UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month
of May, 2024.
Commission
File Number 000-56261
Glass
House Brands Inc.
(Translation
of registrant’s name into English)
3645
Long Beach Blvd.
Long
Beach, California 90807
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F
¨ Form 40-F x
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
Glass House Brands Inc. |
|
|
Date: May 24, 2024 |
/s/ Kyle Kazan |
|
By: Kyle Kazan |
|
Title: Chief Executive Officer |
EXHIBIT
INDEX
Exhibit
99.1
Glass
House Brands Announces the Filing of a Base Shelf Prospectus
Not
for distribution to United States news wire services or dissemination in the United States
LONG
BEACH, CA and TORONTO, May 22, 2024 - Glass House Brands Inc. ("Glass House" or the "Company") (CBOE CA:
GLAS.A.U) (CBOE CA: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), announced today that it has filed a short form base shelf prospectus (the
"Shelf Prospectus") with the securities regulatory authorities in each of the provinces and territories of Canada. The Shelf
Prospectus allows Glass House to offer from time to time over a 25-month period, equity shares, preferred shares, debt securities, subscription
receipts, warrants and units comprised of more than one of the foregoing securities (collectively, the "Securities"), or any
combination thereof, in all of the provinces and territories of Canada.
“With
our strong operating performance, long-term growth prospects, and increase in share price over the past eighteen months, having a base
shelf will provide additional flexibility to add growth capital and lower our cost of capital when we judge the time to be right,”
stated Kyle Kazan, Co-Founder, Chairman and CEO of Glass House. “At that time, we will consider all available options including
debt, equity, and preferred equity or any combination.”
The
Company has filed the Shelf Prospectus to maintain financial flexibility but has no immediate plans to undertake an offering of Securities
under the Shelf Prospectus. There is no certainty that any Securities will be offered or sold under the Shelf Prospectus within the 25-month
effective period. Should Glass House decide to offer any Securities during the 25-month effective period, the specific terms will be
set forth in a prospectus supplement to the Shelf Prospectus.
This
news release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these Securities
in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. The Securities will not be offered, sold or delivered, directly or indirectly within the United States
(as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"))
except pursuant to transactions exempt from registration under the U.S. Securities Act and under the securities laws of any applicable
state.
A
copy of the Shelf Prospectus may be found on SEDAR+ at www.sedarplus.ca.
ABOUT
GLASS HOUSE
Glass
House is one of the fastest-growing, vertically integrated cannabis companies
in the U.S., with a dedicated focus on the California market and building leading, lasting brands to serve consumers across all segments.
From its greenhouse cultivation operations to its manufacturing practices, from brand-building to retailing, the company's efforts are
rooted in the respect for people, the environment, and the community that co-founders Kyle Kazan, Chairman and CEO, and Graham
Farrar, Board Member and President, instilled at the outset. Through its portfolio of brands, which includes Glass House Farms,
PLUS Products, Allswell and Mama Sue Wellness, Glass House is committed to realizing its vision of excellence: outstanding
cannabis products, produced sustainably, for the benefit of all. For more information and company updates, visit www.glasshousebrands.com
and https://glasshousebrands.com/press-releases/.
FORWARD
LOOKING STATEMENTS
This
news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively
referred to herein as "forward-looking statements"). Forward-looking statements reflect current expectations or beliefs regarding
future events or the Company's future performance or financial results. All statements other than statements of historical fact are forward-looking
statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects",
"is expected", "budget", "scheduled", "estimates", "continues", "forecasts",
"projects", "predicts", "intends", "anticipates", "targets" or "believes",
or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could",
"would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements
in this news release include, without limitation, the offering of Securities under the Shelf Prospectus and the Company’s expected
long-term growth prospects. All forward-looking statements, including those herein, are qualified by this cautionary statement. Although
the Company believes that the expectations expressed in such statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results or developments may differ materially from those in the statements. Accordingly,
readers should not place undue reliance on forward-looking statements. There are certain factors that could cause actual results to differ
materially from those in the forward-looking information, including those risks disclosed in the Company's Annual Information Form available
on SEDAR+ at www.sedarplus.ca and in the Company's Form 40-F available on EDGAR at www.sec.gov. For more information on the
Company, investors are encouraged to review the Company's public filings on SEDAR+ at www.sedarplus.ca. The forward-looking statements
in this news release speak only as of the date of this news release or as of the date or dates specified in such statements. The Company
disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future
events or otherwise, other than as required by law.
For
further information, please contact:
Glass
House Brands Inc.
John
Brebeck, Vice President of Investor Relations
T:
(562) 264-5078
E:
ir@glasshousebrands.com
Mark
Vendetti, Chief Financial Officer
T:
(562) 264-5078
E:
ir@glasshousebrands.com
Investor
Relations Contact:
KCSA
Strategic Communications
Phil
Carlson
T:
(212) 896-1233
E:
GlassHouse@kcsa.com
Exhibit 99.2
GLASS HOUSE BRANDS INC.
May 20, 2024
Dear shareholders of Glass House Brands Inc.:
On behalf of the directors and management team
of Glass House Brands Inc. (the "Company"), we are pleased to invite you to attend the Company's annual general and special
meeting of the shareholders (the "Meeting"), to be held at 11:00 a.m. (Pacific Time) on June 21, 2024 at 645
Laguna Road, Camarillo, California, 93012.
At the Meeting, the holders of subordinate voting
shares, restricted voting shares, limited voting shares and multiple voting shares (the "Shareholders") will be asked
to receive the audited annual financial statements of the Company for the year ended December 31, 2023, together with the report
of the auditor thereon, elect the directors for the ensuing year (the "Directors"), which vote shall exclude holders
of limited voting shares, re-appoint Macias Gini & O'Connell LLP as the auditor of the Company and to authorize the Directors
to fix the auditor's remuneration, and to consider and, if deemed advisable, adopt an ordinary resolution for the purpose of renewing,
for a further three years, all unallocated options, rights and other entitlements issuable pursuant to the Company's Equity Incentive
Plan.
As a valued Shareholder, your views and involvement
in the Company are important to us. At the Meeting, you will have the opportunity to ask questions of all C-Suite team members along
with at least some members of the Directors and to vote on the Meeting matters.
Your vote matters. You may exercise it by completing
the proxy form or voting instruction form or by attending the Meeting. The accompanying management information circular describes the
business to be conducted at the Meeting, important additional information and detailed instructions on voting and participation at the
Meeting, and the Company's governance practices.
Tours of the 5.5 million square foot facility
will be given and opportunities to purchase the Company's products at a discount will be available.
Thank you for your investment and we look forward to connecting with
you at the Meeting.
Sincerely,
(Signed) "Kyle Kazan"
Kyle Kazan
Co-Founder, Chairman & CEO
GLASS HOUSE BRANDS INC.
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS TO
BE HELD ON
JUNE 21, 2024
TO THE SHAREHOLDERS OF GLASS HOUSE BRANDS INC.
NOTICE IS HEREBY GIVEN that an annual general
and special meeting (the "Meeting") of the holders ("Shareholders") of subordinate voting shares (the
"Subordinate Voting Shares"), restricted voting shares (the "Restricted Voting Shares"), limited voting
shares ("Limited Voting Shares", together with the Subordinate Voting Shares and the Restricted Voting Shares, the "Equity
Shares") and multiple voting shares (the "Multiple Voting Shares", together with the Equity Shares, the "Company
Shares") of Glass House Brands Inc. (the "Company") will be held at 11:00 a.m. (Pacific Time) on June 21,
2024 at 645 Laguna Road, Camarillo, California, 93012 for the following purposes:
1. | to receive the audited annual financial statements of the Company for the year ended December 31,
2023, together with the report of the auditor thereon (the "Annual Financial Statements"); |
2. | for all Shareholders other than holders of Limited Voting Shares, to elect directors of the Company for
the ensuing year. For more information, see "Business to be Transacted at the Meeting – Election of Directors"
in the Company's management information circular dated May 20, 2024 (the "Information Circular"); |
3. | to re-appoint the auditor of the Company for the ensuing year and to authorize the directors of the Company
to fix the remuneration of the auditor. For more information, see "Business to be Transacted at the Meeting – Appointment
of Auditor" in the Information Circular; |
4. | to consider and, if deemed advisable, pass an ordinary resolution, the full text of which is set forth
in the Information Circular, approving, ratifying and confirming renewal of the Company's Equity Incentive Plan (as defined in the Information
Circular) and approving the unallocated options, rights and other entitlements issuable thereunder; and |
5. | to transact such other business as may properly be brought before the Meeting or any adjournment thereof. |
Shareholders should refer to the Information Circular
for more detailed information with respect to the matters to be considered at the Meeting. The Information Circular and other Meeting
materials also contain important information with respect to voting your Company Shares and attending and participating at the Meeting.
The Company is using the notice-and-access system
("Notice-and-Access") under National Instrument 54-101 Communications
with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 Continuous
Disclosure Obligations to distribute this Notice of Meeting and the Information Circular to Shareholders, as well as the
Annual Financial Statements and accompanying management's discussion and analysis thereon. Notice-and- Access allows the Company to
post electronic versions of its proxy- related materials on SEDAR+ and on the Company's website, rather than mailing paper copies to
Shareholders. This alternative means of distribution of the Company's proxy-related materials is more environmentally friendly by
reducing paper use, and also reduces printing and mailing costs of the Company. Note that Shareholders still have the right to
request paper copies of the proxy-related materials posted online by the Company under Notice-and-Access if they so choose.
The proxy- related materials are available under
the Company's profile on SEDAR+ at www.sedarplus.ca and on the Company's website at https://ir.glasshousebrands.com/agm/.
As noted above, the Company will provide to any Shareholder, free of charge, a paper copy of the Information Circular upon request to
the Company's transfer agent, at 1-888-290-1175 (toll-free), up to one year from the date the Information Circular is filed on SEDAR+.
Shareholders who wish to receive a paper copy of the Information Circular in advance of the Meeting should make such request to the Company
by no later than June 7, 2024, in order to allow reasonable time to receive and review the Information Circular prior to the proxy
deadline of 11:00 a.m. (Pacific Time) on June 19, 2024. The Information Circular will be sent to Shareholders within three (3) business
days of their request if such request is made prior to the date of the Meeting. Following the Meeting, the Information Circular will be
sent to such Shareholders within 10 days of their request.
Shareholders will receive a paper copy of a notice
package (the "Notice Package") under Notice-and-Access via pre-paid mail containing: (i) a notification regarding
the Company's use of Notice-and-Access and how the proxy-related materials may be obtained, (ii) a form of proxy (if you are a Shareholder
who holds your Company Shares in your own name and have a share certificate or direct registration system (DRS) statement (a "Registered
Shareholder")) or a voting instruction form (if you are a Beneficial Shareholder, as defined below), and (iii) a supplemental
mailing list return card to elect to receive paper copies of the Company's financial statements and management's discussion and analysis
for future financial statements and management's discussion and analysis if you so choose.
Shareholders who hold their Company Shares through
a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary ("Beneficial Shareholders")
who have not duly appointed themselves as proxyholder will be able to attend as a guest but will not be able to participate or vote at
the Meeting.
If
you are a Registered Shareholder and are unable to attend the Meeting, please exercise your right to vote by dating, signing
and returning the form of proxy contained in the Notice Package to Odyssey Trust Company ("Odyssey"), the transfer agent
of the Company. To be valid, completed proxy forms must be dated, completed, signed and deposited with Odyssey by mail to: Odyssey Trust
Company, Attention: Proxy Department, 67 Yonge Street, Suite 702, Toronto, Ontario M5E 1J8. You may also vote through the internet
by going to https://login.odysseytrust.com/pxlogin and enter the 12 digit control number found on the form of proxy. Your proxy
or voting instructions must be received in each case no later than 11:00 a.m. (Pacific Time) on June 19, 2024 or two business
days preceding the date of any adjournment or postponement (excluding Saturdays, Sundays and holidays). If you are unable to attend the
Meeting, we encourage you to complete the form of proxy contained in the Notice Package as soon as possible. If a Shareholder received
more than one form of proxy because such holder owns Company Shares registered in different names or addresses, each form of proxy should
be completed and returned. The Chairman of the Meeting shall have the discretion to waive or extend the proxy deadline without notice.
A Shareholder who wishes to appoint a person other
than the management nominees identified on the form of proxy or voting instruction form, to represent him, her or it at the Meeting may
do so by inserting such person's name in the blank space provided in the form of proxy or voting instruction form and following the instructions
for submitting such form of proxy or voting instruction form.
If
you are a Beneficial Shareholder and receive these materials through your broker or through another intermediary, please complete
and return the voting instruction form in the Notice Package in accordance with the instructions provided to you by your broker or by
the other intermediary.
The board of directors of the Company has fixed May 7, 2024 as
the record date for notice of and for voting at the Meeting. Shareholders of record at the close of business on May 7, 2024 are
entitled to notice of the Meeting and to vote thereat or at any adjournment(s) or postponement(s) thereof on the basis of one
vote for each Equity Share held (other than Limited Voting Shares, which are entitled to one vote for each Limited Voting Share held
on all matters other than in respect of the election for directors of the board of directors) and 50 votes for each Multiple Voting Share
held, except to the extent that: (i) a registered Shareholder has transferred the ownership of any Company Shares subsequent to
May 7, 2024, and (ii) the transferee of those Company Shares produces properly endorsed share certificates, or otherwise establishes
that he, she or it owns the Company Shares and demands, not later than 10 days before the Meeting, that his, her or its name be included
on the list of persons entitled to vote at the Meeting, in which case, the transferee shall be entitled to vote such Company Shares at
the Meeting. The transfer books will not be closed.
BY ORDER OF THE BOARD OF DIRECTORS
(Signed) "Kyle Kazan"
Kyle Kazan
Co-Founder, Chairman & CEO
May 20, 2024
TABLE OF CONTENTS
NOTICE-AND-ACCESS |
1 |
|
|
APPOINTMENT AND REVOCATION OF PROXIES |
2 |
|
|
ADVICE TO BENEFICIAL HOLDERS OF COMPANY SHARES |
2 |
|
|
VOTING OF PROXIES |
3 |
|
|
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED ON |
4 |
|
|
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF |
4 |
Principal Holders of Voting Securities |
5 |
|
|
BUSINESS TO BE TRANSACTED AT THE MEETING |
5 |
Receive the Financial Statements |
5 |
Election of Directors |
6 |
Biographies |
7 |
Corporate Cease Trade Orders or Bankruptcies |
9 |
Appointment of Auditor |
9 |
Renewal of Equity Incentive Plan |
10 |
Consideration of Other Business |
11 |
|
|
STATEMENT OF EXECUTIVE COMPENSATION |
11 |
Compensation Discussion and Analysis |
11 |
Performance Graph |
14 |
Summary Compensation Table |
15 |
Incentive Plan Awards – Outstanding Share-Based Awards and Option-Based Awards |
16 |
Incentive Plan Awards – Value Vested or Earned During the Year |
17 |
Pension Plan Benefits |
17 |
Termination and Change of Control Benefits |
17 |
Director Compensation |
19 |
Incentive Plan Awards – Outstanding Share-Based Awards and Option-Based Awards |
21 |
Incentive Plan Awards – Value Vested or Earned During the Year |
22 |
|
|
SECURITY BASED COMPENSATION PLANS |
23 |
Summary of the Equity Incentive Plan |
23 |
Securities Authorized For Issuance Under Equity Compensation Plans |
28 |
|
|
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS |
28 |
|
|
CORPORATE GOVERNANCE AND AUDIT COMMITTEE DISCLOSURE |
28 |
|
|
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS |
28 |
|
|
OTHER BUSINESS |
29 |
|
|
ADDITIONAL INFORMATION |
29 |
|
|
SCHEDULE "A" STATEMENT OF CORPORATE GOVERNANCE PRACTICES |
A-1 |
|
|
APPENDIX 1 TO SCHEDULE "A" GLASS HOUSE
BRANDS INC. CHARTER OF THE BOARD OF DIRECTORS |
A-7 |
|
|
SCHEDULE "B" EQUITY INCENTIVE PLAN |
B-1 |
GLASS HOUSE BRANDS INC. INFORMATION CIRCULAR
FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD ON
JUNE 21, 2024
PURPOSE OF SOLICITATION
This information circular ("Information
Circular") is furnished in connection with the solicitation of proxies by the management of Glass House Brands Inc. (the "Company"
or "Glass House") for use at the annual general and special meeting (the "Meeting") of the holders ("Shareholders")
of subordinate voting shares (the "Subordinate Voting Shares"), restricted voting shares (the "Restricted Voting Shares"),
limited voting shares (the "Limited Voting Shares", together with the Subordinate Voting Shares and Restricted Voting Shares,
the "Equity Shares") and multiple voting shares (the "Multiple Voting Shares", together with the Equity Shares, the
"Company Shares") of the Company.
The Meeting will be held at 11:00 a.m. (Pacific
Time) on June 21, 2024 at 645 Laguna Road, Camarillo, California, 93012 and at any adjournments or postponements thereof for the
purposes set forth in the Notice of Annual General and Special Meeting of Shareholders (the "Notice of Meeting") accompanying
this Information Circular. Information contained herein is given as of May 7, 2024 unless otherwise specifically stated.
Solicitation of proxies will be primarily by mail
but may also be by telephone, facsimile, email or in person by directors, officers and employees of the Company who will not be additionally
compensated therefor. The costs of soliciting proxies will be borne by the Company.
NOTICE-AND-ACCESS
The Company is using the Notice-and-Access system
under National Instrument 54-101 Communications with Beneficial Owners of Securities of a Reporting Issuer ("NI 54-101")
and National Instrument 51-102 Continuous Disclosure Obligations to distribute its proxy-related materials to Shareholders.
Under Notice-and-Access, rather than the Company
mailing paper copies of the proxy-related materials and Annual Financial Statements and related management's discussion and analysis to
Shareholders, the materials can be accessed online under the Company's profile on SEDAR+ at www.sedarplus.ca and on the Company's
website at https://ir.glasshousebrands.com/agm/. The Company has adopted this alternative means of delivery for its proxy-related
materials in order to reduce paper use and printing and mailing costs.
Shareholders will receive a paper copy of a notice
package (the "Notice Package") under Notice-and-Access via pre-paid mail containing: (i) a notification regarding
the Company's use of Notice-and-Access and how the proxy-related materials may be obtained, (ii) a form of proxy (if you are a Registered
Shareholder, as defined below) or a voting instruction form (if you are a Beneficial Shareholder, as defined below), and (iii) a
supplemental mailing list return card to elect to receive paper copies of the Company's financial statements and management's discussion
and analysis for future financial statements.
Shareholders will not receive a paper copy of
the Information Circular unless they contact the Company's transfer agent, toll free, at 1-888-290-1175. For Shareholders who wish to
receive a paper copy of the Information Circular in advance of the voting deadline for the Meeting, requests must be received no later
than June 7, 2024.
Shareholders with questions about Notice-and-Access
may contact the Company's transfer agent, Odyssey Trust Company ("Odyssey") at 1-888-290-1175.
APPOINTMENT AND REVOCATION OF PROXIES
The information in this section applies to Shareholders
who hold Company Shares registered in their own name and have a share certificate or direct registration system (DRS) statement (a "Registered
Shareholder"). As a Registered Shareholder, you are identified on the share register maintained by Odyssey, the Company's register
and transfer agent, as being a Shareholder.
Enclosed in the Notice Package is a form of
proxy or voting instruction form for use at the Meeting. The persons named in the form of proxy or voting instruction form are directors
and/or officers of the Company. Registered Shareholders have the right to appoint a person or company to represent them at the Meeting
other than the persons named in the form of proxy. A Registered Shareholder submitting a proxy who wishes to appoint a person other than
the management nominees identified on the form of proxy, to represent him, her or it at the Meeting may do so by inserting such person's
name in the blank space provided in the form of proxy and following the instructions for submitting such form of proxy.
A Registered Shareholder who has given a proxy
may revoke it prior to its use, in any manner permitted by law, including by an instrument in writing executed by the Registered Shareholder
or by his, her or its attorney authorized in writing or, if the Registered Shareholder is a corporation, executed by a duly authorized
officer or attorney thereof and deposited at the registered office of the Company at any time up to and including the last business day
preceding the day of the Meeting, or any adjournment or postponement thereof, at which the proxy is to be used or with the chairman of
the Meeting on the day of the Meeting or any adjournment or postponement thereof.
ADVICE TO BENEFICIAL HOLDERS OF COMPANY SHARES
The
information set forth in this section is of significant importance to many Shareholders, as a substantial number of Shareholders do
not hold Company Shares in their own name. Shareholders who do not hold their Company Shares in their own name (referred
to in this Information Circular as "Beneficial Shareholders") should note that only proxies deposited by Registered
Shareholders can be recognized and acted upon at the Meeting. If Company Shares are listed in an account statement provided to a
Shareholder by a broker, then in almost all cases those Company Shares will not be registered in the Shareholder's name on the
records of the Company. Such Company Shares will more likely be registered under the names of the Shareholder's broker or an agent
of that broker (an "Intermediary"). In Canada, the vast majority of such shares are registered under the name of
CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian
brokerage firms). Company Shares held by Intermediaries or their agents or nominees can only be voted upon the instructions of the
Beneficial Shareholder. Without specific instructions, Intermediaries and their agents and nominees are prohibited from voting
Company Shares for the Intermediary's clients. Therefore, Beneficial Shareholders should contact their broker or other
Intermediary as soon as practicable to ensure that instructions respecting the voting of their Company Shares are communicated to
the appropriate person.
Beneficial Shareholders fall into two categories-those who object to their identity being known to the issuers of the securities which they own ("OBOs") and those who
do not object to their identity being made known to the issuers of the securities which they own ("NOBOs"). Subject to
the provisions of NI 54-101, issuers may request and obtain a list of their NOBOs from Intermediaries directly or via their transfer agent
and may obtain and use the NOBO list for the distribution of proxy-related materials to such NOBOs.
The Company is not sending the proxy-related materials
directly to NOBOs in connection with the Meeting, but rather has distributed copies of the Notice Package using Notice-and-Access to
the Intermediaries for distribution to NOBOs. If you are a NOBO and the Company or its agent has sent the Notice Package directly to you,
your name, address and information about your holdings of Company Shares have been obtained in accordance with applicable securities regulatory
requirements from the Intermediary holding the Company Shares on your behalf.
The Company's OBOs can expect to be contacted
by their Intermediary. The Company does not intend to pay for Intermediaries to deliver the proxy-related materials and Form 54-101F7
– Request for Voting Instructions Made by Intermediary to OBOs and it is the responsibility of such Intermediaries to ensure
delivery of the Meeting materials to their OBOs. The OBO will not receive the proxy-related materials unless the OBO's Intermediary assumes
the cost of delivery.
Applicable regulatory policy requires Intermediaries/brokers
to seek voting instructions from Beneficial Shareholders in advance of shareholder meetings. Every Intermediary or broker has its own
procedures for distributing proxy-related materials and provides its own return instructions, which should be carefully followed by Beneficial
Shareholders in order to ensure that their Company Shares are voted at the Meeting. Often, the form of proxy supplied to a Beneficial
Shareholder by its broker is identical to the form of proxy provided to Registered Shareholders; however, its purpose is limited to instructing
the Registered Shareholder how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for
obtaining instructions from clients to Broadridge Financial Services, Inc. (" Broadridge"). Broadridge typically
mails a scannable voting instruction form in lieu of the form of proxy. The Beneficial Shareholder is requested to complete and return
the voting instruction form to them by mail or facsimile. Alternatively, the Beneficial Shareholder can call a toll-free telephone number
or visit www.proxyvote.com to vote the Company Shares held by the Beneficial Shareholder. Broadridge then tabulates the results
of all instructions received and provides appropriate instructions respecting the voting of Company Shares to be represented at the Meeting.
A Beneficial Shareholder receiving a voting instruction form cannot use that voting instruction form to vote Company Shares directly at
the Meeting as the voting instruction form must be returned as directed by Broadridge well in advance of the Meeting in order to have
the Company Shares voted.
Although a Beneficial Shareholder may not be recognized
directly at the Meeting for the purposes of voting Company Shares registered in the name of his, her or its broker (or agent of the broker),
a Beneficial Shareholder may attend at the Meeting as proxyholder for a Registered Shareholder and vote the Company Shares in that capacity.
Beneficial Shareholders who wish to attend at the Meeting and indirectly vote their Company Shares as proxyholder for a Registered Shareholder
should enter their own names in the blank space on the instrument of proxy provided to them and return the same to their broker (or the
broker's agent) in accordance with the instructions provided by such broker (or agent), well in advance of the Meeting.
VOTING OF PROXIES
If you are a Registered Shareholder and are unable
to attend the Meeting, please exercise your right to vote by dating, signing and returning the form of proxy contained in the Notice Package
to Odyssey, the transfer agent of the Company. To be valid, completed proxy forms must be dated, completed, signed and deposited with
Odyssey by mail to: Odyssey Trust Company, Attention: Proxy Department, 67 Yonge Street, Suite 702, Toronto, Ontario M5E 1J8. You
may also vote through the internet by going to https://login.odysseytrust.com/pxlogin and enter the 12 digit control number found
on the form of proxy. Your proxy or voting instructions must be received in each case no later than 11:00 a.m. (Pacific Time) on
June 19, 2024 or two business days preceding the date of any adjournment or postponement (excluding Saturdays, Sundays and holidays). If you are unable to attend the Meeting, we encourage you to complete the form of proxy contained in the Notice Package as soon as possible.
If a Shareholder received more than one form of proxy because such holder owns Company Shares registered in different names or addresses,
each form of proxy should be completed and returned. The Chairman of the Meeting shall have the discretion to waive or extend the proxy
deadline without notice.
All Company Shares represented at the Meeting
by properly executed proxies will be voted on any matter that may be called for and, where a choice with respect to any matter to be acted
upon has been specified in the form of proxy in the Notice Package, the Company Shares represented by the proxy will be voted in accordance
with such instructions, with the exception of Limited Voting Shares, which will not be voted in respect of the election for directors
of the board of directors. In the absence of any such instructions, the persons whose names appear on the printed form of proxy will
vote in favour of all the matters set out thereon.
The form of proxy contained in the Notice
Package confers discretionary authority upon the persons named therein. If any other business or amendments or variations to matters
identified in the Notice of Meeting properly comes before the Meeting, then discretionary authority is conferred upon the person
appointed in the proxy to vote in the manner they see fit, in accordance with their best judgment.
As of the date of this Information Circular, the
management of the Company knew of no such amendment, variation or other matter to come before the Meeting other than the matters referred
to in the Notice of Meeting.
Legal Proxy – U.S. Beneficial Shareholders
If you are a Beneficial Shareholder located in
the United States and wish to attend, participate or vote at the Meeting or, if permitted, appoint a third party as your proxyholder,
in addition to the steps described above, you must obtain a valid legal proxy from your Intermediary. Follow the instructions from your
Intermediary included with the legal proxy form and the voting information form sent to you, or contact your Intermediary to request a
legal proxy form or a legal proxy if you have not received one. After obtaining a valid legal proxy from your Intermediary, you must then
submit such legal proxy to Odyssey.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED ON
Except as disclosed in this Information Circular,
management of the Company is not aware of any material interest of any director or executive officer or any associate or affiliate of
any of the foregoing in any matter to be acted on at the Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The board of directors of the Company (the "Board")
has fixed May 7, 2024 as the record date for notice of and for voting at the Meeting (the "Record Date"). Shareholders
at the close of business on the Record Date are entitled to receive notice of the Meeting and to vote thereat or at any adjournments or
postponements thereof on the basis of one vote for each Equity Share held (other than Limited Voting Shares in respect of the election
for directors of the board of directors) and 50 votes for each Multiple Voting Share held, except to the extent that: (i) a Registered
Shareholder has transferred the ownership of any Company Shares subsequent to the Record Date; and (ii) the transferee of those Company
Shares produces properly endorsed share certificates, or otherwise establishes that he, she or it owns the Company Shares and demands,
not later than 10 days before the Meeting, that his, her or its name be included on the list of persons entitled to vote at the Meeting,
in which case, the transferee shall be entitled to vote such Company Shares at the Meeting. The transfer books will not be closed. A quorum
for the transaction of business at the Meeting is present if two Shareholders who are present in person or represented by proxy and who
represent at least 25% of the applicable class or series of shares (and, for greater certainty, where more than one class or series of
shares are voting together as is the case at this Meeting, at least 25% of the total issued and outstanding shares of such classes or
series) are present.
The authorized capital of the Company is comprised
of an unlimited number of (i) Subordinate Voting Shares, (ii) Restricted Voting Shares, (iii) Limited Voting Shares, (iv) Multiple
Voting Shares and (v) preferred shares, issuable in series with such terms as are determined by the Board from time to time ("Preferred
Shares"). As of the Record Date, there were 62,631,404 Equity Shares, 4,754,979 Multiple Voting Shares and no Preferred Shares
outstanding.
The Equity Shares are "restricted securities"
or "restricted shares", as applicable, within the meaning of such term under applicable Canadian securities laws as (i) there
is another class of Company Shares (namely, the Multiple Voting Shares) that carries a disproportionate vote per share relative to each
class of Equity Shares, and (ii) the share terms of the Limited Voting Shares contain provisions that nullify certain of the voting
rights attributable to the Limited Voting Shares (i.e., the Limited Voting Shares do not have votes in respect of the election of directors
of the Company). The Company previously applied for and was granted exemptive relief from, among other applicable securities legislation,
the requirements under Part 10 of NI 51-102 Continuous Disclosure Obligations, and from the requirements under Part 2
of OSC Rule 56-501 Restricted Shares, relating to the use of restricted share terms. The relief was granted pursuant to an
order dated June 29, 2021 (the "Relief Order").
As of the Record Date, the Equity Shares represent
approximately 20.9% of the voting rights attached to outstanding voting securities of the Company and the Multiple Voting Shares represent
approximately 79.1% of the voting rights attached to outstanding voting securities of the Company.
Principal Holders of Voting Securities
The following table sets out the information regarding
ownership of Company Shares owned by each person who, to the knowledge of the directors and executive officers of the Company, beneficially
owns, controls, or directs, indirectly or directly, voting securities of the Company carrying 10% or more of the voting rights attached
to any class of voting securities of the Company (with the Equity Shares being deemed to be one class pursuant to the terms of the Relief
Order) as of the Record Date.
| |
| |
| |
| |
Percentage of Votes | |
| |
Number and Type of | |
| |
Percentage of Issued and | |
Attaching to all | |
Name | |
Shares | |
Type of Ownership | |
Outstanding
Shares(1)(2) | |
Company Shares(2) | |
Kyle Kazan | |
2,025,244 Multiple | |
Direct and Indirect | |
42.6% of the Multiple | |
| 34.3 | % |
| |
Voting Shares | |
| |
Voting Shares | |
| | |
| |
1,756,343 Equity Shares | |
| |
2.8% of the Equity Shares | |
| | |
Graham Farrar | |
1,321,087 Multiple | |
Direct and Indirect | |
27.8% of the Multiple | |
| 22.4 | % |
| |
Voting Shares | |
| |
Voting Shares | |
| | |
| |
1,146,723 Equity Shares | |
| |
1.8% of the Equity Shares | |
| | |
Jamie Rosenwald | |
819,406 Multiple Voting | |
Direct and Indirect | |
17.2% of the Multiple | |
| 14.6 | % |
| |
Shares | |
| |
Voting Shares | |
| | |
| |
2,735,085 Equity Shares | |
| |
4.4% of the Equity Shares | |
| | |
Jocelyn Rosenwald | |
564,523 Multiple Voting | |
Direct and Indirect | |
11.9% of the Multiple | |
| 9.6 | % |
| |
Shares | |
| |
Voting Shares | |
| | |
| |
548,087 Equity Shares | |
| |
0.9% of the Equity Shares | |
| | |
Mercer Park L.P. | |
8,323,374 Equity Shares | |
Direct | |
13.3% of the Equity | |
| 2.8 | % |
| |
| |
| |
Shares | |
| | |
Cornelius Houweling | |
6,500,000 Equity Shares | |
Direct | |
10.4% of the Equity | |
| 2.2 | % |
| |
| |
| |
Shares | |
| | |
Notes:
(1) | Represents the beneficial ownership percentage of the applicable class of shares. |
(2) | Total voting percentages differ from beneficial ownership percentages because the Multiple Voting Shares
carry 50 votes per share compared to one vote per share for Equity Shares. |
BUSINESS TO BE TRANSACTED AT THE MEETING
The following items of business will be transacted
at the Meeting. All resolutions that the Shareholders will be asked to vote upon at the Meeting in connection with seeking approval
of such items of business, must be passed by a simple majority of the votes cast by Shareholders at the Meeting, in person or by proxy.
Receive the Financial Statements
The audited financial statements of the
Company for the financial year ended December 31, 2023 and the report of the auditor thereon will be received at the Meeting.
The financial statements are available on SEDAR+ at www.sedarplus.ca and are posted on the Company's website at https://ir.glasshousebrands.com/agm/.
Election of Directors
The term of office for each director is from
the date of the Meeting at which he or she is elected until the next following annual meeting or until his or her successor is
elected or appointed, unless they resign or are removed by the Shareholders prior thereto. At the Meeting, a board of eight
directors will be proposed for election, and Shareholders will be asked to approve the election of each such director. Management
has been informed that each of the proposed nominees listed below is willing to serve as a director if elected. Absent contrary
instructions, proxies given pursuant to this solicitation by the management of the Company will be voted "FOR" the
election of each of the proposed nominees as directors of the Company to hold office until the next annual meeting of Shareholders. As
the Company is currently majority controlled by its founders who hold 100% of the Multiple Voting Shares (in addition to Equity
Shares), it is exempt from having to adopt a majority voting policy under the rules of Cboe Canada (as defined herein).
However, notwithstanding the foregoing, the Company follows a majority voting approach for the election of its directors such that,
in order to be effective, the election of each individual director must be approved by a majority of votes (at least 50% plus one)
cast by Shareholders who vote in person or by proxy at the Meeting.
The Articles contain an advance notice provision
pertaining to the Shareholders (who meet the necessary qualifications outlined in the Articles) seeking to nominate candidates for election
as directors at any annual meeting of the Shareholders, or for any special meeting of Shareholders if one of the purposes for which the
special meeting was called was the election of directors (the "Advance Notice Provisions"). Pursuant to the Advance Notice
Provisions, any additional director nominations for the Meeting must be received by the Company in compliance with the Advance Notice
Provisions no later than the close of business on May 22, 2024, being 30 days prior to the date of the Meeting.
The
following table sets forth certain information regarding the nominees, their respective positions with the Company, present principal
occupations, the period(s) during which they have served as a director of the Company and the approximate number of Equity Shares,
Multiple Voting Shares and/or exchangeable shares in the capital of the Company's subsidiary MPB Acquisition Corp.(1) (the
"Exchangeable Shares"), beneficially owned by them, directly or indirectly, or over which control or direction is exercised
by them as of the Record Date.
|
|
|
|
|
|
|
|
Company Shares and Exchangeable |
|
|
|
|
|
|
|
|
|
Shares(1) Beneficially Owned |
|
|
|
Position held with |
|
|
|
|
|
Directly or Indirectly or over which |
|
Name and Residence |
|
the Company |
|
Director Since |
|
Principal Occupation |
|
Control or Direction is Exercised(5) |
|
Kyle Kazan(2) |
|
Chairman, CEO and |
|
June 29, 2021 |
|
Chief Executive Officer, GH |
|
1,756,343 Equity Shares |
|
California, United States |
|
Director |
|
|
|
Group, Inc. ("GH Group") |
|
2,025,244 Multiple Voting Shares |
|
|
|
|
|
|
|
|
|
2,166,863 Exchangeable Shares |
|
Graham Farrar(2) |
|
President and |
|
June 29, 2021 |
|
President, GH Group |
|
1,146,723 Equity Shares |
|
California, United States |
|
Director |
|
|
|
|
|
1,321,087 Multiple Voting Shares |
|
|
|
|
|
|
|
|
|
306,563 Exchangeable Shares |
|
Robert ("Jamie") |
|
Director |
|
June 29, 2021 |
|
Chief Business Development |
|
874,799 Equity Shares |
|
Mendola(4) |
|
|
|
|
|
Officer and Head of National |
|
|
|
California, United States |
|
|
|
|
|
Wholesale and Purchasing at |
|
|
|
|
|
|
|
|
|
AYR Wellness |
|
|
|
Humble Lukanga(3) |
|
Director |
|
June 29, 2021 |
|
Chief Executive Officer and |
|
52,598 Equity Shares |
|
California, United States |
|
|
|
|
|
Founder, Life Line Financial |
|
1,415 Exchangeable Shares |
|
|
|
|
|
|
|
Group |
|
|
|
Jocelyn Rosenwald(3) |
|
Director |
|
June 29, 2021 |
|
Director of Acquisitions and |
|
548,087 Equity Shares |
|
California, United States |
|
|
|
|
|
Asset Management, Beach |
|
564,523 Multiple Voting Shares |
|
|
|
|
|
|
|
Front Property Management |
|
|
|
George Raveling(4) |
|
Director |
|
June 29, 2021 |
|
Self-Employed Consultant, |
|
41,528 Equity Shares |
|
California, United States |
|
|
|
|
|
Coaching for Success |
|
|
|
Yelena Katchko(3)(4) |
|
Director |
|
November 7, |
|
Partner, Katchko, Vitiello & |
|
4,823 Equity Shares |
|
California, United States |
|
|
2023 |
|
Karikomi, PC |
|
|
|
John Nichols, Jr. |
|
Director |
|
May 20, 2024 |
|
Insurance and Reinsurance |
|
Nil |
|
|
|
|
|
|
|
Executive (Retired) |
|
|
|
Notes:
(1) | The voting securities of MPB Acquisition Corp. consist of Class A common shares and the Exchangeable
Shares. As of the Record Date, the Company holds all of the Class A common shares of MPB Acquisition Corp., entitling the Company
to approximately 72.65% of the votes attached to all voting securities of MPB Acquisition Corp., and the holders of Exchangeable Shares
are entitled to the remaining 27.35% of the votes attached to the voting securities of MPB Acquisition Corp. The Exchangeable Shares entitle
the holders thereof to rights that are comparable (without
taking into account tax consequences) to those rights attaching to the Equity Shares, except that the aggregate voting power of the Exchangeable
Shares will not exceed 49.9% of the total voting power of all classes of shares of MPB Acquisition Corp. The Exchangeable Shares are exchangeable
at any time, on a one-for-one basis, for Equity Shares, at the option of the holder, subject to certain contractual lockup restrictions.
Until a holder's Exchangeable Shares are exchanged for the applicable Equity Shares, holders of Exchangeable Shares do not have the right
to vote at the Company's shareholder meetings; they only have voting rights in MPB Acquisition Corp. Readers are referred to the Company's
Annual Information Form dated April 1, 2024 for further information concerning the Exchangeable Shares, available on SEDAR+
at www.sedarplus.ca. |
(2) | Messrs. Kazan and Farrar and their respective affiliates hold securities of the Company carrying
10% or more of the voting rights attached to all voting securities of the Company, please see "Voting Securities and Principal
Holders Thereof – Principal Holders of Voting Securities". |
(3) | Member of the Audit Committee of the Board (the "Audit Committee"). Ms. Rosenwald
is the Chair of the Audit Committee. |
(4) | Member of the Compensation, Nomination and Corporate Governance Committee of the Board (the "CN&CG Committee").
Mr. Mendola is the Chair of the CN&CG Committee. |
(5) | The information as to the number of Company Shares beneficially owned or over which control or direction
is exercised has been furnished by the respective nominee. |
Biographies
The following are brief profiles of the proposed directors of the Company.
Kyle Kazan, Co-Founder, Chairman and Chief Executive Officer
Kyle Kazan is a seasoned investor and manager
of private equity with almost three decades of domestic and international experience in repositioning troubled and mismanaged assets.
He has a track record of growing de novo companies to industry leadership in the fields of fund/asset management, property management
and insurance. In 1991, Mr. Kazan began investing in real estate, eventually launching many private equity funds comprised of institutional
investors, family offices and high net worth individuals. During his career, he has owned and/or managed more than $6 Billion in real
estate assets. He also served on the boards of multiple international investment and hedge funds before pivoting in 2016 to the regulated
cannabis industry, where he closed four funds and consolidated them to form the Company. Since his early service as a special education
teacher and law enforcement officer, Mr. Kazan has been a vocal advocate for police reform and ending the War on Drugs and its injustices,
speaking on behalf of Law Enforcement Against Prohibition ( http://LEAP.cc) and appearing in many media outlets ranging from CNN
to Fox. He currently serves on the Board of Directors of Mission Green (https://www. theweldonproject.org/missiongreen) which is
part of the Weldon Project whose mission is to gain the release of all non-violent cannabis prisoners. Mr. Kazan is a frequent guest
professor at NYU Stern School of Business, USC Marshall Business School, and UCLA Anderson School of Management, and is a graduate of
the University of Southern California, where he played varsity basketball for Hall of Fame Coach George Raveling.
Graham Farrar, Director and President
Graham Farrar is a serial entrepreneur who began
his career as part of the original team at Software.com, taking the company public in 1999. Shortly thereafter, he served on the board
of Seacology and was part of the founding team at Sonos, where he was involved with product design, development, sales, and customer support.
After Sonos, Mr. Farrar served as a board member for Heal the Ocean, was a founder and partner of e-book publishers iStoryTime Inc.
and zuuka, and founded a Santa Barbara luxury rental company. He first ventured into the regulated cannabis industry by founding Elite
Garden Wholesale, an agriculture technology company focused on developing products for the hydroponics industry.
Jamie Mendola, Director
Jamie Mendola is the Chief Business
Development Officer and Head of National Wholesale and Purchasing at AYR Wellness, which is a multi-state operator in the cannabis
industry. He is also a co-founder of Mercer Park Brand Acquisition Corp., the sponsor of the SPAC transaction with Glass House
Brands. Prior to joining AYR's founding management team, Jamie was the Founder and CEO of Pacific Grove Capital, a long- short hedge
fund which also launched one of the earliest dedicated SPAC funds in the United States. Mr. Mendola was also a former partner
at Scout Capital, a multi-billion dollar hedge fund and had previous experience at J.P. Morgan, JLL Partners and Watershed Capital.
Jamie also previously served on the Board of Directors of Monaker Group, a travel technology platform, prior to its sale to a
strategic acquirer. He served on the Nominating and Governance Committee and was the Head of the Compensation Committee.
Mr. Mendola has a B.S. from Binghamton University and M.B.A. from the Stanford Graduate School of Business.
Humble Lukanga, Director
Humble
Lukanga is the Founder and CEO of LifeLine Financial Group, a premier business and wealth management firm serving world-class performers
in sports, entertainment, and business. Born in the small village of Masaka, Uganda, where he endured genocide, famine, and extreme poverty,
Humble and his family were granted political asylum in the U.S. when he was 11 years old, an event he calls, "the biggest blessing
of my life." Humble earned his B.A and M.B.A. from the University of New Mexico, is a Certified Financial Planner (CFP®)
and has a Personal Finance Planning degree from UCLA. Mr. Lukanga was named to The Hollywood Reporter's Top Business Managers list
for 4 years running. His work and life story has been covered by The New York Times, ESPN, The Washington Post and The Hollywood Reporter.
Humble currently sits on the board of the Africa-America Institute, a non-profit founded in 1953, that works to strengthen the bond between
Africa and America through education, training, and dialogue. He also sits on the Board of Trustees of the University of New Mexico. Humble
is passionate about social entrepreneurship, financial literacy, and philanthropy with a dedicated focus on the orphaned children of Uganda.
An ambassador of hope, Humble has defied the odds in his journey and continues to inspire along the way.
Jocelyn Rosenwald, Director
Jocelyn Rosenwald began her career as a Teach
For America Corps member in New York City. In 2011, she became a founding teacher at KIPP Star Elementary School and quickly became a
teacher leader. She began her career in real estate investment in 2013 with Beach Front Properties LLC and managed a $500 million portfolio
of value- add real estate investments. In November of 2016, Ms. Rosenwald began supervising the operations of 4 funds in the
regulated cannabis industry which would eventually be consolidated to form the Company. She holds a B.A. from the University of Pennsylvania,
an M.A. in Education from Hunter College, and an M.B.A. from UCLA Anderson School of Business.
George Raveling, Director
George Raveling was the first African American
basketball coach in the Pac-8 (now Pac-12), the head coach at Washington State University, University of Iowa and USC, and the assistant
coach of the medal-winning 1984 and 1988 U.S. Olympic teams. He was also a former Director of International Basketball at Nike and a former
commentator for Fox Sports and CBS. Mr. Raveling was inducted into Naismith Memorial Basketball Hall of Fame, National Collegiate
Hall of Fame, and was a recipient of John W. Bunn Lifetime Achievement Award. He is the author of two books and is a co-founder of The
Daily Coach. George has a B.S. in Economics from Villanova University, where he is also inducted into the Villanova Hall of Fame.
Yelena Katchko, Director
Yelena Katchko is an attorney and a founding partner
of Katchko, Vitiello & Karikomi, PC, a well-regarded law firm located in Los Angeles, California with an authentic deep-rooted
presence in the local cannabis industry. At the helm of KVK's cannabis practice group, Yelena handles intricate transactional, commercial,
licensing and regulatory compliance matters within the cannabis sphere. Ms. Katchko began representing medicinal cannabis clients
in the City of Los Angeles in 2010 and has become one of the industry's most recognized names. Her experience includes involvement in
shaping the Medicinal and Adult Use cannabis regulations in both the City of Los Angeles and the State of California through her expansive
professional network, pro bono affiliations, local alliances and engagements in town halls. In particular, Yelena was integral to the
city- wide resolution of City of Los Angeles v. 420 Grand et al. which provided a framework for Proposition D's limited immunity and,
later, Measure M's priority licensure. She has developed significant experience in local government matters by being a key part of discussions
with officials on the constantly changing cannabis regulatory landscape and by working closely with policymakers to advocate on behalf
of her clients. In addition to her professional commitments, Yelena serves as the Vice Chair of Programming for the Los Angeles County
Bar Association – Cannabis Section and as affiliate counsel for the United Cannabis Business Association (UCBA), a statewide
trade association built by the leaders of the California cannabis industry.
John Nichols, Jr., Director
John Nichols, Jr. is an accomplished insurance
and reinsurance executive with more than four decades of experience, who has held multiple leadership and board positions throughout his
career. Most recently, Mr. Nichols served as Interim Chief Executive Officer and Chairman of the Board at Protective Insurance Company
where he oversaw the acquisition of the company by Progressive Insurance Company. Prior to his work at Protective Insurance, Mr. Nichols
was the CEO of Axis Reinsurance Ltd. and held various roles, including President, during a fifteen-year stint at RenaissanceRe Ventures
Ltd. He currently serves on the boards of Hippo Holdings Inc., Delaware North Companies and Chelsea Avondale / Max Insurance Company,
and previously served on the board of National General Insurance Company and Brit Re and Sussex Re. He holds a Bachelor of Science, with
a concentration in accounting, from Babson College and was formerly a CPA between 1984 and 1998.
Corporate Cease Trade Orders or Bankruptcies
To the knowledge of the Company, no director or
proposed director of the Company has been, at the date hereof or within the last 10 years: (a) a director, chief executive officer
or chief financial officer of any company that, while that person was acting in that capacity, (i) was the subject of a cease trade
or similar order or an order that denied the company access to any exemption under securities legislation, for a period of more than 30
consecutive days, or (ii) was the subject of an event that resulted, after that person ceased to be a director or chief executive
officer or chief financial officer, in the company being the subject of such an order; or (b) a director or executive of a company
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.
Personal Bankruptcies
To the knowledge of the Company, no director or
proposed director of the Company 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 executive officer.
Penalties or Sanctions
To the knowledge of the Company, no director or
proposed director of the Company has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation
or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any
other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder
in making an investment decision.
Appointment of Auditor
Macias Gini & O'Connell LLP is the auditor
of the Company, and was first appointed auditor on June 29, 2021. At the Meeting, Shareholders will be asked to re-appoint Macias
Gini & O'Connell LLP as auditor of the Company to hold office until the next annual meeting of Shareholders or until a successor
is appointed, and to authorize the directors to fix the auditor's remuneration.
Absent contrary instructions, proxies given
pursuant to this solicitation by the management of the Company will be voted "FOR" the appointment of Macias Gini &
O'Connell LLP as the auditor of the Company to hold office until the next annual meeting of Shareholders or until a successor is appointed
and the authorization of the directors to fix the remuneration of the auditor.
Renewal of Equity Incentive Plan
The Company has in place a 10% evergreen equity
incentive plan which was last approved by the Shareholders at a meeting held on June 2, 2021 ("Equity Incentive Plan").
The policies of Cboe Canada Inc. ("Cboe Canada", formerly known as the NEO Exchange) require listed companies to seek
shareholder approval for all unallotted elements of evergreen plan every three years after adoption.
Because the Meeting is currently scheduled to
be held on a date later than three years from the date the Equity Incentive Plan was last approved by the Shareholders, all unallocated
entitlements will be cancelled and the Company will not be permitted to make further grants under the Equity Incentive Plan until shareholder
approval is obtained.
See the section entitled "Security Based Compensation Plans"
for more details on the Equity Incentive Plan.
A copy of the Equity Incentive Plan is attached here as Schedule "B".
At the meeting, the Shareholders will therefore
be asked to consider and, if thought advisable, pass an ordinary resolution approving the renewal of the Company's Equity Incentive Plan
and all of its unallotted options, rights or other entitlements for the next three years (the "Equity Incentive Plan Resolution").
The full text of the Equity Incentive Plan Resolution is as follows:
"Whereas Glass House Brands Inc.
(the "Company") adopted effective on June 29, 2021, an equity incentive plan (the " Equity Incentive Plan")
which does not have a fixed maximum number of securities issuable thereunder;
AND WHEREAS the rules of Cboe
Canada provide that all unallocated entitlements under a compensation arrangement which does not have a fixed number of maximum securities
issuable thereunder must be approved every three years;
BE IT RESOLVED THAT:
| (a) | The renewal of the Equity Incentive Plan is hereby approved, ratified and confirmed; |
| (b) | All unallocated options, rights or other entitlements under the Equity Incentive Plan be and are hereby
approved, ratified and confirmed, until the third anniversary of the adoption of the present resolution by the shareholders of the Company,
being no later than June 21, 2027; and |
| (c) | Any one or more directors or officers of the Company is hereby authorized and directed, acting for, in
the name of and on behalf of the Company, to execute or cause to be executed, under the seal of the Company 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 be
in the opinion of such director or officer of the Company 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 Company being conclusive
evidence of such determination." |
If the Equity Incentive Plan Resolution is not
approved by the Shareholders at the Meeting, all entitlements granted under the Equity Incentive Plan but not yet exercised will continue
unaffected, however, all unallocated options, rights or other entitlements must be cancelled and the Company will not be permitted to
grant further options, rights or other entitlements under the Equity Incentive Plan, until such time as Shareholder approval is obtained.
Unless otherwise directed in properly completed
forms of proxy, it is the intention of individuals named in the accompanying form of proxy to vote FOR the Equity Incentive
Plan Resolution. The Board has approved the Equity Incentive Plan and recommends that the Shareholders vote FOR the Equity
Incentive Plan Resolution.
Consideration of Other Business
Following the conclusion of the former business
to be conducted at the Meeting, we will consider such other business, if any, that may properly come before the Meeting or any adjournment(s) thereof.
As at the date hereof, management of the Company is not aware of any amendments or variations to matters identified in the Notice of Meeting
or other matters that may properly come before the Meeting, other than those mentioned in said Notice of Meeting.
STATEMENT OF EXECUTIVE COMPENSATION
The purpose of this Statement of Executive Compensation
is to provide information about the Company's philosophy, objectives and processes regarding executive compensation. This disclosure is
intended to communicate the compensation provided to each of the Chief Executive Officer ("CEO"), the Chief Financial
Officer ("CFO"), and the three next most highly compensated executive officers of the Company, if any, whose individual
total compensation was more than C$150,000 for the year ended December 31, 2023 (collectively, the "Named Executive Officers"
or "NEOs"), and to the directors of the Company. During the year ended December 31, 2023, the Named Executive Officers
of the Company were Kyle Kazan, Chairman and CEO, Mark Vendetti, CFO, Graham Farrar, President, Hilal Tabsh, Chief Revenue Officer and
Benjamin Vega, General Counsel and Corporate Secretary.
Unless otherwise indicated, all references to
"dollars", "$" or "US$" in this section, and elsewhere in this Information Circular, refer to United States
dollars which is the Company's reporting currency.
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
The Company operates in a dynamic and rapidly
evolving market. To succeed in this environment and to achieve business and financial objectives, the Company needs to attract, retain
and motivate a highly talented team of executive officers. The Company expects the team of executive officers to possess and demonstrate
strong leadership and management capabilities, as well as foster the Company's company culture, which is at the foundation of its success
and remains a pivotal part of its everyday operations.
The Company's executive officer compensation program is designed to
achieve the following objectives:
• | provide market competitive compensation opportunities in order to attract and retain talented, high performing
and experienced executive officers, whose knowledge, skills and performance are critical to the Company's success; |
• | motivate the Company's executive officers to achieve the Company's business and financial objectives; |
• | align the interests of the Company's executive officers with those of the Company's Shareholders by tying
a meaningful portion of compensation directly to the long-term value and growth of the Company's business; |
• | balance achieving short-term results and creating long-term sustainable value to Shareholders by providing
incentives that encourage the Company's executive officers to take appropriate levels of risk and that enforce a strong pay for performance
relationship; and |
• | incentivize Earnings Before Interest Depreciation and Amortization ("EBITDA")(1) targets
set by the Company for individuals with responsibility or other related functions, for example: |
| • |
For all Company executives if EBITDA for the Company, on a consolidated basis, exceeds $55,000,000 for
any three-month period then all executives will have 25% of either: (i) all of their equity incentive plan grants or (ii) the
restricted stock units granted by the Company, excluding the replacement RSUs issued in exchange for the cancellation of previously held
restricted stock units of GH Group on completion of the Business Combination
(the "Performance RSUs"), will be accelerated. |
| • | Certain executives will have one or more of the following performance-based targets: |
| • | If EBITDA for the Company, on a consolidated basis, exceeds $25,000,000 for any three-month period certain
executives will have 16.67% of either (i) all of their equity incentive plan grants or (ii) their Performance RSUs accelerated. |
| • | If EBITDA for the Company's consumer packaged goods business, on a consolidated basis, exceeds $23,000,000
for any three-month period certain executives will have 16.67% either (i) all of their equity incentive plan grants or (ii) their
Performance RSUs accelerated. |
| • | If EBITDA from the Company's Camarillo facility, on a consolidated basis, exceeds $31,000,000 for any
three-month period certain executives will have 16.67% of either (i) all of their equity incentive plan grants or (ii) their Performance RSUs accelerated. |
| • | If the Company completes seven or more mergers and acquisitions or the total acquisition consideration
exceeds $100,000,000 (excluding the Company's transaction with Element 7 and the acquisition of the real estate for the Camarillo facility)
certain executives will have 16.67% either (i) all of their equity incentive plan grants or (ii) their Performance RSUs accelerated. |
The Company expects to establish an appropriate comparator group for
the purposes of setting future compensation to the NEOs.
Note:
(1) | EBITDA is a non-GAAP financial measure, and is calculated based on Net Loss (being the most directly comparable
GAAP financial measure) adjusted for interest and financing costs, income taxes, depreciation, and amortization. EBITDA is not a standardized
financial measure under United States GAAP and might not be comparable to similar financial measures disclosed by other companies. The
Company uses this metric to measure its core financial and operating performance for business planning purposes. In addition, the Company
believes investors use both GAAP and non-GAAP financial measures to assess management's past and future decisions associated with its
priorities and allocation of capital, as well as to analyze how the business operates in, or responds to, swings in economic cycles or
to other events that impact the cannabis industry. This non-GAAP financial measure is intended to provide additional information and should
not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. For further information
on non-GAAP financial measures, please refer to the Company's managements' discussion and analysis of financial conditional and results
of operations for the year ended December 31, 2023 under the heading "Non-GAAP Financial Measures", available under
the Company's profile at www.sedarplus.ca and on the Company's website. |
Elements of Executive Compensation
The compensation of NEOs of the Company currently
includes two main elements: (a) base salary; and (b) long-term equity incentives, which consisted of stock options and restricted
stock unit awards during 2023, granted under the Equity Incentive Plan (as defined herein), and any other equity plan that may
be approved by the Board from time to time.
Base Salaries
Base salaries are intended to provide an appropriate
level of fixed compensation that will assist in employee retention and recruitment. Base salaries will be determined on an individual
basis, taking into consideration the past, current and potential contribution to the Company's success, the NEO's experience and expertise,
the position and responsibilities of the NEO, and competitive industry pay practices for other high growth, premium brand companies of
similar size and revenue growth potential.
Long-Term Incentives
Long-term incentive ("LTI") compensation
awards under the Equity Incentive Plan provide continual motivation for the Company's officers, employees and consultants to achieve business
and financial objectives and align their interests with the long- term interests of the Company's Shareholders. The purpose of the LTI
program is to promote alignment of interests between employees and Shareholders, and to support the achievement of the Company's longer-term
performance objectives, while also promoting long-term retention.
The Company believes that the best method to attract
and retain executive talent and to align interests between the Company's shareholders and the executives is to prioritize share-linked
compensation. Such prioritization benefits the Company as it reduces the cash cost of attracting and retaining executives, a valuable
benefit given that the sector that the Company operates in continues to experience higher costs of capital than comparable businesses
operating outside of the cannabis sector. As a result, the Company approved the granting of new long-term equity-backed incentives. All
new grants by the Company to executives have a standard three-year vesting schedule with performance based accelerations (excluding those
issued as replacement for the cancellation of GH Group equity-based compensation under the Business Combination). For the reasons identified
above, the Company has not as of the date of this document, and does not expect in the near term, to pay any bonuses to executives.
Risks Analysis
The CN&CG Committee considered risks associated
with executive compensation and does not believe that the Company's executive compensation policies and practices encourage its executive
officers to take inappropriate or excessive risks. The following compensation program attributes help mitigate risk: (i) NEOs are
compensated through the granting of Options and RSUs (each as defined below), which is compensation that is both "at risk" and
associated with long-term value creation; (ii) the value of such compensation is dependent upon Shareholder return over the Option
and RSU vesting periods; (iii) the compensation program utilizes multiple performance measures; (iv) the CN&CG Committee
applies judgement when determining individual payouts; and (v) individual payout caps are applicable, all of which leads to the CN&CG
Committee believing that the Company's compensation programs and policies are not likely to lead to excessive risk taking that could have
a material adverse effect on the Company.
Compensation Governance
The Company's CN&CG Committee is responsible
for overseeing the Company's compensation policies, processes and practices. The CN&CG Committee is also responsible for evaluating
performance in determining the compensation of the NEOs, and seeks input from the Board to ensure feedback is thorough and robust. The
CN&CG Committee also ensures that compensation policies and practices provide an appropriate balance of risk and reward consistent
with the Company's risk profile. The Board has established a written charter for the CN&CG Committee setting out its responsibilities
for administering the Company's compensation programs and reviewing and making recommendations to the Board concerning the level and nature
of the compensation payable to the Company's directors and executive officers.
The members of the CN&CG Committee are Jamie
Mendola, Yelena Katchko and George Raveling. The CN&CG Committee is chaired by Mr. Mendola, Head of Strategy and M&A at Mercer
Park L.P. and AYR Wellness. Mr. Mendola brings valuable knowledge and expertise to the CN&CG Committee. Mr. Mendola
co-founded and serves as the Head of Strategy and M&A at Mercer Park L.P. and AYR Wellness. Additionally, Mr. Mendola founded
and served as the CEO of Pacific Grove Capital, a long-short hedge fund that launched one of the earliest dedicated SPAC funds in the
United States. Mr. Mendola's financial industry experience includes serving as a partner of the Scout Capital hedge fund as well
as experience at J.P. Morgan, JLL Partners and Watershed Capital. Other than Mr. Mendola, all of the members of the CN&CG Committee
are independent directors in that they do not have a direct or indirect material relationship with the Company which could, in the view
of the Board, reasonably interfere with the exercise of the director's independent judgment. The CN&CG Committee also evaluates its
own performance on an annual basis. A copy of the CN&CG Committee Charter can be found on the Company's website at www.ir.glasshousebrands.com.
The CN&CG Committee is tasked with establishing
an executive compensation program, which includes any share-based awards, option-based awards or the establishment of any non-equity incentive
plans. The terms of any proposed compensation for the directors of the Company who are not also officers of the Company (including any
share-based awards or options to be granted) are determined by the CN&CG Committee.
Insider Trading Policy
All of the Company's directors, managers, officers
and employees, and certain consultants and other individuals, are subject to the Company's Insider Trading Policy, which prohibits trading
in the Company's securities while in possession of material undisclosed information about the Company. Under this policy, such individuals
are also prohibited from disclosing inside information pursuant to the Insider Trading Policy. Such individuals, including the NEOs are
only permitted to trade in the Company's securities during prescribed trading windows. Furthermore, certain individuals, including the
NEOs and directors, must pre- clear any proposed trade in securities of the Company with an Insider Trading Policy Administrator to ensure
there is no inside information that has not generally been disclosed. A copy of the Company's Insider Trading Policy can be found on the
Company's website at www.ir.glasshousebrands.com.
Restrictions on Hedging
Under the Company's Insider Trading Policy, directors,
executives and certain other employees are prohibited from entering into hedging transactions involving the Company's securities, such
as short sales, puts and calls.
Performance Graph
The following graph shows the Company's cumulative
total Shareholder return since May 13, 2019, the date the Company's shares began trading on Cboe Canada, to December 31, 2023,
compared to the Russell Small Cap Completeness Index and the Advisorshares Pure US Cannabis ETF (which began trading in September 2020).
The Company's executive compensation is
largely share-based with a standard vesting schedule that lasts for three years. As a result of using share-based compensation, the
performance in share price directly affects the largest portion of the Company's executive compensation as such compensation, for
executives present at the time of the Business Combination, included stock options with fixed exercise prices. The result is that
the 53% decrease in share price during the above period had the effect of decreasing the value of the total compensation for those
executives present at the time of the Business Combination by approximately 31% to 46%. The total compensation for the executives
who joined the Company after the Business Combination increased by approximately 9% to 24% from the date they joined the Company
until the end of the period shown above, which in each case is closely correlated to the change in the Company's share price during
the relevant period. In general, there is a strong correlation between the trends shown in the performance graph shown above and the
compensation for executives during the same period or, if applicable, the period since such executive joined the Company. Share
price performance, however, is not the only predictor or outcome of the success of our leadership team, especially in the short
term. It is one of many considerations that influence our executive compensation decisions, including operational and strategic
performance and individual performance.
Summary Compensation Table
The following table sets forth the compensation earned by, paid to or awarded to the Company's NEO's for the
period from June 29, 2021, being the date the Company completed the Business Combination, to December 31, 2023.
| |
| | |
| | |
| | |
| | |
Non-equity incentive | | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
plan compensation | | |
| | |
| | |
| |
| |
| | |
| | |
| | |
Option- | | |
| | |
Long- | | |
| | |
| | |
| |
Name
and | |
| | |
| | |
| | |
based | | |
Annual | | |
term | | |
| | |
| | |
| |
principal | |
| | |
| | |
Share-based | | |
awards | | |
incentive | | |
incentive | | |
Pension | | |
All
other | | |
Total | |
position
of NEO | |
Year | | |
Salary | | |
awards | | |
(10) | | |
plans | | |
plans | | |
Value(1) | | |
compensation | | |
compensation | |
Kyle
Kazan | |
| 2023 | | |
$ | 360,000 | | |
$ | 966,000 | | |
| – | | |
$ | 180,000 | | |
| – | | |
| – | | |
| – | | |
$ | 1,506,000 | |
Chairman,
CEO and Director | |
| 2022 | | |
$ | 360,000 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 360,000 | |
| |
| 2021 | | |
$ | 201,753 | | |
$ | 5,009,920 | (5) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 5,211,673 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Graham
Farrar | |
| 2023 | | |
$ | 337,000 | | |
| – | | |
| – | | |
$ | 168,500 | | |
| – | | |
| – | | |
| – | | |
$ | 505,500 | |
President
and Director | |
| 2022 | | |
$ | 337,000 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 337,000 | |
| |
| 2021 | | |
$ | 179,069 | | |
$ | 7,167,730 | (6) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 7,346,799 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Mark
Vendetti(2) | |
| 2023 | | |
$ | 330,000 | | |
$ | 483,000 | | |
| – | | |
$ | 165,000 | | |
| – | | |
| – | | |
| – | | |
$ | 978,000 | |
CFO | |
| 2022 | | |
$ | 330,000 | | |
$ | 1,149,000 | (7) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 1,479,000 | |
| |
| 2021 | | |
$ | 89,146 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 89,146 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Hilal
Tabsh(3) | |
| 2023 | | |
$ | 300,000 | | |
| – | | |
| – | | |
$ | 150,000 | | |
| – | | |
| – | | |
$ | 12,000 | (12) | |
$ | 462,000 | |
Chief
Revenue Officer | |
| 2022 | | |
$ | 178,846 | | |
$ | 1,170,000 | (8) | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 51,699 | (11) | |
$ | 1,347,545 | |
| |
| 2021 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Benjamin
Vega(4) | |
| 2023 | | |
$ | 300,000 | | |
| – | | |
| – | | |
$ | 150,000 | | |
| – | | |
| – | | |
| – | | |
$ | 450,000 | |
General
Counsel and Corporate Secretary | |
| 2022 | | |
$ | 46,154 | | |
$ | 1,044,000 | (9) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 1,090,154 | |
| |
| 2021 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Notes:
(1) | The Company did not have a defined benefits plan or defined contributions plan during 2023. |
(2) | Mr. Vendetti was appointed CFO effective October 1, 2021. |
(3) | Mr. Tabsh was appointed Chief Revenue Officer on May 16, 2022 and was not employed by the Company
in 2021. |
(4) | Mr. Vega was appointed General Counsel and Corporate Secretary on October 24, 2022 and was not
employed by the company in 2021. |
(5) | 500,992 RSUs valued at $10 per share at the time of the Business Combination, excludes 359,249 unvested
RSUs issued as replacements for the cancellation of GH Group equity-based awards under the Business Combination. |
(6) | 716,773 RSUs valued at $10 per share at the time of the Business Combination, excludes 100,092 unvested
RSUs issued as replacements for the cancellation of GH Group equity-based awards under the Business Combination. |
(7) | In connection with Mr. Vendetti's appointment as Chief Financial Officer in 2021, the Company agreed
to grant him, as an initial LTI grant, 300,000 RSUs (valued at $1,149,000), to further align his interests with those of Shareholders
and as a retention tool. |
(8) | In connection with Mr. Tabsh's appointment as Chief Revenue Officer in 2022, the Company agreed to
grant him, as an initial LTI grant, 300,000 RSUs (valued at $1,170,000), to further align his interests with those of Shareholders and
as a retention tool. |
(9) | In connection with Mr. Vega's appointment as General Counsel and Corporate Secretary in 2022, the
Company agreed to grant him, as an initial LTI grant, 300,000 RSUs (valued at $1,044,000), to further align his interests with those of
Shareholders and as a retention tool. |
(10) | Excludes unvested stock options issued as replacements for the cancellation of GH Group equity-based awards
under the Business Combination. |
(11) | Includes a one-time cash sign-on bonus of $25,000, reimbursements for relocation expenses and car allowance. |
(12) | Includes a car allowance. |
Incentive Plan Awards – Outstanding Share-Based Awards and
Option-Based Awards
The following table sets forth information concerning the option-based
and share-based awards granted to the Company's NEOs that were outstanding as at December 31, 2023.
| |
Option-based Awards | | |
Share-based Awards | |
| |
| | |
| | |
| | |
| | |
Number of | | |
Market or | | |
Market or | |
| |
| | |
| | |
| | |
| | |
Company | | |
Payout | | |
Payout | |
| |
Number of | | |
| | |
| | |
| | |
Shares or Units | | |
Value of | | |
Value of | |
| |
Securities | | |
| | |
| | |
Value of | | |
of Company | | |
Share-Based | | |
Vested | |
| |
Underlying | | |
| | |
| | |
Unexercised | | |
Shares That | | |
Awards | | |
Share-Based | |
| |
Unexercised | | |
Option | | |
Option | | |
in-the- | | |
Have Not | | |
That Have | | |
Awards Not | |
| |
Options | | |
Exercise | | |
Expiration | | |
Money | | |
Vested | | |
Not | | |
Paid Out or | |
Name and Principal Position | |
(#)(2) | | |
Price | | |
Date | | |
Options(1) | | |
(#) | | |
Vested(1) | | |
Distributed(1) | |
Kyle Kazan | |
| 132,768 | | |
$ | 2.49 | | |
10/1/2024 | | |
$ | 296,073 | | |
| 592,728 | | |
$ | 2,797,676 | | |
| – | |
Chairman, CEO and Director | |
| 17,579 | | |
$ | 3.39 | | |
1/25/2026 | | |
$ | 23,380 | | |
| – | | |
| – | | |
| – | |
| |
| 15,254 | | |
$ | 3.39 | | |
4/17/2025 | | |
$ | 20,288 | | |
| – | | |
| – | | |
| – | |
Graham Farrar | |
| 132,768 | | |
$ | 2.26 | | |
10/1/2024 | | |
$ | 326,609 | | |
| 418,165 | | |
$ | 1,973,739 | | |
| – | |
President and Director | |
| 11,514 | | |
$ | 3.08 | | |
1/25/2026 | | |
$ | 18,883 | | |
| – | | |
| – | | |
| – | |
| |
| 17,579 | | |
$ | 3.08 | | |
4/17/2025 | | |
$ | 28,830 | | |
| – | | |
| – | | |
| – | |
Mark Vendetti | |
| – | | |
| – | | |
– | | |
| – | | |
| 224,999 | | |
$ | 1,061,995 | | |
| – | |
CFO | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
Hilal Tabsh | |
| – | | |
| – | | |
– | | |
| – | | |
| 149,999 | | |
$ | 707,995 | | |
| – | |
Chief Revenue Officer | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
Benjamin Vega | |
| – | | |
| – | | |
– | | |
| – | | |
| 183,334 | | |
$ | 865,336 | | |
| – | |
General Counsel and Corporate Secretary | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
Notes:
(1) | Value of unexercised in-the-money Options and market value of unvested share-based awards and vested but
undistributed share-based awards calculated based on the closing share price on Cboe Canada on December 29, 2023 (being the last
trading day of 2023) of $4.72. |
(2) | All stock options in this table issued as replacements for GH Group equity compensation at the time of
the Business Combination and includes vested stock options the net-value of which, calculated at a price per share of $10, was credited
against the Business Combination purchase price for GH Group. |
Incentive Plan Awards – Value Vested or Earned During the
Year
The following table indicates, for each of the
Company's NEOs, a summary of the value of the option-based and share- base awards vested in accordance with their terms for the Company's
financial year ending December 31, 2023.
| |
| | |
| | |
Non-Equity Incentive Plan | |
| |
Option-Based Awards – Value | | |
Share-Based Awards – Value | | |
Compensation – Value Earned | |
Name and Principal Position | |
Vested During the Year | | |
Vested During the Year(1) | | |
During the Year | |
Kyle Kazan | |
| | | |
| | | |
| | |
Chairman, CEO and Director | |
$ | 28,483 | | |
| – | | |
| – | |
Graham Farrar | |
| | | |
| | | |
| | |
President and Director | |
$ | 23,959 | | |
$ | 1,968,500 | | |
| – | |
Mark Vendetti | |
| | | |
| | | |
| | |
CFO | |
| – | | |
$ | 368,166 | | |
| – | |
Hilal Tabsh | |
| | | |
| | | |
| | |
Chief Revenue Officer | |
| – | | |
$ | 476,253 | | |
| – | |
Benjamin Vega | |
| | | |
| | | |
| | |
General Counsel and Corporate | |
| – | | |
$ | 489,747 | | |
| – | |
Secretary | |
| | | |
| | | |
| | |
Notes:
(1) | Value of vested share-based awards calculated based on the closing share price on the dates of vesting;
if share-based awards vested in 2023 but not on a trading day, value of vested share- based awards calculated based on closing share price
on the last trading day prior to the date of vesting. |
Pension Plan Benefits
The Company has not implemented any deferred compensation
plan, pension plan or other form of funded or unfunded retirement compensation for its employees that provides for payments or benefits
at, following or in connection with retirement.
Termination and Change of Control Benefits
Other than as described herein, the Company does
not have any contract, agreement, plan or arrangement that provides for payments to a NEO at, following, or in connection with a termination
(whether voluntary, involuntary or constructive), resignation, retirement, a change of control of the Company or a change in a NEO's responsibilities.
Kyle Kazan
On June 29, 2021, the Company entered into
an employment agreement with Mr. Kazan (the "Kazan Agreement"). In the event of termination without cause of Mr. Kazan's
employment or if Mr. Kazan resigns for good reason, (i) Mr. Kazan shall receive an amount equal to eighteen months of the
sum of his base salary of $360,000 per year, in either a lump sum or installments on the Company's regular payroll schedule following
the termination date; (ii) the Company shall pay its share of Mr. Kazan's health insurance premiums to continue his health insurance
coverage for eighteen months beyond the termination date; and (iii) 292,278 of Mr. Kazan's RSUs shall be subject to accelerated
vesting.
In the event of termination without cause of Mr. Kazan's
employment, or if Mr. Kazan resigns for good reason or if a successor does not renew the contract within 365 days of a change of
control, (i) Mr. Kazan shall receive an amount equal to twenty four months of the sum of his then base salary in either a lump
sum or installments on the Company's regular payroll schedule following the termination date; (ii) the Company shall pay its share
of Mr. Kazan's health insurance premiums to continue his health insurance coverage for eighteen months beyond the termination date;
and (iii) all of Mr. Kazan's equity awards shall be subject to accelerated vesting.
The change of control payments and benefits that
would be made to Mr. Kazan are conditioned on and subject to Mr. Kazan signing and not rescinding the Kazan Agreement, a non-disclosure
agreement and an effective, general release of all claims in favour of the Company within no greater than sixty days following the termination
date. Upon a qualifying termination in connection with a change of control, Mr. Kazan's outstanding equity awards will vest in full.
The total estimated incremental payments, payables
and benefits to Mr. Kazan in the event his employment is terminated in connection with a change of control, as if such event occurred
on the last business day of the Company's most recently completed financial year, is $1,324,689, with Mr. Kazan's health insurance
coverage continuing for eighteen months from the termination date.
The total estimated incremental payments and payables
to Mr. Kazan in the event of termination of his employment without cause (other than due to a change of control), as if such event
occurred on the last business day of the Company's most recently completed financial year, is $1,144,689, with Mr. Kazan's health
insurance coverage continuing for eighteen months from the termination date.
Mark Vendetti
On August 18, 2021, the Company entered into
an employment agreement with Mr. Vendetti. In the event of termination without cause of Mr. Vendetti's employment, Mr. Vendetti
shall receive (i) an amount equal to six months of the sum of Mr. Vendetti's base salary of $330,000 per year; and (ii) accelerated
vesting of 174,999 of Mr. Vendetti's RSUs less any amount previously vested as part of his original grant.
The total estimated incremental payments and payables
to Mr. Vendetti in the event of termination of his employment without cause, regardless of whether incident to or after a change
of control, as if such event occurred on the last business day of the Company's most recently completed financial year, is $507,998.
Graham Farrar
On June 29, 2021, the Company entered into
an employment agreement with Mr. Farrar (the "Farrar Agreement"). In the event of termination without cause of Mr. Farrar's
employment or if Mr. Farrar resigns for good reason, (i) Mr. Farrar shall receive an amount equal to eighteen months of
the sum of his base salary of $337,000 per year, in either a lump sum or installments on the Company's regular payroll schedule following
the termination date; (ii) the Company shall pay its share of Mr. Farrar's health insurance premiums to continue his health
insurance coverage for eighteen months beyond the termination date; and (iii) 811,865 of Mr. Farrar's RSUs shall be subject
to accelerated vesting.
In the event of termination without cause of Mr. Farrar's
employment or if Mr. Farrar resigns for good reason or if a successor does not renew the contract within 365 days of a change of
control, (i) Mr. Farrar shall receive an amount equal to twenty four months of the sum of Mr. Farrar's base salary in either
a lump sum or installments on the Company's regular payroll schedule following the termination date; (ii) the Company shall pay its
share of Mr. Farrar's health insurance premiums to continue Mr. Farrar's health insurance coverage for eighteen months beyond
the termination date; and (iii) all of Mr. Farrar's equity awards shall be subject to accelerated vesting.
The change of control payments and benefits that
would be made to Mr. Farrar are conditioned on and subject to Mr. Farrar signing and not rescinding the Farrar Agreement, a
non-disclosure agreement and an effective, general release of all claims in favour of the Company within no greater than sixty days following
the termination date. Upon a qualifying termination in connection with a change of control, Mr. Farrar's outstanding equity awards
will vest in full.
The total estimated incremental payments, payables
and benefits to Mr. Farrar in the event his employment is terminated in connection with a change of control, as if such event occurred
on the last business day of the Company's most recently completed financial year, is $2,297,079, with Mr. Farrar's health insurance
coverage continuing for eighteen months from the termination date.
The total estimated incremental payments and payables
to Mr. Farrar in the event of termination of his employment without cause (other than due to a change of control), as if such event
occurred on the last business day of the Company's most recently completed financial year, is $2,128,579, with Mr. Farrar's health
insurance coverage continuing for eighteen months from the termination date.
Director Compensation
Non-Employee Director Compensation Programs
The Company's compensation program for non-employee
directors is designed to attract and retain highly qualified non-employee directors as well as align with the long-term interests of non-employee
directors with those of the Shareholders. The Company compensates its non-employee directors by setting a base cash value for such service
and issuing RSUs equal to each quarter's cash value of services valued at the close of each quarter. Thus, no cash fees are paid. Directors
who act as committee chairs of the Audit Committee or the CN&CG Committee receive additional compensation.
Directors who are employees of the Company receive
no additional compensation for their service on the Board. Therefore, neither Kyle Kazan, the Company's Chairman and CEO, nor Graham Farrar,
the Company's President, received any additional compensation for their service on the Board in 2023.
The compensation program for the Company's non-employee directors in
2023 was as follows:
Compensation Component | |
Annual Amount(1) | |
Annual base retainer for all non-employee directors | |
$ | 50,000 | |
Additional annual fee for Chair of Audit Committee and Chair of CN&CG Committee | |
$ | 15,000 | |
Additional annual fee for Chair of CN&CG Committee | |
$ | 5,000 | |
Note:
(1) | The Company compensates its non-employee directors by setting a base cash value for such service and issuing
RSUs equal to each quarter's cash value of services valued at the close of each quarter. No cash fees are paid. |
Fees Paid to Non-Employee Directors in Fiscal Year 2023
The following table sets forth information concerning
the annual and long-term compensation in respect of the directors of the Company, other than the directors who were also NEOs, for the
2023 fiscal year. For details of the compensation for Kyle Kazan and Graham Farrar, the NEOs who are also directors of the Company, see
disclosure under "Statement of Executive Compensation – Summary Compensation Table" which sets out their compensation
as NEOs. Mr. Kazan and Mr. Farrar do not receive any addition compensation for their position as directors of the Company.
| |
| | |
Share- | | |
Option- | | |
Non-Equity | | |
| | |
| | |
| |
| |
Fee | | |
Based | | |
Based | | |
Incentive Plan | | |
Pension | | |
All Other | | |
Total | |
Name | |
Earned(1) | | |
Awards | | |
Awards | | |
Compensation | | |
Value | | |
Compensation | | |
Compensation(2) | |
Jamie Mendola | |
| – | | |
$ | 50,720 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 50,720 | |
Humble Lukanga | |
| – | | |
$ | 62,840 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 62,840 | |
Jocelyn Rosenwald | |
| – | | |
$ | 52,160 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 52,160 | |
George Raveling | |
| – | | |
$ | 50,000 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 50,000 | |
Yelena Katchko(3) | |
| – | | |
$ | 8,016 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 8,016 | |
John Perez(4) | |
| – | | |
$ | 9,103 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 9,103 | |
Hector De La Torre(5) | |
| – | | |
$ | 26,766 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 26,766 | |
Bob Hoban(6) | |
| – | | |
$ | 45,883 | | |
| – | | |
| – | | |
| – | | |
| – | | |
$ | 45,883 | |
Notes:
(1) | The Company compensates its non-employee directors by setting a base cash value for such service and issuing
RSUs equal to each quarter's cash value of services valued at the close of each quarter. Thus, no cash fees are paid. |
(2) | Includes share-based awards for service for the 2023 fiscal year. |
(3) | Ms. Katchko was appointed Director on November 7, 2023. |
(4) | Mr. Perez was appointed Director on October 31, 2023 and resigned as Director on February 8,
2024. |
(5) | Mr. De La Torre resigned as Director on July 13, 2023. |
(6) | Mr. Hoban resigned as Director on October 31, 2023. |
Incentive Plan Awards – Outstanding Share-Based Awards and
Option-Based Awards
The following table sets forth information concerning the option- based
and share-based awards granted to the Company's directors that were outstanding as of December 31, 2023.
| |
| Option-based Awards | | |
| Share-based Awards | |
| |
| | | |
| | | |
| | | |
| | | |
| Number of | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| Company | | |
| Market or | | |
| Market or | |
| |
| | | |
| | | |
| | | |
| | | |
| Shares or | | |
| Payout Value | | |
| Payout Value | |
| |
| Number of | | |
| | | |
| | | |
| | | |
| Units of | | |
| of Share- | | |
| of Vested | |
| |
| Securities | | |
| | | |
| | | |
| Value of | | |
| Company | | |
| Based | | |
| Share-Based | |
| |
| Underlying | | |
| Option | | |
| Option | | |
| Unexercised | | |
| Shares That | | |
| Awards That | | |
| Awards Not | |
| |
| Unexercised | | |
| Exercise | | |
| Expiration | | |
| in-the-Money | | |
| Have Not | | |
| Have Not | | |
| Paid Out or | |
Name | |
| Options (#) | | |
| Price | | |
| Date | | |
| Options | | |
| Vested (#) |
| |
| Vested(1) | | |
| Distributed | |
Jamie Mendola | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Humble Lukanga | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Jocelyn Rosenwald | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
George Raveling | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Yelena Katchko(2) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
John Perez(3) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Hector De La Torre(4) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Bob Hoban(5) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Notes:
(1) | Market value of unvested share-based awards and vested but undistributed share-based awards calculated
based on the closing share price of the Equity Shares on Cboe Canada on December 31, 2023 of $4.72. |
(2) | Ms. Katchko was appointed Director on November 7, 2023. |
(3) | Mr. Perez was appointed Director on October 31, 2023 and resigned as Director on February 8,
2024. |
(4) | Mr. De La Torre resigned as Director on July 13, 2023. |
(5) | Mr. Hoban resigned as Director on October 31, 2023. |
Incentive Plan Awards – Value Vested or Earned During the
Year
The following table indicates, for each of the
Company's directors, a summary of the value of the option-based and share- based awards vested in accordance with their terms for the
Company's financial year ending December 31, 2023.
| |
| | | |
| | | |
| Non-Equity Incentive Plan | |
| |
| Option-Based Awards – Value | | |
| Share-Based Awards – Value | | |
| Compensation – Value Earned | |
Name | |
| Vested During the Year | | |
| Vested During the Year(1) | | |
| During the Year | |
Jamie Mendola | |
| – | | |
| – | | |
| – | |
Humble Lukanga | |
| – | | |
| – | | |
| – | |
Jocelyn Rosenwald | |
| – | | |
| | | |
| – | |
George Raveling | |
| – | | |
| – | | |
| – | |
Yelena Katchko(3) | |
| – | | |
| – | | |
| – | |
John Perez(4) | |
| – | | |
| – | | |
| – | |
Hector De La Torre(5) | |
| – | | |
| – | | |
| – | |
Bob
Hoban(6) | |
| – | | |
| – | | |
| – | |
Notes:
(1) | Value of vested share-based awards calculated based on the closing share price on the dates of vesting;
if share-based awards vested in 2023 but not on a trading day, value of vested share-based awards calculated based on closing share price
on the last trading day prior to the date of vesting. |
(3) | Ms. Katchko was appointed Director on November 7, 2023. |
(4) | Mr. Perez was appointed Director on October 31, 2023 and resigned as Director on February 8,
2024. |
(5) | Mr. De La Torre resigned as Director on July 13, 2023. |
(6) | Mr. Hoban resigned as Director on October 31, 2023. |
SECURITY BASED COMPENSATION PLANS
The Company has its Equity Incentive Plan in place.
The Company maintains the Equity Incentive Plan in accordance with Section 7.08 – Security Based Compensation Arrangements
and Awards of the Cboe Canada Inc. Listing Manual. The Equity Incentive Plan was approved by the Shareholders of the Company on June 2,
2021.
Summary of the Equity Incentive Plan
The following is a summary of certain provisions
of the Equity Incentive Plan. It does not purport to be complete and is subject to, and is qualified in its entirety by all of the provisions
of the Equity Incentive Plan, which is available on the Company's SEDAR+ profile at www. sedarplus.ca and attached to this Circular
as Schedule "B". Capitalized terms that are not expressly defined herein have the meanings ascribed thereto in the Equity Incentive
Plan.
Purpose
The purpose of the Equity Incentive Plan is to
enable the Company and its affiliated companies to: (i) attract and retain employees, officers, consultants, advisors and non-employee
directors capable of assuring the future success of the Company, (ii) offer such persons incentives to put forth maximum efforts,
(iii) compensate such persons through various stock- based arrangements and provide them with opportunities for stock ownership,
thereby aligning the interests of such persons and the Shareholders.
The Equity Incentive Plan permits the grant of
(i) nonqualified stock options ("NQSOs") and incentive stock options ("ISOs") (collectively, "Options"),
(ii) restricted stock units ("RSUs"), (iii) performance compensation awards, and (iv) unrestricted stock
bonuses or purchases, which are referred to herein collectively as "Awards", all as more fully described below.
The Board has the power to manage the Equity Incentive
Plan and may delegate such power at its discretion to any committee of the Board, including the CN&CG Committee.
Eligibility
Any non-employee director of the Company or any
employee, officer, director, consultant, independent contractor or advisor providing services to the Company or any Affiliate, or any
such person to whom an offer of employment or engagement with the Company or any Affiliate is extended, are eligible to participate in
the Equity Incentive Plan if selected by the Board (the "Participants"). The basis of participation of an individual
under the Equity Incentive Plan, and the type and amount of any Award that an individual is entitled to receive under the Equity Incentive
Plan, is determined by the Board based on its judgment as to the best interests of the Company and its Shareholders, and therefore cannot
be determined in advance.
The maximum number of Equity Shares that may be
issued under the Equity Incentive Plan is 10% of the Equity Shares outstanding, on a diluted basis (including the applicable Equity Shares
issuable on exchange of the exchangeable shares (the "Exchangeable Shares") of MPB Acquisition Corp. (" MPB AcquisitionCo")
that are exchangeable for Equity Shares of the Company on a one-for-one basis, and on exercise of the share purchase warrants of the Company
and Series A Warrants of GH Group (collectively, the "Warrants") and excluding grants made pursuant to the Equity
Incentive Plan and any grants of restricted Exchangeable Shares made under any equity plan of MPB AcquisitionCo), from time to time, subject
to adjustment in the Equity Incentive Plan. Notwithstanding the foregoing, a maximum of 17,400,000 Equity Shares may be issued as ISOs,
subject to adjustment in the Equity Incentive Plan.
To the extent that section 2.25 of National Instrument
45-106 Prospectus Exemptions applies to an Award or issuances of Equity Shares pursuant to the Equity Incentive Plan, the maximum
number of Equity Shares that may be issued under the Equity Incentive Plan to any one Related Person, or the number of securities that
may be issuable on exercise of the Options granted to any one Related Person, as compensation within any one-year period, excluding performance-based
Awards (with the performance target being set as the market capitalization of the Equity Shares outstanding), shall not exceed 5.0% of
the outstanding Equity Shares, on a diluted basis (including the applicable Equity Shares issuable on exchange of the Exchangeable Shares
and on exercise of the Warrants and excluding grants made under the Equity Incentive Plan and any equity plan of MPB AcquisitionCo), at
the time of grant, subject to adjustment in the Equity Incentive Plan, or 10% to all Related Persons at time of grant. The maximum number
of Equity Shares that may be issued under the Equity Incentive Plan to the Company's non-executive directors, as a whole, or the number
of securities that may be issuable on exercise of the Awards granted to the Company's non-executive directors, as a whole, as compensation
within any one-year period, shall not exceed 1.0% of the outstanding Equity Shares, on a diluted basis (including the applicable Equity
Shares issuable on exchange of the Exchangeable Shares and on exercise of the Warrants and excluding grants made under the Equity Incentive
Plan and any equity plan of MPB AcquisitionCo), at the time of grant, subject to adjustment in the Equity Incentive Plan. The Board will
not grant Options to any one non-executive director in which the aggregate fair market value (determined as of the time the Options are
granted) of such Options during any calendar year (under the Equity Incentive Plan and all other plans of the Company and its Affiliates)
shall exceed $100,000, or will not grant Awards in which the aggregate fair market value (determined as of the time the Awards are granted)
of the Equity Shares in respect to which the Awards are exercisable by such non-executive director during any calendar year (under the
Equity Incentive Plan and all other plans of MPB AcquisitionCo and its Affiliates) shall exceed $150,000.
Any shares subject to an Award under the Equity
Incentive Plan that are not purchased or 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 Equity Incentive Plan.
In the event of any dividend (other than a regular
cash dividend) or other distribution (whether in the form of cash, Equity Shares, other securities or other property), recapitalization,
forward stock split, reverse stock split, reorganization, plan of arrangement, merger, amalgamation, consolidation, split-up, spin-off,
combination, repurchase or exchange of Equity Shares or other securities of the Company, issuance of warrants or other rights to acquire
Equity Shares or other securities of the Company, or other similar corporate transaction or event which affects the Equity Shares or unusual
or nonrecurring events affecting the Company or the financial statements of the Company, 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 Board may, subject to any required regulatory or Cboe Canada approvals, make such adjustment which it deems appropriate in its discretion
in order to prevent dilution or enlargement of the rights of Participants under the Equity Incentive Plan, to (i) the number and
kind of Equity Shares (or other securities or other property) that may thereafter be issued in connection with Awards, (ii) the number
and kind of Equity Shares (or other securities or other property) subject to 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/or
(iv) any share limit set forth in the Equity Incentive Plan.
MPB AcquisitionCo may establish an equity plan
through which awards of restricted Exchangeable Shares may be granted to service providers to MPB AcquisitionCo and their Affiliates.
See "Restricted Exchangeable Shares" for further information.
Awards
Options
The Board is authorized to grant Options to purchase
Equity 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 Equity Incentive Plan are
subject to the terms and conditions established by the Board. The purchase price per Share purchasable under an Option shall be determined
by the CN&CG Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; provided,
however, that, to the extent permitted under Section 409A and Section 424 of the Code, as applicable, the Committee may designate
a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted
by an entity that is acquired by or merged with the Company or an Affiliate. 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 Board may determine to be appropriate. The maximum term of an Option granted under the Equity Incentive Plan is ten years from
the date of grant (or five years in the case of an ISO granted to a 10% Shareholder). Notwithstanding the foregoing, in the event that
the expiry date of an Option falls within a Blackout Period imposed by the Company and neither the Company nor the individual in possession
of the Options is subject to a cease trade order in respect of the Company's securities, then the expiry date of such Option shall be
automatically extended to the 10th business day following the end of the Blackout Period, provided that the extension contemplated by
this provision does not apply to Incentive Stock Options.
RSUs
RSUs are granted in reference to a specified number
of Equity Shares and entitle the holder to receive, on achievement of specific performance goals established by the Board or after a period
of continued service with the Company or its affiliates or any combination of the above as set forth in the applicable award agreement,
one Equity Share for each such Equity Share covered by the RSU; provided, that the Board may elect to pay cash, or part cash and part
Equity Shares in lieu of delivering only Equity Shares. The 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 Board upon a Participant's termination of employment or service
with the Company, the unvested portion of the RSUs will be forfeited and re-acquired by the Company for cancellation at no cost.
Unrestricted Stock Bonuses or Purchases
The Board is authorized to grant unrestricted
Equity Shares as consideration for services rendered to the Company or an Affiliate in the prior calendar year, or may offer a Participant
the opportunity to purchase unrestricted Equity Shares for cash consideration equal to the fair market value of the unrestricted Equity
Shares.
Dividend Equivalents
The Board is authorized to grant dividend equivalents,
under which the holder is entitled to receive payments (in cash, Equity Shares, other securities or other property, as determined by the
Board) equivalent to the amount of cash dividends paid by the Company to holders of Equity Shares with respect to a number of Equity Shares
determined by the Board. Subject to the terms of the Equity Incentive Plan and any applicable award agreement, such dividend equivalents
may have such terms and conditions as the Board shall determine. Notwithstanding the foregoing, (i) the Board may not grant dividend
equivalents to Participants in connection with grants of Options or other Awards, the value of which is based solely on an increase in
the value of the Equity Shares after the date of grant of such Award, and (ii) dividend and dividend equivalent amounts may be accrued
but shall not be paid unless and until the date on which all conditions or restrictions relating to such Award have been satisfied, waived
or lapsed.
Restricted Exchangeable Shares
If, during the term of the Equity Incentive Plan,
MPB AcquisitionCo establishes a compensatory plan or arrangement through which they may grant awards of restricted Exchangeable Shares
to Participants, any restricted Exchangeable Shares awarded under such plan(s) will reduce the number of Equity Shares that may
be awarded under the Equity Incentive Plan on a one-for-one basis. If any restricted Exchangeable Shares awarded under the plans of MPB
AcquisitionCo are forfeited, cancelled, or are used or withheld to satisfy tax withholding obligations of an award recipient thereunder,
any such restricted Exchangeable Shares that are forfeited, cancelled, used or withheld will thereafter not be treated as reducing the
number of Equity Shares that are available for Awards under the Equity Incentive Plan.
General
The Board may impose restrictions on the vesting,
exercise or payment of an Award as it determines appropriate. Generally, no Awards (other than fully vested and unrestricted Equity Shares
issued pursuant to any Award) granted under the Equity Incentive Plan is transferable except by will or by the laws of descent and distribution.
No Participant has any rights as a Shareholder with respect to Equity Shares covered by Options or RSUs, unless and until such Awards
are settled in Equity Shares.
No Option is exercisable, no Equity Shares shall
be issued, no certificates, registration statements or electronic positions for Equity Shares shall be delivered and no payment shall
be made under the Equity Incentive Plan except in compliance with all applicable laws and Cboe Canada and any other regulatory requirements.
The Board may from time to time amend, suspend,
discontinue or terminate the Equity Incentive Plan, and may amend the terms of any previously granted Award at any time, provided that:
(i) no amendment, alteration, suspension, discontinuation or termination may (except as expressly provided in the Equity Incentive
Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant without the written
consent of the Participant or holder thereof; and (ii) any amendment, alteration, suspension, discontinuation or termination is subject
to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange, including
receipt of any required approval from the governmental entity or stock exchange, and any such amendment, alteration, suspension, discontinuation
or termination of an Award shall be in compliance with the policies of Cboe Canada. For greater certainty and notwithstanding the foregoing,
the Board may amend, suspend, terminate or discontinue the Equity Incentive Plan, and may amend or alter any previously granted Award,
as applicable, without obtaining the approval of Shareholder, in order to:
• | amend the eligibility for, and limitations or conditions imposed upon, participation in the Equity Incentive
Plan, except that any such amendment to change the class or classes of persons eligible to be awarded ISOs will be submitted for Shareholder
approval to the extent required by the U.S. Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated
thereunder, Section 422; |
• | amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating
to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions
of or rights of the Company under any outstanding Award, prospectively or retroactively; |
• | make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies
of any applicable governmental entity or Cboe Canada, including the policies of Cboe Canada (including amendments to Awards necessary
or desirable to avoid any adverse tax results under Section 409A), and no action taken to comply shall be deemed to impair or otherwise
adversely alter or impair the rights of any holder of an Award or beneficiary thereof; or |
• | amend any terms relating to the administration of the Equity Incentive Plan, including the terms of any
administrative guidelines or other rules related to the Equity Incentive Plan. |
Notwithstanding the foregoing and for greater
certainty, prior approval of the Shareholders is required for any amendment to the Equity Incentive Plan or an Award that would require
Shareholder approval under the rules or regulations of Cboe Canada that is applicable to the Company or which would:
| · | increase the shares authorized under the Equity Incentive Plan; |
| · | remove or exceed the limits set out in a Security Based Compensation Arrangement on Awards available to
any of (a) a "related party" (as defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in
Special Transactions) of the Company, (b) a promoter of the Company, or, where the promoter is not an individual, an officer,
director or control person of the promoter, and (c) such other Person as may be designated from time to time by Cboe Canada, in respect
of the Company; |
| · | permit a re-pricing of an Award benefiting any of (a) a "related party" (as defined in
Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions) of the Company, (b) a promoter
of the Company, or, where the promoter is not an individual, an officer, director or control person of the promoter, and (c) such
other person as may be designated from time to time by Cboe Canada; |
| · | permit an extension of the term of an Award where the exercise price is lower than the prevailing market
price, except pursuant to certain provisions of the Equity Incentive Plan; |
| · | permit the award of Options at a price less than 100% of the fair market value of an Equity Share on the
date of grant of such Option; |
| · | permit Options to be transferable; |
| · | amend the amendment provisions of the Equity Incentive Plan; or |
| · | increase the maximum term permitted for Options or extend the terms of any Options beyond their original
expiry date. |
The Board may without prior approval of the Shareholders,
correct any defect, supply any omission or reconcile any inconsistency in the Equity Incentive Plan or in any Award or Award Agreement
in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Equity Incentive Plan.
In the event of any reorganization, merger, amalgamation,
consolidation, split- up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Equity
Shares or other securities of the Company or any other similar corporate transaction or event involving the change of control of the Company
(or if the Company shall enter into a written agreement to undergo such a transaction or event), the Board may, in its sole discretion,
take such measures or make such adjustments in regards to any securities granted pursuant to the Equity Incentive Plan, as it deems appropriate,
as further described in the Equity Incentive Plan and no action taken under the Equity Incentive Plan shall be deemed to impair or otherwise
adversely alter the rights of any holder of any Award or beneficiary thereof. Notwithstanding the foregoing, upon a change of control
event, all Equity Shares or Options granted pursuant to the Equity Incentive Plan will immediately vest in accordance with the terms of
the Equity Incentive Plan.
Unless the Awards and the Equity Shares issuable
upon exercise or redemption thereof have been registered under the U.S. Securities Act, and any applicable state securities laws, any
Awards or Equity Shares granted to residents of the United States will be "restricted securities" within the meaning of Rule 144
under the U.S. Securities Act and will be subject to transfer restrictions under U.S. securities laws.
Tax Withholding
The Company may take such action as it deems appropriate
to ensure that all applicable federal, State, provincial, 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.
Financial Assistance
The Company or any Affiliate or Related Entity
may provide financial assistance to, or enter into support agreements with, Participants in connection with grants under the Equity Incentive
Plan, including without limitation, full, partial or non-recourse loans (to the extent permitted by applicable laws), provided approval
of the disinterested members of the Board is obtained.
Securities Authorized For Issuance Under Equity Compensation Plans
The following table sets forth the number of Equity
Shares to be issued, including upon exercise of outstanding convertible securities, pursuant to the Company's compensation plans, the
weighted-average exercise price of such outstanding convertible securities and the number of Equity Shares remaining available for future
issuance under equity compensation plans as at December 31, 2023.
| |
| |
| |
Number of Equity Shares | |
| |
| |
| |
remaining available for future | |
| |
| |
| |
issuance under equity | |
| |
Number of Equity Shares to be | |
Weighted-average exercise | |
compensation plans (excluding | |
| |
issued upon exercise of | |
price of outstanding | |
securities reflected in the first | |
Plan Category | |
outstanding securities(1) | |
securities(2) | |
column)(3) | |
Equity compensation plans approved by Shareholders | |
| 3,969,369 | |
$ | 2.84 | |
| 3,124,695 | |
Equity compensation plans not approved by Shareholders | |
| Nil | |
| Nil | |
| Nil | |
Total | |
| 3,969,369 | |
$ | 2.84 | |
| 3,124,695 | |
Notes:
| (1) | Equity Shares issuable upon exercise or vesting, as applicable, of outstanding equity-based awards under
the Equity Incentive Plan consisting of (i) 2,533,575 Equity Shares that may be issued upon the vesting of RSUs and (ii) 1,435,794
Equity Shares that may be issued upon the exercise of Options. |
| (2) | Represents the weighted-average exercise price of Options to purchase 1,425,794 Equity Shares. This weighted
average is not applicable to and does not take into account Equity Shares that may be issued upon the vesting of RSUs. |
| (3) | As of December 31, 2023, based on a maximum of 10% of the 61,986,686 Equity Shares that were issued
and outstanding as of December 31, 2023, and including 8,953,686 Equity Shares issuable on exchange of the Exchangeable Shares and
any warrants or derivative securities that are in the money. |
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No director, proposed director, executive officer,
nor any of their respective associates or affiliates, is or has been indebted to the Company or its subsidiaries since the beginning of
the Company's most recently completed financial year.
CORPORATE GOVERNANCE AND AUDIT COMMITTEE DISCLOSURE
The Board is committed to the highest standards
of integrity, fiduciary duty and corporate governance. National Instrument 58-101 Disclosure of Corporate Governance Practices
("NI 58-101") and National Policy 58-201 Corporate Governance Guidelines ("NP 58-201", and together
with NI 58-101, the "CSA Guidelines") set out a series of guidelines for effective corporate governance. Under the CSA
Guidelines, the Company must disclose on an annual basis the corporate governance practices it has adopted. The Company summarizes such
practices, in addition to certain other governance matters under Schedule "A" to this Information Circular.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Except as disclosed in this Information Circular,
neither the Company nor any director, proposed director or officer of the Company, nor any other insider of the Company, nor any associate
or affiliate of any one of them has or has had, at any time since the beginning of the year ended December 31, 2023, any material
interest, direct or indirect, in any transaction or proposed transaction that has materially affected or would materially affect the Company.
OTHER BUSINESS
Management of the Company is not aware of any
other business to come before the Meeting other than as set forth in the Notice of Meeting. If any other business properly comes before
the Meeting, it is the intention of the persons named in the form of proxy to vote the Company Shares represented thereby in accordance
with their best judgment on such matter.
ADDITIONAL INFORMATION
Additional information relating to the Company
is available on SEDAR+ at www .sedarplus.ca. Financial information is provided in the audited consolidated financial statements
and management's discussion and analysis of the Company for the year ended December 31, 2023, which has been filed on SEDAR+. Shareholders
may also contact the General Counsel and Corporate Secretary the Company by phone at (562) 264-5078, or by e-mail at legal@glasshousegroup.com
to request a copy of this document.
SCHEDULE "A"
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Capitalized terms used in this Schedule "A"
but not otherwise defined herein shall have the meanings ascribed thereto in the Information Circular to which this Schedule "A"
is appended.
Set out below is a description of the Company's
current corporate governance practices and other information relating to the Board, per the CSA Guidelines.
The Board and senior management consider good
corporate governance to be central to the effective and efficient operation of the Company. Listed below is a brief discussion of the
Company's approach to corporate governance.
Board of Directors
The Board's principal duties and responsibilities
are described in the Company's Charter of the Board of Directors, a copy of which is attached hereto as Appendix 1 to Schedule "A".
Certain aspects of the composition and organization of the Board are prescribed and/or governed by the BCBCA and the constating documents
of the Company.
The Board facilitates its exercise of independent
supervision over management through the participation of directors. The Board has eight directors of whom five are independent within
the meaning of National Instrument 52-110 Audit Committees ("NI 52-110"). The Board members are Kyle Kazan, Graham
Farrar, Jamie Mendola, Humble Lukanga, Jocelyn Rosenwald, George Raveling, Yelena Katchko and John Nichols, Jr.
Humble Lukanga, Jocelyn Rosenwald, Yelena Katchko,
George Raveling and John Nichols, Jr. are independent directors in that they do not have a direct or indirect material relationship
with the Company which could, in the view of the Board, reasonably interfere with the exercise of the director's independent judgment.
Kyle Kazan is not considered independent as he is the Chairman and Chief Executive Officer of the Company. Graham Farrar is not considered
independent as he is the President of the Company. Jamie Mendola is not considered independent, as he is the Head of Strategy and M&A
at Mercer Park L.P., a holder of more than 10% of the Equity Shares.
Position Descriptions
The Board has developed a position description
for the Lead Director, Humble Lukanga, an independent director. The role of the Lead Director is to facilitate the functioning of the
Board independently of the senior executives of the Company, provide independent leadership to the Board and to the individual directors
on the Board and to reinforce the independence of the Board.
The Board has also developed a position description
for the Chair of the Board, currently Kyle Kazan, a non-independent director. The role of the Chair of the Board is to provide overall
leadership to, together with the Lead Director and the committees of the Board, enhance and protect the effectiveness, performance and
independence of the Board, the committees of the Board, and individual directors of the Board. The Chair is selected amongst the members
of the Board who have a sufficient level of experience with corporate governance issues to ensure the leadership and effectiveness of
the Board.
The Board has developed a written position description
for the Chief Executive Officer. The primary role of the Chief Executive Officer is to manage the Company in an effective, efficient and
forward-looking way and to fulfil the priorities, goals and objectives determined by the Board in the context of the Company's strategic
plans, budgets and responsibilities, with a view to increasing Shareholder value. The Chief Executive Officer is responsible to the Board.
Further, the Board has developed written
position descriptions for the chair of each board committee. The position descriptions for the chair of each board committee can be
found in the corresponding committee charters. Copies of the position descriptions for the Lead Director, the Chair of the Board,
the Chief Executive Officer and the chair of each committee can be found on the Company's website at www.ir.glasshousebrands.com.
Meetings of independent directors
The independent directors may, at their election, meet for in camera
sessions without non-independent directors and members of management at the end of each regular Board meeting.
Attendance
The attendance record of each director for all Board meetings held
during the Company's most recently completed financial year is set out below.
| |
| |
Audit Committee Meetings | |
CN&CG Committee Meetings |
|
Director | |
Board Meetings Attended | |
Attended | |
Attended |
|
Kyle Kazan | |
| 4 | |
| – | |
| – |
|
Graham Farrar | |
| 4 | |
| – | |
| – |
|
Jamie Mendola | |
| 2 | |
| – | |
| 2 |
|
Humble Lukanga | |
| 4 | |
| 4 | |
| – |
|
Jocelyn Rosenwald | |
| 4 | |
| 4 | |
| – |
|
George Raveling | |
| 4 | |
| – | |
| 2 |
|
Yelena Katchko(1) | |
| 1 | |
| – | |
| – |
|
John Perez(2) | |
| – | |
| – | |
| – |
|
Hector De La Torre(3) | |
| 2 | |
| 2 | |
| – |
|
Bob Hoban(4) | |
| 2 | |
| – | |
| 1 |
|
Notes:
| (1) | Ms. Katchko was appointed Director on November 7, 2023. |
| (2) | Mr. Perez was appointed Director on October 31, 2023 and resigned as Director on February 8,
2024. |
| (2) | Mr. De La Torre resigned as Director on July 13, 2023. |
| (3) | Mr. Hoban resigned as Director on October 31, 2023. |
Directorships
The following directors are presently directors of other reporting
issuers:
Director |
|
Name of Other Reporting Issuer |
|
Stock Exchange |
John Nichols, Jr. |
|
Hippo Holdings Inc. |
|
NYSE |
Orientation and Continuing Education
The CN&CG Committee provides all new directors
with comprehensive orientation to, among other things, fully understand the role of the Board and its committees, the contribution individual
directors are expected to make, and the nature and operation of the Company's business. The CN&CG Committee also provides continuing
education opportunities for all directors so that individual directors may maintain or enhance their skills and abilities as directors,
as well as to ensure their knowledge and understanding of the Company's business remains current.
The CN&CG Committee is authorized to
maintain policies and procedures to seek to ensure that sufficient orientation procedures are in place to enable new directors to
operate efficiently from the beginning of their appointment. The CN&CG Committee reviews with each new member: (i) certain
information and materials regarding the Company, including the role of the Board and its committees and the nature and operation of
the Company's business; and (ii) the legal obligations of a director of the Company. The CN&CG Committee also ensures that
sufficient continuing education and development programs are in place for all members of the Board, as required.
Ethical Business Conduct
The Company has adopted a Code of Business Conduct
and Ethics (the "Code"), a copy of which can be found on the Company's website at www.ir.glasshousebrands.com.
All Board members, officers and employees of the
Company ("Representatives") are committed to acting in a manner that will enhance the reputation of the Company for conducting
its business and affairs with honesty, integrity and fairness and to avoid any conflict that might reflect unfavourably upon us or the
Company.
The Company expects everyone who conducts business
on behalf of the Company to be guided by, and be subject to, the following principles: (a) act ethically and honestly; (b) accept
responsibility and be accountable for their actions; (c) make decisions which are in the best interests of the Company; (d) honour
agreements and commitments; (e) conduct business in an environmentally and socially responsible manner; (f) communicate with
all stakeholders in an honest and straight-forward manner; (g) select and treat all employees if the Company in a respectful, fair
and equitable manner and foster a work environment that is safe and healthy and free from discrimination, harassment, intimidation and
hostility of any kind; and (h) obey all laws governing the conduct of the business and affairs of the Company.
Conflicts of Interest
Pursuant to the Code, Representatives shall act
with honesty and integrity and in the best interests of the Company and to avoid any relationship or activity that might create, or appear
to create, a conflict between Representatives' personal interests and the interests of the Company. A conflict of interest arises where
Representatives' position or responsibilities with the Company present an opportunity for personal gain, apart from the normal rewards
of being a director, senior officer or other employee to the detriment of the Company. A conflict of interest also arises where outside
personal interests are inconsistent with those of the Company and create conflicting loyalties. Before any Representative participates
in any outside business interest which may give rise to such a conflict of interest, they should first disclose that interest to the Company
and obtain approval to pursue such interest.
Pursuant to the BCBCA, any officer or director
of the Company with a conflict of interest must disclose the nature and extent of such conflict to the Board and recuse themselves from
a matter that materially conflicts with that individual's duty as a director or senior officer of the Company. If a Representative is
faced with a conflict, they shall promptly disclose such conflict, or potential conflict, to the General Counsel and Corporate Secretary
of the Company.
Compliance with Laws, Rules and Regulations
All Representatives shall comply with the laws,
rules and regulations of the jurisdictions where they carry out their duties and all jurisdictions where the Company conducts its
business activities. All Representatives shall comply with the Code and all Company policies that apply to them, including, without limitation,
the Code, Anti-Corruption and Anti-Bribery Policy, Disclosure Policy, Diversity Policy, Insider Trading Policy and Whistleblower
Policy.
Compliance with and Violations of the Code
The Board is ultimately responsible, acting through
the Audit Committee, for the Code and monitoring compliance therewith. Representatives are encouraged and expected to: (a) identify
and raise potential issues before they cause problems; (b) take all responsible steps to prevent any violation of the Code; (c) report
actual or potential violations of the Code of which they become aware; and (d) seek additional guidance when advisable. Retaliatory
action against any individual for raising such concerns or questions or for reporting suspected violations of the Code in good faith will
not be tolerated by the Company.
Nomination of Directors
The CN&CG Committee is currently comprised
of three members, Jamie Mendola, George Raveling and Yelena Katchko. The majority of CN&CG Committee members are independent directors.
The Board is confident that any potential risk of the non-independent directors being unable to exercise impartial judgment would be mitigated
by the fact that the majority of the committee members are independent directors.
The CN&CG Committee performs the following
functions, among other things: (a) develops and updates a long-term plan for the composition of the Board that takes into consideration
the current strengths, competencies, skills and experience of the Board members, retirement dates and the strategic direction of the Company,
and reports to the Board thereon periodically; (b) undertakes on a periodic basis an examination of the size of the Board, with a
view to determining the impact of the number of directors, the effectiveness of the Board, and recommends to the Board, if necessary,
a reduction or increase in the size of the Board; (c) endeavours, in consultation with the Chair of the Board (or Lead Director,
if applicable), to seek to ensure that an appropriate system is in place to evaluate the effectiveness of the Board as a whole as well
as the committees of the Board, with a view to ensuring that they are fulfilling their respective responsibilities and duties; (d) in
consultation with the Chair of the Board (or Lead Director, if applicable), and the Chief Executive Officer, annually or as required,
recruits and identifies individuals qualified to become new Board members and recommends to the Board new director nominees for the next
annual meeting of Shareholders; and (e) in consultation with the Chair of the Board (or Lead Director, if applicable), annually or
as required, recommends to the Board the individual directors to serve on the various committees.
Compensation
For information regarding the process by which
the CN&CG Committee determines compensation for the Company's directors and officers, please see under the heading "Statement
of Executive Compensation – Compensation Discussion and Analysis".
Board Assessments
The CN&CG Committee is responsible for monitoring
the effectiveness of the Board and the performance of the directors. The CN&CG Committee assesses the operation of the Board and the
committees, 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 CN&CG Committee recommends changes to enhance the performance of the Board accordingly.
Based upon the Company's size, its current state
of development and the number of individuals on the Board, the Board considers a formal process for assessing the effectiveness and contribution
of the Board as a whole, its committees or individual directors to be unnecessary at this time. In light of the fact that the Board and
its committees meet on several occasions each year, each director has regular opportunities to assess the Board as a whole, its committees
and other directors in relation to the Board's and such director's assessment of the competencies and skills that the Board and its committees
should possess. The Board plans to continue to evaluate its own effectiveness and the effectiveness of its committees and individual directors
in such manner.
Director Term Limits and Other Mechanisms of Board Renewal
The Company does not have a retirement policy
and does not discriminate based on age. The Company considers it to be an integral role of the Board and the CN&CG Committee to assess
director engagement and fitness to be a director of the Company.
Similarly, the Board has not adopted a term limit
for directors or established a formal process for the renewal of Board membership. The Board is of the view that the imposition of arbitrary
director term limits may diminish the benefits derived from continuity amongst members and their familiarity with the Company and the
industry in which it operates, and could unnecessarily expose the Company to losing experienced and valuable talent. The Board's renewal
process is built around the concept of performance management. To that end, the Board relies on assessment procedures, and the role of
the CN&CG Committee, to ensure the quality and expertise of its Board.
Diversity
Diversity Policy
The Board has adopted a Diversity Policy in recognition
of the fact that a diverse Board will include and make good use of differences in the skills, regional and industry experience, professional
expertise, personal skills, background, race, gender, status, age, education, nationality, culture, language, geographic background and
other distinctions between directors. These differences will be considered in determining the optimum composition of the Board and when
possible should be balanced appropriately. All Board appointments are made on merit, in the context of the skills, experience, independence
and knowledge which the Board as a whole requires to be effective.
As set out in the Diversity Policy, the Board
recognizes that gender diversity is a significant aspect of diversity and acknowledges the role that women with the right skills and experience
can play in contributing to diversity of perspective in the boardroom. Selection of female candidates to join the Board will be, in part,
dependent on the pool of female candidates with the necessary skills, knowledge and experience. The ultimate decision will be based on
merit and the contribution the chosen candidate will bring to the Board. In order to promote the specific objective of gender diversity,
the Diversity Policy requires that the selection process for Board appointments must involve the following steps: (a) a short-list
identifying potential candidates for the appointment must be compiled; and (b) if, at the end of the selection process, a female
candidate is not selected, the Board must be satisfied that there are objective reasons to support its determination.
The CN&CG Committee will discuss and approve
annually all measurable objectives for achieving diversity on the Board and recommend them to the Board for adoption. At any given time,
the Board may seek to improve one or more aspects of Board diversity and measure progress accordingly.
The Diversity Policy also covers senior executive
appointments and requires the Chief Executive Officer of the Company to have reference to the policy in selecting and assessing candidates
and in presenting recommendations to the Board regarding appointments to the senior executive team. The Diversity Policy requires the
Board to also consider whether potential candidates have diverse backgrounds (with a particular focus on potential candidates who are
women, visible minorities, Aboriginal people and persons with disabilities), and the objectives of the policy when considering those recommendations.
In order to facilitate greater gender diversity
in management and leadership roles, the Diversity Policy requires the Company to: (a) implement policies which address impediments
to gender diversity in the workplace and review their availability and utilization; (b) regularly review the proportion of women
at all levels of the Company; (c) monitor effectiveness of, and continue to expand on, existing initiatives designed to identify,
support and develop talented women with leadership potential; and (d) continue to identify new ways to entrench diversity as a cultural
priority across the organization. The CN&CG Committee will discuss and approve annually all measurable objectives for achieving diversity
on the senior executive team and recommend them to the Board for adoption. At any given time, the Board may seek to improve one or more
aspects of senior executive diversity and measure progress accordingly.
Consideration of the Representation of Women in the Director
Identification and Selection Process
In general, the Board aspires to continuously
improve the diversity of the Board and the Company's management team. As discussed above and set out in the Diversity Policy, the Board
believes that diversity (including, but not limited to, gender) is important to ensure that the profiles of directors and members of the
Company's executive management provide the necessary range of perspectives, experience and expertise required to achieve effective stewardship
and management. The Company believes that diversity is an important attribute of a well-functioning Board and an efficient team of executive
officers. The Company recognizes that gender diversity is a significant aspect of diversity and believes women play an important leadership
role in executing on the Company's strategy, and this belief forms an important part of the focus of management in the appointment and
recruitment of officers and the Board in the search and selection of nominee directors.
Targets Regarding the Representation of Women on the Board and
in Executive Officer Positions
At this time, the Company has not adopted a target
regarding the representation of women on the Board or in executive officer positions. The Company does not adopt targets because the Company
is of the view that its current practice of considering diversity as a factor in selecting candidates as potential directors or executive
officers, and other measures set out in the Diversity Policy, permits the Company to balance the benefit of diversity with other relevant
considerations, including relevant career experience, industry knowledge and experience, and financial and other specialized experience.
The Board has two women serving as a director
(25% of directors). Currently, none of the executive officers of the Company are women. Approximately eighteen percent (18%) of the Company's
senior leadership (executive officers, senior vice presidents and vice presidents) are women.
AUDIT COMMITTEE INFORMATION
The Audit Committee is governed by an Audit Committee
Charter, a copy of which is attached to the Company's Annual Information Form dated April 1, 2024 (the " AIF")
and available on the Company's website at www. ir.glasshousebrands.com. The information required to be disclosed by section 5.1
of NI 52-110 can be found under the heading "Audit Committee" of the Company's AIF.
APPENDIX 1 TO SCHEDULE "A"
GLASS HOUSE BRANDS INC.
CHARTER OF THE BOARD OF DIRECTORS
1. GENERAL
The Board of Directors (the "Board")
is responsible for the stewardship of Glass House Brands Inc. (the "Corporation"), for the general supervision of the
management of the business and affairs of the Corporation, and for acting in the best interests of the Corporation and its shareholders.
Directors shall exercise their business judgment in a manner consistent with their fiduciary duties. In particular, directors are required
to act honestly and in good faith, with a view to the best interests of the Corporation and to exercise the care, diligence and skill
that a reasonably prudent person would exercise in comparable circumstances.
The Board discharges its responsibility for supervising
the management of the business and affairs of the Corporation by delegating the day- to-day management of the Corporation to senior officers.
The Board relies on senior officers to keep it apprised of all significant developments affecting the Corporation and its operations.
The Board discharges its responsibilities directly
and through the delegation to its committees, currently consisting of the Audit Committee and the Compensation, Nomination and Corporate
Governance Committee. In addition, the Board may from time to time, appoint such additional committees, or reconstitute the current committees,
as it deems necessary and appropriate in order to discharge its duties. Each committee shall have its own charter. The Board shall meet
as frequently as the Board considers necessary, but not less than once each quarter, to review the business operations, corporate governance
and financial results of the Corporation. Meetings of the Board will also include in camera meetings of the independent members of the
Board without management being present.
2. COMPOSITION
The Board shall be constituted at all times of
a majority of "independent directors" in accordance with applicable legal requirements, the guidelines under National Policy
58-201 Corporate Governance Guidelines and the Listing Manual of Cboe Canada, as such rules and policies are amended or replaced
from time to time.
In addition, at least three of the directors shall
be "independent" in accordance with applicable legal requirements for service on an Audit Committee, pursuant to National Instrument
52-110 Audit Committees.
3. RESPONSIBILITIES
The Board's responsibilities shall include:
| · | Succession planning including the selection, training, appointment, monitoring evaluation and, if necessary,
the replacement of the senior management to ensure management succession. |
| · | Identifying the risks of the Corporation's business and ensuring that appropriate systems are in place
to manage these risks. |
| · | The adoption of a strategic planning process, approval at least annually of a strategic plan that takes
into account business opportunities and business risks identified by the Board and/or the Audit Committee and monitoring performance against
such plans. |
| · | Overseeing the fair reporting of the Corporation's financial performance to shareholders on a timely and
regular basis and taking steps to enhance the timely disclosure of any other developments that have a significant and material impact
on the Corporation including reviewing and approving all annual and interim financial statements and related footnotes, management's discussion
and analysis, the annual information form and the management information circular. |
| · | Enhancing congruence between shareholder expectations, Corporation plans and management performance. |
| · | Reviewing with senior management material transactions outside the ordinary course of business and such
other major corporate matters which require Board approval including but not limited to, the payment of dividends, the issue, purchase
and redemption of securities, acquisitions and dispositions of material assets and material capital expenditures and approving such decisions
as they arise. |
| · | Satisfying itself as to the integrity of the Chairman and Chief Executive Officer (the "CEO")
and other officers and that such officers create a culture of integrity throughout the organization. |
| · | The review and approval of corporate objectives and goals applicable to the Corporation's senior management. |
| · | Ensuring that this Charter is disclosed on an annual basis to the shareholders in the Corporation's management
information circular prepared for the annual and general meeting of shareholders or other disclosure document or on the Corporation's
website. |
| · | Obtaining periodic reports from management on the Corporation's operations. |
| · | Performing such other functions as prescribed by law or assigned to the Board in the Corporation's constating
documents. |
| · | The assignment to the various committees of the Board the general responsibility for
developing the Corporation's approach to, without limitation: (i) corporate
governance and nomination of directors; (ii) financial reporting and internal
controls; and (iii) compensation of officers and senior employees. |
| · | With the assistance of the Compensation, Nomination and Corporate Governance Committee: |
| · | Developing the Corporation's approach to corporate governance. |
| · | Reviewing the composition of the Board and ensuring it respects
its independence criteria. |
| · | The assessment, at least annually, of the effectiveness of the
Board as a whole, the committees of the Board and the contribution of individual directors, including, consideration of the appropriate
size of the Board. |
| · | Reviewing and approving annual disclosure of the Corporation's corporate governance policies. |
| · | Ensuring that an appropriate review selection process for new nominees to the Board is in place and identifying
and recommending candidates to the Board who meet the selection criteria. |
| · | Overseeing (a) the development and implementation of orientation programs for new directors; and
(b) continuing education for all directors. |
| · | Approving and revising periodically the Corporation's Code of Business Conduct and Ethics (the "Code")
and other corporate governance policies ("Policies"), ensure management has established a system to enforce the Code
and Policies and monitor compliance with each. |
| · | Reviewing and approving corporate goals and objectives relevant to the CEO's compensation, evaluating
the CEO's performance in light of those corporate goals and objectives, and recommending to the Board with respect to the CEO's compensation
level based on this evaluation. |
| · | Reviewing and approving named executive officer and director compensation, incentive-compensation plans and equity-based plans. |
| · | Reviewing executive compensation disclosure before the Corporation publicly discloses such information. |
| · | With the assistance of the Audit Committee: |
| · | Ensuring the integrity of the Corporation's internal controls and management information systems. |
| · | Ensuring the Corporation's ethical behaviour and compliance with laws and regulations, audit and accounting
principles and the Corporation's own governing documents. |
| · | Identifying the financial risks of the Corporation's business and ensuring that appropriate systems are
in place to manage these risks. |
| · | Reviewing the Corporation's insurance program to ensure adequacy of coverage. |
| · | Reviewing and approving significant accounting and financial matters and the provision of direction to
management on these matters. |
| · | Selecting, appointing, determining the remuneration of and, if necessary, replacing the independent auditors. |
| · | Assessing the independence of the auditors. |
The members of the Board are expected to attend all meetings of the
Board of Directors unless prior notification of absence is provided.
The members of the Board are required to have reviewed board materials
in advance of the meeting and be prepared to discuss such materials at the meeting.
Effective Date: June 29, 2021
SCHEDULE "B"
EQUITY INCENTIVE PLAN
GLASS HOUSE BRANDS INC.
AMENDED AND RESTATED EQUITY INCENTIVE PLAN
Section 1. Purpose
The
purpose of this Plan is to promote the interests of the Company and its shareholders by enabling the Company and its affiliated companies
to: (i) attract and retain employees, officers, consultants, advisors and Non-Employee Directors capable of assuring the future success
of the Company; (ii) offer such persons incentives to put forth maximum
efforts for the success of the Company’s business; and (iii) compensate such persons through various stock-based arrangements
and provide them with opportunities for stock ownership in the Company, thereby
aligning the interests of such persons with the Company’s shareholders.
Section 2. Definitions
As used in this Plan, the following terms shall have the
meanings set forth below:
(a) “Affiliate” shall have the meaning ascribed to such term in National Instrument 45-106 – Prospectus Exemptions of the Canadian Securities Administrators.
(b)
“Associate”
when used to indicate a relationship with a person, shall mean (i) an issuer of which the person beneficially owns or controls,
directly or indirectly, voting securities entitling the person to
more than 10% of the voting rights attached to outstanding voting securities of the issuer, (ii) any partner of the person, (iii) any
trust or estate in which the person has a substantial beneficial interest or in respect of which the person serves as trustee or executor
or in a similar capacity, or (iv) in the case of an individual, a relative of that individual, if the relative has the same home
as that individual, including (A) a spouse of that individual, or (B) a relative
of that individual’s spouse.
(c) “Award” shall mean any Option, Restricted Stock Unit or Unrestricted Stock Bonus granted under this Plan.
(d) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under this Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 10(b).
(e) “Blackout Period” shall have the meaning ascribed to such term in Section 6(a)(ii).
(f) “Board” shall mean the board of directors of the Company, in effect from time to time.
(g) “Code”
shall mean the U.S. Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.
(h) “Committee” shall mean the Compensation, Nominating and Corporate Governance Committee of the Board or such other committee designated by the Board to administer this Plan, failing which shall mean the Board.
(i)
“Company”
shall mean Glass House Brands Inc., a company incorporated under the Business Corporations Act (British Columbia), and
any successor corporation.
(j) “MPB AcquisitionCo” means MPB Acquisition Corp., a wholly-owned subsidiary of the Company, incorporated under the laws of Delaware.
(k) “Director” shall mean a member of the Board.
(l) “Dividend Equivalent” shall mean any right granted under Section 6(c) of this Plan.
(m) “Effective Date” shall mean the date this Plan is adopted by the Board, as set forth in Section 2.
(n) “Eligible Person” shall mean any employee, officer, Non-Employee Director, consultant (which, for greater certainty, shall include individuals who provide services pursuant to a management services agreement), independent contractor or advisor providing services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended; provided that any consultant, independent contractor or advisor shall be a natural person providing bona fide services to the Company or any Affiliate and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
(o) “Exchange” means the principal securities exchange on which the Company’s Shares are trading, being the Neo Exchange Inc. as at the date hereof.
(p) “Exchange Policies” shall mean the rules and policies of the Exchange in effect from time to time.
(q) “Exchangeable Shares” shall mean the exchangeable common stock of MPB AcquisitionCo that are exchangeable for Shares of the Company on a one-for-one basis.
(r) “Fair Market Value” with respect to one Share as of any date shall mean: (i) if the Shares are listed on a stock exchange, the greater of: (A) the closing price of such Share on the Exchange (or such other stock exchange where the majority of the trading volume and value of the Shares occurs) on the previous trading day, and (B) the VWAP of such Share on the Exchange (or such other stock exchange where the majority of the trading volume and value of the Shares occurs) for the five trading days immediately preceding the relevant date; and (ii) if the Shares are not so listed on a stock exchange, the per share value of one Share, as determined by the Board, or any duly authorized Committee of the Board, in its sole discretion, by applying principles of valuation with respect thereto.
(s)
“Fully-Diluted Shares”
shall mean the aggregate Shares and multiple voting shares of the Company issued and outstanding, including: (i) the Shares
issuable on exchange of the Exchangeable Shares; and (ii) the Shares issuable on exchange of the Warrants (excluding in respect
of the cashless exercise feature thereof and provided such Warrants are not determined to be “out of the money” by the
Board as at the date of grant of the applicable Award(s); but shall exclude the Shares issuable pursuant to Awards granted hereunder
and pursuant to any restricted Exchangeable Shares (or Shares issuable upon the exchange thereof) awarded by MPB
AcquisitionCo.
(t) “Incentive Stock Option” shall mean an option granted under Section 6(a) of this Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision.
(u) “Non-Employee
Director” shall mean a Director who is not also an employee of the
Company or any Affiliate.
(v) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of this Plan that is not intended to be an Incentive Stock Option.
(w) “Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock Option, as applicable, to purchase shares of the Company.
(x)
Participant”
shall mean an Eligible Person designated to be granted an Award under this Plan.
(y) “Person”
shall mean any individual or entity, including a corporation, partnership, limited or unlimited liability company, association,
joint venture or trust.
(z) “Plan”
shall mean this Glass House Brands Inc. Equity Incentive Plan, as amended or amended and restated from time to time.
(aa) “Related
Entity” shall
mean a person that controls or is controlled by the Company or that is controlled by the same person that controls the Company.
(bb) “Related
Person” shall
mean (i) a director or executive officer of the Company or of a Related Entity of the Company, (ii) an Associate of a director
or executive officer of Company or of a Related Entity of the Company, or (iii) a permitted assign of a director or executive officer
of the Company or of a Related Entity of the Company.
(cc) “Restricted
Stock Unit”
shall mean any unit granted under Section 6(b) of this Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date, provided that in the case of Participants who are liable to taxation
under the Tax Act in respect of amounts payable under this Plan, that such date shall not be later than December 31 of the third
calendar year following the year services were performed in respect of the corresponding Restricted Stock Unit awarded.
(dd) “Section 409A”
shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable
guidance thereunder.
(ee) “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.
(ff) “Security
Based Compensation Arrangements” shall have the meaning ascribed to
such term (or equivalent term) in the Exchange Policies.
(gg) “Share”
or “Shares” shall mean, collectively, the subordinate
voting shares, restricted voting shares and/or limited voting shares of the Company (or such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(b) of this Plan).
(hh) “Specified
Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed
or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly
with respect to all plans maintained by the Company that are subject to Section 409A.
(ii) “Tax
Act” shall mean the Income Tax Act (Canada), as amended
from time to time, including regulations thereunder.
(jj) “U.S.
Award Holder” shall mean any holder of an Award who is a “U.S.
person” (as defined in Rule 902(k) of Regulation S under the Securities Act) or who is holding or exercising Awards
in the United States.
(kk)
“United
States” shall mean the United States of America, its territories and
possession, any State of the United States, and the District of Columbia.
(ll) “Unrestricted
Stock Bonus” shall mean an issue of Shares in consideration of
past services, or an issue of Shares in exchange for cash consideration at the Fair Market Value thereof (with the cash
consideration representing up to the after-withholding tax value of a cash bonus paid).
(mm) “VWAP”
shall mean the volume weighted average trading price of the Shares, calculated by dividing the total value by the total volume
of securities traded for the relevant period.
(nn) “Warrants”
shall mean (i) the share purchase warrants of the Company, each of which entitle the holder thereof to purchase one Share at a
price of $11.50, or (ii) the Series A Warrants of GH Group, Inc.
Unless
otherwise specified, all dollar amounts are expressed in United States dollars and all references to “$” or “US$”
are to United States dollars.
Section 3. Administration
(a) Power
and Authority of the Board. The Plan shall be administered by the Board, and the Board shall have the power to manage this Plan
and may delegate such power at its discretion to any committee of the Company, including the Committee. All references hereinafter
to the “Committee” shall mean the Committee, as delegated to by the Board, if applicable, failing which shall
mean the Board. Subject to the express provisions of this Plan and to applicable law, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant
under this Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to
be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement,
including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Shares or
other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, subject to
the limitations under Section 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating
to any Award, subject to the limitations in Section 7, (vii) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities or other property (excluding promissory notes), or canceled,
forfeited or suspended, subject to the limitations in Section 7; (viii) determine whether, to what extent and under what
circumstances amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of
the holder thereof or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer this Plan
and any instrument or agreement, including an Award Agreement, relating to this Plan; (x) establish, amend, suspend or waive
such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of this Plan;
(xi) make any other determination and take any other action that the Committee deems necessary or desirable for the
administration of this Plan; and (xii) adopt such modifications, rules, procedures and subplans as may be necessary or
desirable to comply with provisions of the laws of the jurisdictions in which the Company or an Affiliate may operate, including,
without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular
country, in order to meet the objectives of this Plan and to ensure the viability of the intended benefits of Awards granted to
Participants located in non-United States jurisdictions. Unless otherwise expressly provided in this Plan, all designations,
determinations, interpretations and other decisions under or with respect to this Plan or any Award or Award Agreement shall be
within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate.
(b) Delegation.
The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall
not delegate such authority in such a manner as would cause this Plan not to comply with applicable Exchange Policies or applicable law.
(c) Power
and Authority of the Committee. Notwithstanding anything to the contrary contained herein, (i) the Committee may, at any time
and from time to time, without any further action of the Board, exercise the powers and duties of the Board under this Plan, unless the
exercise of such powers and duties by the Committee would cause this Plan not to comply with the requirements of all applicable securities
laws and Exchange Policies and (ii) only the Board (or a committee of the Board comprised of directors who qualify as independent
directors within the meaning of the independence rules of any applicable stock exchange on which the Shares are then listed) may
grant Awards to Directors who are not also employees of the Company or an Affiliate.
(d) Indemnification.
To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority
under this Plan shall be liable for any action or determination taken or made in good faith with respect to this Plan or any Award made
under this Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under
this Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph
shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue
of such person’s position with the Company.
Section 4. Shares Reserved for Awards
| (i) | Subject to Section 4(b), the securities that may be acquired by Participants under this Plan will
consist of (A) authorized but unissued Shares; or (B) issued and outstanding Shares held by the Company for its own account
to the extent permitted by applicable law. |
| (ii) | The Company will at all times during the term of this Plan ensure that it is authorized to issue such
number of Shares as are sufficient to satisfy the requirements of this Plan. |
| (iii) | Subject to adjustment as provided
in Section 4(b) of this Plan, the maximum aggregate number of Shares issuable under this Plan and under all other Security Based
Compensation Arrangements shall not exceed 10% of the total number of Fully Diluted Shares issued and outstanding from time to time. This
Plan is considered an “evergreen” plan, since (i) any
Shares subject to an Award which has been exercised or settled in cash by a Participant or for any reason is cancelled or terminated
without having been exercised or settled in Shares will again be available for grants under this Plan, and (ii) the number of Awards
available to grant will increase as the number of issued and outstanding Shares increases from time to time. |
| (iv) | For the purposes of Section 4(a)(iii),
in the event that the Company cancels or purchases to cancel any of its
issued and outstanding Shares (“Cancellation”) and
as a result of such Cancellation, the Company exceeds the limit set out in Section 4(a)(iii),
no approval of the Company’s shareholders will be required for the issuance of Shares on the exercise or settlement of any
Awards which were granted prior to such Cancellation. |
| (v) | For greater certainty, Awards that do not entitle the holder thereof to receive or purchase Shares shall
not be counted against the aggregate number of Shares available for Awards under this Plan. |
| (vi) | Shares issued under Awards granted in substitution for awards previously granted by an entity that is
acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards
under this Plan. |
(b) Adjustments. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, forward stock split, reverse stock split, reorganization, plan of arrangement, merger,
amalgamation, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event which
affects the Shares, or unusual or nonrecurring events affecting the Company or the financial statements of the Company, or changes in
applicable rules, rulings, regulations or other requirements of any governmental body or stock exchange or inter-dealer quotation, accounting
principles or law, such that an adjustment is considered by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under this Plan, then the Committee may, in such manner as it may
deem equitable, subject to any required regulatory or Exchange approvals, adjust any or all of (i) the number and kind of Shares
(or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and kind of Shares (or
other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award, and/or (iv) any share limit
set forth in this Plan; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always
be a whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding
and conclusive.
| (c) | Additional Award Limitations. |
| (i) | From and after the Effective
Date and subject to Section 4(b), to the extent that section 2.25 of National Instrument 45-106 –
Prospectus Exemptions applies to an Award or to the issuance of Shares pursuant thereto: (X) after a grant, the number of
Shares, calculated on a fully-diluted basis, reserved for issuance under Options granted to (A) any one Related Person shall not
exceed 5% of the total number of Shares that are outstanding at the time of the grant, or (B) Related Persons shall not exceed 10%
of the total number of Shares that are outstanding at the time of the grant; and (Y) after a grant, the number of Shares, calculated
on a fully-diluted basis, issued within any 12 months to (A) any one Related Person and the Associates of such Related Person shall
not exceed 5% of the total number of Shares that are outstanding at the time of the grant, or (B) Related Persons shall not exceed
10% of the total number of Shares that are outstanding at the time of the grant. |
| (ii) | The maximum number of Shares
that may be issued under this Plan to the Company’s Non-Employee
Directors, as a whole, or the number of securities that may be issuable on exercise
of the Awards granted to the Company’s Non-Employee Directors, as a whole,
as compensation within any one-year period, shall not exceed 1% of the total number of Fully-Diluted Shares, in aggregate, at the time
of grant, subject to adjustment pursuant to Section 4(b). The Board shall not (i) grant Options to any one Non-Employee Director
in which the aggregate Fair Market Value of the Shares underlying such Options during any calendar year (and including any awards under
any equity compensation program of MPB AcquisitionCo or its Affiliates) shall exceed $100,000, or (ii) grant Awards in which the
aggregate Fair Market Value of the Shares in respect to which the Awards are exercisable by such Non-Employee Director during any calendar
year (and including any awards under any equity compensation program of MPB AcquisitionCo or its Affiliates) shall exceed $150,000, and
in each case of (i) and (ii), measured as at the date of grant. |
(d) Restricted
Exchangeable Shares. If, during the term of this Plan, MPB AcquisitionCo grants awards of restricted Exchangeable Shares to
Persons who are Eligible Persons under this Plan, any restricted Exchangeable Shares awarded by MPB AcquisitionCo will reduce the
number of Shares that may be awarded under this Plan on a one-for-one basis. If any restricted Exchangeable Shares awarded by MPB
AcquisitionCo are forfeited, cancelled, or are used or withheld to satisfy tax withholding obligations of an award recipient
thereunder, any such restricted Exchangeable Shares that are forfeited, cancelled, used or withheld will thereafter not be treated
as reducing the number of Shares that are available for Awards under this Plan.
(e) Financial
Assistance. The Company or any Affiliate or Related Entity may provide financial assistance to, or enter into support agreements
with, Participants in connection with grants under this Plan, including without limitation, full, partial or non-recourse loans (to the
extent permitted by applicable laws), provided approval of the disinterested members of the Board is obtained.
Section 5. Eligibility
Any Eligible Person shall
be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award,
the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential
contributions to the success of the Company and/or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding
the foregoing,
| (i) | an Incentive Stock Option may
only be awarded to an employee of the Company or any “Parent Corporation”
or “Subsidiary Corporation” of the Company (in each case, within the meaning of Section 424 of the Code); and |
| (ii) | in the case of an Eligible Person who is subject to United States income tax, a Non-Qualified Stock Option
may only be awarded to such Eligible Person to the extent the Eligible Person performs direct services to (A) the Company or any
corporation (other than the Company), in an unbroken chain of corporations beginning with the Company, in which each of the corporations
other than the last corporation in the unbroken chain owns, directly or indirectly, stock representing at least 50% of the voting power
of all classes of stock entitled to vote or at least 50% of the value of all classes of stock in one of the other corporations in such
chain, or (B) to an entity that otherwise qualifies as an eligible issuer of
service recipient stock pursuant to United States Treasury Regulation Section 1.409A-1(b)(5)(iii)(E)(1). |
Receipt
of Awards by a Participant is subject to the grant being voluntary within the meaning of section 2.23(2) of National Instrument 45-106
– Prospectus Exemptions, to the extent applicable.
Section 6. Awards
(a) Options.
The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of this Plan, as the Committee shall determine:
| (i) | Exercise Price. The purchase price per Share purchasable under an Option shall be determined by
the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; provided, however,
that, to the extent permitted under Section 409A and Section 424 of the Code, as applicable, the Committee may designate a purchase
price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an
entity that is acquired by or merged with the Company or an Affiliate. |
| (ii) | Option Term. The term
of each Option shall be fixed by the Committee at the date of grant but shall not be longer than ten (10) years from the date of
grant. Notwithstanding the foregoing, in the event that the expiry date of an Option falls within a trading blackout period imposed by
the Company (a “Blackout Period”),
and neither the Company nor the individual in possession of the Options is subject to
a cease trade order in respect of the Company’s securities, then the expiry date of such Option shall be automatically extended
to the 10th business day following the end of the
Blackout Period, provided that the extension contemplated by this paragraph (ii) shall not apply to Incentive Stock Options. |
| (iii) | Time and Method of Exercise. The Committee shall determine the time or times at which an Option
may be exercised in whole or in part and the method or methods by which, and the form or forms, including, subject to applicable law,
but not limited to, cash, cheque, or surrender of other securities or other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the applicable exercise price, in which payment of the exercise price with respect thereto may be
made or deemed to have been made. |
| (A) | Promissory Notes. Notwithstanding the foregoing, the Committee may not permit payment of the exercise
price, either in whole or in part, with a promissory note. |
| (B) | Net Exercises. The Committee may, in its discretion, permit an Option to be exercised by delivering
to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess,
if positive, of the Fair Market Value of the Shares underlying the Option being exercised on the date of exercise, over the exercise price
of the Option for such Shares. |
| (iv) | Options Subject to Targets. Options may be made subject to the achievement by the Company of specified
performance targets, such that such Options will only be exercisable if such targets are met. |
| (v) | Incentive Stock Options. Unless an Award Agreement specifies that an Option is intended to be an
Incentive Stock Option, the Option will be a Non-Qualified Stock Option. The Company makes no assurances that an Option that it designates
as an Incentive Stock Option will meet all requirements for qualification under Section 422 of the Code, and neither the Company,
nor its officers, directors or employees, shall have any liability to the Participant if the Option does not qualify as an Incentive Stock
Option under Section 422 of the Code. If an Award Agreement specifies that an Option is intended to be an Incentive Stock Option,
the following additional provisions shall apply: |
| (A) | To the extent that the aggregate Fair Market Value (determined at the time of grant) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans
of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does not comply with the
rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which
they were granted) or otherwise do not comply with such rules will be treated as Non-Qualified Stock Options, notwithstanding any
contrary provision of the applicable Award Agreement(s). |
| (B) | Subject to adjustment pursuant
to Section 4(b) and the overall plan limitation under Section 4(a), the maximum number of shares that may be issued pursuant
to Incentive Stock Options shall not exceed 17,400,000 Shares, or such other number of Shares as may be determined by the Board prior
to the shareholders’ meeting of the Company in respect of the Company’s
qualifying transaction. |
| (C) | The Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns
(within the meaning of Sections 422 and 424 of the Code) stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any “Parent
Corporation” or “Subsidiary Corporation” of the Company (in each case, within the meaning of Section 424
of the Code), shall not be exercisable after the expiration of five (5) years from the date such Incentive Stock Option is granted. |
| (D) | The purchase price per Share for an Incentive
Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided,
however, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within
the meaning of Section 422 and 424 of the Code) stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any “Parent Corporation” or “Subsidiary Corporation” of the Company (in each case,
within the meaning of Section 424 of the Code), the purchase price per Share purchasable under an Incentive Stock Option shall
be not less than 110% of the Fair Market Value of a Share on the date of grant
of the Incentive Stock Option. |
| (E) | An Incentive Stock Option will not be transferable by a Participant other than by will or the laws of
descent and distribution and, during the Participant’s lifetime, may only
be exercised by the Participant. |
| (F) | Any Incentive Stock Option authorized under this Plan shall contain such other provisions as the Committee
shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as
an Incentive Stock Option. |
| (G) | No Incentive Stock Option may be granted more than ten (10) years after the earlier of (i) the
date this Plan is adopted by the Board, and (ii) the date on which this Plan is approved by shareholders of the Company. |
| (H) | In order to retain status as an Incentive Stock Option, an Incentive Stock Option must be exercised within
three (3) months following the date the optionee ceases to be an employee, except in the case of death or Disability as defined under
Section 22(e) of the Code. Any Incentive Stock Option that is not exercised within the time periods required under Section 422
of the Code, will automatically be deemed to be a Non-Qualified Stock Option (to the extent it would otherwise remain exercisable according
to its terms). |
| (I) | In the event this Plan is not approved by the shareholders of the Company in accordance with the requirements
of Section 422 of the Code within twelve (12) months before or after this Plan is adopted by the Board, any Incentive Stock Option
granted under this Plan automatically will be deemed to be a Non-Qualified Stock Option. |
(b) Restricted
Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock Units to Eligible Persons with the following
terms and conditions and with such additional terms and conditions not inconsistent with the provisions of this Plan as the Committee
shall determine:
| (i) | Restrictions. Restricted Stock Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, any limitation on the right to receive any dividend, Dividend Equivalents, or other right or property
with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise
as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject
to the limitations described in Section 6(c). |
| (ii) | Issuance and Delivery of Shares. In the case of Restricted Stock Units, no Shares shall be issued
at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units
evidencing the right to receive Shares, one Share for each such Share covered by the Restricted Stock Unit shall be issued and delivered
to the holder of the Restricted Stock Units; provided, that the Committee may elect to pay cash, or part cash and part Shares in lieu
of delivering only Shares. |
| (iii) | Acceleration of Vesting. The Committee may, in its discretion, accelerate the vesting, all or in
part, of the Restricted Stock Units. |
| (iv) | Forfeiture. Except as otherwise determined by the Committee or as provided in an Award
Agreement, upon a Participant’s termination of employment or service or resignation or removal as a Director (in either case,
as determined under criteria established by the Committee) during the applicable restriction period, all Restricted Stock Units held by
such Participant that, at such time, remain subject to restrictions, shall be forfeited and re-acquired by the Company for cancellation
at no cost to the Company; provided, however, that the Committee may waive in whole or in part any or all remaining restrictions with
respect to Restricted Stock Units. |
| (v) | Performance Targets. Restricted Stock Units may be made subject to the achievement by the Company
of specified performance targets established by the Board or after a period of continued service with the Company or its Affiliates or
any combination of the above, as set forth in the applicable Award Agreement, such that such Restricted Stock Units will only become vested
if such targets or periods are met (or waived at the discretion of the Committee). |
(c) Dividend
Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall
be entitled to receive payments (in cash, Shares, other securities or other property, as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the
Committee. Subject to the terms of this Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions
as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible
Persons in connection with grants of Options or other Awards the value of which is based solely on an increase in the value of the Shares
after the date of grant of such Award, and (ii) dividend and Dividend Equivalent amounts may be accrued but shall not be paid unless
and until the date on which all conditions or restrictions relating to such Award have been satisfied, waived or lapsed.
(d) Unrestricted
Stock Bonuses. The Committee is hereby authorized to grant an Award of Unrestricted Stock Bonuses to Eligible Persons under
which the Participant shall be entitled to receive fully paid and non-assessable Shares as consideration for services rendered to
the Company or an Affiliate in the prior calendar year, or may purchase fully paid and non-assessable Shares for cash consideration
at the Fair Market Value thereof (with the cash consideration representing up to the after-withholding tax value of a cash bonus
paid). Subject to the terms of this Plan and any applicable Award Agreement, such Unrestricted Stock Bonuses may have such terms and
conditions as the Committee shall determine.
| (i) | Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other
consideration as may be determined by the Committee or required by applicable law or the Exchange Policies. |
| (ii) | Limits on Transfer of Awards. Except as otherwise provided by the Committee in its discretion and
subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Shares issued pursuant
to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and
distribution, and no Award (other than fully
vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company
or any Affiliate. Where the Committee does permit the transfer of an Award other than a fully vested and unrestricted Share, such permitted
transfer shall be for no value and in accordance with all applicable law and Exchange Policies. The Committee may also establish procedures
as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of
the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. |
| (iii) | Restrictions; Exchange Listing. All Shares or other securities delivered under this Plan pursuant
to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under this Plan, applicable
laws and Exchange Policies, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the
certificates or direct registration statements or electronic positions, as applicable, for, such Shares or other securities to reflect
such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the
requirements of any securities or other laws, rules or regulations (including the Exchange Policies) as may be determined by the
Company to be applicable are satisfied. |
| (iv) | Prohibition on Option Repricing. Except as provided in Section 4(b) hereof, the Committee
may not, without prior approval of the Company’s shareholders and applicable stock exchange approval, seek to effect
any repricing of any previously granted, “out-of-the
money” Option by: (i) amending or modifying the terms of the Option to lower the exercise price;
(ii) canceling the out-of-the money Option and granting either (A) replacement Options having a lower exercise price; or
(B) Restricted Stock Units in exchange; or (iii) cancelling or repurchasing the out-of-the money Option for cash or other
securities. An Option will be deemed to be “out-of-the
money” at any time when the Fair Market Value of the Shares covered by such Award is less than the exercise price of
the Award. |
| (v) | Section 409A Provisions. Notwithstanding anything in this Plan or any Award Agreement to the
contrary, to the extent that any amount or benefit that constitutes “deferred
compensation” to a Participant under Section 409A and applicable guidance thereunder (“Deferred
Compensation”) is otherwise payable or distributable to a
Participant under this Plan or any Award Agreement solely by reason of the
occurrence of a change in control or due to the Participant’s disability or
“separation from service” (as such term is defined under Section 409A), such amount or benefit will not be
payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that
(i) the circumstances giving rise to such change in control event, disability or separation from service meet the definition of
a change in control event, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the
Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be
exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or
distribution that is Deferred Compensation that otherwise would be made to a Participant
who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made
before the date which is six months after the date of the Specified Employee’s
separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is
exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. |
| (vi) | Acceleration of Vesting. Upon a change of control event (as described in Section 7(b)),
all securities (namely the Shares or Options) granted pursuant to this Plan shall immediately vest. |
Section 7. Amendment and Termination; Corrections
(a) Amendments
to this Plan and Awards. The Board may from time to time amend, suspend, discontinue or terminate this Plan, and the Committee may
amend the terms of any previously granted Award at any time, provided that, except as contemplated herein (i) no amendment, alteration,
suspension, discontinuation or termination may (except as expressly provided in this Plan) materially and adversely alter or impair the
terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or
holder thereof; and (ii) any amendment, alteration, suspension, discontinuation or termination is subject to compliance with all
applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange, including receipt of any required
approval from the governmental entity or stock exchange, and any such amendment, alteration, suspension, discontinuation or termination
of an Award shall be in compliance with the Exchange Policies. For greater certainty and notwithstanding the foregoing, the Board may
amend, suspend, terminate or discontinue this Plan, and the Committee may amend or alter any previously granted Award, as applicable,
without obtaining the approval of shareholders of the Company, in order to:
| (i) | amend the eligibility for, and limitations or conditions imposed upon, participation in this Plan, except
that any amendment to this Plan to change the class or classes of Persons eligible to be awarded Incentive Stock Options will be submitted
for shareholder approval to the extent required by Code Section 422; |
| (ii) | amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating
to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions
of or rights of the Company under any outstanding Award, prospectively or retroactively; |
| (iii) | make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies
of any applicable governmental entity or the Exchange, including the Exchange Policies (including amendments to Awards necessary or desirable
to avoid any adverse tax results under Section 409A), and no action taken to comply shall be deemed to impair or otherwise adversely
alter or impair the rights of any holder of an Award or beneficiary thereof; or |
| (iv) | amend any terms relating to the administration of this Plan, including the terms of any administrative
guidelines or other rules related to this Plan. |
Notwithstanding the foregoing
and for greater certainty, prior approval of the shareholders of the Company shall be required for any amendment to this Plan or an Award
that would require shareholder approval under the rules or regulations of the Exchange that is applicable to the Company or which
would:
| (i) | increase the shares authorized under this Plan as specified in Section 4 and Section 6(a)(v)(B) of
this Plan; |
| (ii) | remove or exceed the limits
set out in a Security Based Compensation Arrangement on Awards available to any of (a) a
“related party” (as defined in Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special Transactions) of the Company, (b) a promoter of the Company, or, where
the promoter is not an individual, an officer, director or control person of the promoter, and (c) such other Person as may be designated
from time to time by the Exchange, in respect of the Company; |
| (iii) | permit a re-pricing
of an Award benefiting any of (a) a “related party” (as defined in Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special Transactions) of the Company, (b) a promoter of the Company, or, where
the promoter is not an individual, an officer, director or control person of the promoter, and (c) such other Person as may be designated
from time to time by the Exchange; |
| (iv) | permit an extension of the term of an Award where the exercise price is lower than the prevailing market
price, except pursuant to Section 6(a)(ii); |
| (v) | permit the award of Options at a price less than 100% of the Fair Market Value of a Share on the date
of grant of such Option, contrary to the provisions of Section 6(a)(i) of this Plan; |
| (vi) | permit Options to be transferable other than as provided in Section 6(e)(ii); |
| (vii) | amend this Section 7(a); or |
| (viii) | increase the maximum term permitted for Options, as specified in Section 6(a), other than under Section 6(a)(ii),
or extend the terms of any Options beyond their original expiry date. |
(b) Corporate Transactions.
In the event of any reorganization, merger, amalgamation, consolidation, split-up, spin-off, combination, plan of arrangement, take-over
bid or tender offer, repurchase or exchange of Shares or other securities of the Company or any other similar corporate transaction or
event involving the change of control of the Company (or if the Company shall enter into a written agreement to undergo such a transaction
or event), the Committee or the Board may, in its sole discretion, provide for any 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), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter the rights of any
holder of an Award or beneficiary thereof:
| (i) | either (A) termination
of the Award, whether or not vested, in exchange for an amount of 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 (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction
or event described in this Section 7(b)(i) (A) the Committee or the Board determines in good faith that no amount would
have been attained upon the exercise of the Award or realization of the Participant’s
rights, then the Award may be terminated by the Company without any payment), or (B) the replacement of the Award with other rights
or property selected by the Committee or the Board, in its sole discretion; |
| (ii) | that the Award be assumed 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 or property and prices; |
| (iii) | that, subject to Section 6(e)(v), the Award shall be exercisable or payable or fully vested with
respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or |
| (iv) | that the Award cannot vest, be exercised or become payable after a certain date in the future, which may
be the effective date of the event. |
For greater certainty, a change
of control event shall not include: (i) the conversion of multiple voting shares of the Company into Shares, (ii) the exchange
of the Exchangeable Shares or other exchangeable shares of a subsidiary of the Company into Shares, or (iii) the exchange or conversion
of other securities that are exchangeable or convertible, as applicable, into Shares or multiple voting shares of the Company.
(c) Correction of
Defects, Omissions and Inconsistencies. The Committee may, without prior approval of the shareholders of the Company, correct any
defect, supply any omission or reconcile any inconsistency in this Plan or in any Award or Award Agreement in the manner and to the extent
it shall deem desirable to implement or maintain the effectiveness of this Plan.
Section 8. Income Tax Withholding
In order to comply with all
applicable federal, state, provincial, local and/or foreign income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state, provincial, local 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. Without limiting the foregoing,
in order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or collected upon exercise or receipt
of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions
as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion
of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes (subject to any applicable limitations to avoid adverse accounting treatment), or (b) delivering
to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with
a Fair Market Value equal to the amount of such taxes. The election, if any, must be made on or before the date that the amount of tax
to be withheld is determined.
Section 9. Securities Laws
If the Awards and the securities
which may be acquired pursuant to the exercise of the Awards have not been registered under the Securities Act or under any securities
law of any state of the United States, the Awards may not be exercised in the United States unless an exemption from the registration
requirements of the Securities Act is available. Any Awards or Shares issued to a Participant in the United States
that have not be registered under the Securities Act will be deemed “restricted securities” (as such term is defined
in Rule 144(a)(3) under the Securities Act) and shall be certificated and affixed with an applicable restrictive legend as
set forth in the Award Agreement. The Awards may not be offered or sold, directly or indirectly, in the United States except pursuant
to registration under the Securities Act and the securities laws of all applicable states or available exemptions therefrom. Each U.S.
Award Holder or anyone who becomes a U.S. Award Holder, who is granted an Award in the United States, who is a resident of the United
States or who is otherwise subject to the Securities Act or the securities laws of any state of the United States will be required to
complete an Award Agreement which sets out the applicable United States restrictions.
Section 10. General Provisions
(a) No
Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under this Plan, and
there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under this
Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.
(b) Award Agreements.
No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed
by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium
in accordance with procedures established and accepted by the Company. An Award Agreement need not be signed by a representative of the
Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of this Plan and
any other terms and conditions (not inconsistent with this Plan) determined by the Committee.
(c) Availability
of Information. At least annually, copies of the Company’s
balance sheet and income statement for the just completed fiscal year shall be made available (including by way of filing on SEDAR),
to each Participant and purchaser of Shares upon the exercise of an Award upon written request; provided, however, that this requirement
shall not apply if all offers and sales of securities pursuant to this Plan comply with all applicable conditions of Rule 701 under
the Securities Act; provided that for purposes of determining such compliance,
any registered domestic partner shall be considered a “family member” as that term is defined in Rule 701 of the
Securities Act. The Company shall not be required to make such information available to key persons whose duties in connection with the
Company assure them access to equivalent information.
(d) Plan Provisions
Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of
this Plan as set forth herein or subsequently amended, the terms of this Plan shall control.
(e) No
Rights of Shareholders. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee may impose
on such Awards pursuant to Section 6(b)(i) or Section 6(c)),
neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a
shareholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless
and until such Shares have been issued.
(f) No
Limit on Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally
applicable or applicable only in specific cases.
(g) No
Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee
of the Company or any Affiliate, nor will it affect in any way the right of
the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, in accordance with
applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability
or any claim under this Plan or any Award, unless otherwise expressly provided in this Plan or in any Award Agreement. Nothing in this
Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise
to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be
an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under this Plan which
such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages
for wrongful or unfair dismissal, breach of contract or otherwise. By participating in this Plan, each Participant shall be deemed to
have accepted all the conditions of this Plan and the terms and conditions of any rules and regulations adopted by the Committee
and shall be fully bound thereby.
(h) Governing
Law. The Plan, including the validity, construction and effect of this Plan or any Award, and any rules and regulations relating
to this Plan or any Award, shall be governed by and construed in accordance with the Laws of the Province of British Columbia and the
federal Laws of Canada applicable therein, but references to such laws shall not, by conflict of laws, rules or otherwise require
application of the law of any jurisdiction other than the Province of British Columbia and the parties hereby further irrevocably attorn
to the jurisdiction of the courts of the Province of British Columbia in respect of any matter arising hereunder.
(i) Severability.
If any provision of this Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would
disqualify this Plan or any Award under any law or the Exchange Rules deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws or the Exchange Rules, or if it cannot be so construed or deemed amended without,
in the determination of the Committee, materially altering the purpose or intent of this Plan or the Award, such provision shall be stricken
as to such jurisdiction or Award, and the remainder of this Plan or any such Award shall remain in full force and effect.
(j) No
Trust or Fund Created. Neither this Plan nor any Award shall create or be construed to create a trust or separate fund of any kind
or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right
of any unsecured general creditor of the Company or any Affiliate.
(k) Other
Benefits. No compensation or benefit awarded to or realized by any Participant under
this Plan shall be included for the purpose of computing such Participant’s
compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination
pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan.
(l) No Fractional
Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated
or otherwise eliminated.
(m) Headings.
Headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.
Section 11. Clawback or Recoupment
All Awards under this Plan
shall be subject to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time
to time, or (ii) any applicable law, rule or regulation or applicable Exchange Policies.
Section 12.
Effective Date of the Plan
The Plan was adopted by the Board on June 29th,
2021, and approved by the shareholders of the Company on June 2nd, 2021. The Effective
Date of the Plan is June 29th, 2021.
Section 13.
Term of this Plan
No
Award shall be granted under this Plan, and this Plan shall terminate, on the tenth (10th)
anniversary of the date this Plan is approved by the shareholders of the Company, or any earlier date of discontinuation or termination
established pursuant to Section 7(a) of this Plan. Notwithstanding the foregoing, an Award may only be awarded within ten
(10) years from the date this Plan is adopted by the Board or, if earlier, the date this Plan is approved by the shareholders of
the Company. Unless otherwise expressly provided in this Plan or in an applicable Award Agreement, any Award theretofore granted may
extend beyond such dates, and the authority of the Committee provided for hereunder with respect to this Plan and any Awards, and the
authority of the Board to amend this Plan, shall extend beyond the termination of this Plan. Regardless of whether this Plan is approved
by the shareholders of the Company every three (3) years or when otherwise required under the Exchange Rules, after the initial
approval of this Plan by the shareholders of the Company, all previously granted Awards shall remain valid.
GLASS HOUSE BRANDS INC.
3645 Long Beach Boulevard
Long Beach, California 90807, USA E: investors@glasshousegroup.com
Download the latest about Glass House Brands Inc. at: http://www.glasshousebrands.com
Glass House Brands Inc. is traded on the US OTC Markets under the
symbols "GLASF" for shares and "GHBWF" for warrants and on Cboe Canada in Canada under the symbols "GLAS.A.U"
for shares and "GLAS.WT.U" for warrants.
Exhibit 99.3
CERTIFICATE
OF ABRIDGMENT
Section 2.20(c) of
National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer
TO: |
Ontario Securities Commission |
|
British Columbia Securities Commission
Alberta Securities Commission |
|
Financial and Consumer Affairs Authority of Saskatchewan |
|
Manitoba Securities Commission |
|
Financial and Consumer Services Commission, New Brunswick |
|
Nova Scotia Securities Commission |
|
Office of the Superintendent of Securities, Prince Edward Island |
|
Office of the Superintendent of Securities, Newfoundland and Labrador |
|
Superintendent of Securities, Northwest Territories |
|
Superintendent of Securities, Yukon |
|
Superintendent of Securities, Nunavut |
|
|
RE: |
Annual General and Special Meeting of Shareholders of Glass House Brands Inc. (the "Company") to be held on June 21, 2024 (the "Meeting") |
In
connection with the Meeting, the undersigned, being an officer of the Company, hereby certifies for and on behalf of the Company and
not in a personal capacity, that:
(a) |
arrangements have been made to have the proxy-related materials for the Meeting delivered in compliance with the applicable timing requirements in Sections 2.9 and 2.12 of National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer ("NI 54-101"); |
|
|
(b) |
the Company has made arrangements to carry out all of the requirements of NI 54-101 in additional to those described in paragraph (a) above; and |
|
|
(c) |
the Company is relying on Section 2.20(c) of NI 54-101 to abridge the time periods prescribed by Sections 2.2(1) and 2.5(1) of NI 54-101 applicable to the Meeting. |
Dated
this 22nd day of May, 2024.
|
GLASS HOUSE BRANDS INC. |
|
|
|
Per: |
(signed) "Benjamin Vega" |
|
|
Name: |
Benjamin Vega |
|
|
Title: |
General Counsel and Corporate Secretary |
Exhibit 99.4
Notice
of Availability of Proxy Materials
for
Glass House Brands Inc. Annual General and Special Meeting
Meeting Date and Time: 11:00 a.m. (Pacific Time) on June 21,
2024
Location: 645 Laguna Road, Camarillo, California, 93012
Please be advised that the proxy materials for the above noted securityholder
meeting are available for viewing and downloading online. This document provides an overview of these materials, but you are reminded
to access and review the management information circular and other proxy materials available online prior to voting. These materials are
available at:
https://ir.glasshousebrands.com/agm/
OR
www.sedarplus.ca
Obtaining Paper Copies of the Proxy Materials
Securityholders may request to receive paper copies of the proxy materials
related to the above referenced meeting by mail at no cost. Requests for paper copies must be received by June 7, 2024, in
order to receive the paper copy in advance of the meeting. Shareholders may request to receive a paper copy of the Materials for up to
one year from the date the Materials were filed on www.sedarplus.ca.
For more information regarding notice-and-access
or to obtain a paper copy of the Materials you may contact our transfer agent, Odyssey Trust Company, via www.odysseycontact.com
or by phone at 1-888-290-1175 (toll-free within North America) or 1-587-885-0960 (direct from outside North America).
Notice of Meeting
The resolutions to be voted on at the meeting, described in detail
in the Management Information Circular, are as follows:
| ● | ELECTION OF DIRECTORS: For all shareholders of the Glass House Brands Inc. other than holders of limited voting shares of Glass
House Brands Inc., to elect directors of Glass House Brands Inc. for the ensuing year. See the section entitled “Business to be
Transacted at the Meeting – Election of Directors” in the Management Information Circular. |
| ● | APPOINTMENT OF AUDITORS: To re-appoint Macias Gini & O’Connell LLP as auditor of Glass House Brands Inc. for
the ensuing year and to authorize the directors to fix the renumeration. See section entitled “Business to be Transacted at the
Meeting – Appointment of Auditor” in the Management Information Circular. |
| ● | RENEWAL OF EQUITY INCENTIVE PLAN: To consider and, if deemed advisable, approve an ordinary resolution, the full text of which
is set forth in the Management Information Circular, to renew the Company's Equity Incentive Plan (as defined in the Management Information
Circular) and to approve all unallocated options, rights and entitlements thereunder. See section entitled “Business to be Transacted
at the Meeting – Renewal of Equity Incentive Plan” in the Management Information Circular. |
Voting
To vote your securities, please refer to the instructions on the enclosed
Proxy or Voting Instruction Form. Your Proxy or Voting Instruction Form must be received by 11:00 a.m. (Pacific Time) on June 19,
2024.
Stratification
Shareholders will not receive a paper copy of the Management Information
Circular unless they contact the Company's transfer agent, toll free, at 1-888-290-1175. For Shareholders who wish to receive a paper
copy of the Management Information Circular in advance of the voting deadline for the Meeting, requests must be received no later than
June 7, 2024.
Annual Financial Statements
Rather than Glass House Brands Inc. mailing paper copies of the Annual
Financial Statements and related management’s discussion and analysis to the shareholders, the materials can be accessed online
under the Company's profile on SEDAR+ at www.sedarplus.ca and on the Company's website at https://ir.glasshousebrands.com/agm/.
Exhibit 99.5
| Glass House Brands Inc.
Form of Proxy – Annual General and Special Meeting to be held at 11:00 a.m.
(Pacific Time) on June 21, 2024 at 645 Laguna Road, Camarillo, California,
Trader’s Bank Building
02, 67 Yonge Street
Toronto ON M5E 1J8
7
93012
Appointment of Proxyholder
I/We being the undersigned holder(s) of Glass House Brands Inc. (the “Company”) hereby
appoint Kyle Kazan or failing this person, Mark Vendetti or Graham Farrar (collectively, the
Print the name of the person you are appointing if this person is
someone other than the Management Nominees listed herein:
OR
“Management Nominees”)
as my/our proxyholder with full power of substitution and to attend, act, and to vote for and on behalf of the holder in accordance with the following direction (or if no directions have
been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual General and Special Meeting of the Company to be held at 645 Laguna
Road, Camarillo, California, 93012 at 11:00 a.m. (Pacific Time) on June 21, 2024 or at any adjournment thereof.
1 For Withhold For Withhold For Withhold
.. Election of Directors.
a. Kyle Kazan b. Graham Farrar c. Robert (“Jamie”) Mendola
e. Jocelyn Rosenwald f. George Raveling
h. John Nichols, Jr.
d. Humble Lukanga
g. Yelena Katchko
**Note: This resolution may be voted on by all shareholders of the Company other than holders of limited voting shares of the Company.
For
For
Yes
Withhold
Against
No
2
3
4
.. Appointment of Auditors. Re-appointment of Macias Gini & O’Connell LLP as auditor of the Company for the ensuing year and authorization of the
directors of the Company to fix their remuneration.
.. Renewal of Equity Incentive Plan. To consider and approve an ordinary resolution, the full text of which is set forth in the management information
circular of the Company, to renew the Company's Equity Incentive Plan and approve all unallocated options, rights and entitlements thereunder.
.. Ownership Declaration. I am a U.S. Person as such term is defined in Rule 902(k) of Regulation S under the United States Securities Act of1933 (as
may be amended or replaced from time to time).
Authorized Signature(s) – This section must be completed for your instructions
to be executed.
Signature(s): Date
I/we authorize you to act in accordance with my/our instructions set out above. I/We hereby
revoke any proxy previously given with respect to the Meeting. If no voting instructions are
indicated above, this Proxy will be voted as recommended by Management. MM / DD / YY
Interim Financial Statements – Check the box to the right if you would like to
receive interim financial statements and accompanying Management’s
Discussion & Analysis by mail. See reverse for instructions to sign up for delivery
by email.
Annual Financial Statements – Check the box to the right if you would like to receive
the Annual Financial Statements and accompanying Management’s Discussion and Analysis
by mail. See reverse for instructions to sign up for delivery by email. |
| INSTEAD OF MAILING THIS PROXY, YOU MAY SUBMIT YOUR
PROXY USING SECURE ONLINE VOTING AVAILABLE ANYTIME:
This form of proxy is solicited by and on behalf of Management.
Proxies must be received by 11:00 a.m. (Pacific Time), on June 19,
2024.
Notes to Proxy
1. Each holder has the right to appoint a person, who need not be a holder, to attend and
represent them at the Meeting. If you wish to appoint a person other than the persons
whose names are printed herein, please insert the name of your chosen proxyholder in the
space provided on the reverse.
2. If the securities are registered in the name of more than one holder (for example, joint
ownership, trustees, executors, etc.) then all of the registered owners must sign this proxy in
the space provided on the reverse. If you are voting on behalf of a corporation or another
individual, you may be required to provide documentation evidencing your power to sign this
proxy with signing capacity stated.
3
4
..
..
This proxy should be signed in the exact manner as the name appears on the proxy.
If this proxy is not dated, it will be deemed to bear the date on which it is mailed by
Management to the holder.
5. The securities represented by this proxy will be voted as directed by the holder; however, if
such a direction is not made in respect of any matter, this proxy will be voted as
recommended by Management.
6. The securities represented by this proxy will be voted or withheld from voting, in accordance
with the instructions of the holder, on any ballot that may be called for and, if the holder has
specified a choice with respect to any matter to be acted on, the securities will be voted
accordingly.
7
8
..
..
This proxy confers discretionary authority in respect of amendments to matters identified in
the Notice of Meeting or other matters that may properly come before the meeting.
This proxy should be read in conjunction with the accompanying documentation provided by
Management.
To Vote Your Proxy Online please visit:
https://login.odysseytrust.com/pxlogin
You will require the CONTROL NUMBER printed with your
address to the right.
If you vote by Internet, do not mail this proxy.
To request the receipt of future documents via email and/or to
sign up for Securityholder Online services, you may contact Odyssey Trust Company
at https://odysseytrust.com/ca-en/help/.
Voting by mail may be the only method for securities held in the name of a corporation or
securities being voted on behalf of another individual. A return envelope has been enclosed
for voting by mail. |
Exhibit 99.6
Glass House Brands Inc.
(the “Issuer”)
Request for Financial
Statements
In accordance with National Instrument 51-102
– Continuous Disclosure Obligations, registered and beneficial shareholders may elect annually to receive interim (quarterly)
financial statements and corresponding management discussion and analysis (“MD&A”) and/or annual financial statements
and MD&A. If you wish to receive these documents by mail or email, please return this completed form to:
Glass House Brands Inc.
Odyssey Trust Company
350 – 409 Granville
St
Vancouver, BC V6C 1T2
Canada
PLEASE PRINT CLEARLY IN BLOCK LETTERS
SHAREHOLDER REGISTRATION (Please provide the name in which your shares are currently registered) |
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Street Address |
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City |
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Prov/State |
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Postal/Zip Code |
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Country (if not Canada or the USA) |
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Email Address |
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If this is an Address Change, please check the box below and provide your former address. |
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Please send me the following: |
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Annual Financial Statements with MD&A (Mark this box if you would like to receive the Annual Financial Statements and related MD&A) |
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Interim Financial Statements with MD&A (Mark this box if you would like to receive the
Interim Financial Statements and related MD&A) |
I HEREBY CERTIFY that I am a registered and/or
beneficial holder of the Corporation, and as such, request that my name be placed on the Issuer’s Mailing List in respect to its
annual and/or interim financial statements and MD&A for the current financial year. If I have provided my email address above, I
hereby consent to its use for the delivery by the Issuer or its agent of annual and/or interim financial statements by email.
SIGNED: |
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DATE: |
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(Signature of Shareholder) |
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PRIVACY NOTICE: At Odyssey Trust Company, we
take your privacy seriously. In the course of providing services to you we receive non-public, personal information about you. We receive
this information through transactions we perform for you and through other communications with you. We may also receive information about
you by virtue of your transactions with affiliates of Odyssey Trust Company or other parties. This information may include your name,
social insurance number, stock/unit ownership information and other financial information. With respect to both to current and former
securityholders, Odyssey Trust Company does not share non-public personal information with any non-affiliated third party except as necessary
to process a transaction, service your account or as permitted by law. Our affiliates and outside service providers with whom we share
information are legally bound not to disclose the information in any manner, unless permitted by law or other governmental process. We
strive to restrict access to your personal information to those employees who need to know the information to provide our services to
you, and we maintain physical, electronic and procedural safeguards to protect your personal information. Odyssey Trust Company realizes
that you entrust us with confidential personal and financial information and we take that trust very seriously. By providing your personal
information to us and signing this form, we will assume, unless we hear from you to the contrary, that you have consented and are consenting
to this use and disclosure. A complete copy of our Privacy Code may be accessed at www.odysseytrust.com or you may request a copy in
writing to Chief Privacy Officer, 350 – 409 Granville St, Vancouver, BC V6C 1T2.
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