The Voting Agreements terminate upon the earliest of:
(i) mutual written consent of the parties; (ii) the
termination of the Arrangement Agreement in accordance with its
terms; or (iii) in the case of JWAM, upon (A) a Change of
Recommendation; or (B) if the Arrangement Agreement is amended
to reduce the consideration payable to Canopy Rivers or the terms
of the Arrangement Agreement are otherwise modified in a manner
that is materially adverse to Canopy Rivers or JWAM.
The Arrangement constitutes a “related party transaction” within
the meaning of MI 61-101 as
Canopy Growth is a control person of Canopy Rivers and a related
party of CRC, a wholly-owned subsidiary of Canopy Rivers. Canopy
Growth controls approximately 84% of the voting rights of Canopy
Rivers and holds approximately 27% of the issued and outstanding
shares of Canopy Rivers on a non-diluted basis. Following completion
of the Arrangement, Canopy Growth will not have any equity, debt or
other interest in Canopy Rivers.
Pursuant to MI 61-101, a
formal valuation and minority shareholder approval must be obtained
for related party transactions unless, in each instance, an
exemption from such requirement is available. Canopy Growth is
relying on the exemptions from the formal valuation requirement and
the minority approval requirement pursuant to sections 5.5(a) and
5.7(1)(a) of MI 61-101,
respectively, as the fair market value of the consideration for the
Arrangement is below 25% of Canopy Growth’s market capitalization
as determined in accordance with MI 61-101.
There is no prior valuation in respect of Canopy Growth that
relates to the subject matter or is otherwise relevant to the
Arrangement that has been made in the 24 months before the date of
this material change report, the existence of which is known, after
reasonable inquiry, to Canopy Growth or to any director or senior
officer of Canopy Growth.
The Arrangement Agreement and the transactions contemplated thereby
were unanimously approved by the board of directors of Canopy
Unregistered Sales of Equity Securities.
The information contained in (or incorporated by reference into)
Item 1.01 of this Current Report on Form 8-K (“Current Report”) is hereby
incorporated by reference into this Item 3.02. Canopy Growth
anticipates that the securities to be issued to CRC in the Plan of
Arrangement will be issued in a transaction not subject to the
Securities Act of 1933, as amended (the “Securities Act”).
Regulation FD Disclosure.
On December 21, 2020, Canopy Growth issued a press release
announcing that it entered into the Arrangement Agreement with
Tweed NB, Canopy Rivers and CRC. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated by reference
The information set forth in Item 7.01 of this Current Report,
including Exhibit 99.1 attached hereto, is being furnished and
shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to the liabilities of such section. The
information set forth in Item 7.01 of this Current Report,
including Exhibit 99.1 attached hereto, shall not be incorporated
by reference into any filing under the Securities Act or the
Exchange Act, regardless of any incorporation by reference language
in any such filing.
Cautionary Statement Regarding
This Current Report contains “forward-looking statements” and
“forward-looking information” within the meaning of applicable U.S.
and Canadian securities laws (collectively, “forward-looking
statements”), which involve certain known and unknown risks and
uncertainties. Forward-looking statements predict or describe our
future operations, business plans, business and investment
strategies and the performance of our investments. These
forward-looking statements are generally identified by their use of
such terms and phrases as “intend,” “goal,” “strategy,” “estimate,”
“expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,”
“anticipates,” “potential,” “proposed,” “will,” “should,” “could,”
“would,” “may,” “likely,” “designed to,” “foreseeable future,”
“believe,” “scheduled” and other similar expressions. Examples of
such statements include statements with respect to the timing and
outcome of the Arrangement, the anticipated timing of the Meeting
and the satisfaction or waiver of the closing conditions set out in
the Arrangement Agreement. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date the statement was made.