Issuance of Second Lien Notes due 2026 and Warrants

As previously announced in the Current Report on Form 8-K filed by Jushi Holdings Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”) on November 15, 2022, the Company entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “Investors”), pursuant to which the Company agreed to issue and sell its 12% Second Lien Notes due 2026 (the “Notes”) and detached warrants to purchase the Company’s subordinate voting shares (the “Warrants”), in a private placement (the “Offering”).

On December 8, 2022 (the “Closing Date”), the Company announced that it has closed a tranche of the Offering (the “Closing”) and issued $69.0 million aggregate principal amount of Notes and Warrants to purchase up to approximately 16 million of the Company’s subordinate voting shares. The Warrants are exercisable until December 7, 2026 to purchase the Company’s subordinate voting shares at an exercise price of $2.086, subject to adjustment under certain circumstances as described in the Warrants.

Indenture

In connection with the Closing, the Company entered into an indenture, dated December 7, 2022 (the “Indenture”), with Odyssey Trust Company (“Odyssey Trust”), in its capacity as trustee thereunder, in respect of the Notes that were issued to the Investors pursuant to the terms of the Subscription Agreements. The terms of the Notes are as set forth in the Subscription Agreements, the Indenture and the form of Note attached to the Indenture, which the Company issued on December 7, 2022.

Interest and Maturity

The Notes will accrue interest at a rate of 12% per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2022. The Notes will mature on December 7, 2026, unless earlier redeemed or repurchased.

Redemption

Subject to certain criteria, any or all of the Notes may be redeemed within twenty-four (24) months of issuance at a redemption price equal to 105% of the principal amount of Notes redeemed, plus a make-whole interest payment equal to all interest that would be paid through the first twenty-four (24) months the Notes were outstanding minus all interest payments made prior to the redemption date. On or after December 7, 2024 but prior to December 7, 2025, the Company may, on any one or more occasions, redeem all or any part of the Notes at a redemption price equal to 105% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to but excluding the date of redemption (subject to the right of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date). In addition, on or after the December 7, 2025, the Company may, on any one or more occasions, redeem all or any part of the Notes at a redemption price equal to 100% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to but excluding the date of redemption (subject to the right of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date).

Guarantees, Security and Ranking

To secure its obligations pursuant to the Notes, each of the Company and its current and future subsidiaries, other than certain excluded subsidiaries (the “Guarantors”) has granted a second-lien security interest (the “Note Guarantees”) over substantially all of its assets to a collateral agent for the benefit of the Investors, pursuant to a guaranty and collateral security agreement (the “Security Agreement”).

Change of Control

Upon the occurrence of a change of control the Company will be required to make an offer to each holder of Notes to purchase such holder’s Notes at a purchase price in cash of 105% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to but excluding the date of purchase (subject to the right of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date).

Restrictive Covenants

The Indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things: declare or pay cash dividends or other distributions on their respective equity securities; incur additional indebtedness other than “Permitted Indebtedness” (as defined in the Indenture); or engage in certain asset sales. These covenants are subject to important exceptions and qualifications set forth in the Indenture.

Intercreditor Agreement

The Notes and the Note Guarantees will be subject to the terms of an intercreditor agreement setting forth, among other things, the subordination of the Notes and the Note Guarantees to the first lien obligations of the Company and the Guarantors under the Company’s $100 million Senior Secured Credit Facility (the “Acquisition Facility”) with SunStream Bancorp Inc. (“Sunstream”), a joint venture sponsored by Sundial Growers Inc., and the standstill of enforcement rights until the repayment in full of the first lien obligations under the Acquisition Facility in certain instances.

Use of Proceeds

The Company used the proceeds from the Offering, together with approximately $9 million of cash on hand, to repurchase and redeem all of its outstanding existing 10% senior secured notes due January 2023 (the “Existing Notes”), including accrued interest and any applicable premium thereon. Certain Investors satisfied all or a portion of their payment obligations under the Subscription Agreement through delivery of Existing Notes for repurchase by the Company and cancellation. As a result of the repayment and redemption of all outstanding Existing Notes, the Trust Indenture governing the Existing Notes, dated November 20, 2020, by and between the Company and Odyssey Trust, was terminated.

The Notes and Warrants sold were not registered under the Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any state, and were offered and sold in reliance upon the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and, as applicable, corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering, or outside the United States to certain non-U.S. persons in reliance on Regulation S under the Securities Act. The Investors located in the United States are “accredited investors” as such term is defined in Regulation D promulgated under the Securities Act. The Investors outside of the United States who participated in the Offering pursuant to the exemption from registration under the Securities Act afforded by Regulation S are “non-U.S. Persons” as defined in Regulation S, and each such Investor did not receive an offer to purchase subscription shares inside the United States and did not originate a buy order inside the United States. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.

The foregoing description does not purport to be complete and is subject to, and qualified in its entirety by reference to the full text of the document described, copies of which will be filed with the next periodic report of the Company.

Amendment of Acquisition Facility

On December 8, 2022 the Company announced that it amended the Acquisition Facility (the “Amended Acquisition Facility”). Under the terms of the Amended Acquisition Facility, the Company’s loan will be a first lien term loan capped at $65 million, bear an interest rate of 11% per annum, payable quarterly, will no longer carry a standby fee, and will mature on December 31, 2024. The financial covenants on the Amended Acquisition Facility have been modified to remove the total leverage ratio covenant and replace it with a minimum quarterly revenue covenant. Additionally, in connection with the Amended Acquisition Facility, the Company has made a one-time issuance to SunStream of warrants to purchase up to 2 million subordinate voting shares of the Company (the “Lender Warrants”).

The Lender Warrants were sold and issued without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

The foregoing description of the Amended Acquisition Facility does not purport to be complete and is subject to, and qualified in its entirety by reference to the full text of the Amended Acquisition Facility, a copy of which will be filed with the next periodic report of the Company.

The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the repurchase and redemption of all outstanding Existing Notes is incorporated into this Item 2.03.

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03.

The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the Warrants is incorporated into this Item 3.02.

As described in Item 1.01, on the Closing Date, the Company issued Warrants to purchase up to approximately 16 million of the Company’s subordinate voting shares to the Investors and the Lender Warrants to purchase up to 2 million subordinate voting shares of the Company to SunStream. The Warrants and the Lender Warrants sold were not registered under the Securities Act or the securities laws of any state, and were offered and sold in reliance upon the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and, as applicable, corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering, or outside the United States to certain non-U.S. persons in reliance on Regulation S under the Securities Act,. The Investors located in the United States and SunStream are “accredited investors” as such term is defined in Regulation D promulgated under the Securities Act. The Warrants issued to Investors located outside of the United States were issued pursuant to the exemption from registration under the Securities Act afforded by Regulation S and such Investors are “non-U.S. Persons” as defined in Regulation S, and each such Investor did not receive an offer to purchase subscription shares inside the United States and did not originate a buy order inside the United States.

The Company issued a press release, dated December 8, 2022, relating to the Closing of the Offering and the Amended Acquisition Facility. A copy of the press release is furnished herewith as Exhibit 99.1 and is hereby incorporated by reference into this Item 7.01.

(d) Exhibits.