4FRONT HOLDINGS LLC AND 4FRONT CORP. AND 1196260 B.C. LTD. AND CANNEX CAPITAL HOLDINGS INC. BUSINESS COMBINATION AGREEMENT DATED MARCH 1, 2019

ARTICLE 1 INTERPRETATION

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

ARTICLE 2 THE BUSINESS COMBINATION

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

2.10

2.11

2.12

2.13

2.14

2.15

ARTICLE 3 CONDITIONS

3.1

3.2

3.3

3.4

3.5

3.6

ARTICLE 4 ADDITIONAL AGREEMENTS

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

ARTICLE 5 TERM, TERMINATION, AMENDMENT AND WAIVER

5.1

5.2

5.3

5.4

5.5

ARTICLE 6 GENERAL PROVISIONS

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

6.9

6.10

6.11

6.12

SCHEDULE “A” PLAN OF ARRANGEMENT

SCHEDULE “B” [INTENTIONALLY DELETED]

SCHEDULE “C” REPRESENTATIONS AND WARRANTIES OF CANNEX

SCHEDULE “D” REPRESENTATIONS AND WARRANTIES OF BC ▇▇▇▇▇

SCHEDULE “E” REPRESENTATIONS AND WARRANTIES OF 4FRONT

SCHEDULE “F” REPRESENTATIONS AND WARRANTIES OF NEVADA HOLDCO

SCHEDULE “G” COVENANTS OF CANNEX

SCHEDULE “H” COVENANTS OF 4FRONT

SCHEDULE “I” COVENANTS OF BC NEWCO

SCHEDULE “J” COVENANTS OF NEVADA HOLDCO

SCHEDULE

SCHEDULE

SCHEDULE

SCHEDULE

SCHEDULE

The Parties seek to combine their respective companies, all to be owned by the Resulting Issuer.

The Parties intend to carry out the transactions contemplated in this Agreement by way of arrangement under the provisions of the BCBCA, as applicable.

Each of the 4Front Board, Nevada Holdco Board, BC Newco Board and Cannex Board has determined, after receiving financial and/or legal advice, that the consideration to be received by their respective shareholders or members, as applicable, directly or indirectly, pursuant to the Business Combination is fair and that the Business Combination is in the best interests of the respective members or shareholders, as applicable, of 4Front, Nevada Holdco, BC Newco and Cannex.

Contemporaneous with the execution and delivery hereof, the Cannex Shareholder Voting Agreements and the 4Front Voting Agreements were executed and delivered.

Prior to the Plan of Arrangement becoming effective, the Pre-Arrangement Transactions will have been completed.

Definitions

Interpretation Not Affected by Headings

Number and Gender

Date for Any Action

Currency

Knowledge

In this Agreement, references to “the knowledge of Cannex” means the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, in each case, after making reasonable enquiries regarding the relevant matter.

In this Agreement, references to “the knowledge of 4Front” means the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, in each case, after making reasonable enquiries regarding the relevant matter.

Schedules

Representations and Warranties

Cannex makes those representations and warranties set forth in Schedule “C” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

BC Newco makes those representations and warranties set forth in Schedule “D” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

4Front makes those representations and warranties set forth in Schedule “E” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

Nevada Holdco makes those representations and warranties set forth in Schedule “F” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

Each Party acknowledges that it has conducted to its satisfaction an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties, and projected operations of the other Parties and their respective Subsidiaries (if applicable) and, in making its determination to proceed with the transactions contemplated by this Agreement, each Party has relied solely on (i) the results of its own independent investigation and verification and (ii) the representations and warranties of such other Party expressly and specifically set forth in the applicable Schedules hereto, as qualified by the applicable Disclosure Letter, and has not relied on anything else. The representations and warranties of each Party in the applicable Schedules hereto, as qualified by the applicable Disclosure Letter, constitute the sole and exclusive representations and warranties of such Party to the other Parties in connection with the transactions contemplated hereby. Each of the Parties understands, acknowledges, and agrees that all other representations and warranties of any kind or nature expressed or implied (including as to the accuracy or completeness of any of the information provided to such Party in the due diligence process, or any information relating to the future or historical financial condition, results of operations, assets, or liabilities of any Party’s or its Subsidiaries’ assets, or relating to any other information provided to such Party) are specifically disclaimed by the Parties, and such information and such other representations and warranties shall not (except as otherwise expressly represented and warranted to this Agreement) form the basis of any claim against the Parties, their respective affiliates, or any of their respective officers, directors, partners, members, employees, agents, representatives, successors, and permitted assigns with respect thereto or with respect to any related matter. With respect to any projection or forecast delivered by or on behalf of any Party or its Subsidiaries to any other Party, each Party acknowledges that (i) there are uncertainties inherent in attempting to make such projections and other forecasts and plans, and such Party is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections, and other forecasts and plans so furnished to it, including the reasonableness of the assumptions underlying such estimates, projections, and forecasts, (ii) the accuracy and correctness of such projections and forecasts may be affected by information that may become available through discovery or otherwise after the date of such projections and forecasts, (iii) it is familiar with each of the foregoing, and (iv) no other Party, its affiliates, or any of their respective officers, directors, partners, members, employees, agents, representatives, successors, or permitted assigns is making any representation or warranty with respect to such projections or forecasts, including the reasonableness of the assumptions underlying such projections or forecasts.

Covenants

Cannex makes those covenants set forth in Schedule “G” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

4Front makes those covenants set forth in Schedule “H” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

BC Newco makes those covenants set forth in Schedule “I” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

Nevada Holdco makes those covenants set forth in Schedule “J” and does hereby acknowledge and agree that the other Parties are relying thereon in executing and delivering this Agreement.

Business Combination

Interim Order

for the class of Persons to whom notice is to be provided in respect of the Business Combination, the Nevada Holdco Meeting and the Cannex Meeting, and for the manner in which such notice is to be provided;

for calling and holding of the Nevada Holdco Meeting and the Cannex Meeting and the confirmation of the record date for the purposes of determining: (i) the Nevada Holdco Shareholders entitled to receive materials for and vote at the Nevada Holdco Meeting; and (ii) the holders of Cannex Shares entitled to receive materials for and vote at the Cannex Meeting;

that the requisite approval for the Nevada Holdco Business Combination Resolution (the “Nevada Holdco Shareholder Approval”) shall be: (i) 66²⁄₃% of the votes cast on the Nevada Holdco Business Combination Resolution by Nevada Holdco Shareholders present in person or by proxy at the Nevada Holdco Meeting, each voting separately by class; and (ii) majority of the votes cast by minority shareholders of Nevada Holdco approving the Business Combination and the Plan of Arrangement as contemplated by OSC Rule 56-501 and NI 41-101;

that, in all other respects, the terms, conditions and restrictions of the Nevada Holdco organizational documents, including quorum requirements and other matters, shall apply in respect of the Nevada Holdco Meeting;

for the grant of Nevada Holdco Dissent Rights as contemplated in the Plan of Arrangement;

that the Nevada Holdco Meeting may be adjourned from time to time by Nevada Holdco, subject to the terms of this Agreement, without the need for additional approval of the Court;

that the record date for Nevada Holdco Shareholders entitled to notice of and to vote at the Nevada Holdco Meeting will not change in respect of any adjournment(s) of the Nevada Holdco Meeting, except such change as may be required by applicable Law;

that the requisite approval for the Cannex Component of the Business Combination Resolution (the “Cannex Shareholder Approval”) shall be: (i) 66²⁄₃% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares present in person or by proxy at the Cannex Meeting voting as a class; 66²⁄₃% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Common Shares present in person or by proxy at the Cannex Meeting voting as a class; and (iii) majority of the votes cast by minority shareholders of Cannex approving the Business Combination and the Plan of Arrangement, as contemplated by OSC Rule 56-501 and NI 41-101;

that, in all other respects, the terms, conditions and restrictions of the Cannex organizational documents, including quorum requirements and other matters, shall apply in respect of the Cannex Meeting;

for the grant of Cannex Dissent Rights as contemplated in the Plan of Arrangement;

that the Cannex Meeting may be adjourned from time to time by Cannex, subject to the terms of this Agreement, without the need for additional approval of the Court;

that the record date for Cannex Shareholders entitled to notice of and to vote at the Cannex Meeting will not change in respect of any adjournment(s) of the Cannex Meeting, except such change as may be required by applicable Law;

that it is Nevada Holdco’s, Cannex’s, and BC Newco’s intention to rely upon the exemption from registration provided by Section 3(a)(10) of the U.S. Securities Act with respect to the issuance of the Resulting Issuer Shares, the Resulting Issuer Replacement Options for Proportionate Voting Shares, the Resulting Issuer Replacement Options for Subordinate Voting Shares, the Resulting Issuer Warrants and the Resulting Issuer Notes, as applicable, to be issued pursuant to the Business Combination based on the Court’s approval of the Business Combination;

for the notice requirements with respect to the presentation of the application to the Court for the Final Order; and

for such other matters as Nevada Holdco, Cannex, or BC Newco may reasonably require, subject to obtaining the prior consent of Nevada Holdco, Cannex and BC Newco, as applicable, such consent not to be unreasonably withheld or delayed.

Nevada Holdco Meeting

Nevada Holdco agrees to convene and conduct the Nevada Holdco Meeting in accordance with the Interim Order, Nevada Holdco’s organizational documents and applicable Law as soon as reasonably practicable, and in any event on or before the Meeting Deadline. 4Front and Cannex agree that they shall agree upon a record date for determining the Nevada Holdco Shareholders entitled to receive notice of and vote at the Nevada Holdco Meeting in accordance with the Interim Order and Nevada Holdco will fix and publish such record date.

Subject to Section 4.2 and 92A.120 of the NRS and except as required for quorum purposes or otherwise permitted or contemplated under this Agreement, Nevada Holdco shall not adjourn (except as required by Law), postpone or cancel or propose or permit the adjournment (except as required by Law), postponement or cancellation of the Nevada Holdco Meeting without the prior written consent of the Transacting Parties, such consent not to be unreasonably withheld or delayed.

Nevada Holdco will promptly advise Cannex of any written notice of dissent or purported exercise of Nevada Holdco Dissent Rights received in relation to the Continuance or the Business Combination and any withdrawal of Nevada Holdco Dissent Rights received by Nevada Holdco and any written communications sent by or on behalf of any shareholder exercising or purporting to exercise Nevada Holdco Dissent Rights in relation to the Continuance or the Business Combination.

Cannex Meeting

Cannex agrees to convene and conduct the Cannex Meeting in accordance with the Interim Order, Cannex’s organizational documents and applicable Law as soon as reasonably practicable, after the granting of the Interim Order and in any event on or before the Meeting Deadline. Cannex agrees that it shall, in consultation with 4Front, fix and publish a record date for the purposes of determining the Cannex Shareholders entitled to receive notice of and vote at the Cannex Meeting in accordance with the Interim Order.

Subject to Section 4.1, except as required for quorum purposes or otherwise permitted under this Agreement, the Interim Order or Law, Cannex shall not adjourn, postpone or cancel or propose or permit the adjournment, postponement or cancellation of the Cannex Meeting without 4Front’s prior written consent, such consent not to be unreasonably withheld or delayed.

Cannex will advise 4Front as 4Front may reasonably request, and at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Cannex Meeting, as to the aggregate tally of the proxies received by Cannex in respect of the Cannex Component of the Business Combination Resolution.

Cannex will promptly advise 4Front of any written notice of dissent or purported exercise by any Cannex Shareholder of Cannex Dissent Rights received by Cannex in relation to the Cannex Component of the Business Combination and any withdrawal of Cannex Dissent Rights received by Cannex and any written communications sent by or on behalf of Cannex to any Cannex Shareholder exercising or purporting to exercise Cannex Dissent Rights in relation to the Cannex Component of the Business Combination Resolution.

Circulars and Listing Statement

As promptly as reasonably practicable following execution of this Agreement with a targeted date on or before March 6, 2019, (i) each of the Parties shall furnish all information regarding such Party and its Subsidiaries as may be required to be included in the Cannex Circular or the Nevada Holdco Circular under applicable Law, and in the listing statement required to be filed with the CSE in connection with the Cannex CSE Approval and the Business Combination (the “Listing Statement”), (ii) Cannex and Nevada Holdco shall work together to prepare the Circulars, the Listing Statement, and any other documents required by applicable Laws, (iii) Cannex shall (A) file the Cannex Circular in all jurisdictions where the same is required to be filed, (B) mail the Cannex Circular as required in accordance with all applicable Laws and the Interim Order, and

file the Listing Statement and other required filings with applicable regulatory authorities in all jurisdictions where the same is required to be filed; and (iv) Nevada Holdco shall (A) file the Nevada Holdco Circular in all jurisdictions where the same is required to be filed, and (B) mail or otherwise distribute the Nevada Holdco Circular as required in accordance with all applicable Laws and the Interim Order.

The Cannex Circular shall include a statement that each director and executive officer of Cannex intends to vote all of such Person’s Cannex Shares in favour of the Cannex Component of the Business Combination Resolution and the Resulting Issuer Equity Incentive Plans, subject to the other terms of this Agreement and the Cannex Shareholder Voting Agreements. On the date of mailing thereof, the Cannex Circular shall comply in all material respects with all applicable Laws and the Interim Order and shall contain sufficient detail to permit the Cannex Shareholders to form a reasoned judgement concerning the matters to be placed before them at the Cannex Meeting.

The Nevada Holdco Circular shall include a statement that each director and executive officer of 4Front intends to vote all of such Person’s Nevada Holdco Shares in favour of the Nevada Holdco Continuance Resolution, the Nevada Holdco Business Combination Resolution, and the Resulting Issuer Equity Incentive Plans, subject to the terms of this Agreement, and the 4Front Voting Agreement. On the date of mailing thereof, the Nevada Holdco Circular shall comply in all material respects with all applicable Laws and the Interim Order and shall contain sufficient detail to permit the Nevada Holdco Shareholders to form a reasoned judgement concerning the matters to be placed before them at the Nevada Holdco Meeting.

In the event that a Transacting Party provides a notice to the other Transacting Party regarding a possible Acquisition Proposal pursuant to Sections 4.1(c), or 4.2(c), as the case may be, prior to the mailing of either the Cannex Circular or the Nevada Holdco Circular (or both, as the case may be), then unless the Transacting Parties agree otherwise, and subject to applicable Law, the Mailing Deadline will be extended until the date that is seven (7) days following the earlier of either (i) written notification from the Transacting Party providing the aforementioned notice to the other Transacting Party, that its board of directors has determined that the Acquisition Proposal is not a Superior Proposal, or (ii) the date on which the Transacting Parties together enter into an amended agreement pursuant to Sections 4.1(f) or 4.2(f), as the case may be, which results in the Acquisition Proposal in question not being a Superior Proposal. In the event that the Mailing Deadline is so extended, the Meeting Deadline and the Outside Date shall be extended by the same number of days as the Mailing Deadline has been extended.

Each of the Parties shall ensure that the information furnished by such Party that is reasonably required to be included in the Circulars and the Listing Statement under applicable Law complies in all material respects with all applicable Laws, and, without limiting the generality of the foregoing, that such information that is included in the Circulars and the Listing Statement will not contain any misrepresentation.

Subject to Section 4.2, Nevada Holdco shall: (i) solicit proxies in favour of the Nevada Holdco Continuance Resolution and the Nevada Holdco Business Combination Resolution, and the approval of the Resulting Issuer Equity Incentive Plans, and take all other actions that are reasonably necessary or desirable to seek such approvals; (ii) recommend to Nevada Holdco Shareholders that they vote in favour of the Nevada Holdco Continuance Resolution, the Nevada Holdco Business Combination Resolution and the Resulting Issuer Equity Incentive Plans; and (iii) not make a 4Front Change in Recommendation.

Subject to Section 4.1, Cannex shall (i) solicit proxies in favour of the Cannex Component of the Business Combination Resolution, and the approval of the Resulting Issuer Equity Incentive Plans, and take all other actions that are reasonably necessary or desirable to seek such approvals, (ii) recommend to Cannex Shareholders that they vote in favour of the Cannex Component of the Business Combination Resolution and the Resulting Issuer Equity Incentive Plans, and (iii) not make a Cannex Change in Recommendation for 4Front.

Each of the Parties shall also use commercially reasonable efforts to obtain any necessary consents from its auditors and any other advisors to the use of any financial, technical or other expert information required to be included in the Circulars and/or the Listing Statement and to the identification in the Circulars and/or the Listing Statement of each such advisor.

Each of the Parties and its advisors shall be given a reasonable opportunity to review and comment on the Circulars and the Listing Statement prior to each such document being printed and/or filed (as applicable) with the applicable Governmental Entities, and any reasonable comments of the Parties and their respective advisors shall be incorporated therein. The Parties shall each use their commercially reasonable efforts to agree upon the final form of the Circulars and the Listing Statement.

The Parties shall each promptly notify the other Parties if at any time before the Effective Date, it becomes aware that the Circulars and/or the Listing Statement contains a misrepresentation about itself, or that otherwise requires an amendment or supplement to the Circulars and/or the Listing Statement and the Parties shall co-operate in the preparation of any amendment or supplement to the Circulars and/or the Listing Statement as required or appropriate, and Cannex or Nevada Holdco, as applicable, shall promptly mail or otherwise publicly disseminate any amendment or supplement to the Circulars to Cannex Shareholders and/or Nevada Holdco Shareholders, as applicable, and, if required by the Court or applicable Laws, file the same with any Governmental Entity and as otherwise required.

Preparation of Filings

Final Order

Court Proceedings

Business Combination and Effective Date

Deposit of Consideration

Announcement and Shareholder Communications

Withholding Taxes

withhold and sell, on their own account or through a registered broker (the “Broker”), and on behalf of any Affected Person; or

require the Affected Person to irrevocably direct the sale through a Broker and irrevocably direct the Broker to pay the proceeds of such sale to the applicable Parties’ shareholders or the Depository as appropriate (and, in the absence of such irrevocable direction, the Affected Person shall be deemed to have provided such irrevocable direction);

the Depository shall pay the full amount required to be deducted to the appropriate taxing authority on a timely basis and in accordance with applicable Law; and

as soon as practicable after payment of such amount to the appropriate taxing authority, the Depository shall deliver to the Affected Person the original or certified copy of a receipt issued by such taxing authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Affected Person.

List of Shareholders

U.S. Securities Law Matters

the Business Combination will be subject to the approval of the Court;

the Court will be advised prior to the hearing required to approve the Business Combination as to the intention of the Parties to rely on the exemption to the registration requirements of the U.S. Securities Act provided by the Section 3(a)(10) Exemption;

before approving the Business Combination, the Court will be required to satisfy itself as to the fairness and reasonableness of the Business Combination to the Nevada Holdco Shareholders, the Nevada Holdco Optionholders, the Nevada Holdco Warrantholders, the Cannex Shareholders, the Cannex Noteholders, the Cannex Warrantholders and the Cannex Optionholders;

the Final Order approving the Business Combination that is obtained from the Court will state that the Business Combination is approved by the Court as being substantively and procedurally fair to the Nevada Holdco Shareholders, the Nevada Holdco Optionholders, the Nevada Holdco Warrantholders, the Cannex Shareholders, the Cannex Noteholders, the Cannex Warrantholders and the Cannex Optionholders;

each of the Parties will ensure that each Person entitled to receive Resulting Issuer Shares, Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, Resulting Issuer Warrants, Resulting Issuer Notes, and other securities on completion of the Business Combination will be given adequate notice advising them of their right to attend the hearing of the Court to give approval of the Business Combination and providing them with sufficient information necessary for them to exercise that right;

each Person entitled to receive Resulting Issuer Shares, Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, Resulting Issuer Warrants and Resulting Issuer Notes will be advised that such securities issued pursuant to the Business Combination have not been registered under the U.S. Securities Act and will be issued by the Resulting Issuer in reliance on the Section 3(a)(10) Exemption;

the Interim Order approving the Nevada Holdco Meeting, and the manner in which the Nevada Holdco Shareholder Approval will be obtained, will specify that each Nevada Holdco Shareholder, each holder of Nevada Holdco Options, Nevada Holdco Warrants and each holder of Cannex Shares, Cannex Options, Cannex Warrants and Cannex Notes will have the right to appear before the Court at the hearing of the Court to give approval of the Business Combination so long as they enter an appearance within a reasonable time; and

the Final Order shall include a statement substantially to the following effect:

U.S. Tax Matters

The Parties intend that (i) upon completion of the Continuance, Nevada Holdco is treated as a U.S. domestic corporation under Section 7874 of the Code; (ii) upon completion of the BC Amalgamation, the Resulting Issuer will be treated as U.S. domestic corporation under Section 7874 of the Code; (iii) the 4Front Ventures Asset Transfer and 4Front Ventures Windup are interdependent steps in a single transaction which the Parties intend to treat as a single integrated transaction qualifying as a tax-deferred reorganization within the meaning of Code Section 368(a)(1)(C); (iv) the U.S. Blocker Contribution and U.S. Blocker Windup are interdependent steps in a single transaction which the Parties intend to treat as a single integrated transaction qualifying as a tax-deferred reorganization within the meaning of Code Section 368(a)(1)(C); (v) the Cannex Acquisition Transactions are interdependent steps in a single transaction, to which the Parties are legally committed as provided herein, and which the Parties intend to treat as a single integrated transaction qualifying as a tax-deferred reorganization within the meaning of Section 368(a)(1)(C) of the Code; (vi) the Section 351 Transactions are interdependent steps in a single transaction, to which the Parties are legally committed as provided herein, and which the Parties intend to treat as a single integrated transaction qualifying as a tax-deferred transaction within the meaning of Section 351 of the Code; (vii) the Continuance is treated as a tax-deferred reorganization under Section 368(a)(1)(F) of the Code; and (viii) the BC Amalgamation is treated as a tax-deferred reorganization under Section 368(a)(1)(F) (collectively, the “Intended Tax Treatment”). The Parties intend this Agreement to be, and is adopted as, a “plan of reorganization” under Section 368 of the Code. Each Party hereto agrees to not take any position on any Tax Return or otherwise take any Tax reporting position inconsistent with the Intended Tax Treatment set forth in this Section 2.15, unless otherwise required by applicable Law. Notwithstanding the foregoing, the Parties do not make any representation, warranty or covenant to any other Party or to their shareholders or members (and including, without limitation, holders of stock options, warrants, debt instruments or other similar rights or instruments) regarding the U.S. tax treatment of the Business Combination, the Pre-Arrangement Transactions, or any other transaction contemplated by this Agreement.

Notwithstanding any other provision of this Agreement, the Contemporaneous Agreements, the Pre-Arrangement Agreements and any other agreements or documents required or contemplated to be delivered in connection herewith or therewith, to the contrary:

no Party shall knowingly take any action, cause any action to be taken, fail to take any commercially reasonable action or cause any commercially reasonable action to fail to be taken, which action or failure to act would reasonably be expected to prevent Nevada Holdco from being classified as a U.S. domestic corporation under Section 7874 of the Code after completion of the Continuance;

no Party shall knowingly take any action, cause any action to be taken, fail to take any commercially reasonable action or cause any commercially reasonable action to fail to be taken, which action or failure to act would reasonably be expected to prevent the Section 351 Transactions from qualifying as tax-deferred transactions within the meaning of Section 351 of the Code;

no Party shall knowingly take any action, cause any action to be taken, fail to take any commercially reasonable action or cause any commercially reasonable action to fail to be taken, which action or failure to act would reasonably be expected to prevent any of: (A) the 4Front Ventures Asset Transfer and 4Front Ventures Windup, taken together as a single integrated transaction under the Code; (B) the U.S. Blocker Contribution and U.S. Blocker Windup, taken together as a single integrated transaction under the Code, or (C) the Cannex Acquisition Transactions from qualifying as a tax-deferred reorganization under Section 368(a)(1)(C) of the Code;

no Party shall knowingly take any action, cause any action to be taken, fail to take any commercially reasonable action or cause any commercially reasonable action to fail to be taken, which action or failure to act would reasonably be expected to prevent the Resulting Issuer from being classified as a U.S. domestic corporation under Section 7874 of the Code after the completion of the Business Combination; and

if, as a result of the adoption, implementation, promulgation, repeal, modification, amendment or change in applicable Law (including with respect to U.S. Treasury Regulations under Section 7874 of the Code) after the date hereof, upon completion of the Continuance and the Amalgamation, the Resulting Issuer would not be treated as a U.S. domestic corporation under Section 7874 of the Code, the Parties, upon the written request of 4Front, shall take all commercially reasonable actions as to ensure that the Resulting Issuer is so treated.

In the event that the tax analysis and tax due diligence investigations performed by 4Front and its representatives and advisors or Cannex and its representatives and advisors reveal any material information or fact which might, in 4Front’s opinion or Cannex’s opinion, each acting reasonably, adversely affect the Intended Tax Treatment or otherwise result in an adverse material tax consequence to 4Front or 4Front Members (in the case of 4Front), Cannex or the Cannex Shareholders (in the case of Cannex) or the Resulting Issuer or the Resulting Issuer Shareholders (in the case of 4Front or Cannex), each of 4Front and Cannex shall be entitled, at its option and in accordance with Section 5.2 of this Agreement, to terminate its obligations under this Agreement to not consummate the Business Combination by notice to that effect given to the other Transacting Party any time prior to the Effective Time on the Effective Date.

In the event that 4Front and its representatives and advisors or Cannex and its representatives and advisors determine that the Cannex Windup might, in the opinion of either 4Front or Cannex, each acting reasonably, adversely affect the Intended Tax Treatment or otherwise result in an adverse material tax consequence to 4Front or 4Front Members (in the case of 4Front), Cannex or the Cannex Shareholders (in the case of Cannex) or the Resulting Issuer or the Resulting Issuer Shareholders (in the case of 4Front or Cannex), each of 4Front and Cannex shall be entitled, at its option, to decide not to proceed with the Cannex Windup by written notice delivered to the other Transacting Party at any time prior to the Effective Time on the Effective Date. If any such notice is provided, the Cannex Windup shall not take place and “Cannex Acquisition Transactions” shall only include the Cannex Share Exchange, the Cannex Warrant Exchange, the Cannex Option Exchange and the Cannex Note Exchange and all references to “Section 368(a)(1)(C)” in this Agreement in describing the Cannex Acquisition Transactions shall be changed to “Section 368(a)(1)(B).”

Cannex will, following receipt of the Final Order and on or before the Effective Date, using solely its own cash and not cash of 4Front (or its affiliates) or the Resulting Issuer, deposit in escrow with a third-party escrow agent an amount of cash sufficient to satisfy all payments that would be payable to Cannex Dissenting Shareholders. All payments to Cannex Dissenting Shareholders with respect to the Business Combination shall be made from such escrow. Cannex shall not be reimbursed by 4Front or the Resulting Issuer for any payments made from such escrow. Following the Effective Date, any remaining funds in such escrow shall be returned to Cannex, or its successor.

4Front and Cannex shall provide to the tax advisors of 4Front and the tax advisors of Cannex representation letters containing reasonable and customary representations and covenants with respect to the Business Combination and the Intended Tax Treatment.

Mutual Conditions Precedent

the Pre-Arrangement Transactions shall have been completed;

the Nevada Holdco Continuance Resolution shall have been approved and adopted by the Nevada Holdco Shareholders at the Nevada Holdco Meeting;

the Continuance shall be made effective;

the Nevada Holdco Business Combination Resolution shall have been approved and adopted by the Nevada Holdco Shareholders at the Nevada Holdco Meeting in accordance with the Interim Order and this Agreement;

written consent to the Business Combination and other transactions contemplated in this Agreement shall have been received from Gotham Green Fund 1, L.P., Gotham Green Fund 1 (Q), L.P., and Gotham Green Credit Partners SPV 2, L.P., in form and substance satisfactory to the Parties, acting reasonably;

the Cannex Component of the Business Combination Resolution shall have been approved and adopted by the Cannex Shareholders at the Cannex Meeting in accordance with the Interim Order and this Agreement;

the Resulting Issuer Equity Incentive Plans shall have been approved and adopted (i) by the Nevada Holdco Shareholders at the Nevada Holdco Meeting; and (ii) by the Cannex Shareholders at the Cannex Meeting;

the Interim Order and the Final Order shall each have been obtained on terms consistent with this Agreement, and shall not have been set aside or modified in a manner unacceptable to either of the Transacting Parties, each acting reasonably, on appeal or otherwise;

no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any Law which is then in effect and has the effect of making the transactions contemplated herein, in the Contemporaneous Agreements, in the Pre-Arrangement Agreements or in connection with the Business Combination illegal or otherwise preventing or prohibiting consummation of any such transactions;

there shall not be pending or threatened in writing any Action by any Governmental Entity or any other Person that is reasonably likely to result in:

any prohibition or restriction on the consummation of the transactions contemplated herein, in the Contemporaneous Agreements, in the Pre-Arrangement Agreements or in connection with the Business Combination or a Person obtaining from any Party any damages that would result in a 4Front Material Adverse Effect, Cannex Material Adverse Effect, BC Newco Material Adverse Effect or Nevada Holdco Material Adverse Effect as applicable, directly or indirectly in connection with the Business Combination;

any prohibition or material limit on the ownership by the Resulting Issuer of any of the Parties or any material portion of their respective business;

the imposition of limitations on the ability of U.S. Co to acquire or hold, or exercise full rights of ownership of the membership interests of 4Front to be obtained as a result of consummation of the transactions contemplated in the Pre-Arrangement Agreements, including the right to vote such membership interests; or

the unavailability of the Section 3(a)(10) Exemption or the Intended Tax Treatment contemplated by Section 2.15.

all Required Regulatory Approvals shall have been obtained on terms and conditions satisfactory to each of the Parties, acting reasonably;

holders of no more than 5% (or such lower percentage so as not to have a material adverse effect on the Intended Tax Treatment set forth in Section 2.15) of the Nevada Holdco Shares shall have exercised Nevada Holdco Dissent Rights;

holders of no more than 5% (or such lower percentage so as not to have a material adverse effect on the Intended Tax Treatment set forth in Section 2.15) of the Cannex Shares shall have exercised Cannex Dissent Rights;

the Cannex CSE Approval shall have been obtained;

the issuance of the Resulting Issuer Subordinate Voting Shares, the Resulting Issuer Proportionate Voting Shares, the Resulting Issuer Multiple Voting Shares, the Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, the Resulting Issuer Notes and the Resulting Issuer Warrants and the issuance of Resulting Issuer Subordinate Voting Shares upon conversion of the Resulting Issuer Proportionate Voting Shares or Resulting Issuer Multiple Voting Shares shall be exempt from the prospectus and registration requirements of applicable Canadian Securities Laws by virtue of applicable exemptions under Canadian Securities Laws and shall not be subject to resale restrictions under applicable Canadian Securities Laws (other than as applicable to control persons or as imposed by the CSE);

the Escrow Agreements, if required by the CSE or pursuant to Securities Law, shall have been fully executed by the parties thereto;

the Board Nominees shall have been appointed to the Resulting Issuer Board;

the Key Employees shall have executed and delivered employment, non-solicitation, and non-competition agreements, relating to the Resulting Issuer;

any applications, notices, consents and documentation required under the HSR Act prior to the consummation of the Business Combination shall have been given and/or obtained and all waiting periods thereunder shall have expired or been terminated;

there is no adoption, implementation, promulgation, repeal, modification, amendment or change in applicable Law (including with respect to U.S. Treasury Regulations under Section 7874 of the Code) after the date hereof, such that the Resulting Issuer should not be treated as a U.S. domestic corporation under Section 7874 of the Code, taking into account any action taken pursuant to Section 2.15(b)(v); and

this Agreement shall not have been terminated.

Additional Conditions Precedent to the Obligations of 4Front

all covenants of each other Party under this Agreement, to be performed on or before the Effective Time which have not been waived by 4Front shall have been duly performed by each such other Party in all material respects and 4Front shall have received a certificate of each other Party addressed to 4Front and dated the Effective Date, signed on behalf of such other Party by a senior executive officer of such other Party (on such Party’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of Cannex set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or Cannex Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except

where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a Cannex Material Adverse Effect, provided that the Cannex Fundamental Representations shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Business Combination and 4Front shall have received a certificate of Cannex addressed to 4Front and dated the Effective Date, signed on behalf of Cannex by a senior executive officer of Cannex (on Cannex’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of BC Newco set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or BC Newco Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a BC Newco Material Adverse Effect, provided that the representations and warranties of BC Newco set forth in Schedule “D” Sections (a), (b), (c), (d), (e), (f) and (g) shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the BC Amalgamation and the Business Combination and 4Front shall have received a certificate of BC Newco addressed to 4Front and dated the Effective Date, signed on behalf of BC Newco by a senior executive officer of BC Newco (on BC Newco’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of Nevada Holdco set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or Nevada Holdco Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a Nevada Holdco Material Adverse Effect, provided that the representations and warranties of Nevada Holdco set forth in Schedule “F” Sections (a), (b), (c), (d), (e), (f) and (g) shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Pre-Arrangement Transactions, the Continuance and the Business Combination, and 4Front shall have received a certificate of Nevada Holdco addressed to 4Front and dated the Effective Date, signed on behalf of Nevada Holdco by a senior executive officer of Nevada Holdco (on Nevada Holdco’s behalf and without personal liability), confirming the same as at the Effective Time;

since the date of this Agreement, there shall not have occurred a Cannex Material Adverse Effect, and 4Front shall have received a certificate signed on behalf of Cannex by the chief executive officer and the chief financial officer of Cannex (on Cannex’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a BC Newco Material Adverse Effect, and 4Front shall have received a certificate signed on behalf of BC Newco by a senior officer of BC Newco (on BC Newco’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a Nevada Holdco Material Adverse Effect, and 4Front shall have received a certificate signed on behalf of Nevada Holdco by a senior officer and the chief financial officer of Nevada Holdco (on Nevada Holdco’s behalf and without personal liability) to such effect;

each applicable Party shall have delivered or caused to be delivered to the other Parties copies of the consents or waivers, as applicable, of the Required Regulatory Approvals;

the Nevada Holdco Board shall have received a bring down, as of the date of the consummation of the Business Combination, of the Nevada Holdco Fairness Opinion; and

each of Cannex, BC Newco and Nevada Holdco shall have delivered or caused to be delivered to 4Front a certificate, dated as of the Effective Date, executed by the secretary or other officer of such Party, certifying as to:

the names and titles of the officers or authorized signatories of such Party authorized to sign this Agreement and the other instruments contemplated hereby, together with the true signatures of such officers or signatories;

the resolutions duly adopted by the board of directors or other governing body and the shareholders of such Party and as required in connection with the transactions contemplated hereby, authorizing the execution, delivery and performance by such Party of this Agreement and the other instruments contemplated hereby;

true and correct copies of the organizational documents of such Party;

With respect to each of the Cannex Windup and the CCGI Windup, Cannex shall have delivered to 4Front properly executed statements, dated as of the Effective Date, in accordance with United States Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3) and in a form reasonably acceptable to 4Front, certifying that an interest in each of Cannex Holdings (Nevada) Inc. and Cannex Holdings (California) Inc. is not a U.S. real property interest within the meaning of Section 897(c) of the Code, together with the required notices to the IRS; and

Cannex shall procure that any balloon, lump sum or bonus payments that would otherwise be due and payable by Cannex or any of its Subsidiaries upon the consummation of the Transaction shall be waived taking into account Section 409A of the Code.

Additional Conditions Precedent to the Obligations of Cannex

all covenants of each other Party under this Agreement to be performed on or before the Effective Time which have not been waived by Cannex shall have been duly performed by each such other Party in all material respects and Cannex shall have received a certificate of each other Party addressed to Cannex and dated the Effective Date, signed on behalf of such other Party by a senior executive officer of such other Party (on such Party’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of 4Front set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or 4Front Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a 4Front Material Adverse Effect, provided that the 4Front Fundamental Representations shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Pre-Arrangement Transactions and the Business Combination and Cannex shall have received a certificate of 4Front addressed to Cannex and dated the Effective Date, signed on behalf of 4Front by a senior executive officer of 4Front (on 4Front’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of BC Newco set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or BC Newco Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a BC Newco Material Adverse Effect, provided that the representations and warranties of BC Newco set forth in Schedule “D” Sections (a), (b), (c), (d), (e), (f) and (g) shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the BC Amalgamation and the Business Combination, and Cannex shall have received a certificate of BC Newco addressed to Cannex and dated the Effective Date, signed on behalf of BC Newco by a senior executive officer of BC Newco (on BC Newco’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of Nevada Holdco set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or Nevada Holdco Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a Nevada Holdco Material Adverse Effect, provided that the representations and warranties of Nevada Holdco set forth in Schedule “F” Sections (a), (b), (c), (d), (e), (f) and (g) shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Pre-Arrangement Transactions, the Continuance and the Business Combination, and Cannex shall have received a certificate of Nevada Holdco addressed to Cannex and dated the Effective Date, signed on behalf of Nevada Holdco by a senior executive officer of Nevada Holdco (on Nevada Holdco’s behalf and without personal liability), confirming the same as at the Effective Time;

since the date of this Agreement, there shall not have occurred a 4Front Material Adverse Effect and Cannex shall have received a certificate signed on behalf of 4Front by the chief executive officer and chief financial officer of 4Front (on 4Front’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a BC Newco Material Adverse Effect, and Cannex shall have received a certificate signed on behalf of BC Newco by a senior officer of BC Newco (on BC Newco’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a Nevada Holdco Material Adverse Effect, and Cannex shall have received a certificate signed on behalf of Nevada Holdco by a senior officer and the chief financial officer of Nevada Holdco (on Nevada Holdco’s behalf and without personal liability) to such effect;

each applicable Party shall have delivered or caused to be delivered to the other Parties copies of the consents or waivers, as applicable, of the Required Regulatory Approvals;

each of 4Front, BC Newco and Nevada Holdco shall have delivered or caused to be delivered to Cannex a certificate, dated as of the Effective Date, executed by the secretary or other officer of each such Party, certifying as to:

the names and titles of the officers of such Party authorized to sign this Agreement and the other instruments contemplated hereby, together with the true signatures of such officers;

the resolutions duly adopted by the board of directors or other governing body and the shareholders or members of such Party, as applicable, and as required by the transactions contemplated hereby, authorizing the execution, delivery and performance by such Party of this Agreement and the other instruments contemplated hereby; and

true and correct copies of the organizational documents of such Party; and

the Cannex Board shall have received a bring down, as of the date of the consummation of the Business Combination, of the Cannex Fairness Opinion.

Additional Conditions Precedent to the Obligations of BC Newco

all covenants of each other Party under this Agreement to be performed on or before the Effective Time which have not been waived by BC Newco shall have been duly performed by each such other Party in all material respects and BC Newco shall have received a certificate of each other Party addressed to BC Newco and dated the Effective Date, signed on behalf of such other Party by a senior executive officer of such other Party (on such Party’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of 4Front set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or 4Front Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a 4Front Material Adverse Effect, provided that the representations and warranties of 4Front set forth in Schedule “E” Section (cc) shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Pre-Arrangement Transactions and the Business Combination, and BC Newco shall have received a certificate of 4Front addressed to BC Newco and dated the Effective Date, signed on behalf of 4Front by a senior executive officer of 4Front (on 4Front’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of Cannex set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or Cannex Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a Cannex Material Adverse Effect, provided that the representations and warranties of Cannex set forth in Schedule “C” Section (dd) shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Business Combination, and BC Newco shall have received a certificate of Cannex addressed to BC Newco and dated the Effective Date, signed on behalf of Cannex by a senior executive officer of Cannex (on Cannex’s behalf and without personal liability), confirming the same as at the Effective Time;

since the date of this Agreement, there shall not have occurred a 4Front Material Adverse Effect and BC Newco shall have received a certificate signed on behalf of 4Front by the chief executive officer and chief financial officer of 4Front (on 4Front’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a Nevada Holdco Material Adverse Effect and BC Newco shall have received a certificate signed on behalf of Nevada Holdco by the chief executive officer and chief financial officer of Nevada Holdco (on Nevada Holdco’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a Cannex Material Adverse Effect and BC Newco shall have received a certificate signed on behalf of Cannex by the chief executive officer and chief financial officer of Cannex (on Cannex’s behalf and without personal liability) to such effect;

each applicable Party shall have delivered or caused to be delivered to the other Parties copies of the consents or waivers, as applicable, of the Required Regulatory Approvals; and

each of 4Front, Nevada Holdco and Cannex shall have delivered or caused to be delivered to BC Newco a certificate, dated as of the Effective Date, executed by the secretary or other officer of each such Party, certifying as to (i) the names and titles of the officers or authorized signatories of such Party authorized to sign this Agreement and the other instruments contemplated hereby, together with the true signatures of such officers or signatories; (ii) the resolutions duly adopted by the board of directors or other governing body and the shareholders or members of such Party, as applicable and as required in connection with the transactions contemplated hereby, authorizing the execution, delivery and performance by such Party of this Agreement and the other instruments contemplated hereby; and (iii) true and correct copies of the organizational documents of such Party.

Additional Conditions Precedent to the Obligations of Nevada Holdco

all covenants of each other Party under this Agreement to be performed on or before the Effective Time which have not been waived by Nevada Holdco shall have been duly performed by each such other Party in all material respects and Nevada Holdco shall have received a certificate of each other Party addressed to Nevada Holdco and dated the Effective Date, signed on behalf of such other Party by a senior executive officer of such other Party (on such Party’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of 4Front set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or 4Front Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a 4Front Material Adverse Effect, provided that the 4Front Fundamental Representations shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Pre-Arrangement Transactions and the Business Combination, and Nevada Holdco shall have received a certificate of 4Front addressed to Nevada Holdco and dated the Effective Date, signed on behalf of 4Front by a senior executive officer of 4Front (on 4Front’s behalf and without personal liability), confirming the same as at the Effective Time;

the representations and warranties of Cannex set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or Cannex Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except (i) where the failure or failures of all such representations and warranties to be so true and correct in all respects would not have a Cannex Material Adverse Effect, provided that the Cannex Fundamental Representations shall be true and correct in all material respects as of the Effective Time, and (ii) as such representations and warranties are modified as required to consummate the Business Combination, and Nevada Holdco shall have received a certificate of Cannex addressed to Nevada Holdco and dated the Effective Date, signed on behalf of Cannex by a senior executive officer of Cannex (on Cannex’s behalf and without personal liability), confirming the same as at the Effective Time;

since the date of this Agreement, there shall not have occurred a 4Front Material Adverse Effect and Nevada Holdco shall have received a certificate signed on behalf of 4Front by the chief executive officer and chief financial officer of 4Front (on 4Front’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a BC Newco Material Adverse Effect and Nevada Holdco shall have received a certificate signed on behalf of BC Newco by the chief executive officer and chief financial officer of BC Newco (on BC Newco’s behalf and without personal liability) to such effect;

since the date of this Agreement, there shall not have occurred a Cannex Material Adverse Effect and Nevada Holdco shall have received a certificate signed on behalf of Cannex by the chief executive officer and chief financial officer of Cannex (on Cannex’s behalf and without personal liability) to such effect;

each applicable Party shall have delivered or caused to be delivered to the other Parties copies of the consents or waivers, as applicable, of the Required Regulatory Approvals; and

each of 4Front, BC Newco and Cannex shall have delivered or caused to be delivered to Nevada Holdco a certificate, dated as of the Effective Date, executed by the secretary or other officer of each such Party, certifying as to (i) the names and titles of the officers or authorized signatories of such Party authorized to sign this Agreement and the other instruments contemplated hereby, together with the true signatures of such officers or signatories; (ii) the resolutions duly adopted by the board of directors or other governing body and the shareholders or members of such Party, as applicable and as required in connection with the transactions contemplated hereby, authorizing the execution, delivery and performance by such Party of this Agreement and the other instruments contemplated hereby; and (iii) true and correct copies of the organizational documents of such Party.

Satisfaction of Conditions

Cannex Non-Solicitation

On and after the date of this Agreement, except as otherwise provided in this Agreement, Cannex and its Affiliates shall not, directly or indirectly, through any of their respective officers, directors, employees, advisors, representatives, agents or otherwise:

make, solicit, assist, initiate, encourage or otherwise facilitate any inquiries, proposals or offers from any other Person (including any of its shareholders, officers or employees) relating to any Acquisition Proposal for Cannex, or furnish to any Person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek to do any of the foregoing;

engage in any discussions or negotiations regarding, or provide any information with respect to, or otherwise co-operate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to make or complete any Acquisition Proposal for Cannex, provided that, for greater certainty, Cannex may advise any Person making an unsolicited Acquisition Proposal that such Acquisition Proposal does not constitute a Superior Proposal when the Cannex Board has reasonably so determined;

withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in any manner adverse to 4Front, the approval or recommendation of the Cannex Board or any committee thereof of this Agreement or the Cannex Component of the Business Combination;

approve, recommend or remain neutral with respect to, or propose publicly to approve, recommend or remain neutral with respect to, any Acquisition Proposal involving Cannex or any of its Subsidiaries; or

accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, arrangement or undertaking related to any Acquisition Proposal involving Cannex or any of its Subsidiaries;

Cannex shall immediately cease and cause to be terminated any existing discussions or negotiations with any Person (other than 4Front) with respect to any potential Acquisition Proposal and, in connection therewith, Cannex will discontinue access to any of its confidential information being given to any Person other than 4Front (and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise). Cannex agrees not to release any third party from any confidentiality, non-solicitation or standstill agreement to which such third party is a party, or terminate, modify, amend or waive the terms thereof and Cannex undertakes to enforce, or cause its Subsidiaries to enforce, all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its Subsidiaries has entered into prior to the date hereof or shall enter into after the date hereof.

From and after the date of this Agreement, Cannex shall forthwith (and in any event within one (1) Business Day of receipt thereof) provide notice to 4Front of any bona fide Acquisition Proposal or any proposal, inquiry or offer that could lead to an Acquisition Proposal or any amendments to the foregoing or any request for non-public information relating to Cannex or any of its Subsidiaries in connection with such an Acquisition Proposal or potential Acquisition Proposal or for access to the properties, books or records of Cannex or any Subsidiary by any Person that informs Cannex, any member of the Cannex Board or such Subsidiary that it is considering making, or has made, an Acquisition Proposal. Such notice to 4Front shall indicate the identity of the Person making such proposal, inquiry or contact, all material terms thereof, including price, and such other details of the proposal, inquiry or contact known to Cannex, and shall include copies of any such proposal, inquiry, offer or request or any amendment to any of the foregoing. Cannex shall keep 4Front promptly and fully informed of the status, including any change to the material terms, of any such Acquisition Proposal, offer, inquiry or request and will respond promptly to all inquiries by 4Front with respect thereto.

If the Cannex Board receives a request for material non-public information from a Person who proposes to Cannex a bona fide Acquisition Proposal, or indicates a possible intent to do so, Cannex may contact the Person making the Acquisition Proposal and its representatives solely for the purpose of clarifying the terms and conditions of such Acquisition Proposal and the likelihood of its consummation so as to determine whether such Acquisition Proposal is a Superior Proposal; provided that Cannex shall promptly provide 4Front with copies of all correspondence, including email and other electronic and digital communications, and information provided to or received from such Person. If: (x) the Cannex Board reasonably determines that such Acquisition Proposal constitutes a Superior Proposal; and (y) in the opinion of the Cannex Board, acting in good faith and on written advice from their outside legal advisors, the failure to provide such Person with access to information regarding Cannex and its Subsidiaries would be inconsistent with the fiduciary duties of the Cannex Board, then, and only in such case, Cannex may provide such Person with access to information regarding Cannex and its Subsidiaries, subject to the execution of a confidentiality agreement which is customary in such situations and which, in any event and taken as a whole, is no less favourable to Cannex than the Confidentiality Agreement; provided that Cannex sends a copy of any such confidentiality agreement to 4Front promptly upon its execution and 4Front is provided with a list of, and, at the request of 4Front, copies of, the information provided to such Person and immediately provided with access to similar information to which such Person was provided.

Cannex agrees that it will not accept, approve or enter into any agreement (a “Cannex Proposed Agreement”), other than a confidentiality agreement as contemplated by Subsection 4.1(d), with any Person providing for or to facilitate any Acquisition Proposal unless:

the Cannex Board reasonably determines that the Acquisition Proposal constitutes a Superior Proposal;

the Cannex Meeting has not occurred;

Cannex has complied with Subsections 4.1(a) through 4.1(d) inclusive;

Cannex has provided 4Front with a notice in writing that there is a Superior Proposal together with all documentation related to and detailing the Superior Proposal, including a copy of any Cannex Proposed Agreement relating to such Superior Proposal, and a written notice from the Cannex Board regarding the value in financial terms that the Cannex Board has, in consultation with its financial advisors, reasonably determined should be ascribed to any non-cash consideration offered under the Superior Proposal, such documents to be so provided to 4Front not less than ten (10) Business Days prior to the proposed acceptance, approval, recommendation or execution of the Cannex Proposed Agreement by Cannex;

ten (10) Business Days shall have elapsed from the date 4Front received from Cannex the notice and documentation referred to in Subsection 4.1(e)(iv) and, if 4Front has proposed to amend the terms of the Business Combination in accordance with Subsection 4.1(f), the Cannex Board shall have reasonably determined, in good faith, after consultation with its financial advisors and outside legal counsel, that the Acquisition Proposal is a Superior Proposal compared to the proposed amendment to the terms of the Business Combination by 4Front;

Cannex concurrently terminates this Agreement pursuant to Section 5.2(a)(iv)(D);

Cannex has previously, or concurrently will have, paid to 4Front (or as directed by 4Front) the Termination Fee in accordance with the terms hereof;

Cannex acknowledges and agrees that, during the ten (10) Business Day periods referred to in Subsections 4.1(e)(iv) and 4.1(e)(v) or such longer period as Cannex may approve for such purpose, 4Front shall have the opportunity, but not the obligation, to propose to amend the terms of this Agreement and the Business Combination and Cannex shall co-operate with 4Front with respect thereto, including negotiating in good faith with 4Front to enable 4Front to make such adjustments to the terms and conditions of this Agreement and the Business Combination as 4Front deems appropriate in its sole discretion and as would enable 4Front to proceed with the Business Combination and any related transactions on such adjusted terms. The Cannex Board will review promptly, diligently and in good faith any proposal by 4Front to amend the terms of the Business Combination in order to reasonably determine, in good faith in the exercise of its fiduciary duties and consistent with Subsection 4.1(a), whether 4Front’s proposal to amend the Business Combination would result in the Acquisition Proposal not being a Superior Proposal compared to the proposed amendment to the terms of the Business Combination.

The Cannex Board shall promptly reaffirm and communicate its recommendation of the Cannex Component of the Business Combination by press release after: (x) any Acquisition Proposal which the Cannex Board reasonably determines not to be a Superior Proposal is publicly announced or made; or (y) the Cannex Board reasonably determines that a proposed amendment to the terms of the Business Combination pursuant to Section 4.1(f) would result in the Acquisition Proposal which has been publicly announced or made not being a Superior Proposal, and 4Front has so amended the terms of the Business Combination. 4Front and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such press release, recognizing that whether or not such comments are required by applicable Laws or the fiduciary duties of the Cannex Board, the form and content of such press release will be determined by Cannex, acting reasonably and upon the advice of legal counsel.

Nothing in this Agreement shall prevent the Cannex Board from responding through a directors’ circular or otherwise to the extent required by applicable Securities Laws to an Acquisition Proposal that it determines is not a Superior Proposal, or from withdrawing, modifying or changing its recommendation as a result of 4Front having suffered a 4Front Material Adverse Effect. Further, nothing in this Agreement shall prevent the Cannex Board from making any disclosure to the securityholders of Cannex to the extent the Cannex Board, acting in good faith and upon the written advice of its legal advisors, shall have first determined that the failure to make such disclosure would be inconsistent with the fiduciary duties of the Cannex Board or such disclosure is otherwise required under applicable Law, provided, however, that, notwithstanding the Cannex Board shall be permitted to make such disclosure, the Cannex Board shall not be permitted to make a Cannex Change in Recommendation for 4Front, other than as permitted by Section 4.1(e) or the first sentence of this paragraph. 4Front and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such disclosure, recognizing that whether or not such comments are required by applicable Laws or the fiduciary duties of the Cannex Board, the form and content of such disclosure will be determined by Cannex, acting reasonably and upon the advice of outside legal counsel.

Cannex acknowledges and agrees that each successive modification of any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of this Section 4.1 (except that any Termination Fee payable by Cannex pursuant to the terms of this Agreement shall only be paid once).

Cannex shall ensure that the officers, directors and employees of Cannex and its Subsidiaries and any investment bankers or other advisors or representatives retained by Cannex and/or its Subsidiaries in connection with the transactions contemplated by this Agreement are aware of the provisions of this Section 4.1, and Cannex shall be responsible for any action or inaction that would constitute a breach of this Section 4.1 by such officers, directors, employees, investment bankers, advisors or representatives as if such Persons or entities were direct Parties hereto.

If Cannex provides 4Front with the notice of an Acquisition Proposal contemplated in this Section 4.1 on a date that is less than seven (7) calendar days prior to the Cannex Meeting, Cannex shall adjourn the Cannex Meeting to a date that is not less than seven (7) calendar days and not more than ten (10) calendar days after the date of such notice, provided, however, that the Cannex Meeting shall not be adjourned or postponed to a date later than the seventh (7^th) Business Day prior to the Outside Date.

4Front Non-Solicitation

On and after the date of this Agreement, except as otherwise provided in this Agreement, 4Front and its Affiliates shall not, directly or indirectly, through any of their respective officers, directors, employees, advisors, representatives, agents or otherwise:

make, solicit, assist, initiate, encourage or otherwise facilitate any inquiries, proposals or offers from any other Person (including any of its shareholders, officers or employees) relating to any Acquisition Proposal for 4Front, or furnish to any Person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek to do any of the foregoing;

engage in any discussions or negotiations regarding, or provide any information with respect to, or otherwise co-operate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to make or complete any Acquisition Proposal for 4Front, provided that, for greater certainty, 4Front may advise any Person making an unsolicited Acquisition Proposal that such Acquisition Proposal does not constitute a Superior Proposal when the 4Front Board has reasonably so determined;

withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in any manner adverse to Cannex the approval or recommendation of the 4Front Board or any committee thereof of this Agreement or the Business Combination;

approve, recommend or remain neutral with respect to, or propose publicly to approve, recommend or remain neutral with respect to, any Acquisition Proposal involving 4Front or any of its Subsidiaries; or

accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, arrangement or undertaking related to any Acquisition Proposal involving 4Front or any of its Subsidiaries;

4Front shall immediately cease and cause to be terminated any existing discussions or negotiations with any Person (other than Cannex) with respect to any potential Acquisition Proposal and, in connection therewith, 4Front will discontinue access to any of its confidential information being given to any Person other than Cannex (and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise). 4Front agrees not to release any third party from any confidentiality, non-solicitation or standstill agreement to which such third party is a party, or terminate, modify, amend or waive the terms thereof and 4Front undertakes to enforce, or cause its Subsidiaries to enforce, all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its Subsidiaries has entered into prior to the date hereof or shall enter into after the date hereof.

From and after the date of this Agreement, 4Front shall forthwith (and in any event within one (1) Business Day of receipt thereof) provide notice to Cannex of any bona fide Acquisition Proposal or any proposal, inquiry or offer that could lead to an Acquisition Proposal or any amendments to the foregoing or any request for non-public information relating to 4Front or any of its Subsidiaries in connection with such an Acquisition Proposal or potential Acquisition Proposal or for access to the properties, books or records of 4Front or any Subsidiary by any Person that informs 4Front, any member of the 4Front Board or such Subsidiary that it is considering making, or has made, an Acquisition Proposal. Such notice to Cannex shall indicate the identity of the Person making such proposal, inquiry or contact, all material terms thereof, including price, and such other details of the proposal, inquiry or contact known to 4Front, and shall include copies of any such proposal, inquiry, offer or request or any amendment to any of the foregoing. 4Front shall keep Cannex promptly and fully informed of the status, including any change to the material terms, of any such Acquisition Proposal, offer, inquiry or request and will respond promptly to all inquiries by Cannex with respect thereto.

If the 4Front Board receives a request for material non-public information from a Person who proposes to 4Front a bona fide Acquisition Proposal, or indicates a possible intent to do so, 4Front may contact the Person making the Acquisition Proposal and its representatives solely for the purpose of clarifying the terms and conditions of such Acquisition Proposal and the likelihood of its consummation so as to determine whether such Acquisition Proposal is a Superior Proposal; provided that 4Front shall promptly provide Cannex with copies of all correspondence, including email and other electronic and digital communications, and information provided to or received from such Person. If: (x) the 4Front Board reasonably determines that such Acquisition Proposal constitutes a Superior Proposal; and (y) in the opinion of the 4Front Board, acting in good faith and on written advice from their outside legal advisors, the failure to provide such party with access to information regarding 4Front and its Subsidiaries would be inconsistent with the fiduciary duties of the 4Front Board, then, and only in such case, 4Front may provide such Person with access to information regarding 4Front and its Subsidiaries, subject to the execution of a confidentiality agreement which is customary in such situations and which, in any event and taken as a whole, is no less favourable to 4Front than the Confidentiality Agreement; provided that 4Front sends a copy of any such confidentiality agreement to Cannex promptly upon its execution and Cannex is provided with a list of, and, at the request of Cannex, copies of, the information provided to such Person and immediately provided with access to similar information to which such Person was provided.

4Front agrees that it will not accept, approve or enter into any agreement (a “4Front Proposed Agreement”), other than a confidentiality agreement as contemplated by Subsection 4.2(d), with any Person providing for or to facilitate any Acquisition Proposal unless:

the 4Front Board reasonably determines that the Acquisition Proposal constitutes a Superior Proposal;

the Nevada Holdco Meeting has not occurred;

4Front has complied with Subsections 4.2(a) through 4.2(d) inclusive;

4Front has provided Cannex with a notice in writing that there is a Superior Proposal together with all documentation related to and detailing the Superior Proposal, including a copy of any 4Front Proposed Agreement relating to such Superior Proposal, and a written notice from the 4Front Board regarding the value in financial terms that the 4Front Board has in consultation with its financial advisors, reasonably determined should be ascribed to any non-cash consideration offered under the Superior Proposal, such documents to be so provided to Cannex not less than ten (10) Business Days prior to the proposed acceptance, approval, recommendation or execution of the 4Front Proposed Agreement by 4Front;

ten (10) Business Days shall have elapsed from the date Cannex received from 4Front the notice and documentation referred to in Subsection 4.2(e)(iv) from 4Front and, if Cannex has proposed to amend the terms of the Business Combination in accordance with Subsection 4.2(f), the 4Front Board shall have reasonably determined, in good faith, after consultation with its financial advisors and outside legal counsel, that the Acquisition Proposal is a Superior Proposal compared to the proposed amendment to the terms of the Business Combination by Cannex;

4Front concurrently terminates this Agreement pursuant to Section 5.2(a)(iii)(D);

4Front has previously, or concurrently will have, paid to Cannex (or as directed by Cannex) the Termination Fee in accordance with the terms hereof;

4Front acknowledges and agrees that, during the ten (10) Business Day periods referred to in Subsections 4.2(e)(iv) and 4.2(e)(v) or such longer period as 4Front may approve for such purpose, Cannex shall have the opportunity, but not the obligation, to propose to amend the terms of this Agreement and the Business Combination and 4Front shall co-operate with Cannex, with respect thereto, including negotiating in good faith with Cannex to enable Cannex to make such adjustments to the terms and conditions of this Agreement and the Business Combination as Cannex deems appropriate in its sole discretion and as would enable Cannex to proceed with the Business Combination and any related transactions on such adjusted terms. The 4Front Board will review promptly, diligently and in good faith any proposal by Cannex to amend the terms of the Business Combination in order to reasonably determine, in good faith in the exercise of its fiduciary duties and consistent with Subsection 4.2(a), whether Cannex’s proposal to amend the Business Combination would result in the Acquisition Proposal not being a Superior Proposal compared to the proposed amendment to the terms of the Business Combination.

The 4Front Board shall promptly reaffirm and communicate its recommendation of the Business Combination by press release after: (x) any Acquisition Proposal which the 4Front Board reasonably determines not to be a Superior Proposal is publicly announced or made; or (y) the 4Front Board reasonably determines that a proposed amendment to the terms of the Business Combination pursuant to Section 4.2(f) would result in the Acquisition Proposal which has been publicly announced or made not being a Superior Proposal, and Cannex has so amended the terms of the Business Combination. Cannex and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such press release, recognizing that whether or not such comments are required by applicable Laws or the fiduciary duties of the 4Front Board, the form and content of such press release will be determined by 4Front, acting reasonably and upon the advice of outside legal counsel.

Nothing in this Agreement shall prevent the 4Front Board from responding through a directors’ circular or otherwise to the extent required by applicable Securities Laws to an Acquisition Proposal that it determines is not a Superior Proposal, or from withdrawing, modifying or changing its recommendation as a result of Cannex having suffered a Cannex Material Adverse Effect. Further, nothing in this Agreement shall prevent the 4Front Board from making any disclosure to the securityholders of 4Front to the extent the 4Front Board, acting in good faith and upon the written advice of its legal advisors, shall have first determined that the failure to make such disclosure would be inconsistent with the fiduciary duties of the 4Front Board or such disclosure is otherwise required under applicable Law, provided, however, that, notwithstanding the 4Front Board shall be permitted to make such disclosure, the 4Front Board shall not be permitted to make a 4Front Change in Recommendation for Cannex, other than as permitted by Section 4.2(e) or the first sentence of this paragraph. Cannex and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such disclosure, recognizing that whether or not such comments are required by applicable Laws or the fiduciary duties of the 4Front Board, the form and content of such disclosure will be determined by 4Front, acting reasonably and upon the advice of outside legal counsel.

4Front acknowledges and agrees that each successive modification of any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of this Section 4.2 (except that any Termination Fee payable by 4Front pursuant to the terms of this Agreement shall only be paid once).

4Front shall ensure that the officers, directors and employees of 4Front and its Subsidiaries and any investment bankers or other advisors or representatives retained by 4Front and/or its Subsidiaries in connection with the transactions contemplated by this Agreement are aware of the provisions of this Section 4.2, and 4Front shall be responsible for any action or inaction that would constitute a breach of this Section 4.2 by such officers, directors, employees, investment bankers, advisors or representatives as if such Persons or entities were direct Parties hereto.

If 4Front provides Cannex with the notice of an Acquisition Proposal contemplated in this Section 4.2 on a date that is less than seven (7) calendar days prior to the Nevada Holdco Meeting, if requested by Cannex, the Nevada Holdco Meeting will be adjourned to a date that is not less than seven (7) calendar days and not more than ten (10) calendar days after the date of such notice, provided, however, that the Nevada Holdco Meeting shall not be adjourned or postponed to a date later than the seventh (7^th) Business Day prior to the Outside Date.

Bona Fide Attempts

If 4Front or Cannex has reason to believe a breach of Sections 4.1 or 4.2, respectively, has occurred, such Transacting Party must give notice to the other Transacting Party within three (3) calendar days, from the day such potential breach is discovered.

Upon receipt of such notice, the Transacting Party charged with breach may, within three (3) calendar days thereof, provide the alleging Party a valid board resolution or board minutes disclaiming any such breach as a Bona Fide Attempt. Provision of such board resolution or minutes shall serve to cure the alleged default.

Resulting Issuer Board

The Transacting Parties shall collectively review and agree upon, acting reasonably, the organizational and governing documents of the Resulting Issuer, including among other things, its articles and its notice of articles.

Such organizational and governing documents of the Resulting Issuer shall provide, among other things, that:

The Resulting Issuer Board shall be comprised of five (5) directors with the initial directors being the Board Nominees.

▇▇▇▇▇▇ ▇▇▇▇▇ will be the initial Chief Executive Officer of the Resulting Issuer and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ will be the initial Chief Operating Officer of the Resulting Issuer.

Convertible Securities/Debt Instruments

During the Interim Period and other than in connection with those Acquisitions described on Schedule “O” (which issuances, for certainty, shall not require consent), or the Pre-Arrangement Transactions or convertible securities outstanding on the date hereof, no Party shall have the right to issue additional securities or debt instruments exercisable or convertible for the equity securities of such Party without the prior written consent of the other Parties.

All Cannex Class A Share Options, Cannex Common Share Options, Cannex Warrants, Nevada Holdco Options, Nevada Holdco Warrants and Cannex Notes (in each case outstanding as at the Effective Time) shall be exchanged in accordance with the Plan of Arrangement.

As a result of the Pre-Arrangement Transactions, the U.S. Blocker Warrants shall automatically adjust in accordance with their terms into warrants to acquire Nevada Holdco Subordinate Voting Shares which warrants will be exchanged upon the BC Amalgamation for warrants of the Resulting Issuer to acquire the same number of Resulting Issuer Subordinate Voting Shares.

Notwithstanding this Section 4.5 or any other provision of this Agreement to the contrary, no Party shall have the right to issue additional securities or debt instruments pursuant to Section 4.5 if such issuance, viewed together with all of the transactions consummated in connection with the Business Combination, would materially and adversely impact the Intended Tax Treatment set forth in Section 2.15.

Access to Information

Notices of Certain Events

Notwithstanding that during the Interim Period each Transacting Party shall be permitted to hire and manage employee compensation in the ordinary course of business, each Transacting Party must receive the prior written consent of the other Transacting Party prior to hiring any additional senior employees. Each Transacting Party further agrees that there shall not be any severance, bonuses, or salary increases that extend past completion of the Transaction granted to the Key Employees who are to sign employment agreements relating to the Resulting Issuer.

Each Transacting Party will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the earlier to occur of the termination of this Agreement pursuant to its terms and the Effective Time of any event or state of facts which occurrence or failure would, or would be likely to:

reasonably cause any of the conditions precedent as set forth in Article 3, to fail or be unsatisfied as of the time of the Effective Time and that would result in the failure of the conditions relating thereto in (A) with respect to Cannex, Sections 3.2(b); (B) with respect to 4Front, Sections 3.3(b) as the case may be; or

result in the material failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party hereunder prior to the Effective Time, provided, however, that the delivery of any notice pursuant to this Section 4.7(b) shall not limit or otherwise affect the remedies available hereunder to the Transacting Party receiving such notice.

No Party may elect not to complete the transactions contemplated hereby pursuant to the conditions set forth herein or any termination right arising therefrom under Section 5.2(a)(iii)(D), or Section 5.2(a)(iv)(D) and no payments are payable as a result of such termination pursuant to Section 5.3 unless, prior to the Effective Date, the Party intending to rely thereon has delivered a written notice to the Party who is alleged to have breached covenants, representations and warranties or other matters, specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Parties delivering such notice is asserting as the basis for the non-fulfilment or the applicable condition or termination right, as the case may be. If any such notice is delivered, provided that the Party who is alleged to have breached covenants, representations and warranties or other matters, is proceeding diligently to cure such matter and such matter is capable of being cured, no other Party may terminate this Agreement unless such matter shall not have been cured within 30 days after such notice was delivered.

Indemnification

Each Transacting Party agrees that all rights to indemnification, advancement of expenses and exculpation by either Cannex or 4Front now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Date an officer, director or manager of such Transacting Party or any of its Subsidiaries as provided in the constituent documents of such Transacting Party or its applicable Subsidiary, in each case as in effect on the date of this Agreement, or pursuant to any other Contract in effect on the date hereof and disclosed in the Schedules to this Agreement, shall be assumed by the Resulting Issuer or the applicable Subsidiary in the Business Combination, without further action, at the Effective Time and shall survive the Business Combination and shall remain in full force and effect in accordance with their terms, and, in the event that any proceeding is pending or asserted or any claim made during such period, until the final disposition of such proceeding or claim.

Acquisitions

Except for those Acquisitions described on Schedule “O”, a Transacting Party shall give prompt notice to the other Transacting Party at any time from the date hereof until the earlier to occur of the termination of this Agreement pursuant to its terms and the Effective Time, of any Acquisitions with an aggregate price in excess of US$1 million proposed to be consummated by such Transacting Party, and all such Acquisitions must be consented to in advance by the other Transacting Party, acting reasonably.

Notwithstanding the foregoing, no Transacting Party shall close an Acquisition (including those Acquisitions described on Schedule “O”) that would prevent the Section 351 Transactions from qualifying as tax-deferred transactions within the meaning of Section 351 of the Code.

Term

Termination

This Agreement may be terminated at any time prior to the Effective Time (notwithstanding the Nevada Holdco Shareholder Approval, the Cannex Shareholder Approval, and/or approval by the Court, as applicable):

by mutual written agreement of the Parties;

by Cannex or 4Front, if:

the Effective Time shall not have occurred on or before the Outside Date, except that the right to terminate this Agreement under this Section 5.2(a)(ii)(A) shall not be available to any Party whose failure to fulfill any of its obligations or whose breach of any of its representations and warranties under this Agreement has been a substantial cause of the failure of the Effective Time to occur by such Outside Date;

after the date hereof, there shall be enacted or made any applicable Law that makes consummation of the transactions contemplated in the Pre-Arrangement Agreements, the Continuance, or the Business Combination illegal or otherwise prohibited or enjoins Cannex or 4Front from consummating the transactions contemplated in the Pre-Arrangement Agreements, the Continuance, or the Business Combination and such applicable Law or enjoinment shall have become final and non-appealable;

after the date hereof, upon any Governmental Entity having notified any Party in writing that it will not permit the transactions contemplated by this Agreement to proceed, in whole or in part;

(I) a failure to perform any covenant on the part of any Party set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 3.1 not to be satisfied, and (II) the Transacting Party or Parties initiating such termination (x) shall have reasonably determined that such conditions are incapable of being satisfied by the Outside Date and (y) shall not then be in breach of this Agreement so as to cause any condition in Section 3.1 not to be satisfied;

Cannex Shareholder Approval shall not have been obtained at the Cannex Meeting in accordance with the Interim Order; or

Nevada Holdco Shareholder Approval shall not have been obtained at the Nevada Holdco Meeting in accordance with the Interim Order;

by 4Front if:

prior to the Effective Time: (1) subject to Sections 4.1(e) and 4.1(g), the Cannex Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to 4Front, or fails to publicly reaffirm its recommendation of the Cannex Component of the Business Combination and the other transactions contemplated hereby to which Cannex is a party within three (3) calendar days (and in any case prior to the Cannex Meeting) after having been requested in writing by 4Front, to do so (a “Cannex Change in Recommendation for 4Front”); (2) the Cannex Board shall have approved or recommended any Acquisition Proposal; or (3) Cannex shall have breached Section 4.1 in any material respect;

a breach of any representation or warranty of Cannex, BC Newco or Nevada Holdco set forth in Schedule “C”, Schedule “D” or Schedule “F”, respectively, or failure to perform any covenant or agreement on the part of Cannex, BC Newco or Nevada Holdco, set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 3.2(a) to Section 3.2(g) not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date, as reasonably determined by 4Front, and provided that 4Front is not then in breach of this Agreement so as to cause any condition in Section 3.2(a) to Section 3.2(g) not to be satisfied;

4Front has been notified in writing by Cannex of a Cannex Proposed Agreement in accordance with Section 4.1(e), and either: (i) 4Front does not deliver an amended Business Combination proposal within ten (10) Business Days of delivery of the Cannex Proposed Agreement to 4Front; or (ii) 4Front delivers amended Business Combination proposals pursuant to Section 4.1(f) but the Cannex Board reasonably determines following the conclusion of such ten (10) Business Day period, acting in good faith and in the proper discharge of its fiduciary duties, that the Acquisition Proposal provided in the Cannex Proposed Agreement continues to be a Superior Proposal in comparison to the amended Business Combination terms offered by 4Front;

it shall have notified the other Parties that it wishes to enter into a binding written agreement with respect to a Superior Proposal (other than a non-disclosure and standstill agreement permitted by Section 4.2(d)), subject to compliance with Section 4.2 in all material respects and provided that no termination under this Section 5.2(a)(iii)(D) shall be effective unless and until 4Front shall have paid to Cannex the amount required to be paid pursuant to Section 5.3;

there shall have occurred a Cannex Material Adverse Effect;

a Party has received notice of the existence of Cannex Dissenting Shareholders and/or Nevada Holdco Dissenting Shareholders who would hold more than 10% of the equity of the Resulting Issuer on an as-converted basis;

the Cannex Shares have been suspended from trading for longer than 30 days; or

the Cannex Shares have been de-listed from the CSE.

by Cannex if:

prior to the Effective Time: (1) subject to Sections 4.2(e) and 4.2(g), the Nevada Holdco Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to Cannex, or fails to publicly reaffirm its recommendation of the Business Combination and the other transactions contemplated hereby to which Nevada Holdco is a party within three (3) calendar days (and in any case prior to the Nevada Holdco Meeting) after having been requested in writing by Cannex, to do so (a “4Front Change in Recommendation for Cannex”); (2) the 4Front Board shall have approved or recommended any Acquisition Proposal; or (3) 4Front shall have breached Section 4.2 in any material respect;

a breach of any representation or warranty of 4Front, BC Newco or Nevada Holdco set forth in Schedule “E”, Schedule “D” or Schedule “F”, respectively, or failure to perform any covenant or agreement on the part of 4Front, BC Newco or Nevada Holdco, set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 3.3(a) to Section 3.3(g) not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date, as reasonably determined by 4Front, and provided that 4Front is not then in breach of this Agreement so as to cause any condition in Section 3.3(a) to Section 3.3(g) not to be satisfied;

Cannex has been notified in writing by 4Front of a 4Front Proposed Agreement in accordance with Section 4.2(e), and either: (i) Cannex, does not deliver an amended Business Combination proposal within ten (10) Business Days of delivery of the 4Front Proposed Agreement to Cannex; or (ii) Cannex, delivers amended Business Combination proposals pursuant to Section 4.2(f) but the 4Front Board reasonably determines following the conclusion of such ten (10) Business Day period, acting in good faith and in the proper discharge of its fiduciary duties, that the Acquisition Proposal provided in the 4Front Proposed Agreement continues to be a Superior Proposal in comparison to the amended Business Combination terms offered by Cannex;

it shall have notified the other Parties that it wishes to enter into a binding written agreement with respect to a Superior Proposal (other than a non-disclosure and standstill agreement permitted by Section 4.1(d)), subject to compliance with Section 4.1 in all material respects and provided that no termination under this Section 5.2(a)(iv)(D) shall be effective unless and until Cannex shall have paid to 4Front the amount required to be paid pursuant to Section 5.3;

there shall have occurred a 4Front Material Adverse Effect; or

a Party has received notice of the existence of Cannex Dissenting Shareholders and/or Nevada Holdco Dissenting Shareholders who would hold more than 5% of the equity of the Resulting Issuer on an as-converted basis.

The Transacting Party desiring to terminate this Agreement pursuant to this Section 5.2 (other than pursuant to Section 5.2(a)(i)) shall give notice of such termination to the other Transacting Party, specifying in reasonable detail the basis for such Transacting Party’s exercise of its termination right.

If this Agreement is terminated pursuant to this Section 5.2, this Agreement, and the Plan of Arrangement, shall become void and be of no further force or effect without liability of any Transacting Party or party (or any shareholder, director, officer, employee, agent, consultant or representative of such Transacting Party or party) to any other Transacting Party hereto or party thereto, except that the provisions of this Section 5.2(c), Section 5.3 and Article 6 and all related definitions set forth in Section 1.1 shall survive any termination hereof pursuant to Section 5.2.

Expenses and Termination Fees

Except as otherwise provided herein, all fees, costs and expenses incurred in connection with this Agreement and the Plan of Arrangement shall be paid by the Transacting Party incurring such fees, costs or expenses.

For the purposes of this Agreement, “Cannex Termination Fee Event” means the termination of this Agreement:

by 4Front pursuant to Section 5.2(a)(iii)(A) (but not including a termination by 4Front pursuant to Section 5.2(a)(iii)(A) in circumstances where the Cannex Change in Recommendation for 4Front resulted from the occurrence of a 4Front Material Adverse Effect), or Section 5.2(a)(iii)(C), in either case, prior to the Cannex Meeting; or

by Cannex pursuant to Section 5.2(a)(iv)(D).

For the purposes of this Agreement, “4Front Termination Fee Event” means the termination of this Agreement:

by Cannex pursuant to Section 5.2(a)(iv)(A) (but not including a termination by Cannex pursuant to Section 5.2(a)(iv)(A) in circumstances where the 4Front Change in Recommendation for Cannex resulted from the occurrence of a Cannex Material Adverse Effect), or Section 5.2(a)(iv)(C), in either case, prior to the Nevada Holdco Meeting; or

by 4Front pursuant to Section 5.2(a)(iii)(D).

For clarity, the Termination Fee shall only be paid once pursuant to this Section 5.3. Each of the Parties acknowledges that the agreements contained in this Section 5.3 are an integral part of the transactions contemplated in this Agreement and that, without those agreements, the Parties would not enter into this Agreement. Each Transacting Party acknowledges that all of the payment amounts set out in this Section are payments in consideration for the disposition or rights under this Agreement and represent payments of liquidated damages which are a genuine pre-estimate of the damages, which the Transacting Party entitled to such damages will suffer or incur as a result of the event giving rise to such payment and the resultant termination of this Agreement and are not penalties. Each of Cannex and 4Front irrevocably waives any right it may have to raise as a defence that any such liquidated damages are excessive or punitive. For greater certainty, each Transacting Party agrees that, upon any termination of this Agreement under circumstances where Cannex or 4Front is entitled to its respective proportion of the Termination Fee as set forth herein and such respective portion of the Termination Fee is paid in full, Cannex or 4Front, as the case may be, shall be precluded from any other remedy against the other Parties at Law or in equity or otherwise (including, without limitation, an order for specific performance), and shall not seek to obtain any recovery, judgment, or damages of any kind, including consequential, indirect, or punitive damages, against the other Parties or any of their respective Subsidiaries or any of their respective directors, officers, employees, partners, managers, members, shareholders or affiliates or their respective representatives in connection with this Agreement or the transactions contemplated hereby, provided, however that payment by a Transacting Party of the Termination Fee shall not be in lieu of any damages or any other payment or remedy available in the event of any willful or intentional breach by such Transacting Party of any of its obligations under this Agreement.

Amendment

change the time for performance of any of the obligations or acts of the Parties;

waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;

waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the Parties; and

waive compliance with or modify any mutual conditions precedent herein contained.

Waiver

Excluded Claims

Notices

if to Cannex:

▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer

Attention:

▇▇▇▇▇ ▇▇▇▇▇

Email:

▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇

if to 4Front, BC Newco or Nevada Holdco:

▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer

Attention:

▇▇▇▇▇ Rapuch

Email:

▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇

Bahar ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇

▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

Governing Law; Waiver of Jury Trial

Public Announcements

Filings and Authorizations

Injunctive Relief

Time of Essence

Entire Agreement, Binding Effect and Assignment

No Liability

Severability

Further Assurances

Counterparts; Execution

Definitions

Interpretation Not Affected by Headings

“this Plan of Arrangement” means this Plan of Arrangement, including the recitals hereof, and not any particular Article, Section, Subsection or other subdivision or recital hereof, and includes any agreement, document or instrument entered into, made or delivered pursuant to the terms hereof, as the same may, from time to time, be supplemented or amended and in effect;

the words “hereof”, “herein”, “hereto” and “hereunder” and other word of similar import refer to this Plan of Arrangement as a whole and not to any particular Article, Section, Subsection, or other subdivision or recital hereof;

all references in this Plan of Arrangement to a designated “Article”, “Section”, “Subsection” or other subdivision or recital hereof are references to the designated Article, Section, Subsections or other subdivision or recital to, this Plan of Arrangement;

the division of this Plan of Arrangement into Articles, Sections, Subsections and other subdivisions or recitals and the insertion of headings and captions are for convenience of reference only and are not intended to interpret, define or limit the scope, extent or intent of this Plan of Arrangement or any provision hereof;

a reference to a statute in this Plan of Arrangement includes all regulations, rules, policies or instruments made thereunder, all amendments to the statute, regulations, rules, policies or instruments in force from time to time, and any statutes, regulations, rules, policies or instruments that supplement or supersede such statute, regulations, rules, policies or instruments;

the word “or” is not exclusive;

the word “including” is not limiting, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto; and

all references to “approval”, “authorization” or “consent” in this Plan of Arrangement means written approval, authorization or consent.

Number and Gender

Date for any Action

Currency

Time

Business Combination Agreement

Binding Effect

Nevada Holdco;

BC Newco;

Cannex;

the Resulting Issuer;

all registered and beneficial holders of BC Newco Shares;

all registered and beneficial holders of Nevada Holdco Shares, including Nevada Holdco Dissenting Shareholders;

all registered and beneficial holders of Nevada Holdco Warrants;

all registered and beneficial holders of Nevada Holdco Options;

all registered and beneficial holders of Cannex Shares, including Cannex Dissenting Shareholders;

all registered and beneficial holders of Cannex Options;

all registered and beneficial Cannex Warrantholders;

all registered and beneficial Cannex Noteholders;

all registered and beneficial holders of Resulting Issuer Shares;

all registered and beneficial holders of Resulting Issuer NH Replacement Options;

all registered and beneficial holders of Resulting Issuer Replacement Options;

all registered and beneficial holders of Resulting Issuer Warrants;

all registered and beneficial holders of Resulting Issuer Notes;

the registrar and transfer agent of the Resulting Issuer;

the Depositary; and

all other Persons served with notice of the final application to approve this Plan of Arrangement.

Arrangement

each Nevada Holdco Dissenting Share held by a Nevada Holdco Dissenting Shareholder in respect of which a Nevada Holdco Shareholder has validly exercised his, her or its Nevada Holdco Dissent Right shall be deemed to be transferred by such Nevada Holdco Dissenting Shareholder to Nevada Holdco (free and clear of any Liens of any nature whatsoever) in accordance with and for the consideration set forth in Article 4 hereof, and such Nevada Holdco Dissenting Shareholder shall cease to be a holder of such Nevada Holdco Share and his, her or its name shall be removed from the central securities register of Nevada Holdco as a holder of a Nevada Holdco Dissenting Share. Such Nevada Holdco Dissenting Shareholder shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer such Nevada Holdco Dissenting Shares to Nevada Holdco in accordance with this Subsection. Nevada Holdco shall be the holder of all of the Nevada Holdco Dissenting Shares transferred in accordance with this Subsection and such Nevada Holdco Shares will be cancelled and the central securities register of Nevada Holdco shall be revised accordingly;

one minute after 3.2(a) above, each Cannex Dissenting Share held by a Cannex Dissenting Shareholder in respect of which a Cannex Shareholder has validly exercised his, her or its Cannex Dissent Right shall be deemed to be transferred by such Cannex Dissenting Shareholder to Cannex (free and clear of any Liens of any nature whatsoever) in accordance with and for the consideration set forth in Article 4 hereof, and such Cannex Dissenting Shareholder shall cease to be a holder of such Cannex Share and his, her or its name shall be removed from the central securities register of Cannex as a holder of a Cannex Dissenting Share. Such Cannex Dissenting Shareholder shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer such Cannex Dissenting Shares to Cannex in accordance with this Subsection. Cannex shall be the holder of all of the Cannex Dissenting Shares transferred in accordance with this Subsection and such Cannex Shares will be cancelled and the central securities register of Cannex shall be revised accordingly;

one minute after 3.2(b) above, BC Newco and Nevada Holdco shall amalgamate to form the Resulting Issuer, with the same effect as if they had amalgamated under Section 269 of the BCBCA;

without limiting the generality of 3.2(c) above, BC Newco and Nevada Holdco shall amalgamate and continue as one company, the Resulting Issuer, under the terms and conditions prescribed in this Plan of Arrangement;

the property, rights and interests of each of BC Newco and Nevada Holdco shall continue to be the property, rights and interests of the Resulting Issuer;

the Resulting Issuer shall continue to be liable for the obligations of each of BC Newco and Nevada Holdco;

the Resulting Issuer shall be deemed to be the party plaintiff or the party defendant, as the case may be, in any civil action commenced by or against either BC Newco or Nevada Holdco before the BC Amalgamation has become effective;

a conviction against, or a ruling, order or judgment in favour of or against, either BC Newco or Nevada Holdco may be enforced by or against the Resulting Issuer;

the board of directors of the Resulting Issuer shall be comprised of a minimum of three and a maximum of 10 directors and the initial five directors of the Resulting Issuer will be the Board Nominees;

the notice of articles and articles of the Resulting Issuer shall be substantially in the form of the notice of articles and articles of Nevada Holdco following the Continuance and the registered office of the Resulting Issuer shall be the registered office of Nevada Holdco following the Continuance;

each BC Newco Share held by a holder thereof will be cancelled and the holder’s name shall be removed from the register of holders of such BC Newco Shares, and in consideration therefor, the holder thereof shall receive a fully paid and non-assessable Resulting Issuer Subordinate Voting Share on the basis of one Resulting Issuer Subordinate Voting Share for each BC Newco Share and the registered holder thereof shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to exchange such BC Newco Share in accordance herewith;

each Nevada Holdco Subordinate Voting Share, Nevada Holdco Proportionate Voting Share and Nevada Holdco Multiple Voting Share held by a Nevada Holdco Shareholder will be cancelled and the holder’s name shall be removed from the register of holders of such Nevada Holdco Subordinate Voting Share, Nevada Holdco Proportionate Voting Share and Nevada Holdco Multiple Voting Share, respectively, and in consideration therefor, the holder thereof shall receive a Resulting Issuer Subordinate Voting Share, Resulting Issuer Proportionate Voting Share or Resulting Issuer Multiple Voting Share, as the case may be, upon the BC Amalgamation on the basis of one Resulting Issuer Subordinate Voting Share, Resulting Issuer Proportionate Voting Share and Resulting Issuer Multiple Voting Share for each Nevada Holdco Subordinate Voting Share, Nevada Holdco Proportionate Voting Share and Nevada Holdco Multiple Voting Share, respectively, and the registered holder of the Nevada Holdco Shares shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to exchange such Nevada Holdco Shares in accordance herewith;

the amounts added to the stated capital of the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Proportionate Voting Shares and Resulting Issuer Multiple Voting Shares shall be amounts equal to the paid-up capital (as that term is used for purposes of the Tax Act) of the corresponding class of Nevada Holdco Shares (other than the Nevada Holdco Shares held by Nevada Holdco Dissenting Shareholders) immediately prior to the Effective Time, and an additional amount equal to the paid-up capital of the BC Newco Shares immediately prior to the Effective Time shall be added to the stated capital of the Resulting Issuer Subordinate Voting Shares;

each Nevada Holdco Warrant shall be and shall be deemed to be terminated and cancelled and each holder of Nevada Holdco Warrants shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer NH Warrant in exchange for the termination of the rights and release of claims in respect of each Nevada Holdco NH Warrant terminated and cancelled. Each Resulting Issuer NH Warrant shall be exercisable into a Resulting Issuer Subordinate Voting Share and the exercise price per Resulting Issuer NH Warrant shall be adjusted accordingly, and any document evidencing a Nevada Holdco Warrant shall thereafter evidence and be deemed to evidence such Resulting Issuer NH Warrant. Except as explicitly provided herein, all terms and conditions of a Resulting Issuer NH Warrant, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Nevada Holdco Warrant for which it was exchanged, and shall be governed by the terms of the Resulting Issuer NH Warrant and the former holder of such Nevada Holdco Warrants will cease to be the holder thereof or to have any rights as a holder of such Nevada Holdco Warrants; and

each Nevada Holdco Option shall be terminated and cancelled and each holder of Nevada Holdco Options shall be entitled to receive, from the Resulting Issuer, Resulting Issuer NH Replacement Options in exchange for the termination of the rights and release of claims in respect of each Nevada Holdco Option terminated and cancelled. Each Resulting Issuer NH Replacement Option shall be exercisable into a Resulting Issuer Proportionate Voting Share. Such Resulting Issuer NH Replacement Options shall provide for an exercise price per Resulting Issuer NH Replacement Option (rounded up to the nearest whole cent) equal to the exercise price per Nevada Holdco Option, and any document evidencing a Nevada Holdco Option shall thereafter evidence and be deemed to evidence such Resulting Issuer NH Replacement Option for Proportionate Voting Shares. Except as explicitly provided herein, all terms and conditions of a Resulting Issuer NH Replacement Option, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Nevada Holdco Option for which it was exchanged, and shall be governed by the terms of the Resulting Issuer Equity Incentive Plans, the former holder of such Nevada Holdco Options will cease to be the holder thereof or to have any rights as a holder of such Nevada Holdco Options, and the exchange shall not provide any optionee with any additional benefits as compared to those under his or her original Nevada Holdco Option. It is intended that subsection 7(1.4) of Tax Act and U.S. Treas. Reg. Secs. 1.424-1(a)(5) and 1.409A-1(b)(5)(v)(D), as applicable, apply to such exchange of Nevada Holdco Options. Accordingly, and notwithstanding the foregoing, if required, the exercise price of a Resulting Issuer NH Replacement Option will be increased such that the In-The-Money Amount of the Resulting Issuer NH Replacement Option immediately after the exchange does not exceed the In-The-Money Amount of the Nevada Holdco Option (or a fraction thereof) exchanged for such Resulting Issuer NH Replacement Option immediately before the exchange;

one minute after 3.2(c) above, each Resulting Issuer Share held by the Initial BC Newco Shareholder shall, without any further action by or on behalf of the Initial BC Newco Shareholder, be, and shall be deemed to be, canceled and the holder’s name shall be removed from the register of holders of such Resulting Issuer Share, and in consideration therefor, the holder thereof shall receive a cash payment for such Resulting Issuer Share equal to $1.00;

one minute after 3.2(d) above, the CCGI Windup shall be, and shall be deemed to be, effected;

one minute after 3.2(e) above, each Cannex Common Share and Cannex Class A Share outstanding immediately prior to the Effective Time, shall be and shall be deemed to be transferred to the Resulting Issuer by the applicable Cannex Shareholder and the holder’s name shall be removed from the register of holders of such Cannex Share, and in consideration therefor, the holder thereof shall receive fully paid and non-assessable Resulting Issuer Subordinate Voting Shares and Resulting Issuer Proportionate Voting Shares, respectively, on the basis of the Cannex Share Exchange Ratio (rounded down to the nearest whole number); and

each Cannex Shareholder shall cease to be the holder of such Cannex Shares and to have any rights as a holder of such Cannex Shares other than the right to the Resulting Issuers Shares pursuant to this Section 3.2(f);

the Resulting Issuer shall be, and shall be deemed to be, the transferee of such Cannex Shares; and

the Resulting Issuer and Cannex shall make the appropriate entries in their securities registers to reflect the matters referred to in Section 3.2(f);

concurrently with 3.2(f) above, each Cannex PP Warrant shall be and shall be deemed to be terminated and cancelled and each holder of Cannex PP Warrants shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer PP Warrant in exchange for the termination of the rights and release of claims in respect of each Cannex PP Warrant terminated and cancelled. Each Resulting Issuer PP Warrant shall be exercisable for Resulting Issuer Subordinate Voting Shares based on the Cannex Share Exchange Ratio (such that, upon exercise, in lieu of each Cannex Share to which such holder was theretofore entitled upon such exercise and for the same aggregate consideration payable therefor, the holder shall receive Resulting Issuer Subordinate Voting Shares based on the Cannex Share Exchange Ratio). The Resulting Issuer PP Warrants shall provide for an exercise price per Resulting Issuer Warrant equal to the exercise price per Cannex PP Warrant, and any document evidencing a Cannex PP Warrant shall thereafter evidence and be deemed to evidence such Resulting Issuer PP Warrant. Except as explicitly provided herein, all terms and conditions of a Resulting Issuer PP Warrant to be issued in exchange for a Cannex PP Warrant, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Cannex PP Warrant for which it was exchanged, and shall be governed by the terms of the Resulting Issuer PP Warrant and the former holder of such Cannex PP Warrants will cease to be the holder thereof or to have any rights as a holder of such Cannex PP Warrants;

concurrently with 3.2(f) above, the Cannex PP Warrants exchanged pursuant to Subsection 3.2(g) shall be cancelled without payment;

concurrently with 3.2(f) above, each Cannex GG Warrant shall be and shall be deemed to be terminated and cancelled and each holder of Cannex GG Warrants shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer GG Warrant in exchange for the termination of the rights and release of claims in respect of each Cannex GG Warrant terminated and cancelled. Each Resulting Issuer GG Warrant shall be exercisable for Resulting Issuer Proportionate Voting Shares based on the Cannex Share Exchange Ratio and the exercise price per Resulting Issuer GG Warrant shall be adjusted accordingly (such that, upon exercise, in lieu of each Cannex Share to which such holder was theretofore entitled upon such exercise and for the same aggregate consideration payable therefor, the holder shall receive Resulting Issuer Proportionate Voting Shares based on the Cannex Share Exchange Ratio). All terms and conditions of the Resulting Issuer GG Warrant to be issued in exchange for a Cannex GG Warrant shall be governed by the terms of the certificate evidencing the Resulting Issuer GG Warrant and, upon exchange, the former holder of such Cannex GG Warrants will cease to be the holder thereof or to have any rights as a holder of such Cannex GG Warrants;

concurrently with 3.2(f) above, the Cannex GG Warrants exchanged pursuant to Subsection 3.2(i) shall be cancelled without payment;

concurrently with 3.2(f) above, each Cannex Note shall be and shall be deemed to be terminated and cancelled and each holder of Cannex Notes shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer Note in exchange for the termination of the rights and release of claims in respect of each Cannex Note terminated and cancelled. Each Resulting Issuer Note shall be convertible into Resulting Issuer Proportionate Voting Shares in accordance with the Cannex Share Exchange Ratio (such that, upon conversion, in lieu of each Cannex Share to which such holder was theretofore entitled upon such conversion, the holder shall receive Resulting Issuer Proportionate Voting Shares based on the Cannex Share Exchange Ratio) and any document evidencing a Cannex Note shall thereafter cease and terminate and will be replaced by a Resulting Issuer Note. All terms and conditions of a Resulting Issuer Note, shall be governed by the terms of the certificate evidencing the Resulting Issuer Note, and the former holder of such Cannex Note will cease to be the holder thereof or to have any rights as a holder of such Cannex Note;

concurrently with 3.2(f) above, the Cannex Notes exchanged pursuant to Subsection 3.2(k) shall be cancelled without payment;

concurrently with 3.2(f) above, each Cannex Option shall be terminated and cancelled and each holder of Cannex Options shall be entitled to receive, from the Resulting Issuer, Resulting Issuer Replacement Options in exchange for the termination of the rights and release of claims in respect of each Cannex Option terminated and cancelled, on the basis of the Cannex Option Exchange Ratio (provided that if the foregoing would result in the issuance of a fraction of a Resulting Issuer Replacement Option, then the number of Resulting Issuer Replacement Options otherwise issued shall be rounded down to the nearest whole number). Such Resulting Issuer Replacement Options shall provide for an exercise price per Resulting Issuer Replacement Option (rounded up to the nearest whole cent) equal to the quotient obtained when: (i) the exercise price per Cannex Share that would otherwise be payable pursuant to the Cannex Option it replaces is divided by (ii) the Cannex Share Exchange Ratio, and any document evidencing a Cannex Option shall thereafter evidence and be deemed to evidence such Resulting Issuer Replacement Options. Except as explicitly provided herein, all terms and conditions of a Resulting Issuer Replacement Option, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Cannex Option for which it was exchanged, and shall be governed by the terms of the applicable Resulting Issuer Equity Incentive Plan and the former holder of such Cannex Options will cease to be the holder thereof or to have any rights as a holder of such Cannex Options and the exchange shall not provide any optionee with any additional benefits as compared to those under his or her original Cannex Option. It is intended that subsection 7(1.4) of Tax Act and U.S. Treas. Reg. Secs. 1.424-1(a)(5) and 1.409A-1(b)(5)(v)(D), as applicable, apply to such exchange of Cannex Options. Accordingly, and notwithstanding the foregoing, if required, the exercise price of a Resulting Issuer Replacement Option will be increased such that the In-The-Money Amount of the Resulting Issuer Replacement Option immediately after the exchange does not exceed the In-The-Money Amount of the Cannex Option (or a fraction thereof) exchanged for such Resulting Issuer Replacement Option immediately before the exchange;

concurrently with 3.2(f) above, the Cannex Options exchanged pursuant to Subsection 3.2(m) shall be cancelled without payment; and

one minute after 3.2(f) above, the Cannex Windup shall be, and shall be deemed to be, effected;

Issuance of Additional Resulting Issuer Subordinate Voting Shares and Resulting Issuer Proportionate Voting Shares

Each holder of Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, Resulting Issuer Notes, Resulting Issuer Warrants and Resulting Issuer NH Warrants shall be issued and shall receive, upon the exercise by such holder of such Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, Resulting Issuer Notes, Resulting Issuer Warrants and Resulting Issuer NH Warrants in accordance with the terms thereof, Resulting Issuer Subordinate Voting Shares or Resulting Issuer Proportionate Voting Shares, as applicable.

Each holder of Resulting Issuer Proportionate Voting Shares, including holders of Resulting Issuer Replacement Options for Proportionate Voting Shares, Resulting Issuer NH Replacement Options, Resulting Issuer Notes, Resulting Issuer Warrants and Resulting Issuer NH Warrants that exercise or convert such shares, options, notes or warrants shall be issued and shall receive, upon the conversion or exercise by such holder of such Resulting Issuer Proportionate Voting Shares, Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, Resulting Issuer Notes, Resulting Issuer Warrants or Resulting Issuer NH Warrants, as the case may be, in accordance with the special rights and restrictions attached to the Resulting Issuer Proportionate Voting Shares, Resulting Issuer Subordinate Voting Shares in accordance with the special rights and restrictions attached to the Resulting Issuer Proportionate Voting Shares.

Each holder of Resulting Issuer Multiple Voting Shares shall be issued and shall receive, upon the conversion by such holder of such Resulting Issuer Multiple Voting Shares in accordance with the special rights and restrictions attached to the Resulting Issuer Multiple Voting Shares, Resulting Issuer Subordinate Voting Shares in accordance with the special rights and restrictions attached to the Resulting Issuer Multiple Voting Shares.

Post-Effective Time Procedures

Following the receipt of the Final Order and prior to the Effective Date, the Resulting Issuer shall deliver or arrange to be delivered to the Depository such number of Resulting Issuer Proportionate Voting Shares, Resulting Issuer Subordinate Voting Shares and Resulting Issuer Multiple Voting Shares in certificated or book-entry form required to be issued.

Subject to the provisions of Article 5 hereof, and upon return of a properly completed and executed Nevada Holdco Letter of Transmittal or Cannex Letter of Transmittal, if applicable, by a registered former Nevada Holdco Shareholder or Cannex Shareholder, as the case may be, together with certificates, or in the case of shares in book-entry form or uncertificated form, an “agent’s message”, representing Nevada Holdco Shares or Cannex Shares and such other documents as the Depository may require, the Depositary shall deliver to former Nevada Holdco Shareholders and former Cannex Shareholders, as applicable, Resulting Issuer Proportionate Voting Shares, Resulting Issuer Subordinate Voting Shares, or Resulting Issuer Multiple Voting Shares, as the case may be, in accordance with the provisions of this Plan of Arrangement, in certificated or book-entry form to which they are entitled.

No Fractional Resulting Issuer Securities

Rights of Dissent

Subject to Section 4.1(c), registered holders of Nevada Holdco Shares that duly exercise the Nevada Holdco Dissent Rights and are ultimately:

determined to be entitled to be paid fair value for their Nevada Holdco Dissenting Shares by Nevada Holdco (which fair value, notwithstanding anything to the contrary contained in the NRS, shall be determined as of the close of business on the day before the Effective Date), shall be deemed to have irrevocably transferred their Nevada Holdco Dissenting Shares to Nevada Holdco in exchange for the right to be paid fair value for such Nevada Holdco Dissenting Shares, and Nevada Holdco shall thereupon be obligated to pay the amount therefore determined to be the fair value of such Nevada Holdco Dissenting Shares; or

determined not to be entitled to be paid fair value for their Nevada Holdco Dissenting Shares by Nevada Holdco, for any reason, shall be deemed to have participated in the Arrangement on the same basis as a registered holder of a Nevada Holdco Share that has not exercised the Nevada Holdco Dissent Rights.

Subject to 4.1(c), registered holders of Cannex Shares that duly exercise the Cannex Dissent Rights and are ultimately:

determined to be entitled to be paid fair value for their Cannex Dissenting Shares by Cannex (which fair value, notwithstanding anything to the contrary contained in the BCBCA, shall be determined as of the close of business on the day before the Effective Date), shall be deemed to have irrevocably transferred their Cannex Dissenting Shares to Cannex in exchange for the right to be paid fair value for such Cannex Dissenting Shares, and the Resulting Issuer shall thereupon be obligated to pay the amount therefore determined to be the fair value of such Cannex Dissenting Shares from the Cannex Escrow Fund; or

determined not to be entitled to be paid fair value for their Cannex Dissenting Shares by Cannex, for any reason, shall be deemed to have participated in the Arrangement on the same basis as a registered holder of a Cannex Share that has not exercised the Cannex Dissent Rights.

In no circumstances shall the Resulting Issuer, Nevada Holdco, Cannex, or any other person be required to recognize a person purporting to exercise Nevada Holdco Dissent Rights or Cannex Dissent Rights, as the case maybe, after the completion of the step contemplated by Section 3.2(b), and each such Person who has exercised Nevada Holdco Dissent Rights or Cannex Dissent Rights will cease to be entitled to the rights of the registered holders of Nevada Holdco Shares or the Cannex Shares, respectively, in respect of the shares in relation to which such Person has exercised such dissent rights, and the register for the Nevada Holdco Shares and the Cannex Shares, as applicable, will be amended to reflect that such former holder is no longer the holder of such shares as and from the completion of the step set forth in Section 3.2(b).

Delivery of Resulting Issuer Proportionate Voting Shares, Resulting Issuer Subordinate Voting Shares and Resulting Issuer Multiple Voting Shares

Upon surrender to the Depository for cancellation of a certificate, if any, evidencing the surrender of such shares, that immediately before the Effective Time were deemed to have represented one or more outstanding Nevada Holdco Shares that were exchanged for Resulting Issuer Subordinate Voting Shares, Resulting Issuer Proportionate Voting Shares or Resulting Issuer Multiple Voting Shares, together with the duly completed and executed Nevada Holdco Letter of Transmittal with respect to such shares and such other documents and instruments as would have been required to effect the exchange of the Nevada Holdco Shares under the BCBCA and the articles of Nevada Holdco and such additional documents and instruments as the Depository may reasonably require, the holder of such surrendered Nevada Holdco Shares shall be entitled to receive in exchange therefor, and the Depository shall deliver to such holder following the Effective Time, such number of Resulting Issuer Subordinate Voting Shares, Resulting Issuer Proportionate Voting Shares or Resulting Issuer Multiple Voting Shares in certificated form or book-entry form that such holder is entitled to receive pursuant to this Plan of Arrangement.

Upon surrender to the Depository for cancellation of a certificate, if any, or in the case of Cannex Shares in uncertificated or book-entry form, an “agent’s message” evidencing the surrender of such shares, that immediately before the Effective Time represented one or more outstanding Cannex Shares together with the duly completed and executed Cannex Letter of Transmittal with respect to such shares and such other documents and instruments as would have been required under the BCBCA and the notice of articles and articles of Cannex and such additional documents and instruments as the Depository may reasonably require, the holder of such surrendered Cannex Shares shall be entitled to receive in exchange therefor, and the Depository shall deliver to such holder following the Effective Time, the Resulting Issuer Subordinate Voting Shares and/or the Resulting Issuer Proportionate Voting Shares, in certificated or book-entry form, that such holder is entitled to receive in accordance with this Plan of Arrangement.

After the effective time of the amalgamation described in Section 3.2(c) and until surrendered for cancellation as contemplated by Subsection 5.1(a) hereof, each Nevada Holdco Share (other than Nevada Holdco Shares held immediately prior to such time by Nevada Holdco Dissenting Shareholders), and any certificates deemed to represent such Nevada Holdco Shares, shall be deemed at all times to represent only the right to receive in exchange therefor the Resulting Issuer Shares that the holder is entitled to receive in accordance with this Plan of Arrangement.

After the effective time of the exchange described in Section 3.2(f) and until surrendered for cancellation as contemplated by Subsection 5.1(b) hereof, each Cannex Share (other than Cannex Shares held immediately prior to such time by Cannex Dissenting Shareholders) shall be deemed at all times to represent only the right to receive in exchange therefor the Resulting Issuer Subordinate Voting Shares and/or the Resulting Issuer Proportionate Voting Shares that the holder is entitled to receive in accordance with this Plan of Arrangement.

Lost Certificates

Distributions with Respect to Unsurrendered Shares

Withholding Rights

withhold and sell, on their own account or through a broker (the “Broker”), and on behalf of any Affected Person; or

require the Affected Person to irrevocably direct the sale through a Broker and irrevocably direct the Broker to pay the proceeds of such sale to the Resulting Issuer, Nevada Holdco, Cannex or the Depository as appropriate (and, in the absence of such irrevocable direction, the Affected Person shall be deemed to have provided such irrevocable direction);

the Resulting Issuer, Nevada Holdco, Cannex or the Depository, as applicable, shall pay the full amount required to be deducted to the appropriate taxing authority on a timely basis and in accordance with applicable Law; and

as soon as practicable after payment of such amount to the appropriate taxing authority, the Resulting Issuer, Nevada Holdco, Cannex or the Depository, as applicable, shall deliver to the Affected Person the original or certified copy of a receipt issued by such taxing authority evidencing such payment, and a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Affected Person.

Limitation and Proscription

No Liens

No Liability

Paramountcy

Amendments to Plan of Arrangement

The Parties reserve the right to amend, modify or supplement this Plan of Arrangement at any time and from time to time, provided, however, that each such amendment, modification or supplement must be: (i) set out in writing; (ii) agreed to in writing by each of the Parties; (iii) filed with the Court and, if made following the Nevada Holdco Meeting or the Cannex Meeting, approved by the Court; and (iv) communicated to holders or former holders of Nevada Holdco securities or Cannex securities if and as required by the Court.

Subject to the provisions of the Interim Order, any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Parties prior to the Nevada Holdco Meeting and the Cannex Meeting; provided, however, that the Parties shall have consented thereto in writing, with or without any other prior notice or communication, and, if so proposed and accepted by the Persons voting at the Nevada Holdco Meeting and the Cannex Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.

Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the Nevada Holdco Meeting or the Cannex Meeting shall be effective only if: (i) it is consented to in writing by the Parties; (ii) it is filed with the Court (other than amendments contemplated in Subsection 6.1(d), which shall not require such filing) and (iii) if required by the Court, it is consented to by Nevada Holdco Shareholders or Cannex Shareholders, as applicable, voting or consenting, as the case may be, in the manner directed by the Court.

Any amendment, modification or supplement to this Plan of Arrangement may be made by the Parties without the approval of or communication to the Court or the Nevada Holdco Shareholders or the Cannex Shareholders, provided that it concerns a matter which, in the reasonable opinion of the Parties is of an administrative or ministerial nature required to better give effect to the implementation of this Plan of Arrangement and is not materially adverse to the financial or economic interests of any of the Nevada Holdco Shareholders or the Cannex Shareholders, as applicable.

This Plan of Arrangement may be withdrawn prior to the Effective Time in accordance with the terms of the Business Combination Agreement.

Further Assurances

Organization and Qualification. Cannex is duly incorporated and validly existing under the BCBCA and has full corporate power and authority to own its assets now owned and conduct its business as now owned and conducted and as presently proposed to be conducted. Cannex is duly qualified to carry on business and is in good standing in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a Cannex Material Adverse Effect. True and complete copies of the constating documents of Cannex have been delivered or made available to 4Front, such documents are in full force and effect as of the date hereof, and Cannex has not taken any action to amend or supersede such documents as of the date hereof.

Authority Relative to this Agreement. Cannex has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Cannex and the consummation by Cannex of the transactions contemplated by this Agreement have been duly authorized by the Cannex Board, and no other corporate proceedings on the part of Cannex are necessary to authorize this Agreement other than the Cannex Shareholder Approval. This Agreement has been duly executed and delivered by Cannex and assuming due authorization, execution and delivery by each of the other Parties hereto, constitutes a valid and binding obligation of Cannex, enforceable by the other Parties hereto against Cannex in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

No Conflict; Required Filings and Consent. The execution and delivery by Cannex of this Agreement and the performance of its obligations hereunder and the completion of the Business Combination will not violate, conflict with or result in a breach of any provision of the organizational documents of Cannex or its Subsidiaries, or any Cannex Third Party Permit Holder (as defined below), and, except as would not have a Cannex Material Adverse Effect, will not: (i) violate, conflict with or result in a breach of: (A) any Cannex Material Contract; or (B) any Law to which Cannex, its Subsidiaries or any Cannex Third Party Permit Holders are subject or by which Cannex, its Subsidiaries or any Cannex Third Party Permit Holders are bound; (ii) give rise to any right of termination, or the acceleration of any indebtedness, under any Cannex Material Contract or licence or permit held by Cannex, its Subsidiaries or any Cannex Third Party Permit Holder; or (iii) give rise to any rights of first refusal or rights of first offer, trigger any change in control or any restriction or limitation under any Cannex Material Contract or licence or permit held by Cannex, its Subsidiaries or any Cannex Third Party Permit Holder, or result in the imposition of any Lien upon any of Cannex’s assets or the assets of its Subsidiaries or any Cannex Third Party Permit Holder.

Subsidiaries. Cannex does not have Subsidiaries or any material direct or indirect interests in any Person, other than those listed in Schedule “C”, Section (d) of the Cannex Disclosure Letter. Each Subsidiary of Cannex is duly organized and is validly existing under the Laws of its jurisdiction of incorporation or organization, has full corporate power and authority to own its assets now owned and conduct its business as now owned and conducted by it and as presently proposed to be conducted by it and is duly qualified to carry on business in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a Cannex Material Adverse Effect. Cannex beneficially owns, directly or indirectly, all of the issued and outstanding securities of its Subsidiaries. All of the outstanding equity securities in the capital of each Subsidiary are: (i) validly issued, fully-paid and non-assessable and all such equity securities are owned free and clear of all Liens; (ii) except as set forth in the organizational documents (including without limitation, any operating agreements) of each Subsidiary, free of any other restrictions including any restriction on the right to vote, sell or otherwise dispose of shares; and (iii) all such securities so owned directly or indirectly by Cannex have been issued in material compliance with all applicable Laws.

Compliance with Laws.

Except for non-compliance or violations that would not have a Cannex Material Adverse Effect, the operations of Cannex, its Subsidiaries and the Cannex Third Party Permit Holders have been and are now conducted in material compliance with all Laws of each jurisdiction, the Laws of which have been and are now applicable to the operations of Cannex, its Subsidiaries or such Cannex Third Party Permit Holders, as applicable (including applicable Privacy Law and Anti-Spam Law), and none of Cannex, its Subsidiaries nor, to the knowledge of Cannex, the Cannex Third Party Permit Holders has received any written notice of any such alleged non-compliance or violation of any Laws.

None of Cannex nor any of its Subsidiaries is in conflict with, or in default (including cross defaults) under or in violation of: (A) its articles or by-laws or equivalent organizational documents, in any case in any material respect; or (B) any Cannex Material Contract, except for any conflicts, defaults or violations that would not have a Cannex Material Adverse Effect.

Cannex is in compliance in all material respects with (A) all its disclosure obligations under the Securities Laws (including, without limitation, all of its disclosure obligations pursuant to National Instrument 51-102—Continuous Disclosure Obligations and pursuant to National Instrument 58-101 - Disclosure of Corporate Governance Practices of the Canadian Securities Administrators) and (B) the applicable listing rules and regulations of the CSE. Each of the Cannex Public Documents is, as of the date thereof, in compliance in all material respects with the Securities Laws and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and such documents collectively constitute full, true and plain disclosure of all material facts relating to Cannex and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, as of the date thereof. There is no fact known to Cannex which Cannex has not publicly disclosed which results in a Cannex Material Adverse Effect, or so far as Cannex can reasonably foresee, will have a Cannex Material Adverse Effect or materially adversely affect the ability of Cannex to perform its obligations under this Agreement. No Governmental Order preventing, ceasing or suspending trading in any securities of Cannex nor prohibiting the sale of such securities has been issued and is outstanding, nor, to the knowledge of Cannex, is threatened, against Cannex or its directors, officers or promoters.

None of Cannex, nor any of its Subsidiaries or any Cannex Third Party Permit Holders, conducts any material cannabis-related activities nor engages in any material business in any jurisdiction where such activities are not expressly authorized by applicable Laws; in those jurisdictions where such cannabis-related activities are expressly authorized by applicable Laws, Cannex, its Subsidiaries and the Cannex Third Party Permit Holders comply in all material respects, and Cannex reasonably believes that any third party with which it engages in business or transactions complies in all material respects, with such Laws and have all material Permits necessary for the conduct of such cannabis-related activities.

Licenses and Permits.

Schedule “C”, Section (f)(i) of the Cannex Disclosure Letter lists all material Permits issued to each of Cannex, its Subsidiaries and any other Person who is not an Affiliate of Cannex and has a contractual relationship with Cannex or its Subsidiaries (each, a “Cannex Third Party Permit Holder”) which are required for the conduct of the operations of Cannex, its Subsidiaries and the Cannex Third Party Permit Holders as currently conducted or as presently proposed to be conducted or the ownership and use of the assets of Cannex, its Subsidiaries and the Cannex Third Party Permit Holders now owned and used, including the names of the material Permits, the holder of each material Permit, and their respective dates of issuance and expiration. All material Permits required for Cannex to conduct the operations of Cannex and its Subsidiaries as currently conducted or for the ownership and use of the assets of Cannex and its Subsidiaries now owned have been obtained by Cannex, its Subsidiaries, or a Cannex Third Party Permit Holder, and are (A) valid and in full force and effect (to the extent such Permit is held by Cannex or a Subsidiary); or (B) to the knowledge or Cannex, are valid and in full force and effect (to the extent such Permit is held by a Cannex Third Party Permit Holder). Except as disclosed in Schedule “C”, Section (f)(i) of the Cannex Disclosure Letter, Cannex, its Subsidiaries and, to its knowledge, each Cannex Third Party Permit Holder is in material compliance with all material Permits as they are required to hold for the conduct of the operations of Cannex and its Subsidiaries as currently conducted. There is no material Action pending or, to the knowledge of Cannex, threatened, regarding any of the foregoing Permits.

To the knowledge of Cannex, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Schedule “C”, Section (f)(i) of the Cannex Disclosure Letter.

None of Cannex or any of its Subsidiaries nor, to the knowledge of Cannex, any Cannex Third Party Permit Holders, has received any written notice of revocation or non-renewal of any material Permits, or of any intention of any Person to revoke or refuse to renew any of such Permits, except in each case, for revocations or non-renewals which would not have a Cannex Material Adverse Effect.

Capitalization and Listing.

The authorized share capital of Cannex consists of an unlimited number of Cannex Common Shares, an unlimited number of Cannex Class A Shares and an unlimited number of Cannex Preferred Shares. As at the date of this Agreement there are: (A) 87,192,204 Cannex Common Shares validly issued and outstanding as fully-paid and non-assessable shares of Cannex; (B) 96,521,734 Cannex Class A Shares validly issued and outstanding as fully-paid and non-assessable shares of Cannex; (C) no Cannex Preferred Shares issued and outstanding; (D) outstanding Cannex Common Share Options providing for the issuance of 6,925,000 Cannex Common Shares and outstanding Cannex Class A Share Options providing for the issuance of 6,300,000 Cannex Class A Shares upon the exercise thereof; (E) outstanding Cannex Notes providing for the issuance of 38,554,217 Cannex Class A Shares upon the conversion thereof; and (F) outstanding Cannex Warrants providing for the issuance of 39,283,543 Cannex Shares upon the exercise thereof. The terms of the Cannex Options and Cannex Warrants (including exercise price) are disclosed in Schedule “C”, Section (g)(i) to the Cannex Disclosure Letter. Except as disclosed in Schedule “C”, Section (g)(i) of the Cannex Disclosure Letter (x) there are no options, warrants, conversion privileges, calls or other rights, shareholder rights plans, agreements, arrangements, commitments, or obligations of Cannex or its Subsidiaries to issue or sell any shares of Cannex or its Subsidiaries or securities or obligations of any kind convertible into, exchangeable for or otherwise carrying the right or obligation to acquire any shares of Cannex or its Subsidiaries, and (y) no Person is entitled to any pre-emptive or other similar right granted by Cannex or its Subsidiaries. The Cannex Common Shares are listed on the CSE and the OTCQX, and are not listed or quoted on any market other than the CSE and the OTCQX. Except as disclosed in Schedule “C”, Section (g)(i) to the Cannex Disclosure Letter, to the knowledge of Cannex, no Person beneficially owns, directly or indirectly, or exercises control or direction over, more than 10% of the votes attached to the Cannex Shares.

Schedule “C”, Section (g)(ii) of the Cannex Disclosure Letter sets forth, as of the date hereof, the holders of all outstanding Cannex Options and the number, class or series of shares, exercise prices, vesting schedules (including acceleration terms, if any) and expiration dates of each grant to such holders. All Cannex Shares that may be issued pursuant to the exercise of outstanding Cannex Options will, when issued in accordance with the terms of such Cannex Options, be duly authorized, validly issued, fully-paid and non-assessable and are not and will not be subject to or issued in violation of any pre-emptive rights. Each grant of Cannex Options was duly authorized no later than the date on which the grant of such Cannex Options was by its terms to be effective by all necessary corporate action, including, if required as applicable, board of approval or compensation committee approval and required stockholder approval, all Cannex Options have been granted in compliance with applicable Law, including all applicable Securities Laws and in accordance with the Cannex Option Plans. All Cannex Options were granted with a per share exercise price that equals or exceeded the fair market value of a share of the Cannex Common Shares on the applicable grant date.

Schedule “C”, Section (g)(iii) of the Cannex Disclosure Letter sets forth, as of the date hereof, the holders of all outstanding Cannex Warrants and the number, class or series of shares into which such Cannex Warrants are exercisable, exercise prices and expiration dates of each grant to such holders. All Cannex Shares that may be issued pursuant to the exercise of outstanding Cannex Warrants will, when issued in accordance with its Cannex Warrants, be duly authorized, validly issued, fully-paid and non-assessable and are not and will not be subject to or issued in violation of any pre-emptive rights.

Schedule “C”, Section (g)(iv) of the Cannex Disclosure Letter sets forth, as of the date hereof, the holders of all outstanding Cannex Notes and the number, class or series of Cannex Shares into which such Cannex Notes are convertible, principal outstanding and maturity dates of each note to such holders. All Cannex Shares that may be issued pursuant to the conversion of outstanding Cannex Notes will, when issued in accordance with its Cannex Note, be duly authorized, validly issued, fully-paid and non-assessable and are not and will not be subject to or issued in violation of any pre-emptive rights.

There are no outstanding contractual obligations of Cannex or its Subsidiaries to repurchase, redeem or otherwise acquire any Cannex Shares or any shares or other equity securities of its Subsidiaries. No Subsidiary of Cannex owns any Cannex Shares.

Shareholder and Similar Agreements. Cannex is not party to any shareholder, pooling, voting trust or other similar agreement relating to the issued and outstanding shares in the capital of Cannex or its Subsidiaries.

U.S. Securities Law Matters.

Cannex is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act.

There is no class of securities of Cannex which is registered pursuant to Section 12 of the U.S. Exchange Act, nor is Cannex subject to any reporting obligation (whether active or suspended) pursuant to section 15(d) of the U.S. Exchange Act. Cannex is not subject to any requirement to register any class of its equity securities pursuant to Section 12(g) of the U.S. Exchange Act.

None of Cannex or any of its Subsidiaries, predecessors or Affiliates has had the registration of a class of securities under the U.S. Exchange Act revoked by the United States Securities and Exchange Commission pursuant to Section 12(j) of the U.S. Exchange Act and any rules or regulations promulgated thereunder.

Cannex is not an investment company registered or required to be registered under the U.S. Investment Company Act of 1940, as amended.

Where necessary, each of the Cannex Shares has been issued under a valid exemption under the U.S. Securities Act and in accordance with any applicable state securities Laws.

Financial Statements.

The: (A) audited consolidated financial statements for Cannex as at and for each of the fiscal years ended on April 30, 2018 and April 30, 2017 including the notes thereto and the reports by Cannex’s auditors thereon; and (B) the unaudited consolidated financial statements for Cannex as at and for the six (6) month period ending October 31, 2018 (collectively, the “Cannex Financial Statements”) have been prepared in accordance with IFRS, and all financial statements of Cannex which are publicly disseminated by Cannex in respect of any subsequent periods prior to the Effective Date will be prepared in accordance with IFRS applied on a basis consistent with prior periods and all applicable Laws and present fairly, in all material respects, the assets, liabilities (whether accrued, absolute, contingent or otherwise), consolidated financial position and results of operations of Cannex and its Subsidiaries as of the respective dates thereof and its results of operations and cash flows for the respective periods covered thereby (except as may be indicated expressly in the notes thereto). There are no outstanding loans made by Cannex or its Subsidiaries to any executive officer or director of Cannex or its Subsidiaries.

Each of Cannex and its Subsidiaries maintains internal control over financial reporting. Such internal controls over financial reporting are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS and includes policies and procedures that: (A) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of Cannex are being made only with appropriate authorizations of management and directors of Cannex, as applicable; and (B) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the assets of Cannex that could have a material effect on its financial statements. To the knowledge of Cannex, as of the date of this Agreement, there neither is, nor has been, any fraud with respect to Cannex, whether or not material, relating to the financial reporting or internal control over financial reporting of Cannex. To the knowledge of Cannex, as of the date of this Agreement, there is no fraud that involves management or any other employees who have a significant role in the internal control over financial reporting of Cannex.

Neither Cannex nor any of its Subsidiaries has received any material written complaint, allegation, assertion, or claim that Cannex or any of its Subsidiaries has engaged in questionable accounting or auditing practices, which has not been resolved to the satisfaction of the Cannex Board (or, if applicable, the audit committee thereof), or has not been disclosed to 4Front.

To the knowledge of Cannex, Cannex’s auditors, who audited the Cannex Financial Statements and provided their audit report, were, at the relevant time, independent public accountants as required under applicable Securities Laws and there has never been a reportable event (within the meaning of National Instrument 51-102—Continuous Disclosure Obligations) between Cannex and such auditors or, to the knowledge of Cannex, any former auditors of Cannex or its Subsidiaries.

Undisclosed Liabilities. Except as disclosed in Schedule “C”, Section (k) of the Cannex Disclosure Letter, neither Cannex nor any of its Subsidiaries has any material liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, except for: (i) liabilities and obligations that are adequately presented or reserved on the balance sheets forming part of the Cannex Financial Statements (the “Cannex Balance Sheets”) or disclosed in the notes thereto; or (ii) liabilities and obligations incurred in the ordinary course of business consistent with past practice that are not and would not, individually or in the aggregate with all other liabilities and obligations of Cannex and its Subsidiaries (other than those disclosed on the Cannex Balance Sheets and/or in the notes to the Cannex Financial Statements), have a Cannex Material Adverse Effect, or, as a consequence of the consummation of the Cannex Component of the Business Combination, have a Cannex Material Adverse Effect. Without limiting the foregoing, the Cannex Balance Sheets reflect reasonable reserves in accordance with IFRS for contingent liabilities of Cannex and its Subsidiaries.

Intentionally deleted.

Operational Matters. Except as would not, individually or in the aggregate, result in a Cannex Material Adverse Effect all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations due and payable, or performable, as the case may be, on or prior to the date hereof under, with respect to, or on account of, any assets of Cannex and its Subsidiaries have been: (i) duly paid; (ii) duly performed; or (iii) provided for prior to the date hereof.

Employment Matters.

Except as set forth in Schedule “C”, Section (n)(i) of the Cannex Disclosure Letter, neither Cannex nor any of its Subsidiaries has entered into any binding Contract providing for severance, termination or other change in control-related payments to any director, officer or employee in connection with the termination of their position or their employment as a direct result of a change in control of Cannex.

Neither Cannex nor its Subsidiaries (A) is a party to any collective bargaining agreement, or (B) is subject to any application for certification or, to the knowledge of Cannex, actual or threatened union-organizing campaigns for employees not covered under a collective bargaining agreement.

Cannex and its Subsidiaries are and have been in compliance in all material respects with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by Cannex or any of its Subsidiaries as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of Cannex or any of its Subsidiaries classified as exempt under the Fair Labor Standards Act and state and local wage and hour Laws are properly classified. There are no Actions against Cannex or any of its Subsidiaries pending, or to the knowledge of Cannex, threatened to be brought or filed, by or with any Governmental Entity or arbitrator in connection with the employment of any current or former applicant, employee, consultant or independent contractor of Cannex or any of its Subsidiaries, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage and hours or any other employment related matter arising under applicable Laws.

Neither Cannex nor its Subsidiaries is subject to any claim for wrongful dismissal, constructive dismissal or any other tort claim, actual or, to the knowledge of Cannex, threatened, or any litigation actual, or to the knowledge of Cannex, threatened, relating to employment or termination of employment of employees or independent contractors, except for such claims or litigation which individually or in the aggregate would not have a Cannex Material Adverse Effect.

To the knowledge of Cannex, no labour strike, lock-out, slowdown or work stoppage is pending or threatened against or directly affecting Cannex or its Subsidiaries, except as would not have a Cannex Material Adverse Effect.

Neither Cannex nor its Subsidiaries has implemented any facility closing, layoff of employees, or taken any other action that would result in a violation of, or require any action with respect to, the mass termination provisions of applicable employment standards legislation or any similar applicable Law, and no such action shall be implemented prior to the Closing Date.

Absence of Certain Changes or Events. Since November 26, 2018:

Cannex and its Subsidiaries have conducted their respective businesses in the ordinary course of business and consistent with past practice in all material respects;

there has not been any event, circumstance or occurrence which has given rise to a Cannex Material Adverse Effect;

there has not been any material change in the accounting practices used by Cannex or its Subsidiaries, except as disclosed in the Cannex Public Documents;

except as disclosed in the Cannex Public Documents and except for ordinary course adjustments to salary, bonus, severance or other remuneration payable to any non-executive employees, there has not been any increase in the salary, bonus, or other remuneration payable to any employees of any of Cannex or its Subsidiaries;

there has not been any redemption, repurchase or other acquisition of Cannex Shares by Cannex, or any declaration, setting aside or payment of any dividend or other distribution (whether in cash, shares or property) with respect to the Cannex Shares;

there has not been any entering into, or an amendment of, any Cannex Material Contract other than (A) in the ordinary course of business consistent with past practice, or (B) renewals of any such Cannex Material Contract; and

there has not been any satisfaction or settlement of any material claims or material liabilities that were not reflected in the Cannex’s Financial Statements, other than the settlement of such claims or such liabilities incurred in the ordinary course of business consistent with past practice.

Litigation. Except as set forth in Schedule “C”, Section (p) of the Cannex Disclosure Letter, there is no Action pending or, to the knowledge of Cannex, Action threatened against or relating to Cannex or its Subsidiaries, the respective businesses of Cannex or its Subsidiaries or affecting any of their respective properties or assets, or against any current officer or senior executive of Cannex or its Subsidiaries relating to such individual’s current or prior role with or services to Cannex and its Subsidiaries, before or by any Governmental Entity which, if adversely determined, would have a Cannex Material Adverse Effect or prevent or materially delay the consummation of the Business Combination (provided that the representation in this Section (p) shall not apply to Actions which may arise after the date of this Agreement which do not have a reasonable prospect of succeeding or, if successful, would not give rise to a Cannex Material Adverse Effect). Neither Cannex nor its Subsidiaries is subject to any judgments that are unsatisfied, any Governmental Order which in each such case has had a Cannex Material Adverse Effect or which would prevent or materially delay consummation of the transactions contemplated by this Agreement.

Taxes.

Each of Cannex and its Subsidiaries has duly and in a timely manner made or prepared all material Tax Returns required to be made or prepared by it in accordance with applicable Law, and duly and in a timely manner filed all material Tax Returns required to be filed by it with the appropriate Governmental Entity, such Tax Returns were complete and correct in all material respects and Cannex and its Subsidiaries have paid all material Taxes, including instalments on account of Taxes for the current year required by applicable Law, which are due and payable by it whether or not assessed by the appropriate Governmental Entity, other than Taxes which are being contested in good faith through appropriate proceedings.

Cannex has made adequate provisions or reserves in accordance with IFRS in the most recently published financial statements of Cannex for any Taxes of Cannex and its Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being due on any material Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business.

Each of Cannex and its Subsidiaries has duly and timely withheld all material Taxes and other amounts required by applicable Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the benefit of any Person) and has duly and timely remitted to the appropriate Governmental Entity such Taxes or other amounts required by applicable Law to be remitted by it.

Each of Cannex and its Subsidiaries has duly and timely collected all material amounts on account of any sales, use or transfer Taxes, including goods and services, harmonized sales, provincial and territorial taxes and state and local taxes, required by applicable Law to be collected by it and has duly and timely remitted to the appropriate Governmental Entity such amounts required by applicable Law to be remitted by it and has duly and timely paid any and all material sales, use or transfer Taxes required to be paid or self-assessed by it pursuant to applicable Laws and has claimed eligible exemptions, refunds and input Tax credits in respect thereof in all material respects in accordance with applicable Laws.

Each of Cannex and its Subsidiaries have remitted all material Canada Pension Plan contributions, provincial pension plan contributions, employment insurance premiums, employer health taxes, payroll taxes and other Taxes payable by it in respect of its employees, agents and consultants, as applicable, and has remitted such material amounts to the appropriate Governmental Entity within the time required under applicable Laws.

Except as required by applicable Law or applicable accounting method, none of Cannex or any of its Subsidiaries has made, prepared and/or filed any elections, designations or similar filings relating to Taxes or entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period ending after the Effective Date.

There are no proceedings, investigations, audits, proposed adjustments or claims now pending or, to the knowledge of Cannex, asserted or threatened against Cannex or its Subsidiaries in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Entity relating to Taxes.

None of Cannex or its Subsidiaries has acquired property from a non-arm’s length Person (other than a Person that is Cannex or a Subsidiary of Cannex), within the meaning of the Tax Act: (A) for consideration the value of which is less than the fair market value of the property; or (B) as a contribution of capital for which no shares were issued by the acquirer of the property.

For all transactions between Cannex or any of its Subsidiaries and any Person who is not resident in Canada for purposes of the Tax Act with whom Cannex or its Subsidiary was not dealing at arm’s length for purposes of the Tax Act, Cannex or its Subsidiary, as the case may be, has made or obtained records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Tax Act (or comparable provisions of any other applicable legislation).

Cannex has made available to 4Front copies of all income Tax Returns for the years ended December 31, 2017 and December 31, 2016, and all assessments or reassessments, correspondence related to any assessment or reassessment, requests for Tax rulings, Tax rulings issued by any Governmental Entity, and correspondence related to any audit or proposed audit of Cannex or its Subsidiaries, to the extent relating to periods or events in respect of which any Governmental Entity may in accordance with applicable Law assess or otherwise impose any Taxes on Cannex or its Subsidiaries.

For the purposes of the Tax Act and any other relevant Tax purposes:

Cannex is resident in Canada and is a taxable Canadian corporation; and

its Subsidiaries are resident in the jurisdiction in which they were respectively formed, and are not resident in any other country.

No circumstances exist or may reasonably be expected to arise as a result of matters existing before the Effective Date that may result in Cannex or its Subsidiaries being subject to the application of Section 159 or Section 160 of the Tax Act (or comparable provisions of any other applicable legislation).

None of Sections 78 or 80 to 80.04 of the Tax Act (or comparable provisions of any other applicable legislation) have applied to Cannex or its Subsidiary, and there are no circumstances existing which could reasonably be expected to result in the application of Sections 78 or 80 to 80.04 of the Tax Act (or comparable provisions of any other applicable legislation) to Cannex or its Subsidiaries.

There are no circumstances which exist and would result in, or which have existed and resulted in, Section 17 of the Tax Act applying to Cannex or its Subsidiaries.

There are no Liens for Taxes upon any properties or assets of Cannex or its Subsidiaries (other than Permitted Liens or Liens relating to Taxes not yet due and payable or for Taxes which are being contested in good faith through appropriate proceedings and for which adequate provisions or reserves have been recorded on the most recent balance sheet included in the Cannex Financial Statements).

Neither Cannex Holdings (Nevada) Inc. nor Cannex Holdings (California) Inc. has ever been a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

Each of Cannex and its Subsidiaries has not taken any action and none of Cannex or its Subsidiaries knows of any fact relating to the Business Combination that would be reasonably be expected to prevent the Business Combination from qualifying for the Intended Tax Treatment.

Cannex is not a “surrogate foreign corporation” as defined under Section 7874 of the Code.

Title to Assets.

Cannex or its Subsidiaries, as the case may be, has good and marketable title to the owned real property set out in Schedule “C”, Section (r)(i) of the Cannex Disclosure Letter (the “Cannex Owned Properties”) and has a valid leasehold interest in the leased real property set out in Schedule “C”, Section (r)(i) of the Cannex Disclosure Letter (the “Cannex Leased Properties”, each a “Cannex Leased Property”, and together with the Cannex Owned Properties, the “Cannex Properties”), free and clear of any encumbrances (other than Permitted Liens or as would not have a Cannex Material Adverse Effect).

Cannex and its Subsidiaries have good and valid title to, or a valid and enforceable leasehold interest in, as applicable, all material personal property owned or leased by it, free and clear of any encumbrances (other than Permitted Liens) and except as disclosed in Schedule “C”, Section (r)(ii) of the Cannex Disclosure Letter or otherwise as would not have a Cannex Material Adverse Effect.

Real Property.

Except for Permitted Liens, there are no existing contracts, options, rights of first refusal, leases or otherwise, to sell, transfer, lease or otherwise dispose of any Cannex Properties, or to purchase or acquire any Cannex Properties, and Cannex is not aware of any circumstances which would result in any sale or disposal, whether by sale, lease or otherwise, of any of the Cannex Properties including power of sale, foreclosure, expropriation or judicial proceedings.

To the knowledge of Cannex:

neither Cannex, any of its Subsidiaries nor the landlords of the Cannex Properties are in material breach of any applicable Laws, including any material building, zoning or other statutes or any official plan, or any covenants, restrictions, rights or easements affecting such Cannex Properties;

all buildings, structures, additions and/or improvements situated on any of the Cannex Properties are located wholly within the boundaries of such Cannex Properties, are free of any structural or material defect and comply with all Laws, covenants, restrictions, rights and easements affecting the same and their use, in each case in all material respects; and

there are no outstanding work orders, non-compliance orders, deficiency notices or other such notices relative to any of the Cannex Properties.

The Cannex Properties are adequately serviced by utilities (or well water with adequate septic systems, if any) having adequate capacities for the normal operations of Cannex’s or its Subsidiaries’ facilities that are currently growing marijuana in accordance with its licenses and the business of Cannex or its Subsidiaries, as applicable. The Cannex Properties have enforceable rights of access to and from public streets or highways satisfactory, sufficient and adequate for the normal operations of the business of Cannex and its Subsidiaries, to the knowledge of Cannex and its Subsidiaries, there is no fact or circumstance which exists which could result in the termination or restriction of such access.

No amounts are owing by Cannex in respect of any of the Cannex Properties to a public utility, other than current accounts which are not in arrears. All amounts that are due for labour or materials supplied to or on behalf of Cannex relating to the construction, alteration or repair of or on any of the Cannex Properties have been paid in full and, to the knowledge of Cannex, no one has filed any construction, builders’, mechanics’ or similar liens relating to the supply of work or materials to or on any of the Cannex Properties with respect to amounts that are not in arrears.

To the knowledge of Cannex, the Cannex Leases are currently in good standing in all material respects, Cannex or its Subsidiaries, as the case may be, as tenant and the applicable landlord have, as of the date hereof, complied in all material respects with their respective obligations under the Cannex Leases and to the knowledge of Cannex and its Subsidiaries, there exists no claim of any kind or right of set-off against Cannex or its Subsidiaries, as the case may be, as tenant by the landlord or against the landlord by Cannex or its Subsidiaries, as the case may be, as tenant as of the date hereof.

Cannex or its Subsidiaries, as the case may be, as tenant is in actual possession of the Cannex Leased Properties. Cannex or its Subsidiaries, as the case may be, is not in arrears of rent required to be paid pursuant to the applicable Cannex Lease.

Cannex or its Subsidiaries, as the case may be, as tenant has no right to extend, right of termination, option to purchase, or right of first refusal with respect to the Cannex Leased Properties except as set out in the Cannex Leases.

Books and Records. The corporate records and minute books of Cannex and its Subsidiaries have been maintained in accordance with all applicable Laws, and the minute books of Cannex and its Subsidiaries as provided to 4Front are complete and accurate in all material respects. The corporate minute books for Cannex and its Subsidiaries contain minutes of all meetings and resolutions of the directors and securityholders held.

Insurance.

Schedule “C”, Section (u)(i) of the Cannex Disclosure Letter sets out a true and complete list as of the date of this Agreement of Cannex’s and its Subsidiaries’ material policies of insurance.

Cannex has in place reasonable and prudent insurance policies appropriate for its size, nature and stage of development. All premiums payable prior to the date hereof under such material policies of insurance have been paid and neither Cannex nor its Subsidiaries has failed to make any material claim thereunder on a timely basis.

Each of such material policies is in full force and effect on the date hereof and Cannex will use commercially reasonable efforts to keep them in full force and effect or renew them as appropriate through the Effective Date. No written notice of cancellation or termination has been received by Cannex or its Subsidiaries with respect to any such policy. No material claim under any insurance policy of Cannex or its Subsidiaries has been denied during the prior two (2) years.

Non-Arm’s Length Transactions. Except for (i) employment, consulting or employment compensation agreements entered into in the ordinary course of business, (ii) customary director and officer indemnification arrangements on market terms, (iii) financing agreements or shareholder agreements with Cannex’s shareholders entered into in connection with financings or other transactions to which Cannex’s shareholders are generally parties and that will terminate at or prior to the Effective Time as a result of the transactions contemplated hereby, (iv) the Cannex Shareholder Voting Agreements; or (v) as set out in Schedule “C”, Section (v) of the Cannex Disclosure Letter, there are no current Contracts, or other transactions (including relating to indebtedness by Cannex or its Subsidiaries) between Cannex or any of its Subsidiaries on the one hand, and (A) any officer or director of Cannex or its Subsidiaries, (B) any holder of record or, to the knowledge of Cannex, beneficial owner of five percent or more of the voting securities of Cannex, or (C) any affiliate or Associate of any officer, director or beneficial owner, on the other hand.

Benefit Plans.

Schedule “C”, Section (w)(i) of the Cannex Disclosure Letter contains a true and complete list of each pension, benefit, retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off, welfare, fringe-benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including, without limitation, each “employee benefit plan” within the meaning of Section 3(3) of ERISA, which is or has ever been maintained, sponsored, contributed to, or required to be contributed to by Cannex or its Subsidiaries for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant or any spouse or dependent of such individual, or under which Cannex or its Subsidiaries or any of their ERISA Affiliates has or may have any Liability, contingent or otherwise (as listed on Schedule “C”, Section (w)(i)of the Cannex Disclosure Letter, each, a “Cannex Benefit Plan”). Schedule “C”, Section (w)(i) of the Cannex Disclosure Letter separately identifies the plan sponsor of each Cannex Benefit Plan, whether such Cannex Benefit Plan is maintained for service providers working outside of the United States, and whether any Cannex Benefit Plan provides accelerated, enhanced or additional benefits in connection with a change in control.

Cannex has made available to 4Front, to the extent applicable, correct and complete copies of the following with respect to each Cannex Benefit Plan: (A) the Cannex Benefit Plan documents and all amendments thereto and the related trust documents or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise including fidelity bond and fiduciary liability insurance policies related to the Cannex Benefit Plan, if any, in each case, as currently in effect; (B) the three most recent annual reports (IRS Form 5500) filed with the IRS, including all schedules and attachments and the most recent actuarial report, if any, and three most recent actuarial reports, if any; (C) the most recent summary plan description and any summary of material modification thereto; (D) written communications to employees of Cannex relating to such Cannex Benefit Plan (including COBRA communications) and written communications from any Governmental Entity related to such Cannex Benefit Plan; (E) written descriptions of all non-written agreements relating to such Cannex Benefit Plan; and (F) the most recent non-discrimination tests performed under the Code for such Cannex Benefit Plan.

Each Cannex Benefit Plan and related trust has been established, administered, funded and maintained in accordance with its terms and in compliance with all applicable Laws (including ERISA, the Code, the Patient Protection and Affordable Care Act and any applicable local Laws), and neither Cannex nor any of its ERISA Affiliates, nor any “party in interest” or “disqualified person” with respect to the Cannex Benefit Plans has engaged in a non-exempt “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA and neither Cannex nor any of its ERISA Affiliates has incurred, and no fact exists, that would be expected to result in any Liability (including, but not limited to, any Tax Liability or any fine or penalty under the Affordable Care Act) with respect to any Cannex Benefit Plan. No fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Cannex Benefit Plan. Nothing has occurred with respect to any Cannex Benefit Plan that has subjected or could subject Cannex or any of its ERISA Affiliates to penalties under ERISA or to any Tax penalties under the Code.

Other than as required under Section 601, et seq. of ERISA Section 4980B of the Code or other applicable Law, no Cannex Benefit Plan or other arrangement provides post-termination or retiree benefits to any individual for any reason.

To the knowledge of Cannex there is no pending or threatened action relating to any Cannex Benefit Plan (other than routine claims for benefits), and no Cannex Benefit Plan has within the three (3) years prior to the date hereof been the subject of an examination or audit by a Governmental Entity or the subject of an application or filing under, or is a participant in, an amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Entity.

Each Cannex Benefit Plan has been administered, invested and funded in compliance with its terms and in accordance with all applicable Law. All contributions, reserves or premium payments required to have been made or accrued, or that are due, as of the date hereof with respect to the Cannex Benefit Plans have been timely made or accrued.

Neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will (either alone or upon the occurrence of any additional or subsequent events): (A) entitle any current or former director, officer, employee, independent contractor or consultant of the business of Cannex and its Subsidiaries to severance pay or any other payment; (B) accelerate the time of payment, funding or vesting, or increase the amount of compensation due to any such individual; (C) increase the amount payable under or result in any other material obligation pursuant to any Cannex Benefit Plan; (D) result in “excess parachute payments” within the meaning of Section 280G(b) of the Code; or (E) require a “gross-up” or other payment to any “disqualified individual” within the meaning of Section 280G(c) of the Code.

No Cannex Benefit Plan is or has ever been at any time in the past: (A) an “employee pension plan” (as defined in Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the Code; (B) a “multiemployer plan” (as defined in Section 3(37) of ERISA); (C) a “multiple employer plan,” as defined in Section 3(40) of ERISA, (D) a “voluntary employees’ beneficiary association,” as defined in Section 501(c)(9) of the Code, or (E) a “multiple employer welfare arrangement,” as defined in Section 3(40) of ERISA. Neither Cannex nor any of its ERISA Affiliates currently has an obligation to contribute to a “defined benefit plan” within the meaning of Section 3(3) of ERISA, a Multiemployer Plan, or any other plan subject to Title IV of ERISA or Section 412 of the Code. All Cannex Benefit Plans that are health and welfare plans are fully insured through insurance contracts, the premiums for which are paid directly by Cannex or one of its ERISA Affiliates, from its general assets or partly from its general assets and partly from contributions by plan participants. No insurance policy or contract relating to any such Cannex Benefit Plan requires or permits a retroactive increase in premiums or payments due thereunder.

Each Cannex Benefit Plan that is subject to Section 409A of the Code has been administered in compliance with its terms and the operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including, notices, rulings and proposed and final regulations) thereunder in all material respects. Cannex and its Subsidiaries do not have any obligation to gross up, indemnify or otherwise reimburse any individual for any excise taxes, interest or penalties incurred pursuant to Section 409A of the Code.

No Cannex Benefit Plan is: (A) a registered retirement savings plan (as defined in the Tax Act; or (B) a retirement compensation arrangement (as defined in the Tax Act.

Each Cannex Benefit Plan can be amended, terminated, or otherwise discontinued in accordance with its terms, without material liabilities to 4Front, Cannex, or any of their ERISA Affiliates, other than ordinary administrative expenses typically incurred in a termination event. Neither Cannex nor any of its ERISA Affiliates has any commitment or obligation nor has made any representations to any employee, officer, manager, independent contractor, or consultant, to adopt, amend, modify, or terminate any Cannex Benefit Plan, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.

Environmental. Except for any matters that would not have a Cannex Material Adverse Effect:

all facilities and operations of Cannex and its Subsidiaries have been conducted, and are now, in compliance with all applicable Environmental Laws;

no environmental, reclamation or closure obligation, demand, notice, work order or other liabilities presently exist with respect to any portion of any currently or formerly owned, leased, used or otherwise controlled property, interests and rights or relating to the operations and business of Cannex and its Subsidiaries and, to the knowledge of Cannex, there is no reasonable basis for any such obligations, demands, notices, work orders or liabilities to arise in the future as a result of any activity in respect of such property, interests, rights, operations and business occurring as of or prior to the date hereof;

none of Cannex nor its Subsidiaries is subject to any proceeding, application, order or directive which relates to environmental, health or safety matters, and which may require any material work, repairs, construction or expenditures;

to the knowledge of Cannex, there is no renewal, modification, revocation, reassurance, alteration, transfer or amendment of any environmental Permits, or any review by or approval of, any Governmental Entity, of any environmental Permit, that are required in connection with the execution or delivery of this Agreement, the consummation of the transactions contemplated herein or the continuation of the business of Cannex or its Subsidiary following the Effective date;

Cannex and its Subsidiaries have made available to 4Front all material audits, assessments, investigation reports, studies, plans, regulatory correspondence and similar information in its possession or under its control with respect to environmental matters;

to the knowledge of Cannex, there are no hazardous substances located on, in or under any of the Cannex Properties and no release of any hazardous substances has occurred on, in or from the Cannex Properties from the operation of the business of Cannex or its Subsidiaries or the conduct of activities related to the business of Cannex or its Subsidiaries thereon; and

to the knowledge of Cannex, Cannex and its Subsidiaries are not subject to any past or present fact, condition or circumstance that could reasonably be expected to result in liability under any Environmental Laws.

Restrictions on Business Activities. Except as set forth in Schedule “C”, Section (y) of the Cannex Disclosure Letter, there is no Contract or Governmental Order binding upon Cannex or its Subsidiaries the terms of which prohibit or restrict any business practice of Cannex or its Subsidiaries, any acquisition of property by Cannex or its Subsidiaries or the conduct of business by Cannex or its Subsidiaries as currently conducted other than such Contracts or Governmental Orders which would not have a Cannex Material Adverse Effect.

Material Contracts. Except in each case where there would not be a Cannex Material Adverse Effect, (i) Cannex and its Subsidiaries have performed in all material respects all respective obligations required to be performed by them to date under any material Contracts currently in effect as of the date hereof (collectively, and together with the Intellectual Property Agreements of Cannex and its Subsidiaries, the “Cannex Material Contracts”), (ii) none of Cannex nor any of its Subsidiaries has received written notice of any breach or default under any such Cannex Material Contract by any other party thereto, (iii) prior to the date hereof, Cannex has made available to 4Front true and complete copies of all of Cannex Material Contracts, and (iv) all Cannex Material Contracts are legal, valid and binding against Cannex or its applicable Subsidiaries, are in full force and effect and are enforceable by Cannex (or its Subsidiaries, as the case may be) in accordance with their respective terms (subject to bankruptcy, insolvency and other applicable Laws affecting creditors’ rights generally, and to general principles of equity) and are the products of fair and arm’s length negotiations between the parties thereto.

Intellectual Property.

Schedule “C”, Section (aa)(i) of the Cannex Disclosure Letter lists all Owned Intellectual Property Registrations and material unregistered common law trademarks included in the Owned Intellectual Property Assets of Cannex or a Subsidiary of Cannex. All required filings and fees related to such Owned Intellectual Property Registrations have been timely filed with and paid to the relevant Governmental Entities and authorized registrars, and all such Owned Intellectual Property Registrations are otherwise in good standing. Cannex has provided the other Parties with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all such Owned Intellectual Property Registrations.

To the knowledge of Cannex, except as set forth in Schedule “C”, Section (aa)(ii) of the Cannex Disclosure Letter, Cannex or one of its Subsidiaries is the sole and exclusive legal and beneficial, owner of its Owned Intellectual Property Registrations, and has the valid right to use all other Intellectual Property used in or necessary for the conduct of its business as currently conducted, in each case, free and clear of Liens (other than Permitted Liens), except, in each case, as would not have a Cannex Material Adverse Effect.

The Intellectual Property Assets of Cannex and its Subsidiaries are all of the Intellectual Property necessary to operate the business of Cannex and its Subsidiaries as presently conducted or as planned to be conducted. Except as set forth in Schedule “C”, Section (aa)(iii) of the Cannex Disclosure Letter, the consummation of the transactions contemplated under this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, Cannex’s and its Subsidiaries right to own, use or hold for use any Intellectual Property Assets as owned, used or held for use in the conduct of the business of Cannex and its Subsidiaries as currently conducted or as planned to be conducted.

To the knowledge of Cannex, and except as would not have a Cannex Material Adverse Effect, Cannex’s and its Subsidiaries’ rights in the Intellectual Property Assets of Cannex and its Subsidiaries are valid, subsisting and enforceable. Cannex and its Subsidiaries have taken commercially reasonable steps to maintain the Owned Intellectual Property Assets of Cannex and its Subsidiaries and to protect and preserve the confidentiality of all trade secrets or other proprietary information included in the Intellectual Property Assets.

Except as set forth in Schedule “C”, Section (aa)(v) of the Cannex Disclosure Letter, and except as would not have a Cannex Material Adverse Effect, (i) the conduct of Cannex’s and its Subsidiaries’ business as currently conducted, and the Intellectual Property Assets of Cannex and its Subsidiaries as currently owned, licensed or used by Cannex or its Subsidiaries, have not and do not infringe, misappropriate or otherwise violate the Intellectual Property or other rights of any Person and (ii) no Person has infringed, misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Owned Intellectual Property Assets of Cannex or any of its Subsidiaries .

Neither Cannex nor any of its Subsidiaries is subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or would restrict or impair the use of any of Cannex’s or its Subsidiaries’ Intellectual Property Assets in any material respect.

Bank Accounts. Schedule “C”, Section (bb) of the Cannex Disclosure Letter sets forth a complete list of all of the accounts maintained by Cannex and its Subsidiaries as of the date hereof with banks, credit unions, trust companies and other similar financial institutions and each individual with signatory authority with respect to such accounts.

Relationships with Customers, Suppliers, Distributors and Sales Representatives. Cannex has not received any written communication that any material customer, supplier, distributor or sales representative intends to, or constitutes a threat that any such Person may, cancel, terminate or otherwise modify or not renew its relationship with Cannex, which in any of such cases would have a Cannex Material Adverse Effect.

Brokers. None of Cannex, any of its Subsidiaries, or any of their respective officers, directors or employees on behalf of Cannex or its Subsidiaries has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement.

Reporting Issuer Status. As of the date hereof, Cannex is a reporting issuer not in default (or the equivalent) under the Securities Laws of British Columbia, Alberta and Ontario.

Stock Exchange Compliance. Cannex is in compliance in all material respects with the applicable listing and rules and regulations of the CSE.

No Expropriation. No property or asset of Cannex or its Subsidiaries has been taken or expropriated by any Governmental Entity nor has any notice or proceeding in respect thereof been given or commenced nor, to the knowledge of Cannex, is there any intent or proposal to give any such notice or to commence any such proceeding.

Anti-Money Laundering. The operations of Cannex and its Subsidiaries are and have been conducted, at all times, in material compliance with all applicable financial recordkeeping and reporting requirements of applicable anti-money laundering Laws of the jurisdictions in which Cannex conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Cannex Anti-Money Laundering Laws”), and no Action by or before any Governmental Entity against Cannex with respect to the Cannex Anti-Money Laundering Laws is pending. None of Cannex nor its Subsidiaries has, directly or indirectly: (i) made or authorized any contribution, payment or gift of funds or property to any official, employee or agent of any governmental agency, authority or instrumentality of any jurisdiction in violation of applicable Laws; or (ii) made any contribution to any candidate for public office, in either case where either the payment or the purpose of such contribution, payment or gift was, is or would be prohibited under the Corruption of Foreign Public Officials Act (Canada), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (United States) or the rules and regulations promulgated thereunder or under any other Laws of any relevant jurisdiction covering a similar subject matter applicable to Cannex, its Subsidiaries and their operations. Neither Cannex, any of its Subsidiaries, nor, to the knowledge of Cannex, any director, officer, agent, employee, affiliate or Person acting on behalf of Cannex or any of its Subsidiaries has been or is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department.

Corrupt Practices Legislation. None of Cannex, any of its Subsidiaries or affiliates, nor any of their respective officers, directors or employees acting on behalf of Cannex or any of its Subsidiaries or affiliates has violated the United States’ Foreign Corrupt Practices Act (and the regulations promulgated thereunder), the Corruption of Foreign Public Officials Act (Canada) (and the regulations promulgated thereunder) or any other applicable Law, and to the knowledge of Cannex, no such action has been taken by any of its agents, representatives or other Persons acting on behalf of Cannex or its Subsidiaries or any of its Affiliates.

No Insolvency. Cannex and its Subsidiaries are not insolvent and are able to meet all of their respective financial liabilities as they become due and no winding-up, liquidation, dissolution or bankruptcy proceedings have been commenced or are being commenced or contemplated by Cannex or its Subsidiaries, and none of Cannex nor any of its Subsidiaries has knowledge of any such proceedings or transactions having been commenced or being contemplated in respect of Cannex or its subsidiaries by any other party.

No “Collateral Benefit”. No person will receive a “collateral benefit” (within the meaning of Multilateral Instrument 61-101—Protection of Minority Security Holders in Special Transactions) from Cannex, its Subsidiaries or its Affiliates as a consequence of the Business Combination.

Federal Cannabis Laws. Notwithstanding anything in this Agreement or the other documents contemplated hereby to the contrary, neither Cannex nor any of its Subsidiaries, directors, officers, shareholders, employees or other agents makes any representation or warranty, whether express or implied, written or oral, on behalf of Cannex as to the applicability of and compliance with United States federal Law dealing with the possession, use, cultivation, and/or transfer of cannabis and any related drug paraphernalia (including but not limited to Title 21 of the United States Code, the U.S. Controlled Substances Act, and 26 U.S.C. § 280E) as it relates to Cannex, its Subsidiaries, its business and assets or to the transactions contemplated by this Agreement.

Organization and Qualification. BC Newco is duly incorporated and validly existing under the BCBCA and has full corporate power and authority to own its assets now owned and conduct its business as now owned and conducted and as presently proposed to be conducted. BC Newco is duly qualified to carry on business and is in good standing in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a BC Newco Material Adverse Effect. True and complete copies of the constating documents of BC Newco have been delivered or made available to Cannex and 4Front, such documents are in full force and effect as of the date hereof, and BC Newco has not taken any action to amend or supersede such documents as of the date hereof.

Authority Relative to this Agreement. BC Newco has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by BC Newco and the consummation by BC Newco of the transactions contemplated by this Agreement have been duly authorized by the BC Newco Board and sole shareholder and no other corporate proceedings on the part of BC Newco are necessary to authorize this Agreement. This Agreement has been duly executed and delivered by BC Newco and assuming due authorization, execution and delivery by each of the other Parties, constitutes a valid and binding obligation of BC Newco, enforceable by the other Parties against BC Newco in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

No Conflict; Required Filings and Consent. The execution and delivery by BC Newco of this Agreement and the performance by it of its obligations hereunder and the completion of the Business Combination will not violate, conflict with or result in a breach of any provision of the organizational documents of BC Newco, and except as would not have a BC Newco Material Adverse Effect, will not violate, conflict with or result in a breach of any Law to which BC Newco is subject or by which BC Newco is bound; Other than the Interim Order and the Final Order, no Permit is necessary on the part of BC Newco for the consummation by BC Newco of its obligations in connection with the Business Combination under this Agreement or for the completion of the Business Combination not to cause or result in any loss of any rights or assets or any interest therein held by BC Newco in any material properties, except for such Permits as to which the failure to obtain or make would not (x) individually or in the aggregate, prevent or materially delay consummation of the Business Combination or (y) have a BC Newco Material Adverse Effect.

Subsidiaries. BC Newco does not have Subsidiaries or any direct or indirect interests in any Person.

Compliance with Laws.

BC Newco does not have any operations, and has not received any written notice of any alleged violation of any Laws.

BC Newco is not in conflict with, or in default (including cross defaults) under or in violation of its articles or by-laws or equivalent organizational documents in any case in any material respect, except for any conflicts, defaults or violations that would not have a BC Newco Material Adverse Effect.

No Governmental Order preventing, ceasing or suspending trading in any securities of BC Newco is issued and outstanding and no proceeding for either of such purposes have been instituted or, to the knowledge of BC Newco, are pending, contemplated or threatened.

BC Newco does not engage in any material business in any jurisdiction.

Capitalization. The authorized share capital of BC Newco consists of an unlimited number of BC Newco Shares. As at the date of this Agreement there is one BC Newco Share validly issued and outstanding as a fully-paid and non-assessable share of BC Newco. There are no options, warrants, conversion privileges, calls or other rights, shareholder rights plans, agreements, arrangements, commitments, or obligations of BC Newco to issue or sell any shares of BC Newco or securities or obligations of any kind convertible into, exchangeable for or otherwise carrying the right or obligation to acquire any shares of BC Newco, and no Person is entitled to any pre-emptive or other similar right granted by BC Newco.

Shareholder and Similar Agreements. BC Newco is not party to any shareholder, pooling, voting trust or other similar agreement relating to the issued and outstanding BC Newco Shares.

Undisclosed Liabilities. BC Newco does not have any material liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that are not and would not, individually or in the aggregate with all other liabilities and obligations of BC Newco, have a BC Newco Material Adverse Effect, or, as a consequence of the consummation of the BC Newco Component of the Business Combination, have a BC Newco Material Adverse Effect.

BC Newco Property. Aside from cash, BC Newco does not own any property, whether directly or indirectly, tangible or intangible, real or personal.

Operational Matters. BC Newco does not have any operations, and was formed for the purposes of the transactions contemplated by this Agreement.

Employment Matters. BC Newco does not have any employees, and has not entered into any binding Contract providing for severance, termination or other change in control-related payments to any director, officer or employee in connection with the termination of their position or their employment as a direct result of a change in control of BC Newco.

Absence of Certain Changes or Events. Since February 1, 2019:

There has not been any event, circumstance or occurrence which has given rise to a BC Newco Material Adverse Effect; and

there has not been any redemption, repurchase or other acquisition of BC Newco Shares by BC Newco, or any declaration, setting aside or payment of any dividend or other distribution (whether in cash, shares or property) with respect to the BC Newco Shares.

Litigation. There is no Action pending or, to the knowledge of BC Newco, Action threatened against or relating to BC Newco or against any current officer or senior executive relating to such individual’s role with or services to BC Newco before or by any Governmental Entity which, if adversely determined, would have a BC Newco Material Adverse Effect or prevent or materially delay the consummation of the Business Combination (provided that the representation in this Section (m) shall not apply to Actions which may arise after the date of this Agreement which do not have a reasonable prospect of succeeding or, if successful, would not give rise to a BC Newco Material Adverse Effect). BC Newco is not subject to any judgments that are unsatisfied, any Governmental Order which in each such case has had a BC Newco Material Adverse Effect which would prevent or materially delay consummation of the transactions contemplated by this Agreement.

Taxes. BC Newco has not had any Tax Returns required to be made or prepared by it in accordance with applicable Law, or filed with the appropriate Governmental Entity. The

Newco Shares are not “taxable Canadian property” for purposes of the Tax Act.

Books and Records. The corporate records and minute books of BC Newco have been maintained in accordance with all applicable Laws, and the minute books of BC Newco are complete and accurate in all material respects. The corporate minute books for BC Newco contain minutes of all meetings and resolutions of the directors and securityholders held.

Insurance. BC Newco does not have any policies of insurance.

Non-Arm’s Length Transactions. There are no current Contracts or other transactions (including relating to indebtedness by BC Newco) between BC Newco on the one hand, and (i) any officer or director of BC Newco, (ii) any holder of record or, to the knowledge of BC Newco, beneficial owner of five percent or more of the voting securities of BC Newco, or (iii) any affiliate or Associate of any officer, director or beneficial owner, on the other hand.

Restrictions on Business Activities. There is no Contract or Governmental Order binding upon BC Newco, the terms of which prohibit or restrict any acquisition of property by BC Newco, other than such Contracts or Governmental Orders which would not have a BC Newco Material Adverse Effect.

Intellectual Property. BC Newco does not have any Owned Intellectual Property Registrations of Owned Intellectual Property Assets.

No Insolvency. BC Newco is not insolvent and is able to meet all of its financial liabilities as they become due and no winding-up, liquidation, dissolution or bankruptcy proceedings have been commenced or are being commenced or contemplated by BC Newco, and BC Newco has no knowledge of any such proceedings or transactions having been commenced or being contemplated in respect of BC Newco by any other party.

Organization and Qualification. 4Front is a limited liability company validly existing under the Laws of the state of Delaware and has all necessary limited liability company power and authority to own its assets now owned and conduct its business as now owned and conducted and as presently proposed to be conducted. 4Front is duly qualified to carry on business and is in good standing in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a 4Front Material Adverse Effect. True and complete copies of the organizational documents of 4Front have been delivered or made available to Cannex, such documents are in full force and effect as of the date hereof, and 4Front has not taken any action to amend or supersede such documents as of the date hereof.

Authority Relative to this Agreement. 4Front has the requisite limited liability company power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by 4Front and the consummation by 4Front of the transactions contemplated by this Agreement have been duly authorized by the 4Front Board and no other proceedings on the part of 4Front are necessary to authorize this Agreement other than the Nevada Holdco Shareholder Approval and approval of the Nevada Holdco Continuance Resolution and the Nevada Holdco Arrangement Resolution. This Agreement has been duly executed and delivered by 4Front and, assuming due authorization, execution and delivery by each of the other Parties hereto, constitutes a valid and binding obligation of 4Front, enforceable by the other Parties hereto against 4Front in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

No Conflict; Required Filings and Consent. Except as disclosed in Schedule “E”, Section (c) of the 4Front Disclosure Letter, the execution and delivery by 4Front of this Agreement and the performance by it of its obligations hereunder and the completion of the Business Combination will not violate, conflict with or result in a breach of any provision of the organizational documents of 4Front or its Subsidiaries, or any 4Front Third Party Permit Holder, and, except as would not have a 4Front Material Adverse Effect, will not: (i) violate, conflict with or result in a breach of: (A) any 4Front Material Contract; or (B) any Law to which 4Front, its Subsidiaries or any 4Front Third Party Permit Holders are subject or by which 4Front, its Subsidiaries or any 4Front Third Party Permit Holders are bound; (ii) give rise to any right of termination, or the acceleration of any indebtedness, under any 4Front Material Contract or licence or permit held by 4Front, its Subsidiaries or any 4Front Third Party Permit Holder; or (iii) give rise to any rights of first refusal or rights of first offer, trigger any change in control or any restriction or limitation under any 4Front Material Contract or licence or permit held by 4Front, its Subsidiaries or any 4Front Third Party Permit Holder, or result in the imposition of any Lien upon any of 4Front’s assets or the assets of its Subsidiaries or any 4Front Third Party Permit Holder.

Subsidiaries. 4Front does not have Subsidiaries or any material interests in any Person, other than those listed in Schedule “E”, Section (d) of the 4Front Disclosure Letter. Each Subsidiary of 4Front is duly organized or incorporated, as applicable, and is validly existing under the Laws of its jurisdiction of organization, has all necessary limited liability company power and authority to own its assets now owned and conduct its business as now owned and conducted by it and is duly qualified to carry on business in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a 4Front Material Adverse Effect. 4Front beneficially owns, directly or indirectly, all of the issued and outstanding equity securities of its Subsidiaries. All of the outstanding equity securities in the capital of each Subsidiary are: (i) validly issued, fully-paid and non-assessable and all such equity securities are owned free and clear of all Liens; (ii) except as set forth in the organizational documents (including, without limitation, any operating agreement) of each Subsidiary, free of any other restrictions including any restriction on the right to vote, sell or otherwise dispose of shares; and (iii) all such securities so owned directly or indirectly by 4Front have been issued in material compliance with all applicable Laws.

Compliance with Laws.

Except (A) as disclosed in Schedule “E”, Section (e)(i) of the 4Front Disclosure Letter or (B) for non-compliance or violations that would not have a 4Front Material Adverse Effect, the operations of 4Front, its Subsidiaries and the 4Front Third Party Permit Holders have been and are now conducted in material compliance with all Laws of each jurisdiction, the Laws of which have been and are now applicable to the operations of 4Front, its Subsidiaries or such 4Front Third Party Permit Holders, as applicable (including applicable Privacy Law and Anti-Spam Law), and none of 4Front, its Subsidiaries or, to the knowledge of 4Front, the 4Front Third Party Permit Holders has received any written notice of any alleged violation of any such Laws.

Except as disclosed in Schedule “E”, Section (e)(ii) of the 4Front Disclosure Letter, none of 4Front nor any of its Subsidiaries is in conflict with, or in default (including cross defaults) under or in violation of: (A) its articles or by-laws or equivalent organizational documents in any case in any material respect; or (B) any 4Front Material Contract, except for any conflicts, defaults or violations that would not have a 4Front Material Adverse Effect.

No Governmental Order preventing, ceasing or suspending trading in any securities of 4Front is issued and outstanding and no proceedings for any of such purposes have been instituted or, to the knowledge of 4Front, are pending, contemplated or threatened.

Except as disclosed in Schedule “E”, Section (e)(iv) of the 4Front Disclosure Letter, none of 4Front, nor its Subsidiaries or the 4Front Third Party Permit Holders, conducts any material cannabis-related activities nor engages in any material business in any jurisdiction where such activities are not expressly authorized by applicable Laws; in those jurisdictions where such cannabis-related activities are expressly authorized by state Laws, 4Front, its Subsidiaries and the 4Front Third Party Permit Holders comply in all material respects, and 4Front reasonably believes that any third party with which it engages in business or transactions complies in all material respects, with such Laws and have all material Permits necessary for the conduct of such cannabis-related activities.

Licenses and Permits.

Schedule “E”, Section (f) of the 4Front Disclosure Letter lists all material Permits issued to each of 4Front, its Subsidiaries and any other Person who is not an Affiliate of 4Front and has a contractual relationship with 4Front or its Subsidiaries (each, a “4Front Third Party Permit Holder”) which are required for the conduct of the operations of 4Front, its Subsidiaries and the 4Front Third Party Permit Holders as currently conducted or as presently proposed to be conducted or the ownership and use of the assets of 4Front, its Subsidiaries and the 4Front Third Party Permit Holders now owned and used, including the names of the Permits, the holder of each Permit, and their respective dates of issuance and expiration. All material Permits required for each of 4Front and its Subsidiaries to conduct the operations of 4Front and its Subsidiaries as currently conducted or for the ownership and use of the assets of 4Front and its Subsidiaries now owned have been obtained by 4Front or its Subsidiaries or a 4Front Third Party Permit Holder, as applicable, and are (A) valid and in full force and effect (to the extent such Permit is held by 4Front or a Subsidiary); or (B) to the knowledge or 4Front, are valid and in full force and effect (to the extent such Permit is held by a 4Front Third Party Permit Holder). Except as disclosed in Schedule “E”, Section (f)(i) of the 4Front Disclosure Letter, 4Front and its Subsidiaries and, to its knowledge, each 4Front Third Party Permit Holder, are in material compliance with all material Permits, as they are required to hold for the conduct of the operations of 4Front and its Subsidiaries as currently conducted. There is no material Action pending or, to the knowledge of 4Front, threatened, regarding any of the foregoing Permits.

To the knowledge of 4Front, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Schedule “E”, Section (f) of the 4Front Disclosure Letter.

None of 4Front or any of its Subsidiaries nor, to the knowledge of 4Front, and 4Front Third Party Permit Holders, has received any written notice of revocation or non-renewal of any Permits, or of any intention of any Person to revoke or refuse to renew any of such Permits, except in each case, for revocations or non-renewals which would not have a 4Front Material Adverse Effect.

Capitalization.

Schedule “E”, Section (g) of the 4Front Disclosure Letter sets forth the holders of 4Front Membership Interests as of the date of this Agreement, which such 4Front Membership Interests are validly issued and outstanding as fully-paid and non-assessable limited liability company membership interests of 4Front. The terms of the 4Front Warrants and the 4Front Liquidity Warrants (including exercise price) are disclosed in Schedule “E”, Section (g) to the 4Front Disclosure Letter. Except as described in this Section (g) or as disclosed in Schedule “E”, Section (g) of the 4Front Disclosure Letter, (A) there are no options, warrants, conversion privileges, calls or other rights, shareholder rights plans, agreements, arrangements, commitments, or obligations of 4Front or its Subsidiaries to issue or sell any equity securities of 4Front or its Subsidiaries or securities or obligations of any kind convertible into, exchangeable for or otherwise carrying the right or obligation to acquire any equity securities of 4Front or its Subsidiaries, and (B) no Person is entitled to any pre-emptive or other similar right granted by 4Front or its Subsidiaries. Except as disclosed in Schedule “E”, Section (g) of the 4Front Disclosure Letter, to the knowledge of 4Front, no Person beneficially owns, directly or indirectly, or exercises control or direction over, more than 10% of the 4Front Membership Interests.

There are no outstanding contractual obligations of 4Front or its Subsidiaries to repurchase, redeem or otherwise acquire any 4Front Membership Interests or any shares or other equity securities of its Subsidiaries. No Subsidiary of 4Front owns any 4Front Membership Interests.

No Governmental Order ceasing or suspending trading in 4Front Membership Interests or prohibiting the sale of such 4Front Membership Interests has been issued and is outstanding against 4Front or its directors, officers or promoters.

Shareholder and Similar Agreements. Except as set forth on Schedule “E”, Section (h) of the 4Front Disclosure Letter, 4Front is not party to any shareholder, pooling, voting trust or other similar agreement relating to the issued and outstanding equity securities of 4Front or its Subsidiaries.

U.S. Securities Law Matters.

There is no class of securities of 4Front which is registered pursuant to Section 12 of the U.S. Exchange Act, nor is 4Front subject to any reporting obligation (whether active or suspended) pursuant to section 15(d) of the U.S. Exchange Act. 4Front is not, subject to any requirement to register any class of its equity securities pursuant to Section 12(g) of the U.S. Exchange Act.

None of 4Front nor any of its Subsidiaries, predecessors or Affiliates has had the registration of a class of securities under the U.S. Exchange Act revoked by the United States Securities and Exchange Commission pursuant to Section 12(j) of the U.S. Exchange Act and any rules or regulations promulgated thereunder.

4Front is not an investment company registered or required to be registered under the U.S. Investment Company Act of 1940, as amended.

The 4Front Membership Interests, and other equity securities of 4Front have been issued under a valid exemption under the U.S. Securities Act and in accordance with all applicable state securities Laws.

Financial Statements.

Except as disclosed in Schedule “E”, Section (j)(i) of the 4Front Disclosure Letter, (A) the audited consolidated financial statements for 4Front as at and for the fiscal year ended on December 31, 2017, including the notes thereto and the reports by 4Front’s auditors thereon; and (B) the unaudited consolidated financial statements for 4Front as at and for the nine (9) month period ending September 30, 2018, have been prepared in accordance with IFRS, and all financial statements of 4Front which are prepared by 4Front in respect of any subsequent periods prior to the Effective Date will be prepared in accordance with IFRS applied on a basis consistent with prior periods and all applicable Laws and present fairly, in all material respects, the assets, liabilities (whether accrued, absolute, contingent or otherwise), the consolidated financial position and the results of operations of 4Front and its Subsidiaries as of the respective dates thereof and their results of operations and cash flows for the respective periods covered thereby (except as may be indicated expressly in the notes thereto). Other than those listed on Schedule “E”, Section (j) of the 4Front Disclosure Letter, there are no outstanding loans made by 4Front to any executive officer or director of 4Front or its Subsidiaries.

Except as disclosed in Schedule “E”, Section (j)(ii) of the 4Front Disclosure Letter, each of 4Front and its Subsidiaries maintains internal control over financial reporting. Such internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes policies and procedures that: (A) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of 4Front are being made only with appropriate authorizations of management and directors of 4Front, as applicable; and (B) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the assets of 4Front that could have a material effect on its financial statements. To the knowledge of 4Front, as of the date of this Agreement, there neither is, nor has been, any fraud with respect to 4Front, whether or not material, relating to the financial reporting or internal control over financial reporting of 4Front. To the knowledge of 4Front, as of the date of this Agreement, there is no fraud that involves management or any other employees who have a significant role in the internal control over financial reporting of 4Front.

Neither 4Front nor any of its Subsidiaries has received any material written complaint, allegation, assertion, or claim that 4Front or any of its Subsidiaries has engaged in questionable accounting or auditing practices, which has not been resolved to the satisfaction of the 4Front Board (or, if applicable, the audit committee thereof), or has not been disclosed to Cannex and BC Newco.

Undisclosed Liabilities. Other than as disclosed in Schedule “E”, Section (k) of the 4Front Disclosure Letter, neither 4Front nor any of its Subsidiaries has any material liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, except for: (i) liabilities and obligations that are adequately presented or reserved on the unaudited balance sheet of 4Front as of September 30, 2018 (the “4Front Balance Sheet”) or disclosed in the notes thereto; or (ii) liabilities and obligations incurred in the ordinary course of business consistent with past practice that are not and would not, individually or in the aggregate with all other liabilities and obligations of 4Front and its Subsidiaries (other than those disclosed on the 4Front Balance Sheet and/or in the notes to the 4Front financial statements), have a 4Front Material Adverse Effect, or, as a consequence of the consummation of the Business Combination, have a 4Front Material Adverse Effect. Without limiting the foregoing, the 4Front Balance Sheet reflects reasonable reserves in accordance with IFRS for contingent liabilities of 4Front and its Subsidiaries.

Operational Matters. Except as noted in Schedule “E”, Section (l) of the 4Front Disclosure Letter, and except as would not, individually or in the aggregate, result in a 4Front Material Adverse Effect all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations due and payable, or performable, as the case may be, on or prior to the date hereof under, with respect to, or on account of, any assets of 4Front and its Subsidiaries have been: (i) duly paid; (ii) duly performed; or (iii) provided for prior to the date hereof.

Employment Matters.

Other than as disclosed in Schedule “E”, Section (m)(i) of the 4Front Disclosure Letter, neither 4Front nor its Subsidiaries has entered into any binding Contract providing for severance, termination or other change in control-related payments to any director, officer or employee in connection with the termination of their position or their employment as a direct result of a change in control of 4Front.

Neither 4Front nor its Subsidiaries (A) is a party to any collective bargaining agreement, or (B) is subject to any application for certification or, to the knowledge of 4Front, actual or threatened union-organizing campaigns for employees not covered under a collective bargaining agreement.

4Front and its Subsidiaries are and have been in compliance in all material respects with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by 4Front or any of its Subsidiaries as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. All employees of 4Front or any of its Subsidiaries classified as exempt under the Fair Labor Standards Act and state and local wage and hour Laws are properly classified. There are no Actions against 4Front or any of its Subsidiaries pending, or to the knowledge of 4Front, threatened to be brought or filed, by or with any Governmental Entity or arbitrator in connection with the employment of any current or former applicant, employee, consultant or independent contractor of 4Front or any of its Subsidiaries, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wage and hours or any other employment related matter arising under applicable Laws.

Neither 4Front nor its Subsidiaries is subject to any claim for wrongful dismissal, constructive dismissal or any other tort claim, actual or, to the knowledge of 4Front, threatened, or any litigation actual, or to the actual knowledge of 4Front, threatened, relating to employment or termination of employment of employees or independent contractors, except for such claims or litigation which individually or in the aggregate would not have a 4Front Material Adverse Effect.

To the knowledge of 4Front, no labour strike, lock-out, slowdown or work stoppage is pending or threatened against or directly affecting 4Front, except as would not have a 4Front Material Adverse Effect.