Green Thumb sells CPG brands, issues note to Agrify

Executive Summary

• Green Thumb Industries (GTI) sold its consumer packaged goods brands (including Rhythm, Beboe, and Doctor Solomon's) to Agrify Corp. for $50 million in cash.
• GTI entered into a license agreement with Agrify to continue manufacturing and distributing these brands, receiving monthly cash fees based on sales.
• GTI extended a $45 million secured convertible loan to Agrify, which accrues 10% interest and can be converted into Agrify common stock or prefinanced warrants.

Key Details

• Asset Sale: GTI sold all equity interests in VCP IP Holdings LLC to Agrify via its subsidiary VCP23 LLC.
• Brands Transferred: The transaction includes intellectual property rights for brands: Rhythm, Beboe, Dogwalkers, Doctor Solomon's, &Shine, and Good Green.
• Purchase Price: $50 million (U.S.) in cash consideration.
• Related Party Status: GTI owns 35% of Agrify common stock; Benjamin Kovler serves as Chairman and Interim CEO of both companies. The transaction is classified as a related party transaction under Canadian Multilateral Instrument 61-101.
• Loan Terms: GTI provided a $45 million (U.S.) secured convertible note to Agrify.
  • Maturity: February 25, 2027.
  • Interest Rate: 10.0% annualized, payable semi-annually (March 1 and September 1), starting March 1, 2026.
  • Payment Method: Interest may be paid in cash, Agrify common stock, or prefinanced warrants at GTI's election.
  • Default Rate: 14% per annum.
• Conversion Mechanics:
  • Stock Conversion Price: $29.475 per share (based on Nasdaq Rule 5635 minimum price).
  • Warrant Conversion Price: Conversion price less the $0.001 exercise price of the warrant.
  • Ownership Limit: Beneficial ownership limitation of 49.99%, subject to Nasdaq listing rules.
• Licence Agreement: GTI Core LLC received a trademark and recipe licence from Agrify (VCP) to use the licensed IP. Consideration is a monthly cash fee based on product sales.
• Regulatory Filing: A material change report will be filed with Canadian securities authorities within 21 days of closing.

Notable Quotes

• None provided in the text.