Canopy Growth Corp 00-0000000 false 0001737927 0001737927 2023-04-13 2023-04-13

 

 

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): April 13, 2023

 

 

Canopy Growth Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Canada   001-38496   N/A

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

1 Hershey Drive

Smiths Falls, Ontario

  K7A 0A8
(Address of principal executive officers)   (Zip Code)

(855) 558-9333

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

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:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Shares, no par value   CGC   NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company 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  ☐

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.  ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

On April 13, 2023, Canopy Growth Corporation (the “Company”) entered into an exchange agreement (the “Exchange Agreement”) with Greenstar Canada Investment Limited Partnership (“GCILP”), a wholly-owned subsidiary of Constellation Brands, Inc., in order to extinguish C$100 million (approximately US$73.9 million) aggregate principal amount of the Company’s outstanding 4.25% unsecured notes due 2023 (the “Existing Notes”). Pursuant to the terms of the Exchange Agreement, the Company agreed to acquire and cancel C$100 million aggregate principal amount of the Existing Notes held by GCILP in exchange for: (i) a cash payment to GCILP in the amount of unpaid and accrued interest owing under the Existing Notes held by GCILP; and (ii) a promissory note (the “Promissory Note”) issuable to GCILP in the aggregate principal amount of C$100 million payable on December 31, 2024 (collectively, the “CBI Transaction”). The Promissory Note bears interest at a rate of 4.25% per year, payable on maturity of the Promissory Note. The CBI Transaction closed on April 14, 2023.

The foregoing descriptions of the Exchange Agreement and the Promissory Note are not intended to be complete and are qualified in their entirety by reference to the full text of the Exchange Agreement and the Promissory Note, filed as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K (“Current Report”).

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report regarding the Promissory Note is incorporated into this Item 2.03 by reference.

 

Item 8.01

Other Events.

On April 14, 2023, the Company issued a press release (the “Press Release”) to announce, among other things, the CBI Transaction. A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.

  

Exhibit Description

  4.1    Promissory Note, dated April 14, 2023.
10.1    Exchange Agreement, dated as of April 13, 2023, by and between Canopy Growth Corporation and Greenstar Canada Investment Limited Partnership.
99.1    Press release of Canopy Growth Corporation, dated April 14, 2023.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

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.

 

CANOPY GROWTH CORPORATION
By:  

/s/ Judy Hong

  Judy Hong
  Chief Financial Officer

Date: April 14, 2023

Exhibit 4.1

PROMISSORY NOTE

 

CAD$100,000,000.00    April 14, 2023
(the “Issue Date”)

For value received, CANOPY GROWTH CORPORATION (the “Corporation”), promises to pay to the order of GREENSTAR CANADA INVESTMENT LIMITED PARTNERSHIP (the “Holder”), the principal sum of CAD$100,000,000.00 (the “Principal Amount”), together with interest accrued on the Principal Amount as provided in Section 1 below. All dollar amounts expressed in this promissory note (this “Note”) refer to the lawful currency of Canada. This Note is subject to the following terms and conditions:

 

1.

Interest. The Principal Amount shall bear interest at the rate of 4.25% per year from the Issue Date to, but excluding, the Maturity Date (as defined below). Interest is payable in arrears on the Maturity Date. Interest on the Principal Amount shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of the number of days actually elapsed in a 30-day month. Solely for the purposes of disclosure under the Interest Act (Canada), the annual rate of interest to which the rate of interest provided in this Note is equivalent in respect of any period is the rate so determined multiplied by the actual number of days in the calendar year in which such period ends and divided by 360.

 

2.

Maturity Date. The unpaid Principal Amount plus all accrued and unpaid interest owing under this Note will be due and payable on December 31, 2024 (the “Maturity Date”).

 

3.

Prepayment. At any time prior to the Maturity Date, the Corporation may, upon 10 business days prior notice, prepay, without penalty or bonus, the Principal Amount either in whole at one time or in part from time to time, together with all accrued and unpaid interest to the date fixed for repayment and, in the case of prepayment in whole, all other monies owing under this Note.

 

4.

Events of Default. The outstanding Principal Amount and all accrued and unpaid interest thereon, will, at the option of the Holder, become immediately due and payable upon the occurrence of any of the following events (each, an “Event of Default”):

 

  (a)

the Corporation defaults in any payment of interest on this Note when due and payable, and the default continues for a period of 30 days;

 

  (b)

the Corporation defaults in the payment of the Principal Amount when due and payable on the Maturity Date or upon declaration of acceleration;

 

  (c)

the Corporation shall commence a voluntary case or other proceeding seeking a stay, liquidation, reorganization, compromise, arrangement or other relief with respect to the Corporation or its debts under any bankruptcy, insolvency, arrangement or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Corporation or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due;


  (d)

an involuntary case or other proceeding shall be commenced against the Corporation seeking a stay, liquidation, reorganization, compromise, arrangement or other relief with respect to the Corporation or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Corporation or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 30 consecutive days;

 

  (e)

failure by the Corporation to comply with its obligations under Sections 5 and 6 of this Note;

 

  (f)

default by the Corporation with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $10,000,000 (or its foreign currency equivalent) in the aggregate of the Corporation, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise;

 

  (g)

a final judgment or judgments for the payment of $10,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against the Corporation, which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished; or

 

  (h)

a Termination of Trading shall have occurred.

For purposes of this Section 3, a “Termination of Trading” shall have occurred if the common shares of the Corporation are not listed or quoted on at least one of the following: the Toronto Stock Exchange, The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors).

 

5.

Corporation May Consolidate, Etc. on Certain Terms. Subject to the provisions of Section 6 of this Note, the Corporation shall not consolidate or amalgamate with, merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to another person, unless:

 

  (i)

the resulting, surviving or transferee person (the “Successor Company”), if not the Corporation, shall be a corporation organized and existing under the laws of Canada, any province or territory thereof, or the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Corporation) shall expressly assume all of the obligations of the Corporation under this Note; and

 

  (ii)

immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing under this Note.

 

6.

Successor Corporation to Be Substituted. In case of any such consolidation, amalgamation, merger, sale, conveyance, transfer or lease contemplated in Section 5 of this Note and upon the assumption by the Successor Company of the due and punctual payment of the Principal Amount and accrued and unpaid interest under this Note and the due and punctual performance of all of the covenants and conditions of this Note to be performed by the Corporation, such Successor


  Company (if not the Corporation) shall succeed to and, except in the case of a lease of all or substantially all of the Corporation’s properties and assets, shall be substituted for the Corporation, with the same effect as if it had been named herein, and may thereafter exercise every right and power, of the Corporation under this Note. In the event of any such consolidation, amalgamation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with Sections 5 and 6 of this Note, the person named as the “Corporation” in the first paragraph of this Note (or any successor that shall thereafter have become such in the manner prescribed in Sections 5 and 6 of this Note) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such person shall be released from its liabilities as obligor and maker of this Note and from its obligations under this Note.

In case of any such consolidation, amalgamation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in this Note or any replacement note thereafter to be issued as may be appropriate.

 

7.

No Rights as Shareholder. This Note does not by itself entitle the Holder to any voting or other rights as a shareholder of the Corporation.

 

8.

Transfer; Successors and Assigns. The terms and conditions of this Note will inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Subject in all respects to applicable law, this Note and any amount outstanding hereunder may, upon written notice to the Corporation, be assigned, pledged, or otherwise transferred by the Holder.

 

9.

Notices. All notices and other communications given or made under this Note will be in writing and will be deemed effectively given upon the earlier of (a) actual receipt for personal delivery to the party to be notified; (b) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day; or (c) three business days after deposit with an internationally recognized overnight courier, freight prepaid, specifying next or second business day delivery, with written verification of receipt. All communications will be sent to the Holder at its address as set forth on the signature page to this Note, or to such email address or address as subsequently modified by written notice given in accordance with this Section 9. If notice is given to the Corporation, it will be sent to the Corporation’s address as set forth on the signature page to this Note or to such email address or address as subsequently modified by written notice given in accordance with this Section 9.

 

10.

Governing Law. THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

11.

Jurisdiction. The Corporation irrevocably consents and agrees, for the benefit of the Holder, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Note may be brought in any United States federal or State of New York court located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of this Note have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court with respect to any such legal action, suit or proceeding for itself in respect of its properties, assets and revenues. The Corporation irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Note brought in the any United States federal or State of New York court located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.


12.

Waiver of Jury Trial. EACH OF THE CORPORATION AND THE HOLDER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

13.

Costs; Waiver. The Corporation will pay on demand all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) which the Holder incurs in connection with enforcement of this Note or the protection or preservation of the Holder’s rights hereunder. The Corporation hereby waives demand, presentment, protest or notice of any kind.

 

14.

Unsecured. The Corporation and the Holder each acknowledge and agree that this Note is unsecured.

 

15.

Maximum Interest Rate. If any provision of, or any document entered into in connection with, this Note would oblige the Corporation to make any payment of interest or other amount payable to the Holder in an amount or calculated at a rate which would be prohibited by any applicable law or would result in the receipt by the Holder of interest at a criminal or prohibited rate (as these terms are construed under the Criminal Code (Canada) or any other applicable law), then notwithstanding such provision, the amount or rate will be deemed to have been adjusted with the same effect as if adjusted at the original date of this Note to the maximum amount or rate of interest, as the case may be, as to not be prohibited by any applicable law or result in the receipt by the Holder of interest at a criminal or prohibited rate, the adjustment to be effected to the extent necessary by reducing the amount or rate of interest under Section 1 of this Note with any remaining excess that has been paid being credited towards prepayment of the Principal Amount. If any overpayment remains after such crediting, it will be returned forthwith to the Corporation upon demand.

 

16.

Severability. Each of the provisions contained in this Note is distinct and severable and a declaration of invalidity, illegality or unenforceability of any provision or part thereof by a court of competent jurisdiction will not affect the validity or enforceability of any other provision of this Note.

 

17.

Counterparts; Electronic Signature. This Note may be signed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Counterparts signed or delivered electronically (including pdf or electronic signature) or other transmission method will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

18.

Loss of Note. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity reasonably satisfactory to the Corporation (in case of loss, theft or destruction) or surrender and cancellation of the Note (in the case of mutilation), the Corporation will make and deliver in lieu of such Note a new Note of like tenor.

[Signature Page Follows]


The Corporation has signed this Promissory Note as of the Issue Date set forth above.

 

CANOPY GROWTH CORPORATION
By:   /s/ Christelle Gedeon
Name:   Christelle Gedeon
Title:   Chief Legal Officer

 

1 Hershey Drive
Smiths Falls, Ontario
K7A 0A8
Canada
Attention: Christelle Gedeon
Email: contracts@canopygrowth.com
with a copy to (which shall not constitute notice):
Attention: Jonathan Sherman
Email: jsherman@cassels.com

AGREED TO AND ACCEPTED:

 

GREENSTAR CANADA INVESTMENT LIMITED PARTNERSHIP, by its general partner, GREENSTAR CANADA INVESTMENT CORPORATION
By:   /s/ Kenneth W. Metz
Name:   Kenneth W. Metz
Title:   President

200-150 King Street West

Toronto, Ontario

M5H 1J9

Canada

Attention: Jeff LaBarge

Email: Jeffrey.LaBarge@cbrands.com

with a copy to (which shall not constitute notice):

Attention: Emmanuel Pressman

Email: epressman@osler.com

Signature Page – Promissory Note – GS/CGC

Exhibit 10.1

CANOPY GROWTH CORPORATION

Exchange Agreement

April 13, 2023


Table of Contents

 

         Page  

Section 1.

  DEFINITIONS      1  

Section 2.

  RULES OF CONSTRUCTION      3  

Section 3.

  THE EXCHANGE      3  

(a)

 

Generally

     3  

(b)

 

Closing

     3  

Section 4.

  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY      5  

(a)

 

Due Formation, Valid Existence and Good Standing; Power to Perform Obligations

     5  

(b)

 

Securities Act Matters

     5  

(c)

 

Non-Contravention

     5  

(d)

 

No Consents

     6  

(e)

 

Authorization, Execution, Delivery and Enforceability of This Exchange Agreement and the Promissory Note

     6  

(f)

 

Investment Company Act

     6  

(g)

 

Accuracy of Filings

     6  

(h)

 

Additional Documentation

     6  

(i)

 

Bring-Down of Representations and Warranties

     6  

Section 5.

  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR      6  

(a)

 

Power to Perform Obligations and Bind Accounts; Survival of Authority

     6  

(b)

 

Ownership of Existing Notes

     6  

(c)

 

Securities Law Matters

     6  

(d)

 

Passage of Good Title; No Liens

     7  

(e)

 

Non-Contravention

     7  

(f)

 

Jurisdiction of Residence

     7  

(g)

 

Information Provided

     7  

(h)

 

No Investment, Tax or Other Advice

     7  

(i)

 

Due Diligence

     7  

(j)

 

Qualified Institutional Buyer Status

     7  

(k)

 

Mutual Negotiation

     8  

(l)

 

Additional Documentation

     8  

(m)

 

Bring-Down of Representations and Warranties

     8  

Section 6.

  CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE INVESTOR      8  

(a)

 

Conditions to the Company’s Obligations

     8  

(b)

 

Conditions to the Investor’s Obligations

     8  

Section 7.

  TAX MATTERS      8  

(a)

 

U.S. Persons

     8  

(b)

 

Excluded Obligation

     9  

(c)

 

Withholding Tax

     9  

 

- i -


Section 8.

  MISCELLANEOUS      9  

(a)

 

Waiver; Amendment

     9  

(b)

 

Assignability

     9  

(c)

 

Further Instruments and Acts

     9  

(d)

 

Waiver of Jury Trial

     10  

(e)

 

Governing Law

     10  

(f)

 

Section and Other Headings

     10  

(g)

 

Counterparts

     10  

(h)

 

Notices

     10  

(i)

 

Binding Effect

     10  

(j)

 

Notification of Changes

     10  

(k)

 

Severability

     10  

(l)

 

Entire Agreement

     10  

 

Exhibits   
Exhibit A:   Investor Information    A-1
Exhibit B:   Promissory Note    B-1
Exhibit C:   Tax Matters    C-1

 

- ii -


Exchange Agreement

EXCHANGE AGREEMENT, dated as of April 13, 2023 between CANOPY GROWTH CORPORATION, a corporation organized and existing under the Canada Business Corporations Act (the “Company”), and GREENSTAR CANADA INVESTMENT LIMITED PARTNERSHIP, a partnership formed and existing under the law of the Province of British Columbia (the “Investor”).

WHEREAS, the Company and the Investor desire to engage in the Exchange (as defined below) on the terms set forth in this Exchange Agreement.

THEREFORE, the Company and the Investor agree as follows.

Section 1. DEFINITIONS.

Business Day” means any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.

Canadian Public Disclosure Record” means all documents filed with the Canadian securities regulatory authorities on SEDAR under the Company’s profile since January 1, 2023.

Cash Consideration” means, with respect to the Existing Notes of the Investor to be exchanged in the Exchange, an amount equal to the accrued interest (expressed in Canadian dollars) on such Existing Notes from, and including, the “Interest Payment Date” (as defined in the Existing Indenture) immediately preceding the Closing Date to, but excluding, the Closing Date, calculated in accordance with the Existing Indenture; provided, however, that if the Closing Date occurs after any “Regular Record Date” (as defined in the Existing Indenture) and on or before the immediately following Interest Payment Date, then “Cash Consideration” will be deemed to be zero for such Existing Notes (it being understood, for the avoidance of doubt, that accrued and unpaid interest due in respect of such Interest Payment Date will, in accordance with the Existing Indenture, be paid to the person in whose name such Existing Notes are registered at the close of business on such Regular Record Date); and provided further that no additional interest shall accrue on the Existing Notes for any period after the Closing Date.

Closing” has the meaning set forth in Section 3(b)(i).

Closing Date” means the later of (a) such date on which the conditions to the Closing set forth in Section 6 are satisfied or waived; and (b) such other date as the Company and the Investor may agree.

Code” means the Internal Revenue Code of 1986, as amended.

Company” has the meaning set forth in the first paragraph of this Exchange Agreement.

 

- 1 -


Covered SEC Filings” means each of the following documents, in the form they were filed with the SEC and including any amendments thereto filed with the SEC: (a) the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022; (b) those portions of the Company’s 2021 Proxy Statement on Schedule 14A that are incorporated by reference into the Company’s Annual Report for the fiscal year ended March 31, 2021; and (c) the Company’s Current Reports on Form 8-K (excluding any Current Reports or portions thereof that are furnished, and not filed, pursuant to Item 2.02 or Item 7.01 of Form 8-K, and any related exhibits) filed with the SEC after March 31, 2022.

DTC” means The Depository Trust Company.

DWAC” means DTC’s Deposits and Withdrawal at Custodian program.

DWAC Withdrawal” has the meaning set forth in Section 3(b)(iii)(1).

Exchange” has the meaning set forth in Section 3(a).

Exchange Consideration” means, with respect to the Existing Notes of the Investor to be exchanged in the Exchange, (a) cash in an amount equal to the Cash Consideration for such Existing Notes, which cash is to be delivered in respect of such Existing Notes on the Closing Date pursuant to this Exchange Agreement; and (b) the Promissory Note to be delivered pursuant to this Exchange Agreement.

Existing Indenture” means that certain Indenture, dated as of June 20, 2018, between the Company and the Existing Notes Trustees, as supplemented by that certain Supplement No. 1 to Indenture, dated as of April 30, 2019, between the Company and the Existing Notes Trustees and that certain Supplement No. 2 to Indenture, dated as of June 29, 2022, between the Company and the Existing Notes Trustees.

Existing Notes” means the Company’s 4.25% Convertible Senior Notes due 2023 issued pursuant to the Existing Indenture.

Existing Notes Canadian Trustee” means Computershare Trust Company of Canada.

Existing Notes Trustees” means the Existing Notes U.S. Trustee and the Existing Notes Canadian Trustee.

Existing Notes U.S. Trustee” means Computershare Trust Company, N.A. (as successor to GLAS Trust Company LLC).

IRS” means the Internal Revenue Service.

Liens” has the meaning set forth in Section 5(b).

Promissory Note” means a promissory note with a principal amount of C$100,000,000 in the form attached as Exhibit B hereto to be issued by the Company to the Investor on the Closing Date.

 

- 2 -


SEC” means the Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended.

Tax Act” has the meaning set forth in Section 7(b).

Taxes” has the meaning set forth in Section 7(c).

Section 2. RULES OF CONSTRUCTION. For purposes of this Exchange Agreement:

(a) “or” is not exclusive;

(b) “including” means “including without limitation”;

(c) “will” expresses a command;

(d) words in the singular include the plural and in the plural include the singular, unless the context requires otherwise;

(e) “herein,” “hereof” and other words of similar import refer to this Exchange Agreement as a whole and not to any particular Section or other subdivision of this Exchange Agreement, unless the context requires otherwise;

(f) references to currency and to “$” mean the lawful currency of the United States of America, and references to “C$” mean the lawful currency of Canada, unless the context requires otherwise; and

(g) the exhibits to this Exchange Agreement are deemed to form part of this Exchange Agreement.

Section 3. THE EXCHANGE.

(a) Generally. Subject to the other terms of this Exchange Agreement, the Investor agrees, on the Closing Date, to exchange (the “Exchange”), with the Company the aggregate principal amount of Existing Notes, CUSIP No. AT1058540, set forth in Exhibit A hereto that it beneficially owns for Exchange Consideration in kind and amount corresponding to such principal amount of Existing Notes, deliverable on the date(s) set forth in this Exchange Agreement.

(b) Closing.

(i) Closing; Location. The Exchange will be settled as follows: on the Closing Date, the Investor will deliver its Existing Notes to the Company and the Company will deliver the Promissory Note to the Investor (the “Closing”). Closing will take place at the offices of Cassels Brock & Blackwell LLP, Suite 2100, Scotia Plaza, 40 King Street West, Toronto, Ontario M5H 3C2, Canada, at 10:00 a.m., New York City time, on the Closing Date.

 

- 3 -


(ii) Conveyance of Title; Release of Claims. Subject to the other terms and conditions of this Exchange Agreement, at the Closing, subject to satisfaction of the terms and conditions of this Exchange Agreement, including the conditions set forth in Section 6, the Investor hereby agrees to sell, assign and transfer to, or upon the order of, the Company, all right, title and interest in such portion of the Existing Notes as indicated on Exhibit A hereto, and effective as of the Closing, waives any and all other rights with respect to such Existing Notes and the Existing Indenture and releases and discharges the Company from any and all claims, whether now known or unknown, the Investor may now have, or may have in the future, arising out of, or related to, such Existing Notes, including any claims arising from any existing or past defaults under the Existing Indenture, or any claims that the Investor is entitled to receive additional, special or default interest with respect to the Existing Notes, provided that, for certainty, the provisions of this Section 3(b)(ii) shall not affect the rights, entitlements, claims or other benefits the Investor may have if the Closing does not occur in the manner contemplated by this Exchange Agreement. The Investor agrees that the Investor shall not take any steps to enforce any of its rights with respect to the Existing Notes on or after the Closing Date other than its right to receive the Exchange Consideration pursuant to this Exchange Agreement.

(iii) Delivery of Existing Notes and Exchange Consideration.

(1) DWAC Withdrawal. Subject to satisfaction of the applicable conditions precedent specified in this Exchange Agreement, at or prior to 9:30 a.m., New York City time, on the Closing Date, the Investor agrees to direct the eligible DTC participant through which it holds a beneficial interest in the Existing Notes to submit a DWAC withdrawal instruction (the “DWAC Withdrawal”) to the Existing Notes U.S. Trustee for the aggregate principal amount of the Existing Notes to be exchanged by the Investor pursuant to this Exchange Agreement.

(2) Delivery of Exchange Consideration. The Cash Consideration will not be paid nor will the Promissory Note be delivered until a valid DWAC Withdrawal of the Existing Notes has been received and accepted by the Existing Notes U.S. Trustee. If the Closing does not occur, then any Existing Notes submitted for DWAC Withdrawal will be returned to the DTC participant that submitted the DWAC Withdrawal instruction in accordance with the procedures of DTC. On the Closing Date, subject to satisfaction of the conditions precedent specified in this Exchange Agreement, and the prior receipt of a valid DWAC Withdrawal conforming with the aggregate principal amount of the Existing Notes to be exchanged by the Investor, the Company will (A) pay the applicable Cash Consideration to the Investor by wire transfer to the account of the Investor set forth in Exhibit A to this Exchange Agreement; and (B) deliver the Promissory Note to be issued to the Investor in the Exchange in the form attached as Exhibit B hereto.

(3) Acknowledgment of DWAC Posting Expiration; Delivery Instructions. The Investor acknowledges that the DWAC Withdrawal must be posted on the Closing Date and that if it is posted before the Closing Date, then it will expire unaccepted and must be resubmitted on the Closing Date.

 

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(4) Delay of Closing. If (A) the Existing Notes U.S. Trustee is unable to locate the DWAC Withdrawal; or (B) such DWAC Withdrawal does not conform to the Existing Notes to be exchanged in the Exchange, then the Company will promptly notify the Investor. If, because of the occurrence of an event described in clause (A) or (B) of the preceding sentence, the Cash Consideration is not paid or the Promissory Note is not delivered on the Closing Date, then such Cash Consideration or Promissory Note, as applicable, will be paid or delivered, as applicable, on the first Business Day following the Closing Date (or as soon as reasonably practicable thereafter) on which all applicable conditions set forth in clauses (A) or (B) of the first sentence of this paragraph have been cured.

(iv) Questions as to Form. All questions as to the form of all documents and the validity and acceptance of the Existing Notes will be determined by the Company, in its reasonable discretion, which determination will be final and binding.

Section 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company represents and warrants to the Investor and covenants that:

(a) Due Formation, Valid Existence and Good Standing; Power to Perform Obligations. The Company is duly formed, validly existing and in good standing under the Canada Business Corporations Act, with full power and authority to conduct its business as it is currently being conducted and to own its assets. The Company has full power and authority to consummate the Exchange and to enter into this Exchange Agreement and perform all of its obligations hereunder.

(b) Securities Act Matters. The repurchase of the Existing Notes pursuant to this Exchange Agreement is not prohibited by applicable Canadian securities laws.

(c) Non-Contravention. The Exchange and the other transactions contemplated hereby to be performed by the Company will not (i) contravene any law, rule or regulation binding on the Company or any subsidiary thereof or any judgment or order of any court or arbitrator or governmental or regulatory authority applicable to the Company or any such subsidiary; (ii) constitute a breach or violation or result in a default under any loan agreement, mortgage, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it is bound; or (iii) constitute a breach or violation or result in a default under the organizational documents of the Company or any subsidiary thereof, except, in the case of clauses (i) and (ii) above, for such contraventions, conflicts, violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a material adverse effect on the business, properties, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under this Exchange Agreement.

 

- 5 -


(d) No Consents. No consent, approval, authorization, order, license, registration or qualification of or with any court or governmental or regulatory authority or of the shareholders of the Company is required for the execution, delivery and performance by the Company of its obligations under this Exchange Agreement and the consummation of the transactions contemplated by this Exchange Agreement, except such as have been obtained or made (or will, at the Closing, have been obtained or made) by the Company.

(e) Authorization, Execution, Delivery and Enforceability of This Exchange Agreement and the Promissory Note. This Exchange Agreement and the Promissory Note have each been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable by the Investor in accordance with their respective terms.

(f) Investment Company Act. The Company is not and, after giving effect to the transactions contemplated by this Exchange Agreement, will not be required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

(g) Accuracy of Filings. The Covered SEC Filings, taken as a whole, do not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The documents filed and comprising the Canadiain Public Disclosure Record did not at the time of filing and do not contain a misrepresentation (within the meaning of applicable Canadian securities laws).

(h) Additional Documentation. The Company will, upon request, execute and deliver, for itself, any additional documents that the Investor or the Existing Notes U.S. Trustee may reasonably request to complete the Exchange.

(i) Bring-Down of Representations and Warranties. The Company understands that, unless the Company notifies the Investor in writing to the contrary at or before Closing, each of the Company’s representations and warranties contained in this Exchange Agreement will be deemed to have been reaffirmed and confirmed as of Closing, taking into account all information received by the Company.

Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR. The Investor represents and warrants to the Company and covenants that:

(a) Power to Perform Obligations and Bind Accounts; Survival of Authority. The Investor has full power and authority to exchange, sell, assign and transfer the Existing Notes to be exchanged pursuant to, and to enter into, this Exchange Agreement and perform all obligations required to be performed by the Investor under this Exchange Agreement.

(b) Ownership of Existing Notes. The Investor is and, immediately before the Closing, will be the beneficial owner of the Existing Notes set forth on Exhibit A.

(c) Securities Law Matters. The Investor did not acquire the Existing Notes, after the original issue date of such Existing Notes, from the Company or any “affiliate” (within the meaning of Rule 144(a) under the Securities Act) of the Company, and, to its knowledge, no “affiliate” of the Company beneficially owned any of the Existing Notes of the Investor at any time during the period of one year preceding the date of this Exchange Agreement or preceding the Closing Date.

 

- 6 -


(d) Passage of Good Title; No Liens. The Investor is the beneficial owner of the Existing Notes with good, marketable and unencumbered title to the Existing Notes, free and clear of any any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, “Liens”). When the Existing Notes are exchanged pursuant to this Exchange Agreement, the Company will acquire good, marketable and unencumbered title to the Existing Notes, free and clear of any Liens arising as a result of the holding by the Investor.

(e) Non-Contravention. The Exchange and the other transactions contemplated hereby to be performed by the Investor will not (i) contravene any law, rule or regulation binding on the Investor or any investment guideline or restriction applicable to the Investor (provided that the Investor does not make any representations regarding the application of applicable securities laws); or (ii) constitute a breach or violation or result in a default under the organizational documents of the Investor or any material loan agreement, mortgage, lease or other agreement or instrument to which the Investor is a party or by which it is bound.

(f) Jurisdiction of Residence. The Investor is a resident of the jurisdiction set forth on Exhibit A attached to the Exchange Agreement.

(g) Information Provided. The Investor acknowledges that no person has been authorized to give any information or to make any representation concerning the Company or the Exchange other than as contained in this Exchange Agreement. The Company takes no responsibility for, and provides no assurance as to the reliability of, any other information that others may provide to the Investor.

(h) No Investment, Tax or Other Advice. The Investor confirms that it is not relying on any statement (written or oral), representation or warranty made by, or on behalf of, the Company or any of its affiliates as investment, tax or other advice or as a recommendation to participate in the Exchange and receive the Exchange Consideration in exchange for Existing Notes. Neither the Company nor any of its affiliates is acting or has acted as an advisor to the Investor in deciding whether to participate in the Exchange and to exchange Existing Notes for the Exchange Consideration.

(i) Due Diligence. The Investor is familiar with the business and financial condition and operations of the Company and has had the opportunity to conduct its own investigation of the Company. The Investor has had access to and reviewed such information concerning the Company it deems necessary to enable it to make an informed investment decision concerning the Exchange. The Investor has been offered the opportunity to ask questions of the Company and received answers thereto, as it deems necessary to enable it to make an informed investment decision concerning the Exchange.

(j) Qualified Institutional Buyer Status. The Investor is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act. The Investor agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the Exchange.

 

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(k) Mutual Negotiation. The Investor acknowledges that the terms of the Exchange have been mutually negotiated between the Investor and the Company. The Investor was given a meaningful opportunity to negotiate the terms of the Exchange. The Investor had a sufficient amount of time to consider whether to participate in the Exchange, and neither the Company nor any of its affiliates or agents, has placed any pressure on the Investor to respond to the opportunity to participate in the Exchange. The Investor’s participation in the Exchange was not conditioned by the Company on the Investor’s exchange of a minimum principal amount of Existing Notes for the Exchange Consideration.

(l) Additional Documentation. The Investor will, upon request, execute and deliver any additional documents that the Company or the Existing Notes U.S. Trustee may reasonably request to complete the Exchange.

(m) Bring-Down of Representations and Warranties. The Investor understands that, unless the Investor notifies the Company in writing to the contrary at or before Closing, each of the Investor’s representations and warranties contained in this Exchange Agreement will be deemed to have been reaffirmed and confirmed as of Closing, taking into account all information received by the Investor.

Section 6. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE INVESTOR.

(a) Conditions to the Companys Obligations. The obligation of the Company to deliver the Exchange Consideration is subject to the satisfaction at or prior to the Closing of each of the following conditions precedent: (i) the representations, warranties and covenants of the Investor in Section 5 hereof are true and correct as of Closing in all respects with the same effect as though such representations and warranties had been made as of Closing; (ii) and all covenants of the Investor in Section 5 to be performed at or before Closing have been performed; and (iii) the conditions precedent set forth in Section 3(b)(iii)(2) and, in the case of the Closing, the receipt by the Company of a valid DWAC Withdrawal conforming to the requirements set forth in this Exchange Agreement.

(b) Conditions to the Investors Obligations. The obligations of the Investor to deliver (or cause to be delivered) the Existing Notes and to post the DWAC Withdrawal on the Closing Date are subject to the satisfaction at or prior to the Closing of each of the following conditions precedent: (i) the representations, warranties and covenants of the Company in Section 4 are true and correct as of Closing in all respects with the same effect as though such representations and warranties had been made as of Closing; and (ii) all covenants of the Company in Section 4 to be performed at or before Closing have been performed.

Section 7. TAX MATTERS.

(a) U.S. Persons. The Investor acknowledges that, if it is a United States person for U.S. federal income tax purposes, the Company must be provided with a correct taxpayer identification number (generally, a person’s social security or federal employer identification number) and certain other information on a properly completed and executed IRS Form W-9, which is provided herein on Exhibit C attached to this Exchange Agreement. The Investor further acknowledges that, if it is not a United States person for U.S. federal income tax purposes, the

 

- 8 -


Company must be provided with the appropriate properly completed and executed IRS Form W-8, attesting to its foreign status and certain other information, including information establishing an exemption from withholding under Sections 1471 through 1474 of the Code. The Investor further acknowledges that it may be subject to 30% U.S. federal withholding or 24% U.S. federal backup withholding on certain payments or deliveries made to it unless it properly establishes an exemption from, or a reduced rate of, such withholding or backup withholding. Without limiting the generality of the foregoing, the Investor hereby represents that it is able to receive any Exchange Consideration hereunder (including any amounts attributable to accrued and unpaid interest) without any U.S. withholding tax and is entitled to provide U.S. tax forms and required attachments indicating the same (including, where relevant, any certifications indicating that the Investor fulfills the requirements of “portfolio interest exemption” as indicated in Exhibit C) and agrees to hold the Company and its agents harmless for the breach of such representation.

(b) Excluded Obligation. For purposes of the Income Tax Act (Canada) (the “Tax Act”), and for greater certainty, the Existing Notes are an “excluded obligation” as defined in subsection 214(8) of the Tax Act.

(c) Withholding Tax. The Company and the Investor acknowledge that all payments or deliveries in connection with the Exchange made by or on behalf of the Company under or with respect to the Exchange Consideration are required to be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (hereinafter referred to as “Taxes”) imposed or levied by or on behalf of the government of Canada, any province or territory of Canada or any political subdivision or any authority or agency therein or thereof having power to tax, unless such person is required to withhold or deduct Taxes by applicable law or by the interpretation or administration thereof. If any Taxes are required by applicable law to be deducted and withheld in connection with the Exchange Consideration hereunder, the Company shall within the time period for payment required by applicable law, pay to the appropriate governmental body the full amount of such Taxes, and make such reports and filings in connection therewith in the manner required. Where the Company deducts or withholds any amount of Taxes required to be deducted and withheld as contemplated herein, the Company shall be considered for all purposes hereof to have satisfied its obligation to make such amount of the payment and the amount so deducted or withheld shall be deemed to have been paid (or issued) to the Investor hereunder, provided that the Company complies with its obligations to pay such amount to the applicable government authority within the time required.

Section 8. MISCELLANEOUS.

(a) Waiver; Amendment. Neither this Exchange Agreement nor any provisions hereof may be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.

(b) Assignability. Neither this Exchange Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof will be assignable by either the Company, on the one hand, or the Investor, on the other hand, without the prior written consent of the other party.

(c) Further Instruments and Acts. Each of the parties to this Exchange Agreement agrees to execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to more effectively carry out the purposes of this Exchange Agreement.

 

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(d) Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS EXCHANGE AGREEMENT.

(e) Governing Law. This Exchange Agreement will be governed by and construed in accordance with the internal laws of the State of New York.

(f) Section and Other Headings. The section and other headings contained in this Exchange Agreement are for reference purposes only and will not affect the meaning or interpretation of this Exchange Agreement.

(g) Counterparts. This Exchange Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed to be an original and all of which together will be deemed to be one and the same agreement. Delivery of an executed signature page to this Exchange Agreement by facsimile or other electronic transmission (including pdf format) will be effective as delivery of a manually executed counterpart hereof.

(h) Notices. All notices and other communications to the Company provided for herein will be in writing and will be deemed to have been duly given if delivered personally or sent by nationally recognized overnight courier service or by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party may have hereafter specified by notice in writing to the other): (i) if to the Company, Canopy Growth Corporation, 1 Hershey Drive, Smiths Falls, Ontario K7A 0A8, Canada, Attention: Chief Legal Officer; and (ii) if to the Investor, the address provided on the signature page below.

(i) Binding Effect. The provisions of this Exchange Agreement will be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.

(j) Notification of Changes. The Company and the Investor hereby covenants and agrees to notify the other party upon the occurrence of any event prior to Closing that would cause any representation, warranty, or covenant given by the notifying party contained in this Exchange Agreement to be false or incorrect.

(k) Severability. If any term or provision of this Exchange Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other term or provision of this Exchange Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

(l) Entire Agreement. This Exchange Agreement, including all exhibits hereto, constitutes the entire agreement of the parties hereto with respect to the specific subject matter covered hereby, and supersedes in their entirety all other agreements or understandings between or among the parties with respect to such specific subject matter.

 

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[The Remainder of This Page Intentionally Left Blank; Signature Pages Follow]

 

- 11 -


IN WITNESS WHEREOF, the parties to this Exchange Agreement have caused this Exchange Agreement to be duly executed as of the date first written above.

 

Investor:
GREENSTAR CANADA INVESTMENT LIMITED PARTNERSHIP, by its general partner, GREENSTAR CANADA INVESTMENT CORPORATION
Legal Name
By:   /s/ Kenneth W. Metz
  Name: Kenneth W. Metz
  Title: President

 

Investor Address:                       Taxpayer Identification Number:
200-150 King Street West     

[                         ]

Toronto, ON M5H 1J9      Telephone Number:
      

[                         ]

Country (and, if applicable, State) of Residence:     
Ontario, Canada     

Aggregate Principal Amount of Existing Notes to be Exchanged by the Investor (must be an integral multiple of $1,000):

 

$100,000,000

 

[Signature Page to Exchange Agreement]


CANOPY GROWTH CORPORATION
By:   /s/ Christelle Gedeon
  Name: Christelle Gedeon
  Title: Chief Legal Officer

 

[Signature Page to Exchange Agreement]


EXHIBIT A

Investor Information

(Complete the Following Form for the Investor)

Legal Name of Exchanging Holder:

Aggregate principal amount of

Existing Notes to be exchanged

(must be a multiple of $1,000):

Exchanging Holder’s Address:

Telephone:

Country (and, if applicable, State)

of Residence:

Taxpayer Identification Number:

Account for Existing Notes

DTC Participant Number:

DTC Participant Name:

DTC Participant Phone Number:

DTC Participant Contact Email:

Wire Instructions for Cash Consideration

Beneficiary Bank:

Account Bank:

Beneficiary Bank SWIFT Code:

Beneficiary Bank Address:

Beneficiary Information FFC Below:

Beneficiary Account Name:

Beneficiary Account #:

Beneficiary Address:

 

A-1


EXHIBIT B

Promissory Note

 

B-1


EXHIBIT C

Tax Matters

Backup Withholding Tax

Under U.S. federal income tax law, an Investor who exchanges Existing Notes for the Exchange Consideration generally must provide such Investor’s correct taxpayer identification number (“TIN”) on IRS Form W-9 (attached hereto) or otherwise establish a basis for exemption from backup withholding. A TIN is generally an individual holder’s social security number or an Investor’s employer identification number. If the correct TIN is not provided, the Investor may be subject to a $50 penalty imposed by the IRS. In addition, certain payments made to holders may be subject to U.S. backup withholding tax (currently set at 24% of the payment). If an Investor is required to provide a TIN but does not have the TIN, the Investor should consult its tax advisor regarding how to obtain a TIN. Certain holders are not subject to these backup withholding and reporting requirements. Non-U.S. Holders generally may establish their status as exempt recipients from backup withholding by submitting a properly completed applicable IRS Form W-8 (available from the Company or the IRS at www.irs.gov), signed, under penalties of perjury, attesting to such Investor’s exempt foreign status. U.S. backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is timely furnished to the IRS. Investors are urged to consult their tax advisors regarding how to complete the appropriate forms and to determine whether they are exempt from backup withholding or other withholding taxes.

Portfolio Interest Exemption (for Investors That Are Not U.S. Persons for U.S. Federal Income Tax Purposes)

Under U.S. federal income tax law, an Investor that exchanges Existing Notes for the Exchange Consideration and is otherwise not eligible to provide an IRS Form W-9 must claim an exemption from U.S. withholding tax on payments or deliveries attributable to accrued and unpaid interest. Any Investor that claims such an exemption under the so-called “portfolio interest exemption” is hereby deemed to represent and certify (along with the providing the applicable IRS Form W-8BEN or W-8BEN-E). However, if the Investor is an intermediary, a foreign partnership or other flow-through entity, then the following adjustments will be made:

 

  A.

The following representation will be provided as applied to the Investor:

 

   

record ownership under Clause I.

 

  B.

The following representations will be provided as applied to the partners, members or beneficial owners claiming the portfolio interest exemption:

 

   

beneficial ownership under Clause I,

 

   

the status in Clause III, and

 

   

the status in Clause IV.

 

C-1


  C.

The following representation will be provided as applied to the Investor as well as the partners, members:

 

  I.

It is the sole record and beneficial owner of the Existing Notes in respect of which it is providing this certification.

 

  II.

It is not a “bank” (within the meaning of Section 881(c)(3)(A) of the Code).

 

  III.

It is not a “10-percent shareholder” of the Company (within the meaning of Section 881(c)(3)(B) or Section 871(h)(3)(B) of the Code).

 

  IV.

It is not a “controlled foreign corporation” (as such term is defined in Section 881(c)(3)(C) of the Code) related to the Company (within the meaning of Section 864(d)(4) of the Code).

 

C-2

Exhibit 99.1

 

LOGO

Canopy Growth Announces Refinancing of C$100 million of Notes due 2023

SMITHS FALLS, ONTARIO (April 14, 2023) - Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) announced today that it has entered into an exchange agreement (the “Exchange Agreement”) with Greenstar Canada Investment Limited Partnership (“GCILP”), a wholly-owned subsidiary of Constellation Brands, Inc. (“CBI”), in order to extinguish C$100 million (approximately USD$73.9 million) aggregate principal amount of the Company’s outstanding 4.25% unsecured notes due 2023 (the “Existing Notes”).

Pursuant to the Exchange Agreement, the Company agreed to acquire and cancel C$100 million aggregate principal amount of the Existing Notes held by GCILP in exchange for: (i) a cash payment to GCILP in the amount of unpaid and accrued interest owing under the Existing Notes held by GCILP; and (ii) a promissory note (the “Promissory Note”) issuable to GCILP in the aggregate principal amount of C$100 million payable on December 31, 2024 (collectively, the “CBI Transaction”). The Promissory Note will bear interest at a rate of 4.25% per year, payable on maturity of the Promissory Note. The CBI Transaction is expected to close on or about April 14, 2023, subject to customary closing conditions.

Further to its press release dated October 25, 2022, Canopy Growth intends to amend its articles in order to, among other things, create a new class of non-voting and non-participating exchangeable shares (“Exchangeable Shares”), which will be convertible into Company common shares. Following closing of the CBI Transaction and the creation of the Exchangeable Shares, the Company maintains its intention to negotiate an exchange with GCILP to purchase for cancellation up to C$100 million aggregate principal amount of the Promissory Note in exchange for Exchangeable Shares, subject to the rules and policies of the Nasdaq and the Toronto Stock Exchange. The repurchase of the Promissory Note in exchange for Exchangeable Shares would preserve the Company’s cash on hand and reduce the Company’s annual expenses.

The CBI Transaction is considered to be a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Pursuant to Section 5.5(a) and 5.7(1)(a) of MI 61-101, the Company is exempt from obtaining a formal valuation and minority approval of the Company’s shareholders with respect to the CBI Transaction as the fair market value of the CBI Transaction is below 25% of the Company’s market capitalization as determined in accordance with MI 61-101. In addition, the CBI Transaction was approved by the board of directors of the Company with Ms. Judy A. Schmeling, a director of CBI, Mr. Garth Hankinson, Chief Financial Officer and Executive Vice President of CBI, Mr. Robert Hanson, Executive Vice President and President – Wine & Spirits Division of CBI and Mr. James Sabia, Executive Vice President and President - Beer Division of CBI, each having disclosed their interest in the CBI Transaction by virtue of their positions with CBI and abstaining from voting thereon. The Company did not file a material change report 21 days prior to the closing of the CBI Transaction as the details of the CBI Transaction had not been finalized at that time. The Company has not received nor has it requested a valuation of its securities or the subject matter of the CBI Transaction in the 24 months prior to the date hereof.


About Canopy Growth

Canopy Growth is a leading North American cannabis and CPG company dedicated to unleashing the power of cannabis to improve lives. Through an unwavering commitment to our consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Our CPG portfolio features sugar-free sports hydration brand BioSteel, targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in Germany by Storz & Bickel. Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through its rights to Acreage Holdings, Inc. a vertically integrated multi-state cannabis operator with principal operations in densely populated states across the Northeast, as well as Wana Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology. Beyond our world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment—pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement. For more information visit www.canopygrowth.com.

More Information

Media Contact:

Jennifer White

Senior Manager, Communications

jennifer.white@canopygrowth.com

Investor Contact:

Tyler Burns

Director, Investor Relations

Tyler.Burns@canopygrowth.com

Notice Regarding Forward-Looking Information

This news release contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Examples of such statements and uncertainties include statements with respect to the satisfaction of the closing conditions to the CBI Transaction; the anticipated exchange of the Existing Notes held by CBI and payment of unpaid and accrued interest owing under the Existing Notes


held by GCILP in connection with such exchange; the closing date of the CBI Transaction; the anticipated amendment to the Company’s articles in order to create the Exchangeable Shares; the timing and outcome of the negotiations with GCILP and the intention to repurchase the Promissory Note for Exchangeable Shares, the Company’s strategy focused on accelerating growth and profitability; and expectations for other economic, business, and/or competitive factors.

Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including negative operating cash flow; uncertainty of additional financing; use of proceeds; volatility in the price of the Company’s common shares; inherent uncertainty associated with projections; expectations regarding future investment, growth and expansion of operations; regulatory and licensing risks; changes in general economic, business and political conditions, including changes in the financial and stock markets and the impacts of increased rates of inflation; legal and regulatory risks inherent in the cannabis industry, including the global regulatory landscape and enforcement related to cannabis; additional dilution; political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry; and such other risks contained in the public filings of the Company filed with Canadian securities regulators and available under the Company’s profile on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission through EDGAR at www.sec.gov/edgar, including under the heading “Risk Factors” in the Company’s annual report on Form 10-K for the year ended March 31, 2022 and its subsequently filed quarterly reports on Form 10-Q.

In respect of the forward-looking statements and information, the Company has provided such statements and information in reliance on certain assumptions that they believe are reasonable at this time. Although the Company believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. Should one or more of the foregoing risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information or forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.