Exhibit 2
GROWN
ROGUE INTERNATIONAL Inc.
NOTICE
OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
TO
BE HELD ON AUGUST 27, 2020
MANAGEMENT
INFORMATION CIRCULAR
July
20, 2020
NOTICE
OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE
IS HEREBY GIVEN that Grown Rogue International Inc. (the “Corporation”) will hold its annual and special
meeting of shareholders (the “Meeting”) on August 27, 2020, at 11:00 am (Eastern Daylight Time) at the offices
of Miller Thomson LLP, 100 New Park Place, Suite 700, Vaughan, Ontario, L4K 0H9, on August 27, 2020, for the following purposes:
| 1. | to
present the audited consolidated financial statements of the Corporation for its prior
years ended October 31, 2019 and 2018, and the independent auditor’s report thereon; |
| 2. | to
elect the directors of the Corporation for the ensuing year; |
| 3. | to
appoint Dale Matheson Carr-Hilton Labonte LLP as the independent auditors of the Corporation
until the next annual meeting of shareholders and authorize the directors to fix the
auditors’ remuneration; |
| 4. | to
consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution
to ratify the Amended and Restated By-Law No. 1 of the Corporation, the text of which
is attached hereto as Schedule A of the accompanying information circular dated July
20, 2020 (the “Information Circular”); |
| 5. | to
consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution,
the full text of which is set forth in the Information Circular, approving a new long-term
equity based incentive plan to replace the current stock option plan; and |
| 6. | to
transact any other business properly brought before the Meeting. |
This
year to proactively deal with the unprecedented health impact of the novel coronavirus, to mitigate risks to the health and safety
of shareholders, employees, other stakeholders and the community at large, and in compliance with current government direction
and advice, we will hold a hybrid Meeting, allowing for shareholder participation in-person and via teleconference. Shareholders
will have the opportunity to participate at the Meeting via teleconference (if located in Canada or the U.S.) by calling 1 855-453-6968
(Conference ID: 5365781) (if located outside of Canada or the U.S., Shareholders should visit https://www.confsolutions.ca/ILT/?cid=5365781
for the applicable dial-in number in the country such shareholder is located in); however, such shareholders will not be able
to vote or speak at the Meeting via the teleconference call. Callers should dial in ten to fifteen minutes prior to the scheduled
time of the Meeting. All callers will be asked to provide their full legal name for recording purposes.
We
strongly encourage shareholders to vote their Common Shares of the Corporation prior to the Meeting by any of the means described
in the Information Circular and to attend the Meeting via teleconference. The Corporation requests that shareholders provide the
Corporation with a minimum of five (5) business day’s written notice of an intention to attend the Meeting in-person. Public
health restrictions and recommendations in place at the time of the Meeting may require the Corporation to restrict the number
of people in attendance at the Meeting, and physical attendance by a shareholder may therefore not be possible.
Any
persons attending the Meeting in person will be required to comply with health and safety measures that the Corporation may put
in place. You should not attend the Meeting if you or someone with whom you have been in close contact with are experiencing any
cold or flu-like symptoms, or if you or someone with whom you have been in close contact has travelled to/from outside of Canada
within the 14 days prior to the Meeting. The Corporation may refuse any Shareholder entrance to the meeting if the Corporation
feels to allow entrance would put staff and/or other attendees at the Meeting in harm’s way.
Shareholders
of record as at the close of business on July 17, 2020 will be entitled to notice of and to vote at the Meeting. A detailed description
of the matters to be acted upon at the Meeting is set forth in the Information Circular. The Corporation has elected to use the
notice-and-access provisions under National Instrument 54-101 – Communication with Beneficial Owners of Securities of
a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations (the “Notice-and-Access
Provisions”) of the Canadian Securities Administrators for the Meeting. The Notice-and-Access Provisions are a set of
rules developed by the Canadian Securities Administrators that reduce the volume of materials that must be physically mailed to
Shareholders of the Corporation by allowing the Corporation to post its Information Circular and any additional materials online.
Shareholders who would like more information about the Notice-and-Access Provisions may contact the Corporation’s transfer
agent, Capital Transfer Agency, ULC, toll-free at 1-844-499-4482. Please see “Notice-and-Access” in the
accompanying Information Circular.
The
Information Circular and all additional materials have been posted in full online at www.capitaltransferagency.ca and under the
Corporation’s SEDAR profile at www.sedar.com. Shareholders are reminded to carefully review the Information Circular and
any additional materials prior to voting on the matters being transacted at the Meeting. All Shareholders of record as of July
17, 2020, the record date, will receive a notice and access notification containing instructions on how to access the Corporation’s
Information Circular and all additional materials. Copies of: (a) this notice of annual and special meeting of shareholders; (b)
the Information Circular; (c) a management form of proxy and instructions in relation thereto (the “Management Proxy”);
and (d) the audited consolidated financial statements of the Corporation for its prior years ended October 31, 2019 and 2018,
and the independent auditor’s report thereon may be obtained free of charge by contacting Capital Transfer Agency, ULC at
390 Bay Street, Suite 920, Toronto, Ontario M5H 2Y2 or by phone at 1-844-499-4482. In order to ensure that a paper copy of the
Information Circular and additional materials can be delivered to a Shareholder in time for such Shareholder to review the Information
Circular and return a Management Proxy or voting instruction form prior to the deadline to receive proxies, it is strongly suggested
that Shareholders ensure their request is received no later than August 17, 2020.
Registered
shareholders and duly appointed proxyholders will be able to attend, participate and vote at the Meeting or may be represented
by proxy. Shareholders are requested to: (i) sign, date and deliver the Management Proxy to the Corporation’s registrar
and transfer agent, Capital Transfer Agency, ULC, 390 Bay Street, Suite 920, Toronto, Ontario M5H 2Y2 Canada or visit www.capitaltransferagency.com/voteproxy,
so it is received at least 48 hours (excluding Saturdays, Sundays and holidays) before the time of the Meeting or any adjournment
thereof; or (ii) return your voting instructions as specified in the request for voting instructions delivered to you, as applicable.
DATED
this 20th day of July, 2020.
| |
BY ORDER OF THE BOARD OF DIRECTORS |
| |
|
| |
(signed) “J. Obie Strickler” |
| |
J. Obie Strickler |
| |
Director, President and Chief Executive Officer |
GROWN
ROGUE INTERNATIONAL INC.
MANAGEMENT
INFORMATION CIRCULAR
SOLICITATION
OF PROXIES
This
management information circular (the “Information Circular”) is furnished in connection with the solicitation
by management (“Management”) of Grown Rogue International Inc. (the “Corporation”), of proxies
to be used at the annual and special meeting of shareholders (the “Meeting”) of the Corporation to be held
on Thursday, August 27, 2020, at the time and place and for the purposes set forth in the accompanying notice of annual and special
meeting (the “Notice”). The costs associated with this proxy solicitation will be borne by the Corporation.
Except
as otherwise indicated, information herein is given as at July 20, 2020. In this Information Circular, all references to dollar
amounts are to Canadian dollars, unless otherwise specified. All references herein to the Corporation shall include its subsidiaries
as the context may require.
The
board of directors of the Corporation (the “Board” or “Board of Directors”) has by resolution
fixed the close of business on July 17, 2020, as the record date (the “Record Date”) for the Meeting. Only
holders of common shares (the “Common Shares”) of the Corporation (each, a “Shareholder”
and collectively, the “Shareholders”) of record as at 5:00 pm (Eastern Daylight Time) as at the Record Date
will be entitled to receive the Notice and related documents and to vote at the Meeting or at any adjournment thereof, but failure
to receive such Notice does not deprive Shareholders of their right to vote their Common Shares at the Meeting.
If
any person entitled to vote at an annual and special meeting of the Shareholders wishes to propose any matter for consideration
at the next annual and special meeting, in order for such proposal to be considered for inclusion in the materials mailed to Shareholders
in respect of such meeting, such proposal must be received by the Corporation no later than 90 days before the anniversary date
of the Notice.
The
Corporation will use the Notice-and-Access Provisions (as defined below) to conduct the solicitation of proxies in connection
with this Information Circular. Proxies may also be solicited by telephone, facsimile, email or in person by directors, officers
and employees of the Corporation who will not be additionally compensated therefor. Arrangements have been made with brokerage
houses and other intermediaries, clearing agencies, custodians, nominees and fiduciaries to forward solicitation materials to
the beneficial owners of the Common Shares held of record by such persons.
NOTICE-AND-ACCESS
The
Corporation has elected to deliver the materials in respect of the Meeting pursuant to the notice-and-access provisions (“Notice-and-Access
Provisions”) concerning the delivery of proxy-related materials to shareholders found in section 9.1.1 of National Instrument
51-102 – Continuous Disclosure Obligations (“NI 51-102”), in the case of registered shareholders,
and section 2.7.1 of National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer
(“NI 54-101”), in the case of beneficial shareholders. The Notice-and-Access Provisions are a set of rules
that reduce the volume of proxy-related materials that must be physically mailed to shareholders by allowing issuers to deliver
meeting materials to shareholders electronically by providing shareholders with access to these materials online.
The
use of the Notice-and-Access Provisions reduces paper waste and mailing costs to the Corporation. In order for the Corporation
to utilize the Notice-and-Access Provisions to deliver proxy-related materials by posting the Information Circular (and if applicable,
other materials) electronically on a website that is not SEDAR, the Corporation must send a notice to Shareholders, including
beneficial Shareholders, indicating that the proxy-related materials have been posted and explaining how a Shareholder can access
them or obtain a paper copy of those materials from the Corporation.
In
accordance with the Notice-and-Access Provisions, a notice and a form of proxy or voting instruction form has been sent to all
Shareholders informing them that this Information Circular is available online and explaining how this Information Circular may
be accessed, in addition to outlining relevant dates and matters to be discussed at the Meeting. This Information Circular has
been posted in full on www.capitaltransferagency.ca and under the Corporation’s SEDAR profile at www.sedar.com.
The
Corporation will cause its agent to deliver copies of the proxy-related materials to the clearing agencies and Intermediaries
(as hereinafter defined) for onward distribution to Non-Registered Holders (as hereinafter defined). The Corporation intends to
pay for the Intermediaries to deliver to objecting Non-Registered Holders the proxy-related materials and Form 54-101F7 –
Request for Voting Instructions Made by Intermediary of NI 54-101.
Any
Shareholder who wishes to receive a paper copy of this Information Circular free of charge must contact Capital Transfer Agency,
ULC at 390 Bay Street, Suite 920, Toronto, Ontario M5H 2Y2, toll free telephone number 1-844-499-4482. In order to ensure that
a paper copy of the Information Circular can be delivered to a requesting Shareholder in time for such Shareholder to review the
Information Circular and return a form of proxy or voting instruction form prior to the deadline to receive proxies, it is strongly
suggested that Shareholders ensure their request is received no later than August 17, 2020.
APPOINTMENT
AND REVOCATION OF PROXIES
The
persons named in the enclosed management form of proxy and instructions in relation thereto (the “Management Proxy”)
are officers and/or directors of the Corporation. Each Shareholder has the right to appoint a person or company, who need not
be a Shareholder, other than the persons named in the enclosed form of proxy, to represent such Shareholder at the Meeting or
any adjournment(s) thereof. Such right may be exercised by inserting such person’s name in the blank space provided
and striking out the names of Management’s nominees in the Management Proxy or by completing another proper form of proxy.
All proxies must be executed by the Shareholder or his or her attorney duly authorized in writing or, if the Shareholder is a
corporation, by an officer or attorney thereof duly authorized. The completed form of proxy must be deposited at the office of
the Corporation’s transfer agent, Capital Transfer Agency, ULC, 390 Bay Street, Suite 920, Toronto, Ontario M5H 2Y2 Canada,
no later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the Meeting or any adjournment(s) thereof.
A
Shareholder forwarding the enclosed Management Proxy may indicate the manner in which the appropriate appointee is to vote with
respect to any specific item by checking the appropriate space. If the Shareholder giving the proxy wishes to confer a discretionary
authority with respect to any item of business, then the space opposite the item is to be left blank. The Common Shares represented
by the proxy submitted by a Shareholder will be voted in accordance with the directions, if any, given in the proxy.
In
addition to revocation in any other manner permitted by law, a Management Proxy or other form of proxy may be revoked if it is
received not later than 11:00 am (Eastern Daylight Time) on August 25, 2020 or, if the Meeting is adjourned, not later than 48
hours (excluding Saturdays, Sundays and holidays) before the Meeting, by completing and signing a proxy bearing a later date and
depositing it with Capital Transfer Agency, ULC on behalf of the Corporation.
If
you are a registered Shareholder of the Corporation, whether or not you are able to attend the Meeting, you are requested to complete,
execute and deliver the enclosed Management Proxy in accordance with the instructions set forth on the form to the Corporation,
c/o Capital Transfer Agency, ULC, 390 Bay Street, Suite 920, Toronto, Ontario M5H 2Y2, not less than 48 hours (excluding Saturdays,
Sundays and holidays) prior to the Meeting or any adjournment(s) or postponement(s) thereof. The time limit for the deposit of
proxies may be waived by the Board at its discretion without notice.
EXERCISE
OF DISCRETION BY PROXIES
Common
Shares represented by properly executed proxies in favour of the persons named in the enclosed Management Proxy will be either
voted or withheld from voting, as applicable, in accordance with the instructions given by the Shareholder on any ballot that
may be called for and, if the Shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will
be voted accordingly. Where Shareholders have properly executed proxies in favour of the persons named in the enclosed Management
Proxy and have not specified in the Management Proxy the manner in which the named proxies are required to vote the Common Shares
represented thereby, such Common Shares will be voted in favour of the passing of the matters set forth in the Notice. The
enclosed Management Proxy confers discretionary authority with respect to amendments or variations to the matters identified in
the Notice and with respect to other matters that may properly come before the Meeting. At the date hereof, neither Management
nor the directors of the Corporation (each, a “Director” and collectively, the “Directors”)
are aware of any such amendments, variations or others matters to come before the Meeting. If any other matters which at present
are not known to Management should properly come before the Meeting, the proxy will be voted on such matters in accordance with
the best judgement of the named proxies.
INFORMATION
FOR BENEFICIAL HOLDERS OF SECURITIES
Registered
holders of Common Shares or the persons they validly appoint as their proxies are permitted to vote at the Meeting. However, in
many cases, Common Shares beneficially owned by a person (a “Non-Registered Holder”) are registered either:
(i) in the name of an intermediary (an “Intermediary”) (including banks, trust companies, securities dealers
or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans) that the Non-Registered
Holder deals with in respect of the Common Shares; or (ii) in the name of a clearing agency (such as the Canadian Depository for
Securities Limited) of which the Intermediary is a participant.
Distribution
to Beneficial Owners
The
Corporation will have caused its agent to deliver copies of the proxy-related materials to the clearing agencies and Intermediaries
for onward distribution to Non-Registered Holders.
Intermediaries
are required to forward the meeting materials to Non-Registered Holders unless a Non-Registered Holder has waived his or her right
to receive them. Intermediaries often use service companies such as Broadridge Financial Solutions, Inc. to forward the meeting
materials to Non-Registered Holders. Generally, those Non-Registered Holders who have not waived the right to receive meeting
materials will either:
| 1. | be
given a form of proxy which has already been signed by the Intermediary (typically by
a facsimile stamped signature), which is restricted as to the number of shares beneficially
owned by the Non-Registered Holder, but which is otherwise uncompleted. This form of
proxy need not be signed by the Non-Registered Holder. In this case, the Non-Registered
Holder who wishes to submit a proxy should properly complete the form of proxy and deposit
it with Capital Transfer Agency in the manner set out above in this Information Circular,
with respect to the Common Shares beneficially owned by such Non-Registered Holder; or |
| 2. | more
typically, be given a voting registration form which is not signed by the Intermediary
and which, when properly completed and signed by the Non-Registered Holder and returned
to the Intermediary or its service company, will constitute authority and instructions
(often called a “Voting Instruction Form”) which the Intermediary
must follow. Typically, the Voting Instruction Form will consist of a one-page pre-printed
form. The purpose of this procedure is to permit the Non-Registered Holder to direct
the voting of the shares he or she beneficially owns. |
Should
a Non-Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non-Registered Holder should
strike out the names of the persons named in the form and insert the Non-Registered Holder’s name in the blank space provided.
In either case, Non-Registered Holders should carefully follow the instructions, including those regarding when and where the
proxy or voting instruction form is to be delivered.
Non-Registered
Holders (other than Non-Registered Holders who are duly appointed proxyholders) will not be admitted to the Meeting. Non-Registered
Holders are urged to vote their Common Shares in advance of the Meeting in accordance with the procedures and instructions received
from Broadridge Financial Solutions, Inc. or other applicable intermediary. Non-Registered Holders may listen to the Meeting using
the live audioconferencing facilities described in this Information Circular.
INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except
as disclosed herein, no: (i) Director or executive officer (each an “Officer”) of the Corporation who has held
such position at any time since November 1, 2018; (ii) proposed nominee for election as a director of the Corporation; or (iii)
associate or affiliate of a person in (i) or (ii) has any material interest, direct or indirect, by way of beneficial ownership
of securities or otherwise, in any matter to be acted upon at the Meeting other than the election of Directors.
VOTING
SHARES AND PRINCIPAL HOLDERS OF VOTING SHARES
The
Corporation is authorized to issue an unlimited number of Common Shares without nominal or par value of which, as at the date
hereof, 106,759,533 Common Shares are issued and outstanding as fully paid and non-assessable Common Shares. Each issued and outstanding
Common Share entitles its holder to one vote.
To
the knowledge of the Directors and Officers, as at the Record Date, no person beneficially owns, directly and indirectly, or exercises
control or direction over, voting securities of the Corporation carrying more than 10% of the voting rights, except as follows:
| Name | |
Number of
Common
Shares | | |
Percentage of
Class | |
| Cannabis Growth Opportunity Corporation | |
| 30,000,000 | (1) | |
| 28.10 | % |
| J. Obie Strickler | |
| 29,116,266 | | |
| 27.27 | % |
Notes:
| (1) | 15,000,000
of the Common Shares owned by Cannabis Growth Opportunity Corporation are subject to
voting restrictions under the terms of a Voting and Resale Agreement entered into with
the Corporation on February 10, 2020 where the shareholder is required to vote such shares
in favour of recommendations made by the management of the Corporation. |
The
Officers and Directors of the Corporation own, as a group, a total of 31,884,494 Common Shares, representing 29.9% of the issued
and outstanding Common Shares.
MATTERS
TO BE ACTED UPON AT THE MEETING
1. PRESENTATION
OF FINANCIAL STATEMENTS FOR 2019 AND 2018
A
copy of the audited consolidated financial statements of the Corporation for its prior years ended October 31, 2019 and 2018 can
be found on the Corporation’s SEDAR profile at www.sedar.com. Copies can also be obtained on request by contacting the Corporation:
Grown Rogue International Inc. c/o Miller Thomson LLP, Scotia Plaza, 40 King St. W., Suite 5800, PO Box 1011, Toronto, Ontario,
M5H 3S1, Attention to: Michael Johnston, CFO and Corporate Secretary.
2. ELECTION
OF DIRECTORS
The
articles of the Corporation provide that the Corporation shall not have more than ten (10) Directors. At the annual and special
meeting of the shareholders of the Corporation held on July 15, 2019, the Shareholders voted in favour of a special resolution
empowering the directors of the Corporation to determine from time to time the number of directors of the Corporation to be elected
at any future annual meeting of Shareholders in accordance with the provisions of the Business Corporations Act (Ontario).
The directors of the Corporation have determined that the number of directors of the Corporation to be elected at the Meeting
shall be four (4). The nominees are, in the opinion of the Board, well qualified to act as Directors for the coming year. Each
nominee has established his eligibility and willingness to serve as a Director, if elected. Each duly elected Director will hold
office until the next annual meeting of Shareholders or until a successor is duly elected, unless his office is earlier vacated
in accordance with the articles of the Corporation. The following table sets out the names of the persons nominated by management
for election, any offices with the Corporation currently held by them, their principal occupations, the period or periods of service
as directors of the Corporation and the approximate number of voting securities of the Corporation beneficially owned, directly
or indirectly, or over which control or direction is exercised as of the date hereof.
| Name,
province or state and country of residence |
|
Office
Held |
|
Principal
Occupation |
|
Director
Since |
|
Number
of
Common
Shares
Beneficially
Owned or
Controlled
or
Directed(1) |
J.
Obie Strickler(2) (3)
Oregon, United States |
|
President,
Chief Executive Officer and Director |
|
President,
Chief Executive Officer and Director of the Corporation |
|
November
15, 2018 |
|
29,116,266 |
Abhilash
Patel(2)
California, United States |
|
Director |
|
Consultant |
|
November
15, 2018 |
|
680,585 |
Stephen
Gledhill(2)
Ontario, Canada |
|
Director |
|
Accountant |
|
November
15, 2018 |
|
270,000 |
Sean
Conacher(4)
Ontario, Canada |
|
Proposed
Director |
|
Chief Executive Officer of Cannabis
Growth Opportunity Corporation and Chief Executive Officer of Global Cannabis Innovators Corp. |
|
N/A |
|
20,000 |
Notes:
| (1) | The
information as to the number of Common Shares beneficially owned, or over which control
or direction is exercised, directly or indirectly, not being within the direct knowledge
of the Corporation, has been furnished by the respective Director nominees. |
| (2) | Member
of the Audit Committee and Compensation Committee. Stephen Gledhill is the chairman of
the Audit Committee and the Compensation Committee. |
| (3) | J.
Obie Strickler, being an executive officer of the Corporation, is not “independent”
as defined in NI 52-110 – Audit Committees (“NI 52- 110”).
The Corporation is relying on the exemption provided by section 6.1 of NI 52-110 pursuant
to which the Corporation, as a venture issuer, is not required to comply with Part 3
(Composition of the Audit Committee) and Part 5 (Reporting Obligations) of NI 52-110. |
| (4) | Nominee
of Cannabis Growth Opportunity Corporation. |
Director
Biographies
Mr.
J. Obie Strickler
Mr.
Strickler is the CEO, President and founder of the Corporation. He founded Canopy Management, LLC in 2015 to consolidate the three
medical facilities he had operated since 2006 within one company. Mr. Strickler formed the Corporation in late 2016 and entered
the Oregon recreational cannabis market with a plan to build a multi-national cannabis brand. Mr. Strickler was successful in
building a profitable medical cannabis company and used that foundation to build Grown Rogue where he has led a team that now
has operations in three states with over 20 licenses. Mr. Strickler has a BS in Geology from Southern Oregon University and is
also an Oregon Professional Geologist. During the time he was financing and overseeing Canopy’s growth he was also the regional
manager for a large multi-service natural resource company before starting his own business in 2011 to provide management services
to large natural resource companies primarily in the mining sector. In this role, he was responsible for building and integrating
complex technical teams to advance large, world-class, multi-billion-dollar mining projects from exploration through feasibility
primarily in base and precious metals. In 2014, Mr. Strickler teamed with aerospace engineers to form HyperSciences, Inc a platform
technology company focused on commercializing hypervelocity technology into a variety of industrial applications. Mr. Strickler
helped secure a large contract with one of the world’s larger oil and gas providers to solve deep drilling challenges and
moved this project through proof of concept before departing to focus on the opportunities in cannabis full time. Mr. Strickler
is taking his production and product innovation experience in the cannabis industry and his integration and execution experience
from the natural resource industry to build Grown Rogue into a premier cannabis company. Mr. Strickler is 40 years old and is
devotes 100% of his professional time to the Corporation.
Mr.
Abhilash Patel
Mr.
Patel is a serial entrepreneur, venture investor, speaker, and philanthropist. He is currently Founder & CEO of Thermal.co,
a venture studio in Santa Monica, CA with a portfolio of stage-agnostic and category-agnostic investments along with a number
of operating ventures. Previously, Abhilash was founder and CEO at Ranklab, a digital marketing agency and Co-Founder of Recovery
Brands, a digital publisher with assets including Rehabs.com, Recovery.org and others. Both companies were listed in Inc. Magazine’s
fastest growing private companies in 2015. Later in 2015, both companies were acquired by AAC Holdings, then listed on the NYSE.
He is on the Board of Directors for several non-profit organizations in Southern California, including the LA Regional Food Bank,
Junior Achievement of Southern California, Clare|Matrix and 10,000 Beds, and serves on the board of several privately-held startups
as well.
Abhilash
holds a BA in Economics and Philosophy from Columbia University, and an MBA from the UCLA Anderson School of Management. Abhilash’s
work has been featured in several major publications, including Inc., Huffington Post, Forbes, and Entrepreneur, USA Today, among
others. Dr. Drew., Inc. named Abhilash “One of 20 Inspiring Entrepreneurs Improving Health for All” and Forbes highlights
him in an interview entitled “How Web Publishing is Saving Lives”. When he’s not helping businesses grow, Abhilash
is spending time with his wife and their three beautiful sons, or training for his next triathlon. Mr. Patel is 39 years old and
intends to devote the time necessary to serve as a director of the Corporation.
Mr.
Stephen Gledhill
Mr.
Gledhill is the founder and President of Keshill Consulting Associates Inc., a boutique management consulting practice. Mr. Gledhill
has over 25 years of financial-control experience and acts as CFO and Corporate Secretary for multiple publicly-traded companies,
several of which he was instrumental in scaling-up and taking public. He currently serves as the CFO of Caracara Silver Inc. (TSXV:CSV),
CO2 Gro Inc. (TSXV:GROW), DelphX Capital Markets Inc (TSXV:DELX) and POSaBIT Systems Corporation (CSE: PBIT). Mr. Gledhill has
also served as the Senior Vice President and CFO of Borealis Capital Corporation, a Toronto-based merchant bank as well as Vice
President of Finance of OMERS Realty Corporation (ORC), the real estate entity of the Ontario Municipal Employees Retirement System.
Mr. Gledhill is a Chartered Public Accountant and Certified Management Accountant and holds a Bachelor of Math Degree from the
University of Waterloo. Mr. Gledhill is 58 years old and intends to devote the time necessary to serve as a director of the Corporation.
Mr.
Sean Conacher
Sean
is an experienced CEO with a demonstrated history of working in the financial services and marketing sectors. He is skilled in
entrepreneurship, venture capital, public and private equity, foreign exchange, options and asset management. He is currently
the CEO of Cannabis Growth Opportunity Corporation, a publicly traded investment corporation that offers unique global exposure
to the emerging global cannabis sector. CGOC’s main objective is to provide shareholders long-term total return through
its actively managed portfolio of securities, both public and private, operating in, or that derive a portion of their revenue
or earnings from products or services related to the cannabis industry. Mr. Conacher is 50 years old and intends to devote the
time necessary to serve as a director of the Corporation.
Corporate
Cease Trade Orders
Other
than disclosed below, to the knowledge of the Corporation, no Director or proposed Director of the Corporation is, as at the date
of this Information Circular, or was within 10 years before the date of this Information Circular, a director or chief executive
officer or chief financial officer of any company (including the Corporation) that: (a) was the subject of an order (as defined
in Form 51-102F5 under National Instrument 51-102 Continuous Disclosure Obligations) that was issued while the Director
or proposed Director was acting in the capacity as director, chief executive officer or chief financial officer; or (b) was subject
to an order that was issued after the Director or proposed Director ceased to be a director, chief executive officer or chief
financial officer, and which resulted from an event that occurred while that person was acting in the capacity as a director,
chief executive officer or chief financial officer. For the purposes of this paragraph, “order” means a cease trade
order, an order similar to a cease trade order or an order that denied the relevant Corporation access to any exemption under
securities legislation, in each case that was in effect for a period of more than 30 consecutive days.
In
2013, Sean Conacher was a trader and designated person at a firm regulated by The Investment Industry Regulatory Organization
of Canada (“IIROC”). It was determined that between June 2013 and October 2013, Mr. Conacher allowed a U.S.
based client to enter orders directly on an IIROC-regulated marketplace through a firm inventory account, and therefore permitted
trades to be executed that Mr. Conacher knew, or ought to have reasonably have known, would not comply with applicable regulatory
requirements. Mr. Conacher and IIROC subsequently entered into a settlement agreement, resulting in: (i) a fine of $15,000; (ii)
a suspension of access to IIROC-regulated marketplaces for three months effective from October 2013; and (iii) costs of $2,000.
On
April 25, 2016, CO2 Gro Inc. (formerly BlueOcean NutraSciences Inc.) (“BOC”) applied to the applicable Canadian
securities regulatory authorities pursuant to National Policy 12-203 – Cease Trade Orders for Continuous Disclosure Defaults
(“Policy 12-203”) for a MCTO, which precluded members of management (including Stephen Gledhill, CFO) from
trading BOC common shares until such time as the MCTO is no longer in effect. The MCTO was sought by BOC as it would not be filing
its audited annual financial statements, related management discussion and analysis and applicable officer certifications (the
“Annual Materials”) by the deadline date of April 29, 2016. On May 9, 2016, the OSC granted a temporary MCTO,
effective until May 16, 2016. On May 16, 2016, the OSC issued a permanent MCTO in effect until 2 days following BOC filing its
Annual Materials with the applicable regulatory authorities. On July 19, 2016, BOC filed its Annual Materials and on July 21,
2016, the MCTO was lifted.
On
January 12, 2016 (further to a TSX Venture Exchange Bulletin dated January 11, 2016), Gemoscan Canada, Inc.’s (“GES”)
shares were suspended from trading on the TSX Venture Exchange for failing to maintain exchange requirements, GES having made
assignment into bankruptcy. Effective January 13, 2016, GES’s listing was transferred to the NEX. Stephen Gledhill served
as CFO of GES from August 2010 to November 2015.
Other
than disclosed above, no Director or proposed Director of the Corporation: (a) is, or within 10 years before the date hereof has
been a director or executive officer of a corporation (including the Corporation) that while that person was acting in that capacity,
or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its assets; or (b) has within the 10 years before the date hereof, become
bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings,
arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the Director
or proposed Director.
No
Director or proposed Director of the Corporation has been subject to any: (a) penalties or sanctions imposed by a court relating
to Canadian securities legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement
with a Canadian securities regulatory authority; or (b) other penalties or sanctions imposed by a court or regulatory body that
would be likely to be considered important to a reasonable security holder in deciding whether to vote for the Director or proposed
Director.
If
you complete and return the proxy for the Meeting, the persons designated in the proxy for the Meeting intend to vote at the Meeting,
or any adjournment thereof, FOR the election of J. Obie Strickler, Abhilash Patel, Stephen Gledhill and Sean Conacher as Directors,
unless you specifically direct that your vote be withheld.
3. APPOINTMENT
AND REMUNERATION OF AUDITORS
At
the Meeting, Shareholders will be asked to approve a resolution appointing Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional
Accountants, of Vancouver, BC, as auditors for the Corporation, to hold office until the next annual meeting of Shareholders,
and to authorize the Directors to fix their remuneration. Dale Matheson Carr-Hilton Labonte LLP, Charter Professional Accountants
were appointed as auditors of the Corporation effective November 4, 2019.
On
November 4, 2019, the Board of Directors, resolved to appoint Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants
as the auditor of the Corporation effective November 4, 2019. Effective October 31, 2019 MNP LLP, Chartered Professional Accountants
resigned as the auditor of the Corporation and the Board accepted their resignation.
As
required by section 4.11 of NI 51-102, a copy of the Corporation’s reporting package (which has been filed with the applicable
securities regulatory authorities and delivered to each of Dale Matheson Carr-Hilton Labonte LLP and MNP LLP) is attached hereto
as Schedule B and includes:
| i. | the
Notice of Change of Auditor prepared in respect of MNP LLP’s resignation as the
auditor of the Corporation and the Corporation’s appointment of Dale Matheson Carr-Hilton
Labonte LLP as its new auditor to hold office until the next annual general meeting of
shareholders of the Corporation; |
| ii. | the
response letter of MNP LLP with respect to the Corporation’s Notice of Change of
Auditor; and |
| iii. | the
response letter of Dale Matheson Carr-Hilton Labonte LLP with respect to the Board’s
appointment of Dale Matheson Carr-Hilton Labonte LLP as the successor auditor of the
Corporation. |
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF THE APPOINTMENT OF DALE MATHESON CARR-HILTON LABONTE LLP, CHARTERED
PROFESSIONAL ACCOUNTANTS, AS AUDITORS OF THE CORPORATION AND THE AUTHORIZING OF THE DIRECTORS TO FIX THEIR REMUNERATION.
If
you complete and return the Management Proxy, the persons designated in the Management Proxy intend to vote at the Meeting, or
any adjournment thereof, FOR the appointment of Dale Matheson Carr-Hilton Labonte LLP as auditors of the Corporation and to authorize
the Board to fix the auditors’ remuneration, unless you specifically direct that your vote be withheld.
4. APPROVAL
OF AMENDED AND RESTATED BY-LAW NO. 1
On
February 3, 2020, the Board approved an amended and restated form of the Corporation’s By-Law No. 1 (“Amended and
Restated By-Law No. 1”). The Corporation has recently undertaken a review of the previous by-laws of the Corporation
(the “Old By-Laws”), particularly in light of evolving corporate governance practices, and determined that
it would be in the best interests of the Corporation to implement Amended and Restated By-Law No. 1 in order to incorporate such
best practices and implement certain desirable changes to update the Old By-Laws.
The
Amended and Restated By-Law No. 1 is standard in its form and governs all aspect of the business and affairs of the Corporation,
such as the establishment of a quorum for meetings of directors and shareholders, the conduct of such meetings, signing authorities,
the establishment of committees of the Board, the appointment of officers, the description of officers’ duties, the authority
of persons to contract on behalf of the Corporation and similar matters. The Amended and Restated By-Law No.1 also sets out advance
notice requirements for director nominations (the “Advance Notice Requirements”).
The
Advance Notice Requirements set forth a procedure requiring advance notice to the Corporation by any Shareholder who intends to
nominate any person for election as a director of the Corporation. It provides a mechanism through which Shareholders are able
to receive appropriate disclosure with respect to proposed director nominees prior to a meeting. It will also provide the Corporation
with the opportunity, prior to a meeting, to confirm the eligibility of a proposed director to serve as an independent director
and to confirm certain other information about the proposed nominee and the nominating Shareholder that could be material to a
reasonable Shareholder’s understanding of such proposed nominee’s independence, or lack thereof. The inclusion of
advance notice requirements in a corporation’s by-laws has become a common and important tool for public companies in Canada
and the United States to ensure that shareholders are provided with appropriate and timely information in connection with the
election of directors. The proposed timing for the delivery of a notice under the Advance Notice Requirements and the information
that must be submitted are in keeping with recognized good governance principles. The Board believes that the Advance Notice Requirements
will benefit Shareholders by: (i) facilitating orderly nomination and meeting processes; (ii) treating all Shareholders fairly
by providing timely and adequate notice of director nominations; (iii) allowing all Shareholders to register an informed vote;
and (iv) preventing the possibility of a small group of Shareholders taking advantage of a poorly attended meeting to nominate
their slate of directors from the floor, thereby imposing their slate on what could be a majority of Shareholders who are unaware
that this could happen.
A
copy of the Amended and Restated By-Law No. 1 is attached hereto as Schedule A.
At
the Meeting, the Shareholders will be asked to consider and, if deemed advisable, pass the following resolution approving, ratifying
and confirming the Amended and Restated By-Law No. 1 (the “By-Law Amendment Resolution”).
“BE
IT RESOLVED AS AN ORDINARY RESOLUTION THAT:
| 1. | the
“Amended and Restated By-Law No. 1 of Grown Rogue International Inc.” in
the form adopted by the Board of Directors of the Corporation on February 3, 2020 and
attached as Schedule A to the management information circular of the Corporation dated
July 20, 2020, being the by-laws relating generally to the transaction of the business
and affairs of the Corporation, is hereby confirmed; and |
| 2. | any
officer and director of the Corporation is hereby authorized and directed on behalf of
the Corporation to execute and deliver all such documents and to do all such acts and
things as may be necessary or desirable to give effect to this resolution.” |
The
Business Corporations Act (Ontario) requires that any amendment made to the by-laws of a corporation be submitted to the
next meeting of shareholders for confirmation by an ordinary resolution of the majority of the shareholders. If an amendment to
the by-laws of a corporation is not approved by the majority of the shareholders, the amendment ceases to be effective.
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF THE BY-LAW AMENDMENT RESOLUTION.
If
you complete and return the Management Proxy, the persons designated in the Management Proxy intend to vote at the Meeting, or
any adjournment thereof, FOR the By-Law Amendment Resolution, unless you specifically direct that your vote be voted
against the By-Law Amendment Resolution.
5. APPROVAL
OF NEW EQUITY INCENTIVE PLAN
The
Corporation proposes to adopt a new equity incentive plan (the “New Equity Incentive Plan”) to replace the
existing stock option plan of the Corporation (the “Stock Option Plan”), subject to Shareholder approval.
At
the Meeting, the Shareholders will be asked to consider and, if thought advisable, pass an ordinary resolution approving the New
Equity Incentive Plan (the “New Equity Incentive Plan Resolution”). To be effective, the Equity Incentive Plan
Resolution requires the affirmative vote of not less than a majority of the votes cast by Shareholders present in person or represented
by proxy and entitled to vote at the Meeting.
Shareholder
approval of the New Equity Incentive Plan is necessary for certain purposes, including for the Corporation to facilitate grants
of incentive stock options for purposes of Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”).
If Shareholders do not approve the New Equity Incentive Plan, the New Equity Incentive Plan will not go into effect.
Summary
of the New Equity Incentive Plan
The
principal features of the New Equity Incentive Plan are summarized below.
Purpose
The
purpose of the New Equity Incentive Plan will be to enable the Corporation and its affiliated companies to: (i) promote and retain
employees, officers, consultants, and directors capable of assuring the future success of the Corporation, (ii) to offer such
persons incentives to put forth maximum efforts, and (iii) to compensate such persons through various share and cash-based arrangements
and provide them with opportunities for share ownership, thereby aligning the interests of such persons and Shareholders.
The
New Equity Incentive Plan permits the grant of (i) nonqualified stock options (“NQSOs”) and incentive stock
options (“ISOs”) (collectively, “Options”), (ii) restricted stock awards, (iii) restricted
stock units (“RSUs”), (iv) stock appreciation rights (“SARs”), and (v) performance compensation
awards (“PCAs”), which are referred to herein collectively as “Awards,” as more fully described
below.
Eligibility
Any
of the Corporation’s employees, officers, directors, consultants (who are natural persons) are eligible to participate in
the New Equity Incentive Plan (the “Participants”). The basis of participation of an individual under the New
Equity Incentive Plan, and the type and amount of any Award that an individual will be entitled to receive under the New Equity
Incentive Plan, will be determined by the Board or Compensation Committee based on its judgment as to the best interests of the
Corporation.
The
maximum number of Common Shares that may be issued under the New Equity Incentive Plan shall be determined by the Board from time
to time, but in no case shall exceed, in the aggregate, 20% of the number of Common Shares then outstanding. Notwithstanding the
above, the total number of Common Shares issued under ISOs cannot exceed 20,000,000 Common Shares, subject to adjustment as provided
in the New Equity Incentive Plan.
Any
shares subject to an Award under the New Equity Incentive Plan that are forfeited, cancelled, expire unexercised, are settled
in cash, or are used or withheld to satisfy tax withholding obligations of a Participant shall again be available for Awards under
the New Equity Incentive Plan. In the event of any dividend, recapitalization, forward or reverse stock split, reorganization,
merger, amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of Common Shares or other securities
of the Corporation, issuance of warrants or other rights to acquire Common Shares or other securities of the Corporation, or other
similar corporate transaction or event, which affects the Common Shares, or unusual or nonrecurring events affecting the Corporation,
or the financial statements of the Corporation, or changes in applicable rules, rulings, regulations or other requirements of
any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, the Compensation
Committee or Board may make such adjustment, which is appropriate in order to prevent dilution or enlargement of the rights of
Participants under the New Equity Incentive Plan, to (i) the number and kind of shares which may thereafter be issued in connection
with Awards, (ii) the number and kind of shares issuable in respect of outstanding Awards, (iii) the purchase price or exercise
price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award,
and (iv) any share limit set forth in the New Equity Incentive Plan.
Awards
Options
The
Compensation Committee is authorized to grant Options to purchase Common Shares that are either ISOs meaning they are intended
to satisfy the requirements of Section 422 of the Code, or NQSOs, meaning they are not intended to satisfy the requirements of
Section 422 of the Code. Options granted under the New Equity Incentive Plan will be subject to the terms and conditions established
by the Board or Compensation Committee. Under the terms of the New Equity Incentive Plan, unless the Compensation Committee or
Board determines otherwise in the case of an Option substituted for another Option in connection with a corporate transaction,
the exercise price of the Options will not be lower than the greater of the closing market prices of the Common Shares on (a)
the trading day prior to the date of grant of the stock options, and (b) the date of grant of the stock options. Options granted
under the New Equity Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing
of exercise, as may be determined by the Compensation Committee or Board and specified in the applicable award agreement. The
maximum term of an option granted under the New Equity Incentive Plan will be ten years from the date of grant (or five years
in the case of an ISO granted to a 10% shareholder). Payment in respect of the exercise of an Option may be made in cash or by
cheque, by surrender of unrestricted shares (at their fair market value on the date of exercise) or by such other method as the
Compensation Committee may determine to be appropriate.
Restricted
Stock
A
restricted stock award is a grant of Common Shares, which are subject to forfeiture restrictions during a restriction period.
The Compensation Committee or Board will determine the price, if any, to be paid by the Participant for each Common Shares subject
to a restricted stock award, but in any event the price may not be lower than the greater of the closing market prices of the
Common Shares on (a) the trading day prior to the date of grant of the restricted stock, and (b) the date of grant of the restricted
stock. The Compensation Committee or Board may condition the expiration of the restriction period, if any, upon: (a) the Participant’s
continued service over a period of time with the Corporation or its affiliates; (b) the achievement by the Participant, the Corporation
or its affiliates of any other performance goals set by the Compensation Committee; or (c) any combination of the above conditions
as specified in the applicable award agreement. If the specified conditions are not attained, the Participant will forfeit the
portion of the restricted stock award with respect to which those conditions are not attained, and the underlying Common Shares
will be forfeited. At the end of the restriction period, if the conditions, if any, have been satisfied, the restrictions imposed
will lapse with respect to the applicable number of Common Shares. During the restriction period, unless otherwise provided in
the applicable award agreement, a Participant will have the right to vote the shares underlying the restricted stock; however,
all dividends will remain subject to restriction until the stock with respect to which the dividend was issued lapses. The Compensation
Committee may, in its discretion, accelerate the vesting and delivery of shares of restricted stock. Unless otherwise provided
in the applicable award agreement or as may be determined by the Compensation Committee, upon a Participant’s termination
of service with the Corporation, the unvested portion of a restricted stock award will be forfeited.
RSUs
RSUs
are granted in reference to a specified number of Common Shares and entitle the holder to receive, on achievement of specific
performance goals established by the Compensation Committee or Board or after a period of continued service with the Corporation
or its affiliates or any combination of the above as set forth in the applicable award agreement, one Common Share for each such
Common Share covered by the RSU; provided, that the Compensation Committee may elect to pay cash, or part cash and part Common
Shares in lieu of delivering only Common Shares. The Compensation Committee or Board may, in its discretion, accelerate the vesting
of RSUs. Unless otherwise provided in the applicable award agreement or as may be determined by the Compensation Committee, upon
a Participant’s termination of service with the Corporation, the unvested portion of the RSUs will be forfeited. The value
ascribed to the Common Shares covered by the RSU may not be lower than the greater of the closing market prices of the Common
Shares on (a) the trading day prior to the date of grant of the RSUs, and (b) the date of grant of the RSUs
Stock
Appreciation Rights
A
SAR entitles the recipient to receive, upon exercise of the SAR, the increase in the fair market value of a specified number of
Common Shares from the date of the grant of the SAR and the date of exercise payable in Common Shares. Any grant may specify a
vesting period or periods before the SAR may become exercisable and permissible dates or periods on or during which the SAR shall
be exercisable. No SAR may be exercised more than ten years from the grant date. Unless otherwise provided in the applicable award
agreement or as may be determined by the Compensation Committee or Board, upon a Participant’s termination of service with
the Corporation, the unvested portion of a SAR will be forfeited. The value ascribed to the Common Shares covered by the SARs
may not be lower than the greater of the closing market prices of the Common Shares on (a) the trading day prior to the date of
grant of the SAR, and (b) the date of grant of the SAR.
Performance
Compensation Awards
PCAs
may be granted under the Equity Incentive Plan, which (i) may be denominated or payable in cash, Common Shares, or other securities,
awards or other property (including, without limitation, restricted stock and RSUs), and (ii) confer on the holder thereof the
right to receive payments, in whole or in part, upon the achievement of one or more objective performance goals during such performance
periods as the Compensation Committee or Board shall establish. Notwithstanding the foregoing, pursuant to the rules of the CSE,
the value ascribed to the Common Shares covered by the PCAs may not be lower than the greater of the closing market prices of
the Common Shares on (a) the trading day prior to the date of grant of the PCA, and (b) the date of grant of the PCA. Subject
to the terms of the New Equity Incentive Plan and the policies of the CSE, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any PCA granted, the amount of any payment or transfer to be made
pursuant to any PCA and any other terms and conditions shall be determined by the Compensation Committee or Board. Unless otherwise
provided in the applicable award agreement or as may be determined by the Compensation Committee or Board, upon a Participant’s
termination of service with the Corporation, the unvested portion of a PCA will be forfeited.
General
The
Compensation Committee or Board may impose restrictions on the grant, exercise or payment of an Award as it determines appropriate.
Generally, Awards granted under the New Equity Incentive Plan shall be non-transferable except by will or by the laws of descent
and distribution. No Participant shall have any rights as a shareholder with respect to Common Shares covered by any Awards, unless
and until such Awards are settled in Common Shares.
No
Option (or, if applicable, SARs) shall be exercisable, no Common Shares shall be issued, no certificates for Common Shares shall
be delivered and no payment shall be made under the New Equity Incentive Plan except in compliance with all applicable laws. The
Board may amend, alter, suspend, discontinue or terminate the New Equity Incentive Plan and the Compensation Committee or Board
may amend any outstanding Award at any time; provided that (i) such amendment, alteration, suspension, discontinuation, or termination
shall be subject to the approval of the Corporation’s shareholders if such approval is necessary to comply with any tax
or regulatory requirement applicable to the New Equity Incentive Plan (including, without limitation, as necessary to comply with
any rules or requirements of applicable securities exchange), and (ii) no such amendment or termination may adversely affect Awards
then outstanding without the Award holder’s permission.
In
the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take over bid or
tender offer, repurchase or exchange of Common Shares or other securities of the Corporation or any other similar corporate transaction
or event involving the Corporation (or the Corporation shall enter into a written agreement to undergo such a transaction or event),
the Compensation Committee or the Board may, in its sole discretion, provide for any (or a combination) of the following to be
effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the
consummation of the event subsequently occurs):
| ● | termination
of the Award, whether or not vested, in exchange for cash and/or other property, if any,
equal to the amount that would have been attained upon the exercise of the vested portion
of the Award or realization of the Participant’s vested rights, |
| ● | the
replacement of the Award with other rights or property selected by the Compensation Committee
or the Board, in its sole discretion, |
| ● | assumption
of the Award by the successor or survivor corporation, or a parent or subsidiary thereof,
or shall be substituted for by similar options, rights or awards covering the stock of
the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, |
| ● | that
the Award shall be exercisable or payable or fully vested with respect to all Common
Shares covered thereby, notwithstanding anything to the contrary in the applicable award
agreement, or |
| ● | that
the Award cannot vest, be exercised or become payable after a date certain in the future,
which may be the effective date of the event. |
Tax
Withholding
The
Corporation may take such action as it deems appropriate to ensure that all applicable federal, state, local and/or foreign payroll,
withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected
from such Participant.
Shareholders
will be asked at the Meeting to consider and, if thought advisable, pass the New Equity Incentive Plan Resolution, substantially
in the following form:
“BE
IT RESOLVED AS AN ORDINARY RESOLUTION THAT:
| 1. | All
existing stock option plans of the Corporation, including the current option plan of
the Corporation, are hereby terminated and the New Equity Incentive Plan is hereby authorized
and approved as the equity incentive plan of the Corporation and all unallocated options,
rights and other entitlements issuable thereunder be and are hereby approved and authorized;
and |
| 2. | any
one or more of the directors or officers of the Corporation is hereby authorized and
directed, acting for, in the name of and on behalf of the Corporation, to execute or
cause to be executed, under the seal of the Corporation or otherwise, and to deliver
or cause to be delivered, such other documents and instruments, and to do or cause to
be done all such other acts and things, as may in the opinion of such director or officer
of the Corporation be necessary or desirable to carry out the intent of the foregoing
resolution, the execution of any such document or the doing of any such other act or
thing by any director or officer of the Corporation being conclusive evidence of such
determination.” |
THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF THE NEW EQUITY INCENTIVE PLAN RESOLUTION.
If
you complete and return the Management Proxy, the persons designated in the Management Proxy intend to vote at the Meeting, or
any adjournment thereof, FOR the New Equity Incentive Plan Resolution, unless you specifically direct that your
vote be voted against the New Equity Incentive Plan Resolution.
OTHER
MATTERS
The
Corporation knows of no other matters to be brought before the Meeting. If any amendment, variation or other business is properly
brought before the Meeting, the form of Management Proxy and voting instruction confers discretion on the persons named on the
form of Management Proxy to vote on such matters in accordance with their best judgment.
EXECUTIVE
COMPENSATION
For
purposes of this Information Circular, a “Named Executive Officer” of the Corporation means an individual who,
at any time during the year, was:
| (a) | the
Corporation’s chief executive officer (“CEO”); |
| (b) | the
Corporation’s chief financial officer (“CFO”); |
| (c) | each
of the Corporation’s three most highly compensated executive officers, or the three
most highly compensated individuals acting in a similar capacity, other than the CEO
and CFO, at the end of the most recently completed financial year and whose total compensation
was, individually, more than $150,000 during the Corporation’s prior years ended
October 31, 2019 and/or 2018; and |
| (d) | each
individual who would be a Named Executive Officer under paragraph (c) but for the fact
that the individual was neither an executive officer of the Corporation, nor acting in
a similar capacity, at the end of the most recently completed financial year. |
Based
on the foregoing definition, during the last completed financial year of the Corporation, there were three (5) Named Executive
Officers, being J. Obie Strickler, Michael Johnston, Jacques Habra, Adam August and Rob Rigg.
There
were three (3) Directors during the last completed financial year of the Corporation, being J. Obie Strickler, Abhilash Patel
and Stephen Gledhill.
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation
Committee
The
Corporation has constituted a committee of the Board to serve as a compensation committee (the “Compensation Committee”).
The Compensation Committee is appointed by the Board to establish policies and procedures with respect to the compensation of
the Corporation’s Directors and Officers. The Compensation Committee has overall responsibility for approving and evaluating
compensation plans, policies and programs of the Corporation. The Compensation Committee members may be replaced by the Board.
The
Compensation Committee is comprised of a majority of independent Directors. The current Compensation Committee is comprised of
J. Obie Strickler (not independent), Abhilash Patel (independent) and Stephen Gledhill (independent). Under the proposed slate
of the directors, the current members of the Compensation Committee will be re-appointed. Recognizing the importance of an independent
dialogue, in determining the appropriate level of compensation payable to Mr. J. Obie Strickler, the independent members of the
Compensation Committee subjectively and quantitatively analyze his performance using the criteria discussed in this section below.
In addition, the Compensation Committee reviews the adequacy and form of compensation in comparison to other companies of similar
size and stage of development as described further below.
Compensation
Committee Mandate
The
Compensation Committee is appointed by the Board of Directors to assist the Board in carrying out its responsibilities by:
| ● | Reviewing
compensation and human resources issues in support of the achievement of the Corporation’s
business strategy and making recommendations to the Board as appropriate. |
| ● | Reviewing
and approving corporate goals and objectives relevant to Chief Executive Officer’s
compensation. |
| ● | Evaluating
the Chief Executive Officer’s performance against those goals and objectives. |
| ● | Making
recommendations to the Board with respect to the Chief Executive Officer’s compensation. |
| ● | Reviewing
issues and overseeing the investment management of the Corporation’s savings and
investment plans, if applicable. |
Compensation
Philosophy
Compensation
of executive officers of the Corporation is recommended to the Board of Directors by the Compensation Committee. In its review
process, the Compensation Committee relies on input from management on the assessment of executives and Corporation performance.
The
Compensation Committee establishes management compensation policies and oversees their general implementation. All members of
the Compensation Committee have direct experience which is relevant to their responsibilities as Compensation Committee members.
All members are or have held senior executive or director roles within significant businesses. Mr. Gledhill has public company
experience, and all have a good financial understanding which allows them to assess the costs versus benefits of compensation
plans. The members combined experience in the Corporation’s sector provides them with the understanding of the Corporation’s
success factors and risks, which is very important when determining metrics for measuring success.
Risk
management is a primary consideration of the Compensation Committee when implementing its compensation program. The Compensation
Committee does not believe that the Corporation’s current compensation program results in unnecessary or inappropriate risk-taking,
including risks that are likely to have a material adverse effect on the Corporation. Payments of bonuses, if any, are not made
until performance goals have been met.
Executive
compensation is generally based on pay for performance and to be competitive with other firms of comparable size in similar fields.
The Chief Executive Officer makes recommendations to the Compensation Committee as to the compensation of managers, other than
himself, for approval by the Board. The Compensation Committee makes recommendations to the Board as to the compensation of the
Chief Executive Officer, for approval, in accordance with the same criteria upon which the compensation of other managers are
based.
Executive
compensation is comprised of a base salary and variable components in the form of an annual bonus opportunity and stock options.
The annual bonus provides an opportunity for management and executive employees to earn an annual cash incentive based on various
pre-set criteria and the degree of achievement of objectives sets by the Compensation Committee. These performance goals will
therefore take into account (1) the compliance with budgeted results, (2) the Corporation’s share performance during the
last completed financial year, and (3) the business development and personal achievement fulfilled by each executive employee,
as the case may be. Generally, new stock option grants do not take into account previous grants of options when considering new
grants.
The
President and Chief Executive Officer’s salary is based on comparable market consideration and the Compensation Committee’s
assessment of his performance, with regard to the Corporation’s financial performance and progress in achieving strategic
performance.
The
Corporation’s executive compensation program is intended to attract, motivate and retain high performing senior executives,
encourage and reward superior performance and align the executives’ interests with those of the Corporation. The Corporation
aims to achieve these objectives by: (i) providing executive compensation which is competitive with what is offered by comparable
companies; (ii) ensuring that the achievement of annual objectives is rewarded through the payment of bonuses; and (iii) providing
executives with long-term incentive through the grant of stock options.
The
compensation paid to the Named Executive Officers will be based on comparisons to compensation paid to officers of companies in
a similar business, size and stage of development and will reflect the need to provide incentives and compensation for the time
and effort expended by the Named Executive Officers, while taking into account the financial and other resources of the Corporation,
as well as increasing short and long-term shareholder value.
Compensation
Elements
Compensation
of Named Executive Officers is revised each year and has been structured to encourage and reward the executive officers on the
bases of short-term and long-term corporate performance. In the context of the analysis of the compensation for the financial
years ended October 31, 2019 and 2018, the following components were examined:
| (ii) | annual
performance incentive relative to base compensation consisting of cash and stock options; |
| (iii) | grant
of stock options of the Corporation; and |
| (iv) | other
elements of compensation which may include shares of the Corporation. |
Base
Salary
The
compensation of the Corporation’s executive officers is determined by the Board upon recommendations made by the Compensation
Committee. Executive compensation is generally based on performance and what is being offered by other firms of comparable size
in similar fields.
Annual
Incentive Plan
The
Corporation has a bonus plan for its executive officers, representing a percentage of their base annual salary. The grant of bonuses
for performance is left at the discretion of the Board of Directors upon the recommendation of the Compensation Committee, based
on the financial results of the Corporation and the degree of achievement of objectives set by the Board of Directors, as more
fully described above.
Share-based
Awards
The
Corporation believes that encouraging its Officers and employees to become Shareholders is the best way of aligning their interests
with those of its Shareholders. Equity participation is currently accomplished through the Corporation’s Stock Option Plan.
Under the New Equity Incentive Plan, Awards will be granted to management and employees taking into account a number of factors,
including, base salary and bonuses, and competitive factors.
The
Option component of compensation provided by the Corporation under the current Stock Option Plan is intended to advance the interests
of the Corporation by encouraging the Directors, Officers, employees and consultants of the Corporation to acquire Common Shares,
thereby increasing their proprietary interest in the Corporation, encouraging them to remain associated with the Corporation and
furnishing them with additional incentive in their efforts on behalf of the Corporation in the conduct of its affairs. Grants
under the Corporation’s Stock Option Plan are intended to provide long term awards linked directly to the market value performance
of the Corporation’s Common Shares. Under the New Equity Incentive Plan, the Board will review the Compensation Committee’s
recommendations for the granting of Awards to management, Directors, Officers, other employees, and consultants of the Corporation
and its subsidiaries. Awards will be granted according to the specific level of responsibility of the particular Director, Officer,
employee or consultant. The number of outstanding Awards will also be considered by the Board when determining the number of Awards
to be granted in any particular year due to the limited number of Awards that are available for grant under the Corporation’s
New Equity Incentive Plan.
Stock
Option Plan
The
Corporation’s Stock Option Plan was previously approved by the Shareholders at the annual and special meeting of the shareholders
of the Corporation held on July 15, 2019. The following is a description of the material terms and conditions of the Stock Option
Plan. The Stock Option Plan is administered by the Board, or if appointed, by a special committee of Directors appointed from
time to time by the Board. The aggregate number of Common Shares which may be reserved for issue under the Stock Option Plan shall
not exceed 10% of the issued and outstanding number of Common Shares. The number of Common Shares subject to an option to a participant
shall be determined by the Board, but no participant shall be granted an option which exceeds the maximum number of shares permitted
by any stock exchange on which the Common Shares are then listed, or other regulatory body having jurisdiction. The exercise price
of the Common Shares covered by each option shall be determined by the Board, provided however, that the exercise price shall
not be less than the price permitted by any stock exchange on which the Common Shares are then listed, or other regulatory body
having jurisdiction. The maximum term of any option shall be ten (10) years from the date the option is granted, provided that
participant’s options expire ninety (90) days after a participant ceases to act for the Corporation, subject to extension
at the discretion of the Board, except upon the death of a participant, in which case the participant’s estate shall have twelve
(12) months in which to exercise the outstanding options. The Stock Option Plan includes a provision that should an option expiration
date fall within a blackout period or immediately following a blackout period, the expiration date will automatically be extended
for ten (10) business days following the end of the blackout period. The Board has the absolute discretion to amend or terminate
the Stock Option Plan.
Purchase
of Financial Instruments
The
Corporation has not adopted any policies or imposed any contractual obligations to restrict the ability of a Named Executive Officer
or a Director to purchase financial instruments, including for greater certainty, prepaid variable forward contracts, equity swaps,
collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted
as compensation by the Corporation or held, directly or indirectly, by the Named Executive Officer or Director. The Board discourages
the practice of purchasing the securities described above.
Summary
Compensation Table
The
following table is a summary of compensation paid to the Named Executive Officers and Directors for the two most recently completed
financial periods ended October 31, 2019 and 2018:
Table
of Compensation excluding Compensation Securities
| Name | |
Year | |
Salary, consulting fee,
retainer or
commission ($) | | |
Bonus
($) | |
Committee
or meeting
fees ($)(1) | | |
Value of
perquisites | |
Value of all
other
compensation
($) | | |
Total
compensation
($) | |
| J. Obie Strickler, | |
2019 | |
| 130,000 | | |
Nil | |
| Nil | | |
Nil | |
| 60,500 | (4) | |
| 190,500 | |
| President, CEO and Director | |
2018 | |
| 120,000 | | |
Nil | |
| Nil | | |
Nil | |
| 65,000 | (4) | |
| 185,000 | |
| Michael Johnston, | |
2019 | |
| 172,510 | (3) | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| 172,510 | |
| CFO and Corporate Secretary | |
2018 | |
| Nil | | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | |
| Adam August, | |
2019 | |
| 160,612 | (5) | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| 160,612 | |
| CFO of Grown Rogue Unlimited, LLC | |
2018 | |
| Nil | | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | |
| Rob Rigg, | |
2019 | |
| 125,155 | (6) | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| 125,155 | |
| Chief Marketing Officer | |
2018 | |
| Nil | | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | |
| Jacques Habra, | |
2019 | |
| 183,674 | | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| 183,674 | |
| Former Chief Strategy Officer(1) | |
2018 | |
| 239,568 | | |
Nil | |
| Nil | | |
Nil | |
| 524,498 | (2) | |
| 764,066 | |
| Abhilash Patel, | |
2019 | |
| Nil | | |
Nil | |
| 67,045 | (7) | |
Nil | |
| Nil | | |
| 67,045 | |
| Director | |
2018 | |
| Nil | | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | |
| Stephen Gledhill, | |
2019 | |
| Nil | | |
Nil | |
| 109,211 | (7) | |
Nil | |
| Nil | | |
| 109,211 | |
| Director | |
2018 | |
| Nil | | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | |
Notes:
| (1) | Mr.
Habra resigned from his position as the Corporation’s Chief Strategy Officer on
February 21, 2019. |
| (2) | During
the year ended October 31, 2018, Mr. Habra was issued 750 common units of Grown Rogue
Unlimited, LLC with a fair value of $524,498. |
| (3) | Fees
of $172,510 were paid to an accounting firm in which Mr. Johnston is a partner. |
| (4) | Represents
rent charged by a company owned by Mr. Strickler. |
| (5) | Inclusive
of the $50,612 paid to Mr. August in Common Shares. |
| (6) | Inclusive
of the $25,550 paid to Mr. Rigg in Common Shares. |
| (7) | Represents
director and committee fees paid in Common Shares. Mr. Gledhill was paid an additional
$60,500 in fees in his role as chair of the Audit Committee and Compensation Committee,
which was paid in a combination of cash and Common Shares. |
Stock
options and other compensation securities
Set
forth in the table below is a summary of all compensation securities granted or issued to each Director and Named Executive Officer
by the Corporation or one of its subsidiaries in the financial year ended October 31, 2019 for services provided or to be provided,
directly or indirectly, to the Corporation or any of its subsidiaries.
| Name | |
Type of
compensation
security | |
Number of
compensation
securities,
number of
underlying
securities, and
percentage of
class | | |
Date of
issue or
grant | |
Issue,
conversion or
exercise price
($) | | |
Closing
price of
security or
underlying
security on
date of grant
($) | | |
Closing price of
security or
underlying
security at year
end
($) | | |
Expiry
Date |
J. Obie Strickler,
President, CEO and Director | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | | |
| Nil | | |
Nil |
Michael Johnston,
CFO and Corporate Secretary | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | | |
| Nil | | |
Nil |
| Adam August, | |
Common Shares | |
| 100,000 | | |
April 5, 2019 | |
| 0.44 | | |
| 0.40 | | |
| 0.09 | | |
N/A |
| CFO of Grown Rogue Unlimited, LLC | |
Common Shares | |
| 75,000 | | |
October 2, 2019 | |
| 0.19 | | |
| 0.21 | | |
| 0.09 | | |
N/A |
Rob Rigg,
Chief Marketing Officer | |
Common Shares | |
| 100,000 | | |
October 2, 2019 | |
| 0.19 | | |
| 0.21 | | |
| 0.09 | | |
N/A |
Jacques Habra,
Former Chief Strategy Officer | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | | |
| Nil | | |
Nil |
Abhilash Patel,
Director | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | | |
| Nil | | |
Nil |
Stephen Gledhill,
Director | |
Nil | |
| Nil | | |
Nil | |
| Nil | | |
| Nil | | |
| Nil | | |
Nil |
Exercise
of Compensation Securities by Directors and NEOs
Set
forth below is a summary of each exercise by a Director or Named Executive Officer of compensation securities during the financial
year ended October 31, 2019.
| Name |
|
Type of compensation security |
|
Number of compensation securities, number of underlying securities, and percentage of class |
|
Date of issue or grant |
|
Issue, conversion or exercise price
($) |
|
Closing price of security or underlying security on date of grant ($) |
|
Closing price of security or underlying security at year end
($) |
|
Expiry
Date |
J. Obie Strickler,
President, CEO and Director |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Michael Johnston,
CFO and Corporate Secretary |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Adam August,
CFO of Grown Rogue Unlimited, LLC |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Rob Rigg,
Chief Marketing Officer |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Jacques Habra,
Former Chief Strategy Officer |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Abhilash Patel,
Director |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Stephen Gledhill,
Director |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
|
Nil |
Management
and Employment Agreements
On
December 4, 2018, Grown Rogue Unlimited, LLC (“GRU”) entered into an employment agreement with Adam August
as head of finance for GRU, which was amended and restated on March 1, 2019 and on February 1, 2020. Pursuant to the employment
agreement, annual salary of $120,000 is paid in semi-monthly instalments by GRU. Mr. August can be awarded bonuses by GRU from
time to time, including a profitability bonus of 20% of base salary. Mr. August is entitled to additional salary of $6,500
per month, paid in either cash or Common Shares, at the discretion of the Corporation. If Corporation chooses to pay the additional
salary in Common Shares, the price per share shall be based on the 10-day volume weighted average price (VWAP) of the Common Shares
prior to the payment date. Either party can terminate the agreement at any time. If Mr. August is terminated without
cause then he is entitled to receive Common Shares equal to $75,000. Mr. August was promoted to Chief Financial Officer
of GRU on February 24, 2020.
On
December 1, 2018, GRU entered into an employment agreement with Rob Rigg as head of marketing for GRU, which was amended and restated
on March 11, 2020. Pursuant to the employment agreement, annual salary of $150,000 is paid in semi-monthly instalments by GRU.
Mr. Rigg can be awarded bonuses by GRU from time to time, including a profitability bonus of 20% of base salary. Mr. Rigg
is entitled to additional salary of $6,500 per month, paid in either cash or Common Shares, at the discretion of the Corporation.
If Corporation chooses to pay the additional salary in Common Shares, the price per share shall be based on the 10-day volume
weighted average price (VWAP) of the Common Shares prior to the payment date. Either party can terminate the agreement at
any time. If Mr. Rigg is terminated without cause then he is entitled to receive Common Shares equal to $12,500. Mr.
Rigg was promoted to Chief Marketing Officer on February 24, 2020.
Termination
and Change of Control Benefits
See
summary of employment agreements above.
PENSION
PLAN BENEFITS
No
benefits were paid, and no benefits are proposed to be paid to any Directors or Named Executive Officers under any pension or
retirement plan.
The
Corporation does not have any plans, other than the Stock Option Plan, pursuant to which cash or non-cash compensation is paid
or distributed to the Directors and Named Executive Officers.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Set
forth below is a summary of securities issued and issuable under all equity compensation plans for the Corporation as at October
31, 2019. As at October 31, 2019, the Corporation’s Stock Option Plan was the only equity compensation plan of the Corporation.
| Plan Category | |
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights (a) | | |
Weighted-average
exercise price of
outstanding options,
warrants and rights (b) | | |
Number of
securities
remaining available
for future issuance
under equity
compensation plans
(excluding
securities reflected
in column (a)) | |
| Equity compensation plans approved by security holders | |
| Nil | | |
| N/A | | |
| 9,993,689 | |
| Equity compensation plans not approved by security holders | |
| 650,000 | | |
$ | 0.44 | | |
| Nil | |
| Total | |
| 650,000 | | |
$ | 0.44 | | |
| 9,993,689 | |
INDEBTEDNESS
OF DIRECTORS AND EXECUTIVE OFFICERS
No
individual who is, or at any time during the most recently completed financial year was, a director or executive officer of the
Corporation, a proposed nominee for election as a director of the Corporation, and each associate of any such director, executive
officer or proposed nominee: (a) is, or at any time since the beginning of the most recently completed financial year of the Corporation
has been, indebted to the Corporation or any of its subsidiaries or (b) has indebtedness to another entity that is, or at any
time since the beginning of the most recently completed financial year has been, the subject of a guarantee, support agreement,
letter of credit or other similar arrangement or understanding provided by the Corporation or any of its subsidiaries.
INTEREST
OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other
than as disclosed in this Information Circular, none of the informed persons of the Corporation (as defined in National Instrument
51-102 Continuous Disclosure Obligations), nor any proposed nominee for election as a Director of the Corporation, nor
any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to the issued
shares of the Corporation, nor any associate or affiliate of the foregoing persons has any material interest, direct or indirect,
in any transaction since the commencement of the Corporation’s most recently completed financial year or in any proposed
transaction which, in either case, has or will materially affect the Corporation and that none of such persons has any material
interest in any transaction proposed to be undertaken by the Corporation and will materially affect the Corporation.
On
February 10, 2020, the Corporation received a commitment from Cannabis Growth Opportunity Corporation (“CGOC”)
(a corporation that owns shares carrying more than 10% of the voting rights attached to the issued shares of the Corporation)
to complete a non-brokered private placement of units of the Corporation (with each unit comprised of one Common Share and one
Common Share purchase warrant) (the “Units”) for gross proceeds of $1,500,000 (the “Offering”).
The first tranche of the Offering was completed on February 10, 2020 for gross proceeds of approximately CDN$500,000, with 5,000,000
Units being issued at a price of CDN$0.10 per Unit. In connection with the Offering, the Corporation 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 Corporation’s board, to appoint a board observer.
Concurrently
with the completion of the first tranche of the Offering, the Corporation and CGOC completed a share swap transaction pursuant
to which the Corporation received 2,362,204 common shares of CGOC at a price of $0.635 per share, and CGOC received 15,000,000
Common Shares of the Corporation at a price of $0.10 per share (the “Share Swap”). As part of the Share Swap,
each of CGOC and the Corporation 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.
On
May 19, 2020, the Corporation and CGOC completed the final tranche of the Offering pursuant to which the Corporation issued 10,000,000
Units to CGOC at a price of $0.10 per Unit for gross proceeds of $1,000,000.
CORPORATE
GOVERNANCE
Effective
June 30, 2006, the securities regulatory authorities in Canada adopted National Instrument 58-101 Disclosure of Corporate Governance
Practices (“NI 58-101”) and National Policy 58-201 Corporate Governance Guidelines (“NP
58-201”). NP 58-201 contains a series of guidelines for effective corporate governance. The guidelines deal with such
matters as the constitution and independence of corporate boards, their functions, the experience and education of board members
and other items dealing with sound corporate governance.
Corporate
governance refers to the way the business and affairs of a reporting issuer are managed and relates to the activities of the board,
the members of who are elected by and are accountable to the Shareholders. Corporate governance takes into account the role of
the individual members of management who are appointed by the Board and who are charged with the day-to-day management of the
Corporation. The Board is committed to sound corporate governance practices which are both in the interest of its Shareholders
and contribute to effective and efficient decision-making. Pursuant to NI 58-101 the Corporation has established its corporate
governance practices.
Board
of Directors
Directors
are considered to be independent if they have no direct or indirect material relationship with the Corporation. A material relationship
is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a Director’s
independent judgment.
The
independent members of the Board at present are Mr. Abhilash Patel and Mr. Stephen Gledhill. The non-independent Director is Mr.
J. Obie Strickler. The proposed slate of Directors will be comprised of three (3) independent Directors (Mr. Abhilash Patel, Mr.
Stephen Gledhill and Mr. Sean Conacher) and one (1) non-independent Director (Mr. J. Obie Strickler).
The
Board facilitates its independent supervision over management by having regular Board meetings and by establishing and implementing
prudent corporate governance policies and procedures.
The
Board has adopted policies to provide leadership for the independent Directors.
All
Directors have attended all Board meetings held since the beginning of the Corporation’s most recently completed financial
year.
Board
of Directors Mandate
The
Board approved and adopted its Directors’ mandate. Roles and responsibilities of the Board are those typically assumed by
a board of directors.
GENERAL
The
fundamental responsibility of the Board is to appoint a competent senior management team and to oversee the management of the
business, with a view to maximizing shareholder value and ensuring corporate conduct in an ethical and legal manner via an appropriate
system of corporate governance and internal controls.
SPECIFIC
Senior
Management Responsibility
| ● | Appoint
the CEO and senior officers, approve their compensation, and monitor the CEO’s
performance against a set of mutually agreed corporate objectives directed at maximizing
shareholder value. |
| ● | In
conjunction with the CEO, develop a clear mandate for the CEO, which includes a delineation
of senior management’s responsibilities. |
| ● | Ensure
that a process is established that adequately provides for succession planning, including
the appointing, training and monitoring of senior management. |
| ● | Establish
limits of authority delegated to senior management. |
Operational
Effectiveness and Financial Reporting
| ● | Annual
review and adoption of a strategic planning process and approval of the corporate strategic
plan, which takes into account, among other things, the opportunities and risks of the
business. |
| ● | Ensure
that a system is in place to identify the principal risks to the Corporation and that
the best practical procedures are in place to monitor and mitigate the risks. |
| ● | Ensure
that processes are in place to address applicable regulatory, corporate, securities and
other compliance matters. |
| ● | Ensure
that an adequate system of internal control exists. |
| ● | Ensure
that due diligence processes and appropriate controls are in place with respect to applicable
certification requirements regarding the Corporation’s financial and other disclosure. |
| ● | Review
and approve the Corporation’s financial statements and oversee the Corporation’s
compliance with applicable audit, accounting and reporting requirements. |
| ● | Approve
annual operating and capital budgets. |
| ● | Review
and consider for approval all amendments or departures proposed by senior management
from established strategy, capital and operating budgets or matters of policy which diverge
from the ordinary course of business. |
| ● | Review
operating and financial performance results relative to established strategy, budgets
and objectives. |
Ethics,
Integrity and Code of Conduct
| ● | Approve
a communications policy or policies to ensure that a system for corporate communications
to all stakeholders exists, including processes for consistent, transparent, regular
and timely public disclosure, and to facilitate feedback from stakeholders. |
| ● | Approve
a Business Code of Conduct for Directors, Officers, employees, contractors and consultants
and monitor compliance with the Business Code of Conduct and approve any waivers of the
Business Code of Conduct for officers and directors. |
Board
Process/Effectiveness
| ● | Ensure
that Board materials are distributed to Directors in advance of regularly scheduled meetings
to allow for sufficient review of the materials prior to the meeting. Directors are expected
to attend all meetings. |
| ● | Approve
the nomination of Directors. |
| ● | Provide
a comprehensive orientation to each new Director. |
| ● | Establish
an appropriate system of corporate governance including practices to ensure the Board
functions independently of management. |
| ● | Establish
appropriate practices for the regular evaluation of the effectiveness of the Board, its
committees and its members. |
| ● | Establish
committees and approve their respective mandates and the limits of authority delegated
to each committee. |
| ● | Review
and re-assess the adequacy of the Audit Committee Mandate on a regular basis, but not
less frequently than on an annual basis. |
| ● | Review
the adequacy and form of the Directors’ compensation to ensure it realistically
reflects the responsibilities and risks involved in being a Director. |
| ● | Each
member of the Board is expected to understand the nature and operations of the Corporation’s
business, and have an awareness of the political, economic and social trends prevailing
in all countries or regions in which the Corporation invests or is contemplating potential
investment. |
| ● | Directors
shall meet regularly, and in no case less frequently than quarterly, without senior management
participation. |
| ● | In
addition to the above, adherence to all other Board responsibilities as set forth in
the Corporation’s By-Laws, applicable policies and practices and other statutory
and regulatory obligations, such as approval of dividends, issuance of securities, etc.,
is expected. |
POSITION
DESCRIPTIONS
How
the Board Delineates the Role and Responsibilities of the Chair
A
written description has been developed for the Chair of the Board. The fundamental responsibility of the Chair of the Board of
Directors of the Corporation is to effectively manage the affairs of the Board.
How
the Board Delineates the Role and Responsibilities of the Chief Executive Officer
The
Board has developed a written position description of the CEO. The CEO’s objectives are discussed and decided during the
Compensation Committee meetings following the CEO’s presentation of the annual plan. These objectives include the mandate
to maximize shareholder value. The Board approves the CEO objectives for the Corporation on an annual basis.
Orientation
and Continuing Education
When
new Directors are appointed they receive orientation, commensurate with their previous experience, on the Corporation’s
business, assets, industry, and on the responsibilities of Directors. Board meetings may also include presentations by the Corporation’s
management and employees to give the Directors additional insight into the Corporation’s business.
Ethical
Business Conduct
The
Board of Directors adopted a Code of Conduct for its Directors, Officers, and employees. Since its adoption by the Board, any
breach of the Code of Conduct must be brought to the attention of the Board by the CEO or other senior executive of the Corporation.
No material change report has ever been filed which pertains to any conduct of a Director or executive officer that constitutes
a departure from the Code of Conduct.
Steps
Taken to Ensure Directors Exercise Independent Judgement
Since
the adoption of the Code of Conduct, the Board actively monitors compliance with the Code of Conduct and promotes a business environment
where employees are encouraged to report malfeasance, irregularities and other concerns. The Code of Conduct has specific procedures
for reporting non-compliance practices in a manner which, in the opinion of the Board of Directors, encourages and promotes a
culture of ethical business conduct.
In
addition, a Director of the Corporation must immediately disclose to the Board any situation that may place him or her in a conflict
of interest. Any such declaration of interest is recorded in the minutes of the meeting. The Director abstains, except if required,
from the discussion and voting on the question. In addition, an interested Director will excuse himself or herself from the decision-making
process pertaining to a contract or transaction in which he or she has an interest.
Nomination
of Directors
The
Board will consider its size each year when it considers the number of Directors to recommend to the Shareholders for election
at the annual meeting of Shareholders, taking into account the number required to carry out the Board’s duties effectively
and to maintain a diversity of views and experience.
The
selection of the nominees of the Board is made by the other members of the Board, based on the needs of the Corporation and the
qualities required to sit on the Board, including ethical character, integrity and maturity of judgement, the level of experience,
their ideas regarding the material aspects of the business, the expertise of the candidates in the fields relevant to the Corporation,
the will and ability of the candidates to devote the necessary time to their duties, the Board and its committees, the will of
the candidates to serve the Board for numerous consecutive financial periods, and finally, the will of the candidates to refrain
from engaging in activities which conflict with the responsibilities and duties of the Director of the Corporation and its Shareholders.
The
Corporation may use various sources in order to identify the candidates for the Board, including its own contacts and references
from other Directors, Officers, advisors of the Corporation, and executive placement agencies.
The
Board does not have a nominating committee, and these functions are currently performed by the Board as a whole. However, if there
is a change in the number of Directors required by the Corporation, this policy will be reviewed.
Compensation
Committee
The
Compensation Committee has the responsibility of evaluating governance, compensation, performance incentives as well as benefits
granted to the Corporation’s upper management in accordance with their responsibilities and performance as well as to recommend
the necessary adjustments to the Board. This committee also reviews the amount and method of compensation granted to the Directors.
The Compensation Committee may mandate an external firm in order to assist it during the execution of its mandate. The Compensation
Committee considers time commitment, comparative fees and responsibility in determining compensation. The Compensation Committee
is also in charge of establishing the procedure which must be followed by the Corporation in order for it to comply with the guidelines
of the Exchange regarding corporate governance. See “Executive Compensation – Compensation Committee” for additional
details.
The
current Compensation Committee is comprised of J. Obie Strickler, Abhilash Patel and Stephen Gledhill. The Compensation Committee
will be comprised of the same individual Directors under the proposed slate of the Directors.
Directorships
Other
than Sean Conacher and Stephen Gledhill, no Director or proposed Director of the Corporation is presently a director of any other
issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction. Sean Conacher is a director
of Cannabis Growth Opportunity Corporation and Stephen Gledhill is a director of Bhang Inc.
AUDIT
COMMITTEE CHARTER
The
Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight responsibilities.
The
Audit Committee’s primary duties and responsibilities are to:
| ● | Review
management’s identification of principal financial risks and monitor the process
to manage such risks. |
| ● | Oversee
and monitor the Corporation’s compliance with legal and regulatory requirements. |
| ● | Receive
and review the reports of the Audit Committee of any subsidiary with public securities. |
| ● | Oversee
and monitor the Corporation’s accounting and financial reporting processes, financial
statements and system of internal controls regarding accounting and financial reporting
and accounting compliance. |
| ● | Oversee
audits of the Corporation’s financial statements. |
| ● | Oversee
and monitor the qualifications, independence and performance of the Corporation’s
external auditors and internal auditing department. |
| ● | Provide
an avenue of communication among the external auditors, management, the internal auditing
department; and the Board. |
| ● | Report
to the Board regularly. |
The
Audit Committee has the authority to conduct any review or investigation appropriate to fulfilling its responsibilities. The Audit
Committee shall have unrestricted access to personnel and information, and any resources necessary to carry out its responsibility.
The
Corporation’s Audit Committee is comprised of J. Obie Strickler (not independent), Abhilash Patel (independent) and Stephen
Gledhill (independent). Stephen Gledhill is the chairman of the Audit Committee. Under the proposed slate of Directors, the Audit
Committee will be comprised of the same individuals. Based on the experience of the Audit Committee members described below, the
Corporation believes that these persons have sufficient knowledge and background to actively participate on the Audit Committee.
Under
the proposed slate of Directors, the Audit Committee will consist of two independent members and one non-independent member. A
member of the Audit Committee is independent if the member has no direct or indirect material relationship with the Corporation.
A material relationship means a relationship which could, in the view of the Board, reasonably interfere with the exercise of
a member’s independent judgment.
All
the proposed Audit Committee members are financially literate. A member of the Audit Committee is considered financially literate
if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity
of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected
to be raised by the Corporation. From the experience described above, the Corporation believes that these persons have sufficient
knowledge and background to actively participate on the Audit Committee.
Relevant
Education and Experience
As
set out below, each member of the Corporation’s present Audit Committee has adequate education and experience that is relevant
to his performance as an Audit Committee member and, in particular, the requisite education and experience that have provided
the member with:
| (a) | an
understanding of the accounting principles used by the Corporation to prepare its financial
statements and the ability to assess the general application of such principles in connection
with the accounting for estimates, accruals and provisions; |
| (b) | experience
preparing, auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to the breadth
and complexity of issues that can reasonably be expected to be raised by the Corporation’s
financial statements or experience actively supervising individuals engaged in such activities;
and |
| (c) | an
understanding of internal controls and procedures for financial reporting. |
Audit
Committee Oversight
The
Audit Committee has not made any recommendations to the Board to nominate or compensate any external auditor that was not adopted
by the Board.
Reliance
on Certain Exemptions
Since
the commencement of the Corporation’s most recently completed financial year ended October 31, 2019, the Corporation has
not relied on the exemption in Section 2.4 (De Minimis Non-Audit Services) of National Instrument 52-110 Audit Committees
(“NI 52-110”) or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110. The Corporation
is relying upon the exemption in Section 6.1 (Venture Issuers) of NI 52-110.
Pre-Approval
Policies and Procedures
The
Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services.
External
Auditor Service Fees
The
aggregate fees billed by the Corporation’s external auditors in each of the last three fiscal years for audit fees are as
follows:
| Financial Year | |
Audit
Fees ($) | | |
Audit
Related
Fees ($) | |
Tax Fees(1) | |
All Other
Fees ($) | |
| Ended October 31, 2019 | |
$ | 64,186 | | |
Nil | |
Nil | |
$ | 64,186 | |
| Ended October 31, 2018 | |
$ | 80,000 | | |
Nil | |
Nil | |
$ | 80,000 | |
| Ended August 31, 2018 | |
$ | 21,400 | | |
Nil | |
Nil | |
| Nil | |
| Ended August 31, 2017 | |
$ | 21,400 | | |
Nil | |
Nil | |
| Nil | |
Notes:
| (1) | Tax
Fees include fees for all tax services other than those included in “Audit Fees”
and “Audit-Related Fees”. This category includes fees for tax compliance,
tax planning and tax advice. Tax planning and tax advice includes assistance with tax
audits and appeals, tax advice related to mergers and acquisitions, and requests for
rulings or technical advice from tax authorities. |
Other
Board Committees
The
Board has no committees other than the Audit Committee, and the Compensation Committee.
Assessments
The
Board monitors the adequacy of information given to Directors, communication between the Board and management and the strategic
direction and processes of the Board and committees. The Board of Directors does not consider that formal assessments would be
useful at this stage of the Corporation’s development. The Board conducts informal annual assessments of the Board’s
effectiveness, the individual Directors, the Audit Committee and the Compensation Committee. As part of the assessments, the Board
may review its mandate and conduct reviews of applicable corporate policies.
ADDITIONAL
INFORMATION
Financial
information regarding the Corporation is provided in the Corporation’s audited annual consolidated financial statements
for the financial years ended October 31, 2019 and 2018 and the accompanying management’s discussion and analysis. Written
requests for a copy of the above documents should be directed to the Corporation: c/o Miller Thomson LLP, Scotia Plaza, 40 King
St. W., Suite 5800, PO Box 1011, Toronto, Ontario, M5H 3S1, Attention to Grown Rogue International Inc.: Michael Johnston, CFO
and Corporate Secretary.
Additional
information concerning the Corporation is also available online at www.sedar.com.
DIRECTORS’
APPROVAL OF INFORMATION CIRCULAR
The
contents and the sending of this Information Circular to the Shareholders have been approved by the Board.
DATED
at Toronto, Ontario this 20th day of July, 2020.
| |
BY
ORDER OF THE BOARD OF DIRECTORS |
| |
|
| |
(signed)
“J. Obie Strickler” |
| |
J.
Obie Strickler |
| |
Director,
President and Chief Executive Officer |
SCHEDULE
A
GROWN
ROGUE INTERNATIONAL INC.
AMENDED AND RESTATED BY-LAW NO. 1
A
by-law relating generally to the conduct of the affairs of GROWN ROGUE INTERNATIONAL INC.
BE
IT ENACTED AND IT IS HEREBY ENACTED as a by-law of GROWN ROGUE INTERNATIONAL INC. (hereinafter called the
“Corporation”) as follows:
DEFINITIONS
| 1. | In
this by-law and all other by-laws of the Corporation, unless the context otherwise specifies
or requires: |
| (a) | “Act”
means the Business Corporations Act (Ontario), as from time to time amended, and
every statute that may be substituted therefor and, in the case of such amendment or
substitution, any reference in the by-laws of the Corporation shall be read as referring
to the amended or substituted provisions therefore; |
| (b) | “articles”
means the Articles of Amalgamation of the Corporation as from time to time amended or
restated; |
| (c) | “Associate”
has the meaning given in National Instrument 45-106 – Prospectus Exemptions,
as may be amended from time to time; |
| (d) | “Board”
means the board of directors of the Corporation; |
| (e) | “Corporation”
means Grown Rogue International Inc.; |
| (f) | “director”
means an individual who is duly elected or appointed as a director of the Corporation; |
| (g) | “officer”
means any officer of the Corporation appointed by the Board; |
| (h) | “public
announcement” means disclosure in a press release disseminated by the Corporation
through a national news service in Canada, or in a document filed by the Corporation
for public access under its profile on the System of Electronic Document Analysis and
Retrieval at www.sedar.com; |
| (i) | “shareholder”
means a shareholder of the Corporation; |
| (j) | all
terms contained in the by-laws which are defined in the Act shall have the meanings given
to such terms in the Act; |
| (k) | words
importing the singular number only shall include the plural and vice-versa; words importing
the masculine gender shall include the feminine and neuter genders; and |
| (l) | the
headings used in the by-laws are inserted for reference purposes only and are not to
be considered or taken into account in construing the terms or provisions thereof or
to be deemed in any way to clarify, modify or explain the effect of any such terms or
provisions. |
REGISTERED
OFFICE
| 2. | The
Corporation may from time to time (i) by resolution of the directors change the address
of the registered office of the Corporation within the municipality or geographic township
within Ontario specified in its articles, and (ii) by a special resolution of the shareholders,
change the municipality or geographic township within Ontario in which its registered
office is situated. |
SEAL
| 3. | The
Corporation may, but need not, adopt a corporate seal, and if one is adopted, it may
be changed from time to time by the board. An instrument or agreement executed on behalf
of the Corporation by a director, an officer or an agent of the Corporation is not invalid
merely because the corporate seal, if any, is not affixed thereto. |
DIRECTORS
| 4. | Number
and powers. The number of directors of the Corporation shall be such number as shall
be determined from time to time by the directors, subject to such minimum and maximum
number of directors as is set out in the articles of the Corporation. Notwithstanding
the foregoing, if the Corporation is an “offering corporation” as defined in
paragraph 1(1) of the Act, there shall be a minimum of three directors. Not less than
25% of the directors shall be resident Canadians. Subject to any unanimous shareholder
agreement, the directors shall manage or supervise the management of the business and
affairs of the Corporation and may exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation and are not by the Act, the articles,
the by-laws, any special resolution of the Corporation, a unanimous shareholder agreement
or by statute expressly directed or required to be done in some other manner. |
Notwithstanding
any vacancy among the directors the remaining directors may exercise all the powers of the board so long as a quorum of the board
remains in office.
Subject
to the Act and to the Corporation’s articles, where there is a quorum of directors in office and a vacancy occurs, the directors
remaining in office may appoint a qualified person to hold office for the unexpired term of the predecessor director.
| 5. | Duties. Every director and officer of the Corporation in exercising their powers and discharging
their duties shall: |
| (a) | act
honestly and in good faith with a view to the best interests of the Corporation; and |
| (b) | exercise
the care, diligence and skill that a reasonably prudent person would exercise in comparable
circumstances. |
Every
director and officer of the Corporation shall comply with the Act, the regulations thereunder, the Corporation’s articles and
by-laws and any unanimous shareholder agreement.
| 6. | Qualification. Every director shall be an individual eighteen (18) or more years of age and no one
who is of unsound mind and has been so found by a court in Canada or elsewhere or who
has the status of a bankrupt shall be a director. |
| 7. | Term
of office. A director’s term of office (subject to the provisions, if any, of the
Corporation’s articles, and subject to his or her election for an expressly stated term)
shall be from the date of the meeting at which he or she is elected or appointed until
the close of the annual meeting of shareholders next following his or her election or
appointment or until his or her successor is elected or appointed. |
| 8. | Vacation
of office. The office of a director shall be vacated if: |
| (a) | the
person dies or, subject to the Act, sends to the Corporation a written resignation and
such resignation, if not effective upon receipt by the Corporation, becomes effective
in accordance with its terms; |
| (b) | the
person is removed from office in accordance with the Act; |
| (c) | the
person has the status of bankrupt; or |
| (d) | the
person has been found under the Substitute Decisions Act or under the Mental
Health Act to be incapable of managing property or has been found to be incapable
by a court in Canada or elsewhere. |
| 9. | Election
and removal. Directors shall be elected by the shareholders by ordinary resolution
on a show of hands unless a poll is demanded and if a poll is demanded such election
shall be by ballot. Except for those directors elected for an expressly stated term,
all the directors then in office shall cease to hold office at the close of the meeting
of shareholders at which directors are to be elected but, if qualified, are eligible
for re- election. Subject to subsection 122(2) of the Act, the shareholders of the Corporation
may by ordinary resolution at an annual or special meeting remove any director before
the expiration of their term of office and may, by a majority of the votes cast at the
meeting, elect any person in their stead for the remainder of their term in accordance
with Paragraph 11. |
Whenever
at any election of directors of the Corporation the number or the minimum number of directors required by the articles or herein
is not elected by reason of the disqualification, incapacity or the death of any candidates, the directors elected at that meeting
may exercise all the powers of the directors if the number of directors so elected constitutes a quorum pending the holding of
a meeting of shareholders in accordance with subsection 124(3) of the Act.
A
retiring director shall cease to hold office at the close of the meeting at which their successor is elected unless such meeting
was called for the purpose of removing him or her from office as a director in which case the director so removed shall vacate
office forthwith upon the passing of the resolution for their removal.
| 10. | Validity
of acts. An act done by a director or by an officer is not invalid by reason only
of any defect that is thereafter discovered in their appointment, election or qualification. |
| 11. | Advance
Notice of a Director Nominee. Subject to the provisions of the Act and the articles
of the Corporation, only persons who are nominated in accordance with the procedures
set out in this Paragraph 11 shall be eligible for election
as directors of the Corporation. |
| (a) | Nominations
of persons for election to the board may only be made at an annual general meeting of
shareholders, or at a special meeting of shareholders called
for any purpose which includes the election of directors to the board, as follows: |
| (i) | by
or at the discretion of the board or an authorized officer of the Corporation, including
pursuant to a notice of meeting (provided that any such proposed nominee provides to
the Corporation a duly completed personal information form in respect of the proposed
nominee in the form prescribed from time to time by the principal stock exchange on which
the securities of the Corporation are then listed for trading); |
| (ii) | by
or at the direction or request of one or more shareholders pursuant to a proposal made
in accordance with the provisions of the Act or a requisition to call a shareholders
meeting made in accordance with the provisions of the Act; or |
| (iii) | by
any person (a “Nominating Shareholder”) who: (A) is, at the close of
business on the date of the giving of the notice provided for in Paragraph 11(c)
below and on the record date for notice of such meeting, either entered in the securities
register of the Corporation as a holder of one or more shares carrying the right to vote
at such meeting or who beneficially owns shares that are entitled to be voted at such
meeting; and (B) has given timely notice in proper written form in accordance with the
procedures set forth below in this Paragraph 11. |
| (b) | For
the avoidance of doubt, the foregoing Paragraph 11(a) shall
be the exclusive means for any person to bring nominations for election to the board
at or in connection with any annual or special meeting of shareholders of the Corporation.
In addition to any other applicable requirements, for a nomination to be made by a Nominating
Shareholder, the Nominating Shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation at the principal executive offices of
the Corporation in accordance with this Paragraph 11. |
| (c) | For
a nomination made by a Nominating Shareholder to be timely notice (a “Timely
Notice”), the Nominating Shareholder’s notice must be in written form prepared
in accordance with Paragraph 11(d) and received by the Secretary
of the Corporation at the principal executive offices of the Corporation; |
| (i) | in
the case of an annual general meeting of shareholders, not less than 30 nor more than
65 days prior to the date of the annual general meeting of shareholders; provided, however,
if the first public announcement made by the Corporation of the date of the annual general
meeting is less than 50 days prior to the meeting date (the “Notice Date”),
not later than the close of business on the 10th day following the Notice Date; and |
| (ii) | in
the case of a special meeting (which is not also an annual general meeting) of shareholders
called for any purpose which includes the election of directors to the board, not later
than the close of business on the 15th day following the day on which the first public
announcement of the date of the special meeting is made by the Corporation. |
| (d) | To
be in proper written form, a Nominating Shareholder’s notice to the Secretary must comply
with this Paragraph 11 and: |
| (i) | disclose
or include, as applicable, as to each person whom the Nominating Shareholder proposes
to nominate for election as a director (a “Proposed Nominee”): |
| (A) | their
name, age, business and residential address, principal occupation or employment for the
past five years, and status as a “resident Canadian” (as such term is defined
in the Act); |
| (B) | their
direct or indirect beneficial ownership in, or control or direction over, any class or
series of securities of the Corporation, including the number or principal amount and
the date(s) on which such securities were acquired; |
| (C) | any
relationships, agreements, arrangements or understandings, including financial, compensation
and indemnity related relationships, agreements, arrangements or understandings, between
the Proposed Nominee or any affiliates or Associates of, or any person or entity acting
jointly or in concert with, the Proposed Nominee and the Nominating Shareholder; |
| (D) | any
other information that would be required to be disclosed in a dissident proxy circular
or other filings required to be made in connection with the solicitation of proxies for
election of directors pursuant to the Act or applicable securities laws; |
| (E) | a
duly completed personal information form in respect of the Proposed Nominee in the form
prescribed from time to time by the principal stock exchange on which the securities
of the Corporation are then listed for trading; and |
| (F) | a
statement as to whether the Proposed Nominee would be an “independent” director
(within the meaning of sections 1.4 and 1.5 of National Instrument 52-110 – Audit
Committees of the Canadian Securities Administrators, as such provisions may be amended
from time to time) if elected as a director of the Corporation, and the reasons and basis
for such determination; and |
| (ii) | disclose
or include, as applicable, as to each Nominating Shareholder giving the notice and each
beneficial owner, if any, on whose behalf the nomination is made: |
| (A) | their
name, business and residential address; |
| (B) | any
direct or indirect beneficial ownership in, or control or direction over, any class or
series of securities of the Corporation, including the number or principal amount and
the date(s) on which such securities were acquired; |
| (C) | any
relationships, agreements, arrangements or understandings, including financial, compensation
and indemnity related relationships, agreements, arrangements or understandings, between
the Nominating Shareholder or any affiliates or Associates
of, or any person or entity acting jointly or in concert with, the Nominating Shareholder and any Proposed Nominee; |
| (D) | any
proxy, contract, arrangement, agreement or understanding pursuant to which such person,
or any of its affiliates or Associates, or any person acting jointly or in concert with
such person, has any interests, rights or obligations relating to the voting of any securities
of the Corporation or the nomination of directors to the board; |
| (E) | their
interests in, or rights or obligations associated with, an agreement, arrangement or
understanding, the purpose or effect of which is to alter, directly or indirectly, the
person’s economic interest in a security of the Corporation or the person’s economic
exposure to the Corporation; |
| (F) | any
direct or indirect interest of such person in any contract with the Corporation or with
any of the Corporation’s affiliates or principal competitors; |
| (G) | a
representation and proof that the Nominating Shareholder is a holder of record of securities
of the Corporation, or a beneficial owner, entitled to vote at such meeting, and intends
to appear in person or by proxy at the meeting to propose such nomination; |
| (H) | a
representation as to whether such person intends to deliver a proxy circular and/or form
of proxy to any shareholder of the Corporation in connection with such nomination or
otherwise solicit proxies or votes from shareholders of the Corporation in support of
such nomination; and |
| (I) | any
other information relating to such person that would be required to be included in a
dissident proxy circular or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to the Act or as required by applicable
securities laws. |
The
Corporation may require any Proposed Nominee to furnish such other information as may reasonably be required by the Corporation
to determine the eligibility of such Proposed Nominee to serve as an independent director of the Corporation or that could be
material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such Proposed Nominee.
| (e) | All
information to be provided in a Timely Notice pursuant to Paragraph 11(c) shall be provided as of the record date for determining
shareholders entitled to vote at the meeting (if such date shall then have been publicly announced) and as of the date of such
notice. The Nominating Shareholder shall update such information to the extent necessary so that it is true and correct as of
the date that is ten (10) business days prior to the date of the meeting, or any adjournment or postponement thereof. |
| (f) | To
be eligible to be a candidate for election as a director and to be duly nominated, a Proposed Nominee must have previously delivered
to the Secretary at the registered office of the Corporation, not less than five days prior to the date of the meeting of shareholders,
a written representation and agreement (in form provided by the Corporation) that the Proposed Nominee, if elected as a director,
will comply with all applicable corporate governance, conflict of interest, confidentiality and insider trading policies and guidelines
of the Corporation in effect during the Proposed Nominee’s term in office as a director. Upon the request of a Proposed
Nominee or a Nominating Shareholder, the Secretary shall provide copies of all such policies and guidelines then in effect. |
| (g) | Notwithstanding
any other provision of this by-law, any notice, or other document or information required
to be given to the Secretary pursuant to this Paragraph 11
may only be given by personal delivery, facsimile transmission or by email (at such email
address as may be stipulated from time to time by the Secretary for purposes of this
notice), and shall be deemed to have been given and made only at the time it is served
by personal delivery to the Secretary at the address of the principal executive offices
of the Corporation, email (at the address as aforesaid and provided that receipt of confirmation
of such email has been received) or sent by facsimile transmission (provided that receipt
of confirmation of such transmission has been received); provided that if such delivery
or electronic communication is made on a day which is a not a business day or later than
5:00 p.m.
(Toronto time) on a day which is a business day in Toronto, Ontario, then such delivery or electronic communication shall be deemed
to have been made on the next following day that is a business day. |
| (i) | Nothing
in this Paragraph 11 shall obligate the Corporation or the
board to include in any proxy statement or other shareholder communication distributed
by or on behalf of the Corporation or board any information with respect to any proposed
nomination or any Nominating Shareholder or Proposed Nominee. |
| (ii) | The
chair of any meeting of shareholders of the Corporation shall have the power to determine
whether any proposed nomination is made in accordance with the provisions of this Paragraph
11, and if any proposed nomination is not in compliance with such provisions, may declare
that such defective nomination shall not be considered at any meeting of shareholders. |
| (iii) | Despite
any other provision of this by-law, if the Nominating Shareholder (or a qualified representative
of the Nominating Shareholder) does not appear at the meeting of shareholders of the
Corporation to present the nomination of the Proposed Nominee, such nomination shall
be disregarded, notwithstanding that proxies in respect of such nomination may have been
received by the Corporation. |
| (iv) | Notwithstanding
any of the foregoing, the board may, in its sole discretion, waive any requirement of
this Paragraph 11. In no event shall any adjournment or postponement
of a meeting of shareholders of the Corporation or the announcement thereof commence
a new time period for the giving of a Nominating Shareholder’s notice. |
MEETINGS
OF DIRECTORS
| 12. | Place
of meeting. Meetings of directors and of any committee of directors may be held at
any place within or outside Ontario and in any financial year a majority of the meetings
of the board of directors need not be held at a place within Canada. A meeting of directors
may be convened by the Chairman of the Board (if any), the President or any director
at any time and the Secretary shall upon direction of any of the foregoing convene a
meeting of directors. A quorum of the directors may, at any time, call a meeting of the
directors for the transaction of any business the general nature of which is specified
in the notice calling the meeting. |
| 13. | Notice. Notice of the time and place for the holding of any such meeting shall be sent to
each director not less than 2 days (exclusive of the day on which the notice is sent
but inclusive of the day for which notice is given) before the date of the meeting; provided
that meetings of the directors or of any committee of directors may be held at any time
without formal notice if all the directors are present (except where a director attends
a meeting for the express purpose of objecting to the transaction of any business on
the grounds that the meeting is not lawfully called) or if all the absent directors have
waived notice. |
Notice
of the time and place for the holding of any meeting of directors or any committee of directors may be given by delivery, facsimile,
e-mail or other electronic means that produces a written copy.
For
the first meeting of directors to be held following the election of directors at an annual or special meeting of the shareholders
or for a meeting of directors at which a director is appointed to fill a vacancy in the board, no notice of such meeting need
be given to the newly elected or appointed director or directors in order for the meeting to be duly constituted, provided a quorum
of the directors is present.
The
accidental failure to give notice of a meeting of directors to any director entitled to a notice or any error in a notice not
affecting its substance does not invalidate any action taken at the meeting to which the notice relates.
| 14. | Waiver
of notice. Notice of any meeting of directors or of any committee of directors or
any irregularity in any meeting or in the notice thereof may be waived in any manner
by any director and such waiver may be validly given either before or after the meeting
to which such waiver relates. Attendance of a director at a meeting of directors is a
waiver of notice of the meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business on the grounds that the meeting
is not lawfully called. |
| 15. | Remote
participation. Where all the directors of the Corporation present at or participating
in the meeting consent thereto (either before or after the meeting), a director may participate
in a meeting of directors or of any committee of directors by means of such telephone,
electronic or other communications facilities as permit all persons participating in
the meeting to communicate with each other simultaneously and instantaneously, and a
director participating in a meeting by such means shall be deemed for the purposes of
the Act to be present at that meeting. If the majority of the directors participating
in the meeting are then in Canada, the meeting shall be deemed to be held in Canada. |
| 16. | Adjournment. Any meeting of directors or of any committee of directors may be adjourned from time
to time by the chairman of the meeting, with the consent of the meeting, to a fixed time
and place and no notice of the time and place for the holding of the adjourned meeting
need be given to any director if the time and place of the adjourned meeting is announced
at the original meeting. Any adjourned meeting shall be duly constituted if held in accordance
with the terms of the adjournment and a quorum is present thereat. The directors who
formed a quorum at the original meeting are not required to form the quorum at the adjourned
meeting. If there is no quorum present at the adjourned meeting, the original meeting
shall be deemed to have terminated forthwith after its adjournment. |
| 17. | Quorum
and voting. A majority of the number of directors or minimum number of directors
required by the articles shall constitute a quorum for the transaction of business. Subject
to subsection 124(1) of the Act, no business shall be transacted by the directors except
at a meeting of directors at which a quorum is present and at which not less than 25%
of the directors present are resident Canadians, except where: |
| (i) | a
resident Canadian director who is unable to be present approves in writing or by telephone or other communication facilities the
business transacted at the meeting; and |
| (ii) | 25%
of resident Canadians would have been present had that director been present at the meeting. |
Questions
arising at any meeting of directors shall be decided by a majority of votes. In case of an equality of votes, the chairman of
the meeting shall not be entitled to a second or casting vote.
| 18. | Chairperson
of Meetings. The chairperson of any meeting of directors will be the first mentioned
of the following officers (if appointed) who is a director and is present at the meeting:
Chairman of the board, President, Senior Vice-President or any other Vice- President.
If none of the Chairman of the board, President or Senior Vice-President is present at
the meeting, and if more than one Vice-President is present, the first Vice- President
to arrive will be chairperson of the meeting. If none of the foregoing officers is present,
the directors present may choose one of their number to be chairperson of the meeting. |
| 19. | Resolution
in Lieu of Meeting. A resolution in writing signed by all the directors entitled
to vote on that resolution at a meeting of directors or committee of directors is as
valid as if it had been passed at a meeting of directors or committee of directors. A
resolution in writing may be signed in one or more counterparts, all of which together
constitute the same resolution. A facsimile or electronic reproduction of a signed counterpart
of a resolution in writing is as valid as an originally signed counterpart. |
| 20. | Borrowing
Power. Without authorization of the shareholders, the directors may authorize the
Corporation to: |
| (i) | borrow
money on the credit of the Corporation; |
| (ii) | issue,
reissue, sell or pledge debt obligations of the Corporation; |
| (iii) | subject
to the Act, give a guarantee on behalf of the Corporation to secure performance of an
obligation of any person; and |
| (iv) | mortgage,
hypothecate, pledge or otherwise create a security interest in all or any property of
the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation. |
The
directors, by resolution, may delegate to a director, a committee of directors or an officer all or any of the powers conferred
on them by the by-laws of the Corporation.
COMMITTEES
OF DIRECTORS
| 21. | General.
The directors may from time to time appoint from their number a committee of directors
and may delegate to such committee any of the powers of the directors, except those which
under the Act must be exercised by the board itself. |
| 22. | Audit
Committee. If the Corporation is an “offering corporation” as defined in
paragraph 1(1) of the Act, the board of directors shall, and otherwise the directors
may, appoint annually from among their number an audit committee to be composed of not
fewer than 3 directors, the majority of whom are not officers or employees of the Corporation
or any of its affiliates to hold office until the next annual meeting of the shareholders. |
Each
member of the audit committee shall serve during the pleasure of the board of directors and, in any event, only so long as such
person shall be a director. The directors may fill vacancies in the audit committee by election from among their number.
The
audit committee shall have power to fix its quorum at not less than a majority of its members and to determine its own rules of
procedure subject to any regulations imposed by the board of directors from time to time and to the following paragraph.
The
auditor of the Corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the Corporation,
to attend and be heard thereat; and, if so requested by a member of the audit committee, shall attend every meeting of the committee
held during the term of office of the auditor. The auditor of the Corporation or any member of the audit committee may call a
meeting of the committee.
The
audit committee shall review the quarterly and annual financial statements of the Corporation and shall report thereon to the
board of directors of the Corporation prior to approval thereof by the board of directors and shall have such other powers and
duties as may from time to time by resolution be assigned to it by the board.
REMUNERATION
OF DIRECTORS, OFFICERS AND EMPLOYEES
| 23. | The
remuneration to be paid to the directors of the Corporation shall be such as the directors
shall from time to time by resolution determine. The directors may also by resolution
award special remuneration to any director in undertaking any special services on the
Corporation’s behalf other than the normal work ordinarily required of a director of
a corporation. The confirmation of any such resolution or resolutions by the shareholders
shall not be required. The directors may fix the remuneration of the officers and employees
of the Corporation. The directors, officers and employees shall also be entitled to be
paid their travelling and other expenses properly incurred by them in connection with
the affairs of the Corporation. |
SUBMISSION
OF CONTRACTS OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL
| 24. | The
directors in their discretion may submit any contract, act or transaction for approval,
ratification or confirmation at any meeting of the shareholders called for the purpose
of considering the same and any contract, act or transaction that shall be approved,
ratified or confirmed by resolution passed by a majority of the votes cast at any such
meeting (unless any different or additional requirement is imposed by the Act or by the
Corporation’s articles or by-laws) shall be as valid and as binding upon the Corporation
and upon all the shareholders as though it had been approved, ratified and/or confirmed
by every shareholder of the Corporation. |
FOR
THE PROTECTION OF DIRECTORS AND OFFICERS
| 25. | No
director or officer for the time being of the Corporation shall be liable for the acts,
receipts, neglects or defaults of any other director or officer or employee or for joining
in any receipt or act for conformity or for any loss, damage or expense suffered or incurred
by the Corporation through the insufficiency or deficiency of title to any property acquired
by the Corporation or for or on behalf of the Corporation or for the insufficiency or
deficiency of any security in or upon which any of the moneys of or belonging to the
Corporation shall be placed out or invested or for any loss or damage arising from the
bankruptcy, insolvency or tortious act of any person, firm or corporation including any
person, firm or corporation with whom or which any moneys, securities or effects shall
be lodged or deposited or for any loss, conversion, misapplication or misappropriation
of or any damage resulting from any dealings with any moneys, securities or other assets
belonging to the Corporation or for any other loss, damage or misfortune whatever which
may happen in the execution of the duties of their respective office of trust or in relation
thereto, unless the same shall happen by or through their failure to exercise the powers
and to discharge the duties of their office honestly and in good faith with a view to
the best interests of the Corporation, and in connection therewith to exercise the care,
diligence and skill that a reasonably prudent person would exercise in comparable circumstances,
provided that nothing herein contained shall relieve a director or officer from the duty
to act in accordance with the Act or regulations made thereunder or relieve him or her
from liability for a breach thereof. The directors for the time being of the Corporation
shall not be under any duty or responsibility in respect of any contract, act or transaction
whether or not made, done or entered into in the name or on behalf of the Corporation,
except such as shall have been submitted to and authorized or approved by the board of
directors. If any director or officer of the Corporation shall be employed by or shall
perform services for the Corporation otherwise than as a director or officer, or shall
be a member of a firm or a shareholder, director or officer of a body corporate which
is employed by or performs services for the Corporation, the fact of such individual
being a shareholder, director or officer of the Corporation shall not disentitle such
director or officer or such firm or body corporate, as the case may be, from receiving
proper remuneration for such services. |
INDEMNITIES
TO DIRECTORS AND OTHERS
| 26. | Subject
to subsections 136(3) and (4) of the Act, the Corporation shall indemnify a director
or officer of the Corporation, a former director or officer of the Corporation or a person
who acts or acted at the Corporation’s request as a director or officer of a body corporate
of which the Corporation is or was a shareholder or creditor, and his heirs and legal
representatives, against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by him or her in respect
of any
civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a
director or officer of such corporation or body corporate, if |
| (a) | he
or she acted honestly and in good faith with a view to the best interests of the Corporation;
and |
| (b) | in
the case of a criminal or administrative action or proceeding that is enforced by a monetary
penalty, he or she had reasonable grounds for believing that their conduct was lawful. |
The
Corporation is hereby authorized to execute agreements evidencing its indemnity in favour of the foregoing persons to the full
extent permitted by law.
INSURANCE
| 27. | The
Corporation may purchase and maintain insurance for the benefit of a person referred
to in Paragraph 26 above against the liabilities and in the amounts the Act permits. |
OFFICERS
| 28. | Appointment
of officers. The directors shall annually or as often as may be required appoint
a President, Chief Executive Officer, Chief Financial Officer or Treasurer and Secretary,
and if deemed advisable may annually or as often as may be required appoint a Chairman
of the Board and one or more Vice-Presidents. None of such officers, except the Chairman
of the Board, need be a director of the Corporation. Any director may be appointed to
any office of the Corporation. Two or more of such offices may be held by the same person
and two persons may individually hold any of such combined offices. The directors may
from time to time appoint such other officers, employees and agents as they shall deem
necessary who shall have such titles, authority and shall perform such functions and
duties as may from time to time be prescribed by the directors, and such functions may,
subject to the Act and applicable law, be the same or similar to the descriptions set
out in Sections 31-36. |
| 29. | Removal
of officers, etc. All officers, employees and agents, in the absence of agreement
to the contrary, shall be subject to removal by resolution of the directors at any time,
with or without cause. |
| 30. | Duties
of officers may be delegated. In case of the absence or inability or refusal to act
of any officer of the Corporation or for any other reason that the directors may deem
sufficient, the directors may delegate all or any of the powers of such officer to any
other officer or to any director for the time being. |
| 31. | Chairman
of the Board. The Chairman of the Board (if any), shall when present preside at all
meetings of the directors, any committee of the directors and, unless otherwise agreed
by the Chairman and the board, any meeting of shareholders, shall sign such documents
as may require his or her signature in accordance with the by-laws of the Corporation
and shall have such other powers and shall perform such other duties as may from time
to time be assigned to him or her by resolution of the directors or as are incident to
their office. The Chairman of the Board may, but need not, also be the Chief Executive
Officer. |
| 32. | President. The President shall exercise general supervision over the business and affairs of
the Corporation. In the absence of the Chairman of the Board (if any), and if the President
is also a director of the Corporation, the President shall, when present, preside at
all meetings of the directors, any committee of the directors and, unless otherwise agreed
by the Chairman and the board, any meeting of shareholders, he or she shall sign such
contracts, documents or instruments in writing as require his or her signature and shall
have such other powers and shall perform such other duties as may from time to time be
assigned to him or her by resolution of the directors or as are incident to his or her
office. |
| 33. | Vice-President. The Vice-President or, if more than one, the Vice-Presidents in order of seniority,
shall be vested with all the powers and shall perform all the duties of the President
in the absence or inability or refusal to act of the President, provided, however, that
a Vice-President who is not a director shall not preside as chairman at any meeting of
directors. The Vice-President or, if more than one, the Vice-Presidents in order of seniority,
shall sign such contracts, documents or instruments in writing as require his, her or
their signatures and shall also have such other powers and duties as may from time to
time be assigned to him, her or them by resolution of the directors. |
| 34. | Secretary. The Secretary shall give or cause to be given notices for all meetings of the directors,
any committee of the directors and shareholders when directed to do so and shall have
charge of the minute books of the Corporation and, subject to the provisions of Paragraph
56 hereof, of the documents and registers referred to in subsections 140(1) and (2) of
the Act. He or she shall sign such contracts, documents or instruments in writing as
require his or her signature and shall have such other powers and duties as may from
time to time be assigned to him or her by resolution of the directors or as are incident
to his or her office. |
| 35. | Chief
Financial Officer or Treasurer. Subject to the provisions of any resolution of the
directors, the Treasurer shall have the care and custody of all the funds and securities
of the Corporation and shall deposit the same in the name of the Corporation in such
bank or banks or with such other depositary or depositaries as the directors may by resolution
direct. He or she shall prepare and maintain adequate accounting records. He or she shall
sign such contracts, documents or instruments in writing as require his or her signature
and shall have such other powers and duties as may from time to time be assigned to him
or her by resolution of the directors or as are incident to his or her office. He or
she may be required to give such bond for the faithful performance of his or her duties
as the directors in their uncontrolled discretion may require and no director shall be
liable for failure to require any such bond or for the insufficiency of any such bond
or for any loss by reason of the failure of the Corporation to receive any indemnity
thereby provided. |
| 36. | Chief
Executive Officer. The directors may from time to time appoint from their number
a Chief Executive Officer and may delegate to the Chief Executive Officer any of the
powers of the directors subject to the limits on authority provided by subsection 127(3)
of the Act. A Chief Executive Officer shall conform to all lawful orders given to him
or her by the directors of the Corporation and shall at all reasonable times give to
the directors or any of them all information they may require regarding the affairs of
the Corporation. Any agent or employee appointed by a Chief Executive Officer shall be
subject to discharge by the directors. |
| 37. | Vacancies. If the office of Chairman of the Board, Chief Executive Officer, President, Vice-President,
Secretary, Chief Financial Officer or Treasurer, or any other office created
by the directors pursuant to Paragraph 28 hereof shall be or become vacant by reason of death, resignation
or in any other manner whatsoever, the directors shall in the case of the President or the Secretary and may in the case of the
other officers appoint an officer to fill such vacancy. |
| 38. | Term
of Office. The board, in its discretion, may remove any officer of the Corporation,
without prejudice to the rights of such officer under any employment contract. Otherwise
each officer of the Corporation shall hold office until his or her successor is elected
or appointed or until his or her earlier resignation. |
| 39. | Agents
and Attorneys. The board may appoint agents or attorneys of the Corporation within
or outside Canada with such powers and duties as it may deem fit. |
| 40. | Conflict
of Interest. An officer who is a party to, or who is a director or officer of or
has a material interest in any person who is a party to, a material contract or proposed
material contract with the Corporation shall disclose his or her interest in any material
contract or proposed material contract with the Corporation shall disclose the nature
and extent of his or her interest at the time and in the manner provided by the Act. |
SHAREHOLDERS’
MEETINGS
| 41. | Annual
or special meetings. Subject to subsection 104(1) of the Act, the directors of the
Corporation, |
| (a) | shall
call an annual meeting of shareholders not later than eighteen months after the Corporation
comes into existence and subsequently not later than fifteen months after holding the
last preceding annual meeting; and |
| (b) | may
at any time call a special meeting of shareholders. |
| 42. | Place
of meetings. Subject to the articles and any unanimous shareholder agreement, a meeting
of the shareholders of the Corporation may be held at such place in or outside Ontario
as the directors may determine or, in the absence of such a determination, at the place
where the registered office of the Corporation is located. |
| 43. | Participation
In Meetings by Electronic Means. A shareholder or any other person entitled to attend
a meeting of shareholders may participate by electronic means, telephone or other communication
facilities that permit all persons participating in the meeting to hear or otherwise
communicate with each other, and a person participating in such a meeting by those means
is deemed to be present at the meeting. |
| 44. | Electronic
Meetings. Notwithstanding any provisions hereof to the contrary, including Paragraph
42, and subject to the Act and the consent of the Board, if the Board or the shareholders
of the Corporation call a meeting of shareholders, the Board or the shareholders, as
the case may be, may determine that the meeting will be held entirely by electronic means,
telephone, or other communication facility that permits all participants to communicate
adequately with each other during the meeting. The Corporation is under no obligation
to provide telephonic, electronic or other communication facility for any shareholder
to participate in a meeting and the Board may provide such telephonic, electronic or
other communication facility in its sole and absolute discretion. |
| 45. | Notice. A notice stating the day, hour and place of meeting and, if special business is to be transacted thereat, stating (or accompanied
by a statement of) (i) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment
thereon, and (ii) the text of any special resolution or by-law to be submitted to the meeting, shall be served by sending such
notice to each person who is entitled to notice of such meeting and who on the record date for notice appears on the records of
the Corporation or its transfer agent is a shareholder entitled to vote at the meeting and to each director of the Corporation
and to the auditor of the Corporation in accordance with the provisions of Paragraph 63 hereof not less than 21 days (or such
longer period as may be required by applicable securities laws) and not more than 50 days (exclusive of the day of mailing and
of the day for which notice is given) before the date (if the Corporation is an offering corporation as such term is defined in
the Act) or not less than 10 days before the date (if the Corporation is not an offering corporation) of every meeting; provided
that a meeting of shareholders may be held for any purpose at any date and time and at any place without notice if all the shareholders
and other persons entitled to notice of such meeting are present in person or represented by proxy at the meeting (except where
the shareholder or such other person attends the meeting for the express purpose of objecting to the transaction of any business
on the grounds that the meeting is not lawfully called) or if all the shareholders and other persons entitled to notice of such
meeting and not present in person nor represented by proxy thereat waive notice of the meeting. Notice of any meeting of shareholders
or the time for the giving of any such notice or any irregularity in any such meeting or in the notice thereof may be waived in
any manner by any shareholder, the duly appointed proxy of any shareholder, any director or the auditor of the Corporation and
any other person entitled to attend a meeting of shareholders, and any such waiver may be validly given either before or after
the meeting to which such waiver relates. |
The
auditor of the Corporation is entitled to attend any meeting of shareholders of the Corporation and to receive all notices and
other communications relating to any such meeting that a shareholder is entitled to receive.
| 46. | Omission
of notice. The accidental omission to give notice of any meeting to or the non- receipt
of any notice by any person shall not invalidate any resolution passed or any proceeding
taken at any meeting of shareholders. |
| 47. | Record
dates for notice of meetings. Subject to subsection 95(4) of the Act, the directors
may fix in advance a date as the record date for the determination of shareholders entitled
to receive notice of a meeting of shareholders, but such record date shall not precede
by more than 60 days or by less than 30 days the date on which the meeting is to be held.
Notice of such record date shall be given not less than seven days before the record
date, by advertisement in a newspaper published or distributed in the place where the
Corporation has its registered office and in each place in Canada where it has a transfer
agent or where a transfer of the Corporation’s shares may be recorded, and, where applicable,
by written notice to each stock exchange in Canada on which the Corporation’s shares
are listed for trading. |
If
no record date is fixed, the record date for the determination of the shareholders entitled to receive notice of a meeting of
the shareholders shall be
| (i) | at
the close of business on the day immediately preceding the day on which notice is given; or |
| (ii) | if
no notice is given, the day on which the meeting is held. |
| 48. | Votes. Every question submitted to any meeting of shareholders shall be decided in the first
instance on a show of hands and in case of an equality of votes the chairman of the meeting
shall both on a show of hands and at a poll have a second or casting vote in addition
to the vote or votes to which he or she may be entitled as a shareholder or proxy nominee. |
Notwithstanding
any provisions in this by-law to the contrary, any vote referred to above may be held, in accordance with the Act, entirely by
electronic means, telephone or other communication facility, if the Corporation makes such a communication facility available
and any person participating in a meeting of shareholders and entitled to vote at the meeting may vote, in accordance with Act,
by electronic means, telephone or other communication facility that the Corporation has made available for that purpose.
At
any meeting, unless a poll is demanded by a shareholder or proxyholder entitled to vote at the meeting, either before or after
any vote by a show of hands, a declaration by the Chairman of the meeting that a resolution has been carried or carried unanimously
or by a particular majority or lost or not carried by a particular majority shall be evidence of the fact without proof of the
number or proportion of votes recorded in favour of or against the motion.
In
the absence of the Chairman of the Board (if any), Chief Executive Officer, the President and any Vice-President, and if no other
person is agreed by the Chairman and the board to chair the meeting within 15 minutes from the start time fixed for the meeting,
the shareholders present entitled to vote shall choose another director as chairman of the meeting and if no director is present
or if all the directors present decline to take the chair then the shareholders present shall choose one of their number to be
chairman.
If
at any meeting a poll is demanded on the election of a chairman or on the question of adjournment or termination, the poll shall
be taken forthwith without adjournment. If a poll is demanded on any other question or as to the election of directors, the poll
shall be taken by ballot in such manner and either at once or later at the meeting or after adjournment as the chairman of the
meeting directs. The result of a poll shall be deemed to be the resolution of the meeting at which the poll was demanded. A demand
for a poll may be made either before or after any vote by show of hands and may be withdrawn.
Where
two or more persons hold the same share or shares jointly, any one of such persons present at a meeting of shareholders has the
right, in the absence of the other or others, to vote in respect of such share or shares, but if more than one of such persons
are present or represented by proxy and vote, they shall vote together as one on the share or shares jointly held by them.
| 49. | Persons
Entitled to be Present. The only persons entitled to be present at a meeting of the
shareholders shall be those entitled to attend or vote at the meeting, the directors,
officers, auditor, legal counsel of the Corporation and others who, although not entitled
to attend or vote, are entitled or required under any provision of the Act, the articles,
by- laws or a unanimous shareholder agreement to be present at the meeting. Any other
person may be admitted only on the invitation of the chairperson of the meeting or with
the consent of the meeting. |
| 50. | Proxies. Votes at meetings of the shareholders may be given either personally or by proxy.
At every meeting at which a shareholder is entitled to vote, every shareholder present
in person and every proxyholder shall have one (1) vote on a show of hands. Upon a poll
at which a shareholder is entitled to vote every shareholder present in person
or by proxy shall (subject to the provisions, if any, of the Corporation’s articles) have one (1) vote for every share registered
in their name. |
Every
shareholder, including a shareholder that is a body corporate, entitled to vote at a meeting of shareholders may by means of a
proxy appoint a proxyholder or proxyholders or one or more alternate proxyholders, who need not be shareholders, as nominee to
attend and act at the meeting in the manner, to the extent and with the authority conferred by the proxy.
A
proxy shall be executed by the shareholder or attorney authorized in writing or, if the shareholder is a body corporate, by an
officer or attorney thereof duly authorized. If the Corporation is an “offering corporation” as defined in paragraph
1(1) of the Act, any such proxy appointing a proxyholder to attend and act at a meeting is only valid at the meeting in respect
of which it is given or any adjournment thereof.
An
instrument appointing a proxyholder may be in the following form or in such other form which complies with the regulations made
under the Act and other applicable law and which the directors may approve from time to time:
“The
undersigned shareholder of GROWN ROGUE INTERNATIONAL INC. hereby appoints of , whom failing,
Of as
the nominee of the undersigned to attend and act for and on behalf of the undersigned at the meeting of the shareholders of
the said Corporation to be held on the day of , 20 and at any adjournment thereof in the same manner, to the same extent
and with the same power as if the undersigned were personally present at the said meeting or such adjournment
thereof.
Dated
the day of , 20 .
This
form of proxy must be signed by a shareholder or their attorney authorized in writing or, if the shareholder is a body corporate,
by an officer or attorney thereof duly authorized.”
The
directors may from time to time pass regulations regarding the lodging of instruments appointing a proxyholder at some place
or places other than the place at which a meeting or adjourned meeting of shareholders is to be held and for particulars of
such instruments to be e-mailed, faxed, sent in writing or otherwise communicated by electronic means that produces a written
copy before the meeting or adjourned meeting to the Corporation or any agent of the Corporation appointed for the purpose of
receiving such particulars and providing that instruments appointing a proxyholder so lodged may be voted upon as though the
instruments themselves were produced at the meeting or adjourned meeting and votes given in accordance with such regulations
shall be valid and shall be counted. The chairman of the meeting of shareholders may, subject to any regulations made as
aforesaid, in his or her discretion accept e-mail, fax or written communication, or electronic communication that produces a
written copy, as to the authority of anyone claiming to vote on behalf of and to represent a shareholder notwithstanding that
no instrument of proxy conferring such authority has been lodged with the Corporation, and any votes given in accordance with
such e-mail, fax, written or electronic communication accepted by the chairman of the meeting shall be valid and shall be
counted.
| 51. | Adjournment.
The chairman of the meeting may with the consent of the meeting adjourn any meeting of shareholders from time to time to a
fixed time and place and if the meeting is adjourned for less than thirty (30) days no notice of the time and place for the holding
of the adjourned meeting need be given to any shareholder, other than by announcement at the earliest meeting that is adjourned.
If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of thirty (30) days or more, notice of
the adjourned meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments
for an aggregate of more than ninety (90) days, section 111 and section 112 of the Act do not apply. Any adjourned meeting shall
be duly constituted if held in accordance with the terms of the adjournment, provided that a quorum is present thereat. The persons
who formed a quorum at the original meeting are not required to form the quorum at the adjourned meeting. If there is no quorum
present at the adjourned meeting, the original meeting shall be deemed to have terminated forthwith after its adjournment. Any
business may be brought before or dealt with at any adjourned meeting which might have been brought before or dealt with at the
original meeting in accordance with the notice calling the same. |
| 52. | Quorum.
Two (2) persons present and each holding or representing by proxy at least one (1) issued share of the Corporation shall be
a quorum of any meeting of shareholders for the choice of a chairman of the meeting and for the adjournment of the meeting to
a fixed time and place but may not transact any other business; for all other purposes a quorum for any meeting shall be persons
present not being less than two (2) in number and holding or representing by proxy not less than 5% of the votes attaching to
all the issued shares of the Corporation. If a quorum is present at the opening of a meeting of shareholders, the shareholders
present may proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting. |
Notwithstanding
the foregoing, if the Corporation has only one shareholder, or only one shareholder of any class or series of shares, the shareholder
present in person or by proxy constitutes a meeting and a quorum for such meeting.
SHARES
AND TRANSFERS
| 53. | Issuance.
Subject to the articles of the Corporation and any unanimous shareholder agreement, shares in the Corporation may be issued
at such time and issued to such persons and for such consideration as the directors may determine. |
| 54. | Security
certificates. Security certificates (and the form of transfer power on the reverse side thereof) shall (subject to compliance
with section 56 of the Act) be in such form as the directors may from time to time by resolution approve and, subject to subsection
55(3) of the Act, such certificates shall be signed manually by at least one director or officer of the Corporation or by or on
behalf of a registrar, transfer agent, branch transfer agent or issuing or other authenticating agent of the Corporation, or by
a trustee who certifies it in accordance with a trust indenture, and any additional signatures required on a security certificate
may be printed or otherwise mechanically reproduced thereon. Notwithstanding any change in the persons holding an office between
the time of actual signing and the issuance of any certificate and notwithstanding that a person signing may not have held office
at the date of issuance of such certificate, any such certificate so signed shall be valid and binding upon the Corporation. |
| 55. | Transfer
agents. For each class of securities and warrants issued by the Corporation, the
directors may from time to time by resolution appoint or remove, |
| (a) | a
trustee, transfer agent or other agent to keep the securities register and the register
of transfer and one or more persons or agents to keep branch registers; and |
| (b) | a
registrar, trustee or agent to maintain a record of issued security certificates and
warrants, |
and
subject to section 48 of the Act, one person may be appointed for the purposes of both clauses (a) and (b) in respect of all securities
and warrants of the Corporation or any class or classes thereof.
| 56. | Surrender
of security certificates. Subject to the Act, no transfer of a security issued by
the Corporation shall be recorded or registered unless and until (i) the certificate
representing the security to be transferred has been surrendered and cancelled or (ii)
if no security certificate has been issued by the Corporation in respect of such share,
a duly executed security transfer power in respect thereof has been presented for registration. |
| 57. | Defaced,
destroyed, stolen or lost security certificates. In case of the defacement, destruction,
theft or loss of a security certificate, the fact of such defacement, destruction, theft
or loss shall be reported by the owner to the Corporation or to an agent of the Corporation
(if any) acting on behalf of the Corporation, with a statement verified by oath or statutory
declaration as to the defacement, destruction, theft or loss and the circumstances concerning
the same and with a request for the issuance of a new security certificate to replace
the one so defaced, destroyed, stolen or lost. Upon the giving to the Corporation (or,
if there be an agent, hereinafter in this paragraph referred to as the “Corporation’s
agent”, then to the Corporation and the Corporation’s agent) of an indemnity bond
of a surety company in such form as is approved by the directors or by the Chairman of
the Board (if any), the President, a Vice-President, the Secretary or the Treasurer of
the Corporation, indemnifying the Corporation (and the Corporation’s agent if any) against
all loss, damage and expense, which the Corporation and/or the Corporation’s agent may
suffer or be liable for by reason of the issuance of a new security certificate to such
shareholder, and provided the Corporation or the Corporation’s agent does not have notice
that the security has been acquired by a bona fide purchaser, a new security certificate
may be issued in replacement of the one defaced, destroyed, stolen or lost, if such issuance
is ordered and authorized by any one of the Chairman of the Board (if any), the President,
a Vice-President, the Secretary or the Treasurer of the Corporation or by resolution
of the directors. |
DIVIDENDS
| 58. | The
directors may from time to time by resolution declare and the Corporation may pay dividends
on its issued shares, subject to the provisions (if any) of the Corporation’s articles. |
The
directors shall not declare and the Corporation shall not pay a dividend if there are reasonable grounds for believing that:
| (a) | the
Corporation is, or, after the payment, would be unable to pay its liabilities as they
become due; or |
| (b) | the
realizable value of the Corporation’s assets would thereby be less than the aggregate
of its liabilities and stated capital of all classes. |
The
directors may declare and the Corporation may pay a dividend by issuing fully paid shares of the Corporation or options or rights
to acquire fully paid shares of the Corporation and, subject to section 38 of the Act, the Corporation may pay a dividend in money
or property.
| 59. | In
case several persons are registered as the joint holders of any securities of the Corporation,
any one of such persons may give effectual receipts for all dividends and payments on
account of dividends, principal, interest and/or redemption payments on redemption of
securities (if any) subject to redemption in respect of such securities. |
| 60. | To
the extent permitted by law, any dividend or other distribution that remains unclaimed
after a period of two years from the date on which the dividend has been declared to
be payable is forfeited and will revert to the Corporation. |
RECORD
DATES
| 61. | Subject
to section 95 of the Act, the directors may fix in advance a date as the record date for the determination of shareholders (i)
entitled to receive payment of a dividend, (ii) entitled to participate in a liquidation or distribution, or (iii) for any other
purpose except the right to receive notice of or to vote at a meeting of shareholders, but such record date shall not precede
by more than 50 days the particular action to be taken. |
If
no record is fixed, the record date for the determination of shareholders for any purpose, other than to establish a record date
for the determination of shareholders entitled to receive notice of a meeting of shareholders or to vote, shall be the close of
business on the day on which the directors pass the resolution relating thereto.
VOTING
SECURITIES IN OTHER ISSUERS
| 62. | All
securities of any other body corporate or issuer of securities carrying voting rights
held from time to time by the Corporation may be voted at all meetings of shareholders,
bondholders, debenture holders or holders of such securities, as the case may be, of
such other body corporate or issuer and in such manner and by such person or persons
as the directors of the Corporation shall from time to time determine and authorize by
resolution. The duly authorized signing officers of the Corporation may also from time
to time execute and deliver for and on behalf of the Corporation proxies and/or arrange
for the issuance of voting certificates and/or other evidence of the right to vote in
such names as they may determine without the necessity of a resolution or other action
by the directors. |
NOTICES,
ETC.
| 63. | Service.
Any notice or other document required to be given or sent by the Corporation to any
shareholder or director of the Corporation shall be delivered personally or sent by prepaid
mail or by e-mail, fax or other electronic means that produces a written copy addressed
to: |
| (a) | the
shareholder at his or her latest address as shown on the records of the Corporation or
its transfer agent; and |
| (b) | the
director at his or her latest address as shown in the records of the Corporation or in
the last notice filed under the Corporations Information Act, whichever is the more current. |
With
respect to every notice or other document sent by prepaid mail it shall be sufficient to prove that the envelope or wrapper containing
the notice or other document was properly addressed and put into a post office or into a post office letter box and shall be deemed
to be received by the addressee on the fifth day after mailing.
| 64. | If
the Corporation sends a notice or document to a shareholder and the notice or document
is returned on three consecutive occasions because the shareholder cannot be found, the
Corporation is not required to send any further notices or documents to the shareholder
until he or she informs the Corporation in writing of his or her new address. |
| 65. | Shares
registered in more than one name. All notices or other documents shall, with respect
to any shares in the capital of the Corporation registered in more than one name, be
given to whichever of such persons is named first in the records of the Corporation and
any notice or other document so given shall be sufficient notice or delivery of such
document to all the holders of such shares. |
| 66. | Persons
becoming entitled by operation of law. Every person who by operation of law, transfer
or by any other means whatsoever shall become entitled to any shares in the capital of
the Corporation shall be bound by every notice or other document in respect of such shares
which prior to the name and address of the shareholder being entered on the records of
the Corporation shall have been duly given to the person or persons from whom he or she
derives their title to such shares. |
| 67. | Deceased
shareholder. Any notice or other document delivered or sent by post or left at the
address of any shareholder as the same appears in the records of the Corporation shall,
notwithstanding that such shareholder be then deceased and whether or not the Corporation
has notice of his or her decease, be deemed to have been duly served in respect of the
shares held by such shareholder (whether held solely or with other persons) until some
other person be entered in his or her stead in the records of the Corporation as the
holder or one of the holders thereof and such service shall for all purposes be deemed
a sufficient service of such notice or other document on his or her heirs, executors
or administrators and all persons (if any) interested with him or her in such shares. |
| 68. | Signatures
to notices. The signature of any director or officer of the Corporation to any notice
may be written, printed or otherwise mechanically reproduced. |
| 69. | Computation
of time. Where a given number of days’ notice or notice extending over any period
is required to be given under any provisions of the articles or by-laws of the Corporation,
the day of service, posting or other communication of the notice shall not be counted
in such number of days or other period, and such number of days or other period shall
commence on the day following the day of service, posting or other communication of the
notice and shall terminate at midnight of the last day of the period except that if the
last day of the period falls on a Sunday or holiday the period shall terminate at midnight
of the day next following that is not a Sunday or holiday. |
| 70. | Proof
of service. A certificate of any officer of the Corporation in office at the time
of the making of the certificate or of an agent of the Corporation as to facts in relation
to the mailing or delivery or service of any notice or other documents to any shareholder, director,
officer or auditor or publication of any notice or other document shall be conclusive evidence thereof and shall be binding on
every shareholder, director, officer or auditor of the Corporation, as the case may be. |
CHEQUES,
DRAFTS, NOTES, ETC.
| 71. | All
cheques, drafts or orders for the payment of money and all notes, acceptances and bills
of exchange shall be signed by such officer or officers or other person or persons, whether
or not officers of the Corporation, and in such manner as the directors may from time
to time designate by resolution. |
CUSTODY
OF SECURITIES
| 72. | All
securities (including warrants) owned by the Corporation may, if the directors determine
it to be appropriate, be lodged (in the name of the Corporation) with a chartered bank
or a trust company or in a safety deposit box or, if so authorized by resolution of the
directors, with such other depositaries or in such other manner as may be determined
from time to time by the directors. |
All
securities (including warrants) belonging to the Corporation may be issued and held in the name of a nominee or nominees of the
Corporation (and if issued or held in the names of more than one nominee shall be held in the names of the nominees jointly with
right of survivorship) and shall be endorsed in blank with endorsement guaranteed in order to enable transfer thereof to be completed
and registration thereof to be effected.
EXECUTION
OF CONTRACTS, ETC.
| 73. | Contracts,
documents or instruments in writing requiring the signature of the Corporation may be
signed by any officer or director and all contracts, documents or instruments in writing
so signed shall be binding upon the Corporation without any further authorization or
formality. The directors are authorized from time to time by resolution to appoint any
officer or director, or officers or directors, or any other person or persons on behalf
of the Corporation either to sign contracts, documents or instruments in writing generally
or to sign specific contracts, documents or instruments in writing. |
The
corporate seal of the Corporation may, when required, be affixed to contracts, documents or instruments in writing signed as aforesaid
or by an officer or officers, person or persons appointed as aforesaid by resolution of the board of directors.
The
term “contracts, documents or instruments in writing” as used in this by-law shall include deeds, mortgages, hypothecs,
charges, conveyances, transfers and assignments of property, real or personal, immovable or movable, powers of attorney, agreements,
releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of securities
and all paper writings.
In
particular, without limiting the generality of the foregoing, such officers and/or directors are authorized to sell, assign, transfer,
exchange, convert or convey all securities owned by or registered in the name of the Corporation and to sign and execute (under
the seal of the Corporation or otherwise) all assignments, transfers, conveyances, powers of attorney and other instruments that
may be necessary for the purpose of selling, assigning, transferring, exchanging, converting or conveying any such securities.
The
signature or signatures of any such officer or director of the Corporation and/or of any other officer or officers, person or
persons appointed as aforesaid by resolution of the directors may, if specifically authorized by resolution of the directors,
be printed, engraved, lithographed or otherwise mechanically reproduced upon all contracts, documents or instruments in
writing or bonds, debentures or other securities of the Corporation executed or issued by or on behalf of the Corporation and
all contracts, documents or instruments in writing or securities of the Corporation on which the signature or signatures of
any of the foregoing officers, directors or persons shall be so reproduced, by authorization by resolution of the directors,
shall be deemed to have been manually signed by such officers, directors or persons whose signature or signatures is or are
so reproduced and shall be as valid to all intents and purposes as if they had been signed manually and notwithstanding that
the officers, directors or persons whose signature or signatures is or are so reproduced may have ceased to hold office at
the date of the delivery or issue of such contracts, documents or instruments in writing or securities of the
Corporation.
ENFORCEMENT
OF LIEN FOR INDEBTEDNESS
| 74. | Unless
the Corporation has shares listed on a stock exchange recognized by the Ontario Securities
Commission, the Corporation has a lien on shares registered in the name of a shareholder
or their legal representative for a debt of that shareholder to the Corporation. The
directors of the Corporation may authorize the Corporation to apply any dividends or
other distributions paid or payable on or in respect of the share or shares in respect
of which the Corporation has such a lien in repayment of the debt of that shareholder
to the Corporation. |
FINANCIAL
YEAR
| 75. | The
financial year of the Corporation shall terminate on such day in each year as the board
of directors may from time to time by resolution determine. |
PARAMOUNTCY
| 76. | In
the event of any conflict between any provision of this by-law and the Act or the articles,
the provision of the Act or the articles shall prevail. |
REPEAL
| 77. | All
previous by-laws of the Corporation are repealed as of the coming into force of this
by-law provided that such repeal shall not affect the previous operation of any by-law
so repealed or affect the validity of any act done or right, privilege, obligation, or
liability acquired or incurred under or the validity of any contract or agreement made
pursuant to any such by-law prior to its repeal. All officers and persons acting under
any by-law so repealed shall continue to act as if appointed under the provisions of
this by-law and all resolutions of the shareholders or the board with continuing effect
passed under any repealed by-law shall continue to be valid except to the extent inconsistent
with this by- law and until amended or repealed. |
ENACTED
the ______ day of ______________________, 2020 and confirmed by the shareholders the ______ day of _____________________, 2020.
WITNESS
the corporate seal of the Corporation.
SCHEDULE
B
GROWN ROGUE INTERNATIONAL
INC.
NOTICE OF CHANGE OF AUDITOR
| AND TO: | DALE MATHESON CARR-HILTON LABONTE LLP (“DMCL”) |
| AND TO: | BRITISH COLUMBIA SECURITIES COMMISSION ONTARIO SECURITIES
COMMISSION |
| 1. | MNP (the “Former Auditor”) tendered its resignation as
Grown Rogue International Inc.’s (the “Corporation”) auditor, on its own accord. Pursuant to the Business
Corporations Act (Ontario), the directors of the Corporation appointed DMCL (the “Successor Auditor”) as the
Corporation’s auditor in the place and stead of MNP until the close of the next annual meeting (general or special) of the
Corporation. |
| 2. | In accordance with NI 51-102 Continuous Disclosure Obligations (“NI
51-102”), section 4.11, the Audit Committee and the Board of Directors of the Corporation have considered and approved: |
| (a) | The resignation of the Former Auditor, effective October 31, 2019. |
| (b) | The appointment of the Successor Auditor, effective November 4, 2019. |
| 3. | There were no modified opinions expressed in the Former Auditor’s
reports on any of the financial statements of the Corporation commencing at the beginning of the two most recently completed fiscal
years and ending on December 31, 2018. |
| 4. | There are no reportable events (as defined in section 4.11 of NI 51-102). |
DATED this 4th
day of November, 2019
| |
GROWN ROGUE INTERNATIONAL INC. |
| |
|
| |
“J. Obie Strickler” |
| |
|
| |
J. Obie Strickler |
| |
Chief Executive Officer |
November 4, 2019
| British Columbia Securities Commission |
Ontario Securities Commission |
| P.O. Box 10142, Pacific Centre |
20 Queen Street West, 22nd Floor |
| 9th Floor – 701 West Georgia Street |
Toronto, ON M5H 3S8 |
| Vancouver, B.C. V7Y 1L2 |
|
Dear Sirs:
| Re: | Grown Rogue International Inc. (the “Company”) |
Notice Pursuant to National
Instrument 51-102 - Change of Auditor
As required by the National
Instrument 51-102 and in connection with our proposed appointment as auditor of the Company, we have reviewed the information contained
in the Company’s Notice of Change of Auditor, dated November 4, 2019 and agree with the information contained therein, based upon
our knowledge of the information relating to the said notice and of the Company at this time.
| Yours very truly, |
|
| |
|
 |
|
| DALE MATHESON CARR-HILTON LABONTE LLP |
|
| CHARTERED PROFESSIONAL ACCOUNTANTS |
|
Vancouver o Tri-Cities
o Surrey o Victoria
November 5, 2019
British Columbia Securities Commission Ontario
Securities Commission
Dear Sirs:
| Re: | Grown Rogue International Inc. (formerly Novicius Corp.) |
Notice of Change of Auditor Pursuant to NI 51-102 (Part
4.11)
In accordance with Section 4.11 of National Instrument 51-102,
we have reviewed the Company’s Notice of Change of Auditor (“the Notice”), dated November 4, 2019. Based on our
information as of this date, we agree with the Statements contained in the Notice.
Yours truly,
Chartered Professional Accountants,
Licensed Public Accountants
