HEXO Announces Closing of Non-Brokered Private Placement and Amendments to Arrangement Agreement and Waiver and Amendment Agreement - Seite 2

In connection with the Arrangement Amendments, HEXO and Tilray have also agreed to amend the Waiver and Amendment Agreement entered into on April 10, 2023 (“Waiver and Amendment Agreement”). The Waiver and Amendment Agreement provides for, among other things, a waiver by Tilray of, and the amendment to, certain covenants under the amended and restated senior secured convertible note due 2026 issued by the Company and held by Tilray (the “Amended Senior Secured Note”) to mitigate the risk of covenant breaches by HEXO until the consummation of the Arrangement and to allow HEXO to use existing cash resources to satisfy the Company’s ongoing payment and contractual obligations and operate its business, in consideration for the payment of certain cash and non-cash consideration by HEXO to Tilray as previously disclosed. The consent and amendment to the Waiver and Amendment Agreement agreed to in connection with the Arrangement Amendments (the “Consent and Amendment to the Waiver and Amendment Agreement”) provides for, among other things, Tilray’s agreement that in consideration for payment of US$100,000 by the Company to Tilray, the minimum liquidity threshold set out in Section 9(M) of the Amended Senior Secured Note is reduced from US$4,000,000 to US$1 for the duration of the applicable Waiver Period (as defined in the Waiver and Amendment Agreement).

As previously disclosed, the Waiver and Amendment Agreement provides for the possibility of an additional cash payment by HEXO to Tilray of up to US$10,000,000 in consideration for the termination of the Services Agreement between the parties, which additional payment is payable, among other, in the event HEXO generates a sufficient amount of unrestricted cash from any financing of HEXO permitted by Tilray after the signature of the Waiver and Amendment and prior to closing, and subject to the satisfaction of certain other conditions described in the Waiver and Amendment Agreement. On this basis, the Consent and Amendment to the Waiver and Amendment Agreement provides that an amount equal to US$6,400,000 shall be paid immediately by HEXO to Tilray out of the gross proceeds received by HEXO under the first tranche of the Private Placement, and shall be applied in accordance with the provisions of the Waiver and Amendment Agreement. In addition, upon satisfaction of the applicable Release Condition, an additional amount equal to US$6,000,000 shall be paid by HEXO to Tilray under the second tranche of the Private Placement and shall be applied in accordance with the provisions of the Waiver and Amendment Agreement. HEXO is not required to make any further payment to Tilray from the aggregate gross proceeds received under the Private Placement.