Document:

Exhibit

 

SECOND AMENDING AGREEMENT
THIS SECOND AMENDING AGREEMENT is made as of the 6th day of March, 2020.
AMONG:
HSCP CN HOLDINGS ULC 
as Borrower
OF THE FIRST PART
- and -
ACREAGE FINANCE DELAWARE, LLC 
as Guarantor
OF THE SECOND PART
- and -
[Redacted - Lenderʼs name] and the other persons who become Lenders pursuant to the terms of the Credit Agreement  
as Lenders
OF THE THIRD PART
- and -
‎[Redacted - Agentʼs name] ‎ 
as Administrative Agent
OF THE FOURTH PART
WHEREAS the Borrower, the Guarantor, the Administrative Agent and the Lenders entered into the Credit Agreement;
AND WHEREAS the Borrower, the Guarantor, the Administrative Agent and the Lenders wish to enter into this Second Amending Agreement to set forth certain amendments to the Credit Agreement and to otherwise confirm the provisions of Amended Credit Agreement;
NOW THEREFORE THIS SECOND AMENDING AGREEMENT WITNESSES that in consideration of the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby conclusively acknowledged by each of the Parties hereto, the Parties hereto covenant and agree as follows:
		
	1.
	Definitions.  All capitalized terms used in this Second Amending Agreement shall, unless otherwise defined herein, have the meanings herein given to them in the Credit Agreement, and: 

“Amended Credit Agreement” means the Credit Agreement, as amended by this Second Amending Agreement, and as it may hereafter be further amended from time to time.
“Credit Agreement” means the credit agreement dated as of February 7, 2020 among the Borrower, the Guarantor, the Administrative Agent and the Lenders, as amended by a first amending agreement dated as of February 28, 2020.
“Parties” means the parties which are signatories to this Second Amending Agreement. 

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“Second Amending Agreement” means this second amending agreement.
		
	2.
	Amendments to the Credit Agreement.  Effective as of the date of this Second Amending           Agreement, but subject to the satisfaction by the Credit Parties of the conditions set forth in Section        3, the Credit Agreement is amended as follows:

		
	(a)
	Section 1.1 of the Credit Agreement is amended by: 

		
	(i)
	the definition of “Applicable Law” is deleted in its entirety and replaced with the  following:

““Applicable Law” means, (a) any domestic or foreign statute, law (including           common and civil law), treaty, code, ordinance, rule, regulation, restriction or by-law (zoning or otherwise); (b) any judgment, order, writ, injunction, determination,        decision, ruling, decree or award; (c) any regulatory or stock exchange policy,          practice, guideline or directive; or (d) any franchise, licence, qualification,       authorization, consent, exemption, waiver, right, permit or other approval of any Governmental Authority, binding on or affecting the Person referred to in the context     in which the term is used or binding on or affecting the Assets of such Person, in                  each case whether or not having the force of law, provided that, unless specifically included, the Federal Cannabis Laws are specifically excluded.”
		
	(ii)
	deleting the reference in the definition of “Drawdown Period” to “24th” and replacing    it with “34th”; 

		
	(iii)
	adding “and the OID Fee” immediately after “Set-Up Fee” in the definition of “Fees”;

		
	(iv)
	the definition of “IP Credit Agreement” is deleted in its entirety and replaced with                 the following:

““IP Credit Agreement” means the credit agreement dated after the date hereof       among the Guarantor, as borrower, Acreage IP Holdings, LLC, Prime Wellness of Connecticut, LLC, D&B Wellness, LLC and Thames Valley Apothecary, LLC, as guarantors, IP Investment Company, LLC, as lender, administrative agent and     collateral agent, as may be amended, modified, supplemented or restated from time    to time.”
		
	(v)
	adding the following definition in its proper alphabetical order:

“Federal Cannabis Laws” means the Controlled Substances Act, 21 USC 801 et         seq. as it applies to marijuana (including any implementing regulations and             schedules in effect at the relevant time) or any other U.S. federal law the violation of which is predicated upon a violation of the Controlled Substances Act as it applies to marijuana.
“Fourth Advance” has the meaning specified in Section 3.1(d).
“OID Fee” has the meaning specified in Section 2.9(2).
“SPV Parties” has the meaning specified in Section 6.3.
		
	(b)
	Section 2.9 of the Credit Agreement is deleted in its entirety and replaced with the following:

		
	“(1)
	The Borrower shall pay to the Administrative Agent the following set-up fees    (collectively, the “Set-Up Fees”):

 

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	(a)
	an amount equal to 2.00% of the First Advance on the Closing Date; 

		
	(b)
	an amount equal to 0.25% of the Second Advance on the date on which the Second Advance is made;

		
	(c)
	an amount equal to 0.50% of the Third Advance on the date on which the Second Advance is made; and

		
	(d)
	such fee on the Fourth Advance that is agreed to between the Borrower and the Administrative Agent pursuant to Section 4.3(1)(h)(i).

		
	(2)
	The Borrower shall pay the Administrative Agent a fee of US$250,000 (the “OID Fee”) fee which amount shall be fully earned at the time the Third Advance is made and shall be payable on the earlier of the Maturity Date and the date on which the Aggregate Principal Amount is repaid in full.  The Borrower hereby authorizes the Administrative Agent to retain US$250,000 from the Third Advance in order to pay the OID Fee when it becomes due and payable and the Borrower shall not pay interest on such retained US$250,000.”

		
	(c)
	Section 3.1 of the Credit Agreement is deleted in its entirety and replaced with the following:

“Each Lender severally agrees, on the terms and conditions of this Agreement, to make Advances to the Borrower under the Credit Facility from time to time on any Business Day during the Drawdown Period as follows:
		
	(a)
	an Advance of $21,000,000 on the Closing Date (the “First Advance”);

		
	(b)
	an Advance of $27,000,000 on a date that is not later than the tenth day after the Closing Date (the “Second Advance”);

		
	(c)
	an Advance in an amount up to the remaining amount of the Commitment at such time subject to compliance with Section 6.1(j)(i)(A) (taking into account such Advance) as requested by the Borrower in writing (the “Third Advance”); and 

		
	(d)
	an Advance in an amount up to the remaining amount of the Commitment at such time subject to compliance with Section 6.1(j)(i)(A) (taking into account such Advance) as requested by the Borrower in writing (the “Fourth Advance”).”

		
	(d)
	Section 3.4(1) of the Credit Agreement is deleted in its entirety and replaced with the following:

“The Borrower shall pay interest on the unpaid principal amount of each Advance from the date of such Advance until the principal amount of such Advance is repaid in full, as follows:
		
	(a)
	3.55% per annum on the principal amount of the First Advance;

		
	(b)
	1.85% per annum on the principal amount of the Second Advance;

		
	(c)
	1.55% per annum on the principal amount of the Third Advance; and 

		
	(d)
	a per annum interest rate to be agreed between the Borrower and the Lenders on the principal amounts of the Fourth Advance pursuant to Section 4.3(1)(h)(i).”

 

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	(e)
	Section 4.2(b) of the Credit Agreement is amended by adding “(including any Federal Cannabis Law)” after “Applicable Law” and before the “;”;

		
	(f)
	Section 4.3(1)(d) of the Credit Agreement is amended by adding “(including any Federal Cannabis Law)” after “Applicable Law” and before the “;”;

		
	(g)
	Section 4.3(1)(g) of the Credit Agreement is amended by: 

		
	(i)
	deleting “with respect to the Second Advance” and replacing it with “with respect to each of the Second Advance and the Third Advance”; and

		
	(ii)
	deleting the “and” at the end of the subparagraph (i), adding an “and” at the end of subparagraph (ii) and adding the following new subparagraph (iii):

		
	“(iii) 
	a certified copy of the Second Advance Security Documents (as defined in the IP Credit Agreement);” 

		
	(h)
	Section 4.3(1)(h) of the Credit Agreement is amended by: 

		
	(i)
	deleting the reference to “with respect to the Third Advance” and replacing it with “with respect to the Fourth Advance”; and

		
	(ii)
	deleting the “and” at the end of the subparagraph (ii), adding an “and” at the end of subparagraph (iii) and adding the following new subparagraph (iv):

		
	“(iv) 
	a certified copy of the Subsequent Advance Security Documents (as defined in the IP Credit Agreement).”

		
	(i)
	Section 5.1(c) of the Credit Agreement is amended by adding “(including any Federal Cannabis Law)” after “Applicable Law” and before the “,”;

		
	(j)
	Section 5.1(h)(ii)(iii) of the Credit Agreement is amended by adding “(except for Equity Securities in the Parent acquired pursuant to the IP Credit Agreement) after “Person” and before the “;”;

		
	(k)
	Section 5.1(i) of the Credit Agreement is amended by adding “(including, with respect to each of the Credit Parties only, all Federal Cannabis Laws)” after “Applicable Laws” and before “except”;

		
	(l)
	Section 5.1(w) of the Credit Agreement is amended by deleting the second last sentence and replacing it with the following:

“None of the Obligations and none of the other amounts payable under the Credit Agreement will be paid by any of the Credit Parties with any property or proceeds of any property that was obtained or derived directly or indirectly: (x) as a result of an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence (as defined in section 462.31(1) of the Criminal Code); or (y) in contravention of any Federal Cannabis Law.” 
		
	(m)
	Section 6.1(f) of the Credit Agreement is amended by adding “(including, with respect to each of the Credit Parties only, all Federal Cannabis Laws)” after each reference to “Applicable Laws” and before “except” or “would”, as applicable;

 

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	(n)
	Section 6.2(i) of the Credit Agreement is amended by deleting the second last sentence and replacing it with the following:

“Anti-Terrorism Laws.  Pay or cause to be paid all Obligations and other amounts payable under the Credit Documents with any property or proceeds of any property that was obtained or derived directly or indirectly: (x) as a result of an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence (as defined in section 462.31(1) of the Criminal Code); or (y) in contravention of any Federal Cannabis Law.”
		
	(o)
	Section 6.3 of the Credit Agreement is hereby deleted in its entirety and replaced by the following:

“Each of Borrower and the Guarantor (the “SPV Parties” and each an “SPV Party”) hereby represents, warrants and covenants, as of the date hereof and continuing (except with respects to statements expressly made as of the date hereof) until such time as the Obligations are paid in full, that such SPV Party:
		
	(a)
	has not and shall not engage in any business or activity other than the transactions contemplated by this Agreement and the IP Credit Documents;

		
	(b)
	has not and shall not acquire or own any Assets other than (A) the Restricted Account and the Restricted Account Collateral and (B) such incidental personal property as may be necessary for the ownership of the foregoing;

		
	(c)
	has not and shall not (i) liquidate or dissolve (or suffer any liquidation or dissolution), terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its Assets; (ii) reorganize or change its legal structure without the Administrative Agent’s prior written consent; (iii) change its name, address or the name under which such SPV Party conducts its business without promptly notifying the Administrative Agent; (iv) enter into or consummate any merger, amalgamation, consolidation, sale, transfer, assignment, liquidation or dissolution involving any or all of the Assets of such SPV Party or any managing member of such SPV Party; or (v) enter into or consummate any transaction or acquisition, merger, amalgamation or consolidation or otherwise acquire by purchase or otherwise all or any portion of the business or Assets of, or any Equity Securities or other evidence of beneficial ownership of, any Person;

		
	(d)
	has not incurred and shall not incur any secured or unsecured debt except for the debt and guarantees contemplated by this Agreement and the IP Credit Documents, as in effect on the date hereof;

		
	(e)
	has not and shall not, nor shall any member, partner (whether limited or general) or shareholder thereof, as applicable, or any other party, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by‐laws, operating agreement, articles of organization or other formation agreement or document, as applicable, or governing agreement or document, in any material term or manner, or in a manner which adversely affects such SPV Party’s existence as a single purpose entity or such SPV Party’s compliance with this Section 6.3(e);

		
	(f)
	such SPV Party shall utilize and maintain its own separate stationery, invoices and checks bearing its own name;

		
	(g)
	has and shall maintain its own separate bank accounts and correct, complete and separate books of account;

		
	(h)
	has and shall file or cause to be filed its own separate tax returns;

 

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	(i)
	has and shall hold itself out to the public (including any of its Affiliates’ creditors) under such SPV Party’s own name and as a separate and distinct entity and not as a department, division or otherwise of any Affiliate of same;

		
	(j)
	has and shall observe all customary formalities regarding the existence of such SPV Party, including holding meetings and maintaining current and accurate minute books separate from those of any Affiliate of same;

		
	(k)
	has and shall hold title to its Assets in its own name and act solely in its own name and through its own duly authorized officers and agents. No Affiliate of same shall be appointed or act as agent of such SPV Party;

		
	(l)
	except as expressly contemplated by this Agreement or the IP Credit Documents, has not and shall not guarantee or otherwise agree to be liable for (whether conditionally or unconditionally), pledge or assume or hold itself out or permit itself to be held out as having guaranteed, pledged or assumed any liabilities or obligations of any partner (whether limited or general), member, shareholder or any Affiliate of such SPV Party, as applicable, or any other party, nor shall it make any loans;

		
	(m)
	has and shall at all times been, is now and as of the date hereof intends to remain Solvent;

		
	(n)
	has and shall separately identify, maintain and segregate its Assets. Such SPV Party’s Assets shall at all times be held by or on behalf of such SPV Party and, if held on behalf of SPV Party by another entity, shall at all times be kept identifiable (in accordance with customary usages) as Assets owned by such SPV Party. This restriction requires, among other things, that (i) such SPV Party’s funds shall be deposited or invested in such SPV Party’s name, (ii) such SPV Party’s funds shall not be commingled with the funds of any Affiliate of same or any other Person, (iii) such SPV Party shall maintain all accounts in its own name and with its own tax identification number, separate from those of any Affiliate of same or any other Person, and (iv) such SPV Party funds shall be used only for the business of such SPV Party;

		
	(o)
	has and shall maintain its Assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual Assets from those of any Affiliate of same or other person or entity;

		
	(p)
	has and shall pay or cause to be paid its own liabilities and expenses of any kind only out of its own separate funds and Assets;

		
	(q)
	has not and shall not invest any of such SPV Party’s funds in securities issued by, nor shall such SPV Party acquire the indebtedness or obligation of, any Affiliate of same;

		
	(r)
	has and shall maintain an arm’s length relationship with each of its Affiliates and may not enter into contracts or transact business with its Affiliates other than on commercially reasonable terms that are no less favorable to such SPV Party than is obtainable in the market from a Person or entity that is not an Affiliate of same;

		
	(s)
	has and shall correct any misunderstanding that is known by such SPV Party regarding its name or separate identity; and

		
	(t)
	shall not, without the prior written vote of one hundred percent (100%) of its partners, members, or shareholders, as applicable, institute proceedings to be adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy or                                       

 

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insolvency proceedings against it; or file a petition seeking, or consent to, reorganization or relief under any applicable foreign, federal, state or provincial law relating to bankruptcy; or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such SPV Party or a substantial part of such SPV Party’s property; or make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due or declare or effectuate a moratorium on payments of its obligation; or take any action in furtherance of any such action.
		
	(p)
	Sections 8.1(d), (e) and (f) of the Credit Agreement are amended by deleting each of the references to “the Borrower” and replacing them with “any Credit Party”; and

		
	(q)
	Section 8.1(g) of the Credit Agreement is amended by deleting each of the references to “Canopy Offer” and replacing them with “Third Party Offer”.

		
	3.
	Conditions Precedent.  The amendments to the Credit Agreement set forth in Section 2 of this Second Amending Agreement shall be effective upon the following conditions having been fulfilled to the satisfaction of the Administrative Agent on behalf of the Lenders:

		
	(a)
	the Administrative Agent shall have received a fully executed copy of this Second Amending Agreement; and

		
	(b)
	the Borrower shall have paid to the Administrative Agent, on behalf of the Lenders, an amendment fee equal to US$275,000.

		
	4.
	Representations and Warranties.  To confirm each Lender’s understanding concerning each Credit Party and its business, properties and obligations, and to induce the Administrative Agent and each Lender to enter into this Second Amending Agreement, each Credit Party jointly and severally hereby reaffirms to the Administrative Agent and each Lender that, as of the date of this Second Amending Agreement, its representations and warranties contained in Section 5.1 of the Credit Agreement, as amended by this Second Amending Agreement, and except to the extent such representations and warranties relate solely to an earlier date, are true and correct in all material respects (provided that any such representations and warranties which are already qualified by materiality, material adverse effect or similar language shall be true and correct in all respects) and additionally represents and warrants as follows on the date of this Second Amending Agreement:

		
	(a)
	all necessary action has been taken to authorize the execution, delivery and performance of this Second Amending Agreement;  

		
	(b)
	this Second Amending Agreement has been duly executed and delivered by each of the Credit Parties and constitutes legal, valid and binding obligations of each of the Credit Parties enforceable against them in accordance with its terms, subject only to any limitation under Applicable Laws relating to (i) bankruptcy, insolvency, arrangement or creditors’ rights generally, and (ii) the discretion that a court may exercise in the granting of equitable remedies;

		
	(c)
	the execution and delivery by each of the Credit Parties and the performance by each of them of their respective obligations under this Second Amending Agreement will not conflict with or result in a breach of any of the terms or conditions of their respective constating documents or by-laws, any Applicable Law or any contractual restriction binding on or affecting them or their respective Assets;

		
	(d)
	no Default or Event of Default exists under the Credit Agreement; and

		
	(e)
	the Amended Credit Agreement and each of the other Credit Documents remains in full force and effect, unamended, and are enforceable against each of the Credit Parties, in each case, to the extent party thereto in accordance with their respective terms, subject only to                                   

 

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any limitation under Applicable Laws relating to (i) bankruptcy, insolvency, arrangement or creditors’ rights generally, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
		
	5.
	Confirmations.  Each of the Parties acknowledges and agrees that the Credit Agreement, as amended by this Second Amending Agreement, and all other Credit Documents are and will continue to be in full force and effect, and are hereby ratified and confirmed, and the rights and obligations of all Parties thereunder will not be affected in any manner by the provisions of this Second Amending Agreement, except as expressly provided in Section 2 of this Second Amending Agreement.

		
	6.
	Credit Document.  This Second Amending Agreement constitutes a Credit Document.

		
	7.
	Governing Law.   

		
	(a)
	This Second Amending Agreement shall be governed by, and construed in accordance with, the laws of the Province of Alberta and the laws of Canada applicable in that Province.

		
	(b)
	The Credit Parties irrevocably attorns and submits to the non-exclusive jurisdiction of any court of competent jurisdiction of the Province of Alberta sitting in Calgary, Alberta in any action or proceeding arising out of or relating to this Second Amending Agreement.  Each Credit Party irrevocably waives objection to the venue of any action or proceeding in such court or that such court provides an inconvenient forum.  Nothing in this Section limits the right of the Administrative Agent to bring proceedings against any Credit Party in the courts of any other jurisdiction.

		
	8.
	Further Assurances.  The Credit Parties will from time to time forthwith, at the Administrative Agent’s request and at the Borrower’s own cost and expense, do, make, execute and deliver, or cause to be done, made, executed and delivered, all such further documents, financing statements, assignments, acts, manners and things which may be reasonably required by the Administrative Agent and are consistent with the intention of the Parties as evidenced herein, with respect to all matters arising under this Second Amending Agreement or the Amended Credit Agreement.

		
	9.
	Expenses.  Without in any way limiting the provisions of Section 10.5 of the Credit Agreement, the Borrower will be liable for all expenses of the Administrative Agent and the Lenders, including legal fees and other out-of-pocket expenses, in connection with the negotiation, preparation, execution and delivery of this Second Amending Agreement.

		
	10.
	Counterparts.  This Second Amending Agreement may be executed in any number of counterparts (including by facsimile or other electronic transmission), each of which when executed and delivered will be deemed to be an original, and all of which when taken together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF the Parties have caused this Second Amending Agreement to be duly executed by their respective authorized officers as of the date and year above written. 
	
				
	 
	 
	BORROWER:
HSCP CN HOLDINGS ULC

	 
	By:
	“Kevin Murphy”

	 
	 
	Name: Kevin Murphy

	 
	 
	Title:  Director & President

	
				
	 
	 
	GUARANTOR:
ACREAGE FINANCE DELAWARE, LLC

	 
	By:
	“Kevin Murphy”

	 
	 
	Name: Kevin Murphy

	 
	 
	Title: Manager

	
				
	 
	 
	ADMINISTRATIVE AGENT:
[Redacted - Agentʼs name]

	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

	 
	 
	 
	 

	
				
	 
	 
	LENDER:
[Redacted - Lenderʼs name]

	 
	By:
	 

	 
	 
	Name:

	 
	 
	Title:

Second Amending AgreementExhibit

ACREAGE HOLDINGS, INC.
(the “Company”)

Description of Registrant’s Securities Registered
Pursuant to Section 12 of the Exchange Act of 1934

The following summarizes general terms and provisions that apply to the Class A Subordinate Voting Shares (the “Subordinate Voting Shares”) of the Company as of December 31, 2019.  The summary of the general terms and provisions of the Subordinate Voting Shares set forth below does not purport to be complete and is subject to and qualified by reference to the Company’s Articles of Incorporation (“Articles”), which is incorporated by reference as an exhibit to the Annual Report on Form 10-K.  For additional information, please read the Articles and the applicable provisions of the Business Corporations Act (Ontario).
Per the Company’s Articles, the Company is authorized to issue an unlimited number of Subordinate Voting Shares, without nominal or par value, an unlimited number of Proportionate Voting Shares and an unlimited number of Multiple Voting Shares. 

Class A Subordinate Voting Shares
Holders of Subordinate Voting Shares are entitled to notice of and to attend any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. At each such meeting, holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held.
As long as any Subordinate Voting Shares remain outstanding, the Company may not, without the consent of the holders of the Subordinate Voting Shares by separate special resolution, alter or amend its Articles if the result would prejudice or interfere with any right or special right attached to the Subordinate Voting Shares.
The holders of Subordinate Voting Shares shall be entitled to receive such dividends payable in cash or property of the Company as may be declared thereon by the directors from time to time, provided that at any particular time in the period from the Effective Date as defined in the Arrangement Agreement between the Company and Canopy Growth Corporation dated May 15, 2019 (the “Plan of Arrangement”) until the earlier to occur of the Acquisition Date (as defined in the Plan of Arrangement) and the Acquisition Closing Outside Date (as defined in the Plan of Arrangement), the aggregate amount of dividends per Subordinate Voting Share declared from the Effective Date until such particular time shall not exceed the product obtained when (i) the aggregate amount of dividends, per share, declared by Canopy Growth Corporation (or any successor thereto) on its common shares from the Effective Date until such particular time, is multiplied by (ii) the Exchange Ratio (as defined in the Plan of Arrangement). The directors may declare no dividend payable in cash or property on the Subordinate Voting Shares unless the directors simultaneously declare a dividend payable in cash or property on: (x) the Proportionate Voting Shares, in an amount per Proportionate Voting Share equal to the amount of the dividend declared per Subordinate Voting Share, multiplied by 40; and (y) the Multiple Voting Shares, in an amount per Multiple Voting Share equal to the amount of the dividend declared per Subordinate Voting Share.
In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Subordinate Voting Shares are entitled to participate pari passu with the holders of Proportionate Voting Shares and Multiple Voting Shares, with the amount of such distribution per Subordinate Voting Share equal to each of: (i) the amount of such distribution per Proportionate Voting Share, divided by 40; and (ii) the amount of such distribution per Multiple Voting Share.
Holders of Subordinate Voting Shares are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of shares, or bonds, debentures or other securities of the Company.
There may no subdivision or consolidation of the Subordinate Voting Shares unless, simultaneously, the Proportionate Voting Shares and Multiple Voting Shares are subdivided or consolidated utilizing the same divisor or multiplier.

Proportionate Voting Shares
Holders of Proportionate Voting Shares are entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote. At each such meeting, holders of Proportionate Voting Shares are entitled to 40 votes in respect of each Proportionate Voting Share held.
As long as any Proportionate Voting Shares remain outstanding, the Company may not, without the consent of the holders of the Proportionate Voting Shares and Multiple Voting Shares by separate special resolution, alter or amend its Articles if the result would be to prejudice or interfere with any right or special right attached to the Proportionate Voting Shares. Consent of the holders of a majority of the outstanding Proportionate Voting Shares and Multiple Voting Shares is required for any action that authorizes or creates shares of any class having preferences superior to or on a parity with the Proportionate Voting Shares. In connection with the exercise of the voting rights in respect of any such approvals, each holder of Proportionate Voting Shares has one vote in respect of each Proportionate Voting Share held.
In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Proportionate Voting Shares are entitled to participate pari passu with the holders of Subordinate Voting Shares and Multiple Voting Shares in an amount equal to the amount of such distribution per Subordinate Voting Share and Multiple Voting Share, multiplied by 40.
No dividend may be declared on the Proportionate Voting Shares unless the Company simultaneously declares dividends on the Subordinate Voting Shares in an amount equal to the dividend declared per Proportionate Voting Shares divided by 40, and on the Multiple Voting Shares in an amount equal to the dividend declared per Proportionate Voting Share divided by 40.
There may be no subdivision or consolidation of the Proportionate Voting Shares unless, simultaneously, the Subordinate Voting Shares and Multiple Voting Shares are subdivided or consolidated using the same divisor or multiplier.
Each Proportionate Voting Share is convertible, at the option of the holder thereof, into 40 Subordinate Voting Shares. The ability to convert the Proportionate Voting Shares and Multiple Voting Shares is subject to a restriction that, unless the Board determines otherwise, the aggregate number of Subordinate Voting Shares, Proportionate Voting Shares and Multiple Voting Shares held of record, directly or indirectly, by residents of the United States (as determined in accordance with Rules 3b-4 and 12g3-2(a) under the U.S. Exchange Act), may not exceed forty percent (40%) of the aggregate number of Subordinate Voting Shares, Proportionate Voting Shares and Multiple Voting Shares issued and outstanding after giving effect to such conversions.
Notwithstanding anything to the contrary, the Company shall require, in accordance with the Plan of Arrangement, each holder of Proportionate Voting Shares to convert all, and not less than all, of the Proportionate Voting Shares on the Acquisition Date. Each Proportionate Voting Share shall be converted into such number of Subordinate Voting Shares as is determined by multiplying the number of Proportionate Voting Shares by 40. Fractions of Proportionate Voting Shares shall be converted into such number of Subordinate Voting Shares as is determined by multiplying the fraction by 40.
Multiple Voting Shares
Holders of Multiple Voting Shares are entitled to notice of and to attend any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company shall have the right to vote.
Multiple Voting Shares provide voting control of the Company to Kevin Murphy, the Company’s Chief Executive Officer and President. As long as any Multiple Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Multiple Voting Shares by separate special resolution, alter or amend its Articles if the

 result would be to prejudice or interfere with any right or special right attached to the Multiple Voting Shares, or affect the rights or special rights of the holders of Subordinate Voting Shares, Proportionate Voting Shares and Multiple Voting Shares on a per share basis as provided in the Articles. Consent of the holders of a majority of the outstanding Multiple Voting Shares is required for any action that authorizes or creates shares of any class or series having preferences superior to or on a parity with the Multiple Voting Shares. In connection with the exercise of the voting rights in respect of any such approvals, each holder of Multiple Voting Shares has one vote in respect of each Multiple Voting Share held.
In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of Multiple Voting Shares are entitled to participate pari passu with the holders of Proportionate Voting Shares and Subordinate Voting Shares, in an amount equal to: (i) the amount of such distribution per Proportionate Voting Share, divided by 40; and (ii) the amount of such distribution per Subordinate Voting Share.
No dividend may be declared on the Multiple Voting Shares unless the Company simultaneously declares dividends: (i) on the Subordinate Voting Shares, in an amount equal to the dividend declared per Multiple Voting Share; and (ii) on the Proportionate Voting Shares, in an amount equal to the dividend declared per Multiple Voting Share, multiplied by 40.
There may be no subdivision or consolidation of the Multiple Voting Shares unless, simultaneously, the Subordinate Voting Shares and Proportionate Voting Shares are subdivided or consolidated utilizing the same divisor or multiplier.
Each Multiple Voting Share is convertible, at the option of the holder, into one Subordinate Voting Share. Each Multiple Voting Share will automatically convert, without any action on the part of the holder thereof, into Subordinate Voting Shares on the basis of one Subordinate Voting Share for one Multiple Voting Share upon the earliest of the date that (i) the aggregate number of Multiple Voting Shares held by the holder of Multiple Voting Shares together with its affiliates are reduced to a number which is less than fifty percent (50%) of the aggregate number of Multiple Voting Shares held by such holder together with its affiliates on the date of completion of the Transaction (defined as the High Street Capital Partners, LLC (“High Street”) reverse take-over of Applied Inventions Management, Inc.), (ii) the aggregate number of units of High Street (“High Street Units”) held by the holder of Multiple Voting Shares together with its affiliates are reduced to a number which is less than fifty percent (50%) of the aggregate number of High Street units held by such holder together with its affiliates on the date of completion of the Transaction and (iii) is five (5) years following completion of the Transaction.
Coattail Provisions
In the event that an offer is made to purchase Proportionate Voting Shares, and such offer is:
(a) required, pursuant to applicable securities legislation, or the rules of any stock exchange on which: (i) the Proportionate Voting Shares; or (ii) the Subordinate Voting Shares which may be obtained upon conversion of the Proportionate Voting Shares; may then be listed, to be made to all or substantially all of the holders of Proportionate Voting Shares in a province or territory of Canada to which the requirement applies (an “Offer”); and
(b) not made to the holders of Subordinate Voting Shares for consideration per Subordinate Voting Share equal to 0.025 of the consideration offered per Proportionate Voting Share;
each Subordinate Voting Share shall become convertible at the option of the holder into Proportionate Voting Shares on the basis of 40 Subordinate Voting Shares for one Proportionate Voting Share, at any time while the Offer is in effect until one day after the time prescribed by applicable securities legislation or stock exchange rules for the offeror to take up and pay for such shares as are to be acquired pursuant to the Offer (the “Subordinate Voting Share Conversion Right”). Fractions of Proportionate Voting Shares may be issued in respect of any amount of Subordinate Voting Shares in respect of which the Subordinate Voting Share Conversion Right is exercised which is less than 40.

The Subordinate Voting Share Conversion Right may only be exercised for the purpose of depositing the Proportionate Voting Shares acquired upon conversion under such Offer. If the Subordinate Voting Share Conversion Right is exercised, the Company will procure that the transfer agent for the Subordinate Voting Shares shall deposit under such Offer the Proportionate Voting Shares acquired upon conversion, on behalf of the holder. If the holder withdraws such Proportionate Voting Shares from deposit under the Offer, or the Offer is abandoned, withdrawn or terminated by the offeror, or the Offer expires without the offeror taking up and paying for the Proportionate Voting Shares, then the Proportionate Voting Shares acquired upon conversion shall automatically reconvert to Subordinate Voting Shares on the basis of 40 Subordinate Voting Shares for one Proportionate Voting Share, without further action on the part of the holder.
Coattail Agreement
The Company, Odyssey Trust Company, as trustee for the benefit of the holders of Subordinate Voting Shares (in such capacity, the “Trustee”), Mr. Murphy and Murphy Capital, LLC (together, the “MVS Shareholders”) have entered into a coattail agreement dated November 14, 2018 (the “Coattail Agreement”) under which the MVS Shareholders, as the only holders of Multiple Voting Shares, and holders of High Street Units, are prohibited from selling, directly or indirectly, any Multiple Voting Shares or High Street Units pursuant to a takeover bid, if applicable securities legislation would have required the same offer to be made to holders of Subordinate Voting Shares (“SVS Shareholders”) had the sale been a sale of Subordinate Voting Shares rather than Multiple Voting Shares or High Street Units. The prohibition does not apply if a concurrent offer is made to purchase Subordinate Voting Shares if: (i) the price per Subordinate Voting Share under such concurrent offer is at least as high as the price to be paid for the Multiple Voting Shares or High Street Units, assuming their conversion to Subordinate Voting Shares; (ii) the percentage of Subordinate Voting Shares to be taken up under such concurrent offer is at least as high as the percentage of Multiple Voting Shares or High Street Units to be sold; (iii) such concurrent offer is unconditional, other than the right not to take up and pay for any Subordinate Voting Shares tendered if no Multiple Voting Shares or High Street Units are purchased; and (iv) such concurrent offer is in all other material respects identical to the offer for Multiple Voting Shares or High Street Units. The Coattail Agreement does not apply to prevent the sale or transfer of High Street Units to Mr. Murphy and members of his immediate family, or a person or company controlled by Mr. Murphy or a member of his immediate family. If SVS Shareholders representing not less than 10% of the then outstanding Subordinate Voting Shares determine that the MVS Shareholders or the Company have breached or intend to breach any provision of the Coattail Agreement, they may by written requisition require the Trustee to take such action as is specified in the requisition in connection with the breach or intended breach, and the Trustee is to forthwith take such action or any other action it considers necessary to enforce its rights under the Coattail Agreement on behalf of the SVS Shareholders. The obligation of the Trustee to take such action on behalf of the SVS Shareholders is conditional upon the provision to the Trustee of such funds and indemnity as it may reasonably require in respect of any costs or expenses it may incur in connection with such action. SVS Shareholders may not institute any action or proceeding, or exercise any other remedy to enforce rights under the Coattail Agreement unless they have submitted such a requisition, and provided such funds and indemnity, to the Trustee, and the Trustee shall have failed to act within 30 days of receipt thereof.
Change of Control 
In the event of any business consolidation, amalgamation, arrangement, merger, redemption, compulsory acquisition or similar transaction of or involving Canopy Growth Corporation, or a sale or conveyance of all or substantially all of the assets of Canopy Growth Corporation to any other body corporate, trust, partnership or other entity, but excluding, for greater certainty, any transactions involving Canopy Growth Corporation and one or more of its subsidiaries (a “Canopy Growth Change of Control”) during the period between the entering into the Plan of Arrangement and the earlier of the closing of such acquisition or the termination of the Plan of Arrangement in accordance with its terms, holders of Subordinate Voting Shares, Proportionate Voting Shares, Multiple Voting Shares and High Street Units (collectively, the “Acreage Holders”) will not be entitled to vote or exercise any dissent rights in connection with such proposed acquisition, however, all such Acreage Holders will be bound by the terms of any such acquisition if approved. Accordingly, in the event of the exercise or deemed exercise of the “Canopy Growth Call Option” (which allows Canopy Growth Corporation to acquire all issued and outstanding shares of the Company) following a successful Canopy Growth Change of Control, it is anticipated that Acreage Holders would receive securities of the entity resulting from such Canopy Growth Change of Control.

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