Grown Rogue International Inc 6-K, filed Feb 28, 2020
Grown Rogue International Inc. (GRUSF)
About this 6-K
Grown Rogue International Inc filed this 6-K on February 28, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
THE SECURITIES EXCHANGE ACT OF 1934
Date: February 25, 2020
Commission File No. 0-53646
Grown Rogue International Inc. (formerly Novicius Corp.)
(Translation of Registrant’s name into English)
340 Richmond Street West
Toronto, Ontario, Canada M5V 1X2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ☐ No ☒
TABLE OF CONTENTS
1
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: February 25, 2020 | GROWN ROGUE INTERNATIONAL INC. | |
| (FORMERLY: NOVICIUS CORP.) | ||
| By: | /s/ Obie Strickler | |
| Name: | Obie Strickler | |
| Title: | President & Chief Executive Officer | |
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Exhibit 1

Grown Rogue International Inc.
Announces
Private Placement with
Cannabis Growth Opportunity Corporation
NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES
Medford, Oregon, February 10, 2020 – Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTCQX: GRUSF), a multi-state cannabis company, with operations and assets in Oregon, California, and Michigan, announced today that it has received a commitment from Cannabis Growth Opportunity Corporation (CSE: CGOC) (“CGOC”) to invest up to CDN$1,500,000 million in a non-brokered private placement offering (the “Offering”) of units (the “Units”) with each Unit comprising of one common share in the capital of the Company (the “Shares”) and one common share purchase warrant (the “Warrants”). Each Warrant is exercisable into one Share at a price equal to a 25% premium to the Unit price for a period of 24 months. The Company has the right to accelerate the expiry of the Warrants to thirty (30) days following written notice to the holder if the Shares close at or above CDN$0.25 per share for a period of ten (10) consecutive trading days on the Canadian Securities Exchange.
The first tranche of the Offering for gross proceeds of approximately CDN$500,000 was completed today with 5,000,000 Units being issued by Grown Rogue at a price of CDN$0.10 per Unit. The Units expected to be sold under the second tranche for gross proceeds of approximately CDN$500,000 will be at a price of $0.10 per Unit. The Units expected to be sold under the third tranche for gross proceeds of approximately CDN$500,000 will be at a price of $0.10 per Unit. It is expected that the second and third tranches of the Offering will be completed in the next 30 days upon the Company satisfying the conditions in the subscription agreement relating to its expansion plans into Michigan.
In connection with the Offering, Grown Rogue has agreed to provide CGOC with a pre-emptive right to participate in future offerings of Grown Rogue securities in order to maintain its percentage of ownership at the time of such offering. In addition, Grown Rogue has agreed to nominate one board member recommended by CGOC at future shareholder meetings that are called to elect directors and the ability, while CGOC does not have its nominee on the Company’s board, to appoint a board observer.
The Company intends to use the proceeds from the Offering for general corporate purposes.
In addition, CGOC and Grown Rogue have entered into subscription agreements to exchange approximately CDN$1,500,000 worth of each other’s shares (the “Share Swap”). Under the terms of the Share-Swap, Grown Rogue received 2,362,204 common shares of CGOC at a price of $0.635 per share, and CGOC received 15,000,000 Shares at a price of $0.10 per share. As part of the Share Swap, each of CGOC and Grown Rogue have signed a voting and resale agreement providing that each party will be required to vote the shares acquired under the Share Swap as recommended by the other party and will be restricted from trading the shares for a period of 18 months.
All securities issued pursuant to the Offering and Share Swap are subject to a mandatory hold period of four months and a day under applicable Canadian securities laws.
Obie Strickler, Chief Executive Officer of Grown Rogue commented, “We welcome this significant cash investment from CGOC at this critical juncture in our Company’s Growth. The share-swap further aligns us with CGOC, strengthens our balance sheet, and provides us with a new strategic shareholder with a diverse interest in our industry, both in the United States and internationally.”

Sean Conacher, Chief Executive Officer of CGOC, commented, “We have been following Grown Rogue’s story since they were a private company and we are excited to work with them, and through this investment, participate in their continued success. Throughout our due diligence of Grown Rogue, we have continued to be impressed by their cultivation capabilities and their lean and cost-effective operating structure. Producing cannabis flower of a high quality at their low cost is definitely a recipe for success that they have proven in the Oregon market and are now expanding into new markets.”
Early Warning
Grown Rogue has acquired beneficial ownership of 2,362,204 common shares of CGOC, representing over 10% of that class. The common shares were issued at a value $0.635 per share. Immediately prior to the acquisition, Grown Rogue owned or controlled no securities of CGOC.
This disclosure is provided pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which also requires a report to be filed with regulatory authorities in each of the jurisdictions in which CGOC is a reporting issuer containing information with respect to the foregoing matters (the “Early Warning Report”). A copy of the Early Warning Report will appear with CGOC’s filings on the System for Electronic Document Analysis and Retrieval (SEDAR).
Grown Rogue’s registered office is located at 340 Richmond Street West, Toronto, Ontario, M5V 1X2.
About Grown Rogue
Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a vertically-integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning cultivation team, state of the art indoor and outdoor manufacturing facilities, and consumer insight based product categorization, to create innovative products thoughtfully curated from “seed to experience”. The Grown Rogue family of products includes sungrown and indoor premium flower, patented nitrogen sealed pre-rolls along with chocolate edibles featuring a partnership with world-renowned chocolatier.
FORWARD LOOKING STATEMENTS
This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on www.sedar.com.
2

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
SAFE HARBOR STATEMENT
This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.
The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company’s business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
3

This press release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States and may not be offered or sold within the United States or to any “U.S. Person” (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
For further information on Grown Rogue International please visit www.grownrogue.com or contact:
Obie Strickler
Chief Executive Officer
obie@grownrogue.com
Investor Relations Desk Inquiries
invest@grownrogue.com
+1 (458) 226-2100
4
Exhibit 2

Grown
Rogue Announces Partnership and Brings Expertise to
Grow Oregon Quality Cannabis in Michigan
NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES
Medford, Oregon, February 12, 2020 – Grown Rogue International Inc. (CSE: GRIN) (OTCQX: GRUSF), a multi-state cannabis company with operations and assets in Oregon, California and Michigan, today announced that its majority held subsidiary GR Michigan, LLC (“GR Michigan” and together with Grown Rogue International Inc. “Grown Rogue”) has entered into a purchase agreement with Golden Harvests, LLC (Golden Harvests), a fully licensed Michigan based operator with an approximately 80,000 sq. ft cultivation facility located in Bay City, Michigan. The agreement provides Grown Rogue the option to acquire a 60% controlling interest of Golden Harvests (“Option”) pending Municipal and State regulatory approval.
“Michigan remains an important location for our continued growth and Grown Rogue has been committed to finding the right, fully-licensed partner for a successful expansion into this market,” said Obie Strickler, chief executive officer Grown Rogue. “By leveraging over a decade of operational, grow and sales experience in Oregon, we plan to build on Golden Harvests’ solid foundation to increase yields, develop new grow rooms and establish partnerships with the best retailers in the state.”
GOLDEN HARVESTS FACILITY AND MANAGEMENT SERVICES AGREEMENT
Approximately 10,000 sq ft of the facility is already online and operating with three separate flower rooms, vegetative, clone, packaging, trimming, and other infrastructure required to operate a best-in- class cultivation facility. Golden Harvests is currently producing approximately 600lbs annually and with improvements by the experienced Grown Rogue management team, it is anticipated production in 2020 will approach 1,500lbs and 3,500lbs in 2021.
Grown Rogue has also signed an exclusive management services agreement with Golden Harvests to immediately begin providing consulting services for a variety of business functions primarily focused on cultivation, sales, branding and marketing, and compliance.
Grown Rogue has mastered the art of indoor flower production during its past three years in Oregon, which has been proven out through numerous awards, and will bring expertise in facility design, improved growing techniques and methods and facility build-out/expansion to the existing operations. In addition, Grown Rogue has committed to investing an additional $1,200,000 of capital improvements at the facility to increase efficiencies and cultivation capacity.
“Grown Rogue takes great pride in its team, who are some of the top talent in the country, and we bring a level of experience not yet seen in Michigan,” said Strickler. “We are relocating our most experienced indoor grower to Bay City to ensure this facility produces at the same quality and consistency our customers have come to expect from our flower. In addition, our sales, marketing, and operations leadership will all be spending significant time in state to ensure that the SOPs that have led to success in Oregon are duplicated here.”

Golden Harvests was one of the first licensed Michigan operators receiving a Class C grow license in late 2018 with their first harvest in the spring of 2019. Building upon the positive reputation and strong sell in of Golden Harvests flower, Grown Rogue has already begun conversations with retail partners across the state to understand their needs and present a plan that will build long lasting relationships that drive top line and profitability for all parties while inspiring, educating and empowering consumers.
“Grown Rogue has proven to be one of the top producers in the industry and their unrelenting focus on quality, consistency and consumer education made this partnership a natural fit,” said Dave Pleitner, founder and owner of Golden Harvests. “The Michigan market has untapped growth potential and with Grown Rogue’s help, we plan to lead the charge with best-in-class flower cultivated right here in
Michigan.”
Deal Terms
As part of the Option, and to acquire the 60% controlling interest, Grown Rogue will pay USD$810,000 in cash, and cause Grown Rogue to issue 800,000 shares of common stock (“Shares”) to the existing members of Golden Harvests in four tranches:
| ● | Tranche 1 – USD $150,000 within five days after signing the Option and 200,000 GRIN Shares within 60 days after signing the Option |
| ● | Tranche 2 – Due at the 6-month anniversary of signing the Option is USD $200,000 and 200,000 Grown Rogue Shares. Grown Rogue can, at its election, extend the due date of the Tranche 2 consideration for 6 months by paying an additional USD $25,000 payment and issuing an additional 25,000 Grown Rogue Shares |
| ● | Tranche 3 – Due at the 12-month anniversary of signing the Option is USD $260,000 and 200,000 Grown Rogue Shares. Grown Rogue can, at its election, extend the Tranche 3 consideration for 6 months by paying an additional USD $25,000 and issuing an additional 25,000 Grown Rogue Shares |
| ● | Tranche 4 – Due upon exercise of the Option, pending Municipal and State regulatory approval, is USD$200,000 and 200,000 GRIN Shares. |
Exercise of the Option by Grown Rogue is subject to Municipal and State regulatory approval. The Option includes representations, warranties, and covenants that are typical for transactions of this type.
GROWN ROGUE & DECIBEL TERMINATE LETTER OF INTENT
As Grown Rogue shifts its attention to the tremendous opportunity in Michigan, it has also announced that the letter of intent previously signed with Decibel Farms, Inc. has been terminated by mutual agreement. Obie Strickler, Chief Executive Officer of Grown Rogue commented, “The current market conditions forced both companies to evaluate our short- and long-term goals and it became apparent that continuing forward with the proposed acquisition was not in the best interests of either Grown Rogue or Decibel shareholders”. The agreement has been terminated with a full release and no further obligations for either party.
For more information visit grownrogue.com, or follow us at facebook.com/grownrogue, instagram.com/grownrogue, twitter.com/grownrogue, or linkedin.com/company/grown-rogue
2

About Grown Rogue
Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a vertically-integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning cultivation team, state of the art indoor and outdoor manufacturing facilities, and consumer insight based product categorization, to create innovative products thoughtfully curated from “seed to experience”. The Grown Rogue family of products includes sungrown and indoor premium flower, patented nitrogen sealed pre-rolls along with chocolate edibles featuring a partnership with world-renowned chocolatier.
FORWARD LOOKING STATEMENTS
This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Safe Harbor Statement:
This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.
3

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company’s business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Contacts:
Obie Strickler
Chief Executive Officer
obie@grownrogue.com
Investor Relations Desk Inquiries
invest@grownrogue.com
4
Exhibit 3
Required Disclosure under the Early Warning Requirements
Item 1 – Security and Reporting Issuer
| 1.1 | State the designation of securities to which this report relates and the name and address of the head office of the issuer of the securities. |
This report relates to subordinate voting shares (“Shares”) and Share purchase warrants (“Warrants”) of the Issuer (as defined below).
Grown Rogue International Inc. (the “Issuer”)
340 Richmond Street West
Toronto, Ontario
M5V 1X2
| 1.2 | State the name of the market in which the transaction or other occurrence that triggered the requirement to file this report took place. |
Not applicable. See item 2.2 below.
Item 2 – Identity of the Acquiror
| 2.1 | State the name and address of the acquiror. |
Cannabis Growth Opportunity Corporation (the “Securityholder”)
240 Richmond Street West, Suite 4163
Toronto, Ontario
M5V 1V6
The Securityholder is an investment corporation with an actively managed portfolio of securities of public and private companies operating in, or deriving a significant portion of its revenue or earnings from, products or services related to the cannabis industry.
| 2.2 | State the date of the transaction or other occurrence that triggered the requirement to file this report and briefly describe the transaction or other occurrence. |
On February 10, 2020, the Securityholder acquired 5,000,000 units (“Units”) of the Issuer and 15,000,000 Shares. Each Unit is comprised of one Share and one Warrant. Each Warrant entitles the holder to acquire one Share at a price of $0.125 until February 10, 2022, provided that the Issuer has the right to accelerate the expiry date of the Warrants to 30 days following written notice to the Securityholder if during the term of the Warrants the closing price of the Shares on the Canadian Securities Exchange is at or above $0.25 per Share on each trading day for a period 10 consecutive trading days.
The acquisition of the Units and the Shares is collectively referred to herein as the “Offering”.
| 2.3 | State the names of any joint actors. |
Not applicable.
Item 3 – Interest in Securities of the Reporting Issuer
| 3.1 | State the designation and number or principal amount of securities acquired or disposed of that triggered the requirement to file this report and the change in the acquiror’s security holding percentage in the class of securities. |
Immediately prior to completion of the Offering, the Securityholder held nil securities of the Issuer.
Pursuant to the Offering, the Securityholder acquired 20,000,000 Shares and 5,000,000 Warrants, representing approximately 21.16% of the issued and outstanding Shares on a non-diluted basis and approximately 25.12% of the issued and outstanding Shares on a partially diluted basis, assuming the exercise of the all of the Warrants held by the Securityholder.
| 3.2 | State whether the acquiror acquired or disposed ownership of, or acquired or ceased to have control over, the securities that triggered the requirement to file this report. |
The Securityholder acquired ownership of the Shares and Warrants pursuant to the Offering. See item 2.2.
| 3.3 | If the transaction involved a securities lending arrangement, state that fact. |
Not applicable.
| 3.4 | State the designation and number or principal amount of securities and the acquiror’s security holding percentage in the class of securities, immediately before and after the transaction or other occurrence that triggered the requirement to file this report. |
Immediately prior to completion of the Offering, the Securityholder held nil securities of the Issuer.
Immediately following completion of the Offering, the Securityholder owns 20,000,000 Shares and 5,000,000 Warrants, representing approximately 21.16% of the issued and outstanding Shares on a non-diluted basis and approximately 25.12% of the issued and outstanding Shares on a partially diluted basis, assuming the exercise of the all of the Warrants held by the Securityholder.
| 3.5 | State the designation and number or principal amount of securities and the acquiror’s security holding percentage in the class of securities referred to in Item 3.4 overwhich |
| (a) | the acquiror, either alone or together with any joint actors, has ownership and control, |
See Item 3.1 above.
| (b) | the acquiror, either alone or together with any joint actors, has ownership but control is held by persons or companies other than the acquiror or any joint actor, and |
Not applicable.
| (c) | the acquiror, either alone or together with any joint actors, has exclusive or shared control but does not have ownership. |
Not applicable.
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| 3.6 | If the acquiror or any of its joint actors has an interest in, or right or obligation associated with, a related financial instrument involving a security of the class of securities in respect of which disclosure is required under this item, describe the material terms of the related financial instrument and its impact on the acquiror’s security holdings. |
Not applicable.
| 3.7 | If the acquiror or any of its joint actors is a party to a securities lending arrangement involving a security of the class of securities in respect of which disclosure is required under this item, describe the material terms of the arrangement including the duration of the arrangement, the number or principal amount of securities involved and any right to recall the securities or identical securities that have been transferred or lent under the arrangement. |
State if the securities lending arrangement is subject to the exception provided in section 5.7 of NI 62-104.
Not applicable.
| 3.8 | If the acquiror or any of its joint actors is a party to an agreement, arrangement or understanding that has the effect of altering, directly or indirectly, the acquiror’s economic exposure to the security of the class of securities to which this report relates, describe the material terms of the agreement, arrangement or understanding. |
Not applicable.
Item 4 – Consideration Paid
| 4.1 | State the value, in Canadian dollars, of any consideration paid or received per security and in total. |
The Securityholder acquired the 5,000,000 Units at a price of $0.10 per Unit for aggregate consideration of $500,000 pursuant to the terms of a subscription agreement dated February 10, 2020 between the Issuer and the Securityholder (the “Unit Subscription Agreement”).
The Securityholder acquired the 15,000,000 Shares (at a deemed value of $0.10 per Share) in exchange for the issuance to the Issuer by the Securityholder of 2,362,204 common shares (the “CGOC Shares”) of the Securityholder (at a deemed price of $0.635 per CGOC Share) pursuant to the terms of a subscription agreement dated February 10, 2020 between the Issuer and the Securityholder (the “Share Subscription Agreement”).
| 4.2 | In the case of a transaction or other occurrence that did not take place on a stock exchange or other market that represents a published market for the securities, including an issuance from treasury, disclose the nature and value, in Canadian dollars, of the consideration paid or received by the acquiror. |
See item 4.1 above.
| 4.3 | If the securities were acquired or disposed of other than by purchase or sale, describe the method of acquisition or disposition. |
Not applicable.
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Item 5 – Purpose of the Transaction
State the purpose or purposes of the acquiror and any joint actors for the acquisition or disposition of securities of the reporting issuer. Describe any plans or future intentions which the acquiror and any joint actors may have which relate to or would result in any of the following:
| (a) | the acquisition of additional securities of the reporting issuer, or the disposition of securities of the reporting issuer; |
| (b) | a corporate transaction, such as a merger, reorganization or liquidation, involving the reporting issuer or any of its subsidiaries; |
| (c) | a sale or transfer of a material amount of the assets of the reporting issuer or any of its subsidiaries; |
| (d) | a change in the board of directors or management of the reporting issuer, including any plans or intentions to change the number or term of directors or to fill any existing vacancy on the board; |
| (e) | a material change in the present capitalization or dividend policy of the reporting issuer; |
| (f) | a material change in the reporting issuer’s business or corporate structure; |
| (g) | a change in the reporting issuer’s charter, bylaws or similar instruments or another action which might impede the acquisition of control of the reporting issuer by anyperson or company; |
| (h) | a class of securities of the reporting issuer being delisted from, or ceasing to be authorized to be quoted on, a marketplace; |
| (i) | the issuer ceasing to be a reporting issuer in any jurisdiction of Canada; (j) a solicitation of proxies from securityholders; |
| (k) | an action similar to any of those enumerated above. |
Pursuant to the terms of the Unit Subscription Agreement, the Securityholder agreed to subscribe for $1,000,000 of additional Units, at a price per Unit of $0.10, subject to the satisfaction of certain corporate milestone events by the Issuer.
The Shares and the Warrants were acquired for investment purposes. Other than the foregoing, the Securityholder currently has no current plan or future intentions which relate to, or would result in, acquiring additional securities of the Issuer, disposing of securities of the Issuer, or any of the other actions listed in (a) through (k) above. Depending on market conditions, the Securityholder’s view of the Issuer’s prospects, other investment opportunities and other factors considered relevant by the Securityholder, the Securityholder may from time to time acquire additional securities of the Issuer in the future, in the open market or pursuant to privately negotiated transactions, may sell all or a portion of its securities of the Issuer or may continue to hold the Shares, Warrants or other securities of the Issuer.
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Item 6 – Agreements, Arrangements, Commitments or Understandings With Respect to Securities of the Reporting Issuer
Describe the material terms of any agreements, arrangements, commitments or understandings between the acquiror and a joint actor and among those persons and any person with respect to securities of the class of securities to which this report relates, including but not limited to the transfer or the voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Include such information for any of the securities that are pledged or otherwise subject to a contingency, the occurrence of which would give another person voting power or investment power over such securities, except that disclosure of standard default and similar provisions contained in loan agreements need not be included.
Pursuant to the terms of a voting and resale agreement between the Issuer and the Securityholder dated February 10, 2020, the Securityholder agreed to vote all 15,000,000 Shares acquired pursuant to the Share Subscription Agreement at any and all annual and/or special meetings of the shareholders of the Issuer in such manner as the Issuer may in its absolute and unfettered discretion determine, until August 10, 2021. In addition, the Securityholder has agreed not to sell the 15,000,000 Shares held by it prior to August 10, 2021, without the prior written consent of the Issuer.
Item 7 – Change in Material Fact
If applicable, describe any change in a material fact set out in a previous report filed by the acquiror under the early warning requirements or Part 4 in respect of the reporting issuer’s securities.
Not applicable.
Item 8 – Exemption
If the acquiror relies on an exemption from requirements in securities legislation applicable to formal bids for the transaction, state the exemption being relied on and describe the facts supporting that reliance.
Not applicable.
Item 9 – Certification
I, as the acquiror, certify, or I, as the agent filing this report on behalf of an acquiror, certify to the best of my knowledge, information and belief, that the statements made in this report are true and complete in every respect.
DATED this 12th day of February, 2020
| “Sean Conacher” (signed) | |
| Name: Sean Conacher | |
| Title: Chief Executive Officer |
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Exhibit 4
Material Change Report
| Item 1 | Name and Address of Company |
Grown Rogue International Inc. (the “Corporation” or “Company”)
340 Richmond Street West
Toronto, Ontario
M5V 1X2
| Item 2 | Date of Material Change |
February 10, 2020
| Item 3 | News Release |
News releases were issued by the Company on February 10, 2020 through the facilities of Business Wire and were subsequently filed on SEDAR.
| Item 4 | Summary of Material Change |
On February 10, 2020, the Company announced that it received a commitment from Cannabis Growth Opportunity Corporation (CSE: CGOC) (“CGOC”) to invest up to CDN$1,500,000 million in a non-brokered private placement offering of units with each Unit comprising of one common share in the capital of the Company and one common share purchase warrant.
In addition, on February 10, 2020, the Company also announced that CGOC and the Company have entered into subscription agreements to exchange approximately CDN$1,500,000 worth of each other’s shares.
| Item 5.1 | Full Description of Material Change |
On February 10, 2020 the Company announced that it has received a commitment from Cannabis Growth Opportunity Corporation (CSE: CGOC) (“CGOC”) to invest up to CDN$1,500,000 million in a non-brokered private placement offering (the “Offering”) of units (the “Units”) with each Unit comprising of one common share in the capital of the Company (the “Shares”) and one common share purchase warrant (the “Warrants”). Each Warrant is exercisable into one Share at a price equal to a 25% premium to the Unit price for a period of 24 months. The Company has the right to accelerate the expiry of the Warrants to thirty (30) days following written notice to the holder if the Shares close at or above CDN$0.25 per share for a period of ten (10) consecutive trading days on the Canadian Securities Exchange.
The first tranche of the Offering for gross proceeds of approximately CDN$500,000 was completed on February 10, 2020 with 5,000,000 Units being issued by the Company at a price of CDN$0.10 per Unit. The Units expected to be sold under the second tranche for gross proceeds of approximately CDN$500,000 will be at a price of $0.10 per Unit. The Units expected to be sold under the third tranche for gross proceeds of approximately CDN$500,000 will be at a price of $0.10 per Unit. It is expected that the second and third tranches of the Offering will be completed in the next 30 days upon the Company satisfying the conditions in the subscription agreement relating to its expansion plans into Michigan.
In connection with the Offering, the Company has agreed to provide CGOC with a pre-emptive right to participate in future offerings of Company securities in order to maintain its percentage of ownership at the time of such offering. In addition, the Company has agreed to nominate one board member recommended by CGOC at future shareholder meetings that are called to elect directors and the ability, while CGOC does not have its nominee on the Company’s board, to appoint a board observer. For further details, please see the subscription agreement between the Company and CGOC dated February 10, 2020, as filed on SEDAR at www.sedar.com.
In addition, CGOC and the Company have entered into subscription agreements to exchange approximately CDN$1,500,000 worth of each other’s shares (the “Share Swap”). Under the terms of the Share Swap, Grown Rogue received 2,362,204 common shares of CGOC at a price of $0.635 per share, and CGOC received 15,000,000 Shares at a price of $0.10 per share. As part of the Share Swap, each of CGOC and Grown Rogue have signed a voting and resale agreement providing that each party will be required to vote the shares acquired under the Share Swap as recommended by the other party and will be restricted from trading the shares for a period of 18 months. For further details, please see the voting and resale agreement between the Company and CGOC dated February 10, 2020, as filed on SEDAR at www.sedar.com.
All securities issued pursuant to the Offering and Share Swap are subject to a mandatory hold period of four months and a day under applicable Canadian securities laws.
| Item 6 | Reliance on Subsection 7.1(2) of National Instrument 51-102 |
Not applicable.
| Item 7 | Omitted Information |
Not applicable.
| Item 8 | Executive Officer |
J. Obie Strickler
President and Chief Executive Officer
Tel: (503) 765-8108
| Item 9 | Date of Report |
February 20, 2020.
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Cautionary Note Regarding Forward Looking Information
This report contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s Listing Statement available on www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
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Exhibit 5
| TO: | Grown Rogue International Inc. (the “Issuer”) |
| FROM: | Cannabis
Growth Opportunity Corporation (Subscriber Name) |
| RE: | Purchase of Units of the Issuer |
| REFERENCE DATE: | February 10, 2020 |
THIS DOCUMENT CONTAINS A NUMBER OF FORMS REQUIRED BY SECURITIES LEGISLATION AND POLICY, SOME OF WHICH YOU MUST COMPLETE AND OTHERS NOT DEPENDING ON SEVERAL FACTORS. PLEASE READ THE FOLLOWING GUIDE CAREFULLY AS IT WILL ASSIST YOU IN COMPLETING THIS SUBSCRIPTION AGREEMENT CORRECTLY.
| STEP 1 | All Subscribers must complete “Information Regarding the Subscriber” appearing on page 3. |
| STEP 2 | All Subscribers must complete the Registration and Delivery Instructions on page 19 if their Units are to be registered or delivered differently from your name and address on page 18. |
| STEP 3 | All Subscribers must enter the number of Units they are purchasing, and their name, address, telephone number and email address and sign this document on the execution page on 20. |
| STEP 4 | If you are a Subscriber resident in Canada and are an “Accredited Investor” as defined in National Instrument 45-106 or Securities Act (Ontario) (generally a high net worth or high income investor), you must complete and sign Schedule A – “Accredited Investor Certificate” and the Appendix 2 attached to Schedule A if you are an individual. |
| STEP 5 | If you are a resident in an International Jurisdiction other than in the United States, please review Section 7 for an exemption available to you. Please complete and sign Schedule A – “Accredited Investor Certificate” if you are an “Accredited Investor” and the Appendix 2 attached to Schedule A if you are an individual. |
| STEP 6 | Subscribers resident in Canada, and who are not “Accredited Investors” but who are officers, directors, employees, family, close friends or business associates thereof, must complete and sign Schedule B – “Family, Friends and Business Associates Certifications” and those in Ontario must also complete Appendix 1 attached to the Schedule B. |
GROWN ROGUE INTERNATIONAL INC. IS A “REPORTING ISSUER” UNDER THE SECURITIES LAWS OF BRITISH COLUMBIA, AND ONTARIO. THE ISSUER’S COMMON SHARES TRADE ON THE CANADIAN SECURITIES EXCHANGE (THE “EXCHANGE”).
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR (4) MONTHS AND A DAY AFTER THE CLOSING DATE.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED AND SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR BY OR TO OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT) WITHOUT REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
DELIVERY OF DOCUMENTS AND METHODS OF PAYMENT
A completed and executed copy of this Subscription Agreement, including all applicable Schedules and Appendices thereto, together with the aggregate Subscription Price payable by (i) bank draft or certified cheque made payable to “Grown Rogue International Inc.” or as directed by the Issuer or (ii) by wire transfer pursuant to instructions provided by the Issuer.
Grown Rogue International Inc.
340 Richmond Street West
Toronto, Ontario M5V 1X2
Attn: J. Obie Strickler (obie@grownrogue.com, (503) 765-8108)
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INFORMATION REGARDING THE SUBSCRIBER
Please check the appropriate box (and complete the required information, if applicable) in each section:
| 1. | Security Holdings. Prior to giving effect to the securities being subscribed for under this Subscription Agreement, the Subscriber and all persons acting jointly and in concert with the Subscriber currently own, directly or indirectly, or exercise control or direction over (provide additional detail as applicable): |
| ☐ | ________________ common shares of Grown Rogue International Inc. (the “Issuer”) and/or the following other kinds of shares and convertible securities (including but not limited to convertible debt, warrants and options) entitling the Subscriber to acquire additional common shares or other kinds of shares of the Issuer: | |
| ☒ | No shares of the Issuer or securities convertible into shares of the Issuer. |
| 2. | Insider Status. The Subscriber either: |
| ☐ | Is an “insider” of the Issuer by virtue of being: |
| (a) | a director or senior officer of the Issuer; |
| (b) | a director or senior officer of a company that is an Insider or subsidiary of the Issuer; |
| (c) | a person that beneficially owns or controls, directly or indirectly, voting shares of the Issuer carrying more than 10% of the voting rights attached to all the Issuer’s outstanding voting shares; |
| (d) | the Issuer itself if it holds any of its own securities; or |
| (e) | a person designated as an insider in an order made by the Ontario Securities Commission under Securities Act (Ontario). |
| ☒ | Is not an Insider of the Issuer. |
| 3. | Related Entity. |
| ☒ | The subscriber is not a Related Entity of the Issuer. Related Entity means, in respect of a CSE Issuer: |
| (a) | a person |
| (i) | that is an affiliated entity of the Issuer; |
| (ii) | of which the Issuer is a control block holder; |
| (b) | a management company or a distribution company of a mutual fund that is a CSE Issuer; or |
| (c) | a management company or other company that operates a trust or partnership that is a CSE Issuer. |
| ☐ | The subscriber is a Related Entity of the Issuer. |
| 4. | Related Person. |
| ☒ | The Subscriber is not a Related Person. Related Person means, in respect of a CSE Issuer: |
| (a) | a Related Entity of the Issuer; |
| (b) | a partner, director or officer of the Issuer or Related Entity; |
| (c) | a promoter of or person who performs Investor Relations Activities for the Issuer or Related Entity; |
| (d) | any person that beneficially owns, either directly or indirectly, or exercises voting control or direction over at least 10% of the total voting rights attached to all voting securities of the Issuer or Related Entity; and |
| (e) | such other person as may be designated from time to time by CSE. |
| ☐ | The Subscriber is a Related Person. |
| 5. | Registrant status. The Subscriber either: |
| ☐ | is a person registered or required to be registered under the Securities Act (Ontario); |
| ☒ | is not a person registered or required to be registered under the Securities Act (Ontario). |
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| Re: | Purchase of Units Exempt from Prospectus Requirements |
| 1. | Definitions |
| 1.1 | (a) “Accredited Investor” means a Subscriber resident in Canada who is an accredited investor as defined in Section 1.1 of NI 45-106 or under the Securities Act (Ontario) if the Subscriber is a resident in Ontario; |
(b) “Applicable Securities Laws” means the securities legislation having application and the rules, policies, notices and orders issued by applicable securities regulatory authorities, including the Exchange, having application over this Offering and the Issuer in the Qualifying Jurisdictions;
(c) “Board” means the board of directors of the Issuer;
(d) “Board Observer Agreement” has the meaning set out in subsection 4.7(j);
(e) “Closing” means a completion of an issue and sale by the Issuer and the purchase by the Subscriber of the Units pursuant to this Subscription Agreement on the Closing Date. Closings may occur on one or more dates as the Issuer may determine and upon the completion of certain milestones pursuant to Section 4;
(f) “Closing Date” means a day, as the Issuer may determine within the requirements of the Exchange, for the Closing of each of the First Tranche, the Second Tranche and the Third Tranche. On the Closing Date, the Shares and Warrants will be issued and the certificates representing the Shares and Warrants will be delivered to the Subscriber;
(g) “CSE Issuer” means an issuer which has its securities qualified for listing on the Exchange or which has applied to have its securities qualified for listing on the Exchange;
(h) “Exempt Amount Exemption” means the exemption from the prospectus requirements under Applicable Securities Laws for subscriptions made by non-individual Subscriber of CDN$150,000 paid in cash at the time of Closing and which does not require the Subscriber to be an Accredited Investor;
(i) “Exchange” means the Canadian Securities Exchange, operated by CNSX Markets Inc.;
(j) “Exemptions” means the exemptions from the registration and prospectus or equivalent requirements under Applicable Securities Laws;
(k) “Family, Friends and Business Associates Exemptions” means the exemptions from the prospectus requirements found in Sections 2.5 – 2.6.1 of NI 45-106;
(l) “First Tranche” has the meaning set out in subsection 4.3(a);
(m) “First Tranche Purchase Price” has the meaning set out in subsection 4.4;
(n) “fully managed” in relation to an account, means that the Subscriber has the discretion as to the account as contemplated by Applicable Securities Laws;
(o) “International Jurisdiction” means a country other than Canada or the United States;
(p) “material” means material in relation to the Issuer and any subsidiary considered on a consolidated basis;
(q) “material change” means any change in the business, operations, assets, liabilities, ownership or capital of the Issuer and any subsidiary considered on a consolidated basis that would reasonably be expected to have a significant effect on the market price or value of the Issuer’s securities;
(r) “material fact” means any fact that significantly affects or would reasonably be expected to have a significant effect on the market price or value of the Issuer’s securities;
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(s) “misrepresentation” is as defined under Applicable Securities Laws;
(t) “NI 45-106” means National Instrument 45-106 – Prospectus and Registration Exemptions in the form adopted by the securities commissions in all provinces and territories of Canada (a copy is available online at www.bcsc.bc.ca);
(u) “Nomination Right” has the meaning set out in subsection 9.1(e);
(v) “Offering” means the sale by the Issuer of Units of the Issuer on the terms set forth in this Subscription Agreement. There is no minimum aggregate Offering and the Issuer reserves the right to decrease or increase the size of the Offering at its discretion;
(w) “permitted assign” means, for a person that is an employee, executive officer, director or consultant of the Issuer or of a related entity of the Issuer,
(i) a trustee, custodian, or administrator acting on behalf of, or for the benefit of the person,
(ii) a holding entity of the person,
(iii) an RRSP or a RRIF of the person,
(iv) a spouse of the person,
(v) a trustee, custodian, or administrator acting on behalf of, or for the benefit of the spouse of the person,
(vi) a holding entity of the spouse of the person, or
(vii) an RRSP or a RRIF of the spouse of the person;
(x) “person” means and includes any individual, corporation, partnership, firm, joint venture, syndicate, association, trust, government, governmental agency or board or commission or authority, and any other form of entity or organization;
(y) “Portfolio Manager” means an adviser who manages the investment portfolio of clients through discretionary authority granted by one or more clients;
(z) “Public Record” means information which has been publicly filed at www.sedar.com by the Issuer under Applicable Securities Laws;
(aa) “Qualifying Jurisdictions” means British Columbia, Alberta and Ontario and certain other jurisdictions referred to in National Instrument 45-102;
(bb) “Regulation D” means Regulation D under the U.S. Securities Act;
(cc) “Regulation S” means Regulation S under the U.S. Securities Act;
(dd) “Schedules” means the schedules attached hereto and forming part hereof and comprising of:
(i) A Accredited Investor Certificate; and
(ii) B Family, Friends and Business Associates Certifications;
(ee) “Share” means a common share without par value in the capital of the Issuer;
(ff) “Second Tranche” has the meaning set out in subsection 4.3(b);
(gg) “Second Tranche Purchase Price” has the meaning set out in subsection 4.4;
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(hh) “Securities Laws” means, collectively, the applicable securities laws of each of the provinces of Canada and the respective regulations and rules made under those securities laws together with all applicable policy statements, blanket orders and rulings of the Securities Commissions and all discretionary orders or rulings, if any, of the Securities Commissions made in connection with the transactions contemplated by this Subscription Agreement, together with applicable published policy statements of the Canadian Securities Administrators, and the rules of the CSE;
(ii) “Subscriber” means the person or persons named as a Subscriber on the execution page of this Subscription Agreement and if more than one person is so named, means all of them jointly and severally;
(jj) “Subscriber’s Nominee” means the person nominated by the Subscriber, from time to time, for appointment and/or election as a director of the Issuer pursuant to Section 4.2(i), and any replacement of any such person from time to time.
(kk) “Subscriber’s Observer” means the person appointed by the Subscriber, from time to time, who shall have the right to attend, in a non-voting, observer capacity, meetings of the Board.
(ll) “Subscription Agreement” or “Agreement” means this subscription agreement between the Subscriber and the Issuer, including all Schedules incorporated by reference, as it may be amended or supplemented from time to time;
(mm) “Third Tranche” has the meaning set out in subsection 4.3(c);
(nn) “U.S. Person” means a U.S. Person as defined in Regulation S (the definition of which includes, but is not limited to, (i) any natural person resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any partnership or corporation organized outside of the United States by a U.S. Person principally for the purpose of investing in securities not registered under the U.S. Securities Act, unless it is organized, or incorporated, and owned, by accredited investors who are not natural persons, estates or trusts, and (iv) any estate or trust of which any executor or administrator or trustee is a U.S. Person;
(oo) “U.S. Purchaser” is (a) any “U.S. Person” as defined in Regulation S, (b) any person purchasing the Units on behalf of any “U.S. Person” or any person in the United States, (c) any person who receives or received an offer of the Units while in the United States, or (d) any person who is or was in the United States at the time the Subscriber’s buy order was made or this Agreement was executed or delivered;
(pp) “U.S. Securities Act” means the Securities Act of 1933, as amended, of the United States of America;
(qq) “United States” means the United States of America, its territories, any State of the United States and the District of Columbia;
(rr) “Units” means units of the Issuer consisting of one Share and one Warrant; and
(ss) “VWAP” has the meaning set out in subsection 4.4.
1.2 Words and phrases which are used in this Subscription Agreement and all Schedules thereto and which are defined in NI 45-106 will have the meaning ascribed thereto in NI 45-106, unless otherwise specifically defined in Section 1.1 of this Subscription Agreement.
| 2. | Prospectus Exempt Subscription Commitment |
2.1 The Subscriber (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) hereby irrevocably subscribes for and agrees to purchase from the Issuer, subject to the terms and conditions set forth herein, that number of Units and at such price as set out in Section 4. Subject to the terms hereof, this Subscription Agreement will be deemed to have been made and be effective only upon its acceptance by the Issuer.
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2.2 The Subscriber (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) acknowledges and agrees that the Issuer reserves the right, in its absolute discretion, to reject this subscription for Units, in whole or in part, at any time prior to the Closing Date notwithstanding prior receipt by the Subscriber of a notice of acceptance of this subscription. Upon the Issuer’s acceptance of this subscription, this Subscription Agreement will constitute an agreement for the purchase by the Subscriber from the Issuer, and for the Issuer to issue and sell to the Subscriber, the number of Units set out on the execution page hereof and on the terms and conditions set out herein. If this subscription is rejected in whole, any cheques or other forms of payment delivered to the Issuer representing payment for the Units subscribed for herein will be promptly returned to the Subscriber without interest or deduction. If this subscription is accepted only in part, a cheque representing any refund for that portion of the subscription for the Units which is not accepted will be promptly delivered to the Subscriber by the Issuer without interest or deduction.
| 3. | Description of Units |
3.1 The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that there is no minimum number of Units that must be subscribed for under the Offering for the Offering to close and therefore the subscription amount tendered herewith may be released to the Issuer on the Closing Date notwithstanding the number of Units issued pursuant to the Offering.
3.2 Each Unit is comprised of one Share and one Share purchase warrant (a “Warrant”), with each Warrant entitling the holder thereof to purchase an additional Share (a “Warrant Share”) at an exercise price per Warrant Share equal to the purchase price of the Unit on the Closing in which the Warrant was issued plus 25%. For greater certainty, if the First Tranche Purchase Price is $0.10 then the exercise price of the Warrants issued on the Closing Date of the First Tranche shall be $0.125. The Warrants shall expire 24 months following the Closing Date (the “Expiry Date”). The Issuer has the right to accelerate the Expiry Date to be thirty (30) days following written notice to the holder if during the term the Shares close at or above $0.25 per Share on each trading day for a period of ten (10) consecutive trading days on the Exchange.
3.3 The Subscriber further acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that the Issuer may pay a commission or finder’s fee up to the maximum amount allowable by the policies of the Exchange in connection with the Subscriber’s subscription for Units hereunder.
| 4. | Closing |
4.1 Prior to any Closing, the Subscriber will deliver to the offices of the Issuer aggregate subscription funds and subscription documents completed in accordance with the instructions on the face page of this Agreement. Alternatively, the Subscriber will deliver certified funds to the Issuer at its direction against concurrent delivery by the Issuer of certificates representing the Shares and Warrants. On request by the Issuer, the Subscriber agrees to complete and deliver any other documents, questionnaires, notices and undertakings as may possibly be required by regulatory authorities, stock exchanges and Applicable Securities Laws to complete the transactions contemplated by this Agreement.
4.2 The separate tranche Closings will occur on the Closing Date at which time certificates representing the Shares and Warrants will be available against payment of funds for delivery to the Subscriber as the Subscriber will instruct.
4.3 The Subscriber agrees to subscribe for a number of Units that total of a purchase price of no less than $1,500,000 and which will be completed in three tranches as follows:
(a) a number of Units with an aggregate purchase price of $500,000 shall be purchased upon signing of this Subscription Agreement (the “First Tranche”);
(b) a number of Units with an aggregate purchase price of $500,000 shall be purchased at a time mutually agreed by the Issuer and the Subscriber within 10 days after the acquisition by the Issuer, or its affiliate, of an option to acquire 60% of Golden Harvests, LLC (the “Second Tranche”); and
(c) a number of Units with an aggregate purchase price of $500,000 shall be purchased at a time mutually agreed by the Issuer and the Subscriber within 30 days after the closing of the Second Tranche (the “Third Tranche”).
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4.4 The Units purchased under the First Tranche, Second Tranche and Third Tranche shall be sold at a price of $0.10 per Unit.
4.5 The obligations of the Subscriber hereunder are subject to the following conditions being satisfied at or prior to the Closing, which conditions are for the exclusive benefit of the Subscriber and may be waived, in whole or in part, by the Subscriber in its sole discretion:
(a) The representations and warranties of the Issuer contained in this Subscription Agreement shall have been true and correct as of the date of this Subscription Agreement and shall be true and correct in all material respects (or, if qualified by materiality, in all respects) as of each Closing Date with the same force and effect as if such representations and warranties had been made at such time, except for such representations and warranties which are in respect of a specific date or time, in which case such representations and warranties shall be true and correct, in all material respects (or, if qualified by materiality, in all respects), as of such date or time.
(b) The Issuer shall have fulfilled or complied with all covenants contained in this Subscription Agreement to be fulfilled or complied with by it at or prior to each Closing Date.
(c) Between the date hereof and each applicable Closing Date, there shall not have occurred, in the reasonable judgement of the Subscriber, an adverse material change (as such term is defined under applicable Securities Laws) in the business, assets or financial condition of the Issuer and its Subsidiaries, taken as a whole.
(d) The Issuer shall not be required to obtain shareholder approval of the Offering.
(e) All orders, licenses, approvals, notifications, waivers, consents, or similar authorizations necessary to complete the offer, sale and issuance of the Units, as they relate to Laws applicable in Canada and applicable Securities Laws, shall have been obtained on terms acceptable to the Subscriber, acting reasonably.
(f) The Issuer shall have delivered to the Subscriber a certificate executed by the Chief Executive Officer or the Chief Financial Officer of the Issuer with respect to:
(i) certified copies of (a) the articles and by-laws of the Issuer, (b) and all resolutions of the board of directors of the Issuer (the “Board”) approving the entering into and completion of the transactions contemplated by this Subscription Agreement; and
(ii) the representations and warranties of the Issuer contained in this Subscription Agreement being true and correct in all material respects (or, if qualified by materiality, in all respects) as at the applicable Closing Date, with the same force and effect as if made on and as at the applicable Closing Date, except for such representations and warranties which are in respect of a specific date or time in which case such representations and warranties shall be true and correct, in all material respects (or, if qualified by materiality, in all respects), as of such date or time, after giving effect to the transactions contemplated by this Subscription Agreement.
(g) The issue and sale of the Units shall be exempt from the requirement to file a prospectus and the requirement to deliver an offering memorandum under applicable Securities Laws relating to the sale of the Units, or the Issuer shall have received such orders, consents or approvals as may be required to permit such sale without the requirement to file a prospectus or deliver an offering memorandum.
(h) The completion of the transactions contemplated by this Subscription Agreement comply with all applicable Securities Laws.
(i) The Subscriber’s Nominee shall have been duly appointed to the Board, subject to such nominee qualifying for such appointment under applicable Securities Laws.
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(j) the Issuer has taken all action necessary to be taken by it to authorize the execution and delivery of, and the performance by it of its obligations under this Subscription Agreement, and the board observer agreement between the Issuer and the Subscriber to be dated as of the Closing Date for the First Tranche (the “Board Observer Agreement”), and each of this Subscription Agreement and the Board Observer Agreement has been and will be, once entered into, as applicable, duly executed and delivered by it and constitutes a legal, valid and binding obligation of the Issuer enforceable against it in accordance with the terms thereof, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws of general application relating to or affecting rights of creditors and that equitable remedies, including specific performance and injunctive relief, are available only in the discretion of the applicable court;
(k) The Issuer and the Subscriber shall have entered into the Board Observer Agreement;
(l) The Issuer shall deliver to the Subscriber, at each applicable Closing Date, certificates representing the Shares and Warrants underlying the Units together with evidence satisfactory to the Subscriber that the registers of the Issuer have been updated to reflect such issuance.
(m) The Subscriber shall have received a favourable legal opinion from Miller Thomson LLP (the “Issuer’s Counsel”), dated as of the applicable Closing Date and addressed to the Subscriber in a form acceptable to the Subscriber, acting reasonably, with respect to such matter as would be customary for a transaction of this nature and such other matters as the Subscriber reasonably requests, and provided that the Issuer’s Counsel may rely, as to factual matters only, on certificates of auditors, public officials and officers of the Issuer.
(n) All documentation relating to the offer, sale and issuance of the Units shall be in form and substance satisfactory to the Subscriber, acting reasonably.
| 5. | Privacy Legislation |
5.1 The Subscriber acknowledges and consents to the fact that the Issuer is collecting the Subscriber’s (and any beneficial purchaser for which the Subscriber is contracting hereunder) personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) and any other applicable similar replacement or supplemental provincial or federal legislation or laws in effect from time to time) for the purpose of completing the Subscriber’s subscription. The Subscriber acknowledges and consents to the Issuer retaining the personal information for so long as permitted or required by applicable law or business practices. The Subscriber further acknowledges and consents to the fact that the Issuer may be required by Applicable Securities Laws, stock exchange rules and/or Investment Industry Regulatory Organization of Canada rules to provide regulatory authorities any personal information provided by the Subscriber respecting itself (and any beneficial purchaser for which the Subscriber is contracting hereunder). The Subscriber represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers for which the Subscriber is contracting. In addition to the foregoing, the Subscriber agrees and acknowledges that the Issuer may use and disclose the Subscriber’s personal information, or that of each beneficial purchaser for whom the Subscriber are contracting hereunder, as follows:
(a) for internal use with respect to managing the relationships between and contractual obligations of the Issuer and the Subscriber or any beneficial purchaser for whom the Subscriber is contracting hereunder;
(b) for use and disclosure to the Issuer’s transfer agent and registrar;
(c) for use and disclosure for income tax related purposes, including without limitation, where required by law, disclosure to Canada Revenue Agency;
(d) disclosure to securities regulatory authorities (including the Exchange) and other regulatory bodies with jurisdiction with respect to reports of trade and similar regulatory filings;
(e) disclosure to a governmental or other authority (including the Exchange) to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure;
(f) disclosure to professional advisers of the Issuer in connection with the performance of their professional services;
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(g) disclosure to any person where such disclosure is necessary for legitimate business reasons and is made with the Subscriber’s prior written consent;
(h) disclosure to a court determining the rights of the parties under this Subscription Agreement; or
(i) for use and disclosure as otherwise required or permitted by law.
The Subscriber further acknowledges and agrees that the Exchange collects personal information in forms submitted by the Issuer, which will include personal information regarding the Subscriber. The Subscriber agrees that the Exchange may use and publish this information in the manner provided for in their policies which may be viewed at the Exchange website, www.thecse.com. The Subscriber further acknowledges that the Ontario Securities Commission collects personal information in forms submitted to it by the Issuer, including information about the Subscriber, the Subscriber’s address and contact information, and the Subscriber’s subscription. The Subscriber acknowledges that the Ontario Securities Commission is entitled to collect the information under authority granted to it under Applicable Securities Laws for the purpose of administration and enforcement of the Applicable Securities Laws in Ontario. The Subscriber acknowledges that it may obtain information regarding the collection of this information by contacting the Administrative Assistant to the Director of Corporate Finance, Ontario Securities Commission, Suite 1903, Box 5520, Queen Street West, Toronto, Ontario M5H 3S8, Telephone: (416) 593-3682, Facsimile: (416) 593-8252. The Subscriber consents to the collection of personal information by the Ontario Securities Commission.
| 6. | Subscriber’s Acknowledgements – Regarding Risk, Restrictions, Independent Advice and Advancement of Subscription Proceeds to the Issuer |
6.1 The Subscriber represents and warrants and acknowledges and agrees with (on its own behalf and, if applicable, on behalf of each beneficial purchaser for whom the Subscriber is contracting hereunder) the Issuer that as of the date of this Subscription Agreement and at Closing hereunder:
(a) its decision to execute this Subscription Agreement and purchase the Units agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Issuer, and that its decision is based entirely upon its review of information about the Issuer in the Public Record;
(b) no prospectus has been filed by the Issuer with any securities commission or similar authority, in connection with the issuance of the Shares and Warrants, and the issuance and the sale of the Shares and Warrants is subject to such sale being exempt from the prospectus/registration requirements under Applicable Securities Laws and accordingly:
(i) the Subscriber is restricted from using certain of the civil remedies available under such legislation;
(ii) the Subscriber may not receive information that might otherwise be required to be provided to it under such legislation; and
(iii) the Issuer is relieved from certain obligations that would otherwise apply under such legislation;
(c) the Subscriber (or others for whom the Subscriber is contracting hereunder) has been advised to consult its own legal advisors with respect to the merits and risks of an investment in the Units and with respect to applicable resale restrictions and it (or others for whom it is contracting hereunder) is solely responsible (and the Issuer is in no way responsible) for compliance with applicable resale restrictions;
(d) to the knowledge of the Subscriber, the sale of the Units was not accompanied by any advertisement;
(e) the offer made by this Subscription Agreement is irrevocable (subject to the right of the Issuer to terminate this Subscription Agreement) and requires acceptance by the Issuer;
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(f) this Subscription Agreement is not enforceable by the Subscriber unless it has been accepted by the Issuer and the Subscriber waives any requirement on the Issuer’s behalf to communicate immediately its acceptance of this Subscription Agreement to the Subscriber;
(g) the Units are speculative investments which involve a substantial degree of risk and the Subscriber may lose its entire investment in the Units;
(h) the Subscriber is sophisticated in financial investments, has had access to and has received all such information concerning the Issuer that the Subscriber has considered necessary in connection with the Subscriber’s investment decision and the Subscriber will not receive an offering memorandum or similar disclosure document;
(i) the subscription proceeds will be available to the Issuer on Closing and this subscription is not conditional on any other subscription completing;
(j) no agency, governmental authority, regulatory body, stock exchange or other entity has made any finding or determination as to the merit for investment of, nor have any such agencies or governmental authorities made any recommendation or endorsement with respect to, the Units;
(k) the Subscriber acknowledges that the Issuer may complete additional financings in the future which may have a dilutive effect on existing shareholders at such time, including the Subscriber; and
(l) the Issuer will rely on the representations and warranties made herein or otherwise provided by the Subscriber to the Issuer in completing the sale and issue of the Units to the Subscriber.
| 7. | Subscriber’s Exemption Status |
7.1 The Subscriber, by its execution of this Subscription Agreement, hereby further represents, warrants to, and covenants with, the Issuer as of the date of this Subscription Agreement and at Closing hereunder (which representations, warranties and covenants will survive the Closing of the Offering) that the Subscriber is purchasing the Units as principal for its own account, it is purchasing such Units not for the benefit of any other person, and not with a view to the resale or distribution of the Units and one of the following Exemptions applies to the Subscriber:
(a) Family, Friends and Business Associates Exemptions
(i) The Subscriber is a resident of a Province or Territory of Canada other than Ontario, and is:
(A) a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer,
(B) a spouse, parent, grandparent, brother, sister, child or grandchild of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer,
(C) a parent, grandparent, brother, sister, child or grandchild of the spouse of a director, executive officer or control person of the Issuer or of an affiliate of the Issuer,
(D) a close personal friend of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer,
(E) a close business associate of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer,
(F) a founder of the Issuer or a spouse, parent, grandparent, brother, sister, child, grandchild, close personal friend or close business associate of a founder of the Issuer,
(G) a parent, grandparent, brother, sister, child or grandchild of a spouse of a founder of the Issuer,
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(H) a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons described in paragraphs (A) to (G), or
(I) a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are persons described in paragraphs (A) to (G);
(ii) The Subscriber is a resident of Ontario and is not an investment fund, you have concurrently executed and delivered a Form 45-106F12 – Risk Acknowledgement Form for Family, Friends and Business Associates in the form attached as Appendix 1 to Schedule B and signed by all of the following:
(A) the purchaser;
(B) an executive officer of the Issuer other than the purchaser;
(C) if the purchaser is a person referred to under paragraph 7.1(a)(i)(B), the director, executive officer or control person of the issuer or an affiliate of the issuer who has the specified relationship with the purchaser;
(D) if the purchaser is a person referred to under paragraph 7.1(a)(i)(C), the director, executive officer or control person of the issuer or an affiliate of the issuer whose spouse has the specified relationship with the purchaser;
(E) if the purchaser is a person referred to under paragraph 7.1(a)(i)(D) or (i)(E), the director, executive officer or control person of the issuer or an affiliate of the issuer who is a close personal friend or a close business associate of the purchaser; and
(F) the founder of the Issuer, if the purchaser is a person referred to in paragraph 7.1(a)(i)(F) and (i)(G) other than the founder of the Issuer; and
(iii) you have concurrently executed and delivered a certificate in the form attached as Schedule B attached hereto.
(b) Minimum Amount Exemption
You are not an individual and the aggregate acquisition cost of purchasing the Units will not be less than CDN$150,000 paid in cash at the time of purchase, and the Subscriber has not been created or used solely to purchase or hold the Shares and Warrants in reliance on this Exemption;
(c) Accredited Investor Exemption
(i) The Subscriber is an “Accredited Investor” and the Subscriber has properly completed and duly executed the Accredited Investor Certificate attached to this Subscription Agreement as Schedule A indicating the means by which the Subscriber is an Accredited Investor and confirms the truth and accuracy of all statements made by the Subscriber in such certificate; and
(ii) If you are an individual, you have concurrently executed and delivered Form 45-106F9 – Form for Individual Accredited Investors in the form attached as Appendix 2 to Schedule A hereto; or
| 7.2 | Subscriber Outside of Canada |
If the Subscriber is resident in an International Jurisdiction or in the United States, it certifies in particular that it is not resident in Ontario and further acknowledges and certifies that:
(a) no securities commission or similar regulatory authority has reviewed or passed on the merits of the Units;
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(b) there is no government or other insurance covering the Units;
(c) there are risks associated with the purchase of the Units;
(d) there are restrictions on the Subscriber’s ability to resell the Shares and Warrants and it is the responsibility of the Subscriber to determine what those restrictions are and to comply with them before selling the Shares and Warrants;
(e) the Issuer has advised the Subscriber that the Issuer is relying on an exemption from the requirements to provide the Subscriber with a prospectus and to sell the Units through a person registered to sell the Units under Applicable Securities Laws and, as a consequence of acquiring securities pursuant to this exemption, certain protections, rights and remedies provided by Applicable Securities Laws, including statutory rights of rescission or damages, will not be available to the Subscriber;
(f) the Subscriber is knowledgeable of securities legislation having application or jurisdiction over the Subscriber and the Offering (other than the laws of Canada and the United States) which would apply to this Subscription Agreement;
(g) the Subscriber is purchasing the Units pursuant to exemptions from any prospectus, registration or similar requirements under the laws of that International Jurisdiction and or, if such is not applicable, the Subscriber is permitted to purchase the Units, and the Issuer has no filing obligations in the International Jurisdiction;
(h) no laws in the International Jurisdiction require the Issuer to make any filings or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the International Jurisdiction; and
(i) the Shares and Warrants are being acquired for investment only and not with a view to resale and distribution within the International Jurisdiction.
| 7.3 | Other General Representations Applicable to All Subscribers |
The Subscriber represents and warrants to the Issuer that, as of the date of this Subscription Agreement and at Closing hereunder:
(a) the Subscriber has no knowledge of a “material fact” or “material change”, as those terms are defined herein, in respect of the affairs of the Issuer that has not been generally disclosed to the public;
(b) the Subscriber (and, if applicable, any beneficial purchaser for whom it is acting) is resident in the jurisdiction set out under the heading “Name and Address of Subscriber” on the execution page of this Subscription Agreement;
(c) the Subscriber is of legal age and has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Subscriber is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution of this Subscription Agreement on behalf of the Subscriber;
(d) the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the constating documents of, the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber is or may be bound;
(e) the Subscriber has duly and validly authorized, executed and delivered this Subscription Agreement and understands it is intended to constitute a valid and binding agreement of the Subscriber enforceable against the Subscriber;
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(f) in connection with the Subscriber’s investment in the Units, the Subscriber has not relied upon the Issuer for investment, legal or tax advice, and has, in all cases sought the advice of the Subscriber’s own personal investment advisor, legal counsel and tax advisers or has waived its rights thereto and the Subscriber is either experienced in or knowledgeable with regard to the affairs of the Issuer, or either alone or with its professional advisors is capable, by reason of knowledge and experience in financial and business matters in general, and investments in particular, of evaluating the merits and risks of an investment in the Units and is able to bear the economic risk of the investment and it can otherwise be reasonably assumed to have the capacity to protect its own interest in connection with the investment in the Units;
(g) no person has made to the Subscriber any written or oral representations:
(i) that any person will resell or repurchase the Shares or Warrants;
(ii) that any person will refund the purchase price for the Units;
(iii) as to the future price or value of the Shares or Warrants; or
(iv) that the Shares or Warrants will be listed and posted for trading on a stock exchange or that application has been made to list and post the Shares or Warrants for trading on a stock exchange, other than the Exchange;
Not a person in the United States or a U.S. Person
(h) The Subscriber represents and warrants that:
(i) the Units are not being acquired, directly or indirectly, for the account or benefit of a U.S. Person or a person in the United States and the Subscriber does not have any agreement or understanding (either written or oral) with any U.S. Person or a person in the United States respecting:
(A) the transfer or assignment of any rights or interests in any of the Shares or Warrants;
(B) the division of profits, losses, fees, commissions, or any financial stake in connection with this Subscription Agreement; or
(C) the voting of the Shares; and
(ii) the Subscriber has no intention to distribute either directly or indirectly any of the Shares or Warrants in the United States or to U.S. Persons;
(iii) the Subscriber represents that the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act;
(iv) the Subscriber is a not a “U.S. Person” and is not purchasing the Units for the account or benefit of any U.S. Person or a person in the United States or for offering, resale or delivery for the account or benefit of any U.S. Person or a person in the United States;
(v) the Subscriber was outside the United States at the time of execution and delivery of this Subscription Agreement within the meaning of Regulation S;
(vi) no offers to sell the Units were made by any person to the Subscriber while the Subscriber was in the United States;
(vii) the Subscriber acknowledges that the Shares or Warrants have not been registered under the U.S. Securities Act, and may not be offered or sold in the United States or to a U.S. Person unless an exemption from such registration requirements is available. The Subscriber understands that the Issuer has no obligation or present intention of filing a registration statement under the U.S. Securities Act in respect of the Securities;
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(viii) the Subscriber will not engage in any directed selling efforts (as defined by Regulation S under the U.S. Securities Act) in the United States in respect of the Units, which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of conditioning the market in the United States for the resale of the Shares or Warrants; and
Compliance with Resale Laws
(i) the Subscriber will comply with Applicable Securities Laws and, if applicable, Rule 904 of Regulation S concerning the resale of the Shares or Warrants and all related restrictions (and the Issuer is not in any way responsible for such compliance) and will speak and consult with its own legal advisors with respect to such compliance;
Own Expense
(j) the Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements of any special counsel or other advisors retained by the Subscriber) relating to the purchase of the Units will be borne by the Subscriber;
| 8. | The Issuer’s Representations |
8.1 The Issuer represents and warrants to the Subscriber that, as of the date of this Subscription Agreement and at Closing hereunder:
(a) The Issuer has filed all forms, reports, documents and information required to be filed by it, whether pursuant to applicable securities laws or otherwise, with the Exchange (or one of its predecessors) or the applicable securities regulatory authorities (the “Disclosure Documents”). As of the time the Disclosure Documents were filed with the applicable securities regulators and on SEDAR (System for Electronic Document Analysis and Retrieval) (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (i) each of the Disclosure Documents complied in all material respects with the requirements of the applicable securities laws; and (ii) none of the Disclosure Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) The financial statements of the Issuer contained in the Disclosure Documents: (i) complied as to form in all material respects with the published rules and regulations under the applicable securities laws; (ii) were reported in accordance with Canadian generally accepted accounting principles or International Financial Reporting Standards, as the case may be; and (iii) present fairly the consolidated financial position of the Issuer and its subsidiaries, if any, as of the respective dates thereof and the consolidated results of operations of the Issuer and its subsidiaries, if any, for the periods covered thereby.
(c) There is no “material fact” or “material change” (as those terms are defined in applicable securities legislation) in the affairs of the Issuer that has not been generally disclosed to the public.
(d) The Issuer has the full corporate right, power and authority to execute this Subscription Agreement, and to issue the Shares and Warrants to the Subscriber pursuant to the terms of this Subscription Agreement.
(e) The Issuer is duly qualified to carry on business in each jurisdiction wherein the carrying out of the activities contemplated makes such qualifications necessary.
(f) the Issuer and any subsidiaries are valid and subsisting corporations duly incorporated and in good standing under the laws of the jurisdictions in which they are incorporated, continued or amalgamated;
(g) the Issuer has complied, or will comply, with all applicable corporate and securities laws and regulations in connection with the offer, sale and issuance of the Units;
(h) the Issuer and any subsidiaries are the beneficial owners (or have the right to acquire) of the properties, business and assets or the interests in the properties, business or assets referred to in its Public Record and except as disclosed therein, all agreements by which the Issuer or its subsidiaries holds an interest in a property, business or asset are in good standing according to their terms, and the properties are in good standing under the applicable laws of the jurisdictions in which they are situated;
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(i) no offering memorandum has been or will be provided to the Subscriber;
(j) the financial statements comprised in the Public Record accurately reflect the financial position of the Issuer as at the date thereof, and no adverse material changes in the financial position of the Issuer have taken place since the date of the Issuer’s last financial statements except as filed in the Public Record;
(k) the creation, issuance and sale of the Shares and Warrants by the Issuer does not and will not conflict with and does not and will not result in a breach of any of the terms, conditions or provisions of its constating documents or any agreement or instrument to which the Issuer is a party;
(l) the Shares will, at the time of issue, be duly allotted, validly issued, fully paid and non-assessable and will be free of all liens, charges and encumbrances and the Issuer will reserve sufficient shares in the treasury of the Issuer to enable it to issue the Shares and the Warrant Shares;
(m) this Subscription Agreement, when accepted, will have been duly authorized by all necessary corporate action on the part of the Issuer and, subject to acceptance by the Issuer, will constitute a valid obligation of the Issuer legally binding upon it and enforceable in accordance with its terms;
(n) neither the Issuer nor any of its subsidiaries is a party to any actions, suits or proceedings which could materially affect its business or financial condition, and to the best of the Issuer’s knowledge no such actions, suits or proceedings have been threatened as at the date hereof, except as disclosed in the Public Record;
(o) no order ceasing or suspending trading in the securities of the Issuer nor prohibiting sale of such securities has been issued to the Issuer or its directors, officers or promoters and to the best of the Issuer’s knowledge no investigations or proceedings for such purposes are pending or threatened; and
(p) except as set out in the Public Record or as otherwise disclosed to the Subscriber, no person has any right, agreement or option, present or future, contingent or absolute, or any right capable of becoming a right, agreement or option for the issue or allotment of any unissued shares of the Issuer or any other security convertible or exchangeable for any such shares or to require the Issuer to purchase, redeem or otherwise acquire any of the issued or outstanding shares of the Issuer.
| 9. | Covenants of the Issuer |
9.1 The Issuer hereby covenants with each Subscriber that it will:
(a) offer, sell, issue and deliver the Units pursuant to exemptions from the prospectus filing, registration or qualification requirements of Applicable Securities Laws and otherwise fulfil all legal requirements required to be fulfilled by the Issuer (including without limitation, compliance with all Applicable Securities Laws in connection with the Offering;
(b) within the required time, file with the Exchange any documents, reports and information, in the required form, required to be filed by Applicable Securities Laws in connection with the Offering, together with any applicable filing fees and other materials;
(c) the Issuer will use reasonable commercial efforts to satisfy as expeditiously as possible any conditions of the Exchange required to be satisfied prior to the Exchange’s acceptance of the Issuer’s notice of the Offering; and
(d) use its reasonable commercial efforts to obtain all necessary approvals for this Offering.
(e) The Issuer shall take all necessary actions to recommend to its directors and its shareholders that the Subscriber’s Nominee be appointed or elected, as the case may be, to the Board at each meeting of directors called for the purposes of appointing directors or each meeting of shareholders of the Issuer at which directors are to be elected and at such other times as may be required by the Subscriber (the “Nomination Right”).
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(f) The Issuer shall take such other reasonable action necessary or advisable to facilitate the appointment to and continuing membership on the Board of the Subscriber’s Nominee.
(g) In the event of any vacancy on the Board created by the removal or resignation of the Subscriber’s Nominee as a result of such nominee’s failure to satisfy the applicable Securities Laws and/or Exchange requirements, such vacancy shall be filled with a new Subscriber’s Nominee, provided that such new nominee satisfies such Securities Laws and TSX requirements.
(h) Notwithstanding any provision in this Agreement, the Nomination Right shall expire and be of no force or effect upon the Subscriber holding less than 5,000,000 Shares.
9.2 Pre-emptive Right
(a) The Issuer grants to the Subscriber a right to purchase any authorized but unissued Shares (“New Shares”) that the Issuer may from time to time propose to issue or sell to any person in an amount such that following the subscription by the Subscriber, the Subscriber is able to maintain its pro rata share of the Issuer based on the percentage of the outstanding Shares owned by the Subscriber immediately prior to the proposed issuance or sale including the amount of any dilution resulting from the issuance of Shares under Section 9.2(i)(iv) (the “Pro Rata Portion”).
(b) The Issuer shall give written notice (an “Issuance Notice”) of any proposed issuance or sale of New Shares to the Subscriber within five Business Days following any meeting of the board of directors of the Issuer at which any such issuance or sale is approved.
(c) The Issuance Notice shall set forth the material terms and conditions of the proposed issuance or sale, including: (i) the number and description of New Shares proposed to be issued; (ii) the proposed issuance date, which shall be at least 20 Business Days from the date of the Issuance Notice; and (iii) the proposed purchase price per share of New Shares and all other material terms of the offer or sale.
(d) The Subscriber shall, for a period of 10 Business Days following the receipt of an Issuance Notice (the “Pre-Emptive Exercise Period”), have the right to elect irrevocably to purchase for cash all or any portion of the Pro Rata Portion of any New Shares on the terms and conditions, including the purchase price, set forth in the Issuance Notice by delivering a written notice to the Issuer (a “Pre-Emptive Acceptance Notice”) specifying the number of New Shares that the Subscriber desires to purchase up to the Pro Rata Portion.
(e) The delivery of a Pre-Emptive Acceptance Notice by the Subscriber shall be a binding and irrevocable offer by the Subscriber to purchase the New Shares described therein. The failure of the Subscriber to deliver a Pre-Emptive Acceptance Notice by the end of the Pre-Emptive Exercise Period shall constitute a waiver of the Subscriber’s rights with respect to the purchase of such New Shares but shall not affect the Subscriber’s rights with respect to any other future issuances or sales of New Shares.
(f) Following the expiration of the Pre-Emptive Exercise Period, the Issuer shall be free to complete the proposed issuance or sale of New Shares described in the Issuance Notice with respect to which the Subscriber waives or fails to exercise the pre-emptive right set forth in this Agreement on terms no less favourable to the Issuer than those set forth in the Issuance Notice; provided that: (i) such issuance or sale shall be closed within 20 Business Days after the expiration of the Pre-Emptive Exercise Period; and (ii) for the avoidance of doubt, the price at which the New Shares are sold to any prospective third party purchaser seeking to purchase the applicable New Shares (a “Prospective Purchaser”) shall be at least equal to or higher than the purchase price described in the Issuance Notice.
(g) If the Issuer has not sold such New Shares within such time period, the Issuer shall not thereafter issue or sell any New Shares without first again offering such shares to the Subscriber in accordance with the procedures set forth in this Subscription Agreement.
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(h) The closing of any purchase by any Prospective Purchaser shall be consummated concurrently with the consummation of the issuance or sale described in the Issuance Notice. Upon the issuance or sale of any New Shares in accordance with this Subscription Agreement, the Issuer shall deliver certificates representing the New Shares, free and clear of any mortgage, lien, charge, hypothec or encumbrance, whether fixed or floating, on, or any security interest in, any property, whether real, personal or mixed, tangible or intangible, any pledge or hypothecation thereof, any deposit arrangement, priority, conditional sale agreement, other title retention agreement, capital lease or other security arrangement of any kind and, in respect of any securities, includes an adverse claim (other than those arising hereunder and those attributable to the actions of the purchasers thereof), and the Issuer shall so represent and warrant to the purchasers thereof, and further represents and warrants to such purchasers that such New Shares shall be, upon issuance thereof to such purchasers and after payment therefor, duly authorized, validly issued, fully paid and non-assessable. The Subscriber shall deliver to the Issuer the purchase price for the New Shares purchased by the Subscriber by certified cheque, bank draft or wire transfer of immediately available funds or in such other medium and manner as agreed between the Issuer and the Subscriber. Each party to the purchase and sale of New Shares shall take all such other actions as may be reasonably necessary to consummate the purchase and sale, including entering into such additional agreements as may be necessary or appropriate.
(i) Notwithstanding the foregoing, the pre-emptive right provided to the Subscriber in this subsection 9.2 shall not apply in the event of an issuance of Shares in connection with:
(i) the issuance of incentive securities to purchase or otherwise acquire Shares pursuant to an equity incentive plan and the issuance of Shares on the exercise, conversion or settlement thereof;
(ii) the issuance of any Shares upon the exercise or conversion of any securities currently outstanding;
(iii) the issuance of Shares in a share dividend, capital reorganization or similar transaction where all holders of Shares are treated in an equivalent manner;
(iv) the issuance of Shares in lieu of services to any director, officer, employee or consultant, provided that such issuance shall not exceed 2% of the issued and outstanding Shares in any 12 month period.
(j) Notwithstanding any provision in this Agreement, the pre-emptive right provided in this Section 9.2 shall expire and be of no force or effect upon the Subscriber holding less than 5,000,000 Shares.
| 10. | Resale Restrictions and Legending of Shares and Warrants |
10.1 The Subscriber acknowledges that any resale of the Shares and Warrants will be subject to resale restrictions contained in the Applicable Securities Laws applicable to the Issuer, the Subscriber or any proposed transferee. Subscribers with a Canadian or international address will receive certificates representing the Shares and Warrants bearing the following legend imprinted thereon:
“Unless permitted under securities legislation, the holder of this security must not trade the security before [four months plus one day from the Closing Date]”
10.2 The Subscriber is aware that the Shares or Warrants have not been and will not be registered under the U.S. Securities Act or the securities laws of any state and that the Shares or Warrants may not be offered or sold in the United States without registration under the U.S. Securities Act or compliance with requirements of an exemption from registration and the applicable laws of all applicable states and acknowledges that the Issuer has no present intention of filing a registration statement under the U.S. Securities Act in respect of the Shares or Warrants.
| 11. | General |
11.1 Time is of the essence hereof.
11.2 Neither this Subscription Agreement nor any provision hereof will be modified, changed, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.
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11.3 The parties hereto will execute and deliver all such further documents and instruments and do all such acts and things as may either before or after the execution of this Subscription Agreement be reasonably required to carry out the full intent and meaning of this Subscription Agreement.
11.4 This Subscription Agreement will be subject to, governed by and construed in accordance with the laws of Ontario and the laws of Canada as applicable therein and the Subscriber hereby irrevocably attorns to the jurisdiction of the Courts situate therein.
11.5 This Subscription Agreement may not be assigned by any party hereto.
11.6 Without limitation, this Subscription Agreement and the transactions contemplated hereby are conditional upon and subject to the Issuer receiving the acceptance of the Exchange for this Subscription Agreement and the transactions contemplated hereby.
11.7 The Issuer will be entitled to rely on delivery of a facsimile copy of this Subscription Agreement, and acceptance by the Issuer of a facsimile copy of this Subscription Agreement will create a legal, valid and binding agreement between the Subscriber and the Issuer in accordance with its terms.
11.8 This Subscription Agreement may be signed by the parties in as many counterparts as may be deemed necessary, each of which so signed will be deemed to be an original, and all such counterparts together will constitute one and the same instrument.
11.9 This Subscription Agreement is deemed to be entered into on the acceptance date by Issuer, notwithstanding its actual date of execution by the Subscriber.
11.10 This Subscription Agreement, including, without limitation, the representations, warranties, acknowledgements and covenants contained herein, will survive and continue in full force and effect and be binding upon the parties notwithstanding the completion of the purchase of the Units by the Subscriber pursuant hereto, the completion of the issue of Shares and Warrants of the Issuer and any subsequent disposition by the Subscriber of the Shares or Warrants Shares.
11.11 The invalidity or unenforceability of any particular provision of this Subscription Agreement will not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.
11.12 Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, including the Board Observer Agreement, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Units and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute, by common law, by the Issuer, by the Subscriber, or by anyone else. In the event that execution pages are delivered to the Issuer without this entire Agreement, the Issuer is entitled to assume that the Subscriber, and each beneficial purchaser for whom it is acting, has accepted all of the terms and conditions contained in the parts of this Subscription Agreement that are not returned, without amendment or modification.
11.13 All monetary amounts expressed herein are Canadian Dollars.
[Execution Page Follows]
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IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement as of the date first above mentioned.
| Name, Address and Telephone Number | |
| Cannabis Growth Opportunity Corporation | |
| (Name of Subscriber - Please type or print) | |
| “Sean Conacher”, Chief Executive Officer | |
| (Signature and, if applicable, Office) | |
| [Redacted for confidentiality] | |
| (Address of Subscriber) | |
| [Redacted for confidentiality] | |
| (City, Province, Postal Code of Subscriber) | |
| [Redacted for confidentiality] | |
| (Telephone number) | |
| [Redacted for confidentiality] | |
| (email address) |
If the Subscriber is signing as agent or other person, please complete below with the name, address and telephone number of the beneficial owner of the Units purchased. OR if the Subscriber is a corporation, please complete below with the name, address and telephone number of the beneficial owner of the Subscriber:
| (Name of Subscriber - Please type or print) | |
| (Signature and, if applicable, Office) | |
| (Address of Subscriber) | |
| (City, Province, Postal Code of Subscriber) | |
| (Telephone Number) |
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REGISTRATION AND DELIVERY INSTRUCTIONS
| 1. | Registration - registration of the single certificate which is to be delivered at Closing should be made as follows: (Registration must reflect legal ownership in accordance with Subscriber’s disclosure made on the execution page and must be in the form required by Subscriber’s broker.) |
| [Redacted for confidentiality] | ||
| (name of registered holder) | (name of beneficial holder & account reference, if applicable) | |
| [Redacted for confidentiality] | ||
| (address) | ||
| 2. | Delivery - please deliver the Share certificate(s) to the following street address (include contact name and contact telephone number): |
| [Redacted for confidentiality] | ||
| (address) | ||
| (contact name) | (contact telephone number) | |
21
A C C E P T A N C E
The above-mentioned Subscription Agreement is hereby accepted and the terms hereof agreed to by the Issuer and the Subscriber.
DATED the 10th day of February, 2020.
| GROWN ROGUE INTERNATIONAL INC. | ||
| Per: | “J. Obie Strickler” | |
| Authorized Signing Officer | ||
22
SCHEDULE A
ACCREDITED INVESTOR CERTIFICATE
(To be completed by Accredited Investors only) Part 1: Accredited Investor (defined in NI 45-106):
The undersigned (the “Subscriber”) hereby confirms and certifies to Grown Rogue International Inc. (the “Issuer”) that the Subscriber is purchasing the Units as principal and that the Subscriber is an “Accredited Investor” as defined in NI 45-106 or Securities Act (Ontario) and is: [check appropriate boxes]
| _____ | (a) | except in Ontario, a Canadian financial institution, or a Schedule III bank, |
| _____ | (a.1) | in Ontario, a financial institution described in paragraph 1, 2 or 3 of subsection 73.1 (1) of the Securities Act (Ontario), |
| _____ | (b) | except in Ontario, the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada), |
| _____ | (b.1) | in Ontario, the Business Development Bank of Canada, |
| _____ | (c) | except in Ontario, a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary, |
| _____ | (c.1) | in Ontario, a subsidiary of any person or company referred to in clause (a.1) or (b.1), if the person or company owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary, |
| _____ | (d) | except in Ontario, a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, |
| _____ | (d.1) | in Ontario, a person or company registered under the securities legislation of a province or territory of Canada as an adviser or dealer, except as otherwise prescribed by the regulations, |
| Jurisdiction(s) registered: _________________ Categories of registration: _______________ | ||
| _____ | (e) | an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d), |
| _____ | (e.1) | an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador), |
|
Name of person with whom Subscriber is or was registered: _______________
Jurisdiction(s) registered: _______________ Categories of registration: _______________ |
||
| _____ | (f) | except in Ontario, the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada, |
| _____ | (f.1) | in Ontario, the Government of Canada, the government of a province or territory of Canada, or any Crown corporation, agency or wholly owned entity of the Government of Canada or of the government of a province or territory of Canada, |
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| _____ | (g) | a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec, |
| _____ | (h) | any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government, |
| _____ | (i) | except in Ontario, a pension fund that is regulated by the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction of Canada, |
| _____ | (i.1) | in Ontario, a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a province or territory of Canada, |
| Jurisdiction(s) registered: ________________ Registration number(s): ________________ | ||
| _____ | (j) | an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000, [If this is your applicable category, you must also complete Form 45-106F9 attached as Appendix II to this Schedule “A” |
| _____ |
(j.1) |
an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000, [If this is your applicable category, you must also complete Form 45-106F9 attached as Appendix II to this Schedule “A” |
| _____ | (k) | an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300 000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year, [If this is your applicable category, you must also complete Form 45-106F9 attached as Appendix II to this Schedule “A” |
| (l) | an individual who, either alone or with a spouse, has net assets of at least $5,000,000, [If this is your applicable category, you must also complete Form 45-106F9 attached as Appendix II to this Schedule “A” | |
| ☒ | (m) | a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements, |
| Type of entity: corporation Jurisdiction and date of formation: Canada | ||
| _____ |
(n) |
an investment fund that distributes or has distributed its securities only to: (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment], or 2.19 [Additional investment in investment funds], or (iii) a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment], |
| _____ | (o) | an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt, |
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| _____ | (p) | a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be, |
| Jurisdiction(s) registered: ________________ Registration number(s): ________________ | ||
| _____ | (q) | a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, |
|
Jurisdiction(s) registered or authorized: ________________________________ Categories of registration: ________________________________________________ |
||
| _____ | (r) | a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded, |
|
Registration number(s) assigned to subscriber:
Name of eligibility advisor or registered advisor:
Jurisdiction(s) registered: ________________ Categories of registration: ________________ |
||
| _____ | (s) | an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) paragraph (i) [and in Ontario, paragraphs (a.1) to (d.1) or paragraph (i.1)] in form and function, |
| Jurisdiction organized: ________________ Type of entity: ________________ | ||
| _____ | (t) | a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors [If this is your applicable category, each owner of interest must individually complete and submit to the Company its own copy of this Certificate of Accredited Investor], |
|
Name(s) of owners of interest: ________________________________________________
Type of entity (if applicable): ________________________________________________
Categories of accredited investor: ________________________________________________ | ||
| _____ | (u) | an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser, |
|
Name of advisor: ________________ Jurisdiction(s) registered: ________________
Categories of registration: ________________ Basis of exemption: ________________ | ||
| _____ | (v) | a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor, |
| _____ | (v.1) | in Ontario, a person or company that is recognized or designated by the Commission as an accredited investor, |
| Jurisdiction(s) recognized or designated: ________________________________________________ | ||
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| _____ | (w) | a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse. |
| Name(s) of settlor: ________________________________________________________________ | ||
| Name(s) of trustees: | ||
|
________________________________________________________________ Categories of accredited investor: ________________________________________________ | ||
| Categories of beneficiaries: ________________________________________________ | ||
and for purposes hereof, words and phrases which are used in this Accredited Investor Certificate and which are defined in NI 45-106 will have the meaning ascribed thereto in NI 45-106. Certain definitions that are relevant to qualifications as an “Accredited Investor” are attached hereto as Appendix I. You must review these definitions carefully.
EXECUTED by the Subscriber at 10th day of February, 2020.
| If a corporation, partnership or other entity: | If an Individual: | |
| “Sean Conacher” | ||
| Signature of Authorized Signatory | Signature | |
| Sean Conacher, Chief Executive Officer | ||
| Name and Position of Signatory | Print Name | |
| Cannabis Growth Opportunity Corporation | ||
| Name of Purchasing Entity | Jurisdiction of Residence | |
| Canada | ||
| Jurisdiction of Residence |
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APPENDIX I TO SCHEDULE A
DEFINITIONS RELEVANT TO QUALIFICATIONS AS AN ACCREDITED INVESTOR
(a) “Canadian financial institution” means
(i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of the Cooperative Credit Associations Act (Canada), or
(ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;
(b) “control person” has the meaning ascribed to that term in securities legislation except in Manitoba, Ontario, Quebec, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories and Nunavut where “control person” means any person that holds or is one of a combination of persons that hold
(i) a sufficient number of any of the securities of an issuer so as to affect materially the control of the issuer, or
(ii) more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of that issuer;
(c) “eligibility adviser” means
(i) a person that is registered as an investment dealer or in an equivalent category of registration under the securities legislation of the jurisdiction of a purchaser and authorized to give advice with respect to the type of security being distributed, and
(ii) in Saskatchewan or Manitoba, also means a lawyer who is a practising member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not:
(A) have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders or control persons, and
(B) have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months;
(d) “executive officer” means, for an issuer, an individual who is
(i) a chair, vice-chair or president,
(ii) a vice-president in charge of a principal business unit, division or function including sales, finance or production,
(iii) an officer of the issuer or any of its subsidiaries and who performs a policy-making function in respect of the issuer, or
(iv) performing a policy-making function in respect of the issuer;
(e) “financial assets” means cash, securities or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;
(f) “founder” means, in respect of an issuer, a person who,
(i) acting alone, in conjunction or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer, and
(ii) at the time of the trade is actively involved in the business of the issuer;
(g) “fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client's express consent to a transaction;
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(h) “investment fund” has the meaning ascribed thereto in National Instrument 81-106 - Investment Fund Continuous Disclosure except in Ontario where “investment fund” means a mutual fund or anon-redeemable fund;
(i) “person” includes
(i) an individual,
(ii) a corporation,
(iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and
(iv) an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative;
except in Ontario where “person” means
(i) an individual,
(ii) a partnership,
(iii) an unincorporated association,
(iv) an unincorporated syndicate,
(v) an unincorporated organization,
(vi) a trust,
(vii) an executor,
(viii) an administrator, and
(ix) a legal representative;
(j) “related liabilities” means
(i) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or
(ii) liabilities that are secured by financial assets.
(k) “spouse” means, an individual who,
(i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,
(ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or
(iii) in Alberta, is an individual referred to in paragraph (i) or (ii) immediately above or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and
(l) “subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary;
Affiliated Entities and Control
For the purposes of Part 1:
1. An issuer is considered to be an affiliate of another issuer if one of them is a subsidiary of the other, or if each of them is controlled by the same person.
2 A person (first person) is considered to control another person (second person) if
(i) the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless the first person holds the voting securities only to secure an obligation,
(ii) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests in the partnership, or
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(iii) the second person is a limited partnership and the general partner of the limited partnership is the first person.
For the purposes of Part 2:
1. A company shall be deemed to be an affiliate of another company if one of them is a subsidiary of the other, or if both are subsidiaries of the same company or if each of them is controlled by the same person or company.
2. A company shall be deemed to be controlled by another person or company or by two or more companies if,
(a) voting securities of the first-mentioned company carrying more than 50 per cent of the votes for the election of directors or held, otherwise than by way of security only, by or for the benefit of the other person or company or by or for the benefit of the other companies; and
(b) the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of the first-mentioned company.
All monetary references are in Canadian Dollars
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APPENDIX II TO SCHEDULE A
Form 45-106F9
Form for Individual Accredited Investors
| WARNING! |
| This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment. |
| SECTION 1 TO BE COMPLETED BY ISSUER OR SELLING SECURITY HOLDER | |
| 1. About your investment | |
|
Type of securities:
Units, comprised of one Share and one Warrant |
Issuer:
Grown Rogue International Inc. |
| SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER | |
| 2. Risk acknowledgement | |
| This investment is risky. Initial that you understand that: | Your initials |
| Risk of loss – You could lose your entire investment of $________. | |
| Liquidity risk – You may not be able to sell your investment quickly – or at all. | |
| Lack of information – You may receive little or no information about your investment. | |
| Lack of advice – You may not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca. | |
| 3. Accredited investor status | |
| You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria. | Your initials |
| ● Your net income before taxes was more than $200,000 in each for the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.) | |
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| ● Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year. | |
| ● Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the case and securities. | |
| ● Either alone or with your spouse, you may have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.) |
| 4. Your name and signature | |
| By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. | |
| First and last name (please print): | |
| Signature: | Date: |
| SECTION 5 TO BE COMPLETED BY SALESPERSON | |
| 5. Salesperson information | |
| [Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.] | |
| First and last name of salesperson (please print): | |
| Telephone: | Email: |
| Name of firm (if registered): | |
| SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | |
| 6. For more information about this investment | |
|
Please contact:
Grown Rogue International Inc. 340 Richmond Street West Toronto, Ontario M5V 1X2 Attn: J. Obie Strickler (obie@grownrogue.com, (503) 765-8108)
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www. securities-administrators.ca | |
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SCHEDULE B
FAMILY, FRIENDS AND BUSINESS ASSOCIATES CERTIFICATIONS
(To be completed by Officers, Directors, Employees, Family, Close Friends and Business Associates Only)
TO: Grown Rogue International Inc.
In connection with the purchase of Units of Grown Rogue International Inc. (the “Issuer”) by the undersigned Subscriber, or if applicable, the principal on whose behalf the undersigned is purchasing as agent, the Subscriber hereby represents, warrants, covenants and ratifies to the Issuer that:
1. The Subscriber is resident in or is subject to the laws of a Province of Canada;
2. The Subscriber is purchasing the Units as principal for its own account;
3. It is (please initial):
| ___ | (a) | a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer; or |
| ___ | (b) | a spouse, parent, grandparent, brother, sister, child or grandchild of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer; or |
| ___ | (c) | a parent, grandparent, brother, sister, child or grandchild of the spouse of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer; or |
| ___ | (d) | a close personal friend (by reason of the fact that you have directly known such individual well enough and for a sufficient period of time and in a sufficiently close relationship (where such relationship is direct and extends beyond being a relative or a member of the same organization, association or religious group or a client, customer or former client or customer or being a close personal friend of a close personal friend of such individual) to be in a position to assess the capabilities and the trustworthiness of such individual) of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer; or |
| ___ | (e) | a close business associate (by reason of the fact that you have had direct sufficient prior business dealings with such individual (where such relationship is direct and extends beyond being a client, customer or former client or customer or being a close business associate of a close business associate of such individual) to be in a position to assess the capabilities and trustworthiness of such individual) of a director, executive officer or control person of the Issuer, or of an affiliate of the Issuer, or |
| ___ | (f) | a founder of the Issuer or a spouse, parent, grandparent, brother, sister, child, grandchild, close personal friend (by reason of the fact that you have directly known such individual well enough and for a sufficient period of time and in a sufficiently close relationship (where such relationship is direct and extends beyond being a relative or a member of the same organization, association or religious group or a client, customer or former client or customer or being a close personal friend of a close personal friend of such individual) to be in a position to assess the capabilities and the trustworthiness of such individual) or close business associate (by reason of the fact that you have had direct sufficient prior business dealings with such individual (where such relationship is direct and extends beyond being a client, customer or former client or customer or being a close business associate of a close business associate of such individual) to be in a position to assess the capabilities and trustworthiness of such individual) of a founder of the Issuer, or |
| ___ | (g) | a parent, grandparent, brother, sister, child or grandchild of a spouse of a founder of the Issuer, or |
| ___ | (h) | a person or company of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons or companies described in subsections 3(a) to 3(g) above; or |
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| ___ | (i) | a trust or estate of which all of the beneficiaries or a majority of the trustees are persons or companies described in subsections 3(a) to 3(g) above; or |
| Please complete the following details of whose relationship is if you have checked any one of items 3(b)to 3(i) above: | |
| (insert name of applicable person) | |
| Length of Relationship | |
| Details of Relationship | |
| Prior Business Dealings, if applicable |
4. The Subscriber represents and warrants that the above representations and warranties will be true and correct both as of the execution of this certificate and as of the closing time of the purchase and sale of the Units and acknowledges that they will survive the completion of the issue of the Shares and Warrants.
5. For the purposes hereof, words and phrases used in this representation letter and which are defined in NI 45-106 will have the meaning ascribed thereto in NI 45-106.
6. The undersigned acknowledges that the foregoing representations and warranties are made by the undersigned with the intent that they be relied upon in determining the suitability of the Subscriber as a purchaser of the Units and that this Schedule B is incorporated into and forms part of the Subscription Agreement and the undersigned undertakes to immediately notify the Issuer of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the closing time of the purchase and sale of the Units.
Dated: ____________________, 202___.
| Print name of Subscriber | ||
| By: | ||
| Signature | ||
| Print name of Signatory | ||
| (if different from Subscriber) | ||
| Title | ||
33
Appendix 1 to Schedule B
Form 45-106F12
Risk Acknowledgement Form for Family, Friend and Business Associate Investors
| WARNING! |
| This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment. |
| SECTION 1 TO BE COMPLETED BY ISSUER | |
| 1. About your investment | |
|
Type of securities:
Units of the Issuer |
Issuer:
Grown Rogue International Inc. |
| SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER | |
| 2. Risk acknowledgement | |
| This investment is risky. Initial that you understand that: | Your initials |
| Risk of loss – You could lose your entire investment of $ _______. | |
| Liquidity risk – You may not be able to sell your investment quickly – or at all. | |
| Lack of information – You may receive little or no information about your investment. The information you receive may be limited to the information provided to you by the family member, friend or close business associate specified in section 3 of this form. | |
| 3. Family, friend or business associate status | |
| You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you: | Your initials |
|
A) You are:
1. [check all applicable boxes]
☐ a director of the issuer or an affiliate of the issuer
☐ an executive officer of the issuer or an affiliate of the issuer
☐ a control person of the issuer or an affiliate of the issuer
☐ a founder of the issuer | |
34
|
OR
2. [check all applicable boxes]
☐ a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, (i) individuals listed in (1) above and/or (ii) family members, close personal friends or close business associates of individuals listed in (1) above
☐ a truest or estate of which all of the beneficiaries or a majority of the trustees or executors are (i) individuals listed in (1) above and/or (ii) family members, close personal friends or close business associates of individuals listed in (1) above
| |
|
B) You are a family member of _________________, who holds the following position at the issuer or an affiliate of the issue: _________________.
You are the _________________ of that person or that person’s spouse. | |
|
C) You are a close personal friend of _________________, who holds the following position at the issuer or an affiliate of the issuer: _________________.
You have known that person for _________ years. | |
| 4. Your name and signature | |
|
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. You also confirm that you are eligible to make this investment because you are a family member, close personal friend or close business associate of that person identified in section 5 of this form. | |
| First and last name (please print): | |
| Signature: | Date: |
| SECTION 5 TO BE COMPLETED BY PERSON WHO CLAIMS THE PERSONAL RELATIONSHIP, IF APPLICABLE | |
| 5. Contact person at the issuer or an affiliate of the issuer | |
|
[Instruction: To be completed by the director, executive officer, control person or founder with whom the purchaser has a close personal relationship indicated under sections 3B, C or D of this form.]
By signing this for, you confirm that you have, or your spouse has, the following relationship with the purchaser: [check the box that applies]
☐ family relationship as set out in section 3B of this form
☐ close personal friendship as set out in section 3C of this form
☐ close business associate relationship as set out in section 3D of this form | |
| First and last name of contact person (please print): | |
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| Position with the issuer or affiliate of the issuer (director, executive officer, control person or founder): | |
| Telephone: | Email: |
| Signature: | Date: |
| SECTION 6 TO BE COMPLETED BY THE ISSUER | |
| 6. For more information about this investment | |
|
Please contact:
Grown Rogue International Inc. 340 King Street West Toronto, Ontario M5V 1X2 Attn: J. Obie Strickler (obie@grownrogue.com, (503) 765-8108)
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www. securities-administrators.ca
| |
Signature of executive officer of issuer (other than the purchaser):
|
Date: |
36
Exhibit 6
THIS AGREEMENT made as of this 10 day of February, 2020.
A M O N G:
CANNABIS GROWTH OPPORTUNITY CORPORATION,
a
corporation incorporated under the
laws of Canada
(hereinafter called “CGOC”)
OF THE FIRST PART
- and -
GROWN ROGUE INTERNATIONAL INC.,
a
corporation incorporated under
the laws of the Province of Ontario
(hereinafter called “Grown Rogue”)
OF THE SECOND PART
WHEREAS CGOC has subscribed for 15,000,000 common shares of Grown Rogue (the “Subscription Shares”);
AND WHEREAS CGOC and Grown Rogue wish to provide for the voting of the Subscription Shares;
AND WHEREAS CGOC and Grown Rogue wish to provide for supplemental resale restrictions upon Grown Rogue’s entitlement to resell the Subscription Shares;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants contained herein and other good and valuable consideration (the receipt and sufficiency of which is being hereby acknowledged), the parties hereto agree as follows:
1. Voting of Shares
1.1 CGOC hereby agrees to vote all of the Subscription Shares at any and all annual and/or special meetings of the shareholders of Grown Rogue in such manner as Grown Rogue may in its absolute and unfettered discretion determine.
1.2 In order to give effect to section 1.1 hereof CGOC shall complete the form of proxy prepared and delivered by management of Grown Rogue as directed by Grown Rogue and shall deliver such completed form of proxy to Grown Rogue’s registrar and transfer agent within the time limits specified to permit the shares represented by such proxy to be voted at the meeting of shareholders.
2. Supplemental Resale Restrictions
2.1 CGOC agrees not to resell any of the Subscription Shares prior to August 5, 2021 without the prior written consent of Grown Rogue.
2.2 CGOC acknowledges the share certificate, direct registration statement or other electronic book-entry system shall bear legends or notations indicating the supplemental resale restrictions in section 2.1.
3. Termination
3.1 This agreement shall terminate at 5:00 pm (Toronto time) on August 5, 2021.
4. Interpretation
4.1 Whenever used in this Agreement, words importing the singular number only shall include the plural, and vice versa, and words importing the masculine gender shall include the feminine gender.
4.2 Time shall in all respects be of the essence of this Agreement.
4.3 The insertion of headings and the division of this Agreement into articles, sections, paragraphs, clauses or schedules are for convenience of reference only and shall not affect or be utilized in the construction or the interpretation hereof.
4.4 This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and the parties hereby attorn to the jurisdiction of the courts of the Province of Ontario.
4.5 When calculating the period of time within which or following which an act is to be done or steps taken pursuant to this Agreement, the date which is the reference date in calculating such period shall be excluded. If the last day of such period is not a Business Day, the period in question shall end on the next Business Day. If the day on which an act is to be done or steps taken pursuant to this Agreement is not a Business Day, such day shall be deemed to be the next Business Day.
4.6 Unless otherwise stated, a reference herein to a numbered or lettered article, paragraph, clause or schedule refers to the article, paragraph, clause or schedule bearing that number or letter in this Agreement. A reference to “this Agreement”, “hereof”, “hereunder”, “herein” or words of similar meaning, means this Agreement including the schedules hereto, together with any amendments thereof.
4.7 Any notice, document or other communication required or permitted by this Agreement to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if sent by prepaid ordinary mail posted in Canada, or if transmitted by any form of telecommunication (which is tested prior to transmission, confirms to the sender the receipt of the entire transmission by the recipient and reproduces a complete written version of the transmission at the point of reception) to such party addressed as set out below.
| (a) | for CGOC at: |
Cannabis Growth Opportunity Corporation
240 Richmond Street West, Suite 4163
Toronto, Ontario M5V 1V6
Attention: Jamie Blundell, President and COO
Email: jblundell@cgocorp.com
2
| (b) | for Grown Rogue at: |
Grown Rogue International Inc.
340 Richmond Street West
Toronto, Ontario M5V 1X2
Attention: J. Obie Strickler
Email: obie@grownrogue.com
Notice so mailed shall be deemed to have been given on the third Business Day after deposit in a post office or public letterbox. Neither party shall mail any notice, request or other communication hereunder during any period in which Canadian postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notice transmitted by a form of recorded telecommunication during normal business hours on a Business Day (9:00 a.m. to 5:00 p.m. local time at the place of receipt) shall be deemed to have been given on the day of transmission or, in the case of notice transmitted outside of normal business hours shall be deemed to have been given on the first Business Day after the day of transmission; provided that immediately following such transmission such notice is given by personal delivery. Notice delivered personally shall be deemed to have been given on the day it was delivered. Any party may from time to time notify the others in the manner provided herein of any change of address which thereafter, until changed by like notice, shall be the address of such party for all purposes hereof.
4.8 The parties agree to execute and deliver to each other such further instruments and other written assurances and to do or cause to be done such further acts or things as may be necessary or convenient to carry out and give effect to the intent of this Agreement or as any of the parties may reasonably request in order to carry out the transactions contemplated herein.
4.9 This Agreement sets forth the entire agreement among the parties hereto pertaining to the specific subject matter hereof and replaces and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties hereto, and there are no warranties, representations or other agreements, whether oral or written, express or implied, statutory or otherwise, between the parties hereto in connection with the subject matter hereof except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby.
4.10 No delay or failure of any party in exercising any right or remedy hereunder and no partial exercise of any such right or remedy shall be deemed to constitute a waiver of such right or remedy or any other rights or remedies of such party hereunder. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. Any consent by a party to or any waiver by a party of any breach of any provision of this Agreement shall not constitute a consent to or waiver of any subsequent, further or other breach of the provisions of this Agreement.
4.11 This Agreement may be executed by the parties hereto in separate counterparts each of which when so executed and delivered shall constitute an original document, and all such counterparts shall together constitute one and the same instrument. Telecopied counterparts shall constitute original counterparts.
3
4.12 This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, assigns and legal representatives.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.
| CANNABIS GROWTH OPPORTUNITY CORPORATION | ||
| Per: | “Sean Conacher” | |
| Name: Sean Conacher | ||
| Title: Chief Executive Officer | ||
| GROWN ROGUE INTERNATIONAL INC. | ||
| Per: | “J. Obie Strickler” | |
| Name: J. Obie Strickler | ||
| Title: Chief Executive Officer | ||
4
Exhibit 7
Grown Rogue Announces
Resignation of Chief Strategy Officer
MEDFORD, OREGON – February 21, 2019 -- Grown Rogue International Inc. (CSE:GRIN | OTC: GRUSF) (“Grown Rogue” or the “Company”), a vertically-integrated, multi-state cannabis company, with operations and assets in Oregon, California, and Michigan, reports the resignation of the Company’s Chief Strategy Officer, Jacques Habra.
“Grown Rogue wants to thank Jacques for his leadership and dedication to Grown Rogue over the past three years” said Obie Strickler, CEO of Grown Rogue. “Jacques was instrumental in Grown Rogue’s early growth, fundraising strategy, and corporate development. We wish him and the Noospheric team all the success in future endeavors”, added Mr. Strickler.
Jacques initially joined Grown Rogue to develop the brand and product marketing around the concept of using cannabis to create the right experience. Upon the Company’s public listing in November 2018, Mr. Habra shifted to focus on investor relations, strategic expansion, and assisting the CEO with growth objectives.
“I joined Grown Rogue to help tell the story of the founders who passionately focus on best practices in cultivation, high standards of consumer experience, and developing meaningful dialogue with the investment community”, commented Mr. Habra. “It’s been very rewarding to see the positive growth of the entire Company over the past few years. As an early partner and continuing shareholder, I am excited to watch the next phase of Grown Rogue’s growth,” added Mr. Habra.
About Grown Rogue
Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a vertically-integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning cultivation team, state of the art indoor and outdoor manufacturing facilities, and consumer insight based product categorization, to create innovative products thoughtfully curated from “seed to experience”. The Grown Rogue family of products includes sungrown and indoor premium flower, patented nitrogen sealed pre-rolls along with chocolate edibles featuring a partnership with world-renowned chocolatier.
FORWARD LOOKING STATEMENTS
This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on www.sedar.com.
PRESS RELEASE
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Safe Harbor Statement:
This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.
The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
For further information on Grown Rogue International please visit www.grownrogue.com or contact:
Obie Strickler Chief Executive Officer obie@grownrogue.com |
Investor Relations Desk Inquiries invest@grownrogue.com (458) 226-2100 |
Exhibit 8

Grown Rogue Strengthens Executive Team with New Appointments
Medford, Oregon, February 24, 2020 – Grown Rogue International Inc. (“Grown Rogue”) (CSE: GRIN) (OTCQX: GRUSF), a multi-state cannabis company with operations and assets in Oregon, California and Michigan, today announced the promotion of two senior leaders to its executive team. Rob Rigg has been promoted to Chief Marketing Officer, while Adam August takes on the responsibility of Chief Financial Officer of Grown Rogue’s US based operating subsidiary.
“Bringing in talent with diverse backgrounds and experience at best in class organizations has been key to Grown Rogue’s success,” said Obie Strickler, CEO of Grown Rogue. “Both Rob and Adam have proven over the last 15 months that they can take best practices from other industries and apply them to the cannabis industry as we expand into new markets and continue to build shareholder value.”
Rob Rigg was originally brought on as VP of Marketing where he focused on changing the branding strategy of Grown Rogue to enhancing experiences by understanding how products effect a consumer’s mind, body and mood. Rob quickly took on more responsibility for the company becoming the sales leader and functioning as an Oregon based general manager, identifying new opportunities to generate efficiencies and increase profitability. Rigg came to Grown Rogue after honing his craft at global leaders such as Nike and Goldman Sachs, while also spending several years building a successful footwear start up. During his time at Grown Rogue, Rigg has focused on optimizing Grown Rogue SKU efficiency and ensuring consistent monthly sales with key retail partners.
“It has been inspiring to see the progress that the Grown Rogue team has made over the past year as we rapidly evolved not only our product and marketing strategy but focus as a business to drive profitability and future growth,” said Rigg. “I am grateful for the opportunity to step into the CMO role and look forward to educating and empowering cannabis consumers and retailer partners with our high-quality products and innovative branding as we enter exciting new markets such as Michigan.”
Adam August has brought a robust financial background to Grown Rogue with a career which began at Harry & David, an American-based premium food and gift producer and retailer. At Harry & David, August began as a financial analyst and advanced to the position of Vice President of Finance, responsible for the Treasury, Credit, Payroll and FP&A functions for the vertically-integrated retailer. During his time with Grown Rogue, August has been responsible for implementing efficiencies and cost saving strategies which have earned him the promotion to US based CFO where he oversees finance, accounting, IT and human resources. August’s focus on profitability and diligent cash management has provided Grown Rogue with the runway to fund growth with focused prioritization on maximizing its return on investment. Grown Rogue will be actively leveraging August’s successful Oregon financial management strategy as it expands into Michigan and other new markets.
“I am proud of the accomplishments we’ve made over the past year and especially the heightened focus on our core competency of cannabis cultivation, which has enabled us to create a more streamlined business on a path to profitability,” said August. “I look forward to bringing our proven playbook to Michigan and beyond, while being an active and positive corporate citizen in the communities we call home.”

For more information visit grownrogue.com, or follow us at facebook.com/grownrogue, instagram.com/grownrogue, twitter.com/grownrogue, or linkedin.com/company/grown-rogue
About Grown Rogue
Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a vertically-integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning cultivation team, state of the art indoor and outdoor manufacturing facilities, and consumer insight based product categorization, to create innovative products thoughtfully curated from “seed to experience”. The Grown Rogue family of products includes sungrown and indoor premium flower, patented nitrogen sealed pre-rolls along with chocolate edibles featuring a partnership with world-renowned chocolatier.
FORWARD LOOKING STATEMENTS
This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
2

Safe Harbor Statement:
This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.
The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Contacts:
Obie Strickler
Chief Executive Officer obie@grownrogue.com
Investor Relations Desk Inquiries invest@grownrogue.com
(458) 226-2100
3
Exhibit 9
Material Change Report
| Item 1 | Name and Address of Company |
Grown Rogue International Inc. (the “Corporation” or “Company”)
340 Richmond Street West
Toronto, Ontario
M5V 1X2
| Item 2 | Date of Material Change |
February 12, 2020
| Item 3 | News Release |
News release was issued by the Company on February 12, 2020 through the facilities of Business Wire and was subsequently filed on SEDAR.
| Item 4 | Summary of Material Change |
On February 12, 2020, the Company announced that its majority held subsidiary GR Michigan, LLC has entered into a purchase agreement with Golden Harvests, LLC (“Golden Harvests”), a fully licensed Michigan based operator with an approximately 80,000 sq. ft cultivation facility located in Bay City, Michigan. The agreement provides the Company the option to acquire a 60% controlling interest of Golden Harvests pending Municipal and State regulatory approval.
| Item 5.1 | Full Description of Material Change |
On February 12, 2020, the Company announced that its majority held subsidiary GR Michigan, LLC (“GR Michigan” and together with the Company, “Grown Rogue”) has entered into a purchase agreement with Golden Harvests, LLC (“Golden Harvests”), a fully licensed Michigan based operator with an approximately 80,000 sq. ft cultivation facility located in Bay City, Michigan. The agreement provides Grown Rogue the option to acquire a 60% controlling interest of Golden Harvests (“Option”) pending Municipal and State regulatory approval.
Approximately 10,000 sq ft of the facility is already online and operating with three separate flower rooms, vegetative, clone, packaging, trimming, and other infrastructure required to operate a best-in-class cultivation facility. Golden Harvests is currently producing approximately 600lbs annually and with improvements by the experienced Grown Rogue management team, it is anticipated production in 2020 will approach 1,500lbs and 3,500lbs in 2021.
Grown Rogue has also signed an exclusive management services agreement with Golden Harvests to immediately begin providing consulting services for a variety of business functions primarily focused on cultivation, sales, branding and marketing, and compliance. Grown Rogue has committed to investing an additional $1,200,000 of capital improvements at the facility to increase efficiencies and cultivation capacity.
As part of the Option, and to acquire the 60% controlling interest, Grown Rogue will pay USD$810,000 in cash, and cause Grown Rogue to issue 800,000 common shares (“Shares”) to the existing members of Golden Harvests in four tranches:
| ● | Tranche 1 – USD $150,000 within five days after signing the Option and 200,000 Shares within 60 days after signing the Option |
| ● | Tranche 2 – Due at the 6-month anniversary of signing the Option is USD $200,000 and 200,000 Shares. Grown Rogue can, at its election, extend the due date of the Tranche 2 consideration for 6 months by paying an additional USD$25,000 payment and issuing an additional 25,000 Shares |
| ● | Tranche 3 – Due at the 12-month anniversary of signing the Option is USD$260,000 and 200,000 Shares. Grown Rogue can, at its election, extend the Tranche 3 consideration for 6 months by paying an additional USD$25,000 and issuing an additional 25,000 Shares |
| ● | Tranche 4 – Due upon exercise of the Option, pending Municipal and State regulatory approval, is USD$200,000 and 200,000 Shares |
Exercise of the Option by Grown Rogue is subject to Municipal and State regulatory approval. The Option includes representations, warranties, and covenants that are typical for transactions of this type.
| Item 6 | Reliance on Subsection 7.1(2) of National Instrument 51-102 |
Not applicable.
| Item 7 | Omitted Information |
Not applicable.
| Item 8 | Executive Officer |
J. Obie Strickler
President and Chief Executive Officer
Tel: (503) 765-8108
| Item 9 | Date of Report |
February 24, 2020.
2
Cautionary Note Regarding Forward Looking Information
This report contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s Listing Statement available on www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
3
Exhibit 10
OPTION TO PURCHASE CONTROLLING INTEREST
This Option to Purchase Controlling Interest (this “Option”), dated and effective February 6, 2020 (the “Effective Date”), is among David Pleitner (“David”), Allan Pleitner (“Allan”), Golden Harvests, LLC, a Michigan limited liability company (the “Company”), and GR Michigan, LLC, a Michigan limited liability company or its assignee (“Buyer”). David and Allan are each referred to in this Option as a “Seller” and, collectively, as “Sellers”. David, Allan, the Company, and Buyer are each referred to in this Option as a “Party” and, collectively, as the “Parties”.
RECITALS
A. Sellers (i) are all of the members of the Company and (ii) own 100% of the outstanding membership interests of the Company (the “Membership Interests”). The Membership Interests constitute all of the issued and outstanding equity securities of the Company.
B. Sellers have agreed to grant to Buyer, and Buyer has agreed to acquire from Sellers, an option to purchase 60% of the Membership Interests (the “Controlling Interest”).
AGREEMENT
The Parties agree as follows:
1. Recitals. The above recitals are incorporated as a material and contractual term of this Option.
2. Grant of Option to Purchase. On and subject to the terms and conditions set forth in this Option, Sellers hereby grant to Buyer, and Buyer hereby acquire and accepts from Sellers, the option to purchase the Controlling Interest from Sellers (the “Purchase Option”). Buyer may assign or transfer the Purchase Option to any Affiliate (as defined below) of Buyer without the consent of, or notice to, Seller. Subject to the provisions in this Option, title to, and all rights (voting, economic, and otherwise) with respect to, the Controlling Interest shall remain with Sellers unless and until Buyer exercises the Purchase Option pursuant to this Option. For purposes of this Agreement, an “Affiliate” means any other person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person or entity, where the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise.
3. Option Consideration. In full consideration for the Purchase Option, Buyer will (a) pay to Sellers $150,000 (the “Cash Option Consideration”), and (b) cause to be issued to Sellers 200,000 shares of common stock of Grown Rogue International, Inc. (“GRIN”) free and clear of any liens or encumbrances (other than any restrictions under applicable federal, state, or provincial securities laws) (the “Shares Option Consideration”). Buyer will pay the Cash Option Consideration to Sellers within five business days after the Effective Date. Buyer will cause the Shares Option Consideration to be issued to Sellers within 60 days after the Effective Date.
4. Installment Payments and Shares.
(a) On the 6-month anniversary of the Effective Date, Buyer will (i) pay to Sellers an additional $200,000, and (ii) cause to be issued to Sellers an additional 200,000 shares of common stock of GRIN free and clear of any liens or encumbrances (other than any restrictions under applicable federal, state, or provincial securities laws).
(b) On the 12-month anniversary of the Effective Date, Buyer will (i) pay to Sellers an additional $260,000 (this payment and the payment described in Section 4(a)(i) above are each referred to in this Agreement as an “Installment Payment”), and (ii) cause to be issued to Sellers an additional 200,000 shares of common stock of GRIN (together with the shares described in Section 4(a)(ii) above, the “Installment Shares”) free and clear of any liens or encumbrances (other than any restrictions under applicable federal, state, or provincial securities laws).
(c) Buyer may, in its sole discretion, extend either or both of the due dates for the Installment Payments and Installment Shares by, in each case, up to six months provided that, in consideration for any such extension, Buyer pays to Sellers an additional $25,000 and causes an additional 25,000 shares of common stock of GRIN to be issued to Sellers (free and clear of any liens or encumbrances (other than any restrictions under applicable federal, state, or provincial securities laws)), in each case, on or promptly following the original due date.
(d) If the 6-month or 12-month anniversary of the Effective Date will occur after Buyer has exercised the Purchase Option, then the MIPA (as defined below) will include Buyer’s obligation to pay the remaining Installment Payment(s) and to cause to be issued any remaining Installment Shares.
5. Exercise of Purchase Option.
(a) Buyer may exercise the Purchase Option at any time during the period (the “Option Period”) that: (i) begins on the date on which the Company has received both (A) all licensing and other regularly or governmental approvals from the State of Michigan necessary to operate a cannabis business in that state and (B) approval of Buyer’s acquisition of an interest in the Company; and (ii) ends at 5:00 p.m., Pacific Time, on the second anniversary of the Effective Date. From time to time during the Option Period, upon Buyer’s reasonable request, each Seller will certify as to the continuing accuracy of, and compliance with, such Seller’s representations, warranties, and covenants set forth in this Option.
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(b) To exercise the Purchase Option, Buyer must give written notice to Sellers before the expiration of the Option Period that Buyer is exercising the Purchase Option. If Buyer exercises the Purchase Option, then:
(i) Subject to the provisions of this Option and the MIPA, Buyer will purchase from Sellers, and Sellers will assign, sell, and transfer to Buyer, the Controlling Interest free and clear of all liens, security interests, encumbrances, and other restrictions. Sellers may determine between themselves how much of each Seller’s Membership Interest to transfer to Buyer so that Buyer acquires the Controlling Interest; provided, however, that if Sellers do not notify Buyer of their determination in writing within one business day after Buyer delivers notice of its decision to exercise the Option, then Allan will transfer his entire 49% Membership Interest and David will transfer 11% of his Membership Interest.
(ii) The consideration for the Controlling Interest will consist of:
(A) the sum of: (1) the Cash Option Consideration (i.e., $150,000 paid on the Effective Date); plus (2) the Installment Payments (i.e., $460,000, of which $200,000 was or will be paid on each of the 6-month anniversary of the Effective Date and $260,000 was paid on the 12-month anniversary of the Effective Date); plus (3) $200,000 to be paid by Buyer to Sellers upon the closing of the purchase and sale of the Controlling Interest; plus (4) the aggregate amount that Buyer or its affiliates advanced to or on behalf of the Company for capital expenditures, as such advances are evidenced by Buyer’s or its affiliates’ written records; and
(B) 800,000 shares of GRIN common stock, consisting of (1) the Shares Option Consideration (i.e., 200,000 shares); plus (2) the Installment Shares (i.e., 400,000, of which 200,000 shares was or will be paid on each of the 6 and 12-month anniversaries of the Effective Date); plus (3) 200,000 shares of GRIN common stock to be issued to Sellers free and clear of any liens or encumbrances (other than any restrictions under applicable federal, state, or provincial securities laws) upon the closing of the purchase and sale of the Controlling Interest.
(iii) The closing of the purchase and sale of the Controlling Interest will occur on a date determined by Buyer as soon as possible, but in any event within 120 days, after Buyer delivers written notice of its election to exercise the Purchase Option, provided, however, that such date may be extended if required by, or if closing cannot then occur as a result of, the application of any law, regulation, order, or other action or any applicable governmental authority.
(iv) The Parties will enter into a Membership Interest Purchase Agreement (the “MIPA”) in the form attached hereto as Exhibit A, and including the terms set forth in this Section 4(b), and the consummation of the purchase and sale of the Controlling Interest will be subject to the conditions and terms set forth in the MIPA.
(v) The Parties will enter into an Amended and Restated Operating Agreement of the Company in the form attached hereto as Exhibit B, which will include, among other terms and conditions, an option for Buyer to purchase the Sellers’ remaining Membership Interests at any time after the third anniversary of the closing of the purchase of the Controlling Interest (unless otherwise agreed to by the Parties or Buyer is pursuing a sale of the Company, in which case Sellers would receive reasonable and customary price protections).
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(c) If Buyer fails to exercise the Purchase Option before the end of the Option Period, then the Purchase Option shall terminate and cease, time being of the essence for the option granted to Buyer.
6. Covenants. Subject to, and without limiting the rights, duties, and obligations of the Parties under, any other agreement between or among one or more of the Parties, during the period beginning on the Effective Date and ending on the earlier of (a) the closing of the purchase and sale of the Controlling Interest following Buyer’s exercise of the Purchase Option pursuant to Section 5 or (b) the termination of this Option pursuant to Section 9:
(a) The Company shall, and Sellers shall cause the Company to, diligently pursue all licensing and other governmental or regulatory approvals that are necessary or desirable in connection with operating a cannabis business in the State of Michigan.
(b) Sellers shall not, directly or indirectly, sell, exchange, transfer (including, without limitation, any transfer by gift or operation of law), assign, distribute, pledge, encumber, hypothecate, grant any option with respect to or security interest in, or otherwise encumber in any manner any of the Membership Interests without, in each instance, Buyer’s prior written consent.
(c) The Company shall not, and Sellers shall cause the Company not to, without Buyer’s prior written consent, in each instance: (i) issue any ownership or other equity securities of the Company; (ii) issue any securities convertible into or exercisable for any equity securities of the Company; (iii) issue any debt convertible into equity securities of the Company; or (iv) enter into any agreement obligating the Company to issue any securities of the Company.
(d) The Company shall, and Sellers shall cause the Company to, do all things necessary to preserve and to keep in full force and effect its existence, rights, and privileges.
(e) Except as Buyer may otherwise approve in writing, the Company shall not, and Sellers shall not cause or permit the Company to: (i) declare, make, or pay any dividend or distribution to Sellers on account of their Membership Interests or otherwise (other than normal salaries consistent with the Company’s past practices); or (ii) make any payment to, or guaranty any indebtedness of, any Affiliate of the Company or any person related to or affiliated with either Seller (such as family members or other entities in which either Seller owns any interest).
(f) Except as Buyer may otherwise approve in writing, the Company shall not, and Sellers shall cause the Company not to, amend its articles of organization or operating agreement, enter into or amend any agreement (whether written or oral) that is or would be material to the Company’s business, or incur any indebtedness or other liabilities that, individually or in the aggregate, are material in amount or nature.
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(g) Except as Buyer may otherwise approve in writing, the Company shall, and Sellers shall cause the Company to, conduct the Company’s business only in the ordinary course of business consistent with past practice.
(h) The Company shall, and Sellers shall cause the Company to, promptly, and in any event within three business days, inform Buyer of: (i) all material adverse changes in the Company’s financial condition; and (ii) all existing and all threatened litigation, claims, investigations, administrative proceedings, or similar actions affecting the Company. As of the Effective Date, the Company and Dave are defendants in the lawsuit described on attached Schedule 6(h).
(i) (i) Accurately maintain its books and records to present fairly, on a consistent basis, and in all material respects, the financial condition of the Company, and permit Buyer reasonable access to examine and audit the Company's books and records upon reasonable notice during normal business hours; and (ii) furnish Buyer with such financial and additional information and statements, including confirmation of paid obligations (e.g., tax obligations), as Buyer may request from time to time.
(j) Maintain fire and other risk insurance, public liability insurance and such other insurance as maintained by other similarly situated businesses.
(k) Comply in all material respects with all terms and conditions of all other agreements, whether now or hereafter existing, between the Company and Buyer or any of Buyer's affiliates and notify Buyer within three days of any default by the Company under any such agreements.
(l) Pay and discharge when due all of its indebtedness and obligations, including, without limitation, all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon the Company or its properties, income or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of the Company's properties, income or profits.
(m) Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities, applicable to the conduct of the Company's business and operations.
(n) Sellers will not initiate, solicit, entertain, negotiate, accept, or discuss, directly or indirectly, any proposal or offer from any person or group of persons other than Buyer and its Affiliates (an “Acquisition Proposal”) to acquire all or any portion of the Membership Interest or all or any material portion of the assets or business of the Company, whether by merger, purchase of equity, purchase of assets, tender offer, or otherwise, or provide any non- public information to any third party in connection with an Acquisition Proposal or enter into any agreement, arrangement, or understanding requiring it to abandon, terminate, or fail to consummate a transaction with Buyer as contemplated in this Option. Sellers will notify Buyer promptly if either of them receives any indications of interest, requests for information, or offers in respect of an Acquisition Proposal, and will communicate to Buyer in reasonable detail the terms of any such indication, request, or offer, and will provide Buyer with copies of all written communications relating to any such indication, request, or offer.
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7. Sellers’ Representations and Warranties. The Sellers jointly and severally represent and warrant to Buyer that, as of the Effective Date and on each day during the Option Period, the following statements are accurate and complete:
(a) The Membership Interests are owned 51% by David and 49% by Allan. Each Seller is the sole record and beneficial owner of the Membership Interests he owns. No other person has any right, title, or interest in or to the Membership Interests. The Membership Interests are free and clear of all liens, security interests, encumbrances, and other restrictions. Each Seller has the unrestricted right, ability, and authority to enter into and perform his obligations under this Option, to grant the Purchase Option hereunder, and, upon Buyer’s exercise of the Purchase Option, to transfer and sell the Membership Interests he owns to Buyer pursuant hereto and the MIPA.
(b) Each Seller is an individual and resident of the state set forth in his address on the signature page to this Option. The Company is duly organized, validly existing, and in good standing under the laws of the State of Michigan and has all requisite limited liability company power and authority to carry on its business as now being conducted.
(c) The execution and delivery of this Option by the Company and each Seller, and the performance of the Company’s and each Seller’s obligations hereunder, have been duly authorized by all necessary action on the Company’s and each Seller’s part. No proceedings on the part of the Company or either Seller are necessary to authorize the execution and delivery of this Option or to consummate the transactions contemplated by this Option.
(d) This Option has been duly executed and delivered by the Company and each Seller and constitutes a legal, valid, and binding obligation of the Company and each Seller, enforceable against the Company and each Seller in accordance with its terms (subject to applicable bankruptcy, solvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors' rights generally from time to time in effect and by general principles of equity).
(e) The execution and delivery of this Option by the Company and each Seller does not, and the consummation of the transactions contemplated by this Option, and compliance with the provisions of this Option by the Company and each Seller, will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time or both) under or give rise to a right of termination, cancellation, or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any lien in or upon any of the Membership Interests under: (i) the organizational documents of the Company; (ii) any agreement, contract, or instrument to which the Company, either Seller or their respective assets is subject or bound; or (iii) any law applicable to the Company, either Seller, or their respective assets.
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(f) Each representation and warranty set forth in the MIPA and to be made by the Company or the Seller, if made on the date hereof, is accurate and complete in all material respects.
(g) No representation or warranty made by the Company or either Seller in this Option or in the MIPA contains or will contain any untrue statement of a material fact or will omit to state a material fact necessary to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading.
8. Buyer’s Representations and Warranties.
(a) Buyer is duly organized, validly existing, and in good standing under the laws of the State of Michigan.
(b) The execution and delivery of this Option by Buyer, and the performance of its obligations hereunder, has been duly authorized by all necessary action on Buyer’s part. No proceedings on the part of Buyer are necessary to authorize the execution and delivery of this Option or to consummate the transactions contemplated by this Option.
(c) This Option has been duly executed and delivered by Buyer and constitutes a legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (subject to applicable bankruptcy, solvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors' rights generally from time to time in effect and by general principles of equity).
9. Termination; Effect of Termination.
(a) This Option (and the Purchase Option granted hereunder) will terminate and be of no further force or effect upon the earlier of: (i) Buyer’s failure to exercise the Purchase Option before the expiration of the Option Period; (ii) the written agreement of the Parties; (iii) Buyer’s written notice to Seller upon Seller’s breach of or default under this Option; or (iv) Sellers’ written notice to Buyer upon Buyer’s breach of default under this Option.
(b) If this Option terminates pursuant to Section 9(a)(iii), then: (i) Sellers shall repay to Buyer in full (without deduction or offset) all amounts that Buyer paid to Sellers under this Option through the date of termination; (ii) Buyer shall have the authority to cancel, or cause to be cancelled, all certificates for GRIN shares issued through the date of termination; and (iii) Sellers shall reimburse Buyer for, or shall cause Buyer to be reimbursed for, all cost and expenses that Buyer has incurred or paid on behalf of the Company under that certain Master Services Agreement dated on or about the date hereof and each and every Work Order thereunder. If this Option terminates pursuant to this Section 9 for any other reason, then Sellers shall repay to Buyer 50% (without deduction or offset) of the aggregate amounts that Buyer paid to Sellers under this Option through the date of termination plus all cost and expenses that Buyer has incurred or paid on behalf of the Company under that certain Master Services Agreement dated on or about the date hereof and each and every Work Order thereunder.
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10. Miscellaneous.
(a) All amounts to be paid by Buyer to Sellers under this Agreement, and all shares of common stock of GRIN to be issued to Sellers under this Agreement, are stated in the aggregate as the amount to be paid or issued, as applicable, to Sellers collectively and not to each individual Seller (i.e., a payment of $200,000 is the total amount to be paid to both Sellers not the amount to be paid to each Seller). Shares of common stock of GRIN to be issued to Sellers under this Agreement will be issued to each Seller in such amounts (of the aggregate amount stated to be issued to Sellers) as Sellers direct. All amounts to be paid to Sellers under this Agreement will be paid according to instructions provide to Buyer by Sellers, and each Seller acknowledges and agrees that payment by Buyer pursuant to those instructions shall fully satisfy Buyer’s obligation with respect to the payment. Buyer is entitled to assume the continuing accuracy of any payment instructions until notified by Sellers in writing of new payment instructions.
(b) All notices, requests, demands, and other communications required or permitted to be given under this Option shall be in writing and shall be deemed to have been duly given: (i) upon delivery if delivered by hand to the Party to whom directed; (ii) when sent to a Party by e-mail to the e-mail address set forth under such Part’s signature block to this Option (if sent during regular business hours of the recipient and otherwise on the next business day); (iii) on the day of confirmed delivery if sent by overnight mail by UPS, FedEx, or other national overnight delivery service; or (iv) on the third business day after deposit in the mail if the notice, request, demand, or other communication was mailed by certified or registered mail with postage prepaid and sent to the physical address of the recipient set forth under the recipient’s signature block to this Option. A Party may change its or his e-mail or physical address by written notice pursuant to this Section 10(b).
(c) The headings of the sections in this Option are for convenience of reference only and are not to be considered in construing or interpreting this Option. All pronouns contained in this Option shall be deemed to refer to the masculine, feminine, and neutral, singular or plural, as the identity of the Parties may require.
(d) Each Party has read this Option in full, has had the opportunity for independent review by its or his legal counsel and other professional advisors, and has consulted with and has been advised by such counsel and other advisors and the terms and conditions in this Option have been arrived at by arm’s length negotiations. Therefore, the Parties agree that no rule of interpretation or construction that disfavors the Party drafting (or whose advisors drafted) this Option shall apply to the interpretation or construction of this Option.
(e) Each provision of this Option will be viewed as separate and divisible, and if any provision of this Option is held to be invalid or unenforceable, the remaining provisions will continue to be in full force and effect.
(f) This Option is binding on the successors and permitted assigns of the Parties. Except as set forth in this Option, neither this Option nor a Party’s rights or obligations under this Option may be assigned or delegated without the prior written consent of the other Party.
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(g) This Option shall be governed by the internal laws of the State of Michigan.
(h) This Option may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Parties agree that signatures delivered by PDF attachment or other electronic means shall be as fully binding as delivery of an original signature.
(i) This Option (including its exhibits) contains the entire agreement between the Parties and supersedes any and all prior written or oral agreements. This Option cannot be modified or amended except by means of writing signed by both Parties and no provision of this Option may be waived except in a writing signed by the Party against whom the waiver is to be enforced.
(j) Each Party agrees that this Option’s invalidity for public policy reasons and/or its violation of federal cannabis laws is not a valid defense to any dispute or claim arising out of this Option. Each Party expressly waives the right to present any defense related to the federal illegality of cannabis and agrees that such defense shall not be asserted, and will not apply, in any dispute or claim arising out of this Option.
[Signature page follows]
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| SELLER: | “David Pleitner” | |
| David Pleitner | ||
| Address: [Redacted] | ||
| E-Mail: [Redacted] | ||
| “Allan Pleitner” | ||
| Allan Pleitner | ||
| Address: [Redacted] | ||
| E-Mail: [Redacted] | ||
| COMPANY: | Golden Harvests, LLC | |
| By: | “David Pleitner” | |
| Name: | David Pleitner | |
| Title: | Member | |
| By: | “Allan Pleitner” | |
| Name: | Allan Pleitner | |
| Title: | Member | |
| Address: [Redacted] | ||
| E-Mail: [Redacted] | ||
[Signature Page to Option to Purchase Controlling Interest]
The Parties have executed this Option as of the Effective Date.
| BUYER: | GR Michigan, LLC | |
| By: | “J. Obie Strickler” | |
| Name: | J. Obie Strickler | |
| Title: | Manager | |
| Address: | P.O. Box266 | |
| Eaton Rapids, MI 48827 | ||
| E-Mail: | obie@grownrogue.com | |
[Signature Page to Option to Purchase Controlling Interest]
EXHIBIT A
[Redacted for confidentiality purposes]
EXHIBIT B
[Redacted for confidentiality purposes]