UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current
Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 2020 (February
7, 2020)
Acreage
Holdings, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-56021
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British Columbia, Canada
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98-1463868
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(State or other jurisdiction
of incorporation)
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(IRS Employer
Identification No.)
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366 MADISON AVENUE, 11TH FLOOR
NEW YORK, NEW YORK, 10017, UNITED STATES
(Address of principal executive offices,
including zip code)
(646) 600-9181
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Subordinate Voting Shares, no par value
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ACRGF
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OTC Markets Group Inc.
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Indicate by check mark whether the registrant is an emerging
growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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Item 1.01
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Entry into a Material Definitive Agreement.
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Agency Agreement
On February 10, 2020,
Acreage Holdings, Inc. (the “Company”) entered into an agency agreement (the “Agency Agreement”) with Canaccord
Genuity Corp. (the “Agent”) relating to the sale of up to 6,085,192 special warrants of the Company (the “Special
Warrants”) at a price of $4.93 per Special Warrant (the “Issue Price”), for aggregate gross proceeds to the Company
of approximately $30,000,000.
Each Special Warrant
will be automatically exercised, for no additional consideration, under and subject to the terms of the Agency Agreement and the
special warrant indenture dated February 10, 2020 between the Company and Odyssey Trust Company, for one unit of the Company (each
a “Unit”). Each Unit will be comprised of: (i) one Class A subordinate voting share of the Company (each, a “Subordinate
Voting Share”) and (ii) one Subordinate Voting Share purchase warrant of the Company (each, a “Warrant”). Each
Warrant will entitle the holder thereof to purchase one Subordinate Voting Share (each, a “Warrant Share”) for a period
of sixty months after the closing date at a price of $5.80 per Warrant Share (subject to adjustment in certain circumstances).
Automatic exercise will take place on that day (the “Qualification Date”) which is 3 business days following the earlier
of: (i) (A) the Company filing an amendment to its shelf prospectus (the “Prospectus Supplement”) qualifying the distribution
of the Subordinate Voting Shares and the Warrants with the securities regulatory authorities in each Province of Canada other than
Quebec, Prince Edward Island and Newfoundland and Labrador; and (B) the Company filing an amendment to its shelf registration statement
on Form F-10 registering the issuance of the Subordinate Voting Shares and the Warrants, and the issuance of the Warrant Shares
upon exercise of the Warrants (the “Qualification Registration Statement”) which is declared effective by the SEC;
and (ii) June 11, 2020.
In addition, the Company
has agreed to grant to Anson Advisors Inc. (the “Lead Purchaser”) an option (the “Purchaser’s Option”)
to permit purchasers to purchase, in such proportion among the purchasers as the Lead Purchaser may determine: (i) up to 4,056,795
additional Special Warrants (the “Additional Special Warrants”) at the Issue Price or (ii) if the Qualification Date
(as defined in the Agency Agreement) occurs prior to the exercise of the Purchaser’s Option, 4,056,795 additional Units (the
“Additional Units”, and together with the Additional Special Warrants, the “Additional Securities”) at
a price of $4.93 per Additional Unit, for additional aggregate proceeds to the Company of approximately $20,000,000. The Purchaser’s
Option is exercisable by the Lead Purchaser at any time at or after the time of closing until 8:00 a.m. (Eastern time) on March
16, 2020. The Prospectus Supplement will qualify the issuance of the Additional Units, and the Qualification Registration Statement
will register the issuance of the Additional Units and the issuance of shares upon exercise of the Additional Warrants.
In consideration for
the Agent agreeing to act as agent to find the purchasers of Special Warrants and the Purchaser’s Option on a commercially
reasonable “best efforts” private placement basis, the Company agrees to pay to the Agent at the time of closing of
the issue of the Special Warrants and at the time of exercise of the Purchaser’s Option in whole or in part, as applicable,
a cash commission (the “Cash Commission”) in an amount equal to 6.0% of the gross proceeds received by the Company
from the issue and sale of: (i) the Special Warrants and (ii) Additional Securities.
The Agency Agreement contains customary representations,
warranties and covenants by the Company, conditions to closing and indemnification provisions.
In connection with
the Agency Agreement and the securities contemplated thereby, the Company has prepared and filed with the United States Securities
Commission (“the “SEC”) pursuant to the Canada/United States Multi-Jurisdictional Disclosure System a registration
statement on Form F-10, as amended (File No. 333-232313), under the United States Securities Act of 1933, as amended (the “U.S.
Securities Act”).
Credit Agreement
On February 7, 2020,
the Company entered into a credit agreement (the “Credit Agreement”) through its subsidiary, HSCP CN Holdings ULC (the
“Borrower”), by and among the Borrower, Acreage Finance Delaware, LLC (the “Guarantor”), ############# as administrative agent and the institutional lenders (the “Lender”) that may be parties thereto.
The
Credit Agreement provides for a secured credit facility in the amount of $100,000,000 (“Credit Facility”), which
may be drawn down on by the Borrower in three tranches, maturing on the date that is two years from the date the first tranche
is drawn down on. The obligations under the Credit Agreement will be guaranteed the Guarantor, and secured by a first priority
lien (the “Security Interest”) over $50,000,000 in cash deposited in a bank account of the Company (the “Restricted
Account”). The Company will arrange to obtain such cash through a separate transaction (the “Loan Transaction”).
The Company expects to draw down on the first tranche of the Credit Facility, $49,000,000, in February 2020, subject to satisfaction
of certain closing conditions including completion of the Loan Transaction.
The
interest payable on the Credit Facility will be (a) 2.55% per annum on the first tranche, 1.25% per annum on the second tranche,
and a rate to be negotiated for the third tranche for the first year; and (b) a rate to be negotiated for the second year. The
Borrower will be entitled to draw down on the remaining $51,000,000 of the Credit Facility in two further tranches, if each additional
tranche is secured by cash collateral equal to the additional amount drawn down under that tranche plus $1,000,000.
The
Credit Agreement contains representations and warranties, and affirmative, negative and financial covenants that are customary
for facilities of this type. The negative covenants include, without limitation, certain limits on the ability of the Borrower
and Guarantor to: incur indebtedness and liens; consummate mergers, consolidations, amalgamations, winding-up or other similar
transactions; dispose of certain assets; make any material change to the nature of its business; and enter into a registered pension
plan or collective bargaining agreement. The financial covenant requires, so long as any amount is owing under the Credit Agreement,
the Guarantor maintain in the Restricted Account an amount equal to the total amount drawn down on the Credit Facility plus $1,000,000.
The
Credit Agreement also contains customary events of default (which are in some cases subject to certain exceptions, thresholds,
and notice requirements), including, but not limited to, nonpayment of principal or interest, breaches of representations and warranties,
failure to maintain a perfected Security Interest, failure of the Guarantor to perform or observe its covenants, change of control
events and certain bankruptcy-related events or proceedings. On the occurrence and continuance of an event of default, the Lender
may, by written notice, terminate its obligations to make further advances through draw downs under the Credit Facility and/or
declare all obligations under the Credit Agreement to be immediately due and payable.
Special Warrant Indenture and Warrant
Indenture
On February 10, 2020,
the Company entered into (i) a special warrant indenture (the “Special Warrant Indenture”) with Odyssey Trust Company
(the “Warrant Agent”) and (ii) a warrant indenture (the “Warrant Indenture”) with the Warrant Agent.
The Special Warrant
Indenture provides for the creation of the Special Warrants. The Special Warrant Indenture sets forth the terms and conditions
pursuant to which each Special Warrant will be automatically exercised, for payment of no additional consideration, for one Unit,
which will be comprised one Subordinate Voting Share and one Warrant, and sets forth the mechanics for the issuance of the underlying
Unit on automatic exercise. The Special Warrant Indenture further sets forth the rights of each Special Warrant holder in respect
to the Special Warrants.
The Warrant Indenture
provides for the creation of the Warrants underlying the Special Warrants. The Warrant Indenture sets forth the exercise terms
of the Warrants and the mechanics for the exercise of the Warrants and the issuance of the Warrant Shares. The Warrant Indenture
further sets forth the rights of each Warrant holder in respect to the Warrants.
The
foregoing is a summary of certain material terms and conditions of the Agency Agreement, Credit
Agreement, Special Warrant Indenture and Warrant Indenture, and is not a complete description thereof. Accordingly, the foregoing
is qualified in its entirety by the full text of the Agency Agreement, Credit
Agreement, Special Warrant Indenture and Warrant Indenture, attached to this Current Report on Form 8-K as Exhibits
1.1, 4.1, 4.2 and 4.3, respectively, and incorporated herein by reference.
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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The information disclosed
in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
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Item 3.02
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Unregistered Sales of Equity Securities.
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On
February 10, 2020 (the “Closing Date”), the Company closed a private placement of $30,000,000 of Special Warrants,
at a price of $4.93 per Special Warrant. The Special Warrants will automatically be exercised, without any further consideration,
into Units on the Qualification Date.
Each
Unit issued on automatic exercise of the Special Warrants will be comprised of one Subordinate Voting Share and one Warrant. Each
Warrant is exercisable for a period of five years from the Closing Date at an exercise price of $5.80 per Share (the “Exercise
Terms”). The net proceeds from the private placement will be used for working capital and general corporate purposes.
The
Lead Purchaser for the private placement was additionally granted an option to purchase up to $20,000,000 of either additional
Special Warrants or, if the Prospectus Supplement is filed prior to the exercise of the Purchaser’s Option, Units. The Purchaser’s
Option is exercisable by the lead subscriber at any time until 8:00 a.m. on March 16, 2020.
The
Special Warrants were issued offshore of the United States in reliance on an exemption from registration under the U.S. Securities
Act pursuant to Rule 903 of Regulation S promulgated thereunder.
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Item 7.01
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Regulation FD Disclosure.
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A
copy of the press release announcing the Credit Facility and the private placement is attached to this Current Report on Form 8-K
as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 7.01 disclosure.
The
information in this Item 7.01, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of such section. The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit
99.1, shall not be incorporated by reference into any filing under the U.S. Securities Act
or the Exchange Act, irrespective of any incorporation by reference language in any such filing.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
Signature
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Acreage
Holdings, Inc.
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Date:
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February 13, 2020
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By:
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/s/ Glen Leibowitz
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Glen Leibowitz
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Chief Financial Officer
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Exhibit 1.1
EXECUTION VERSION
AGENCY AGREEMENT
February 10, 2020
Acreage Holdings, Inc.
366 Madison Avenue, 11th Floor
New York, New York, 10017
Attention: Kevin P. Murphy, Chief Executive Officer
Dear Sirs/Mesdames:
The undersigned, Canaccord Genuity Corp.
(the “Agent”), understands that Acreage Holdings, Inc. (the “Company”) proposes to create,
offer, issue and sell up to 6,085,192 special warrants of the Company (the “Initial Special Warrants”), at a
price of US$4.93 per Special Warrant (the “Issue Price”), for aggregate gross proceeds to the Company of approximately
US$30,000,000.
The Special Warrants (as defined herein)
shall be duly and validly created and issued pursuant to, and governed by, a special warrant indenture (the “Special Warrant
Indenture”) to be entered into on the Closing Date (as defined herein) between the Company and Odyssey Trust Company,
or such other trust company as may be acceptable to the Company and the Agent, in its capacity as special warrant agent thereunder.
Each Special Warrant shall be automatically exercised, for no additional consideration, under and subject to the terms described
herein and in the Special Warrant Indenture, for one unit of the Company (each a “Unit”). Each Unit will be
comprised of: (a) one (1) Subordinate Voting Share (as defined herein) (each a “Unit Share”); and (b) one (1)
Subordinate Voting Share purchase warrant of the Company (each a “Warrant”). The description of the Special
Warrants herein is a summary only and is subject to the specific attributes and detailed provisions of the Special Warrants set
forth in the Special Warrant Indenture. In the case of any inconsistency between the description of the Special Warrants in this
Agreement and their terms and conditions as set forth in the Special Warrant Indenture, the provisions of the Special Warrant Indenture
shall govern.
The Warrants shall be duly and validly
created and issued pursuant to, and governed by, a warrant indenture (the “Warrant Indenture”) to be entered
into on the Closing Date between the Company and Odyssey Trust Company, or such other trust company as may be acceptable to the
Company and the Agent, in its capacity as warrant agent thereunder. Each Warrant will entitle the holder thereof to purchase one
(1) Subordinate Voting Share (each, a “Warrant Share”) for a period of sixty (60) months after the Closing Date
at a price of US$5.80 per Warrant Share (subject to adjustment in certain circumstances). The description of the Warrants herein
is a summary only and is subject to the specific attributes and detailed provisions of the Warrants set forth in the Warrant Indenture.
In the case of any inconsistency between the description of the Warrants in this Agreement and their terms and conditions as set
forth in the Warrant Indenture, the provisions of the Warrant Indenture shall govern.
Each Special Warrant shall be automatically
exercised at 4:00 p.m. (Toronto time) on the Automatic Exercise Date (as defined herein).
In addition, the Company will grant
to Anson Advisors Inc. (the “Lead Purchaser”) an option (the “Purchaser’s
Option”), which Purchaser’s Option may be exercised in the sole discretion of the Lead Purchaser, in whole or
in part, to permit the Purchasers to purchase, in such proportion among the Purchasers as the Lead Purchaser may determine,
up to: (a) 4,056,795 additional Special Warrants (the “Additional Special Warrants”) at the Issue Price;
or (b) if the Qualification Date (as defined herein) occurs prior to the exercise of the Purchaser’s Option, 4,056,795
additional Units (the “Additional Units”, and together with the Additional Special Warrants, the
“Additional Securities”) at a price of US$4.93 per Additional Unit, for additional aggregate proceeds to
the Company of approximately US$20,000,000, all in such proportion among the Purchasers as the Lead Purchaser may determine.
The Purchaser’s Option shall be exercisable by the Lead Purchaser at any time and from time to time at or after the
Time of Closing (as defined herein) and from time to time up to 8:00 a.m. (Eastern time) on March 16, 2020. The Lead
Purchaser shall deliver written notice to the Company and the Agent forty-eight (48) hours prior to the exercise thereof and
upon the furnishing of such notice, the Company will be committed to sell, in accordance with and subject to the provisions
of this Agreement the number of Additional Special Warrants or Additional Units, as applicable, indicated in the notice.
Delivery of and payment for any Additional Securities will be made at the time and on the date (the
“Purchaser’s Option Closing Date”) as set out in a written notice of the Lead Purchaser delivered to
the Company and the Agent, provided that the Purchaser’s Option Closing Date shall be no later than five (5) days
following delivery of the notice; and; which Purchaser’s Option Closing Date may occur on the Closing Date. Unless the
context otherwise requires, (A) all references to the “Offering” and “Special Warrants”
shall include the “Additional Special Warrants” if the Purchaser’s Option is exercised prior to the
Qualification Date, and in such case references to “Units”, “Unit Shares”,
“Warrants” and “Warrant Shares” shall include any such securities issued or issuable in
connection with the exercise of the Additional Special Warrants, as applicable, and (B) all references to the
“Units” shall include the “Additional Units” if the Purchaser’s Option is
exercised on or following the Qualification Date, and in such case references to “Unit Shares”,
“Warrants” and “Warrant Shares” shall include any such securities issued or issuable in
connection with the exercise of the Additional Units, as applicable.
In consideration of the Agent agreeing
to act as agent to find the Purchasers (as defined herein) of Initial Special Warrants and the Purchaser’s Option on a commercially
reasonable “best efforts” private placement basis, the Company agrees to pay to the Agent at the Time of Closing on
the Closing Date and the Purchaser’s Option Closing Date, as applicable, a cash commission (the “Cash Commission”)
in an amount equal to 6.0% of the gross proceeds received by the Company from the issue and sale of: (a) the Initial Special Warrants;
and (b) Additional Securities, pursuant to the Offering (as defined herein).
The Agent shall be entitled to appoint,
at its sole expense, other registered dealers (“Selling Firms”) as agents to assist in the Offering and the
Agent shall determine the remuneration payable to such Selling Firms, such remuneration to be the sole responsibility of the Agent.
The Company confirms the filing on June
24, 2019 of the Preliminary Base Shelf Prospectus (as defined herein) and the filing on August 8, 2019 of the Final Base Shelf
Prospectus (as defined herein) in each case in each Qualifying Jurisdiction (as defined herein) and the issuance of the Preliminary
Receipt (as defined herein) on June 24, 2019 and the Final Receipt (as defined herein) on August 9, 2019, in each case by the OSC
(as defined herein) on behalf of the Securities Commissions (as defined herein). The Company has also prepared and filed with the
SEC (as defined herein) pursuant to the Canada/United States Multi-Jurisdictional Disclosure System adopted by the Securities Commissions
and the SEC, the Preliminary Registration Statement (as defined herein) and the Final Registration Statement (as defined herein).
The Offering is conditional upon and subject
to the additional terms and conditions set forth below. The following are additional terms and conditions of the Agreement between
the Company and the Agent:
Definitions –
In addition to the terms previously defined and terms defined elsewhere in this Agreement (as defined herein) (including the Schedules
hereto), where used in this Agreement or in any amendment hereto, the following terms shall have the following meanings, respectively:
“Agreement”
means this agreement between the Company and the Agents as the same may be amended and/or restated from time to time;
“Ancillary Documents”
means all agreements, indentures (including the Special Warrant Indenture, the Warrant Indenture and the Option Certificate), certificates
(including any certificates representing the Special Warrants and the Warrants), officers’ certificates, notices and other
documents executed and delivered, or to be executed and delivered, by the Company in connection with Offering or the qualification
for distribution of the Prospectus-Qualified Securities, whether pursuant to Applicable Securities Laws or otherwise;
“Applicable Laws”
means, in relation to any person or persons, the Applicable Securities Laws and all other statutes, regulations, statutory rules,
orders, by-laws, codes, ordinances, decrees, the terms and conditions of any grant of approval, permission, authority or licence,
or any judgment, order, decision, ruling, award, policy or guideline, of any Governmental Authority that are applicable to such
person or persons or its or their business, undertaking, property or securities and emanate from a Governmental Authority, having
jurisdiction over the person or persons or its or their business, undertaking, property or securities;
“Applicable Securities
Laws” means, as applicable, the Canadian Securities Laws, the U.S. Securities Laws, the securities legislation of and
policies issued by each other Selling Jurisdiction and the rules and policies of each of the FRA and the OTCQX;
“Associated Entity”
means any entity (corporate or otherwise), affiliate, or resulting entity pursuant to a reorganization: (i) in which the Company,
has directly or indirectly controlled, directly or indirectly controls or is controlled by and which is material to the Company,
and the business of the Company; or (ii) from which the Company has derived or will derive a beneficial financial or other interest,
including, but not limited to, any entity with whom the Company has entered into or will enter into a business relationship (for
example, via a management agreement, via a loan agreement, etc.);
“Automatic Exercise
Date” means the earlier of: (i) the date that is three (3) Business Days following the Qualification Date, and (ii) the
date that is four (4) months and one (1) day after the Closing Date or the Purchaser’s Option Closing Date, as applicable;
“Beneficiaries”
has the meaning ascribed thereto in Section 13(c);
“Business Day”
means a day, other than a Saturday, a Sunday or a day on which chartered banks are not open for business in Toronto, Ontario or
New York, New York;
“Canadian Securities
Laws” means collectively, the applicable securities laws of each of the Qualifying Jurisdictions, their respective regulations,
rulings, rules, orders (including blanket orders and discretionary orders), instruments (including national and multilateral instruments),
fee schedules and prescribed forms thereunder, the applicable policy statements issued by the Securities Commissions or similar
authority thereunder and the rules and policies of the CSE;
“Canopy Agreement”
means the arrangement agreement dated April 18, 2019 between Canopy Growth Corporation and the Company in respect of the acquisition
by Canopy Growth Corporation of the issued and outstanding securities of the Company subject to and pursuant to the terms of such
agreement;
“Canopy Consent”
means that certain consent of Canopy Growth Corporation to the Credit Facility and transactions contemplated by this Agreement;
“CanWell Litigation”
means the litigation described in Schedule “B” attached hereto;
“Claims” and
“Claim” have the meanings ascribed thereto in Section 13(a);
“Closing Date”
means February 10, 2020 or such other date as may be agreed to in writing by the Company and the Agent each acting reasonably,
being the date for delivery of and payment for any Initial Special Warrants;
“Credit Agreement”
means the credit agreement dated February 7, 2020 among HSCP CN Holdings ULC, Acreage Finance Delaware, Inc., #############, and
the Lenders (as such term is defined in the Credit Agreement);
“Credit Facility”
means the $100 million term loan facility provided for in the Credit Agreement;
“CSE” means
the Canadian Securities Exchange;
“Directed Selling Efforts”
means “directed selling efforts” as such term is defined in Rule 902(c) of Regulation S;
“Disclosure Record”
means the Company’s prospectuses, annual reports, annual and interim financial statements, annual information forms, business
acquisition reports, management discussion and analysis of financial condition and results of operations, information circulars,
material change reports, press releases and all other information or documents publicly filed or otherwise publicly disseminated
by the Company since November 14, 2018;
“distribution”
means distribution or distribution to the public, as the case may be, for the purposes of the Canadian Securities Laws or any of
them;
“Documents Incorporated
by Reference” means all financial statements, management’s discussion and analysis, management information circulars,
annual information forms, business acquisition reports, material change reports or other documents filed by the Company, whether
before or after the date of this Agreement, that are required to be incorporated by reference, or that are deemed to be incorporated
by reference, under Canadian Securities Laws in the Preliminary Base Shelf Prospectus, the Final Base Shelf Prospectus, the Qualification
Prospectus Supplement or any Supplementary Material, as applicable;
“Eligible Issuer”
means an issuer which meets the criteria and has complied with the requirements of NI 44-101 and NI 44-102 so as to be qualified
to offer securities by way of a short form prospectus and prospectus supplement to a base shelf prospectus;
“Encumbrance”
means any charge, mortgage, lien, pledge, claim, restriction, security interest or other encumbrance whether created or arising
by agreement, statute or otherwise pursuant to any applicable law, attaching to property, interests or rights;
“Final Base Shelf Prospectus”
means the final short form base shelf prospectus of the Company dated August 8, 2019 and filed with the Securities Commissions
for the purpose of qualifying the distribution in the Qualifying Jurisdictions of the securities described therein, including all
Documents Incorporated by Reference therein and any Supplementary Material;
“Final Receipt”
means the Passport Receipt for the Final Base Shelf Prospectus;
“Final Registration
Statement” means an amendment to the shelf registration statement of the Company on Form F-10 (File No. 333-232313) filed
with the SEC under the U.S. Securities Act, including the Final Base Shelf Prospectus with such deletions therefrom and additions
or changes thereto as are permitted or required by Form F-10 and the applicable rules and regulations of the SEC;
“FRA” means
the Frankfurt Stock Exchange;
“Governmental Authority”
means and includes, without limitation, any national or federal government, province, state, municipality or other political subdivision
of any of the foregoing, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any
of the foregoing;
“Historical Financial
Statements” means, collectively, the: (i) audited consolidated financial statements of the Company as at and for the
years ended December 31, 2018 and 2017 to be included in the Prospectus, together with the report of MNP LLP on those financial
statements, and including the notes with respect to those financial statements; (ii) the unaudited interim financial statements
of the Company for the three and nine months ended September 30, 2019 and 2018; and (iii) any other financial statements of the
Company that are or are deemed under Canadian Securities Laws to be incorporated by reference in the Prospectus or any Supplementary
Materials;
“Indemnified Parties”
and “Indemnified Party” have the meanings ascribed thereto in Section 13(a);
“Intellectual
Property” means all domestic and foreign: (i) inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto and all patents, patent applications, patent disclosures and industrial
designs, together with all re-issuances, continuations, continuations-in-part, revisions, extensions and re-examinations
thereof; (ii) trademarks, service marks, trade dress, trading styles, logos, trade names and business names, domain names,
social media handles, together with all translations, adaptations, derivations and combinations thereof and including all
goodwill associated therewith and all applications, registrations and renewals in connection therewith; (iii) copyrightable
works, copyrights and applications, registrations and renewals in connection therewith; (iv) trade secrets and confidential
business information (including ideas, research and development, know-how, formulas, algorithms, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals); (v) computer systems, software, data and
related documentation; (vi) right, title and interest as licensee or authorized user of any of the aforementioned
intellectual property; and (vii) copies and tangible embodiments thereof in whatever form or medium whether now known or
hereafter developed;
“Losses” has
the meaning ascribed thereto in Section 13(a);
“Material Adverse Effect”
means any event, fact, change, circumstance, development, occurrence or state of affairs that, individually or in the aggregate
with other events, facts, changes, circumstances, developments or occurrences, is or would reasonably be expected to be, materially
adverse to the business, operations, assets, properties, capital, prospects, condition (financial or otherwise) or liabilities,
whether contractual or otherwise, of the Company and the Subsidiaries, taken as a whole; provided that Material Adverse Effect
shall not include an adverse effect resulting from a change: (i) that arises out of a matter that has been publicly disclosed prior
to the date of this Agreement or otherwise disclosed in writing by the Company to the Agent prior to the date of this Agreement;
(ii) that results from general economic, financial, currency exchange, interest rate or securities market conditions in Canada
or the United States; or (iii) that is a direct result of any matter permitted by this Agreement, the Transaction Documents or
consented to in writing by the Agent;
“material change”
has the meaning ascribed thereto in the Canadian Securities Laws of the Province of Ontario;
“material fact”
has the meaning ascribed thereto in the Canadian Securities Laws of the Province of Ontario;
“misrepresentation”
has the meaning ascribed thereto in the Canadian Securities Laws of the Province of Ontario;
“Multiple Voting Shares”
means the Class C multiple voting shares of the Company;
“Murphy Loan”
means the amount of $20,000,000 loaned from Kevin Murphy, Chairman, Founder, and Chief Executive Officer of the Company, to Acreage
Finance Delaware, LLC in connection with securing the borrowings of HSCP CN Holdings ULC under the Credit Facility;
“NI 44-101”
means National Instrument 44-101 – Short Form Prospectus Distributions;
“NI 44-102”
means National Instrument 44-102 – Shelf Distributions;
“NI 45-106”
means National Instrument 45-106 – Prospectus Exemptions;
“Offering”
means the issuance of the Initial Special Warrants to Purchasers as contemplated hereunder, and includes the issuance of the applicable
number of Additional Securities pursuant to any exercise of the Purchaser’s Option;
“OSC” means
the Ontario Securities Commission;
“OTCQX” means
the OTCQX Best Market by OTC Markets Group;
“Option Certificate”
means the certificate issued to the Lead Purchaser on the Closing Date evidencing the grant of the Purchaser’s Option;
“Passport Receipt”
means a receipt issued by the OSC as principal regulator pursuant to the Passport System and which also evidences the receipt of
the OSC and the deemed receipt of the Securities Commissions of the Qualifying Jurisdictions (other than Ontario) for the Preliminary
Base Shelf Prospectus or the Final Base Shelf Prospectus, as the case may be;
“Passport System”
means the passport system procedures provided for under National Policy 11-202 - Process for Prospectus Reviews in Multiple
Jurisdictions;
“Personally Identifiable
Information” means any information that alone or in combination with other information held a person or entity can be
used to specifically identify a person including but not limited to a natural person’s name, street address, telephone number,
e-mail address, photograph, social insurance number, driver’s license number, passport number, credit or debit card number
or customer or financial account number or any similar information that is treated as “Personally Identifiable Information”
under any Applicable Laws;
“Preliminary Base Shelf
Prospectus” means the preliminary short form base shelf prospectus of the Company dated June 24, 2019, filed with the
Securities Commissions for the purpose of qualifying the distribution in the Qualifying Jurisdictions of the securities described
therein, including all Documents Incorporated by Reference therein and any Supplementary Material;
“Preliminary Receipt”
means the Passport Receipt for the Preliminary Base Shelf Prospectus;
“Preliminary Registration
Statement” means the registration statement of the Company on Form F-10 (File No. 333-232313) filed with the SEC under
the U.S. Securities Act, including the Preliminary Base Shelf Prospectus with such deletions therefrom and additions or changes
thereto as are permitted or required by Form F-10 and the applicable rules and regulations of the SEC;
“Proportionate Voting
Shares” means the Class B proportionate voting shares of the Company;
“Prospectus”
means, together, the Final Base Shelf Prospectus and the Qualification Prospectus Supplement, including any Documents Incorporated
by Reference therein;
“Prospectus-Qualified
Securities” means the securities of the Company qualified for distribution pursuant to the satisfaction of the Qualification
Condition, being: (i) the Units, the Unit Shares and the Warrants (including for certainty the Units, the Units Shares and the
Warrants issuable upon exercise of the Additional Special Warrants if the Purchaser’s Option is exercised prior to the Qualification
Date), (ii) if the Purchaser’s Option is not exercised prior to the Qualification Date, the Additional Units and the Unit
Shares and the Warrants underlying the Additional Units, and (iii) with respect to the Qualification Registration Statement, the
Warrant Shares;
“Purchasers”
means the persons who (as purchaser or beneficial purchaser) acquire Initial Special Warrants and, in the case of the Lead Purchaser
the Purchaser’s Option, by duly completing, executing and delivering Subscription Agreements and paying the issue price therefor,
and permitted assignees or transferees of such persons from time to time, and for certainty, “Purchasers” includes
the Lead Purchaser on behalf of funds advised by the Lead Purchaser;
“Qualification”
has the meaning ascribed thereto in Section 8(c);
“Qualification Condition”
means the filing by the Company of the Qualification Prospectus Supplement with the Securities Commissions, and the filing by the
Company of the Qualification Registration Statement with the SEC, which qualifies the distribution of the Prospectus-Qualified
Securities;
“Qualification Date”
means the date on which the Qualification Condition is satisfied;
“Qualification Deadline”
means 10:00 p.m. (Eastern time) on February 14, 2020 or such earlier time or date as may be agreed to in writing by the Company
and the Agent each acting reasonably;
“Qualification Prospectus
Supplement” means the prospectus supplement of the Company, including all of the Documents Incorporated by Reference
therein and any Supplementary Material, prepared by the Company and certified by the Company and the Agent, qualifying the distribution
of the Prospectus-Qualified Securities in the Qualifying Jurisdictions;
“Qualification Registration
Statement” means the registration statement of the Company on Form F-10 pursuant to General Instruction II.L of Form
F-10, registering the issuance of the Prospectus-Qualified Securities in the United States and filed with the SEC under the U.S.
Securities Act, including the Qualification Prospectus Supplement with such deletions therefrom and additions or changes thereto
as are permitted or required by Form F-10 and the applicable rules and regulations of the SEC;
“Qualifying Jurisdictions”
means each of the provinces of Canada, excluding Quebec, Prince Edward Island and Newfoundland and Labrador (and excluding Yukon,
Northwest Territories and Nunavut);
“Registration Statement”
means, together, the Final Registration Statement and the Qualification Registration Statement, including any Documents Incorporated
by Reference therein;
“Regulation S”
means Regulation S promulgated under the U.S. Securities Act;
“SEC” means
the United States Securities and Exchange Commission;
“Securities Commission”
means the applicable securities commission or securities regulatory authority in each of the Qualifying Jurisdictions and “Securities
Commissions” has a comparable meaning;
“Selling Jurisdictions”
means, collectively, the Qualifying Jurisdictions, and such other jurisdictions consented to by the Company and the Agent where
Initial Special Warrants or the Purchaser’s Option are sold or granted;
“Special Warrants”
means the special warrants of the Company offered hereunder, exercisable, for no additional consideration, into Units, and includes
the Initial Special Warrants and any Additional Special Warrants issued or issuable pursuant to the exercise of the Purchaser’s
Option;
“Standard Listing Conditions”
has the meaning ascribed thereto in Section 7(a);
“Subordinate Voting
Shares” means the Class A subordinate voting shares of the Company;
“Subscription Agreements”
means, collectively, the subscription agreements in the form agreed upon by the Agent and the Company, pursuant to which Purchasers
agree to subscribe for and purchase Special Warrants, as herein contemplated and shall include, for greater certainty, all schedules
thereto;
“Subsequent Disclosure
Documents” means any annual and/or interim financial statements, management’s discussion and analysis, information
circulars, annual information forms, material change reports, business acquisition reports or other documents issued by the Company
after the date of this Agreement that are required by Canadian Securities Laws to be incorporated by reference into the Prospectus
or any Supplementary Material;
“Subsidiaries”
means the material subsidiaries of the Company set out in Schedule “A” attached hereto and “Subsidiary”
means any one of them;
“Supplementary Material”
means any documents supplemental to the Prospectus or the Registration Statement, as applicable, including any amending or supplementary
prospectus, registration statement or other supplemental documents (including Documents Incorporated by Reference in the Prospectus
or Registration Statement after the date of the Qualification Prospectus Supplement or Qualification Registration Statement, as
applicable) or similar documents;
“Survival Limitation
Date” means the third (3rd) anniversary of the Closing Date except in respect of any of the covenants set
out in Section 9(c), Section 9(d), Section 9(e), Section 9(f), Section 9(g) and Section 9(h) which shall be on the fifth (5th)
anniversary of the Closing Date;
“Tax Act”
means the Income Tax Act (Canada) and the regulations thereunder;
“Taxes” means
all taxes (including income tax, capital tax, payroll taxes, employer health tax, workers’ compensation payments, property
taxes, sales, value-added, custom and land transfer taxes), duties, royalties, levies, imposts, assessments, deductions, charges
or withholdings and all liabilities with respect thereto including any penalty and interest payable with respect thereto;
“Time of Closing”
means 8:00 a.m. (Eastern time) on the Closing Date or any Purchaser’s Option Closing Date, as applicable, or such other time
on the Closing Date or any Purchaser’s Option Closing Date as may be agreed to by the Company and the Agent;
“Transaction Documents”
means, collectively, this Agreement, the Subscription Agreements, the Special Warrant Indenture, the Warrant Indenture, the Option
Certificate and the certificates, if any, representing the Special Warrants and the Warrants;
“United States”
and “U.S.” means the United States of America, its territories and possessions, any State of the United States
and the District of Columbia;
“U.S. Exchange Act”
means the United States Securities Exchange Act of 1934, as amended;
“U.S. Person”
means “U.S. person” as defined in Rule 902(k) of Regulation S;
“U.S. Securities Act”
means the United States Securities Act of 1933, as amended; and
“U.S. Securities Laws”
means all applicable securities laws in the United States, including without limitation, the U.S. Securities Act and the U.S. Exchange
Act and the rules and regulations promulgated thereunder, and any applicable state securities laws.
Other
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(a)
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Any reference in this Agreement to a Section shall refer to a section of this Agreement.
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(b)
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All words and personal pronouns relating thereto shall be read and construed as the number and
gender of the party or parties referred to in each case and the verb shall be construed as agreeing with the required word and/or
pronoun.
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(c)
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Any reference in this Agreement to “US$”, “$” or to “dollars”
shall refer to the lawful currency of the United States, unless otherwise specified.
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(d)
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All references in this Agreement to “deemed exercise” of the Special Warrants shall
refer to the automatic exercise of the Special Warrants on the Automatic Exercise Date.
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(e)
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Where any representation or warranty contained in this Agreement or any Ancillary Document is expressly
qualified by reference to the “knowledge” of the Company or “the best of the Company’s knowledge”,
or where any other reference is made herein or in any Ancillary Document to the “knowledge” of the Company,
it shall be deemed to refer to the best knowledge of: (i) Kevin Murphy, Chairman, Founder, and Chief Executive Officer of the Company;
(ii) Glen Leibowitz, Chief Financial Officer of the Company; (iii) Robert Daino, Chief Operating Officer of the Company; (iv) James
Doherty, General Counsel of the Company; (v) James Tyson MacDonald, EVP, Corporate Development of the Company; and (vi) Steven
Hardardt, Chief People Officer and Administration of the Company, after having made due enquiry of appropriate and relevant persons
and documentation (which for greater certainty shall exclude any due diligence reports or materials prepared by the Agent or its
counsel).
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(f)
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If any day on or before which any action or notice is required or permitted to be taken or given
hereunder is not a Business Day, then such action or notice shall be required or permitted to be taken or given on or before the
requisite time on the next succeeding day that is a Business Day.
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The Company hereby agrees to
comply with all Applicable Securities Laws on a timely basis in connection with the distribution of the Initial Special Warrants
and the Additional Securities and the Company shall execute and file with the Securities Commissions all forms, notices and certificates
relating to the Offering required to be filed pursuant to the Canadian Securities Laws in the Qualifying Jurisdictions in the time
required by Canadian Securities Laws in the Qualifying Jurisdictions.
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(a)
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Agency Deal. The Company hereby appoints the Agent to act as exclusive agent to offer and
sell the Initial Special Warrants and any Additional Securities on a commercially reasonable “best efforts” private
placement basis and the Agent hereby accepts such appointment. Notwithstanding anything to the contrary contained herein or any
oral representations or assurances previously
or subsequently made by the parties hereto, this Agreement does not constitute a commitment by, or legally binding obligation of,
the Agent or any of its affiliates to act as underwriters, initial purchasers, arrangers, and/or placement agents in connection
with any offering of securities of the Company, including the Initial Special Warrants and any Additional Securities, or to provide
or arrange any financing, other than the appointment as agent in connection with the Offering in accordance with the prior sentence
and otherwise on the terms set forth herein.
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(b)
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Sale on Exempt Basis. The Company understands that the Agent shall have the right to and
shall use its commercially reasonable efforts to arrange for the offer and sale of the Initial Special Warrants and the Additional
Securities to be purchased by the Purchasers: (i) in the Qualifying Jurisdictions on a private placement basis in compliance with
Canadian Securities Laws and U.S. Securities Laws and only to Purchasers who are non-U.S. Persons pursuant to the exclusion from
registration requirements of the U.S. Securities Act afforded by Regulation S, such that the offer and sale of the Initial Special
Warrants and any Additional Securities does not obligate the Company to file a prospectus, registration statement or similar disclosure
document in any of the Qualifying Jurisdictions or in the United States (other than the Prospectus or any Supplementary Material
filed with the Securities Commissions relating to the distribution of the Prospectus-Qualified Securities as contemplated by this
Agreement); and (ii) in such other jurisdictions outside of Canada and the U.S. as consented to by the Company on a private placement
basis in compliance with Applicable Securities Laws of such other jurisdictions.
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(c)
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Press Releases. In order to comply with applicable U.S. securities laws, any press release
announcing or otherwise concerning the Offering shall include an appropriate notation on each page as follows: “Not for
distribution to United States Newswire Services or for dissemination in the United States”. In addition, any such press
release shall contain the following disclaimer: “This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not
be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under
the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from
such registration is available.”
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(d)
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Filings. The Company undertakes to file, or cause to be filed, all forms or undertakings
required to be filed by the Company in connection with the issue and sale of the Initial Special Warrants, the Purchaser’s
Option and any Additional Securities (including a Form 45-106F1 or Form 72-503F with the applicable Securities Commissions within
10 days of the Closing Date or the Purchaser’s Option Closing Date, as applicable) so that the distribution of the Initial
Special Warrants, the Purchaser’s Option and any Additional Securities to the Purchasers may lawfully occur without the necessity
of filing a prospectus, registration statement or other offering document in Canada or other jurisdictions (other than the Prospectus,
the Registration Statement or any Supplementary Material relating to the distribution of the Prospectus-Qualified Securities as
contemplated by this Agreement), but on terms that will permit the Initial Special Warrants, the Purchaser’s Option and any
Additional Securities and the securities to be issued upon exercise of such securities acquired by the Purchasers to be sold by
such Purchasers at any time in the Qualifying Jurisdictions, subject to applicable hold periods under Canadian Securities Laws
and the U.S. Securities Law legends which the certificates representing the Special Warrants and any securities which may be acquired
on exercise thereof, if applicable, will be required to carry prior to the satisfaction of the Qualification Condition. All prescribed
fees payable in connection with such filings shall be at the sole expense of the Company.
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(e)
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No Offering Memorandum. Neither the Company nor the Agent shall: (i) provide to any prospective
purchasers of Initial Special Warrants, the Purchaser’s Option or any Additional Securities any document or other material
that would constitute an offering memorandum within the meaning of Canadian Securities Laws, including any investor presentation;
or (ii) engage in any form of general solicitation or general advertising in connection with the offer and sale of the Initial
Special Warrants, the Purchaser’s Option and any Additional Securities, including any advertisement, article, notice or other
communication published in any newspaper, magazine, printed public media, printed media or similar media, or broadcast over radio,
television or telecommunications, including electronic display, or any seminar or meeting relating to the offer and sale of the
Initial Special Warrants, the Purchaser’s Option and any Additional Securities whose attendees have been invited by general
solicitation or advertising.
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(f)
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Undertakings of the Agent in Compliance with Regulation S. The Agent represents warrants,
covenants and agrees to and with the Company that it will offer and sell the Special Warrants only in accordance with Rule 903
of Regulation S. Accordingly, none of the Agent, its affiliates, or any person acting on its or any of its affiliates’ behalf
(including but not limited to the Selling Firms), has made or will make, as of the date hereof and as of the Closing Date, any:
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(i)
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offer to sell, or any solicitation of an offer to buy, the Special Warrants or the Units in the
United States or to, or for the account or benefit of, any U.S. Person or any person in the United States;
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(ii)
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sale of the Special Warrants to any Purchaser unless, at the time the buy order was or will have
been originated:
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A.
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the Purchaser is outside the United States and not a U.S. Person and not acting for the account
or benefit of a person in the United States or a U.S. Person; or
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B.
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the Agent, its affiliates (including, if applicable, any of the Selling Firms) and any person acting
on their behalf reasonably believe that the Purchaser is outside the United States and not a U.S. Person and not acting for the
account or benefit of a person in the United States or a U.S. Person;
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(iii)
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Directed Selling Efforts in the United States with respect to any of the Special Warrants, Units
or Warrant Shares;
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(iv)
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offers or sales of the Special Warrants prior to the expiration of a period of one year after the
Closing Date (such one period referred to as the “Distribution Compliance Period”) unless such offers and sales
are made in accordance with Rule 903 or Rule 904 of Regulation S, pursuant to registration of such securities under the U.S. Securities
Act, or pursuant to an available exemption under the U.S. Securities Act, and any
hedging transactions with regard to such securities prior to the expiration of the Distribution Compliance Period are made in compliance
with the U.S. Securities Act; or
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(v)
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sale of Special Warrants during the Distribution Compliance Period to any distributor (as defined
in Regulation S), any dealer (as defined in Section 2(a)(12) of the U.S. Securities Act), or any person receiving a selling concession,
fee or other remuneration, unless it sends to any such person a confirmation or other notice stating that such person is subject
to the same restrictions on offers and sales that apply to a distributor under Regulation S.
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4.
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Filing of Qualification Prospectus Supplement and Qualification Registration Statement
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(a)
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Qualification Prospectus Supplement. The Company shall use commercially reasonable efforts
to, no later than the Qualification Deadline, prepare and file the Qualification Prospectus Supplement and other required documents
with the Securities Commissions under Canadian Securities Laws, elect to use the Passport System and designate the OSC as the principal
regulator thereunder, and otherwise fulfill all legal requirements to qualify the Prospectus-Qualified Securities for distribution
in the Qualifying Jurisdictions. The Initial Special Warrants and the Additional Securities and the underlying Unit Shares, Warrants
and Warrant Shares, will be subject to a statutory hold period in Canada under Canadian Securities Laws for a period of four (4)
months and one (1) day from the Closing Date, subject to the earlier filing with the Securities Commissions of the Qualification
Prospectus Supplement qualifying the distribution of the Prospectus-Qualified Securities. If the Company has not filed the Qualification
Prospectus Supplement by the Qualification Deadline, the Company covenants to file such document as soon as possible, and in any
event on or before March 10, 2020.
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(b)
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Qualification Registration Statements. The Company shall use commercially reasonable efforts
to, no later than the Qualification Deadline, prepare and file the Qualification Registration Statement and other required documents
with the SEC under U.S. Securities Laws, and otherwise fulfill all legal requirements such that the Prospectus-Qualified Securities
and Warrant Shares shall be free of resale restrictions under the U.S. Securities Act. In the event that no registration statement
is effective under the U.S. Securities Act at any time during the term of the Warrants, the exercise of any Warrants may be subject
to U.S. Securities Law restrictions and the Warrant Shares, when issued, may be “restricted” securities within the
meaning of Rule 144 under the U.S. Securities Act, and in such case may only be resold pursuant to an available exemption from
the registration requirements of the U.S. Securities Act. The Company shall, no later than the Qualification Deadline, prepare
and file the Qualification Registration Statement and other required documents, which shall include a registration statement on
Form S-3 (and if not then available Form S-1) to be filed following March 16, 2020 registering the Warrant Shares, with the SEC
under U.S. Securities Laws, and otherwise fulfill all legal requirements such that the Prospectus-Qualified Securities and Warrant
Shares shall be free of resale restrictions under the U.S. Securities Act.
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(c)
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Commercial Copies. The Company shall cause commercial copies of the Prospectus, the
Registration Statement and any Supplementary Material to be delivered to the Agent without charge, in such numbers and in
such cities in the Qualifying Jurisdictions as the Agent may reasonably request. Such delivery shall be effected as soon as
practicable and, in any event, within two (2) Business
Days after the filing of the Qualification Prospectus Supplement in the Qualifying Jurisdictions.
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(d)
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Representation as to Prospectus, Registration Statement and Supplementary Material. Each
filing with the Securities Commissions and each delivery to the Agent of the Prospectus, the Registration Statement and/or any
Supplementary Material by or on behalf of the Company shall constitute the representation and warranty of the Company to the Agent
that:
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(i)
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all information and statements (except information and statements relating solely to and provided
in writing by the Agent) contained and incorporated by reference in the Prospectus, the Registration Statement or any Supplementary
Material, as the case may be, are, at the respective dates of delivery thereof, true and correct and contain no misrepresentation
or untrue, false or misleading statement of a material fact and, on the respective dates of delivery thereof, the Prospectus, the
Registration Statement or any Supplementary Material provide full, true and plain disclosure of all material facts relating to
the Company (on a consolidated basis), the Initial Special Warrants, the Purchaser’s Option, the Additional Securities, the
Prospectus-Qualified Securities and the Warrant Shares as required by Applicable Securities Laws;
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(ii)
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no material fact has been omitted from the Prospectus, the Registration Statement or any Supplementary
Material (except information and statements relating solely to and provided in writing by the Agent) which is required to be stated
therein or is necessary to make the statements therein not misleading in light of the circumstances in which they were made; and
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(iii)
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each of such documents complies with the requirements of the Applicable Securities Laws.
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Such delivery
shall also constitute the Company’s consent to the Agent’s and any Selling Firm’s use of the Prospectus, the
Registration Statement and any Supplementary Material in connection with the distribution of the Prospectus-Qualified Securities
in the Qualifying Jurisdictions in compliance with the provisions of this Agreement.
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(e)
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Review of Prospectuses. The form and substance of the Qualification Prospectus Supplement,
the Qualification Registration Statement and any Supplementary Material shall be satisfactory to the Agent, acting reasonably,
prior to the filing thereof with the Securities Commissions and the SEC.
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(f)
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Contractual Right of Rescission. In the event that a Purchaser who acquires Unit Shares
or Warrants that comprise Prospectus-Qualified Securities upon deemed exercise of the Initial Special Warrants or any Additional
Securities is or becomes entitled under Canadian Securities Laws to the remedy of rescission by reason of a misrepresentation in
the Preliminary Base Shelf Prospectus, the Final Base Shelf Prospectus, the Qualification Prospectus Supplement or any Supplementary
Material, qualifying for distribution in the Qualifying Jurisdictions the Unit Shares and Warrants comprising the Prospectus-Qualified
Securities, the Company hereby agrees that such holder shall, subject to available defences and any limitation period under Canadian
Securities Laws, be entitled to rescission not only of the holder’s deemed exercise of its Initial Special Warrants or Additional
Securities (as applicable), but also of the private placement transaction under this Agreement pursuant to which
the Initial Special Warrants or Additional Securities, were initially acquired (i.e. the Offering), and shall be entitled in connection
with such rescission to a full refund of all consideration paid to the Company on the acquisition of Initial Special Warrants or
Additional Securities (as applicable). In the event that such holder is a permitted assignee of the interest of the original purchaser
of the Initial Special Warrants or Additional Securities (as applicable), the Company hereby agrees that such permitted assignee
shall be permitted to exercise the rights of rescission and refund granted hereunder as if such permitted assignee was such original
purchaser. The Company hereby agrees that the foregoing right, which is extended by the Company in respect of the Initial Special
Warrants and Additional Securities issued by the Company pursuant to accepted subscriptions at the Time of Closing on the Closing
Date, is in addition to any other right or remedy available to a holder of Initial Special Warrants or Additional Securities (as
applicable), under Section 130 of the Securities Act (Ontario) or equivalent provisions of Canadian Securities Laws, or
otherwise at law, and is subject to the defences and limitations described under such Canadian Securities Laws. The Company agrees
that the foregoing rights shall be described in the Prospectus and any Supplementary Material, and the Company agrees to and shall
comply with such contractual right of rescission.
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(g)
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Due Diligence. The Company shall permit the Agent and its counsel to participate in the
preparation of the Qualification Prospectus Supplement, the Qualification Registration Statement and any Supplementary Material,
to discuss the Company’s business with its corporate officers, auditors, legal counsel, consultants and other advisors and
to conduct such full and comprehensive review and investigation of the Company’s business, affairs, capital and operations
as the Agent shall consider to be necessary to establish a due diligence defence under Applicable Securities Laws to an action
for misrepresentation or damages and to enable the Agent to responsibly execute the Agent’s certificate in the Qualification
Prospectus Supplement and any Supplementary Material (including, but not limited to, making available to the Agent, on a timely
basis, all books and records including all corporate, financial, property, engineering, legal and operational information and documentation
of the Company, and providing access to all facilities and properties, and assisting the Agent in sourcing any other information
useful and necessary to conducting such due diligence). The Company also covenants to use commercially reasonable efforts to secure
the cooperation of the Company’s professional advisors (including its legal advisors and auditors) to participate in any
due diligence conference calls required by the Agent (including but not limited to participating in such calls prior to the Closing
Date and prior to the Qualification Date), and the Company consents to the use and the disclosure of information obtained during
the course of the due diligence investigation where such disclosure is required by Applicable Laws. Notwithstanding anything herein
to the contrary and for greater certainty, no provision of this Agreement shall obligate the Agent to execute a certificate page
to the Qualification Prospectus Supplement or any Supplementary Material.
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(h)
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Deliveries. The Company will deliver to the Agent prior to or concurrently with the filing
of the Qualification Prospectus Supplement, unless otherwise indicated:
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(i)
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a copy of the Final Base Shelf Prospectus and the Qualification Prospectus Supplement manually
signed on behalf of the Company, by the persons and in the form required by Canadian Securities Laws;
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(ii)
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a copy of any other document filed with, or delivered to, the Securities Commissions or the SEC
by the Company under Applicable Securities Laws in connection with the filing of the Qualification Prospectus Supplement or the
Qualification Registration Statement;
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(iii)
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a “long-form” comfort letter dated the date of the Qualification Prospectus Supplement,
in form and substance satisfactory to the Agent, acting reasonably, addressed to the Agent, from the Company’s auditors MNP
LLP, and based on a review completed not more than two (2) Business Days prior to the date of the letter, with respect to certain
financial and accounting information relating to the Company included and incorporated by reference in the Prospectus, which letter
shall be in addition to the auditors’ report contained in the Prospectus and any auditors’ comfort letter addressed
to or filed with the Securities Commissions under Canadian Securities Laws;
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(iv)
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an opinion, subject to customary qualifications, of the Company’s counsel or from local counsel
in the Qualifying Jurisdictions (it being understood that such counsel may rely to the extent appropriate in the circumstance as
to matters of fact, on certificates of the Company executed on its behalf by a senior officer of the Company) addressed to the
Purchasers, the Agent and its counsel, in form and substance satisfactory to the Agents, acting reasonably, with respect to the
following matters:
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(A)
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the Company has the necessary corporate power and authority to execute and deliver the Prospectus
and all necessary corporate action has been taken by the Company to authorize the execution and delivery by it of the Prospectus
and the filing thereof, as the case may be, in each of the Qualifying Jurisdictions in accordance with applicable Canadian Securities
Laws;
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(B)
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all necessary documents have been filed, all necessary proceedings have been taken and all legal
requirements have been fulfilled as required under Canadian Securities Laws in order to qualify the distribution of the Prospectus-Qualified
Securities to the public in each of the Qualifying Jurisdictions by or through investment dealers and brokers duly registered under
the applicable laws of such provinces who have complied with the relevant provisions of Canadian Securities Laws;
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(C)
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the statements and opinions concerning tax matters set forth in the Prospectus under the headings
(including for certainty, all subheadings under such headings) “Eligibility for Investment” and “Certain Canadian
Federal Income Tax Considerations” insofar as they purport to describe the provisions of the laws referred to therein are
fair and adequate summaries of the matters discussed therein subject to the qualifications, assumptions and limitations set out
under such headings; and
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(D)
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the attributes of the Prospectus-Qualified Securities conform in all material respects with the
description thereof contained in the Prospectus;
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(v)
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a favourable legal opinion addressed to the Agent and the Purchasers, in form and substance satisfactory
to the Agent, acting reasonably, from the U.S. counsel to the Company, to the effect that:
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(A)
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Assuming the compliance of the Prospectus, including the documents incorporated by reference therein,
with the requirements of the Canadian Securities Laws and any other applicable Canadian law, the Registration Statement (other
than (i) the financial statements, including the notes thereto, schedules, and other financial, statistical and accounting data
contained therein or omitted therefrom and (ii) the documents incorporated or deemed to be incorporated by reference therein, as
to which such counsel need express no opinion) appeared on its face to be appropriately responsive as to form in all material respects
with the applicable requirements of the U.S. Securities Act and the rules and regulations thereunder; and
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(B)
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no consent, approval, authorization or order of, or filing, registration or qualification with,
any Governmental Authority, which has not been obtained, taken or made (other than as required by any state securities laws, as
to which such counsel expresses no opinion) is required on the part of the Company under U.S. Securities Laws for the issuance
or sale of the Prospectus-Qualified Securities or the performance by the Company of its obligations under this Agreement; and
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(vi)
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such other certificates, opinions, agreements or documents in form
and substance reasonably satisfactory to the Agent as the Agent may reasonably request prior to the Qualification Date.
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(i)
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Supplementary Material. If applicable, the Company shall prepare and deliver promptly to
the Agent copies of all Supplementary Material. Concurrently with the delivery of any Supplementary Material or the incorporation
by reference in the Prospectus of any Subsequent Disclosure Document, the Company shall deliver to the Agent, with respect to such
Supplementary Material or Subsequent Disclosure Document, documents substantially similar to those referred to in Section 4(i).
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5.
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Distribution and Certain Obligations of the Agent
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(a)
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The Agent shall, and shall require any Selling Firm to agree to, comply with the Applicable Securities
Laws in connection with the distribution of the Initial Special Warrants and the Purchaser’s Option and shall offer the Initial
Special Warrants and the Purchaser’s Option for sale on a private placement basis directly and through Selling Firms upon
the terms and conditions set out in this Agreement.
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(b)
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The Agent shall, and shall require any Selling Firm to agree to, distribute the Initial
Special Warrants and the Purchaser’s Option in a manner which complies with and observes all Applicable Securities Laws
in each jurisdiction into and from which they may offer to sell the Initial Special Warrants and the Purchaser’s Option
and will not, directly or indirectly, offer, sell or deliver any Initial Special Warrants or the Purchaser’s Option to
any person in any jurisdiction other than in the Qualifying Jurisdictions, unless the Company and the Agent agree otherwise
and then only in a manner which will not require the Company to comply with the registration and prospectus or other similar
requirements under the applicable securities laws of such other jurisdictions.
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(c)
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The Agent will use commercially reasonable efforts to obtain from each Purchaser a duly completed
and executed Subscription Agreement and other forms required under Applicable Securities Laws that are provided to the Agent by
the Company for execution by such Purchaser relating to the issuance and sale of the Initial Special Warrants and the Purchaser’s
Option, and the Agent shall at least one (1) Business Day prior to the Closing Date, provide the Company with a copy of the Subscription
Agreement and complete registration instructions in respect of the Initial Special Warrants and the Purchaser’s Option.
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(d)
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The Agent shall inform, and cause its affiliates and the Selling Firms, if applicable, to inform,
each Purchaser that: (i) the Special Warrants have not been and will not be registered under the U.S. Securities Act or under state
securities laws; (ii) the Special Warrants are being sold to it without registration under the U.S. Securities Act in reliance
on the exclusion from registration afforded by Regulation S; (iii) the Special Warrants are “restricted securities”
within the meaning of Rule 144 of the U.S. Securities Act and can only be offered, sold, pledged or otherwise transferred, directly
or indirectly, (A) to the Company, (B) outside the United States to a person that is not a U.S. Person in compliance with Regulation
S and in compliance with local laws and regulations, (C) pursuant to an effective registration statement under the U.S. Securities
Act, or (D) pursuant to an available exemption under the U.S. Securities Act and in compliance with all applicable state securities
laws; and (iv) hedging transactions involving the Special Warrants may not be conducted unless in compliance with the U.S. Securities
Act.
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(a)
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The Company shall promptly inform the Agent (and promptly confirm such notification in writing)
during the period from the date of this Agreement until the first to occur of (i) the Qualification Date, and (ii) the day that
is four (4) months and one (1) day after the Closing Date, of the full particulars of:
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(i)
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any material change whether actual, anticipated, contemplated, threatened or proposed in the Company
or any Subsidiary or in any of their respective businesses, assets (including intangible assets), affairs, operations, prospects,
liabilities (contingent or otherwise), capital, assets, properties, condition (financial or otherwise) or results of operations
or in the Offering;
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(ii)
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any material fact which has arisen or has been discovered or any new material fact that would have
been required to have been stated in the Prospectus, the Registration Statement or any Supplementary Materials had that fact arisen
or been discovered on, or prior to the date of any of the Prospectus, the Registration Statement or any Supplementary Materials;
or
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(iii)
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any change in any material fact (which for the purposes
of this Agreement shall be deemed to include the disclosure of any previously undisclosed material fact) contained or incorporated
by reference in the Prospectus, the Registration Statement or any Supplementary Materials or the Disclosure Record or whether
any event or state of facts has occurred after the date hereof, which, in any case,is, or may be, of such a nature as to render
any of the Prospectus, the Registration Statement or any Supplementary Materials or the Disclosure Record untrue or misleading
in any material respect or to result in any misrepresentation in any of the Prospectus, the Registration Statement or any Supplementary
Materials or the Disclosure Record, including as a result of any of the Prospectus, the Registration Statement or any Supplementary
Materials or the Disclosure Record containing or incorporating by reference an untrue statement of a material fact or omitting
to state a material fact required to be stated therein or necessary to make any statement therein not false or not misleading
in the light of the circumstances in which it was made, or which could result in any of the Prospectus, the Registration Statement
or any Supplementary Materials or the Disclosure Record not complying with the Applicable Securities Laws.
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(b)
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Subject to Section 6(d) the Company will prepare and file promptly (and, in any event, within the
time prescribed by Applicable Securities Laws) any Supplementary Material which may be necessary under the Applicable Securities
Laws, and the Company will prepare and file promptly at the request of the Agent any Supplementary Material which, in the opinion
of the Agent, acting reasonably, may be necessary or advisable.
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(c)
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During the period commencing on the date hereof until the first to occur of (i) the Qualification
Date, and (ii) the day that is four (4) months and one (1) day after the Closing Date, the Company will promptly inform the Agent
in writing of the full particulars of:
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(i)
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any request of any Securities Commission or the SEC for any amendment to the Prospectus, the Registration
Statement or any Supplementary Material or for any additional information in respect of the Offering;
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(ii)
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the receipt by the Company of any material communication, whether written or oral, from any Securities
Commission, the CSE, the SEC or any other competent authority, relating to the Offering, the Prospectus, the Registration Statement
or any Supplementary Material;
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(iii)
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any notice or other correspondence received by the Company from any Governmental Authority or any
stock exchange and any requests from such bodies for information, a meeting or a hearing relating to the Company, the Offering,
the issue, sale and delivery of the Initial Special Warrants, the issue and grant of the Purchaser’s Option, the issue, sale
and delivery of the Additional Securities to be issued and sold by the Company upon exercise of the Purchaser’s Option, the
issue and delivery of the Units upon the deemed exercise of the Initial Special Warrants and any Additional Special Warrants, the
issue and delivery of the Unit Shares and Warrants comprising the Units, and the issue of the Warrant Shares upon exercise of the
Warrants, or any other event or state of affairs that would be reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect;
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(iv)
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the issuance by any Securities Commission, the CSE, the
SEC or any other stock exchange or other competent authority, including any other Governmental Authority, of any order to cease
or suspend trading or distribution of any securities of the Company or of the institution, threat of institution of any proceedings
for that purpose or any notice of investigation that could potentially result in an order to cease or suspend trading or distribution
of any securities of the Company; or
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(v)
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any other circumstance, change, event or fact that would reasonably be expected to be material
to the Agent or the securityholders of the Company.
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(d)
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In addition to the provisions of Sections 6(a), 6(b) and 6(c) hereof, the Company shall in good
faith discuss with the Agent any circumstance, change, event or fact contemplated in Sections 6(a), 6(b) or 6(c) which is of such
a nature that there is or could be reasonable doubt as to whether notice should be given to the Agent under Section 6(a), 6(b)
or 6(c) hereof and shall consult with the Agent with respect to the form and content of any Supplementary Material proposed to
be filed by the Company, it being understood and agreed that no such Supplementary Material shall be filed with any Securities
Commission prior to the review and approval thereof by the Agent and its counsel, acting reasonably.
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(a)
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Prior to the completion of the Offering, the Company shall file or cause to be filed with the CSE
all necessary documents and shall take or cause to be taken all necessary steps to ensure that the Company has obtained all necessary
approvals for the Unit Shares and the Warrant Shares to be listed on the CSE subject only to the satisfaction by the Company of
such customary and standard post-closing conditions imposed by the CSE in similar circumstances (the “Standard Listing
Conditions”).
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(b)
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The Company will make all necessary filings and obtain all necessary regulatory consents and approvals
(if any), and the Company will pay all filing, exemption and other fees required to be paid in connection with the transactions
contemplated in this Agreement.
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8.
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Representations and Warranties of the Company
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The Company represents and warrants
(on its own behalf and on behalf of the Subsidiaries, as applicable) to the Agent and the Purchasers, and acknowledges that each
of them is relying on such representations and warranties in connection with the purchase by the Purchasers of Initial Special
Warrants and the Purchaser’s Option, as applicable, that:
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(a)
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the Company: (i) has been duly incorporated, amalgamated, continued or organized and is validly
existing as a company in good standing under the laws of its jurisdiction of incorporation, amalgamation, continuation or organization,
and has the corporate power, capacity and authority to own, lease and operate its property and assets, to conduct its business
as now conducted and to carry out the provisions hereof; and (ii) where required, has been duly qualified as an extra-provincial
or foreign corporation for the transaction of business and is in good standing under the laws of each jurisdiction in which it
owns or leases property, or conducts any business;
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(b)
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each Subsidiary: (i) has been duly incorporated, amalgamated,
continued or organized and is validly existing as a company or other legal entity in good standing under the laws of its jurisdiction
of incorporation, amalgamation, continuation or organization and has the corporate power, capacity and authority to own, lease
and operate its property and assets, to conduct its business as now conducted and to carry out the provisions hereof; and (ii)
where required, has been duly qualified as a foreign corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases property, or conducts any business and is not precluded from carrying
on business or owning property in such jurisdictions by any other commitment, agreement or document;
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(c)
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the Company has full corporate power, capacity and authority to enter into the Transaction Documents
to which it is a party and to do all acts and things and execute and deliver all documents as are required hereunder and thereunder
to be done, observed, performed or executed and delivered by it in accordance with the terms hereof and thereof, and the Company
has taken all necessary corporate action to authorize the execution, delivery and performance of each of the Transaction Documents
to which it is a party and each of the Transaction Documents has been, or will be on the Closing Date, as applicable, duly executed
and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company
in accordance with their terms, provided that enforcement thereof may be limited by laws affecting creditors’ rights generally,
that specific performance and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction
and that the provisions relating to indemnity, contribution, severability and waiver of contribution may be limited under Applicable
Law (the “Qualification”);
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(d)
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the execution and delivery of each of the Transaction Documents and the performance of the transactions
contemplated hereby and thereby by the Company (including the issuance, sale and delivery of the Initial Special Warrants, the
issuance and grant of the Purchaser’s Option, the issuance, sale and delivery of the Additional Securities to be issued and
sold by the Company upon exercise of the Purchaser’s Option, the issuance and delivery of the Units upon the deemed exercise
of the Initial Special Warrants and any Additional Special Warrants, the issuance and delivery of the Unit Shares and Warrants
comprising the Units (including for certainty any Additional Units), and the issuance of the Warrant Shares upon exercise of the
Warrants) do not and will not:
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(i)
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require the consent, approval, authorization, registration, order or qualification of or with any
Governmental Authority, stock exchange, Securities Commission, SEC or other third party, except such as have been obtained or such
as may be required (and shall be obtained by the Company prior to the applicable Time of Closing) under Applicable Securities Laws;
or
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(ii)
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result in a breach of or default under, and do not and will not create a state of facts which,
after notice or lapse of time or both, will result in a breach of or default under, and do not and will not conflict with:
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A.
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any of the terms, conditions or provisions of the Notice of articles, Articles or resolutions of
the shareholders, directors or any committee of directors of the Company or any Subsidiary; or
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B.
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any statute, rule, regulation or law applicable to the Company or any Subsidiary, including, without
limitation, the Applicable Securities Laws, or any judgment, order or decree of any Governmental Authority, stock exchange or court
having jurisdiction over the Company; and
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(iii)
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upon obtaining the Canopy Consent, result in the breach
of, or be in conflict with, or constitute a default under, and do not and will not create a state of facts which, after notice
or lapse of time or both, will result in a breach of, or conflict with or default under, and do not affect the rights, duties
and obligations of any parties to, any material indenture, agreement or instrument to which the Company or any Subsidiary is a
party (including, for certainty, the Canopy Agreement and the Credit Facility), nor give a party the right to terminate any such
indenture, agreement or instrument by virtue of the application of terms, provisions or conditions in such indenture, agreement
or instrument;
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(e)
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the Special Warrants (including for certainty any Additional Special Warrants) have been duly created
and authorized for issuance and, upon payment of the aggregate Issue Price therefor, the Special Warrants will be validly issued
and outstanding as fully paid securities of the Company. The Company has the corporate power, capacity and authority to issue and
sell the Special Warrants and the Special Warrants will not have been issued in violation of or subject to any pre-emptive or contractual
rights to purchase securities issued or granted by the Company;
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(f)
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the Purchaser’s Option has been duly created and authorized for issuance;
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(g)
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the Unit Shares comprised in the Units (including for certainty any Additional Units) have been
duly created, authorized, reserved and allotted for issuance, and upon the deemed exercise of the Initial Special Warrants or any
Additional Special Warrants, or exercise of the Purchaser’s Option after the Qualification Date, as applicable, will be duly
and validly issued and outstanding as fully paid and non-assessable Subordinate Voting Shares of the Company. The Company has the
corporate power, capacity and authority to issue the Unit Shares and, at the time of issuance thereof, the Unit Shares will not
have been issued in violation of or subject to any pre-emptive or contractual rights to purchase securities issued or granted by
the Company;
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(h)
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the Warrants comprised in the Units (including for certainty any Additional Units) have been duly
created and authorized for issuance, and upon the deemed exercise of the Initial Special Warrants or any Additional Special Warrants,
or exercise of the Purchaser’s Option after the Qualification Date, as applicable, will be validly issued and are outstanding.
The Company has the corporate power, capacity and authority to issue and sell the Warrants and the Warrants have not been issued
in violation of or subject to any pre-emptive or contractual rights to purchase securities issued or granted by the Company;
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(i)
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the Warrant Shares have been duly created, authorized, reserved and allotted for issuance, and,
upon the due exercise of the Warrants and payment of the exercise price therefor, will be duly and validly issued and outstanding
as fully paid and non-assessable Subordinate Voting Shares of the Company. The Company has the corporate power, capacity and authority
to issue the Warrant Shares and, at the time of issuance thereof, the Warrant Shares will not have been issued in violation of
or subject to any pre-emptive or contractual rights to purchase securities issued or granted by the Company;
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(j)
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the minute books and records of each of the Company and
the Subsidiaries made available to counsel for the Agent in connection with its due diligence investigation of the Company and
the Subsidiaries for the periods from their respective dates of incorporation to the date of examination thereof are all of the
minute books and substantially all of the records of the Company and the Subsidiaries and contain copies of and reflect the contents
of all material proceedings and meetings of the shareholders, the boards of directors and all committees of the boards of directors
of the Company and the Subsidiaries to the date of review of such corporate records and minute books and there have been no other
material meetings, resolutions or proceedings of the shareholders, board of directors or any committees of the board of directors
of the Company and the Subsidiaries to the date of review of such corporate records and minute books not reflected in such minute
books and other records;
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(k)
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the Company is authorized to issue an unlimited number of Subordinate Voting Shares, an unlimited
number of Proportionate Voting Shares and an unlimited number of Multiple Voting Shares, of which 68,530,207 Subordinate Voting
Shares, 572,231.3951 Proportionate Voting Shares and 168,000 Multiple Voting Shares were issued and outstanding as of the date
hereof, and all such issued shares are validly issued and outstanding, and no person, firm or corporation has any right, agreement
or option, present or future, contingent or absolute, or any right capable of becoming such a right, agreement or option or privilege
(whether pre-emptive or contractual), for the issue or allotment of any unissued shares of the Company or any Subsidiary or any
other security convertible into or exchangeable for any such shares, or to require the Company or any Subsidiary to purchase, redeem
or otherwise acquire any of the outstanding securities of the Company or any Subsidiary, except as disclosed in the Disclosure
Record and pursuant to the Offering;
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(l)
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to the best of the Company’s knowledge, except as otherwise disclosed in the Disclosure Record,
no agreement is in force or effect which in any manner affects the voting or control of any of the securities of the Company or
any Subsidiary;
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(m)
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other than the Subsidiaries, or as otherwise described in the Disclosure Record, the Company has
no material direct or indirect subsidiaries nor any material investment in any person or any agreement, option or commitment to
acquire any such investment. The Subsidiaries are the only subsidiaries of the Company that are material to the Company’s
business on a consolidated basis, including with respect to the generation of revenues and the ownership of Intellectual Property
and permits, authorizations, certifications, consents and orders necessary for the conduct of its business as presently conducted.
With the exception of High Street Capital Partners, LLC and Acreage Holdings WC, Inc., the Company is the direct or indirect registered
and/or beneficial owner of all of the issued and outstanding shares of or interests in each Subsidiary (and such ownership is evidenced
by definitive documentation in the possession of the Company or the applicable Subsidiary), and, except for Encumbrances arising
in connection with the Credit Facility, in each case free and clear of all Encumbrances or adverse interests whatsoever, and no
person, firm, corporation or entity has any agreement, option, right or privilege (whether pre-emptive or contractual) capable
of becoming an agreement or option, for the purchase from the Company or any Subsidiary of any of the shares or other securities
of any Subsidiary, except as disclosed in the Disclosure Record;
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(n)
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the Company and each Subsidiary is duly registered to do business and is in good standing in each
jurisdiction in which the character of its properties, owned or leased, or the nature of its activities make such registration
necessary;
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(o)
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no proceedings have been taken, instituted or are pending for the dissolution, winding-up or liquidation
of the Company or any Subsidiary, and no approval has been given to commence any such proceedings;
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(p)
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except as disclosed in the Disclosure Record and the CanWell Litigation, there are no suits, actions
or litigation or arbitration proceedings or governmental proceedings in progress, pending or, to the knowledge of the Company,
contemplated or threatened, to which the Company or any Subsidiary is party or to which the property of the Company or any Subsidiary
is subject, except where such suit, action or litigation or arbitration proceeding or governmental proceeding would not have a
Material Adverse Effect. There is not presently outstanding against the Company or any Subsidiary any material judgment, injunction,
rule or order of any court, governmental department, commission, agency or arbitrator;
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(q)
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all Taxes due and payable as of the date hereof by the Company and each Subsidiary have been paid
or accrued, except where failure to pay such Taxes would not constitute a Material Adverse Effect. All tax returns due, declarations,
remittances and filings required to be filed by the Company and each Subsidiary have been filed with all appropriate governmental
authorities and all such returns, declarations, remittances and filings are complete and accurate in all material respects and
no material fact or facts have been omitted therefrom which would make any of them misleading except where the failure to file
such documents would not constitute an adverse material fact of such Company or any Subsidiary;
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(r)
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except as disclosed in the Disclosure Record, to the knowledge of the Company: (i) there is no
material examination of any tax return of the Company or any Subsidiary is currently in progress; and (ii) there are no material
issues or disputes outstanding with any governmental entity respecting any Taxes that have been paid, or may be payable, by the
Company or any Subsidiary. There are no agreements with any taxation authority providing for an extension of time for any assessment
or reassessment of Taxes with respect to the Company or any Subsidiary;
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(s)
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the Historical Financial Statements:
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(i)
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are, in all material respects, consistent with the books and records of the Company and the Subsidiaries
on a consolidated basis for the periods covered thereby;
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(ii)
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have been prepared in accordance with Applicable Securities Laws and International Financial Reporting
Standards, applied on a consistent basis throughout the periods referred to therein, except as otherwise disclosed therein;
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(iii)
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present fairly, in all material respects, the financial position and condition of the Company and
the Subsidiaries on a consolidated basis as at the dates thereof and the results of its operations and the changes in its shareholder’s
equity and cash flows for the periods then ended, and do not contain a misrepresentation; and
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(iv)
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to the best of the Company’s knowledge, have been audited (in the case of the annual financial
statements comprising the Historical Financial Statements) or reviewed (in the case of the interim financial statements comprising
the Historical Financial Statements) by independent public accountants within the meaning of Applicable Securities Laws and the
rules of the Canadian Institute of Chartered Accountants;
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(t)
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the accountants who audited or reviewed (as the case may be) the Historical Financial Statements
are independent with respect to the Company within the meaning of Applicable Securities Laws and there has not been any reportable
event (within the meaning of National Instrument 51-102 - Continuous Disclosure Obligations of the Canadian Securities Administrators)
with the current auditors or any former auditors of the Company during the past two (2) financial years;
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(u)
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there are no material liabilities of the Company whether direct, indirect, absolute, contingent
or otherwise which are not disclosed or reflected in the Historical Financial Statements, except for liabilities incurred in the
ordinary course of business since September 30, 2019, and which liabilities would not, individually or in the aggregate, have a
Material Adverse Effect;
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(v)
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the Company’s audit committee’s responsibilities and composition comply with National
Instrument 52-110 - Audit Committees of the Canadian Securities Administrators;
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(w)
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neither the Company nor a Subsidiary is party to or bound or affected by any commitment, agreement
or document containing any covenant which expressly limits the freedom of such person to compete in any line of business, transfer
or move any of its assets or operations that would materially or adversely affect the business practices, operations or condition
of the Company and the Subsidiaries, taken as a whole;
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(x)
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the Company has provided to the Agent copies of (including all material correspondence relating
to) all material licenses and permits held by it, the Subsidiaries and any of their Associated Entities, and any renewals thereof
as of the date hereof. As at the date hereof, the Company and each Subsidiary has all licenses, permits, authorizations, certifications,
consents and orders necessary for the conduct of its business as presently conducted other than in respect of certain U.S. federal
laws, statutes and/or regulations, as applicable, relating to the cultivation, processing, extraction, tracking, distribution or
possession of cannabis and cannabis related products and substances in the U.S. as disclosed in the Disclosure Record and other
related orders, judgements, or decrees (collectively, the “U.S. Cannabis Laws”) and except as disclosed in the
Disclosure Record, none of the Company nor any Subsidiary has received any material penalty, enforcement action or public notice
violation or notice thereof from any state, municipal or local government in respect of such licenses and/or permits or, to the
knowledge of the Company, are there any facts that could give rise to any such material penalty, enforcement action or public notice
violation. The Company and each Subsidiary is not in breach or violation of any judgment, order or decree of any Governmental Authority
or court having jurisdiction over the Company or any Subsidiary, as applicable;
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(y)
|
other than in respect of U.S. Cannabis Laws, the Company
and each Subsidiary has conducted and is conducting its business in compliance with all applicable laws of each jurisdiction in
which it carries on business and with all applicable laws, tariffs and directives material to its operations, including all applicable
federal, state, municipal, and local laws and regulations and other lawful requirements of any governmental or regulatory body
that governs all aspects of the Company’s and each Subsidiaries’ business, including, but not limited to, permits
and/or licenses to grow, process, and dispense cannabis and cannabis-derived products and, each of the Company and the Subsidiaries
has implemented or, with respect to those Subsidiaries not yet actively engaged in the growth, processing and dispensing of cannabis
and cannabis-derived products, is in the process of implementing regulatory compliance regimes designed to ensure compliance with
such applicable laws and regulations;
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(z)
|
the material contracts of the Company and the Subsidiaries as set forth in the Disclosure Record,
other than the Credit Agreement, are the only material documents and contracts currently in effect under and by virtue of which
the Company and its Subsidiaries are entitled to the assets and conducts their respective businesses. Each of such material contracts
is in full force and effect, the material terms of any amendment thereto is disclosed in the Disclosure Record, and there are no
outstanding material defaults or breaches under any of such material contracts or is there an intention to terminate such contracts
on the part of the Company or any Subsidiary or, to the knowledge of the Company, the counterparties to such contracts;
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(aa)
|
the execution and delivery of the Credit Agreement and the performance of the transactions contemplated
thereby has been duly authorized by all necessary corporate action of the Company and the Credit Agreement has been duly executed
and delivered by each of HSCP CN Holdings ULC and Acreage Finance Delaware, Inc. and constitutes a legal, valid and binding obligation
of each of HSCP CN Holdings ULC and Acreage Finance Delaware, Inc., enforceable against each of HSCP CN Holdings ULC and Acreage
Finance Delaware, Inc. in accordance with its terms, subject to the Qualification;
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(bb)
|
any required approvals or consents required to be obtained by the Company in respect of the Credit
Facility have been obtained, and for certainty, the execution of the Credit Facility and the implementation of the transaction
contemplated thereby did not and do not require approval by the shareholders of the Company or a formal valuation under Multilateral
Instrument 61-101 - Protection of Minority Security Holders in Special Transactions;
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(cc)
|
upon receipt of the Canopy Consent, the execution and delivery of the Credit Agreement and the
performance of the transactions contemplated thereby by the Company does not and will not result in the breach of, or be in conflict
with, or constitute a default under, and does not and will not create a state of facts which, after notice or lapse of time or
both, will result in a breach of, or conflict with or default under, and does not affect the rights, duties and obligations of
any parties to the Canopy Agreement, nor give a party the right to terminate the Canopy Agreement by virtue of the application
of terms, provisions or conditions in such agreement;
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(dd)
|
other than liabilities as disclosed in the Historical Financial Statements or pursuant to the Credit
Facility, neither the Company nor any Subsidiary is a party to or otherwise bound by any note, loan, bond, debenture, indenture,
promissory note or other instrument evidencing indebtedness (demand or otherwise) for borrowed money or other liability;
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(ee)
|
except for customary indemnity to its directors and officers, neither the Company nor any Subsidiary
is a party to or bound by any agreement, guarantee, indemnification, or endorsement or like commitment respecting the obligations,
liabilities (contingent or otherwise) or indebtedness of any person, firm or corporation, except as would not, individually or
in the aggregate, have a Material Adverse Effect;
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(ff)
|
the Company owns no real property. Each lease with respect
to real property to which the Company or a Subsidiary is a party (collectively, the “Leases” and each, a “Lease”),
copies of which have been provided to the Agent, is in good standing, creates a good and valid leasehold interest in the lands
and premises thereby demised and is in full force and effect without amendment. With respect to each Lease: (i) all rents and
additional rents have been paid to date; (ii) no waiver, indulgence or postponement of the lessee’s obligations has been
granted by the lessor; (iii) there exists no event of default or event, occurrence, condition or act (including this transaction)
which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default under
the Lease; and (iv) all of the covenants to be performed by any other party under the Lease have been fully performed;
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(gg)
|
the Company and each Subsidiary is the absolute legal and beneficial owner, and has good and valid
title to, all of the material property or assets thereof as described in the Disclosure Record free and clear of all Encumbrances
and defects of title except such as are disclosed in the Disclosure Record, and: (i) no other material property or assets are necessary
for the conduct of the business of the Company or any Subsidiary as currently conducted; (ii) the Company has no knowledge of any
claim or the basis for any claim that might or could materially and adversely affect the right of the Company or any Subsidiary
to use, transfer or otherwise exploit such property or assets; and (iii) neither the Company nor the Subsidiary has any responsibility
or obligation to pay any commission, royalty, licence fee or similar payment to any person with respect to the property and assets
thereof;
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(hh)
|
except as disclosed in the Disclosure Record, there are no plans for retirement, bonus, stock purchase,
profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision
care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, incentive or otherwise
contributed to or required to be contributed to, by the Company or any of the Subsidiaries for the benefit of any current or former
director, officer, employee or consultant of the Company or any of the Subsidiaries. Each employee benefit plan that is maintained,
administered or contributed to by the Company or any of the Subsidiaries for employees or former employees of the Company or the
Subsidiaries has been maintained in compliance in all material respects with its terms and the requirements of any applicable statutes,
orders, rules and regulations and the fair market value of the assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeds the present value of all benefits accrued under such plan determined using reasonable actuarial assumptions.
Each benefit plan or pension plan administered or provided by the Company or any of its Subsidiaries is duly registered where required
by Applicable Laws (including registration with relevant tax authorities where such registration is required to qualify for tax
exemption or other tax beneficial status), except where such failure to be so registered would not be material to the Company or
such Subsidiary. Neither the Company nor any Subsidiary contributes to or has an obligation to contribute to a plan, program or
arrangement that provides defined benefit pensions or for which the funding is determined by reference to a defined benefit;
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(ii)
|
no material labour dispute with current and former employees of the Company or any of the Subsidiaries
exists or is imminent and the Company has no knowledge of any existing, threatened or imminent labour disturbance by the employees
of any of the principal suppliers, manufacturers or contractors of the Company;
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(jj)
|
there has not been and there is not currently any labour disruption or conflict which is adversely
affecting the Company or the Subsidiaries or would have a Material Adverse Effect;
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(kk)
|
except as disclosed in the Disclosure Record, no officer, consultant, insider or other non-arm’s
length party to the Company or the Subsidiaries (or any associate or affiliate thereof) has any right, title or interest in (or
the right to acquire any right, title or interest in) any royalty interest, carried interest, participation interest or any other
interest whatsoever which are based on revenue from or otherwise in respect of any assets of the Company or any of the Subsidiaries;
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(ll)
|
there is not (or are not): (i) any order or directive from any regulatory authority which relates
to environmental matters and which requires any material work, repairs, construction, or capital expenditures relating to the Company
or any of the Subsidiaries or any of their business undertakings; (ii) any demand or notice from any Regulatory Authority with
respect to the material breach of any environmental, health or safety law applicable to the Company or any of the Subsidiaries
or any of their business undertakings, including, without limitation, any regulations respecting the use, storage, treatment, transportation,
or disposition of environmental contaminants; or (iii) any spills, releases, deposits or discharges of hazardous or toxic substances,
contaminants or wastes, which have not been rectified, on any of the properties or assets owned or leased by the Company or any
of the Subsidiaries, or to the knowledge of the Company, in which the Company or any of the Subsidiaries has an interest or over
which it has control;
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(mm)
|
the Company or each of the Subsidiaries holds all material authorizations required under any applicable
environmental laws in connection with the operation of its business and the ownership and use of its assets, and neither the Company
nor any of the Subsidiaries nor any of their assets is the subject of any investigation, evaluation, audit or review not in the
ordinary and regular course by any Governmental Entity to determine whether any violation of environmental laws has occurred or
is occurring, and neither the Company nor any of the Subsidiaries is subject to any known environmental liabilities;
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(nn)
|
to the knowledge of the Company, there is no legislation, proposed legislation, regulation, or
proposed regulation to be published by a legislative or regulatory body, which it anticipates will materially and adversely affect
the business, affairs, operations, assets, liabilities (contingent or otherwise) or prospects of the Company and the Subsidiaries,
with the exception of any U.S. Cannabis Laws and products;
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(oo)
|
to the knowledge of the Company, the Company and each Subsidiary is in good standing under all,
and is not in default under any, and there is no existing condition, circumstance or matter which constitutes or which, with the
passage of time or the giving of notice, would constitute a default under any, leases, licenses, permits, registrations and other
title and operating documents or any other agreements and instruments pertaining to its real property assets to which it is a party
or by or to which it or such assets are bound or subject and, all such leases, licenses, permits, registrations, title and operating
documents and other agreements and instruments are in good standing and in full force and effect and, to the knowledge of the Company,
none of the counterparties to such leases, licenses, permits, registrations, title and operating documents and other agreements
and instruments is in default thereunder;
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(pp)
|
the Company and each Subsidiary has good and marketable title to all of its assets and property
and no person has any contract or any right or privilege capable of becoming a right to purchase any personal property from the
Company or any Subsidiary, with the exception of the contracts for the sale of goods in the ordinary course of the Company’s
business;
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(qq)
|
the Company or a Subsidiary owns or has the right to use all of the Intellectual Property owned
or used by it as of the date hereof. All registrations, if any, and filings necessary to preserve the rights of the Company or
a Subsidiary, as applicable, in the Intellectual Property owned by it have been made and are in good standing. Neither the Company
nor any Subsidiary is a party to any material pending action or proceeding, nor to the Company’s knowledge is there any material
threatened action or proceeding, against any person with respect to the use of the Intellectual Property, and there are no circumstances
which cast doubt on the validity or enforceability of the Intellectual Property owned or used by the Company or a Subsidiary, except
as a result of U.S. Cannabis Laws. The conduct of the Company’s and its Subsidiaries’ business, taken as a whole, does
not, to the knowledge of the Company, infringe upon the intellectual property rights of any other person. Neither the Company nor
any Subsidiary has any pending action or proceeding, nor, to the knowledge of the Company, is there any threatened action or proceeding
against it with respect to the Company’s or a Subsidiary’s, as applicable, use of such Intellectual Property. To the
knowledge of the Company, no third parties have rights to any Intellectual Property that is owned by the Company or a Subsidiary.
None of the Intellectual Property that is owned by the Company or a Subsidiary comprises an improvement to any Intellectual Property
that would give any third person any rights to any such Intellectual Property, including, without limitation, rights to license
any such Intellectual Property;
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(rr)
|
the Company and each Subsidiary has security measures and safeguards in place to protect Personally
Identifiable Information it collects from registered patients and customers and other parties from illegal or unauthorized access
or use by its personnel or third parties or access or use by its personnel or third parties in a manner that violates the privacy
rights of third parties. The Company and each Subsidiary has complied in all material respects with all applicable privacy and
consumer protection laws and neither has collected, received, stored, disclosed, transferred, used, misused or permitted unauthorized
access to any information protected by privacy laws, whether collected directly or from third parties, in an unlawful manner. The
Company and each Subsidiary has taken all reasonable steps to protect Personally Identifiable Information against loss or theft
and against unauthorized access, copying, use, modification, disclosure or other misuse;
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(ss)
|
to the extent applicable, the policies of insurance in force at the date hereof naming the Company
or any Subsidiary as an insured remain in force and effect, and such policies are customary for corporations engaged in businesses
similar to that carried on by the Company and the Subsidiaries, and will not be cancelled or otherwise terminated as a result of
the transactions contemplated herein and there are no pending or outstanding claims, notices of non-renewal or cancellation or,
to the knowledge of the Company, any events which may give rise to a claim, under such policies;
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(tt)
|
there are no third party consents required to be obtained by the Company or a Subsidiary in order
to complete the transactions contemplated by this Agreement;
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(uu)
|
to the knowledge of the Company, neither the Company nor any Subsidiary 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 or any official of any public international organization; 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 U.S.
Foreign Corrupt Practices Act of 1977, as amended, the Corruption of Foreign Public Officials Act (Canada) or the Proceeds
of Crime (Money Laundering) and Terrorist Financing Act (Canada) or the rules and regulations promulgated thereunder;
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(vv)
|
the operations of the Company and the Subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements of the money laundering statutes of all applicable
jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered
or enforced by any governmental authority (collectively, the “Applicable Money Laundering Laws”) and no action,
suit or proceeding by or before any governmental authority involving the Company or any Subsidiary with respect to Applicable Money
Laundering Laws is, to the knowledge of the Company, pending or threatened;
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(ww)
|
neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary has had any sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department, the Government of Canada or any other relevant sanctions authority (collectively, “Sanctions”)
imposed upon such person, and neither the Company nor any Subsidiary is in violation of any of the Sanctions or any law or executive
order relating thereto, or is conducting business with any person subject to any Sanctions;
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(xx)
|
except as disclosed in the Disclosure Record, and except for the Murphy Loan, none of the directors,
executive officers or shareholders who beneficially own, directly or indirectly, or exercise control or direction over, more than
10% of any class or series of the voting securities of the Company or any known associate or affiliate of any such person, had
or has any material interest, direct or indirect, in any transaction or any proposed transaction (including, without limitation,
any loan made to or by any such person) with the Company which, as the case may be, materially affects, is material to or will
materially affect the Company and its Subsidiaries on a consolidated basis;
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(yy)
|
the Company is a reporting issuer not in default under the Canadian Securities Laws of each Qualifying
Jurisdiction where it is a reporting issuer and is not on the list of defaulting issuers maintained by any Securities Commission
in the Qualifying Jurisdiction as at the date hereof;
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(zz)
|
the Company is in compliance with its timely and continuous disclosure obligations under the applicable
U.S. Securities Laws and Canadian Securities Laws of each of the Qualifying Jurisdictions and the policies, rules and regulations
of the CSE and the OTCQX, without limiting the generality of the foregoing, there has not occurred any material change (actual,
anticipated, contemplated or threatened) in the business, assets (including intangible assets), affairs, operations, prospects,
liabilities (contingent or otherwise), capital, assets, properties, condition (financial or otherwise), results of operations or
control of the Company and the Subsidiaries, taken as a whole, since November 14, 2018 which has not been set forth in the Disclosure
Record or otherwise publicly disclosed on a non-confidential basis, and the Company has not filed any confidential material change
reports since January 1, 2018 which remains confidential as at the date hereof. To the knowledge of the Company, no trades in the
Company’s securities have been made by persons having knowledge of material non-public information regarding the Company;
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(aaa)
|
no default exists under and no event has occurred which, after notice or lapse of time or both,
or otherwise, constitutes a default under or breach of, by the Company, any Subsidiary, or to the Company’s knowledge any
other person, any material obligation, agreement, covenant or condition contained in any contract, indenture, trust, deed, mortgage,
loan or credit agreement, note, lease or other agreement or instrument to which the Company or any Subsidiary is a party or by
which it or any of its properties may be bound. No order, ruling or determination having the effect of suspending the sale or ceasing
the trading of the Subordinate Voting Shares, the Special Warrants, the Units, the Unit Shares, the Warrants, the Warrant Shares
or any other security of the Company has been issued or made by any Securities Commission, the SEC or any other stock exchange
or any other regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending
or, to the best of the Company’s knowledge, contemplated or threatened by any such authority or under any Applicable Securities
Laws;
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(bbb)
|
except for the Agent as provided herein, there is no person, firm or corporation acting for the
Company entitled to any brokerage or finder’s fee in connection with this Agreement or any of the transactions contemplated
hereunder;
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(ccc)
|
there are no material facts required to be disclosed by the Company under Applicable Securities
Laws which are not contained in the Disclosure Record and each of the documents forming the Disclosure Record filed since November
14, 2018 by or on behalf of the Company with any Securities Commission or the CSE, did not contain a misrepresentation, determined
as at the date of filing, and do not contain a misrepresentation as of the date hereof, except to the extent such misrepresentation
has been corrected and superseded by the filing of a subsequent document which forms part of the Disclosure Record;
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(ddd)
|
the Company is an Eligible Issuer in the Qualifying Jurisdictions and on the date of and upon filing
of the Qualification Prospectus Supplement;
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(eee)
|
the Company is a “domestic issuer” (as defined in Rule 902(e) of Regulation S);
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(fff)
|
this Agreement and the transactions contemplated hereby do not violate any laws, rules or policies
of the OTCQX and there are no approvals, consents, or orders required in order to complete the Offering, the listing of the Warrant
Shares and Unit Shares and the transactions contemplated by this Agreement as a result of the Subordinate Voting Shares being quoted
on the OTCQX;
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(ggg)
|
based on the provisions of the Tax Act in force on the date hereof and proposals to amend the Tax
Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, the Special Warrants, the
Unit Shares, the Warrants and the Warrant Shares will be qualified investments for the purposes of the Tax Act at the time of their
acquisition for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing
plans, registered education savings plans, registered disability savings plans and tax-free savings accounts each as defined in
the Tax Act (each, a “Plan”), provided that at that time, in the case of (a) the Special Warrants and the Warrants,
neither the Company nor any person with whom the Company does not deal at arm’s length is an annuitant, a beneficiary, an
employer or a subscriber under, or a holder of, the Plan, and the Company is a public corporation for purposes of the Tax Act, and (b)
the Unit Shares and the Warrant Shares, the Company is a public corporation for the purposes of the Tax Act;
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(hhh)
|
the forms and terms of the certificates representing the Subordinate Voting Shares have been approved
and adopted by the board of directors of the Company and the form and terms of the certificate representing the Subordinate Voting
Shares do not and will not conflict with any Applicable Laws or the rules of the CSE;
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(iii)
|
the forms and terms of the certificates representing each of the Special Warrants and the Warrants
have been approved and adopted by the board of directors of the Company do not and will not conflict with any Applicable Laws;
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(jjj)
|
Odyssey Trust Company, at its principal offices in Toronto, Ontario has been duly appointed as
the registrar and transfer agent for the Subordinate Voting Shares;
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(kkk)
|
Odyssey Trust Company, at its principal offices in Toronto, Ontario, has been duly appointed as
special warrant agent under the Special Warrant Indenture;
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(lll)
|
Odyssey Trust Company, at its principal offices in Toronto, Ontario, has been duly appointed as
warrant agent under the Warrant Indenture;
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(mmm)
|
the business and material property and assets of the Company and the Subsidiaries conform in all
material respects to the descriptions thereof contained in the Disclosure Record;
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(nnn)
|
all services provided to customers, in whole or in part, by the Company or any Subsidiary are provided
in full compliance with and meet industry specific standards set by all applicable organizations which pertain to the business
of the Company and each Subsidiary;
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(ooo)
|
all forward-looking information and statements of the Company contained in the Disclosure Record,
including any forecasts and estimates, expressions of opinion, intention and expectation have been based on assumptions that are
reasonable in the circumstances, and the Company has updated such forward-looking information and statements as required by and
in compliance with Applicable Securities Laws;
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(ppp)
|
the statistical, industry and market related data included in the Disclosure Record are derived
from sources which the Company reasonably believes to be accurate, reasonable and reliable, and such data agrees with the sources
from which it was derived;
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(qqq)
|
all information which has been prepared by the Company relating to the Company or any of the Subsidiaries
and the business, property and liabilities thereof and provided or made available to the Agent, and all financial, marketing, sales
and operational information provided to the Agent is, as of the date of such information, true and correct in all material respects,
taken as whole, and no fact or facts have been omitted therefrom which would make such information misleading in any material respect;
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(rrr)
|
(i) the responses given by the Company and its officers at all oral due diligence sessions conducted
by the Agent in connection with the Offering, as they relate to matters of fact, have been and shall continue to be true and correct
in all material respects as at the time such responses have been or are given, as the case may be, and such responses taken as
a whole have not omitted any fact
or information necessary to make any of the responses not misleading in any material respect in light of the circumstances in which
such responses were given or shall be given, as the case may be; and (ii) where the responses reflect the opinion or view of the
Company or its officers (including responses or portions of such responses which are forward-looking or otherwise relate to projections,
forecasts, or estimates of future performance or results (operating, financial or otherwise)), such opinions or views have been
and will be honestly held and believed to be reasonable in the circumstances as at the date on which they are given;
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(sss)
|
the Company is not insolvent (within the meaning of Applicable Laws), is able to pay its liabilities
as they become due and, upon completion of the Offering and taking into account the Credit Facility, has sufficient working capital
to fund its operations for twelve (12) months following the Closing Date;
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(ttt)
|
the Company has not withheld from the Agent any adverse material facts relating to the Company,
any of the Subsidiaries or the Offering;
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(uuu)
|
the Company has not completed any “significant acquisition” or “significant disposition”,
nor is it proposing any “probable acquisitions” (as such terms are used in NI 44-101) that would require the inclusion
of any additional financial statements or pro forma financial statements in the Prospectus pursuant to Applicable Securities Laws;
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(vvv)
|
except as set out in the Disclosure Record, to the best of the Company’s knowledge, no person
or group of persons who are “joint actors” (within the meaning of Applicable Securities Laws) legally or beneficially
owns, or has control or direction over, 10% or more of the outstanding voting securities of the Company;
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(www)
|
except for Kevin Murphy, there is no person or persons who are “promoter(s)” (within
the meaning of Applicable Securities Laws) of the Company;
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(xxx)
|
the information and statements contained in this Agreement with respect to the Company and each
Subsidiary, as applicable, is true and correct and does not: (i) contain any untrue statement of a material fact in respect of
the Company or any Subsidiary or the affairs, prospects, operations or condition (financial or otherwise) of the Company or any
Subsidiary, or any of its assets; or (ii) to the knowledge of the Company, omit any statement of a material fact necessary in order
to make the statements in respect of the Company and each Subsidiary, the affairs, prospects, operations or condition of such person
or its assets contained herein or therein not misleading. There is no fact known to the Company which materially and adversely
affects the affairs, prospects, operations or condition of the Company or any Subsidiary or any of its assets which has not been
set forth in this Agreement;
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(yyy)
|
the Company is not, and as a result of the sale of the Special Warrants or the issuance of the
underlying Units will not be, an “investment company” as defined in the United States Investment Company Act of
1940, as amended, registered or required to be registered under such Act;
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(zzz)
|
neither the Company nor any of its affiliates, nor any person acting on their behalf (other than
the Agent or any person acting on its behalf, in respect to whom no representation is made):
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(i)
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has made or will make any Directed Selling Efforts in the United States with respect to any of
the Special Warrants, or
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(ii)
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has violated or will violate Regulation M under the U.S. Exchange Act in connection with the offer
and sale of the Special Warrants;
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(aaaa)
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none of the Company, its affiliates, or any person acting on its or their behalf (other than the
Agent, its affiliates or any person acting on its or their behalf, in respect of which no representation, warranty, covenant or
agreement is made) has taken or will take any action that would cause the exclusion from registration afforded by Rule 903 of Regulation
S to be unavailable for offers and sales of the Special Warrants outside the United States to non-U.S. Persons in accordance with
this Agreement;
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(bbbb)
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the Company shall refuse to register the transfer of any Special Warrants that is not made in accordance
with Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from such registration
and the Special Warrants shall bear a legend to the foregoing effect, as well as a notation that hedging transactions involving
such securities may not be conducted unless in compliance with the U.S. Securities Act; and
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(cccc)
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none of the Company or any of its predecessors or subsidiaries has had the registration of a class
of securities under the U.S. Exchange Act revoked by the SEC pursuant to Section 12(j) of the U.S. Exchange Act and any rules or
regulations promulgated under the U.S. Securities Act.
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9.
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Covenants of the Company
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The Company covenants and agrees
with the Agent and the Purchasers, and acknowledges that each of them is relying on such covenants in connection with the purchase
by the Purchasers of Initial Special Warrants and the Purchaser’s Option, as applicable, that the Company:
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(a)
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will advise the Agent, promptly after receiving notice thereof, of the time when the Qualification
Prospectus Supplement, the Qualification Registration Statement and any Supplementary Material has been filed and will provide
evidence satisfactory to the Agent of each such filings;
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(b)
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will advise the Agent, promptly after receiving notice or obtaining knowledge thereof, of: (i)
the issuance by any Securities Commission or the SEC of any order suspending or preventing the Offering, the use of the Prospectus,
the Registration Statement or any Supplementary Material; (ii) the suspension of the qualification of any of the Prospectus-Qualified
Securities for distribution in any of the Qualifying Jurisdictions or the United States; (iii) the institution, threatening or
contemplation of any proceeding for any such purposes; or (iv) any requests made by any Securities Commission or the SEC for amending
or supplementing the Prospectus, the Registration Statement or any Supplementary Material or for additional information, and will
use its reasonable best efforts to prevent the issuance of any order referred to in (i) or (ii) above and, if any such order is
issued, to obtain the withdrawal thereof as promptly as possible;
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(c)
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will use its commercially reasonable efforts to remain, and to cause each of the Subsidiaries to
remain, a corporation validly subsisting under the laws of its jurisdiction of incorporation, and to be duly licensed, registered
or qualified as an extra-provincial or foreign corporation in all jurisdictions
where the character of its properties owned or leased or the nature of the activities conducted by it make such licensing, registration
or qualification necessary and to carry on its business in the ordinary course and in compliance in all material respects with
all Applicable Laws, rules and regulations of each such jurisdiction, except where the failure to be subsisting, licensed, registered
or qualified would not be material to the Company or any Subsidiary;
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(d)
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will use its commercially reasonable efforts to maintain its status as a “reporting issuer”
(or the equivalent thereof) not in default of the requirements of the Canadian Securities Laws of each of the Qualifying Jurisdictions
and will comply with all of its obligations under Applicable Laws until the Survival Limitation Date;
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(e)
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will use its commercially reasonable efforts (including, without limitation, making application
to the Securities Commissions of each Qualifying Jurisdiction for all consents, orders and approvals necessary) to maintain the
listing of the Subordinate Voting Shares on the CSE or such other recognized stock exchange or quotation system as the Agent may
approve, acting reasonably, until the Survival Limitation Date;
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(f)
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will comply in all material respects with all Applicable Laws (other than U.S. Cannabis Laws),
until the Survival Limitation Date;
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(g)
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will not, nor will it permit any subsidiary or any director, officer, employee, agent or other
person acting on behalf of it or any subsidiary to cultivate, produce, process, import, export, sell or distribute any cannabis
or cannabinoid product or otherwise engage in, or target or derive (or reasonably expect to derive) revenues or funds from, any
direct or indirect dealings or transactions with respect to the foregoing, in or to any federal, provincial, territorial, state,
municipal, local or foreign jurisdiction unless such activity is in full compliance with all Applicable Laws applicable to such
activity, provided that the foregoing shall not require compliance with U.S. Cannabis Laws prior to the Triggering Event Date (as
defined in the Canopy Agreement as of the date hereof), until the Survival Limitation Date;
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(h)
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will use its commercially reasonable efforts to ensure that the Unit Shares and the Warrant Shares
are, when issued, listed and posted for trading on the CSE upon their date of issuance;
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(i)
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will apply the net proceeds from the issue and sale of the Initial Special Warrants and any Additional
Securities for general corporate purposes;
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(j)
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will promptly do, make, execute, deliver or cause to be done, made, executed or delivered, all
such acts, documents and things as the Agent may reasonably require from time to time for the purpose of giving effect to the Transaction
Documents and the Company will use its commercially reasonable efforts to implement to their full extent the provisions, and to
satisfy the conditions, of each of the Transaction Documents;
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(k)
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will forthwith notify the Agent of any breach of any covenant of this Agreement or any other Transaction
Document, or any Ancillary Documents, by any party thereto, or upon it becoming aware that any representation or warranty of the
Company contained in this Agreement or any other Transaction Document or any Ancillary Document, is or has become untrue or inaccurate
in any material respect;
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(l)
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will not, at any time prior to the closing of the Offering, halt the trading of the Subordinate
Voting Shares on the CSE without the prior consent of the Agent;
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(m)
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will make available management of the Company for meetings with investors as scheduled by the Agent
at the discretion of the Agent upon reasonable notice to the Company;
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(n)
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will comply with all Applicable Laws relating to the Offering and the offer and sale of the Initial
Special Warrants and the Purchaser’s Option and the securities underlying the Initial Special Warrants and the Purchaser’s
Option and will retain, if required by the Agent, and subject to the Agent’s reasonable approval, legal, accounting, tax
and other applicable advisors or experts to work with the Agent in effecting the Offering;
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(o)
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will fulfil or cause to be fulfilled, at or prior to the applicable Time of Closing, each of the
conditions applicable to the Company set out in Section 10 that are within its control (unless waived by the Agent);
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(p)
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will remain an Eligible Issuer in the Qualifying Jurisdictions and there will be no documents required
to be filed under the Canadian Securities Laws in connection with the Prospectus that will not have been filed as required as at
that date;
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(q)
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will promptly deliver to the Agent a copy of any notice delivered by the Lead Purchaser to the
Company in respect of the exercise of the Purchaser’s Option;
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(r)
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will ensure that, at the applicable Time of Closing, the Special Warrants are duly and validly
created, authorized and issued on payment of the purchase price therefor and have attributes corresponding in all material respects
to the description thereof set forth in this Agreement and the Subscription Agreement;
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(s)
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will ensure that, at the Time of Closing on the Purchaser’s Option Closing Date, if applicable,
any Additional Securities are duly and validly created, authorized and issued on payment of the purchase price therefor and have
attributes corresponding in all material respects to the description thereof set forth in this Agreement and the Subscription Agreement;
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(t)
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will ensure that, upon the deemed exercise of the Special Warrants, the Unit Shares and the Warrants
are duly and validly created, authorized and issued and have attributes corresponding in all material respects to the description
thereof set forth in this Agreement and the Subscription Agreement;
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(u)
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will ensure that, upon the exercise of the Warrants, the Warrant Shares are duly and validly authorized
and issued and have attributes corresponding in all material respects to the description thereof set forth in this Agreement and
the Subscription Agreement;
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(v)
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will ensure that at all times a sufficient number of Unit Shares and Warrant Shares are duly and
validly allotted and reserved for issuance upon the deemed exercise of the Special Warrants and the exercise of the Warrants;
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(w)
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will ensure that, upon deemed exercise of the Special Warrants, the Unit Shares are duly and validly
issued as fully paid and non-assessable Subordinate Voting Shares of the Company;
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(x)
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will ensure that, upon exercise of the Warrants and the payment of the exercise price therefor,
the Warrant Shares are duly and validly issued as fully paid and non-assessable Subordinate Voting Shares of the Company;
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(y)
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will use commercially reasonable efforts to ensure that the Qualification Date occurs on or before
Qualification Deadline and will ensure that the Qualification Date occurs on or before March 10, 2020;
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(z)
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in connection with the issuance of the Initial Special Warrants and the Purchaser’s Option,
will execute and file with the Securities Commissions and the SEC all forms, notices and certificates required to be filed in connection
therewith pursuant to Applicable Securities Laws within prescribed time periods;
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(aa)
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until the Qualification Date, will consult in good faith with the Agent as to the content and form
of any press release relating to the Offering or the Prospectus or the transactions contemplated therein and will, if so requested
by the Agent, include a reference to the Agent and its role in the Offering in such press release; and
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(bb)
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will take all necessary corporate action to authorize the execution and delivery of each of the
Qualification Prospectus Supplement, the Qualification Registration Statement and any Supplementary Material and the filing thereof
with the Securities Commissions and the SEC.
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10.
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Conditions of Closing
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The obligation of the Agent to
complete the Offering and of the Purchasers to purchase (i) the Initial Special Warrants at the Time of Closing on the Closing
Date and, (ii) if applicable, the Additional Securities at the Time of Closing on the Purchaser’s Option Closing Date, shall
be subject to the following:
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(a)
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The Agent will receive at the Time of Closing on the Closing Date, a legal opinion addressed to
the Purchasers, the Agent and its counsel dated the Closing Date, from the Company’s Canadian counsel, DLA Piper (Canada)
LLP, and from local counsel (in respect of matters governed by laws of any Qualifying Jurisdiction where the Company’s counsel
is not qualified to practice), in each case in form and substance satisfactory to the Agent and its counsel, acting reasonably,
with respect to the following matters:
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(i)
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the Company is incorporated and validly existing under the laws British Columbia, and has all requisite
corporate power and capacity to carry on its business as now conducted and to own, lease and operate its property and assets;
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(ii)
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as to the authorized and issued capital of the Company;
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(iii)
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the Initial Special Warrants have been duly and validly created, authorized and issued;
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(iv)
|
the Additional Special Warrants have been duly and validly created, authorized and reserved for
issuance, and upon the exercise of the Purchaser’s Option in accordance with its terms, including the payment of the Issue
Price per Additional Special Warrant, will be duly and validly issued;
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(v)
|
the Unit Shares comprised in the Units (including for certainty, any Additional Units) have been
duly and validly created, authorized, and reserved for issuance and, upon the deemed exercise of the Special Warrants in accordance
with the terms of the Special Warrant Indenture, or the exercise of the Purchaser’s Option after the Qualification Date including
payment of the aggregate issue price per Additional Unit, as applicable, will be duly and validly issued;
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(vi)
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the Warrants comprised in the Units (including for certainty, any Additional Units) have been authorized
and reserved for issuance and, upon the deemed exercise of the Special Warrants in accordance with the terms of the Special Warrant
Indenture, or the exercise of the Purchaser’s Option after the Qualification Date including payment of the aggregate issue
price per Additional Unit, as applicable, will be duly and validly issued and outstanding as fully paid securities of the Company;
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(vii)
|
the Warrant Shares underlying the Warrants (including for certainty, any Warrants comprised in
Additional Units) have been authorized, allotted and reserved for issuance and, upon the exercise of the Warrants in accordance
with the terms of the Warrant Indenture, including the payment of the aggregate exercise price, will be duly and validly issued
and outstanding as fully paid and non-assessable Subordinate Voting Shares of the Company;
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(viii)
|
the form and terms of the definitive certificate representing the Subordinate Voting Shares and
the certificate(s) representing the Special Warrants and Warrants (if any) have been approved by the directors of the Company and
comply in all material respects with the rules of the CSE and the Business Corporations Act (British Columbia);
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(ix)
|
the Company has all necessary corporate power and capacity: (i) to execute and deliver the Transaction
Documents and perform its obligations thereunder; (ii) to create, offer, issue and sell the Initial Special Warrants; (iii) to
create, issue and grant the Purchaser’s Option; (iv) to create, offer, issue and sell the Additional Securities; (v) to create,
allot, reserve for issuance and issue the Units upon deemed exercise of the Initial Special Warrants and any Additional Special
Warrants or due exercise of the Purchaser’s Option after the Qualification Date, as applicable; (vi) to create, allot, reserve
for issuance and issue the Unit Shares and the Warrants underlying the Units, and (vii) to allot, reserve for issuance and issue
the Warrant Shares issuable upon exercise of the Warrants;
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(x)
|
the Company has duly executed and delivered the Transaction Documents and authorized the performance
of its obligations thereunder, including the creation, issuance, sale and delivery of the Initial Special Warrants, the creation,
issuance and grant of the Purchaser’s Option, the creation, issuance, sale and delivery of the Additional Securities to be
issued and sold by the Company upon exercise of the Purchaser’s Option, the creation, issuance and delivery of the Unit Shares
and Warrants to be issued on deemed exercise of the Special Warrants or the due exercise of the Purchaser’s Option after
the Qualification Date, as applicable, and the issuance of the Warrant Shares upon exercise of the Warrants;
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(xi)
|
each of the Transaction Documents constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to usual and customary qualifications;
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(xii)
|
the execution and delivery of the Transaction Documents and the performance of the terms thereof,
the offer, issue and sale of the Initial Special Warrants, the creation, issue and grant of the Purchaser’s Option, the creation,
issue, sale and delivery of the Additional Securities upon exercise of the Purchaser’s Option, the issue and delivery of
the Unit Shares and Warrants comprising the Units upon the deemed exercise of the Initial Special Warrants and any Additional Special
Warrants or the exercise of the Purchaser’s Option after the Qualification Date, as applicable, and the issue of the Warrant
Shares upon exercise of the Warrants, and the consummation of the other transactions contemplated by the Transaction Documents,
do not conflict with or result in a breach of (whether after notice or lapse of time or both) or constitute a default under (a)
any of the terms, conditions or provisions of the Notice of Articles or Articles of the Company, resolutions of the shareholders
or the board of directors (or any committee thereof) of the Company, (b) any laws of the Province of British Columbia or federal
laws of Canada applicable therein, or (c) any of the terms, conditions or provisions of the Canopy Agreement;
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(xiii)
|
the execution and delivery of the Credit Agreement and the fulfillment of the terms thereof, do
not conflict with or result in a breach of (whether after notice or lapse of time or both) or constitute a default under any of
the terms, conditions or provisions of the Canopy Agreement;
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(xiv)
|
Odyssey Trust Company is the duly appointed registrar and transfer agent for the Subordinate Voting
Shares;
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(xv)
|
Odyssey Trust Company has been appointed the special warrant agent in respect of the Special Warrants
and as warrant agent in respect of the Warrants;
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(xvi)
|
the issuance and sale by the Company of the Initial Special Warrants, the Purchaser’s Option
and any Additional Securities to the Purchasers in the Qualifying Jurisdictions in accordance with the Subscription Agreements
is exempt from the prospectus requirement of Canadian Securities Laws, and no prospectus or other documents are required to be
filed (other than specified forms accompanied by requisite filing fees), no proceedings taken or approvals, permits, consents,
orders or authorizations obtained under the Canadian Securities Laws to permit such issuance and sale;
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(xvii)
|
the issuance of the Unit Shares and Warrants to holders of Initial Special Warrants and any Additional
Special Warrants pursuant to and in accordance with the terms of the Special Warrant Indenture or the exercise of the Purchaser’s
Option after the Qualification Date, as applicable, is exempt from the prospectus requirements of Canadian Securities Laws and
no prospectus or other documents are required to be filed, proceedings taken or approvals, permits, consents, orders or authorizations
obtained under the Canadian Securities Laws to permit such issuance;
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(xviii)
|
the issuance of the Warrant Shares upon exercise of the Warrants pursuant to and in accordance
with the terms of the Warrant Indenture, including payment of the aggregate exercise price, is exempt from the prospectus requirements
of Canadian Securities Laws, and no prospectus or other documents are required to be filed, proceedings taken or approvals, permits,
consents, orders or authorizations obtained under the Canadian Securities Laws to permit such issuance;
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(xix)
|
that no other documents will be required to be filed, proceedings taken or approvals, permits,
consents or authorizations obtained under Canadian Securities Laws in connection with the first trade of the Special Warrants,
the Unit Shares, the Warrants, or the Warrant Shares, provided that four (4) months have elapsed since the Closing Date, subject
to the usual qualifications;
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(xx)
|
if a Qualification Prospectus Supplement qualifying the distribution of the Prospectus-Qualified
Securities has been filed with the Securities Commissions prior to their issuance: (A) the Unit Shares, the Warrants, and the Warrant
Shares will not be subject to any statutory hold period or restricted period under Canadian Securities Laws, and (B) no documents
will be required to be filed, proceedings taken or approvals, permits, consents or authorizations obtained under Canadian Securities
Laws in order to permit the first trade of such securities in the Qualifying Jurisdictions;
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(xxi)
|
based on the provisions of the Tax Act in force on the date hereof and proposals to amend the Tax
Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, the Special Warrants, the
Unit Shares, the Warrants and the Warrant Shares will be qualified investments for the purposes of the Tax Act at the time of their
acquisition for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing
plans, registered education savings plans, registered disability savings plans and tax-free savings accounts, each as defined in
the Tax Act (each, a “Plan”), provided that at that time, in the case of (a) the Special Warrants and the Warrants,
neither the Company nor any person with whom the Company does not deal at arm’s length is an annuitant, a beneficiary, an
employer or a subscriber under, or a holder of, the Plan, and the Company is a public corporation for purposes of the Tax Act;
and (b) the Unit Shares and the Warrant Shares, the Company is a public corporation for purposes of the Tax Act;
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(xxii)
|
the Company is a “reporting issuer”, or its equivalent, in each of the Qualifying Jurisdictions,
and is not listed as in default of any requirement of the Canadian Securities Laws in any of the Qualifying Jurisdictions which
maintain such a list;
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(xxiii)
|
subject only to the Standard Listing Conditions, the Unit Shares and the Warrant Shares have been
listed or approved for listing on the CSE; and
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(xxiv)
|
as to all other legal matters reasonably requested by counsel to the Agent prior to the applicable
Time of Closing.
|
In connection with such
opinion, counsel to the Company may rely on the opinions of local counsel in the Qualifying Jurisdictions acceptable to
counsel to the Agent, acting reasonably, as to the distribution s of securities contemplated by this Section 10(a)
or opinions may be given directly by local counsel of the Company with respect to those items and as to other matters
governed by the laws of jurisdictions other than the province or provinces in which the Company’s Canadian counsel are
qualified to practice and may rely, to the extent appropriate in the circumstances and only as to matters of fact, on
certificates of officers of the Company and others;
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(b)
|
the Agent shall have received at the Time of Closing on the Closing Date, a favourable legal opinion
addressed to the Agent and the Purchasers, in form and substance satisfactory to the Agent, acting reasonably, dated as of the
Closing Date, from the U.S. counsel to the Company, to the effect that the offer and sale of the Special Warrants does not require
registration under the U.S. Securities Act; provided that such offers and sales are made in compliance with this Agreement and
provided further that it is understood that no opinion is expressed to any subsequent resale of any Special Warrants;
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(c)
|
the Agent shall have received at the Time of Closing on the Closing Date, a favourable legal opinion
addressed to the Agent and the Purchasers, in form and substance satisfactory to the Agent, acting reasonably, dated as of the
Closing Date, from United States regulatory counsel to the Company, to the effect that: (i) the Company or one of its Subsidiaries
has the applicable cannabis licenses it is required to have from each such state in order for the Company or such Subsidiary to
transact its cannabis business in such state; and (ii) each holder of such licenses has the licenses it is required to have from
each such governmental authority in order for such holder to engage in its activities involving those aspects of the sale and processing
of cannabis in which it is involved;
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(d)
|
the Agent shall have received at the Time of Closing on the Closing Date, favourable legal opinions
addressed to the Agent and the Purchasers, in form and substance satisfactory to the Agents, acting reasonably, dated as of the
Closing Date, from legal counsel duly qualified to practice law in the jurisdiction of incorporation of, each of the Subsidiaries
(which counsel, in turn may rely, only as to matters of fact, on certificates of officers of such Subsidiaries, as appropriate
and subject to confirmation by the Agent) with respect to: (i) the incorporation, existence and good standing of such Subsidiary;
(ii) the authorized and issued and outstanding securities of such Subsidiary and the holders of such outstanding securities; (iii)
the power and capacity of such Subsidiary to carry on its business and activities and to own and lease its property and assets;
such opinion to be in form and substance, acceptable in all reasonable respects to the Agent and its legal counsel;
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|
(e)
|
the Agent shall have received at the Time of Closing on the Closing Date, a certificate dated the
Closing Date signed by the Chief Executive Officer and Chief Financial Officer of the Company or any other senior officer(s) of
the Company as may be acceptable to the Agent, in form and content satisfactory to the Agent’s counsel, acting reasonably,
with respect to:
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(i)
|
the Notice of Articles and Articles of the Company;
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(ii)
|
the resolutions of the Company’s board of directors with respect to the issuance, sale and
delivery of the Initial Special Warrants, the issuance and grant of the Purchaser’s Option, the issuance, sale and delivery
of the Additional Securities to be issued and sold by the Company upon exercise of the Purchaser’s Option, the issuance and
delivery of the Units upon the deemed exercise of the Initial Special Warrants and any Additional Special
Warrants or the exercise of the Purchaser’s Option after the Qualification Date, as applicable, the issuance and delivery
of the Unit Shares and Warrants comprising the Units (including for certainty any Additional Units), and the issuance of the Warrant
Shares upon exercise of the Warrants, and the authorization of this Agreement and the other Transaction Documents; and
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(iii)
|
the incumbency and signatures of signing officers of the Company;
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(f)
|
the Agent shall have received at each applicable Time of Closing, a certificate of status (or the
equivalent thereof pursuant to the relevant governing legislation) dated within one (1) Business Day prior to the Closing Date
and the Purchaser’s Option Closing Date, as applicable, from each of the Company and the Subsidiaries;
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(g)
|
the Company shall deliver to the Agent, at each applicable Time of Closing, certificates dated
the Closing Date and the Purchaser’s Option Closing Date, as applicable, addressed to the Agent and the Purchasers and signed
by the Chief Executive Officer of the Company and the Chief Financial Officer of the Company, or such other senior officer(s) of
the Company as may be acceptable to the Agent, certifying for and on behalf of the Company and without personal liability, after
having made due enquiries, to the effect that:
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(i)
|
the Company has complied in all respects with all the covenants and satisfied all the terms and
conditions of this Agreement and the other Transaction Documents on its part to be complied with and satisfied at or prior to the
applicable Time of Closing;
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|
(ii)
|
the representations and warranties of the Company contained herein are true and correct in all
material respects (or, in the case of any representation or warranty containing a materiality or Material Adverse Effect qualification,
in all respects) as at the applicable Time of Closing with the same force and effect as if made on and as at the applicable Time
of Closing after giving effect to the transactions contemplated hereby;
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(iii)
|
to the knowledge of such persons, no order, ruling or determination having the effect of ceasing
the trading of the Subordinate Voting Shares or suspending the offering or sale of the Initial Special Warrants, the Purchaser’s
Option, any Additional Securities, the Unit Shares, the Warrants, or the Warrant Shares to be issued by the Company has been issued
and no proceedings for such purpose have been instituted or are pending or, to the knowledge of such officers, contemplated or
threatened;
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(iv)
|
there has been no change in any material fact (which includes the disclosure of any previously
undisclosed material fact) contained in the Disclosure Record which fact or change is, or may be, of such a nature as to render
any statement in the Disclosure Record misleading or untrue in any material respect or which would result in a misrepresentation
in the Disclosure Record or which would result in the Disclosure Record not complying with Applicable Securities Laws; and
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(v)
|
such other matters as the Agent may reasonably request prior to the applicable Time of Closing;
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(h)
|
the Agent shall have received at the Time of Closing on the Closing Date copies of correspondence
indicating that the Company has obtained all necessary approvals for the Unit Shares and the Warrant Shares to be listed on the
CSE, subject only to the Standard Listing Conditions;
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(i)
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the Agent shall have received at each applicable Time of Closing evidence that the Company is a
“reporting issuer”, or its equivalent, in each of the Qualifying Jurisdictions, and it is not listed as in default
of any requirement of the Canadian Securities Laws in any of the Qualifying Jurisdictions which maintain such a list;
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(j)
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the Agent shall have received at the Time of Closing on the Closing Date an executed copy of the
Special Warrant Indenture and the Warrant Indenture, in form acceptable to the Agent, acting reasonably;
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(k)
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the Agent shall have received at the Time of Closing on the Closing Date an executed copy of the
Credit Agreement;
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(l)
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the Agent shall have received at the Time of Closing on the Closing Date a copy of the Canopy Consent;
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(m)
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the Agent shall have received at the Time of Closing on the Closing Date satisfactory evidence
that all requisite approvals and consents for completion of the Offering have been obtained by the Company;
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(n)
|
the Agent shall have received at the Time of Closing on the Closing Date an executed copy of the
Option Certificate;
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(o)
|
the representations and warranties of the Company contained in this Agreement will be true and
correct in all material respects (or, in the case of any representation or warranty containing a materiality or Material Adverse
Effect qualification, in all respects) at and as of the applicable Time of Closing on the Closing Date and the Purchaser’s
Option Closing Date, as applicable, as if such representations and warranties were made at and as of such time and all agreements,
covenants and conditions required by this Agreement to be performed, complied with or satisfied by the Company will have been performed,
complied with or satisfied prior to that time;
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(p)
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the absence of any misrepresentations in the Disclosure Record or undisclosed material change or
material fact relating to the Company or the Initial Special Warrants, the Purchaser’s Option, the Additional Securities,
the Units, the Unit Shares, the Warrants or the Warrant Shares;
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(q)
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the Agent shall have completed its due diligence review of the Company and its Subsidiaries to
its satisfaction prior to the Closing Date;
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(r)
|
the Agent shall have received a certificate from Odyssey Trust Company as to the number of Subordinate
Voting Shares issued and outstanding as at the date immediately prior to the Closing Date and the Purchaser’s Option Closing
Date, as applicable;
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(s)
|
the
Agent will have received such other certificates, opinions, agreements or closing documents
in form and substance reasonably satisfactory to the Agent as the Agent may reasonably
request prior to the applicable Time of Closing; and
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(t)
|
Kevin
Murphy will not (and will execute an undertaking in favour of the Agent, prior to or
concurrent with the entering into of this Agreement, pursuant to which he will agree
not to), without the prior written consent of the Agent (such consent not to be unreasonably
withheld), directly or indirectly, offer, issue, sell, grant, secure, pledge, or otherwise
transfer, dispose of or monetize, or engage in any hedging transaction, or enter into
any form of agreement or arrangement the consequence of which is to alter economic exposure
to, in any manner whatsoever, or announce any intention to do so, any Subordinate Voting
Shares or securities convertible into, exchangeable for, or otherwise exercisable to
acquire Subordinate Voting Shares or other equity securities of the Company for a period
of ninety (90) days after the Closing Date, except, as applicable, in conjunction with:
(i) the grant or exercise of stock options, restricted share units and other similar
issuances pursuant to the share incentive plan of the Company and other share compensation
arrangements that are in place on the date hereof; (ii) the exercise of outstanding warrants;
(iii) obligations of the Company in respect of existing agreements (including, for greater
certainty, conversion of the Company’s outstanding Proportionate Voting Shares);
(iv) the issuance of securities by the Company in connection with acquisitions, credit
facilities or in the normal course of business; or (vi) in connection with the Company’s
arrangement with Canopy Growth Corporation or in order to accept a bona fide take-over
bid made to all securityholders of the Company or similar business combination transaction.
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The
closing of the purchase and sale of (i) the Initial Special Warrants on the Closing Date and, (ii) if applicable, the Additional
Securities on the Purchaser’s Option Closing Date, shall be completed at the Time of Closing and in each case at the Toronto
offices of DLA Piper (Canada) LLP or at such other place as the Company and the Agent may agree in writing. At the applicable
Time of Closing:
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(a)
|
the
Company will deliver to the Agent, or as the Agent may direct, (i) one or more certificates
in definitive form or direct registration statements representing each of the Special
Warrants or the Unit Shares and the Warrants, as applicable, registered in such name
or names as the Agent may notify the Company in writing not less than 24 hours prior
to the applicable Time of Closing, and (ii) all further documentation as may be contemplated
in this Agreement or as counsel to the Agent may reasonably require; against payment
by the Agent to the Company of the applicable aggregate purchase price for the Initial
Special Warrants or Additional Securities, as applicable, being issued and sold under
this Agreement, net of the Cash Commission and the Agent’s expenses contemplated
in Section 15 of this Agreement, by certified cheque, bank draft or wire transfer payable
to or as directed by the Company not less than forty-eight (48) hours prior to the applicable
Time of Closing; and
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(b)
|
the
Company shall make all necessary arrangements for the exchange of any such definitive
certificates, on the date of delivery, at the principal offices of the registrar of the
Company in the City of Toronto for certificates representing the Special Warrants or
the Unit Shares and the Warrants, as applicable, in such amounts and registered in such
names as shall be designated by the Agent not less than forty-eight (48) hours prior
to the applicable Time of Closing. The Company shall pay all fees and expenses payable
to or incurred by the registrar of the Company in connection with the preparation, delivery,
certification and exchange of any definitive certificates contemplated by this Section
11 and the fees and expenses payable to or incurred by the registrar of the Company in
connection with such additional transfers required in the course of the distribution
of the Initial Special Warrants, the Purchaser’s Option and any Additional Securities,
which fees and expenses may be deducted by the Agent from the aggregate gross proceeds
of the Offering.
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12.
|
Restrictions
on Further Issues or Sales
|
During
the period commencing on the date of this Agreement and ending ninety (90) days following the Closing Date, the Company agrees
that it will not, directly or indirectly, offer, issue, sell, grant, in any matter whatsoever, any Subordinate Voting Shares or
other equity securities or other financial instruments convertible into, exchangeable for, or otherwise exercisable to acquire
Subordinate Voting Shares or other equity securities of the Company, or announce any intention to do so, without the prior written
consent of the Agent (such consent not to be unreasonably withheld), except, as applicable, in conjunction with: (i) the grant
or exercise of stock options, restricted share units and other similar issuances pursuant to the share incentive plan of the Company
and other share compensation arrangements that are in place on the date hereof; (ii) the exercise of outstanding warrants; (iii)
obligations of the Company in respect of existing agreements (including, for greater certainty, conversion of the Company’s
outstanding Proportionate Voting Shares); (iv) the issuance of securities by the Company in connection with acquisitions or credit
facilities, in each case, disclosed in the Disclosure Record on or prior to the date hereof; or (v) the issuance
and sale of the Initial Special Warrants and Additional Securities and the issuance and sale of the Units upon the deemed exercise
of the Initial Special Warrants and Additional Securities, the issuance of the Unit Shares and Warrants and the issuance of the
Warrant Shares upon the exercise of the Warrants.
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13.
|
Indemnification
by the Company
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(a)
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The
Company shall fully indemnify and save harmless the Agent and its subsidiaries and affiliates
and its and their respective directors, officers, employees, shareholders, partners,
advisors and agents and each other person, if any, controlling any of the Agent or its
subsidiaries or affiliates (collectively, the “Indemnified Parties”
and individually an “Indemnified Party”) from and against all losses,
expenses (including the aggregate amount paid in settlement of any action, suit, proceeding,
investigation or claim), claims (including shareholder actions, derivative or otherwise),
actions, damages and liabilities, joint or several, including without limitation the
aggregate amount paid in reasonable settlement of any actions, suits, proceedings, investigations
or claims and the reasonable fees and expenses of their counsel (collectively, “Losses”)
that may be suffered by, imposed upon or asserted against an Indemnified Party as a result
of, in respect of, connected with or arising out of any action, suit, proceeding, investigation
or claim that may be made or threatened by any person or in enforcing this indemnity
(collectively, the “Claims” and individually, a “Claim”)
to which any Indemnified Party may become subject or otherwise involved in any capacity
insofar as the Losses and/or Claims relate to, are caused by, result from, arise out
of, are based upon, or are in consequence of, or are in connection with, directly or
indirectly:
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(i)
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the
breach of any representation or warranty of the Company made in any Transaction Document
or Ancillary Document or the failure of the Company to comply with any of its covenants
or other obligations in any Transaction Document or Ancillary Document or to satisfy
any conditions contained in any Transaction Document or Ancillary Document required to
be satisfied by the Company or any omission or alleged omission to state in any Transaction
Document or Ancillary Document any fact required to be stated in such document or necessary
to make any statement in such document not misleading in light of the circumstances under
which it was made;
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(ii)
|
any
information or statement (except any information or statement relating solely to the
Agent and furnished in writing by the Agent to the Company) in any of the Prospectus,
the Registration Statement or any Supplementary Materials (including, for greater certainty,
the Documents Incorporated by Reference and any Subsequent Disclosure Documents) containing
or being alleged to contain a misrepresentation or being or being alleged to be untrue,
or based upon any omission or alleged omission in any of the Prospectus, the Registration
Statement or any Supplementary Materials to state in those documents any material fact
required to be stated in those documents or necessary to make any of the statements therein
not misleading in light of the circumstances in which they were made;
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(iii)
|
any
order made or any inquiry, investigation or proceeding instituted, threatened or announced
by any court, securities regulatory authority, stock exchange or by any other competent
authority, based upon any untrue statement, omission or misrepresentation or alleged
untrue statement, omission or misrepresentation (except a statement, omission or misrepresentation
relating solely to the Agent and furnished in writing by the Agent to the Company) contained
in any of the Prospectus, Registration Statement or any Supplementary Materials or any
other document or material filed or delivered on behalf of the Company pursuant to this
Agreement or the other Transaction Documents, preventing or restricting the trading in
or the sale or distribution of the Initial Special Warrants, the Additional Securities,
the Purchaser’s Option, the Units, the Unit Shares, the Warrants, the Warrant Shares,
or any other securities of the Company;
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(iv)
|
the
non-compliance or alleged non-compliance by the Company with any Applicable Securities
Laws or other regulatory requirements including the Company’s non-compliance with
any statutory requirement to make any document available for inspection; or
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(v)
|
any
misrepresentation or alleged misrepresentation relating to the Offering, whether oral
or written and whether made during and in connection with the Offering, where such misrepresentation
may give or gives rise to any other liability under any statute in any jurisdiction which
is in force on the date of this Agreement.
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(b)
|
If
any Claim contemplated by this Section 13 shall be asserted against any of the Indemnified
Parties, or if any potential Claim contemplated by this Section 13 shall come to the
knowledge of any of the Indemnified Parties, the Indemnified Party concerned shall notify
in writing the Company as soon as possible of the nature of such Claim (provided that
any failure to so notify in respect of any Claim or potential Claim shall not relieve
the Company of any liability which the Company may have under this Section 13). The Company
shall, subject as hereinafter provided, be entitled (but not required) to assume the
defence on behalf of the Indemnified Party of any such Claim within fourteen (14) days
of receipt of the aforementioned notice from the Indemnified Party; provided that the
defence shall be through legal counsel selected by the Company and acceptable to the
Indemnified Party, acting reasonably, the Indemnified Party shall have the right to participate
in the settlement and defense of the Claim and no admission of liability shall be made
by the Company or the Indemnified Party without, in each case, the prior written consent
of all the Indemnified Parties affected and the Company, such consent not to be unreasonably
withheld. If such defence is assumed by the Company, the Company throughout the course
thereof will provide copies of all relevant documentation to the Agent, will keep the
Agent advised of the progress thereof and will discuss with the Agent all significant
actions proposed. An Indemnified Party shall have the right to employ separate counsel
in any such Claim and participate in the defence thereof but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party unless:
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(i)
|
the
Company fails to assume the defence of such Claim on behalf of the Indemnified Party
within fourteen (14) days of receiving notice of such suit;
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|
(ii)
|
the
employment of such counsel has been authorized by the Company; or
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(iii)
|
the
named parties to any such Claim (including any added or third parties) include the Indemnified
Party and the Company and the Indemnified Party shall have been advised by counsel that
representation of the Indemnified Party by counsel for the Company is inappropriate as
a result of the potential or actual conflicting interests of those represented or that
there may be legal defences available to the Indemnified Party or Indemnified Parties
which are different from or in addition to those available to the Company or that the
subject matter of the Claim may not fall within the foregoing indemnity;
|
in
each of which cases the Company shall not have the right to assume the defence of such Claim on behalf of the Indemnified Party,
but the Company shall be liable to pay the reasonable fees and disbursements of counsel for such Indemnified Parties as well as
the reasonable costs and out-of-pocket expenses of the Indemnified Party (including an amount to reimburse the Agent at its normal
per diem rates for time spent by their respective directors, officers, employees or shareholders). Notwithstanding anything set
forth herein, in no event shall the Company be liable for the fees or disbursements of more than one firm of legal counsel for
all Indemnified Parties in a particular jurisdiction.
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|
(c)
|
The
Company hereby acknowledges and agrees that, with respect to Sections 13 and 14 hereof,
the Agent is contracting on their own behalf and as agents for its subsidiaries and affiliates,
and its and their directors, officers, employees, shareholders, partners, advisors, agents
and each other person, if any, controlling any of the Agent or its subsidiaries or affiliates,
and their respective directors, officers, employees, shareholders, partners, advisors
and agents (collectively, the “Beneficiaries”). In this regard, the
Agent shall act as trustee for the Beneficiaries of the covenants of the Company under
Sections 13 and 14 hereof with respect to the Beneficiaries and accepts these trusts
and shall hold and enforce such covenants on behalf of the Beneficiaries.
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(d)
|
The
Company agrees to waive any right it may have of first requiring an Indemnified Party
to proceed against or enforce any other right, power, remedy or security or claim payment
from any other person before claiming under this indemnity. The Company also agrees that
no Indemnified Party shall have any liability (whether direct or indirect, in contract
or tort or otherwise) to the Company or any person asserting Claims on behalf of or in
right of the Company for or in connection with the Offering (whether performed before
or after the date of this Agreement) except to the extent any Losses suffered by the
Company are determined by a court of competent jurisdiction in a final judgment that
has become non-appealable to have resulted from the gross negligence, intentional fraud
or wilful misconduct of such Indemnified Party.
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|
(e)
|
The
Company will not, without the prior written consent of the Agent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any Claim in respect
of which indemnification may be sought under Sections 13 (whether or not any Indemnified
Party is a party to such Claim) unless the Company has acknowledged in writing that the
Indemnified Parties are entitled to be indemnified in respect of such Claim and such
settlement, compromise, consent or termination includes an unconditional release of each
Indemnified Party from any liabilities arising out of such Claim without any admission
of negligence, misconduct, liability or responsibility by or on behalf of any Indemnified
Party.
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|
(f)
|
Notwithstanding
anything to the contrary contained herein, the indemnity in this Section 13 shall not
apply to the extent that a court of competent jurisdiction in a final judgment that has
become non-appealable shall determine that such Losses to which the Indemnified Party
may be subject were caused primarily by the gross negligence, intentional fraud or wilful
misconduct of the Indemnified Party.
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(g)
|
The
Company agrees that in case any legal proceeding or investigation shall be brought or
initiated against the Company and/or the Agent by any governmental commission or regulatory
authority or any stock exchange or other entity having regulatory authority, either domestic
or foreign, in connection with the transactions contemplated by this Agreement, and if
the Company and/or the Indemnified Parties shall be required to testify in connection
therewith or shall be required to respond to procedures designed to discover information
regarding, in connection with, or by reason of the performance of professional services
rendered to the Company by the Agent, the Indemnified Parties shall have the right to
employ their own counsel in connection therewith, and the reasonable fees and expenses
of such counsel as well as the reasonable costs (including an amount to reimburse the
Agent for time spent by the Indemnified Parties in connection therewith) and out-of-pocket
expenses incurred by Indemnified Parties in connection therewith shall be paid by the
Company as they occur.
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|
(h)
|
The
rights to indemnification provided in this Section 13 shall be in addition to and not
in derogation of any other rights which the Agent or any other Indemnified Party may
have by statute or otherwise at law.
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|
(a)
|
In
order to provide for just and equitable contribution in circumstances in which the indemnity
provided in Section 13 hereof would otherwise be available in accordance with its terms
but is, for any reason held to be illegal, unavailable to or unenforceable by the Indemnified
Parties or enforceable otherwise than in accordance with its terms or is insufficient
to hold the Agent or any other Indemnified Party harmless in respect of a Claim, the
Agent or the other Indemnified Party and the Company shall contribute to the aggregate
of all Losses of the nature contemplated in Section 13 hereof and suffered or incurred
by the Indemnified Parties in the following proportions: (i) the relative benefits received
by the Agent or the other Indemnified Party, on the one hand (being, in respect of the
Agent, the Cash Commission), and the relative benefits received the Company on the other
hand (being the gross proceeds derived from the sale of the Initial Special Warrants
and any Additional Securities less the Cash Commission); (ii) the relative fault of the
Company on the one hand and the Agent or the other Indemnified Party on the other hand;
and (iii) relevant equitable considerations; provided that the Company shall in any event
contribute to the amount paid or payable by the Indemnified Parties as a result of such
Claim any excess of such amount over the amount of Cash Commission actually received
by the Agent or any other Indemnified Party under this Agreement and further provided
that the Agent or any other Indemnified Party shall not in any event be liable to contribute,
in the aggregate, any amount in excess of the total Cash Commission or any portion thereof
actually received by the Agent. However, no party who has engaged in any gross negligence,
intentional fraud or wilful misconduct shall be entitled to claim contribution from any
person who has not engaged in such gross negligence, intentional fraud or wilful misconduct.
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(b)
|
The
rights to contribution provided in this Section 14 shall be in addition to and not in
derogation of any other right to contribution which the Indemnified Parties may have
by statute or otherwise at law.
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(c)
|
If
an Indemnified Party has reason to believe that a claim for contribution may arise, the
Indemnified Party shall give the Company notice thereof in writing, but failure to so
notify shall not relieve the Company of any obligation which it may have to the Indemnified
Party under this Section 14 provided that the Company is not materially and adversely
prejudiced by such failure, and the right of the Company to assume the defence of such
Indemnified Party shall apply as set out in Section 13 hereof, mutatis mutandis.
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Whether or not the purchase and sale of the Initial Special Warrants and any Additional Securities shall be completed, all fees and expenses (including HST, if applicable) of or incidental to the creation, issuance and delivery of the Initial Special Warrants, the Purchaser’s Option and any Additional Securities and of or incidental to all matters in connection with the transactions herein set out shall be borne by the Company including, without limitation:
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|
(a)
|
all
expenses of or incidental to the creation, issue, sale or distribution of Initial Special
Warrants, the Purchaser’s Option and any Additional Securities, the Prospectus-Qualified
Securities and any securities underlying such securities, the filing of the Qualification
Prospectus Supplement, the Qualification Registration Statement and any Supplementary
Material and any stock exchange approval and other regulatory compliance;
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(b)
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the
fees and expenses of the auditors, technical consultants, translators, other experts,
and counsel to the Company and all local counsel (including all taxes payable in respect
of any of the foregoing);
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(c)
|
all
costs and expenses incurred in connection with roadshows and marketing activities, the
preparation and printing of the Prospectus, the Registration Statement and any Supplementary
Material contemplated hereunder and otherwise relating to the Offering; and
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(d)
|
the
reasonable out-of-pocket expenses of the Agent (including, but not limited to, travel
expenses in connection with due diligence and marketing activities, and reasonable fees
and disbursements of the Agent’s legal counsel), including any expenses incurred
prior to the date first written above and all taxes payable in respect of any of the
foregoing, with such expenses to be paid by the Company at the Time of Closing on the
Closing Date and on the Purchaser’s Option Closing Date, if applicable, or at any
other time reasonably requested by the Agent and shall be payable by the Company immediately
upon receiving an invoice therefor from the Agent.
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16.
|
All
Terms to be Conditions
|
The
Company agrees that the conditions contained in Section 10 will be complied with insofar as the same relate to acts to be performed
or caused to be performed by the Company and that it will use its reasonable best efforts to cause all such conditions to be complied
with. Any breach or failure to comply with any of the conditions set out in Section 10 shall entitle the Agent to terminate this
Agreement by written notice to that effect given to the Company at or prior to the Time of Closing on the Closing Date. It is
understood that the Agent may waive, in whole or in part, or extend the time for compliance with, any of such terms and conditions
without prejudice to the rights of the Agent in respect of any such terms and conditions or any other or subsequent breach or
non-compliance, provided that to be binding on the Agent any such waiver or extension must be in writing.
|
17.
|
Termination
by Agent in Certain Events
|
|
|
(a)
|
The
Agent shall also be entitled to terminate its obligation under this Agreement by written
notice to that effect given to the Company at or prior to the Time of Closing on the
Closing Date if:
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|
(i)
|
any
inquiry, action, suit, investigation or other proceeding (whether formal or informal)
is commenced, announced or threatened or any order made or issued under or pursuant to
any federal, provincial, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality (including, without limitation, the CSE or any
securities regulatory authority) or any law, rule or regulation, or the interpretation
or administration thereof, is enacted or changed, which in the sole opinion of the Agent,
acting reasonably, operates to prevent, restrict or otherwise materially adversely effect
the distribution of the Initial Special Warrants or the distribution or trading of any
of the Company’s securities;
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(ii)
|
there
shall occur or come into effect any material change in the assets, business, affairs,
financial condition, results of operations, capital or prospects of the Company or its
Subsidiaries, or there should be discovered any previously undisclosed material fact
or circumstance or there should occur a change in any material fact relating to the Company
and/or the Subsidiaries, including from that information disseminated by the Company
through its periodic and timely disclosure documents publicly filed on SEDAR, which in
any case, in the reasonable opinion of the Agent, has or could reasonably be expected
to have a material adverse effect on the market price or value or marketability of the
Special Warrants or any other securities of the Company;
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(iii)
|
there
should develop, occur or come into effect or existence any event, action, state, circumstance
or condition, or any action, law or regulation, inquiry or other occurrence of any nature,
including, without limitation, terrorism, accident or major financial, political or economic
occurrence of national or international consequence, or any action, government, law,
regulation, inquiry or other occurrence of any nature, which, in the reasonable opinion
of the Agent, materially adversely affects or involves, or could reasonably be expected
to materially adversely affect or involve, the financial markets in Canada or the U.S.
or the business, operations or affairs of the Company or the Subsidiaries or the marketability
of the Special Warrants;
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(iv)
|
an
order is made or threatened to cease or suspend trading or to otherwise prohibit or restrict
in any manner the distribution or trading, or proceedings are announced or commenced
for the making of any such order in respect of the Subordinate Voting Shares, the Special
Warrants, the Purchaser’s Option, the Units, the Unit Shares, the Warrants, the
Warrant Shares, or other securities of the Company by any Securities Commission, the
CSE or other competent authority;
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|
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(v)
|
the
Agent determines, acting reasonably, that the state of the financial markets in Canada
and the U.S. is such that the Special Warrants cannot be profitably marketed or it would
be impractical to offer or to continue to offer the Special Warrants for sale;
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(vi)
|
the
Company is not in compliance in all material respects with any Applicable Laws (including
Applicable Securities Laws relating to timely disclosure of material information) or
is in breach of any term, condition or covenant contained in this Agreement or any representation
or warranty given by the Company in this Agreement becomes or is false;
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(vii)
|
the
Agent is not satisfied in its sole discretion with its due diligence review and investigations
in respect of the Company, the Subsidiaries and their respective business, affairs and
operations; or
|
|
|
|
|
|
|
(viii)
|
the
Agent and the Company agree in writing to terminate this Agreement.
|
|
|
|
|
|
|
(b)
|
If
this Agreement is terminated by any of the Agent pursuant to Section 17(a), there shall
be no further liability on the part of the Agent to the Company, or on the part of the
Company to such Agent except in respect of any liability which may have arisen or may
thereafter arise under Sections 13, 14, 15, 17(d) and 18.
|
|
|
|
|
|
|
(c)
|
The
right of the Agent to terminate its obligations under this Agreement is in addition to
such other remedies as it may have in respect of any default, act or failure to act of
the Company in respect of any of the matters contemplated by this Agreement.
|
|
|
|
|
|
|
(d)
|
Notwithstanding
any other provision of this Agreement, if this Agreement is terminated by the Company
and the Company completes a transaction substantially similar to the Offering within
the six (6) month period following such termination, the Company shall pay to the Agent
100% of the total Cash Commission that would have been payable to the Agent hereunder
had the Offering been successfully completed on the Closing Date for aggregate gross
proceeds of US$30,000,000, and such fee will constitute liquidated damages of the Agent
resulting from the failure to complete the Offering contemplated herein and not a penalty.
|
|
|
|
|
|
18.
|
Right
of First Refusal
|
|
|
|
|
|
If,
during the term of this Agreement and for a period of twelve (12) months subsequent to the Closing Date, the Company: (a) requires
additional equity or debt financing, (b) proposes to acquire or dispose of any assets out of the ordinary course of business,
(c) decides to hedge, lock-in or swap any currency or interest rate exposure relating to its business, (d) proposes a material
corporate transaction, such as an amalgamation, recapitalization, merger, take-over bid, joint venture, plan of arrangement or
reorganization, or (e) receives an unsolicited take-over bid, you will offer to engage the Agent as its lead manager, underwriter,
private placement agent and/or exclusive financial advisor (as the case may be, depending upon the nature of the transaction)
in connection with such transaction, subject to agreeing on mutually acceptable fee arrangements. The terms and conditions relating
to any such services will be outlined in a separate engagement letter, underwriting agreement or agency agreement and the fees
for such services will be in addition to the fees payable under this Agreement, will be negotiated separately and in good faith
and will be consistent with fees paid to North American investment bankers for similar services. If the Agent does not accept
the terms and conditions contained in the Company’s offer, the Company may engage any other financial institution as manager,
underwriter, agent and/or financial advisor (as the case may be, depending on the nature of the transaction) in connection with
such transaction, provided that the terms and conditions of any such engagement shall be no more favourable to such other financial
institution than the terms and conditions offered by the Company to the Agent.
|
|
19.
|
Exclusivity
|
|
|
|
|
|
The
Agent shall have the exclusive right to act as the lead manager and sole bookrunner of any public offering by the Company or any
other entity created by the Company for the period commencing on the date of this Agreement and ending on the first (1st)
anniversary of this Agreement have been entered into.
|
|
20.
|
Notices
|
|
|
|
|
|
Any
notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered to,in the
case of the Company, to:
|
Acreage
Holdings, Inc.
366 Madison Avenue,
11th Floor
New York, New York,
10017
|
Attention:
|
##############
|
|
Email:
|
#######################
|
with
a copy of any such notice (which shall not constitute notice to the Company) to:
DLA Piper (Canada)
LLP
Suite 6000, 1 First
Canadian Place
PO Box 367, 100 King
St W
Toronto, Ontario M5X
1E2
|
Attention:
|
#############
|
|
Email:
|
#####################
|
in
the case of the Agent, to:
Canaccord
Genuity Corp.
161 Bay Street, Suite 3100
P.O. Box 516
Toronto,
Ontario, M5J 2S1
|
Attention:
|
############
|
|
Email:
|
#####################
|
and
with a copy of any such notice (which shall not constitute notice to the Agent) to:
Fasken
Martineau DuMoulin
Suite 2400 -
333 Bay Street
Box 20
Bay Adelaide Centre
Toronto,
Ontario, M5H 2T6
|
Attention:
|
#############
|
|
Email:
|
#####################
|
The
Company and the Agent may change their respective addresses for notice by notice given in the manner aforesaid. Any such notice
or other communication shall be in writing, and unless delivered personally to the addressee or to a responsible officer of the
addressee, as applicable, shall be given by email and shall be deemed to have been given when: (i) in the case of a notice delivered
personally to a responsible officer of the addressee, when so delivered; and (ii) in the case of a notice delivered or given by
email prior to 5:00 p.m. (Eastern time), on the date that it is sent, and thereafter, on the first Business Day following the
day on which it is sent.
|
|
(a)
|
The
Company acknowledges and agrees that all written and oral opinions, advice, analysis
and materials provided by the Agent in connection with this Agreement hereunder are intended
solely for the Company’s benefit and the Company’s internal use only with
respect to the Offering and the Company agrees that no such opinion, advice, analysis
or material will be used for any other purpose whatsoever or reproduced, disseminated,
quoted from or referred to in whole or in part at any time, in any manner or for any
purpose, without the Agent’s prior written consent in each specific instance. Any
advice or opinions given by the Agent hereunder will be made subject to, and will be
based upon, such assumptions, limitations, qualification and reservations as the Agent,
in its sole judgement, deem necessary or prudent in the circumstances. The Agent shall
act as independent contractor under this Agreement and not in any other capacity, including
as a fiduciary, and any duties arising out of this Agreement shall be owed solely to
the Company.
|
|
|
|
|
|
|
(b)
|
Upon
successful completion of the Offering, the Agent shall be permitted to publish, at its
own expense, such advertisements or announcements describing its services provided hereunder
in such newspaper or other publications as the Agent considers appropriate, and shall
further be permitted to post such advertisements or announcements on its website. Prior
to publishing or posting any such advertisement, the Agent shall provide a draft thereof
to the Company and shall afford the Company an opportunity to review and provide comments
on such advertisement.
|
|
|
|
|
|
|
(c)
|
Each
party to this Agreement is entering into this Agreement as an independent contractor.
Nothing in this Agreement is intended to (a) create any partnership, joint venture or
fiduciary relationship of any kind whatsoever or (b) benefit any third parties or create
any obligations to any third parties, except pursuant to Section 13, which is intended
to benefit all Indemnified Parties. This Agreement, including all schedules to this Agreement,
constitutes the entire agreement between the parties relating to its subject matter and
supersedes all prior agreements, understandings, negotiations and discussions, whether
oral or written, of the parties with respect to such subject matter. This Agreement may
only be amended, supplemented, or otherwise modified by written agreement signed by all
of the parties.
|
|
|
|
|
|
|
(d)
|
This
Agreement shall enure to the benefit of and be binding upon the respective successors
and assigns of the parties to this Agreement and of the Indemnified Parties, provided
that no party may assign this Agreement or any rights or obligations under this Agreement,
in whole or in part, without the prior written consent of every other party.
|
|
|
|
|
|
|
(e)
|
No
waiver of any provision of this Agreement will constitute a waiver of any other provision
(whether or not similar). No waiver will be binding unless executed in writing by the
party to be bound by the waiver. A party’s failure or delay in exercising any right
under this Agreement will not operate as a waiver of that right. A single or partial
exercise of any right will not preclude a party from any other or further exercise of
that right or the exercise of any other right it may have.
|
|
|
|
|
|
|
(f)
|
If
any provision of this Agreement is determined to be illegal, invalid or unenforceable
by an arbitrator or any court of competent jurisdiction from which no appeal exists or
is taken, that provision will be severed from this Agreement and the remaining provisions
will remain in full force and effect.
|
|
|
|
|
|
|
(g)
|
To
the extent any amounts payable under this Agreement are subject to Goods and Services
Tax and/or Provincial Sales Tax and/or Harmonized Sales Tax, the Company will pay an
additional amount equal to the amount of any applicable tax.
|
|
|
|
|
|
|
(h)
|
This
Agreement shall be governed by and interpreted in accordance with the laws of the Province
of Ontario and the federal laws of Canada applicable therein.
|
|
|
|
|
|
|
(i)
|
Time
shall be of the essence hereof and, following any waiver or indulgence by any party,
time shall again be of the essence hereof.
|
|
|
|
|
|
|
(j)
|
The
words, “hereunder”, “hereof” and similar phrases mean and refer
to the Agreement.
|
|
|
|
|
|
|
(k)
|
All
warranties, representations, covenants and agreements (including the Company’s
indemnification and contribution covenants and agreements in favour of the Agent and
the other Indemnified Parties) of or made by the Company herein contained or contained
in any Ancillary Document shall survive the purchase by the Purchasers of the Initial
Special Warrants and any Additional Securities and shall continue in full force and effect
for the benefit of the Purchasers and the Agent regardless of the closing of the sale
of the Initial Special Warrants and any Additional Securities, any subsequent disposition
of the Special Warrants or the Units, Unit Shares, Warrants or Warrant Shares by the
Purchasers or the termination of the Agent’s obligations under this Agreement for
a period ending on the Survival Limitation Date and shall not be limited or prejudiced
by any investigation made by or on behalf of the Agent in connection with the Offering,
the preparation of the Prospectus, the Registration Statement or any Supplementary Material
or the distribution of the Initial Special Warrants and any Additional Securities, the
Purchaser’s Option, Units, Unit Shares, Warrants or Warrant Shares or otherwise,
and the Company agrees that the Agent shall not be presumed to know of the existence
of a claim against the Company under this Agreement or the other Transaction Documents
or any Ancillary Document or in connection with the purchase and sale of the Initial
Special Warrants or any Additional Securities or the issuance of the Purchaser’s
Option, Units, Unit Shares, Warrants or Warrant Shares as a result of any investigation
made by or on behalf of the Agent in accordance with the preparation of the Prospectus,
the Registration Statement or any Supplementary Material or the distribution of Initial
Special Warrants, Additional Securities, the Purchaser’s Option, Units, Unit Shares,
Warrants or Warrant Shares.
|
|
|
|
|
|
|
(l)
|
Each
of the parties hereto shall be entitled to rely on delivery of a facsimile or portable
document format copy of this Agreement and acceptance by each such party of any such
facsimile or portable document format copy shall be legally effective to create a valid
and binding agreement between the parties hereto in accordance with the terms hereof.
|
|
|
|
|
|
|
(m)
|
This
Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
|
|
|
|
|
[remainder
of page intentionally left blank]
If this
letter accurately reflects the terms of the transactions which we are to enter into and are agreed to by you, please communicate
your acceptance by executing the enclosed copies of this letter where indicated and returning them to us.
Yours very
truly,
|
|
CANACCORD
GENUITY CORP.
|
|
|
|
|
|
By:
|
/s/
Patrick Burke
|
|
|
Name:
Title:
|
Patrick Burke
President,
Capital Markets - Canada
|
[Agency
Agreement (Acreage Holdings, Inc.)]
Accepted
and agreed to by the undersigned as of the date of this agreement first written above.
|
|
Acreage
Holdings, Inc.
|
|
|
|
|
|
By:
|
/s/ Glen
Leibowitz
|
|
|
Name:
Title:
|
Glen Leibowitz
Chief Financial Officer
|
[Agency
Agreement (Acreage Holdings, Inc.)]
SCHEDULE
“A”
Subsidiaries
|
Entity
|
|
Jurisdiction
of Incorporation
|
|
|
Jurisdiction
of Operation
|
|
|
Company
Percentage Ownership (direct or indirect)
|
|
|
High Street Capital
Partners, LLC
|
|
|
DE
|
|
|
|
NY
|
|
|
|
78.36
|
%
|
|
Prime Wellness of Connecticut,
LLC
|
|
|
CT
|
|
|
|
CT
|
|
|
|
100
|
%
|
|
Thames Valley Apothecary,
LLC
|
|
|
CT
|
|
|
|
CT
|
|
|
|
100
|
%
|
|
NYCANNA, LLC
|
|
|
DE
|
|
|
|
NY
|
|
|
|
50
|
%
|
|
In Grown Farms, LLC 2
|
|
|
IL
|
|
|
|
IL
|
|
|
|
100
|
%
|
|
NCC LLC
|
|
|
IL
|
|
|
|
IL
|
|
|
|
100
|
%
|
|
MA RMD SVCS, LLC
|
|
|
MA
|
|
|
|
MA
|
|
|
|
100
|
%
|
|
The Botanist, Inc.
|
|
|
MA
|
|
|
|
MA
|
|
|
|
100
|
%
|
|
Prime Wellness of Pennsylvania
LLC
|
|
|
PA
|
|
|
|
PA
|
|
|
|
100
|
%
|
|
Acreage Florida, Inc.
|
|
|
FL
|
|
|
|
FL
|
|
|
|
100
|
%
|
|
Gravenstein Foods, LLC
|
|
|
CA
|
|
|
|
CA
|
|
|
|
100
|
%
|
[Agency
Agreement (Acreage Holdings, Inc.)]
SCHEDULE
“B”
CanWell Litigation
CanWell Litigation: Rhode
Island Litigation and Related Litigation in Maine and Delaware
The ongoing
litigation detailed below centers on the rights and responsibilities of various entities operating in the cannabis space in Rhode
Island and Maine. The issues in dispute overlap across the Rhode Island, Maine, and Delaware cases as identified below.
|
|
o
|
CanWell,
LLC, CanWell Processing (RI), LLC and CanWell Processing (ME), LLC v. High Street Capital
Partners, LLC, d/b/a Acreage Holdings, Inc., and as the Successor-in-interest to The
Wellness and Pain Managements Connection, LLC, Kevin Murphy, and John Does 1-20 (C.A.
No. KM-2019-0948); and
|
|
|
o
|
CanWell,
LLC v. The Wellness and Pain Managements Connection, LLC and Its Successor in Interest
High Street Capital Partners, LLC, d/b/a Acreage Holdings, Inc., Northeast Patients Group
d/b/a Wellness Connection of Maine, Kevin Murphy, and John Does 1-20 (Superior Court
No. KM-2019-1047)
|
|
|
·
|
Maine:
Northeast Patients Group, Inc. d/b/a Wellness Connection of Maine v. CanWell,
LLC and CanWell Processing (Maine), LLC (Cumberland County, BCD-CV-19-50)
|
|
|
·
|
Delaware:
High Street Capital Partners, LLC v. CanWell, LLC, CanWell Processing (Maine),
LLC, and CanWell Processing (Rhode Island), LLC (Court of Chancery, No. 2019-0957-MTZ)
|
[Agency
Agreement (Acreage Holdings, Inc.)]
Exhibit 4.1
HSCP
CN HOLDINGS ULC
as
Borrower
and
ACREAGE
FINANCE DELAWARE, LLC
as
Guarantor
and
THE
LENDERS LISTED
ON THE SIGNATURE PAGES
as
Lenders
and
###################
as
Administrative Agent
CREDIT
AGREEMENT
FEBRUARY
7, 2020
TABLE
OF CONTENTS
Article 1
INTERPRETATION
|
|
|
|
Section 1.1
|
Defined Terms
|
1
|
|
Section 1.2
|
Gender and Number
|
10
|
|
Section 1.3
|
Headings, etc.
|
10
|
|
Section 1.4
|
Currency
|
10
|
|
Section 1.5
|
Certain Phrases, etc.
|
10
|
|
Section 1.6
|
Non-Business Days
|
10
|
|
Section 1.7
|
Accounting Terms
|
11
|
|
Section 1.8
|
Rateable Portion of Advances
|
11
|
|
Section 1.9
|
Incorporation of Schedules and Exhibits
|
11
|
|
Section 1.10
|
Conflict
|
11
|
|
Section 1.11
|
Certificates
|
11
|
|
Section 1.12
|
Permitted Liens
|
11
|
|
Section 1.13
|
References to Agreements
|
11
|
|
Section 1.14
|
Statutes
|
12
|
|
Section 1.15
|
Currency Equivalents Generally
|
12
|
|
|
|
Article 2
CREDIT FACILITIES
|
|
|
|
Section 2.1
|
Availability
|
12
|
|
Section 2.2
|
Commitment and Facility Limits
|
12
|
|
Section 2.3
|
Use of Proceeds
|
12
|
|
Section 2.4
|
Mandatory Repayments and Reductions
of Commitments
|
12
|
|
Section 2.5
|
Optional Prepayments; Termination and
Reductions of Commitments
|
12
|
|
Section 2.6
|
Payments under this Agreement
|
13
|
|
Section 2.7
|
Application of Payments and Prepayments
|
13
|
|
Section 2.8
|
Extension of Maturity Date
|
14
|
|
Section 2.9
|
Fees
|
14
|
|
Section 2.10
|
Computations of Interest and Fees
|
15
|
|
|
|
Article 3
ADVANCES
|
|
|
|
Section 3.1
|
The Advances
|
15
|
|
Section 3.2
|
Procedure for Borrowing
|
16
|
|
Section 3.3
|
Reliance upon Borrower’s Authority
|
16
|
|
Section 3.4
|
Interest on Advances
|
16
|
|
|
|
Article 4
CONDITIONS OF LENDING
|
|
|
|
Section 4.1
|
Conditions Precedent to Effectiveness
|
17
|
|
Section 4.2
|
Conditions Precedent to the Initial
Advance
|
17
|
|
Section 4.3
|
Conditions Precedent to Advances
|
18
|
|
Section 4.4
|
Waiver of Conditions Precedent
|
19
|
|
Section 4.5
|
Termination
|
20
|
Article 5
REPRESENTATIONS AND WARRANTIES
|
|
|
|
Section 5.1
|
Representations and Warranties
|
20
|
|
Section 5.2
|
Survival of Representations and Warranties
|
24
|
|
|
|
Article 6
COVENANTS OF THE BORROWER
|
|
|
|
Section 6.1
|
Affirmative Covenants
|
24
|
|
Section 6.2
|
Negative Covenants
|
26
|
|
Section 6.3
|
Separateness Covenants
|
27
|
|
Section 6.4
|
Financial Covenants
|
28
|
|
|
|
Article 7
CHANGES IN CIRCUMSTANCES
|
|
|
|
Section 7.1
|
Increased Costs
|
28
|
|
Section 7.2
|
Taxes
|
29
|
|
Section 7.3
|
Illegality
|
30
|
|
|
|
Article 8
EVENTS OF DEFAULT
|
|
|
|
Section 8.1
|
Events of Default
|
30
|
|
Section 8.2
|
Acceleration
|
32
|
|
Section 8.3
|
Remedies Upon Default
|
32
|
|
Section 8.4
|
Right of Set-off
|
32
|
|
Section 8.5
|
Application of Cash Proceeds of Realization
|
33
|
|
|
|
Article 9
THE AGENTS AND THE LENDERS
|
|
|
|
Section 9.1
|
Appointment and Authority
|
33
|
|
Section 9.2
|
Rights as a Lender
|
33
|
|
Section 9.3
|
Exculpatory Provisions
|
33
|
|
Section 9.4
|
Reliance by Administrative Agent
|
34
|
|
Section 9.5
|
Indemnification of Agents
|
35
|
|
Section 9.6
|
Delegation of Duties
|
35
|
|
Section 9.7
|
Notices
|
35
|
|
Section 9.8
|
Replacement of Agents
|
35
|
|
Section 9.9
|
Non-Reliance on Agents and Other Lenders
|
36
|
|
Section 9.10
|
Collective Action of the Secured Creditors
|
36
|
|
Section 9.11
|
Obligations
|
36
|
|
Section 9.12
|
Holding of Security; Discharges
|
36
|
|
Section 9.13
|
Sharing of Payments by Lenders
|
37
|
|
Section 9.14
|
Liability of the Lenders inter se
|
37
|
|
Section 9.15
|
Survival
|
37
|
Article 10
MISCELLANEOUS
|
|
|
|
Section 10.1
|
Amendments, etc.
|
37
|
|
Section 10.2
|
Waiver
|
38
|
|
Section 10.3
|
Evidence of Debt
|
38
|
|
Section 10.4
|
Notices: Effectiveness; Electronic Communication
|
38
|
|
Section 10.5
|
Expenses; Indemnity; Damage Waiver
|
39
|
|
Section 10.6
|
Successors and Assigns
|
41
|
|
Section 10.7
|
Judgment Currency
|
41
|
|
Section 10.8
|
Interest on Amounts
|
42
|
|
Section 10.9
|
Anti-Terrorism Laws
|
42
|
|
Section 10.10
|
Governing Law: Jurisdiction: Etc.
|
42
|
|
Section 10.11
|
Entire Agreement
|
43
|
|
Section 10.12
|
Waiver of Jury Trial
|
43
|
|
Section 10.13
|
Counterparts: Integration: Effectiveness:
Electronic Execution
|
43
|
|
Section 10.14
|
Treatment of Certain Information: Confidentiality
|
44
|
|
Section 10.15
|
Severability
|
45
|
|
Section 10.16
|
Time of the Essence
|
45
|
|
Section 10.17
|
USA PATRIOT Act
|
45
|
|
Section 10.18
|
No Fiduciary Duty
|
45
|
ADDENDA
|
Schedule “A”
|
Lenders and Commitments
|
|
Exhibit 2.8
|
Form of Extension
Request
|
|
Exhibit 3.2
|
Form of Borrowing
Notice
|
|
Exhibit 6.1(b)(ii)
|
Form of Compliance
Certificate
|
|
Exhibit 10.6
|
Form of Assignment
and Assumption Agreement
|
CREDIT AGREEMENT
Credit Agreement dated
February 7, 2020 among HSCP CN Holdings ULC, as Borrower,
Acreage Finance Delaware, LLC, as Guarantor, the lenders from time to time party hereto,
as Lenders, and ##############, as Administrative Agent.
Article 1
INTERPRETATION
|
|
Section 1.1
|
Defined Terms.
|
As used in this Agreement,
the following terms have the following meanings:
“Administrative
Agent” means ############# as administrative agent for the Lenders under
this Agreement and the other Credit Documents, and any successor administrative agent appointed pursuant to Section 9.8, and
their successors and permitted assigns.
“Advances”
means advances made by a Lender to the Borrower in U.S. Dollars pursuant to Article 3.
“Affiliate”
means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
“Aggregate
Principal Amount” means, in relation to the Borrower and any Lender at any time under the Credit Facility, the aggregate
principal amount of all outstanding Advances made by such Lender under the Credit Facility and, in relation to the Borrower and
all Lenders at any time under the Credit Facility, means the sum of the Aggregate Principal Amount under the Credit Facility made
by each Lender.
“Agreement”
means this credit agreement as amended, modified, extended, renewed, replaced, restated, supplemented or refinanced from time to
time; and the expressions “Article” and “Section” followed by a number mean and refer to
the specified Article or Section of this Agreement.
“Anti-Terrorism
Laws” means any law, judgment, order, executive order, decree, ordinance, rule or regulation related to terrorism financing,
money laundering or Sanctions including Part II.1 and Part XII.2 of the Criminal Code, the Proceeds of Crime (Money Laundering)
and Terrorist Financing Act, S.C. 2000, c. 17, and regulations promulgated pursuant to the Special Economic Measures Act,
S.C. 1992, c. 17, the United Nations Act, R.S.C. 1985, c. U-2 and the Justice for Victims of Corrupt Foreign Officials
Act, S.C. 2017, c. 21.
“Applicable
Law” means, (a) any domestic or foreign statute, law (including common and civil law), treaty, code, ordinance, rule,
regulation, restriction or by-law (zoning or otherwise); (b) any judgment, order, writ, injunction, determination, decision, ruling,
decree or award; (c) any regulatory or stock exchange policy, practice, guideline or directive; or (d) any franchise, licence,
qualification, authorization, consent, exemption, waiver, right, permit or other approval of any Governmental Authority, binding
on or affecting the Person referred to in the context in which the term is used or binding on or affecting the Assets of such Person,
in each case whether or not having the force of law, except the Controlled Substances Act, 21 USC 801 et seq. as it applies
to marijuana (including any implementing regulations and schedules in effect at the relevant time) or any other U.S. federal law
the violation of which is predicated upon a violation of the Controlled Substances Act as it applies to marijuana.
“Applicable
Premium” means, in respect of any amount of the Aggregate Principal Amount prepaid or accelerated,
in each case, whether voluntary or involuntary:
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(a)
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prior to all Advances being outstanding for 90 days, an amount
equal to:
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(i)
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the amount of the interest that would have been payable if all
Advances had been outstanding for 90 days, less
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(ii)
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any interest actually paid on each amount advanced in
respect of the first 90 days during which that amount was outstanding, and
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(b)
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following to all Advances being outstanding for 90 days, an amount
equal to $0.
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“Approved
Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or
an Affiliate of an entity that administers or manages a Lender.
“Asset”
means, with respect to any Person, any property (including real property), assets and undertakings of such Person of every kind
and wheresoever situate, whether now owned or hereafter acquired (and, for greater certainty, includes any equity or like interest
of such Person in any other Person).
“Assignment
and Assumption” means an assignment and assumption entered into by a Lender and any Person who is or becomes an assignee
in accordance with this Agreement, in substantially the form of Exhibit 10.6 or any other form approved by the Administrative Agent.
“Board of
Directors” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person,
(b) in the case of any limited liability company, the board of managers of such Person, (c) in the case of any partnership, the
board of directors of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
“Borrower”
means, HSCP CN Holdings ULC, an unlimited liability corporation incorporated under the laws of Alberta, and its successors and
permitted assigns.
“Borrowing
Notice” has the meaning ascribed thereto in Section 3.2.
“Business
Day” means any day of the year, other than a Saturday, Sunday or any day on which banks are closed for business in ###########.
“Canopy”
means Canopy Growth Corporation and each successor thereto.
“Canopy Option”
means Canopy’s option to acquire all of the issued and outstanding securities of the Parent in accordance with the Parent’s
constating documents as amended in connection with the plan of arrangement implemented by the Parent on June 27, 2019.
“Capital Lease”
means a lease that would, in accordance with GAAP, be treated as a balance sheet liability.
“Cash Proceeds
of Realization” means the aggregate of (a) all Proceeds of Realization in the form of cash and (b) all cash proceeds
of the sale or disposition of non-cash Proceeds of Realization, in each case expressed in U.S. Dollars.
“Change
in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption, making,
issuance or taking effect of any Applicable Law, (b) any change in any Applicable Law or in the administration,
interpretation, implementation or application thereof by any Governmental Authority, or (c) compliance by any Lender with any
request, rule, regulation, guideline or directive (whether or not having the force of law) of any Governmental Authority made
or issued after the date of this Agreement, provided that notwithstanding anything herein
to the contrary (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules,
regulations, guidelines or directives thereunder or issued in connection therewith or in implementation thereof, and (ii) all
requests, rules, regulations, guidelines and directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the Canadian, United States or foreign regulatory
authorities, in each case, pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted, issued or implemented.
“Change of
Control” means the occurrence of any of the following events: (a) any Person (or any successor to it continuing from
any amalgamation, merger or other reorganization) or group of Persons acting jointly or in concert (as such concept is defined
in National Instrument 62-104 - Take-over Bids and Issuer Bids) becoming the owner, directly or indirectly, beneficially or of
record, of Equity Securities representing more than 50% of the aggregate ordinary voting power represented by the outstanding share
capital of the Parent, (b) any sale, lease, exchange or other transfer (in one transaction or series of related transactions) of
all or substantially all of the Parent’s and its subsidiaries, on a consolidated basis, property and assets, (c) the Parent’s
shareholders approve any plan or proposal for the liquidation or dissolution of the Parent, or (d) the Parent ceases to own, directly
or indirectly, 100% of the Equity Securities of the Borrower and the Guarantor; provided, however, that none of the following events
shall constitute a “Change of Control”: (i) the acquisition of outstanding Equity Securities by Canopy or an affiliate
thereof pursuant to the Canopy Option, (ii) Mr. Kevin Murphy ceasing to hold Equity Securities representing more or less than 50%
of the aggregate ordinary voting power represented by the outstanding share capital of the Parent, or (iii) any event or circumstance
in which the public shareholders of the Parent immediately prior to such event or circumstance continue to, directly or indirectly,
own substantially all of the Parent’s and its subsidiaries property and assets through the ownership in a successor to, or
assignee of, the Parent under this Agreement.
“Closing Date”
means the date on which the First Advance is made or such other date as agreed by the parties hereto.
“Code”
means the United States Internal Revenue Code of 1986, as amended from time to time.
“Commitment”
means, at any time, in respect of a Lender, the maximum amount of the Advances which such Lender has covenanted to make under the
Credit Facility, as set forth in Schedule A (which shall be amended and distributed to all parties by the Administrative Agent
from time to time as other Persons become Lenders or to reflect any reduction in the Commitment in accordance with the terms hereof),
and which for greater certainty shall in each case be reduced by such Lender’s rateable share of the amount of any repayments
or reductions required or made hereunder with respect to the Credit Facility.
“Compliance
Certificate” means a certificate of the Borrower substantially in the form of Exhibit 6.1(b)(ii), signed on its behalf
by its chief financial officer or any other officer acceptable to the Administrative Agent.
“Control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have corresponding meanings.
“Credit Documents”
means this Agreement, the Guarantee, the Security Agreement, the Restricted Cash Account Agreement, and all other documents to
be executed and delivered to the Administrative Agent and the Lenders, or any of them, by the Credit Parties, or any of them, from
time to time in connection with this Agreement or any other Credit Document.
“Credit Facility”
means the term credit facility to be made available to the Borrower under this Agreement for the purposes set out in Section 2.3.
“Credit Parties”
means, collectively, the Borrower and the Guarantor.
“Criminal
Code” means the Criminal Code (Canada), R.S.C. 1985, c.C-46.
“Debt”
of any Person means (without duplication):
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(a)
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all indebtedness of such Person for borrowed money, including borrowings of commodities, prepaid
forward sales of commodities, bankers’ acceptances, letters of credit or letters of guarantee;
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(b)
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all indebtedness of such Person for the deferred purchase price of Assets or services, other than
for Assets and services purchased in the ordinary course of business and paid for in accordance with customary practice and not
represented by a note, bond, debenture or other evidence of Debt;
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(c)
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all indebtedness created or arising under any conditional sale or other title retention agreement
with respect to Assets acquired by such Person (even though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such Assets);
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(d)
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all obligations of such Person represented by a note, bond, debenture or other evidence of Debt;
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(e)
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all obligations under Capital Leases and all obligations under synthetic leases, in each case,
in respect of which such Person is liable as lessee;
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(f)
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all obligations with respect to any Equity Securities in the capital of the Person which, by their
terms (or by the terms of any security into which they are convertible or for which they are exchangeable), or upon the happening
of any event (i) mature or are mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) are redeemable
for cash or debt at the sole option of the holder, or (iii) provide for scheduled payments of dividends in cash, in each case,
on or prior to the Maturity Date;
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(g)
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the net amount payable by such Person under Derivatives Agreements, provided that such amount shall
only constitute Debt if such Derivatives Agreements have been closed out or terminated; and
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(h)
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all Debt of another entity of a type described in clauses (a) through (g) which is directly or
indirectly guaranteed by such Person, which is secured by a Lien on any Assets of such Person, which such Person has agreed (contingently
or otherwise) to purchase or otherwise acquire, or in respect of which such Person has otherwise assured a creditor or other entity
against loss.
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The Debt of any Person shall include the
Debt of any other entity (including a partnership in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or relationship with such entity, except (other than in the case
of general partner liability) to the extent that the terms of such Debt expressly provide that such Person is not liable therefor.
“Default”
means an event which, with the giving of notice or passage of time, or both, would constitute an Event of Default.
“Derivatives
Agreement” means any agreement relating to a transaction of a type commonly considered to be a derivatives or hedging
transaction or any combination of such transactions, in each case, whether relating to one or more of currencies, interest, commodities,
securities or other matters, including (a) any option, collar, floor or cap, (b) any forward contract, and (c) any rate swap,
basis swap, commodity swap, cross-currency swap or other swap or contract for differences.
“Disposition”
means, with respect to any Asset of any Person, any direct or indirect sale, lease (where such Person is the lessor), assignment,
cession, transfer, exchange, conveyance, release or gift of such Asset, including by means of a sale and leaseback transaction,
or any reorganization, consolidation, amalgamation or merger of such Person pursuant to which such Asset becomes the property of
any other Person; and “Dispose” and “Disposed” have meanings correlative thereto.
“Drawdown
Period” means the period commending on the Closing Date and ending on the 24th
day following the Closing Date.
“Environmental
Laws” means all Applicable Laws and agreements with a Governmental Authority relating to public health, the protection
of the environment, the release of hazardous materials and occupational health and safety.
“Environmental
Liabilities” means all liabilities imposed by, under or pursuant to Environmental Laws or which relate to the existence
of contaminants on, under or about any of the properties now or previously used or occupied by any of the Credit Parties.
“Equity Securities”
means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person’s capital, including any interest in a partnership, limited partnership
or other similar Person and any beneficial interest in a trust, and any and all rights, warrants, options or other rights exchangeable
for or convertible into any of the foregoing.
“Equivalent
Amount” means, on any day with respect to any two currencies, the amount obtained in one such currency (the “first
currency”) when an amount in the other currency is converted into the first currency using the Bank of Canada’s
spot rate for the conversion of the applicable amount of the other currency into the first currency in effect as of 4:30 p.m. (Toronto
time) on such Business Day (or the immediately preceding Business Day if such day is not a Business Day) or, in the absence of
such a spot rate on such day, using such other rate as the Administrative Agent may reasonably select.
“Event of
Default” has the meaning specified in Section 8.1.
“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder or under any other Credit Document, (a) Taxes imposed on or measured
by its net income, capital gains or capital, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is located, or that are Other Connection Taxes, (b)
any branch profits taxes or any similar tax imposed by any jurisdiction in which the Lender is located, (c)
in the case of a Foreign Lender, any withholding tax that is attributable to such Foreign Lender’s failure or inability (other
than as a result of a Change in Law) to comply with Section 7.2(5), (d) any Taxes imposed under FATCA, and (e) any Taxes required
to be deducted or withheld under the Income Tax Act from any payment under the Credit Documents as a result of: (1) the
recipient (or beneficial holder of the Advances) not dealing at arm’s length (within the meaning of the Income Tax
Act) with the Borrower, or (2) the recipient being a “specified non-resident shareholder” of the Borrower or
not dealing at arm’s length with a “specified shareholder” of the Borrower (in each case within the meaning
of the Income Tax Act) (other than where the non-arm’s length relationship arises, or where the recipient is
a “specified non-resident shareholder”, or does not deal at arm’s length with a “specified shareholder”,
as a result of such Person having become a party to, received or perfected a security interest under, or received or enforced
any rights under, any Credit Document). For greater certainty, for purposes of clause (c) above, a withholding tax
includes any Tax that a Foreign Lender is required to pay pursuant to Part XIII of the Income Tax Act or any successor provision
thereto.
“Extension
Request” means a written request from the Borrower to the Administrative Agent requesting an extension of the Maturity
Date substantially in the form attached as Exhibit 2.8.
“FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that
is substantively comparable), any current or future regulations or official interpretations thereof, any agreements entered
into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements or implementing legislation enacted by any
jurisdiction with respect to such intergovernmental agreements.
“Fees”
means the fees payable by the Borrower under this Agreement, including the Set-Up Fee.
“Financial
Quarter” means a period of three consecutive months in any Financial Year ending on March 31, June 30, September 30
and December 31 of such year.
“Financial
Year” means, in relation to the Borrower, its financial year commencing on January 1 of each
calendar year and ending on December 31 of such year.
“First Advance”
has the meaning specified in Section 3.1(a).
“Foreign Administrative
Agent” means any Administrative Agent that is not organized under the laws of the jurisdiction in which a Borrower is
resident for tax purposes by application of the laws of that jurisdiction and that is not otherwise considered or deemed in respect
of any amount payable to it hereunder or under any Credit Document to be resident for income tax or withholding tax purposes in
the jurisdiction in which such Borrower is resident for tax purposes by application of the laws of that jurisdiction. For the purposes
of this definition, Canada and each Province and Territory thereof shall be deemed to constitute a single jurisdiction and the
United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Lender”
means any Lender that is not organized under the laws of the jurisdiction in which the Borrower is resident for tax purposes by
application of the laws of that jurisdiction and that is not otherwise considered or deemed in respect of any amount payable to
it hereunder or under any Credit Document to be resident for income tax or withholding tax purposes in the jurisdiction in which
the Borrower is resident for tax purposes by application of the laws of that jurisdiction. For the purposes of this definition,
Canada and each Province and Territory thereof shall be deemed to constitute a single jurisdiction and the United States of America,
each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Fund”
means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of its business.
“GAAP”
means the accounting principles generally accepted in Canada and/or the United States, as may
be adopted by the Parent from time to time in accordance with applicable securities legislation.
“Governmental
Authority” means the government of Canada or any other nation, or of any political subdivision thereof, whether state,
provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including
any supranational bodies such as the European Union or the European Central Bank and including a Minister of the Crown, Superintendent
of Financial Institutions or other comparable authority or agency, any securities exchange and any self-regulatory organization.
“Guarantee”
means the guarantee dated as of the Closing Date given by the Guarantor in favour of the
Administrative Agent, in form and substance satisfactory to the Administrative Agent, as may
be amended, amended and restated, supplemented or otherwise modified from time to time.
“Guarantor”
means Acreage Finance Delaware, LLC, a limited liability company incorporated under the
laws of the State of Delaware, and its successors and permitted assigns.
“Impermissible
Qualification” means, relative to the financial statements or notes thereto
of the Parent or the opinion or report of any independent auditors as to such financial statements or notes thereto, any qualification
or exception to such financial statements, notes, opinion or report, as the case may be, which is of a “going concern”
or similar nature or which relates to any limited scope of examination of matters relevant to such financial statements, if such
limitation results from the refusal or failure of the Parent to grant access to necessary information or to cause such access to
be granted.
“Income Tax
Act” means the Income Tax Act (Canada), as amended from time to time.
“Indemnified
Taxes” means Taxes other than Excluded Taxes.
“Indemnitee”
has the meaning specified in Section 10.5(2).
“Information”
has the meaning specified in Section 10.14(2).
“IP Credit
Agreement” means the credit agreement dated after the date hereof among the Guarantor, as borrower, IP Investment Company,
LLC and any other persons from time to time party thereto as lenders, as may be amended, modified, supplemented or restated from
time to time.
“IP Credit
Documents” means the each of the IP Credit Agreements, all guarantees and security provided in connection therewith and
all other agreements, instruments and other documents governing or relating thereto, and “IP Credit Document”
means any of them.
“IP Guarantor”
means Acreage IP Holdings, LLC, a limited liability company incorporated under the laws of the State
of Nevada, and its successors and permitted assigns.
“Lenders”
mean, collectively, the lenders set forth on the signature pages of this Agreement, any Person who may become a Lender under this
Agreement in accordance with Section 10.6, and, in the singular, any one of them.
“Lien”
means any mortgage, deed of trust, trust or deemed trust, lien (statutory or otherwise), pledge, assignment, hypothecation, encumbrance,
charge, security interest, deposit arrangement, royalty interest, claim, right of detention or seizure, right of distraint, easement,
or right of set off (other than a right of set off arising in the ordinary course), including the interest of a vendor or a lessor
under any conditional sale agreement, Capital Lease, title retention agreement or consignment agreement (or any financing lease
having substantially the same economic effect as any of the foregoing), and any other agreement, trust or arrangement that in substance
secures payment or performance of an obligation.
“Majority
Lenders” means, at any time, Lenders who, taken together, hold at least 66-2/3%
of the Aggregate Principal Amount at that time.
“Material
Adverse Effect” means (a) a material adverse effect on the business, operations, results of operations, Assets, the Restricted
Account Collateral, liabilities or financial condition of the Credit Parties taken as a whole, (b) a material adverse effect on
the ability of any of the Credit Parties to perform its obligations under any Credit Document to which it is a party, or (c) a
material adverse effect on the rights and remedies of the Lenders or the Administrative Agent (or any of them) under any Credit
Document.
“Maturity
Date” means the second anniversary of the Closing Date (or such later date as may apply pursuant to the extension provisions
in Section 2.8).
“Minimum Balance”
has the meaning specified in Section 6.1(j)(i)(A).
“Obligations”
means all debts, liabilities and obligations, present or future, direct or indirect, absolute or contingent, matured or
unmatured, at any time or from time to time due or accruing due and owing by or otherwise payable by the Credit Parties, or
any of them, to the Administrative Agent and the Lenders, or any of them, under, in connection with or pursuant to the Credit
Documents, including the Aggregate Principal Amount, all accrued interest and Fees and all other amounts payable under this
Agreement (including the Applicable Premium).
“Original
Currency” has the meaning specified in Section 10.7(1).
“Other Connection
Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, Taxes imposed as a result of a present or former connection
between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient
having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected
a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned
an interest in any Credit Document).
“Other Currency”
has the meaning specified in Section 10.7(1).
“Other Taxes”
means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or under any other Credit Document or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Credit Document, in each case, including any interest, additions to tax or penalties
applicable thereto.
“Parent”
means Acreage Holdings, Inc., and its successors and permitted assigns.
“Pension Plan”
means a plan or arrangement maintained, sponsored or funded by any Credit Party or in respect of which any Credit Party has any
liability, contingent or otherwise, in each case, that is or is intended to be a “registered pension plan” as such
term is defined in the Income Tax Act (including any such plan that contains a “defined benefit provision” as such
term is defined in the Income Tax Act).
“Permitted
Liens” means, in respect of any Person, any one or more of the following:
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(a)
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Liens for Taxes which are not due or delinquent or the validity of which is being contested at
the time by the Person in good faith by proper legal proceedings if adequate provision has been made for their payment and such
Liens are not executed on or enforced against any of the Assets of any Credit Party; and
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(b)
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Liens in favour of the Administrative Agent and the other Secured Creditors created by the Security
Agreement.
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“Person”
means an individual, sole proprietorship, corporation, limited liability company, trust, joint venture, association, company, partnership,
institution, public benefit corporation, investment or other fund, Governmental Authority or other entity, and pronouns have a
similarly extended meaning.
“Proceeds
of Realization” means all cash and non-cash proceeds derived from any sale, disposition or other realization of the Restricted
Account Collateral (a) after any notice by the Administrative Agent to the Borrower pursuant to Section 8.1 declaring all
indebtedness of the Borrower hereunder to be immediately due and payable, (b) upon any dissolution, liquidation, winding-up, reorganization,
bankruptcy, insolvency or receivership of any of the Credit Parties (or any other arrangement or marshalling of the Restricted
Account Collateral that is similar thereto) or (c) upon the enforcement of, or any action taken with respect to, any of the Credit
Documents.
“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents and advisors of
such Person and of such Person’s Affiliates.
“Restricted
Account” means the bank account of the Guarantor at ############# that is described
in the Security Agreement.
“Restricted
Account Collateral” means any and all Assets in respect of which the Administrative Agent or any Secured Creditor has
or will have or is intended to have a Lien pursuant to a Security Agreement.
“Restricted
Cash Account Agreement” mean the collateral account and set-off acknowledgement agreement
dated as of the Closing Date among the Guarantor, the Administrative Agent (for the benefit of the Secured Creditors) and #############
with respect to the Restricted Account, in form and substance satisfactory to the Administrative Agent, as may be amended,
amended and restated, supplemented or otherwise modified from time to time.
“Sanctioned
Person” means any Person that is a designated target of Sanctions or is otherwise a subject of Sanctions, including as
a result of being (a) owned, held or controlled by any person which is a designated target of Sanctions, (b) located or resident
in, a national of, or organized under, the laws of any country that is subject to general or country-wide Sanctions, or (c) a “designated
person”, a “politically exposed foreign person” or “terrorist group” as described in any Sanctions.
“Sanctions”
means applicable economic or trade sanctions or other restrictive measures administered or enforced by a Governmental Authority
(including, in Canada, Global Affairs Canada and Public Safety Canada) or other relevant sanctions authority which governs transactions
in controlled goods or technologies or dealings with countries, entities, organizations or individuals subject to such economic
or trade sanctions or restrictive measures.
“Second Advance”
has the meaning specified in Section 3.1(b).
“Secured Creditors”
means the Administrative Agent and the Lenders.
“Security”
means, at any time, the Liens in favour of the Secured Creditors, or any of them, in the Restricted Account Collateral securing
their obligations under this Agreement and the other Credit Documents.
“Security
Agreement” means the restricted account security agreement dated as of the Closing Date granted by the Guarantor
in favour of the Administrative Agent (for the benefit of the Secured Creditors), in form and
substance satisfactory to the Administrative Agent, as amended, amended and restated, supplemented or otherwise modified
from time to time.
“Set-Up Fees”
has the meaning specified in Section 2.9.
“Solvent”
means, (a) with respect to any Person organized
under the laws of Canada or any province or territory thereof, on a particular date, that on such date, (i) such
Person is not for any reason unable to meet its obligations as they generally become due, (ii) such Person has not
ceased paying its current obligations in the ordinary course of business as they generally become due, and (iii) the
aggregate property of such Person is, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under
legal process, would be sufficient, to enable payment of all its obligations, due and accruing due, and
(b) with respect to any Person organized under the laws of a jurisdiction located within the United States on a particular
date, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of
such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (iv) such Person is not
engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
“subsidiary”
means with respect to any Person (the “parent”) at any date, (a) any corporation, limited liability company,
association or other business entity of which securities or other ownership interests representing more than 50% of the voting
power of all equity interests entitled to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled
or held by the parent and/or one or more subsidiaries of the parent, (b) any partnership, (x) the sole general partner or the managing
general partner of which is the parent and/or one or more subsidiaries of the parent or (y) the only general partners of which
are the parent and/or one or more subsidiaries of the parent and (c) any other Person that is otherwise Controlled by the parent
and/or one or more subsidiaries of the parent.
“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed
by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Third Advance”
has the meaning specified in Section 3.1(c).
“U.S. Dollars”
and “U.S. $” means lawful money of the United States of America.
|
|
Section 1.2
|
Gender and Number.
|
Any reference in the
Credit Documents to gender includes all genders and words importing the singular number only include the plural and vice versa.
|
|
Section 1.3
|
Headings, etc.
|
The provision of a
Table of Contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect the interpretation of this Agreement.
All references in the
Credit Documents to $ or dollars, unless otherwise specifically indicated, are expressed in the currency of the United States of
America.
|
|
Section 1.5
|
Certain Phrases, etc.
|
In any Credit Document
(i) (y) the words “including” and “includes” mean “including (or includes) without
limitation” and (z) the phrase “the aggregate of”, “the total of”, “the
sum of”, or a phrase of similar meaning means “the aggregate (or total or sum), without duplication, of”,
(ii) in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated,
the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding”, and references to “this Agreement”, “hereof”
and “herein” and like references refer to such Credit Document and not to any particular Article, Section or
other subdivision of such Credit Document.
|
|
Section 1.6
|
Non-Business Days.
|
Whenever any payment
to be made hereunder shall be stated to be due or any action to be taken hereunder shall be stated to be required to be taken on
a day other than a Business Day, such payment shall be made or such action shall be taken on the next succeeding Business Day and,
in the case of the payment of any amount, the extension of time shall be included for the purposes of computation of interest,
if any, thereon.
|
|
Section 1.7
|
Accounting Terms.
|
All accounting terms
not specifically defined in this Agreement shall be interpreted in accordance with GAAP. If there occurs a material change in GAAP,
including as a result of a conversion to International Financial Reporting Standards and, as a result, an amount required to be
determined hereunder would be materially different (as determined by the Borrower or the Administrative Agent), the Borrower and
the Administrative Agent shall negotiate in good faith to revise (if appropriate) the relevant covenants to give effect to the
intention of the parties under this Agreement as at the date hereof, and any new covenant shall be subject to approval by the Majority
Lenders. Until the successful conclusion of any such negotiation and approval by the Majority Lenders, and/or if the Borrower and
the Majority Lenders cannot agree on revisions to the covenants within thirty (30) days following the implementation of the change,
the Borrower shall thereafter make all calculations for the purpose of determining compliance with the financial covenants contained
herein both under GAAP in existence as at the date hereof and GAAP subsequently in effect and applied by the Borrower.
|
|
Section 1.8
|
Rateable Portion of Advances.
|
References in this
Agreement to a Lender’s rateable portion of the Advances or rateable share of payments of principal, interest, Fees or any
other amount, shall mean and refer to a rateable portion or share as nearly as may be rateable in the circumstances, as determined
in good faith by the Administrative Agent. Each such determination by the Administrative Agent shall be prima facie evidence of
such rateable share.
|
|
Section 1.9
|
Incorporation of Schedules and Exhibits.
|
The schedules and exhibits
attached to this Agreement shall form an integral part of it.
The provisions of this
Agreement prevail in the event of any conflict or inconsistency between its provisions and the provisions of any of the other Credit
Documents (other than the Restricted Cash Account Agreement).
|
|
Section 1.11
|
Certificates.
|
Any certificate required
by the terms of this Agreement or any Credit Document to be given by an officer of the Borrower for and on behalf of any Credit
Party shall be given without any personal liability on the part of the officer giving the certificate.
|
|
Section 1.12
|
Permitted Liens.
|
Any reference in this
Agreement or any of the other Credit Documents to a Permitted Lien or a Lien permitted by this Agreement is not intended to subordinate
or postpone, and shall not be interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any Lien
created by any of the Credit Documents to any Permitted Lien or any Lien permitted hereunder, it being the intention of the parties
that all Liens created pursuant to the Security shall at all times rank as first priority Liens, including in priority to Permitted
Liens or indebtedness of a Credit Party and all other Liens or other obligations whatsoever, subject only to Permitted Liens which
under Applicable Law rank in priority thereto.
|
|
Section 1.13
|
References to Agreements.
|
Except
as otherwise provided in this Agreement, any reference in this Agreement to any agreement or document means such
agreement or document as the same may have been or may from time to time be amended, modified, extended, renewed, restated,
replaced or supplemented in accordance herewith and therewith.
Except
as otherwise provided in this Agreement, any reference in this Agreement to a statute refers to such statute and all rules
and regulations made under it as the same may have been or may from time to time be amended, re-enacted or replaced.
|
|
Section 1.15
|
Currency Equivalents Generally.
|
Any amount specified
in Article 5, Article 6 or Article 8 to be in U.S. Dollars shall also include the Equivalent Amount of such amount
in any currency other than U.S. Dollars. For purposes of determining compliance with Section 6.2 with respect to any transaction
in a currency other than U.S. Dollars, no Default shall be deemed to have occurred solely as a result of changes in rates of exchange
occurring after the time such transaction occurs but, for the avoidance of doubt, the foregoing provisions of this Section 1.15
shall otherwise apply to Section 6.2.
Article 2
CREDIT FACILITIES
|
|
Section 2.1
|
Availability.
|
Each
Lender severally agrees, on the terms and conditions of this Agreement, to make Advances rateably to the Borrower in accordance
with its Commitment. Advances shall be made available pursuant to Article 3. To the
extent that less than the full amount of any Commitment is borrowed by the Borrower during the Drawdown Period, such Commitment
will be automatically reduced to the amount so borrowed.
|
|
Section 2.2
|
Commitment and Facility Limits.
|
|
|
(1)
|
The Aggregate Principal Amount owing at any time under the Credit Facility to (i) all Lenders shall
not exceed the aggregate Commitments, and (ii) each Lender shall not exceed such Lender’s Commitment.
|
|
|
(2)
|
The Credit Facility does not revolve and any amount repaid or prepaid, as the case may be, under
the Credit Facility cannot be reborrowed and reduces the Commitment, rateably by the amount repaid or prepaid, as the case may
be.
|
|
|
Section 2.3
|
Use of Proceeds.
|
The
Borrower shall use the proceeds of the Advances for general
corporate purposes. No proceeds of the Advances shall be used to fund the Restricted Account.
|
|
Section 2.4
|
Mandatory Repayments and Reductions of Commitments.
|
The Borrower shall
repay (subject to Section 8.1) the Aggregate Principal Amount, together with all accrued interest and Fees and all other amounts
payable in connection with the Credit Facility, on the Maturity Date.
|
|
Section 2.5
|
Optional Prepayments; Termination and Reductions of Commitments.
|
|
|
(1)
|
The Borrower may, subject to the provisions of this Agreement, prepay the Aggregate Principal Amount
under the Credit Facility and the Applicable Premium, upon five Business Days’ notice
to the Administrative Agent, by delivery of a notice to the Administrative Agent stating the proposed date and aggregate
principal amount of any prepayment of the Aggregate Principal Amount. The Borrower shall, on the specified
date, pay to the Lenders the amount of the proposed prepayment (together with any accrued interest on such amount and fees then
outstanding) and the Applicable Premium. Each partial prepayment or reduction shall be in an aggregate principal amount of U.S.
$10,000,000 or an integral multiple of such amount in the case of the Aggregate Principal
Amount and Commitments. Notwithstanding
any other provision in this Agreement, in the event that all Advances have not been being outstanding
for more than 90 days, no Applicable Premium shall be payable if the Borrower provides three months’ (or longer) notice
to the Administrative Agent of such prepayment. An amount of the Restricted
Account Collateral on deposit
in the Restricted Account equal to the principal amount of each full or partial prepayment (and, for greater certainty, excluding
any accrued interest on such amount and fees then outstanding) shall be returned to the Guarantor with five
(5) Business Days of such repayment or prepayment (unless a withdrawal from the Restricted Account Collateral was the source of
the repayment or prepayment).
|
|
|
(2)
|
If any payment, repayment, prepayment or acceleration,
in each case whether voluntary or involuntary, of the Aggregate Principal
Amount or part thereof should occur, then the Applicable Premium shall immediately become
due and payable by the Borrower to the Lenders, in addition to all other amounts then due and owing to the Lenders. The Applicable
Premium, shall form part of the Obligations and shall be secured by the Security. The Borrower acknowledges that the Applicable
Premium represents reasonable and fair compensation for the loss that the Lenders may sustain from any such payment, repayment,
prepayment or acceleration, in each case whether voluntary or involuntary, of the Aggregate Principal Amount or part thereof prior
to the Maturity Date.
|
|
|
Section 2.6
|
Payments under this Agreement.
|
|
|
(1)
|
All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or set-off. Unless otherwise expressly provided in this Agreement, the Borrower shall (i) make any payment
required to be made by it to the Administrative Agent or a Lender by depositing the amount of the payment to the Administrative
Agent in immediately available funds not later than 10:00 a.m. (Calgary time) on the date the payment is due, and (ii) with respect
to any prepayment, provide to the Administrative Agent, upon five (5) Business Day’s notice to the Administrative Agent,
a notice of prepayment which shall be irrevocable and binding on the Borrower and shall specify (x) the date of repayment, and
(y) the amount of the Aggregate Principal Amount to be repaid.
|
|
|
(2)
|
Payments made hereunder shall be made on a Business Day. Payments received by the Administrative
Agent before 10:00 a.m. (Calgary time) on a Business Day will be given value on that Business Day. All payments received by the
Administrative Agent after 10:00 a.m. (Calgary time) will be given value on the next following Business Day.
|
|
|
(3)
|
The Borrower shall make each such payment under the Credit Documents in U.S. Dollars.
|
|
|
(4)
|
Any amount received by the Administrative Agent for the account of the Lenders or any of them shall
be held in trust for their respective benefit until a distribution is made by the Administrative Agent to the Lenders or any of
them and shall be deemed to be payment to such Lenders in accordance with the terms of this Agreement.
|
|
|
Section 2.7
|
Application of Payments and Prepayments.
|
|
|
(1)
|
All optional prepayments under the Credit Facility pursuant to Section 2.5 shall be applied
by the Administrative Agent to the Aggregate Principal Amount and the other outstanding Obligations.
|
|
|
(2)
|
If at any time insufficient funds are received by and available to the Administrative Agent to
pay fully all Obligations then due hereunder then such funds shall be applied (i) first, in reduction of the Borrower’s obligation
to pay any unpaid interest and any Fees which are due and owing, (ii) second, in reduction of the Borrower’s obligation to
pay any expenses, claims or losses referred to in Section 10.5,
(iii) third, in reduction of the Borrower’s obligation to pay any Applicable Premium, and (iv) fourth, in reduction of the
Borrower’s obligation to pay any amounts due and owing on account of any unpaid principal amount of Advances and any other
unpaid Aggregate Principal Amount which are due and owing.
|
|
|
Section 2.8
|
Extension of Maturity Date.
|
|
|
(1)
|
The Borrower may, from time to time and provided there is no Default
or Event of Default which is continuing, request an extension of the Maturity Date of each Lender by sending to the Administrative
Agent, an Extension Request not less than sixty (60) days and not more than ninety (90) days prior to the then-current
Maturity Date and the Administrative Agent shall forthwith notify the Lenders of such request and each Lender shall acknowledge
receipt of such notification. No later than thirty (30) days after receipt by the Administrative Agent of an Extension Request,
the Administrative Agent shall provide a written notice to the Borrower confirming either: (i) the Lenders agree to extend
the then-current Maturity Date for an additional 364-day period; or (ii) the Lenders will not extend the then-current
Maturity Date; provided that in the event any such Lender does not so advise the Administrative Agent within such thirty (30)
day period, such Lender shall be deemed to have advised the Administrative Agent that it is not prepared to make an offer to the
Borrower to extend the Maturity Date. Within two (2) Business Days of the Administrative Agent receiving from each such Lender
its decision with respect to making an offer to the Borrower to extend the Maturity Date, the Administrative Agent shall provide
the Borrower with an offer to extend the Maturity Date (which may be subject to such terms and conditions as the Lenders may require,
in their discretion) and the Borrower shall be entitled to accept any such offer at any time up to and including the last Business
Day preceding the then-current Maturity Date by written notice to the Administrative Agent of such acceptance.
|
|
|
(2)
|
If any Lender does not agree or is deemed not to agree to make an offer to the Borrower to extend
the Maturity Date pursuant to the Extension Request, the Administrative Agent shall not provide the Borrower with an offer to extend
the Maturity Date of any of the Lenders.
|
|
|
(3)
|
The Borrower understands that consideration of any Extension Request constitutes an independent
credit decision which each Lender retains the absolute and unfettered discretion to make, and that no commitment in this regard
is hereby given by any Lender.
|
|
|
(4)
|
Notwithstanding the foregoing, the Borrower shall not be entitled to make (a) an Extension Request
if a Default or Event of Default has occurred and is continuing, unless such Default or Event of Default is waived by all of the
Lenders; provided that any such waiver shall be effective only for the purposes of this Section 2.8; and (b) more than two
364-day Extension Requests.
|
The
Borrower shall pay to the Administrative Agent the following set-up fees (collectively, the “Set-Up Fees”):
|
|
(a)
|
an amount equal to 1.25% of the First Advance on the Closing Date;
|
|
|
(b)
|
an amount equal to 0.50% of the Second Advance on the date on which the Second Advance is made;
and
|
|
|
(c)
|
such fee on the Third Advance that is agreed to between the Borrower and the Administrative Agent
pursuant to Section 4.3(1)(h)(i).
|
|
|
Section 2.10
|
Computations of Interest
and Fees.
|
|
|
(1)
|
All computations of interest shall be made by the Administrative Agent taking into account the
actual number of days occurring in the period for which such interest is payable and on the basis of a year of 365 days.
|
|
|
(2)
|
All computations of Fees shall be made by the Administrative Agent on the basis of a year of 365
days taking into account the actual number of days (including the first day but excluding the last day) occurring in the period
for which the fees are payable.
|
|
|
(3)
|
For purposes of the Interest Act (Canada), (i) whenever any interest or Fee under this Agreement
is calculated using a rate based on a year of 365 days (or such other period that is less than a calendar year), as the case may
be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate
based on a year of 365 days (or such other period that is less than a calendar year), as the case may be, (y) multiplied by the
actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends,
and (z) divided by 365 (or such other period that is less than a calendar year), as the case may be, (ii) the principle of deemed
reinvestment of interest does not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated
in this Agreement are intended to be nominal rates and not effective rates or yields.
|
|
|
(4)
|
If any provision of this Agreement or of any of the other Credit Documents would obligate any Credit
Party to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate which would be
prohibited by Applicable Law or would result in a receipt by such Lender of interest at a criminal rate (as such terms are construed
under the Criminal Code) then, notwithstanding such provisions, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Applicable Law
or so result in a receipt by such Lender of interest at a criminal rate, such adjustment to be effected, to the extent necessary,
as follows: firstly, by reducing the amount or rate of interest required to be paid to such Lender under the applicable Credit
Document, and thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to such Lender which
would constitute “interest” for purposes of Section 347 of the Criminal Code.
|
|
|
(5)
|
To the extent permitted by Applicable Law, the provisions of the Judgment Interest Act (Alberta)
will not apply to the Credit Documents and are hereby expressly waived by each of the Credit Parties.
|
Article 3
ADVANCES
|
|
Section 3.1
|
The Advances.
|
Each Lender severally
agrees, on the terms and conditions of this Agreement, to make Advances to the Borrower under
the Credit Facility from time to time on any Business Day during the Drawdown Period as follows:
|
|
(a)
|
an Advance of $49,000,000
on the Closing Date (the “First
Advance”);
|
|
|
(b)
|
an Advance in an amount up to the remaining amount of the Commitment at such time subject to compliance
with Section 6.1(j)(i)(A) (taking into account such Advance) as requested by the Borrower in writing (the “Second
Advance”); and
|
|
|
(c)
|
an Advance in an amount up to the remaining amount of
the Commitment at such time subject to compliance with Section 6.1(j)(i)(A) (taking into account such Advance) as requested
by the Borrower in writing (the “Third Advance”).
|
|
|
Section 3.2
|
Procedure for Borrowing.
|
Each Advance shall
be made on three (3) Business Days’ prior written notice given not later than 9:00 a.m. (Calgary time) by the Borrower to
the Administrative Agent, in substantially the form of Exhibit 3.2 (the “Borrowing
Notice”), and shall be irrevocable and binding on the Borrower. Upon receipt by the Administrative Agent of funds from
the Lenders and fulfilment of the applicable conditions set forth in Article 4, the Administrative Agent will make such funds available
to the Borrower in accordance with Article 2.
|
|
Section 3.3
|
Reliance upon Borrower’s Authority.
|
On or prior to the
Closing Date, the Borrower shall deliver to the Administrative Agent a writing setting forth (a) the bank account of the Borrower
to which the Administrative Agent is authorized to transfer the proceeds of the Advances requested by the Borrower pursuant to
Section 3.2, which bank account shall be reasonably satisfactory to the Administrative Agent, and (b) the names of the officers
authorized to request the Advances on behalf of the Borrower, and shall provide the Administrative Agent with a specimen signature
of each such officer. The Administrative Agent shall be entitled to rely conclusively on such officer’s authority to request
an Advance on behalf of the Borrower, the proceeds of which are to be transferred to the bank account specified by the Borrower
pursuant to the immediately preceding sentence, until the Administrative Agent receives written notice to the contrary. The Administrative
Agent shall have no duty to verify the identity of any individual representing himself as one of the officers authorized by the
Borrower to make such requests on its behalf. The Administrative Agent shall not incur any liability to the Borrower as a result
of acting upon the Borrowing Notice, which notice the Administrative Agent believes in good faith to have been given by an officer
duly authorized by the Borrower to request an Advance on its behalf or for otherwise acting in good faith under this Section 3.3,
and the crediting of such Advance to the bank account specified by the Borrower, or transmittal to such other Person’s bank
account as the Borrower shall direct, shall conclusively establish the obligation of the Borrower to repay such Advance as provided
herein.
|
|
Section 3.4
|
Interest on Advances.
|
|
|
(1)
|
The Borrower shall pay interest on the unpaid principal amount of each Advance from the date of
such Advance until the principal amount of such Advance is repaid in full, as follows:
|
|
|
(a)
|
2.55% per annum on the principal amount of the First Advance;
|
|
|
(b)
|
1.25% per annum on the principal amount of the Second Advance;
and
|
|
|
(c)
|
a per annum interest rate to be agreed between the Borrower
and the Lenders on the principal amounts of the Third Advance pursuant to Section 4.3(1)(h)(i).
|
|
|
(2)
|
Interest on each Advances shall be calculated and payable in arrears (i) on the last
Business Day of each month, and (ii) when such Advance becomes due and payable in full or is repaid.
|
|
|
(3)
|
From and after the date of the occurrence of an Event of Default and for so long as such Event
of Default continues, the Aggregate Principal Amount shall bear interest or Fees at the rates otherwise applicable plus two percent
(2%) per annum.
|
Article 4
CONDITIONS
OF LENDING
|
Section 4.1
|
Conditions Precedent to Effectiveness.
|
The effectiveness of
this Agreement is subject to and conditional upon the Administrative Agent having received, in form and substance satisfactory
to the Lenders and their counsel and in sufficient quantities for each Lender, an executed copy of this Agreement.
|
Section 4.2
|
Conditions Precedent to the Initial Advance.
|
The obligation of each
Lender to make its initial Advance under the Credit Facility is subject to and conditional upon the fulfilment of the following
conditions precedent at the time the initial Advance is made available:
|
|
(a)
|
no Default or Event of Default has occurred or is continuing or would arise immediately after giving
effect to or as a result of the Advance;
|
|
|
(b)
|
the Advance will not violate
any Applicable Law;
|
|
|
(c)
|
the representations and warranties of the Credit Parties contained
in Article 5 and in each of the other Credit Documents are true and correct on the date of the Advance as
if such representations and warranties were made on that date;
|
|
|
(d)
|
the conditions precedent in Section 4.1 have been satisfied;
|
|
|
(e)
|
the Administrative Agent has received, in form and substance and dated a date satisfactory to the
Lenders and their counsel and in sufficient quantities for each Lender:
|
|
|
(i)
|
an executed copy of the Credit Documents (other than this Agreement);
|
|
|
(ii)
|
a certified copy of the IP Credit Documents;
|
|
|
(iii)
|
(i) all documents, instruments, financing statements and notices of security shall have been properly
registered, recorded and filed in all places which, (ii) searches shall have been conducted in all jurisdictions which, and (iii)
deliveries of all consents, approvals, acknowledgements, confirmations, undertakings, subordinations, discharges, waivers, directions,
negotiable documents of title and other documents and instruments to the Administrative Agent shall have been made which, in each
case, are desirable or required to make effective the Security and to ensure the perfection and the first-ranking priority of such
Security subject only to Permitted Liens which rank by law in priority;
|
|
|
(iv)
|
an executed no interest letter in favour of the Administrative Agent and the Lenders from the lenders
under the IP Credit Agreement, in respect of the Restricted Account and the Restricted Account Collateral;
|
|
|
(v)
|
certified copies of (i) the charter documents and by-laws of each Credit Party, (ii) all resolutions
of the Board of Directors or shareholders, as the case may be, of each Credit Party approving the borrowing and other matters contemplated
by this Agreement and the other Credit Documents, and (iii) a list of the officers and directors authorized to sign agreements
together with their specimen signatures;
|
|
|
(vi)
|
a certificate of status, compliance or like certificate with respect to each Credit Party issued
by the appropriate Governmental Authority of the jurisdiction of its incorporation;
|
|
|
(vii)
|
an opinion of counsel to each Credit Party addressed to the Lenders and the Administrative Agent
relating to the status and capacity of such Credit Party, the due authorization, execution and delivery and the validity and enforceability
of the Credit Documents to which such Credit Party is a party, and perfection of the Security granted pursuant to the Security
Agreement to which such Credit Party is a party in the jurisdiction of incorporation of such Credit Party, in the Province of Alberta
and in any other relevant jurisdiction, and such other matters as the Administrative Agent may reasonably request;
|
|
|
(viii)
|
all approvals, acknowledgments and consents of all Governmental Authorities and other Persons which
are required to be obtained by any Credit Party in order to complete the transactions contemplated by this Agreement and to perform
its obligations under any Credit Document to which it is a party;
|
|
|
(ix)
|
the documentation and other information that is required by the Administrative Agent and the Lenders
pursuant to Anti-Terrorism Laws and applicable “know your client” laws and regulations;
|
|
|
(x)
|
such other certificates and documentation as the Administrative Agent may reasonably request;
|
|
|
(f)
|
the Lenders have completed, to their satisfaction, a due diligence
review of the Credit Parties including a review of the capital structure of the Borrower and the IP Credit Documents;
|
|
|
(g)
|
the Lenders are satisfied that, since December 31, 2018, there
has not been an event or circumstance which could reasonably be expected to result in a Material Adverse Effect;
|
|
|
(h)
|
all fees and other amounts then payable under the Credit Documents have been paid in full; and
|
|
|
(i)
|
the initial Advance is made by the Lenders prior to March 1, 2020.
|
|
Section 4.3
|
Conditions Precedent to Advances.
|
|
|
(1)
|
The obligation of each Lender to make Advances or otherwise give effect to any Borrowing Notice
is subject to fulfilment of the following conditions at the time of any Borrowing Notice or Advance, as the case may be:
|
|
|
(a)
|
the conditions precedent in Section 4.1 and Section 4.2 have been satisfied;
|
|
|
(b)
|
the Administrative Agent has received, in form and substance satisfactory
to the Administrative Agent, evidence that the aggregate monies in
the Restricted Account equal, after giving pro forma effect to the Advance, the Minimum Balance;
|
|
|
(c)
|
no Default or Event of Default has occurred or is continuing or would arise immediately after giving
effect to or as a result of the Advance or Borrowing Notice;
|
|
|
(d)
|
the Advance will not violate any Applicable Law;
|
|
|
(e)
|
the representations and warranties contained in Article 5 of this Agreement and in any other
Credit Document are true and correct on the date of the Advance or Borrowing Notice, as the case may be, as if they were made on
that date except for any representation and warranty which is stated to be made only as of a certain date (and then as of such
date), and except to the extent that on or prior to such date the Borrower has advised the Administrative Agent in writing of a
variation in any such representation or warranty, and the Majority Lenders have approved such variation in accordance with Section 10.1;
|
|
|
(f)
|
there has not occurred, developed or come into effect or existence
any event, action, state, condition or major financial occurrence of national or international consequence or any Applicable Law,
or other occurrence of any nature whatsoever which materially adversely affects, or may materially adversely affect, the financial,
banking (including syndication markets) or capital markets in Canada or the United States of America; and
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(g)
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with respect to the Second Advance:
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(i)
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all fees and other amounts then payable under the Credit Documents
have been paid in full; and
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(ii)
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the Administrative Agent has received, in form and substance and
dated a date satisfactory to the Lenders and their counsel and in sufficient quantities for each Lender, such other certificates
and documentation as the Administrative Agent may reasonably request;
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(h)
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with respect to the Third Advance:
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(i)
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the Borrower and the Lenders shall have agreed on the interest rate and fee payable in result of
such Advance, and the Borrower shall execute and deliver such documentation as is required by the Administrative Agent, acting
reasonably, to document such agreement;
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(ii)
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all fees and other amounts then payable under the Credit Documents
have been paid in full; and
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(iii)
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the Administrative Agent has received, in form and substance and
dated a date satisfactory to the Lenders and their counsel and in sufficient quantities for each Lender, such other certificates
and documentation as the Administrative Agent may reasonably request.
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(2)
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Each of the giving of any Borrowing Notice by the Borrower and the acceptance by the Borrower of
any Advance shall be deemed to constitute a representation and warranty by the Borrower that, on the date of such Borrowing Notice
or Advance, as the case may be, and after giving effect to it and to the application of any proceeds from it, the statements set
forth in Section 4.2(a), Section 4.2(b) and Section 4.2(c) are true and correct.
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Section 4.4
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Waiver of Conditions Precedent.
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The making of an Advance
or otherwise giving effect to any Borrowing Notice, without the fulfilment of one or more conditions set forth in Section 4.1,
Section 4.2 or Section 4.3, shall not constitute a waiver of any condition and the Administrative Agent and the Lenders
reserve the right to require fulfilment of such condition in connection with any subsequent Borrowing Notice or Advance.
Section 4.5 Termination.
If the conditions precedent
in Section 4.2 and, with respect to the First Advance only, Section 4.3 are not satisfied by March 1, 2020, this Agreement
will automatically terminate without any further action of the parties to this Agreement and be of no further force and effect
without liability of any party to this Agreement (or any Related Party of such party) to any other party to this Agreement, except
as expressly contemplated by this Agreement, any other Credit Document and any other written agreement that is entered into by
the parties to this Agreement (or any Affiliate of such party) in connection with this Agreement and expressly stated to survive
the termination of this Agreement.
Article 5
REPRESENTATIONS AND WARRANTIES
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Section 5.1
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Representations and Warranties.
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Each Credit Party jointly
and severally represents and warrants to the Administrative Agent and each Lender, acknowledging and confirming that the Administrative
Agent and each Lender is relying on such representations and warranties without independent inquiry in entering into this Agreement
and providing Advances that:
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(a)
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Incorporation and Qualification. Each of the Credit Parties is a corporation duly incorporated,
organized and validly existing under the laws of its jurisdiction of incorporation. Each of the Credit Parties is qualified, licensed
or registered to carry on business under the laws applicable to it in all jurisdictions in which such qualification, licensing
or registration is necessary or where failure to be so qualified would have a Material Adverse Effect;
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(b)
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Corporate Power. Each of the Credit Parties has all requisite corporate power and authority
to (i) own, lease and operate its properties and assets and to carry on its business as now being conducted by it, and (ii) enter
into and perform its obligations under the Credit Documents to which it is a party;
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(c)
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Conflict With Other Instruments. The execution and delivery by each of the Credit Parties
and the performance by each of them of their respective obligations under, and compliance with the terms, conditions and provisions
of, the Credit Documents to which they are a party will not (i) conflict with or result in a breach of any of the terms or conditions
of (u) their respective constating documents or by-laws, (v) any Applicable Law, or (w) any contractual restriction binding on
or affecting them or their respective Assets, or (ii) result in, require or permit (x) the imposition of any Lien in, on or with
respect to any of their respective Assets (except in favour of the Administrative Agent and the Secured Creditors), (y) the acceleration
of the maturity of any Debt binding on or affecting any Credit Party, or (z) any third party to terminate or acquire rights under
the IP Credit Documents;
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(d)
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Corporate Action, Governmental Approvals, etc. The execution and delivery of each of the
Credit Documents by each of the Credit Parties, in each case, to the extent a party thereto and the performance by each of the
Credit Parties of their respective obligations under the Credit Documents, in each case, to the extent a party thereto have been
duly authorized by all necessary corporate action including, without limitation, the obtaining of all necessary shareholder consents.
No authorization, consent, approval, registration, qualification, designation, declaration or filing with any Governmental Authority
or other Person, is or was necessary in connection with the execution, delivery and performance of obligations under the Credit
Documents except as are in full force and effect, unamended, at the date of this Agreement;
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(e)
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Execution and Binding Obligation. This Agreement and the other Credit Documents have been
duly executed and delivered by each of the Credit Parties, in each case, to the extent a party thereto and constitute legal, valid
and binding obligations of each such Person enforceable against them in accordance with their respective terms, subject only to
any limitation under Applicable Laws relating to (i) bankruptcy, insolvency, arrangement or creditors’ rights generally,
and (ii) the discretion that a court may exercise in the granting of equitable remedies;
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(f)
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Authorizations, etc. Each of the Credit Parties possesses all authorizations, permits, consents,
registrations and approvals necessary to properly conduct their respective businesses and all such authorizations, permits, consents,
registrations and approvals are in good standing and in full force and effect, except where the failure to possess or maintain
in good standing and in full force and effect such authorizations, permits, consents, registrations or approvals, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
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(g)
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Ownership and Use of Property. The Guarantor has good and merchantable title to all Restricted
Account Collateral free and clear of any Liens other than Permitted Liens. The Guarantor does not have any commitment or
obligation (contingent or otherwise) to grant any Liens on the Restricted Account Collateral except for Permitted Liens. No Credit
Party owns or leases any real property;
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(i)
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The Borrower: (i) is a single purpose entity created solely for
the purpose of entering into and performing its obligations under the Credit Documents and making intercompany loans to the Parent
and its subsidiaries; (ii) does not have any subsidiaries, (iii) does not hold any Equity Securities in any Person; and (iv) does
not engage and has not engaged in any business or activities unrelated to the business or activities described in (i) (other than
such business or activities that are incidental, necessary and appropriate to accomplish the foregoing);
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(ii)
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The Guarantor: (i) is a single purpose entity
created solely for the purpose of entering into and performing its obligations under the Guarantee, the Security Agreement, the
Restricted Cash Account Agreement and the IP Credit Documents, (ii) does not have any subsidiaries; (iii) does not hold any Equity
Securities in any Person; and (iv) does not engage and has not engaged in any business or activities unrelated to the business
or activities described in (i) (other than such business or activities that are incidental, necessary and appropriate to accomplish
the foregoing).
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(i)
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Compliance with Applicable Laws. Each of the Credit Parties,
the Parent and each of the subsidiaries of the Parent is in compliance with all Applicable Laws except where the failure to be
in compliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The Credit
Documents and the transactions contemplated thereby are in compliance with all applicable securities related laws, rules
and regulations applicable to each of the Credit Parties and any direct or indirect parent thereof to which any such laws, rules
and regulations would apply;
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(j)
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Withholding and Remittance of Source Deductions. Each of the Credit Parties has withheld
from its employees, customers and other applicable payees (and timely paid to the applicable Governmental Authority) the proper
and accurate amount of all Taxes, priority claims and other amounts required to be withheld or collected and remitted in compliance
with all Applicable Laws;
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(k)
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No Default. No Credit Party is in violation of its constating documents, its by-laws or
any shareholders’ agreement applicable to it;
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(l)
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No Default or Event of Default. No Default or Event of Default
has occurred and is continuing or would reasonably be expected to arise immediately after giving effect to or as a result of any
Advance or Borrowing Notice pursuant to this Agreement;
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(m)
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No Restrictive Agreements. The Guarantor is not a party to any agreement or instrument or
subject to any restriction (including any restriction set forth in its constating documents, by-laws or any shareholders’
agreement applicable to it) which has or, to the best of its knowledge, in the future may prohibit,
restrict or impose any condition upon the ability of the Guarantor to create, incur or permit to exist any Lien upon the Restricted
Account Collateral;
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(n)
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Pension Plans. No Credit Party has any Pension Plans;
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(o)
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IP Credit Documents. All IP Credit Documents are
in full force and effect and, other than amendments in accordance with Section 6.2(f)(i), unamended. The Guarantor and the
IP Guarantor are not in default of the IP Credit Documents to the extent that such default would
reasonably be expected to have a Material Adverse Effect and none of the Guarantor, or to the best knowledge of the Guarantor,
the IP Guarantor or any other party to any IP Credit Document is in default of the IP
Credit Documents to the extent that such default would reasonably be expected to have a Material Adverse Effect. No event
has occurred which, with the giving of notice, lapse of time or both, would constitute a default under, or in respect of, any IP
Credit Document which would reasonably be expected to have a Material Adverse Effect. There is no dispute regarding any
IP Credit Document which would reasonably be expected to have a Material Adverse Effect;
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(p)
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Books and Records. All books and records of each of the Credit Parties have been fully,
properly and accurately kept and completed in accordance with GAAP, where applicable, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein. The Credit Parties’ books and records and other data and information
are available to the Credit Parties in the ordinary course of their respective businesses;
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(q)
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Tax Liability. Each of the Credit Parties has filed all tax and information returns which
are required to be filed. Each of the Credit Parties has paid all Taxes which have become due pursuant to such returns or pursuant
to any assessment received by any of them other than those in respect of which liability based on such returns or assessments is
being contested in good faith and by appropriate proceedings where adequate reserves have been established in accordance with GAAP,
and all Taxes that any Governmental Authority is currently entitled to collect in respect of such contest, if any, have been paid.
Adequate provision for payment has been made for Taxes not yet due. There are no disputes with respect to Taxes existing or pending
involving any of the Credit Parties or their respective businesses which would reasonably be expected to have a Material Adverse
Effect;
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(r)
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Financial Statements. The historical financial statements provided to the Lenders in connection
with this Agreement and the audited consolidated financial statements of the Parent most recently delivered to the Administrative
Agent pursuant to Section 6.1(a) have been prepared in accordance with GAAP and each presents fairly and consistently:
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(i)
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the consolidated assets, liabilities, (whether accrued, absolute, contingent or otherwise) and
financial position of the Parent as at the respective dates of the relevant statements; and
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(ii)
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the consolidated sales and earnings of the Parent during the periods covered by such statements;
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(s)
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Debt. No Credit Party has any Debt except as permitted by Section 6.2(a). There exists
no default under the provisions of any instrument evidencing such Debt or of any agreement relating thereto which default could
reasonably be expected to have a Material Adverse Effect;
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(t)
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Solvency. Each of the Credit Parties is Solvent;
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(u)
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Security. The Security Agreement is effective to create in favour of the Administrative
Agent for the benefit of the Secured Creditors, legal, valid and perfected first priority Liens (subject only to Permitted Liens
which rank by law in priority), enforceable in accordance with their terms against third parties and any trustee in bankruptcy
in the Restricted Account Collateral subject thereto, except to the extent a secured creditor’s rights are affected or limited
by applicable bankruptcy, insolvency, moratorium, organization and other laws of general application limiting the enforcement of
secured creditors’ rights generally;
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(v)
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No Litigation. There is no action, suit, arbitration or proceeding pending, taken or to
the Borrower’s knowledge, threatened, before or by any Governmental Authority or arbitrator or by or against any elected
or appointed public official or private person in Canada or elsewhere, which (i) challenges, or to the knowledge of the Borrower,
has been proposed which may challenge, the validity or propriety of the transactions contemplated under the Credit Documents or
the documents, instruments and agreements executed or delivered in connection therewith or related thereto, or (ii) would
reasonably be expected to have a Material Adverse Effect;
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(w)
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Anti-Terrorism, Anti-Corruption Laws. None of the Credit
Parties or other Related Parties is a Sanctioned Person or is in violation of any Anti-Terrorism Law or Sanction, or deals in property
or interests in property, or otherwise engages in any transaction, prohibited by any Anti-Terrorism Law or Sanction. None of the
Advances and none of the other services and products, if any, to be provided by any of the Secured Creditors under or in connection
with this Agreement (i) will be used by, on behalf of, or for the benefit of, any Person other than any Credit Party, (ii) will
be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political
party, candidate for political office, official of any public international organization, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the Corruption of
Foreign Public Officials Act (Canada), or any similar laws, rules or regulations issued, administered or enforced by any Governmental
Authority having jurisdiction over any Credit Party, or (iii) will be used in a manner that would result in a violation of any
Sanctions and/or section 462.31(1) of the Criminal Code. None of the Obligations and none
of the other amounts payable under the Credit Agreement will be paid by any of the Credit Parties with any property or proceeds
of any property that was obtained or derived directly or indirectly as a result of an act or omission anywhere that, if it had
occurred in Canada, would have constituted a designated offence (as defined in section 462.31(1) of the Criminal Code).
Each of the Credit Parties has taken measures appropriate to the circumstances (in any event as
required by Applicable Law) to ensure that each of the Credit Parties is and will continue to be in compliance with such applicable
anti-corruption laws, rules and regulations and Anti-Terrorism Laws; and
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(x)
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Disclosure. All written information supplied to
the Administrative Agent and the Lenders is true and accurate in all material respects and does not contain any untrue statement
of material fact or omit to state a material fact necessary in order to make the statements contained in such written information
not misleading in light of the circumstances under which such statements were made. There
is no fact known to the Credit Parties which would reasonably be expected to have a Material Adverse Effect and which has not
been disclosed to the Administrative Agent and the Lenders. No
event has occurred which would reasonably be expected to have a Material Adverse Effect since the
date of last financial statements delivered to the Lenders.
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Section 5.2
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Survival of Representations and Warranties.
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(1)
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The representations and warranties in this Agreement and in any
certificates or documents delivered to the Administrative Agent and the Lenders shall not merge in or be prejudiced by and shall
survive any Advance and shall continue in full force and effect so long as any amounts are
owing by the Borrower to the Lenders, or any of them, under this Agreement.
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(2)
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The representations and warranties in Section 5.1 will be
deemed to be repeated by the Credit Parties on the date of delivery of any Borrowing Notice by the Borrower, the acceptance by
the Borrower of any Advance, the last day of each Financial
Quarter, and the date of delivery of each Compliance Certificate, except to the extent that on or prior to such date the
Credit Parties have advised the Administrative Agent in writing of a variation in any such representation or warranty, and the
Majority Lenders have approved such variation in accordance with Section 10.1.
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Article 6
COVENANTS OF THE BORROWER
|
Section 6.1
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Affirmative Covenants.
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So long as any amount
owing under this Agreement remains unpaid or any Lender has any obligation under this Agreement, and unless consent is given in
accordance with Section 10.1, the Borrower and each other Credit Party shall do the following:
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(a)
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Prompt Payment. The Borrower will pay or cause to be paid all Obligations and other amounts
payable under the Credit Documents punctually when due;
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(i)
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The Borrower shall cause the Parent to timely file all financial statements that must be publicly
filed or sent to its shareholders pursuant to applicable securities legislation within the time prescribed by such applicable
securities legislation and make such documents available on the System for Electronic Document Analysis and Retrieval
(SEDAR) within such prescribed time period. If the Parent is not at any time subject to applicable securities legislation,
the Borrower shall deliver to the Lender: (i) within 90 days after the end of each Financial Year, copies of its audited
annual financial statements, and (ii) within 45 days after the end of each of the first three Financial Quarters of each
Financial Year, interim financial statements which shall contain such information required to be provided in quarterly reports
by a “reporting issuer” (as such term is defined in such applicable securities legislation) under the applicable securities
legislation; and
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(ii)
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The Borrower will deliver to the Administrative Agent within 90 days after the end of each
Financial Year and within 45 days after the end of each of the first three Financial Quarters of each Financial Year, a
duly executed and completed a Compliance Certificate substantially in the form of Exhibit 6.1(b)(ii);
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(c)
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Additional Reporting Requirements. Deliver to the Administrative Agent (with sufficient
copies for each of the Lenders):
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(i)
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as soon as practicable, and in any event within five days after the occurrence of each Default
or Event of Default, a statement of the chief financial officer of the Borrower or any other officer acceptable to the Administrative
Agent setting forth the details of the Default or Event of Default and the action which the Credit Party proposes to take or have
taken; and
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(ii)
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such other information respecting the condition or operations, financial or otherwise, of any Credit
Party or its business as the Administrative Agent, on behalf of the Lenders, may from time to time reasonably request;
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(d)
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Corporate Existence. Except as otherwise permitted in this Agreement, preserve and maintain
its corporate existence;
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(e)
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Permitted Uses. Use the proceeds of the Advances
hereunder only for the purposes permitted pursuant to Section 2.3 and in compliance with Section 5.1(w);
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(f)
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Compliance with Applicable Laws, etc. Comply, and cause the Parent and each of the subsidiaries
of the Parent to comply, with the requirements of all Applicable Laws except where non-compliance with any such requirement of
Applicable Law would not reasonably be expected to have a Material Adverse Effect;
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(g)
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IP Credit Documents. Perform and observe all terms and provisions of each IP Credit Document
to be performed or observed by the Guarantor if failure to do so would reasonably be expected
to have a Material Adverse Effect and maintain each IP Credit Document in full force and effect if failure to do so would
reasonably be expected to have a Material Adverse Effect;
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(h)
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Payment of Taxes and Claims. Pay or cause to be paid, when due, (i) all Taxes imposed upon
it or upon its income, sales, capital or profit or any other Assets belonging to it before the same becomes delinquent or in default,
and (ii) all claims which, if unpaid, would by Applicable Law become a Lien upon the Assets of any of the Credit Parties, except
any such Tax or claim which is being contested in good faith and by proper proceedings and in respect of which such Credit Party
have established adequate reserves in accordance with GAAP or which are Permitted Liens;
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(i)
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Keeping of Books. Keep (i) proper books of record and account, in which full and correct
entries shall be made in respect of the businesses in accordance with GAAP, and (ii) books and records pertaining to the Restricted
Account Collateral in such detail, form and scope as the Administrative Agent reasonably requires;
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(i)
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The Guarantor shall maintain the Restricted Account pursuant
to the Restricted Cash Account Agreement and the Security Agreement and in accordance with the following terms:
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(A)
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at all times the minimum balance in the Restricted
Account shall be equal to no less than the Aggregate Principal Amount plus
$1,000,000 (the “Minimum Balance”);
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(B)
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except as provided
in the Restricted Cash Account Agreement, the Guarantor shall not have the right to withdraw, require delivery of, assign
or otherwise take possession of, or exercise rights in respect of, the Restricted Account or the Restricted Account Collateral
so long as any of the Obligations have not been satisfied in full or the Administrative Agent or any of the Lenders have any obligation
under this Agreement or the other Credit Documents and the Administrative Agent is irrevocably authorized and directed to apply
the Restricted Account Collateral in full or partial payment of the Obligations upon the occurrence and during the continuance
of an Event of Default; and
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(C)
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############# shall not be required to refund or return any of the funds deposited into the Restricted
Account (to the extent required to do so hereunder or otherwise) to any party or bank account located outside of Canada and ############# will only accept Restricted Account Collateral from a wire transfer originating from a Canadian domiciled account;
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(ii)
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If, on any day, the Minimum Balance is not credited to the Restricted Account, the Guarantor will
promptly, and in any event within five Business Days, either prepay the Obligations or deposit additional funds in the Restricted
Account, in each case, in an amount to cure the Minimum Balance deficiency;
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(iii)
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The Guarantor shall from time to time take such actions
as may be necessary or advisable in order to preserve the rights of the Administrative Agent under the Security Agreement. Without
limiting the generality of the foregoing, the Guarantor shall execute any documents, filing
statements, agreements and instruments, and take all further action that may be required under Applicable Law, or that the Administrative
Agent may reasonably request, in order to effectuate the execution, delivery and performance by the Guarantor
of the Security Agreement and the transactions contemplated thereby and in order to grant, preserve, protect and perfect
the validity and first priority of the Liens created or intended to be created by the Security Agreement. Such Liens will be created
under the Security Agreement in form and substance reasonably satisfactory to the Administrative Agent, and the Guarantor
shall deliver, or cause to be delivered, to the Administrative Agent all such instruments and documents (including legal
opinions and lien searches) as the Administrative Agent shall reasonably request to evidence compliance with this Section 6.1(j)(iii);
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(k)
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Anti-Terrorism Laws. Promptly provide all information with respect to the Credit Parties,
their respective directors, authorized signing officers, direct or indirect shareholders or other persons in control of the Credit
Parties, including supporting documentation and other evidence, as may be reasonably requested by the Administrative Agent or Lender,
or any prospective assignee of the Administrative Agent or Lender, in order to comply with any applicable Anti-Terrorism Laws or
such other applicable “know your client” laws and requirements, whether now or hereafter existence; and
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(l)
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Further Assurances. At its cost and expense, upon the reasonable request of the Administrative
Agent, execute and deliver or cause to be executed and delivered to the Administrative Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Administrative Agent to carry
out more effectually the provisions and purposes of the Credit Documents.
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Section 6.2
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Negative Covenants.
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So long as any amount
owing under this Agreement remains unpaid or any Lender has any obligation under this Agreement and, unless consent is given in
accordance with Section 10.1, the Borrower and each other Credit Party shall not:
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(a)
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Debt. Create, incur, assume or suffer to exist any Debt except:
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(i)
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Debt of the Borrower to the Lenders under this Agreement;
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(ii)
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Debt of the Guarantor to the lenders under the IP Credit Agreement;
and
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(iii)
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Guarantees by the Guarantor of Debt of the Borrower permitted pursuant to this Section 6.2(a),
in each case, provided that to the extent the primary Debt is required to be subordinated, the Debt under such Guarantees is subordinated
on the same terms;
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(b)
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Liens. Create, incur, assume or suffer to exist any Lien on the Restricted Account or the
Restricted Account Collateral except Permitted Liens;
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(c)
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Mergers, Etc. Enter into, or permit any of the Credit Parties to enter into, any reorganization,
consolidation, amalgamation, arrangement, winding-up, merger or other similar transaction;
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(d)
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Disposal of Assets Generally. Dispose of the Restricted Account or the Restricted Account
Collateral to any Person;
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(e)
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Change in Business. Make any material change in the nature of its business description in
Section 5.1(h);
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(i)
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Make any amendments to any IP Credit Document if such amendments would be materially adverse (as
determined by the Majority Lenders, acting reasonably) to the interests of the Lenders under the Credit Documents or affect the
Restricted Account or the Restricted Account Collateral;
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(ii)
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Amend or change any of its constating documents, except where such amendment, change or new agreement
is not materially adverse (as determined by the Majority Lenders, acting reasonably) to the interests of the Lenders under the
Credit Documents;
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(g)
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Restrictive Agreements. Directly or indirectly enter into,
incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability
of the Guarantor to create, incur or permit to exist any Lien upon the Restricted Account Collateral;
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(h)
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Pension Plans. Enter into or permit any Credit Party to enter into any Pension Plan or collective
bargaining agreement; and
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(i)
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Anti-Terrorism Laws. Pay or cause to be paid all Obligations
and other amounts payable under the Credit Documents with any property or proceeds of any property that was obtained or derived
directly or indirectly as a result of an act or omission anywhere that, if it had occurred in Canada, would have constituted a
designated offence (as defined in section 462.31(1) of the Criminal Code).
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Section 6.3
|
Separateness Covenants.
|
Each of Borrower and
the Guarantor hereby represents, warrants and covenants, as of the date hereof and continuing (except with respects to statements
expressly made as of the date hereof) until such time as the Obligations are paid in full, that it will comply with Section 6.3
of the IP Credit Agreement (as in effective on the date of this Agreement) is incorporated herein, mutatis mutandis.
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Section 6.4
|
Financial Covenants.
|
So long as any amount
owing under this Agreement remains unpaid or any Lender has any obligation under this Agreement, and unless consent is given in
accordance with Section 10.1, the Borrower shall maintain, at all times, maintain the Minimum
Balance in the Restricted Account.
Article 7
CHANGES IN CIRCUMSTANCES
|
Section 7.1
|
Increased Costs.
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(1)
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If any Change in Law shall:
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(a)
|
impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge
or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;
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(b)
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subject any Lender to any Tax of any kind whatsoever with respect
to this Agreement, any Advance made by it or any participation by it in any Advance,
or change the basis of taxation of payments to such Lender in respect thereof, except for Indemnified Taxes or Other Taxes covered
by Section 7.2 and the imposition, or any change in the rate, of any Excluded Tax payable by such Lender; or
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(c)
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impose on any Lender or any applicable interbank market any other
condition, cost or expense affecting this Agreement, Advances made by such Lender or Advances
in which such Lender has a participation interest;
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and
the result of any of the foregoing shall be to increase the cost to such Lender of making, maintaining, issuing or participating
in any Advance (or of maintaining its obligation to make, issue or participate in any such
Advance), or to reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or any other amount), then upon request of such Lender the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.
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(2)
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A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender
or its holding company, as the case may be, as specified in Section 7.1(1), including reasonable detail of the basis of calculation
of the amount or amounts, and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
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(3)
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Failure or delay on the part of any Lender to demand compensation pursuant to this Section 7.1
shall not constitute a waiver of such Lender’s right to demand such compensation, except that the Borrower shall not be required
to compensate a Lender pursuant to this Section 7.1 for any increased costs incurred or reductions suffered more than nine
months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s intention to claim compensation therefore, unless the Change in Law giving rise to such increased costs
or reductions is retroactive, in which case the nine-month period referred to above shall be extended to include the period of
retroactive effect thereof.
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(4)
|
The provisions of this Section 7.1 shall survive the termination of this Agreement and the
repayment of the Aggregate Principal Amount.
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(1)
|
If any Credit Party, the Administrative Agent or any Lender
is required by Applicable Law to deduct or pay any Indemnified Taxes (including any Other Taxes) in respect of any payment by or
on account of any obligation of any Credit Party hereunder or under any other Credit Document,
then (i) the sum payable shall be increased by such Credit Party when payable as necessary
so that after making or allowing for all required deductions and payments for Indemnified Taxes (including deductions and payments
applicable to additional sums payable under this Section 7.2), the Administrative Agent or any Lender, as the case may be,
receives an amount equal to the sum it would have received had no such deductions or payments for Indemnified Taxes been required,
(ii) such Credit Party shall make any such deductions required to be made by it under
Applicable Law and (iii) such Credit Party shall timely pay the full amount required to
be deducted to the relevant Governmental Authority in accordance with Applicable Law.
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(2)
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Without limiting the provisions of Section 7.2(1) above, each
Credit Party shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law.
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(3)
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The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly
or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.
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(4)
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As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a
Credit Party to a Governmental Authority, such Credit Party shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment satisfactory to the Administrative Agent.
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(5)
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Any Foreign Lender or Foreign Administrative Agent that is entitled
to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax
purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Credit Document
shall, at the request of the Borrower, deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by Applicable Law or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed documentation prescribed
by Applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition,
any Lender or the Administrative Agent, if requested by the Borrower or the Administrative
Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower
or the Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender or Administrative Agent is subject to withholding or information reporting requirements.
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(6)
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If the Administrative
Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it
has been indemnified by a Credit Party or with respect to which a Credit Party has paid additional amounts pursuant to this Section 7.2
or that, because of the payment of such Taxes or Other Taxes, it has benefited from a reduction in Excluded Taxes otherwise payable
by it, it shall pay to such Credit Party an amount equal to such refund or reduction (but only to the extent of indemnity payments
made, or additional amounts paid, by such Credit Party under this Section 7.2 with respect to the Taxes or Other Taxes giving
rise to such refund or reduction), net of all expenses of the Administrative Agent or
such Lender, as the case may be, and without interest (other than any net after Tax interest paid by the relevant Governmental
Authority with respect to such refund). Each Credit Party, upon the request of the Administrative Agent
or such Lender, agrees to repay the amount paid over to such Credit Party (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such Lender if
the Administrative Agent or such Lender is required to repay such refund or reduction to such Governmental Authority. This Section 7.2(6)
shall not be construed to require the Administrative
Agent or any Lender to make available its tax returns (or any other information relating to
its taxes that it deems confidential) to the Borrower or any other Person, to arrange its affairs in any particular manner or
to claim any available refund or reduction.
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(7)
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The provisions of this Section 7.2 shall survive the termination of this Agreement and the
repayment of the Aggregate Principal Amount.
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If any Lender determines
that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender
or its applicable lending office to make, maintain, issue or participate in, any Advance (or to maintain any such obligation to
make, issue or participate in any Advance), or to determine or charge interest rates based upon any particular rate, then, on notice
thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender with respect to the activity
that is unlawful shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender
(with a copy to the Administrative Agent), prepay or take any necessary steps with respect to any Advance, in order to avoid the
activity that is unlawful. Upon any such prepayment, the Borrower shall also pay accrued interest on the amount so prepaid and
any applicable breakage costs and amounts as a result of prepayment to a Lender.
Article 8
EVENTS OF DEFAULT
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Section 8.1
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Events of Default.
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The occurrence of any
one or more of the following events shall constitute an event of default under this Agreement (an “Event of Default”):
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(a)
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the Borrower fails to pay any amount of the Aggregate Principal Amount (including the Applicable
Premium) when such amount becomes due and payable;
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(b)
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the Borrower fails to pay any interest or Fees when they become due and payable and such failure
remains unremedied for a period of three Business Days;
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(c)
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any representation or warranty or certification made or deemed
to be made by any Credit Party or any of their respective directors or officers in any Credit Document shall prove to have been
incorrect when made or deemed to be made and, if the circumstances giving rise to the incorrect
representation or warranty are capable of modification or rectification (such that, thereafter the representation or warranty would
be correct), the representation or warranty remains uncorrected for a period of 15
days;
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(d)
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the Borrower fails to perform, observe or comply with any of the covenants contained in Section 6.1(a),
Section 6.1(j), Section 6.2 or Section 6.3;
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(e)
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the Borrower fails to perform, observe or comply with any of the
covenants contained in Section 6.1 and such failure remains unremedied for 15 days;
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(f)
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the Borrower fails to perform, observe or comply with any other
term, covenant or agreement contained in any Credit Document to which it is a party and such failure remains unremedied for 15
days;
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(g)
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the Guarantor fails to perform or observe any term, covenant
or agreement contained in any IP Credit Document on its part to be performed or observed where such failure would reasonably be
expected to have a Material Adverse Effect; or there is an event of default under the IP Credit Agreement and such event of default
has resulted in the lenders under the IP Credit Agreement commencing enforcement proceedings, provided that in the case of the
exercise of the Canopy Offer (as defined in the IP Credit Agreement), it shall only be an event of default hereunder if the obligations
under the IP Credit Agreement have not been repaid in full within the 30 period after the Canopy Offer is first permitted to be
exercised;
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(h)
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any Credit Party repudiates its obligations under any Credit Document or any material provision
thereof, or claims any of the Credit Documents or any material provision thereof to be invalid or withdrawn in whole or in part;
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(i)
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any one or more of the Credit Documents or any material provision thereof ceases to be, or is determined
by a court of competent jurisdiction not to be, a legal, valid and binding obligation of any Credit Party which is a party thereto,
enforceable by the Administrative Agent, the Lenders or any of them against such Credit Party;
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(j)
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if any of the Security shall cease to be a valid and perfected first priority Lien on the Restricted
Account Collateral thereunder or any Assets intended to be Restricted Account Collateral thereunder, subject only to Permitted
Liens which rank by law in priority;
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(k)
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any judgment or order for the payment of money in excess of U.S.
$1,000,000 is rendered against any Credit Party and either (i) enforcement proceedings have been commenced by a creditor
upon the judgment or order, or (ii) there is any period of 15 consecutive days during which a stay of enforcement of the judgment
or order, by reason of a pending appeal or otherwise, is not in effect;
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(l)
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there is a Change of Control;
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(m)
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any of the Credit Parties (i) becomes insolvent or generally not able to pay its debts as they
become due, (ii) admits in writing its inability to pay its debts generally or makes a general assignment for the benefit of creditors,
(iii) institutes or has instituted against it any proceeding seeking (x) to adjudicate it a bankrupt or insolvent, (y) liquidation,
winding up, administration, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under
any Applicable Law relating to bankruptcy, insolvency, reorganization or relief of debtors including any proceeding under applicable
corporate law seeking a compromise or arrangement of, or stay of proceedings to enforce, some or all of the debts of such Person,
or (z) the entry of an order for relief or the appointment of a receiver, receiver-manager, administrator, custodian, monitor,
trustee or other similar official for it or for any substantial part of its Assets, and in the case of any such proceeding instituted
against it (but not instituted by it), either the proceeding remains undismissed or unstayed for a period of 30
days, such Person fails to diligently and actively oppose such proceeding, or any of the actions sought in such proceeding (including
the entry of an order for relief against it or the appointment of a receiver, receiver-manager, administrator, custodian, monitor,
trustee or other similar official for it or for any substantial part of its properties and assets) occurs, or (iv) takes any corporate
action to authorize any of the above actions;
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(n)
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there has occurred an event or development that, in the sole opinion of the Majority Lenders, has
had or could reasonably be expected to have a Material Adverse Effect; or
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(o)
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the audited consolidated financial statements of the Parent are qualified by an Impermissible Qualification.
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Section 8.2
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Acceleration.
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Upon the occurrence
and during the continuance of an Event of Default, the Administrative Agent shall at the request of, or may with the consent of,
the Majority Lenders, by written notice to the Borrower (i) terminate the Lenders’ obligations to make further Advances under
the Credit Facility, and (ii) (at the same time or at any time after such termination) declare all Obligations (including the Applicable
Premium) to be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that, upon the occurrence of an Event of Default under Section 8.1(m), the
Lender’s obligations to make further Advances under the Credit Facility shall automatically terminate and all Obligations
shall become immediately due and payable, with any presentment, demand, protest or notice of any kind from the Administrative Agent
or any Lender.
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Section 8.3
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Remedies Upon Default.
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|
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(1)
|
Upon a declaration that the Obligations are immediately due and payable pursuant to Section 8.2,
the Administrative Agent shall at the request of, or may with the consent of, the Majority Lenders, commence such legal action
or proceedings as the Majority Lenders, in their sole discretion, deem expedient, including the commencement of enforcement proceedings
under the Credit Documents, all without any additional notice, presentation, demand, protest, notice of dishonour, entering into
of possession of any property or assets, or any other action or notice, all of which are expressly waived by the Borrower.
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|
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(2)
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The rights and remedies of the Administrative Agent and the Lenders under the Credit Documents
are cumulative and are in addition to, and not in substitution for, any other rights or remedies. Nothing contained in the Credit
Documents with respect to the indebtedness or liability of the Borrower to the Secured Creditors, nor any act or omission of the
Secured Creditors, or any of them, with respect to the Credit Documents or the Security shall in any way prejudice or affect the
rights, remedies and powers of the Secured Creditors under the Credit Documents or the Security.
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Section 8.4
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Right of Set-off.
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If an Event of Default
has occurred and is continuing, each of the Lenders and each of their respective Affiliates is hereby authorized at any time and
from time to time to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate
to or for the credit or the account of the Credit Parties against any and all of the obligations of the Credit Parties now or hereafter
existing under this Agreement or any other Credit Document to such Lender, irrespective of whether or not such Lender has made
any demand under this Agreement or any other Credit Document and although such obligations of the Credit Parties may be contingent
or unmatured. The rights of each of the Lenders and their respective Affiliates under this Section are in addition to other rights
and remedies (including other rights of set-off, consolidation of accounts and bankers’ lien) that the Lenders or their respective
Affiliates may have. Each Lender may notify the Borrower and the Administrative Agent after any such set-off and application, but
the failure to give such notice shall not affect the validity of such set-off and application. If any Affiliate of a Lender exercises
any rights under this Section 8.4, it shall share the benefit received in accordance with Section 9.13 as if the benefit
had been received by the Lender of which it is an Affiliate.
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Section 8.5
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Application of Cash Proceeds
of Realization.
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(1)
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Subject to the claims, if any, of secured creditors of the Credit Parties whose security ranks
in priority to the Security, all Cash Proceeds of Realization shall be applied and distributed, and the claims of the Secured Creditors
shall be deemed to have the relative priorities which would result in the Cash Proceeds of Realization being applied and distributed,
as follows:
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(a)
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first, to the payment of all costs and expenses (including fees of counsel) of the Administrative
Agent in connection with realization on the Security and enforcing the rights of the Lenders under the Credit Documents;
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(b)
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second, except as set forth in clause (a) above, to the payment of the outstanding Obligations
owing to each Secured Creditor, rateably according to the proportion that the Obligations owing to such Secured Creditor at such
time bear to the Obligations owing to all Secured Creditors at such time;
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(c)
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third, to the payment of the surplus, if any, to whomever may be lawfully entitled to receive
such surplus.
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Article 9
THE AGENTS AND THE LENDERS
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Section 9.1
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Appointment and Authority.
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Each of the Lenders
hereby irrevocably appoints the Administrative Agent to act on its behalf as the Administrative Agent hereunder and under the other
Credit Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the Secured Creditors, and no Credit Party shall have rights
as a third party beneficiary of any of such provisions.
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Section 9.2
|
Rights as a Lender.
|
Each Person serving
as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise requires, include each Person serving as the Administrative
Agent hereunder in its individual capacity. Each such Person and its Affiliates may accept deposits from, lend money to, own securities
of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Credit
Party or any Affiliate thereof as if such Person were not the Administrative Agent and without any duty to account to the Lenders.
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Section 9.3
|
Exculpatory Provisions.
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|
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(1)
|
The Administrative Agent shall not have any duties or obligations except those expressly set forth
herein and in the other Credit Documents, and its duties shall be administrative in nature. Without limiting the generality of
the foregoing, the Administrative Agent shall not:
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|
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(a)
|
be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of
Default has occurred and is continuing;
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(b)
|
have any duty to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that the Administrative Agent
is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as
shall be expressly provided for in the Credit Documents), but the Administrative
Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, (i) may expose the
Administrative Agent to liability, (ii) is contrary to any Credit Document or Applicable Law, (iii) would require the
Administrative Agent to become registered to do business in any jurisdiction, or (iv) would subject the Administrative Agent
to taxation; and
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|
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(c)
|
except as expressly set forth herein and in the other Credit Documents, have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
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|
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(2)
|
The Administrative Agent shall not be (and none of its directors, officers, agents or employees
shall be) liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Lenders (or such
other number or percentage of the Lenders as is necessary, or as the Administrative Agent believes in good faith is necessary,
under the provisions of the Credit Documents) or (ii) in the absence of its own gross negligence or wilful misconduct as determined
by a court of competent jurisdiction by final and nonappealable judgment.
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|
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(3)
|
Except as otherwise expressly specified in this Agreement, the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection
with this Agreement or any other Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder
or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default (and the Administrative
Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until the Administrative Agent has been
notified in writing by a Credit Party of such fact or has been notified in writing by a Lender that it considers that a Default
or Event of Default has occurred and is continuing, such notification to specify in detail the nature thereof), (iv) the validity,
enforceability, effectiveness or genuineness of, or the sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this Agreement, any other Credit Document or any other
agreement, instrument or document (and the Administrative Agent shall be entitled to assume that the same are valid, enforceable,
effective, genuine, sufficient, supported by value given, have been signed or delivered by the proper parties and are what they
purport to be), or (v) the satisfaction of any condition specified in this Agreement, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.
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|
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(4)
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The Administrative Agent is not obliged to (i) take or refrain from taking any action or exercise
or refrain from exercising any right or discretion under the Credit Documents, or (ii) incur or subject itself to any cost in connection
with the Credit Documents, unless it is first specifically indemnified or furnished with security by the Secured Creditors, in
form and substance satisfactory to it (which may include further agreements of indemnity or the deposit of funds).
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Section 9.4
|
Reliance by Administrative Agent.
|
The
Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or
intranet posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated
by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making, extension, renewal or increase of an Advance that by its terms must be
fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such
Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of
such Advance. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.
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Section 9.5
|
Indemnification of Agents.
|
Each Lender agrees
to indemnify the Administrative Agent and hold it harmless (to the extent not reimbursed by the Borrower), according to its rateable
share (and not jointly or jointly and severally) from and against any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel, which may be incurred by or asserted against the Administrative
Agent in any way relating to or arising out of the Credit Documents or the transactions therein contemplated or any actions taken
or omitted to be taken by the Administrative Agent. However, no Lender shall be liable for any portion of such losses, claims,
damages, liabilities and related expenses resulting from the Administrative Agent’s gross negligence or wilful misconduct.
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Section 9.6
|
Delegation of Duties.
|
The Administrative
Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by
or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent of
the Administrative Agent may perform any and all of its duties and exercise its rights and powers by or through their respective
Related Parties. The provisions of this Article 9 and other provisions of this Agreement and the other Credit Documents for
the benefit of the Administrative Agent shall apply to any such sub-agent and to the Related Parties of the Administrative Agent
and any such sub-agents, and shall apply to their respective activities in connection with the syndication of the credit facilities
provided for herein as well as activities as the Administrative Agent. The Administrative Agent shall not be responsible for the
negligence or misconduct of any of its sub-agents except to the extent that a court of competent jurisdiction determines in a final
and nonappealable judgment that the Administrative Agent acted with gross negligence or wilful misconduct in the selection of such
sub-agent.
The Administrative
Agent shall promptly deliver to each Lender any notices, reports or other communications contemplated in this Agreement which are
intended for the benefit of the Lenders.
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Section 9.8
|
Replacement of Agents.
|
|
|
(1)
|
The Administrative Agent may resign at any time by giving 30 days prior notice of its resignation
to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Majority Lenders shall have the right to appoint
a successor.
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|
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(2)
|
If no such successor shall have been so appointed by the Majority Lenders or shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may on behalf of the Lenders, appoint a successor Administrative Agent, (i) the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any Security held by
the Administrative Agent on behalf of the Secured Creditors under any of the Credit Documents, the retiring Administrative Agent
shall continue to hold such Security until such time as a successor Administrative Agent is appointed) and (ii) except for any
indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided
to be made by, to or through such Administrative Agent shall instead be made by or to each Lender directly, until such time as
the Majority Lenders appoint a successor Administrative Agent pursuant to Section 9.8(1).
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|
|
(3)
|
Upon a successor’s appointment as Administrative Agent hereunder, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of the former Administrative Agent (other than
any rights to indemnity payments owed to the former Administrative Agent), and the former Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Credit Documents. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the termination of the service of the former Administrative Agent, the provisions of this Article 9 and of
Section 10.5 shall continue in effect for the benefit of such former Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the former Administrative Agent was
acting as an Administrative Agent.
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|
Section 9.9
|
Non-Reliance on Agents and Other Lenders.
|
Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties
and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or
any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Credit
Document or any related agreement or any document furnished hereunder or thereunder.
|
Section 9.10
|
Collective Action of the Secured Creditors.
|
Each of the Secured
Creditors hereby acknowledges that to the extent permitted by Applicable Law, all Security and the remedies provided under the
Credit Documents to the Secured Creditors are for the benefit of the Secured Creditors collectively and acting together and not
severally and further acknowledges that its rights hereunder and under any Security are to be exercised not severally, but by the
Administrative Agent upon the decision of the Majority Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for in the Credit Documents). Accordingly, notwithstanding any of the provisions contained herein or in any Security,
each of the Secured Creditors hereby covenants and agrees that it shall not be entitled to take any action hereunder or thereunder
including, without limitation, any declaration of default hereunder or thereunder, but that any such action shall be taken only
by the Administrative Agent with the prior written agreement of the Majority Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for in the Credit Documents). Each of the Secured Creditors hereby further covenants and
agrees that upon any such written agreement being given, it shall co-operate fully with the Administrative Agent to the extent
requested by the Administrative Agent. Notwithstanding the foregoing, in the absence of instructions from the Lenders and where
in the sole opinion of the Administrative Agent, acting reasonably and in good faith, the exigencies of the situation warrant such
action, the Administrative Agent may without notice to or consent of the Secured Creditors take such action on behalf of the Secured
Creditors as it deems appropriate or desirable in the interest of the Secured Creditors.
|
Section 9.11
|
Obligations.
|
All Obligations shall
rank pari passu with each other and any proceeds from any realization of the Restricted Account Collateral shall be applied
to the Obligations rateably in accordance with Section 8.5 (whether such Restricted Account Collateral is in the name of the
Administrative Agent or in the name of any one or more of the other Secured Creditors and without regard to any priority to which
any Secured Creditor may otherwise be entitled under Applicable Law).
|
Section 9.12
|
Holding of Security; Discharges.
|
|
|
(1)
|
Each Secured Creditor agrees with the other Secured Creditors that it will not, without the prior
consent of the other Secured Creditors, take or obtain any Lien on any properties or assets of the Borrower or any other Credit
Party to secure the obligations of the Borrower under the Credit Documents, except for the benefit
of all Secured Creditors or as may otherwise be required by Applicable Law.
|
|
|
(2)
|
If the Aggregate Principal Amount and all other amounts due and payable under the Credit Documents
to the Administrative Agent and the Lenders have been indefeasibly paid and performed in full in cash and the Commitment has been
terminated, the Lenders will release their interest in the Security.
|
|
Section 9.13
|
Sharing of Payments by Lenders.
|
If any Lender, by exercising
any right of set-off or counterclaim or otherwise, obtains any payment or other reduction that might result in such Lender receiving
payment or other reduction of a proportion of the aggregate amount of its Aggregate Principal Amount and accrued interest thereon
or other obligations hereunder greater than its rateable share thereof as provided herein, then the Lender receiving such payment
or other reduction shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Aggregate Principal Amount and such other obligations of the other Lenders, or make such other adjustments
as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders rateably in accordance with the
aggregate amount of principal of and accrued interest on their respective Aggregate Principal Amount and other amounts owing them.
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise against it rights of set-off and counterclaim and
similar rights of Lenders with respect to such participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
|
Section 9.14
|
Liability of the Lenders inter se.
|
Each of the Lenders
agrees with each of the other Lenders that, except as otherwise expressly provided in this Agreement, none of the Lenders has or
shall have any duty or obligation, or shall in any way be liable, to any of the other Lenders in respect of the Credit Documents
or any action taken or omitted to be taken in connection with them.
The provisions of this
Article shall survive the termination of this Agreement and the repayment of the Obligations.
Article 10
MISCELLANEOUS
|
Section 10.1
|
Amendments, etc.
|
|
|
(1)
|
Subject to Section 10.1(2) and Section 10.1(3), no amendment or waiver of any provision
of any of the Credit Documents, nor consent to any departure by the Credit Parties or any other Person from such provisions, shall
be effective unless in writing and approved by the Credit Parties and the Majority Lenders. Any amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for which it was given.
|
|
(2)
|
Without the prior written consent of each Lender, no amendment, waiver or consent shall:
|
|
|
(a)
|
increase any Lender’s Commitment;
|
|
|
(b)
|
reduce or forgive the principal amount of any Aggregate Principal
Amount; waive, reduce or postpone any scheduled repayment of principal of any Aggregate
Principal Amount; or extend the scheduled final maturity of any Aggregate Principal Amount;
|
|
|
(c)
|
reduce the stated rate of interest on any Aggregate Principal
Amount, or any Fee; or waive, reduce or extend the time for payment of interest on any Aggregate
Principal Amount or any payment of Fees;
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|
|
(d)
|
change the definition of Majority Lenders; or change the percentage of the Commitments, or the
number or percentage of Lenders, in each case, required for the Lenders, or any of them, the Administrative Agent to take any action;
|
|
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(e)
|
amend the requirement of pro rata application of all amounts received by the Administrative
Agent in respect of the Credit Facility or the Obligations, or the requirement of pro rata sharing by the Lenders pursuant
to Section 9.13;
|
|
|
(f)
|
consent to the assignment or transfer by the Borrower of any of its rights and obligations under
any Credit Document;
|
|
|
(g)
|
release any of the guarantees of the Obligations provided by
the Borrower or any of the Restricted Account Collateral; or
|
|
|
(h)
|
amend this Section 10.1.
|
|
(3)
|
Only written amendments, waivers or consents signed by the Administrative Agent, in addition to
the Lenders, shall affect the rights or duties of the Administrative Agent under the Credit Documents.
|
No failure on the part
of a Lender or the Administrative Agent to exercise, and no delay in exercising, any right under any of the Credit Documents shall
operate as a waiver of such right; nor shall any single or partial exercise of any right under any of the Credit Documents preclude
any other or further exercise of such right or the exercise of any other right. The closing of this transaction shall not prejudice
any right of one party against any other party in respect of anything done or omitted under this Agreement or in respect of any
right to damages or other remedies.
|
Section 10.3
|
Evidence of Debt.
|
The
indebtedness of the Borrower resulting from the Advances under the Credit Facility shall
be evidenced by the records of the Administrative Agent acting on behalf of the Lenders which shall constitute prima facie evidence
of such indebtedness.
|
Section 10.4
|
Notices: Effectiveness; Electronic Communication.
|
|
|
(1)
|
Except in the case of notices and other communications expressly permitted to be given by telephone,
all notices and other communications provided for herein shall be in writing and shall be sent by personal delivery or courier
service, mailed by certified or registered mail, or sent by e-mail addressed:
|
|
|
(a)
|
to a Credit Party at:
|
c/o
Acreage Holdings, Inc.
366
Madison Avenue, 11th Floor
New
York, NY 10017
USA
|
|
Attention:
|
Glen Leibowitz, Chief Financial Officer
|
|
|
Telephone:
|
(646) 491-6347
|
|
|
E-mail:
|
g.leibowitz@acreageholdings.com
|
|
|
(b)
|
to the Administrative Agent at:
|
#################
######################
#################
|
|
Attention:
|
##################
|
|
|
Telephone:
|
############
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|
|
E-mail:
|
################
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|
|
(c)
|
and, if to a Lender, to it at its address or e-mail address specified in the Register.
|
|
|
(2)
|
A notice is deemed to have been given and received (i) if sent by personal delivery or courier
service, or mailed by certified or registered mail, on the date of delivery if it is a Business Day and the delivery was made prior
to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day or (ii) if sent by e-mail, on the date sent
if it is a Business Day prior to 4:00 p.m. (local time where the recipient is located) and otherwise on the next Business Day.
|
|
|
(3)
|
Any party hereto may change its address or e-mail address for notices and other communications
hereunder by notice to the other parties hereto.
|
|
|
Section 10.5
|
Expenses; Indemnity; Damage Waiver.
|
|
|
(1)
|
The Borrower shall pay (i) all reasonable expenses incurred by
the Lenders and the Administrative Agent, including the fees, charges and disbursements
of counsel, in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other
Credit Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), and (ii) all reasonable expenses incurred by the Lenders and the Administrative
Agent, including the reasonable fees, charges and disbursements of counsel, in connection with the enforcement or protection of
their rights in connection with this Agreement and the other Credit Documents, including their rights under this Section 10.5,
or in connection with the Advances issued hereunder, including all such expenses incurred
during any workout, restructuring or negotiations in respect of such Advances.
|
|
|
(2)
|
The Borrower shall indemnify
the Administrative Agent (and any sub-agent thereof), each Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Credit Party arising out of, in connection
with, or as a result of (a) the execution, delivery or enforcement of this Agreement, any other Credit Document or any agreement
or instrument contemplated hereby or thereby, the performance or non-performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation or non-consummation of the transactions contemplated hereby or thereby, (b) any Advance
or the use or proposed use of the proceeds therefrom, (c) the presence of contaminants in, on,
at, under or about, or the discharge or likely discharge of contaminants from, any of the properties now or previously used or
occupied by any of the Credit Parties, or the breach by or non-compliance with any Environmental Law by any mortgagor, owner or
lessee of such properties, or any Environmental Liability related in any way to the Credit Parties, or (d) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any
other theory, whether brought by a third party or by a Credit Party and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities
or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted
from the gross negligence or wilful misconduct of such Indemnitee.
|
|
|
(3)
|
To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under
Section 10.5(1) or Section 10.5(2) to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related
Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such
Related Party, as the case may be, such Lender’s rateable portion (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any
such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent
(or any such sub-agent) in connection with such capacity.
|
|
|
(4)
|
To the fullest extent permitted by Applicable Law, no Credit Party shall assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for indirect, consequential, punitive, aggravated or exemplary damages
(as opposed to direct damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document
or any agreement or instrument contemplated hereby (or any breach thereof), the transactions contemplated hereby or thereby, any
Advance or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed by it through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby.
|
|
|
(5)
|
Without limiting the foregoing, the Borrower shall pay to each
Lender on demand any amounts required to compensate the Lender for any loss suffered or incurred by it as a result of (i) the failure
of the Borrower to give any notice in the manner and at the times required by this Agreement, (ii) the failure of the Borrower
to effect an Advance in the manner and at the time specified in any Borrowing Notice or
to make a prepayment in the manner and at the time specified in any notice with respect thereto, or (iii) the failure of the Borrower
to make a payment or a mandatory repayment in the manner and at the time specified in this Agreement, including any loss or expense
arising from the liquidation or deployment of funds obtained by it to maintain such Advance or
from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative
fees charged by such Lender in connection with the foregoing.
|
|
|
(6)
|
All amounts due under this Section 10.5 shall be payable promptly after demand therefor. A
certificate of the Administrative Agent or a Lender setting forth the amount or amounts owing to the Administrative Agent, Lender
or a sub-agent or Related Party, as the case may be, as specified in this Section, including reasonable detail of the basis of
calculation of the amount or amounts, and delivered to the Borrower shall be conclusive absent manifest error.
|
|
|
(7)
|
The provisions of this Section 10.5 shall survive the termination of this Agreement and the
repayment of the Aggregate Principal Amount. To the extent required by law to give full effect to the rights of the Indemnitees
under this Section 10.5, the parties hereto agree and acknowledge that the Administrative Agent and Lender is acting as agent
for its respective Related Parties and agrees to hold and enforce such rights on behalf of such Related Parties as they may direct.
The Borrower acknowledges that neither its obligation to indemnify nor any actual indemnification by it of the Lenders, the Administrative
Agent or any other Indemnitee in respect of such Person’s losses for legal fees and expenses shall in any way affect the
confidentiality or privilege relating to any information communicated by such Person to its counsel.
|
|
|
Section 10.6
|
Successors and Assigns.
|
|
|
(1)
|
The provisions of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender.
|
|
|
(2)
|
Any Lender may at any time assign all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Commitments and its Aggregate Principal Amount) to (i)
any Affiliate of a Lender or an Approved Fund with respect to a Lender or (ii) any other Person with the prior written consent
of the Borrower, unless an Event of Default has occurred and is continuing (in which case no such consent is required); provided
that the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption. From and
after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement and the other Credit Documents, including any collateral security, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and,
in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement,
such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Article 7 and Section 10.5,
and shall continue to be liable for any breach of this Agreement by such Lender, with respect to facts and circumstances occurring
prior to the effective date of such assignment. Any payment by an assignee to an assigning Lender in connection with an assignment
or transfer shall not be or be deemed to be a repayment by the Borrower or a new Advance to
the Borrower.
|
|
|
(3)
|
The Administrative Agent shall maintain at its office in ########### a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments
of, and principal amounts (and stated interest) of the Aggregate Principal Amount to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error,
and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender for all purposes of this Agreement. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
|
|
|
(4)
|
Each Borrower shall provide such certificates, acknowledgments and further assurances in respect
of this Agreement and the Credit Facility as such Lender may reasonably require in connection with any assignment pursuant to this
Section 10.6.
|
|
|
(5)
|
Any Lender may at any time pledge or assign a security interest in all or any portion of its rights
under the Credit Documents to secure obligations of such Lender, but no such pledge or assignment shall release such Lender from
any of its obligations hereunder or thereunder or substitute any such pledgee or assignee for such Lender as a party hereto or
thereto.
|
|
|
Section 10.7
|
Judgment Currency.
|
|
|
(1)
|
If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due to
a Lender in any currency (the “Original Currency”) into another currency (the “Other Currency”),
the parties agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which,
in accordance with normal banking procedures, such Lender could purchase the Original Currency with the Other Currency on the Business
Day preceding the day on which final judgment is given or, if permitted by Applicable Law, on the day on which the judgment is
paid or satisfied.
|
|
|
(2)
|
The obligations of the Borrower in respect of any sum due in the Original Currency from it to the
Lender under any of the Credit Documents shall, notwithstanding any judgment in any Other Currency, be discharged only to the extent
that on the Business Day following receipt by the Lender of any sum adjudged to be so due in the Other Currency, the Lender may,
in accordance with normal banking procedures, purchase the Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due to the Lender in the Original Currency, the Borrower agrees, as a separate
obligation and notwithstanding the judgment, to indemnify the Lender, against any loss, and, if the amount of the Original Currency
so purchased exceeds the sum originally due to the Lender in the Original Currency, the Lender shall remit such excess to the Borrower.
|
|
|
Section 10.8
|
Interest on Amounts.
|
Without duplication
of any amounts contemplated in Section 3.4(3) and except as may be expressly provided otherwise in this Agreement, all amounts
owed by the Borrower to the Administrative Agent and to any of the Lenders, which are not paid when due (whether at stated maturity,
on demand, by acceleration or otherwise) shall bear interest (both before and after default and judgment), from the date on which
such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal to the highest applicable rate
in Section 3.4(1) plus two percent (2%), calculated daily and compounded monthly.
|
|
Section 10.9
|
Anti-Terrorism Laws.
|
|
|
(1)
|
If, upon the written request of any Lender, the Administrative Agent has ascertained the identity
of the Borrower or any authorized signatories of the Borrower for purposes of Anti-Terrorism Laws, then the Administrative Agent:
|
|
|
(a)
|
shall be deemed to have done so as an agent for such Lender, and this Agreement shall constitute
a “written agreement” in such regard between such Lender and the Administrative Agent within the meaning of the applicable
Anti-Terrorism Law; and
|
|
|
(b)
|
shall provide to such Lender copies of all information obtained in such regard without any representation
or warranty as to its accuracy or completeness.
|
|
|
(2)
|
Notwithstanding and except as may otherwise be agreed in writing, each of the Lenders agrees that
the Administrative Agent does not have any obligation to ascertain the identity of the Borrower or any authorized signatories of
the Borrower on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from the Borrower
or any authorized signatory in doing so.
|
|
|
Section 10.10
|
Governing Law: Jurisdiction: Etc.
|
|
|
(1)
|
This Agreement shall be governed by, and construed in accordance with, the laws of the Province
of Alberta and the laws of Canada applicable in that Province.
|
|
|
(2)
|
The Borrower irrevocably and unconditionally submits, for itself and its Assets, to the non-exclusive
jurisdiction of the courts of the Province of Alberta, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Agreement or any other Credit Document, or for recognition
or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement or in any other Credit Document shall affect any right that the Administrative
Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement or any other Credit Document against any Credit Party or its Assets
in the courts of any jurisdiction.
|
|
|
(3)
|
The Borrower irrevocably consents to the service of any and all process in any such action or proceeding
to the Borrower at the address provided for it in Section 10.4. Nothing in this Section 10.10(3) limits the right of
the Administrative Agent or any Lender to serve process in any other manner permitted by Applicable Law.
|
|
|
(4)
|
The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by Applicable
Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating
to this Agreement or any other Credit Document in any court referred to in Section 10.10(2). Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
|
|
|
Section 10.11
|
Entire Agreement
|
This Agreement together
with the other Credit Documents constitutes the whole and entire agreement between the parties and cancels and supersedes any prior
agreements, undertakings, declarations and representations, written or verbal, in respect of the subject matter of this Agreement
and the other Credit Documents, and any other written agreements that are expressly stated to survive the effectiveness of this
Agreement.
|
|
Section 10.12
|
Waiver of Jury Trial.
|
Each party hereto hereby
irrevocably waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in any legal proceeding
directly or indirectly arising out of or relating to this Agreement or any other Credit Document or the transactions contemplated
hereby or thereby (whether based on contract, tort or any other theory). Each party hereto (a) certifies that no representative,
agent or attorney of any other Person has represented, expressly or otherwise, that such other Person would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to
enter into this Agreement and the other Credit Documents by, among other things, the mutual waivers and certifications in this
Section.
|
|
Section 10.13
|
Counterparts: Integration: Effectiveness: Electronic Execution.
|
|
|
(1)
|
This Agreement may be executed in any number of counterparts, each of which is deemed to be an
original, and such counterparts together constitute one and the same instrument. Transmission of an executed signature page by
facsimile, email or other electronic means is as effective as a manually executed counterpart of this Agreement. This Agreement
and the other Credit Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. This Agreement shall become effective when it has been executed by the
Administrative Agent and when the Administrative Agent has received counterparts hereof that, when taken together, bear the signatures
of each of the other parties hereto.
|
|
|
(2)
|
The words “execution,”
“signed,” “signature,” and words of like import
in any Assignment and Assumption shall be deemed to include electronic signatures or
the keeping of records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any Applicable
Law, including Parts 2 and 3 of the Personal Information Protection and Electronic
Documents Act (Canada), the Electronic Transactions Act (Alberta) and other
similar federal or provincial laws based on the Uniform Electronic Commerce Act
of the Uniform Law Conference of Canada or its Uniform Electronic Evidence Act, as the
case may be.
|
|
|
Section 10.14
|
Treatment of Certain Information: Confidentiality.
|
|
|
(1)
|
Each of the Administrative Agent and the Lenders agrees, and each of the Credit Parties agree,
to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to it, its
Affiliates and its and its Affiliates’ respective partners, directors, officers, employees, managers, administrators, trustees,
agents, auditors, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed
of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (c) to the extent
required by Applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection
with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement
or any other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 10.14 to (i) any assignee of, or any prospective assignee of, any of its rights
or obligations under this Agreement or (ii) any actual or prospective party (or its partners, directors, officers, employees, managers,
administrators, trustees, agents, advisors or other representatives) to any swap, derivative, credit-linked note or similar transaction
under which payments are to be made by reference to the Credit Parties and its obligations, this Agreement or payments hereunder,
or the advisors of the Persons referred to in (i) and (ii), (g) with the consent of the Credit Party or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative
Agent or any Lender on a non-confidential basis.
|
|
|
(2)
|
For purposes of this Section, “Information” means: (a) with respect to the Administrative
Agent and each Lender, all information received in connection with this Agreement from the Credit Parties relating to the Credit
Parties or any of their respective businesses, other than any such information that is available to the Administrative Agent or
any Lender on a non-confidential basis prior to such receipt; and (b) with respect to the Credit Parties, all information contained
in this Agreement and all other Credit Documents and all information received from the Administrative Agent and the Lenders, including
the identity of Affiliates and its and its Affiliates’ respective partners, directors, officers, employees, managers, administrators,
trustees, agents, auditors, advisors and representatives. Any Person required to maintain the confidentiality of Information as
provided in this Section 10.14 shall be considered to have complied with its obligation to do so if such Person has exercised
the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential
information. In addition, the Administrative Agent may disclose to any agency or organization that assigns standard identification
numbers to loan facilities such basic information describing the facilities provided hereunder as is necessary to assign unique
identifiers (and, if requested, supply a copy of this Agreement), it being understood that the Person to whom such disclosure is
made will be informed of the confidential nature of such Information and instructed to make available to the public only such Information
as such person normally makes available in the course of its business of assigning identification numbers.
|
|
|
(3)
|
The Credit Parties agree to provide the Administrative Agent with the opportunity to review and
comment on any press release in respect of any matter contemplated in any Credit Document. In respect of any Credit Document or
other document to be filed on SEDAR (or on any other public filing repository), the Credit Parties agree to redact the names of
all parties other than the Administrative Agent and the names of any partners, directors, officers, employees, managers, administrators,
trustees, agents, auditors, advisors and representatives of the Administrative Agent, the other Secured Creditors and their respective
Affiliates, the foregoing obligations of the Credit Parties all subject to applicable securities laws in the relevant jurisdiction
in which the public filings are to be made.
|
|
|
Section 10.15
|
Severability.
|
If any court of competent
jurisdiction from which no appeal exists or is taken, determines any provision of this Agreement to be illegal, invalid or unenforceable,
that provision will be severed from this Agreement and the remaining provisions will remain in full force and effect.
|
|
Section 10.16
|
Time of the Essence.
|
Time is of the essence
in this Agreement.
|
|
Section 10.17
|
USA PATRIOT Act.
|
Each Lender that is
subject to the requirements of the USA PATRIOT Act hereby notifies the Borrower that, pursuant to the requirements of the
USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance
with the USA PATRIOT Act.
|
|
Section 10.18
|
No Fiduciary Duty.
|
The Administrative
Agent, each Lender and their respective Affiliates (collectively, solely for purposes of this Section 10.18, the “Lenders”),
may have economic interests that conflict with those of a Borrower, its shareholders and its Affiliates. The Borrower agrees that
nothing in the Credit Documents will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied
duty between any Lender, on the one hand, and the Borrower, its shareholders or its Affiliates, on the other hand. The Borrower
acknowledges and agrees that (a) the transactions contemplated by the Credit Documents (including the exercise of rights and remedies
hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower,
on the other hand, and (b) in connection therewith and with the process leading thereto, (i) no Lender has assumed an advisory
or fiduciary responsibility in favour of the Borrower, its shareholders or its Affiliates with respect to the transactions contemplated
hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any
Lender has advised, is currently advising or will advise the Borrower, its shareholders or its Affiliates on other matters) or
any other obligation to the Borrower except the obligations expressly set forth in the Credit Documents and (ii) each Lender is
acting solely as principal and not as the agent or fiduciary of the Borrower, its management, shareholders, creditors or any other
person. The Borrower acknowledges and agrees that the Borrower has consulted its own legal and financial advisors to the extent
it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and
the process leading thereto. The Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature
or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transactions or the process leading thereto.
[Remainder of page left intentionally
blank]
IN WITNESS WHEREOF the parties have
executed this Credit Agreement.
|
|
HSCP CN HOLDINGS ULC, as Borrower
|
|
|
|
|
|
By:
|
/s/ Kevin Murphy
|
|
|
|
Name: Kevin Murphy
Title: President
|
|
|
ACREAGE FINANCE DELAWARE, LLC, as Guarantor
|
|
|
|
|
|
By:
|
/s/ Kevin Murphy
|
|
|
|
Name: Kevin Murphy
Title: Manager
|
|
|
################, by its general partner, #######################,
as Lender
|
|
|
|
|
|
By:
|
/s/ #############
|
|
|
|
Name: #############
Title: #######################
|
|
|
################, by its general partner, #######################,
as Administrative Agent
|
|
|
|
|
|
By:
|
/s/ #############
|
|
|
|
Name: ############
Title: #######################
|
SCHEDULE “A”
LENDERS AND COMMITMENTS
|
Lender
|
|
Commitment
|
|
|
% of Credit Facility
|
|
|
|
|
|
|
|
|
|
|
################
|
|
$
|
100,000,000
|
|
|
|
100
|
%
|
|
###################
|
|
|
|
|
|
|
|
|
|
#####################
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
100,000,000
|
|
|
|
100
|
%
|
EXHIBIT 2.8
FORM OF EXTENSION REQUEST
EXTENSION REQUEST
[Date]
|
TO:
|
################, as Administrative Agent
|
|
|
|
AND TO:
|
The Lenders (as defined below)
|
Dear Sirs:
Reference is made to the credit agreement
dated February 7, 2020 (as amended, modified, extended, renewed, replaced, restated, supplemented or refinanced from time to time,
the “Credit Agreement”, the terms defined therein being used herein are as therein defined) among HSCP
CN Holdings ULC, as borrower, Acreage Finance Delaware, LLC, as guarantor, the
lenders signatory thereto from time to time, as lenders (collectively, the “Lenders”) and ################,
in its capacity as administrative agent under the Credit Agreement (the “Administrative Agent”).
The
undersigned hereby requests, pursuant to Section 2.8 of the Credit Agreement, to extend the current Maturity Date to l
[insert date that is 364-days after the current Maturity Date].
|
|
Yours truly,
|
|
|
|
|
|
HSCP CN HOLDINGS ULC
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
EXHIBIT “3.2”
FORM OF BORROWING NOTICE
[Date]
################, as Administrative Agent
##################
#################
Dear Sir:
The undersigned, HSCP
CN Holdings ULC (the “Borrower”), refers to the credit agreement dated February 7,
2020 (as amended, supplemented or restated from time to time, the “Credit Agreement”, the terms defined
therein being used herein as therein defined) among the Borrower, as borrower, Acreage
Finance Delaware, LLC, as guarantor, the lenders signatory thereto from time to time, as lenders (collectively, the “Lenders”)
and ################, in its capacity as administrative agent under the Credit Agreement (the “Administrative Agent”),
and gives you notice pursuant to Section 3.2 of the Credit Agreement that the Borrower requests an Advance under the Credit Agreement,
and, in that connection, sets forth below the information relating to the Borrowing (the “Proposed Borrowing”)
as required by Section 3.2 of the Credit Agreement:
|
|
1.
|
The date of the Proposed Borrowing, being
a Business Day, is l.
|
|
|
2.
|
The aggregate amount of the Proposed Borrowing
is US$l.
|
|
|
3.
|
The Borrower hereby confirms that:
|
|
|
(a)
|
no Default or Event of Default has occurred or is continuing or would arise immediately after giving
effect to or as a result of the Proposed Borrowing;
|
|
|
(b)
|
the representations and warranties contained in Article 5 of the Credit Agreement and in any other
Credit Document are true and correct on the date hereof as if they were made on this date and will be true and correct on the date
of the Proposed Borrowing except, in each case, for those changes to the representations and warranties which have been disclosed
to and accepted by the Majority Lenders pursuant to Section 10.1 of the Credit Agreement and any representation and warranty which
is stated to be made only as of a certain date (and then as of such date); and
|
|
|
(c)
|
this notice is irrevocable.
|
|
|
Yours truly,
|
|
|
|
|
|
HSCP CN HOLDINGS ULC
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
EXHIBIT “6.1(b)(ii)”
FORM OF COMPLIANCE CERTIFICATE
|
TO:
|
################, as Administrative Agent
|
|
|
|
|
AND TO:
|
The Lenders (as defined below)
|
|
|
|
|
RE:
|
Compliance Certificate for the [Fiscal Quarter][Fiscal Year] ended l (the “Statement Date”)
|
The undersigned refers
to the credit agreement dated February 7, 2020 (as amended, supplemented or restated from time
to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined) among HSCP
CN Holdings ULC, as borrower (the “Borrower”), Acreage Finance Delaware,
LLC, as guarantor, the lenders signatory thereto from time to time, as lenders (collectively, the “Lenders”)
and ################, in its capacity as administrative agent under the Credit Agreement (the “Administrative Agent”).
I, the undersigned
[Chief Financial Officer] of the Borrower, certify, without personal liability, to the Administrative Agent and the Lenders,
that on [date] (the “Determination Date”):
|
|
1.
|
I have read the provisions of the Credit Agreement which are relevant to this certificate and have
made such examinations or investigations as are necessary to enable me to express an informed opinion on the matters contained
in this certificate.
|
|
|
2.
|
At all time during the period ended as of the Statement Date and as at the Determination Date,
the Minimum Balance has been deposited in the Restricted Account.
|
|
|
(a)
|
No Default or Event of Default has occurred and is continuing;
|
|
|
(b)
|
The representations and warranties contained in Article 5 of the Credit Agreement were
true and correct on the Determination Date as though made on such date, and are true and correct as though made on this
date, in each case, except for those changes to the representations and warranties which have been disclosed to and accepted by
the Majority Lenders pursuant to Section 10.1 of the Credit Agreement and any representation and warranty which is stated to be
made only as of a certain date (and then as of such date); and
|
|
|
(c)
|
The financial statements delivered pursuant to Section 6.1(b) of the Credit Agreement for the period
ended as of the Statement Date (i) have been prepared in accordance with GAAP in effect on the date of such financial statements
consistently applied and the information contained therein is true and correct in all material respects, and (ii) present fairly
the results of operations and changes in the financial position of the Parent as of and to this date. There has been no material
change in the financial position of the Parent since the date of the most recent financial statements delivered pursuant to Section
6.1(b) of the Credit Agreement.
|
DATED
the l day
of l,
20l.
|
|
HSCP CN HOLDINGS ULC
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
EXHIBIT “10.6”
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment
and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name
of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as
amended, supplemented or restated from time to time, the “Credit Agreement”), receipt of a copy of which is
hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to
and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor
hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor,
subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted
by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender
under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount
and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective
facilities identified below and (ii) to the extent permitted to be assigned under Applicable Law, all claims, suits, causes of
action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the
Assignor.
|
1.
|
Assignor:
|
___________________________
|
|
2.
|
Assignee:
|
___________________________
|
|
3.
|
Borrower:
|
HSCP CN Holdings ULC
|
|
4.
|
Administrative Agent:
|
################, as the administrative agent under the Credit Agreement
|
|
5.
|
Credit Agreement:
|
Credit Agreement dated February 7, 2020 among HSCP CN Holdings ULC, as borrower, Acreage Finance Delaware, LLC, as guarantor, the lenders from time to time party thereto, and ################, as administrative agent
|
|
6.
|
Assigned Interest:
|
|
|
Facility Assigned
|
|
Aggregate Amount
of Commitment/
Accommodations for
all Lenders1
|
|
Amount of
Commitment/
Accommodations
Assigned
|
|
Percentage
Assigned of
Commitment/
Accommodations2
|
|
Credit Facility
|
|
$
|
|
$
|
|
$
|
7. [Trade
Date: ________________ ]3
Effective Date: ___________, 20 ___ [To
be inserted by Administrative Agent and which shall be the effective date of recordation of transfer in the Register therefor.]
The terms set forth in this Assignment
and Assumption are hereby agreed to:
|
|
ASSIGNOR
|
|
|
|
|
|
[NAME
OF ASSIGNOR]
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
ASSIGNEE
|
|
|
|
|
|
[NAME
OF ASSIGNEE]
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
1
Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the
Effective Date.
2
Set forth, to at least 9 decimals, as a percentage of the Commitment/Accommodations of all Lenders thereunder.
3
To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade
Date.
ANNEX “1” to Assignment and
Assumption
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
Representations and Warranties.
|
|
1.
|
Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption
and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties
or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document
or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Credit Document.
|
|
|
2.
|
Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions
of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iii) it has as received a copy of the Credit Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest
on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or
any other Lender, and (iv) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to
be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that
(i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Documents are required to be performed by it as a Lender.
|
|
|
3.
|
Payments. From and after the Effective Date, the Administrative Agent shall make all payments
in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether
such amounts have accrued prior to, on or after the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments
in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment
directly between themselves.
|
|
|
4.
|
General Provisions. This Assignment and Assumption shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted assigns. This Assignment and Assumption may be executed
in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature
page of this Assignment and Assumption by telecopy or by sending a scanned copy by electronic mail shall be effective as delivery
of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and
construed in accordance with, the law governing the Credit Agreement.
|
Exhibit 4.2
|
ACREAGE
HOLDINGS, INC.
Special Warrant Indenture
|
February 10, 2020
TABLE OF CONTENTS
|
1. INTERPRETATION
|
2
|
|
|
1.1
|
Definitions
|
2
|
|
|
1.2
|
Headings
|
5
|
|
|
1.3
|
Gender
|
6
|
|
|
1.4
|
Weekends and Holidays
|
6
|
|
|
1.5
|
Meaning of "Outstanding"
|
6
|
|
|
1.6
|
Time
|
6
|
|
|
1.7
|
Applicable Law
|
6
|
|
|
1.8
|
Severability
|
6
|
|
|
1.9
|
Currency
|
6
|
|
|
1.10
|
Conflicts
|
7
|
|
|
1.11
|
Schedules
|
7
|
|
|
|
|
|
|
2. ISSUE AND PURCHASE OF SPECIAL WARRANTS
|
7
|
|
|
2.1
|
Creation, Form and Terms of Special Warrants
|
7
|
|
|
2.2
|
Form of Special Warrants, Certificated Special Warrants
|
7
|
|
|
2.3
|
Special Warrant Certificate
|
7
|
|
|
2.4
|
Transferability and Ownership of Special Warrants
|
9
|
|
|
2.5
|
Special Warrantholders Not Shareholders
|
12
|
|
|
2.6
|
Signing of Special Warrants
|
12
|
|
|
2.7
|
Countersigning
|
12
|
|
|
2.8
|
Loss, Mutilation, Destruction or Theft of Special Warrants
|
13
|
|
|
2.9
|
Exchange of Special Warrants
|
13
|
|
|
2.10
|
Ranking
|
13
|
|
|
2.11
|
Purchase of Special Warrants for Cancellation
|
14
|
|
|
2.12
|
Cancellation of Surrendered Special Warrants
|
14
|
|
|
|
|
|
|
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
|
14
|
|
|
3.1
|
To Issue Special Warrants and Reserve Subordinate Voting Shares and Unit Warrants
|
14
|
|
|
3.2
|
To Execute Further Assurances
|
15
|
|
|
3.3
|
To Carry On Business
|
15
|
|
|
3.4
|
Reporting Issuer
|
15
|
|
|
3.5
|
No Breach of Constating Documents
|
15
|
|
|
3.6
|
Filing Prospectus Supplement, Registration Statement and Related Matters
|
16
|
|
|
3.7
|
Notices to Special Warrant Agent
|
16
|
|
|
3.8
|
Securities Qualification Requirements
|
16
|
|
|
3.9
|
Maintain Listing
|
16
|
|
|
3.10
|
Satisfy Covenants
|
17
|
|
|
3.11
|
Performance of Covenants by Special Warrant Agent
|
17
|
|
|
3.12
|
Special Warrant Agent's Remuneration and Expenses
|
17
|
|
|
3.13
|
Trust for Special Warrantholder's Benefit
|
17
|
|
|
3.14
|
Notice to Special Warrantholders of Certain Events
|
17
|
|
|
3.15
|
Closure of Share Transfer Books
|
18
|
|
|
3.16
|
Payment of Commissions
|
18
|
|
|
|
|
|
|
4. ADJUSTMENT OF NUMBER OF UNITS
|
18
|
|
|
4.1
|
Adjustment of Number of Units
|
18
|
|
|
4.2
|
Proceedings Prior to any Action Requiring Adjustment
|
23
|
|
|
4.3
|
Certificate of Adjustment
|
23
|
|
|
4.4
|
No Action After Notice
|
23
|
|
|
4.5
|
Protection of Special Warrant Agent
|
23
|
|
|
4.6
|
Notice of Special Matters
|
24
|
|
5. EXERCISE AND CANCELLATION OF SPECIAL WARRANTS
|
24
|
|
|
5.1
|
Notice of Automatic Exercise to Special Warrantholders
|
24
|
|
|
5.2
|
No Voluntary Exercise of Special Warrants
|
24
|
|
|
5.3
|
Automatic Exercise of Special Warrants
|
24
|
|
|
5.4
|
Effect of Exercise of Special Warrants
|
25
|
|
|
5.5
|
Partial Exercise
|
25
|
|
|
5.6
|
Special Warrants Void After Exercise
|
25
|
|
|
5.7
|
Fractions of Unit Shares or Unit Warrants
|
25
|
|
|
5.8
|
Accounting and Recording
|
26
|
|
|
5.9
|
Legending of Special Warrant Certificates and Underlying Securities
|
26
|
|
|
5.10
|
Issuance of Unit Shares and Unit Warrants
|
28
|
|
|
5.11
|
Securities Restrictions
|
29
|
|
|
5.12
|
Contractual Right of Rescission
|
29
|
|
|
|
|
|
|
6. MEETINGS OF SPECIAL WARRANTHOLDERS
|
30
|
|
|
6.1
|
Definitions
|
30
|
|
|
6.2
|
Convening Meetings
|
30
|
|
|
6.3
|
Place of Meeting
|
30
|
|
|
6.4
|
Notice
|
30
|
|
|
6.5
|
Persons Entitled to Attend
|
31
|
|
|
6.6
|
Quorum
|
31
|
|
|
6.7
|
Chairman
|
31
|
|
|
6.8
|
Power to Adjourn
|
31
|
|
|
6.9
|
Adjourned Meeting
|
31
|
|
|
6.10
|
Show of Hands
|
31
|
|
|
6.11
|
Poll
|
32
|
|
|
6.12
|
Regulations
|
32
|
|
|
6.13
|
Powers of Special Warrantholders
|
33
|
|
|
6.14
|
Powers Cumulative
|
34
|
|
|
6.15
|
Minutes of Meetings
|
34
|
|
|
6.16
|
Written Resolutions
|
34
|
|
|
6.17
|
Binding Effect
|
34
|
|
|
6.18
|
Holdings by the Company or Subsidiaries of the Company Disregarded
|
34
|
|
|
|
|
|
|
7. SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS
|
35
|
|
|
7.1
|
Provision for Supplemental Indentures for Certain Purposes
|
35
|
|
|
7.2
|
Company May Consolidate, etc. on Certain Terms
|
36
|
|
|
7.3
|
Successor Body Corporate Substituted
|
36
|
|
|
|
|
|
|
8. CONCERNING THE SPECIAL WARRANT AGENT
|
36
|
|
|
8.1
|
Duties of Special Warrant Agent
|
36
|
|
|
8.2
|
Action by Special Warrant Agent
|
36
|
|
|
8.3
|
Certificate of the Company
|
37
|
|
|
8.4
|
Special Warrant Agent May Employ Experts
|
37
|
|
|
8.5
|
Resignation and Replacement of Special Warrant Agent
|
37
|
|
|
8.6
|
Indenture Legislation
|
38
|
|
|
8.7
|
Notice
|
38
|
|
|
8.8
|
Use of Proceeds
|
38
|
|
|
8.9
|
Documents, Monies, etc. Held by Special Warrant Agent
|
38
|
|
|
8.10
|
No Inquiries
|
39
|
|
|
8.11
|
Actions by Special Warrant Agent to Protect Interest
|
39
|
|
|
8.12
|
Special Warrant Agent Not Required to Give Security
|
39
|
|
|
8.13
|
No Conflict of Interest
|
39
|
|
|
8.14
|
Special Warrant Agent Not Ordinarily Bound
|
39
|
|
|
8.15
|
Special Warrant Agent May Deal in Instruments
|
40
|
|
|
8.16
|
Recitals or Statements of Fact Made by Company
|
40
|
|
|
8.17
|
Special Warrant Agent's Discretion Absolute
|
40
|
|
|
8.18
|
No Representations as to Validity
|
40
|
|
|
8.19
|
Acceptance of Agency
|
40
|
|
|
8.20
|
Special Warrant Agent's Authority to Carry on Business
|
41
|
|
|
8.21
|
Additional Protections of Special Warrant Agent
|
41
|
|
|
8.22
|
Indemnification of Special Warrant Agent
|
41
|
|
|
8.23
|
Performance of Covenants by Special Warrant Agent
|
42
|
|
|
8.24
|
Third Party Interests
|
42
|
|
|
8.25
|
Not Bound to Act
|
42
|
|
|
|
|
|
|
9. NOTICES
|
43
|
|
|
9.1
|
Notice to Company, Special Warrant Agent and Agent
|
43
|
|
|
9.2
|
Notice to Special Warrantholders
|
44
|
|
|
|
|
|
|
10. POWER OF BOARD OF DIRECTORS
|
44
|
|
|
10.1
|
Board of Directors
|
44
|
|
|
|
|
|
|
11. MISCELLANEOUS PROVISIONS
|
44
|
|
|
11.1
|
Further Assurances
|
44
|
|
|
11.2
|
Unenforceable Terms
|
45
|
|
|
11.3
|
No Waiver
|
45
|
|
|
11.4
|
Waiver by Special Warrantholders and Special Warrant Agent
|
45
|
|
|
11.5
|
Suits by Special Warrantholders
|
45
|
|
|
11.6
|
SEC Reporting Status
|
46
|
|
|
11.7
|
Force Majeure
|
46
|
|
|
11.8
|
Privacy Matters
|
46
|
|
|
11.9
|
Enurement
|
47
|
|
|
11.10
|
Counterparts
|
47
|
|
|
11.11
|
Formal Date and Effective Date
|
47
|
SPECIAL
WARRANT INDENTURE
THIS SPECIAL WARRANT
INDENTURE made as of February 10, 2020.
BETWEEN:
ACREAGE
HOLDINGS, INC., a company incorporated under the laws of the Province of British Columbia
(the "Company")
OF THE FIRST PART
AND:
ODYSSEY
TRUST COMPANY, a trust company incorporated under the laws of Alberta and authorized to carry on business in the provinces
of Alberta and British Columbia
(the "Special Warrant Agent")
OF THE SECOND PART
WHEREAS
the Company is proposing to issue up to 10,141,987 Special Warrants in the manner herein set forth;
AND
WHEREAS the Company is proposing to grant the Purchaser’s Option (as defined herein);
AND
WHEREAS each Special Warrant shall entitle the holder thereof to acquire one Unit upon automatic exercise thereof, subject
to adjustment in certain circumstances in accordance with this Indenture, without payment of additional consideration;
AND
WHEREAS the Company is authorized to create and issue the Special Warrants;
AND
WHEREAS the Company represents to the Special Warrant Agent that all necessary resolutions of the directors of the Company
have been duly enacted, passed or confirmed and all other proceedings taken and conditions complied with to authorize the execution
and delivery of this Indenture and the execution, delivery and issue of the Special Warrants and to make the same legal, valid
and binding on the Company in accordance with the laws relating to the Company;
AND
WHEREAS the foregoing recitals are made as representations and statements of fact by the Company and not by the Special
Warrant Agent;
AND
WHEREAS the Special Warrant Agent has been appointed by the Company and has agreed to act as trustee on behalf of the
Special Warrantholders on the terms and conditions set forth herein.
NOW
THEREFORE, in consideration of the promises and in further consideration of the mutual covenants herein set forth
and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company hereby
appoints the Special Warrant Agent as special warrant agent to hold the rights, interests and benefits contained herein for
and on behalf of those persons who from time to time become the holders of the Special Warrants issued pursuant to this
Indenture and the parties hereto agree as follows:
In this Indenture,
unless there is something in the subject matter or context inconsistent therewith, the following words have the respective meaning
indicated below:
|
|
(a)
|
"1933 Act" means the United States Securities Act of 1933, as amended;
|
|
|
(b)
|
"1934 Act" means the United States Securities Exchange Act of 1934, as
amended;
|
|
|
(c)
|
"Agent" means Canaccord Genuity Corp.;
|
|
|
(d)
|
"Agency Agreement" means the agency
agreement to be entered into on the Closing Date between the Company and the Agent in relation to the Private Placement;
|
|
|
(e)
|
"Applicable Legislation" means the provisions, if any, for the time being, of
any statute of any of the Designated Jurisdictions, and of the regulations under such statute, relating to warrant indentures and
to the rights, duties and obligations of warrant agents under warrant indentures, and of corporations issuing their securities
under warrant indentures, to the extent that any such provisions are in force and applicable to this Indenture;
|
|
|
(f)
|
“Arrangement Agreement” means the arrangement agreement between the Company
and Canopy Growth Corporation dated April 18, 2019;
|
|
|
(g)
|
"Authenticated" means (a) with respect to the issuance of a Special Warrant Certificate,
a Special Warrant Certificate which has been duly signed by the Company and authenticated by manual signature of an authorized
officer of the Special Warrant Agent, and (b) with respect to the issuance of an Uncertificated Special Warrant, an Uncertificated
Special Warrant in respect of which the Special Warrant Agent has completed all Internal Procedures such that the particulars of
such Uncertificated Special Warrant are entered in the register of holders of Special Warrants, and "Authenticate",
"Authenticating" and "Authentication" have the appropriate correlative meanings;
|
|
|
(h)
|
"Automatic Exercise Date" means, with respect to any particular Special Warrant,
the earlier of:
|
|
|
(i)
|
the third business day after the Qualification Date;
and
|
|
|
(ii)
|
the date that is four months and one day after the Closing
Date;
|
|
|
(i)
|
"Automatic Exercise Time" means, with
respect to any particular Special Warrant, 4:00 p.m. (Toronto time) on the Automatic Exercise Date, or such other time as the
Company and the Agent may agree;
|
|
|
(j)
|
"Business Day" means a day which is not a Saturday, Sunday or legal holiday in
the City of ##########, the City of Toronto, Ontario or the City of New York, New York;
|
|
|
(k)
|
"Closing" means the completion of the issuance and sale of Special Warrants by
the Company to the purchasers of Special Warrants arranged by the Agent in accordance with the Agency Agreement;
|
|
|
(l)
|
"Closing Date" means February 10, 2020;
|
|
|
(m)
|
"Commissions" means the securities commissions of each of the Designated Jurisdictions;
|
|
|
(n)
|
“Company” means Acreage Holdings, Inc.;
|
|
|
(o)
|
"Company's auditors" means the firm of chartered professional accountants duly
appointed by the shareholders of the Company and serving as the auditors of the Company at the relevant time;
|
|
|
(p)
|
“CSE” means the Canadian Securities Exchange;
|
|
|
(q)
|
"Current Market Price" in respect of a Subordinate Voting Share, at any date,
means the price per share equal to the volume weighted average of the trading price for the 10 consecutive Trading Days ending
five days before such date, on the CSE, or, if the Subordinate Voting Shares are not listed thereon, on any stock exchange on which
such shares are listed as may be selected for such purpose by the directors or, if such shares are not listed on any stock exchange,
then on such over-the-counter market in Canada as may be selected for such purpose by the directors, provided further that if the
Subordinate Voting Shares are not then listed on any Canadian stock exchange or traded in the over-the counter market, then the
Current Market Price shall be determined by such firm of independent chartered professional accountants as may be selected by the
directors of the Company;
|
|
|
(r)
|
"Designated Jurisdictions" means each of the provinces of Canada, excluding Quebec,
Prince Edward Island and Newfoundland and Labrador (and excluding Yukon, Northwest Territories and Nunavut) and such other jurisdictions
as agreed to in writing by the Company and the Agent;
|
|
|
(s)
|
“DRS Registration Statement” means an ownership statement under a direct registration
system;
|
|
|
(t)
|
"director" means a director of the Company for the time being and, unless otherwise
specified herein, a reference to an action by the directors means an action by the directors of the Company as a board or, whenever
duly empowered, action by a committee of such board;
|
|
|
(u)
|
"Indenture", "herein", "hereto", "hereunder",
"hereof", "hereby" and similar expressions mean or refer to this special warrant indenture and
not to any particular Article, Section, paragraph, clause, subdivision or portion hereof and include any indenture, deed or instrument
supplemental or ancillary hereto, in each case, as may be amended from time to time; and the expressions "Article",
"Section" and "paragraph" followed by a number mean and refer to the specified Article, Section
or paragraph of this Indenture;
|
|
|
(v)
|
"Internal Procedures" means in respect of the making of any one or more entries
to, changes in or deletions of any one or more entries in the register at any time (including without limitation, original issuance
or registration of transfer of ownership) the minimum number of the Special Warrant Agent's internal procedures customary at such
time for the entry, change or deletion made to be completed under the operating procedures followed at the time by the Special
Warrant Agent;
|
|
|
(w)
|
"Private Placement" means the private placement of up to 6,085,192 Special Warrants
pursuant to the Agency Agreement;
|
|
|
(x)
|
"Prospectus Supplement" means a prospectus supplement of the Company which supplements
the Company’s short form base shelf prospectus dated August 8, 2019 filed with the Commissions by the Company and qualifies
the distribution of the Units underlying the Special Warrants and the Purchaser’s Option, including for greater certainty
all Unit Shares and Unit Warrants in the Designated Jurisdictions;
|
|
|
(y)
|
“Purchaser’s Option” has the meaning ascribed thereto in the Agency Agreement;
|
|
|
(z)
|
"Purchase Price" means US$4.93 per Special Warrant;
|
|
|
(aa)
|
"Qualification Date" means the date on which: (i) the Prospectus Supplement is
filed with and deemed effective in each of the Designated Jurisdictions; and (ii) Registration Statement has been filed
with, and declared effective by, the SEC.
|
|
|
(bb)
|
"Qualification Deadline" means 5:00 p.m. (Toronto time) on February 14, 2020;
|
|
|
(cc)
|
“Registration Statement” means the registration statement of the Company, pursuant
to an amendment to its Form F-10 shelf registration statement, to be prepared and filed by the Company with the SEC registering
the issuance of the Unit Shares and Unit Warrants issuable upon the exercise of the Special Warrants and the Purchaser’s
Option, and the Warrant Shares issuable on the exercise of the Warrants;
|
|
|
(dd)
|
"SEC" means the United States Securities and Exchange Commission;
|
|
|
(ee)
|
"Special Warrant" means a special warrant of the Company created by the Company
and issued hereunder for a purchase price of US$4.93 per special warrant and entitling the holder thereof to acquire one Unit upon
the automatic exercise thereof, subject to adjustment in certain circumstances in accordance with this Indenture, without payment
of additional consideration;
|
|
|
(ff)
|
"Special Warrant Agent" means Odyssey Trust Company, the Company's registrar and
transfer agent for the Special Warrants, having a principal office in ###########;
|
|
|
(gg)
|
"Special Warrant Certificate" means a certificate evidencing one or more Special
Warrants issuable hereunder, substantially in the form attached hereto as Schedule "A";
|
|
|
(hh)
|
"Special Warrantholder" means the registered holder from time to time of an outstanding
Special Warrant;
|
|
|
(ii)
|
"Subordinate Voting Share" means a fully paid and non-assessable Class A subordinate
voting share in the capital of the Company as such capital is presently constituted;
|
|
|
(jj)
|
"Subsidiary of the Company" means a corporation of which voting securities carrying
a majority of the votes attached to all outstanding voting securities of the Company are owned, directly or indirectly, by the
Company or by one or more subsidiaries of the Company, and, as used in this definition, voting securities means securities, other
than debt securities, carrying a voting right to elect directors either under all circumstances or under some circumstances that
may have occurred and are continuing;
|
|
|
(kk)
|
"Trading Day" means any day on which the facilities of the CSE are open for trading;
|
|
|
(ll)
|
"Transaction Instruction" means a written order signed by the Special Warrantholder
entitled to request that one or more actions be taken, or such other form as may be reasonably acceptable to the Special Warrant
Agent, requesting one or more such actions to be taken in respect of an Uncertificated Special Warrant;
|
|
|
(mm)
|
“U.S. Securities Laws” means the 1933 Act, the 1934 Act, each as amended, and
all rules and regulations promulgated thereunder and the applicable securities (“Blue Sky”) laws of the states
of the United States;
|
|
|
(nn)
|
“United States” or “U.S.” means the United States of America,
its territories and possessions, and any state of the United States and the District of Columbia;
|
|
|
(oo)
|
"Uncertificated Special Warrant" means any Special Warrant which is not represented
by a Special Warrant Certificate;
|
|
|
(pp)
|
"Unit" means a unit of securities of the Company consisting of one Unit Share
and one Unit Warrant, issuable upon the automatic exercise of the Special Warrants;
|
|
|
(qq)
|
"Unit Share" means a Subordinate Voting
Share forming part of a Unit, issuable upon the automatic exercise of the Special Warrants;
|
|
|
(rr)
|
"Unit Warrant" means a Subordinate Voting Share purchase warrant of the Company
forming part of a Unit, issuable upon the automatic exercise of the Special Warrants and pursuant to the Warrant Indenture, with
each Unit Warrant exercisable by the holder thereof to acquire one Subordinate Voting Share of the Company for a period of 60 months
following the Closing Date at a price of US $4.93 per Warrant Share;
|
|
|
(ss)
|
"U.S. Person" has the meaning ascribed thereto in Rule 902 K of Regulation "S"
under the 1933 Act, as amended;
|
|
|
(tt)
|
“Warrant Indenture” means the warrant indenture governing the terms of the Unit
Warrants between the Company and Odyssey Trust Company in its capacity as warrant agent, dated the Closing Date; and
|
|
|
(uu)
|
“Warrant Share” means a Subordinate Voting Share issued upon the exercise of
a Unit Warrant.
|
The division of this
Indenture into Articles, Sections or other subdivisions, the provision of a Table of Contents and the insertion of headings are
for convenience of reference only and shall not affect the construction or interpretation of this Indenture or the Special Warrants.
Words importing the
singular number also include the plural and vice versa and words importing a particular gender or neuter include both genders and
neuters.
|
|
1.4
|
Weekends and Holidays
|
If the date for the
taking of any action under this Indenture expires on a day which is not a Business Day, such action may be taken on the next succeeding
Business Day with the same force and effect as if taken within the period for the taking of such action.
|
|
1.5
|
Meaning of "Outstanding"
|
Every
Special Warrant represented by a Special Warrant Certificate countersigned by the Special Warrant Agent or Uncertificated Special
Warrant that has been Authenticated and delivered to the holder thereof is deemed to be outstanding until it is cancelled or delivered
to the Special Warrant Agent for cancellation or until the Automatic Exercise Time. Where a new Special Warrant Certificate has
been issued pursuant to Section 2.8 to replace one which has been mutilated, lost, stolen or destroyed, the Special Warrants
represented by only one of such Special Warrant Certificates are counted for the purpose of determining the aggregate number of
Special Warrants outstanding. A Special Warrant Certificate representing a number of Special Warrants which has been partially
exercised will be deemed to be outstanding only to the extent of the unexercised portion of the Special Warrants.
Time is of the essence
hereof and of each Special Warrant Certificate.
This Indenture and
each Special Warrant Certificate are subject to and shall be construed in accordance with the laws of the Province of Ontario and
the federal laws of Canada applicable therein. Each of the parties hereto irrevocably attorn to the exclusive jurisdiction of the
courts of the Province of Ontario with respect to all matters arising out of this Indenture and the transactions contemplated herein.
Wherever possible,
each provision hereof shall be interpreted in such manner as to be effective and valid under Applicable Legislation. In the event
that any provision hereof shall be determined to be invalid, illegal or unenforceable in any respect under Applicable Legislation,
such provision will be ineffective only to the extent of such invalidity, illegality and unenforceability and the validity, legality
and enforceability of the remainder of such provision and any other provision hereof shall not be affected or impaired thereby.
All references to currency
herein and in the Special Warrant Certificates are to United States dollars unless otherwise indicated.
In the event of any
conflict or inconsistency between the provisions of this Indenture and the Special Warrant Certificates, the provisions of this
Indenture will govern.
The
attached Schedule "A" is incorporated into and form part of this Indenture.
|
|
2.
|
ISSUE AND PURCHASE OF SPECIAL WARRANTS
|
|
|
2.1
|
Creation, Form and Terms of Special Warrants
|
|
|
(a)
|
The Company hereby creates and authorizes for issuance up to 10,141,987 Special Warrants at a price
of US$4.93 per Special Warrant, each such Special Warrant entitling a Special Warrantholder to acquire one Unit at no additional
cost, subject to adjustment as provided under this Indenture.
|
|
|
(b)
|
Subject to the provisions hereof, the Special Warrants issued under this Indenture are limited
in the aggregate to 10,141,987 Special Warrants, provided that the number of Units is subject to increase or decrease so as to
give effect to the adjustments required by Article 4.
|
|
|
(c)
|
No fractional Special Warrants shall be issued or otherwise provided for hereunder.
|
|
|
2.2
|
Form of Special Warrants, Certificated Special Warrants
|
The
Special Warrants may be issued in both certificated and uncertificated form. All Special Warrants issued in certificated form shall
be evidenced by a Special Warrant Certificate (including all replacements issued in accordance with this Indenture), substantially
in the form set out in Schedule "A" hereto, which shall be dated as of the Closing Date, shall bear such
distinguishing letters and numbers as the Company may, with the approval of the Special Warrant Agent, prescribe, and shall be
issuable in any denomination excluding fractions. All Special Warrants issued in uncertificated form shall be evidenced by a DRS
Registration Statement or other written notice, as determined by the Company to be the most efficient means of complying with U.S.
Securities Laws and shall be reflected in the register of the Special Warrant Agent. Notwithstanding the foregoing, all Special
Warrants issued will bear the applicable legends as set forth herein.
|
|
2.3
|
Special Warrant Certificate
|
|
|
(a)
|
Special Warrants shall be issued in a certificated form or in an uncertificated form, such
uncertificated form being evidenced by a DRS Registration Statement or other written notice, as determined by the Company to be
the most efficient means of complying with U.S. Securities Laws. The form of certificate representing Special Warrants shall be
substantially as set out in Schedule "A" hereto or such other form as is authorized from time to time by the Special
Warrant Agent. Each Special Warrant Certificate shall be Authenticated on behalf of the Special Warrant Agent. Each Special Warrant
Certificate shall be signed by any one duly authorized signatory of the Company; whose signature shall appear on the Special Warrant
Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event, certificates so signed
are as valid and binding upon the Company as if it had been signed manually. Any Special Warrant Certificate which has one
signature as hereinbefore provided shall be valid and binding notwithstanding that one or more of the persons whose signature is
printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Special
Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Special Warrant
Agent may determine.
|
|
|
(b)
|
The Special Warrant Agent shall Authenticate Uncertificated Special Warrants (whether upon original
issuance, exchange, registration of transfer, partial payment, or otherwise) by completing its Internal Procedures and the Company
shall, and hereby acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Special Warrants
under this Indenture. Such Authentication shall be conclusive evidence that such Uncertificated Special Warrant has been duly issued
hereunder and that the holder or holders are entitled to the benefits of this Indenture. The register shall be final and conclusive
evidence as to all matters relating to Uncertificated Special Warrants with respect to which this Indenture requires the Special
Warrant Agent to maintain records or accounts. In case of differences between the register at any time and any other time, the
register at the later time shall be controlling, absent manifest error and such Uncertificated Special Warrants are binding on
the Company.
|
|
|
(c)
|
No Special Warrant shall be considered issued and shall be valid or obligatory or shall entitle
the holder thereof to the benefits of this Indenture, until it has been Authenticated by the Special Warrant Agent. Authentication
by the Special Warrant Agent, including by way of entry on the register or otherwise, shall not be construed as a representation
or warranty by the Special Warrant Agent as to the validity of this Indenture or of such Special Warrant Certificates or Uncertificated
Special Warrants (except the due Authentication thereof) or as to the performance by the Company of its obligations under this
Indenture and the Special Warrant Agent shall in no respect be liable or answerable for the use made of the Special Warrants or
any of them or of the consideration thereof. Authentication by the Special Warrant Agent shall be conclusive evidence as against
the Company that the Special Warrants so Authenticated have been duly issued hereunder and that the holder thereof is entitled
to the benefits of this Indenture.
|
|
|
(d)
|
No Special Warrant Certificate shall be considered issued and Authenticated or, if Authenticated,
shall be obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by manual
signature by or on behalf of the Special Warrant Agent substantially in the form of the Special Warrant Certificate set out in
Schedule "A" hereto. Such Authentication on any such certificated Special Warrant shall be conclusive evidence that
such Special Warrant Certificate is duly Authenticated and is valid and a binding obligation of the Company and that the holder
is entitled to the benefits of this Indenture.
|
|
|
(e)
|
No Uncertificated Special Warrant shall be considered issued and shall be obligatory or shall entitle
the holder thereof to the benefits of this Indenture, until it has been Authenticated by entry on the register of the particulars
of the Uncertificated Special Warrants. Such entry on the register of the particulars of an Uncertificated Special Warrant shall
be conclusive evidence that such Uncertificated Special Warrant is a valid and binding obligation of the Company and that the holder
is entitled to the benefits of this Indenture.
|
|
|
2.4
|
Transferability and Ownership of Special Warrants
|
|
|
(a)
|
The Company hereby appoints the Special Warrant Agent as registrar of the Special Warrants, whether
certificated or uncertificated, which shall contain the information called for below with respect to each Special Warrant, together
with such other information as may be required by law or as the Special Warrant Agent may elect to record. All such information
shall be kept in one set of accounts and records, at the Special Warrant Agent's Calgary office set forth in Section 1.1(ff), which
the Special Warrant Agent shall designate (in such manner as shall permit it to be so identified as such by an unaffiliated party)
as the register of the Special Warrantholders. The information to be entered for each account in the register of Special Warrants
at any time shall include (without limitation):
|
|
|
(i)
|
the name and address of the Special Warrantholder, the date of Authentication thereof and the number
of Special Warrants held;
|
|
|
(ii)
|
whether such Special Warrant is a certificated or uncertificated and, if certificated, the unique
number or code assigned to and imprinted thereupon and, if an uncertificated, the unique number or code assigned thereto if any;
|
|
|
(iii)
|
whether such Special Warrant has been cancelled; and
|
|
|
(iv)
|
a register of transfers in which all transfers of Special Warrants and the date and other particulars
of each transfer shall be entered.
|
The register shall be available
for inspection by the Company and or any Special Warrantholder during the Special Warrant Agent's regular business hours on a Business
Day and upon payment to the Special Warrant Agent of its reasonable fees. Any Special Warrantholder exercising such right of inspection
shall first provide an affidavit in form satisfactory to the Company and the Special Warrant Agent stating the name and address
of the Special Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting
of Special Warrantholders or to influence the voting of Special Warrantholders at any meeting of Special Warrantholders.
|
|
(b)
|
Once an Uncertificated Special Warrant has been Authenticated, the information set forth in the
register with respect thereto at the time of Authentication may be altered, modified, amended, supplemented or otherwise changed
only to reflect exercise or proper instructions to the Special Warrant Agent from the holder as provided herein, except that the
Special Warrant Agent may act unilaterally to make purely administrative changes internal to the Special Warrant Agent and changes
to correct errors. Each person who becomes a holder of an Uncertificated Special Warrant, by his, her or its acquisition thereof
shall be deemed to have irrevocably (i) consented to the foregoing authority of the Special Warrant Agent to make such minor error
corrections and (ii) agreed to pay to the Special Warrant Agent, promptly upon written demand, the full amount of all loss and
expense (including without limitation reasonable legal fees of the Company and the Special Warrant Agent plus interest, at an appropriate
then prevailing rate of interest), sustained by the Company or the Special Warrant Agent as a proximate result of such error caused
by the holder if but only if and only to the extent that such present or former holder realized any benefit as a result of such
error and could reasonably have prevented, forestalled or minimized such loss and expense by prompt reporting of the error or avoidance
of accepting benefits thereof whether or not such error is or should have been timely detected and corrected by
the Special Warrant Agent; provided, that no person who is a bona fide purchaser shall have any such obligation to the Company
or to the Special Warrant Agent.
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(c)
|
The Special Warrant Certificates may only be transferred by the Special Warrantholder (or its legal
representatives or its attorney duly appointed), in accordance with Applicable Legislation and upon compliance with the conditions
herein, on the register kept at the office of the Special Warrant Agent pursuant to Section 2.4(a) by delivering to the Special
Warrant Agent's Calgary office a duly executed Form of Transfer attached as Appendix 1 to the Special Warrant Certificate
and complying with such other reasonable requirements as the Company and the Special Warrant Agent may prescribe and such transfer
shall be duly noted on the register by the Special Warrant Agent. In the case of Uncertificated Special Warrants, the legal or
beneficial interest in the Special Warrants may only be transferred in accordance with the procedures of the direct registration
system utilized.
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(d)
|
Notwithstanding anything contained in this Indenture, in the Special Warrant Certificate or in
any subscription agreements under which Special Warrants were issued and sold, the Special Warrant Agent, relying solely on the
Form of Transfer or such other reasonable requirements as the Company and Special Warrant Agent may prescribe pursuant to Section
2.4(b) or this Section shall not register any transfer of a Special Warrant unless the transfer is made in compliance with this
Section.
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(e)
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The Special Warrant Agent acknowledges and understands that the Special Warrants have not been
and will not be registered under the 1933 Act or under the securities or "blue sky" laws of any state of the United States.
As a result, a Special Warrantholder may only offer, sell, or otherwise transfer such securities (A) in compliance with Regulation
S under the 1933 Act; or (B) in a transaction that does not require registration under the 1933 Act or any applicable state securities
laws and, in each case, after the seller has prior to such transfer furnished to the Company an opinion of counsel of recognized
standing in form and substance reasonably satisfactory to the Company to such effect. If a Special Warrant Certificate is tendered
for transfer in violation of the foregoing, the Special Warrant Agent shall not register such transfer.
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(f)
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The Company shall direct the Special Warrant Agent as to matters related to the applicable hold
periods and applicable securities legislation. The Special Warrant Agent shall have no obligation to ensure or verify compliance
with any Applicable Legislation or regulatory requirements on the issue, automatic exercise or transfer of any Special Warrants,
Unit Shares, Unit Warrants or other securities issuable upon the exercise of any Special Warrants. The Special Warrant Agent shall
be entitled to process all proffered transfers and exercises of Special Warrants upon the presumption that such transfers or exercises
are permissible pursuant to all Applicable Legislation and regulatory requirements and the terms of this Indenture. The Special
Warrant Agent may assume for the purposes of this Indenture that the address on the register of Special Warrantholders of any Special
Warrantholder is the Special Warrantholder's actual address and is also determinative of the Special Warrantholder's residency
and that the address of any transferee to whom any Special Warrants or any Unit Shares and Unit Warrants comprising the Units are
to be registered, as shown on the transfer document, is the transferee's actual address and is also determinative of the transferee's
residency.
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(g)
|
Upon any transfer of Special Warrants in accordance with the provisions of this Indenture, the
Company shall covenant and agree with the Special Warrant Agent, on behalf of the transferee holder and with the transferee holder,
that the transferee holder is a permitted assignee of the transferring holder and is entitled to the benefits of the covenant of
the Company to be set forth under the heading "Contractual Right of Rescission" in the Prospectus Supplement, subject
to the restrictions and limitations hereunder. Should a holder of Special Warrants exercise any legal, statutory, contractual or
other right of withdrawal or rescission that may be available to it, the Special Warrant Agent shall not be responsible for ensuring
the Special Warrants or the exercise of Special Warrants is cancelled and a refund of the holder's funds is paid back to the holder.
In such cases, the holder shall seek a refund directly from the Company and subsequently, the Company shall instruct the Special
Warrant Agent in writing, to cancel the Special Warrants or exercise transaction and any underlying shares on the register, which
may have already been issued upon the Special Warrant exercise.
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(h)
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A person who furnishes evidence that he is, to the reasonable satisfaction of the Special Warrant
Agent:
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(i)
|
the executor, administrator, heir or legal representative of the heirs of the estate of a deceased
Special Warrantholder;
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(ii)
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a guardian, committee, trustee, curator or tutor representing a Special Warrantholder who is an
infant, an incompetent person or a missing person; or
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(iii)
|
a liquidator or, a trustee in bankruptcy for, a Special Warrantholder,
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may,
as hereinafter stated, by surrendering such evidence together with the Special Warrant Certificate in question to the Special Warrant
Agent (by delivery or mail as set forth in Section 9.1 hereof), and subject to such reasonable requirements as the Special
Warrant Agent may prescribe and all applicable securities legislation and requirements of regulatory authorities, become noted
upon the register of Special Warrantholders. After receiving the surrendered Special Warrant Certificate and upon the person surrendering
the Special Warrant Certificate meeting the requirements as hereinbefore set forth, the Special Warrant Agent shall forthwith give
written notice thereof together with confirmation as to the identity of the person entitled to become the holder to the Company.
Forthwith after receiving written notice from the Special Warrant Agent as aforesaid, the Company shall cause a new Special Warrant
Certificate to be issued and sent to the new holder and the Special Warrant Agent shall alter the register of Special Warrantholders
accordingly.
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(i)
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The Company and the Special Warrant Agent shall deem and treat the registered holder of any Special
Warrant as the absolute legal and beneficial owner thereof for all purposes, free from all equities or rights of set off or counterclaim
between the Company and any previous holder of such Special Warrant, save in respect of equities of which the Company is required
to take notice by statute or by order of a court of competent jurisdiction, and neither the Company nor the Special Warrant Agent
is affected by any notice to the contrary.
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(j)
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Subject to the provisions of this Indenture and Applicable Legislation, each Special Warrantholder
is entitled to the rights and privileges attaching to the Special Warrants, and the issue of the Units by the Company on exercise
of Special Warrants by any Special Warrantholder in accordance
with the terms and conditions herein contained discharges all responsibilities of the Company and the Special Warrant Agent with
respect to such Special Warrants and neither the Company nor the Special Warrant Agent is bound to inquire into the title of any
such registered holder.
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(k)
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No charge will be levied on a presenter of a Special Warrant Certificate pursuant to this Indenture for the transfer of any Special Warrant.
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(l)
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Notwithstanding any other provision of this Section 2.4, in connection with any transfer of Special
Warrants, the transferor and transferee shall comply with all reasonable requirements of the Special Warrant Agent as the Special
Warrant Agent may deem necessary to secure the obligations of the transferee of such Special Warrants with respect to such transfer
or the sale of such Special Warrants to the Company pursuant to Section 2.11.
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2.5
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Special Warrantholders Not Shareholders
|
A Special Warrantholder
is not deemed or regarded as a shareholder of the Company nor is such Special Warrantholder entitled to any right or interest except
as is expressly provided in this Indenture, in the Special Warrant Certificates or if the Special Warrants are issued in uncertificated
form, as provided for under the direct registration system.
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2.6
|
Signing of Special Warrants
|
Any one director or
officer of the Company shall sign the Special Warrant Certificates either manually or by electronic signature. An electronic signature
upon any Special Warrant Certificate is, for all purposes hereof, deemed to be the signature of the person whose signature it purports
to be and to have been signed at the time such electronic signature is reproduced. If a person whose signature, either manually
or in electronic form, appears on a Special Warrant Certificate is not a director or officer of the Company at the date of this
Indenture or at the date of the countersigning and delivery of such Special Warrant Certificate, such fact does not affect in any
way the validity of the Special Warrants or the entitlement of the Special Warrantholder to the benefits of this Indenture or of
the Special Warrant Certificate.
The Special
Warrant Agent shall countersign the Special Warrant Certificates and Authenticated Uncertificated Special Warrants upon the
written direction of the Company. No Special Warrant Certificate shall be issued, or if issued, is valid or exercisable or
entitles the holder thereof to the benefits of this Indenture until the Special Warrant Certificate has been countersigned by
the Special Warrant Agent or the Uncertificated Special Warrant has been Authenticated by the Special Warrant Agent, as the
case may be. The countersignature or Authentication by or on behalf of the Special Warrant Agent will be conclusive evidence
as against the Company that the Special Warrant Certificate so countersigned or Uncertificated Special Warrant so
Authenticated has been duly issued hereunder and that the holder is entitled to the benefit hereof. The countersignature by
or on behalf of the Special Warrant Agent on any Special Warrant Certificate or the Authentication of any Uncertificated
Special Warrant by or on behalf of the Special Warrant Agent is not to be construed as a representation or warranty by the
Special Warrant Agent as to the validity of this Indenture or of the Special Warrants or as to the performance by the Company
of its obligations under this Indenture and the Special Warrant Agent is in no way liable or answerable for the use made of
the Special Warrants or the proceeds from the issuance thereof, except as specified by this Indenture. The countersignature
or Authentication, as the case may be, by or on behalf of the Special Warrant Agent is, however, a representation and
warranty of the Special Warrant Agent that the Special Warrant Certificate has been duly countersigned by or on behalf of the
Special Warrant Agent pursuant to the provisions of this Indenture.
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2.8
|
Loss, Mutilation, Destruction or Theft of Special Warrants
|
In case any of the
Special Warrant Certificates issued and countersigned hereunder is mutilated or lost, destroyed or stolen, the Company, in its
discretion, may issue and thereupon the Special Warrant Agent will countersign and deliver a new Special Warrant Certificate of
like date and tenor, and bearing the same legend, as applicable, in exchange for and in place of the one mutilated, lost, destroyed
or stolen and upon surrender and cancellation of such mutilated Special Warrant Certificate or in lieu of and in substitution for
such lost, destroyed or stolen Special Warrant Certificate and the substituted Special Warrant Certificate entitles the holder
thereof to the benefits hereof and ranks equally in accordance with its terms with all other Special Warrants issued hereunder.
The Special Warrantholder
applying for the issue of a new Special Warrant Certificate pursuant to this Section shall bear the cost of the issue thereof and
in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Company and the Special
Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Special Warrant Certificate so lost, destroyed
or stolen as is satisfactory to the Company and the Special Warrant Agent in their discretion. The Company and the Special Warrant
Agent shall also, as a condition precedent to issuing a new Special Warrant Certificate, require such applicant to furnish an indemnity
and surety bond in amount and form satisfactory to the Company and Special Warrant Agent in their sole discretion, and the applicant
shall pay the reasonable charges of the Company and the Special Warrant Agent in connection therewith.
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2.9
|
Exchange of Special Warrants
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A
Special Warrantholder may, upon compliance with the reasonable requirements of the Special Warrant Agent (including compliance
with applicable securities laws) at any time prior to the Automatic Exercise Time, by written instruction delivered to the Special
Warrant Agent at the office of the Special Warrant Agent set forth in Section 1.1, exchange his Special Warrant Certificates
for Special Warrant Certificates evidencing Special Warrants in other denominations entitling the Special Warrantholder to acquire
in the aggregate the same number of Units to which it was entitled to acquire under the Special Warrant Certificates so surrendered,
in which case the Special Warrant Agent may make a charge sufficient to reimburse it for any government fees or charges required
to be paid and such reasonable fees as the Special Warrant Agent may determine for every Special Warrant Certificate issued upon
exchange. The Special Warrantholder surrendering such Special Warrant Certificate shall bear such fee and charge. Payment of the
charges is a condition precedent to the exchange of the Special Warrant Certificate. The Company shall sign and the Special Warrant
Agent shall countersign all Special Warrant Certificates necessary to carry out exchanges as aforesaid.
Special
Warrant Certificates exchanged for Special Warrant Certificates that bear the legend set forth in Section 5.9 shall bear
the same legend.
All Special Warrants
will have the same attributes and rank pari passu regardless of the date of actual issue.
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2.11
|
Purchase of Special Warrants for Cancellation
|
Subject
to Applicable Legislation, the Company may, at any time or from time to time, purchase all or any of the Special Warrants in the
market, by private contract or otherwise, on such terms as the Company may determine. Any such purchase shall be made at the lowest
price or prices at which, in the opinion of the directors, such Special Warrants are then obtainable plus reasonable costs of purchase.
The Special Warrants (and if applicable, the Special Warrant Certificates representing the Special Warrants) purchased hereunder
by the Company shall immediately following purchase, be delivered to and cancelled by the Special Warrant Agent and no Special
Warrants shall be issued in substitution therefor. In the case of Uncertificated Special Warrants, the Special Warrants purchased
pursuant to this Section 2.11 shall be reflected accordingly on the register of the Special Warrants and in accordance with
procedures prescribed under the direct registration system utilized. No Special Warrants shall be issued in replacement thereof.
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2.12
|
Cancellation of Surrendered Special Warrants
|
All
Special Warrant Certificates surrendered pursuant to Article 5 shall be cancelled by the Special Warrant Agent and upon
such circumstances all such Uncertificated Special Warrants shall be deemed cancelled and so noted on the register by the Special
Warrant Agent.
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3.
|
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
|
So long as any Special
Warrants remain outstanding and/or the Purchaser’s Option remains exercisable in whole or in part, the Company represents,
warrants, covenants and agrees with the Special Warrant Agent for the benefit of the Special Warrant Agent and Special Warrantholders
as follows:
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3.1
|
To Issue Special Warrants and Reserve Subordinate Voting Shares and Unit Warrants
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(a)
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That it is duly authorized to create and issue the Special Warrants and that the Special Warrants,
when issued and, in the case of certificated Special Warrants, countersigned by the Special Warrant Agent, will be valid and enforceable
against the Company in accordance with their terms and the terms of this Indenture and that, subject to the provisions of this
Indenture, the Company shall cause the Unit Shares and Unit Warrants comprising the Units acquired pursuant to the automatic exercise
of Special Warrants and the certificates (if any) representing such securities, to be duly issued and delivered in accordance with
the terms of the Special Warrants and this Indenture without payment of additional consideration by the Special Warrantholders.
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(b)
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That the Company has reserved, allotted and set aside for issuance out of its authorized share
structure a number of Unit Shares, and shall direct the agent for the Unit Warrants to reserve and allot a number of Unit Warrants
sufficient to enable the Company to meet its obligations to issue Units in respect of the automatic exercise of all Special Warrants
outstanding from time to time. All Unit Shares issued pursuant to the automatic exercise of the Special Warrants shall be fully
paid and non-assessable and free and clear of all encumbrances arising through or under the Company. All Unit Warrants issued pursuant
to the automatic exercise of the Special Warrants will be issued as fully paid securities and will be valid, binding and enforceable
obligations of the Company and free and clear of all encumbrances arising through or under the Company.
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(c)
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Subject to the terms of this Indenture, the Company shall not issue Subordinate Voting Shares or
securities convertible or exercisable for or into Subordinate Voting Shares in excess of the Purchaser Approved
Share Threshold (as such term is defined pursuant to the Arrangement Agreement) without the prior written consent of the Special
Warrantholders.
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(d)
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That Odyssey Trust Company is the registrar and transfer agent of the Unit Shares, and is duly
authorized to countersign, register and issue certificates representing, or otherwise document or evidence ownership of, such Unit
Shares, in each case in accordance with and pursuant to the terms of this Indenture.
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(e)
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That Odyssey Trust Company is the warrant agent of the Unit Warrants, and is duly authorized to
countersign, register and issue certificates representing, or document such other evidence of ownership of, such Unit Warrants,
in each case in accordance with and pursuant to the terms of this Indenture and the Warrant Indenture.
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3.2
|
To Execute Further Assurances
|
That it shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other acts, deeds and assurances in law
as may reasonably be required for the better accomplishing and effecting of the intentions and provisions of this Indenture.
That subject to the
express provisions hereof, it shall carry on and conduct and shall cause to be carried on and conducted its business in the same
manner as heretofore carried on and conducted and in accordance with industry standards and good business practice, provided, however,
that the Company or any Subsidiary of the Company may cease to operate or may dispose of any business, premises, property, assets
or operation if in the opinion of the directors or officers of the Company or any Subsidiary of the Company, as the case may be,
it would be advisable and in the best interests of the Company or any Subsidiary of the Company, as the case may be, to do so,
and subject to the express provisions hereof, it shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, provided, however, that nothing herein contained shall prevent the amalgamation, consolidation,
merger, sale, winding-up or liquidation of the Company or any Subsidiary of the Company or the abandonment of any rights and franchises
of the Company or any Subsidiary of the Company if, in the opinion of the directors or officers of the Company or any Subsidiary
of the Company, as the case may be, it is advisable and in the best interest of the Company or of such Subsidiary of the Company
to do so. Without limiting the generality of the foregoing, notwithstanding anything herein to the contrary, nothing herein shall
prevent the Company from carrying out its obligations under the Arrangement Agreement.
That the Company is
presently a reporting issuer not in default in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, and Nova
Scotia, and will use its commercially reasonable efforts to maintain its status in such jurisdictions and in each other Designated
Jurisdiction in which the Company becomes a reporting issuer for a period of 60 months following the date hereof.
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3.5
|
No Breach of Constating Documents
|
That the issue
and sale of the Special Warrants and the issue of the Unit Shares and Unit Warrants comprising the Units do not or will not
conflict with any of the terms, conditions or provisions of the Notice of Articles, Articles or resolutions of the
shareholders or directors of the Company, or any trust indenture, loan agreement or any other agreement or instrument to
which the Company or any Subsidiary is contractually bound as of the date of this Indenture.
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3.6
|
Filing Prospectus Supplement, Registration Statement and Related Matters
|
That the Company shall
use its use its commercially reasonable efforts to, no later than the Qualification Deadline, file the Prospectus Supplement with
the Commissions and the Registration Statement with the SEC. If the Company has not filed the Prospectus Supplement with the Commissions
and the Registration Statement with the SEC by the Qualification Deadline, the Company covenants to file such documents as soon
as possible and in any event on or before March 20, 2020.
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3.7
|
Notices to Special Warrant Agent
|
That
upon: (i) the filing of the Prospectus Supplement; and (ii) the SEC declaring the Registration Statement effective; or as contemplated
in Section 3.6, the Company shall forthwith, and in any event not later than the first Business Day thereafter:
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(a)
|
give written notice to the Special Warrant Agent and the Agent of the filing of the Prospectus
Supplement and the declaration of effectiveness of the Registration Statement and the date upon which the Special Warrants will
be automatically exercised; and
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(b)
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provide written confirmation to the Special Warrant Agent and the Agent of any adjustment that
has been made pursuant to Article 4.
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3.8
|
Securities Qualification Requirements
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|
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(a)
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If any instrument is required to be filed with or any permission, order or ruling is required to
be obtained from the Commissions or any other step is required under any federal or provincial law of the Designated Jurisdictions
before any securities or property which a Special Warrantholder is entitled to receive pursuant to the automatic exercise of a
Special Warrant may properly and legally be delivered upon the automatic exercise of a Special Warrant, the Company covenants that
it shall use its reasonable best efforts to make such filing, obtain such permission, order or ruling and take all such action,
at its expense, as is required or appropriate in the circumstances.
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(b)
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For so long as any Special Warrants remain outstanding, or the Purchaser’s Option remains
exercisable in whole or in part, the Company covenants that it will use its reasonable best efforts to ensure that the certificates
or DRS Registration Statements representing the Unit Shares and Warrants which may be acquired upon automatic exercise of
the Special Warrants and exercise of the Purchaser’s Option will bear no legends, such that such certificates and
DRS Registration Statements will constitute “good delivery” in settlement of transactions under the rules of
the Canadian stock exchanges.
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Except to the extent
that the transactions contemplated in the Arrangement Agreement are completed, the Company will, at its expense, use its reasonable
best efforts to maintain the listing of the Subordinate Voting Shares which are outstanding on the CSE for a period of 60 months
following the date hereof and ensure that the Unit Shares and Warrant Shares will be accepted for trading and listed on such exchange
as of the Automatic Exercise Time.
That the Company will
comply with all covenants and satisfy all terms and conditions on its part to be performed and satisfied under this Indenture and
advise the Agent, the Special Warrant Agent and the Special Warrantholders promptly in writing of any default under the terms of
this Indenture.
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3.11
|
Performance of Covenants by Special Warrant Agent
|
If the Company shall
fail to perform any of its covenants contained in this Indenture and the Company has not rectified such failure within ten (10)
Business Days after receiving notice of such failure by the Special Warrant Agent, the Special Warrant Agent may notify the Special
Warrantholders of such failure on the part of the Company or may itself perform any of the covenants capable of being performed
by it but, shall be under no obligation to perform said covenants or to notify the Special Warrantholders of such performance by
it. No such performance, expenditure or advance by the Special Warrant Agent shall relieve the Company of any default hereunder
or of its continuing obligations under the covenants herein contained.
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3.12
|
Special Warrant Agent's Remuneration and Expenses
|
The Company will pay
the Special Warrant Agent from time to time such reasonable remuneration for its services hereunder as may be agreed upon between
the Company and the Special Warrant Agent and will pay or reimburse the Special Warrant Agent upon its request for all reasonable
expenses and disbursements and advances properly incurred or made by the Special Warrant Agent in the administration or execution
of its duties hereby created (including the reasonable compensation and disbursements of its counsel and all other advisers and
assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Special Warrant
Agent hereunder shall be finally and fully performed, except any such expense, disbursement advance as may arise from the gross
negligence, wilful misconduct or fraud of the Special Warrant Agent. Any amount owing hereunder and remaining unpaid after 30 days
from the invoice date will bear interest at the then current rate charged by the Special Warrant Agent against unpaid invoices
and shall be payable upon demand. This Section shall survive the resignation of the Special Warrant Agent and/or the termination
of this Indenture.
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3.13
|
Trust for Special Warrantholder's Benefit
|
The covenants of the
Company to the Special Warrant Agent provided for in this Indenture shall be held in trust by the Special Warrant Agent for the
benefit of the Special Warrantholders.
|
3.14
|
Notice to Special Warrantholders of Certain Events
|
The Company covenants
with the Special Warrant Agent for the benefit of the Special Warrant Agent and the Special Warrantholders that, so long as any
of the Special Warrants are outstanding, it will not:
|
|
(a)
|
pay any dividend payable in shares of any class to the holders of its Subordinate Voting Shares
or make any other distribution to the holders of its Subordinate Voting Shares;
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(b)
|
offer to the holders of its Subordinate Voting Shares generally rights to subscribe for or to purchase
any Subordinate Voting Shares or shares of any class or any other securities, rights, warrants or options;
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(c)
|
make any repayment of capital on, or distribution of evidences of indebtedness on, any of its assets
(excluding cash dividends) to the holders of Subordinate Voting Shares;
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(d)
|
amalgamate, consolidate or merge with any other person (including, for greater certainty, pursuant
to the arrangement contemplated by the Arrangement Agreement) or sell or lease the whole or substantially the whole of its assets
or undertaking;
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|
(e)
|
effect any subdivision, consolidation or reclassification of its Subordinate Voting Shares; or
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|
(f)
|
liquidate, dissolve or wind-up,
|
unless,
in each such case, the Company will have given notice, in the manner specified in Section 9.2, to each Special Warrantholder,
of the action proposed to be taken and the date on which (a) the books of the Company will close or a record will be taken for
such dividend, repayment, distribution, subscription rights or other rights, warrants or securities, or (b) such subdivision, consolidation,
reclassification, amalgamation, merger, sale or lease, dissolution, liquidation or winding-up will take place, as the case may
be, provided that the Company will only be required to specify in the notice those particulars of the action as will have been
fixed and determined at the date on which the notice is given. The notice will also specify the date as of which the holders of
Subordinate Voting Shares of record will participate in the dividend, repayment, distribution, subscription of rights or other
securities, rights, warrants or options, or will be entitled to exchange their Subordinate Voting Shares for securities or other
property deliverable upon such reclassification, amalgamation, subdivision, consolidation, merger, sale or lease, other disposition,
dissolution, liquidation or winding-up, as the case may be. The notice will be given, with respect to the actions described in
Sections (a), (b), (c), (d), (e) and (f) above not less than 10 days prior to the record date or the date on which the Company's
transfer books are to be closed with respect thereto.
|
3.15
|
Closure of Share Transfer Books
|
The
Company further covenants and agrees that it will not during the period of any notice given under Section 9 close its share transfer
books or take any other corporate action which might deprive the Special Warrantholders of the opportunity of exercising their
Special Warrants; provided that nothing contained in this Section 3.15 will be deemed to affect the right of the Company
to do or take part in any of the things referred to in Section 3.14 or to pay cash dividends on the shares of any class or clauses
in its capital from time to time outstanding.
|
3.16
|
Payment of Commissions
|
The Company will not
pay or give any commission or other remuneration within the meaning of section 3(a)(9) of the 1933 Act to any person, directly
or indirectly, for soliciting or in respect of the exercise of the Special Warrants.
|
4.
|
ADJUSTMENT OF NUMBER OF UNITS
|
|
4.1
|
Adjustment of Number of Units
|
The rights to acquire
Units in effect at any date attaching to the Special Warrants are subject to adjustment from time to time as follows:
|
|
(a)
|
if and whenever at any time from the date hereof and prior to the Automatic Exercise Time, the
Company:
|
|
|
(i)
|
subdivides, redivides or changes its outstanding Subordinate Voting Shares into a greater number
of shares;
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|
(ii)
|
consolidates, reduces or combines its outstanding Subordinate Voting Shares into a smaller number
of shares; or
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|
|
(iii)
|
issues Subordinate Voting Shares or securities exchangeable or exercisable for or convertible into
Subordinate Voting Shares ("convertible securities") to the holders of all or substantially all of the outstanding
Subordinate Voting Shares by way of a stock dividend;
|
(any of the above being a "Subordinate
Voting Share Reorganization"), the number of Units issuable upon the exercise of each Special Warrant shall be adjusted
immediately after the effective date of the Subordinate Voting Share Reorganization or on the record date for the issue of Subordinate
Voting Shares or exchangeable, exercisable or convertible securities by way of stock dividend, by multiplying the number of Units
previously obtainable on the exercise of a Special Warrant by the fraction of which:
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(A)
|
the numerator is the total number of Subordinate Voting Shares outstanding immediately after the
effective or record date of the Subordinate Voting Share Reorganization, or, in the case of the issuance of exchangeable, exercisable
or convertible securities, the total number of Subordinate Voting Shares outstanding immediately after the effective or record
date of the Subordinate Voting Share Reorganization plus the total number of Subordinate Voting Shares issuable upon conversion,
exercise or exchange of such convertible securities; and
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|
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(B)
|
the denominator is the total number of Subordinate Voting Shares outstanding immediately prior
to the applicable effective or record date of such Subordinate Voting Share Reorganization;
|
and
the Company and Special Warrant Agent, upon receipt of notice pursuant to Section 4.3, shall make such adjustment successively
whenever any event referred to in this Section 4.1(a) occurs and any such issue of Subordinate Voting Shares or convertible, exchangeable
or exercisable securities by way of a stock dividend is deemed to have occurred on the record date for the stock dividend for the
purpose of calculating the number of outstanding Subordinate Voting Shares under this Section 4.1(a). To the extent that any convertible
securities are not converted into or exchanged for Subordinate Voting Shares, prior to the expiration thereof, the number of Units
obtainable under each Special Warrant shall be readjusted to the number of Units that is then obtainable based upon the number
of Subordinate Voting Shares actually issued on conversion or exchange of such convertible securities;
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(b)
|
if and whenever at any time from the date hereof and
prior to the Automatic Exercise Time the Company shall fix a record date for the issue of rights, options or warrants to all or
substantially all of the holders of Subordinate Voting Shares under which such holders are entitled, during a period expiring
not more than 45 days after the record date for such issue ("Rights Period"), to subscribe for or acquire Subordinate
Voting Shares at a price per share to the holder of less than 95% of the Current Market Price for the Subordinate Voting Shares
on such record date (any of such events being called a "Rights Offering"), then the number of Units obtainable
upon the exercise of each Special Warrant shall be adjusted effective immediately after the end of the Rights Period to a number
determined by multiplying the number of Units obtainable upon the exercise thereof immediately prior to the end of the Rights
Period by a fraction:
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(i)
|
the numerator of which shall be the number of Subordinate Voting Shares outstanding after giving
effect to the Rights Offering and including the number of Subordinate Voting Shares actually issued or subscribed for during the
Rights Period upon exercise of the rights, warrants or options under the Rights Offering; and
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(ii)
|
the denominator of which shall be the aggregate of:
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|
|
(A)
|
the number of Subordinate Voting Shares outstanding as of the record date for the Rights Offering,
and
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(B)
|
a number determined by dividing (1) the product of the number of Subordinate Voting Shares issued
or subscribed during the Rights Period upon the exercise of the rights, warrants, or options under the Rights Offering and the
price at which such Subordinate Voting Shares are offered by (2) the Current Market Price of the Subordinate Voting Shares as of
the record date for the Rights Offering;
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(c)
|
if and whenever at any time from the date hereof and prior to the Automatic Exercise Time the Company
shall issue or distribute to all or to substantially all of the holders of the Subordinate Voting Shares:
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(i)
|
securities of the Company including rights, options or warrants to acquire shares of any class
or securities exchangeable or exercisable for, or convertible into, any such shares or property or assets and including evidence
of its indebtedness; or
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(ii)
|
any property (including cash) or other assets, and if such issuance or distribution does not constitute
a Subordinate Voting Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special
Distribution"), the number of Units obtainable upon the exercise of each Special Warrant shall be adjusted effective immediately
after the record date at which the holders of affected Subordinate Voting Shares are determined for purposes of the Special Distribution
to a number determined by multiplying the number of Units obtainable upon the exercise thereof in effect on such record date by
a fraction:
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(A)
|
the numerator of which shall be the number of Subordinate Voting Shares outstanding on such record
date multiplied by the Current Market Price of the Subordinate Voting Shares on such record date; and
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(B)
|
the denominator of which shall be:
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|
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(1)
|
the product of the number of Subordinate Voting Shares outstanding on such record date and the
Current Market Price of the Subordinate Voting Shares on such record date, less
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(2)
|
the excess, if any, of (I) the fair market value on such record date, as determined by action by
the directors (whose determination absent manifest error shall be conclusive), to the holders of the Subordinate Voting Shares
of such securities or property or other assets so issued or distributed in the Special Distribution over (II) the fair market value
of the consideration received therefor by the Company from the holders of the Subordinate Voting Shares, as determined by action
by the directors (whose determination shall be conclusive);
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(d)
|
if and whenever at any time from the date hereof and
prior to the Automatic Exercise Time, there is a reclassification of the Subordinate Voting Shares or a change or exchange in
the Subordinate Voting Shares into or for other shares or securities, or a capital reorganization of the Company other than as
described in Section 4.1(a) or the triggering of a shareholders' rights plan or a consolidation, amalgamation, arrangement or
merger of the Company with or into any other body corporate, trust, partnership or other entity (including, for greater certainty,
pursuant to the arrangement contemplated by the Arrangement Agreement), or a transfer, sale or conveyance of the property and
assets of the Company as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other
entity, any of such events being referred to as a "Capital Reorganization", every Special Warrantholder who has
not exercised its right of acquisition, as at the effective date of such Capital Reorganization is entitled to receive upon exercise
in accordance with the terms and conditions hereof and shall accept, in lieu of the number of Unit Shares and Unit Warrants obtainable
under the Special Warrants to which it was previously entitled, the kind and number of Units or other securities or property of
the Company that the Special Warrantholder would have been entitled to receive on such Capital Reorganization, if, on the record
date or the effective date thereof, as the case may be, the Special Warrantholder had been the registered holder of the number
of Units obtainable upon the exercise of Special Warrants then held, subject to adjustment thereafter in accordance with provisions
of the same, as nearly as may be possible, as those contained in this Section 4.1. The Company shall not carry into effect any
action requiring an adjustment pursuant to this Section 4.1(d) (including, for greater certainty, pursuant to the arrangement
contemplated by the Arrangement Agreement) unless all necessary steps have been taken so that the Special Warrantholders are thereafter
entitled to receive such kind and number of Units, other securities or property. The Company will not enter into a Capital Reorganization
unless its successor, or the purchasing body corporate, partnership, trust or other entity, as the case may be, prior to or contemporaneously
with any such Capital Reorganization, enters into an indenture which provides, to the extent possible, for the application of
the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Special Warrantholders to
the end that the provisions set forth in this Indenture are correspondingly made applicable, as nearly as may reasonably be, with
respect to any shares, other securities or property to which a Special Warrantholder is entitled on the exercise of his acquisition
rights thereafter. An indenture entered into by the Company pursuant to the provisions of this Section 4.1(d) is deemed a supplemental
indenture entered into pursuant to the provisions of Article 7. An indenture entered into between the Company, any successor to
the Company or any purchasing body corporate, partnership, trust or other entity and the Special Warrant Agent must provide for
adjustments which are as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which apply
to successive Capital Reorganizations;
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(e)
|
where this Section 4.1 requires that an adjustment becomes effective immediately after a record
date or effective date, as the case may be, for an event referred to herein, the Company may defer, until the occurrence of that
event, issuing to the Special Warrantholder exercising his acquisition rights after the record date or effective date, as the case
may be and before the occurrence of that event the adjusted number of Units, other securities or property issuable upon the automatic
exercise of the Special Warrants by reason of the adjustment required by that event. If the Company relies on this Section 4.1(e)
to defer issuing an adjusted number of Units (or Unit Shares and Unit Warrants comprising such Units), other securities or property
to a Special Warrantholder, the Special Warrantholder has the right to receive any distributions made on the adjusted number of
Units, other securities or property declared in favour of holders of record on and after the date of exercise or such later date
as the Special Warrantholder would but for the provisions of this Section 4.1(e), have become the holder of record of the adjusted
number of Units, other securities or property;
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(f)
|
the adjustments provided for in this Section 4.1 are cumulative. After any adjustment pursuant
to this Section 4.1, the terms "Units", "Unit Shares" and "Unit Warrants" where used in this Indenture
is interpreted to mean securities of any class or classes which, as a result of such adjustment and all prior adjustments pursuant
to this Section, the Special Warrantholder is entitled to receive upon the exercise of his Special Warrant, and the number of Units
obtainable in any exercise made pursuant to a Special Warrant is interpreted to mean the number of Units or other property or securities
a Special Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section
4.1, upon the full exercise of a Special Warrant;
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(g)
|
notwithstanding anything in this Article 4, no adjustment shall be made in the acquisition rights
attached to the Special Warrants if the issue of Subordinate Voting Shares is being made pursuant to any stock option or stock
purchase plan in force from time to time for directors, officers or employees of the Company;
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(h)
|
in the event of a question arising with respect to the adjustments provided for in this Section
4.1, that question shall be conclusively determined by the Company's auditors, acting in good faith, who shall have access to all
necessary records of the Company, and a determination by the Company's auditors is binding upon the Company, the Special Warrant
Agent, all Special Warrantholders and all other persons interested therein, subject to manifest error; and
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(i)
|
no adjustment in the number of Units obtainable upon automatic exercise of Special Warrants shall
be made in respect of any event described in this Section 4.1, other than the events referred in clauses (i) and (ii) of Section
(b) thereof, if the Special Warrantholders are entitled to participate in such event on the same terms, mutatis mutandis, as if
the Special Warrantholders had exercised their Special Warrants prior to or on the effective date or record date of such event.
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|
4.2
|
Proceedings Prior to any Action Requiring Adjustment
|
As a condition precedent
to the taking of any action which requires an adjustment in any of the acquisition rights pursuant to the Special Warrants, including
the number of Units obtainable upon the automatic exercise thereof, the Company shall take any corporate action which may in its
opinion be necessary in order that the Company or any successor to the Company has unissued and reserved Subordinate Voting Shares
in its authorized share structure and may validly and legally issue as fully paid and non-assessable all the Unit Shares and may
validly and legally issue and deliver all Unit Warrants and any other securities or property which the Special Warrantholders are
entitled to receive on the full exercise of the Special Warrants in accordance with the provisions hereof.
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4.3
|
Certificate of Adjustment
|
The
Company shall from time to time immediately after the occurrence of any event which requires an adjustment as provided in Section
4.1, deliver a notice to the Special Warrantholders and the Special Warrant Agent specifying the nature of the event requiring
the adjustment, the amount of the adjustment necessitated thereby, and setting forth in reasonable detail the method of calculation
and the facts upon which the calculation is based. In the event of a dispute about such calculation, the certificate shall be supported
by a certificate of the Company's auditors verifying such calculation. The Special Warrant Agent shall rely, and shall be protected
in so doing, upon the certificate of the Company or the Company's auditor and any other document filed by the Company pursuant
to this Article 4 for all purposes.
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4.4
|
No Action After Notice
|
The
Company covenants with the Special Warrant Agent that it will not close its transfer books or take any other corporate action which
might deprive the holder of a Special Warrant of the opportunity of exercising the Special Warrants during the period of 14 days
after giving of the notice set forth in Section 4.3 hereof and 4.6 hereof.
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4.5
|
Protection of Special Warrant Agent
|
The Special Warrant
Agent shall not:
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|
(a)
|
at any time be under any duty or responsibility to a Special Warrantholder to determine whether
any facts exist which require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed in making the same;
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|
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(b)
|
be accountable with respect to the validity or value (or the kind or amount) of any shares or other
securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Special Warrant;
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|
|
(c)
|
be responsible for any failure of the Company to make any cash payment or to issue, transfer or
deliver Unit Shares or Unit Warrants comprising the Units or certificates for the Unit Shares or Unit Warrants comprising the Units
upon the surrender of any Special Warrants for the purpose of the exercise of such rights or to comply with any of the covenants
contained in this Article 4; and
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|
|
(d)
|
incur any liability or responsibility whatever or be in any way responsible for the consequence
of any breach on the part of the Company of any of the representations,warranties or covenants herein
contained or of any acts of the agents or servants of the Company.
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|
4.6
|
Notice of Special Matters
|
The
Company covenants with the Special Warrant Agent that so long as any Special Warrants remain outstanding it will give notice, not
less than 14 days prior to the applicable record date, in the manner provided for in Article 9 to the Special Warrant Agent,
each Special Warrantholder and to the Agent of any event which requires an adjustment to the subscription rights attaching to any
of the Special Warrants pursuant to this Article 4. The Company covenants and agrees that such notice shall contain the particulars
of such event in reasonable detail and, if determinable, the required adjustment in the manner provided for in Article 9. The Company
further covenants and agrees that it shall promptly, as soon as the adjustment calculations are reasonably determinable, file a
certificate of an officer of the Company with the Special Warrant Agent, if so requested by the Special Warrant Agent in writing,
on which the Special Warrant Agent may act and rely, showing how such adjustment shall be computed and give notice to the Special
Warrantholders and the Agent of such adjustment computation.
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5.
|
EXERCISE AND CANCELLATION OF SPECIAL WARRANTS
|
|
5.1
|
Notice of Automatic Exercise to Special Warrantholders
|
Upon
receipt of notice from the Company in accordance with Section 3.7, the Special Warrant Agent shall give written notice,
in the form to be provided by the Company to the Special Warrant Agent, to each holder of a Special Warrant concurrently with delivery
of the certificates (or DRS Statements or such other book-entry form, as applicable) representing the Unit Shares and Unit Warrants
comprising the Units in accordance with Section 5.3, which notice will include confirmation that no adjustment has occurred pursuant
to section 4.1, or if an adjustment has occurred, provide a certificate as set forth in section 4.3 herein.
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5.2
|
No Voluntary Exercise of Special Warrants
|
No Special Warrant
may be voluntarily exercised by the holder thereof at any time. The only exercise of the Special Warrants shall be automatic exercise
pursuant to Section 5.3
|
5.3
|
Automatic Exercise of Special Warrants
|
|
|
(a)
|
All Special Warrants will be automatically exercised at the Automatic Exercise Time and deemed
surrendered by the Special Warrantholders without any further action on the part of the Special Warrantholder. In that event, the
Special Warrant Agent shall, within three Business Days thereafter, deliver in uncertificated form the Unit Shares and Unit Warrants
comprising the Units issued upon automatic exercise of the Special Warrants, registered in the name of the Special Warrantholders,
to the addresses of the Special Warrantholders as specified in the register for the Special Warrants or to such address as the
Special Warrantholder may specify in writing to the Special Warrant Agent; provided, however, that all Unit Shares and Unit Warrants
comprising the Units issued to U.S. holders of Special Warrants must be represented by definitive certificates or DRS Registration
Statements.
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(b)
|
If any Units subscribed for are to be issued to a person
or persons other than the Special Warrantholder, the Special Warrantholder must pay to the Company or to the Special Warrant Agent
on his behalf an amount equal to all applicable transfer taxes or other government charges, and the Company will not be required
to issue or deliver any certificates evidencing, or provide other evidence of the issuance of any Unit Shares or Unit Warrants
unless or until that amount has been so paid or the Special Warrantholder has established to the satisfaction of the Company that
the taxes and charges have been paid or that no taxes or charges are owing.
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|
5.4
|
Effect of Exercise of Special Warrants
|
Upon the automatic
exercise of the Special Warrants, each Special Warrantholder is, at that time, deemed to have become the holder or holders of record
of the Unit Shares and Unit Warrants comprising the Units, in respect of which such Special Warrantholder's Special Warrants are
exercised or are automatically exercised, unless the transfer registers of the Company shall be closed by law on such date, in
which case the Units acquired shall be deemed to have been issued and such person or persons deemed to have become the holder or
holders of record of such Unit Shares and Unit Warrants comprising the Units on the date on which such transfer registers are next
reopened.
Notwithstanding any
provision herein to the contrary, the Company shall not be required to deliver certificates for Unit Shares and Unit Warrants comprising
the Units in any period while the Subordinate Voting Share or Unit Warrant transfer registers of the Company are closed and, in
the event of the exercise of any Special Warrant during any such period, the Unit Shares and Unit Warrants subscribed for shall
be issued and such person shall be deemed to have become the holder of record of such Unit Shares and Unit Warrants on the date
on which such Subordinate Voting Share and Unit Warrant transfer registers, respectively, are reopened.
Any Special Warrantholder
may acquire a number of Units less than the number of Units which the holder is entitled to acquire pursuant to the surrendered
Special Warrant Certificate(s). In the event of any exercise of a number of Special Warrants less than the number which the holder
is entitled to exercise pursuant to the surrendered Special Warrant Certificates, the Special Warrantholder upon such exercise
shall, in addition to the number of Units acquired pursuant to the Special Warrants exercised, be entitled to receive, without
charge therefor, a new Special Warrant Certificate(s) bearing the same legend, if applicable, in respect of the balance of the
Special Warrants represented by the surrendered Special Warrant Certificate(s) and which were not then exercised.
|
5.6
|
Special Warrants Void After Exercise
|
After the automatic
exercise of a Special Warrant as provided in this Section, the holder of a Special Warrant no longer has any rights either under
this Indenture or the Special Warrant Certificate, other than the right to receive certificates or other evidence of ownership
as provided herein representing the Unit Shares and Unit Warrants comprising the Units, and the Special Warrant is void and of
no value or effect.
|
5.7
|
Fractions of Unit Shares or Unit Warrants
|
|
|
(a)
|
Where a Special Warrantholder is entitled to receive, as a result of the adjustments provided for
in Section 4.1 or otherwise, on the automatic exercise of its Special Warrants a fraction of a Warrant Share or Unit Warrant, such
right may only be exercised in respect of such fraction in combination with another Special Warrant or other Special Warrants which
in the aggregate entitle the Special Warrantholder to receive a whole number of Unit Shares and Unit Warrants; and
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|
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(b)
|
If a Special Warrantholder is not able to, or elects not to, combine Special Warrants so as to
be entitled to acquire a whole number of Unit Shares and Unit Warrants, the Special Warrantholder may not exercise the right to
acquire a fractional Unit Share or Unit Warrant, and, as a result, has the right to acquire only that number of Unit Shares and
Unit Warrants equal to the next lowest whole number of Unit Shares and Unit Warrants and no cash will be paid in lieu of any fractional
Warrant Share or Unit Warrant.
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|
5.8
|
Accounting and Recording
|
The
Special Warrant Agent shall promptly notify the Company with respect to Special Warrants exercised. The Special Warrant Agent shall
record the particulars of the Special Warrants exercised which include the name or names and addresses of the persons who become
holders of Units on exercise pursuant to this Article 5 and the number of Units issued. Within three Business Days of the
exercise of each Special Warrant pursuant to Section 5.2, the Special Warrant Agent shall provide those particulars in writing
to the Company.
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5.9
|
Legending of Special Warrant Certificates and Underlying Securities
|
|
|
(a)
|
The Special Warrant Certificates and Direct Registration Statements will bear a legend substantially
in the form of the following legend:
|
“THESE SECURITIES HAVE
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO
REGISTRATION UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER
FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.”
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|
(b)
|
in the event that as of the exercise of the Special Warrants there is no effective Registration
Statement filed with the SEC covering the offer and sale of the Unit Shares, the Unit Shares shall be issued in a certificated
form or such other book-entry form as determined to be appropriate by the Company in order to comply with applicable U.S. Securities
Laws and the certificates (or such other book-entry or DRS Statements, as applicable) representing the Unit Shares (and any certificates
or such other DRS Statements issued in exchange therefor or substitution thereof), will bear a legend substantially in the form
of the following legend:
|
“THESE SECURITIES HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION
UNDER THE U.S.
SECURITIES ACT, OR (3) PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED
STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT.
HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES
ACT.”
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|
(c)
|
in the event that as of the exercise of the Special Warrants there is no effective registration
statement filed with the SEC covering the offer and sale of the Unit Warrants, the Unit Warrants shall be issued in certificated
form or as DRS Statements, and the certificates or DRS Statements representing the Warrants (and any certificates or DRS Statements
issued in exchange therefor or substitution thereof), will bear a legend substantially in the form of the following legend:
|
“THESE SECURITIES
AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES
AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES
ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE,
IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE COMPANY AN OPINION OF
COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE U.S. SECURITIES ACT.
THIS
WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON
UNLESS THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT AND APPLICABLE STATE SECURITIES LEGISLATION OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS
AVAILABLE. “UNITED STATES” AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES
ACT.”
|
|
(d)
|
In the event that as of the exercise of the Unit Warrants there is no effective registration statement
filed with the SEC covering the offer and sale of the Subordinate Voting Shares underlying the Unit Warrants, the Subordinate Voting
Shares underlying the Unit Warrants shall be issued in certificated form or as DRS Statements, and the certificates or DRS Statements
representing such Subordinate Voting Shares (and any certificates or DRS Statements issued in exchange therefor or substitution
thereof), shall bear a legend substantially in the form of the following legend:
|
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES
ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE
WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING
OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT. HEDGING TRANSACTIONS
INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
|
|
(e)
|
All Special Warrant Certificates, all certificates issued in exchange therefor or in substitution
thereof and all DRS Registration Statements will have the following additional legends endorsed thereon:
|
"UNLESS PERMITTED UNDER
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY BEFORE [FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL
DATE OF ISSUANCE OF SPECIAL WARRANT(S)."
"WITHOUT PRIOR WRITTEN
APPROVAL OF THE CSE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE CSE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL [FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL DATE OF ISSUANCE OF SPECIAL WARRANT(S)."
|
5.10
|
Issuance of Unit Shares and Unit Warrants
|
All certificates issued
for, or DRS Registration Statements in respect of, the Unit Shares, Unit Warrants and any Warrant Shares issuable upon exercise
of the Unit Warrants prior to the earlier of the Qualification Date and the date which is four months and one day after the original
date of issuance of Special Warrants will have the following legends endorsed thereon:
"UNLESS PERMITTED UNDER
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY BEFORE FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL
DATE OF ISSUANCE OF SPECIAL WARRANT(S)."
"WITHOUT PRIOR WRITTEN
APPROVAL OF THE CSE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE
CSE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL DATE
OF ISSUANCE OF SPECIAL WARRANT(S)."
In addition, all Unit
Shares and Unit Warrants issued prior to the filing of an effective Registration Statement will be endorsed with the legend
required by Section 5.9(b) and all Subordinate Voting Shares issuable upon exercise of the Unit Warrants issued prior to
the filing of an effective registration statement covering the offer and sale of such Subordinate Voting Shares will
be endorsed with the legend required by Section 5.9(c).
|
5.11
|
Securities Restrictions
|
Notwithstanding
anything herein contained, in the event that the Special Warrants are exercised pursuant to and in accordance with the provisions
of Section 5.2 prior to the filing of the Prospectus Supplement, the certificates or DRS Registration Statements representing
the Unit Shares and Unit Warrants comprising the Units thereby issued will bear such legends as may, in the opinion of counsel
to the Company, acting reasonably, be necessary in order to avoid a violation of any applicable securities laws or to comply with
the requirements of any stock exchange on which the Subordinate Voting Shares or Unit Warrants are listed, provided that, if at
any time, in the opinion of counsel to the Company, such legends are no longer necessary in order to avoid violation of such laws,
or the holder of any such legended certificates representing the Unit Shares and Unit Warrants comprising the Units, at the holder's
expense, provides the Company and the registrar and transfer agent of the Subordinate Voting Shares with evidence satisfactory
in form and substance to the Company and the registrar and transfer agent of the Subordinate Voting Shares (which may include an
opinion of counsel satisfactory to the Company and the registrar and transfer agent of the Subordinate Voting Shares) to the effect
that such holder is entitled to sell or otherwise transfer such Unit Shares or Unit Warrants in a transaction in which such legends
are not required, such legended certificates representing Unit Shares or Unit Warrants may thereafter be surrendered to the Special
Warrant Agent in exchange for a certificate which does not bear such legend.
|
5.12
|
Contractual Right of Rescission
|
The Company
covenants with the Special Warrant Agent to provide a right of rescission to each Special Warrantholder as hereinafter set
forth, which right shall be exercisable by a Special Warrantholder directly. The Company has agreed that in the event that a
holder of Special Warrants who acquires Unit Shares and Unit Warrants pursuant to the exercise of Special Warrants is or
becomes entitled under applicable Securities Laws to the remedy of rescission by reason of the short form base shelf
prospectus of the Company as supplemented by the Prospectus Supplement and any amendments thereto containing a
misrepresentation, such holder shall, subject to available defences and any limitation period under applicable securities
laws, be entitled to rescission not only of the holder’s exercise of its Special Warrants but also of the private
placement transaction pursuant to which the Special Warrants were initially acquired, and shall be entitled in connection
with such rescission to a full refund from the Company of the aggregate purchase price paid on the acquisition of the Special
Warrants. In the event such holder is a permitted assignee of the interest of the original holder of Special Warrants, such
permitted assignee shall be permitted to exercise the rights of rescission and refund granted hereunder as if such permitted
assignee was such original holder. The holder (or its permitted assignee) shall seek a refund directly from the Company and
the Special Warrant Agent shall not be under any duty or obligation to take any steps to ensure or enforce the return of the
funds pursuant to this section, nor shall the Special Warrant Agent be in any other way responsible in the event that any
payment is not delivered or received pursuant to this section, and the Special Warrant Agent shall incur no liability with
respect to the delivery or non-delivery of any such funds. The provisions of this Section are a direct contractual right
extended by the Company to holders of Special Warrants and permitted assignees of such holders and are in addition to any
other right or remedy available to a holder of a purchased security under section 130(1) of the Securities Act
(Ontario) or equivalent provisions of applicable securities laws, or otherwise at law. The foregoing contractual rights of
action for rescission shall be subject to the defences described under section 130(1) of the Securities Act (Ontario)
which is incorporated herein by reference and any other defence or defences available to the Company under Applicable
Legislation.
|
6.
|
MEETINGS OF SPECIAL WARRANTHOLDERS
|
In
this Article 6 or otherwise in this Indenture:
|
|
(a)
|
"Adjourned Meeting" means a meeting adjourned in accordance with Section 6.8;
|
|
|
(b)
|
"Extraordinary Resolution" means a resolution proposed to be passed as an extraordinary
resolution at a Meeting duly convened for that purpose and held in accordance with the provisions of this Article 6, and carried
by not less than 2/3 of the votes cast on such resolution; and
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|
|
(c)
|
"Meeting" means a meeting of the Special Warrantholders.
|
The
Special Warrant Agent or the Company may convene a Meeting at any time at the expense of the Company. Upon receipt of a written
requisition signed in one or more counterparts by Special Warrantholders having the right to acquire not less than 20% of the Units
which may at such time be acquired hereunder, the Special Warrant Agent or the Company shall convene a Meeting, provided that in
the case of the Special Warrant Agent, it has been indemnified and funded to its reasonable satisfaction by the Company or the
Special Warrantholders for the costs of convening and holding a Meeting. If the Special Warrant Agent or the Company fails to convene
the Meeting within 15 Business Days after being duly requisitioned to do so and indemnified and funded as aforesaid, the Special
Warrantholders having the right to acquire not less than 20% of the Units which may be acquired hereunder may themselves convene
a Meeting, the notice for which must be signed by one or more of those Special Warrantholders at such time, provided that the Special
Warrant Agent and Company receive notice of the Meeting in accordance with Section 6.4. A written requisition must state,
generally, the reason for the Meeting and business to be transacted at the Meeting.
Every Meeting must
be held in Toronto, Ontario, #########, or at such other place that the Special Warrant Agent and Company approve.
The
Special Warrant Agent or the Company, as the case may be, shall give written notice of each Meeting to each Special
Warrantholder, the Special Warrant Agent (unless the Meeting has been called by the Special Warrant Agent), the Agent and the
Company (unless the Meeting has been called by the Company) in the manner specified in Article 9 at least 25 days
before the date of the Meeting. The Special Warrant Agent shall give written notice of each Adjourned Meeting to each Special
Warrantholder in the manner specified in Article 9 at least 7 days before the date of the Adjourned Meeting. The notice for a
Meeting must state the time and place of the Meeting and, generally, the reason for the Meeting and the business to be
transacted at the Meeting, together with such additional information as may be required to sufficiently inform the Special
Warrantholders regarding the business to be transacted at the Meeting. The notice for an Adjourned Meeting must state the
time and place of the Adjourned Meeting but need not specify the business to be transacted at an Adjourned Meeting. The
accidental omission by the Special Warrant Agent or the Company, as the case may be, to give notice of a Meeting or an
Adjourned Meeting to a Special Warrantholder does not invalidate a resolution passed at a Meeting or Adjourned Meeting.
|
6.5
|
Persons Entitled to Attend
|
The Company and the
Agent may and the Special Warrant Agent shall, each by its authorized representatives, attend every Meeting and Adjourned Meeting
but neither the Company, the Agent nor the Special Warrant Agent has the right to vote. The legal advisors of the Company, the
Agent, the Special Warrant Agent, and any Special Warrantholders, respectively, may also attend a Meeting or Adjourned Meeting
but do not have the right to vote, unless they have the right to vote as a Special Warrantholder.
Subject
to the provisions of Section 6.18, a quorum for a Meeting shall consist of two or more persons present in person and owning
or representing by proxy the right to acquire, not less than 20% of the Units which may at that time be acquired hereunder.
The Special Warrant
Agent shall nominate a natural person as the chairman of a Meeting or Adjourned Meeting. If the person so nominated is not present
within 15 minutes after the time set for holding the Meeting or Adjourned Meeting, the Special Warrantholders and proxies for Special
Warrantholders present shall choose one of their number to be chairman. The chairman may vote any Special Warrants for which he
or she is the registered holder.
The
chairman of any Meeting at which a quorum of the Special Warrantholders is present may, with the consent of the Meeting, adjourn
any such meeting. Notice of such adjournment will be given in accordance with Section 6.4 with such other requirements,
if any, as the Meeting may prescribe.
If
a quorum of the Special Warrantholders is not present within 30 minutes after the time fixed for holding a Meeting, the Meeting
stands adjourned to a date not less than 10 calendar days and not more than 30 calendar days later, at a place determined in accordance
with Section 6.3, and at a time specified by the chairman. The Special Warrant Agent shall promptly and in accordance with
Section 6.4 send a notice of the Adjourned Meeting to each Special Warrantholder and the Company. At an Adjourned Meeting, two
or more Special Warrantholders or persons representing Special Warrantholders by proxy constitutes a quorum for the transaction
of business for which the Meeting was convened.
Subject to a poll
and except as otherwise required herein, every question submitted to a Meeting or Adjourned Meeting, except an Extraordinary
Resolution, shall be decided, in the first instance, by the majority of votes in a show of hands. If the vote is tied, the
chairman does not have a casting vote and the motion will not be carried. On a show of hands, each Special Warrantholder
present in person or represented by proxy and entitled to vote is entitled to one vote for every Special Warrant then
outstanding of which such Special Warrantholder is the registered owner.
When requested by a
Special Warrantholder acting in person or by the proxy representing the Special Warrantholder, and on every Extraordinary Resolution,
the chairman of a Meeting or Adjourned Meeting shall request a poll on a question submitted to the Meeting. Except as otherwise
required herein, if a question has been put to a poll, that question shall be decided by the affirmative vote of not less than
a majority of the votes given on the poll. If the vote is tied, the motion shall not be carried. On a poll, each Special Warrantholder
or person representing a Special Warrantholder shall be entitled to one vote for every Warrant Share which he or she is entitled
to acquire upon exercise of the Special Warrants of which he is the registered holder. A declaration made by the chairman that
a resolution has been carried or lost is conclusive evidence thereof. In the case of joint registered Special Warrantholders, any
one of them present in person or represented by proxy may vote in the absence of the other or others but when more than one of
them is present in person or by proxy, they may only vote together in respect of the Special Warrants of which they are joint registered
holders.
Subject to the provisions
of this Indenture, the Special Warrant Agent, or the Company with the approval of the Special Warrant Agent, may from time to time
make and, thereafter, vary regulations not contrary to the provisions of this Indenture as it deems fit providing for and governing
the following:
|
|
(a)
|
setting a record date for a Meeting for determining Special Warrantholders entitled to receive
notice of and vote at a Meeting;
|
|
|
(b)
|
voting by proxy, the manner in which a proxy instrument must be executed, and the production of
the authority of any person signing an instrument of a proxy on behalf of a Special Warrantholder;
|
|
|
(c)
|
lodging and the means of forwarding the instruments appointing proxies, and the time before a Meeting
or Adjourned Meeting by which an instrument appointing a proxy must be deposited;
|
|
|
(d)
|
the form of the instrument of proxy; and
|
|
|
(e)
|
any other matter relating to the conduct of a meeting of Special Warrantholders.
|
A regulation so made
is binding and effective and votes given in accordance with such a regulation are valid. The Special Warrant Agent may permit Special
Warrantholders to make proof of ownership in the manner the Special Warrant Agent approves.
|
|
6.13
|
Powers of Special Warrantholders
|
By
Extraordinary Resolution passed pursuant to this Article 6, the Special Warrantholders may:
|
|
(a)
|
agree to any modification, abrogation, alteration, compromise, or arrangement of the rights of
the Special Warrantholders whether arising under this Indenture, or otherwise at law, including the rights of the
Special Warrant Agent in its capacity as trustee hereunder or on behalf of the Special Warrantholders against the Company, which
has been agreed to by the Company;
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|
|
(b)
|
direct and authorize the Special Warrant Agent to exercise any discretion, power, right, remedy
or authority given to it by or under this Indenture in the manner specified in such resolution or to refrain from exercising any
such discretion, power, right, remedy, or authority;
|
|
|
(c)
|
direct the Special Warrant Agent to enforce any covenant or obligation on the part of the Company
contained in this Indenture or to waive any default by the Company in compliance with any provision of this Indenture either unconditionally
or upon any conditions specified in such resolution;
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|
|
(d)
|
assent to any change in or omission from the provisions contained in this Indenture or the Special
Warrant Certificates or any ancillary or supplemental instrument which is agreed to by the Company, and to authorize the Special
Warrant Agent to concur in and execute any ancillary or supplemental indenture embodying the change or omission;
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|
|
(e)
|
without limiting the generality of Sections 6.13(a) and (d), assent to an extension of time thereunder;
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|
|
(f)
|
with the consent of the Company, remove the Special Warrant Agent or its successor in office and
to appoint a new special warrant agent, registrar and trustee to take the place of the Special Warrant Agent so removed;
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|
|
(g)
|
upon the Special Warrant Agent being furnished with funding and an indemnity that is, in its discretion,
sufficient, require the Special Warrant Agent to enforce any covenant of the Company contained in this Indenture or the Special
Warrant Certificates, or to enforce any right of the Special Warrantholders in any manner specified in such Extraordinary Resolution,
or to refrain from enforcing any such covenant or right;
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|
|
(h)
|
restrain any Special Warrantholder from instituting or continuing any suit or proceeding against
the Company for the enforcement of a covenant on the part of the Company contained in this Indenture or any of the rights conferred
upon the Special Warrantholders as set out in this Indenture or the Special Warrant Certificates;
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|
|
(i)
|
direct a Special Warrantholder who, as such, has brought a suit, action or proceeding to stay or
discontinue or otherwise deal with the same upon payment of the costs, charges, and expenses reasonably and properly incurred by
such Special Warrantholder in connection therewith;
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|
|
(j)
|
waive and direct the Special Warrant Agent to waive a default by the Company in complying with
any of the provisions of this Indenture or the Special Warrant Certificate either unconditionally or upon any conditions specified
in such Extraordinary Resolution;
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|
|
(k)
|
assent to a compromise or arrangement with a creditor or creditors or a class or classes of creditors,
whether secured or otherwise, and with holders of any shares or other securities of the Company; or
|
|
|
(l)
|
amend, alter, or repeal any Extraordinary Resolution previously passed pursuant to this Section
6.13.
|
Any one or more of
the powers or any combination of the powers in this Indenture stated to be exercised by the Special Warrantholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination
of powers from time to time shall not be deemed to exhaust the right of the Special Warrantholder to exercise such power or combination
of powers then or thereafter from time to time.
The Special Warrant
Agent shall make and maintain minutes and records of all resolutions and proceedings at a Meeting or Adjourned Meeting at the expense
of the Company and shall make available those minutes and records at the office of the Special Warrant Agent for inspection by
a Special Warrantholder or his authorized representative and the Agent at reasonable times. If signed by the chairman of the Meeting
or by the chairman of the next succeeding Meeting, such minutes shall be prima facie evidence of the matters therein stated and,
until the contrary is proved, every such Meeting in respect of which minutes shall have been made shall be deemed to have been
duly convened and held, and all the resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and
taken.
Notwithstanding the
foregoing, a written resolution or instrument signed in one or more counterparts by the Special Warrantholders holding the right
to acquire not less than a majority of the Units which may at that time be acquired hereunder in the case of a resolution, or not
less than 2/3 of the Units which may at that time be acquired hereunder in the case of an Extraordinary Resolution, is deemed to
be the same as, and to have the same force and effect as, a resolution or Extraordinary Resolution, as the case may be, duly passed
at a Meeting or Adjourned Meeting.
A
resolution of the Special Warrantholders passed pursuant to this Article 6 is binding upon all Special Warrantholders. Upon
the passing of a Special Warrantholder's resolution at a meeting of the Special Warrantholders, or upon the signing of a written
resolution or instrument pursuant to Section 6.16 and delivery by the Company to the Special Warrant Agent of an original, certified
or notarial copy, or copies, of such resolution as executed or passed by the Special Warrantholders, the Special Warrant Agent
is entitled to and shall give effect thereto.
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|
6.18
|
Holdings by the Company or Subsidiaries of the Company Disregarded
|
In determining whether
Special Warrantholders holding Special Warrants evidencing the required number of Units which may be acquired pursuant to the exercise
of the Special Warrants are present at a meeting of Special Warrantholders for the purpose of determining a quorum or have concurred
in any consent, waiver, resolution, Extraordinary Resolution or other action under this Indenture, Special Warrants owned legally
or beneficially by the Company or any Subsidiary of the Company shall be disregarded.
|
|
7.
|
SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS
|
|
|
7.1
|
Provision for Supplemental Indentures for Certain Purposes
|
From time to time the
Company (when authorized by the directors of the Company) and the Special Warrant Agent may, subject to the provisions of this
Indenture, and they will when so directed in accordance with the provisions hereof, execute and deliver by their proper officers,
deeds, indentures or instruments supplemental hereto, which thereafter form part hereof for any one or more or all of the following
purposes:
|
|
(a)
|
adding to the provisions hereof such additional covenants, enforcement provisions, and release
provisions (if any) as in the opinion of counsel acceptable to the Company and the Special Warrant Agent are necessary or advisable,
provided the same are not, in the opinion of counsel to the Special Warrant Agent prejudicial to the interests of the Special Warrantholders;
|
|
|
(b)
|
adding to the covenants of the Company in this Indenture for the protection of the Special Warrantholders;
|
|
|
(c)
|
evidencing any succession (or successive successions), of other companies to the Company and the
covenants of, and obligations assumed by, such successor (or successors) in accordance with the provisions of this Indenture;
|
|
|
(d)
|
setting forth any adjustments resulting from the application of the provisions of Article 4;
|
|
|
(e)
|
making such provisions not inconsistent with this Indenture as may be deemed necessary or desirable
with respect to matters or questions arising hereunder, provided that such provisions are not, in the opinion of counsel to the
Special Warrant Agent, prejudicial to the interests of the Special Warrantholders;
|
|
|
(f)
|
giving effect to any Extraordinary Resolution;
|
|
|
(g)
|
to rectify any ambiguity, defective provision, clerical omission or mistake or manifest or other
error contained herein or in any deed or indenture supplemental or ancillary hereto provided that, in the opinion of the counsel
to the Special Warrant Agent, the interests of the Special Warrantholders are not prejudiced thereby;
|
|
|
(h)
|
adding to or altering the provisions hereof in respect of the transfer of Special Warrants, making
provision for the exchange of Special Warrant Certificates of different denominations, and making any modification in the form
of the Special Warrant Certificate which does not affect the substance thereof; or
|
|
|
(i)
|
for any other purpose not inconsistent with the provisions of this Indenture, provided that, in
the opinion of counsel to the Special Warrant Agent, the rights of the Special Warrantholders are in no way prejudiced thereby.
|
|
|
7.2
|
Company May Consolidate, etc. on Certain Terms
|
Nothing in this
Indenture prevents any consolidation, amalgamation, arrangement or merger of the Company with or into any other body
corporate or bodies corporate, or a conveyance or transfer of all or substantially all the properties and assets of the
Company as an entirety to any body corporate lawfully entitled to acquire and operate the same, provided, however, that the
body corporate formed by such consolidation, amalgamation, arrangement or into which such merger has been made (including,
for greater certainty, the body corporate resulting from consummation of the arrangement contemplated by the Arrangement
Agreement), or which has acquired by conveyance or transfer all or substantially all the properties and assets of the Company
as an entirety in circumstances resulting in the Special Warrantholders being entitled to receive property from or securities
of such body corporate, shall execute prior to or contemporaneously with such consolidation, amalgamation, arrangement,
merger, conveyance or transfer, an indenture supplemental hereto wherein the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be performed or observed by the Company are assumed by the successor
body corporate. The Special Warrant Agent is entitled to receive and is fully protected in relying upon an opinion of counsel
that any such consolidation, amalgamation, arrangement, merger, conveyance or transfer, and a supplemental indenture executed
in connection therewith, complies with the provisions of this Section.
|
|
7.3
|
Successor Body Corporate Substituted
|
Where
the Company, pursuant to Section 7.2 hereof, is consolidated, amalgamated, arranged or merged with or into any other body
corporate or bodies corporate or conveys or transfers all of substantially all of the properties and assets of the Company as an
entirety to another body corporate, the successor body corporate formed by such consolidation, amalgamation, arrangement or into
which the Company has been merged or which has received a conveyance or transfer as aforesaid succeeds to and is substituted for
the Company hereunder with the same effect as nearly as may be possible as if it had been named herein. Such changes may be made
in the Special Warrants as may be appropriate in view of such consolidation, amalgamation, arrangement, merger, conveyance or transfer.
|
|
8.
|
CONCERNING THE SPECIAL WARRANT AGENT
|
|
|
8.1
|
Duties of Special Warrant Agent
|
By way of supplement
to the provisions of any statute for the time being relating to trustees, and notwithstanding any other provision of this Indenture,
in the exercise of the rights, duties and obligations prescribed or conferred by the terms of this Indenture, the Special Warrant
Agent shall act honestly and in good faith with a view to the best interests of the Special Warrantholders and shall exercise that
degree of care, diligence and skill that a reasonably prudent special warrant agent would exercise in comparable circumstances.
No provision of this Indenture shall be construed to relieve the Special Warrant Agent from, or require any other person to indemnify
the Special Warrant Agent against any liability for its own gross negligence, wilful misconduct or fraud under this Indenture.
|
|
8.2
|
Action by Special Warrant Agent
|
The Special Warrant
Agent is not obligated or bound to give any notice or to do or take any act action, proceeding or thing by virtue of the powers
conferred on it hereby unless and until it shall have been required to do so by this Indenture and, in the case of a default, only
when it has received actual written notice thereof, which notice shall distinctly specify the default desired to be brought to
the attention of the Special Warrant Agent and in the absence of any such notice the Special Warrant Agent may for all purposes
of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein. Any such notice shall in no way limit any discretion herein given
to the Special Warrant Agent to determine whether or not the Special Warrant Agent shall take action with respect to any default.
|
|
8.3
|
Certificate of the Company
|
In the administration
of its duties under this Indenture, the Special Warrant Agent may accept, act, and rely on, and shall be protected in accepting,
acting, and relying upon, a certificate of the Company, resolutions, opinions, orders or other documents as conclusive evidence
of the truth of any fact relating to the Company or its assets therein stated and proof of the regularity of any proceedings or
actions associated therewith, but the Special Warrant Agent may in its discretion require further evidence or information before
acting or relying on any such certificate.
|
|
8.4
|
Special Warrant Agent May Employ Experts
|
The Special Warrant
Agent may, at the Company's expense, employ or retain such counsel, lawyers, accountants, engineers, appraisers or other experts,
advisers or agents as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay
reasonable remuneration for such services rendered to it, without taxation of costs of any counsel or lawyers, but it is not responsible
for any misconduct, mistake, negligence or error of judgment on the part of any of them. The Company shall pay or reimburse the
Special Warrant Agent for any reasonable fees, expenses and disbursements of such counsel, lawyers, accountants, engineers, appraisers
or other experts, advisers or agents retained under this Section 8.4. The Special Warrant Agent may rely upon and act upon and
shall be protected in acting and relying in good faith upon the opinion or advice of, or information obtained from, any such counsel,
lawyer, accountant, engineer, appraiser or other expert, adviser or agent, whether retained or employed by the Company or by the
Special Warrant Agent, in relation to any matter arising in the administration of the agency hereof. The Special Warrant Agent
shall not incur any liability for the acts or omissions of such counsel, lawyers, accountants, engineers, appraisers or other experts,
advisers or agents employed by the Special Warrant Agent in good faith..
|
|
8.5
|
Resignation and Replacement of Special Warrant Agent
|
|
|
(a)
|
The Special Warrant Agent may resign its trust and be discharged from all further obligations hereunder
by giving to the Company and the Special Warrantholders written notice at least 60 days, or such shorter time period if acceptable
to the Special Warrant Agent, the Company and the Special Warrantholders, before the effective date of the resignation. If the
Special Warrant Agent resigns, or becomes incapable of acting hereunder, the Company shall forthwith appoint in writing a new Special
Warrant Agent. Failing such appointment by the Company or by the Special Warrantholders by Extraordinary Resolution, the retiring
Special Warrant Agent or any Special Warrantholder may apply to a Judge of the Ontario Superior Court on such notice as such Judge
may direct, for the appointment of a new Special Warrant Agent. The Special Warrantholders may, by Extraordinary Resolution, remove
the Special Warrant Agent (including a Special Warrant Agent appointed by the Company or by a Judge as aforesaid) and appoint a
new Special Warrant Agent. On any new appointment, the new Special Warrant Agent is vested with the same powers, rights, duties
and obligations as if it had been originally named as Special Warrant Agent without any further assurance, conveyance, act or deed.
If for any reason it becomes necessary or expedient to execute any further deed or assurance, the former Special Warrant Agent
shall execute the same in favour of the new Special Warrant Agent.
|
|
|
(b)
|
Upon payment by the Company to the retiring Special Warrant Agent of any and all outstanding
fees or charges still properly owing to it, the retiring Special Warrant Agent shall undertake to transfer all requisite
files, inventory and other records to the successor trustee upon request of the Company. Any Special Warrant Certificates
Authenticated but not delivered by a predecessor
Special Warrant Agent may be Authenticated by the successor Special Warrant Agent in the name of the successor Special Warrant
Agent.
|
|
|
(c)
|
Any company into or with which the Special Warrant Agent may be merged or consolidated or amalgamated,
or any company resulting from a merger, consolidation, arrangement or amalgamation to which the Special Warrant Agent for the time
being is a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Special Warrant
Agent shall be the successor Special Warrant Agent under this Indenture without any further act on its part or any of the parties
hereto.
|
|
|
8.6
|
Indenture Legislation
|
The Company and the
Special Warrant Agent agree that each shall at all times in relation to this Indenture and to any action to be taken hereunder,
observe and comply with and be entitled to the benefits of all Applicable Legislation. If and to the extent that any provision
of this Indenture limits, qualifies or conflicts with any mandatory requirement of Applicable Legislation, such mandatory requirement
prevails.
The Special Warrant
Agent is not required to give notice to third parties, including the Special Warrantholders, of the execution of this Indenture.
The Special Warrant
Agent is in no way responsible for the use by the Company of the proceeds of the issue or any other funds that may be realized
hereunder.
|
|
8.9
|
Documents, Monies, etc. Held by Special Warrant Agent
|
Until released in accordance
with this Indenture, any funds received hereunder shall be kept in segregated records of the Special Warrant Agent and the Special
Warrant Agent shall place the funds in accounts of the Special Warrant Agent at one or more of the Canadian Chartered Banks listed
in Schedule 1 of the Bank Act (Canada) (“Approved Bank”). All amounts held by the Special Warrant Agent
pursuant to this Indenture shall be held by the Special Warrant Agent for the Company and the delivery of the funds to the Special
Warrant Agent shall not give rise to a debtor-creditor or other similar relationship. The amounts held by the Special Warrant Agent
pursuant to this Agreement are at the sole risk of the Company and, without limiting the generality of the foregoing, the Special
Warrant Agent shall have no responsibility or liability for any diminution of the funds which may result from any deposit made
with an Approved Bank pursuant to this section, including any losses resulting from a default by the Approved Bank or other credit
losses (whether or not resulting from such a default). The parties hereto acknowledge and agree that the Special Warrant Agent
will have acted prudently in depositing the funds at any Approved Bank, and that the Special Warrant Agent is not required to make
any further inquiries in respect of any such bank. The Special Warrant Agent may hold cash balances constituting part or all of
such monies and need not, invest the same, and the Special Warrant Agent shall not be liable to account for any profit to any parties
to this Indenture or to any other person or entity. Any written direction for the investment or release of funds shall be received
by the Special Warrant Agent by 1:00p.m. (Toronto time) on the Business Day on which such release is to be made, failing which
such direction will be handled on a commercially reasonable efforts basis and may result in funds being invested or released on
the next Business Day.
In the exercise of
any right or duty hereunder the Special Warrant Agent, if it is acting in good faith, may act and rely, as to the truth of any
statement or the accuracy of any opinion expressed therein, on any statutory declaration, opinion, report, written requests, consents,
or orders of the Company, certificates of the Company or other evidence furnished to the Special Warrant Agent pursuant to a provision
hereof or of Applicable Legislation or pursuant to a request of the Special Warrant Agent, if such evidence complies with Applicable
Legislation and the Special Warrant Agent examines such evidence and determines that it complies with the applicable requirements
of this Indenture. The Special Warrant Agent may nevertheless, in its discretion, require further proof in cases where it deems
further proof desirable. The Special Warrant Agent is not bound to make any inquiry or investigation as to the performance by the
Company of the Company's covenants hereunder.
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8.11
|
Actions by Special Warrant Agent to Protect Interest
|
The Special Warrant
Agent shall have the power to institute and to maintain such actions and proceedings as it may consider necessary or expedient
to preserve, protect or enforce its interests and the interests of the Special Warrantholders.
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8.12
|
Special Warrant Agent Not Required to Give Security
|
The Special Warrant
Agent is not required to give any bonds or security with respect to the execution or administration of the duties and powers of
this Indenture.
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8.13
|
No Conflict of Interest
|
The
Special Warrant Agent represents to the Company that, at the date of execution and delivery by it of this Indenture, there exists
no material conflict of interest in the role of the Special Warrant Agent as a fiduciary hereunder but if, notwithstanding the
provisions of this Section 8.13, such a material conflict of interest exists, the validity and enforceability of this Indenture
and the instruments issued hereunder is not affected in any manner whatsoever by reason only that such material conflict of interest
exists or arises. The Special Warrant Agent shall, within 30 days after ascertaining that it has a material conflict of interest,
either eliminate such material conflict of interest or resign in the manner and with the effect specified in Section 8.5.
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8.14
|
Special Warrant Agent Not Ordinarily Bound
|
No provision of
this Indenture shall require the Special Warrant Agent to expend or risk its own funds or otherwise incur liability,
financial or otherwise, in the performance of any of its duties or in the exercise of any of its rights or powers unless it
is indemnified and funded to its satisfaction. The obligation of the Special Warrant Agent to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the Special Warrantholders hereunder, is conditional upon
Special Warrantholders furnishing, when required in writing so to do by the Special Warrant Agent, notice specifying the act,
action or proceeding which the Special Warrant Agent is requested to take, an indemnity reasonably satisfactory to the
Special Warrant Agent, and funds sufficient for commencing or continuing the act, action or proceeding and an indemnity
reasonably satisfactory to the Special Warrant Agent to protect and hold harmless the Special Warrant Agent and its officers,
directors, employees and agents against the costs, charges and expenses and liabilities to be incurred thereby and any loss,
damage or liability it may suffer by reason thereof. The Special Warrant Agent may, before commencing or at any time during
the continuance of any such act, action or proceeding, require the Special Warrantholders, at whose instance it is acting to
deposit with the Special Warrant Agent the Special Warrant Certificates held by them, for which Warrants the Special Warrant
Agent shall issue receipts.
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8.15
|
Special Warrant Agent May Deal in Instruments
|
The Special Warrant
Agent may in its personal or other capacity, buy, sell, lend upon and deal in and hold securities of the Company and generally
contract and enter into financial transactions with the Company or otherwise, without being liable to account for any profits made
thereby.
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|
8.16
|
Recitals or Statements of Fact Made by Company
|
Except
for the representations contained in Sections 8.13 and 8.20 subject to the provisions hereof, the Special Warrant Agent
is not liable for or by reason of any of the statements of fact or recitals contained in this Indenture or in the Special Warrant
Certificates and is not required to verify the same but all such statements and recitals are and are deemed to have been made by
the Company only.
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8.17
|
Special Warrant Agent's Discretion Absolute
|
The Special Warrant
Agent, except as herein otherwise provided, has, as regards all the duties, powers, authorities and discretions vested in it, absolute
and uncontrolled discretion as to the exercise thereof, whether in relation to the manner or as to the mode and time for the exercise
thereof.
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8.18
|
No Representations as to Validity
|
The Special Warrant
Agent is not:
|
|
(a)
|
under any responsibility in respect of the validity of this Indenture or the execution and delivery
thereof or (subject to Section 2.7 hereof) in respect of the validity or the execution of any Special Warrant Certificate;
|
|
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(b)
|
responsible for any breach by the Company of any covenant or condition contained in this Indenture
or in any Special Warrant Certificate; or
|
|
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(c)
|
by any act hereunder, deemed to make any representation or warranty as to the authorization or
reservation of any Unit Shares or Unit Warrants to be issued as provided in this Indenture or in any Special Warrant Certificate
or as to whether any shares will when issued be duly authorized or be validly issued and fully paid and non-assessable. The duty
and responsibility as to all the matters and things referred to in this Section 8.18 rests upon the Company and not upon the Special
Warrant Agent and the failure of the Company to discharge any such duty and responsibility does not in any way render the Special
Warrant Agent liable or place upon it any duty or responsibility for breach of which it would be liable.
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8.19
|
Acceptance of Agency
|
The Special Warrant
Agent hereby accepts the agency in this Indenture and agrees to perform the same upon the terms and conditions herein set forth
or referred to unless and until discharged therefrom by resignation or in some other lawful way. No trust is intended to be or
will be created hereby and the Special Warrant Agent shall owe no duties hereunder as a trustee.
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8.20
|
Special Warrant Agent's Authority to Carry on Business
|
The
Special Warrant Agent represents to the Company that at the date hereof it is authorized to carry on the business of a trust company
in the provinces of Alberta and British Columbia. If, notwithstanding the provisions of this Section 8.20, it ceases to
be authorized to carry on such business in any of the provinces of Alberta and British Columbia, the validity and enforceability
of this Indenture and of the Special Warrants issued hereunder are not affected in any manner whatsoever by reason only of such
event, provided that the Special Warrant Agent shall, within 30 days after ceasing to be authorized to carry on business in any
of the provinces of Alberta and British Columbia, either become so authorized or resign in the manner and with the effect specified
in Section 8.5.
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8.21
|
Additional Protections of Special Warrant Agent
|
By way of supplement
to the provisions of any law for the time being relating to the Special Warrant Agent and this Indenture, it is expressly declared
and agreed as follows:
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|
(a)
|
the Special Warrant Agent shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture;
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|
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(b)
|
the Special Warrant Agent shall incur no liability with respect to the delivery or non-delivery
of any certificate or certificates whether delivered by hand, mail or any other means provided that they are sent in accordance
with the provisions hereof;
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(c)
|
nothing herein contained shall impose any obligation on the Special Warrant Agent to see to or
to require evidence of the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental
hereto; and
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|
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(d)
|
the Special Warrant Agent shall not incur any liability or responsibility whatever or be in any
way responsible for the consequence of any breach on the part of the Company of any of its covenants herein contained or of any
acts of any directors, officers, employees, agents or servants of the Company.
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8.22
|
Indemnification of Special Warrant Agent
|
Without limiting
any protection or indemnity of the Special Warrant Agent under any other provision hereof, or otherwise at law, the Company
hereby agrees to indemnify and hold harmless the Special Warrant Agent, its affiliates, and each of their officers,
directors, employees, agents, successors and assigns (the "Indemnified Parties") from and against any and
all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including reasonable
legal or advisor fees and disbursements, of whatever kind and nature which may at any time be imposed on, incurred by or
asserted against the Indemnified Parties, or any of them, whether at law or in equity, in any way caused by or arising,
directly or indirectly, in respect of any act, deed, matter or thing whatsoever made, done, acquiesced in or omitted in or
about or in relation to the execution of the Indemnified Parties’ duties, or any other services that Special Warrant
Agent may provide in connection with, or in any way relating to, this Indenture and including any action or liability brought
against or incurred by the Indemnified Parties in relation to or arising out of any breach by the Company. Notwithstanding
any other provision hereof, the Company agrees that its liability hereunder shall be absolute and unconditional regardless of
the correctness of any representations of any third parties and regardless of the correctness of any representations of any
third parties and regardless of any liability of third parties to the Indemnified Parties, and shall accrue and become
enforceable without prior demand or any other precedent action or proceeding; provided that the Company shall not be required
to indemnify the Indemnified Parties in the event of the gross negligence or wilful misconduct or fraud of the Special
Warrant Agent. This provision shall survive the resignation or removal of the Special Warrant Agent, or the termination of
this Indenture. The Special Warrant Agent shall not be under any obligation to prosecute or to defend any action or suit in
respect of the relationship which, in the opinion of its counsel, may involve it in expense or liability, unless the Company
shall, so often as required, furnish the Special Warrant Agent with satisfactory indemnity and funding against such expense
or liability.
Notwithstanding any
other provision of this Indenture, and whether such losses or damages are foreseeable or unforeseeable, the Special Warrant Agent
shall not be liable under any circumstances whatsoever for any (a) breach by any other party of securities law or other rule of
any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated
or punitive losses or damages. This provision shall survive the resignation or removal of the Special Warrant Agent, or the termination
of this Indenture.
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|
8.23
|
Performance of Covenants by Special Warrant Agent
|
If
the Company fails to perform any of its covenants contained in this Indenture, then the Company will notify the Special Warrant
Agent in writing of such failure and upon receipt by the Special Warrant Agent of such notice, the Special Warrant Agent will notify
the Special Warrantholders of such failure on the part of the Company and may itself perform any of the said covenants capable
of being performed by it, but shall be under no obligation to perform said covenants or to notify the Special Warrantholders of
such performance by it. All sums expended or disbursed by the Special Warrant Agent in so doing shall be reimbursed as provided
in Section 3.12. No such performance, expenditure or disbursement by the Special Warrant Agent shall be deemed to relieve
the Company of any default hereunder or of its continuing obligations under the covenants herein contained.
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8.24
|
Third Party Interests
|
Each party to this
Indenture hereby represents to the Special Warrant Agent that any account to be opened by, or interest to held by the Special Warrant
Agent in connection with this Indenture, for or to the credit of such party, either (i) is not intended to be used by or on behalf
of any third party; or (ii) is intended to be used by or on behalf of a third party, in which case such party hereto agrees to
complete and execute forthwith a declaration in the Special Warrant Agent's prescribed form as to the particulars of such third
party.
The Special Warrant
Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any
other reason whatsoever, the Special Warrant Agent, in its sole judgment, determines that such act might cause it to be in non-compliance
with any applicable anti-money laundering, anti-terrorist or sanctions legislation, regulation or guideline. Further, should the
Special Warrant Agent, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being
in non-compliance with any applicable anti-money laundering, anti-terrorist or sanctions legislation, regulation or guideline,
then it shall have the right to resign on 10 days' written notice to the Company, provided (i) that the Special Warrant Agent's
written notice shall describe the circumstances of such noncompliance to the extent permitted by any applicable anti-money laundering,
anti-terrorist or sanctions legislation, regulation or guideline; and (ii) that if such circumstances are rectified to the Special
Warrant Agent's satisfaction within such 10-day period, then such resignation shall not be effective.
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|
9.1
|
Notice to Company, Special Warrant Agent and Agent
|
Any notice to the Company,
Special Warrant Agent or the Agent under the provisions of this Indenture is valid and effective if in writing delivered, sent
by registered letter, postage prepaid or sent by facsimile or email:
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Acreage Holdings, Inc.
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|
|
366 Madison Avenue, 11th Floor
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|
|
New York, NY 10017
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USA
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Attn:
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##########################
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Email:
|
##########################
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with a copy to:
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DLA Piper (Canada) LLP
|
|
|
Suite 6000, 1 First Canadian
Place
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PO Box 367, 100 King St West
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|
Toronto, ON M5X 1E2
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Attn:
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################
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E-Mail:
|
##########################
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to the Special Warrant Agent
at:
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Odyssey Trust Company
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Stock Exchange Tower
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1230-300 5th Avenue SW
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Calgary, AB T2P 3C4
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|
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Attn:
|
##############
|
|
|
Email:
|
##########################
|
|
|
Canaccord Genuity Corp.
|
|
|
Brookfield Place
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|
|
161 Bay Street, Suite 3000
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|
P.O. Box 516, Toronto, ON M5G
2S1
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|
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Attn:
|
###########
|
|
|
Email:
|
##################
|
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with a copy (which shall not
constitute notice hereunder) to:
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Fasken Martineau DuMoulin LLP
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|
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333 Bay Street, Suite 2400
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Toronto, ON M5H 2T6
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|
|
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|
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Attn:
|
##############
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|
|
E-Mail:
|
##########################
|
Any notice, direction
or other instrument aforesaid will, if delivered, be deemed to have been given and received on the day it was delivered and, if
mailed, be deemed to have been received on the fifth Business Day following the date of the postmark on such notice and, if sent
by facsimile or email, be deemed to have been given and received on the day it was so sent unless it was sent:
|
|
(a)
|
on a day which is not a business day in the place to which it was sent; or
|
|
|
(b)
|
after 4:30 p.m. in the place to which it was sent,
|
in which cases it will be deemed to have
been given and received on the next day which is a business day in the place to which it was sent.
|
|
9.2
|
Notice to Special Warrantholders
|
Any notice to the Special
Warrantholders under the provisions of this Indenture is valid and effective if delivered, sent by regular mail or sent by courier,
to each Special Warrantholder at its address appearing on the register of Special Warrants kept by the Special Warrant Agent or,
in the case of joint holders, to the first such address, and, if delivered or couriered, shall be deemed to have been given and
received on the day it was delivered and, if mailed, be deemed to have been received on the fifth Business Day following the date
of the postmark on such notice.
A
copy of any notice provided to the Special Warrantholders shall be concurrently provided to the Agent in the manner specified in
Section 9.1. The Company, the Special Warrant Agent or the Agent, as the case may be, may from time to time notify the other
in the manner provided in Section 9.1 of a change of address which, from the effective date of such notice and until changed by
like notice, shall be the address of the Company, the Special Warrant Agent or the Agent, as the case may be, for all purposes
of this Indenture.
|
|
10.
|
POWER OF BOARD OF DIRECTORS
|
In this Indenture,
where the Company is required or empowered to exercise any acts, all such acts may be exercised by the directors of the Company,
by any duly appointed committee of the directors of the Company or by those officers of the Company authorized to exercise such
acts.
|
|
11.
|
MISCELLANEOUS PROVISIONS
|
The parties covenant
and agree from time to time, as may be reasonably required by any party hereto, to execute and deliver such further and other documents
and do all matters and things which are convenient or necessary to carry out the intention of this Indenture more effectively and
completely.
If any term, covenant
or condition of this Indenture or the application thereof to any party or circumstance is invalid or unenforceable to any extent,
the remainder of this Indenture or application of such term, covenant or condition to a party or circumstance other than those
to which it is held invalid or unenforceable is not affected thereby and each remaining term, covenant or condition of this Indenture
is valid and enforceable to the fullest extent permitted by law.
No consent or waiver,
express or implied, by either party to or of any breach or default by the other party in the performance by the other party of
its obligations hereunder is deemed or construed to be a consent or waiver to or of any other breach or default in the performance
of obligations hereunder by such party. Failure on the part of either party to complain of any act or failure to act of the other
party or to declare the other party in default, irrespective of how long such failure continues, does not constitute a waiver by
such party of its rights hereunder.
|
|
11.4
|
Waiver by Special Warrantholders and Special Warrant Agent
|
Notwithstanding
Section 11.3 above, upon the happening of any default hereunder:
|
|
(a)
|
the holders of not less than 50% of the Special Warrants plus one Special Warrant then outstanding
shall have power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in writing to instruct the
Special Warrant Agent to waive any default hereunder and the Special Warrant Agent shall thereupon waive the default upon such
terms and conditions as shall be prescribed in such requisition; or
|
|
|
(b)
|
the Special Warrant Agent shall have power to waive any default hereunder upon such terms and conditions
as the Special Warrant Agent may deem advisable, if, in the Special Warrant Agent's opinion, relying on the opinion of legal counsel,
the same shall have been cured or adequate provision made therefor; provided that no delay or omission of the Special Warrant Agent
or of the Special Warrantholders to exercise any right or power accruing upon any default shall impair any such right or power
or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act or omission either
of the Special Warrant Agent or of the Special Warrantholders shall extend to or be taken in any manner whatsoever to affect any
subsequent default hereunder of the rights resulting therefrom.
|
|
|
11.5
|
Suits by Special Warrantholders
|
|
|
(a)
|
No Special Warrantholder has any right to institute any action, suit or proceeding at law or in
equity for the purpose of enforcing the execution of any trust or power hereunder or for the appointment of a liquidator or receiver
or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to have the Company wound up or to file or
prove a claim in any liquidation or bankruptcy proceedings or for any other remedy hereunder unless the Special Warrantholders
by resolution adopted by the holders of Special Warrants exercisable to acquire 66.66% or more of the Unit Shares which may be
acquired upon exercise of all outstanding Special Warrants at the relevant time have made a request to the Special Warrant Agent
and the Special Warrant Agent has been afforded reasonable opportunity to proceed or complete any action or suit for any such purpose
whether or not in its own name and the Special Warrantholders, or any of them, have furnished to the Special Warrant
Agent, when so requested by the Special Warrant Agent sufficient funds and security and indemnity satisfactory to it against the
costs, expenses and liabilities to be incurred therein or thereby and the Special Warrant Agent has failed to act within a reasonable
time or the Special Warrant Agent has failed to actively pursue any such act or proceeding.
|
|
|
(b)
|
Subject to the provisions of this Section and otherwise in this Indenture, all or any of the rights
conferred upon a Special Warrantholder by the terms of a Special Warrant may be enforced by such Special Warrantholder by appropriate
legal proceedings without prejudice to the right which is hereby conferred upon the Special Warrant Agent to proceed in its own
name to enforce each and all of the provisions herein contained for the benefit of the Special Warrantholders from time to time.
|
|
|
11.6
|
SEC Reporting Status
|
The Company confirms
that it has either (i) a class of securities registered pursuant to Section 12 of the 1934 Act; or (ii) a reporting obligation
pursuant to Section 15(d) of the 1934 Act, and has provided, the Special Warrant Agent with an Officers’ Certificate (in
a form provided by the Special Warrant Agent), if requested by the Special Warrant Agent, certifying such reporting obligation
and other information as requested by the Special Warrant Agent. The Company covenants that in the event that any such registration
or reporting obligation shall be terminated by the Company in accordance with the 1934 Act, the Company shall promptly notify the
Special Warrant Agent of such termination and such other information as the Special Warrant Agent may require at the time. The
Company acknowledges that the Special Warrant Agent is relying upon the foregoing representation and covenants in order to meet
certain SEC obligations with respect to those clients who are filing with the SEC.
Except for the payment
obligations of the Company contained herein, neither party shall be liable to the other, or held in breach of this Indenture, if
prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots,
terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including,
but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this
Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this
Section.
The Company acknowledge
that the Special Warrant Agent may, in the course of providing services hereunder, collect or receive financial and other personal
information about such parties and/or their representatives, as individuals, or about other individuals related to the subject
matter hereof, and use such information for the following purposes:
|
|
(a)
|
to provide the services required under this Indenture and other services that may be requested
from time to time;
|
|
|
(b)
|
to help the Special Warrant Agent manage its servicing relationships with such individuals;
|
|
|
(c)
|
to meet the Special Warrant Agent’s legal and regulatory requirements; and
|
|
|
(d)
|
if Social Insurance Numbers are collected by the Special Warrant Agent, to perform tax reporting
and to assist in verification of an individual’s identity for security purposes.
|
The Company acknowledges
and agrees that the Special Warrant Agent may receive, collect, use and disclose personal information provided to it or acquired
by it in the course of its acting as agent hereunder for the purposes described above and, generally, in the manner and on the
terms described in its Privacy Code, which the Special Warrant Agent shall make available on its website, https://www.odysseytrust.com/,
or upon request, including revisions thereto. The Special Warrant Agent may transfer personal information to other companies in
or outside of Canada that provide data processing and storage or other support in order to facilitate the services it provides.
Further, the Company
agrees that it shall not provide or cause to be provided to the Special Warrant Agent any personal information relating to an individual
who is not a party to this Indenture unless that party has assured itself that such individual understands and has consented to
the aforementioned uses and disclosures.
This Indenture enures
to the benefit of and is binding upon the parties hereto and their respective successors and assigns.
This Indenture may
be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and notwithstanding their date of execution they shall be deemed to be dated as of
the date hereof. Delivery of an executed copy of the Indenture by electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy will be deemed to be execution and delivery of this Indenture as of the date
hereof.
|
|
11.11
|
Formal Date and Effective Date
|
For the purpose of
convenience this Indenture is referred to as bearing the formal date of February 10, 2020, however notwithstanding such formal
date, this Indenture becomes effective as between the Company and any particular Special Warrantholder upon the date of issuance
of a Special Warrant Certificate or Uncertificated Special Warrant to such Special Warrantholder.
|
ACREAGE HOLDINGS, INC.
|
|
|
|
|
|
|
Per:
|
/s/ Glen Leibowitz
|
|
|
|
Authorized Signatory
|
|
|
ODYSSEY TRUST COMPANY
|
|
|
|
|
|
Per:
|
/s/ Dan Sander
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
Per:
|
/s/ Gloria Gherasim
|
|
|
|
Authorized Signatory
|
|
Signature Page to Special Warrant Indenture
Schedule "A"
FORM OF SPECIAL WARRANT CERTIFICATE
“THESE SECURITIES
HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION
UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE
COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE U.S. SECURITIES ACT.”
"UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY BEFORE FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL DATE OF
ISSUANCE OF SPECIAL WARRANT(S).
WITHOUT PRIOR WRITTEN APPROVAL
OF THE CSE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE CSE OR OTHERWISE IN CANADA OR TO OR FOR
THE BENEFIT OF A CANADIAN RESIDENT UNTIL FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL DATE OF ISSUANCE OF SPECIAL WARRANT(S).
THE SPECIAL WARRANTS REPRESENTED
BY THIS CERTIFICATE WILL BE DEEMED TO BE EXERCISED IMMEDIATELY PRIOR TO THE AUTOMATIC EXERCISE TIME (AS DEFINED BELOW) AND WILL
BE VOID THEREAFTER."
SPECIAL WARRANT CERTIFICATE
ACREAGE
HOLDINGS, INC.
(incorporated under the laws of British Columbia)
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No. SW-«Warrant»
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«Number» SPECIAL WARRANTS entitling the holder to acquire one Unit Share and one Unit Warrant for each Special Warrant, subject to adjustment as set out below
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THIS
IS TO CERTIFY that, for value received, «Name» (the "Special Warrantholder") is the registered
holder of the number of special warrants (the "Special Warrants") stated above and is entitled to acquire in the
manner and at the time, and subject to the restrictions contained in the Indenture (as defined below) hereinafter referred to,
the number of units (the "Units") of Acreage Holdings, Inc. (the "Company") as is equal to the
number of Special Warrants represented hereby (subject to adjustment as set out in the Indenture), all without payment of any consideration
in addition to that paid for the Special Warrants represented hereby. Each Unit is comprised of one Class A subordinate voting
share (a "Unit Share") and one Class A subordinate voting share purchase warrant (a "Unit Warrant").
Each Unit Warrant will be issued pursuant to the terms of a warrant indenture dated February 10, 2020 between the Company and Odyssey
Trust Company (the "Unit Warrant Agent") in its capacity as agent for the Unit Warrants and will entitle the holder
thereof to acquire one Class A subordinate voting share of the Company (a “Warrant Share”) for a period of 60
months following the Closing Date at a price of US$5.80 per share, subject to adjustment in certain events.
The Special Warrants
represented by this certificate are issued under and pursuant to a certain indenture (the "Indenture") made as
of February 10, 2020 between the Company and Odyssey Trust Company (the "Special Warrant Agent") (which expression
includes any successor trustee appointed under the Indenture), to which Indenture and any instruments supplemental thereto reference
is hereby made for a full description of the rights of the holders of the Special Warrants and the terms and conditions upon which
such Special Warrants are, or are to be, issued and held, all to the same effect as if the provisions of the Indenture and all
instruments supplemental thereto were herein set forth, to all of which provisions the holder of these Special Warrants by acceptance
hereof assents. All terms defined in the Indenture are used herein as so defined. In the event of any conflict or inconsistency
between the provisions of the Indenture and the provisions of this Special Warrant Certificate, except those that are necessary
by context, the provisions of the Indenture shall prevail. The Company will furnish to the holder of this Special Warrant Certificate,
upon request and without charge, a copy of the Indenture.
No voluntary exercise
of Special Warrants is permitted. At the Automatic Exercise Time, all Special Warrants will be automatically exercised, delivered
and surrendered by the holder without any further action on the part of the holder.
The Company has covenanted
to: (i) prepare and file the Prospectus Supplement qualifying the Unit Shares and Unit Warrants for issuance in the Designated
Jurisdictions upon automatic exercise of the Special Warrants; and (ii) file with, and have declared effective by the Registration
Statement registering the issuance of the Unit Shares and the Warrants upon automatic exercise of the Special Warrants; on or before
the Qualification Deadline, provided however that there is no assurance that a Prospectus Supplement will be filed prior to the
expiry of the statutory four month hold period, or that the Registration Statement will be filed or declared effective.
The Unit Shares and
Unit Warrants in respect of which the Special Warrants are exercised will be deemed to have been issued on the date of such exercise,
at which time each Special Warrantholder will be deemed to have become the holder of record of such Unit Shares and Unit Warrants.
After the Automatic
Exercise of Special Warrants, the Special Warrant Agent shall within three Business Days of such Automatic Exercise cause to be
issued the appropriate number of Unit Shares and Unit Warrants issuable in respect of such Special Warrants, not exceeding those
which such Special Warrantholder is entitled to acquire pursuant to the Special Warrants so exercised.
The holder of this
Special Warrant Certificate may at any time up to the Automatic Exercise Time, upon written instruction delivered to the Special
Warrant Agent and payment of the charges provided for in the Indenture and otherwise in accordance with the provisions of the Indenture,
exchange this Special Warrant Certificate for other Special Warrant Certificates evidencing Special Warrants entitling the holder
to acquire in the aggregate the same number of Unit Shares and Unit Warrants as may be acquired under this Special Warrant Certificate.
The
number of Units which may be acquired by a Special Warrantholder upon exercise of Special Warrants, are also subject to and governed
by Article 4 of the Indenture with respect to the anti-dilution provisions, including provisions for the appropriate adjustment
of the class, number and price of the securities issuable hereunder upon the occurrence of certain events including any subdivision,
consolidation, or reclassification of the shares, payment of stock dividends, or amalgamation of the Company.
The holding of the
Special Warrants evidenced by this Special Warrant Certificate does not constitute the Special Warrantholder a shareholder of the
Company or entitle such holder to any right or interest in respect thereof except as herein and in the Indenture expressly provided.
The
Special Warrants may only be transferred by the Special Warrantholder (or its legal representatives or its attorney duly appointed),
in accordance with applicable laws and upon compliance with the conditions set out in the Indenture, on the register kept at the
office of the Special Warrant Agent by delivering to the Special Warrant Agent's Calgary office a duly executed Form of Transfer
attached as Appendix 1 hereto and complying with such other reasonable requirements as the Company and the Special
Warrant Agent may prescribe and such transfer shall be duly noted on the register by the Special Warrant Agent.
The holder
understands and acknowledges that the Special Warrants have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "1933 Act"), or under the securities laws of any state of the
United States, and that the Special Warrants are and, unless there is an effective registration statement filed with
the United States Securities and Exchange Commission covering the offer and sale of the Unit Shares and the Unit
Warrants, any Unit Shares and Unit Warrants issued upon exercise of such Special Warrants will be, "restricted
securities" within the meaning of Rule 144(a)(3) of the 1933 Act. The holder understands and acknowledges that
the Special Warrants will bear an appropriate 1933 Act legend to the foregoing effect and will remain
“restricted securities” notwithstanding any resale within or outside the United States unless the sale is
completed in accordance with Rule 144 under the 1933 Act (“Rule 144”). The holder further
acknowledges that the Special Warrants will be subject to a minimum hold period of at least one year under Rule 144;
that it has been advised to obtain independent legal and professional advice on the requirements of Rule 144; and that
it has been advised that resales of the Special Warrants may be made only under certain circumstances. The holder
understands that to the extent Rule 144 is not available, the holder may be unable to sell the Special Warrants
without the availability of another exemption or exclusion from such registration requirements, and in all cases
pursuant to exemptions from applicable Securities Laws of any applicable state of the United States.
This Special Warrant
Certificate shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable
therein and shall be treated in all respects as an Ontario contract.
After the Automatic
Exercise of any of the Special Warrants represented by this Special Warrant Certificate, the Special Warrantholder shall no longer
have any rights under either the Indenture or this Special Warrant Certificate with respect to such Special Warrants, other than
the right to receive certificates or other evidence of ownership representing the Unit Shares and Unit Warrants issuable on the
exercise of those Special Warrants, and those Special Warrants shall be void and of no further value or effect.
The Indenture contains
provisions making binding upon all Special Warrantholders resolutions passed at meetings of such holders in accordance with such
provisions or by instruments in writing signed by the Special Warrantholders holding a specified percentage of the Special Warrants.
IN WITNESS WHEREOF
the Company has caused this Special Warrant Certificate to be executed and the Special Warrant Agent has caused this Special Warrant
Certificate to be countersigned by its duly authorized officers as of this ___ day of __________, 2020.
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ACREAGE HOLDINGS, INC.
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Per:
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Authorized Signatory
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COUNTERSIGNED BY:
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ODYSSEY TRUST COMPANY
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Per:
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Authorized Signatory
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Appendix 1
to
SPECIAL WARRANT CERTIFICATE
FORM OF TRANSFER
TO: ACREAGE HOLDINGS, INC. (the
"Company")
AND TO: ODYSSEY TRUST COMPANY (the
“Special Warrant Agent”)
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto (name) ______________________________ (the "Transferee"), of ______________________
(residential address) ________________________________________________ Special Warrants of Acreage Holdings, Inc. registered in
the name of the undersigned on the records of Odyssey Trust Company represented by the attached certificate, and irrevocably appoints
____________________ as the attorney of the undersigned to transfer the said securities on the books or register of transfer, with
full power of substitution.
THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”).
THESE SECURITIES MAY ONLY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES.
The undersigned hereby represents, warrants
and certifies that (one (only) of the following must be checked):
¨ (A) the transfer is being made
only to the Company;
¨ (B) the transfer is being made
in compliance with Regulation S under the U.S. Securities Act; or
¨ (C) the transfer is being made
in a transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws.
In the case of a transfer in accordance
with (B) and (C) above, the Company and the Special Warrant Agent and shall first have received an opinion of counsel of recognized
standing in form and substance reasonably satisfactory to the Company, to such effect.
DATED the ______ day of _________________,
20____.
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__________________________________________
Signature Guaranteed
(See instructions to Special
Warrantholders in Appendix 3)
Name of Special Warrantholder:
Address (please print):
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___________________________________________
(Signature of Special Warrantholder, to
be the same
as appears on the face of this Special
Warrant
Certificate)
___________________________________________
___________________________________________
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REASON FOR TRANSFER – For US Residents only
(where the individual(s) or corporation receiving the securities is a US resident). Please select only one (see instructions
below).
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¨ Gift
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¨ Estate
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¨ Private Sale
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¨ Other (or no change in ownership)
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Date of Event (Date of gift, death or sale):
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Value per Special Warrant on the date of event:
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¨ ¨ /
¨ ¨ /
¨ ¨ ¨ ¨
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$
¨ ¨ ¨.¨ ¨
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¨ CAD
OR ¨ USD
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Note to Special Warrantholders:
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(1)
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In order to transfer the Special Warrants represented by this Special Warrant Certificate, this
transfer form must be delivered to the Special Warrant Agent, together with this Special Warrant Certificate and, if applicable,
an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company that the transfer is
in compliance with applicable United States and state securities laws.
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(2)
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The signature of the holder on the transfer form must be guaranteed by a Canadian Schedule 1 chartered
bank, a major trust company in Canada, a member of the Securities Transfer Association Medallion Program (STAMP), a member of the
Stock Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP).
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CERTAIN REQUIREMENTS RELATING TO
TRANSFERS – READ CAREFULLY
The signature(s) of the transferor(s)
must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement,
or any change whatsoever. All securityholders or a legally authorized representative must sign this form. The signature(s) on this
form must be guaranteed in accordance with the transfer agent’s then current guidelines and requirements at the time of transfer.
Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may choose one of
the following methods (although subject to change in accordance with industry practice and standards):
• Canada
and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP,
SEMP, NYSE, MSP). Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature
Guarantee Program. The Guarantor must affix a stamp bearing the actual words "Medallion Guaranteed", with the correct
prefix covering the face value of the certificate.
• Canada:
A Signature Guarantee obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust. The Guarantor
must affix a stamp bearing the actual words "Signature Guaranteed", sign and print their full name and alpha numeric
signing number. Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are
members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate
of incumbency, are also required to accompany the transfer, unless there is a "Signature & Authority to Sign Guarantee"
Stamp affixed to the transfer (as opposed to a "Signature Guaranteed" Stamp) obtained from an authorized officer of the
Royal Bank of Canada, Scotia Bank or TD Canada Trust or a Medallion Signature Guarantee with the correct prefix covering the face
value of the certificate.
• Outside
North America: For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee
to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion
Signature Guarantee Program. The corresponding affiliate will arrange for the signature to be over-guaranteed.
OR
The signature(s) of the transferor(s)
must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement,
or any change whatsoever. The signature(s) on this form must be guaranteed by an authorized officer of Royal Bank of Canada, Scotia
Bank or TD Canada Trust whose sample signature(s) are on file with the transfer agent, or by a member of an acceptable Medallion
Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed signatures are not acceptable as guaranteed signatures.
The Guarantor must affix a stamp bearing the actual words: "SIGNATURE GUARANTEED", "MEDALLION GUARANTEED" OR
"SIGNATURE & AUTHORITY TO SIGN GUARANTEE", all in accordance with the transfer agent’s then current guidelines
and requirements at the time of transfer. For corporate holders, corporate signing resolutions, including certificate of incumbency,
will also be required to accompany the transfer unless there is a "SIGNATURE & AUTHORITY TO SIGN GUARANTEE" Stamp
affixed to the Form of Transfer obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust
or a "MEDALLION GUARANTEED" Stamp affixed to the Form of Transfer, with the correct prefix covering the face value of
the certificate.
REASON
FOR TRANSFER – FOR US RESIDENTS ONLY:
Consistent with US IRS regulations, the
Special Warrant Agent is required to request cost basis information from US securityholders. Please indicate the reason for requesting
the transfer as well as the date of event relating to the reason. The event date is not the day in which the transfer is finalized,
but rather the date of the event which led to the transfer request (i.e. date of gift, date of death of the securityholder, or
the date the private sale took place).
Appendix 2
INSTRUCTIONS TO SPECIAL WARRANTHOLDERS
TO TRANSFER:
If the Special Warrantholder wishes to
transfer Special Warrants, then the Special Warrantholder must complete, sign and deliver (as appropriate):
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(a)
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the Transfer Form attached as Appendix 1 (including an opinion of counsel described in Appendix
2, if applicable); and
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(b)
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the Special Warrant Certificates.
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to the Special Warrant Agent indicating
the number of Special Warrants to be transferred.
If the Special Warrant Certificate is transferred,
the Special Warrantholder's signature on the Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust
company or an investment dealer who is a member of a recognized stock exchange.
For the protection of the holder, it would
be prudent to use registered mail if forwarding by mail.
GENERAL:
If the Transfer Form or Exercise Form is
signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary
or representative capacity, the Special Warrant Certificate must also be accompanied by evidence of authority to sign satisfactory
to the Special Warrant Agent.
The name and address of the Special Warrant
Agent is:
Odyssey Trust Company
Stock Exchange Tower
1230 - 300 5th Avenue SW
Calgary, AB T2P 3C4
Exhibit 4.3
ACREAGE HOLDINGS, INC.
- and -
ODYSSEY TRUST COMPANY
WARRANT
INDENTURE
Providing for the Issue of Warrants
Dated
as of February 10, 2020
TABLE OF CONTENTS
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Article 1
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INTERPRETATION
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Section 1.1
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Definitions
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1
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Section 1.2
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Gender and Number
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6
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Section 1.3
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Headings, Etc.
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6
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Section 1.4
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Day not a Business Day
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6
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Section 1.5
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Time of the Essence
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7
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Section 1.6
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Monetary References
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7
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Section 1.7
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Applicable Law
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7
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Article 2
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ISSUE OF WARRANTS
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Section 2.1
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Creation and Issue of Warrants
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7
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Section 2.2
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Terms of Warrants.
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7
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Section 2.3
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Warrantholder not a Shareholder
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8
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Section 2.4
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Warrants to Rank Pari Passu
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8
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Section 2.5
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Form of Warrants; Warrant Certificates
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8
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Section 2.6
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Book Entry Warrants
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9
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Section 2.7
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Warrant Certificate
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10
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Section 2.8
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Legends
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12
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Section 2.9
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Register of Warrants
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14
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Section 2.10
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Issue in Substitution for Warrant Certificates Lost, etc.
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15
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Section 2.11
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Exchange of Warrant Certificates
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15
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Section 2.12
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Transfer and Ownership of Warrants
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16
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Section 2.13
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Cancellation of Surrendered Warrants
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17
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Article 3
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EXERCISE OF WARRANTS
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Section 3.1
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Right of Exercise
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17
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Section 3.2
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Warrant Exercise
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17
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Section 3.3
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Prohibition on Exercise
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19
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Section 3.4
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Transfer Fees and Taxes
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19
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Section 3.5
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Warrant Agency
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20
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Section 3.6
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Effect of Exercise of Warrants
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20
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Section 3.7
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Partial Exercise of Warrants; Fractions
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20
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Section 3.8
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Expiration of Warrants
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21
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Section 3.9
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Accounting and Recording
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21
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Section 3.10
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Securities Restrictions
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21
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Article 4
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ADJUSTMENT OF NUMBER OF WARRANT SHARES AND EXERCISE PRICE
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Section 4.1
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Adjustment of Number of Warrant Shares and Exercise Price
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21
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Section 4.2
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Entitlement to Warrant Shares on Exercise of Warrant
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26
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Section 4.3
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No Adjustment for Certain Transactions
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26
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Section 4.4
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Determination by Independent Firm
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26
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Section 4.5
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Proceedings Prior to any Action Requiring Adjustment
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26
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Section 4.6
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Certificate of Adjustment
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26
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Section 4.7
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Notice of Special Matters
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27
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Section 4.8
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No Action after Notice
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27
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Section 4.9
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Other Action
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27
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Section 4.10
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Protection of Warrant Agent
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27
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Section 4.11
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Participation by Warrantholder
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28
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Article 5
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RIGHTS OF THE CORPORATION AND COVENANTS
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Section 5.1
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Optional Purchases by the Corporation
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28
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Section 5.2
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General Covenants
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28
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Section 5.3
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Warrant Agent’s Remuneration and Expenses
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30
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Section 5.4
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Performance of Covenants by Warrant Agent
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30
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Section 5.5
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Enforceability of Warrants
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30
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Article 6
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ENFORCEMENT
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Section 6.1
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Suits by Registered Warrantholders
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30
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Section 6.2
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Suits by the Corporation
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30
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Section 6.3
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Immunity of Shareholders, etc.
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31
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Section 6.4
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Waiver of Default
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31
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Article 7
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MEETINGS OF REGISTERED WARRANTHOLDERS
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Section 7.1
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Right to Convene Meetings
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31
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Section 7.2
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Notice
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32
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Section 7.3
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Chairman
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32
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Section 7.4
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Quorum
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32
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Section 7.5
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Power to Adjourn
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32
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Section 7.6
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Show of Hands
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32
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Section 7.7
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Poll and Voting
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33
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Section 7.8
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Regulations
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33
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Section 7.9
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Corporation and Warrant Agent May be Represented
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34
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Section 7.10
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Powers Exercisable by Extraordinary Resolution
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34
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Section 7.11
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Meaning of Extraordinary Resolution
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35
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Section 7.12
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Powers Cumulative
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35
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Section 7.13
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Minutes
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35
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Section 7.14
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Instruments in Writing
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36
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Section 7.15
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Binding Effect of Resolutions
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36
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Section 7.16
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Holdings by Corporation Disregarded
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36
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Article 8
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SUPPLEMENTAL INDENTURES
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Section 8.1
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Provision for Supplemental Indentures for Certain Purposes
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36
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Section 8.2
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Successor Entities
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37
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Article 9
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CONCERNING THE WARRANT Agent
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Section 9.1
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Trust Indenture Legislation
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37
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Section 9.2
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Rights and Duties of Warrant Agent
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38
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Section 9.3
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Evidence, Experts and Advisers
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38
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Section 9.4
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Documents, Monies, etc. Held by Warrant Agent
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39
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Section 9.5
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Actions by Warrant Agent to Protect Interest
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39
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Section 9.6
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Warrant Agent Not Required to Give Security
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39
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Section 9.7
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Protection of Warrant Agent
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39
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Section 9.8
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Replacement of Warrant Agent; Successor by Merger
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40
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Section 9.9
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Conflict of Interest
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41
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Section 9.10
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Acceptance of Agency
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41
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Section 9.11
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Warrant Agent Not to be Appointed Receiver
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41
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Section 9.12
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Authorization to Carry on Business
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42
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Section 9.13
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Warrant Agent Not Required to Give Notice of Default
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42
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Section 9.14
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Anti-Money Laundering
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42
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Section 9.15
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Compliance with Privacy Code
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42
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Section 9.16
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Securities Exchange Commission Certification
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43
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Article 10
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GENERAL
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Section 10.1
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Notice to the Corporation and the Warrant Agent
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43
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Section 10.2
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Notice to Registered Warrantholders
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44
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Section 10.3
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Ownership of Warrants
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45
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Section 10.4
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Counterparts
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45
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Section 10.5
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Currency
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45
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Section 10.6
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Satisfaction and Discharge of Indenture
|
45
|
|
Section 10.7
|
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders
|
46
|
|
Section 10.8
|
Subordinate Voting Shares or Warrants Owned by the Corporation - Certificate to be Provided
|
46
|
|
Section 10.9
|
Severability
|
46
|
|
Section 10.10
|
Force Majeure
|
46
|
|
Section 10.11
|
Assignment, Successors and Assigns
|
47
|
|
Section 10.12
|
Rights of Rescission and Withdrawal for Holders
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47
|
SCHEDULES
SCHEDULE “A” – FORM OF WARRANT
CERTIFICATE
WARRANT INDENTURE
THIS WARRANT INDENTURE
is dated as of February 10, 2020,
BETWEEN:
Acreage
Holdings, Inc., a corporation existing under the laws of British Columbia (the “Corporation”),
- and -
ODYSSEY TRUST
COMPANY, a trust company existing under the laws of Alberta and authorized to carry on business in the provinces of British
Columbia and Alberta (the “Warrant Agent”)
WHEREAS in connection
with a brokered private placement (the “Offering”) of Special Warrants (as defined herein) by the Corporation,
the Corporation is proposing to issue up to 10,141,987 Warrants (as defined herein), pursuant to this Indenture on the Issue Date
(as defined herein);
AND WHEREAS pursuant
to this Indenture, each Warrant shall, subject to adjustment, entitle the holder thereof to acquire one Warrant Share (as defined
herein) upon payment of the Exercise Price (as defined herein) prior to the Expiry Time (as defined herein) upon the terms and
conditions herein set forth;
AND WHEREAS
all acts and deeds necessary have been done and performed to make the Warrants, when created and issued as provided in this Indenture,
legal, valid and binding upon the Corporation with the benefits and subject to the terms of this Indenture;
AND WHEREAS
the foregoing recitals are made as representations and statements of fact by the Corporation and not by the Warrant Agent;
NOW THEREFORE,
in consideration of the premises and mutual covenants hereinafter contained and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Corporation hereby appoints the Warrant Agent as warrant agent to hold the
rights, interests and benefits contained herein for and on behalf of those persons who from time to time become the holders of
Warrants issued pursuant to this Indenture and the parties hereto agree as follows:
Article 1
INTERPRETATION
In this Indenture,
including the recitals and schedules hereto, and in all indentures supplemental hereto:
“Adjustment
Period” means the period from the Effective Date up to and including the Expiry Time;
“Agent” means Canaccord Genuity Corp.;
“Agency
Agreement” means the agency agreement dated as of February 10, 2020 between the Corporation and the Agent;
“Applicable
Legislation” means any statute of any of the Designated Jurisdictions, and the regulations under any such named or other
statute, relating to warrant indentures or to the rights, duties and obligations of warrant agents under warrant indentures, to
the extent that such provisions are at the time in force and applicable to this Indenture;
“Arrangement
Agreement” means the arrangement agreement between the Corporation and Canopy Growth Corporation dated April 18, 2019,
as amended on May 15, 2019;
“Auditor”
means Marcum LLP or such other firm of chartered accountants duly appointed as auditor of the Corporation from time to time;
“Authenticated”
means (a) with respect to the issuance of a Warrant Certificate, one which has been signed by the Corporation or on which the signatures
of the Corporation have been printed, lithographed or otherwise mechanically reproduced and authenticated by signature of an authorized
officer of the Warrant Agent, and (b) with respect to the issuance of an Uncertificated Warrant, one in respect of which the Warrant
Agent has completed all Internal Procedures such that the particulars of such Uncertificated Warrant as required by Section 2.7
are entered in the register of holders of Warrants, “Authenticate” and “Authentication” have
the appropriate correlative meanings;
“beneficial owner”
means a person that has a beneficial interest in a Warrant;
“Book
Entry Participants” means institutions that participate directly or indirectly in the Depository’s book entry registration
system for the Warrants;
“Book
Entry Warrants” means Warrants that are to be held only by or on behalf of the Depository;
“Business
Day” means any day other than Saturday, Sunday or a statutory or civic holiday, or any other day on which the
businesses of the Warrant Agent and Canadian chartered banks are generally closed;
“CDS
Global Warrants” means Warrants representing all or a portion of the aggregate number of Warrants issued in the name
of the Depository and represented by an Uncertificated Warrant, or if requested by the Depository or the Corporation, by a Warrant
Certificate;
“CDSX”
means the settlement and clearing system of CDS Clearing and Depository Services Inc. for equity and debt securities in Canada;
“Counsel”
means a barrister and/or solicitor or a firm of barristers and/or solicitors retained by the Warrant Agent or retained by the Corporation,
which may or may not be counsel for the Corporation;
“CSE”
means the Canadian Securities Exchange;
“Current
Market Price” of the Subordinate Voting Shares at any date means the greater of (a) the closing trading price per
Subordinate Voting Share on the CSE on the Trading Day immediately prior to such date, and (b) the volume weighted average of
the trading price per Subordinate Voting Share for such Subordinate Voting Shares for each day there was a closing price for
the 20 consecutive Trading Days ending five days prior to such date on the CSE or, if on such date the Subordinate
Voting Shares are not listed on the CSE, on such stock exchange upon which such Subordinate Voting Shares are listed and as
selected by the directors of the Corporation or, if such Subordinate Voting Shares are not listed on any stock exchange then
on such over-the-counter market as may be selected for such purpose by the directors of the Corporation acting
reasonably, or, if not traded on any recognized market or exchange or over-the-counter market, as determined by the
Corporation, acting reasonably;
“Depository”
means CDS Clearing and Depository Services Inc. or such other person as is designated in writing by the Corporation to act as depository
in respect of any of the Warrants;
“Designated Jurisdictions”
means each of the provinces of Canada, excluding Quebec, Prince Edward Island and Newfoundland and Labrador (and excluding
Yukon, Northwest Territories and Nunavut);
“Directors”
means the board of directors of the Corporation;
“DRS
Registration Statement” means an ownership statement under a direct registration system;
“Dividends”
means any dividends paid by the Corporation;
“Effective
Date” means the date of this Indenture;
“Exchange
Rate” means the number of Warrant Shares subject to the right of purchase under each Warrant;
“Exercise
Date” means, in relation to a Warrant, the Business Day on which such Warrant is validly exercised or deemed to be validly
exercised in accordance with Article 3 hereof;
“Exercise
Notice” has the meaning set forth in Section 3.2(1);
“Exercise
Price” at any time means the price at which a Warrant Share may be purchased by the exercise of a Warrant, which is initially
$5.80 per Warrant Share, payable in immediately available United States funds, subject to adjustment in accordance with the provisions
of Section 4.1;
“Expiry
Date” means the date that is 60 months from the Effective Date;
“Expiry
Time” means 4:00 p.m. (Toronto, Ontario time) on the Expiry Date, provided that, if the Warrants are held by the Depository,
such earlier time on the Expiry Date as may be required by the Depository pursuant to the Depository’s internal procedures;
“Extraordinary
Resolution” has the meaning set forth in Section 7.11;
“F-10
Supplement” means a supplement to the Corporation’s Form F-10 shelf registration statement wrapping the Prospectus
Supplement and registering under the U.S. Securities Act the issuance of the Units underlying the Special Warrants;
“Internal
Procedures” means in respect of the making of any one or more entries to, changes in or deletions of any one or more
entries in the register at any time (including without limitation, original issuance or registration of transfer of ownership)
the minimum number of the Warrant Agent’s internal procedures customary at such time for the entry, change or deletion made
to be complete under the operating procedures followed at the time by the Warrant Agent, it being understood that neither preparation
and issuance shall constitute part of such procedures for any purpose of this definition;
“Issue
Date” for a particular Warrant means the date on which the Warrant is actually issued by or on behalf of the Corporation
either upon the exercise or deemed exercise of the Special Warrants or the exercise of the Option;
“Multiple
Voting Shares” fully paid and non-assessable Class C multiple voting shares in the capital of the Corporation as presently
constituted;
“person”
means an individual, body corporate, partnership, trust, warrant agent, executor, administrator, legal representative or any unincorporated
organization;
“Prospectus
Supplement” means a prospectus supplement of the Corporation which supplements the Corporation’s short form base
shelf prospectus dated August 8, 2019 filed with the Securities Regulators by the Corporation and qualifies the distribution of
the Units underlying the Special Warrants in the Designated Jurisdictions;
”Purchaser’s
Option” has the meaning ascribed thereto in the Agency Agreement;
“Qualification
Date” means the date on which the Prospectus Supplement is filed in each of the Designated Jurisdictions;
“Qualification Deadline”
means 5:00 p.m. (Toronto time) on February 14, 2020;
“register”
means the one set of records and accounts maintained by the Warrant Agent pursuant to Section 2.9:
“Registered
Warrantholders” means the persons who are registered owners of Warrants as such names appear on the register, and for
greater certainty, shall include the Depository as well as the holders of Uncertificated Warrants appearing on the register of
the Warrant Agent;
“Registration
Statement” means an effective registration statement of the Corporation to be prepared and filed by the Corporation with
the SEC registering the issuance and resale of the Warrant Shares;
“Regulation
S” means Regulation S as promulgated by the SEC under the U.S. Securities Act;
“Rights
Offering” has the meaning set forth in Section 4.1(b);
“Securities
Regulators” means, collectively, the securities commissions or other applicable securities regulatory authorities of
each of the Designated Jurisdictions;
“SEC”
means the United States Securities and Exchange Commission;
“Shareholders”
means holders of Subordinate Voting Shares;
“Special
Warrant Indenture” means the special warrant indenture between the
Corporation and Odyssey Trust
Company; in its capacity as special warrant agent, dated February 10, 2020;
“Special
Warrants” means special warrants issued by the Corporation in accordance with the Special Warrant Indenture;
“Subscriber’s Option” means the option granted to Anson Advisors Inc. under the Offering to purchase
up to $20,000,000 of additional Special Warrants;
“Subordinate
Voting Share Reorganization” has the meaning set forth in Section 4.1(a);
“Subordinate
Voting Shares” means, subject to Article 4, fully paid and non-assessable Class A subordinate voting shares in the
capital of the Corporation as presently constituted;
“Tax
Act” means the Income Tax Act (Canada) and the regulations thereunder;
“this
Warrant Indenture”, “this Indenture”, “hereto” “herein”, “hereby”,
“hereof” and similar expressions mean and refer to this Indenture and any indenture, deed or instrument supplemental
hereto; and the expressions “Article”, “Section”, “subsection” and “paragraph”
followed by a number, letter or both mean and refer to the specified article, section, subsection or paragraph of this Indenture;
“Trading
Day” means a day on which the CSE is open for the transaction of business and with respect to another stock exchange
or an over-the-counter market means a day on which such exchange or over-the-counter market is open for the transaction
of business;
“Uncertificated
Warrant” means any Warrant which is not evidenced by a Warrant Certificate;
“United
States” means the United States of America, its territories and possessions, any state of the United States, and the
District of Columbia;
“Units”
means the units of the Corporation, each Unit entitling the holder to receive one Subordinate Voting Share and one Warrant;
“U.S.
Exchange Act” means the United States Securities Exchange Act of 1934, as amended;
“U.S.
Person” has the meaning set forth in Rule 902(k) of Regulation S;
“U.S.
Securities Act” means the United States Securities Act of 1933, as amended;
“Warrant
Agency” means the principal office of the Warrant Agent in ######### or such other place as may be designated
in accordance with Section 3.5;
“Warrant
Agent” means Odyssey Trust Company, in its capacity as warrant agent of the Warrants, or its successors from time to
time;
“Warrant
Certificate” means a certificate, substantially in the form set forth in Schedule ”A” hereto or such
other form as may be approved by the Corporation and the Warrant Agent, to evidence those Warrants that will be evidenced by a
certificate;
“Warrant
Share” means a Subordinate Voting Share issuable upon exercise of a Warrant;
“Warrantholders”,
or “holders” without reference to Warrants, means the warrantholders as and in respect of Warrants registered
in the name of the Depository and includes owners of Warrants who beneficially hold securities entitlements in respect of the Warrants
through a Book Entry Participant or means, at a particular time, the persons entered in the register hereinafter mentioned as holders
of Warrants outstanding at such time;
“Warrantholders’
Request” means an instrument signed in one or more counterparts by Registered Warrantholders entitled to acquire in the
aggregate not less than 20% of the aggregate number of Warrant Shares which could be acquired pursuant to all Warrants then unexercised
and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein; “written order of the
Corporation”, “written request of the Corporation”, “written consent of the “Corporation”
and “certificate of the Corporation” mean, respectively, a written order, request, consent and certificate signed
in the name of the Corporation by two duly authorized signatories of the Corporation and may consist of one or more instruments
so executed; and
“Warrants”
means the Subordinate Voting Share purchase warrants of the Corporation created by and authorized by and issuable under this Indenture,
which form part of the Units issuable upon exercise or deemed exercise of the Special Warrants or the exercise of the Subscriber’s
Option (as the case may be), to be issued and countersigned hereunder as a Warrant Certificate and /or Uncertificated Warrant
held through the book entry registration system on a no certificate issued basis, entitling the holder or holders thereof to purchase
up to 10,141,987 Warrant Shares (subject to adjustment as herein provided and which, for greater certainty, includes the Warrants
underlying the Special Warrants issuable pursuant to the Subscriber’s Option) at the Exercise Price prior to the Expiry Time
and, where the context so requires, also means the warrants issued and Authenticated hereunder, whether by way of Warrant Certificate
or Uncertificated Warrant.
|
Section 1.2
|
Gender and Number.
|
Words importing the
singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa.
|
Section 1.3
|
Headings, Etc.
|
The division of this
Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this Indenture or of the Warrants.
|
Section 1.4
|
Day not a Business Day.
|
If any day on or before
which any action or notice is required to be taken or given hereunder is not a Business Day, then such action or notice shall be
required to be taken or given on or before the requisite time on the next succeeding day that is a Business Day.
|
Section 1.5
|
Time of the Essence.
|
Time shall be of the
essence in this Indenture and each Warrant.
|
Section 1.6
|
Monetary References.
|
Whenever any amounts
of money are referred to herein, such amounts shall be deemed to be in lawful money of the United States unless otherwise expressed.
|
Section 1.7
|
Applicable Law.
|
This Indenture, the
Warrants, the Warrant Certificates (including all documents relating thereto, which by common accord have been and will be drafted
in English) shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable
therein and shall be treated in all respects as Ontario contracts. Each of the parties hereto, which shall include the Warrantholders,
irrevocably attorns to the exclusive jurisdiction of the courts of the Province of Ontario with respect to all matters arising
out of this Indenture and the transactions contemplated herein.
Article 2
ISSUE
OF WARRANTS
|
Section 2.1
|
Creation and Issue of Warrants.
|
A maximum of 10,141,987
Warrants (subject to adjustment as herein provided and which, for greater certainty, includes the Warrants underlying the Special
Warrants or otherwise directly issuable pursuant to the Subscriber’s Option) are hereby created and authorized to be issued
in accordance with the terms and conditions hereof. By written order of the Corporation, the Warrant Agent shall deliver Warrants
in certificated or uncertificated form pursuant to Section 2.5 hereof to Registered Warrantholders upon the exercise or deemed
exercise of the Special Warrants, as applicable, and record the name of the Registered Warrantholders on the Warrants register.
Registration of interests in Warrants held by the Depository may be evidenced by a position appearing on the register for Warrants
of the Warrant Agent for an amount representing the aggregate number of such Warrants outstanding from time to time.
|
Section 2.2
|
Terms of Warrants.
|
|
(1)
|
Subject to the applicable conditions for exercise set out in Article 3 having been satisfied
and subject to adjustment in accordance with Section 4.1, each whole Warrant shall entitle each Warrantholder thereof, upon
exercise at any time after the Issue Date and prior to the Expiry Time, to acquire one Warrant Share upon payment of the Exercise
Price.
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|
(2)
|
No fractional Warrants shall be issued or otherwise provided for hereunder and Warrants may only
be exercised in a sufficient number to acquire whole numbers of Warrant Shares. Any fractional Warrants shall be rounded down to
the nearest whole number and no consideration shall be paid for any such fractional Warrant.
|
|
(3)
|
Each whole Warrant shall entitle the holder thereof to such other rights and privileges as are
set forth in this Indenture.
|
|
(4)
|
The number of Warrant Shares which may be purchased pursuant to the Warrants and the Exercise Price
therefor shall be adjusted upon the events and in the manner specified in Section 4.1.
|
|
(5)
|
Neither the Corporation nor the Warrant Agent shall have any obligation to deliver Warrant Shares
upon the exercise of any Warrant if the person to whom such shares are to be delivered is a resident of a country or political
subdivision thereof in which the Warrant Shares may not lawfully be issued pursuant to applicable securities legislation. The Corporation
or the Warrant Agent may, each acting reasonably and in good faith, require any person to provide proof of an applicable exemption
from such securities legislation to the Corporation and Warrant Agent before Warrant Shares are delivered pursuant to the exercise
of any Warrant.
|
|
Section 2.3
|
Warrantholder not a Shareholder.
|
Except as may be specifically
provided herein, nothing in this Indenture or in the holding of a Warrant Certificate, entitlement to a Warrant or otherwise, shall,
in itself, confer or be construed as conferring upon a Warrantholder any right or interest whatsoever as a Shareholder, including,
but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings
of the Corporation, or the right to Dividends and other allocations.
|
Section 2.4
|
Warrants to Rank Pari Passu.
|
All Warrants shall
rank equally and without preference over each other, whatever may be the actual date of issue thereof.
|
Section 2.5
|
Form of Warrants; Warrant Certificates.
|
|
(1)
|
The Warrants may each be issued in either certificated or uncertificated form. In the event that
as of the exercise of the Special Warrants or the Subscriber’s Option (as applicable) there is no effective F-10 Supplement,
the Warrants must be issued in individually certificated form or as DRS Registration Statement only and bear the applicable legend
set forth in Section 2.8(1). All Warrants issued in certificated form shall be evidenced by a Warrant Certificate (including
all replacements issued in accordance with this Indenture), substantially in the form and bearing the applicable legends as set
out in Schedule ”A” hereto, which shall be dated as of the Issue Date, shall bear such distinguishing letters
and numbers as the Corporation may, with the approval of the Warrant Agent, prescribe, and shall be issuable in any denomination
excluding fractions. All Warrants issued to the Depository may be in either a certificated or uncertificated form, such uncertificated
form being evidenced by a book position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with
Section 2.6 and if so issued prior to the filing of an effective F-10 Supplement, shall bear or be deemed to bear the legend
set forth in Section 2.8(1).
|
|
(2)
|
Each Warrantholder by purchasing such Warrant acknowledges and agrees that the terms and conditions
set forth in the form of the Warrant Certificate set out in Schedule ”A” hereto shall apply to all Warrants and
Warrantholders regardless of whether such Warrants are issued in certificated or uncertificated form or whether such Warrantholders
are Registered Warrantholders or owners of Warrants who beneficially hold security entitlements in respect of the Warrants through
a Depository.
|
|
Section 2.6
|
Book Entry Warrants.
|
|
(1)
|
Registration of beneficial interests in and transfers of Warrants held by the Depository shall
be made only through the book entry registration system and no Warrant Certificates shall be issued in respect of such Warrants
except where physical certificates evidencing ownership in such securities are required or as set out herein or as may be requested
by the Depository, as determined by the Corporation, from time to time. Except as provided in this Section 2.6, owners of
beneficial interests in any CDS Global Warrants shall not be entitled to have Warrants registered in their names and shall not
receive or be entitled to receive Warrants in definitive form or to have their names appear in the register referred to in Section 2.9
herein. Notwithstanding any terms set out herein, Warrants having the legend set forth in Section 2.8(1) herein may not be
held in the name of the Depository or in the form of Uncertificated Warrants.
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|
(2)
|
Notwithstanding any other provision in this Indenture, no CDS Global Warrants may be exchanged
in whole or in part for Warrants registered, and no transfer of any CDS Global Warrants in whole or in part may be registered,
in the name of any person other than the Depository for such CDS Global Warrants or a nominee thereof unless:
|
|
|
(a)
|
the Depository notifies the Corporation that it is unwilling or unable to continue to act as depository
in connection with the Book Entry Warrants and the Corporation is unable to locate a qualified successor;
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|
|
(b)
|
the Corporation determines that the Depository is no longer willing, able or qualified to discharge
its responsibilities as holder of the CDS Global Warrants and the Corporation is unable to locate a qualified successor;
|
|
|
(c)
|
the Depository ceases to be a clearing agency or otherwise ceases to be eligible to be a depository
and the Corporation is unable to locate a qualified successor;
|
|
|
(d)
|
the Corporation determines that the Warrants shall no longer be held as Book Entry Warrants through
the Depository;
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|
|
(e)
|
such right is required by applicable law, as determined by the Corporation and the Corporation’s
Counsel;
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|
|
(f)
|
the Warrant is to be Authenticated in the United States or to or for the account or benefit of
a person in the United States or a U.S. Person (in which case, the Warrant Certificate shall contain the legend set forth
in Section 2.8(1), if applicable); or
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|
|
(g)
|
such registration is effected in accordance with the internal procedures of the Depository and
the Warrant Agent,
|
following which,
Warrants for those holders requesting the same shall be registered and issued to the beneficial owners of such Warrants or their
nominees as directed by the holder. The Corporation shall provide a certificate executed by an officer of the Corporation giving
notice to the Warrant Agent of the occurrence of any event outlined in Section 2.6(2)(a) to (f).
|
(3)
|
Subject to the provisions of this Section 2.6, any
exchange of CDS Global Warrants for Warrants which are not CDS Global Warrants may be made in whole or in part in accordance with
the provisions of Section 2.11, mutatis mutandis. All such Warrants issued in exchange for a CDS Global Warrant or any portion
thereof shall be registered in such names as the Depository for such CDS Global Warrants shall direct and shall be entitled to
the same benefits and be subject to the same terms and conditions (except insofar as they relate specifically to CDS Global Warrants
or to any legend required by Section 2.8(1) and the restrictions set out in such legend) as the CDS Global Warrants or portion
thereof surrendered upon such exchange.
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|
(4)
|
Every Warrant that is Authenticated upon registration or transfer of a CDS Global Warrant, or in
exchange for or in lieu of a CDS Global Warrant or any portion thereof, whether pursuant to this Section 2.6, or otherwise,
shall be Authenticated in the form of, and shall be, a CDS Global Warrant, unless such Warrant is registered in the name of a person
other than the Depository for such CDS Global Warrant or a nominee thereof.
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|
(5)
|
Notwithstanding anything to the contrary in this Indenture, subject to applicable law, the CDS
Global Warrant will be issued as an Uncertificated Warrant, unless otherwise requested in writing by the Depository or the Corporation.
|
|
(6)
|
The rights of beneficial owners of Warrants who hold securities entitlements in respect of the
Warrants through the book entry registration system shall be limited to those established by applicable law and agreements between
the Depository and the Book Entry Participants and between such Book Entry Participants and the beneficial owners of Warrants who
hold securities entitlements in respect of the Warrants through the book entry registration system, and such rights must be exercised
through a Book Entry Participant in accordance with the rules and procedures of the Depository.
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|
(7)
|
Notwithstanding anything herein to the contrary, neither the Corporation nor the Warrant Agent
nor any agent thereof shall have any responsibility or liability for:
|
|
|
(a)
|
the electronic records maintained by the Depository relating to any ownership interests or any
other interests in the Warrants or the depository system maintained by the Depository, or payments made on account of any ownership
interest or any other interest of any person in any Warrant represented by an electronic position in the book entry registration
system (other than the Depository or its nominee);
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|
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(b)
|
maintaining, supervising or reviewing any records of the Depository or any Book Entry Participant
relating to any such interest; or
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|
|
(c)
|
any advice or representation made or given by the Depository or those contained herein that relate
to the rules and regulations of the Depository or any action to be taken by the Depository on its own direction or at the direction
of any Book Entry Participant.
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|
(8)
|
The Corporation may terminate the application of this Section 2.6 in its sole discretion in
which case all Warrants shall be evidenced by Warrant Certificates registered in the name of a person other than the Depository.
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|
Section 2.7
|
Warrant Certificate.
|
|
(1)
|
For Warrants issued in certificated form, the form of
certificate representing the Warrants shall be substantially as set out in Schedule “A” hereto or such other form
as is authorized from time to time by the Warrant Agent. Each Warrant Certificate shall be Authenticated on behalf of the Warrant
Agent. Each Warrant Certificate shall be signed by at least one duly authorized signatory of the Corporation whose signature shall
appear on the Warrant Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event,
certificates so signed are as valid and binding upon the Corporation as if it had been signed manually. Any Warrant Certificate
which has a signature as hereinbefore provided shall be valid notwithstanding that any person whose signature is printed, lithographed
or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Warrant Certificates may be
engraved, printed or lithographed, or partly in one form and partly in another, as the Warrant Agent may determine.
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|
(2)
|
The Warrant Agent shall Authenticate Uncertificated Warrants (whether upon original issuance, exchange,
registration of transfer, partial payment, or otherwise) by completing its Internal Procedures and the Corporation shall, and hereby
acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Warrants under this Indenture.
Such Authentication shall be conclusive evidence that such Uncertificated Warrant has been duly issued hereunder and that the holder
or holders are entitled to the benefits of this Indenture. The register shall be final and conclusive evidence as to all matters
relating to Uncertificated Warrants with respect to which this Indenture requires the Warrant Agent to maintain records or accounts.
In case of differences between the register at any time and any other time, the register at the later time shall be controlling,
absent manifest error, and such Uncertificated Warrants are binding on the Corporation.
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|
(3)
|
Any Warrant Certificate validly issued in accordance with the terms of this Indenture in effect
at the time of issue of such Warrant Certificate shall, subject to the terms of this Indenture and applicable law, validly entitle
the holder to acquire Warrant Shares, notwithstanding that the form of such Warrant Certificate may not be in the form currently
required by this Indenture.
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|
(4)
|
No Warrant shall be considered issued and shall be valid or obligatory or shall entitle the holder
thereof to the benefits of this Indenture, until it has been Authenticated by the Warrant Agent. Authentication by the Warrant
Agent, including by way of entry on the register, shall not be construed as a representation or warranty by the Warrant Agent as
to the validity of this Indenture or of such Warrant Certificates or Uncertificated Warrants (except the due Authentication thereof)
or as to the performance by the Corporation of its obligations under this Indenture and the Warrant Agent shall in no respect be
liable or answerable for the use made of the Warrants or any of them or of the consideration thereof. Authentication by the Warrant
Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated have been duly issued hereunder
and that the holder thereof is entitled to the benefits of this Indenture.
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(5)
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No Warrant Certificate shall be considered issued and Authenticated or, if Authenticated, shall
be obligatory or shall entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by signature
by or on behalf of the Warrant Agent substantially in the form of the Warrant set out in Schedule ”A” hereto.
Such Authentication on any such Warrant Certificate shall be conclusive evidence that such Warrant Certificate is duly Authenticated
and is valid and a binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture.
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(6)
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No Uncertificated Warrant shall be considered issued and shall be obligatory or shall entitle the
holder thereof to the benefits of this Indenture, until it has been Authenticated by entry on the register of the particulars of
the Uncertificated Warrant. Such entry on the register of the particulars of an Uncertificated Warrant shall be conclusive evidence
that such Uncertificated Warrant is a valid and binding obligation of the Corporation and that the holder is entitled to the benefits
of this Indenture.
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(1)
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In the event there is no effective F-10 Supplement filed with the SEC covering the offer and sale
of the Warrants, all Warrants shall be issued in a certificated form or as DRS Registration Statements and the certificates (or
the DRS Registration Statements, as applicable) representing the Warrants (and any certificates or DRS Registration Statements
issued in exchange therefor or substitution thereof), shall bear a legend substantially in the form as follows:
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“THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES AND
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE
WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT TO
AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF
EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING SUCH
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THIS WARRANT
MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON UNLESS THIS WARRANT
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE
SECURITIES LEGISLATION OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S.
PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”
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(2)
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In the event that as of the exercise of the Warrants there is no effective Registration Statement,
the Warrant Shares shall be issued in a certificated form or as DRS Registration Statement and the certificates (or the DRS Registration
Statements, as applicable) representing such Warrant Shares (and any certificates or DRS Registration Statements issued in exchange
therefor or substitution thereof), shall bear a legend substantially in the form as follows:
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“THESE SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE
U.S. SECURITIES ACT, OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH
CASE, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF
COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
U.S. SECURITIES ACT.”
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(3)
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Each Warrant (and the Warrant Share issued upon exercise of such Warrant) and any Warrant issued
in exchange therefor or in substitution thereof (if issued prior to the earlier of: (i) the date that is four months and one day
after the date of issue of the Special Warrants; and (ii) the Qualification Date) shall bear or be deemed to bear the following
legend or such variations thereof as the Corporation may prescribe from time to time:
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“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY BEFORE FOUR MONTHS
AND ONE DAY AFTER THE ORIGINAL DATE OF ISSUANCE OF THE SPECIAL WARRANT(S).”
”WITHOUT
PRIOR WRITTEN APPROVAL OF THE CSE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED
BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF
THE CSE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL FOUR MONTHS AND ONE DAY AFTER
THE ORIGINAL DATE OF ISSUANCE OF THE SPECIAL WARRANT(S).”
provided that
if, at any time, in the opinion of counsel to the Corporation, such legend is no longer necessary or advisable under applicable
securities laws, or the holder of any such legended certificate, at the holder’s expense, provides the Corporation with evidence
satisfactory in form and substance to the Corporation (which may include an opinion of counsel satisfactory to the Corporation)
to the effect that such legend is not required, such legended certificate may thereafter be surrendered to the Corporation in exchange
for a certificate which does not bear such legend.
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(4)
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Each CDS Global Warrant if issued on a certificated basis originally issued in Canada and held
by the Depository, and each CDS Global Warrant issued in exchange therefor or in substitution thereof shall bear or be deemed to
bear the following legend or such variations thereof as the Corporation may prescribe from time to time:
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“UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”)
TO ACREAGE HOLDINGS, INC. (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF,
CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS
FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.”
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(5)
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Notwithstanding any other provisions of this Indenture, in processing and registering transfers
of Warrants, no duty or responsibility whatsoever shall rest upon the Warrant Agent to determine the compliance by any transferor
or transferee with the terms of the legends contained in Section 2.8, as applicable, or with the relevant securities laws or regulations,
including, without limitation, Regulation S, and the Warrant Agent shall be entitled to assume that all transfers that are
processed in accordance with this Indenture are legal and proper.
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Section 2.9
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Register of Warrants
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(1)
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The Warrant Agent shall maintain records and accounts concerning the Warrants, whether certificated
or uncertificated, which shall contain the information called for below with respect to each Warrant, together with such other
information as may be required by law or as the Warrant Agent may elect to record. All such information shall be kept in one set
of accounts and records which the Warrant Agent shall designate (in such manner as shall permit it to be so identified as such
by an unaffiliated party) as the register of the holders of Warrants. The information to be entered for each account in the register
of Warrants at any time shall include (without limitation):
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(a)
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the name and
address of the Registered Warrantholder, the date of Authentication thereof and the number of Warrants;
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(b)
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whether such Warrant is a Warrant Certificate or an Uncertificated Warrant and, if a Warrant Certificate,
the unique number or code assigned to and imprinted thereupon and, if an Uncertificated Warrant, the unique number or code assigned
thereto if any;
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(c)
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whether such Warrant has been cancelled; and
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(d)
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a register of transfers in which all transfers of Warrants and the date and other particulars of
each transfer shall be entered.
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The register
shall be available for inspection by the Corporation and any Warrantholder during the Warrant Agent’s regular business hours
on a Business Day and upon payment to the Warrant Agent of its reasonable fees. Any Warrantholder exercising such right of inspection
shall first provide an affidavit in form satisfactory to the Corporation and the Warrant Agent stating the name and address of
the Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders
or to influence the voting of Warrantholders at any meeting of Warrantholders.
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(2)
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Once an Uncertificated Warrant has been Authenticated,
the information set forth in the register with respect thereto at the time of Authentication may be altered, modified, amended,
supplemented or otherwise changed only to reflect exercise or proper instructions to the Warrant Agent from the holder as provided
herein, except that the Warrant Agent may act unilaterally to make purely administrative changes internal to the Warrant Agent
and changes to correct errors. Each person who becomes a holder of an Uncertificated Warrant, by his, her or its acquisition thereof
shall be deemed to have irrevocably (i) consented to the foregoing authority of the Warrant Agent to make such minor error corrections
and (ii) agreed to pay to the Warrant Agent, promptly upon written demand, the full amount of all loss and expense (including
without limitation reasonable legal fees of the Corporation and the Warrant Agent plus interest, at an appropriate then prevailing
rate of interest to the Warrant Agent) sustained by the Corporation or the Warrant Agent as a proximate result of such error if
but only if and only to the extent that such present or former holder realized any benefit as a result of such error and could
reasonably have prevented, forestalled or minimized such loss and expense by prompt reporting of the error or avoidance of accepting
benefits thereof whether or not such error is or should have been timely detected and corrected by the Warrant Agent; provided,
that no person who is a bona fide purchaser shall have any such obligation to the Corporation or to the Warrant Agent.
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Section 2.10
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Issue in Substitution for Warrant Certificates Lost, etc.
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(1)
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If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation,
subject to applicable law, and subsection Section 2.10(2) shall issue and thereupon the Warrant Agent shall certify and deliver,
a new Warrant Certificate of like tenor, and bearing the same legend, if applicable, as the one mutilated, lost, destroyed or stolen
in exchange for and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution
for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by
the Warrant Agent and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance
with its terms with all other Warrants issued or to be issued hereunder.
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(2)
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The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.10 shall
bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issuance thereof,
furnish to the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Warrant
Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent, in their sole discretion,
acting reasonably, and such applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory
to the Corporation and the Warrant Agent, in their sole discretion, and shall pay the reasonable charges of the Corporation and
the Warrant Agent in connection therewith.
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Section 2.11
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Exchange of Warrant Certificates.
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(1)
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Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with
the reasonable requirements of the Warrant Agent (including compliance with applicable securities legislation), be exchanged for
one or more other Warrant Certificates representing the same aggregate number of Warrants, and bearing the same legend, if applicable,
as represented by the Warrant Certificate or Warrant Certificates so exchanged.
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(2)
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Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is
designated by the Corporation with the approval of the Warrant Agent. Any Warrant Certificate from the holder (or such other instructions,
in form satisfactory to the Warrant Agent), tendered for exchange shall be surrendered to the Warrant Agency and cancelled by the
Warrant Agent.
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(3)
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Warrant Certificates exchanged for Warrant Certificates that bear a legend set forth in Section 2.8
shall bear the same legend, unless the Warrant Agent is otherwise instructed by counsel to the Corporation or the Corporation.
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Section 2.12
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Transfer and Ownership of Warrants.
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(1)
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The Warrants may only be transferred on the register kept by the Warrant Agent at the Warrant Agency
by the holder or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory
to the Warrant Agent only upon (a) in the case of a Warrant Certificate, surrendering to the Warrant Agent at the Warrant Agency
the Warrant Certificates representing the Warrants to be transferred together with a duly executed transfer form as set forth in
Schedule “A” attached hereto (together with a declaration for removal of legend or opinion of counsel, if required
by Sections Section 2.8(1) or Section 2.8(3), as applicable), and (b) in the case of Book Entry Warrants, in accordance
with procedures prescribed by the Depository under the book entry registration system, and (c) upon compliance with:
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(i)
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the conditions herein;
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(ii)
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such reasonable requirements as the Warrant Agent may prescribe; and
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(iii)
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all applicable securities legislation and requirements of regulatory authorities;
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and such transfer shall be duly
noted in such register by the Warrant Agent. Upon compliance with such requirements, the Warrant Agent shall issue a Warrant Certificate
to the transferee of a Warrant Certificate and shall issue an Uncertificated Warrant to the transferee of an Uncertificated Warrant,
or the Warrant Agent shall Authenticate and deliver a Warrant Certificate upon request that part of the CDS Global Warrant be certificated.
Transfers within the systems of the Depository are not the responsibility of the Warrant Agent and will not be noted on the register
maintained by the Warrant Agent.
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(2)
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If a Warrant Certificate tendered for transfer bears the legend set forth in Section 2.8(1), the Warrant Agent shall not
register such transfer unless the transferor has provided the Warrant Agent with the Warrant Certificate and such securities may
be transferred only as set forth in such Section 2.8(1).
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(3)
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Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled
to the rights and privileges attaching to the Warrants, and the issue of Warrant Shares by the Corporation upon the exercise of
Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and
the Warrant Agent with respect to such Warrants and neither the Corporation nor the Warrant Agent shall be bound to inquire into
the title of any such holder.
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(4)
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The Corporation will be entitled, and may direct the Warrant Agent, to refuse to recognize any
transfer, or enter the name of any transferee, of any Warrant on the register kept by the Warrant Agent, if such transfer would
constitute a violation of applicable securities laws or the rules, regulations or policies of any regulatory authority having jurisdiction.
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(5)
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Any Warrant Certificate issued to a transferee upon transfers contemplated by this Section 2.12
shall bear the appropriate legends, as required by applicable securities laws, as set forth in Section 2.8.
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Section 2.13
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Cancellation of Surrendered
Warrants.
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All Warrant Certificates
surrendered pursuant to Section 2.11(2), Section 2.12(1) or Section 3.2(1) shall be cancelled by the Warrant Agent
and upon such circumstances all such Uncertificated Warrants shall be deemed cancelled and so noted on the register by the Warrant
Agent. Upon request by the Corporation, the Warrant Agent shall furnish to the Corporation a cancellation certificate identifying
the Warrant Certificates so cancelled, the number of Warrants evidenced thereby, the number of Warrant Shares, if any, issued pursuant
to such Warrants and the details of any Warrant Certificates issued in substitution or exchange for such Warrant Certificates cancelled.
Article 3
EXERCISE
OF WARRANTS
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Section 3.1
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Right of Exercise.
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Subject to the provisions
of this Indenture, each Registered Warrantholder may exercise the right conferred on such holder to subscribe for and purchase
one Warrant Share for each Warrant on or after the Issue Date and prior to the Expiry Time and in accordance with the conditions
herein.
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Section 3.2
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Warrant Exercise.
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(1)
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Other
than Warrants held by the Depository, Registered Warrantholders of Warrant Certificates who wish to exercise the Warrants
held by them in order to acquire Warrant Shares must, if permitted pursuant to the terms and conditions hereunder and as set
forth in any applicable legend, complete the exercise form (the “Exercise Notice”) attached to the Warrant
Certificate(s), which may be amended by the Corporation with the consent of the Warrant Agent, if such amendment does not,
in the reasonable opinion of the Corporation and the Warrant Agent, which may be based on the advice of Counsel, materially
and adversely affect the rights, entitlements and interests of the Warrantholders, and deliver such certificate(s), the executed
Exercise Notice and a certified cheque, bank draft or money order payable to or to the order of the Corporation for the aggregate
Exercise Price to the Warrant Agent at the Warrant Agency. The Warrants represented by a Warrant Certificate shall be deemed
to be surrendered upon personal delivery of such certificate, Exercise Notice and aggregate Exercise Price or, if such documents
are sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the office referred to
above. If the Warrants are exercised pursuant to Box (B) or (C) of the Exercise Notice, the Warrant Agent will promptly forward
the Exercise Notice and related materials to the Corporation together with the request for the Corporation to confirm (a)
whether the exercise is approved, and (b) whether a U.S. Securities Act legend should be imposed on the Warrant Shares. The
Warrant Agent agrees not to issue any Warrant Shares upon exercise pursuant to Box (B) or (C) of the Exercise Notice without
the approval of the Corporation.
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(2)
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A Registered Warrantholder of Uncertificated Warrants evidenced by a security entitlement in respect of Warrants must complete
the Exercise Notice and deliver the executed Exercise Notice and a certified cheque, bank draft or money order payable to or to
the order of the Corporation for the aggregate Exercise Price to the Warrant Agent at the Warrant Agency. The Uncertificated Warrants
shall be deemed to be surrendered upon receipt of the Exercise Notice and aggregate Exercise Price or, if such documents are sent
by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the office referred to above.
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(3)
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A beneficial owner of Uncertificated Warrants by a security entitlement in respect of Warrants
in the book entry registration system who desires to exercise his or her Warrants must do so by causing a Book Entry Participant
to deliver to the Depository on behalf of the entitlement holder, notice of the owner’s intention to exercise Warrants in
a manner acceptable to the Depository. Forthwith upon receipt by the Depository of such notice, as well as payment for the aggregate
Exercise Price, the Depository shall deliver to the Warrant Agent confirmation of its intention to exercise Warrants (a “Confirmation”)
in a manner acceptable to the Warrant Agent, including by electronic means through a book based registration system, including
CDSX. An electronic exercise of the Warrants initiated by the Book Entry Participant through a book based registration system,
including CDSX, at a time when there is no Registration Statement effective covering the issuance of Warrant Shares shall constitute
a representation to both the Corporation and the Warrant Agent that the beneficial owner at the time of exercise of such Warrants
(a) is an “accredited investor” as such term is defined in in Rule 501(a) of Regulation D under the U.S. Securities
Act, or (b) is not in the United States; is not a U.S. Person and is not exercising such Warrants on behalf of a U.S. Person
or a person in the United States; and did not execute or deliver the notice of the owner’s intention to exercise such Warrants
in the United States. If the CDS Participant is not able to make or deliver the foregoing representations by initiating the electronic
exercise of the Warrants, then such Warrants shall be withdrawn from the book based registration system, including CDSX by the
CDS Participant and an individually registered Warrant Certificate shall be issued by the Warrant Agent to such Beneficial Owner
or CDS Participant and the exercise procedures set forth in Section 3.2(1) shall be followed.
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(4)
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Payment representing the aggregate Exercise Price must be provided to the appropriate office of
the Book Entry Participant in a manner acceptable to it. A notice in form acceptable to the Book Entry Participant and payment
from such beneficial holder should be provided to the Book Entry Participant sufficiently in advance so as to permit the Book Entry
Participant to deliver notice and payment to the Depository and for the Depository in turn to deliver notice and payment to the
Warrant Agent prior to the Expiry Time. The Depository will initiate the exercise by way of the Confirmation and forward the aggregate
Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to the Depository
through the book entry registration system the Warrant Shares to which the exercising Warrantholder is entitled pursuant to the
exercise. Any expense associated with the exercise process will be for the account of the entitlement holder exercising the Warrants
and/or the Book Entry Participant exercising the Warrants on its behalf.
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(5)
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By causing a Book Entry Participant to deliver notice to the Depository, a Warrantholder shall
be deemed to have irrevocably surrendered his or her Warrants so exercised and appointed such Book Entry Participant to act as
his or her exclusive settlement agent with respect to the exercise and the receipt of Warrant Shares in connection with the obligations
arising from such exercise.
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(6)
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Any notice which the Depository determines to be incomplete, not in proper form or not duly executed
shall for all purposes be void and of no force and effect and the exercise to which it relates shall be considered for all purposes
not to have been exercised thereby. A failure by a Book Entry Participant to exercise or to give effect to the settlement thereof
in accordance with the Warrantholder’s instructions will not give rise to any obligations or liability on the part of the
Corporation or Warrant Agent to the Book Entry Participant or the Warrantholder.
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(7)
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The Exercise Notice referred to in this Section 3.2 shall be signed by the Registered Warrantholder,
or its executors or administrators or other legal representatives or an attorney of the Registered Warrantholder, duly appointed
by an instrument in writing satisfactory to the Warrant Agent but such Exercise Notice need not be executed by the Depository.
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(8)
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Any exercise referred to in this Section 3.2 shall require that the entire Exercise Price
for Warrant Shares subscribed must be paid at the time of subscription and such Exercise Price and original Exercise Notice executed
by the Registered Warrantholder or the Confirmation from the Depository must be received by the Warrant Agent prior to the Expiry
Time.
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(9)
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Warrants may only be exercised pursuant to this Section 3.2 by or on behalf of a Registered
Warrantholder, as applicable, who makes the certifications set forth on the Exercise Notice set out in the Warrant Certificate
and delivers, if applicable, any opinion or other evidence as required by the Corporation.
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(10)
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If the form of Exercise Notice set forth in the Warrant Certificate shall have been amended, the
Corporation shall cause the amended Exercise Notice to be forwarded to all Registered Warrantholders.
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(11)
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Exercise Notices and Confirmations must be delivered to the Warrant Agent at any time during the
Warrant Agent’s actual business hours on any Business Day prior to the Expiry Time. Any Exercise Notice or Confirmations
received by the Warrant Agent after business hours on any Business Day other than the Expiry Date will be deemed to have been received
by the Warrant Agent on the next following Business Day.
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(12)
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Any Warrant with respect to which a Confirmation or Exercise Notice is not received by the Warrant
Agent before the Expiry Time shall be deemed to have expired and become void and all rights with respect to such Warrants shall
terminate and be cancelled.
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Section 3.3
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Prohibition on Exercise
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|
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(1)
|
Notwithstanding any provision to the contrary contained in this Warrant Indenture, no Warrantholder
may exercise any Warrant within the United States or by or on behalf of, or for the account or benefit for, any U.S. Person or
person in the United States at a time when a Registration Statement is not effective, unless an exemption from the registration
requirements to the U.S. Securities Act is available.
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(2)
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In the event that at the time of any exercise of the Warrants there is no effective Registration
Statement, the Warrants may not be exercised within the United States or by or on behalf of, or for the account or benefit of,
any U.S. Person or person in the United States.
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(3)
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Notwithstanding Section 3.3(2), Warrants may be exercised in the United States or by or on
behalf of, or for the account or benefit of, a U.S. Person or a person in the United States, provided that the Warrants are exercised
in accordance with box (B) or (C) of the Exercise Notice and the Corporation has approved the issuance of the Warrant Shares.
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Section 3.4
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Transfer Fees and Taxes.
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If any of the
Warrant Shares subscribed for are to be issued to a person or persons other than the Registered Warrantholder, the Registered
Warrantholder shall execute the form of transfer and will comply with such reasonable requirements as the Warrant Agent may
stipulate and will pay to the Corporation or the Warrant Agent on behalf of the Corporation, all applicable transfer or
similar taxes and the Corporation will not be required to issue or deliver certificates evidencing Warrant Shares unless or
until such Warrantholder shall have paid to the Corporation or the Warrant Agent on behalf of the Corporation, the amount of
such tax or shall have established to the satisfaction of the Corporation and the Warrant Agent that such tax has been paid
or that no tax is due.
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Section 3.5
|
Warrant Agency.
|
To facilitate the exchange,
transfer or exercise of Warrants and compliance with such other terms and conditions hereof as may be required, the Corporation
has appointed the Warrant Agency, as the agency at which Warrants may be surrendered for exchange or transfer or at which Warrants
may be exercised and the Warrant Agent has accepted such appointment. The Corporation may from time to time designate alternate
or additional places as the Warrant Agency (subject to the Warrant Agent’s prior approval) and will give notice to the Warrant
Agent of any proposed change of the Warrant Agency. Branch registers shall also be kept at such other place or places, if any,
as the Corporation, with the approval of the Warrant Agent, may designate. The Warrant Agent will from time to time when requested
to do so by the Corporation or any Registered Warrantholder, upon payment of the Warrant Agent’s reasonable charges, furnish
a list of the names and addresses of Registered Warrantholders showing the number of Warrants held by each such Registered Warrantholder.
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Section 3.6
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Effect of Exercise of Warrants.
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(1)
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Upon the exercise of Warrants
pursuant to and in compliance with Section 3.2 and
subject to Section 3.3 and Section 3.4,
the Warrant Shares to be issued pursuant to the Warrants exercised shall be deemed to have been issued and the person or persons
to whom such Warrant Shares are to be issued shall be deemed to have become the holder or holders of such Warrant Shares on the
Exercise Date, unless the register shall be closed on such date, in which case the Warrant Shares subscribed for shall be deemed
to have been issued and such person or persons deemed to have become the holder or holders of record of such Warrant Shares, on
the date on which such register is reopened.
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(2)
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Within two Business Days after the Exercise Date with respect to a Warrant, the Warrant Agent shall
cause to be delivered or mailed to the person or persons in whose name or names the Warrant is registered or, if so specified in
writing by the holder, cause to be delivered to such person or persons at the Warrant Agency where the Warrant Certificate was
surrendered, a certificate or certificates for the appropriate number of Warrant Shares subscribed for, or any other appropriate
evidence of the issuance of Warrant Shares to such person or persons in respect of Warrant Shares issued under the book entry registration
system.
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Section 3.7
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Partial Exercise of Warrants; Fractions.
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(1)
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The holder of any Warrants may exercise his or her right to acquire a number of whole Warrant Shares
less than the aggregate number which the holder is entitled to acquire. In the event of any exercise of a number of Warrants less
than the number which the holder is entitled to exercise, the holder of Warrants upon such exercise shall, in addition, be entitled
to receive, without charge therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate
evidence of Warrants, in respect of the balance of the Warrants held by such holder and which were not then exercised.
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(2)
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Notwithstanding anything herein contained including any adjustment provided for in Section 4.1,
the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Warrant Shares. Warrants may
only be exercised in a sufficient number to acquire whole numbers of Warrant Shares. Any fractional Warrant Shares shall be rounded
down to the nearest whole number and the holder of such Warrants shall not be entitled to any compensation in respect of any fractional
Warrant Shares which is not issued.
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Section 3.8
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Expiration of Warrants.
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Immediately after the
Expiry Time, all rights under any Warrant in respect of which the right of acquisition provided for herein shall not have been
exercised shall cease and terminate and each Warrant shall be void and of no further force or effect.
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Section 3.9
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Accounting and Recording.
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(1)
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The Warrant Agent shall
promptly account to the Corporation with respect to Warrants exercised, and shall promptly forward to the Corporation (or
into an account or accounts of the Corporation with the bank or trust company designated by the Corporation for that purpose),
all monies received by the Warrant Agent on the subscription of Warrant Shares through the exercise of Warrants. All such monies
and any securities or other instruments, from time to time received by the Warrant Agent shall be received in trust for, and shall
be segregated and kept apart by the Warrant Agent, the Warrantholders and the Corporation as their interests may appear.
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(2)
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The Warrant Agent shall record the particulars of Warrants exercised, which particulars shall include
the names and addresses of the persons who become holders of Warrant Shares on exercise and the Exercise Date, in respect thereof.
The Warrant Agent shall provide such particulars in writing to the Corporation within three Business Days of any request by the
Corporation therefor.
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Section 3.10
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Securities Restrictions.
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Notwithstanding anything
herein contained, Warrant Shares will be issued upon exercise of a Warrant only in compliance with the securities laws of any applicable
jurisdiction, and, without limiting the generality of the foregoing, the Corporation will legend the certificates representing
the Warrant Shares if, in the opinion of counsel to the Corporation, such legend is necessary in order to avoid a violation of
any securities laws of any applicable jurisdiction. For greater certainty, in the event that as of the exercise of the Warrants
there is no effective Registration Statement, the Warrant Shares shall
be issued in a certificated form or as a DRS Registration Statement and will bear the restrictions on transfer as noted in the
legend described in Section 2.8(2) above. Certificates representing Warrant Shares issued upon the exercise of Warrants
pursuant to box (B) or (C) of the Exercise Notice will, if and to the extent the Corporation directs, bear a U.S. Securities Act
legend in the form provided by the Corporation in such direction.
Article 4
ADJUSTMENT
OF NUMBER OF WARRANT SHARES AND EXERCISE PRICE
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Section 4.1
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Adjustment of Number of Warrant Shares and Exercise Price.
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The subscription rights
in effect under the Warrants for Warrant Shares issuable upon the exercise of the Warrants shall be subject to adjustment from
time to time as follows:
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(a)
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if, at any time during the Adjustment Period, the Corporation shall:
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(i)
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subdivide, re-divide or change its outstanding Subordinate Voting Shares into a greater number
of Subordinate Voting Shares;
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(ii)
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reduce, combine or consolidate its outstanding Subordinate Voting Shares into a lesser number of
Subordinate Voting Shares; or
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(iii)
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issue Subordinate Voting Shares or securities exchangeable for, or convertible into, Subordinate
Voting Shares to all or substantially all of the holders of Subordinate Voting Shares by way of stock dividend or other distribution
(other than a distribution of Subordinate Voting Shares upon the exercise of Warrants or any outstanding options);
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(any of such events in Section 4.1(a)(i),
(ii) or (iii) being called a “Subordinate Voting Share Reorganization”) then the Exercise Price shall be adjusted
as of the effective date or record date of such subdivision, re-division, change, reduction, combination, consolidation or distribution,
as the case may be, shall in the case of the events referred to in (i) or (iii) above be decreased in proportion to the number
of outstanding Subordinate Voting Shares resulting from such subdivision, re-division, change or distribution, or shall, in the
case of the events referred to in (ii) above, be increased in proportion to the number of outstanding Subordinate Voting Shares
resulting from such reduction, combination or consolidation by multiplying the Exercise Price in effect immediately prior to such
effective date or record date by a fraction, the numerator of which shall be the number of Subordinate Voting Shares outstanding
on such effective date or record date before giving effect to such Subordinate Voting Share Reorganization and the denominator
of which shall be the number of Subordinate Voting Shares outstanding as of the effective date or record date after giving effect
to such Subordinate Voting Share Reorganization (including, in the case where securities exchangeable for or convertible into Subordinate
Voting Shares are distributed, the number of Subordinate Voting Share that would have been outstanding had such securities been
exchanged for or converted into Subordinate Voting Shares on such record date or effective date). Such adjustment shall be made
successively whenever any event referred to in this Section 4.1(a) shall occur. Upon any adjustment of the Exercise Price
pursuant to Section 4.1(a), the Exchange Rate shall be contemporaneously adjusted by multiplying the number of Subordinate
Voting Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the Exercise Price in
effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;
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(b)
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if and whenever at any time during the Adjustment Period, the Corporation shall fix a record date
for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Subordinate Voting Shares
entitling them to subscribe for or purchase Subordinate Voting Shares (or securities convertible or exchangeable into Subordinate
Voting Shares) at a price per Subordinate Voting Share (or having a conversion or exchange price per Subordinate Voting Share)
less than 95% of the Current Market Price on such record date (a “Rights Offering”), the Exercise Price shall
be adjusted immediately after such record date so that it shall equal the amount determined by multiplying the Exercise Price in
effect on such record date by a fraction, of which the numerator shall be the total number of Subordinate Voting Shares outstanding
on such record date plus a number of Subordinate Voting Shares equal to the number arrived at by dividing the aggregate price of
the total number of additional Subordinate Voting Shares offered for subscription or purchase (or the aggregate conversion or exchange
price of the convertible or exchangeable securities so offered) by the Current Market Price, and of which the denominator shall
be the total number of Subordinate Voting Shares outstanding on such record date plus the total
number of additional Subordinate Voting Shares offered for subscription or purchase or into which the convertible or exchangeable
securities so offered are convertible or exchangeable; any Subordinate Voting Shares owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever
such a record date is fixed; to the extent that no such rights or warrants are exercised prior to the expiration thereof, the Exercise
Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or, if any
such rights or warrants are exercised, to the Exercise Price which would then be in effect based upon the number of Subordinate
Voting Shares (or securities convertible or exchangeable into Subordinate Voting Shares) actually issued upon the exercise of such
rights or warrants, as the case may be. Upon any adjustment of the Exercise Price pursuant to this Section 4.1(b), the Exchange
Rate will be adjusted immediately after such record date so that it will equal the rate determined by multiplying the Exchange
Rate in effect on such record date by a fraction, of which the numerator shall be the Exercise Price in effect immediately prior
to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment. Such adjustment will be made
successively whenever such a record date is fixed, provided that if two or more such record dates or record dates referred to in
this Section 4.1(b) are fixed within a period of 25 Trading Days, such adjustment will be made successively as if each
of such record dates occurred on the earliest of such record dates;
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(c)
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if and whenever at any time during the Adjustment Period the Corporation shall fix a record date
for the making of a distribution to all or substantially all the holders of its outstanding Subordinate Voting Shares of (i) securities
of any class, whether of the Corporation or any other entity (other than Subordinate Voting Shares), (ii) rights, options or warrants
to subscribe for or purchase Subordinate Voting Shares (or other securities convertible into or exchangeable for Subordinate Voting
Shares), other than pursuant to a Rights Offering; (iii) evidences of its indebtedness or (iv) any property or other assets then,
in each such case, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined
by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number
of Subordinate Voting Shares outstanding on such record date multiplied by the Current Market Price on such record date, less the
excess, if any, of the fair market value on such record date, as determined by the Corporation acting reasonably and in good faith,
of such securities or other assets so issued or distributed over the fair market value of any consideration received therefor by
the Corporation from the holders of the Subordinate Voting Shares, and of which the denominator shall be the total number of Subordinate
Voting Shares outstanding on such record date multiplied by the Current Market Price; and Subordinate Voting Shares owned by or
held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment
shall be made successively whenever such a record date is fixed; to the extent that such distribution is not so made, the Exercise
Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed. Upon any
adjustment of the Exercise Price pursuant to this Section 4.1(c), the Exchange Rate will be adjusted immediately after such
record date so that it will equal the rate determined by multiplying the Exchange Rate in effect on such record date by a fraction,
of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be
the Exercise Price resulting from such adjustment;
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(d)
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if and whenever at any time during the Adjustment Period, there is a reclassification of the Subordinate
Voting Shares or a capital reorganization of the Corporation other than as described in Section 4.1(a) or a consolidation,
amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity
(including, for greater certainty, pursuant to the plan of arrangement contemplated by the Arrangement Agreement), or a sale or
conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate,
trust, partnership or other entity, any Registered Warrantholder who has not exercised its right of acquisition prior to the effective
date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance,
upon the exercise of such right thereafter, shall be entitled to receive upon payment of the Exercise Price and shall accept, in
lieu of the number of Warrant Shares that prior to such effective date the Registered Warrantholder would have been entitled to
receive, the number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or
other entity resulting from such merger, amalgamation or consolidation, or to which such sale or conveyance may be made, as the
case may be, that such Registered Warrantholder would have been entitled to receive on such reclassification, capital reorganization,
consolidation, amalgamation, arrangement or merger, sale or conveyance, if, on the effective date thereof, as the case may be,
the Registered Warrantholder had been the registered holder of the number of Warrant Shares to which prior to such effective date
it was entitled to acquire upon the exercise of the Warrants. If determined appropriate by the Warrant Agent, relying on advice
of Counsel, to give effect to or to evidence the provisions of this Section 4.1(d), the Corporation, its successor, or such
purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any
such reclassification, capital reorganization, consolidation, amalgamation, arrangement (including, for greater certainty, pursuant
to the plan of arrangement contemplated by the Arrangement Agreement), merger, sale or conveyance, enter into an indenture which
shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights
and interests thereafter of the Registered Warrantholders to the end that the provisions set forth in this Indenture shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to
which a Registered Warrantholder is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between
the Corporation and the Warrant Agent pursuant to the provisions of this Section 4.1(d) shall be a supplemental indenture
entered into pursuant to the provisions of Article 8 hereof. Any indenture entered into between the Corporation, any successor
to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Warrant Agent shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1(d) and
which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, sales or conveyances;
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(e)
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in any case in which this Section 4.1 shall require that an adjustment shall become
effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of
such event, issuing to the Registered Warrantholder of any Warrant exercised after the record date and prior to completion of
such event the additional Warrant Shares issuable by reason of the adjustment required by such event before giving effect to
such adjustment; provided, however, that the Corporation shall deliver to such Registered Warrantholder an appropriate
instrument evidencing such Registered Warrantholder’s right to receive such additional Subordinate Voting Shares upon
the occurrence of the event requiring such adjustment and the
right to receive any distributions made on such additional Subordinate Voting Shares declared in favour of holders of record of
Subordinate Voting Shares on and after the relevant date of exercise or such later date as such Registered Warrantholder would,
but for the provisions of this Section 4.1(e), have become the holder of record of such additional Subordinate Voting Shares
pursuant to Section 4.1;
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(f)
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in any case in which Section 4.1(a)(iii), Section 4.1(b) or Section 4.1(c) require
that an adjustment be made to the Exercise Price, no such adjustment shall be made if the Registered Warrantholders of the outstanding
Warrants receive, subject to any required stock exchange or regulatory approval, the rights or warrants referred to in Section 4.1(a)(iii),
Section 4.1(b) or the shares, rights, options, warrants, evidences of indebtedness or assets referred to in Section 4.1(c),
as the case may be, in such kind and number as they would have received if they had been holders of Subordinate Voting Shares on
the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised
into Subordinate Voting Shares at the Exercise Price in effect on the applicable record date or effective date, as the case may
be;
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(g)
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the adjustments provided for in this Section 4.1 are cumulative, and shall, in the case of
adjustments to the Exercise Price be computed to the nearest whole cent and shall apply to successive subdivisions, re-divisions,
reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions
of this Section 4.1, provided that, notwithstanding any other provision of this Section, no adjustment of the Exercise Price
shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect;
provided, however, that any adjustments which by reason of this Section 4.1(g) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment;
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(h)
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after any adjustment pursuant to this Section 4.1, the term “Subordinate Voting Shares”
where used in this Indenture shall be interpreted to mean securities of any class or classes which, as a result of such adjustment
and all prior adjustments pursuant to this Section 4.1, the Registered Warrantholder is entitled to receive upon the exercise
of his Warrant, and the number of Warrant Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean
the number of Warrant Shares or other property or securities a Registered Warrantholder is entitled to receive, as a result of
such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant;
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(i)
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the purpose and intent of the adjustments provided for in this Section 4.1 is to ensure that
the rights and obligations of the Registered Warrantholder are neither diminished nor enhanced as a result of any of the events
set forth in Section 4.1 (a), (b), (c) and (d). Accordingly, the provisions of this Section 4.1 will be interpreted and
applied in accordance with such purpose and intent;
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(j)
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if the Corporation sets a record date to take any action and thereafter and before taking such
action abandons its plan to take such action, then no adjustment to the Exercise Price will be required by reason of setting such
record date;
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(k)
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upon the occurrence of each and every event set out in this Section 4.1, the provisions of
this Warrant Indenture, including the Exercise Price, will ipso facto be deemed to be amended accordingly and the Corporation
shall take all necessary action to comply with such provisions as so amended; and
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(l)
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for greater certainty, the adjustments provided for in this Section 4.1 apply, mutatis mutandis,
to the Multiple Voting Shares.
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Section 4.2
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Entitlement to Warrant Shares on Exercise of Warrant.
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All Subordinate Voting
Shares or shares of any class or other securities, which a Registered Warrantholder is at the time in question entitled to receive
on the exercise of its Warrant, whether or not as a result of adjustments made pursuant to this Article 4, shall, for the
purposes of the interpretation of this Indenture, be deemed to be Warrant Shares which such Registered Warrantholder is entitled
to acquire pursuant to such Warrant.
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Section 4.3
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No Adjustment for Certain Transactions.
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Notwithstanding anything
in this Article 4, no adjustment shall be made in the acquisition rights attached to the Warrants if the issue of Subordinate
Voting Shares is being made pursuant to this Indenture or in connection with (a) any share incentive plan or restricted share plan
or share purchase plan in force from time to time for directors, officers, employees, consultants or other service providers of
the Corporation; or (b) the satisfaction of existing instruments issued at the date hereof.
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Section 4.4
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Determination by Independent Firm.
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In the event of any
question arising with respect to the adjustments provided for in this Article 4 such question shall be conclusively determined
(acting reasonably and in good faith) by an independent firm of chartered professional accountants other than the Auditor, who
shall have access to all necessary records of the Corporation, and such determination shall be binding upon the Corporation, the
Warrant Agent, all holders and all other persons interested therein. In connection with the foregoing, the Corporation acknowledges
and agrees that for so long as funds controlled or managed by Anson Advisors Inc. beneficially own or control any Warrants, the
Corporation shall consult and agree with Anson Advisors Inc. as to the selection of the Independent Firm.
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Section 4.5
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Proceedings Prior to any Action Requiring Adjustment.
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As a condition precedent
to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any of the Warrants,
including the number of Warrant Shares which are to be received upon the exercise thereof, the Corporation shall take any action
which may, in the opinion of Counsel, be necessary in order that the Corporation has unissued and reserved in its authorized capital
and may validly and legally issue as fully paid and non-assessable all the Warrant Shares which the holders of such Warrants are
entitled to receive on the full exercise thereof in accordance with the provisions hereof.
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Section 4.6
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Certificate of Adjustment.
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The Corporation shall
from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 4.1,
deliver a certificate of the Corporation to the Warrant Agent specifying the nature of the event requiring the same and the amount
of the adjustment or readjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based, which certificate shall be supported by a certificate of the Auditor verifying such
calculation. The Warrant Agent shall rely, and shall be protected in so doing, upon the certificate of the Corporation or of the
Auditor and any other document filed by the Corporation pursuant to this Article 4 for all purposes.
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Section 4.7
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Notice of Special Matters.
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The Corporation covenants
with the Warrant Agent that, so long as any Warrant remains outstanding, it will give notice to the Warrant Agent and to the Registered
Warrantholders of its intention to fix a record date that is prior to the Expiry Date for any matter for which an adjustment may
be required pursuant to Section 4.1. Such notice shall specify the particulars of such event and the record date for such
event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have
been fixed and determined on the date on which the notice is given. The notice shall be given in each case not less than 14 days
prior to such applicable record date. If notice has been given and the adjustment is not then determinable, the Corporation shall
promptly, after the adjustment is determinable, file with the Warrant Agent a computation of the adjustment and give notice to
the Registered Warrantholders of such adjustment computation.
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Section 4.8
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No Action after Notice.
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The Corporation covenants
with the Warrant Agent that it will not close its transfer books or take any other corporate action which might deprive the Registered
Warrantholder of the opportunity to exercise its right of acquisition pursuant thereto during the period of 14 days after the giving
of the certificate or notices set forth in Section 4.6 and Section 4.7.
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Section 4.9
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Other Action.
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If the Corporation,
after the date hereof, shall take any action affecting the Subordinate Voting Shares other than action described in Section 4.1,
which in the reasonable opinion of the directors of the Corporation would materially affect the rights of Registered Warrantholders,
the Exercise Price and/or Exchange Rate, the number of Warrant Shares which may be acquired upon exercise of the Warrants shall
be adjusted in such manner and at such time, by action of the directors, acting reasonably and in good faith, as they may determine
to be equitable to the Registered Warrantholders in the circumstances, provided that no such adjustment will be made unless any
requisite prior approval of any stock exchange on which the Subordinate Voting Shares are listed for trading has been obtained.
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Section 4.10
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Protection of Warrant Agent.
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The Warrant Agent shall
not:
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(a)
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at any time be under any duty or responsibility to any Registered Warrantholder to determine whether
any facts exist which may require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed in making the same;
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(b)
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be accountable with respect to the validity or value (or the kind or amount) of any Warrant Shares
or of any other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to
any Warrant;
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(c)
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be responsible for any failure of the Corporation to issue, transfer or deliver Warrant Shares
or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with
any of the covenants contained in this Article; and
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(d)
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incur any liability or be in any way responsible for the consequences of any breach on the part
of the Corporation of any of the representations, warranties or covenants herein contained or of any acts of the directors, officers,
employees, agents or servants of the Corporation.
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Section 4.11
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Participation by Warrantholder.
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No adjustments shall
be made pursuant to this Article 4 if the Registered Warrantholders are entitled to participate in any event described in
this Article 4 on the same terms, mutatis mutandis, as if the Registered Warrantholders had exercised their Warrants prior
to, or on the effective date or record date of, such event and any such participation will be subject to the prior approval of
the CSE.
Article 5
RIGHTS
OF THE CORPORATION AND COVENANTS
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Section 5.1
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Optional Purchases by the Corporation.
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Subject to compliance
with applicable securities legislation and approval of applicable regulatory authorities, if any, the Corporation may from time
to time purchase by private contract or otherwise any of the Warrants. Any such purchase shall be made at the lowest price or prices
at which, in the opinion of the directors of the Corporation, such Warrants are then obtainable, plus reasonable costs of purchase,
and may be made in such manner, from such persons and on such other terms as the Corporation, in its sole discretion, may determine.
In the case of Warrant Certificates, Warrant Certificates representing the Warrants purchased pursuant to this Section 5.1
shall forthwith be delivered to and cancelled by the Warrant Agent and reflected accordingly on the register of Warrants. In the
case of Uncertificated Warrants, the Warrants purchased pursuant to this Section 5.1 shall be reflected accordingly on the
register of Warrants and in accordance with procedures prescribed by the Depository under the book entry registration system. No
Warrants shall be issued in replacement thereof.
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Section 5.2
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General Covenants.
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The Corporation covenants
with the Warrant Agent that so long as any Warrants remain outstanding:
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(a)
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it will reserve and keep available a sufficient number of Subordinate Voting Shares for the purpose
of enabling it to satisfy its obligations to issue Warrant Shares upon the exercise of the Warrants;
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(b)
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it will cause the Warrant Shares from time to time acquired pursuant to the exercise of the Warrants
to be duly issued and delivered in accordance with the Warrants and the terms hereof;
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(c)
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all Warrant Shares which shall be issued upon exercise of the right to acquire provided for herein
shall be fully paid and non-assessable, free and clear of all encumbrances;
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(d)
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it will use reasonable commercial efforts to maintain its existence and carry on its business in
the ordinary course, provided that this clause shall not be construed as limiting or restricting the Corporation from completing
the transactions contemplated in the Arrangement Agreement;
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(e)
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it will use reasonable commercial efforts to ensure that all Warrant Shares outstanding or issuable
from time to time (including without limitation the Warrant Shares issuable on the exercise of the Warrants) continue to be or
are listed and posted for trading on the CSE (or such other Canadian stock exchange acceptable to the Corporation), provided that
this clause shall not be construed as limiting or restricting the Corporation to agree to a consolidation, amalgamation, arrangement,
takeover bid, merger or other like transaction, including, for greater certainty, the transactions contemplated in the Arrangement
Agreement, even if the consideration being offered are not securities that are so listed and posted for trading;
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(f)
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it will use its commercially reasonable efforts to, no later than the Qualification Deadline, file
the Prospectus Supplement with the Securities Regulators and the Registration Statement with the SEC. If it has not filed the Prospectus
Supplement with the Securities Regulators and the Registration Statement with the SEC by the Qualification Deadline, it will file
such documents as soon as possible and in any event on or before March 20, 2020;
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(g)
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it will make all requisite filings under applicable Canadian securities legislation including those
necessary to remain a reporting issuer not in default in each of the provinces and other jurisdictions where it is or becomes a
reporting issuer provided that this clause shall not be construed as limiting or restricting the Corporation to agree to a consolidation,
amalgamation, arrangement, takeover bid, merger or other like transaction that would result in the Corporation ceasing to be a
reporting issuer including, for greater certainty, the transactions contemplated in the Arrangement Agreement;
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(h)
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if any instrument is required to be filed with or any permission, order or ruling is required to
be obtained from the Securities Regulators or any other step is required under any federal or provincial law of the Designated
Jurisdictions before any securities or property which a Warrantholder is entitled to receive pursuant to the automatic exercise
of a Warrant may properly and legally be delivered upon the automatic exercise of a Warrant, it shall use its reasonable best efforts
to make such filing, obtain such permission, order or ruling and take all such action, at its expense, as is required or appropriate
in the circumstances;
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(i)
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for so long as any Warrants remain outstanding, or the Purchaser’s Option remains exercisable
in whole or in part, it will use its reasonable best efforts to ensure that the certificates or DRS Registration Statements representing
the Warrant Shares which may be acquired upon automatic exercise of the Warrants and exercise of the Purchaser’s Option
will bear no legends, such that such certificates and DRS Registration Statements will constitute “good delivery”
in settlement of transactions under the rules of the Canadian stock exchange;
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(j)
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generally, it will well and truly perform and carry out all of the acts or things to be done by
it as provided in this Indenture; and
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(k)
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the Corporation will promptly notify the Warrant Agent and the Warrantholders in writing of any
default under the terms of this Warrant Indenture which remains unrectified for more than five days following its occurrence.
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Without limiting the
generality of the foregoing, notwithstanding anything herein to the contrary, nothing herein shall prevent the Corporation
from carrying out its obligations under the Arrangement Agreement.
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Section 5.3
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Warrant Agent’s Remuneration
and Expenses.
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The Corporation covenants
that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and will pay or reimburse
the Warrant Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Warrant Agent
in the administration or execution of its duties hereby created (including the reasonable compensation and the disbursements of
its Counsel and all other advisers and assistants not regularly in its employ) both before any default hereunder and thereafter
until all duties of the Warrant Agent hereunder shall be finally and fully performed, except any such expense, disbursement or
advance as may arise out of or result from the Warrant Agent’s gross negligence, wilful misconduct or bad faith. Any amount
owing hereunder and remaining unpaid after 30 days from the invoice date will bear interest at the then current rate charged by
the Warrant Agent against unpaid invoices and shall be payable upon demand. This Section shall survive the resignation or removal
of the Warrant Agent and/or the termination of this Indenture.
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Section 5.4
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Performance of Covenants by Warrant Agent.
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If the Corporation
shall fail to perform any of its covenants contained in this Indenture, the Warrant Agent may notify the Registered Warrantholders
of such failure on the part of the Corporation and may itself perform any of the covenants capable of being performed by it but,
subject to Section 9.2, shall be under no obligation to perform said covenants or to notify the Registered Warrantholders
of such performance by it. All sums expended or advanced by the Warrant Agent in so doing shall be repayable as provided in Section 5.3.
No such performance, expenditure or advance by the Warrant Agent shall relieve the Corporation of any default hereunder or of its
continuing obligations under the covenants herein contained.
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Section 5.5
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Enforceability of Warrants.
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The Corporation covenants
and agrees that it is duly authorized to create and issue the Warrants to be issued hereunder and that the Warrants, when issued
and Authenticated as herein provided, will be valid and enforceable against the Corporation in accordance with the provisions hereof
and the terms hereof and that, subject to the provisions of this Indenture, the Corporation will cause the Warrant Shares from
time to time acquired upon exercise of Warrants issued under this Indenture to be duly issued and delivered in accordance with
the terms of this Indenture.
Article 6
ENFORCEMENT
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Section 6.1
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Suits by Registered Warrantholders.
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All or any of the rights
conferred upon any Registered Warrantholder by any of the terms of this Indenture may be enforced by the Registered Warrantholder
by appropriate proceedings but without prejudice to the right which is hereby conferred upon the Warrant Agent to proceed in its
own name to enforce each and all of the provisions herein contained for the benefit of the Registered Warrantholders.
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Section 6.2
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Suits by the Corporation.
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The Corporation
shall have the right to enforce full payment of the Exercise Price of all Warrant Shares issued by the Warrant Agent to a
Registered Warrantholder hereunder and shall be entitled to demand such payment from the Registered Warrantholder or
alternatively to instruct the Warrant Agent to cancel the share certificates representing such Warrant Shares and amend the
securities register of the Corporation accordingly.
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Section 6.3
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Immunity of Shareholders, etc.
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The Warrant Agent and
the Warrantholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction
against any incorporator or any past, present or future shareholder, trustee, employee or agent of the Corporation or any successor
entity on any covenant, agreement, representation or warranty by the Corporation herein. The obligations hereunder are not personally
binding upon, nor shall resort hereunder be had to, the private property of any of the past, present or future Directors or Shareholders
of the Corporation or any of the past, present or future officers, employees or agents of the Corporation, but only the property
of the Corporation (or any successor person) shall be bound in respect hereof.
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Section 6.4
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Waiver of Default.
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Upon the happening
of any default hereunder:
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(a)
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the Registered Warrantholders of not less than 51% of the Warrants then outstanding shall have
power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in writing to instruct the Warrant Agent
to waive any default hereunder and the Warrant Agent shall thereupon waive the default upon such terms and conditions as shall
be prescribed in such requisition; or
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(b)
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the Warrant Agent shall have power to waive any default hereunder upon such terms and conditions
as the Warrant Agent may deem advisable, on the advice of Counsel, if, in the Warrant Agent’s opinion, based on the advice
of Counsel, the same shall have been cured or adequate provision made therefor;
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provided that no delay or omission of the
Warrant Agent or of the Registered Warrantholders to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act
or omission either of the Warrant Agent or of the Registered Warrantholders in the premises shall extend to or be taken in any
manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.
Article 7
MEETINGS
OF REGISTERED WARRANTHOLDERS
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Section 7.1
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Right to Convene Meetings.
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The Warrant Agent may
at any time and from time to time, and shall on receipt of a written request of the Corporation or of a Warrantholders’ Request
and upon being indemnified and funded to its reasonable satisfaction by the Corporation or by the Registered Warrantholders signing
such Warrantholders’ Request against the costs which may be incurred in connection with the calling and holding of such meeting,
convene a meeting of the Registered Warrantholders. If the Warrant Agent fails to so call a meeting within seven days after receipt
of such written request of the Corporation or such Warrantholders’ Request and the indemnity and funding given as aforesaid,
the Corporation or such Registered Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be held
in Toronto, Ontario, New York, New York, or at such other place as may be approved or determined by the Warrant Agent and the Corporation.
At least 21 days’
prior written notice of any meeting of Registered Warrantholders shall be given to the Registered Warrantholders in the manner
provided for in Section 10.2 and a copy of such notice shall be sent by mail to the Warrant Agent (unless the meeting has
been called by the Warrant Agent) and to the Corporation (unless the meeting has been called by the Corporation). Such notice shall
state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be
transacted thereat and shall contain such information as is reasonably necessary to enable the Registered Warrantholders to make
a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to
be proposed or any of the provisions of this Section 7.2.
An individual (who
need not be a Registered Warrantholder) designated in writing by the chair of the Corporation shall be chairman of the meeting
and if no individual is so designated, or if the individual so designated is not present within fifteen minutes from the time fixed
for the holding of the meeting, the Registered Warrantholders present in person or by proxy shall choose an individual present
to be chairman.
Subject to the provisions
of Section 7.11, at any meeting of the Registered Warrantholders a quorum shall consist of Registered Warrantholder(s) present
in person or by proxy and holding at least 20% of the aggregate number of all the then outstanding Warrants. If a quorum of the
Registered Warrantholders shall not be present within thirty minutes from the time fixed for holding any meeting, the meeting,
if summoned by Registered Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other case the meeting
shall be adjourned to the same day in the next week (unless such day is not a Business Day, in which case it shall be adjourned
to the next following Business Day) at the same time and place and no notice of the adjournment need be given. Any business may
be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance
with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement
of business. At the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum and may transact
the business for which the meeting was originally convened, notwithstanding that they may not be holding at least 20% of the aggregate
number of all then outstanding Warrants.
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Section 7.5
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Power to Adjourn.
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The chairman of any
meeting at which a quorum of the Registered Warrantholders is present may, with the consent of the meeting, adjourn any such meeting,
and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.
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Section 7.6
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Show of Hands.
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Every question submitted
to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an Extraordinary
Resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided,
a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or
not carried by a particular majority shall be conclusive evidence of the fact.
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Section 7.7
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Poll and Voting.
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(1)
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On every Extraordinary Resolution, and on any other question submitted to a meeting and after a
vote by show of hands when demanded by the chairman or by one or more of the Registered Warrantholders acting in person or by proxy
and holding in the aggregate at least 5% of all the Warrants then outstanding, a poll shall be taken in such manner as the chairman
shall direct. Questions other than those required to be determined by Extraordinary Resolution shall be decided by a majority of
the votes cast on the poll.
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(2)
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On a show of hands, every person who is present and entitled to vote, whether as a Registered Warrantholder
or as proxy for one or more absent Registered Warrantholders, or both, shall have one vote. On a poll, each Registered Warrantholder
present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of
each Warrant then held or represented by it. A proxy need not be a Registered Warrantholder. The chairman of any meeting shall
be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him.
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(1)
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The Warrant Agent, or the Corporation with the approval of the Warrant Agent, may from time to
time make and from time to time vary such regulations as it shall think fit for
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(a)
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the setting of the record date for a meeting for the purpose of determining Registered Warrantholders
entitled to receive notice of and to vote at the meeting;
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(b)
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the deposit of instruments appointing proxies at such place and time as the Warrant Agent, the
Corporation or the Registered Warrantholders convening the meeting, as the case may be, may in the notice convening the meeting
direct;
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(c)
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the deposit of instruments appointing proxies at some approved place or place other than the place
at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed or telecopied before
the meeting to the Corporation or to the Warrant Agent at the place where the same is to be held and for the voting of proxies
so deposited as though the instruments themselves were produced at the meeting;
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(d)
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the form of the instrument of proxy; and
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(e)
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generally for the calling of meetings of the Registered Warrantholders and the conduct of business
thereat.
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(2)
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Any regulations so
made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting as a Registered Warrantholder, or be entitled
to vote or be present at the meeting in respect thereof (subject to Section 7.9),
shall be Registered Warrantholders or proxies of Registered Warrantholders.
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Section 7.9
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Corporation and Warrant Agent
May be Represented.
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The Corporation and
the Warrant Agent, by their respective directors, officers, agents, and employees and the Counsel for the Corporation and for the
Warrant Agent may attend any meeting of the Registered Warrantholders.
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Section 7.10
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Powers Exercisable by Extraordinary Resolution.
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In addition to all
other powers conferred upon them by any other provisions of this Indenture or by law, the Registered Warrantholders at a meeting
shall, subject to the provisions of Section 7.11, have the power exercisable from time to time by Extraordinary Resolution:
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(a)
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to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of
Registered Warrantholders or the Warrant Agent in its capacity as warrant agent hereunder (subject to the Warrant Agent’s
prior consent, acting reasonably) or on behalf of the Registered Warrantholders against the Corporation whether such rights arise
under this Indenture or otherwise;
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(b)
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to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Registered
Warrantholders;
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(c)
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to direct or to authorize the Warrant Agent, subject to Section 9.2(2) hereof, to enforce
any of the covenants on the part of the Corporation contained in this Indenture or to enforce any of the rights of the Registered
Warrantholders in any manner specified in such Extraordinary Resolution or to refrain from enforcing any such covenant or right;
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(d)
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to waive, and to direct the Warrant Agent to waive, any default on the part of the Corporation
in complying with any provisions of this Indenture either unconditionally or upon any conditions specified in such Extraordinary
Resolution;
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(e)
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to restrain any Registered Warrantholder from taking or instituting any suit, action or proceeding
against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or to enforce
any of the rights of the Registered Warrantholders;
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(f)
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to direct any Registered Warrantholder who, as such, has brought any suit, action or proceeding
to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly
incurred by such Registered Warrantholder in connection therewith;
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(g)
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to assent to any change in or omission from the provisions contained in this Indenture or any ancillary
or supplemental instrument which may be agreed to by the Corporation, and to authorize the Warrant Agent to concur in and execute
any ancillary or supplemental indenture embodying the change or omission;
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(h)
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with the consent of the Corporation, such consent not to be unreasonably withheld, to remove the
Warrant Agent or its successor in office and to appoint a new warrant agent or warrant agents to take the place of the Warrant
Agent so removed; and
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(i)
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to assent to any compromise or arrangement with any creditor or creditors or any class or classes
of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation.
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Section 7.11
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Meaning of Extraordinary Resolution.
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(1)
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The expression “Extraordinary Resolution” when used in this Indenture means,
subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution (i) proposed at a meeting of Registered
Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 7 at which there
are present in person or by proxy Registered Warrantholders holding at least 20% of the aggregate number of all the then outstanding
Warrants and passed by the affirmative votes of Registered Warrantholders holding not less than 66 2/3% of the Warrants present
in person or by proxy at the meeting and voted on a poll upon such resolution; or (ii) in writing signed by holders of at least
66 2/3% of the then outstanding Warrants on any matter that would otherwise be voted upon at a meeting called to approve such resolution
as contemplated in Section 7.11(1)(i).
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(2)
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If, at the meeting at which an Extraordinary Resolution is to be considered, Registered Warrantholders
holding at least 20% of the aggregate number of all the then outstanding Warrants are not present in person or by proxy within
30 minutes after the time appointed for the meeting, then the meeting, if convened by Registered Warrantholders or on a Warrantholders’
Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than 15 or more than 60 days
later, and to such place and time as may be appointed by the chairman. Not less than 14 days’ prior notice shall be given
of the time and place of such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at
the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary
to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Registered
Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally
convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Section 7.11(1)
shall be an Extraordinary Resolution within the meaning of this Indenture notwithstanding that Registered Warrantholders holding
at least 20% of the aggregate number of all the then outstanding Warrants are not present in person or by proxy at such adjourned
meeting.
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(3)
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Subject to Section 7.14, votes on an Extraordinary Resolution shall always be given on a poll
and no demand for a poll on an Extraordinary Resolution shall be necessary.
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Section 7.12
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Powers Cumulative.
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Any one or more of
the powers or any combination of the powers in this Indenture stated to be exercisable by the Registered Warrantholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination
of powers from time to time shall not be deemed to exhaust the right of the Registered Warrantholders to exercise such power or
powers or combination of powers then or thereafter from time to time.
Minutes of all
resolutions and proceedings at every meeting of Registered Warrantholders shall be made and duly recorded in the books and
such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or
proceedings had shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every such
meeting in respect of the proceedings of which minutes shall have been made shall be deemed to have been duly convened and
held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.
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Section 7.14
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Instruments in Writing.
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All actions which may
be taken and all powers that may be exercised by the Registered Warrantholders at a meeting held as provided in this Article 7
may also be taken and exercised by Registered Warrantholders holding at least 66 2/3% of the aggregate number of all then outstanding
Warrants by an instrument in writing signed in one or more counterparts by such Registered Warrantholders in person or by attorney
duly appointed in writing, and the expression “Extraordinary Resolution” when used in this Indenture shall include
an instrument so signed.
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Section 7.15
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Binding Effect of Resolutions.
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Every resolution and
every Extraordinary Resolution passed in accordance with the provisions of this Article 7 at a meeting of Registered Warrantholders
shall be binding upon all the Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed
by Registered Warrantholders in accordance with Section 7.14 shall be binding upon all the Warrantholders, whether signatories
thereto or not, and each and every Warrantholder and the Warrant Agent (subject to the provisions for indemnity herein contained)
shall be bound to give effect accordingly to every such resolution and instrument in writing.
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Section 7.16
|
Holdings by Corporation Disregarded.
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In determining whether
Registered Warrantholders holding Warrants evidencing the required number of Warrants are present at a meeting of Registered Warrantholders
for the purpose of determining a quorum or have concurred in any consent, waiver, Extraordinary Resolution, Warrantholders’
Request or other action under this Indenture, Warrants owned legally or beneficially by the Corporation shall be disregarded in
accordance with the provisions of Section 10.8.
Article 8
SUPPLEMENTAL
INDENTURES
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Section 8.1
|
Provision for Supplemental Indentures for Certain Purposes.
|
From time to time,
the Corporation (when authorized by action of the directors of the Corporation) and the Warrant Agent may, subject to the provisions
hereof and subject to the prior approval of the CSE, as necessary, and they shall, when so directed in accordance with the provisions
hereof, execute and deliver by their proper officers, indentures or instruments supplemental hereto, which thereafter shall form
part hereof, for any one or more or all of the following purposes:
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(a)
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setting forth any adjustments resulting from the application of the provisions of Article 4;
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(b)
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adding to the provisions hereof such additional covenants and enforcement provisions as, in the
opinion of Counsel, are necessary or advisable in the circumstances, provided that the same are not in the opinion of the Warrant
Agent, relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders;
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(c)
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giving effect to any Extraordinary Resolution passed as provided in Section 7.11;
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(d)
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making such provisions not inconsistent with this Indenture as may be necessary or desirable with
respect to matters or questions arising hereunder or for the purpose of obtaining a listing or quotation of the Warrants on any
stock exchange or quotation system, provided that such provisions are not, in the opinion of the Warrant Agent, relying on the
advice of Counsel, prejudicial to the interests of the Registered Warrantholders;
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(e)
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adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision
for the exchange of Warrants, and making any modification in the form of the Warrant Certificates which does not affect the substance
thereof;
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(f)
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modifying any of the provisions of this Indenture, including relieving the Corporation from any
of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative
or effective only if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such modification or relief in no
way prejudices any of the rights of the Registered Warrantholders or of the Warrant Agent, and provided further that the Warrant
Agent may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate
protection to the Warrant Agent when the same shall become operative;
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(g)
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providing for the issuance of additional Warrants hereunder, including Warrants in excess of the
number set out in Section 2.1 and any consequential amendments hereto as may be required by the Warrant Agent relying on the
advice of Counsel; and
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(h)
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for any other purpose not inconsistent with the terms of this Indenture, including the correction
or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that
in the opinion of the Warrant Agent, relying on the advice of Counsel, the rights of the Warrant Agent and of the Registered Warrantholders
are in no way prejudiced thereby.
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Section 8.2
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Successor Entities.
|
In the case of the
consolidation, amalgamation, arrangement, merger or transfer of the undertaking or assets of the Corporation as an entirety or
substantially as an entirety to or with another entity (“successor entity”), the successor entity resulting
from such consolidation, amalgamation, arrangement, merger or transfer (if not the Corporation) shall expressly assume, by supplemental
indenture satisfactory in form to the Warrant Agent and executed and delivered to the Warrant Agent, the due and punctual performance
and observance of each and every covenant and condition of this Indenture to be performed and observed by the Corporation.
Article 9
CONCERNING
THE WARRANT Agent
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Section 9.1
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Trust Indenture Legislation.
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(1)
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If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a
mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail.
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(2)
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The Corporation and the Warrant Agent agree that each will, at all times in relation to this Indenture
and any action to be taken hereunder, observe and comply with and be entitled to the benefits of Applicable Legislation.
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Section 9.2
|
Rights and Duties of Warrant Agent.
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(1)
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In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture,
the Warrant Agent shall act honestly and in good faith and exercise that degree of care, diligence and skill that a reasonably
prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve
the Warrant Agent from liability for its own gross negligent action, wilful misconduct, bad faith or fraud under this Indenture.
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(2)
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The obligation of the Warrant Agent to commence or continue any act, action or proceeding for the
purpose of enforcing any rights of the Warrant Agent or the Registered Warrantholders hereunder shall be conditional upon the Registered
Warrantholders furnishing, when required by notice by the Warrant Agent, sufficient funds to commence or to continue such act,
action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to protect and to hold harmless the Warrant
Agent and its officers, directors, employees and agents, against the costs, charges and expenses and liabilities to be incurred
thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require
the Warrant Agent to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid.
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(3)
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The Warrant Agent may, before commencing or at any time during the continuance of any such act,
action or proceeding, require the Registered Warrantholders, at whose instance it is acting to deposit with the Warrant Agent the
Warrants Certificates held by them, for which Warrants the Warrant Agent shall issue receipts.
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(4)
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Every provision of this Indenture that by its terms relieves the Warrant Agent of liability or
entitles it to rely upon any evidence submitted to it is subject to the provisions of Applicable Legislation.
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Section 9.3
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Evidence, Experts and Advisers.
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(1)
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In addition to the reports, certificates, opinions and other evidence required by this Indenture,
the Corporation shall furnish to the Warrant Agent such additional evidence of compliance with any provision hereof, and in such
form, as may be prescribed by Applicable Legislation or as the Warrant Agent may reasonably require by written notice to the Corporation.
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(2)
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In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good
faith, rely as to the truth of the statements and the accuracy of the opinions expressed in statutory declarations, opinions, reports,
written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Warrant
Agent pursuant to a request of the Warrant Agent, provided that such evidence complies with Applicable Legislation and that the
Warrant Agent complies with Applicable Legislation and that the Warrant Agent examines the same and determines that such evidence
complies with the applicable requirements of this Indenture.
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(3)
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Whenever it is provided in this Indenture or under Applicable
Legislation that the Corporation shall deposit with the Warrant Agent resolutions, certificates, reports, opinions, requests,
orders or other documents, it is intended that the truth, accuracy and good faith on the effective date thereof and the facts
and opinions stated in all such documents so deposited shall, in each and every such case, be conditions precedent to the right
of the Corporation to have the Warrant Agent take the action to be based thereon.
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(4)
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The Warrant Agent may employ or retain such Counsel, accountants, appraisers or other experts or
advisers as it may reasonably require for the purpose of discharging its duties hereunder and may pay reasonable remuneration for
all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct
or negligence on the part of any such experts or advisers who have been appointed with due care by the Warrant Agent.
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(5)
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The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on
the opinion or advice of or information obtained from any Counsel, accountant, appraiser, engineer or other expert or adviser,
whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in the administration
of the agency hereof.
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Section 9.4
|
Documents, Monies, etc. Held by Warrant Agent.
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Until released in accordance
with this Indenture, any funds received hereunder shall be kept in segregated records of the Warrant Agent and the Warrant Agent
shall place the funds in segregated trust accounts of the Warrant Agent at one or more of the Canadian Chartered Banks listed in
Schedule 1 of the Bank Act (Canada) (“Approved Bank”). All amounts held by the Warrant Agent pursuant
to this Indenture shall be held by the Warrant Agent for the Corporation and the delivery of the funds to the Warrant Agent shall
not give rise to a debtor-creditor or other similar relationship. The amounts held by the Warrant Agent pursuant to this Indenture
are at the sole risk of Corporation and, without limiting the generality of the foregoing, the Warrant Agent shall have no responsibility
or liability for any diminution of the funds which may result from any deposit made with an Approved Bank pursuant to this Section 9.4,
including any losses resulting from a default by the Approved Bank or other credit losses (whether or not resulting from such a
default). The parties hereto acknowledge and agree that the Warrant Agent will have acted prudently in depositing the funds at
any Approved Bank and that the Warrant Agent is not required to make any further inquiries in respect of any such bank. The Warrant
Agent may hold cash balances constituting part or all of such monies and need not, invest same and the Warrant Agent shall not
be liable to account for any profit to any parties to this Indenture or to any other person or entity.
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Section 9.5
|
Actions by Warrant Agent to Protect Interest.
|
The Warrant Agent shall
have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect
or enforce its interests and the interests of the Registered Warrantholders.
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Section 9.6
|
Warrant Agent Not Required to Give Security.
|
The Warrant Agent shall
not be required to give any bond or security in respect of the execution
of the agency and powers of this Indenture or otherwise in respect of the premises.
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Section 9.7
|
Protection of Warrant Agent.
|
By way of supplement
to the provisions of any law for the time being relating to the Warrant Agent, it is expressly declared and agreed as follows:
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|
(a)
|
the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in
this Indenture or in the Warrant Certificates (except in the authentication of the Warrant Agent on the Warrant Certificates) or
be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation;
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(b)
|
nothing herein contained shall impose any obligation on the Warrant Agent to see to or to require
evidence of the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto;
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|
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(c)
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the Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof;
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(d)
|
the Warrant Agent shall not incur any liability or responsibility whatever or be in any way responsible
for the consequence of any breach on the part of the Corporation of any of its covenants herein contained or of any acts of any
directors, officers, employees, agents or servants of the Corporation; and
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(e)
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the Corporation hereby indemnifies and agrees to hold harmless the Warrant Agent, its affiliates,
their officers, directors, employees, agents, successors and assigns (the “Indemnified Parties”) from and against
any and all liabilities whatsoever, losses, damages, penalties, claims, demands, actions, suits, proceedings, costs, charges, assessments,
judgments, expenses and disbursements, including reasonable legal fees and disbursements of whatever kind and nature which may
at any time be imposed on or incurred by or asserted against the Indemnified Parties, or any of them, whether at law or in equity,
in any way caused by or arising, directly or indirectly, in respect of any act, deed, matter or thing whatsoever made, done, acquiesced
in or omitted in or about or in relation to the execution of the Indemnified Parties’ duties, or any other services that
Warrant Agent may provide in connection with or in any way relating to this Indenture. The Corporation agrees that its liability
hereunder shall be absolute and unconditional regardless of the correctness of any representations of any third parties and regardless
of any liability of third parties to the Indemnified Parties, and shall accrue and become enforceable without prior demand or any
other precedent action or proceeding; provided that the Corporation shall not be required to indemnify the Indemnified Parties
in the event of the gross negligence, wilful misconduct or fraud of the Warrant Agent, and this provision shall survive the resignation
or removal of the Warrant Agent or the termination or discharge of this Indenture.
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Section 9.8
|
Replacement of Warrant Agent; Successor by Merger.
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(1)
|
The Warrant Agent may resign its agency and be discharged from all further duties and
liabilities hereunder, subject to this Section 9.8, by giving to the Corporation not less than 60 days’ prior
notice in writing or such shorter prior notice as the Corporation may accept as sufficient. The Registered Warrantholders by
Extraordinary Resolution shall have power at any time to remove the existing Warrant Agent and to appoint a new warrant
agent. In the event of the Warrant Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going
into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new warrant
agent unless a new warrant agent has already been appointed by the Registered Warrantholders; failing such appointment by the
Corporation, the retiring Warrant Agent or any Registered Warrantholder may apply to a judge of the Province of Ontario on
such notice as such judge may direct, for the appointment of a new warrant agent; but any new warrant agent so appointed by
the Corporation or by the Court shall be subject to removal as aforesaid by the Registered Warrantholders. Any new warrant
agent appointed under any provision of this Section 9.8 shall be an entity authorized to carry on the business of a
trust company in one or more province of Canada and, if required by the Applicable Legislation for any other provinces, in
such other provinces. On any such appointment the new warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as Warrant Agent hereunder.
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(2)
|
Upon the appointment of a successor warrant agent, the Corporation shall promptly notify the Registered
Warrantholders thereof in the manner provided for in Section 10.2.
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(3)
|
Any Warrant Certificates Authenticated but not delivered by a predecessor Warrant Agent may be
Authenticated by the successor Warrant Agent in the name of the predecessor or successor Warrant Agent.
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(4)
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Any corporation into which the Warrant Agent may be merged or consolidated or amalgamated, or any
corporation resulting therefrom to which the Warrant Agent shall be a party, or any corporation succeeding to substantially the
corporate trust business of the Warrant Agent shall be the successor to the Warrant Agent hereunder without any further
act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as successor Warrant
Agent under Section 9.8(1).
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Section 9.9
|
Conflict of Interest.
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(1)
|
The Warrant Agent represents to the Corporation that at the time of execution and delivery hereof
no material conflict of interest exists between its role as a warrant agent hereunder and its role in any other capacity and agrees
that in the event of a material conflict of interest arising hereafter it will, within 90 days after ascertaining that it has such
material conflict of interest, either eliminate the same or assign its agency hereunder to a successor Warrant Agent approved by
the Corporation and meeting the requirements set forth in Section 9.8(1)). Notwithstanding the foregoing provisions of this
Section 9.9(1), if any such material conflict of interest exists or hereafter shall exist, the validity and enforceability
of this Indenture and the Warrant Certificate shall not be affected in any manner whatsoever by reason thereof.
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(2)
|
Subject to Section 9.9(1), the Warrant Agent, in its personal or any other capacity, may buy,
lend upon and deal in securities of the Corporation and generally may contract and enter into financial transactions with the Corporation
without being liable to account for any profit made thereby.
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Section 9.10
|
Acceptance of Agency.
|
The Warrant Agent hereby
accepts the agency in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein
set forth.
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Section 9.11
|
Warrant Agent Not to be Appointed Receiver.
|
The Warrant Agent and
any person related to the Warrant Agent shall not be appointed a receiver, a receiver and manager or liquidator of all or any part
of the assets or undertaking of the Corporation.
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Section 9.12
|
Authorization to Carry on
Business
|
The Warrant Agent represents
to the Corporation that as at the date of the execution and delivery of this Indenture, it is duly authorized and qualified to
carry on the business of a trust company in the Provinces of British Columbia and Alberta.
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Section 9.13
|
Warrant Agent Not Required to Give Notice of Default.
|
The Warrant Agent shall
not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless
and until it shall have been required so to do under the terms hereof; nor shall the Warrant Agent be required to take notice of
any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default
desired to be brought to the attention of the Warrant Agent and in the absence of any such notice the Warrant Agent may for all
purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein. Any such notice shall in no way limit any discretion herein given
to the Warrant Agent to determine whether or not the Warrant Agent shall take action with respect to any default.
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Section 9.14
|
Anti-Money Laundering.
|
|
(1)
|
Each party to this Indenture other than the Warrant Agent hereby represents to the Warrant Agent
that any account to be opened by, or interest to be held by the Warrant Agent in connection with this Indenture, for or to the
credit of such party, either (i) is not intended to be used by or on behalf of any third party; or (ii) is intended to be used
by or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the
Warrant Agent’s prescribed form as to the particulars of such third party.
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(2)
|
The Warrant Agent shall retain the right not to act and shall not be liable for refusing to act
if, due to a lack of information or for any other reason whatsoever, the Warrant Agent, in its sole judgment, determines that such
act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist or economic sanctions legislation,
regulation or guideline. Further, should the Warrant Agent, in its sole judgment, determine at any time that its acting under this
Indenture has resulted in its being in non-compliance with any applicable anti-money laundering, anti-terrorist or economic sanctions
legislation, regulation or guideline, then it shall have the right to resign on ten days’ written notice to the other
parties to this Indenture, provided (i) that the Warrant Agent’s written notice shall describe the circumstances of such
non-compliance; and (ii) that, if such circumstances are rectified to the Warrant Agent’s satisfaction within such 10-day
period, then such resignation shall not be effective.
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Section 9.15
|
Compliance with Privacy Code.
|
The parties acknowledge
that the Warrant Agent may, in the course of providing services hereunder, collect or receive financial and other personal information
about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof,
and use such information for the following purposes:
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|
(a)
|
to provide the services required under this Indenture and other services that may be requested
from time to time;
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|
|
(b)
|
to help the Warrant Agent manage its servicing relationships with such individuals;
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(c)
|
to meet the Warrant Agent’s legal and regulatory requirements; and
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(d)
|
if Social Insurance Numbers are collected by the Warrant Agent, to perform tax reporting and to
assist in verification of an individual’s identity for security purposes.
|
Each party acknowledges
and agrees that the Warrant Agent may receive, collect, use and disclose personal information provided to it or acquired by it
in the course of its acting as agent hereunder for the purposes described above and, generally, in the manner and on the terms
described in its Privacy Code, which the Warrant Agent shall make available on its website (www.odysseytrust.com) or upon request,
including revisions thereto. The Warrant Agent may transfer personal information to other companies in or outside of Canada that
provide data processing and storage or other support in order to facilitate the services it provides.
Further, each party
agrees that it shall not provide or cause to be provided to the Warrant Agent any personal information relating to an individual
who is not a party to this Indenture unless that party has assured itself that such individual understands and has consented to
the aforementioned uses and disclosures.
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Section 9.16
|
Securities Exchange Commission Certification.
|
The Corporation confirms
that it has either (i) a class of securities registered pursuant to Section 12 of the U.S. Exchange Act; or (ii) a reporting obligation
pursuant to Section 15(d) of the U.S. Exchange Act, and has provided the Warrant Agent with an Officers’ Certificate (in
a form provided by the Warrant Agent), if so requested by the Warrant Agent in writing, certifying such reporting obligation and
other information as requested by the Warrant Agent. The Corporation covenants that in the event that any such registration or
reporting obligation shall be terminated by the Corporation in accordance with the U.S. Exchange Act, the Corporation shall promptly
notify the Warrant Agent of such termination and such other information as the Warrant Agent may require at the time. The Corporation
acknowledges that the Warrant Agent is relying upon the foregoing representation and covenants in order to meet certain SEC obligations
with respect to those clients who are filing with the SEC.
Article 10
GENERAL
|
Section 10.1
|
Notice to the Corporation and the Warrant Agent.
|
|
(1)
|
Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation
or the Warrant Agent shall be deemed to be validly given if delivered, sent by registered letter, postage prepaid, of if faxed
or emailed:
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(a)
|
If to the Corporation:
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Acreage Holdings, Inc.
366 Madison Avenue,
11th Floor
New York, NY 10017
USA
Attn: ###############################
Email: ##########################
with a copy to (which shall not constitute
notice):
DLA Piper (Canada) LLP
Suite
6000, 1 First Canadian Place
PO Box 367, 100 King St West
Toronto, ON M5X 1E2
Attn: ##############
E-Mail: ##########################
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(b)
|
If to the Warrant Agent:
|
Odyssey Trust Company
Stock Exchange Tower
1230 - 300 5th Avenue SW
Calgary AB T2P 3C4
|
|
Attention:
|
###############
|
Email: ##########################
and any such notice delivered
in accordance with the foregoing shall be deemed to have been received and given on the date of delivery or, if mailed, on the
fifth Business Day following the date of mailing such notice or, if faxed, on the next Business Day following the date of transmission.
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(2)
|
The Corporation or the Warrant Agent, as the case may be, may from time to time notify the other
in the manner provided in Section 10.1(1) of a change of address which, from the effective date of such notice and until changed
by like notice, shall be the address of the Corporation or the Warrant Agent, as the case may be, for all purposes of this Indenture.
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(3)
|
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal
employees, any notice to be given to the Warrant Agent or to the Corporation hereunder could reasonably be considered unlikely
to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to
which it is addressed, as provided in Section 10.1(1), or given by fax or other means of prepaid, transmitted and recorded
communication.
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Section 10.2
|
Notice to Registered Warrantholders.
|
|
(1)
|
Unless otherwise provided herein, notice to the Registered Warrantholders under the provisions
of this Indenture shall be valid and effective if delivered or sent by ordinary prepaid post addressed to such holders at their
post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively received and
given on the date of delivery or, if mailed, on the third Business Day following the date of mailing such notice. In the event
that Warrants are held in the name of the Depository, a copy of such notice shall also be sent by electronic communication to the
Depository and shall be deemed received and given on the day it is so sent.
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(2)
|
If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving postal employees, any notice to be given to the Registered Warrantholders hereunder could reasonably
be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to such Registered
Warrantholders to the address for such Registered Warrantholders contained in the register maintained by the Warrant Agent or
such notice may be given, at the Corporation’s expense, by means of publication in the Globe and Mail, National Edition,
or any other English language daily newspaper or newspapers of general circulation in Canada, in each two successive weeks, the
first such notice to be published within five Business Days of such event, and any such notice published shall be deemed
to have been received and given on the latest date the publication takes place.
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|
Section 10.3
|
Ownership of Warrants.
|
The Corporation and
the Warrant Agent may deem and treat the Registered Warrantholders as the absolute owner thereof for all purposes, and the Corporation
and the Warrant Agent shall not be affected by any notice or knowledge to the contrary except where the Corporation or the Warrant
Agent is required to take notice by statute or by order of a court of competent jurisdiction. The receipt of any such Registered
Warrantholder of the Warrant Shares which may be acquired pursuant thereto shall be a good discharge to the Corporation and the
Warrant Agent for the same and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such
holder except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent
jurisdiction.
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Section 10.4
|
Counterparts.
|
This Indenture may
be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and notwithstanding their date of execution they shall be deemed to be dated as of
the date hereof. Delivery of an executed copy of the Indenture by electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy will be deemed to be execution and delivery of this Indenture as of the date
hereof.
In this Warrant Indenture
all references to “$” or any money amount are to United States dollars, unless otherwise noted.
|
Section 10.6
|
Satisfaction and Discharge of Indenture.
|
Upon the earlier of:
|
|
(a)
|
the date by which there shall have been delivered to the Warrant Agent for exercise or cancellation
all Warrants theretofor Authenticated hereunder, in the case of Warrant Certificates (or such other instructions, in a form satisfactory
to the Warrant Agent), in the case of Uncertificated Warrants, or by way of standard processing through the book entry registration
system in the case of a CDS Global Warrant; and
|
and if all certificates or other
entry on the register representing Warrant Shares required to be issued in compliance with the provisions hereof have been
issued and delivered hereunder or to the Warrant Agent in accordance with such provisions, this Indenture shall cease to be
of further effect and the Warrant Agent, on demand of and at the cost and expense of the Corporation and upon delivery to the
Warrant Agent of a certificate of the Corporation stating that all conditions precedent to the satisfaction and discharge of
this Indenture have been complied with, shall execute proper instruments acknowledging satisfaction of and discharging this
Indenture. Notwithstanding the foregoing, the indemnities provided to the Warrant Agent by the Corporation hereunder shall
remain in full force and effect and survive the termination of this Indenture.
|
Section 10.7
|
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders.
|
Nothing in this Indenture
or in the Warrants, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the
Registered Warrantholders, as the case may be, any legal or equitable right, remedy or claim under this Indenture, or under any
covenant or provision herein or therein contained, all such covenants and provisions being for the sole benefit of the parties
hereto and the Registered Warrantholders.
|
Section 10.8
|
Subordinate Voting Shares or Warrants Owned by the Corporation - Certificate to be Provided.
|
For the purpose of
disregarding any Warrants owned legally or beneficially by the Corporation in Section 7.16, the Corporation shall provide
to the Warrant Agent, from time to time, a certificate of the Corporation setting forth as at the date of such certificate:
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|
(a)
|
the names (other than the name of the Corporation) of the Registered Warrantholders which, to the
knowledge of the Corporation, are owned by or held for the account of the Corporation; and
|
|
|
(b)
|
the number of Warrants owned legally or beneficially by the Corporation;
|
and the Warrant Agent,
in making the computations shall be entitled to rely on such certificate without any additional evidence.
|
Section 10.9
|
Severability.
|
If, in any jurisdiction,
any provision of this Indenture or its application to any party or circumstance is restricted, prohibited or unenforceable, such
provision will, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability
without invalidating the remaining provisions of this Indenture and without affecting the validity or enforceability of such provision
in any other jurisdiction or without affecting its application to other parties or circumstances.
|
Section 10.10
|
Force Majeure.
|
No party shall be liable
to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision
contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes,
or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions
or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because
of any delay that is excusable under this Section.
|
Section 10.11
|
Assignment, Successors and
Assigns.
|
Neither of the parties
hereto may assign its rights or interest under this Indenture, except as provided in Section 9.8 in the case of the Warrant
Agent, or as provided in Section 8.2 in the case of the Corporation. Subject thereto, this Indenture shall enure to the benefit
of and be binding upon the parties hereto and their respective successors and permitted assigns.
|
Section 10.12
|
Rights of Rescission and Withdrawal for Holders.
|
Should a holder of
Warrants exercise any legal, statutory, contractual or other right of withdrawal or rescission that may be available to it, and
the holder’s funds which were paid on exercise have already been released to the Corporation by the Warrant Agent, the Warrant
Agent shall not be responsible for ensuring the exercise is cancelled and a refund is paid back to the holder. In such cases, the
holder shall seek a refund directly from the Corporation and subsequently, the Corporation, upon surrender to the Corporation or
the Warrant Agent of any underlying Warrant Shares or other securities that may have been issued, or such other procedure as agreed
to by the parties hereto, shall instruct the Warrant Agent in writing, to cancel the exercise and any such underlying Warrant Shares
or other securities on the register, which may have already been issued upon the Warrant exercise. In the event that any payment
is received from the Corporation by virtue of the holder being a shareholder for such Warrants that were subsequently rescinded,
such payment must be returned to the Corporation by such holder. The Warrant Agent shall not be under any duty or obligation to
take any steps to ensure or enforce the return of the funds pursuant to this section, nor shall the Warrant Agent be in any other
way responsible in the event that any payment is not delivered or received pursuant to this section. Notwithstanding the foregoing,
in the event that the Corporation provides the refund to the Warrant Agent for distribution to the holder, the Warrant Agent shall
return such funds to the holder as soon as reasonably practicable, and in so doing, the Warrant Agent shall incur no liability
with respect to the delivery or non-delivery of any such funds.
IN WITNESS WHEREOF
the parties hereto have executed this Indenture under the hands of their proper officers in that behalf as of the date first written
above.
|
|
ACREAGE
HOLDINGS, INC.
|
|
|
|
|
|
By:
|
/s/ Glen Leibowitz
|
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Name: Glen Leibowitz
|
|
|
|
Title: Chief Financial Officer
|
|
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ODYSSEY TRUST COMPANY
|
|
|
|
|
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By:
|
/s/ Dan Sander
|
|
|
|
Name: Dan Sander
|
|
|
|
Title: VP, Corporate Trust
|
|
|
By:
|
/s/ Gloria Gherasim
|
|
|
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Name: Gloria Gherasim
|
|
|
|
Title: Director, Client Services
|
Signature page to Warrant Indenture
Schedule
“A”
Form of
Warrant
THE WARRANTS EVIDENCED HEREBY ARE EXERCISABLE
AT OR BEFORE 4:00 PM (TORONTO, ONTARIO TIME) ON [INSERT DATE THAT IS 60 MONTHS FROM THE ISSUE DATE] (THE “EXPIRY
DATE”) AFTER WHICH TIME THE WARRANTS EVIDENCED HEREBY SHALL BE DEEMED TO BE VOID AND OF NO FURTHER FORCE OR EFFECT.
Insert if required under Section 2.8(1)
“THESE SECURITIES AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S.
SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN COMPLIANCE
WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (2) PURSUANT TO REGISTRATION UNDER THE U.S. SECURITIES ACT, OR (3) PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AND, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE
STATE SECURITIES LAWS, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR
OTHER EVIDENCE OF EXEMPTION IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING
TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.
THIS WARRANT MAY NOT BE EXERCISED IN THE
UNITED STATES OR BY OR ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON UNLESS THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE
STATE SECURITIES LEGISLATION OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. ”UNITED
STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”
Insert if required under Section 2.8(3)
”UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY SHALL NOT TRADE THE SECURITY BEFORE FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL
DATE OF ISSUANCE OF THE SPECIAL WARRANT(S).”
”WITHOUT PRIOR WRITTEN APPROVAL
OF THE CSE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE CSE OR OTHERWISE
IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL FOUR MONTHS AND ONE DAY AFTER THE ORIGINAL DATE OF
ISSUANCE OF THE SPECIAL WARRANT(S).”
For all Warrants registered in the name
of the Depository, also include the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“CDS”) TO ACREAGE HOLDINGS,
INC. (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN
AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.
WARRANT
To acquire Subordinate Voting Shares of
ACREAGE
HOLDINGS, INC.
(existing under the laws of British Columbia,
Canada)
Warrant
Certificate No. ●
|
Certificate for ● Warrants,
each entitling the holder to acquire one (1) Subordinate Voting Share
CUSIP ●
ISIN ●
|
THIS IS TO CERTIFY THAT, for value
received,
(the “Warrantholder”)
is the registered holder of the number of Class A subordinate voting share purchase warrants (the “Warrants”)
of Acreage Holdings, Inc. (the “Corporation”) specified above, and is entitled, on exercise of these Warrants
upon and subject to the terms and conditions set forth herein and in the Warrant Indenture, to purchase at any time before the
Expiry Time (as defined below) on [Insert Date that is 60 months from the Issue Date] (the “Expiry Date”)
one fully paid and non-assessable Class A subordinate voting share without par value in the capital of the Corporation as constituted
on the date hereof (a “Subordinate Voting Share”) for each Warrant, subject to adjustment in accordance with
the terms of the Warrant Indenture (as hereinafter defined). “Expiry Time” means 4:00 p.m. (Toronto, Ontario
time) on the Expiry Date.
The right to purchase Subordinate Voting
Shares may only be exercised by the Warrantholder within the time set forth above by:
(a) duly
completing and executing the exercise form (the “Exercise Form”) attached hereto; and
(b) surrendering
this warrant certificate (the “Warrant Certificate”), with the Exercise Form to the Warrant Agent at the principal
office of the Warrant Agent, in ###########, together with a certified cheque, bank draft or money order in the lawful money
of Canada payable to or to the order of the Corporation in an amount equal to the purchase price of the Subordinate Voting Shares
so subscribed for.
The surrender of this Warrant Certificate,
the duly completed Exercise Form and payment as provided above will be deemed to have been effected only on personal delivery thereof
to, or if sent by mail or other means of transmission on actual receipt thereof by, the Warrant Agent at its principal office as
set out above.
Subject to adjustment thereof in the events
and in the manner set forth in the Warrant Indenture hereinafter referred to, the exercise price payable for each Subordinate Voting
Share upon the exercise of Warrants shall be $5.80 per Subordinate Voting Share (the “Exercise Price”).
Certificates for the Subordinate Voting
Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein
or, if so specified in the Exercise Form, delivered to such persons at the office where this Warrant Certificate is surrendered.
If fewer Subordinate Voting Shares are purchased than the number that can be purchased pursuant to this Warrant Certificate, the
holder hereof will be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Subordinate
Voting Shares not so purchased. No fractional Subordinate Voting Shares will be issued upon exercise of any Warrant.
This Warrant Certificate evidences Warrants
of the Corporation issued or issuable under the provisions of a warrant indenture (which indenture together with all other instruments
supplemental or ancillary thereto is herein referred to as the “Warrant Indenture”) dated as of February 10,
2020 between the Corporation and Odyssey Trust Company, as Warrant Agent, to which Warrant Indenture reference is hereby
made for particulars of the rights of the holders of Warrants, the Corporation and the Warrant Agent in respect thereof and the
terms and conditions on which the Warrants are issued and held, all to the same effect as if the provisions of the Warrant Indenture
were herein set forth, to all of which the holder, by acceptance hereof, assents. Any capitalized term in this Warrant Certificate
that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture. The Corporation will furnish
to the holder, on request and without charge, a copy of the Warrant Indenture.
Notwithstanding any provision contained
herein to the contrary, the Warrantholder shall not exercise any portion of the Warrants if the exercise of such portion of the
Warrants would result in the Warrantholder, together with its affiliates and parties acting jointly and in concert with such persons
(the “Attribution Group”) beneficially owning, or having control or direction over, 10% or more of the outstanding
Subordinate Voting Shares (the “Warrant Ownership Threshold”). For purposes of calculating the Warrant Ownership
Threshold, the number of Subordinate Voting Shares beneficially owned, or controlled or directed by, the Attribution Group shall
include the number of Subordinate Voting Shares issuable upon exercise of such portion of the Warrants with respect to which such
determination is being made, but shall exclude the number of Subordinate Voting Shares which are issuable upon (i) exercise of
the Warrants in respect of which such determination is not being made and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Attribution Group or securities available to be borrowed under securities lending arrangements
by any member of the Attribution Group that are, in each case, subject to a limitation on conversion or exercise analogous to the
restrictions set forth in this paragraph.1
On presentation at the principal office
of the Warrant Agent as set out above, subject to the provisions of the Warrant Indenture and on compliance with the reasonable
requirements of the Warrant Agent, one or more Warrant Certificates may be exchanged for one or more Warrant Certificates entitling
the holder thereof to purchase in the aggregate an equal number of Subordinate Voting Shares as are purchasable under the Warrant
Certificate(s) so exchanged.
1 This
paragraph is to be included only for Warrants issued to Anson.
The Warrant Indenture contains provisions
for the adjustment of the Exercise Price payable for each Subordinate Voting Share upon the exercise of Warrants and the number
of Subordinate Voting Shares issuable upon the exercise of Warrants in the events and in the manner set forth therein.
The Warrant Indenture also contains provisions
making binding on all holders of Warrants outstanding thereunder resolutions passed at meetings of holders of Warrants held in
accordance with the provisions of the Warrant Indenture and instruments in writing signed by Warrantholders of Warrants entitled
to purchase a specific majority of the Subordinate Voting Shares that can be purchased pursuant to such Warrants.
Nothing contained in this Warrant Certificate,
the Warrant Indenture or elsewhere shall be construed as conferring upon the holder hereof any right or interest whatsoever as
a holder of Subordinate Voting Shares or any other right or interest except as herein and in the Warrant Indenture expressly provided.
In the event of any discrepancy between anything contained in this Warrant Certificate and the terms and conditions of the Warrant
Indenture, the terms and conditions of the Warrant Indenture shall govern.
Warrants may only be transferred in compliance
with the conditions of the Warrant Indenture on the register to be kept by the Warrant Agent in #########, or such other
registrar as the Corporation, with the approval of the Warrant Agent, may appoint at such other place or places, if any, as may
be designated, upon surrender of this Warrant Certificate to the Warrant Agent or other registrar accompanied by a written instrument
of transfer in form and execution satisfactory to the Warrant Agent or other registrar and upon compliance with the conditions
prescribed in the Warrant Indenture and with such reasonable requirements as the Warrant Agent or other registrar may prescribe
and upon the transfer being duly noted thereon by the Warrant Agent or other registrar.
The Warrants evidenced hereby shall not
be exercised by the holder hereof at any time that a registration statement under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”) registering the Subordinate Voting Shares issuable upon the exercise of
the Warrants evidenced hereby is not effective, unless an exemption from the registration requirements of the U.S. Securities Act
is available and such holder provides evidence of the availability of such exemption reasonably satisfactory to the Corporation
and the Warrant Agent, including an opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing
and in form and substance reasonably satisfactory to the Corporation) to such effect.
In this Warrant Certificate all references
to “$” or any money amount are to United States dollars, unless otherwise noted.
Time is of the essence hereof.
This Warrant Certificate will not be valid
for any purpose until it has been countersigned by or on behalf of the Warrant Agent from time to time under the Warrant Indenture.
The parties hereto have declared that they
have required that these presents and all other documents related hereto be in the English language. Les parties aux présentes
déclarent qu’elles ont exigé que la présente convention, de même que tous les documents s’y
rapportant, soient rédigés en anglais.
IN WITNESS WHEREOF the Corporation
has caused this Warrant Certificate to be duly executed as of ___________, 2020.
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ACREAGE HOLDINGS, INC.
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By:
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Authorized Signatory
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Countersigned and Registered by:
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ODYSSEY TRUST COMPANY
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By:
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Authorized Signatory
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Date:
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FORM OF TRANSFER
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TO:
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Odyssey Trust Company
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FOR VALUE
RECEIVED the undersigned hereby sells, assigns and transfers to _________________________________________________________________________________________________________________________
___________________________________(print
name and address) a total of ____________________ Warrants represented by this Warrant Certificate and hereby irrevocably
constitutes and appoints ____________________ as its attorney with full power of substitution to transfer the said securities on
the appropriate register of the Warrant Agent.
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¨
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Check this box if the transfer is being made within the United States
or to, or for the account or benefit of, a “U.S. person” (as defined in Rule 902(k) of Regulation S under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act”)). The undersigned represents, warrants
and certifies that the transfer of the Warrants is being completed pursuant to an exemption from the registration requirements
of the U.S. Securities Act and any applicable state securities laws, in which case the undersigned has furnished to the Corporation
and the Warrant Agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation
and the Warrant Agent to such effect.
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DATED this ____ day of_________________,
20____.
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SPACE FOR GUARANTEES OF SIGNATURES (BELOW)
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)
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__________________________________
Signature of Transferor
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_________________________________
Guarantor’s Signature/Stamp
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__________________________________
Name of Transferor
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REASON FOR TRANSFER – For US Residents
only (where the individual(s) or corporation receiving the securities is a US resident). Please select only one (see instructions
below).
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¨Gift
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¨Estate
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¨Private Sale
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¨Other (or no change in ownership)
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Date of Event (Date of gift, death or
sale): Value per Warrant on the date of event:
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¨CAD OR ¨USD
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CERTAIN REQUIREMENTS RELATING TO TRANSFERS
– READ CAREFULLY
The signature(s) of the
transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration
or enlargement, or any change whatsoever. All securityholders or a legally authorized representative must sign this form. The signature(s)
on this form must be guaranteed in accordance with the transfer agent’s then current guidelines and requirements at the time
of transfer. Notarized or witnessed signatures are not acceptable as guaranteed signatures. As at the time of closing, you may
choose one of the following methods (although subject to change in accordance with industry practice and standards):
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Canada and the USA: A Medallion Signature Guarantee obtained from a member of an acceptable
Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Many commercial banks, savings banks, credit unions, and all broker
dealers participate in a Medallion Signature Guarantee Program. The Guarantor must affix a stamp bearing the actual words “Medallion
Guaranteed”, with the correct prefix covering the face value of the certificate.
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Canada: A Signature Guarantee obtained from an authorized officer of the Royal Bank of Canada,
Scotia Bank or TD Canada Trust. The Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”, sign
and print their full name and alpha numeric signing number. Signature Guarantees are not accepted from Treasury Branches, Credit
Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate
signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature
& Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guaranteed” Stamp)
obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a Medallion Signature Guarantee
with the correct prefix covering the face value of the certificate.
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Outside North America: For holders located outside North America, present the certificates(s)
and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate
which is a member of an acceptable Medallion Signature Guarantee Program. The corresponding affiliate will arrange for the signature
to be over-guaranteed.
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OR
The signature(s) of the transferor(s) must
correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement,
or any change whatsoever. The signature(s) on this form must be guaranteed by an authorized officer of Royal Bank of Canada, Scotia
Bank or TD Canada Trust whose sample signature(s) are on file with the transfer agent, or by a member of an acceptable Medallion
Signature Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed signatures are not acceptable as guaranteed signatures.
The Guarantor must affix a stamp bearing the actual words: “SIGNATURE GUARANTEED”, “MEDALLION GUARANTEED”
OR “SIGNATURE & AUTHORITY TO SIGN GUARANTEE”, all in accordance with the transfer agent’s then current guidelines
and requirements at the time of transfer. For corporate holders, corporate signing resolutions, including certificate of incumbency,
will also be required to accompany the transfer unless there is a “SIGNATURE & AUTHORITY TO SIGN GUARANTEE” Stamp
affixed to the Form of Transfer obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust
or a “MEDALLION GUARANTEED” Stamp affixed to the Form of Transfer, with the correct prefix covering the face value
of the certificate.
REASON FOR TRANSFER
– FOR US RESIDENTS ONLY
Consistent with US IRS
regulations, Odyssey Trust Company is required to request cost basis information from US securityholders. Please indicate the reason
for requesting the transfer as well as the date of event relating to the reason. The event date is not the day in which the transfer
is finalized, but rather the date of the event which led to the transfer request (i.e. date of gift, date of death of the securityholder,
or the date the private sale took place).
EXERCISE FORM
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TO:
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Acreage
Holdings, Inc.
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AND TO:
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Odyssey Trust Company
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The undersigned holder
of the Warrants evidenced by this Warrant Certificate hereby exercises the right to acquire ____________ (A) Subordinate Voting
Shares of Acreage Holdings, Inc.
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Total Exercise Price Payable:
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((A) multiplied by $5.80, subject to adjustment)
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The undersigned hereby
exercises the right of such holder to be issued, and hereby subscribes for, Subordinate Voting Shares that are issuable pursuant
to the exercise of such Warrants on the terms specified in such Warrant Certificate and in the Warrant Indenture.
The undersigned hereby
acknowledges that the undersigned is aware that the Subordinate Voting Shares received on exercise may be subject to restrictions
on resale under applicable securities legislation.
Any capitalized
term herein that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture.
As at the time of exercise
hereunder, the undersigned represents, warrants and certifies as follows:
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(A)
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The undersigned holder (i) at the time of exercise
of the Warrants and execution and delivery of this Exercise Form is not in the United States (as defined in Regulation S under
the United States Securities Act of 1933, as amended (the “U.S. Securities Act”)); (ii) is not a U.S. Person
(as defined in Regulation S under the U.S. Securities Act); (iii) is not exercising the Warrants for the account or benefit of
a U.S. Person or a person in the United States; (iv) did not receive an offer to exercise the Warrants in the United States; and
(v) represents and warrants that the exercise of the Warrants and the acquisition of the Warrant Shares occurred in an “offshore
transaction” (as defined under Regulation S under the U.S. Securities Act); OR
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(B)
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The undersigned holder has delivered to the Corporation
an opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance
reasonably satisfactory to the Corporation) to the effect that the securities are registered pursuant to the U.S. Securities Act
or an exemption from the registration requirements thereof and applicable state securities laws is available; OR
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(C)
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The undersigned holder represents to the Corporation
that (i) the undersigned is a U.S. Person or a person in the United States, (ii) the undersigned was the original purchaser of
the Special Warrants from the Corporation and acquired the Warrants upon exercise of the Special Warrants or the undersigned is
a transferee pursuant to Section 2.12 of the Warrant Indenture, and (iii) the undersigned is an “accredited investor”
within the meaning of Rule 501(a) of Regulation D under the U.S. Securities Act on the date hereof.
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It is understood that
the Corporation and Odyssey Trust Company may require evidence to verify the foregoing representation. If Box B above is checked,
holders are encouraged to consult with the Corporation in advance to determine that the legal opinion tendered in connection with
the exercise will be satisfactory in form and substance to the Corporation.
The undersigned hereby
irrevocably directs that the said Subordinate Voting Shares be issued, registered and delivered as follows:
Name(s) in Full and Social
Insurance Number(s)
(if applicable)
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Address(es)
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Number of
Subordinate Voting
Shares
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Please print full name
in which certificates representing the Subordinate Voting Shares are to be issued. If any Subordinate Voting Shares are to be issued
to a person or persons other than the registered holder, the registered holder must pay to the Warrant Agent all exigible transfer
taxes or other government charges, if any, and the Form of Transfer must be duly executed.
Once completed and
executed, this Exercise Form must be mailed or delivered to Odyssey Trust Company, c/o Corporate Trust.
DATED this ____day
of _____, 20__.
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Witness
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(Signature of Warrantholder, to be the same as appears on the face of this Warrant Certificate)
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Name of Registered Warrantholder
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¨ Please
check if the certificates representing the Subordinate Voting Shares are to be delivered at the office where this Warrant Certificate
is surrendered, failing which such certificates will be mailed to the address set out above. Certificates will be delivered or
mailed as soon as practicable after the surrender of this Warrant Certificate to the Warrant Agent.
Exhibit 99.1
Acreage
Announces Comprehensive Financing Transactions
New
York, NY – February 7, 2020 – Acreage Holdings, Inc. (“Acreage” or “Company”) (CSE: ACRG.U)
(OTCQX: ACRGF) (FSE: 0VZ), one of the largest vertically integrated cannabis operators in the U.S., today announced it entered
into agreements in respect of the following financing transactions (collectively, the “Financing Transactions”):
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US$100,000,000 credit facility (the “Credit Facility”) with an institutional lender
(the “Institutional Lender”), with US$49,000,000 available to be drawn down at First Closing (as defined below)
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US$50,000,000 private loan transaction to provide cash collateral for the Credit Facility (the
“Loan Transaction”)
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US$30,000,000 private placement of special warrants (the “Private Placement”) and an
option to acquire a further US$20,000,000 of special warrants (the “Option”)
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Benefits of the Financing Transactions:
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Capital Needs - Satisfies the near-term capital requirements of Acreage and its subsidiaries
and creates a path for further borrowings pursuant to the Credit Facility up to $100 million in aggregate
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Closing of the Private Placement and the first tranche of the Credit Facility will provide access
to gross proceeds of approximately $79 million
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Availability of further $50 million under Credit Facility (and total additional availability of
$70 million if the Option is exercised)
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Non-Dilutive to Canopy Transaction - the consideration per share to be received by Acreage
shareholders upon completion of the previously approved plan of arrangement with Canopy Growth is not impacted by the Financing
Transactions
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Financial Position - the Financing Transactions significantly improve Acreage’s financial
position to continue to execute on its vision while establishing paths for further additional non-dilutive and shareholder-friendly
financing transactions
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Kevin Murphy, Chairman and CEO of Acreage
said, “In a time of limited capital availability for our industry, I am excited to announce these proposed transactions to
strengthen our balance sheet, further enabling us to execute our plan to be a leading consumer cannabis company in the U.S. In
the course of these transactions, we have cemented a relationship with a well-capitalized institutional lender that has the capacity
to provide additional credit facilities as necessary.”
ADDITIONAL TRANSACTION DETAILS
Credit Facility
A subsidiary of Acreage (the “Borrower”)
may draw down up to US$100,000,000 from the Institutional Lender under the Credit Facility in three tranches, with the first advance,
of US$49,000,000, expected to be received in February 2020, subject to satisfaction of the closing conditions including closing
of the Loan Transaction (“First Closing”).
Interest under the Credit Facility advances
will be payable monthly as follows: (a) for the first year, 2.55% per annum on the first advance, 1.25% per annum on the second
advance, and a rate to be negotiated for the third advance; and (b) for the second year, a rate to be negotiated. Advances made
pursuant to the Credit Facility will be secured by a guarantee from the IP Borrower (as defined below) and security over the US$50,000,000
of the proceeds from the Loan Transaction (the “Cash Collateral”). The Borrower may drawdown on the remaining US$51,000,000
of the Credit Facility if such additional advances are secured by cash collateral equal to the additional amounts borrowed plus
US$1,000,000. The Institutional Lender will not have security in any of Acreage’s or its subsidiaries’ other property
or assets. The Credit Facility has a two-year term and matures, subject to acceleration in certain limited instances, on the date
that is two years from First Closing.
Acreage expects to use the advances for
working capital and general corporate purposes.
Loan Transaction
In order to fund the Cash Collateral, an
Acreage subsidiary (the “IP Borrower”) will borrow US$50,000,000 in the aggregate (the “Borrowed Amount”)
from IP Investment Company, LLC (the “Lender”). Kevin Murphy, Acreage’s Chief Executive Officer, is lending US$21,0000,000
of the Borrowed Amount to the Lender in connection with the completion of the Lender’s loan to the IP Borrower. Acreage has
been advised that Mr. Murphy will not be a member, an officer nor a director of the Lender and that Mr. Murphy will be entitled
to receive, assuming full repayment of the Borrowed Amount at maturity, US$23,100,000 along with up to 304,001 Interest Shares
(as defined below). The maturity date for borrowings under the Loan Transaction, subject to acceleration in certain instances,
will be 366 days from the closing date of the Loan Transaction.
Monthly interest under the Loan Transaction
will be satisfied by the IP Borrower delivering to the Lender 83,333 Acreage Class A subordinate voting shares
(“Subordinate Voting Shares”) per month, or 1,000,000 Subordinate Voting Shares in the aggregate (the
“Interest Shares”). Acreage is required to use commercially reasonable efforts to ensure that the Interest
Shares are not subject to resale restrictions.
The Lender will be granted a security interest
in the non-U.S. intellectual property owned by Acreage and its affiliates (the “IP Security”). If the IP Borrower has
not repaid the principal amount outstanding at maturity along with an additional repayment amount, being an aggregate of US$55,000,000,
the Lender shall have the right to enforce its IP Security and sell such collateral to a third party in satisfaction of the IP
Borrower’s obligations to the Lender. In the event that the sale of the IP Security does not take place, the Lender may require
Acreage to issue up to 20,000,000 Subordinate Voting Shares, with all net proceeds of the offering payable to the Lender in satisfaction
of the repayment amount owing to it. If the Lender does not receive at least US$55,000,000 from the net proceeds of such offering
and Acreage does not make a cash payment in respect of any shortfall, certain subsidiaries of Acreage will be required to dispose
of assets (“Secured Assets”) in transactions to make up the difference between US$55,000,000 and the net proceeds from
such offering.
If, prior to the date that is four
months from the closing of the Credit Facility, Acreage or its affiliates has not (a) borrowed or otherwise raised
debt or equity capital from any person of at least an additional US$65,000,000, or (b) repaid US$20,000,000 of the principal
amount of the Borrowed Amount by (i) paying US$22,000,000 to the Lender and concurrently delivering to the
Lender that number of Interest Shares equal to 48% of the Interest Shares that have yet to be delivered to the Lender,
the Lender shall have the right to accelerate the maturity of US$20,000,000 of the principal amount of the Borrowed
Amount. If this acceleration occurs, (a) certain Secured Assets will be transferred to the Lender in satisfaction of
the maturing amount, and (b) a number of Interest Shares equal to 48% of the Interest Shares that have yet to
be delivered to the Lender shall be immediately delivered by the IP Borrower. If the Secured Assets cannot be
transferred for regulatory reasons, Acreage and/or its applicable subsidiaries will make arrangements to provide the economic
benefits thereof to the Lender.
The Lender shall have the right to put
any Interest Shares that it still owns upon maturity of the Loan Transaction to the IP Borrower at a put price of
US$4.50 per Interest Share for a period of 10 business days following the maturity date.
Closing of the Loan Transaction is expected
to occur in February, 2020 and is subject to execution of definitive transaction documents, required consent and approval, closing
of the Private Placement, approval of the Canadian Securities Exchange (“CSE”) and customary closing conditions.
The participation of Kevin Murphy in the
Loan Transaction constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101
- Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The
Company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101
contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in respect of related party participation in the placement
as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration
for, the transaction, insofar as it involved the related parties (being Mr. Murphy), exceeded 25% of the Company’s market
capitalization (as determined under MI 61-101). Further details will be included in a material change report to be filed
by the Company. The material change report will not be filed more than 21 days prior to closing of the Loan Transaction
due to the timing of the announcement of the Loan Transaction and the anticipated closing thereof occurring in less than 21 days.
Private Placement
Acreage also announced today the Private
Placement of US$30,000,000 of special warrants ("Special Warrants") at a price of US$4.93 (the “Issue Price”)
per Special Warrant. The Special Warrants shall be automatically exercised (without payment of any further consideration) into
units of the Company (the “Units”) on the earliest to occur of: (i) the date that is three business days following
the date on which the Company files a prospectus supplement (the “Qualification Prospectus Supplement”) to the Company’s
base shelf prospectus dated August 8, 2019 (the “Base Shelf Prospectus”) with the applicable securities regulatory
authorities in the Province of Ontario and each of the jurisdictions in Canada in which the Special Warrants are sold (collectively,
the “Securities Commissions”) qualifying the distribution of the Units issuable upon exercise of the Special Warrants,
and (ii) the date that is four months and one day after the Closing Date (as hereinafter defined) (the “Automatic Conversion
Date”), subject to adjustment in certain events.
Each Unit will consist of one Subordinate
Voting Share and one Subordinate Voting Share purchase warrant of the Company (a “Warrant”). Each Warrant will be exercisable
to acquire one subordinate voting share of the Company (a “Warrant Share”) for a period of five years following the
Closing Date (as hereinafter defined) of the Private Placement at an exercise price of US$5.80 per Warrant Share, subject to adjustment
in certain events.
At the closing of the Private Placement,
the lead subscriber will be granted the Option to purchase, at the Issue Price per Special Warrant, up to US$20,000,000 of additional
Special Warrants or, if the Qualification Prospectus Supplement has been filed prior to the time of exercise, Units,
exercisable at the lead subscriber’s option at any time up until 8:00 a.m. (Eastern time) on March 16, 2020.
The Qualification Prospectus Supplement shall also qualify the distribution of the Units issuable upon exercise of such
additional Special Warrants (if the Option is exercised prior to filing the Qualification Prospectus Supplement)
or issuable upon exercise of the Option (if the Option has not been exercised prior to the filing of the Qualification Prospectus
Supplement).
The net proceeds from the Private Placement
will be used for working capital and general corporate purposes.
Canaccord Genuity Corp. is acting as bookrunner
and lead agent (the “Agent”) on a fully marketed, “best efforts” private placement basis.
The Special Warrants shall be offered and
sold by private placement to “accredited investors” within the meaning of National Instrument 45-106 - Prospectus
Exemptions and other exempt purchasers only in those provinces of Canada in which a receipt (or deemed receipt) has been issued
for the Base Shelf Prospectus by the applicable securities regulatory authority.
The Special Warrants and the Warrants will
not be listed on any stock exchange. The Company intends to apply to list the Subordinate Voting Shares and the Warrant Shares
on the CSE.
The Special Warrants issued pursuant to
the Private Placement will be subject to a statutory four month and one day hold period following the Closing Date subject to the
earlier clearing of the Qualification Prospectus Supplement qualifying the distribution of the Units issuable upon exercise of
the Special Warrants.
Closing of the Private Placement is expected
to occur on or about February 7, 2020 (the “Closing Date”). Closing of the Private
Placement is subject to customary closing conditions, including, without limitation, receipt of all regulatory approvals.
This press release shall not constitute
an offer to sell or the solicitation of an offer to buy any securities in the United States. The Special Warrants being offered
have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities
Act”) or the securities laws of any state of the United States and may not be offered or sold in the United States or to,
or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act) absent registration or
an applicable exemption from the registration requirements. This news release will not constitute an offer to sell or the solicitation
of an offer to buy nor will there be any sale of the securities in any state of the United States in which such offer, solicitation
or sale would be unlawful.
ABOUT ACREAGE
Headquartered
in New York City, Acreage is one of the largest vertically integrated, multi-state operators of cannabis licenses and assets in
the U.S., according to publicly available information. Acreage owns licenses to operate or has management or consulting services
or other agreements in place with license holders to assist in operations in 20 states (including pending acquisitions) with a
population of approximately 180 million Americans, and an estimated 2022 total addressable market of US$16.7 billion in legal cannabis
sales, according to Arcview Market Research. Acreage is dedicated to building and scaling operations to create a seamless, consumer-focused
branded cannabis experience. Acreage debuted its national retail store brand, The Botanist, in 2018 and its award-winning
consumer brands, The Botanist and Live Resin Project in 2019.
On June 27, 2019
Acreage implemented an arrangement under section 288 of the Business Corporations Act (British Columbia) (the “Arrangement”)
with Canopy Growth. Pursuant to the Arrangement, the Acreage articles were amended to provide Canopy Growth with an option to acquire
all of the issued and outstanding shares in the capital of Acreage, with a requirement to do so, upon a change in federal laws
in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation)
or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”),
subject to the satisfaction of the conditions set out in the arrangement agreement entered into between Acreage and Canopy Growth
on April 18, 2019, as amended on May 15, 2019 (the “Arrangement Agreement”). Acreage will continue to operate as a
stand-alone entity and to conduct its business independently, subject to compliance with certain covenants contained in the Arrangement
Agreement. Upon the occurrence or waiver of the Triggering Event, Canopy Growth will exercise the option and, subject to the satisfaction
or waiver of certain conditions to closing set out in the Arrangement Agreement, acquire (the “Acquisition”) each of
the Subordinate Voting Shares (following the automatic conversion of the Class B proportionate voting shares and Class C multiple
voting shares of Acreage into Subordinate Voting Shares) in exchange for the payment of 0.5818 of a common share of Canopy Growth
per Subordinate Voting Share (subject to adjustment in accordance with the terms of the Arrangement Agreement). If the Acquisition
is completed, Canopy Growth will acquire all of the Acreage Shares, Acreage will become a wholly owned subsidiary of Canopy Growth
and Canopy Growth will continue the operations of Canopy Growth and Acreage on a combined basis. For more information about the
Arrangement and the Acquisition please see the respective information circulars of each of Acreage and Canopy Growth dated May
17, 2019, which are available on Canopy Growth’s and Acreage’s respective profiles on SEDAR at www.sedar.com.
For additional information regarding Canopy Growth, please see Canopy Growth’s profile on SEDAR at www.sedar.com.
FORWARD LOOKING STATEMENTS
This news release
and each of the documents referred to herein contains “forward-looking information” within the meaning of applicable
Canadian and United States securities legislation. All statements, other than statements of historical fact, included herein are
forward-looking information, including, for greater certainty, statements regarding the financing transactions described herein
meeting Acreage’s capital requirements, the closing of the Credit Facility, Loan Transaction, Private Placement and the use
of proceeds thereof, the execution of definitive documentation in respect of the Loan Transaction, the filing of the Qualification
Prospectus, future access to capital, and the proposed transaction with Canopy Growth, including the anticipated benefits and likelihood
of completion thereof.
Generally,
forward-looking information may be identified by the use of forward-looking terminology such as “plans”,
“expects” or “does not expect”, “proposed”, “is expected”,
“budgets”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates” or “does not anticipate”, or “believes”, or variations of such words and
phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might
occur or be achieved. There can be no assurance that such forward-looking information will prove to be accurate, and actual
results and future events could differ materially from those anticipated in such forward-looking information. This
forward-looking information reflects Acreage’s current beliefs and is based on information currently available to
Acreage and on assumptions Acreage believes are reasonable. Forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of
Acreage to be materially different from those expressed or implied by such forward-looking information. Such risks and other
factors may include, but are not limited to: the ability of the parties to receive, in a timely manner and on satisfactory
terms, the necessary regulatory approvals; the available funds of Acreage and the anticipated use of such funds; the
availability of financing opportunities; the ability of Acreage and Canopy Growth to satisfy, in a timely manner, the
conditions to the completion of the Acquisition; the likelihood of completion of the Acquisition; other expectations and
assumptions concerning the transactions contemplated between Acreage and Canopy Growth; legal and regulatory risks inherent
in the cannabis industry; risks associated with economic conditions, dependence on management and currency risk; risks
relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks; risks relating to
anti-money laundering laws and regulation; other governmental and environmental regulation; public opinion and perception of
the cannabis industry; risks related to contracts with third-party service providers; risks related to the enforceability of
contracts; reliance on the expertise and judgment of senior management of Acreage; risks related to proprietary intellectual
property and potential infringement by third parties; the concentrated voting control of Acreage’s founder and the
unpredictability caused by Acreage’s capital structure; risks relating to the management of growth; increasing
competition in the industry; risks inherent in an agricultural business; risks relating to energy costs; risks associated to
cannabis products manufactured for human consumption including potential product recalls; reliance on key inputs, suppliers
and skilled labor; cybersecurity risks; ability and constraints on marketing products; fraudulent activity by employees,
contractors and consultants; tax and insurance related risks; risks related to the economy generally; risk of litigation;
conflicts of interest; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and
effect service outside of Canada; risks related to future acquisitions or dispositions; sales by existing shareholders; and
limited research and data relating to cannabis. A description of additional assumptions used to develop such forward-looking
information and a description of additional risk factors that may cause actual results to differ materially from
forward-looking information can be found in Acreage’s disclosure documents, including the Circular and Acreage’s
Annual Information Form for the year ended December 31, 2018 filed on April 29, 2019, on the SEDAR website
at www.sedar.com. Although Acreage has attempted to identify important factors that could cause actual results to differ
materially from those contained in forward-looking information, there may be other factors that cause results not to be as
anticipated, estimated or intended. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are
further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans,
intentions or expectations upon which they are placed will occur. Forward-looking information contained in this news release
is expressly qualified by this cautionary statement. The forward-looking information contained in this news release
represents the expectations of Acreage as of the date of this news release and, accordingly, is subject to change after such
date. However, Acreage expressly disclaims any intention or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, except as expressly required by applicable securities
law.
Neither the Canadian
Securities Exchange nor its Regulation Service Provider has reviewed and does not accept responsibility for the adequacy or accuracy
of the content of this news release.
# # #
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Investor Contacts:
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Media Contact:
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Steve West
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Howard Schacter
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Vice President, Investor Relations
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Vice President of Communications
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Investors@acreageholdings.com
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h.schacter@acreageholdings.com
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646-600-9181
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646-600-9181
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