account even though the member does not receive a corresponding distribution of Company revenues; and Company revenues may be expended for non-deductible costs or retained to establish a reserve for future estimated costs.
Common Units not registered under the Securities Act or state Blue Sky laws.
The Common Units will not be registered for public sale or resale under the Securities Act or the securities laws of any state, in reliance upon exemptions which depend in part upon the investment intent of the Investors. There is no present plan to register the Common Units in the future. Accordingly, the Common Units must be acquired for investment purposes only and not with a view to resale or other distribution. Such Common Units may only be offered and sold to such persons who are “accredited investors” as defined in Rule 501 of Regulation D promulgated under the Securities Act. Such Common Units will be offered without registration in reliance upon the Securities Act exemption for transactions not involving a public offering. Investors will be required to make certain representations to the Company, including that they are acquiring interests in the Company for their own account, for investment purposes only and not with a view to their distribution.
Risks associated with investing in securities in general.
Investment in the Common Units involves a high degree of risk, including the risk of the loss of all capital. The Company makes no guarantee or representation that the Company will achieve its business objectives or that a member will receive a return of his, her or its capital. Making an investment in the Company is speculative. Prospective members should carefully consider, among other factors, the matters described in this section, each of which could have a material adverse effect on the value of the Common Units offered hereby. As a result of these factors, as well as other risks set forth elsewhere in this document, there can be no assurance that the Company will be able to implement the business plan or that the Common Units will be of value in the future. A prospective member should only invest in the Common Units as part of an overall investment strategy and only if the prospective member is able to withstand a total loss of his, her or its investment.
Absence of operating history.
The Company was formed in 2018 and has extremely limited operating history on which to base an evaluation of its business and prospects and its success, if any, will be entirely dependent on its management and employees. The past performance, existing relationships and historic growth of the Company cannot be relied upon as indicia of future performance or success of the Company. The Company faces risks in developing its products and eventually bringing them to market. The Company also faces risks that it will lose some or all of the Company’s market share in existing businesses to competition, or that its business model becomes obsolete. Many of the Company’s business projects are not yet developed, and can be considered subject to risk associated with development-level businesses. The Company operates in a rapidly evolving market. Accordingly, the Company’s future prospects are difficult to evaluate, with the risk that the Company may not be successful. The Company will encounter risks and difficulties as a company operating in a rapidly evolving market and may not be able to successfully address


these risks and difficulties, which could materially harm its business and operating results. The risks detailed herein are material risks faced by the Company. If any of these risks occur, the Company’s business, its ability to receive revenues, its operating results and its financial condition could be seriously harmed.
Need for additional financing.
The Company anticipates that it will be able to raise sufficient capital to fund its anticipated development and operation through various sources. However, the estimated budget is based on certain assumptions, including assumptions related to the performance of the business, and there can be no assurance that unanticipated unbudgeted costs will not be incurred or that the business will not perform as expected. Future events, including problems, delays, expenses and difficulties frequently encountered in the industry, as well as changes in economic, regulatory or competitive conditions, may lead to cost increases that could make it necessary or advisable for the Company to seek additional financing. There can be no assurance that the Company would be able to obtain any necessary additional financing on terms acceptable to the Company, if at all. Also, additional financings may result in dilution of equity stakes in the Company.
Ability to obtain requisite permits.
Prior to beginning operations in a particular state, the Company’s subsidiaries must obtain certain operating, building and safety, and other necessary permits. The Company’s subsidiaries are in the process of obtaining such permits as required by law. The Company cannot guarantee that approval of such permits will be completed in the time frame required for beginning operations as planned. While the Company believes there should be no impediments to granting any necessary permits and licenses, or obtaining any consents or approvals, no assurances can be made that they will be obtained.
Reliance on management; potential disqualification of managers.
The Company’s Board of Managers has discretionary authority to structure, manage and monitor the Company’s activities, as well as to commit the Company assets, and, in doing so, has no responsibility to consult with any member. The continued availability of the services of the Company’s managers is critical to the Company’s success, and the Company has no key executive insurance on such managers. The Company’s managers could become disqualified from having an ownership stake in the Company under the cannabis agencies’ interpretation of the relevant state laws and regulations if any manager is convicted of a certain type of felony or fails to meet the residency requirements for owning equity in a company like the Company. The loss of services of any key manager, officer or employee or consultant may have a material adverse effect on the Company.
Manager conflict of interest.


The managers and their principals and employees are not required to render exclusive services in connection with the Company. Consequently, the managers or one or more of their principals or employees may render services in connection with other business projects, including other projects in the cannabis industry, during any and or all phases of operations. Furthermore, there may be conflicts of interest between a manager on the one hand, and the Company and its other members on the other. Such conflicts may include cash distribution policies, working capital reserve policies, and the opening of other enterprises in the cannabis industry by the managers.
Dependence on successful recruiting efforts.
The Company’s long-term success is heavily dependent upon its ability to recruit and train qualified personnel, including key management, industry talent, and technical and marketing personnel. Competition for highly qualified professional, technical, talent, business development, and management and marketing personnel is intense. There can be no assurance that the Company will be successful in attracting, training, or retaining the key personnel required to execute its business plan. If the Company is unsuccessful in its recruiting efforts, such failure could have a material adverse effect on its business, results of operations, financial condition and forecasted financial results.
Risks associated with valuation.
The assumption of Company value underlying this offer may not be representative of fair market value. There is no market for the Company’s Units. Likewise, no independent appraisal or valuation has been performed on the Company. Consequently, the Company has arbitrarily determined the value of the Company based on several factors: estimates of the Company’s business potential and earnings prospects; the present state of the Company’s development; assessment of the Company’s management; the Company’s capital needs; and consideration of these factors in relation to the market evaluations of comparable companies, the current conditions of the Company’s industry, and the economy as a whole. There can be no assurance that the valuation is representative of fair market value.
Fluctuation of operating results.
The Company and its management expect that the Company will experience substantial variations in net sales and operating results from quarter to quarter due to customer acceptance of its products. If customers do not accept the Company’s products, its sales and revenues will decline, resulting in a reduction in its operating income. Customer interest for the Company’s products could also be impacted by the timing of the Company’s introduction of new products. If competitors introduce new products around the same time that the Company issues new products, and if such competing products are superior to the Company’s, customers’ desire for the Company’s products could decrease, resulting in a decrease in Company sales and revenue. The Company may also lose market share to better-funded, aggressive competitors, particularly if large pharmaceutical companies or alcohol or tobacco companies decide to compete against the Company. Increased competition is likely to result in lower sales volumes, price reductions and reduced revenue and gross margins.


Risks inherent in an agricultural business
Adult-use and medical cannabis are agricultural products. There are risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although the products are usually grown indoors under climate-controlled conditions, with conditions monitored, there can be no assurance that natural elements will not have a material adverse effect on the production of the Company’s subsidiaries’ products.
Vulnerability to rising energy costs
Adult-use and medical cannabis growing operations consume considerable energy, making the Company potentially vulnerable to rising energy costs. Rising or volatile energy costs may have a material adverse effect as to the business, results of operations, financial condition or prospects of the Company.
Product recalls
Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. Such recalls cause unexpected expenses of the recall and any legal proceedings that might arise in connection with the recall. This can cause loss of a significant amount of sales. In addition, a product recall may require significant management attention. Although the Company’s subsidiaries have detailed procedures in place for testing its products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if one of the Company’s subsidiaries’ brands or products were subject to recall, the image of that brand and the Company could be harmed. Additionally, product recalls can lead to increased scrutiny of operations by applicable regulatory agencies, requiring further management attention and potential legal fees and other expenses.
Results of future clinical research
Research in Canada, the U.S. and internationally regarding the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis or isolated cannabinoids remains in early stages. There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids (such as CBD and THC). Future research and clinical trials may raise concerns regarding, and perceptions relating to, cannabis. Given these risks, uncertainties and assumptions, prospective Investors should not place undue reliance on existing articles and reports. Future research studies and clinical trials may reach negative conclusions regarding the medical benefits, viability, safety, efficacy, dosing, social acceptance or other facts and perceptions related to cannabis, which could have a material adverse effect on the demand for the Company’s products with the potential to lead to a material adverse effect on the Company’s business, financial condition, results of operations or prospects.


Reliance on key inputs
The cannabis business is dependent on a number of key inputs and their related costs including raw materials and supplies related to growing operations, as well as electricity, water and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition, results of operations or prospects of the Company. Some of these inputs may only be available from a single supplier or a limited group of suppliers. If a sole source supplier was to go out of business, the Company might be unable to find a replacement for such source in a timely manner or at all. If a sole source supplier were to be acquired by a competitor, that competitor may elect not to sell to the Company in the future. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the business, financial condition, results of operations or prospects of the Company.
Competition from synthetic production and technological advances
The pharmaceutical industry may attempt to dominate the cannabis industry through the development and distribution of synthetic products which emulate the effects and treatment of organic cannabis. If they are successful, the widespread popularity of such synthetic products could change the demand, volume and profitability of the cannabis industry. This could adversely affect the ability of the Company to obtain long-term profitability and success through the sustainable and profitable operation of its business. There may be unknown additional regulatory fees and taxes that may be assessed in the future.
Constraints on marketing products
The development of the Company’s business and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by government regulatory bodies. The regulatory environment in the United States limits companies’ abilities to compete for market share in a manner similar to other industries. If the Company is unable to effectively market its products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for its products, the Company’s sales and results of operations could be adversely affected.
Fraudulent or illegal activity by employees, contractors and consultants
The Company is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent unauthorized activities that violate: (i) government regulations; (ii) manufacturing standards; (iii) federal and provincial healthcare fraud and abuse laws and regulations; or (iv) laws that require the true, complete and accurate reporting of financial information or data. It may not always be possible for the Company to identify and deter misconduct by its employees and other third parties, and the precautions taken by the Company to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting the Company from governmental investigations or other actions or


lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against the Company, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on the Company’s business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of the Company’s operations, any of which could have a material adverse effect on the Company’s business, financial condition, results of operations or prospects.
Information technology systems and cyber-attacks
The Company’s operations depend, in part, on how well it and its suppliers protect networks, equipment, and information technology systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company’s reputation and results of operations. The Company’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.
Security breaches
Given the nature of the Company’s products and its deficit of legal availability, as well as the concentration of inventory in its facilities, despite meeting or exceeding all legislative security requirements, there remains a risk of shrinkage as well as theft. A security breach at one of the Company’s facilities could expose the Company to additional liability and to potentially costly litigation, increase expenses relating to the resolution and future prevention of these breaches and may deter potential patients from choosing the Company’s products.
In addition, the Company collects and stores personal information about its patients and is responsible for protecting that information from privacy breaches. A privacy breach may occur through procedural or process failure, information technology malfunction, or deliberate unauthorized intrusions. Theft of data for competitive purposes, particularly patient lists and preferences, is an ongoing risk whether perpetrated via employee collusion or negligence or through deliberate cyber-attack. Any such theft or privacy breach would have a material adverse effect on the Company’s business, financial condition and results of operations.


THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE ENUMERATION OR EXPLANATION OF THE RISKS INVOLVED IN AN INVESTMENT IN THE COMPANY. EACH INVESTOR SHOULD READ THIS AGREEMENT IN ITS ENTIRETY AND CONSULT WITH THE INVESTOR’S OWN ADVISOR BEFORE DECIDING WHETHER TO INVEST IN THE COMPANY. IN ADDITION, AS THE COMPANY’S INVESTMENT PROGRAM DEVELOPS AND CHANGES OVER TIME, AN INVESTMENT IN THE COMPANY MAY BE SUBJECT TO ADDITIONAL AND DIFFERENT RISK FACTORS.
EXHIBIT C
TERM SHEET
Issuer:
Ascend Wellness Holdings, LLC (the “Company”).
Issue:
Unsecured convertible notes of the Company (the “Convertible Notes”). Each Convertible Note will be convertible into equity securities of the Company, as described in greater detail below.
Issue Size:
Up to US$30,000,000 principal amount of Convertible Notes or such greater amount as may be determined by the Company (the “Offering”).
Coupon:Interest on the Convertible Notes will accrue commencing on the Closing Date of the Note at a rate of: (a) eight percent (8%) per annum from the Closing Date through and including the twelve (12) month anniversary of the Closing Date, (b) ten percent (10%) per annum following the twelve (12) month anniversary of the Closing Date through and including the fifteen (15) month anniversary of the Closing Date, and (c) thirteen percent (13%) per annum following the fifteen (15) month anniversary of the Closing Date and thereafter; which interest will be “paid-in-kind” and added to the outstanding principal amount and be computed on the basis of a three hundred sixty five (365) day year. Notwithstanding anything to the contrary, in the event the Convertible Notes are converted prior to the twelve (12) month anniversary of the Closing Date, the interest payable will be calculated as of the twelve (12) month anniversary of the Closing Date. Interest paid to non-US holders may be subject to US withholding tax.


Maturity Date:
The term of the Convertible Notes will be for a period of 24 months from the Closing Date. Provided that no Go-Public Transaction (as defined herein) has occurred, on the Maturity Date, the principal aggregate amount of the Convertible Notes and the accrued and unpaid interest thereon will be payable in cash. Notwithstanding the foregoing, a holder of the Convertible Notes may elect to convert its principal amount of the Convertible Notes and the accrued and unpaid interest thereon, subject to applicable withholding tax, into Common Units of the Company (“Common Units”), at a price per Common Unit of $3.00 (subject to appropriate adjustments for future unit splits, unit dividends and similar recapitalization events, the “Maturity Conversion Price”).
Minimum Investment:
US$100,000
Use of Proceeds:
The net proceeds from the Offering will be used for working capital requirements and other general corporate purposes, including potential acquisitions.
Conversion:
The Convertible Notes and the accrued and unpaid interest thereon, less applicable withholding tax, will automatically be converted into equity securities of the Company, which equity securities will automatically be exchanged for the same type of security (the “Go-Public Security”) issued in connection with a Go-Public Transaction (as defined below), with such numbers of equity securities of the Company issued on the basis of a price equal to the lesser of: (a) (i) in the event the Go-Public Transaction occurs on or before 12 months from the Closing Date, a 20% discount to the issue price of the Go-Public Securities; (ii) in the event the Go-Public Transaction occurs after 12 months from the Closing Date, but before the Maturity Date, a 25% discount to the issue price of the Go-Public Securities; and (b) the equivalent per share price applicable to Common Units issued at the Maturity Conversion Price.
Go-Public Transaction:
A “Go-Public Transaction” shall be defined as the closing of: (i) a transaction resulting in the business or assets of the Company being listed (directly or indirectly) on the Canadian Securities Exchange or any other recognized securities exchange (the “Stock Exchange”), including but not limited to an initial public offering, plan of arrangement, amalgamation, reverse take-over or other business combination pursuant to which the securities of the Company (or any resulting issuer or parent thereof) are listed on the Stock Exchange; and (ii) a concurrent financing of equity securities of the Company for aggregate gross proceeds of greater than or equal to US$20,000,000.
Convertible Note holders will not have the right on a Go-Public Transaction to be repaid the principal amount of the Convertible Notes and the accrued and unpaid interest thereon in cash by the Company. Instead, the Convertible Notes will automatically convert into equity securities of the Company, which equity securities will automatically be exchanged for Go- Public Securities.


Change of
Control:
Other than in connection with the Go-Public Transaction, within 30 days following the consummation of: (i) any transaction (whether by purchase, merger or otherwise) whereby a person or persons acting jointly or in concert directly or indirectly acquires the right to cast, at a general meeting of shareholders of the Company, more than 50% of the votes that may be ordinarily cast at a general meeting; (ii) the Company’s amalgamation, consolidation or merger with or into any other person or any merger of another person into the Company, unless in each case the holders of voting securities of the Company immediately prior to such amalgamation, consolidation or merger hold securities representing 50% or more of the voting control or direction in the Company or the successor entity upon completion of such amalgamation, consolidation or merger; or (iii) any conveyance, transfer, sale lease or other disposition of all or substantially all of the Company’s and the Company’s subsidiaries’ assets and properties, taken as a whole, to another arm’s length person (collectively, a “Change of Control”), the Company shall make an offer in writing to holders of Convertible Notes (the “Change of Control Offer”) to, at the Convertible Note holders’ election, either: (i) purchase the Convertible Notes from such holders for cash at 102% of the principal amount thereof and the accrued and unpaid interest thereon; or (ii) convert the Convertible Notes at a price equal to 95% of the Maturity Conversion Price.
If 90% or more of the principal amount of the Convertible Notes outstanding on the date of the giving of notice of the Change of Control have been tendered to the Company pursuant to an offer made to the holders of all Convertible Notes, the Company will have the right to redeem all the remaining Convertible Notes for cash at 102% of the principal amount thereof and the accrued and unpaid interest thereon.


Form and
Terms of
Offering:
The Offering will be offered for purchase and sales (i) to accredited investors in Canada pursuant to available private placement exemptions; (ii) to “accredited investors” (within the meaning of Rule 501(a) of the United States Securities Act of 1933, as amended (the “Securities Act”)) in the U.S. pursuant to available private placement exemptions; (iii) to investors resident in jurisdictions outside of Canada and the U.S., in each case in accordance with all applicable laws; provided that no prospectus, registration statement or similar document is required to be filed in such foreign jurisdiction.
The Convertible Notes will not be qualified investments under the Income Tax Act (Canada) for registered accounts.
The Convertible Notes may not be transferred in the United States other than to an “institutional accredited investor” in compliance with an available exemption from the registration requirements of the Securities Act. All transfers of Convertible Notes will be subject to the prior approval of the Company in order to ensure compliance with applicable securities laws, including the Securities Act.
At or prior to, and as a condition precedent in favor of the Company for, the Closing, each subscriber that is not a U.S. person shall deliver to the Company an IRS Form W-8BEN or W-8BEN-E and each subscriber that is a U.S. person shall deliver to the Company an IRS Form W-9, in each case in form and completed in a manner satisfactory to the Company.
Each subscriber shall irrevocably grant to the Company and its designees an irrevocable proxy and power of attorney, with full power of substitution, with full power and authority in the subscriber’s place and stead to execute and deliver all documents, instruments and agreements, including any lock-up agreement, in such manner and on such terms as is customary, in respect of such subscriber’s equity securities of the Company in respect of the Go-Public Transaction, and to vote all voting securities of the Company in respect of the Notes prior to conversion in such manner as more fully described in the Subscription Agreement.
Hold Period:
The Company is a private company and there is currently no market through which its securities may be sold. Holders may not be able to resell Convertible Notes purchased under this Term Sheet. The Convertible Notes and the securities issuable thereunder may be subject to an indefinite hold period pursuant to applicable securities laws.
Conditions:
The Issue remains subject to receipt of Board of Managers approval by the Company and the completion of all customary documentation for transactions of this nature.
Closing Date:
Closing will be on a date or date(s) as the Company may determine.


EXHIBIT D
WIRE INSTRUCTIONS
(see attached)


FORM A
CANADIAN ACCREDITED INVESTOR STATUS CERTIFICATE
TO BE COMPLETED BY CANADIAN SUBSCRIBERS.
The categories listed herein contain certain specifically defined terms. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your broker and/or legal advisor before completing this certificate.
TO: ASCEND WELLNESS HOLDINGS, LLC (the “Company”)
In connection with the purchase by the undersigned Investor of the Convertible Notes, the Investor, on its own behalf or on behalf of each Disclosed Principal for whom the Investor is acting (collectively, the “Investor”), hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its counsel are relying thereon) that:
(a)the Investor is resident in or otherwise subject to the securities laws of one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island or Newfoundland and Labrador;
(b)the Investor is purchasing the Convertible Notes as principal for its own account and not for the benefit of any other person or is deemed to be purchasing as principal pursuant to NI 45-106;
(c)the Investor is an “accredited investor” within the meaning of NI 45-106 or Section 73.3 of the Securities Act (Ontario) on the basis that the Investor fits within one of the categories of an “accredited investor” reproduced below beside which the Investor has indicated the undersigned belongs to such category;
(d)the Investor was not created or used solely to purchase or hold securities as an accredited investor as described in paragraph (m) below;
(e)if the Investor is purchasing under category (j), (k) or (l) below, it has completed and signed Exhibit “I” attached hereto; and
(f)upon execution of this Form A by the Investor (and if applicable, Exhibit “I” to Form A), this Form A (and if applicable, Exhibit “I” to Form A) shall be incorporated into and form a part of the Subscription Agreement to which this Form A is attached.
(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)
(a)(i) except in Ontario, a Canadian financial institution, or a Schedule III bank; or
(ii) in Ontario, a financial institution that is (A) a bank listed in Schedule I, II or III of the Bank Act (Canada); (B) an association to which the Cooperative Credit Associations Act (Canada) applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act; or (C) a loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative or credit union league or federation that is authorized by a statute of Canada or Ontario to carry on business in Canada or Ontario, as the case may be;
(b)the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);
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(c)a subsidiary of any person or company referred to in paragraphs (a) or (b), if the person or company owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;
(d)a person or company registered under the securities legislation of a jurisdiction (province or territory) of Canada as an adviser or dealer (or in Ontario, except as otherwise prescribed by the regulations under the Securities Act (Ontario));
(e)an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);
(e.1)an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);
(f)the Government of Canada or a jurisdiction (province or territory) of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada;
(g)a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;
(h)any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;
(i)a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction (province or territory) of Canada;
(j)an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes, but net of any related liabilities, exceeds C$1,000,000 (completion of Exhibit “I” is also required);
(j.1)an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds C$5,000,000;
(k)an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded C$300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year (completion of Exhibit “I” is also required);
(l)an individual who, either alone or with a spouse, has net assets of at least C$5,000,000 (completion of Exhibit “I” is also required);
(m)a person, other than an individual or investment fund, that has net assets of at least C$5,000,000 as shown on its most recently prepared financial statements;
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(n)an investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] or 2.19 [Additional investment in investment funds] of NI 45-106, or (iii) a person described in sub-paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106;
(o)an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;
(p)a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;
(q)a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction;
(r)a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;
(s)an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;
(t)a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors;
(u)an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser;
(v)a person that is recognized or designated by the securities regulatory authority or, except in Ontario or Québec, the regulator as an accredited investor;
(w)a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse; or
(x)in Ontario, such other persons or companies as may be prescribed by the regulations under the Securities Act (Ontario).
***If checking this category (x), please provide a description of how this requirement is met.
For the purposes hereof, the following definitions are included for convenience:
(a)“bank” means a bank named in Schedule I or II of the Bank Act (Canada);
(b)“Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative,
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or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;
(c)“company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization;
(d)“eligibility adviser” means:
(i)a person that is registered as an investment dealer and authorized to give advice with respect to the type of security being distributed, and
(ii)in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not
(A)have a professional, business or personal relationship with the issuer, or any of its directors, executive officer, founders, or control persons, and
(B)have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months;
(e)“executive officer” means, for an issuer, an individual who is: (i) a chair, vice-chair or president, (ii) a vice-president in charge of a principal business unit, division or function including sales, finance or production, or (iii) performing a policy-making function in respect of the issuer;
(f)“financial assets” means (i) cash, (ii) securities, or (iii) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;
(g)“fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;
(h)“investment fund” has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure;
(i)“person” includes: (i) an individual, (ii) a corporation, (iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons whether incorporated or not, and (iv) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative.
(j)“related liabilities” means (i) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or (ii) liabilities that are secured by financial assets;
(k)“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);
(l)“spouse” means, an individual who, (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and
(m)“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.
In NI 45-106 a person or company is an affiliate of another person or company if one of them is a subsidiary of the other, or if each of them is controlled by the same person.
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In NI 45-106 and except in Part 2 Division 4 (Employee, Executive Officer, Director and Consultant Exemption) of NI 45-106, a person (first person) is considered to control another person (second person) if (a) the first person, beneficially owns or directly or indirectly exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation, (b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or © the second person is a limited partnership and the general partner of the limited partnership is the first person.
The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time (as defined in the Subscription Agreement to which this Form A is attached) and the Investor acknowledges that this Accredited Investor Status Certificate is incorporated into and forms a part of the Subscription Agreement to which it is attached. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time.
Dated:Signed:
Witness (If Investor is an Individual)
Print the name of Investor
Print Name of Witness
If Investor is a corporation or other entity, print name and title of Authorized Signing Officer
A- 5

EXHIBIT “I” TO FORM A
FORM FOR INDIVIDUAL ACCREDITED INVESTORS
THIS “EXHIBIT I” TO FORM A IS TO BE COMPLETED BY ACCREDITED INVESTORS WHO ARE INDIVIDUALS SUBSCRIBING UNDER CATEGORIES (J), (K) OR (L) IN FORM A TO WHICH THIS EXHIBIT “I” IS ATTACHED.
WARNING!
This investment is risky. Don’t invest unless you can afford to lose all the money you pay for
this investment.
SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY SUBSCRIBER
1. About your investment
Type of securities: Convertible Note
Issuer: Ascend Wellness Holdings, LLC
Purchased from: Issuer
SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that:
Your
Initials
Risk of loss - You could lose your entire investment of US$ . [Instruction: Insert the total dollar amount of the investment.]
Liquidity risk - You may not be able to sell your investment quickly - or at all.
Lack of information - You may receive little or no information about your investment.
Lack of advice - You will not receive advice from the salesperson about whether this
investment is suitable for you unless the salesperson is registered. The salesperson is the
person who meets with, or provides information to, you about making this investment. To
check whether the salesperson is registered, go to www.aretheyregistered.ca.
3. Accredited investor status
You must meet at least one of the following criteria to be able to make this investment.
Your
initials
Initial the statement that applies to you. (You may initial more than one statement.) The
person identified in section 6 is responsible for ensuring that you meet the definition of
accredited investor. That person, or the salesperson identified in section 5, can help you if
you have questions about whether you meet these criteria.
•Your net income before taxes was more than C$200,000 in each of the two most recent calendar years, and you expect it to be more than C$200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.)
•Your net income before taxes combined with your spouse’s was more than C$300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than C$300,000 in the current calendar year.
A- 6

•Either alone or with your spouse, you own more than C$1 million in cash and
securities, after subtracting any debt related to the cash and securities.
•Either alone or with your spouse, you have net assets worth more than C$5 million. (Your net assets are your total assets (including real estate) minus your total debt.)
4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
First and last name (please print):
Signature:
Date:
SECTION 5 TO BE COMPLETED BY THE SALESPERSON
5. Salesperson information
[Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
First and last name of salesperson (please print):
Telephone:
Email:
Name of firm (if registered):
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY SUBSCRIBER
6. For more information about this investment
Ascend Wellness Holdings, LLC
1411 Broadway, 16th Floor
New York, NY 10018
Attention: Sarah Levy
Email: slevy@awholdings.com
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca.
Form instructions:
1.This form does not mandate the use of a specific font size or style but the font must be legible.
2.The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form.
3.The purchaser must sign this form. Each of the purchaser and the issuer or selling security holder must receive a copy of this form signed by the purchaser. The issuer or selling security holder is required to keep a copy of this form for 8 years after the distribution.
A- 7

FORM B
INTERNATIONAL JURISDICTION CERTIFICATE
TO BE COMPLETED BY SUBSCRIBERS WHO ARE RESIDENT OUTSIDE OF CANADA AND THE UNITED STATES
Terms not otherwise defined herein will have the definition ascribed thereto in the Subscription Agreement to which this Form B is attached.
TO: ASCEND WELLNESS HOLDINGS, LLC (the “Company”)
In connection with the purchase by the undersigned Investor of the Convertible Notes, the Investor, on its own behalf or on behalf of each Disclosed Principal for whom the Investor is acting (collectively, the “Investor”), hereby represents, warrants, covenants and certifies to the Company (and acknowledges that the Company and its counsel are relying thereon) that:
(a)the Investor is knowledgeable of, or has been independently advised as to, the applicable Securities Laws of the securities regulators having application in the jurisdiction in which the Investor is resident which would apply to the acquisition of the Convertible Notes (the “International Jurisdiction”);
(b)the Investor is purchasing the Convertible Notes pursuant to exemptions from prospectus or equivalent requirements under applicable Securities Laws or, if such is not applicable, the Investor is permitted to purchase the Convertible Notes under the applicable Securities Laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions;
(c)the applicable Securities Laws of the authorities in the International Jurisdiction do not require the Company to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Convertible Notes (or Underlying Securities);
(d)the purchase of the Convertible Notes by the Investor does not trigger:
(i)any obligation of the Company to prepare and file a prospectus, registration statement, offering memorandum or similar document, or any other report or notice with respect to such purchase in the International Jurisdiction;
(ii)any continuous disclosure reporting obligation of the Company in the International Jurisdiction; or
(iii)any registration or other similar obligation on the part of the Company in the International Jurisdiction;
(e)the distribution of the Convertible Notes (and the Underlying Securities) to the Investor by the Company complies with the laws of the International Jurisdiction;
(f)the Investor will, if requested by the Company, deliver to the Company a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in paragraphs (b), (c), (d) and (e) above to the satisfaction of the Company, acting reasonably; and
(g)the Investor will not sell, transfer or dispose of the Convertible Notes (or the Underlying Securities) except in accordance with all applicable Securities Laws of the securities regulators in the International Jurisdiction and the Investor acknowledges that the Company shall have no obligation to register any purported sale, transfer or disposition.


The foregoing representations, warranties, covenants and certifications contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time (as defined in the Subscription Agreement to which this Form B is attached) and the Investor acknowledges that this international jurisdiction certificate is incorporated into and forms a part of the Subscription Agreement to which it is attached. If any such representations, warranties and certifications shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Company prior to the Closing Time.
Dated:Signed:
Witness (If Investor is an Individual)
Print the name of Investor
Print Name of Witness
If Investor is a corporation or other entity, print name and title of Authorized Signatory
B– 2

FORM C
U.S. ACCREDITED INVESTOR CERTIFICATE
Investors that are U.S. Accredited Investors must review and complete the following U.S. Accredited Investor Certificate.
Terms not otherwise defined herein will have the definition ascribed thereto in the Subscription Agreement to which this Form C is attached.
TO: ASCEND WELLNESS HOLDINGS, LLC (the “Company”)
The undersigned (the “Investor”), on behalf of itself and any Disclosed Principal, represents, warrants and covenants (which representations, warranties and covenants shall survive the Closing) to and with the Company and acknowledges that the Company is relying thereon that:
(a)it (and any Disclosed Principal), alone or with the assistance of its professional advisors, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Convertible Notes and is able, without impairing its financial condition, to hold the Convertible Notes or the Underlying Securities for an indefinite period of time and to bear the economic risks, and withstand a complete loss, of such investment;
(b)it (and any Disclosed Principal) acknowledges that the Convertible Notes and the Underlying Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and will, therefore, be “restricted securities”, as such term is defined under Rule 144(a)(3) under the U.S. Securities Act, and that the offer and sale of the Convertible Notes to it will be made in reliance upon an exemption from registration available to the Company pursuant to Rule 506(b) of Regulation D under the U.S. Securities Act and/or Section 4(a)(2) thereof;
(c)it is purchasing the Convertible Notes for its own account, or for the account of another U.S. Accredited Investor over which it exercises sole investment discretion, for investment purposes only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Convertible Notes or the Underlying Securities in the United States; provided, however, that this paragraph shall not restrict the Investor (and any Disclosed Principal) from selling or otherwise disposing of any of the Convertible Notes or the Underlying Securities pursuant to a registration statement effective under the U.S. Securities Act and any applicable state securities laws or under an exemption from such registration requirements;
(d)it (and any Disclosed Principal) is a U.S. Accredited Investor that satisfies one or more of the categories of U.S. Accredited Investor indicated below (the Investor must mark “S” for the Investor and “DP” for the Disclosed Principal on the appropriate line(s)):
Category 1.
_____
A bank, as defined in section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
Category 2.
_____
A savings and loan association or other institution as defined in section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
Category 3.
_____
A broker or dealer registered pursuant to section 15 of the United States Securities Exchange Act of 1934, as amended; or
Category 4.
_____
An insurance company as defined in section 2(a)(13) of the U.S. Securities Act; or



Category 5._____An investment company registered under the United States Investment Company Act of 1940, as amended; or
Category 6._____A business development company as defined in section 2(a)(48) of the United States Investment Company Act of 1940, as amended; or
Category 7._____A small business investment company licensed by the U.S. Small Business Administration under section 301 (c) or (d) of the United States Small Business Investment Act of 1958, as amended; or
Category 8._____A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S.$5,000,000; or
Category 9._____An employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, as amended, in which the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a selfdirected plan, with investment decisions made solely by persons who are accredited investors; or
Category 10._____A private business development company as defined in section 202(a)(22) of the United States Investment Advisers Act of 1940, as amended; or
Category 11._____An organization described in section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of U.S.$5,000,000; or
Category 12._____Any director or executive officer of the Company; or
Category 13._____
A natural person (including an Individual Retirement Account (“IRA”) owned by such person) with individual net worth, or joint net worth with that person’s spouse, at the time of this purchase exceeds U.S.$1,000,000;
Note:
(i)person’s primary residence shall not be included as an asset;
(ii)indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
(ii)indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; or
Category 14._____A natural person (including an IRA owned by such person) who had an individual income in excess of U.S.$200,000 in each of the two most recent years or joint income with that person’s spouse in excess of
C– 2

C- 3 B5219985.3 U.S.$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or
Category 15._____A trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; or
Category 16._____Any entity in which all of the equity owners meet the requirements of at least one of the above categories;
(e)it (and any Disclosed Principal) has not purchased the Convertible Notes as a result of any form of “general solicitation” or “general advertising” (as used in Rule 502(c) of Regulation D under the U.S. Securities Act), including, without limitation, any advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, television or internet or any seminar or meeting whose attendees have been invited by “general solicitation” or “general advertising”;
(f)it (and any Disclosed Principal) agrees that if it decides to offer, sell, pledge or otherwise transfer any of the Convertible Notes or the Underlying Securities, it will not offer, sell, pledge or otherwise transfer any of such securities, directly or indirectly, unless the transfer is:
(i)pursuant to a registration statement effective under the U.S. Securities Act and applicable state securities laws; or
(ii)pursuant to an exemption from registration under the U.S. Securities Act;
and, in either case, it has furnished to the Company an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company to such effect;
(g)the Convertible Notes purchased hereunder will be represented by physical certificates and it understands and acknowledges that upon the original issuance thereof, and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, certificates representing the Securities and all certificates issued in exchange therefore or in substitution thereof, will bear the legends set forth in the Subscription Agreement;
(h)it (and any Disclosed Principal) has had the opportunity to ask questions of and receive answers from the Company regarding the investment, and has received all the information regarding the Company that it has requested;
(i)it (and any Disclosed Principal) has had access to such information concerning the Company as it has considered necessary or appropriate in connection with its investment decision to acquire the Convertible Notes;
(j)it (and any Disclosed Principal) is aware that purchasing, holding and disposing of the Convertible Notes or the Underlying Securities may have tax consequences under the laws of both Canada and the United States, the tax consequences for prospective investors who are resident in, or citizens of, the United States are not described in this Subscription Agreement, and it is solely responsible for determining the tax consequences applicable to its particular circumstances and should consult its own tax advisors concerning investment in the Convertible Notes; in particular, but without limitation, no determination has been made whether the Company is or will be a “passive foreign investment company” within the meaning of section 1297 of the United States Internal Revenue Code of 1986, as amended; and
(k)it (and any Disclosed Principal) acknowledges that the representations, warranties and covenants contained in this Schedule are made by it with the intent that they may be relied upon by the Company in determining its eligibility to purchase the Convertible Notes. It (and any Disclosed Principal) agrees that by accepting
C– 3

the Convertible Notes, it shall be representing and warranting that the representations and warranties above are true as at the Closing and as at the date of conversion of Convertible Notes for the Underlying Securities with the same force and effect as if they had been made by it at the Closing and that they shall survive the purchase by it of the Convertible Notes and shall continue in full force and effect notwithstanding any subsequent disposition by it of the Convertible Notes.
The Investor undertakes to notify the Company immediately of any change in any representation, warranty or other information relating to the Investor (and any Disclosed Principal) set forth herein which takes place prior to the Closing.
If a Corporation, Partnership or Other Entity:
If an Individual:
Name of Entity
Signature
Type of Entity
Print or Type Name
Signature of Person Signing
Print or Type Name and Title of Person Signing
C– 4

FORM D
W-8BEN (Non U.S. Individuals)
W-8BEN-E (Non U.S. Entities)
(see attached)


FORM E
W-9
(U.S. Persons – individuals or entities)
(see attached)