Issuer CIK | 0001790169 |
Issuer CCC | XXXXXXXX |
DOS File Number | |
Offering File Number | |
Is this a LIVE or TEST Filing? | ☒ LIVE ☐ TEST |
Would you like a Return Copy? | ☐ |
Notify via Filing Website only? | ☐ |
Since Last Filing? | ☐ |
Name | |
Phone | |
E-Mail Address |
Exact name of issuer as specified in the issuer's charter | Flora Growth Corp. |
Jurisdiction of Incorporation / Organization |
ONTARIO, CANADA
|
Year of Incorporation | 2019 |
CIK | 0001790169 |
Primary Standard Industrial Classification Code | MEDICINAL CHEMICALS & BOTANICAL PRODUCTS |
I.R.S. Employer Identification Number | 00-0000000 |
Total number of full-time employees | 5 |
Total number of part-time employees | 8 |
Address 1 | 65 Queen Street West, Suite 800 |
Address 2 | |
City | Toronto |
State/Country |
ONTARIO, CANADA
|
Mailing Zip/ Postal Code | M5H2M5 |
Phone | 416-861-2267 |
Name | Damian Lopez |
Address 1 | |
Address 2 | |
City | |
State/Country | |
Mailing Zip/ Postal Code | |
Phone |
Industry Group (select one) | ☐ Banking ☐ Insurance ☒ Other |
Cash and Cash Equivalents |
$
0.00 |
Investment Securities |
$
0.00 |
Total Investments |
$
|
Accounts and Notes Receivable |
$
238.00 |
Loans |
$
|
Property, Plant and Equipment (PP&E): |
$
0.00 |
Property and Equipment |
$
|
Total Assets |
$
238.00 |
Accounts Payable and Accrued Liabilities |
$
414082.00 |
Policy Liabilities and Accruals |
$
|
Deposits |
$
|
Long Term Debt |
$
0.00 |
Total Liabilities |
$
414082.00 |
Total Stockholders' Equity |
$
-413844.00 |
Total Liabilities and Equity |
$
238.00 |
Total Revenues |
$
0.00 |
Total Interest Income |
$
|
Costs and Expenses Applicable to Revenues |
$
1899714.00 |
Total Interest Expenses |
$
|
Depreciation and Amortization |
$
0.00 |
Net Income |
$
-1899714.00 |
Earnings Per Share - Basic |
$
-0.99 |
Earnings Per Share - Diluted |
$
-0.99 |
Name of Auditor (if any) | McGovern Hurley LLP |
Name of Class (if any) Common Equity | Common Stock |
Common Equity Units Outstanding | 70000000 |
Common Equity CUSIP (if any): | n/a |
Common Equity Units Name of Trading Center or Quotation Medium (if any) | n/a |
Preferred Equity Name of Class (if any) | n/a |
Preferred Equity Units Outstanding | 0 |
Preferred Equity CUSIP (if any) | n/a |
Preferred Equity Name of Trading Center or Quotation Medium (if any) | n/a |
Debt Securities Name of Class (if any) | n/a |
Debt Securities Units Outstanding | 0 |
Debt Securities CUSIP (if any): | n/a |
Debt Securities Name of Trading Center or Quotation Medium (if any) | n/a |
Check this box to certify that all of the following statements are true for the issuer(s)
☒
Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.
☒
Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.
☐
Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering | ☐ Tier1 ☒ Tier2 |
Check the appropriate box to indicate whether the financial statements have been audited | ☐ Unaudited ☒ Audited |
Types of Securities Offered in this Offering Statement (select all that apply) |
☒Equity (common or preferred stock) |
☒Option, warrant or other right to acquire another security |
☒Security to be acquired upon exercise of option, warrant or other right to acquire security |
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? | ☒ Yes ☐ No |
Does the issuer intend this offering to last more than one year? | ☒ Yes ☐ No |
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? | ☐ Yes ☒ No |
Will the issuer be conducting a best efforts offering? | ☒ Yes ☐ No |
Has the issuer used solicitation of interest communications in connection with the proposed offering? | ☐ Yes ☒ No |
Does the proposed offering involve the resale of securities by affiliates of the issuer? | ☐ Yes ☒ No |
Number of securities offered | 60000000 |
Number of securities of that class outstanding | 70000000 |
Price per security |
$
0.7500 |
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer |
$
50000000.00 |
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders |
$
0.00 |
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement |
$
0.00 |
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement |
$
0.00 |
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs) |
$
50000000.00 |
Underwriters - Name of Service Provider | Underwriters - Fees |
$
0.00 | |
Sales Commissions - Name of Service Provider | Dalmore Partners LLC | Sales Commissions - Fee |
$
900000.00 |
Finders' Fees - Name of Service Provider | Finders' Fees - Fees |
$
0.00 | |
Audit - Name of Service Provider | McGovern Hurley LLP | Audit - Fees |
$
20000.00 |
Legal - Name of Service Provider | Greenberg Traurig LLP | Legal - Fees |
$
160000.00 |
Promoters - Name of Service Provider | Promoters - Fees |
$
0.00 | |
Blue Sky Compliance - Name of Service Provider | DALV Consulting LLC, Dalmore Partners LLC, FINRA fees | Blue Sky Compliance - Fees |
$
63000.00 |
CRD Number of any broker or dealer listed: | 136352 |
Estimated net proceeds to the issuer |
$
48857000.00 |
Clarification of responses (if necessary) | Offering consists of 40,000,000 Units at $0.75 per Unit, each unit comprised of one common share and one-half of one warrant for an additional 20,000,000 common shares. Blue Sky Compliance 30,000 to DALV, 25,000 to Dalmore & 8,000 FINRA |
Selected States and Jurisdictions |
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
DISTRICT OF COLUMBIA
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISIANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
PUERTO RICO
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
ALBERTA, CANADA
BRITISH COLUMBIA, CANADA
MANITOBA, CANADA
NEW BRUNSWICK, CANADA
NEWFOUNDLAND, CANADA
NOVA SCOTIA, CANADA
ONTARIO, CANADA
PRINCE EDWARD ISLAND, CANADA
QUEBEC, CANADA
SASKATCHEWAN, CANADA
YUKON, CANADA
CANADA (FEDERAL LEVEL)
|
None | ☐ |
Same as the jurisdictions in which the issuer intends to offer the securities | ☐ |
Selected States and Jurisdictions |
ALABAMA
ARIZONA
FLORIDA
NEW JERSEY
NORTH DAKOTA
TEXAS
WASHINGTON
|
None ☐
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Flora Growth Corp. |
(b)(1) Title of securities issued | Common stock |
(2) Total Amount of such securities issued | 70000000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | 1400000 |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Flora Growth Corp. |
(b)(1) Title of securities issued | Stock Option |
(2) Total Amount of such securities issued | 7000000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | Exercisable at $0.05 per share |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Flora Growth Corp. |
(b)(1) Title of securities issued | Share Purchase Warrant |
(2) Total Amount of such securities issued | 7000000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | Exercisable at $0.05 per share |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption | Not applicable as no securities were issued to US residents. The Company relied on Canadian securities laws exemptions. |
Title of Each Class of Securities to be Qualified
|
Amount to be Qualified
|
|
|
Price to Public
|
|
|
Underwriting Discount and Commissions
|
|
Proceeds to
the
Company (2)
|
|
||
Units, each consisting of:
|
40,000,000
|
|
|
$
|
0.75
|
|
|
(1)
|
|
$
|
29,075,000
|
|
One Common Share
|
40,000,000
|
|
|
|
-
|
|
|
|
|
|
|
|
One-half of one Warrant
|
40,000,000
|
|
|
|
-
|
|
|
|
|
|
|
|
Common Shares underlying Warrants
|
20,000,000
|
|
|
$
|
1.00
|
|
|
(1)
|
|
$
|
20,000,000
|
|
Total Maximum Offering (3)
|
|
|
|
$
|
50,000,000
|
|
|
(1)
|
|
$
|
49,075,000
|
|
The minimum investment amount for each subscription is 1,333 Units or $1,000. The Offering is being made directly to investors by the management of the Company on a “best efforts” basis. We reserve the right
to offer the Units through broker-dealers who are registered with the Financial Industry Regulatory Authority (“FINRA”). The Company has engaged Dalmore Group, LLC, a New York limited liability company and FINRA/SIPC registered broker-dealer
("Dalmore"), to provide broker-dealer services in seven specified states, including Washington, Arizona, Texas, Alabama, North Dakota, Florida and New Jersey, in connection with this Offering. The Company has agreed to pay Dalmore a one-time
setup fee of $25,000, as described in the Broker-Dealer Agreement between the Company and Dalmore, as well as a 3% commission on the aggregate amount raised by the Company from investors in the specified states from the sale of Units.
Commissions are not payable upon exercise of the Warrants.
|
|
|
|
(2)
|
The amounts shown in the "Proceeds to the Company" column include a deduction of 3% for commissions payable to Dalmore on all the Units being offered. The 3% commission will only be paid on investments in the
seven states where Dalmore is engaged to provide broker-dealer services (Washington, Arizona, Texas, Alabama, North Dakota, Florida and New Jersey), although the Company intends to offer Units in all states within the United States and in
certain provinces of Canada (and other non-U.S. jurisdictions). The amount of total estimated proceeds to the Company in the table above also includes a deduction of $25,000 for the one-time setup fee payable to Dalmore. The amounts shown are
before deducting other organization and Offering costs to be borne by the Company, including legal, accounting, printing, due diligence, marketing, selling and other costs incurred in the Offering of the Units (See "Use of Proceeds to Issuer"
and "Plan of Distribution and Selling Securityholders").
|
|
|
(3)
|
The Units, the Common Shares and Warrants of which the Units consist and the underlying Warrant Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act for Tier 2 offerings. The
Units, the Common Shares and Warrants of which the Units consist and the underlying Warrant Shares are only issued to purchasers who satisfy the requirements set forth in Regulation A. We have the option in our sole discretion to accept less
than the minimum investment. The Total Maximum Offering amounts include the aggregate price and future aggregate potential proceeds of $20,000,000 with respect to the Warrant Shares if all 40,000,000 Units are sold and all 20,000,000 Warrant
Shares are sold upon exercise of the Warrants issued in the Offering.
|
|
|
Page
|
|
|
|
|
4
|
|
|
4
|
|
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6
|
|
|
10
|
|
|
24
|
|
|
26
|
|
|
27
|
|
|
28
|
|
|
39
|
|
|
40
|
|
|
46
|
|
|
50
|
|
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52
|
|
|
53
|
|
|
53
|
|
|
56
|
|
Part F/S
|
|
|
|
F-1
|
|
Part III – Exhibits
|
|
|
|
57
|
|
59
|
•
|
limited operating history;
|
•
|
reliance on licenses and authorizations;
|
•
|
changes in cannabis laws, regulations and guidelines;
|
•
|
demand for cannabis and derivative products;
|
•
|
product recalls;
|
•
|
regulatory compliance risks;
|
•
|
retention and acquisition of skilled personnel;
|
•
|
risks inherent in an agricultural business;
|
•
|
supply of cannabis seeds;
|
•
|
competition;
|
•
|
legal and regulatory proceedings;
|
•
|
ability to establish and maintain bank accounts;
|
•
|
insurance coverage;
|
•
|
protected areas established by the National System of Protected Areas;
|
•
|
changes in corporate structure;
|
•
|
emerging market risks; and
|
•
|
global economy risks.
|
•
|
economic and political risks inherent with any investment in Colombia;
|
•
|
governmental influence on the Colombian economy;
|
•
|
internal security issues; and
|
•
|
political and economic instability in the region.
|
•
|
foreign sales;
|
•
|
estimates or judgments relating to critical accounting policies;
|
•
|
tax risks; and
|
•
|
failure to develop our internal controls.
|
•
|
reliance on licenses and authorizations and delays in receiving such licenses and authorizations;
|
•
|
changes in cannabis laws, regulations and guidelines;
|
•
|
demand for cannabis and derivative products;
|
•
|
product liability;
|
•
|
product recalls;
|
•
|
regulatory compliance risks;
|
•
|
retention and acquisition of skilled personnel;
|
•
|
risks inherent in an agricultural business;
|
•
|
supply of cannabis seeds;
|
•
|
limited operating history;
|
•
|
managing growth;
|
•
|
legal and regulatory proceedings;
|
•
|
ability to establish and maintain bank accounts;
|
•
|
insurance coverage;
|
•
|
protected areas established by the National System of Protected Areas;
|
•
|
changes in corporate structure;
|
•
|
emerging market risks; and
|
•
|
global economy risks.
|
•
|
economic and political risks inherent with any investment in Colombia;
|
•
|
guerrilla activity in Colombia;
|
•
|
operational risks;
|
•
|
inflation in Colombia;
|
•
•
|
operations in Spanish; and
enforements of judgements.
|
•
|
access to capital;
|
•
|
foreign sales and fluctuations in the exchange rate between the Colombian peso and the Canadian dollar, the Colombian peso and the U.S. dollar and the U.S. dollar and the Canadian dollar;
|
•
|
estimates or judgments relating to critical accounting policies; and
|
•
|
tax risks.
|
Issuer:
|
|
Flora Growth Corporation, a corporation incorporated in the Province of Ontario, Canada.
|
|
|
|
Units Offered:
|
|
A maximum of 40,000,000 units (the “Units”) at an offering price of $0.75 per Unit, each Unit being comprised of:
• one common share in the capital of the Company, with no par value per share (a “Common Share”);
and
• one-half of one Common Share purchase warrant (each whole warrant, a “Warrant”) to purchase one
additional Common Share (a “Warrant Share”) at an exercise price of $1.00 per share, subject to customary adjustments, over an 18-month exercise period following the date of issuance of the Warrant.
|
|
|
|
Warrant Shares Offered:
|
|
A maximum of 20,000,000 Warrant Shares at an exercise price of $1.00 per Warrant Share, subject to customary adjustments, over an 18-month exercise period following the date of issuance.
|
|
|
|
Common Shares Outstanding before the Offering (1):
|
|
70,000,000 Common Shares.
|
|
|
|
Common Shares to be Outstanding after the Offering (1):
|
|
110,000,000 Common Shares if the maximum Units are sold, or 130,000,000 Common Shares upon exercise of the Warrants if the maximum Units are sold and the maximum Warrant Shares are issued.
|
|
|
|
Price per Unit:
|
|
$0.75
|
|
|
|
Price per Warrant Share
|
|
$1.00, subject to customary adjustments as described in the form of Warrant included as Exhibit 4.2 hereto.
|
|
|
|
Maximum Offering:
|
|
40,000,000 Units, at an offering price of $0.75 per Unit, (including the exercise of the Warrants to purchase 20,000,000 Warrant Shares with an exercise price of $1.00 per Warrant Share, subject to customary
adjustments).
|
|
|
|
Use of Proceeds:
|
|
If we sell all of the 40,000,000 Units being offered, and all of the 20,000,000 Warrant Shares underlying the Units being offered, our net proceeds (after deducting fees and commissions and estimated offering
expenses) will be approximately $48,857,000. We will use these net proceeds for research and development expenses, working capital and general corporate purposes, and such other purposes described in the “Use of Proceeds to Issuer” section of this Offering Circular.
|
|
|
|
Resale Restrictions:
|
|
See “Securities Being Offered – Resale Restrictions” on page 55.
|
|
|
|
Risk Factors:
|
|
Investing in our Units, the Common Shares and Warrants of which the Units consist and the underlying Warrant Shares involve a high degree of risk. See “Risk Factors” starting on page 10.
|
(1)
|
Excludes 7,000,000 Common Shares issuable upon exercise of stock options outstanding which are exercisable at an exercise price of $0.05 per share and 7,000,000 Common Shares issuable upon exercise of common
share purchase warrants outstanding which are exercisable at an exercise price of $0.05 per share.
|
•
|
successfully implement or execute our business plan, or that our business plan is sound;
|
•
|
adjust to changing conditions or keep pace with increased demand;
|
•
|
attract and retain an experienced management team; or
|
•
|
raise sufficient funds in the capital markets to effectuate our business plan, including product development, licensing and approvals.
|
●
|
delaying, deferring or preventing a change of control of the Company;
|
|
|
●
|
impeding a merger, consolidation, takeover or other business combination involving the Company; or
|
|
●
|
discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.
|
Funding Level
|
$
|
48,857,000
|
$
|
36,582,000
|
$
|
24,307,500
|
$
|
12,302,000
|
||||||||
Offering Price per Unit
|
$
|
0.75
|
$
|
0.75
|
$
|
0.75
|
$
|
0.75
|
||||||||
Offering Price per Warrant Share
|
$
|
1.00
|
$
|
1.00
|
$
|
1.00
|
$
|
1.00
|
||||||||
Weighted Average Price per Unit and Warrant Share
|
$
|
0.83
|
$
|
0.83
|
$
|
0.83
|
$
|
0.83
|
||||||||
Pro forma net tangible book value per Common Share before the Offering
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
||||
Increase per Common Share attributable to investors in this Offering
|
$
|
0.38
|
$
|
0.33
|
$
|
0.25
|
$
|
0.15
|
||||||||
Pro forma net tangible book value per Common Share after the Offering
|
$
|
0.37
|
$
|
0.31
|
$
|
0.24
|
$
|
0.14
|
||||||||
Dilution to investors after the Offering
|
$
|
0.46
|
$
|
0.52
|
$
|
0.59
|
$
|
0.69
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 100% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
54
|
%
|
$
|
1,400,000
|
3 | % | |||||||||
New Investors
|
60,000,000
|
46
|
%
|
$
|
50,000,000
|
97 |
%
|
|||||||||
Total
|
130,000,000
|
100
|
%
|
$
|
51,400,000
|
100
|
%
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 75% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
61
|
%
|
$
|
1,400,000
|
4
|
%
|
|||||||||
New Investors
|
45,000,000
|
39
|
%
|
$
|
37,500,000
|
96
|
%
|
|||||||||
Total
|
115,000,000
|
100
|
%
|
$
|
38,900,000
|
100
|
%
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 50% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
70
|
%
|
$
|
1,400,000
|
5
|
%
|
|||||||||
New Investors
|
30,000,000
|
30
|
%
|
$
|
25,000,000
|
95
|
%
|
|||||||||
Total
|
100,000,000
|
100
|
%
|
$
|
26,400,000
|
100
|
%
|
|
Units Purchased
|
Total Consideration
|
||||||||||||||
|
Number
|
Percentage
|
Amount
|
Percentage
|
||||||||||||
Assuming 25% of Units Sold:
|
||||||||||||||||
Existing Shareholders
|
70,000,000
|
82
|
%
|
$
|
1,400,000
|
10 |
%
|
|||||||||
New Investors
|
15,000,000
|
18
|
%
|
$
|
12,500,000
|
90
|
%
|
|||||||||
Total
|
85,000,000
|
100
|
%
|
$
|
13,900,000
|
100
|
%
|
Percentage of Offering Sold
|
||||||||||||||||
100%
|
|
75%
|
|
50%
|
|
25%
|
|
|||||||||
Construction of facilities and equipment
|
$
|
10,000,000
|
$
|
8,000,000
|
$
|
8,000,000
|
$
|
4,000,000
|
||||||||
Complete licensing and permitting at new facilities
|
$
|
1,000,000
|
$
|
1,000,000
|
$
|
1,000,000
|
$
|
1,000,000
|
||||||||
Cosechemos operational expenditures
|
$
|
6,000,000
|
$
|
6,000,000
|
$
|
6,000,000
|
$
|
3,000,000
|
||||||||
Recruit and implement sales team
|
$
|
1,500,000
|
$
|
900,000
|
$
|
600,000
|
$
|
400,000
|
||||||||
Research and Development
|
$
|
5,800,000
|
$
|
4,800,000
|
$
|
1,900,000
|
$
|
1,328,500
|
||||||||
General and Administrative
|
$
|
6,100,000
|
$
|
6,100,000
|
$
|
6,007,000
|
$
|
2,003,500
|
||||||||
Execute marketing and branding campaigns
|
$
|
3,000,000
|
$
|
2,000,000
|
$
|
800,000
|
$
|
300,000
|
||||||||
Strategic acquisitions and related capital expenditures
|
$
|
15,457,000
|
$
|
7,782,000
|
$
|
-
|
$
|
-
|
||||||||
TOTAL
|
$
|
48,857,000
|
$
|
36,582,000
|
$
|
24,307,000
|
$
|
12,032,000
|
Flora Growth Corp.
(Ontario)
|
|||
|
|
||
90% | |||
Cosechemos Ya S.A.S.
(Colombia)
|
•
|
marketing, strategic planning and sales tactics (line leaders, visitors and promoters);
|
•
|
scientific contents;
|
•
|
institutional relations;
|
•
|
customer service, after sales; and
|
•
|
information systems and management platform.
|
•
|
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
|
•
|
taking advantage of extensions of time to comply with certain new or revised financial accounting standards;
|
•
|
being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements; and
|
•
|
being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved.
|
Name
|
|
Position
|
|
Age
|
|
|
Term of Office
|
|
|
Approximate hours per week
for part-time employees |
||
Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
||
Damian Lopez
|
|
President and Chief Executive Officer
|
|
|
36
|
|
|
|
March 2019 – Present
|
|
|
30
|
Deborah Battiston
|
|
Chief Financial Officer
|
|
|
61
|
|
|
|
March 2019 – Present
|
|
|
15
|
Orlando Bustos
|
|
VP Corporate Development
|
|
|
32
|
|
|
|
March 2019 – Present
|
|
|
30
|
Javier Franco
|
|
VP Agriculture
|
|
52
|
|
|
|
June 2019 – Present
|
|
|
N/A
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stan Bharti
|
|
Executive Chairman
|
|
|
67
|
|
|
|
March 2019 – Present
|
|
|
N/A
|
Damian Lopez
|
|
Director
|
|
|
36
|
|
|
|
March 2019 – Present
|
|
|
N/A
|
Fred Leigh
|
|
Director
|
|
|
63
|
|
|
|
March 2019 – Present
|
|
|
N/A
|
William Steers
|
Director
|
66
|
July 2019 – Present
|
N/A
|
|
|
• Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
|
|
|
|
• had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive
officer, either at the time of the bankruptcy filing or within two years prior to that time;
|
|
|
|
|
|
• been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such
activity;
|
|
|
|
|
|
• been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended, or vacated;
|
|
|
|
|
|
• been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not
limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire
fraud or fraud in connection with any business entity; or
|
|
|
|
|
|
• been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act
of 1934, as amended (the Exchange Act)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or
persons associated with a member.
|
|
|
• the director is, or at any time during the past three years was, an employee of the company;
|
|
|
• the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the independence
determination (subject to certain exemptions, including, among other things, compensation for board or board committee service);
|
|
|
|
|
|
• the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the
current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exemptions);
|
|
|
|
|
|
• the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the
compensation committee of such other entity; or
|
|
|
|
|
|
• the director or a family member of the director is a current partner of the company's outside auditor, or at any time during the past three years was a partner or employee of the company's outside auditor, and
who worked on the company's audit.
|
Name and Capacity
|
Cash Compensation and Value of Shares issued for Service
|
|
|
Other Compensation
|
|
|
Total Compensation
|
|
||||
|
|
|
|
(1)
|
|
|
|
|
||||
Damian Lopez (CEO//Director)
|
|
$
|
150,688
|
|
|
$
|
12,300
|
|
|
$
|
162,988
|
|
Deborah Battiston (CFO)
|
|
$
|
84,413
|
|
|
$
|
9,840
|
|
|
$
|
94,253
|
|
Orlando Bustos (VP Corp. Development)
|
|
$
|
38,138
|
|
|
$
|
12,300
|
|
|
$
|
50,438
|
|
Stan Bharti (Executive Chairman)
|
|
$
|
214,688
|
|
|
$
|
-
|
|
|
$
|
214,688
|
|
Fred Leigh (Director)
|
|
$
|
65,000
|
|
|
$
|
-
|
|
|
$
|
65,000
|
|
William Steers (Director)
|
|
$
|
-
|
|
|
$
|
12,300
|
|
|
$
|
12,300
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent
of Class (1)
|
|
|
|
|
|
|
|
|
|
Directors and Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group
|
|
25,750,
|
000(2)
|
|
|
36.8%(2)
|
|
|
|
|
|
|
|
Greater than 10% Securityholders:
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This Offering Statement does not contemplate that any of our current listed shareholders will acquire any additional Common Shares as part of this Offering.
|
(2)
|
Includes 3,800,000 shares of common stock issuable upon exercise of stock options and 7,000,000 shares of common stock issuable upon exercise of founder warrants held by executive officers and directors.
|
•
|
to vote at meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote;
|
•
|
subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of our company, to share equally in the remaining property of our company on liquidation, dissolution
or winding-up of our company; and
|
•
|
the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors.
|
INDEX TO FINANCIAL STATEMENTS
|
Page
|
|
Audited Financial Statements of Cosechemos Ya S.A.S. for the Years Ended December 31, 2018 and December 31, 2017 (Expressed in United States Dollars)
|
F-2
|
Independent Auditor's Report
|
F-3
|
Statements of Financial Position as of December 31, 2018 and December 31, 2017
|
F-6
|
Statements of Loss and Comprehensive Loss (Income) for the years ended December 31, 2018 and December 31, 2017
|
F-7
|
Statements of Shareholders' Equity for the years ended December 31, 2018 and December 31, 2017
|
F-8
|
Statements of Cash Flows for the years ended December 31, 2018 and December 31, 2017
|
F-9
|
Notes to the Financial Statements
|
F-10
|
Unaudited Condensed Interim Financial Statements of Cosechemos Ya S.A.S. for the three and six months ended June 30, 2019 and June 30, 2018 (Expressed in United States Dollars)
|
F-27 |
Unaudited Condensed Interim Statements of Financial Position as of June 30, 2019 and December 31, 2018
|
F-28
|
Condensed Interim Statements of Loss and Comprehensive Loss for the three and six months ended June 30, 2019 and June 30, 2018
|
F-29
|
Condensed Interim Statements of Shareholders' Equity for the six months ended June 30, 2019 and June 30, 2018
|
F-30
|
Condensed Interim Statements of Cash Flows for the six months ended June 30, 2019 and June 30, 2018
|
F-31
|
Notes to the Condensed Interim Financial Statements
|
F-32
|
Audited Financial Statements of Flora Growth Corp. for the Period from Incorporation on March 13, 2019 to June 30, 2019 (Expressed in United States Dollars)
|
F-40
|
Independent Auditors’ Report
|
F-41
|
Interim Statement of Financial Position as of June 30, 2019
|
F-43
|
Interim Statement of Loss and Comprehensive Loss for the three months ended June 30, 2019 and for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-44
|
Interim Statement of Changes in Shareholders' Equity for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-45
|
Interim Statement of Cash Flows for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-46
|
Notes to the Unaudited Interim Financial Statements for the period from incorporation on March 13, 2019 to June 30, 2019
|
F-47
|
Pro Forma Consolidated Financial Statements of Flora Growth Corp. (unaudited) as of December 31, 2018 and June 30, 2019 (Expressed in United States Dollars)
|
F-61
|
Pro-Forma Condensed Consolidated Statement of Financial Position as of June 30, 2019
|
F-62
|
Pro-Forma Condensed Consolidated Statement of Loss and Comprehensive Loss as of June 30, 2019 and December 31, 2018
|
F-63 and F-64
|
Notes to Pro-Forma Condensed Consolidated Financial Statements as of December 31, 2018
|
F-65
|
1.
|
Compliance of transactions related with cannabis activities
|
2.
|
Lease agreement
|
COSECHEMOS YA S.A.S.
|
||||||||
Statements of Financial Position
|
||||||||
(Expressed in United States dollars)
|
||||||||
|
||||||||
As at:
|
December 31, 2018
|
December 31, 2017
|
||||||
|
||||||||
ASSETS
|
||||||||
Current
|
||||||||
Amounts receivable (Note 5)
|
$
|
1,539
|
1,676
|
|||||
Prepaid expenses (Note 6)
|
3
|
1
|
||||||
Total assets
|
$
|
1,542
|
1,677
|
|||||
|
||||||||
LIABILITIES
|
||||||||
Current
|
||||||||
Trade payables and accrued liabilities (Note 7)
|
$
|
14
|
8
|
|||||
Total liabilities
|
14
|
8
|
||||||
|
||||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Share capital (Note 8)
|
1,764
|
1,764
|
||||||
Accumulated deficit
|
(11
|
)
|
(7
|
)
|
||||
Accumulated other comprehensive income
|
(225
|
)
|
(88
|
)
|
||||
Total shareholders' equity
|
1,528
|
1,669
|
||||||
Total liabilities and shareholders’ equity
|
$
|
1,542
|
1,677
|
|||||
|
COSECHEMOS YA S.A.S.
Statements of Loss and Comprehensive Loss (Income)
|
||||||||
(Expressed in United States dollars)
|
||||||||
|
||||||||
For the year ended
|
For the year ended
|
|||||||
|
December 31, 2018
|
December 31, 2017
|
||||||
|
||||||||
Expenses
|
||||||||
Income tax expenses (Note 9)
|
$
|
4
|
$
|
7
|
||||
Net loss for the year
|
$
|
4
|
$
|
7
|
||||
Other comprehensive income
|
||||||||
Foreign currency translation
|
137
|
88
|
||||||
Comprehensive loss for the year
|
$
|
141
|
$
|
95
|
||||
|
||||||||
Basic and diluted loss per share
|
$
|
0.03
|
$
|
0.02
|
||||
Weighted average number of common shares outstanding – basic and diluted
|
5,000
|
5,000
|
COSECHEMOS YA S.A.S.
|
||||||||||||||||||||
Statements of Shareholders' Equity
|
||||||||||||||||||||
(Expressed in United States dollars)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
Share Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income
|
Shareholders’ Equity
|
||||||||||||||||
#
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||||||||
Balance, December 31, 2017
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
|||||||||||||
Loss for the year
|
-
|
-
|
(4
|
)
|
-
|
(4
|
)
|
|||||||||||||
Other comprehensive loss for the year
|
-
|
-
|
-
|
(137
|
)
|
(137
|
)
|
|||||||||||||
Balance, December 31, 2018
|
5,000
|
1,764
|
(11
|
)
|
(225
|
)
|
1,528
|
|||||||||||||
Balance, December 31, 2016
|
5,000
|
1,764
|
-
|
-
|
1,764
|
|||||||||||||||
Loss for the year
|
-
|
-
|
(7
|
)
|
-
|
(7
|
)
|
|||||||||||||
Other comprehensive loss for the year
|
-
|
-
|
-
|
(88
|
)
|
(88
|
)
|
|||||||||||||
Balance, December 31, 2017
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
COSECHEMOS YA S.A.S
|
||||||||
Statements of Cash Flows
(Expressed in United States dollars)
|
||||||||
December 31, 2018
|
December 31, 2017
|
|||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the year
|
$
|
(4
|
)
|
$
|
(7
|
)
|
||
Net change in non-cash working capital
|
4
|
7
|
||||||
Net cash flows from operating activities
|
-
|
-
|
||||||
CHANGE IN CASH DURING THE PERIOD
|
-
|
-
|
||||||
CASH, beginning of the year
|
-
|
-
|
||||||
CASH, end of the year
|
$
|
-
|
$
|
-
|
||||
•
|
The contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically
distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
|
•
|
The Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
|
•
|
The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used.
In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
|
o
|
The Company as the right to operate the asset; or
|
o
|
The Company designed the asset in a way that predetermines how and for what purpose it will be used.
|
December 31, 2018
|
December 31, 2017
|
|||||||
Amounts receivable
|
$
|
1,539
|
$
|
1,676
|
||||
Total
|
$
|
1,539
|
$
|
1,676
|
December 31, 2018
|
December 31, 2017
|
|||||||
Prepaid expenses
|
$
|
3
|
$
|
1
|
||||
Total
|
$
|
3
|
$
|
1
|
December 31, 2018
|
December 31, 2017
|
|||||||
Trade payables and accrued liabilities
|
$
|
14
|
$
|
8
|
||||
Total
|
$
|
14
|
$
|
8
|
a.
|
Authorized
|
b.
|
Common shares issued
|
December 31, 2018
|
December 31, 2017
|
|||||||
Share capital
|
$
|
1,764
|
$
|
1,764
|
||||
Total
|
$
|
1,764
|
$
|
1,764
|
December 31, 2018
|
December 31, 2017
|
|||||||
Income tax
|
4
|
7
|
||||||
Total
|
$
|
4
|
$
|
7
|
1.
|
The list of goods and services excluded from VAT established in articles 424, 426 and 476 of the Tax Code was modified.
|
2.
|
Article 437 of the Tax Code was added, regarding guidelines on the fulfillment of formal duties on VAT by service providers from abroad.
|
3.
|
The withholding of VAT may be up to 50% of the value of the tax, subject to regulation of the National Government. Withholding tax must be made at VAT when personal property or encumbered services are
acquired from persons registered as contributors to Simple regime.
|
4.
|
The VAT rate remains at 19%.
|
5.
|
The simplified VAT regime is eliminated, classifying taxpayers as not responsible as long as they meet the same criteria as they were for the simplified one (in addition to not belonging to the simple
regime).
|
6.
|
The tax discount on income is created in the sales tax on the acquisition or formation of real productive fixed assets (eliminating the special deduction of VAT on the acquisition of capital goods).
|
7.
|
For the years 2019, 2020, 2021, an extraordinary estate tax is created by: i) natural persons and illiquid successions contributing to income tax, ii) national or foreign natural persons who do not have
residence in the country , with respect to the assets directly owned in the country, ii) national or foreign natural persons who do not have residence in the country, with respect to their assets indirectly owned through permanent
establishments in the country (except for exceptions in international treaties and in domestic law ), iv) illiquid successions of causes without residence in the country at the time of their death with respect to their assets owned in
the country; and v) foreign companies or entities not declaring income tax, with respect to their property owned in Colombia, such properties, yachts, boats, boats, works of art, aircraft or mining or oil rights. This lien will not
apply to stocks or accounts receivable. The lien will apply to the possession as of January 1, 2019 of a net worth of more than 5,000 million pesos (1% rate each year).
|
8.
|
Creation of the tax normalization tax at a rate of 13% for taxpayers of income tax who have omitted assets or non-existent liabilities as of January 1, 2019.
|
9.
|
As of 2019, a withholding at the source of the income tax of 7.5% on the profits that would have been able to be distributed to national companies as non-constitutive income or occasional income is
added. The component taxed on profits distributed via dividends will be taxed at the rate indicated in article 240 of the Tax Statute, in which case the withholding at the source indicated above will be applied once this tax has been
reduced. This withholding does not apply to taxpayers who are part of a business group or who belong to the holding regime.
|
10.
|
The income tax rate on dividends received by companies or other foreign entities without domicile in the country, by natural persons without residence in Colombia and by illiquid successions of causes
that were not residents in Colombia was increased to 7.5% (profits) of 2017 and 2018 were taxed at 5%). The component taxed on profits distributed via dividends will be taxed at the rate indicated in article 240 of the Tax Statute, in
which case the tax indicated above will be applied once this tax has been reduced.
|
11.
|
A transition regime is created with regard to changes made to dividends.
|
12.
|
Increases the maximum marginal rate applicable to resident natural persons and modal assignments to 39%. Likewise, certain percentages applicable to withholding at source to natural persons are
modified.
|
13.
|
Life insurance indemnities will be taxed at the rate applicable to occasional earnings from the taxable year 2019 if they exceed 12,000 UVT.
|
14.
|
The income tax rate applicable to national (and similar) or foreign companies (with or without residence in Colombia required to file annual income tax returns) and permanent establishments of foreign
entities will be 33% for the taxable year 2019, 32% by 2020, 31% by 2021, and 30% from 2022. Special rules will apply to the hotel sector as of January 1, 2019
|
15.
|
Financial institutions must settle additional point to income tax and complementary when the taxable income is equal to or greater than 120,000 UVTs as follows: (i) 4% by 2019; and (ii) 3% by 2020 and
2021.
|
16.
|
In the income tax there are modifications around: i) income that is not considered to be of national source; ii) deduction of all taxes paid (exception to estate tax and standardization tax) and
inclusion of some taxes paid as a tax discount (50% - industry and commerce tax); iii) reduction of the presumptive income rate gradually up to 0% from the taxable year 2021 iv) discounts for taxes paid abroad, v) modification of the
exempt income contained in article 235-2 of the Tax Statute ; vi) elimination of tax discounts; and vii) the rules applicable to private equity funds, collective investment funds, among others.
|
17.
|
Modifies the provision contained in article 90 of the Tax Statute and the allocation of commercial margins will be extensible to the provision of services. It is understood that the value assigned by
the parties differs markedly from the average when it is separated by more than fifteen percent (15%) of the prices established in commerce for goods or services of the same species and quality. It is also provided that the sale value
of the shares cannot be less than 130% of the intrinsic value, leaving the possibility for the DIAN to use technical methods to determine the sale price.
|
18.
|
The sub-capitalization rule is modified by stating that it only applies when debts that generate interest are incurred, directly or indirectly, in favor of economic or domestic affiliates (before it did
not matter), only interest generated on occasion may be deducted of such debts as the average total amount thereof, does not exceed the result of multiplying by two (2) the taxpayer's liquid assets determined as of December 31 of the
immediately preceding taxable year.
|
19.
|
The profits obtained in the transfer of assets or companies located in the national territory are taxed, through the transfer of shares, participations or rights of foreign entities, if the transfer was
made directly with the underlying asset (indirect disposals).
|
20.
|
Permanent establishments of foreign companies will be taxed with income tax with respect to their income from national and foreign sources that are attributable to them.
|
21.
|
Employee education contributions not considered as indirect payments to the worker are included as a deductible expense.
|
22.
|
It also indicates that interest and other financial costs attributed to a permanent establishment in Colombia may be deductible provided they have not been subject to withholding at source.
|
23.
|
Article 885 of the Tax Statute regarding the presumption of full right for foreign controlled entities is amended, indicating that if more than 80% of income is active there will be no passive income.
|
24.
|
Article 793 of the Tax Statute is added, including events under which there is joint and several liability with the principal taxpayer in paying the tax.
|
25.
|
A special regime called mega investments is created as of January 1, 2019 for 20 years, for income taxpayers who generate at least 250 direct jobs and make new investments within the national territory
with a value equal to or greater than 30,000. 000 UVT (COP $ 1,028,100,000,000 in the year 2019) in any commercial, industrial and / or service activity.
|
26.
|
Benefits are raised for the mega-investment regime in: i) the income tax rate (27%), ii) asset depreciation, iii) presumptive income exclusion, iv) non-application of dividend tax; and v) not subject to
the estate tax.
|
27.
|
The regime for Colombian holding companies is added to income and complementary taxes. It emphasizes in national societies that have as one of their main activities the holding of securities, investment
in shares or participations abroad. This regime allows an exemption on dividends received by foreign entities.
|
28.
|
Guidelines are generated around works for taxes clarifying validity, conditions for maintaining the means of payment, among others.
|
29.
|
Some retention rates at the source are modified for payments abroad: i) for administration services it will be 33% and in the case of technical assistance, exploitation of
industrial property, technical services, consulting, software licensing (among others) will be 20%.
|
30.
|
In the matter of procedure there are modifications: i) withholding statements at the source that despite being ineffective will be an executive title, ii) electronic notification of administrative acts;
and iii) payment of glosses in the statement of objections to avoid default interest and use the flows plus two points; iv) elimination of extension of firmness to three (3) additional years for compensation of tax losses; v)
inclusion of terminations by mutual agreement and conciliations, among others.
|
(ii)
|
Foreign exchange risk
|
COSECHEMOS YA S.A.S.
|
||||||
Condensed Interim Statements of Financial Position
|
||||||
(Expressed in United States dollars)
(Unaudited)
|
|
||||||||
As at:
|
June 30,
2019
|
December 31, 2018
|
||||||
|
||||||||
ASSETS
|
||||||||
Current
|
||||||||
Amounts receivable (Note 5)
|
$
|
1,575
|
$
|
1,539
|
||||
Prepaid expenses (Note 6)
|
3
|
3
|
||||||
Biological asset (Note 7)
|
11,096
|
-
|
||||||
Total current assets
|
12,674
|
1,542
|
||||||
Non-current
|
||||||||
Right-of-use asset (Note 8)
|
315,531
|
-
|
||||||
Intangible asset (Note 9)
|
1,048
|
-
|
||||||
Total assets
|
$
|
329,253
|
$
|
1,542
|
||||
|
||||||||
LIABILITIES
|
||||||||
Current
|
||||||||
Trade payables and accrued liabilities (Note 10)
|
$
|
15,027
|
$
|
14
|
||||
Current lease liability (Note 11)
|
5,374
|
-
|
||||||
Total current liabilities
|
20,401
|
14
|
||||||
Non-current lease liability (Note 11)
|
310,157
|
-
|
||||||
Total liabilities
|
330,558
|
14
|
||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Share capital (Note 12)
|
1,764
|
1,764
|
||||||
Accumulated deficit
|
(3,005
|
)
|
(11
|
)
|
||||
Accumulated other comprehensive income
|
(64
|
)
|
(225
|
)
|
||||
Total shareholders' equity
|
(1,305
|
)
|
1,528
|
|||||
Total liabilities and shareholders’ equity
|
$
|
329,253
|
$
|
1,542
|
||||
|
COSECHEMOS YA S.A.S.
Condensed Interim Statements of Loss and Comprehensive Loss
|
||||||||||||||||
(Expressed in United States dollars)
(Unaudited)
|
||||||||||||||||
|
||||||||||||||||
For the three months ended
|
For the three months ended
|
For the six months ended
|
For the six months ended
|
|||||||||||||
|
June 30, 2019
|
June 30, 2018
|
June 30, 2019
|
June 30, 2018
|
||||||||||||
|
||||||||||||||||
Expenses
|
||||||||||||||||
General administration expenses
|
$
|
1,295
|
$
|
-
|
$
|
1,295
|
$
|
-
|
||||||||
Travel
|
779
|
-
|
779
|
-
|
||||||||||||
Amortization (Notes 9)
|
28
|
-
|
28
|
-
|
||||||||||||
Income tax expense
|
577
|
-
|
577
|
-
|
||||||||||||
Interest expense (Note 10)
|
315
|
-
|
315
|
-
|
||||||||||||
Net loss for the period
|
$
|
2,994
|
$
|
-
|
$
|
2,994
|
$
|
-
|
||||||||
Other comprehensive loss
|
||||||||||||||||
Foreign currency translation
|
(161
|
)
|
-
|
(161
|
)
|
-
|
||||||||||
Comprehensive loss for the period
|
$
|
2,833
|
$
|
-
|
$
|
2,833
|
$
|
-
|
||||||||
|
||||||||||||||||
Basic and diluted loss per share
|
$
|
0.57
|
$
|
0.00
|
$
|
0.57
|
$
|
0.00
|
||||||||
Weighted average number of common shares outstanding – basic and diluted
|
5,000
|
5,000
|
5,000
|
5,000
|
COSECHEMOS YA S.A.S.
|
||||||||||||||||||||
Condensed Interim Statements of Shareholders' Equity
|
||||||||||||||||||||
(Expressed in United States dollars)
(Unaudited)
|
||||||||||||||||||||
|
||||||||||||||||||||
|
Share Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Income
|
Shareholders’ Equity
|
||||||||||||||||
#
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||||||||
Balance, December 31, 2018
|
5,000
|
1,764
|
(11
|
)
|
(225
|
)
|
1,528
|
|||||||||||||
Other comprehensive loss for the period
|
-
|
-
|
-
|
161
|
161
|
|||||||||||||||
Loss for the period
|
-
|
-
|
(2,994
|
)
|
-
|
(2,994
|
)
|
|||||||||||||
Balance, June 30, 2019
|
5,000
|
1,764
|
(3,005
|
)
|
(64
|
)
|
(1,305
|
)
|
||||||||||||
Balance, December 31, 2017
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
|||||||||||||
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Balance, June 30, 2018
|
5,000
|
1,764
|
(7
|
)
|
(88
|
)
|
1,669
|
COSECHEMOS YA S.A.S
|
||||||||
Condensed Interim Statements of Cash Flows
(Expressed in United States dollars)
(Unaudited)
|
||||||||
June 30, 2019
|
June 30, 2018
|
|||||||
CASH FROM OPERATING ACTIVITIES:
|
||||||||
Net loss for the period
|
$
|
(2,833
|
)
|
$
|
-
|
|||
Accrued interest on amounts payables (Note 10)
|
315
|
-
|
||||||
Amortization (Notes 9)
|
28
|
-
|
||||||
(2,490
|
)
|
-
|
||||||
Net change in non-cash working capital
|
2,490
|
-
|
||||||
Net cash flows from operating activities
|
-
|
-
|
||||||
CHANGE IN CASH DURING THE PERIOD
|
-
|
-
|
||||||
CASH, beginning of the year
|
-
|
-
|
||||||
CASH, end of the period
|
$
|
-
|
$
|
-
|
||||
•
|
The contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically
distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
|
•
|
The Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
|
•
|
The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is
used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
|
o
|
The Company as the right to operate the asset; or
|
o
|
The Company designed the asset in a way that predetermines how and for what purpose it will be used.
|
June 30, 2019
|
December 31, 2018
|
|||||||
Amounts receivable
|
$
|
1,575
|
$
|
1,539
|
||||
Total
|
$
|
1,575
|
$
|
1,539
|
June 30, 2019
|
December 31, 2018
|
|||||||
Prepaid expenses
|
$
|
3
|
$
|
3
|
||||
Total
|
$
|
3
|
$
|
3
|
June 30, 2019
|
December 31, 2018
|
|||||||
Biological asset
|
$
|
11,096
|
$
|
-
|
||||
Total
|
$
|
11,096
|
$
|
-
|
Cost
|
||||
Balance, December 31, 2018
|
$
|
-
|
||
Adoption of IFRS 16
|
315,531
|
|||
Balance, June 30, 2019
|
$
|
315,531
|
||
Amortization
|
||||
Balance, December 31, 2018
|
$
|
-
|
||
Amortization for the period
|
-
|
|||
Balance, June 30, 2019
|
$
|
-
|
||
Net book value:
|
||||
At December 31, 2018
|
$
|
-
|
||
At June 30, 2019
|
$
|
315,531
|
June 30, 2019
|
December 31, 2018
|
|||||||
License
|
$
|
1,048
|
$
|
-
|
||||
Total
|
$
|
1,048
|
$
|
-
|
June 30, 2019
|
December 31, 2018
|
|||||||
Trade payables and accrued liabilities
|
$
|
15,027
|
$
|
14
|
||||
Total
|
$
|
15,027
|
$
|
14
|
Lease liability, January 1, 2019
|
$
|
315,531
|
||
Interest expense
|
-
|
|||
Lease payments
|
-
|
|||
Lease liability as at June 30, 2019
|
$
|
315,531
|
|
June 30, 2019
|
|||
Current lease liability
|
$
|
5,374
|
||
Non-current lease liability
|
310,157
|
|||
|
$
|
315,531
|
a.
|
Authorized
|
b.
|
Common shares issued
|
June 30, 2019
|
December 31, 2018
|
|||||||
Share capital
|
$
|
1,764
|
$
|
1,764
|
||||
Total
|
$
|
1,764
|
$
|
1,764
|
Flora Growth Corp.
Interim Statements of Loss and Comprehensive Loss
|
||||||||
(Expressed in United States dollars)
|
||||||||
For the three months ended
|
From period from incorporation on March 13, 2019 to June 30,
|
|||||||
|
June 30, 2019
|
2019
|
||||||
|
||||||||
Expenses
|
||||||||
Consulting and management fees (Note 6(b) and 10)
|
$
|
1,550,610
|
$
|
1,550,610
|
||||
Professional fees
|
19,309
|
19,309
|
||||||
General office expenses
|
24,312
|
24,312
|
||||||
Travel expenses
|
219,613
|
219,613
|
||||||
Share based compensation (Note 7, 8, and 10)
|
85,870
|
85,870
|
||||||
Loss and comprehensive loss for the period
|
$
|
1,899,714
|
$
|
1,899,714
|
||||
|
||||||||
Basic and diluted loss per share
|
$
|
0.82
|
$
|
0.99
|
||||
Weighted average number of common shares outstanding – basic and diluted
|
2,307,692
|
1,926,606
|
||||||
Flora Growth Corp.
|
||||||||||||||||||||||||
Interim Statement of Shareholders' Equity
|
||||||||||||||||||||||||
(Expressed in United States dollars)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Common Shares
|
Options
|
Warrants
|
Accumulated Deficit
|
Shareholders’
Equity (Deficiency)
|
|||||||||||||||||||
#
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||||||||||
Balance, March 13, 2019
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Common shares issued (Note 6(b))
|
70,000,000
|
1,400,000
|
-
|
-
|
-
|
1,400,000
|
||||||||||||||||||
Options issued (Note 7)
|
-
|
-
|
85,870
|
-
|
-
|
85,870
|
||||||||||||||||||
Warrants issued (Note 8)
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Loss for the period
|
-
|
-
|
-
|
-
|
(1,899,714
|
)
|
(1,899,714
|
)
|
||||||||||||||||
Balance, June 30, 2019
|
70,000,000
|
1,400,000
|
85,870
|
-
|
(1,889,714
|
)
|
(413,844
|
)
|
||||||||||||||||
Flora Growth Corp.
|
||||
Interim Statement of Cash Flows
(Expressed in United States dollars)
|
||||
For the period from incorporation on March 13, 2019 to June 30, 2019
|
||||
CASH FROM OPERATING ACTIVITIES:
|
||||
Net loss for the period
|
$
|
(1,899,714
|
)
|
|
Share based compensation (Note 7 and 8)
|
85,870
|
|||
Bonus (Note 6(b))
|
1,400,000
|
|||
(413,844
|
)
|
|||
Net change in non-cash working capital
|
413,844
|
|||
Net cash flows from operating activities
|
-
|
|||
CHANGE IN CASH DURING THE PERIOD
|
-
|
|||
CASH, beginning of the period
|
-
|
|||
CASH, end of the period
|
$
|
-
|
||
3. |
SIGNIFICANT ACCOUNTING POLICIES (continued)
|
June 30, 2019
|
||||
HST receivable
|
$
|
238
|
||
Total
|
$
|
238
|
a.
|
Authorized
|
b.
|
Common shares issued
|
|
|
Number of shares
|
|
Stated value $
|
|
Balance, March 13, 2019
|
-
|
$ -
|
|||
Bonus shares
|
70,000,000
|
1,400,000
|
|||
Balance, June 30, 2019
|
|
70,000,000
|
|
$ 1,400,000
|
|
Number of options
|
Weighted average exercise price
|
||||||
Balance, March 13, 2019
|
-
|
$
|
-
|
|||||
Granted
|
7,000,000
|
0.05
|
||||||
|
||||||||
Balance, June 30, 2019
|
7,000,000
|
$
|
0.05
|
Date
|
Options
|
Options
|
Exercise
|
Grant date
|
Remaining life
|
of expiry
|
outstanding
|
exercisable
|
price
|
fair value
|
in years
|
June 28, 2024
|
7,000,000
|
7,000,000
|
$0.05
|
$ 85,870
|
5.00
|
|
7,000,000
|
7,000,000
|
|
$ 85,870
|
5.00
|
|
Number of warrants
|
Weighted average exercise price
|
||||||
Balance, March 13, 2019
|
-
|
$
|
-
|
|||||
Granted
|
7,000,000
|
0.05
|
||||||
Balance, June 30, 2019
|
7,000,000
|
$
|
0.05
|
Date of expiry
|
Warrants outstanding
|
Exercise price
|
Grant date
fair value
|
Remaining life in years
|
March 15, 2022
|
7,000,000
|
$ 0.05
|
$ -
|
2.71
|
|
7,000,000
|
|
$ -
|
2.71
|
a)
|
Provision for income taxes
|
June 30, 2019
|
||||
|
|
$
|
||
(Loss) before income taxes
|
(1,899,714
|
)
|
||
Expected income tax recovery based on statutory rate
|
(503,000
|
)
|
||
Adjustment to expected income tax benefit:
|
||||
Stock based compensation
|
394,000
|
|||
Change in benefit not recognized
|
109,000
|
|||
Deferred income tax provision (recovery)
|
-
|
b)
|
Deferred income tax
|
June 30, 2019
|
||||
|
|
$
|
||
Non-capital loss carry-forwards
|
412,000
|
|||
Total
|
412,000
|
|||
Three months ended June 30, 2019
|
Period from incorporation from March 13, 2019 to June 30, 2019
|
|||||||
Directors & officers’ compensation
|
$
|
80,231
|
$
|
95,759
|
||||
Share based payments
|
345,615
|
345,615
|
||||||
|
$
|
425,846
|
$
|
441,374
|
(ii)
|
Foreign exchange risk
|
June 30, 2019
|
CAD
|
Trade payables
|
$ 2,703
|
Accrued liabilities
|
519,010
|
$ 521,713
|
Pro Forma Condensed Consolidated Statement of Financial Position
|
||||||||||||||||||||
As at June 30, 2019
|
||||||||||||||||||||
(Unaudited, Expressed in United States Dollars)
|
||||||||||||||||||||
|
Flora Growth Corp
|
Cosechemos Ya S.A.S
|
Note 5
|
Pro Forma Adjustments
|
Pro Forma Consolidated
|
|||||||||||||||
|
||||||||||||||||||||
|
June 30, 2019
|
June 30, 2019
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||
Current assets
|
||||||||||||||||||||
Cash (Note 4)
|
$
|
-
|
$
|
-
|
a
|
$
|
30,000,000
|
$
|
48,777,000
|
|||||||||||
|
a
|
20,000,000
|
||||||||||||||||||
|
b
|
(1,143,000
|
)
|
|||||||||||||||||
|
c
|
345,747
|
||||||||||||||||||
(Note 3)
|
d
|
(80,000
|
)
|
|||||||||||||||||
|
e
|
(345,747
|
)
|
|||||||||||||||||
Amounts receivable
|
238
|
1,575
|
1,813
|
|||||||||||||||||
Prepaid
|
-
|
3
|
3
|
|||||||||||||||||
Biological asset
|
-
|
11,096
|
11,096
|
|||||||||||||||||
Total current assets
|
238
|
12,674
|
48,777,000
|
48,789,912
|
||||||||||||||||
Right-of-use asset
|
-
|
315,531
|
315,531
|
|||||||||||||||||
Intangible asset
|
-
|
1,048
|
81,175
|
82,223
|
||||||||||||||||
Total assets
|
$
|
238
|
$
|
329,253
|
$
|
-
|
$
|
48,858,175
|
$
|
49,187,666
|
||||||||||
LIABILITIES
|
||||||||||||||||||||
Current liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
414,082
|
$
|
15,027
|
$
|
429,109
|
||||||||||||||
Loan payable
|
-
|
-
|
c
|
345,747
|
-
|
|||||||||||||||
|
e
|
(345,747
|
)
|
|||||||||||||||||
Current lease liability
|
-
|
5,374
|
5,374
|
|||||||||||||||||
Total current liabilities
|
414,082
|
20,401
|
434,483
|
|||||||||||||||||
Non-current lease liability
|
-
|
310,157
|
310,157
|
|||||||||||||||||
Total liabilities
|
414,082
|
330,558
|
744,640
|
|||||||||||||||||
SHAREHOLDERS' EQUITY
|
||||||||||||||||||||
Share capital (Note 3)
|
1,400,000
|
1,764
|
a
|
22,777,070
|
50,257,000
|
|||||||||||||||
|
a
|
20,000,000
|
||||||||||||||||||
|
a
|
7,222,930
|
||||||||||||||||||
|
b
|
(1,143,000
|
)
|
|||||||||||||||||
|
d
|
(1,764
|
)
|
|||||||||||||||||
Options
|
85,870
|
-
|
85,870
|
|||||||||||||||||
Warrants
|
-
|
-
|
a
|
7,222,930
|
-
|
|||||||||||||||
|
a
|
(7,222,930
|
)
|
|||||||||||||||||
Deficit
|
(1,899,714
|
)
|
(3,005
|
)
|
d
|
3,005
|
(1,899,714
|
)
|
||||||||||||
Accumulated other comprehensive income
|
-
|
(64
|
)
|
d
|
64
|
-
|
||||||||||||||
Equity attributable to owners of the parent
|
(413,844
|
)
|
(1,305
|
)
|
48,858,305
|
48,443,156
|
||||||||||||||
Non-controlling interest
|
-
|
-
|
d
|
(131
|
)
|
(131
|
)
|
|||||||||||||
Total shareholders' equity
|
(413,844
|
)
|
(1,305
|
)
|
48,858,175
|
48,443,026
|
||||||||||||||
Total liabilities and shareholders' equity
|
$
|
238
|
$
|
329,253
|
$
|
48,858,175
|
$
|
49,187,666
|
Pro Forma Condensed Consolidated Statement of Loss and Comprehensive Loss
|
||||||||||||||||||||
From January 1, 2019 to June 30, 2019
|
||||||||||||||||||||
(Unaudited, Expressed in United States Dollars)
|
||||||||||||||||||||
|
Flora Growth Corp
|
Cosechemos Ya S.A.S
|
Note 5
|
Pro Forma Adjustments
|
Pro Forma Consolidated
|
|||||||||||||||
|
||||||||||||||||||||
|
June 30, 2019
|
June 30, 2019
|
||||||||||||||||||
EXPENSES
|
||||||||||||||||||||
Consulting and management fees
|
$
|
1,550,610
|
$
|
-
|
$
|
-
|
$
|
1,550,610
|
||||||||||||
Professional fees
|
19,309
|
-
|
-
|
19,309
|
||||||||||||||||
General administration expense
|
24,312
|
1,295
|
d
|
(1,295
|
)
|
24,312
|
||||||||||||||
Travel expenses
|
219,613
|
779
|
d
|
(779
|
)
|
219,613
|
||||||||||||||
Shared based compensation
|
85,870
|
-
|
d
|
-
|
85,870
|
|||||||||||||||
Interest expense
|
-
|
315
|
d
|
(315
|
)
|
-
|
||||||||||||||
Amortization
|
-
|
28
|
d
|
(28
|
)
|
-
|
||||||||||||||
Income tax expense
|
-
|
577
|
d
|
(577
|
)
|
-
|
||||||||||||||
Loss for the period
|
1,899,714
|
2,994
|
(2,994
|
)
|
1,899,714
|
|||||||||||||||
Other comprehensive loss
|
||||||||||||||||||||
Foreign currency translation
|
-
|
(161
|
)
|
d
|
161
|
-
|
||||||||||||||
Comprehensive loss for the period
|
$
|
1,899,714
|
$
|
2,833
|
$
|
(2,833
|
)
|
$
|
1,899,714
|
|||||||||||
|
||||||||||||||||||||
Comprehensive loss for the period attributable to:
|
||||||||||||||||||||
Owners of the parent
|
1,899,714
|
2,833
|
(2,964
|
)
|
1,899,584
|
|||||||||||||||
Non-controlling interest
|
-
|
-
|
d
|
131
|
131
|
|||||||||||||||
Comprehensive loss for the period
|
$
|
1,899,714
|
$
|
2,833
|
$
|
(2,833
|
)
|
$
|
1,899,714
|
Flora Growth Corp.
|
||||||||||||||||
Pro Forma Condensed Consolidated Statement of Loss and Comprehensive Loss
|
||||||||||||||||
From January 1, 2018 to December 31, 2018
|
||||||||||||||||
(Unaudited, Expressed in United States Dollars)
|
||||||||||||||||
|
Cosechemos Ya S.A.S
|
Note 5
|
Pro Forma Adjustments
|
Pro Forma Consolidated
|
||||||||||||
|
||||||||||||||||
|
December 31, 2018
|
|||||||||||||||
|
||||||||||||||||
EXPENSES
|
||||||||||||||||
General administration expense
|
$
|
-
|
d
|
$
|
(1,295
|
)
|
$
|
(1,295
|
)
|
|||||||
Travel expenses
|
-
|
d
|
(779
|
)
|
(779
|
)
|
||||||||||
Interest expense
|
-
|
d
|
(315
|
)
|
(315
|
)
|
||||||||||
Amortization
|
-
|
d
|
(28
|
)
|
(28
|
)
|
||||||||||
Income tax expense
|
4
|
d
|
(577
|
)
|
(573
|
)
|
||||||||||
Loss for the period
|
4
|
(2,994
|
)
|
(2,990
|
)
|
|||||||||||
Other comprehensive loss
|
||||||||||||||||
Foreign currency translation
|
137
|
(137
|
)
|
-
|
||||||||||||
Comprehensive loss for the year
|
$
|
141
|
$
|
(3,131
|
)
|
$
|
(2,990
|
)
|
||||||||
|
||||||||||||||||
Comprehensive loss for the period attributable to:
|
||||||||||||||||
Owners of the parent
|
141
|
(3,262
|
)
|
(3,121
|
)
|
|||||||||||
Non-controlling interest
|
-
|
131
|
131
|
|||||||||||||
Comprehensive loss for the year
|
$
|
141
|
$
|
(3,131
|
)
|
$
|
(2,990
|
)
|
i.
|
The unaudited interim condensed consolidated statement of financial position of Flora as at June 30, 2019;
|
ii.
|
The unaudited interim condensed consolidated statement of financial position of Cosechemos as at June 30, 2019;
|
iii.
|
The unaudited interim condensed statement of loss and comprehensive loss of Flora for the period from incorporation on March 13, 2019 to June 30, 2019;
|
iv.
|
The unaudited interim condensed statement of loss and comprehensive loss of Cosechemos for the six months June 30, 2019; and
|
v.
|
The unaudited interim condensed statement of loss and comprehensive loss of Cosechemos for the year ended December 31, 2018.
|
Acquisition of Cosechemos Ya. S.A.S
|
||||
Preliminary purchase price allocation
|
Estimated fair value
|
|||
Consideration:
|
||||
Cash
|
$
|
80,000
|
||
|
$
|
80,000
|
||
Allocation of purchase price:
|
||||
Amounts receivable
|
$
|
1,575
|
||
Prepaid expenses
|
3
|
|||
Biological asset
|
11,096
|
|||
Right-of-use asset
|
315,531
|
|||
Trade payables and accrued liabilities
|
(15,027
|
)
|
||
Current lease liability
|
(5,374
|
)
|
||
Non-current lease liability
|
(310,157
|
)
|
||
Minority interest
|
131
|
|||
Intangible asset
|
82,223
|
|||
|
$
|
80,000
|
(a)
|
To record the receipt of the Offering for gross proceeds of $50,000,000 with the exercise of 20,000,000 warrants.
|
(b)
|
To record estimated transaction costs of $1,143,000.
|
(c)
|
To record loans received from Copper One.
|
(d)
|
To record the acquisition of 90% of Cosechemos, Note 3.
|
(e)
|
To record the repayment of short term loans.
|
|
Number of shares
|
$
|
Number of shares held by Flora shareholders
|
70,000,000
|
$ 1,400,000
|
Commons shares expected to be issued through the Maximum Offering
|
60,000,000
|
50,000,000
|
Transaction costs
|
(1,143,000)
|
|
Pro forma common shares at June 30, 2019
|
130,000,000
|
$ 50,257,000
|
Exhibit No.
|
|
Description
|
|
|
|
EX1A-2.1†
|
|
Certificate of Incorporation of Flora Growth Corp.
|
|
|
|
EX1A-2.2†
|
|
Bylaws of Flora Growth Corp.
|
|
|
|
EX1A-4.1†
|
|
Form of Subscription Agreement.
|
|
|
|
EX1A-4.2†
|
|
Form of Common Share Purchase Warrant.
|
|
|
|
|
Consulting Agreement dated March 14, 2019 between Flora Growth Corp. and Forbes & Manhattan, Inc.
|
|
|
|
|
EX1A-6.2†
|
|
Consulting Agreement dated March 14, 2019 between Flora Growth Corp. and Stan Bharti.
|
|
|
|
EX1A-6.3†
|
|
Consulting Agreement dated March 14, 2019 between Flora Growth Corp. and Damian Lopez.
|
|
|
|
EX1A-6.4†
|
|
Consulting Agreement dated March 14, 2019 between Flora Growth Corp. and Jadan Consulting Corporation.
|
|
|
|
EX1A-6.5†
|
|
Consulting Agreement dated September 11, 2019 between Flora Growth Corp. and Orlando Bustos.
|
|
|
|
EX1A-6.6†
|
|
Form of Founder Warrant to Purchase Common Shares of Flora Growth Corp.
|
|
|
|
EXA1-6.7†
|
|
Broker-Dealer Agreement dated September 6, 2019 between Flora Growth Corp. and Dalmore Group, LLC.
|
EX1A-6.8†
|
Consulting Agreement dated September 6, 2019 between Flora Growth Corp. and DALV Consulting, LLC.
|
|
|
|
|
EX1A-6.9†
|
|
Shared Costs Services Agreement dated March 14, 2019 between Flora Growth Corp. and 2227929 Ontario Inc.
|
|
|
|
|
Promissory Lease With Option to Sale and Purchase Agreement dated December 27, 2018 between Cosechemos YA S.A.S. and Waldshut C.V.
|
|
|
|
EX1A-6.11†
|
|
Promissory Lease With Option to Sale and Purchase Agreement dated December 27, 2018 between Cosechemos YA S.A.S. and Vicalvaro C.V.
|
|
|
|
EX1A-6.12†
|
|
Lease Agreement dated May 2, 2018 between Cosechemos YA S.A.S. and C.I Gramulaz S.C.A
|
EX1A-6.13†
|
|
Amendment to Lease Agreement dated September 1, 2019 between Cosechemos YA S.A.S. and C.I Gramulaz S.C.A.
|
EX1A-6.14†
|
Loan Agreement dated August 6, 2019 between Flora Growth Corp. and Copper One Inc., as amended on September 12, 2019.
|
|
|
|
|
EX1A-6.15†
|
|
Shareholders’ Agreement dated October 2, 2019 among Flora Growth Corp., Guillermo Andres Ramirez Martinez, Guillermo Ramirez Cabrales and Oscar Mauricio Franco Ulloa.
|
EX1A-6.16†
|
|
Flora Growth Corp. Stock Option Plan.
|
EX1A-6.17†
|
Form of Stock Option Agreement.
|
|
|
|
|
EX1A-7.1†
|
|
Share Purchase Agreement dated July 16, 2019 among Flora Growth Corp., Guillermo Andres Ramirez Martinez, Guillermo Ramirez Cabrales and Oscar Mauricio Franco Ulloa.
|
|
|
|
EX1A-10.1†
|
|
Power of Attorney (included on signature page hereto).
|
|
|
|
EX1A-11.1†
|
|
Consent of McGovern Hurley LLP.
|
|
Consent of RSM Colombia SAS.
|
|
|
|
|
EX1A-12.1†
|
|
Opinion of Wildeboer Dellelce LLP.
|
|
|
|
EX1A-14.1†
|
|
Appointment of Agent for Service of Process.
|
FLORA GROWTH CORP. | |||
Date: October 10, 2019
|
By:
|
/s/Damian Lopez | |
Name:Damian Lopez | |||
Title:Chief Executive Officer | |||
/s/Damian Lopez
Name: Damian Lopez
Title: Chief Executive Officer, President and Director
(Principal Executive Officer)
|
Date: October 10, 2019
|
/s/Deborah Battiston
Name: Deborah Battiston
Title: Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer) |
Date: October 10, 2019
|
/s/Orlando Bustos
Name: Orlando Bustos
Title: VP Corporate Development
|
Date: October 10, 2019
|
/s/Javier Franco
Name: Javier Franco
Title: VP Agriculture
|
Date: October 10, 2019
|
/s/Stan Bharti
Name: Stan Bharti
Title: Executive Chairman
|
Date: October 10, 2019
|
/s/Frederic Leigh
Name: Frederic Leigh
Title: Director
|
Date: October 10, 2019
|
/s/William Steers
Name: William Steers
Title: Director
|
Date: October 10, 2019
|
1.
|
Interpretation
|
2.
|
Business of the Corporation
|
3.
|
Directors
|
4.
|
Committees
|
5.
|
Officers
|
6.
|
Protection of Directors, Officers and Others
|
7.
|
Shares
|
8.
|
Dividends and Rights
|
9.
|
Meetings of Shareholders
|
10.
|
Divisions and Departments
|
11.
|
Notices
|
12.
|
Electronic Documents
|
13.
|
Effective Date
|
1.01
|
Definitions
|
(1)
|
"Act" means the Business Corporations Act, R.S.0. 1990 c. B. 16 and the regulations under the Act, as from time to time amended, and every
statute that may be substituted therefor and, in the case of such substitution, any reference in the by-laws of the Corporation to provisions of the Act shall be read as references to the substituted provisions therefor in the new statute
or statutes;
|
(2)
|
"appoint" includes "elect" and vice versa;
|
(3)
|
"articles" means the articles of the Corporation as from time to time amended or restated;
|
(4)
|
"board" means the board of directors of the Corporation;
|
(5)
|
"by-laws" means this by-law and all other by-laws of the Corporation from time to time in force and effect;
|
(6)
|
"meeting of shareholders" includes an annual meeting of shareholders and a special meeting of shareholders; "special meeting of shareholders" includes a meeting of any class or classes of
shareholders and a special meeting of all shareholders entitled to vote at an annual meeting of shareholders;
|
(7)
|
"non-business day" means Saturday, Sunday and any other day that is a holiday as defined in the Interpretation Act (Ontario);
|
(8)
|
"recorded address" means in the case of a shareholder his address as recorded in the securities register; and in the case of joint shareholders the address appearing in the securities
register in respect of such joint holding or the first address so appearing if there is more than one; and in the case of a director, officer, auditor or member of a committee of the board his latest address as recorded in the records of
the Corporation;
|
(9)
|
"Securities Transfer Act" means the Securities Transfer Act (Ontario) 2006, c.8. as amended from time to
time;
|
(10)
|
"signing officer" means, in relation to any instrument, any person authorized to sign the same on behalf of the Corporation by paragraph 2.04 or by a resolution passed pursuant thereto;
|
(11)
|
all terms contained in the by-laws that are not otherwise defined in the by-laws and which are defined in the Act, such as "resident Canadian", shall have the meanings given to such
terms in the Act;
|
(12)
|
the headings used in the by-laws are inserted for reference purposes only and are not be considered or taken into account in construing the terms of provisions thereof or to be deemed in
any way to clarify, modify or explain the effect of any such terms or provisions; and
|
(13)
|
the singular shall include the plural and the plural shall include the singular; the masculine shall include the feminine and neuter genders; and the word "person" shall include
individuals, bodies corporate, corporations, companies, partnerships, syndicates, trusts, unincorporated organizations and any number or aggregate of persons.
|
1.02
|
Conflict with Laws
|
2.01
|
Registered Office
|
2.02
|
Corporate Seal
|
2.03
|
Financial Year
|
2.05
|
Banking Arrangements
|
2.06
|
Custody of Securities
|
2.07
|
Voting Shares and Securities in other Companies
|
3.01
|
Number of Directors and Quorum
|
3.02
|
Qualification
|
3.03
|
Election and Term
|
3.04
|
Removal of Directors
|
3.05
|
Vacation of Office
|
3.06
|
Vacancies
|
3.07
|
Action by the Board
|
3.09
|
Place of Meetings
|
3.10
|
Calling of Meetings
|
3.11
|
Notice of Meeting
|
3.12
|
First Meeting of New Board
|
3.13
|
Adjourned Meeting
|
3.14
|
Regular Meetings
|
3.15
|
Chairman
|
3.16
|
Votes to Govern
|
3.18
|
Remuneration and Expenses
|
4.01
|
Committee of Directors
|
4.02
|
Transaction of Business
|
5.01
|
Appointment
|
5.03
|
President
|
5.04
|
Executive Vice-President or Vice-President
|
5.05
|
Secretary or Assistant Secretary
|
5.07
|
Powers and Duties of Other Officers
|
5.08
|
Variation of Powers and Duties
|
5.09
|
Term of Office
|
5.10
|
Terms of Employment and Remuneration
|
5.11
|
Conflict of Interest
|
5.12
|
Agents and Attorneys
|
6.01
|
Submission of Contracts or Transactions to Shareholders for Approval
|
6.02
|
For the Protection of Directors and Officers
|
6.03
|
Limitation of Liability
|
a)
|
Subject to the provisions of paragraph (b) below, the Corporation shall, to the maximum extent permitted by law, indemnify a director or officer of the Corporation, a
former director or officer of the Corporation, or another individual who acts or acted at the Corporation's request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and
expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved
because of that association with the Corporation or other entity.
|
b)
|
The indemnity provided under paragraph (a) above will only be applicable if the individual:
|
i.
|
acted honestly and in good faith with a view to the best interests of the Corporation or other entity for which the individual acted as director or officer or in a similar capacity at
the Corporation's request, as the case may be;
|
ii.
|
in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that the individual's conduct was lawful;
and
|
iii.
|
was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done.
|
c)
|
The Corporation shall advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in paragraph (a), provided
that such individual shall repay the moneys so advanced if the individual does not fulfill the conditions of paragraph (b).
|
d)
|
The provisions for indemnification contained in this by-law shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled
under any agreement, vote of shareholders or directors or otherwise, both as to action in the individual's official capacity and as to action in another capacity, and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs and legal representatives of such a person.
|
6.05
|
Insurance
|
7.01
|
Allotment
|
7.02
|
Commissions
|
7.03
|
Registration of Transfers
|
7.04
|
Transfer Agents and Registrars
|
7.06
|
Non-recognition of Trusts
|
7.07
|
Share Certificates and Written Evidence of Ownership
|
7.08
|
Replacement of Share Certificates
|
7.09
|
Joint Shareholders
|
7.10
|
Deceased Shareholders
|
8.01
|
Dividends
|
8.03
|
Non-receipt of Cheques
|
8.04
|
Record Date for Dividends and Rights
|
8.05
|
Unclaimed Dividends
|
9.01
|
Annual Meetings
|
9.02
|
Special Meetings
|
9.03
|
Place of Meetings
|
9.04
|
Notice of Meetings
|
9.05
|
List of Shareholders Entitled to Notice
|
9.07
|
Meetings Held by Electronic Means
|
9.08
|
Meetings without Notice
|
(a)
|
if all the shareholders entitled to vote thereat are present in person or represented by proxy waive notice of or otherwise consent to such meeting being held, and
|
(b)
|
if the auditor and the directors are present or waive notice of or otherwise consent to such meeting being held, so long as such shareholders, auditor and directors present are not
attending for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. At such a meeting any business may be transacted which the Corporation at a meeting of shareholders
may transact. If the meeting is held at a place outside Canada, shareholders not present or represented by proxy, but who have waived notice of or otherwise consented to such meeting, shall also be deemed to have consented to the meeting
being held at such place.
|
9.09
|
Chairman, Secretary and Scrutineers
|
9.10
|
Persons Entitled to be Present
|
9.11
|
Quorum
|
9.12
|
Right to Vote
|
9.13
|
Proxies
|
9.14
|
Time for Deposit of Proxies
|
9.15
|
Joint Shareholders
|
9.16
|
Votes to Govern
|
9.17
|
Show of Hands
|
9.18
|
Ballots
|
9.19
|
Electronic Voting
|
9.20
|
Adjournment
|
9.21
|
Resolution in Writing
|
10.01
|
Creation and Consolidation of Divisions
|
10.02
|
Name of Division
|
10.03
|
Officers of Division
|
11.02
|
Signature to Notices
|
11.03
|
Proof of Service
|
11.04
|
Notice to Joint Shareholders
|
11.05
|
Computation of Time
|
11.06
|
Undelivered Notices
|
11.07
|
Omissions and Errors
|
11.08
|
Deceased Shareholders
|
11.09
|
Persons Entitled by Death or Operation of Law
|
11.10
|
Waiver of Notice
|
13.01
|
Effective Date
|
(signed) “Damian Lopez”
|
|
Chief Executive Officer
|
|
☐ |
I represent and warrant that the Subscriber is a United States citizen or resident or a corporation, partnership, limited liability company, trust, or equivalent
legal entity organized under the laws of any state of the United States.
|
|
[☐ |
I represent and warrant that the International Subscriber is not a United States citizen or resident, corporation, partnership, limited liability company, trust, or
equivalent legal entity organized under the laws of any state of the United States.]1
|
|
[☐ |
Accredited Investor Status. I
represent and warrant that the Subscriber is an “accredited investor,” within the meaning of Rule 501(a) under the Securities Act, [and the Subscriber has been authenticated and verified by the Company’s accreditation service as an
accredited investor.]2
|
|
[☐ |
Qualified Purchaser Status. I
represent and warrant that the Subscriber is a “qualified purchaser,” as defined in Regulation A of the Securities Act, based on the fact that either:
|
a. |
I am the Subscriber and I am a natural person. I am not investing more than the greater of either 10% of my net worth3 or 10% of my annual income4;
or
|
b. |
The Subscriber is not a natural person, and the Subscriber is not investing more than the greater of the following, as calculated for the most recently completed
fiscal year end:
|
|
(a) |
10% of the Subscriber’s revenue; or
|
|
(b) |
10% of the Subscriber’s net assets.]5
|
|
a. |
The Offering Circular;
|
|
[b. |
The International Supplement which accompanies the US Offering Circular (the “International Supplement”)]6
|
|
c. |
The terms of use for the _______ website operated by the Company (“Terms
of Use”);
|
|
d. |
The privacy notice for the Company and its affiliates (“Privacy
Notice”); and
|
|
e. |
This Agreement, which sets forth the terms governing my subscription to the Securities, and sets forth certain representations I am making in connection with my
subscription to the Securities.
|
Signatory name:
Signatory title (if applicable):
Entity address:
|
Entity Name:
|
E-Mail Address:
|
|
Aggregate Investment (USD value):
|
|
Price per Security in general sale:
|
$0.75
|
Payment Method (USD):
|
☐ |
I represent and warrant to the Company that the answers provided in this Subscriber Questionnaire are current, true, correct and complete and may be relied upon by
the Company and its respective affiliates in evaluating my eligibility, or the eligibility of the entity that I represent, as a Subscriber and determining whether to accept this Agreement. I will notify the Company of any change to the
information provided in this Subscriber Questionnaire promptly, but in any event within fifteen days of such change.
|
☐ |
I agree to be bound (or, if I am an authorized representative of the Subscriber, I agree that the Subscriber will be bound) by any affirmation, assent or agreement
that I transmit to or through this website by computer or other electronic device, including internet, telephonic and wireless devices, including, but not limited to, any consent I give to receive communications from the Company or any of
its affiliates solely through electronic transmission. I agree that when I click on an “I Agree,” “I Consent” or other similarly worded button or entry field with my mouse, keystroke or other device, my agreement or consent will be
legally binding and enforceable against me (or, if I am an authorized representative of the Subscriber, against the Subscriber) and will be the legal equivalent of my handwritten signature on an agreement that is printed on paper. I
agree that the Company and any of their affiliates will send me electronic copies of any and all communications associated with my subscription to the Securities, as provided in Section 6 of this Subscriber Questionnaire and Section 11 below of the Subscription Agreement.
|
☐ |
I represent and warrant to the Company that all questions and responses provided by the Subscriber in the course of completing the “purchase flow” process,
including without limitation, the information reflected in this Subscriber Questionnaire, as well as Subscriber’s contact information, address, and account information, Subscriber’s social security number if Subscriber is a natural
person, and, if Subscriber is an entity, Subscriber’s tax identification number and whether Subscriber is an S Corporation, C Corporation, Grantor Trust, Limited Partnership, General Partnership, Limited Liability Partnership, Limited
Liability Company, Estate, or other type of entity, is current, true, correct and complete and may be relied upon by the Company and its respective affiliates. I will notify the Company of any change to this information promptly, but in
any event within fifteen days of such change.
|
Entity Name:
|
[ENTITY NAME]
|
By:
|
/s/ [SIGNATORY NAME]
|
Name:
|
[SIGNATORY NAME]
|
Title:
|
[SIGNATORY TITLE]
|
Submission Date:
|
[INVESTMENT SIGN DATE]
|
Total Purchase Amount:
|
$[PURCHASE AMOUNT]
|
Number of General Sale _______:
|
|
AGREED AND ACCEPTED BY
THE COMPANY:
_______
|
|
By:
|
|
Name:
|
|
Title:
|
|
Effective Date:
|
[EFFECTIVE DATE]
|
_______
_______
_______
_______
|
Certificate Number: __
|
|
**______** Warrants to Purchase
|
|
|
**_____** Shares
|
(a)
|
“Company”
means Flora Growth Corp. and includes any successor corporations;
|
(b)
|
“Company’s
auditor” means the accountant duly appointed as auditor of the Company;
|
(c)
|
“Exercise
Price” means US$1.00 per Share or as may be adjusted as per Part 5;
|
(d)
|
“Expiry Date”
means the date defined as such on the face page of the Warrant Certificate;
|
(e)
|
“Expiry Time”
means 5:00 p.m. Ontario time on the Expiry Date;
|
(f)
|
“Holder”
means the registered holder of a Warrant;
|
(g)
|
“Joint
Actors” has the meaning ascribed thereto in §7.1;
|
(h)
|
“person”
means an individual, corporation, partnership, trustee or any unincorporated organization, and words importing persons have a similar meaning;
|
(i)
|
“Shares”
or “shares” means the common shares in the capital of the Company as constituted at the date of issue of a Warrant and any shares
resulting from any event referred to in Part 5;
|
(j)
|
“Warrant”
means a warrant as evidenced by the certificate, one Warrant entitles the holder to purchase one (1) common share of the Company (subject to adjustment) on or before the Expiry Date at the Exercise Price set forth on the Warrant
Certificate;
|
(k)
|
“Warrant
Certificate” means the certificate evidencing the Warrant;
|
(l)
|
“Warrant
Exercise Form” means Appendix “B” hereof; and
|
(m)
|
“Warrant
Transfer Form” means Appendix “C” hereof.
|
(a)
|
the words “herein”,
“hereof”, and “hereunder” and
other words of similar import refer to these Terms and Conditions as a whole and not to any particular Part, clause, subclause or other subdivision;
|
(b)
|
a reference to a Part means a Part of these Terms and Conditions and the symbol § followed by a number or
some combination of numbers and letters refers to the section, paragraph or subparagraph of these Terms and Conditions so designated;
|
(c)
|
the headings are for convenience only, do not form a part of these Terms and Conditions and are not intended
to interpret, define or limit the scope, extent or intent of these Terms and Conditions or any of its provisions;
|
(d)
|
all dollar amounts referred to herein are expressed in United States funds;
|
(e)
|
time will be of the essence hereof; and
|
(f)
|
words importing the singular number include the plural and vice versa, and words importing the masculine
gender include feminine and neuter genders.
|
(a)
|
adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of
counsel for the Company, are necessary or advisable in the circumstances;
|
(b)
|
making such provisions not inconsistent herewith 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 Warrants on any stock exchange or house;
|
(c)
|
adding to or altering the provisions hereof in respect of the registration of Warrants making provision for
the exchange of Warrant Certificates of different denominations; and making any modification in the form of Warrant Certificates which does not affect the substance thereof;
|
(d)
|
for any other purpose not inconsistent with the terms hereof, including the correction or rectification of
any ambiguities, defective provisions, errors or omissions herein; and
|
(e)
|
to evidence any succession of any corporation and the assumption by any successor of the covenants of the
Company herein and in the Warrants contained as provided hereafter in this Part 8.
|
NAME(S) IN FULL
|
ADDRESS(ES)
|
NUMBER OF SHARES
|
|
(A) |
|
the undersigned Holder at the time of exercise of the Warrant is not in the United States, is not a “U.S. person” as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and is not exercising the Warrant for the account or benefit of a U.S. person or a person in the United States (as defined in Regulation S), and did not execute or deliver this exercise form in the United States; OR |
|
(B) |
|
the undersigned Holder is resident in the United States, is a U.S. person, or is exercising the Warrant for the account or benefit of a U.S. person or a person in the United States (a “U.S. Holder”), and is an “accredited investor”, as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (a “U.S. Accredited Investor”), and has completed the U.S. Accredited Investor Status Certificate in the form attached to this exercise form; OR |
|
(C) |
|
if the undersigned Holder is a U.S. Holder, the undersigned Holder has delivered to the Company and the Company’s transfer agent an opinion of counsel (which will not be sufficient unless it is in form and substance satisfactory to the Company) or such other evidence satisfactory to the Company to the effect that with respect to the Shares to be delivered upon exercise of the Warrant, the issuance of such securities has been qualified pursuant to Regulation A under the U.S. Securities Act and applicable state securities laws, or an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available. |
|
1 |
the undersigned Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in
the Shares, and the undersigned is able to bear the economic risk of loss of his or her entire investment;
|
|
2. |
the undersigned is: (i) purchasing the Shares for his or her own account or for the account of one or more U.S. Accredited Investors with respect to which the
undersigned is exercising sole investment discretion, and not on behalf of any other person; (ii) is purchasing the Shares for investment purposes only and not with a view to resale, distribution or other disposition in violation of
United States federal or state securities laws; and (iii) in the case of the purchase by the undersigned of the Shares as agent or trustee for any other person or persons (each a “Beneficial Owner”), the undersigned Holder has due and proper authority to act as agent or trustee for and on behalf of each such Beneficial Owner in connection with the transactions
contemplated hereby; provided that: (x) if the undersigned Holder, or any Beneficial Owner, is a corporation or a partnership, syndicate, trust or other form of unincorporated organization, the undersigned Holder or each such Beneficial
Owner was not incorporated or created solely, nor is it being used primarily to permit purchases without a prospectus or registration statement under applicable law; and (y) each Beneficial Owner, if any, is a U.S. Accredited Investor;
and
|
|
3. |
the undersigned has not exercised the Warrants as a result of any form of general solicitation or general advertising (as such terms are used in Rule 502 of
Regulation D under the U.S. Securities Act), including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio, television, the Internet or other form of
telecommunications, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.
|
|
1. |
the Company has provided to the undersigned the opportunity to ask questions and receive answers concerning the terms and conditions of the offering, and the
undersigned has had access to such information concerning the Company as the undersigned has considered necessary or appropriate in connection with the undersigned’s investment decision to acquire the Shares;
|
|
2. |
if the undersigned decides to offer, sell or otherwise transfer any of the Shares, the undersigned must not, and will not, offer, sell or otherwise transfer any of
such Shares directly or indirectly, unless:
|
|
(a) |
the sale is to the Company;
|
|
(b) |
the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance
with applicable local laws and regulations;
|
|
(c) |
the sale is made pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in
accordance with any applicable state securities or “blue sky” laws; or
|
|
(d) |
the Shares are sold in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the
offer and sale of securities,
|
|
3. |
the Shares are “restricted securities” under applicable federal securities laws and that the U.S. Securities Act and the rules of the United States Securities and
Exchange Commission provide in substance that the undersigned may dispose of the Shares only pursuant to an effective registration statement under the U.S. Securities Act or an exemption therefrom;
|
|
4. |
the Company has no obligation to register any of the Shares or to take action so as to permit sales pursuant to the U.S. Securities Act (including Rule 144
thereunder);
|
|
5. |
the certificates representing the Shares (and any certificates issued in exchange or substitution for the Shares) will bear a legend stating that such securities
have not been registered under the U.S. Securities Act or the securities laws of any state of the United States, and may not be offered for sale or sold unless registered under the U.S. Securities Act and the securities laws of all
applicable states of the United States, or unless an exemption from such registration requirements is available;
|
|
6. |
the legend may be removed by delivery to the registrar and transfer agent of the Company and the Company of an opinion of counsel, reasonably satisfactory to the
Company, that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;
|
|
7. |
there may be material tax consequences to the undersigned of an acquisition or disposition of the Shares;
|
|
8. |
the Company gives no opinion and makes no representation with respect to the tax consequences to the undersigned under United States, state, local or foreign tax
law of the undersigned’s acquisition or disposition of any Shares; in particular, no determination has been made whether the Company will be a “passive foreign investment company” (commonly known as a “PFIC”) within the meaning of Section 1297 of the United States Internal
Revenue Code;
|
|
9. |
funds representing the exercise price for the Shares which will be advanced by the undersigned to the Company upon exercise of the Warrants will not represent
proceeds of crime for the purposes of the United States Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act (the “PATRIOT Act”), and the undersigned acknowledges that the Company may in the future
be required by law to disclose the undersigned’s name and other information relating to this exercise form and the undersigned’s subscription hereunder, on a confidential basis, pursuant to the PATRIOT Act. No portion of the exercise
price to be provided by the undersigned (i) has been or will be derived from or related to any activity that is deemed criminal under the laws of the United States, or any other jurisdiction, or (ii) is being tendered on behalf of a
person or entity who has not been identified to or by the undersigned, and it shall promptly notify the Company if the undersigned discovers that any of such representations ceases to be true and provide the Company with appropriate
information in connection therewith; and
|
|
10. |
the undersigned consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company in order to implement the
restrictions on transfer set forth and described in this subscription form.
|
_______ (1)
|
Any bank as defined in Section 3(a)(2) of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934; any insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; any investment company registered under
the U.S. Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the
U.S. Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of US$5,000,000; any employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000, or, if a self-directed plan, with investment decisions
made solely by persons that are “accredited investors” (as such term is defined in Rule 501 of Regulation D of the U.S. Securities Act);
|
_______ (2)
|
Any private business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940;
|
_______ (3)
|
Any organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000;
|
_______ (4)
|
Any trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person (being defined as a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment);
|
_______ (5)
|
A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase, exceeds US$1,000,000 (for the
purposes of calculating net worth, (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at
the time of this certification, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of this certification exceeds the amount outstanding 60 days before such time, other than as a result
of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary
residence shall be included as a liability);
|
_______ (6)
|
A natural person who had annual gross income during each of the last two full calendar years in excess of US$200,000 (or together with his or her
spouse in excess of US$300,000) and reasonably expects to have annual gross income in excess of US$200,000 (or together with his or her spouse in excess of US$300,000) during the current calendar year, and no reason to believe that his or her
annual gross income will not remain in excess of US$200,000 (or that together with his or her spouse will not remain in excess of US$300,000) for the foreseeable future;
|
_______ (7)
|
Any director or executive officer of the Company; or
|
_______ (8)
|
Any entity in which all of the equity owners meet the requirements of at least one of the above categories (if this alternative is selected you must identify each equity owner and provide statements for each demonstrating how they qualify as an accredited investor).
|
NAME IN FULL
|
ADDRESS
|
NUMBER OF WARRANTS
|
|
Signature of Warrant Holder
|
Signature Guaranteed
|
a.
|
the payment of income taxes and goods and services tax remittances as shall be required by any governmental entity with respect to fees paid by the Company to the Consultant;
|
b.
|
maintaining proper financial records of the Consultant, which records will detail, amongst other things, expenses incurred on behalf of the Company; and
|
c.
|
obtaining all necessary licenses and permits and for complying with all applicable federal, provincial and municipal laws, codes and regulations in connection with the provision of services hereunder and the
Consultant shall, when requested, provide the Company with adequate evidence of compliance with this paragraph.
|
a.
|
Dishonesty or fraud;
|
b.
|
Theft;
|
c.
|
Breach of fiduciary duties
|
d.
|
Being guilty of bribery or attempted bribery; or
|
e.
|
Gross mismanagement.
|
|
(1) |
the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the
heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Canada Business Corporations Act) or
group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Company or securities which are
convertible into shares of the Company or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast at a meeting of the shareholders of
the Company; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such that
after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 25% of the material assets of the
Company, including the acquisition of more than 25% of the material assets of any material subsidiary of the Company; or
|
|
(2) |
as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Company or any of its Affiliates and another
corporation or other entity, the nominees named in the most recent management information circular of the Company for election to the Company’s board of directors do not constitute a majority of the Company’s board of directors.
|
(1)
|
any entity that has entered into a shared costs services agreement with 2227929 Ontario Inc. more than 90 days prior to the occurrence of such Change in Control; or
|
(2)
|
any entity that
|
a.
|
does not have its shares, units or other equity listed on a public securities exchange; and
|
b.
|
has, for more than 90 days prior to the occurrence of such Change in Control, more than 25% of its shares, units or other equity held collectively by Forbes & Manhattan, Inc. (including any of its
affiliates as defined pursuant to the Canada Business Corporations Act) or any director, officer or shareholder of Forbes & Manhattan, Inc.
|
a.
|
the payment of income taxes and goods and services tax remittances as shall be required by any governmental entity with respect to fees paid by the Company to the Consultant;
|
b.
|
maintaining proper financial records of the Consultant, which records will detail, amongst other things, expenses incurred on behalf of the Company; and
|
c.
|
obtaining all necessary licenses and permits and for complying with all applicable federal, provincial and municipal laws, codes and regulations in connection with the provision of services hereunder and the
Consultant shall, when requested, provide the Company with adequate evidence of compliance with this paragraph.
|
a.
|
Dishonesty or fraud; |
b.
|
Theft; |
c.
|
Breach of fiduciary duties; |
d.
|
Being guilty of bribery or attempted bribery; or |
e.
|
Gross mismanagement. |
|
(1) |
the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the
heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Canada Business Corporations Act) or
group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Company or securities which are
convertible into shares of the Company or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast at a meeting of the shareholders
of the Company; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such
that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 25% of the material assets of
the Company, including the acquisition of more than 25% of the material assets of any material subsidiary of the Company; or
|
|
(2) |
as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Company or any of its Affiliates and another
corporation or other entity, the nominees named in the most recent management information circular of the Company for election to the Company’s board of directors do not constitute a majority of the Company’s board of directors.
|
(1)
|
any entity that has entered into a shared costs services agreement with 2227929 Ontario Inc. more than 90 days prior to the occurrence of such Change in Control; or
|
(2)
|
any entity that
|
a.
|
does not have its shares, units or other equity listed on a public securities exchange; and
|
b.
|
has, for more than 90 days prior to the occurrence of such Change in Control, more than 25% of its shares, units or other equity held collectively by Forbes & Manhattan, Inc. (including any of its
affiliates as defined pursuant to the Canada Business Corporations Act) or any director, officer or shareholder of Forbes & Manhattan, Inc.
|
a.
|
the payment of income taxes and goods and services tax remittances as shall be required by any governmental entity with respect to fees paid by the Company to the Consultant;
|
b.
|
maintaining proper financial records of the Consultant, which records will detail, amongst other things, expenses incurred on behalf of the Company; and
|
c.
|
obtaining all necessary licenses and permits and for complying with all applicable federal, provincial and municipal laws, codes and regulations in connection with the provision of services hereunder and the
Consultant shall, when requested, provide the Company with adequate evidence of compliance with this paragraph.
|
a.
|
Dishonesty or fraud; |
b.
|
Theft; |
c.
|
Breach of fiduciary duties; |
d.
|
Being guilty of bribery or attempted bribery; or |
e.
|
Gross mismanagement. |
|
(1) |
the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the
heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Canada Business Corporations Act) or
group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Company or securities which are
convertible into shares of the Company or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast at a meeting of the shareholders
of the Company; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such
that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 25% of the material assets of
the Company, including the acquisition of more than 25% of the material assets of any material subsidiary of the Company; or
|
|
(2) |
as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Company or any of its Affiliates and another
corporation or other entity, the nominees named in the most recent management information circular of the Company for election to the Company’s board of directors do not constitute a majority of the Company’s board of directors.
|
(1)
|
any entity that has entered into a shared costs services agreement with 2227929 Ontario Inc. more than 90 days prior to the occurrence of such Change in Control; or
|
(2)
|
any entity that
|
a.
|
does not have its shares, units or other equity listed on a public securities exchange; and
|
b.
|
has, for more than 90 days prior to the occurrence of such Change in Control, more than 25% of its shares, units or other equity held collectively by Forbes & Manhattan, Inc. (including any of its
affiliates as defined pursuant to the Canada Business Corporations Act) or any director, officer or shareholder of Forbes & Manhattan, Inc.
|
a.
|
the payment of income taxes and goods and services tax remittances as shall be required by any governmental entity with respect to fees paid by the Company to the Consultant;
|
b.
|
maintaining proper financial records of the Consultant, which records will detail, amongst other things, expenses incurred on behalf of the Company; and
|
c.
|
obtaining all necessary licenses and permits and for complying with all applicable federal, provincial and municipal laws, codes and regulations in connection with the provision of services hereunder and the
Consultant shall, when requested, provide the Company with adequate evidence of compliance with this paragraph.
|
a.
|
Dishonesty or fraud; |
b.
|
Theft; |
c.
|
Breach of fiduciary duties; |
d.
|
Being guilty of bribery or attempted bribery; or |
e.
|
Gross mismanagement. |
|
(1) |
the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the
heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Canada Business Corporations Act) or
group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Company or securities which are
convertible into shares of the Company or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast at a meeting of the shareholders
of the Company; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such
that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 25% of the material assets of
the Company, including the acquisition of more than 25% of the material assets of any material subsidiary of the Company; or
|
|
(2) |
as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Company or any of its Affiliates and another
corporation or other entity, the nominees named in the most recent management information circular of the Company for election to the Company’s board of directors do not constitute a majority of the Company’s board of directors.
|
(1)
|
any entity that has entered into a shared costs services agreement with 2227929 Ontario Inc. more than 90 days prior to the occurrence of such Change in Control; or
|
(2)
|
any entity that
|
a.
|
does not have its shares, units or other equity listed on a public securities exchange; and
|
b.
|
has, for more than 90 days prior to the occurrence of such Change in Control, more than 25% of its shares, units or other equity held collectively by Forbes & Manhattan, Inc. (including any of its
affiliates as defined pursuant to the Canada Business Corporations Act) or any director, officer or shareholder of Forbes & Manhattan, Inc.
|
a.
|
the payment of income taxes and goods and services tax remittances as shall be required by any governmental entity with respect to fees paid by the Company to the Consultant;
|
b.
|
maintaining proper financial records of the Consultant, which records will detail, amongst other things, expenses incurred on behalf of the Company; and
|
c.
|
obtaining all necessary licenses and permits and for complying with all applicable federal, provincial and municipal laws, codes and regulations in connection with the provision of services hereunder and the
Consultant shall, when requested, provide the Company with adequate evidence of compliance with this paragraph.
|
a.
|
Dishonesty or fraud; |
b.
|
Theft; |
c.
|
Breach of fiduciary duties; |
d.
|
Being guilty of bribery or attempted bribery; or |
e.
|
Gross mismanagement. |
|
(1) |
the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the
heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Canada Business Corporations Act) or
group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Company or securities which are
convertible into shares of the Company or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast at a meeting of the shareholders
of the Company; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such
that after the completion of such acquisition such person would be entitled to exercise 25% or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 25% of the material assets of
the Company, including the acquisition of more than 25% of the material assets of any material subsidiary of the Company; or
|
|
(2) |
as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Company or any of its Affiliates and another
corporation or other entity, the nominees named in the most recent management information circular of the Company for election to the Company’s board of directors do not constitute a majority of the Company’s board of directors.
|
(1)
|
any entity that has entered into a shared costs services agreement with 2227929 Ontario Inc. more than 90 days prior to the occurrence of such Change in Control; or
|
(2)
|
any entity that
|
a.
|
does not have its shares, units or other equity listed on a public securities exchange; and
|
b.
|
has, for more than 90 days prior to the occurrence of such Change in Control, more than 25% of its shares, units or other equity held collectively by Forbes & Manhattan, Inc. (including any of its
affiliates as defined pursuant to the Canada Business Corporations Act) or any director, officer or shareholder of Forbes & Manhattan, Inc.
|
Number FWT[NTD: insert number]
|
Number of Warrants represented
by this certificate: • |
1.
|
Definitions: In this Warrant Certificate, unless there is something in the subject matter or context inconsistent therewith, the following expressions
shall have the following meanings namely:
|
(a)
|
“Adjustment Period”
means the period commencing on the date hereof and ending at the Expiry Time;
|
(b)
|
“Business Day” means
any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions are closed in Toronto, Ontario;
|
(c)
|
“Change of Control”
means any of the following:
|
(i)
|
a takeover bid (as defined in the Securities Act (Ontario)), which is successful in acquiring Common Shares,
|
(ii)
|
the sale of all or substantially all the assets of the Company,
|
(iii)
|
the sale, exchange or other disposition of a majority of the outstanding Common Shares in a single
transaction or series of related transactions,
|
(iv)
|
the dissolution of the Company’s business or the liquidation of its assets,
|
(d)
|
“Common Shares” means
the common shares of the Company as such shares are constituted on the date hereof, as the same may be reorganized, reclassified or otherwise changed pursuant to any of the events set out in Section 11 hereof;
|
(e)
|
“Company” means FLORA
GROWTH CORP., a company incorporated under the laws of Ontario and its successors and assigns;
|
(f)
|
“Current Market Price”
of a Common Share at any date means the price per share equal to the weighted average price at which the Common Shares have traded on any stock exchange for the 20 Trading Days prior to the relevant date as may be selected by the directors
of the Company or, if the Common Shares are not listed on any stock exchange, then on the over-the-counter market with the weighted average price per Common Share being determined by dividing the aggregate sale price of all Common Shares
sold on the said exchange or market, as the case may be, during the said 20 Trading Days by the aggregate number of Common Shares so sold or, if the Common Shares are not listed or quoted on any stock exchange or over-the-counter market,
such price as may be reasonably determined by the directors of the Company after consideration of the market value of the Company and the price at which the Company has issue any Common Shares in the previous 12 months;
|
(g)
|
“Dividends Paid in the
Ordinary Course” means dividends paid in any financial year of the Company, whether in (i) cash; (ii) shares of the Company; (iii) warrants or similar rights to purchase any shares of the Company or property or other assets of the
Company provided that the value of such dividends does not in such financial year exceed the greater of:
|
(i)
|
150% of the aggregate amount of dividends paid by the Company on the Common Shares in the 12-month period ending immediately
prior to the first day of such financial year; and
|
(ii)
|
100% of the consolidated net earnings from continuing operations of the Company, before any extraordinary items, for the
12-month period ending immediately prior to the first day of such financial year (such consolidated net earnings from continuing operations to be computed in accordance with generally accepted accounting principles in Canada);
|
(h)
|
“Exercise Price”
means USD$0.05 per Warrant Share, subject to adjustment in accordance with Section 12 hereof;
|
(i)
|
“Expiry Day” means 36
months from the date hereof;
|
(j)
|
“Expiry Time” means
5:00 p.m. (Toronto time), on the Expiry Day;
|
(k)
|
“Holder” shall have
the meaning ascribed thereto on the face page hereof;
|
(l)
|
“person” means an
individual, corporation, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof or any other entity whatsoever;
|
(m)
|
“Trading Day” with
respect to a stock exchange, market or over-the-counter market means a day on which such stock exchange or over-the-counter market is open for business;
|
(n)
|
“U.S. Person” means
U.S. person as that term is defined in Regulation S adopted by the United States Securities Exchange Commission under the U.S. Securities Act;
|
(o)
|
“U.S. Securities Act”
means the United States Securities Act of 1933, as amended;
|
(p)
|
“Warrant” means a
Warrant exercisable to purchase one Common Share at the Exercise Price until the Expiry Time; and
|
(q)
|
“Warrant Share”
means the Common Shares issuable upon the exercise of the Warrants.
|
2.
|
Expiry Time: At the Expiry Time, all rights under the Warrants evidenced hereby, in respect of which the right of subscription and purchase herein
provided for shall not theretofore have been exercised, shall expire and be of no further force and effect.
|
3.
|
Exercise Procedure:
|
(a)
|
Subject to Section 4 herein, the Holder may exercise the right to subscribe and purchase the number of Warrant Shares herein
provided, by delivering to the Company prior to the Expiry Time at its principal office this Warrant Certificate, with the Subscription Form attached hereto duly completed and executed by the Holder or its legal representative or attorney,
duly appointed by an instrument in writing in form and manner satisfactory to the Company, together with a certified cheque or bank draft payable to or to the order of the Company in an amount equal to the aggregate Exercise Price in
respect of the Warrants so exercised. Any Warrant Certificate so surrendered shall be deemed to be surrendered only upon delivery thereof to the Company at its principal office set forth herein (or to such other address as the Company may
notify the Holder).
|
(b)
|
Upon such delivery as aforesaid, the Company shall cause to be issued to the Holder hereof the Warrant Shares subscribed for
not exceeding those which such Holder is entitled to purchase pursuant to this Warrant Certificate and the Holder hereof shall become a shareholder of the Company in respect of the Warrant Shares subscribed for with effect from the date of
such delivery and shall be entitled to delivery of a certificate evidencing the Warrant Shares and the Company shall cause such certificates to be mailed to the Holder hereof at the address or addresses specified in such subscription as
soon as practicable, and in any event within five (5) Business Days of such delivery.
|
(c)
|
The certificate or certificates representing Warrant Shares issued before the date that is four months and a day after the
later of: (i) •, 2019; and (ii) the date the Company became a reporting issuer in any province or territory, shall be impressed
with a legend substantially in the following form:
|
(d)
|
This Warrant may not be exercised in the United States or by or on behalf of a U.S. Person unless an exemption is available
from the registration requirements of the U.S. Securities Act and applicable state securities laws and the holder of this Warrant has furnished an opinion of counsel of recognized standing in form and substance satisfactory to the Company
to such effect.
|
(e)
|
If the certificate or certificates representing the Warrants that have been surrendered for exercise bear the legend
described below, the certificate or certificates representing the Warrant Shares subscribed for and issued upon exercise of the Warrants shall be correspondingly impressed with the following legend unless such legend is no longer required
under the applicable requirements of the U.S. Securities Act or applicable U.S. state laws and regulations,
|
(i)
|
if any such securities are being sold under clause (B) above and in compliance with Canadian local laws and regulations, and
provided that the Company is a “foreign issuer” within the meaning of Regulation S of the U.S. Securities Act at the time of sale, the legend set forth above may be removed by providing a declaration to the transfer agent for the Company in
a form satisfactory to the transfer agent, as may be amended from time to time by the Company, to the effect that such securities are being sold in compliance with Rule 904 of Regulation S of the U.S. Securities Act, together with any
documentation as may be required by the Company or its transfer agent to the effect that an exemption from the registration requirements of the U.S. Securities Act or state securities laws are available; and
|
(ii)
|
If any such securities are being sold under clause (C)(II) or (D) above, the legend may be removed by delivery to the transfer
agent for the Company and the Company of an opinion of counsel, of recognized standing reasonably satisfactory to the Company, that such legend is no longer required under applicable requirements of the U.S. Securities Act or state
securities laws.
|
4.
|
Partial Exercise: The Holder may subscribe for and purchase a number of Warrant Shares less than the maximum number the Holder is entitled to purchase
pursuant to the full exercise of this Warrant Certificate. In the event of any such subscription prior to the Expiry Time, the Holder shall be entitled to receive, without charge, a new Warrant Certificate in respect of the balance of the
Warrant Shares which the Holder was entitled to subscribe for pursuant to this Warrant Certificate and which were then not purchased.
|
5.
|
No Fractional Shares: Notwithstanding any adjustments provided for in Section 11 hereof or otherwise, the Company shall not be required upon the exercise of any
Warrants to issue fractional Warrant Shares in satisfaction of its obligations hereunder and, in any such case, the number of Warrant Shares issuable upon the exercise of any Warrants shall be rounded down to the nearest whole number.
|
6.
|
Exchange of Warrant
Certificates: This Warrant Certificate may be exchanged for Warrant Certificates representing in the aggregate the same
number of Warrants and entitling the Holder thereof to subscribe for and purchase an equal aggregate number of Warrant Shares at the same Exercise Price and on the same terms as this Warrant Certificate (with or without legends as may be
appropriate).
|
8.
|
Not a Shareholder: Nothing in this Warrant Certificate or in the holding of a Warrant evidenced hereby shall be construed as conferring upon the Holder any
right or interest whatsoever as a shareholder of the Company.
|
9.
|
No Obligation to Purchase: Nothing herein contained or done pursuant hereto shall obligate the Holder to subscribe for or the Company to issue any Warrant Shares
except those Warrant Shares in respect of which the Holder shall have exercised its right to purchase hereunder in the manner provided herein.
|
10.
|
Covenants:
|
(a)
|
The Company covenants and agrees that so long as any Warrants evidenced hereby remain outstanding, it shall reserve and
there shall remain unissued out of its authorized capital a sufficient number of Warrant Shares to satisfy the right of purchase herein provided for, it will cause the Warrant Shares subscribed for and purchased in the manner herein
provided to be issued and delivered as directed and such Warrant Shares shall be issued as fully paid and non-assessable Common Shares and the holders thereof shall not be liable to the Company or to its creditors in respect thereof.
|
(b)
|
The Company covenants and agrees that until the Expiry Time, while the Warrants (or remaining portion thereof) shall be
outstanding, the Company shall use its best efforts to preserve and maintain its corporate existence and the Company shall take all action as may be necessary to ensure that the issuance of the Warrant Shares upon the exercise of the
Warrants is in compliance with all applicable laws and applicable requirements of any exchange on which the Common Shares of the Company may become listed.
|
(c)
|
If the issuance of the Warrant Shares upon the exercise of the Warrants requires any filing or registration with or approval
of any securities regulatory authority or other governmental authority or compliance with any other requirement under any law before such Warrant Shares may be validly issued (other than the filing of a prospectus or similar disclosure
document), the Company agrees to take such actions as may be necessary to secure such filing, registration, approval or compliance, as the case may be.
|
(d)
|
The Company will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other
acts, deeds and assurances in law as may be reasonably required for the better accomplishing and effecting of the intentions and provisions of this Warrant Certificate.
|
11.
|
Adjustments:
|
(a)
|
Adjustment: The rights of the
holder of this Warrant, including the number of Warrant Shares issuable upon the exercise of such Warrants, will be adjusted from time to time in the events and in the manner provided in, and in accordance with the provisions of, this
Section. The purpose and intent of the adjustments provided for in this Section is to ensure that the rights and obligations of the Holder are neither diminished or enhanced as a result of any of the events set forth in paragraphs (b), (c)
or (d) of this Section. Accordingly, the provisions of this Section shall be interpreted and applied in accordance with such purpose and intent.
|
(b)
|
The Exercise Price in effect at any date will be subject to adjustment from time to time as follows:
|
(i)
|
Share Reorganization: If and
whenever at any time during the Adjustment Period, the Company shall (A) subdivide, redivide or change the outstanding Common Shares into a greater number of Common Shares, (B) consolidate, combine or reduce the outstanding Common Shares
into a lesser number of Common Shares, or (C) fix a record date for the issue of Common Shares or securities convertible into or exchangeable for Common Shares to all or substantially all of the holders of Common Shares by way of a stock
dividend or other distribution other than a Dividend Paid in the Ordinary Course, then, in each such event, the Exercise Price shall, on the record date for such event or, if no record date is fixed, the effective date of such event, be
adjusted so that it will equal the rate determined by multiplying the Exercise Price in effect immediately prior to such date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such date before
giving effect to such event, and of which the denominator shall be the total number of Common Shares outstanding on such date after giving effect to such event. Such adjustment shall be made successively whenever any such event shall occur.
Any such issue of Common Shares by way of a stock dividend shall be deemed to have been made on the record date for such stock dividend for the purpose of calculating the number of outstanding Common Shares under paragraphs 11(b)(i) and
(ii) hereof.
|
(ii)
|
Rights Offering: If and whenever
at any time during the Adjustment Period, the Company shall fix a record date for the issue of rights, options or warrants to all or substantially all of the holders of Common Shares entitling the holders thereof, within a period expiring
not more than 45 days after the record date for such issue, to subscribe for or purchase Common Shares (or securities convertible into or exchangeable for Common Shares) at a price per share (or having a conversion or exchange price per
share) less than 95% of the Current Market Price on such record date, then the Exercise Price shall be adjusted immediately after such record date so that it will equal the rate 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 Common Shares outstanding on such record date plus the number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number
of additional Common Shares so offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered) by such Current Market Price, and of which the denominator shall be
the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares so offered for subscription or purchase (or into or for which the convertible or exchangeable securities so offered are
convertible or exchangeable). Any Common Shares owned by or held for the account of the Company or any subsidiary of the Company 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, provided that if two or more such record dates referred to in this paragraph 11(b)(ii) 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. To the extent that any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price
which would then be in effect based upon the number of Common Shares (or securities convertible into or exchangeable for Common Shares) actually issued upon the exercise of such rights, options or warrants, as the case may be.
|
(iii)
|
Distribution:
If and whenever at any time during the Adjustment Period, the Company shall fix a record date for the making of a distribution to all or substantially all of the holders of Common Shares of (A) shares of any class other than Common Shares
whether of the Company or any other corporation, (B) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares or property or other assets of the Company (other than a Rights
Offering as described above), (C) evidences of indebtedness, or (D) cash, securities or other property or assets then, in each such case and if such distribution does not constitute a Dividend Paid in the Ordinary Course, or fall under
clauses (i) or (ii) above, the Exercise Price will be adjusted immediately after such record date so that it will equal the rate 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 Common Shares outstanding on such record date multiplied by the Current Market Price on the earlier of such record date and the date on which the Company announces its intention to make such
distribution, less the aggregate fair market value (as determined by the directors, acting reasonably, at the time such distribution is authorized) of such shares or rights, options or warrants or evidences of indebtedness or cash,
securities or other property or assets so distributed, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by such Current Market Price. Any Common Shares owned by or held for
the account of the Company or any subsidiary of the Company 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, provided that if
two or more such record dates referred to in this paragraph 11(b)(iii) 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.
To the extent that any such rights, options or warrants so distributed are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect based upon such
rights, options or warrants or evidences of indebtedness or cash, securities or other property or assets actually distributed or based upon the number or amount of securities or the property or assets actually issued or distributed upon the
exercise of such rights, options or warrants, as the case may be.
|
(c)
|
Reclassifications: If and
whenever at any time during the Adjustment Period, there is (A) any reclassification of or amendment to the outstanding Common Shares, any change of the Common Shares into other shares or any other reorganization of the Company (other than
as described in subsection 11(b) hereof), (B) any consolidation, amalgamation, arrangement, merger or other form of business combination of the Company with or into any other corporation resulting in any reclassification of the outstanding
Common Shares, any change of the Common Shares into other shares or any other reorganization of the Company, or (C) any sale, lease, exchange or transfer of the undertaking or assets of the Company as an entirety or substantially as an
entirety to another corporation or entity, then, in each such event, the Holder of this Warrant which is thereafter exercised shall be entitled to receive, and shall accept, in lieu of the number of Common Shares to which such Holder was
theretofore entitled upon such exercise, the kind and number or amount of shares or other securities or property which such Holder would have been entitled to receive as a result of such event if, on the effective date thereof, such Holder
had been the registered holder of the number of Common Shares to which such Holder was theretofore entitled upon such exercise. If necessary as a result of any such event, appropriate adjustments will be made in the application of the
provisions set forth in this subsection with respect to the rights and interests thereafter of the Holder of this Warrant Certificate to the end that the provisions set forth in this subsection will thereafter correspondingly be made
applicable, as nearly as may reasonably be, in relation to any shares or other securities or property thereafter deliverable upon the exercise of this Warrant. Any such adjustments will be made by and set forth in an instrument
supplemental hereto approved by the directors, acting reasonably, and shall for all purposes be conclusively deemed to be an appropriate adjustment.
|
(d)
|
If at any time during the Adjustment Period any adjustment or readjustment in the Exercise Price shall occur pursuant to the
provisions of subsection 11(b) or 11(c) of this Warrant Certificate, then the number of Warrant Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted or readjusted, as the case may be, by
multiplying the number of Warrant Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment
of the Exercise Price.
|
12.
|
Rules Regarding
Calculation of Adjustment of Exercise Price:
|
(a)
|
The adjustments provided for in Section 11 are cumulative and will, in the case of adjustments to the Exercise Price, be
computed to the nearest whole Warrant Share and will be made successively whenever an event referred to therein occurs, subject to the following subsections of this Section 12.
|
(b)
|
No adjustment in the Exercise Price is required to be made unless such adjustment would result in a change of at least 1% in
the prevailing Exercise Price and no adjustment in the Exercise Price is required unless such adjustment would result in a change of at least one one-hundredth of a Warrant Share; provided, however, that any adjustments which, except for
the provisions of this subsection, would otherwise have been required to be made, will be carried forward and taken into account in any subsequent adjustments.
|
(c)
|
No adjustment in the Exercise Price will be made in respect of any event described in Section 11, other than the events
referred to in clauses 11(1)(c), if the Holder is entitled to participate in such event on the same terms, mutatis mutandis, as if the
Holder had exercised this Warrant prior to or on the effective date or record date of such event.
|
(d)
|
No adjustment in the Exercise Price will be made under Section 11 in respect of the issue from time to time of Common Shares
issuable from time to time as Dividends Paid in the Ordinary Course to holders of Common Shares who exercise an option or election to receive substantially equivalent dividends in Common Shares in lieu of receiving a cash dividend.
|
(e)
|
If at any time a question or dispute arises with respect to adjustments provided for in Section 11, such question or dispute
will be conclusively determined by the auditor of the Company or, if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the directors of the Company and any such
determination, subject to regulatory approval and absent manifest error, will be binding upon the Company and the Holder. The Company will provide such auditor or chartered accountant with access to all necessary records of the Company.
|
(f)
|
In case the Company after the date of issuance of this Warrant takes any action affecting the Common Shares, other than
action described in Section 11, which in the opinion of the board of directors of the Company would materially affect the rights of the Holder, the Exercise Price will be adjusted in such manner, if any, and at such time, by action of the
directors of the Company in their sole discretion, acting reasonably and in good faith, but subject in all cases to any necessary regulatory approval. Failure of the taking of action by the directors of the Company so as to provide for an
adjustment on or prior to the effective date of any action by the Company affecting the Common Shares will be conclusive evidence that the board of directors of the Company has determined that it is equitable to make no adjustment in the
circumstances.
|
(g)
|
If the Company sets a record date to determine the holders of the Common Shares for the purpose of entitling them to receive
any dividend or distribution or sets a record date to take any other action and, thereafter and before the distribution to such shareholders of any such dividend or distribution or the taking of any other action, decides not to implement
its plan to pay or deliver such dividend or distribution or take such other action, then no adjustment in the Exercise Price will be required by reason of the setting of such record date.
|
(h)
|
In the absence of a resolution of the directors of the Company fixing a record date for any event which would require any
adjustment to this Warrant, the Company will be deemed to have fixed as the record date therefor the date on which the event is effected.
|
(i)
|
As a condition precedent to the taking of any action which would require any adjustment to the Warrant Shares issuable under
this Warrant, including the Exercise Price, the Company shall take any corporate action which may be necessary in order that the Company or any successor to the Company or successor to the undertaking or assets of the Company have unissued
and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which the Holder is entitled to receive on the full exercise thereof in accordance with the
provisions hereof.
|
(j)
|
The Company will from time to time, immediately after the occurrence of any event which requires an adjustment or
readjustment as provided in Section 11, forthwith give notice to the Holder specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Exercise Price.
|
(k)
|
The Company covenants to and in favour of the Holder that so long as this Warrant remains outstanding, it will give notice
to the Holder of the effective date or of its intention to fix a record date for any event referred to in Section 11 whether or not such action would give rise to an adjustment in the Exercise Price or the number and type of securities
issuable upon the exercise of the Warrants, and, in each case, such notice shall specify the particulars of such event and the record date and the effective date for such event; provided that the Company shall only be required to specify in
such notice such particulars of such event as have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days in each case prior to such applicable record date or effective date.
|
(l)
|
In any case that an adjustment pursuant to Section 11 shall become effective immediately after a record date for or an
effective date of an event referred to herein, the Company may defer, until the occurrence and consummation of such event, issuing to the Holder of this Warrant, if exercised after such record date or effective date and before the
occurrence and consummation of such event, the additional Warrant Shares or other securities or property issuable upon such exercise by reason of the adjustment required by such event, provided, however, that the Company will deliver to the
Holder an appropriate instrument evidencing the Holder’s right to receive such additional Warrant Shares or other securities or property upon the occurrence and consummation of such event and the right to receive any dividend or other
distribution in respect of such additional Warrant Shares or other securities or property declared in favour of the holders of record of Common Shares or of such other securities or property on or after the Exercise Date or such later date
as the Holder would, but for the provisions of this subsection, have become the holder of record of such additional Warrant Shares or of such other securities or property.
|
13.
|
Representation and
Warranty: The Company hereby represents and warrants with and to the Holder that the Company is duly authorized and has
all corporate and lawful power and authority to create and issue this Warrant and the Warrant Shares issuable upon the exercise hereof and perform its obligations hereunder and that this Warrant Certificate represents a valid, legal and
binding obligation of the Company enforceable in accordance with its terms.
|
14.
|
If Share Transfer Books
Closed: The Company shall not be required to deliver certificates for Warrant Shares while the share transfer books of
the Company are properly closed, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any
subscription and payment for the Warrant Shares called for thereby during any such period delivery of certificates for Warrant Shares may be postponed for a period not exceeding three (3) Business Days after the date of the re-opening of
said share transfer books provided that any such postponement of delivery of certificates shall be without prejudice to the right of the Holder, if the Holder has surrendered the same and made payment during such period, to receive such
certificates for the Warrant Shares called for after the share transfer books shall have been re-opened.
|
15.
|
Lost Certificate: If the Warrant Certificate evidencing the Warrants issued hereby becomes stolen, lost, mutilated or destroyed the Company shall issue and
countersign a new Warrant Certificate of like denomination, tenor and date as the Warrant Certificate so stolen, lost mutilated or destroyed provided that the Holder shall bear the reasonable 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 such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate as shall be satisfactory to the Company, in its
sole discretion acting reasonably, and the Holder may also be required to furnish an indemnity in form satisfactory to the Company, in its sole discretion acting reasonably, and shall pay the reasonable charges of the Company in connection
therewith.
|
16.
|
Change of Control: If a Change of Control shall or is proposed to occur prior to the Expiry Date, the Company will procure that an offer to participate in
such Change of Control is made to all Holders in respect of all outstanding Warrants. Such offer will enable all Holders to participate (in whole or in part) at their election in such Change of Control by exercising their Warrants with the
resulting Common Shares participating on the same terms as all other Common Shares of the Company. The Company will use all reasonable endeavours to assist Holders to participate to the fullest extent that they wish in the Change of
Control including agreeing to a reduced period of time for notice of exercise of Warrants, issuing the arising Common Shares promptly to enable participation and, in respect of a Change of Control where holders of Common Shares will receive
a cash payment, establishing a mechanism whereby the Holder will not be required to pay the Exercise Price to the Company prior to receipt of the consideration under the Change of Control (ie the Company will procure an agreement between
the Holder and the offeror under the Change of Control for the arising Common Shares to participate in the Change of Control with the offeror to pay the Company the Exercise Price for each relevant Common Share participating due to the
exercise of the Warrants and the Holder to receive the difference between the consideration per Common Share and the Exercise Price). For the avoidance of doubt, the Holder will hold the right to elect whether their Warrants participate in
whole or part in a Change of Control.
|
17.
|
Governing Law: This Warrant shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable
therein but the reference to such laws shall not, by conflict of laws, rules or otherwise, require the application of the law of any jurisdiction other than the Province of Ontario.
|
18.
|
Severability: If any one or more of the provisions or parts thereof contained in this Warrant Certificate should be or become invalid, illegal or
unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom.
|
19.
|
Amendments:
The provisions of these Warrants may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to in writing by the Company and the holders of at least 80% of the Warrants then
outstanding.
|
20.
|
Headings: The headings of the articles, sections, subsections and clauses of this Warrant Certificate have been inserted for convenience and
reference only and do not define, limit, alter or enlarge the meaning of any provision of this Warrant Certificate.
|
21.
|
Numbering of Articles,
etc.: Unless otherwise stated, a reference herein to a numbered or lettered article, section, subsection, clause,
subclause or schedule refers to the article, section, subsection, clause, subclause or schedule bearing that number or letter in this Warrant Certificate.
|
22.
|
Gender: Whenever used in this Warrant Certificate, words importing the singular number only shall include the plural, and vice versa, and words
importing the masculine gender shall include the feminine gender.
|
23.
|
Day not a Business Day: In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action shall be
required to be taken on or before the requisite time on the next succeeding day that is a Business Day.
|
24.
|
Binding Effect: This Warrant Certificate and all of its provisions shall enure to the benefit of the Holder, its successors, assigns and legal personal
representatives and shall be binding upon the Company and its successors.
|
25.
|
Notice: Unless herein otherwise expressly provided, a notice to be given hereunder will be deemed to be validly given if the notice is sent by
telecopier or prepaid same day courier addressed as follows:
|
(a)
|
If to the Holder at the latest address of the Holder as recorded on the books of the Company; and
|
(b)
|
If to the Company at:
|
26.
|
Time of Essence: Time shall be of the essence hereof.
|
FLORA GROWTH CORP.
|
||
Per:
|
||
Authorized Signing Officer
|
TO: |
FLORA GROWTH CORP.
65 Queen Street West
Suite 805
Toronto, ON M5H 2M5
|
☐ | A | The undersigned holder (i) at the time of exercise of the Warrant is not in the United States; (ii) is not a “U.S. person” as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), (iii) is not exercising the Warrant on behalf of a “U.S. person”; and (iv) did not execute or deliver this exercise form in the United States. |
☐ | B. | The undersigned holder is the original U.S. Purchaser and (a) purchased the Units (of which the Warrants were a part) directly from the Company pursuant to a subscription agreement for the purchase of Units; (b) is exercising the Warrants solely for its own account or for the account of the original beneficial purchaser, if any; (c) each of it and any beneficial purchaser was on the date the Units was purchased from the Company, and is on the date of exercise of the Warrants, an “accredited investor” (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act; and (d) the representations, warranties and covenants set forth in the written subscription agreement for the purchase of Units from the Corporation continue to be true and correct. |
☐ | C. | The undersigned holder is a U.S. person and has delivered to the Company an opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance satisfactory to the Company) to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available. |
NAME(S) IN FULL |
ADDRESS(ES) |
NUMBER OF
WARRANT SHARES |
NAME:
|
||
Signature of Authorized Representative:
|
||
Print Name:
|
||
Print Address:
|
|
(Transferee)
|
|
(Address)
|
|
(Social Insurance Number)
|
|
|
|
|
Signature of Registered Holder
(Transferor)
|
|
Signature Guarantee
|
|
|
|
|
|
Print name of Registered Holder
|
|
|
|
|
|
|
|
|
|||
Address |
NOTE: |
The signature on this transfer form must correspond with the name as recorded on the face of the Warrant Certificate in every particular without alteration or
enlargement or any change whatsoever or this transfer form must be signed by a duly authorized trustee, executor, administrator, curator, guardian, attorney of the Holder or a duly authorized signing officer in the case of a corporation
If this transfer form is signed by any of the foregoing, or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign.
|
iii.
|
Confidentiality Obligations. During the Term and at all times thereafter, neither party shall disclose Confidential Information of the other party or use such Confidential Information for any purpose without the prior written consent of
such other party. Without limiting the preceding sentence, each
|
|
party shall use at least the same degree of care in safeguarding the other party’s Confidential Information as it uses to safeguard its own Confidential Information. Notwithstanding the foregoing, a party may disclose Confidential Information (i) if required to do by order of a court of competent jurisdiction, provided that such party shall notify the other party in writing promptly upon receipt of knowledge of such order so that such other party may attempt to prevent such disclosure or seek a protective order; or (ii) to any applicable governmental authority as required by applicable law. Nothing contained herein shall be construed to prohibit the SEC, FINRA, or other government official or entities from obtaining, reviewing, and auditing any information, records, or data. Issuer acknowledges that regulatory record-keeping requirements, as well as securities industry best practices, require Provider to maintain copies of practically all data, including communications and materials, regardless of any termination of this Agreement. |
a.
|
Dalmore Responsibilities – Dalmore agrees to:
|
i.
|
Review investor information, including KYC (Know Your Customer) data, perform AML (Anti-Money Laundering) and other compliance background checks, and provide a recommendation to Client whether or not to accept investor as a customer of the
Client in the following states: Washington, North Dakota, Arizona, Texas, Alabama, New Jersey and Florida;
|
ii.
|
Review each investors subscription agreement to confirm such Investors participation in the offering, and provide a recommendation to Client whether or not to accept the use of the subscription agreement for the Investors participation;
|
iii.
|
Contact and/or notify the issuer, if needed, to gather additional information or clarification on an investor in states where Dalmore is acting as broker/dealer of record;
|
iv.
|
Keep investor details and data confidential and not disclose to any third-party except as required by regulators or in our performance under this Agreement (e.g. as needed for AML and background checks);
|
v.
|
Provide operations, compliance and other services in order to secure funding for the offering;
|
vi.
|
Coordinate with third party providers to ensure adequate review and compliance.
|
DALV Consulting, LLC
|
FLORA GROWTH CORP.
|
By:(signed) “Vlad Uchenik
|
By: (signed) “Damian Lopez”
|
Name: Vlad Uchenik
|
Name: Damian Lopez
|
Title: President
|
Title: CEO
|
BETWEEN:
|
FLORA GROWTH CORP., a body corporate duly incorporated under the laws of Ontario, and having an office at 65 Queen Street West, Suite 815, P.O. Box 75, Toronto,
Ontario, M5H 2M5
(hereinafter referred to as the “Issuer”)
|
|
AND:
|
2227929 ONTARIO INC., a body corporate duly incorporated under the laws of Ontario and having an office at 65 Queen
Street West, Suite 815, Toronto, ON M5H 2M5
(hereinafter the “Company”)
|
|
(collectively, the “Parties” and each of them, a “Party”)
|
1.1
|
Definitions
|
1.2
|
Certain Rules of Interpretation
|
(a)
|
Time – time is of the essence in the performance of the Parties' respective obligations;
|
(b)
|
Currency – unless otherwise specified, all references to money amounts are to Canadian currency;
|
(c)
|
Headings – descriptive headings of Articles and Sections are inserted solely for convenience of reference only and are not intended as complete or accurate descriptions of the content of such Articles or
Sections;
|
(d)
|
Singular, etc. – use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of this Agreement to such person or persons or
circumstances as the context otherwise permits;
|
(e)
|
Inclusion – where the words “including” or “includes” appear in this Agreement, they mean “including (or includes) without limitation”;
|
(f)
|
Any reference to a law is a reference to such law as in force from time to time, including (i) modifications thereto, (ii) any regulation, decree, order or ordinance enacted thereunder and (iii) any law that
may be passed which has the effect of supplementing, re-enacting or superseding the law to which it is referred; and
|
(g)
|
Any reference to a numbered or lettered section in this Agreement is a reference to the section bearing that number or letter in this Agreement and a reference to “this” section means the
section in which such reference appears.
|
1.3
|
Severability
|
1.4
|
Entire Agreement
|
1.5
|
Applicable Law
|
2.1
|
Services
|
2.2
|
Excluded Services
|
2.3
|
Fees
|
5.1
|
Term of Agreement
|
(a)
|
This Agreement may be terminated by either Party giving at least 90 days’ prior written notice (or such shorter period as the Parties may mutually agree upon) to the other Party of
termination.
|
(b)
|
This Agreement shall terminate immediately in the event of the commission by the Company of any fraudulent act.
|
(c)
|
This Agreement shall terminate immediately where a winding-up, liquidation, dissolution, bankruptcy, sale of substantially all assets, sale of business or insolvency proceeding have been commenced or are being
contemplated by the Company.
|
(d)
|
Upon termination of this Agreement, stock options granted by the Issuer to Executive Officers, Directors and other personnel provided by the Company will vest and expire in accordance with the Issuer’s stock
option plan.
|
5.3
|
Conduct After Notice of Termination
|
(a)
|
the Company shall not enter into any new arrangements or agreements on behalf of the Issuer (unless already legally committed to do so) without the Issuer’s prior consent; and
|
(b)
|
notwithstanding any termination of this Agreement, the Issuer shall continue to be bound by any agreements contracted for on its behalf by the Company prior to termination.
|
5.4
|
Conduct After Termination
|
(a)
|
agreements or obligations which have been executed or incurred by the Company in connection with or related to Services provided to the Issuer shall be assigned over to the Issuer and the Issuer shall
indemnify Company in connection with the due performance of such agreements;
|
(b)
|
The Issuer shall, within 10 days of the effective date of the termination of this Agreement, pay to the Company a termination payment equal to the anticipated Fees of the Issuer for the greater of (i) the six
months following termination; or (ii) the remaining calendar year;
|
(c)
|
The Issuer shall cease to use the Company’s premises, facilities, equipment, phone numbers and any other items that are the property of Company and shall make arrangements for the
orderly transition of the Services by advice letter to the Company;
|
(d)
|
The Company shall be the sole and exclusive owner of the business contacts and investor database maintained by the Company; and
|
(e)
|
The Company shall immediately furnish to the Issuer at the Issuer’s cost, all books, records, electronic data and other information pertaining to the Issuer and, upon the effective date
of the termination of this Agreement, Company shall forthwith transfer all books, records, electronic data and other information pertaining to the Issuer together with all other materials pertaining to the Issuer, in its possession, at the
Issuer’s cost, to any successor thereof. For a period of six years following the effective date of the termination of this Agreement, Company shall provide the Issuer and any successor manager of the Issuer with any information from its
records that the Issuer may reasonably require and shall be reimbursed for its reasonable costs and expenses thereof.
|
6.1
|
Records and Reporting
|
6.2
|
Audit and Inspection Right
|
(a)
|
Upon reasonable notice from the Issuer, the Company shall provide to the Issuer and its internal and external auditors, inspectors, advisors, and such other representatives as such parties may designate from
time to time, access to the Company’s locations during normal business hours for the purposes of performing audits and inspections relating to the Services, including access to:
|
(i)
|
the parts of a facility at or from which the Company is providing the Services;
|
(ii)
|
the Company’s personnel who are providing the Services;
|
(iii)
|
all Documentation relating to the Services;
|
(iv)
|
all physical assets that belong to or are charged to the Issuer;
|
(b)
|
the Issuer shall be responsible for any additional costs or expenses reasonably incurred by the Company in connection with any audits or inspections conducted as provided for hereunder.
|
6.3
|
Philosophy and Policies
|
6.4
|
Survival
|
•
|
Aberdeen International Inc.
|
•
|
African Gold Group, Inc.
|
•
|
AnalytixInsight Inc.
|
•
|
ARHT Media Inc.
|
•
|
Belo Sun Mining Corp.
|
•
|
Black Iron Inc.
|
•
|
Brazil Potash Corp.
|
•
|
Copper One Inc.
|
•
|
EarthRenew Inc.
|
•
|
Emerita Gold Corp.
|
•
|
Euro Sun Mining Inc.
|
•
|
Fura Gems Inc.
|
•
|
Irati Energy Ltd.
|
•
|
Jourdan Resources Inc.
|
•
|
Q-Gold Resources Ltd.
|
•
|
QMX Gold Corporation
|
•
|
Routemaster Capital Inc.
|
•
|
Savanna Capital Corp.
|
•
|
Sulliden Mining Capital Inc.
|
•
|
Magnolia Colombia Ltd.
|
•
|
Trigon Metals Inc.
|
•
|
Yukoterre Resources Inc.
|
•
|
Honour the termination provisions of the agreement between the Corporation and F&M and agreement between the Corporation and the Shared Service Company, including the payment of a
termination fee to the Shared Service Company equal to the anticipated contribution of the Corporation to the Shared Service Company for the greater of (i) the six months following termination; or (ii) the remaining calendar year;
|
•
|
Assume the agreements or obligations that have been executed or incurred by F&M or the Shared Service Company in connection with or related to those services that F&M or Shared
Service Company, as the case may be, determines, in its sole discretion, have been procured for the principal benefit of the Corporation and the Corporation shall indemnify F&M or the Shared Service Company, as the case may be, in
connection with the due performance of such agreements;
|
•
|
Shall cease to use F&M’s name or premises, facilities, equipment, phone numbers and any other items that are the property of F&M or the Shared Service Company; and
|
•
|
F&M shall always be the sole and exclusive owner of (i) the business contacts and investor database maintained by F&M; (ii) potential corporate transactions, acquisition and strategic
opportunities and the like developed by, or otherwise presented initially to, F&M, regardless of whether or not F&M presented such opportunity or related information to the Corporation; and (iii) any other proprietary or confidential
information of F&M, whether or not explicitly identified as such to the Corporation. The Corporation shall promptly return all information in (i), (ii) and (iii) to F&M following the termination
|
•
|
is required by any applicable law or by order of any court of competent jurisdiction or governmental authority;
|
•
|
relates to information that is independently developed by the Corporation;
|
•
|
relates to information that is or becomes publicly available (other than through unauthorized disclosure by the Corporation);
|
•
|
or relates to information that is received from a third party free of any obligation of confidentiality.
|
•
|
The Corporation will adopt a policy regarding the public disclosure of material information, restrictions regarding the trading of securities of both the Corporation and all other
members of the F&M Group of Companies, and a prohibition on tipping.
|
•
|
Each Sunday night, the Chief Executive Officer of the Corporation will report to the Senior Lawyer in the F&M Group of Companies as to whether or not there is any undisclosed material
information relating to the Corporation.
|
•
|
Each employee or consultant of the Corporation must receive prior written approval from the Senior Lawyer in the F&M Group of Companies regarding any proposed trade in the securities of
any company in the F&M Group of Companies, including the Corporation. Approval will be granted unless there is undisclosed material information relating to the respective company. An email from the Senior Lawyer will be considered written
approval for this purpose.
|
1.
|
The parties celebrate into this agreement on 706 hectares, 8895 square meters (the “Area”)
of the property located in the village Palagua, rural area of the municipality of Puerto Boyacá, department of Boyacá, identified with the real estate registration No. 088-611836 of the County Recorder’s Office of Puerto Boyacá and the
cadastral certificate No. 155720001000000040183000000000, land property A Brisas de Palagua (the “Property”).
|
2.
|
The Tenant with Option to Purchase, shall destine the Property to labors related to cannabis cultivation with medicinal and scientific purposes, other activities of production and
transformation associated to these and activities included within its business purpose.
|
1.
|
Ninety-five thousand eight hundred-nine Colombia pesos (COP $95.879), monthly for each hectare, which shall be in force from the beginning of the use of each hectare, in accordance
with the delivery certificates signed by the parties.
|
2.
|
The Tenant with Option to Purchase shall request from the Landlord the delivery of the total or partial Area corresponding with at least ten working days prior to its use, and it is
obliged not to use additional areas without the corresponding delivery certificates being executed and subscribed.
|
(a)
|
To allow the peaceful use and enjoyment of the total or partial Area delivered.
|
(b)
|
To release the Tenant from any disturbance in the normal and full enjoyment of the total or partial Area delivered.
|
(c)
|
To receive the payment of the fee on the total or partial Area delivered.
|
(d)
|
To file the accounts receivable or invoice of the lease fee.
|
(e)
|
To allow the Tenant, with prior express written authorization, to make improvements and adjustments in the Area for its adaptation and use, in accordance with the Agreement Provisions.
Being understood that the same will access the property and in event of termination and restitution, shall not be recognized to the Tenant.
|
(f)
|
To carry out all necessary acts to prevent the imposition of any judicial or extrajudicial lien or precautionary measure that affects the free holding of the Area and/or the Property
that do not correspond to the use or destination of the Area delivered by the Tenant.
|
(g)
|
To receive the Area upon termination of the Agreement, as determined in the mentioned.
|
(h)
|
To notify to the Tenant prior to entering into any legal business involving areas wholly or partially delivered.
|
(i)
|
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
To pay the Fee in accordance with the provisions of this Agreement.
|
(b)
|
To use and enjoy the Area in accordance with this Agreement, without changing its destination.
|
(c)
|
To watch over and care for the conservation of the property and/or Area and those things received in rent. To carry out timely and at its own expense repairs or replacements
|
(d)
|
To restitute the property and/or Areas at the termination of the Agreement, in the state in which they were delivered according to the arrangements herein agreed, to restitute the
property with all services and annexes totally up to date and fully discharged of its obligations.
|
(e)
|
To comply with all requirements set forth in the regulations in force to the operation and use of the property and/or Area, including obtaining all permits and licenses required in
relation to the operation and maintenance
|
(f)
|
All other law provisions as well as those stipulated on this Agreement. .
|
(a)
|
Termination by either Party
|
i.
|
Damage or destruction of the Area and/or Property, when said damage or destruction is of such magnitude as to prevent the normal use and enjoyment of the Tenant.
|
ii.
|
By dissolution or declaration of compulsory liquidation of any of the Parties.
|
iii.
|
By judicial conviction or inclusion of the Parties and/or any of their administrators in the Specially Designated Nationals and Blocked Persons List, issued by the Office of Foreign Assets Control of the United States Department of
Treasury (“OFAC”) and/or in any similar list issued by the OFAC or any similar entity, in accordance with any authorization, executive order or regulation. Those shall be in written form.
|
iv.
|
The mutual agreement between the Parties, which must be in written form.
|
(b)
|
Termination by the Tenant
|
i.
|
The impossibility of using the Area for the purposes agreed upon this Agreement, due to the urban planning and use regulations in force or that shall be governed in the future by judicial rulings, administrative or police decisions
that so order.
|
ii.
|
By revocation, denial or termination of the required licenses or permits for the operation of the activities to which the Area shall be assigned for.
|
iii.
|
If the Tenant fails to make the necessary repairs to the purpose of this Agreement and this failure causes damage to the Landlord. |
(c)
|
Termination by the Tenant
|
i.
|
The breach of Agreement or arrears of more than two (2) consecutive months in the payment of the established fee and interest on arrears at the maximum rate provided by law.
|
ii.
|
If the Tenant uses the Area for a purpose other than that specified in the Agreement.
|
iii.
|
The Landlord and Seller, shall have total freedom and priority to lease or sell all or part of the property object of the Promissory Lease and Sale Agreement, as long as the recipient
or beneficiary (Buyer or lessee), are public, mixed or private companies in the Hydrocarbons and/or Communications sector, without requiring any prior or express formality or authorization. This situation shall be notified at any time to
the Tenant and Buyer, being understood the object and/or possible early termination of the Agreement has been modified as of right and without any additional formality requirement.
|
iv.
|
If the Tenant and Buyer have not made use of or have not initiated either the sowing or the purchase of the areas of the property, subject of the Promissory Lease and Purchase Option
Agreement within the first nine (9) months of the time established as the initial date of the Agreement, the Landlord and Seller with a Sale Option, may, in whole or in part, dispose of, use, enjoy, negotiate, contract, assign and in
general any activity or agreement freely over the area of the property object of this Agreement, without any requirement, formality, notification or similar, and without accepting any type of penalty, indemnity or sanctions of any kind.
Consequently, the contract will be unilaterally terminated for just cause due to the expiration of this agreed term, totally or partially, a faculty that is reserved by the Landlord and Seller.
|
v.
|
At any time, the Landlord and Seller may terminate this Agreement and areas not delivered by means of minutes, without justification or application of penalties, provision, penalty, or
indemnity of any kind.
|
(a)
|
That they are a legal entity legally established in accordance with the laws of their domicile.
|
(b)
|
That, for the celebration and the fulfillment of this Agreement, they have all the corporate and legal authorizations and faculties and have taken all the necessary corporate actions,
including the authorizations of the respective corporate bodies, to be able to celebrate and perform this Agreement.
|
(c)
|
That the effectiveness, enforceability, subscription, celebration and/or performance of this Agreement does not require the granting of approval, consent, permission, order, license,
authorization, declaration, presentation or report from any person.
|
(d)
|
That the information provided is truthful, complete, accurate, up to date, verifiable and comprehensible. Likewise, the information to be provided to the Tenant in performance of the
Contract shall be truthful, complete, accurate, up to date, verifiable and comprehensible.
|
(e)
|
The Landlord represents that the Contract has been duly celebrated and subscribed, and constitutes a source of legal, valid, binding and enforceable obligations in accordance with its
regulations.
|
(f)
|
The Landlord represents that the Property is exempt from all charges, encumbrances, ownership restrictions, leases, or any judicial or extrajudicial measure that limits or restricts
his/ her right to lease the Property or the Area.
|
(g)
|
The lessor declares that, in addition to the open mortgage that falls on the Property, and which is recorded in notation 011 of the eighteenth of December 2009 of the property
registration number folio, to date he/she is not aware of any situation that limits or threatens to limit or restrict the use, enjoyment and disposition of the Property or the Area, including threats of a civil nature to the ownership,
possession or free disposition, nor has he/she been notified of or identified any circumstance of a regulatory, urban, environmental or health nature that could affect the development of the object of this Agreement.
|
(h)
|
The Landlord represents that the Property, at the date of subscription of this Agreement, is up to date in the payment of all taxes such as property tax, valuation charge,
participation in capital gain and in general, other concepts related to the maintenance of the Property.
|
(i)
|
The Landlord represents that he/she is solely and exclusively responsible for any possible complaint regarding the right to and/or ownership of the Property. In this sense, it releases
in a long-term the Tenant from all liability for judicial and / or extrajudicial complaints that may arise against the Tenant.
|
i.
|
The purchase and sale price shall be that agreed upon by the parties based on the corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá, which shall be contracted by the Tenant with an
Option to Purchase within six (6) months following the Starting Date, and shall be indexed to the date on which the notification of the intention to purchase the Property is made, increasing in a
proportional manner equal to that of the Consumer Price Index.
|
ii.
|
The Purchase Option may be exercised in whole or in part by the Tenant with the Purchase Option at any time during the Term of the Contract contemplated in the Fourth Provision of this Agreement, excluding
its extensions (the "Term of effectiveness of the Option").
|
iii.
|
The Tenant with an Option to Purchase, at any time during the Term of Effectiveness of the Option to Purchase, must communicate in writing to the Landlord with an Option to sale, the will to exercise the
Option to Purchase, indicating in such communication the documents required for the performance of due diligence on the Leased Property (the "Due Diligence Documents"), which will be, but not
limited to, registered public deeds on the Property, proof of payment of trade taxes, building permits, information on disputes, precautionary measures, liens or encumbrances on the Leased Property, among other documents of a similar
nature.
|
iv.
|
The Landlord shall, within ten (10) business days of receiving the notice, forward the Due Diligence Documents to the Tenant. Once the Due Diligence Documents have been received, the Tenant shall have a
term of fifteen (15) business days to carry out the due diligence process of the Properties.
|
v.
|
Once the legal due diligence process of the Properties has been satisfactorily completed, at the discretion of the Tenant with Purchase Option, the Parties, within fifteen (15) business days following the
expiration of the period for carrying out the due diligence process, shall sign the promissory Sale and Purchase Agreement in which the price, the method of payment of the Sale and Purchase Price, and other conditions for executing the
purchase and sale agreement on the Properties shall be specified.
|
vi.
|
With a prior written agreement, the Parties may grant the public deed of sale and Purchase or the document by means of which the sale of the Properties is understood to be executed, without the need to exhaust the subscription stage of the Promissory Sale and Purchase Agreement. |
No.
|
Description
|
Exhibit 1
|
Landlord Legal Representation Instruments.
|
Exhibit 2
|
Tenant Legal Representation Instruments.
|
Exhibit 3
|
Boundaries Deed, taken from Public Deed No. 970 of the 30th of September of 2005, granted through the Sole Notary of Puerto
Boyacá.
|
Exhibit 4
|
Corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá.
|
Exhibit 5
|
Title research study.
|
1.
|
The parties celebrate into this agreement on 1,432 hectares (the “Area”) of the
property located in the village Palagua, rural area of the municipality of Puerto Boyacá, department of Boyacá, identified with the real estate registration No. 088-6222 of the County Recorder’s Office of Puerto Boyacá and the cadastral
certificate No. 155720001000000040212000000000, land properties BOCAS DE PALAGUA Y TIERRA PROMETIDA (the “Property”).
|
2.
|
The Tenant with Option to Purchase, shall destine the Property to labors related to cannabis cultivation with medicinal and scientific purposes, other activities of production and
transformation associated to these and activities included within its business purpose.
|
1.
|
Ninety-five thousand eight hundred-nine Colombia pesos (COP $95.879), monthly for each hectare, which shall be in force from the beginning of the use of each hectare, in accordance
with the delivery certificates signed by the parties.
|
2.
|
The Tenant with Option to Purchase shall request from the Landlord the delivery of the total or partial Area corresponding with at least ten working days prior to its use, and it is
obliged not to use additional areas without the corresponding delivery certificates being executed and subscribed.
|
(a)
|
To allow the peaceful use and enjoyment of the total or partial Area delivered.
|
(b)
|
To release the Tenant from any disturbance in the normal and full enjoyment of the total or partial Area delivered.
|
(c)
|
To receive the payment of the fee on the total or partial Area delivered.
|
(d)
|
To file the accounts receivable or invoice of the lease fee.
|
(e)
|
To allow the Tenant, with prior express written authorization, to make improvements and adjustments in the Area for its adaptation and use, in accordance with the Agreement Provisions.
Being understood that the same will access the property and in event of termination and restitution, shall not be recognized to the Tenant.
|
(f)
|
To carry out all necessary acts to prevent the imposition of any judicial or extrajudicial lien or precautionary measure that affects the free holding of the Area and/or the Property
that do not correspond to the use or destination of the Area delivered by the Tenant.
|
(g)
|
To receive the Area upon termination of the Agreement, as determined in the mentioned.
|
(h)
(i)
|
To notify to the Tenant prior to entering into any legal business involving areas wholly or partially delivered.
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
To pay the Fee in accordance with the provisions of this Agreement.
|
(b)
|
To use and enjoy the Area in accordance with this Agreement, without changing its destination.
|
(c)
|
To watch over and care for the conservation of the property and/or Area and those things received in rent. To carry out timely and at its own expense repairs or replacements
|
(d)
|
To restitute the property and/or Areas at the termination of the Agreement, in the state in which they were delivered according to the arrangements herein agreed, to restitute the
property with all services and annexes totally up to date and fully discharged of its obligations.
|
(e)
|
To comply with all requirements set forth in the regulations in force to the operation and use of the property and/or Area, including obtaining all permits and licenses required in
relation to the operation and maintenance
|
(f)
|
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
Termination by either Party
|
i.
|
Damage or destruction of the Area and/or Property, when said damage or destruction is of such magnitude as to prevent the normal use and enjoyment of the Tenant.
|
ii.
|
By dissolution or declaration of compulsory liquidation of any of the Parties.
|
iii.
|
By judicial conviction or inclusion of the Parties and/or any of their administrators in the Specially Designated Nationals and Blocked Persons List, issued by the Office of Foreign Assets Control of the United States Department of
Treasury (“OFAC”) and/or in any similar list issued by the OFAC or any similar entity, in accordance with any authorization, executive order or regulation. Those shall be in written form.
|
iv.
|
The mutual agreement between the Parties, which must be in written form.
|
(b)
|
Termination by the Tenant
|
i.
|
The impossibility of using the Area for the purposes agreed upon this Agreement, due to the urban planning and use regulations in force or that shall be governed in the future by judicial rulings, administrative or police decisions
that so order.
|
ii.
|
By revocation, denial or termination of the required licenses or permits for the operation of the activities to which the Area shall be assigned for.. |
iii.
|
If the Tenant fails to make the necessary repairs to the purpose of this Agreement and this failure causes damage to the Landlord. |
(c)
|
Termination by the Tenant
|
i.
|
The breach of Agreement or arrears of more than two (2) consecutive months in the payment of the established fee and interest on arrears at the maximum rate provided by law.
|
ii.
|
If the Tenant uses the Area for a purpose other than that specified in the Agreement.
|
iii.
|
The Landlord and Seller, shall have total freedom and priority to lease or sell all or part of the property object of the Promissory Lease and Sale Agreement, as long as the
recipient or beneficiary (Buyer or lessee), are public, mixed or private companies in the Hydrocarbons and/or Communications sector, without requiring any prior or express formality or authorization. This situation shall be notified at
any time to the Tenant and Buyer, being understood the object and/or possible early termination of the Agreement has been modified as of right and without any additional formality requirement.
|
iv.
|
If the Tenant and Buyer have not made use of or have not initiated either the sowing or the purchase of the areas of the property, subject of the Promissory Lease and Purchase Option
Agreement within the first nine (9) months of the time established as the initial date of the Agreement, the Landlord and Seller with a Sale Option, may, in whole or in part, dispose of, use, enjoy, negotiate, contract, assign and in
general any activity or agreement freely over the area of the property object of this Agreement, without any requirement, formality, notification or similar, and without accepting any type of penalty, indemnity or sanctions of any kind.
Consequently, the contract will be unilaterally terminated for just cause due to the expiration of this agreed term, totally or partially, a faculty that is reserved by the Landlord and Seller.
|
v.
|
At any time, the Landlord and Seller may terminate this Agreement and areas not delivered by means of minutes, without justification or application of penalties, provision, penalty,
or indemnity of any kind.
|
|
|
(a)
|
That they are a legal entity legally established in accordance with the laws of their domicile.
|
(b)
|
That, for the celebration and the fulfillment of this Agreement, they have all the corporate and legal authorizations and faculties and have taken all the necessary corporate
actions, including the authorizations of the respective corporate bodies, to be able to celebrate and perform this Agreement.
|
(c)
|
That the effectiveness, enforceability, subscription, celebration and/or performance of this Agreement does not require the granting of approval, consent, permission, order, license,
authorization, declaration, presentation or report from any person.
|
(d)
|
That the information provided is truthful, complete, accurate, up to date, verifiable and comprehensible. Likewise, the information to be provided to the Tenant in performance of the
Contract shall be truthful, complete, accurate, up to date, verifiable and comprehensible.
|
(e)
|
The Landlord represents that the Contract has been duly celebrated and subscribed, and constitutes a source of legal, valid, binding and enforceable obligations in accordance with
its regulations.
|
(f)
|
The Landlord represents that the Property is exempt from all charges, encumbrances, ownership restrictions, leases, or any judicial or extrajudicial measure that limits or restricts
his/ her right to lease the Property or the Area.
|
(g)
|
The lessor declares that, in addition to the open mortgage that falls on the Property, and which is recorded in notation 011 of the eighteenth of December 2009 of the property
registration number folio, to date he/she is not aware of any situation that limits or threatens to limit or restrict the use, enjoyment and disposition of the Property or the Area, including threats of a civil nature to the ownership,
possession or free disposition, nor has he/she been notified of or identified any circumstance of a regulatory, urban, environmental or health nature that could affect the development of the object of this Agreement.
|
(h)
|
The Landlord represents that the Property, at the date of subscription of this Agreement, is up to date in the payment of all taxes such as property tax, valuation charge,
participation in capital gain and in general, other concepts related to the maintenance of the Property.
|
(i)
|
The Landlord represents that he/she is solely and exclusively responsible for any possible complaint regarding the right to and/or ownership of the Property. In this sense, it
releases in a long-term the Tenant from all liability for judicial and / or extrajudicial complaints that may arise against the Tenant.
|
i.
|
The purchase and sale price shall be that agreed upon by the parties based on the corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá, which shall be contracted by the
Tenant with an Option to Purchase within six (6) months following the Starting Date, and shall be indexed to the date on which the notification of the intention to purchase the Property is made,
increasing in a proportional manner equal to that of the Consumer Price Index.
|
ii.
|
The Purchase Option may be exercised in whole or in part by the Tenant with the Purchase Option at any time during the Term of the Contract contemplated in the Fourth Provision of this Agreement,
excluding its extensions (the "Term of effectiveness of the Option").
|
iii.
|
The Tenant with an Option to Purchase, at any time during the Term of Effectiveness of the Option to Purchase, must communicate in writing to the Landlord with an Option to sale, the will to exercise the
Option to Purchase, indicating in such communication the documents required for the performance of due diligence on the Leased Property (the "Due Diligence Documents"), which will be, but
not limited to, registered public deeds on the Property, proof of payment of trade taxes, building permits, information on disputes, precautionary measures, liens or encumbrances on the Leased Property, among other documents of a
similar nature.
|
iv.
|
The Landlord shall, within ten (10) business days of receiving the notice, forward the Due Diligence Documents to the Tenant. Once the Due Diligence Documents have been received, the Tenant shall have a
term of fifteen (15) business days to carry out the due diligence process of the Properties.
|
v.
|
Once the legal due diligence process of the Properties has been satisfactorily completed, at the discretion of the Tenant with Purchase Option, the Parties, within fifteen (15) business days following
the expiration of the period for carrying out the due diligence process, shall sign the promissory Sale and Purchase Agreement in which the price, the method of payment of the Sale and Purchase Price, and other conditions for
executing the purchase and sale agreement on the Properties shall be specified.
|
vi.
|
With a prior written agreement, the Parties may grant the public deed of sale and Purchase or the document by means of which the sale of the Properties is understood to be executed, without the need to exhaust the subscription stage of the Promissory Sale and Purchase Agreement. |
No.
|
Description
|
Exhibit 1
|
Landlord Legal Representation Instruments.
|
Exhibit 2
|
Tenant Legal Representation Instruments.
|
Exhibit 3
|
Restrictions acknowledgment: Public Deed No. 1644 of the 4th of June of 1990, granted
through the 2nd (second) Notary of Armenia.
|
Exhibit 4
|
Corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá.
|
Exhibit 5
|
Title research study.
|
1.
|
That on the second of May of 2018, the Parties have celebrated a lease (the “Agreement”) on 361 hectares with 6,057 square meters (the “Area”) of the property located in the village of Motoso, rural area of the municipality of Girón, Santander, identified with the real estate
registration No. 300-193758 of the County Recorder´s Office of Bucaramanga and the cadastral certificate No.000000110076000 the (“Property”). The current
amendment aims to clarify that any requirement or environmental regulation present on zones required by the environmental authority shall be respected and/or compensated, serving this as an explicit authorization utilizing this document,
to the owner to cede and deed these strips of land in favor of the environmental entity. This shall not deteriorate the value of the lease.
|
2.
|
That under the Agreement, the Tenant shall destine the Property to labors related to cannabis cultivation with medicinal and scientific purposes and other activities of production
and transformation associated to these and activities included within its business purpose.
|
3.
|
That the Parties have been engaged in negotiations and to reflect the agreements outlined in the Agreement, have decided to subscribe the present Amendment, which leads to the entire
replacement of the points contained in the Agreement, which shall remain as:
|
4.
|
The Tenant has full knowledge that as of October of 2018, the property subject of this contract has had a lien by an embargo process with Bancolombia.
|
5.
|
The Tenant has full knowledge of the condition of the property, and its access roads and its internal building roads.
|
6.
|
The Tenant has full knowledge of the condition of the property, and its access roads and its internal building roads.
|
7.
|
COSECHEMOS YA SAS, has full knowledge of the existence of a pineapple crop that occupies approximately 20 hectares of the farm Cantalavieja, it is estimated that the pineapple
harvest comes out once a year. CI GRAMALUZ SCA shall indemnify COSECHEMOS YA SAS, against any possible claim arising from this crop.
|
8.
|
COSECHEMOS YA SAS, has full knowledge that on the Cantalavieja farm, there are two (2) portions of land leased for the installation of two (2) antennas of the companies Sistelec, one
of them works for meteorological analysis and Genesis Data. For internet purposes, CI GRAMALUZ SCA shall hold Cosechemos Ya SAS compensated from any third party claims that may arise from the existence of the mentioned antennas.
|
(a)
|
Ten million Colombian pesos (COP $10.000.000) plus VAT, which shall be in force from September 19th,
2019 until February 29th, 2020.
|
(b)
|
Twenty million Colombian pesos (COP $20.000.000) plus VAT, which shall be in force from March 1st, 2020. Upon expiration of
the first year of the Agreement, the Fee shall be increased automatically without the need for any requirement between the Parties, in a proportion equal to the consumer Price index (CPI) increase, this being certified by the DANE for the
12 months immediately prior to the date in which readjustments are to be made.
|
|
(a)
|
To allow the peaceful use and enjoyment of the Area.
|
(b)
|
To release the Tenant from any disturbance in the normal and full enjoyment of the Area.
|
(c)
|
To receive the payment of the fee.
|
(d)
|
To file the corresponding invoice to the collection of the fees within the first 5 business days of each month.
|
(e)
|
To assume the payment of the Property´s tax obligations, specifically those that correspond to property taxes, valuation contributions, and overall, any tax or tribute levied on the
Property, for which the Tenant may demand verification of said payments under the applicable legislation.
|
(f)
|
To allow the Tenant, with prior express written authorization, to make improvements and adjustments in the Area for its adaptation and use, under the Agreement Provisions. To allow
the Tenant to make improvements and adaptations in the Area for its use under the provisions determined in the Agreement, said expenses should fall under the Tenant responsibility, and if the withdrawing of the improvements causes any
deterioration to the Property, these shall not be withdrawn. The tenant shall not intervene in any way among the areas currently purposed for pineapple, avocado, lemon, and tangerine harvests. The Tenant shall respect these areas with
their respective crops. Said areas may be intervened after previous stipulated agreements with the Landlord.
|
(g)
|
To carry out all the necessary acts for the Tenant to have a peaceful tenancy of the Property.
|
(h)
|
To receive the Area upon termination of the Agreement, as determined in the mentioned.
|
(i)
|
To notify the Tenant before entering into any legal business involving the Property.
|
(j)
|
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
To pay the Fee under the provisions of this Agreement.
|
(b)
|
To use and enjoy the Area under this Agreement, showing respect to the areas with current pineapple, lemon, tangerine and avocado harvests.
|
(c)
|
To restitute the property and/or Areas at the termination of the Agreement.
|
(d)
|
To maintain good relations, peaceful and respectful coexistence with the personnel and other people who are in the Cantalavieja estate.
|
(e)
|
To comply with the farm’s biosecurity standards.
|
(f)
|
To pay for the respective public services of the farm.
|
(g)
|
To provide the Landlord with copies of the licenses permits and other required authorizations by different entities regarding the development of the business purpose activity carried
out on the leased property.
|
(h)
|
To watch over and care for the conservation and security of the farm and of those who are on it.
|
(i)
|
The Tenant shall be liable for all provisions assumed on this Agreement, as well as those imposed by the applicable law, not being limited to the agreed initial term but also during
tacit carryovers and written renewals, until the date of restitution of the property to the Landlord. It shall not keep or allow the storage within the Property of explosive substances or those detrimental to safety, conservation, and
hygiene, as well as those that in any way may be qualified as illicit.
|
(j)
|
All other law provisions as well as those stipulated on this Agreement.
|
(a)
|
Termination by either Party
|
i.
|
Damage or destruction of the Area and/or Property, when said damage or destruction is of such magnitude as to prevent the normal use and
enjoyment of the Tenant.
|
ii.
|
By dissolution or declaration of compulsory liquidation of any of the Parties.
|
iii.
|
By judicial conviction or inclusion of the Parties and/or any of their administrators in the Specially Designated Nationals and Blocked Persons List, issued by the Office of Foreign
Assets Control of the United States Department of Treasury (“OFAC”) and/or in any similar list issued by the OFAC or any similar entity, in accordance with any authorization, executive order or regulation.
|
iv.
|
The expiry of the term of the Agreement, its carryovers, or renewals.
|
v.
|
The mutual agreement between the Parties, which must be in written form.
|
vi.
|
The breach of any of the provisions set forth in the present Agreement.
|
(b)
|
Termination by the Tenant
|
i.
|
The impossibility of using the Area for the purposes agreed upon this Agreement, due to the urban planning and use regulations in force or that shall be governed in the future by
judicial rulings, administrative or policy decisions that so order.
|
ii.
|
By revocation, denial, or termination of the required licenses or permits for the operation of the activities to which the Area shall be
assigned.
|
iii.
|
If the Tenant fails to make the necessary repairs to the purpose of this Agreement, and this failure causes damage to the Landlord.
|
(c)
|
Termination by the Landlord
|
i.
|
By failure or delay greater than four (4) consecutive months in the payment of the established Fee.
|
ii.
|
If the Tenant destines the Area to a different purpose other than the one established in the present Agreement.
|
(a)
|
That he is a legal entity legally established under the laws of the Republic of Colombia.
|
(b)
|
That, for the celebration and the fulfillment of this Agreement, they have all the corporate and legal authorizations and faculties and have taken all the necessary corporate
actions, including the authorizations of the respective corporate bodies, to be able to celebrate and perform this Agreement.
|
(c)
|
That the effectiveness, enforceability, subscription, celebration, and/or performance of this Agreement does not require the granting of approval, consent, permission, order,
license, authorization, declaration, presentation, or report from any person.
|
(d)
|
That the information provided to the Tenant is truthful, complete, accurate, up to date, verifiable, and comprehensible. Likewise, the information to be provided to the Tenant in the
performance of the Contract shall be truthful, complete, accurate, up to date, verifiable and comprehensible.
|
(e)
|
That the Contract has been duly celebrated and subscribed and constitutes a source of legal, valid, binding and enforceable obligations under its regulations.
|
(f)
|
That, in addition to the executive attachment that falls on the Property, and which is recorded in notation 008 of the ninth (9) of October 2018 of the property registration number
folio, to date he/she is not aware of any situation that limits or threatens to limit or restrict the use, enjoyment and disposition of the Property or the Area, including threats of a civil nature to the ownership, possession or free
disposition, nor has he/she been notified of or identified any circumstance of a regulatory, urban, environmental or health nature that could affect the development of the object of this Agreement.
|
(g)
|
That the Property, at the date of subscription of this Agreement, is up to date in the payment of all taxes such as property tax, valuation charge, and in general, other concepts
related to the maintenance of the Property.
|
(h)
|
That he/she is solely and exclusively responsible for any possible complaint regarding the right to and/or ownership of the Property, in
this sense, it releases in a long-term the Tenant from all liability for judicial and / or extrajudicial complaints that may arise against the Tenant.
|
i.
|
The purchase and sale price shall be that agreed-upon corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá, which shall be contracted by the
Tenant within six (6) months following the Starting Date, and shall be indexed to the date on which the notification of the intention to purchase the Property is made, increasing in a proportional
manner equal to that of the Consumer Price Index.
|
ii.
|
The Purchase Option may be exercised in whole by the Tenant, at any time during the Term of the Contract, contemplated in the Fourth Provision of this Agreement,
excluding its extensions (the "Term of the effectiveness of the Option ").
|
iii.
|
The Tenant, at any time during the Term of Effectiveness of the Option to Purchase, must communicate in writing to the Landlord, the will to exercise the Option
to Purchase, indicating in such communication the documents required for the performance of due diligence on the Leased Property (the "Due Diligence Documents"),
which will be, but not limited to, registered public deeds on the Property, proof of payment of trade taxes, building permits, information on disputes, precautionary measures, liens or encumbrances on the Leased Property, among other
documents of a similar nature.
|
iv.
|
The Landlord shall, within thirty (30) business days of receiving the notice, forward the Due Diligence Documents to the Tenant. Once the Due Diligence Documents
have been received, the Tenant shall have a term of sixty (60) business days to carry out the due diligence process of the Property.
|
v.
|
Once the legal, due diligence process of the Properties has been satisfactorily completed, at the discretion of the Tenant, the Parties, within fifteen (15)
business days following the expiration of the period for carrying out the due diligence process, shall sign the promissory Sale and Purchase Agreement in which the method of payment of the Sale and Purchase Price, and other conditions
for executing the purchase and sale agreement on the Property shall be specified.
|
vi.
|
With a prior written agreement, the Parties may grant the public deed of sale and Purchase or the document through which the sale of the Properties is
understood to be executed, without the need to exhaust the subscription stage of the Promissory Sale and Purchase Agreement.
|
No.
|
Description
|
Exhibit 1
|
Landlord Legal Representation Instruments
|
Exhibit 2
|
Tenant Legal Representation Instruments
|
Exhibit 3
|
Area plan
|
Exhibit 4
|
Corporate appraisal carried out by the Lonja de Propiedad Raíz of Bogotá
|
Exhibit 5
|
Title research study
|
LANDLORD
|
TENANT
|
|
(signed) “Guillermo Ramirez Cabrales”
|
(signed) “Oscar Mauricio Franco”
|
|
CI GRAMALUZ SCA
|
COSECHEMOS YA
|
|
TIN 804.017.745-1
|
TIN 900.969.918-1,
|
|
GUILLERMO RAMIREZ CABRALES
|
OSCAR MAURICIO FRANCO
|
|
ID NO. 5.764.410
Legal Rep.
|
ID NO. 79.596.227
Legal Rep.
|
1.
|
The Loan
|
2.
|
Repayment
|
3.
|
Conditions of Advance
|
4.
|
Waiver of Formalities
|
5.
|
Waivers Generally
|
6.
|
Assigns, Successors and Governing Law
|
(a)
|
if a Person commits an act of bankruptcy or a petition or other process for the bankruptcy of the Person is filed or instituted and remains undismissed or unstayed for a
period of 30 days or any of the relief sought in such proceeding (including the appointment of a receiver, trustee, custodian or other similar official for it or any substantial part of its property) shall occur;
|
(b)
|
if any proposal is made or any petition is filed by or against the Person under any law having for its purpose the extension of time for payment, composition or compromise
of the liabilities of the Person or other reorganization or arrangement respecting its liabilities and such proposal or petition is not stayed or dismissed within 20 days or if the Person gives notice of its intention to make or file any
such proposal or petition including an application to any court to stay or suspend any proceedings of creditors pending the making or filing of any such proposal or petition;
|
(c)
|
if any receiver, administrator, or manager of the property, assets or undertaking of the Person or a substantial part thereof is appointed, whether privately, pursuant to
any statute, or by or under any judgment or order of any court;
|
(d)
|
if any proceedings are taken to enforce any Encumbrance affecting the assets of the Person or if a distress or any similar process be levied or enforced against such
assets and such proceedings are not dismissed or stayed within 20 days after the commencement thereof;
|
(e)
|
the making by the Person of a general assignment for the benefit of its creditors; or
|
(f)
|
with respect to a person to which Colombia laws apply, as provided for in the applicable provisions of the Colombian Commercial Code, in Law 1116 of 2006 and in law 1564
of 2012, regarding bankruptcy as well as in the Corporate Superintendency legal opinions regarding legal interpretations of these laws;
|
(a)
|
the terms “Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”, “herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its entirety and not to
any particular provision hereof;
|
(b)
|
references to an “Article”, “Section” or “Schedule” followed by a number or letter refer to the specified Article or Section of or Schedule to this Agreement;
|
(c)
|
the division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of
this Agreement;
|
(d)
|
words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine and neuter genders and vice versa;
|
(e)
|
unless otherwise indicated, any reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended, re-enacted or
replaced, and any reference to a statute shall include any regulations or rules made thereunder;
|
(f)
|
the words “include”, “includes” and “including” mean “include”, “includes” or “including”, in each case, “without limitation”;
|
(g)
|
reference to any agreement or other instrument in writing means such agreement or other instrument in writing as amended, modified, replaced or supplemented from time to time;
|
(h)
|
unless otherwise indicated, time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated excluding the day on which the period
commences and including the day on which the period ends; and
|
(i)
|
whenever any payment to be made or action to be taken hereunder is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next
following Business Day.
|
(a)
|
if it is a company, it is a corporation validly existing under the laws of its respective jurisdiction of incorporation;
|
(b)
|
the entering into of this Agreement and the completion of the transactions contemplated hereby will not result in a violation of any of the terms and provisions of any law applicable to
it or if it is a company, any of its constating documents;
|
(c)
|
this Agreement has been: (i) if it is a company, duly authorized by all necessary corporate action on the part of it; and (ii) duly executed and delivered by it and is valid and legally
binding on it in accordance with its terms, except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by the
effect of general principles of equity (regardless of whether enforcement is considered in proceedings in equity or at law);
|
(d)
|
it has obtained all consents, approvals or authorizations required by any Governmental Authority or other Person in connection with the execution and performance of this Agreement;
|
(e)
|
it owns its Shares free of any Encumbrances;
|
(f)
|
it has incurred no obligation or liability, contingent or otherwise, for brokers or finder’s fees or the like that will in any way become an obligation of, or result in a valid claim
against, the other Shareholder with respect to the matters provided for in this Agreement; and
|
(g)
|
except for the rights set out in this Agreement in favour of the other Shareholders and the Company, no Person has any agreement or option, or any right or privilege capable of becoming
an agreement or option, to purchase or otherwise acquire any of the Shares owned by it.
|
(i)
|
Approval of the disposition of the License; and
|
|
(ii)
|
Permanent cessation of operations or abandonment of the project after commencement of production other than due to health and safety reasons.
|
3.4
|
Meetings of the Shareholders
|
6.1
|
Confidentiality
|
(a)
|
A Shareholder:
|
|
(i) |
subject to a Bankruptcy Proceeding or Insolvency pursuant to Colombian or Canadian laws;
|
|
(ii) |
refuses, neglects or otherwise fails to comply with the Transfer restrictions contained in this Agreement;
|
|
(iii) |
if he/she does not comply with the transfer of shares he/she is obliged to, under the Drag-Along Right.
|
|
(iv) |
is in material default of its obligations under this Agreement;
|
(b)
|
Any Non-Defaulting Shareholder shall have the right to give the Defaulting Shareholder(s) a written notice of default (a “Notice of
Default”), which shall describe the default in reasonable detail and state the date by which the default must be cured. If a longer term is required, the Defaulting Shareholder(s) will request a reasonable extension of the term,
which must be accepted in writing to be considered granted by the Non-Defaulting Shareholders. Whether nothing is said about the term the default shall be cured, there will be a term of 30 days, which will be the minimum term to comply. Any
difference in terms of the term required to comply or its extension, may be resolved through a friendly composition in the terms of the second section of Chapter VIII of Law 1563 of 2012. Failure of either Non-Defaulting Shareholder to give
a Notice of Default shall not release the Defaulting Shareholder(s) from any of their respective duties under this Agreement.
|
(c)
|
The Defaulting Shareholder(s) shall proportionately pay all fees and expenses charged by the Appraiser(s). The Appraisers shall be entitled to retain such qualified
independent appraisers as each may deem appropriate to assist with its valuation.
|
7.5
|
No Penalty
|
(i)
|
the date on which no Shareholder owns legally or beneficially any Shares;
|
(ii)
|
the date on which this Agreement is terminated in writing by all of the Shareholders who continue to beneficially own any Shares; or
|
(iii)
|
the winding-up or dissolution of the Company,
|
(i)
|
if to Flora, at
|
|
65 Queen Street West
Suite 800, Toronto, Ontario Canada M5H 2M5 |
||
Attention: Chief Executive Officer
Email:dlopez@fmresources.ca |
||
(ii)
|
if to Guillermo at:
|
|
Carrera 35ª no. 46-04 Bucaramanga Santander Colombia telefono (037)6430024
|
||
Attention: Guillermo Ramirez Cabrales
Email: grc.53@hotmail.com
|
||
(iii)
|
if to Cabrales at:
|
|
Carrera 35ª no. 46-04 Bucaramanga Santander Colombia telefono (037)6430024
|
||
Attention: Guillermo Ramirez Cabrales
Email: grc.53@hotmail.com
|
||
(iv)
|
if to Oscar at:
|
|
Vereda el Guamo, casa 8, Piedecuesta, Santander, Colombia
|
||
Attention: Oscar Mauricio Franco Ulloa
Email: osmafrul@gmail.com
|
FLORA GROWTH CORPORATION
|
||||
By:
|
“Deborah Battiston”
|
|||
Name: Deborah Battiston
|
||||
Title: Chief Financial Officer
|
||||
“Damian Lopez”
|
||||
Name: Damian Lopez
|
||||
Title: Director
|
“Roberto Paez”
|
“Guillermo Andres Ramirez Martinez”
|
|||
(WITNESS)
|
GUILLERMO ANDRES RAMIREZ MARTINEZ | |||
|
|
|||
“Roberto Paez” |
“Guillermo Ramirez Cabrales”
|
|||
(WITNESS)
|
GUILLERMO RAMIREZ CABRALES | |||
“Roberto Paez”
|
“Oscar Mauricio Franco Ulloa”
|
|||
(WITNESS) | OSCAR MAURICIO FRANCO ULLOA | |||
|
|
|
|
|
(a)
|
“Act” means the Securities Act (Ontario), as amended from time to time;
|
(b)
|
“Affiliate” shall have the meaning ascribed to such term in the Act;
|
(c)
|
“Associate” shall have the meaning ascribed to such term in the Act;
|
(d)
|
“Board” means the Board of Directors of the Company;
|
(e)
|
“Change in Control” means:
|
|
(i) |
a takeover bid (as defined in the Act), which is successful in acquiring Shares,
|
|
(ii) |
the change of control of the Board resulting from the election by the members of the Company of less than a majority of the persons nominated for election by management of the Company,
|
|
(iii) |
the sale of all or substantially all the assets of the Company,
|
|
(iv) | he sale, exchange or other disposition of a majority of the outstanding Shares in a single transaction or series of related transactions, |
|
(v) |
the dissolution of the Company’s business or the liquidation of its assets,
|
|
(vi) |
a merger, amalgamation or arrangement of the Company in a transaction or series of transactions in which the Company’s shareholders receive less than 51% of the outstanding shares of the new or continuing corporation, or
|
|
(vii) |
the acquisition, directly or indirectly, through one transaction or a series of transactions, by any Person, of an aggregate of more than 50% of the outstanding Shares;
|
(f)
|
“Committee” means a committee of the Board appointed in accordance with this Plan, or if no such committee is appointed, the Board itself;
|
(g)
|
“Company” means Flora Growth Corp., a company incorporated under the laws of Ontario;
|
(h)
|
“Consultant” means an individual, other than an Employee, senior officer or director of the Company or a Related Company, or a Consultant Company, who;
|
|
(i) |
is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or a Related Company, other than services provided in relation to a distribution,
|
|
(ii) |
provides the services under a written contract between the Company or a Related Company and the individual or Consultant Company,
|
|
(iii) |
in the reasonable opinion of the Company spends or will spend a significant amount of time and attention on the affairs and business of the Company or a Related Company, and
|
|
(iv) |
has a relationship with the Company or a Related Company that enables the individual or Consultant Company to be knowledgeable about the business and affairs of the Company;
|
(i)
|
“Consultant Company” means, for an individual Consultant, a company of which the individual is an employee or shareholder, or a partnership of which the individual is an employee or partner;
|
(j)
|
“CSE” means the Canadian Securities Exchange;
|
(j)
|
“Date of Grant” means the date specified in the Option Agreement as the date on which the Option is effectively granted;
|
(k)
|
“Disability” means any disability with respect to an Optionee which the Board, in its sole and unfettered discretion, considers likely to prevent permanently the Optionee from:
|
|
|
|
|
(i) |
being employed or engaged by the Company, a Related Company or another employer, in a position the same as or similar to that in which he was last employed or engaged by the Company or a Related Company; or
|
(l)
|
“Disinterested Shareholder Approval” means an ordinary resolution approved by a majority of the votes cast by members of the Company at a shareholders’ meeting, excluding votes attaching to
Shares beneficially owned by Insiders to whom Options may be granted and Associates of those persons and including, on a resolution that requires disinterested approval, votes case by any holders of non-voting and subordinate voting
shares of the Company who shall be given full voting rights on such a resolution;
|
(m)
|
“Effective Date” means the effective date of this Plan, which is the day of its approval by the shareholders of the Company;
|
(n)
|
“Eligible Person” means:
|
|
(i) |
an Employee, senior officer or director of the Company or any Related Company,
|
|
(iii) |
an issuer, all of the voting securities of which are beneficially owned by one or more of the persons referred to in (i) above,
|
|
(iv) |
a Management Company Employee if at the Date of Grant the Company is a “reporting issuer” as defined in the Act;
|
|
(i) |
an individual who is considered an employee under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and CPP deductions must be made at source),
|
|
(ii) |
an individual who works full-time for the Company or a Related Company providing services normally provided by an employee and who is subject to the same control and direction by the Company or a Related Company over the details and
methods of work as an employee of the Company or a Related Company, but for whom income tax deductions are not made at source, or
|
|
(iii) |
an individual who works for the Company or a Related Company, on a continuing and regular basis for a minimum amount of time per week, providing services normally provided by an employee and who is subject to the same control and
direction by the Company or a Related Company over the details and methods of work as an employee of the Company or a Related Company, but for whom income tax deductions are not made at source;
|
(p)
|
“Exchange” means the stock exchange or over the counter market on which the Shares are listed;
|
(q)
|
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;
|
(r)
|
“Fair Market Value” means, where the Shares are listed for trading on an Exchange, the last closing price of the Shares before the Date of Grant on the Exchange which is the
principal trading market for the Shares, as may be determined for such purpose by the Committee, provided that, so long as the Shares are listed only on the CSE, the “Fair Market Value” shall not be lower than the last
closing price of the Shares before the Date of Grant less the maximum discount permitted under the policies of the CSE;
|
(s)
|
“Guardian” means the guardian, if any, appointed for an Optionee;
|
(t)
|
“Insider” shall have the meaning ascribed to such term in the Act;
|
(t)
|
“Investor Relations Activities” means any activities or oral or written communications, by or on behalf of the Company or a shareholder of the Company that
promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:
|
|
(i) |
the dissemination of information provided, or records prepared, in the ordinary course of business of the Company
|
|
(B) |
the rules and policies of the CSE, if the Shares are listed only on the CSE, or the by-laws, rules or other regulatory instruments of any other self-regulatory body or exchange having jurisdiction over the Company,
|
|
(iii) |
communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if
|
|
(A) |
the communication is only through the newspaper, magazine or publication and
|
|
(B) |
the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer, or
|
|
(iv) |
activities or communications that may be otherwise specified by the CSE, if the Shares are listed only on the CSE;
|
(v)
|
“Management Company Employee” means an individual employed by a Person providing management services to the Company, which management services are required for the ongoing successful operation of
the business enterprise of the Company but excluding a Person engaged in Investor Relations Activities;
|
(w)
|
“Option” means an option to purchase unissued Shares granted pursuant to the terms of this Plan;
|
(x)
|
“Option Agreement” means a written agreement between the Company and an Optionee specifying the terms of the Option being granted to the Optionee under the Plan;
|
(y)
|
“Option Price” means the exercise price per Share specified in an Option Agreement, adjusted from time to time in accordance with the provisions of Sections 6.2 and 10;
|
(z)
|
“Optionee” means an Eligible Person to whom an Option has been granted;
|
(aa)
|
“Person” means a natural person, company, government or political subdivision or agency of a government; and where two or more Persons act as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of securities of an issuer, such syndicate or group shall be deemed to be a Person;
|
(bb)
|
“Plan” means this Stock Option Plan of the Company;
|
(cc)
|
“Qualified Successor” means a person who is entitled to ownership of an Option upon the death of an Optionee, pursuant to a will or the applicable laws of descent and distribution
upon death;
|
(dd)
|
“Related Company” shall mean a company which is an Affiliate of the Company;
|
(ee)
|
“Shares” means the common shares in the capital of the Company as constituted on the Date of Grant, adjusted from time to time in accordance
with the provisions of Section 10; and
|
(ff)
|
“Term” means the period of time during which an Option may be exercised.
|
|
(a) |
administration of the Plan in accordance with its terms,
|
|
(b) |
determination of all questions arising in connection with the administration, interpretation and application of the Plan, including all questions relating to the value of the Shares,
|
|
(c) |
correction of any defect, supply of any information or reconciliation of any inconsistency in the Plan in such manner and to such extent as shall be deemed necessary or advisable to carry out the purposes of the Plan,
|
|
(d) |
prescription, amendment and rescission of the rules and regulations relating to the administration of the Plan;
|
|
(e) |
determination of the duration and purpose of leaves of absence from employment which may be granted to Optionees without constituting a termination of employment for purposes of the Plan,
|
|
(f) |
with respect to the granting of Options:
|
|
(i) |
determination of the employees, officers, directors or consultants to whom Options will be granted, based on the eligibility criteria set out in this Plan,
|
|
(ii) |
determination of the terms and provisions of the Option Agreement which shall be entered into with each Optionee (which need not be identical with the terms of any other Option Agreement) and which shall not be inconsistent with the
terms of this Plan,
|
|
(iii) |
amendment of the terms and provisions of an Option Agreement provided the Board obtains:
|
|
(B) |
if required, the approval of any stock exchange on which the Shares are listed,
|
|
(iv) |
determination of when Options will be granted,
|
|
(v) |
determination of the number of Shares subject to each Option, and
|
|
(vi) |
determination of the vesting schedule, if any, for the exercise of each Option, and
|
|
(a) |
the number of Shares subject to option pursuant to such Option, subject to the following limitations if the Shares are listed only on the CSE:
|
|
(i) |
the number of Shares reserved for issuance pursuant to Options to any one Optionee shall not exceed 5% of the issued Shares in any 12-month period (unless the Company is designated as a “Tier 1” listed company by the CSE and has
obtained Disinterested Shareholder Approval to exceed this number),
|
|
(ii) |
the number of Shares reserved for issuance pursuant to Options to any one Consultant shall not exceed 2% of the issued Shares in any 12-month period, and
|
|
(iii) |
the aggregate number of Shares reserved for issuance pursuant to Options to Employees and Management Company Employees conducting Investor Relations Activities shall not exceed 2% of the issued Shares in any 12-month period;
|
|
(b) |
the Date of Grant;
|
|
(c) |
the Term shall in no event be greater than five years following the Date of Grant;
|
|
(d) |
the Option Price, provided that the Option Price shall not be less than the Fair Market Value of the Shares on the Date of Grant;
|
|
(e) |
subject to Section 6.2 below, any vesting schedule upon which the exercise of an Option is contingent;
|
|
(f) |
if the Optionee is an Employee, Consultant or Management Company Employee, a representation by the Company and the Optionee that the Optionee is a bona fide Employee, Consultant or Management Company Employee, as the case may be, of
the Company or a Related Company; and
|
|
(g) |
such other terms and conditions as the Board deems advisable and are consistent with the purposes of this Plan.
|
|
(a) |
permit partial vesting in stated percentage amounts based on the Term of such Option; and
|
|
(b) |
permit full vesting after a stated period of time has passed from the Date of Grant.
|
|
(a) | the termination date specified for such Option in the Option Agreement; |
|
(b) |
where the Optionee’s position as an Employee, a Consultant, a director or a senior officer of the Company or any Related Company, or a Management Company Employee, is terminated for cause, the date of such termination for cause;
|
|
(c) |
where the Optionee’s position as an Employee, a Consultant, a director or a senior officer of the Company or any Related Company, or a Management Company Employee terminates for a reason other than the Optionee’s Disability or death or
for cause, not more than 90 days after such date of termination; PROVIDED that if an Optionee’s position changes from one of the said categories to another category, such change shall not constitute termination or cessation for the
purpose of this Subsection 9.1(c); and
|
|
(d) |
the date of any sale, transfer, assignment or hypothecation, or any attempted sale, transfer, assignment or hypothecation, of such Option in violation of Section 8.1.
|
|
(b) |
all of the Optioned Shares tendered by the Optionee pursuant to the Offer are not taken up and paid for by the offeror pursuant thereto;
|
1. |
on ________________ (the "Grant Date");
|
2. |
_______________________ (the "Optionee");
|
3. |
was granted the option (the "Option") to purchase ____________________ Common Shares (the "Option Shares") of the Company;
|
4. |
for the price of ______________ per share (the "Option Price");
|
5. |
which shall subject, be exercisable ("Vested") as follows:
|
6. |
terminating on ______________________ unless terminated earlier in accordance with Section 9 of the Plan (the "Expiry Date");
|
FLORA GROWTH CORP.
Per:
|
|
|
Authorized Signatory | OPTIONEE | |
Witness:
|
||
|
(a)
|
having or purporting to have jurisdiction on behalf of any nation, province, territory or state or any other geographic or political subdivision of any of them; or
|
(b)
|
exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power;
|
(a)
|
trade-marks, trade dress, trade-names, business names and other indicia of origin, including those listed and described in Schedule 4.24;
|
(b)
|
copyrights, including the copyright registrations and applications listed and described in Schedule 4.24;
|
i.
|
Inchoate statutory liens for Taxes, assessments, governmental or utility charges or levies not at due as at the Closing Date.
|
ii.
|
Rights of equipment lessors under Equipment Contracts provided the terms of such Equipment Contracts have been fully performed to the Closing Date.
|
iii.
|
Any privilege in favour of any lessor, licensor or permitter for rent to become due or for other obligations or acts, the performance of which is required under Contracts so long as the payment of or the
performance of such other obligation or act is not delinquent and provided that such liens or privileges do not materially adversely affect the use or value of the assets affected thereby.
|
(a)
|
trade secrets, formulations, confidential information and other proprietary know-how;
|
(b)
|
public information and non-proprietary know-how;
|
(c)
|
information of a financial or business nature regardless of its form;
|
(d)
|
uniform resource locators, domain names, telephone, telecopy, internet protocol and email addresses; and
|
(a)
|
Consent – Whenever a provision of this Agreement requires an approval or consent and such approval or consent is not delivered within the
applicable time limit, then, unless otherwise specified, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.
|
(b)
|
Currency – Unless otherwise specified, all references to money amounts are to lawful currency of the United States.
|
(c)
|
Governing Law – This Agreement is a contract made under and shall be governed by and construed in accordance with Colombian Laws.
|
(d)
|
Headings – Headings of Articles and Sections are inserted for convenience of reference only and do not affect the construction or interpretation of
this Agreement.
|
(e)
|
Including – Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.
|
(f)
|
No Strict Construction – The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.
|
(g)
|
Number and Gender – Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing
gender include all genders.
|
(h)
|
Severability – If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited
or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting
the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.
|
(i)
|
Statutory references – A reference to a statute includes all regulations and rules made pursuant to such statute and, unless otherwise specified,
the provisions of any statute, regulation or rule which amends, supplements or supersedes any such statute, regulation or rule.
|
(j)
|
Time – Time is of the essence in the performance of the Parties’ respective obligations.
|
(k)
|
Time Periods – Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day.
|
(a)
|
Actions and Deliverables of Vendor on the Closing Date
|
(i)
|
the original certificates representing the Purchased Shares duly issued and the original shareholders log of the Company, evidencing the recording of the transfer of the Purchased Shares
in favor of Purchaser;
|
(ii)
|
the original certificates representing the Purchased Shares owned by Vendor duly endorsed in favor of Purchaser, accompanied with a transfer letter instructing the legal representative of
the relevant Company to register Purchaser as new owner of the Purchased Shares and to cancel the Share certificates in the name of Vendor;
|
(iv)
|
an executed version of the Lease Agreement,
|
(v)
|
|
(vi)
|
Vendor shall transfer to the Purchaser all of the Books and Records of the Company;
|
(vii)
|
a closing certificate issued by Vendor, which certifies that (i) the representations and warranties set forth in this Agreement are true and correct as of the Closing Date in all
material respects, (ii) that Vendor has complied, in all material respects with all the terms of this Agreement that must be fulfilled on or before the Closing, and (c) that all Conditions Precedent to Purchase have been satisfied; and
|
(viii)
|
a waiver letter releasing the Company from any claims Vendor may have against the Company or any of its subsidiaries (provided that such waiver does not include claims expressly included
in the Agreement).
|
(i)
|
a copy of the applicable corporate resolutions evidencing that Purchaser has all required authorizations for the execution, delivery and performance of this Agreement, pursuant to its
Corporate Documents;
|
(ii)
|
a public certificate of incorporation or existence, evidencing the existence of Purchaser and, as applicable, the name and identification document of the legal representatives of
Purchaserr;
|
(iii)
|
a executed version of the JVSA; and
|
(iv)
|
the Closing Purchase Price by wire transfer of immediately available funds, to Vendor to the accounts instructed by Vendor.
|
(a)
|
apply for and use best efforts to obtain all consents, approvals, waivers or modifications acceptable to the Purchaser acting reasonably; and
|
(b)
|
take all such actions and do, or cause to be done, all such things at the request of the Purchaser as shall reasonably be necessary in order that the value and benefits of the applicable
Restricted Rights shall be preserved and endure to the benefit of the Purchaser.
|
(a)
|
USD$80,000. The payment will be made by wire transfer of immediately available funds to the bank accounts indicated in writing by Vendor. Each Vendor shall a portion of this amount
commensurate to their shareholders in the Company.
|
3.2
|
Bonus Payments
|
(a)
|
Contract;
|
(b)
|
charter or by-law; or
|
(c)
|
Laws or Governmental Authorizations;
|
(a)
|
there has not been any change in the financial condition, operations or prospects of the Company other than changes in the ordinary course of business, none of which has a Material Adverse
Effect;
|
(b)
|
there has not been any material change in the level or value of Inventories;
|
(c)
|
the Company has not transferred, assigned, sold or otherwise disposed of any of the assets shown or reflected in the Balance Sheet or cancelled any debts or entitlements except, in each
case, in the ordinary course of business;
|
(d)
|
the Company has not incurred or assumed any obligation or liability (fixed or contingent), except those described in Section 4.8 and except
unsecured current obligations and liabilities incurred in the ordinary course of business;
|
(e)
|
the Company has not discharged or satisfied any Encumbrance, or paid any obligation or liability (fixed or contingent) other than liabilities included in the Balance Sheet and liabilities
incurred since the date of the Balance Sheet in the ordinary course of business;
|
(f)
|
the Company has not suffered an operating loss or any unusual or extraordinary loss except as is consistent with its financial performance over the 12 month period prior to the date
hereof, waived or omitted to take any action in respect of any rights, or entered into any commitment or transaction not in the ordinary course of business where such loss, rights, commitment or transaction is or would be material in
relation to the Company;
|
(g)
|
the Company has not granted any bonuses, whether monetary or otherwise, or made any general wage or salary increases in respect of its Employees, other than as provided for in the
Collective Agreements, or changed the terms of employment for any Employee or entered into a written contract with any Employee;
|
(h)
|
the Company has not, directly or indirectly, engaged in any transaction, made any loan or entered into any arrangement with any officer, director, partner, shareholder, Employee (whether
current or former or retired), consultant, independent contractor or agent of the Company;
|
(i)
|
the Company has not, except for Permitted Encumbrances, has created or permitted to exist any Encumbrance affecting any of its assets or property;
|
(j)
|
the Company has not, directly or indirectly, declared or paid any dividends or declared or made any other payments or distributions on or in respect of any of its shares and has not,
directly or indirectly, purchased or otherwise acquired any of its shares; and
|
(k)
|
the Company has not authorized, agreed or otherwise become committed to do any of the foregoing.
|
(a)
|
Schedule 4.22 (a) sets forth a complete list and a brief description of all Intellectual Property which
has been registered, or for which applications for registration have been filed, by or on behalf of the Company.
|
(b)
|
Schedule 4.22 (b) sets forth a complete list and brief description of all Contracts and Encumbrances
relating to any of the Technology. Such Contracts are in full force and effect and no default exists on the part of the Company or, to the knowledge of the Company, on the part of the other parties thereto.
|
(a)
|
Schedule 4.24 sets forth a complete list of the Leased Real Property and the agreements related to such
Leased Real Property.
|
(b)
|
The Real Property Leases have not been altered or amended and are in full force and effect. There are no Contracts between the landlord and tenant, or sublandlord and subtenant, or other
relevant parties relating to the use and occupation of the Leased Real Property, other than as contained in the Real Property Leases.
|
(c)
|
There are no outstanding defaults (or events which would constitute a default with the passage of time or giving of notice or both) under the Real Property Leases on the part of the
Company or on the part of any other party to such Real Property Leases.
|
(d)
|
All interests held by the Company as lessee or occupant under the Real Property Leases are free and clear of all Encumbrances other than Permitted Encumbrances.
|
(e)
|
The Company does not have an option, right of first refusal or other right relating to the Leased Real Property, other than as set out in the Real Property Leases.
|
(f)
|
The Company has not waived or omitted to take any action in respect of any material rights under any of the Real Property Leases.
|
(a)
|
The Company’s’ Business is and has been in compliance with all environmental Applicable Laws and Permits.
|
(b)
|
(c)
|
There are no ongoing, pending or, to the knowledge of the Vendor, threatened proceedings (in writing) against the Company resulting from or arising under any environmental Applicable Law
or Permit.
|
(c)
|
There are no Claims, pending Claims nor, to the knowledge of the Vendor, threatened Claims pursuant to any Laws relating to the Employees or former employees, including employment
standards, human rights, labour relations, occupational health and safety, workers’ compensation, pay equity or employment equity. To the knowledge of the Vendor, nothing has occurred which might lead to a Claim under any such Laws.
|
(d)
|
All current assessments under workers’ compensation legislation in relation to the Company and all of their respective contractors and subcontractors have been paid or accrued. The
Company has not been or is subject to any additional or penalty assessment under such legislation which has not been paid or has been given notice of any audit. Moreover, the Vendor’s accident cost experience is such that there are no
pending nor, to the knowledge of the Vendor, potential assessments, experience rating charges or Claims which could adversely affect the Vendor’s premium payments or accident cost experience or result in any additional payments in
connection with the Company.
|
(a)
|
have a Material Adverse Effect,
|
(b)
|
enjoin, restrict or prohibit the transfer of all or any part of the Purchased Shares as contemplated by this Agreement, or
|
(c)
|
delay, restrict or prevent the Vendor or the Company from fulfilling any of its obligations set out in this Agreement or arising from this Agreement,
|
(a)
|
The Company has duly and timely made or prepared all Tax Returns required to be made or prepared by it, has duly and timely filed all Tax Returns required to be filed by it with the
appropriate Governmental Authority and has duly, completely and correctly reported all income and all other amounts and information required to be reported thereon.
|
(b)
|
The Company has duly and timely paid all Taxes, including all instalments on account of Taxes for the current year, that are due and payable by it whether or not assessed by the
appropriate Governmental Authority. Provision has been made on the Balance Sheet for amounts at least equal to the amount of all Taxes owing by any one of them that were not yet due and payable by the date of the Balance Sheet and that
relate to periods ending on or prior to the date of the Balance Sheet.
|
(e)
|
All income, sales (including goods and services, harmonized sales and provincial or territorial sales) and capital tax liabilities of the Company has been assessed by the relevant
Governmental Authorities and notices of assessment have been issued to each such entity by the relevant Governmental Authorities for all taxation years or periods ending prior to and including the taxation year or period ended December 31,
2018.
|
(f)
|
There are no proceedings, investigations, audits or Claims now pending or threatened against the Company in respect of any Taxes and there are no matters under discussion, audit or appeal
with any Governmental Authority relating to Taxes.
|
(g)
|
The Company has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of
any amount paid or credited or deemed to be paid or credited by it to or for the account or benefit of any Person, including any Employee, officer or director and any non-resident Person), and has duly and timely remitted to the appropriate
Governmental Authority such Taxes and other amounts required by Law to be remitted by it.
|
(h)
|
The Company has duly and timely collected all amounts on account of any sales or transfer taxes, including goods and services, harmonized sales and provincial or territorial sales taxes,
required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Authority any such amounts required by Law to be remitted by it.
|
(a)
|
The Articles and by-laws for the Company, including any and all amendments, have been delivered or made available to the Purchaser and such Articles and by-laws as so amended are in full
force and effect and no amendments are being made to them.
|
(b)
|
The corporate records and minute books for the Company have been delivered or made available to the Purchaser. The minute books include complete and accurate minutes of all meetings of
the directors or shareholders for the Company, held to date or resolutions passed by the directors or shareholders on consent, since the date of its incorporation. The share certificate book, register of shareholders, register of transfers
and register of directors for the Company, are complete and accurate.
|
(a)
|
the funds owned by the Company used to conduct the Business are the result of licit commercial activities and can be used pursuant to Applicable Law to conduct the Business. The Company
is not involved in money laundering or corruption events, or other illicit activities, pursuant to Applicable Law.
|
(b)
|
(c)
|
neither the Company, nor the Employees, to the knowledge of the Vendor, have given payment, promised to pay nor given an authorization or payment confirmation, directly or indirectly,
regarding any gift, payment or other thing of value to (i) a government official, (ii) a candidate to public office, or (iii) any Person which is engaged in business with the Company, in order to illegally obtain or retain a business or
illegally obtain any improper advantage for the benefit of the Company.
|
(b)
|
Consumers. The Company (i) has conducted its activities in accordance with Applicable Law on consumer protection, and is not engaged in misleading publicity campaigns, and (ii)
there are no pending or, to the knowledge of the Vendor, threatened (in writing) Litigation regarding such conducts.
|
5.1
|
Status of the Vendor and Right to Sell
|
5.2
|
Due Authorization and Enforceability of Obligations
|
5.3
|
No Conflict
|
(a)
|
Require or will require the procurement of any consent, waiver, approval, order, license, authorization, Permit by, or any action, filing or notice before any Governmental Authority
(except when this Agreement provides otherwise), and shall not result in a breach of any term or provision of an order of a Governmental Authority applicable to Vendor;
|
(b)
|
Create any conflict nor result in the violation or breach of any term or provision of any Applicable Law applicable to Vendor; and
|
(c)
|
Result in (i) a violation of any agreement or legal act to which Vendor is a party; (ii) the acceleration of any obligation of Vendor, or any change or detriment of any right contained in
any agreement to which Vendor is a party; (iii) a cause for termination under any agreement to which Purchaser is a party; or (iv) the imposition of a Lien on Vendor’s assets.
|
5.4
|
Litigation
|
5.5
|
Intermediaries and/or Brokers
|
5.6
|
Informed Decision
|
(a)
|
indenture, mortgage, lease, agreement, obligation or instrument;
|
(b)
|
charter or by-law provision; or
|
(c)
|
Laws or Governmental Authorizations;
|
(a)
|
the Closing;
|
(b)
|
the execution and delivery under this Agreement of any share or security transfer instruments or other documents of title to any of the Purchased Shares; and
|
(c)
|
the payment of the consideration for the Purchased Shares,
|
(a)
|
All consents, approvals, Orders and authorizations of any Person (and registrations, declarations, filings or recordings with any Governmental Authority), required in connection with the
completion of any of the transactions contemplated by this Agreement, the execution of this Agreement, the Closing or the performance of any of the terms and conditions of this Agreement, including consents to the disclosure of Personal
Information to the Purchaser and the continuing use of such Personal Information by the Company in a manner consistent with the operation of their respective businesses and any consents required under Contracts shall have been obtained at
or before the Closing Time on terms acceptable to the Purchaser, acting reasonably.
|
(b)
|
All consents, approvals, waivers or modifications to Restricted Rights required by the Purchaser shall have been obtained at or before the Closing Time on terms acceptable to the
Purchaser.
|
8.9
|
Due Diligence Review
|
8.10
|
Execution of the Lease Agreement
|
(a)
|
Conduct Business in the Ordinary Course – except as otherwise contemplated or permitted by this Agreement, conduct its business in the ordinary
course, consistent with past practice and not, without the prior written consent of the Purchaser, enter into any transaction which, if effected before the date of this Agreement, would constitute a breach of the representations, warranties
or agreements of the Vendor contained in this Agreement;
|
(b)
|
Maintain Good Relations – use all reasonable efforts to maintain good relations with the Employees, customers and suppliers;
|
(c)
|
Continue Insurance – continue in force all policies of insurance maintained by or for the benefit of the Company and give all notices and present
claims under all insurance policies in a timely fashion;
|
(d)
|
Comply with Laws – comply with all Applicable Laws affecting the operation of the Company;
|
(e)
|
Prevent Certain Changes – not, without the prior written consent of the Purchaser, take any of the actions, do any of the things or perform any of
the acts out of the ordinary course of business; and
|
(f)
|
Approvals – cooperate with the Purchaser and use all commercially reasonable efforts to obtain and diligently assist the Purchaser in obtaining all
necessary consents, approvals and authorizations under any Applicable Law.
|
(a)
|
From the date of this Agreement until the earlier of (i) the Closing Date and (ii) the termination of this Agreement pursuant to ARTICLE 11, the Vendor covenants that it will not,
directly or indirectly, through any representative or otherwise, solicit or entertain offers from, negotiate with, or in any manner encourage, discuss, accept or consider any proposal of any other person relating to the acquisition of the
Purchased Shares, or the Company’s assets or properties in whole or in part, whether through direct purchase, merger, consolidation or other business combination and whether through disposing, optioning or transferring the rights to the
Company’s properties or assets to a third party, including without limitation any single or multi-step transaction or series of related transactions, (each, an “Alternative Transaction”). The Vendor
will immediately (and in any event within 24 hours) notify the Purchaser in writing regarding any contact between the Vendor, the Company or their respective representatives and any other person regarding any such offer or proposal or any
related inquiry and provide the Purchaser with a copy of any such correspondence or related materials.
|
11.1
|
Termination. Notwithstanding any other provision in this Agreement, this Agreement may be terminated at any time prior to the
Closing Date as follows:
|
(i)
|
the Vendor breaches any of its representations or warranties or fails to comply with any covenants contained herein; or
|
(ii)
|
any of the conditions precedent contained herein for the benefit of the Purchaser have not been complied with by September 30, 2019; or
|
(c)
|
by the Vendor if:
|
(i)
|
the Purchaser breaches any of its representations or warranties or fails to comply with any covenants contained herein; or
|
(ii)
|
any of the conditions precedent contained herein for the benefit of the Vendor have not been complied with by September 30, 2019;
|
11.2
|
Break-Fee: If this Agreement is terminated in accordance with the terms hereunder, other than pursuant to Sections 11.1(a) or 11.1(c), the Vendor agrees to pay in cash to the Purchaser a break-up fee of $250,000 plus an amount equal to all reasonable expenses incurred in connection with this
proposed Transaction (the “Break Fee”) to compensate the Purchaser for its expenses and time lost due to failure of the Vendor to complete the Transaction. The Break Fee will be payable immediately
upon such termination.
|
(i)
|
any non-fulfilment or breach of any covenant or agreement on the part of the Vendor contained in this Agreement or in any
certificate or other document furnished by or on behalf of the Vendor pursuant to this Agreement;
|
(ii)
|
any misrepresentation or any incorrectness in or breach of any representation or warranty of the Vendor contained in this
Agreement or in any certificate or other document furnished by or on behalf of the Vendor pursuant to this Agreement;
|
(iii)
|
liability to third Persons and warranty obligations which occurred prior to the Closing Date; and
|
(iv)
|
any liability for Taxes in respect of any taxation year or other period ended prior to the Closing Date, or any portion of a
taxation year or other period up to and including the Closing Date, for which no adequate reserve has been provided and disclosed in the Balance Sheet;
|
(c)
|
The Purchaser agrees that it will not make a claim in respect of any misrepresentation, incorrectness in or breach of any representation or warranty, or breach of covenant, by the Vendor,
or any claim for indemnification, under this Agreement unless such claim (or claims) exceed $5,000 in the aggregate. Once one or more claims exceeds $5,000 the Purchaser is entitled to bring a claim against the Vendor.
|
(c)
|
Upon the assumption of control of any Claim by the Indemnifying Party as set out in Section 12.2(b), the Indemnifying Party shall diligently
proceed with the defence, compromise or settlement of the Claim at its sole expense, including if necessary, employment of counsel and experts reasonably satisfactory to the Indemnified Party and, in connection therewith, the Indemnified
Party shall cooperate fully, but at the expense of the Indemnifying Party with respect to any out-of-pocket expenses incurred, to make available to the Indemnifying Party all pertinent information and witnesses under the Indemnified Party’s
control, make such assignments and take such other steps as in the opinion of counsel for the Indemnifying Party are reasonably necessary to enable the Indemnifying Party to conduct such defence. The Indemnified Party shall also have the
right to participate in the negotiation, settlement or defence of any Claim at its own expense.
|
(d)
|
The final determination of any Claim pursuant to this Section, including all related costs and expenses, shall be binding and conclusive upon the Parties as to the validity or invalidity,
as the case may be, of such Claim against the Indemnifying Party.
|
(e)
|
If the Indemnifying Party does not assume control of a Claim as permitted in Section 12.2(b), the Indemnified Party shall be entitled to make such
settlement of the Claim as in its sole discretion may appear advisable, and such settlement or any other final determination of the Claim shall be binding upon the Indemnifying Party.
|
(a)
|
The Party initiating arbitration (the “Claimant”) shall nominate an arbitrator in its request for arbitration (the “Arbitration Request”). The other Party or Parties (the “Respondent”), shall nominate an arbitrator within thirty (30) days of receipt of the Arbitration Request and shall notify the
Claimant of such nomination in writing. If either the Claimant or the Respondent fails to nominate an arbitrator within the specified time period, then the ICC Court shall appoint an arbitrator on behalf of the Claimant and/or Respondent.
The first two arbitrators, once appointed by the ICC Court, shall nominate a third arbitrator within thirty (30) days. If the first two arbitrators appointed fail to nominate a third arbitrator within such time, the ICC Court shall appoint
the third arbitrator and shall promptly notify the Parties of the appointment. The third arbitrator shall act as chair of the Arbitral Tribunal.
|
(i)
|
(ii)
|
Any Award rendered by the arbitrators shall be in writing in the English language and shall be final and binding upon the Parties, and may include an award of costs, including reasonable
legal fees and disbursements. Judgment upon the Award rendered may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant parties or their assets or properties and, to the maximum extent permitted by
Applicable Law, the Parties agree that any court of competent jurisdiction in which enforcement of the Award is sought shall have power to enforce the relief awarded by the Arbitral Tribunal, regardless of whether such relief is
characterized as legal, equitable or otherwise.
|
(a)
|
in the case of a Notice to the Vendor at:
|
(b)
|
in the case of a Notice to the Purchaser at:
|
A. Parties
|
Purchaser and Vendor
|
B. Purpose of Agreement
|
A unanimous shareholders’ agreement (the “Shareholders Agreement”) will govern the shareholders’ relations as shareholders of
the Company.
|
C. Operating Model
|
The Company will have its own employees and management reporting to the Board (as hereinafter defined) and/or various non-executive committees that will provide interface between the
Board, the management team and the shareholders and will provide advice to the Board as needed. Day-to-day operations will be carried out by the management of the Company. Management of the Company,
including the Chief Executive Officer and Chief Financial Officer, is to be appointed by the Purchaser.
|
D. Project Expenditures and Funding Obligations
|
The interest of the Vendor will be free carried and there will be no dilution to them until such time that the Company or the Company’s majority shareholder raises an
aggregate of USD$25,000,000 in one or more equity financings (the “Financing Milestone”). Following completion of the Financing Milestone, all shareholders of the Company will be diluted equally in
connection with any equity financing or financing convertible into equity. The free carried interest will not extend to successors or assigns of the Vendor. Prior to the Financing Milestone, the Purchaser will have the right to fund the
Company by loans or equity so long as such funding is non dilutive to the Vendor.
|
J. Lock Up
K. Drag Along Right
|
Notwithstanding the right of first refusal provisions, the Vendor shall not be able to transfer, sell, or dispose of any of its shares of the Company for a period of
24 months following the Closing Date. This lock up period shall expire on the date the Financing Milestone has been achieved.
If the Purchaser seeks to sell all (but not less than all) of its shares to a third party, it will have the right to require that the Vendor also sell its shares to
the same third party.
|
L. Conversion Right
|
The Vendors shall have the right to convert half of their equity ownership interest in the Company (in other words 5% of the issued and outstanding shares of the
Company) into 5% of issued and outstanding shares of the Purchaser prior to the Purchaser publicly announcing its intention to obtain a listing on a stock exchange.
|
M. Governing Law
|
Colombia, with arbitration pursuant to by the International Court of Arbitration of the International Chamber of Commerce pursuant to the rules of the International Chamber of Commerce. The
place of arbitration shall be Bogotá.
|
McGovern Hurley LLP
|
Chartered Professional Accountants
Licensed Public Accountants |
Toronto, Ontario
October 10, 2019
|
(a)
|
a certified copy dated October 10, 2019 of the constating documents and by-laws of the Corporation;
|
(b)
|
a certificate of status dated October 9, 2019 issued by the Ministry of Government and Consumer Services (Ontario) in respect of the Corporation (the “Certificate of Status”);
and
|
(c)
|
resolutions of the directors of the Corporation relating to the Offering and the transactions contemplated thereby, including resolutions of the directors approving, among other things, the Offering, the form
of subscription agreement to be entered into between the Corporation and purchasers of the Units and the form of the certificate representing the Warrants.
|
(a)
|
the legal capacity of all individuals;
|
(b)
|
the genuineness of all signatures on, and the authenticity and completeness of all documents submitted to us as originals and the conformity to authentic or original documents of all documents submitted to us
as certified, conformed, telecopied, photostatic, electronically transmitted copies (including commercial reproductions);
|
(c)
|
the identity and capacity of any person acting or purporting to act as a corporate or public official;
|
(d)
|
the accuracy and completeness of all information provided to us by public officials or offices of public record;
|
(e)
|
the accuracy and completeness of all representations and statements of fact contained in all documents, instruments and certificates (including the Officer’s Certificate);
|
(f)
|
the accuracy and completeness of the minute books and all other corporate records of the Corporation reviewed by us;
|
(g)
|
the facts stated in the Certificate of Status continue to be true as of the date hereof;
|
(h)
|
the Units will be offered, issued and sold in compliance with applicable United States federal and state securities laws, and in the manner stated in the Offering Statement; and
|
(i)
|
that the facts stated in the Certificate of Status and the Officer’s Certificate shall continue to be true and correct as at the date of completion of the Offering.
|
1.
|
The Corporation is a corporation existing under the Business Corporations Act (Ontario) and has not been dissolved.
|
2.
|
The Shares have been duly authorized by all necessary corporate action on the part of the Corporation and, when the Shares are issued and sold in the manner and under the terms described in the Offering
Statement, will be validly issued, fully paid and non-assessable.
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3.
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The Warrants have been duly authorized and, when issued and sold in accordance with and in the manner described in the Offering Statement, shall be authorized, created and validly issued by the Corporation.
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4.
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The Warrant Shares have been authorized and reserved for issuance and such Warrant Shares, when issued and delivered by the Corporation in accordance with the terms and conditions of the certificates
representing the Warrants against payment of the exercise price therefor, will be validly issued as fully paid and non-assessable common shares in the capital of the Corporation.
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Name of registrant:
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Flora Growth Corp.
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Form type:
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Form 1-A
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File Number (if known):
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Flora Growth Corp.
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Filed by:
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Date Filed (if filed concurrently, so indicate):
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October 11, 2019 (concurrent herewith)
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D. |
The Filer is incorporated or organized under the laws of the Province of Ontario, Canada and has its principal place of business at:
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E. |
The Filer designates and appoints:
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(a) |
any investigation or administrative proceeding conducted by the Commission; and
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(b) |
any civil suit or action brought against the Filer or to which the Filer has been joined as defendant or respondent, in any appropriate court in any place subject to the jurisdiction of any State or of the United States or of any of its
territories or possessions or of the District of Columbia, where the investigation, proceeding or cause of action arises out of or relates to or concerns (i) any offering made or purported to be made in connection with the securities
registered or qualified by the Filer on Form 1-A on the date hereof or any purchases or sales of any security in connection therewith; (ii) the securities in relation to which the obligation to file an annual report on Form 40-F arises, or
any purchases or sales of such securities; (iii) any tender offer for the securities of a Canadian issuer with respect to which filings are made by the Filer with the Commission on Schedule 13E-4F, 14D-1F or 14D-9F; or (iv) the securities
in relation to which the Filer acts as a Trustee pursuant to an exemption under Rule 10a-5 under the Trust Indenture Act of 1939. The Filer stipulates and agrees that any such civil suit or action or administrative proceeding may be
commenced by the service of process upon, and that the service of an administrative subpoena shall be effected by service upon such Agent for service of process, and that service as aforesaid shall be taken and held in all courts and
administrative tribunals to be valid and binding as if personal service thereof had been made.
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F. |
The Filer stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time
until six years have elapsed from the date of the last sale of securities in reliance upon the Regulation A exemption.
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G. |
The Filer undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to:
the Form 1-A; the securities to which the Form 1-A relates; and the transactions in such securities.
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FLORA GROWTH CORP.
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By:
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/s/ Damian Lopez
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Name: Damian Lopez
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Title: Chief Executive Officer | |||
CT CORPORATION SYSTEM | |||
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By:
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/s/ Kathryn A. Widdoes
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Name: Kathryn A. Widdoes
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Title: Assistant Secretary
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Date: October 2, 2019
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