UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE
14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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LOWELL FARMS
INC.
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(Name of Registrant as Specified in its Charter)
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N/A
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check all boxes that apply):
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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LOWELL FARMS INC.
NOTICE OF ANNUAL GENERAL MEETING OF
SHAREHOLDERS
OF LOWELL FARMS INC.
AND
PROXY STATEMENT
FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 21, 2022
August 31, 2022
LOWELL FARMS INC.
Notice of Annual General Meeting of Shareholders (the
“Notice”)
The 2022 annual general meeting of shareholders (the
“Meeting”) of Lowell Farms Inc., a British
Columbia corporation (the “Corporation” or the
“Company”), will be held on September 21, 2022,
beginning at 8:30 a.m. (Eastern Time), at Odyssey Trust
Company, 67 Yonge St., Suite 702, Toronto, Ontario, M5E IJ8. This
Notice of Meeting is accompanied by the proxy statement and form of
proxy (“Proxy Instrument”).
The following matters will be considered at the Meeting:
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the election of seven directors for
the forthcoming year from the nominees proposed by the Board of the
Corporation; |
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the appointment of GreenGrowth CPAs, as auditors for the
Corporation and the authorization of the board of directors of the
Corporation (the “Board”) to fix the auditors’ remuneration and
terms of engagement; and
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the transaction of such other
business as may properly come before the Meeting or any
adjournment(s) thereof. |
The record date for the determination of shareholders of the
Corporation entitled to receive notice of and to vote at the
Meeting or any adjournment(s) thereof is August 2, 2022 (the
“Record Date”). Shareholders of the Corporation
whose names have been entered in the register of shareholders of
the Corporation at the close of business on the Record Date will be
entitled to receive notice of and to vote at the Meeting or any
adjournment(s) thereof.
A shareholder of the Corporation may attend the Meeting or may be
represented by proxy. Registered shareholders of the Corporation
who are unable to attend the Meeting or any adjournment(s) thereof
are requested to date, sign, and return the accompanying Proxy
Instrument for use at the Meeting or any adjournment(s)
thereof.
To be effective, the enclosed Proxy Instrument must be returned to
the Corporation’s transfer agent by using the envelope provided or
by mailing the Proxy Instrument to Odyssey Trust Company, 67 Yonge
St., Suite 702, Toronto, Ontario, M5E 1J8 (Attention: Proxy
Department). You may also vote on the Internet by going to
https://odysseytrust.com/login/, clicking on VOTE and
following the instructions. You will need your control number
located on the Proxy Instrument. If you wish to vote on the
Internet, you must do so no later than September 19, 2022 at 8:30
a.m. (Eastern Time). If you vote prior to the Meeting using any
other method, your Proxy Instrument must be received by Odyssey
Trust Company no later than September 19, 2022 at 8:30 a.m.
(Eastern Time). If the Meeting is adjourned, your proxy or voting
instructions must be received at least 48 hours before the
beginning of any adjournment(s) or postponement(s) of the
Meeting.
If you are a non-registered shareholder (for example, if you hold
shares of the Corporation in an account with a broker or another
intermediary), you should follow the voting procedures described in
the form of proxy or voting instruction form provided by your
broker or intermediary or call your broker or intermediary for
information as to how you can vote your shares. Without specific
instructions, brokers and their agents and nominees are prohibited
from voting shares for the broker’s clients. Therefore, each
non-registered shareholder should ensure that voting instructions
are communicated to the appropriate person well in advance of the
Meeting. Note that the deadlines set by your broker or intermediary
for submitting your form of proxy or voting instruction form may be
earlier than the dates described above.
You may also vote your shares in person at the Meeting. If you are
a non-registered shareholder, you may not vote your shares at the
Meeting, or any adjournment(s) or postponement(s) thereof, unless
you obtain a legal proxy from the registered holder of the shares
giving you the right to do so.
Whether or not you plan to attend the Meeting, we encourage you to
read this proxy statement and promptly vote your
shares. For specific instructions on how to vote
your shares, please refer to the section entitled “How You Can
Vote” and to the instructions on your proxy or voting
instruction card.
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DATED as of August 31, 2022
By Order of the Board of Directors
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/s/ George Allen
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George Allen
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Chairman
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TABLE OF CONTENTS
PROXY STATEMENT FOR THE 2022 ANNUAL GENERAL MEETING OF
SHAREHOLDERS TO BE HELD ON SEPTEMBER 21, 2022
This proxy statement contains information about the 2022 annual
general meeting of shareholders (the “Meeting”) of
Lowell Farms Inc., to be held on September 21, 2022, beginning at
8:30 a.m. (Eastern Time), at Odyssey Trust Company, 67 Yonge
St., Suite 702, Toronto, Ontario, M5E IJ8. The board of directors
(the “Board”) is using this proxy statement to
solicit proxies for use at the Meeting. Unless the context
otherwise requires, references to “we,”
“us,” “our,”
“Company,” “Corporation,”
“Lowell Farms,” or similar terms refer to Lowell
Farms Inc. The mailing address of our principal executive offices
is 19 Quail Run Circle, Suite B, Salinas, California 93907.
All properly submitted proxies will be voted in accordance with the
instructions contained in those proxies. If no instructions are
specified, the proxies will be voted in accordance with the Board’s
recommendation for each of the matters outlined in the accompanying
Notice of Meeting.
A shareholder whose shares are directly registered on the books of
the Corporation maintained by the transfer agent
(“Registered Shareholder”) of the Corporation who
has given a proxy may revoke the proxy at any time prior to use by:
(i) attending the Meeting and voting in person; (ii) depositing an
instrument in writing executed by such Registered Shareholder or by
his or her attorney authorized in writing, or, if the Registered
Shareholder is a corporation, by an authorized officer or attorney
thereof: (a) at the registered office of the Corporation at any
time prior to 5:00 p.m. (Eastern Time) on the last business day
preceding the day of the Meeting or any adjournment(s) of the
Meeting; or (b) with the Chair of the Meeting on the day of the
Meeting or any adjournment(s) or postponement(s) thereof; or (iii)
any other manner permitted by law.
We mailed this proxy statement and our annual report for the fiscal
year ended December 31, 2021 (“Annual
Report”), to shareholders on or about August 31, 2022.
We are an “emerging growth company” under applicable U.S. federal
securities laws and, therefore, permitted to conform with certain
reduced public company reporting requirements. As an emerging
growth company, we provide in this proxy statement the scaled
disclosure permitted under the U.S. Jumpstart Our Business Startups
Act of 2012 (the “JOBS Act”). In addition, as an
emerging growth company, we are not required to conduct votes
seeking approval, on an advisory basis, of the compensation of our
named executive officers or the frequency with which such votes
must be conducted. We may take advantage of these exemptions for up
to five years or such an earlier time that we are no longer an
emerging growth company. We will cease to be an emerging growth
company if we have more than $1.07 billion in annual revenues
as of the end of a fiscal year, if we are deemed to be a
large-accelerated filer under the rules of the U.S. Securities and
Exchange Commission (the “SEC”) or if we issue
more than $1.00 billion of non-convertible debt over a
three-year period. We currently expect to cease filing as an
emerging growth company no later than January 1, 2027.
Important Notice Regarding the Availability of Proxy
Materials for the Annual General Meeting of Shareholders to be Held
on September 21, 2022:
This proxy statement and our Annual Report for the fiscal
year ended December 31, 2021, are available for viewing,
printing, and downloading at: ir.lowellfarms.com
A copy of our Annual Report will be furnished without charge to any
shareholder upon written request to Mr. Steve Neil via e-mail at
steve@lowellfarms.com. This proxy statement is also available on
the SEC’s website at www.sec.gov and on SEDAR
at www.sedar.com
GENERAL INFORMATION ABOUT THE ANNUAL GENERAL
MEETING AND VOTING
Proxy Materials
Why am I receiving these materials?
The Board is using this proxy statement to solicit proxies for use
at the Meeting to be held on September 21, 2022 at Odyssey Trust
Company, 67 Yonge St., Suite 702, Toronto, Ontario, M5E IJ8. The
cost of any solicitation will be borne by the Corporation. Proxies
may also be solicited personally by employees of the Corporation at
nominal cost to the Corporation.
As a shareholder, you are invited to attend the Meeting and are
entitled and requested to vote on the business items described in
this proxy statement. This proxy statement is furnished in
connection with the solicitation of proxies by or on behalf of the
management of the Corporation and the Board. This proxy statement
is designed to assist you in voting your shares and includes
information that we are required to provide under the rules of the
SEC and applicable Canadian securities laws.
These proxy materials are being sent to both registered and
non-registered shareholders. In some instances, the Corporation has
distributed copies of the Notice, the proxy statement, and the
accompanying Proxy Instrument (collectively, the
“Documents”) to clearing agencies, securities
dealers, banks and trust companies, brokerage houses, other
custodians, nominees, and fiduciaries or their nominees
(collectively “Intermediaries,” and each an
“Intermediary”) for onward distribution to
non-registered shareholders whose shares are held by or in the
custody of those Intermediaries (“Non-Registered
Shareholders” or “Beneficial
Owners”).
Existing regulatory policy requires Intermediaries to forward all
proxy-related materials to and seek voting instructions from
Non-Registered Shareholders in advance of shareholder meetings. The
various Intermediaries have their own mailing procedures and
provide their own return instructions to clients, which should be
carefully followed by Non-Registered Shareholders in order to
ensure that their subordinate voting shares
(“Shares”) are voted at the
Meeting. Often the form of proxy supplied to a Non-Registered
Shareholder by an Intermediary is identical to the form of proxy
provided by the Corporation to Registered Shareholders. However,
its purpose is limited to instructing the Registered Shareholder
(i.e., the Intermediary or agent or nominee thereof) how to vote on
behalf of the Non-Registered Shareholder. The majority of
Intermediaries now delegate responsibility for obtaining
instructions from clients to Broadridge Financial Solutions, Inc.
(“Broadridge”). Broadridge typically prepares a
machine-readable voting instruction form (a
“VIF”), mails those forms to Non-Registered
Shareholders and asks Non-Registered Shareholders to return the
forms to Broadridge, or otherwise communicate voting instructions
to Broadridge (by way of the internet or telephone, for example).
Broadridge then tabulates the results of all instructions received
and provides appropriate instructions respecting the voting of
shares to be represented at a meeting. For the purposes hereof, a
Non-Registered Shareholder who receives a Broadridge VIF cannot use
that form to vote Shares directly at the Meeting. The VIF
must be returned to Broadridge (or instructions respecting the
voting of Shares must be communicated to Broadridge) well in
advance of the Meeting in order to have the Shares
voted.
There are two kinds of Non-Registered Shareholders: (i) those who
object to their identity being known to the issuers of securities
which they own (“Objecting Beneficial Owners” or
“OBOs”), and (ii) those who do not object to their
identity being made known to the issuers of securities which they
own (“Non-Objecting Beneficial Owners” or
“NOBOs”). Subject to the provisions of applicable
Canadian securities laws, issuers may deliver proxy-related
materials directly to their NOBOs.
The Corporation is not sending proxy-related materials
directly to NOBOs and accordingly, NOBOs can expect to receive a
scannable VIF from Broadridge. These VIFs are to be completed and
returned to Broadridge in the envelope provided or by facsimile. In
addition, Broadridge provides both telephone voting and Internet
voting as described on the VIF itself which contains complete
instructions. Broadridge will tabulate the results of the VIFs
received from the NOBOs and will provide appropriate instructions
to Odyssey Trust Company, the transfer agent of the Corporation,
with respect to the Shares represented by the VIFs they receive.
Please return your voting instructions as specified in the
VIF.
The Corporation intends to pay for an Intermediary to
deliver the proxy-related materials to its OBOs and, as such, the
Corporation’s OBOs can expect to be contacted by Broadridge or
their Intermediaries or an agent or nominee thereof.
Although Non-Registered Shareholders may not be recognized directly
at the Meeting for the purposes of voting Shares registered in the
name of an Intermediary or an agent or nominee thereof, a
Non-Registered Shareholder may attend the Meeting as proxy holder
for the Registered Shareholder and vote its Shares in that
capacity. Should a Non-Registered Shareholder wish to attend the
Meeting and indirectly vote its Shares as proxy holder for an
applicable Registered Shareholder, such Non-Registered Shareholder
should enter its own name in the blank space on the Proxy
Instrument or VIF provided to such Non-Registered Shareholder and
return same in accordance with the instructions provided
thereon.
What is included in the proxy
materials?
The proxy materials include:
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our Notice of Meeting; |
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our proxy statement for the
Meeting; |
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a Proxy Instrument or voting
instruction card; and |
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our 2021 Annual Report. |
What information is contained in this proxy
statement?
The information in this proxy statement relates to the proposals to
be voted on at the Meeting, the voting process, our Board and board
committees, corporate governance, the compensation of our directors
and executive officers, and other required information.
I share an address with another shareholder, and we
received only one paper copy of the proxy materials. How may I
obtain an additional copy?
If you share an address with another shareholder, you may receive
only one set of proxy materials unless you have provided contrary
instructions.
A separate set of materials will be sent promptly following receipt
of your request.
If you are a shareholder of record and wish to receive a separate
set of proxy materials in the future, or if you have received
multiple sets of proxy materials and would like to receive only one
set in the future, please contact Odyssey Trust Company at:
Odyssey Trust Company
67 Yonge St., Suite 702
Toronto, Ontario, M5E IJ8
shareholders@odysseytrust.com
If you are a Beneficial Owner and wish to receive a separate set of
proxy materials in the future, or if you have received multiple
sets of proxy materials and would like to receive only one set in
the future, please contact your bank or broker directly.
Shareholders also may write to or email us at the address below to
request a separate copy of the proxy materials:
Lowell Farms Inc.
Attn: Corporate Secretary
19 Quail Run Circle, Suite B
Salinas, California 93907
ir@lowellfarms.com
(831) 998-8214
Note that you should allow more time for receipt and processing of
physical mail than under normal circumstances as the Corporation
could again become subject to “stay-at-home” or similar orders in
connection with the novel coronavirus
(“COVID-19”).
Who pays the cost of soliciting proxies for the
Meeting?
The Corporation will bear the cost of solicitation. This
solicitation of proxies is being made to shareholders by mail but
may be supplemented by telephone or other personal contacts.
The Corporation will reimburse Intermediaries for forwarding proxy
materials to beneficial shareholders.
What items of business will be voted on at the
Meeting?
The business items to be voted on at the Meeting are:
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the election of directors for the
forthcoming year from the nominees proposed by the Board of the
Corporation; |
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the appointment of GreenGrowth CPAs
as auditors for the Corporation and the authorization of the Board
to fix the auditors’ remuneration and terms of engagement; and |
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the transaction of such other
business as may properly come before the Meeting or any
adjournment(s) thereof. |
What are my voting choices?
You may vote “FOR” or “WITHHOLD” for the election of
nominees for election as directors and “FOR” or
“WITHHOLD,” for the appointment of GreenGrowth CPAs, as
auditors for the ensuing year and the authorization of the Board to
fix the auditor’s remuneration and set the terms of engagement.
How does the Board recommend that I
vote?
Our Board recommends that you vote your shares “FOR” each of its
nominees for election to the Board and “FOR” the appointment of
GreenGrowth CPAs as auditors for the ensuing year and the
authorization of the Board to fix the auditor’s remuneration and
set the terms of engagement.
What vote is required to approve each
item?
A quorum for the transaction of business at a meeting of
shareholders is present if at least two shareholders who, in the
aggregate, hold or represent in the aggregate not less than 20% of
the issued shares entitled to be voted at the meeting are present
in person or represented by proxy, irrespective of the number of
persons actually present at the meeting.
If you indicate “WITHHOLD” in respect to the election of
directors or the appointment and remuneration of the auditors, your
vote will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business at the Meeting.
Broker non-votes will be counted for determining the
presence or absence of a quorum for the transaction of business at
the Meeting, but will not be considered votes cast with respect to
the election of any director nominee or the appointment and
remuneration of the auditors.
Proposal
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Required Vote
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1. The election of directors
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Ordinary resolution, whereby only votes “FOR” will affect the
outcome
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2. Appointment and remuneration of auditors
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Ordinary resolution, whereby only votes “FOR” will affect the
outcome
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What happens if additional items are presented at the
Meeting?
As of the date of this proxy statement, management of the
Corporation knows of no such amendments, variations, or other
matters to come before the Meeting. However, if other matters
properly come before the Meeting, it is the intention of the
persons named in the enclosed Proxy Instrument to vote such proxy
according to their best judgment.
Where can I find the voting results?
We expect to announce preliminary voting results at the Meeting and
to publish final results in a current report on Form 8-K that we
will file with the SEC and in a press release that we will file in
Canada with the applicable Canadian securities commissions or
similar regulatory authorities promptly following the Meeting. Both
the Form 8-K and press release will also be available on our
website at https://ir.lowellfarms.com/.
How
You Can Vote
What shares can I vote?
You are entitled to vote all the shares that you own on the Record
Date, including (1) shares held directly in your name as the
shareholder of record and (2) shares held for you as the
Beneficial Owner through an Intermediary. As of the Record Date,
there were 351 shareholders of record holding 100,613,094
Subordinate Voting Shares and one shareholder of record holding
202,590 Super Voting Shares.
REGISTERED SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON
TO REPRESENT HIM, HER OR IT AT THE MEETING OTHER THAN THE PERSON(S)
DESIGNATED IN THE PROXY INSTRUMENT either by striking out
the names of the persons designated in the Proxy Instrument and by
inserting the name of the person or company to be appointed in the
space provided in the Proxy Instrument or by completing another
proper form of proxy and, in either case, delivering the completed
proxy to the Corporation’s transfer agent by using the envelope
provided or by mailing the proxy to Odyssey Trust Company, 67 Yonge
St., Suite 702, Toronto, Ontario, M5E 1J8 (Attention: Proxy
Department). You may also vote on the Internet by going to
https://odysseytrust.com/login/, clicking on VOTE and
following the instructions. You will need your control number
located on the Proxy Instrument.
What is the difference between holding shares as a
shareholder of record and as a Beneficial Owner?
Shareholder of Record
If your shares are registered directly in your name with our
transfer agent, Odyssey Trust Company, you are the shareholder of
record of the shares. As the shareholder of record, you have the
right to grant a proxy to vote your shares to representatives from
the Corporation or to another person, or to vote your shares at the
Meeting. You have received a proxy card to use in voting your
shares either by mail or via the Internet.
Beneficial Owner
If your shares are held through an Intermediary, then it is likely
that they are registered in the name of the nominee, and you are
the Beneficial Owner of shares held in street name.
As the Beneficial Owner of shares held for your account, you have
the right to direct the registered holder to vote your shares as
you instruct, and you also are invited to attend the Meeting. Your
Intermediary has provided a voting instruction card for you to use
in directing how your shares are to be voted. However, since a
Beneficial Owner is not the shareholder of record, you may not vote
your shares at the Meeting, or any adjournment(s) or
postponement(s) thereof, unless you obtain a legal proxy from the
registered holder of the shares giving you the right to do so.
How can I vote at the Meeting?
Shareholders who attend the Meeting may be provided with a ballot
with which they can cast their vote or a vote may proceed by way of
a show of hands.
Even if you plan to attend the Meeting, we recommend that you also
submit your proxy or voting instructions as described herein so
that your vote will be counted if you later decide not to
attend.
How can I vote without attending the
Meeting?
Whether you hold your shares as a shareholder of record or as a
Beneficial Owner, you may direct how your shares are to be voted
without attending the Meeting or any adjournment(s) or
postponement(s) thereof. If you are a shareholder of record, you
may vote by submitting a proxy. If you hold shares as a Beneficial
Owner, you may vote by submitting voting instructions to the
registered owner of your shares. Each registered shareholder
submitting a proxy has the right to appoint one or more proxy
holders (but not more than five) to represent the shareholder at
the Meeting to the extent and with the powers conferred by the
proxy.
For directions on how to vote, please refer to the following
instructions and those included on your proxy or voting instruction
card. A proxy form will not be valid unless completed and deposited
in accordance with the instructions set out in the proxy form.
Voting by Internet
Shareholders may vote via the Internet by following the
instructions on the proxy or voting instruction card.
Voting by Mail
Shareholders may vote by mail by signing, dating, and returning
their proxy or voting instruction card to the address indicated on
the proxy or voting instruction card.
How will my shares be voted?
Shares represented by properly executed proxies in favor of persons
designated in the printed portion of the enclosed Proxy Instrument
WILL, UNLESS OTHERWISE INDICATED BY THE SHAREHOLDER, BE
VOTED FOR THE ELECTION OF
DIRECTORS AND FOR THE
APPOINTMENT OF GREENGROWTH CPAs AS THE AUDITORS OF THE CORPORATION,
AND THE AUTHORIZATION OF THE BOARD OF DIRECTORS TO FIX THE
AUDITORS’ REMUNERATION AND TERMS OF ENGAGEMENT. The shares
represented by the Proxy Instrument will be voted or withheld from
voting in accordance with the instructions of the shareholder on
any ballot that may be called for and, if the shareholder specifies
a choice with respect to any matter to be acted upon, the shares
will be voted accordingly. The enclosed Proxy Instrument confers
discretionary authority on the persons named therein with respect
to amendments or variations to matters identified in the Notice or
other matters which may properly come before the Meeting. As of the
date of this proxy statement, management of the Corporation knows
of no such amendments, variations, or other matters to come before
the Meeting. However, if other matters properly come before the
Meeting, it is the intention of the persons named in the enclosed
Proxy Instrument to vote such proxy according to their best
judgment.
Will shares I hold in my brokerage account be voted if
I do not provide timely voting instructions?
If your shares are held through a brokerage firm, they will be
voted as you instruct on the voting instruction card provided by
your broker. If you sign and return your card without giving
specific instructions, your shares will be voted in accordance with
the recommendations of our Board.
If you do not return your voting instruction card on a timely
basis, your broker will be prohibited from voting your shares
without your instructions on the election of directors and on any
other proposal. These “broker non-votes” will be counted
only for the purpose of determining whether a quorum is present at
the Meeting and not as votes cast. Such
broker non-votes will have no effect on the outcome of
the matter.
Will shares that I own as a shareholder of record be
voted if I do not timely return my proxy card?
Shares that you own as a shareholder of record will be voted as you
instruct on your proxy card. If you sign and return your proxy card
without giving specific instructions, they will be voted in
accordance with the procedure set out above under the heading
“How will my shares be voted?”
If you do not timely return your proxy card, your shares will not
be voted unless you or your proxy holder attends the Meeting and
any adjournment(s) or postponement(s) thereof and votes during the
Meeting as described above under the heading “How can I vote at
the Meeting?”
When is the deadline to vote by
proxy?
If you hold shares as the shareholder of record, your vote by proxy
must be received no later than 8:30 a.m. (Eastern Time) on
September 19, 2022, or at least 48 hours prior to any
adjournment(s) of the Meeting or must be deposited at the Meeting
with the Chair of the Meeting before the commencement of the
Meeting or any adjournment(s) thereof.
If you hold shares as a Beneficial Owner, please follow the voting
instructions provided by Broadridge or your Intermediary.
May I change or revoke my vote?
Every proxy may be revoked by an instrument in writing that is
received (1) at the registered office of the Company at any time up
to and including 5:00 p.m. (Eastern time) on the last business day
before the day set for the holding of the Meeting or any adjourned
or postponed meeting at which the proxy is to be used or (2) at the
Meeting or any adjourned or postponed meeting, by the Chair of the
Meeting or adjourned or postponed meeting, before any vote in
respect of which the proxy has been given has been taken. If the
shareholder for whom the proxy holder is appointed is an
individual, the instrument must be signed by the shareholder or the
shareholder’s legal personal representative or trustee in
bankruptcy. If the shareholder for whom the proxy holder is
appointed is a corporation, the instrument must be signed by the
corporation or by a representative appointed for the
corporation.
Shareholder Proposals and Director
Nominations
What is the deadline to submit shareholder proposals to
be included in the proxy materials for next year’s annual
meeting?
The Corporation is subject to the rules of both the SEC under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and provisions of the Business Corporations Act
(British Columbia) (“BCBCA”) with respect to
shareholder proposals to be included in the Corporation’s proxy
materials. As clearly indicated under the BCBCA and SEC rules under
the Exchange Act, simply submitting a shareholder proposal does not
guarantee its inclusion in the proxy materials.
Shareholder proposals submitted pursuant to SEC rules under the
Exchange Act for inclusion in the Corporation’s proxy materials for
next year’s annual meeting must be received no later than 120 days
before the date of the Corporation’s proxy statement is released to
shareholders in connection with the last annual general meeting (in
this case, May 3, 2023), and must be submitted to Mr. Steve Neil
via e-mail at steve@lowellfarms.com. Such proposals must
also comply with all applicable provisions of Rule 14a-8 under the
Exchange Act.
Additionally, to comply with the SEC’s universal proxy rules (once
effective as of August 31, 2022), stockholders who intend to
solicit proxies in support of director nominees other than the
Company’s nominees must provide notice that sets forth the
information required by Rule 14a-19 under the Exchange Act no later
than July 23, 2023.
The BCBCA also sets out the requirements for a valid proposal and
provides for the rights and obligations of the Corporation and the
submitter upon a valid proposal being made. Proposals submitted
under the applicable provisions of the BCBCA that a shareholder
intends to present at next year’s annual meeting and wishes to be
considered for inclusion in the Corporation’s proxy statement and
form of proxy relating to next year’s annual meeting must be
received at least three (3) months before the anniversary of
the Corporation’s last annual general meeting (in this case, June
21, 2023). Such proposals must also comply with all applicable
provisions of the BCBCA and the regulations thereunder.
Proposals that are not timely submitted or are submitted to the
incorrect address or other than to the attention of our corporate
secretary may, at our discretion, be excluded from our proxy
materials.
See below under the heading “How may I nominate director
candidates for consideration at a meeting?” for a description
of the procedures through which shareholders may nominate director
candidates for consideration.
How may I nominate director candidates for
consideration at a meeting?
Shareholders who wish to submit director nominees for consideration
must give written notice of their intention to do so to our
corporate secretary at the address set forth below under the
heading “How do I obtain additional copies of this proxy
statement or voting materials?”. Any such notice also must be
in the form and include the information required by our Articles
(“Articles”) (which may be obtained as provided
below under the heading “How may I obtain financial and other
information about Lowell Farms Inc.?”). In addition,
shareholders must comply with the deadlines for submission and
other requirements described below. See “Advance Notice
Provision” under “Proposal 1—Election of Directors”
in this proxy statement.
How may I recommend candidates to serve as
directors?
Shareholders may recommend director candidates for consideration by
the Board by writing to our corporate secretary at the address set
forth below under the heading “How do I obtain additional
copies of this proxy statement or voting materials?” in
accordance with the notice provisions described above under the
heading “How may I nominate director candidates for
consideration at a meeting?”. To be in proper written form,
such notice must set forth the nominee’s name, age, business, and
residential address, and principal occupation or employment for the
past five (5) years, their direct or indirect beneficial
ownership in, or control or direction over, any class of securities
of the Corporation, including the number or principal amount and
such other information on the nominee and the nominating
shareholder as set forth in the Articles, which may be obtained in
accordance with the instructions below under the heading “How
may I obtain financial and other information about Lowell Farms
Inc.?”
Description of the Corporation’s Voting
Securities
As of the Record Date, there were 351 shareholders of record
holding 100,613,094 Subordinate Voting Shares and one shareholder
of record holding 202,590 Super Voting Shares.
The Subordinate Voting Shares are “restricted securities” within
the meaning of such term under applicable Canadian securities laws.
Under Canadian securities laws, a “restricted security” includes an
equity security of a reporting issuer if there is another class of
securities of the reporting issuer that carries a greater number of
votes per security relative to the equity security.
Holders of Subordinate Voting Shares are entitled to notice of and
to attend any meeting of the shareholders of the Corporation,
except a meeting of which only holders of another particular class
of shares of the Corporation have the right to vote. At each such
meeting, holders of Subordinate Voting Shares are entitled to one
vote in respect of each Subordinate Voting Share held.
Holders of Super Voting Shares are entitled to notice of and to
attend any meeting of the shareholders of the Corporation, except a
meeting of which only holders of another particular class of shares
of the Corporation have the right to vote. At each meeting of
shareholders, holders of Super Voting Shares are entitled to 1,000
votes per share.
Obtaining Additional
Information
How may I obtain financial and other information about
Lowell Farms Inc.?
Financial and other information is provided in the Corporation’s
audited consolidated financial statements and management’s
discussion and analysis for the fiscal year ended December 31,
2021, which are included in our Annual Report. The Company is
mailing the Annual Report along with this proxy statement and the
enclosed Proxy Instrument. In addition, we will furnish
a copy of our Annual Report without charge to any shareholder who
so requests by writing to our corporate secretary at the address
below under the heading in “How do I obtain additional copies
of this proxy statement or voting materials?”. The Annual
Report is also available free of charge on our website at
https://ir.lowellfarms.com/sec-filings.
By writing to us, shareholders also may obtain, without charge, a
copy of the Articles, Code of Ethics and Business Conduct
(“Code of Conduct”), and Board committee
charters.
What if I have questions for the Corporation’s transfer
agent?
If you are a shareholder of record and have questions concerning
share certificates, ownership transfer, or other matters relating
to your share account, please contact our transfer agent at the
following address:
Odyssey Trust Company
67 Yonge St., Suite 702
Toronto, Ontario, M5E IJ8
shareholders@odysseytrust.com
How do I obtain additional copies of this proxy
statement or voting materials?
If you need additional copies of this proxy statement or voting
materials, please contact us at:
Lowell Farms Inc.
Attn: Corporate Secretary
19 Quail Run Circle, Suite B
Salinas, California 93907
ir@lowellfarms.com
OVERVIEW OF PROPOSALS TO BE VOTED
ON
Proposals 1 and 2 are included in this proxy statement at the
direction of our Board. Our Board unanimously recommends that you
vote “FOR” the election of the nominees in Proposal 1 and
“FOR” the appointment and remuneration of auditors in
Proposal 2.
PROPOSAL 1—ELECTION OF
DIRECTORS
The Articles provide that the number of directors should not be
fewer than three (3) directors. There are currently seven
directors of the Corporation. At the Meeting, it is proposed to
elect seven (7) directors.
The Board proposes to nominate at the Meeting each person whose
name is set forth in the table below, each to serve as a director
of the Corporation until the next Meeting at which the election of
directors is considered, or until such person’s successor is duly
elected or appointed, unless such person resigns, is removed or
otherwise ceases to be a director in accordance with the Articles
or the BCBCA. The persons named in the accompanying Proxy
Instrument intend to vote for the election of such persons at the
Meeting, unless otherwise directed. Management does not contemplate
that any of the nominees will be unable to serve as a director of
the Corporation. Please see the discussion of the Voting Agreement
set forth in the Security Ownership of Certain Beneficial Owners
and Management section of this proxy statement relating to the
number of directors and the composition of the Board of
Directors.
The following table and the notes thereto set out the name of each
of the current directors, each proposed by management to be
nominated for election as a director of the Corporation at the
Meeting, their respective positions, and the period during which
they have been a director of the Corporation.
Name
|
|
Age
|
|
Position(s)
|
|
Location of Residence
|
|
Director Since
|
George Allen (1)
|
|
47
|
|
Chairman
|
|
New York, U.S.
|
|
April 2020
|
Mark Ainsworth
|
|
48
|
|
Chief Executive Officer and Director
|
|
California, U.S.
|
|
April 2019
|
Stephanie Harkness (2)
|
|
78
|
|
Director
|
|
California, U.S.
|
|
April 2019
|
William Anton (1)(2)
|
|
80
|
|
Director
|
|
Nevada, U.S.
|
|
April 2019
|
Brian Shure
|
|
46
|
|
Chief Financial Officer and Director
|
|
District of Columbia, U.S.
|
|
April 2020
|
Bruce Gates
|
|
61
|
|
Director
|
|
Montana, U.S.
|
|
October 2020
|
Jeffrey Monat (1)
|
|
44
|
|
Director
|
|
New Jersey, U.S.
|
|
January 2022
|
____________
(1) Member of the Audit Committee.
(2) Member of the Compensation and Corporate Governance
Committee.
Biographical Information
The biographies of the proposed nominees for the Board are set out
below.
George Allen
George Allen has served as the non-executive Chairman and Director
of the Company since April 2020. Mr. Allen is the Founder of
Geronimo Capital LLC, a cannabis-industry investment firm, and has
been its Managing Member since April 2019. Mr. Allen was the
President of Acreage Holdings, a cannabis multi-state operator,
from August 2017 to April 2019. At the time of his departure from
Acreage Holdings, it was the largest multi-state operator with the
broadest footprint in the United States. Mr. Allen was the Chief
Investment Officer of Cambridge Information Group, a family
investment office, from July 2015 to August 2017. Mr. Allen holds a
Bachelor of Science degree in Mechanical Engineering from Yale
University. From 2011 to 2014, Mr. Allen led an acquisition-driven
restructuring of Blucora (NASDAQ: BCOR) into a leading provider of
wealth management and tax software. Prior to Blucora, Mr. Allen
spent nine years at Warburg Pincus, where he managed investments in
the communication, media, and technology sectors. He also worked at
Goldman Sachs in New York and Hong Kong, where he invested capital
in distressed securities. The Company believes that Mr. Allen’s
extensive public company and executive-level experience and his
expertise in strategy, mergers and acquisitions, and corporate
finance qualify him to serve as our Chairman.
Mark Ainsworth
Mark Ainsworth serves as Chief Executive Officer of the Corporation
and has also served as a director of the Corporation since April
2019. Mr. Ainsworth previously served as the Company’s Chief
Operating Officer (November 2019 to April 2020) and Executive Vice
President (April 2019 to April 2020) and as Executive Vice
President of Indus Holding Company (inception to April 2019). In
2006, Mr. Ainsworth founded Pastry Smart, an American Humane
Certified and Organic bakery and confectionery manufacturer. He has
been a member of the American Culinary Federation since 2013. The
Company believes that Mr. Ainsworth’s long history as an
entrepreneur and as a co-founder of the Company as well as his
executive-level experience qualify him to serve as a member of our
Board.
Stephanie Harkness
Stephanie Harkness has served as an independent director of the
Company since April 2019. Ms. Harkness is the Managing General
Partner of OPES Holdings, LLC, a venture capital and private equity
firm. From 1980 to 2011, Ms. Harkness was CEO of Pacific Plastics
& Engineering, a leading medical device manufacturer in the San
Francisco Bay area. Ms. Harkness was formerly the Chairperson of
the National Association of Manufacturers, a member of the Board of
Directors for Dignity Health Hospital, and Chair of the Silicon
Valley Capital Club Board of Governors. Ms. Harkness holds a B.S.
degree from California Polytechnic State University. The Company
believes that Ms. Harkness’ extensive experience as a senior
executive and director and her long history of value creation with
companies at both early and later stages of their development
qualify her to serve as a member of our Board.
William Anton
William Anton has served as an independent director of the Company
since April 2019. Mr. Anton has served as Chairman and CEO of Anton
Enterprises, Inc. since 2005 and Managing Partner of Anton Venture
Capital Fund LLC since 2004. Prior to Anton Enterprises, he was
Chairman of Anton Airfood, Inc. from 1989 to 2005, the airport
foodservice company he founded. Mr. Anton is Chairman Emeritus of
the Board of Trustees of the Culinary Institute of America. He also
serves on the Board of Trustees of Media Research Corporation, the
Board of Directors of QSpex Technologies Inc., and is a member of
the Board of Governors of the Thalians Foundation for Mental Health
at Cedars-Sinai. Mr. Anton formerly served on the Board of
Directors of Air Chef Corporation, a leading private aviation
catering firm in North America, the Board of Directors for Morton’s
Restaurant Group, the Board of the British Restaurant Association,
the Board of Trustees of the William F. Harrah College – University
of Nevada in Las Vegas, and the National Restaurant Association
Education Foundation. The Company believes that Mr. Anton’s
extensive experience as a senior executive and director and his
lengthy history of value-creation as a founder and entrepreneur
qualify him to serve as a member of our Board.
Brian Shure
Brian Shure has served as a director of the Company since April
2020 and was appointed as Chief Financial Officer in November 2020.
Mr. Shure leads Ambrose Capital Partners, an investment management
firm, directing public and private investments where he has served
as President since 2008. Mr. Shure served as Chief Financial
Officer of MedData, a revenue cycle management company in the
healthcare industry, where he oversaw significant organic and
M&A growth. Mr. Shure joined MedData following the company’s
acquisition of Cardon Outreach, where he led finance and M&A
strategy as Chief Financial Officer. The Company believes that Mr.
Shure’s extensive experience as a financial executive and his
expertise in mergers and acquisitions and corporate finance qualify
him to serve as a member of our Board.
Bruce Gates
Bruce Gates has served as an independent director of the Company
since October 2020. Mr. Gates founded and since November 2017 has
served as the President of Three Oaks Strategies, LLC, a
multi-disciplined consultancy firm, and of Three Oaks Asset
Management, LLC, a family office and venture capital firm. Mr.
Gates was the Senior Vice President, External Affairs for Altria
Group, Inc. from 2008 until October 2017. Mr. Gates served as a
director of Cronos Group Inc. (Nasdaq: CRON) and as the Chair of
its compensation committee from March 2019 to March 2020. Mr. Gates
received his B.A. from the University of Georgia. The Company
believes that Mr. Gates’ extensive experience as a senior executive
and director qualifies him to serve as a member of our Board.
Jeffrey Monat
Jeffrey Monat has served as an independent director of the Company
since January 2022. Mr. Monat has been an investor in cannabis
companies since 2013, funding both cultivation and ancillary
businesses. Since 2018, he has been a Senior Partner at Merida
Capital Holdings, a private equity firm targeting fundamental
growth drivers underpinning the rapid development of the cannabis
industry. He also sits on Merida Capital's Investment Committee.
From 2000 to 2002, he was with Goldman Sachs, where he advised
clients on M&A transactions, financial valuation, and corporate
governance issues. He worked in the Goldman Sachs Principal
Strategies Group from 2002 to 2003, analyzing public-market
opportunities for the firm’s proprietary investment fund. From 2003
to 2010, he was an investment analyst at Rockbay Capital, where he
helped grow the firm to $1 billion in assets under management. From
2010 to 2012, he was with FrontPoint Rockbay, an event-driven hedge
fund in New York where he evaluated prospective investments and
helped build the firm’s investment analysis infrastructure. Mr.
Monat also served as a Senior Analyst at Seven Locks Capital, a
long/short equity hedge fund from 2012 to 2016 and was a Senior
Analyst at Sage Rock Capital, an event-driven hedge fund based in
New York from 2016 to 2018. In addition to his professional
accomplishments, Mr. Monat serves as treasurer and trustee of the
Friends Grow Friends Foundation, Inc., an after-school program that
helps children with special needs improve their social skills. Mr.
Monat has a Bachelor of Science in Economics from The Wharton
School of the University of Pennsylvania. The Company believes that
Mr. Monat's extensive experience as an investor in cannabis
companies and his expertise in the areas of finance and mergers and
acquisitions qualifies him to serve as a member of our Board.
The persons named in the accompanying Proxy Instrument (if named
and absent contrary directions) intend to vote the shares
represented thereby FOR the election of each of the
aforementioned named nominees unless otherwise instructed on a
properly executed and validly deposited proxy. Management of the
Corporation does not contemplate that any nominees named above will
be unable to serve as a director but, if that should occur for any
reason prior to the Meeting, the persons named in the enclosed form
of proxy reserve the right to vote for another nominee in their
discretion.
Replacement or Removal of Directors
To the extent that directors are elected or appointed to fill
casual vacancies or vacancies arising from the removal of
directors, in both instances whether by shareholders or directors,
the directors shall hold office until the remainder of the
unexpired portion of the term of the departed director that was
replaced.
Advance Notice Provision
Our Articles include an advance notice provision for the nomination
for election of directors (the “Advance Notice
Provision”). The Advance Notice Provision provides that
any shareholder seeking to nominate a candidate for election as a
director (a “Nominating Shareholder”) at any
annual meeting of the shareholders, or at any special meeting of
shareholders if one of the purposes for which the special meeting
was called was the election of directors, must give timely notice
in proper written form.
In order for a nomination made by a Nominating Shareholder to be
timely notice (a “Timely Notice”), the Nominating
Shareholder’s notice must be received by the corporate secretary of
the Company at the principal executive offices or registered office
of the Company: (a) in the case of an annual meeting of
shareholders (including an annual and special meeting), no later
than the 60th day before the date of the meeting; provided,
however, if the first public announcement made by the Company of
the date of the meeting (each such date being the “Notice
Date”) is less than 50 days before the meeting date,
notice by the Nominating Shareholder may be given not later than
the close of business on the 20th day following the Notice Date;
and (b) in the case of a special meeting (which is not also an
annual meeting) of shareholders called for any purpose which
includes the election of directors to the Board, not later than the
close of business on the 15th day following the Notice Date.
To be in proper written form, a Nominating Shareholder’s notice to
the corporate secretary must comply with all applicable provisions
of the Articles and disclose or include, as applicable:
|
(a)
|
as
to each person whom the Nominating Shareholder proposes to nominate
for election as a director (a “Proposed Nominee”):
|
|
(i)
|
the name, age, business, and residential address of the Proposed
Nominee;
|
|
|
|
|
(ii)
|
the principal occupation/business or employment of the Proposed
Nominee, both presently and for the past five years;
|
|
|
|
|
(iii)
|
the number of securities of each class of securities of the Company
beneficially owned, or controlled or directed, directly or
indirectly, by the Proposed Nominee, as of the record date for the
meeting of shareholders (if such date shall then have been made
publicly available and shall have occurred) and as of the date of
such notice;
|
|
|
|
|
(iv)
|
full particulars of any relationships, agreements, arrangements or
understandings (including financial, compensation or indemnity
related) between the Proposed Nominee and the Nominating
Shareholder, or any affiliates or associates of, or any person or
entity acting jointly or in concert with, the Proposed Nominee or
the Nominating Shareholder;
|
|
|
|
|
(v)
|
any other information that would be required to be disclosed in a
dissident proxy circular or other filings required to be made in
connection with the solicitation of proxies for election of
directors pursuant to the BCBCA or applicable securities law;
and
|
|
|
|
|
(vi)
|
written consent of each Proposed Nominee to be named as a nominee
and certifying that such Proposed Nominee is not disqualified from
acting as a director under the provisions of subsection 124(2) of
the BCBCA; and
|
|
(b)
|
as
to each Nominating Shareholder giving the notice, and each
Beneficial Owner, if any, on whose behalf the nomination is
made:
|
|
(i)
|
their name, business, and residential address;
|
|
|
|
|
(ii)
|
the number of securities of the Company or any of its subsidiaries
beneficially owned, controlled, or directed (directly or
indirectly) by the Nominating Shareholder or any other person with
whom the Nominating Shareholder is acting jointly or in concert
with respect to the Company or any of its securities, as of the
record date for the meeting of shareholders (if such date shall
then have been made publicly available and shall have occurred) and
as of the date of such notice;
|
|
|
|
|
(iii)
|
their interests in, or rights or obligations associated with, any
agreement, arrangement, or understanding, the purpose or effect of
which is to alter, directly or indirectly, the person’s economic
interest in a security of the Company or the person’s economic
exposure to the Company;
|
|
|
|
|
(iv)
|
any relationships, agreements, or arrangements, including
financial, compensation, and indemnity related relationships,
agreements, or arrangements, between the Nominating Shareholder or
any affiliates or associates of, or any person or entity acting
jointly or in concert with, the Nominating Shareholder and any
Proposed Nominee;
|
|
|
|
|
(v)
|
full particulars of any proxy, contract, relationship arrangement,
agreement, or understanding pursuant to which such person, or any
of its affiliates or associates, or any person acting jointly or in
concert with such person, has any interests, rights, or obligations
relating to the voting of any securities of the Company or the
nomination of directors to the Board;
|
|
|
|
|
(vi)
|
a representation that the Nominating Shareholder is a holder of
record of securities of the Company, or a Beneficial Owner,
entitled to vote at such meeting, and intends to appear in person
or by proxy at the meeting to propose such nomination;
|
|
|
|
|
(vii)
|
a representation as to whether such person intends to deliver a
proxy circular or form of proxy to any shareholder of the Company
in connection with such nomination or otherwise solicit proxies or
votes from shareholders of the Company in support of such
nomination; and
|
|
|
|
|
(viii)
|
any other information relating to such person that would be
required to be included in a dissident proxy circular or other
filings required to be made in connection with solicitations of
proxies for election of directors pursuant to the BCBCA or as
required by applicable securities law.
|
The chair of the meeting shall have the power to determine whether
a nomination was made in accordance with the notice procedures set
forth in the Articles and, if any proposed nomination is not in
compliance with such provisions, must declare that such defective
nomination will be disregarded.
Notwithstanding the foregoing, the Board may, in its sole
discretion, waive any requirement in the Advance Notice
Provision.
As of the date of this proxy statement, the Corporation has not
received any nominations under the Advance Notice Provision.
Corporate Cease Trade Orders, Bankruptcies, Penalties, or
Sanctions
To the Corporation’s knowledge, no proposed director is, as at the
date of this proxy statement, or has been, within the ten
(10) years prior to the date of this proxy statement, a
director, chief executive officer, or chief financial officer of
any company (including the Corporation) that: (i) while that
person was acting in that capacity was the subject of a cease trade
order or similar order, or an order that denied the relevant
company access to any exemption under securities legislation (an
“Order”) for a period of more than thirty
(30) consecutive days; or (ii) after that person ceased
acting in that capacity, was subject to an Order, which resulted
from an event that occurred while that person was acting in the
capacity of director, chief executive officer, or chief financial
officer.
To the Corporation’s knowledge, no proposed director is, as at the
date of this proxy statement, or has been, within the ten
(10) years prior to the date of this proxy statement, a
director or executive officer of any company (including the
Corporation) that while that person was acting in that capacity, or
within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement, or compromise with creditors or had a
receiver, receiver-manager, or trustee appointed to hold its
assets.
To the Corporation’s knowledge, no proposed director has, during
the ten (10) years prior to the date of this proxy statement,
become bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency, or became subject to or instituted any
proceedings, arrangement, or compromise with creditors, or had a
receiver, receiver-manager, or trustee appointed to hold assets of
the proposed director.
To the Corporation’s knowledge, no proposed director has been
subject to 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 been subject to any other penalties or
sanctions imposed by a court or regulatory body that would likely
be considered important to a reasonable securityholder in deciding
whether to vote for the proposed director.
Indebtedness of Directors, Executive Officers, and
Employees
None of (i) the individuals who are, or at any time since the
beginning of the last fiscal year of the Corporation were, a
director or executive officer of the Corporation, (ii) the proposed
nominees for election as a director of the Corporation, or (iii)
any associates of the foregoing persons, is or at any time
since the beginning of the most recently completed fiscal year of
the Corporation has been, indebted to the Corporation or any of its
subsidiaries or is a person whose indebtedness to another entity
is, or at any time since the beginning of the most recently
completed fiscal year of the Corporation has been, the subject of a
guarantee, support agreement, letter of credit, or other similar
arrangement or understanding provided by the Corporation or any of
its subsidiaries.
Requirements under the Business Corporations Act (British
Columbia)
Pursuant to the BCBCA, directors and officers are required to act
honestly and in good faith with a view to the best interests of the
Corporation. Under the BCBCA, subject to certain limited
exceptions, a director who holds a disclosable interest in a
material contract or transaction into which we have entered or
propose to enter shall not vote on any directors’ resolution to
approve the contract or transaction. A director or executive
officer has a disclosable interest under the BCBCA in a material
contract or transaction if the director or executive officer:
|
·
|
has a material interest in the
contract or transaction; |
|
·
|
is a director or executive officer
of a party who has a material interest in the contract or
transaction; or |
|
·
|
has a material interest in a party
who has a material interest in the contract or transaction. |
Generally, as a matter of practice, directors or officers who have
disclosed a material interest in any contract or transaction that
the Board is considering will not take part in any Board discussion
respecting that contract or transaction. If such directors were to
participate in the discussions, they would abstain from voting in
accordance with the BCBCA on any matters relating to matters in
which they have disclosed a disclosable interest under the
BCBCA.
Interests of Certain Persons in Matters to be Acted
Upon
Other than the election of directors, management of the Corporation
is not aware of any material interest, direct or indirect, by way
of beneficial ownership of securities or otherwise, of any person
who has been a director or executive officer of the Corporation at
any time since the beginning of the Corporation’s last fiscal year
or who is proposed to be a director of the Corporation or of any
associate or affiliate of any such persons, in any matter to be
acted upon at the Meeting.
Interests of Management of the Corporation and Others in
Material Transactions
Other than as described elsewhere in this proxy statement, there
are no material interests, direct or indirect, of any of our
directors or executive officers, any shareholder that beneficially
owns, or controls or directs, directly or indirectly, more than 10%
of the voting rights attached to all outstanding voting securities
of the Corporation, any director or executive officer of any such
shareholder or any associate or affiliate of any of the foregoing
persons, in any transaction since the commencement of the
Corporation’s most recently completed fiscal year or in any
proposed transaction which in either such case has materially
affected or would materially affect the Corporation or any of its
subsidiaries on a consolidated basis.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION OF THE NOMINEES IN PROPOSAL 1.
PROPOSAL 2—APPOINTMENT AND REMUNERATION OF
AUDITORS
The members of our Audit Committee and our Board believe the
appointment of GreenGrowth CPAs as our independent registered
public accounting firm is in the best interests of the Corporation
and our shareholders. GreenGrowth CPAs has been the independent
registered public accounting firm of the Corporation since April
29, 2019. Representatives of GreenGrowth CPAs are expected to be
present at the Meeting, have an opportunity to make a statement if
they desire to do so, and are expected to be available to respond
to appropriate questions.
Principal Independent Accountant Fees and
Services
Aggregate fees billed by GreenGrowth CPAs for the years ended
December 31, 2021, and December 31, 2020, are detailed in
the table below.
|
|
2021
($)
|
|
|
2020
($)
|
|
Audit Fees(1)
|
|
|
120,180 |
|
|
|
126,150 |
|
Audit-Related Fees(2)
|
|
|
— |
|
|
|
55,150 |
|
Tax Fees(3)
|
|
|
— |
|
|
|
— |
|
All Other Fees(4)
|
|
|
— |
|
|
|
39,200 |
|
Total Fees Paid
|
|
|
120,180 |
|
|
|
220,500 |
|
(1) Fees for audit service on an accrual basis.
(2) Fees not included in audit fees that are billed by the
independent registered public accounting firm for assurance and
related services that are reasonably related to the performance of
the audit or review of the financial statements.
(3) Fees for professional services rendered for tax
compliance, tax advice and tax planning.
(4) All fees billed by the independent registered public
accounting firm for products and services not included in the
foregoing categories, which consisted of the audit of the
historical financial statements of an acquisition target for 2020
and 2021.
Pre-Approval of Non-Audit Services
The Audit Committee will pre-approve the appointment of the
independent auditor for any non-audit service to be provided to the
Corporation. Before the appointment of the independent auditor for
any non-audit service, the Audit Committee will consider the
compatibility of the service with the independent auditor’s
independence. The Audit Committee may pre-approve the appointment
of the independent auditor for any non-audit services by adopting
specific policies and procedures, from time to time, for the
engagement of the independent auditor for non-audit services. Such
policies and procedures will be detailed as to the particular
service, and the Audit Committee must be informed of each service,
and the procedures may not include delegation of the Audit
Committee’s responsibilities to management. In addition, the Audit
Committee may delegate to one or more members the authority to
pre-approve the appointment of the independent auditor for any
non-audit service to the extent permitted by applicable law
provided that any pre-approvals granted pursuant to such delegation
shall be reported to the Audit Committee at its next scheduled
meeting.
Audit Committee Report
The material in this report is not “soliciting material,” is not
deemed “filed” with the SEC, and is not to be incorporated by
reference into any filing by Lowell Farms Inc. under the Securities
Act of 1933, as amended, or the Exchange Act.
The primary purpose of the Audit Committee is to assist the Board
in fulfilling its responsibilities for oversight of financial,
audit and accounting matters. In addition, the Audit Committee
reviews the financial reports and other financial information
provided by the Corporation to regulatory authorities and its
shareholders and reviews the Corporation’s system of internal
controls regarding finance and accounting, including auditing,
accounting and financial reporting processes.
The Audit Committee has reviewed and discussed the audited
financial statements of the Company for the fiscal year ended
December 31, 2021 with management and has discussed with
GreenGrowth CPAs, the Corporation’s independent registered public
accounting firm for the fiscal year ended December 31, 2021, those
matters required to be discussed by applicable requirements of the
Public Company Accounting Oversight Board (the “PCAOB”) and the
SEC. In addition, the Audit Committee discussed with GreenGrowth
CPAs its independence and received from GreenGrowth CPAs the
written disclosures and the letter required by applicable
requirements of the PCAOB. Finally, the Audit Committee discussed
with GreenGrowth CPAs, with and without management present, the
scope and results of GreenGrowth CPAs’ audit of such financial
statements.
Based on these reviews and discussions, the Audit Committee
recommended to the Board that such audited financial statements be
included in the Corporation’s Annual Report for the year ended
December 31, 2021.
Audit Committee of the Board
William Anton (Chair)
George Allen
Jeffrey Monat
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
THE APPOINTMENT AND REMUNERATION OF OUR AUDITORS IN PROPOSAL
2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The tables below sets forth information with respect to the
beneficial ownership of our Super Voting Shares and Subordinate
Voting Shares as of the Record Date by:
|
·
|
each person or entity known by us
to own beneficially more than 5% of our outstanding Subordinate
Voting Shares; |
|
|
|
|
·
|
each of our directors and executive
officers individually; and |
|
|
|
|
·
|
all of our executive officers and
directors as a group. |
The Super Voting Shares carry 1,000 votes per share. The
Subordinate Voting Shares carry one vote per share. As of the
Record Date, the Subordinate Voting Shares represented
approximately 33.2% of the voting power of our outstanding voting
securities and approximately 59.8% of the voting power of our
voting securities on a fully diluted basis, and the Super Voting
Shares represented approximately 66.8% of the voting power of
our outstanding voting securities and approximately 40.2% of the
voting power of our voting securities on a fully diluted basis.
Fully diluted calculations take into account Subordinate Voting
Shares issuable upon the conversion of outstanding debentures, the
redemption of Class B Common Shares of our subsidiary, Indus
Holding Company, and the exercise of outstanding warrants and
options and Subordinate Voting Shares subject to unvested
restricted stock units.
The Super Voting Shares are held by Robert Weakley. Mr. Weakley
served as Chairman and Chief Executive Officer of the Company from
the date of the reverse takeover transaction with Indus Holding
Company (the “RTO”) until April 2020 and thereafter as a member of
our Board until October 2020. Mr. Weakley has entered into an
agreement with the Company to vote the Super Voting Shares in
accordance with the voting agreement described below (the
“Voting Agreement”) and otherwise as directed by
our Board.
In connection with the initial closing in April 2020 of the
Corporation’s private placement of convertible debentures and
warrants (the “Convertible Debenture Offering”),
the Company and Mr. Weakley entered into the Voting Agreement with
the investors in the Convertible Debenture Offering. Pursuant to
the Voting Agreement, Mr. Weakley and such investors have agreed to
maintain the size of our Board at seven directors and to vote all
of their voting securities (including the Super Voting Shares) to
elect three persons (currently George Allen, Brian Shure, and
Jeffrey Monat) designated by a majority in interest of the
debenture holders (“Investor Directors”), three
persons (currently Mark Ainsworth, William Anton, and Stephanie
Harkness) designated by a majority of the incumbent directors or
their successors or, in the event no such director is then serving,
Mr. Weakley (“Indus Directors”) and one person
designated by mutual agreement of a majority of the Investor
Directors and a majority of the Indus Directors (currently Bruce
Gates). In addition, the parties to the Voting Agreement agreed to
take such actions as are within their control to maintain audit,
compensation, and corporate governance committees consisting of an
equal number of non-employee Investor Directors and Indus
Directors.
Mr. Weakley is also a party to an investment agreement with the
Company pursuant to which the Super Voting Shares may be
transferred only with the Company’s consent. The Company has agreed
to grant its consent to a transfer by Mr. Weakley to certain family
members, trusts for their benefit, and entities controlled by Mr.
Weakley or such family members, in each case subject to the entry
by the transferee into an accession agreement with the Company
providing for the same restrictions on transfer and pursuant to
which the transferee agrees to comply with Mr. Weakley’s
obligations under the Voting Agreement. The investment agreement
prohibits the Company from consenting to a transfer that would
result in the Super Voting Shares being acquired pursuant to a
change of control transaction, as defined in the investment
agreement. Pursuant to the investment agreement, in the event of a
non-permitted transfer by Mr. Weakley, or upon a change of control
transaction, the Super Voting Shares shall be redeemed by the
Company for their original purchase price of $40,000. The holders
of Subordinate Voting Shares will not be entitled to participate in
any such permitted transfer or redemption under the terms of the
Subordinate Voting Shares or under any coattail or similar
agreement.
To our knowledge, except as discussed above, none of the shares
listed below are held under a voting trust or similar agreement,
except as noted. To our knowledge, there is no arrangement,
including any pledge by any person of our securities or any of our
parents, the operation of which may at a subsequent date result in
a change in control of our company. Unless otherwise noted below,
the address of each other person listed on the table is c/o Lowell
Farms Inc., 19 Quail Run Circle – Suite B, Salinas, California
93907.
Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with
respect to securities. In accordance with the SEC rules, our shares
that may be acquired within 60 days of the date of the table below,
including but not limited to by reason of any right to acquire such
shares (a) through the exercise of any option, warrant or right,
(b) through the conversion of a security, (c) pursuant to the power
to revoke a trust, discretionary account, or similar arrangement or
(d) pursuant to the automatic termination of a trust, discretionary
account or similar arrangement, are deemed beneficially owned by
the holders of such equity awards and are deemed outstanding for
the purpose of computing the percentage of ownership of such
person, but are not treated as outstanding for the purpose of
computing the percentage of ownership of any other person. As of
the Record Date, 202,590 Super Voting Shares and 100,613,094
Subordinate Voting Shares were issued and outstanding.
To the knowledge of the directors and officers of the Corporation,
except as set out below, no person beneficially owns or exercises
control over, directly or indirectly, voting securities carrying
10% or more of the voting rights attached to any class of voting
securities of the Corporation as of the Record Date:
Super Voting Shares
|
|
Super Voting Shares Beneficially Owned
|
|
|
Percentage of Super Voting Shares Beneficially Owned
(%)
|
|
Robert Weakley
|
|
|
202,590 |
|
|
|
100.00 |
% |
Subordinate Voting Shares
|
|
Subordinate Voting Shares Beneficially Owned
|
|
|
Percentage of Subordinate Voting Shares Beneficially Owned
(%)
|
|
Directors and Named Executive Officers:
|
|
|
|
|
|
|
George Allen (1)
|
|
|
62,372,412 |
|
|
|
38.4 |
% |
Mark Ainsworth (2)
|
|
|
1,801,015 |
|
|
|
1.8 |
% |
Stephanie Harkness (3)
|
|
|
1,625,809 |
|
|
|
1.6 |
% |
William Anton (4)
|
|
|
3,692,080 |
|
|
|
3.6 |
% |
Brian Shure (5)
|
|
|
15,164,726 |
|
|
|
13.5 |
% |
Bruce Gates (6)
|
|
|
139,450 |
|
|
*
|
|
Jeffrey Monat (7)
|
|
|
56,250 |
|
|
*
|
|
Jenny Montenegro (8)
|
|
|
196,183 |
|
|
*
|
|
All executive officers and directors as a group (8 persons)
|
|
|
85,047,925 |
|
|
|
47.1 |
% |
|
|
|
|
|
|
|
|
|
5% or Greater Stockholders:
|
|
|
|
|
|
|
|
|
Geronimo Fund (9)
|
|
|
45,364,310 |
|
|
|
31.1 |
% |
Geronimo CVOF Manager, LLC (10)
|
|
|
46,964,436 |
|
|
|
31.8 |
% |
Geronimo Capital, LLC (11)
|
|
|
14,957,476 |
|
|
|
13.0 |
% |
The Hacienda Company, LLC
|
|
|
21,771,897 |
|
|
|
21.6 |
% |
Hannah Buchan (12)
|
|
|
22,224,771 |
|
|
|
22.1 |
% |
Beehouse Entities (13)
|
|
|
39,390,159 |
|
|
|
37.2 |
% |
Gregory Heyman (14)
|
|
|
39,440,159 |
|
|
|
37.3 |
% |
Merida Funds (15)
|
|
|
9,771,858 |
|
|
|
8.9 |
% |
Joseph P. Landy Wagner Partners LLC (16)
|
|
|
19,248,500 |
|
|
|
16.1 |
% |
Kevin McGrath (17)
|
|
|
10,929,968 |
|
|
|
9.8 |
% |
John Farrell/Yaax Capital US, Inc. (18)
|
|
|
5,286,666 |
|
|
|
5.0 |
% |
_______________________
*
|
Represents beneficial ownership of less than 1%.
|
(1)
|
Includes 22,682,155 Subordinate Voting Shares issuable upon the
conversion of convertible debentures and 22,682,155 Subordinate
Voting Shares issuable upon the exercise of warrants held by
Geronimo Central Valley Opportunity Fund, LLC; 800,063 Subordinate
Voting Shares issuable upon the conversion of convertible
debentures and 800,063 Subordinate Voting Shares issuable upon the
exercise of warrants held by Geronimo CVOF Manager, LLC; 7,328,738
Subordinate Voting Shares issuable upon the conversion of
convertible debentures and 7,328,738 Subordinate Voting Shares
issuable upon the exercise of warrants held by Geronimo Capital,
LLC; and 133,500 and 50,000 Subordinate Voting Shares issuable upon
the exercise of warrants and options, respectively, held by Mr.
Allen. Mr. Allen is the sole member of Geronimo Capital, LLC and
the sole manager of Geronimo CVOF Manager, LLC. Geronimo CVOF
Manager, LLC is the sole manager of Geronimo Central Valley
Opportunity Fund, LLC.
|
(2)
|
Includes 1,019,765 Subordinate Voting Shares issuable upon
redemption of Indus Redeemable Shares and 331,250 Subordinate
Voting Shares issuable upon the exercise of options held by Mr.
Ainsworth.
|
(3)
|
Includes 811,104 Subordinate Voting Shares issuable upon redemption
of Indus Redeemable Shares, 177,500 Subordinate Voting Shares
issuable upon the exercise of warrants and 66,250 Subordinate
Voting Shares issuable upon the exercise of options held by Ms.
Harkness; and 190,231 Subordinate Voting Shares issuable upon
redemption of Indus Redeemable Shares and 245,724 Subordinate
Voting Shares issuable upon the exercise of warrants held by a
family trust of which Ms. Harkness is a trustee. Excludes 482,667
Subordinate Voting Shares issuable upon redemption of Indus
Redeemable Shares, as to which Ms. Harkness disclaims beneficial
ownership.
|
(4)
|
Includes 460,000 Subordinate Voting Shares issuable upon redemption
of Indus Redeemable Shares and 66,250 Subordinate Voting Shares
issuable upon the exercise of options held by Mr. Anton; and
1,026,095 Subordinate Voting Shares issuable upon the conversion of
convertible debentures, 532,917 Subordinate Voting Shares issuable
upon redemption of Indus Redeemable Shares and 1,271,818
Subordinate Voting Shares issuable upon the exercise of warrants
held by Anton Enterprises, Inc. Mr. Anton is the president and sole
stockholder of Anton Enterprises, Inc.
|
(5)
|
Includes 468,750 Subordinate Voting Shares issuable upon the
exercise of options held by Mr. Shure; 1,882,000 outstanding
Subordinate Voting Shares, 9,850,000 Subordinate Voting Shares
issuable upon the conversion of convertible debentures and 941,000
Subordinate Voting Shares issuable upon the exercise of warrants
held by Ambrose Capital Holdings, LP; 824,000 outstanding
Subordinate Voting Shares and 412,000 Subordinate Voting Shares
issuable upon the exercise of warrants held by AMTG Holdings, LLLP;
184,800 outstanding Subordinate Voting Shares and 92,400
Subordinate Voting Shares issuable upon the exercise of warrants
held by HSK Holdings, LLC; and 300,000 Subordinate Voting Shares
and 150,000 Subordinate Voting Shares issuable upon the exercise of
warrants held by the Brian K. Shure Charitable Trust Lead Annuity.
Mr. Shure is the President of Ambrose Capital Partners, LLC, which
is the general partner of Ambrose Capital Holdings, LP, President
of AMTG Management, Inc., which is the general partner of AMTG
Holdings, LLLP, Managing Member of HSK Holdings, LLC and the sole
trustee of the Brian K. Shure Charitable Trust Lead Annuity.
|
(6)
|
Includes 56,250 Subordinate Voting Shares issuable upon the
exercise of options held by Mr. Gates.
|
(7)
|
Includes 56,250 Subordinate Voting Shares issuable upon the
exercise of options held by Mr. Monat.
|
(8)
|
Includes 177,500 Subordinate Voting Shares issuable upon the
exercise of options held by Ms. Montenegro.
|
(9)
|
Consists of 22,682,155 Subordinate Voting Shares issuable upon the
conversion of convertible debentures and 22,682,155 Subordinate
Voting Shares issuable upon the exercise of warrants held by
Geronimo Fund.
|
(10)
|
Consists of 800,063 Subordinate Voting Shares issuable upon the
conversion of convertible debentures and 800,063 Subordinate Voting
Shares issuable upon the exercise of warrants held by Geronimo CVOF
Manager, LLC and 22,682,155 Subordinate Voting Shares issuable upon
the conversion of convertible debentures and 22,682,155 Subordinate
Voting Shares issuable upon the exercise of warrants held by
Geronimo Fund.
|
(11)
|
Includes 7,328,738 Subordinate Voting Shares issuable upon the
conversion of convertible debentures and 7,428,738 Subordinate
Voting Shares issuable upon the exercise of warrants held by
Geronimo Capital, LLC.
|
(12)
|
Consists of 22,224,771 Subordinate Voting Shares held by The
Hacienda Company, LLC (“Hacienda”). Ms. Buchan is the sole manager
of Hacienda.
|
(13)
|
Consists of 21,771,897 Subordinate Voting Shares held by Hacienda
and 12,394,762 outstanding Subordinate Voting Shares and 5,223,500
Subordinate Voting Shares issuable upon the exercise of warrants
held by Beehouse Partners, LP (“Beehouse Partners”). Beehouse, LLC
is the investment manager of two SPVs that collectively own a
majority interest in Hacienda and is also the investment manager of
Beehouse Partners. Beehouse Manager, LLC (together with Beehouse,
LLC, the “Beehouse Entities”) is the manager of Beehouse, LLC.
|
(14)
|
Consists of the Subordinate Voting Shares beneficially owned by the
Beehouse Entities and 50,000 Subordinate Voting Shares held by Mr.
Heyman. Mr. Heyman is the sole and managing member of Beehouse
Manager, LLC.
|
(15)
|
Reflects beneficial ownership of Merida Capital Partners QP LP ,
Merida Capital Partners III LP , Merida Capital Partners III
Offshore and Merida Capital Partners III AI LP (the “Merida
Funds”). Includes 9,271,858 Subordinate Voting Shares issuable upon
the exercise of warrants held by the Merida Funds.
|
(16)
|
Consists of 9,624,250 Subordinate Voting Shares issuable upon the
conversion of a convertible debenture and 9,624,250 Subordinate
Voting Shares issuable upon the exercise of warrants.
|
(17)
|
Includes 5,015,984 Subordinate Voting Shares issuable upon the
conversion of a convertible debenture and 5,150,984 Subordinate
Voting Shares issuable upon the exercise of warrants held by Mr.
McGrath.
|
(18)
|
Includes 258,460 Subordinate Voting Shares issuable upon the
conversion of a convertible debenture and 258,460 Subordinate
Voting Shares issuable upon the exercise of warrants held by Mr.
Farrell and 2,384,873 Subordinate Voting Shares issuable upon the
conversion of a convertible debenture and 2,384,873 Subordinate
Voting Shares issuable upon the exercise of warrants held by Yaax
Capital USA, Inc. Yaax Capital USA, Inc. is wholly owned by Yaax
Capital LP. Mr. Farrell is the managing partner of Yaax Capital
LP.
|
SECURITY-BASED COMPENSATION
ARRANGEMENTS
The following table provides information as of December 31, 2021,
concerning our compensation plans under which equity securities are
authorized for issuance.
Plan Category
|
|
Number of securities
to be issued upon exercise of outstanding options,
warrants, and rights (a)
|
|
|
Weighted average exercise price of outstanding options,
warrants, and rights (b)
|
|
|
Number of securities remaining available for future
issuance under equity compensation plans (excluding securities
reflected in column (a)) (c)
|
|
Equity compensation plans approved by stockholders (1)
|
|
|
7,333,793 |
|
|
$ |
1.01 |
|
|
|
4,694,331 |
|
Equity compensation plans not approved by stockholders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
_______________________
(1) In connection with the RTO, the Company assumed the 2016 stock
incentive plan of Indus Holding Company and outstanding option
awards thereunder became exercisable for Subordinate Voting Shares.
Of the Company’s 7,333,793 outstanding awards on December 31, 2021,
747,000 were issued under the legacy 2016 stock incentive plan and
the remainder were issued under the Company’s 2019 stock incentive
plan. No further awards will be made pursuant to the 2016 stock
incentive plan.
GOVERNANCE
Board of Directors
Our business and affairs are managed, and all corporate powers are
exercised, under the direction of our Board. Our Board establishes
fundamental corporate policies and oversees our performance and the
performance of our Chief Executive Officer and the other officers
to whom our Board has delegated authority to
manage day-to-day business operations.
The following table provides information with respect to our
directors:
Name
|
|
Age
|
|
Position
|
George Allen
|
|
47
|
|
Chairman
|
Mark Ainsworth
|
|
48
|
|
Chief Executive Officer and Director
|
Stephanie Harkness
|
|
78
|
|
Director
|
William Anton
|
|
80
|
|
Director
|
Brian Shure
|
|
46
|
|
Chief Financial Officer and Director
|
Bruce Gates
|
|
61
|
|
Director
|
Jeffrey Monat
|
|
44
|
|
Director
|
The Board has adopted a Code of Ethics and Business Conduct (the
"Code of Conduct") for directors, officers, and employees. The Code
of Conduct is available on our website at
https://ir.lowellfarms.com/corporate-governance/governance-documents.
In addition, the Code of Conduct has been filed on, and is
accessible through, Canada’s SEDAR. The Corporation will, upon
request at ir@lowellfarms.com, provide a copy of the Code of
Conduct free of charge to any shareholder. The information on our
website is not deemed to be incorporated in this proxy statement or
to be part of this proxy statement.
The Board expects its directors, officers, and employees to act
ethically at all times and to acknowledge their adherence to the
policies comprising the Code of Conduct. Any material issues
regarding compliance with the Code of Conduct are required to be
brought forward by management at either the Board or appropriate
Board committee meetings or are referred to the executive officers
of the Company, as may be appropriate in the circumstances. The
Board or appropriate committee or executive officers determine what
remedial steps, if any, are required. Any waivers from the Code of
Conduct that are granted for the benefit of a director or executive
officer may be granted only by the Board (or a committee thereof,
as designated by the Board). No material waiver has ever been
granted under the Code of Conduct.
Each director of the Corporation must disclose all actual or
potential conflicts of interest and refrain from voting on matters
in which such director has a conflict of interest. In addition, the
director must excuse themselves from any discussion or decision on
any matter in which the director is precluded from voting as a
result of a conflict of interest.
Our Articles provide that the quorum necessary for the transaction
of the business of the Board is a majority of the number of
directors in office or such greater number as the directors may
determine from time to time.
The Canadian Securities Administrators has issued corporate
governance guidelines pursuant to Canadian National Policy
58-201—Corporate Governance Guidelines (the “Corporate
Governance Guidelines”), together with certain related
disclosure requirements pursuant to Canadian
National Instrument 58-101—Disclosure of Corporate
Governance Practices
(“NI 58-101”). The Corporate Governance
Guidelines are recommended as “best practices” for issuers to
follow. We recognize that good corporate governance plays an
important role in our overall success and in enhancing shareholder
value. Accordingly, we have adopted certain corporate governance
policies and practices that reflect our consideration of the
recommended Corporate Governance Guidelines.
Role of the Board of Directors
Our Board is responsible for the stewardship of the Corporation and
managing and supervising the management of our business and
affairs, including providing guidance and strategic oversight to
management. Our Board has the authority to exercise all such powers
of the Corporation as are not, by the BCBCA or by our Articles,
required to be exercised by the shareholders of the
Corporation.
Board Leadership
The positions of Chairman of the Board and Chief Executive Officer
are held by different individuals: George Allen serves as Chairman
and Mark Ainsworth serves as Chief Executive Officer. Our Board has
concluded that our current leadership structure is appropriate at
this time and takes advantage of these persons’ respective
strengths and perspectives. However, our Board will continue to
review our leadership structure periodically and may make changes
in the future as it deems appropriate.
Risk Oversight
Our Board is responsible for the general oversight of risks that
affect us and oversees our enterprise risk management. Our Board
receives regular reports on our operations from our Chief Executive
Officer and other members of management. Our Board reviews these
reports and makes inquiries in their business judgment.
Our Board also fulfills its oversight role through two committees,
the Audit Committee and the Compensation and Corporate Governance
Committee. Our Board receives periodic reports on each committee’s
activities. Our Audit Committee has responsibility for risk
oversight in connection with its review of our financial reports
filed with the SEC and the applicable Canadian securities
commissions or similar regulatory authorities. Additionally, our
Audit Committee receives reports from our Chief Financial Officer
and our independent auditors in connection with the review of our
quarterly and annual financial statements regarding significant
financial transactions, accounting and reporting matters, critical
accounting estimates, and management’s exercise of judgment in
accounting matters. When reporting on such matters, our independent
auditors also provide their assessment of management’s report and
conclusions.
Director Independence
Our Board of Directors includes George Allen, Mark Ainsworth,
Stephanie Harkness, William Anton, Brian Shure, Bruce Gates and
Jeff Monat, of which all members except George Allen, Mark
Ainsworth, and Brian Shure are deemed to be independent. George
Allen is not considered independent because of his position as the
founder of Geronimo Capital, LLC, the lead lender that participated
in the Convertible Debenture Offering. Mark Ainsworth and Brian
Shure are not considered independent because of their executive
positions with the Corporation. Although our securities are not
listed on any U.S. national securities exchange, we use the
definition of independence applied by the New York Stock Exchange
(“NYSE”) to determine which directors are “independent.” We also
use the definition of independence under NI 58-101.
None of the directors are presently directors of other reporting
issuers.
Orientation and Continuing Education
Each new director is given an outline of the nature of the
Corporation’s business, its corporate strategy and current issues
within the Corporation. New directors are also required to meet
with management of the Corporation to discuss and better understand
the Corporation’s business and are given the opportunity to meet
with counsel to the Corporation to discuss their legal obligations
as director of the Corporation.
In addition, management of the Corporation takes steps to ensure
that its directors and officers are continually updated as to the
latest corporate and securities policies which may affect the
directors, officers and committee members of the Corporation as a
whole. The Corporation continually reviews the latest securities
rules and stock exchange policies. Any changes or new requirements
are then brought to the attention of the Corporation’s directors
either by way of director or committee meetings or by direct
communications from management to the directors.
Ethical Business Conduct
The Board has found that the fiduciary duties placed on individual
directors by the Corporation’s governing corporate legislation and
the common law and the restrictions placed by applicable corporate
legislation on an individual director’s participation in decisions
of the Board in which the director has an interest have been
sufficient to ensure that the Board operates independently of
management and in the best interests of the Corporation. Further,
the Corporation’s auditor has full and unrestricted access to the
Audit Committee at all times to discuss the audit of the
Corporation’s financial statements and any related findings as to
the integrity of the financial reporting process.
Nomination of Directors
Please refer to “– Board Committees – Compensation and
Corporate Governance Committee” for a description of the
process undertaken to identify new candidates for board
nomination.
Assessments
The Board monitors the adequacy of information given to directors,
communication between the Board and management and the strategic
direction and processes of the Board and committees.
Certain Relationships and Related
Transactions
The following includes a summary of transactions during our fiscal
years ended December 31, 2021 and 2020 to which we have been a
party, including transactions in which the amount involved in the
transaction exceeds the lesser of $120,000 or 1% of the average of
our total assets at year-end for the last two completed fiscal
years and in which any of our directors, executive officers or, to
our knowledge, beneficial owners of more than 5% of our capital
stock or any member of the immediate family of any of the foregoing
persons had or will have a direct or indirect material interest,
other than equity and other compensation, termination, change in
control and other arrangements, which are described elsewhere in
this proxy statement. We are not otherwise a party to a current
related party transaction and no transaction is currently proposed,
in which the amount of the transaction exceeds the lesser of
$120,000 or 1% of the average of our total assets at year-end for
the last two completed fiscal years and in which a related person
had or will have a direct or indirect material interest.
Certain officers and directors of the Company purchased an
aggregate of 2,900,000 Units pursuant to the PIPE transaction that
closed on August 30, 2021 on the same terms as the other
participants in the PIPE transaction. Participation by such
insiders of the Company in the PIPE transaction was approved by the
disinterested directors of the Company.
Prior to January 1, 2021, we contracted with Edible Management,
LLC, a California limited liability company controlled by Robert
Weakley and Mark Ainsworth for various management services,
including the development and marketing of our brands, the
development of standard operating procedures for the sale of our
products in California, industry specific strategic marketing
advice, quarterly reporting, sales, legal and human resources
support services and coordination efforts with our licensees. In
exchange for such services, we reimbursed Edible Management for
payroll and all other out-of-pocket expenses on a dollar-for-dollar
basis and provided rent free office space to Edible Management.
Prior to January 1, 2021, Cypress Manufacturing Company, one of our
subsidiaries, also contracted with Edible Management for management
services. In addition to the reimbursement of expenses and the
provision of free office space, Cypress Manufacturing Company paid
Edible Management a monthly incentive commission of 2% of gross
sales through June 30, 2018, which amounted to a payment of
$650,000 in the aggregate. Effective as of January 1, 2021, the
services of Edible Management were discontinued and Wellness
Innovation Group Incorporated, a subsidiary of Indus Holding
Company, assumed all functions previously conducted by Edible
Management. Amounts paid to Edible Management pursuant to the
foregoing arrangements were nil and $11.4 million for the years
ended December 31, 2021 and 2020, respectively.
Board and Committee Meetings; Executive
Sessions
At regularly scheduled board and committee meetings, directors
review and discuss management reports regarding our performance,
prospects, and plans, as well as significant opportunities and
immediate issues facing us. At least once a year, our Board also
reviews management’s long-term strategic and financial goals. The
Chair, in consultation with the committee chairs and other
directors, as appropriate, establishes the agenda for meetings of
the Board. Committee agendas and schedules are set by or in
consultation with the committee chair. During the year ended
December 31, 2021, our Board held 5 meetings, and all directors
attended at least 75% of all applicable Board and committee
meetings during the year that ended December 31, 2021.
Board Attendance at Annual Meeting of
Shareholders
The Board’s unwritten policy regarding director attendance at the
annual meeting of shareholders is that directors are encouraged to
attend. All members of the Board attended the 2021 annual meeting
of shareholders.
Board Committees
Audit Committee
The Audit Committee is appointed annually by the Board to assist
the Board in fulfilling its oversight responsibilities relating
to:
|
·
|
the quality and integrity of the
Corporation’s financial statements; |
|
·
|
the Corporation’s compliance with
legal and regulatory requirements; |
|
·
|
the qualifications and independence
of the independent registered public accounting firm (the
“Independent Auditors”); |
|
·
|
the oversight and performance of
the Corporation’s internal audit function and the Independent
Auditors; and |
|
·
|
any other matters delegated to the
Committee by the Board. |
As further described in the Audit Committee Charter, the
Committee’s primary duties and responsibilities relate to:
|
·
|
maintenance by management of the
reliability and integrity of the accounting policies and financial
reporting and financial disclosure practices of the
Corporation; |
|
·
|
establishment and maintenance by
management of processes to assure that an adequate system of
internal controls is functioning within the Corporation; and |
|
·
|
retention and termination of the
Independent Auditors. |
Our Audit Committee consists of William Anton, George Allen and
Jeffrey Monat. William Anton serves as the chair of our Audit
Committee and has been identified as an “audit committee financial
expert” as that term is defined in the rules and regulations
established by the SEC. The members of our Audit Committee are
“financially literate” within the meaning of the applicable NYSE
rules and NI 52-110. William Anton and Jeffrey Monat are
“independent” within the meaning of the applicable NYSE rules and
NI 52-110. The following chart sets forth the composition of our
Audit Committee:
Name of Member
|
Independent(1)
|
|
Financially Literate(2)
|
William Anton (Chair)
|
Yes
|
|
Yes
|
George Allen
|
No(3)
|
|
Yes
|
Jeffrey Monat
|
Yes
|
|
Yes
|
Notes:
(1)
|
A member of the Audit Committee is independent if they have no
direct or indirect ‘material relationship’ with the Corporation. A
material relationship is a relationship that could, in the view of
the Board, reasonably interfere with the exercise of a member’s
independent judgment. An executive officer of the Corporation, such
as the Chief Executive Officer, is deemed to have a material
relationship with the Corporation.
|
(2)
|
A member of the Audit Committee is financially literate if they
have the ability to read and understand a set of financial
statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of the issues that can reasonably be expected to be
raised by the Corporation’s financial statements.
|
(3)
|
Mr. Allen is not independent as permitted by the exemptions from
the independence requirements of Rule 10A-3 of the Exchange Act, NI
52-110 and the OTCQX listing standards.
|
The education and experience of each member of the Audit Committee
that is relevant to the performance of their responsibilities as a
member of the Audit Committee is described above under the heading
“Proposal 1—Election of Directors.”
Our Board has adopted a written charter for the Audit Committee,
which sets out the Audit Committee’s responsibilities, consistent
with the Canadian National Instrument 52-110 – Audit Committees
(“NI 52-110”) a current copy of which is available on our website
at
https://ir.lowellfarms.com/corporate-governance/governance-documents.
The Audit Committee has access to all books, records, facilities,
and personnel and may request any information about us as it may
deem appropriate. It has the authority to retain and compensate
special legal, accounting, financial, and other consultants or
advisors to advise the Audit Committee.
Both our independent auditors and internal financial personnel
regularly meet privately with the Audit Committee and have
unrestricted access to this committee. At no time since the
commencement of the Corporation’s most recently completed fiscal
year was a recommendation of the Audit Committee to nominate or
compensate an external auditor not adopted by the Board. Our Audit
Committee held five (5) meetings during the year ended
December 31, 2021.
The Corporation is a “venture issuer” as defined in NI 52-110 and
as such is exempt from the requirements of Part 3 (Composition
of the Audit Committee) and Part 5 (Reporting
Obligations) of NI 52-110.
Compensation and Corporate Governance
Committee
The Compensation and Corporate Governance Committee consists of
Stephanie Harkness and William Anton. Stephanie Harkness serves as
the Chair of our Compensation and Corporate Governance Committee.
The Board has determined that Stephanie Harkness and William Anton
are independent as defined by NYSE rules and applicable Canadian
securities laws.
The Compensation and Corporate Governance Committee is responsible
for assisting the Board in fulfilling its oversight
responsibilities in relation to:
|
·
|
the Company’s overall approach to
corporate governance; |
|
·
|
subject to the requirements of the
Voting Agreement, the size, composition, and structure of the Board
and its committees; |
|
·
|
executive and director
compensation; |
|
·
|
executive compensation
disclosure; |
|
·
|
management development and
succession; |
|
·
|
orientation and continuing
education for directors; |
|
·
|
subject to the requirements of the
Voting Agreement, identifying and recommending new director
nominees; |
|
·
|
promotion of a culture of integrity
throughout the Company; |
|
·
|
related party transactions and
other matters involving conflicts of interest; and |
|
·
|
any additional matters delegated to
the Compensation and Corporate Governance Committee by the
Board. |
Subject to the requirements of the Voting Agreement, the
Compensation and Corporate Governance Committee formulate and
administer criteria for identifying, evaluating and recommending
director candidates to stand for election at a meeting of
shareholders or to fill a vacancy existing on the Board, which will
reflect, among other things:
|
·
|
competencies, skills, and personal
qualities that the Board considers to be necessary for the Board,
as a whole, to possess; |
|
·
|
competencies, skills, and personal
qualities that the Board considers each existing director to
possess; |
|
·
|
competencies, skills, and personal
qualities that each new director would bring to the Board; and |
|
·
|
responsibilities that would
materially interfere with or be incompatible with Board
membership. |
The Compensation and Corporate Governance Committee will consider
all qualified director candidates identified by various sources,
including members of the board of directors, management and
shareholders. Candidates for directors recommended by shareholders
will be given the same consideration as those identified from other
sources. Any shareholder who wishes to recommend a candidate for
consideration by the Compensation and Corporate Governance
Committee as a nominee for director should follow the procedures
described in “Advance Notice Provision” under
“Proposal 1—Election of Directors” in this proxy
statement.
Subject to the requirements of the Voting Agreement, the
Compensation and Corporate Governance Committee will recommend to
the Board a list of candidates for nomination for election to the
Board at the Company’s annual meeting of shareholders. In addition,
as the need arises, it will identify and recommend to the Board new
candidates for Board membership. Should the Compensation and
Corporate Governance Committee recommend a Lead Director be
appointed to the Board, or should a vacancy occur in the role of
Lead Director, the Compensation and Corporate Governance Committee
will recommend to the Board an Independent Director to fill such
role. In making its recommendations to the Board, the Compensation
and Corporate Governance Committee will provide an assessment of
whether each candidate is or would be: (i) an independent director;
and (ii) “financially literate” as defined in NI 52-110.
The Board has adopted a written charter setting forth the purpose,
composition, authority, and responsibility of our Compensation and
Corporate Governance Committee consistent with the guidance of the
Canadian Securities Administrators, a current copy of which is
available on our website at
https://ir.lowellfarms.com/corporate-governance/board-committees.
Our Compensation and Corporate Governance Committee held no
separate committee meetings during the year ended December 31,
2021, with its business being conducted with the entire Board.
Other Board Committees
The Board has no committees other than the Audit Committee and the
Compensation and Corporate Governance Committee.
Communications with the Board of
Directors
Shareholders and other interested parties may contact any member
(or all members) of our Board (including, without limitation, the
non-management directors as a group), any committee of our Board,
or the chair of any such committee. Written correspondence may be
sent to our Board, any committee, or any individual director, c/o
Corporate Secretary, Lowell Farms Inc., 19 Quail Run Circle, Suite
B, Salinas, California 93907.
EXECUTIVE OFFICERS
The following table provides information concerning our executive
officers:
Name
|
|
Age
|
|
Position
|
George Allen
|
|
46
|
|
Chairman
|
Mark Ainsworth
|
|
48
|
|
Chief Executive Officer and Director
|
Brian Shure
|
|
46
|
|
Chief Financial Officer and Director
|
Jenny Montenegro
|
|
39
|
|
Chief Operating Officer
|
Biographical Information
The biographies of Mark Ainsworth, George Allen, and Brian Shure
are under “Proposal 1—Election of Directors.” The
biographical information for our other executive officer is
below.
Jenny Montenegro
Jenny Montenegro joined the Company leadership team in June 2020.
Previously Ms. Montenegro served as Vice President of
Commercialization from August 2019 to June 2020. She was
responsible for planning and managing the timeline of the launch of
brand products into the market. Before joining Lowell Farms, Ms.
Montenegro served as the Founding Vice President of Consumer
Packaged Goods and Operations. Ms. Montenegro served as Vice
President – Operations and Marketing of The Organic Coop from April
2016 to August 2019. Prior to that, Ms. Montenegro served as a
regional buyer at Costco Wholesale, where she worked from October
2001 to April 2016.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires that
the Company’s directors, executive officers and persons who
beneficially own 10% or more of the Company’s common stock file
with the SEC initial reports of ownership and reports of changes in
ownership of our stock and our other equity securities. To the
Company’s knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the year ended December
31, 2021, all such filing requirements applicable to the Company’s
directors, executive officers and greater than 10% beneficial
owners were complied with except as follows: Messrs. Ainsworth,
Allen, Anton, McGrath and McMillin and Geronimo Capital, LLC each
filed one late initial statement of beneficial ownership due to
delays in updating their SEC filing codes; and Mr. Gates and
Gregory Heyman each inadvertently filed one late statement of
change in beneficial ownership.
EXECUTIVE COMPENSATION
Compensation of Named Executive Officers
The Corporation’s compensation practices are intended to retain,
motivate and reward its executive officers for their performance
and contribution to the Corporation’s success. Executive officers
may be compensated through some combination of cash and equity or
equity-linked incentives, both short and long-term in nature. To
date, compensation of executive officers, including the NEOs, has
been determined by way of negotiation with such officers.
The Compensation and Corporate Governance Committee, comprised of
independent directors, is charged with oversight of compensation
practices. The Compensation and Corporate Governance Committee is
responsible for developing a compensation philosophy that rewards
the achievement of corporate and individual performance objectives,
and aligns executive officers’ incentives with shareholder value
creation. The Compensation and Corporate Governance Committee will
select components of compensation packages and the amounts of such
components, as well as corporate and individual goals and
objectives to be used in determining the level of certain of these
components. The Compensation and Corporate Governance Committee may
determine to use different compensation components and approach
compensation in a manner that is different than that used by the
Corporation to date.
We are an “emerging growth company,” as that term is used in the
JOBS Act, and have elected to comply with the reduced compensation
disclosure requirements available to emerging growth companies
under the JOBS Act.
Summary Compensation Table
The following table provides the compensation paid to our principal
executive officer and other executive officers whose total
compensation exceeded $100,000 for the years ended December 31,
2021, and December 31, 2020.
Name
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Nonequity incentive plan
compensation
|
|
|
Nonqualified deferred
compensation earnings
|
|
|
Total
|
|
Mark Ainsworth (1)
|
|
2021
|
|
$ |
250,000 |
|
|
$ |
- |
|
|
$ |
110,401 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
360,401 |
|
Chief Executive Officer
|
|
2020
|
|
$ |
250,000 |
|
|
$ |
15,000 |
|
|
$ |
38,205 |
|
|
$ |
85,427 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
388,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Shure (2)
|
|
2021
|
|
$ |
250,000 |
|
|
$ |
- |
|
|
$ |
82,801 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
332,801 |
|
Chief Financial Officer
|
|
2020
|
|
$ |
36,059 |
|
|
$ |
- |
|
|
$ |
37,266 |
|
|
$ |
158,114 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
231,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jenny Montenegro (3)
|
|
2021
|
|
$ |
225,000 |
|
|
$ |
- |
|
|
$ |
93,841 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
318,841 |
|
Chief Operating Officer
|
|
2020
|
|
$ |
121,875 |
|
|
$ |
15,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
136,875 |
|
_______________________
(1) Appointed as Chief Executive Officer in April 2020.
(2) Appointed as Chief Financial Officer in November 2020.
(3) Appointed as Chief Operating Officer in June 2020.
Executive Employment Agreements
Mark Ainsworth – The Company is a party to an
employment agreement with Mark Ainsworth dated as of July 1, 2020.
Mr. Ainsworth is entitled to an annual base salary of $250,000. He
is also eligible to receive annual bonuses in such amounts and
subject to such performance metrics or other criteria determined by
the Board or its Compensation and Corporate Governance Committee
from time to time, including performance-based bonuses or programs
as determined at the discretion of the Board. Mr. Ainsworth is also
eligible to receive discretionary grants of options. In the event
of Mr. Ainsworth’s termination without cause, for a period of nine
months from the date of such termination, he is entitled to receive
continued payment of his base salary and continuation of health
insurance benefits. In addition, in the event that, within six
months following a “change of control” of the Company, Mr.
Ainsworth’s title or responsibilities are materially diminished or
Mr. Ainsworth is terminated without cause, he is entitled, upon
notice to the Company given not later than thirty (30) days
following such material diminishment or termination, to the
acceleration of vesting of half of the remaining unvested portion
of any stock options or restricted stock awards previously granted
to him and any unvested portion shall continue to vest ratably, or
be forfeited, in accordance with the terms of such grants.
Brian Shure – The Company is a party to an
employment agreement with Brian Shure dated as of November 10,
2020. Mr. Shure is entitled to an annual base salary of $250,000.
He is also eligible to receive annual bonuses in such amounts and
subject to such performance metrics or other criteria determined by
the Board or its Compensation and Corporate Governance Committee
from time to time, including performance-based bonuses or programs
as determined at the discretion of the Board. Mr. Shure was granted
options to purchase 300,000 Subordinate Voting Shares of the
Company under its 2019 Stock Incentive Plan. 50,000 of the options
were vested immediately upon grant. The remaining 250,000 options
will vest in four equal annual installments on each anniversary of
the date of the grant. In the event of Mr. Shure’s termination
without cause, for a period of six months from the date of such
termination, he is entitled to receive continued payment of his
base salary and continuation of health insurance benefits. In
addition, in the event that, within twelve months following a
“change of control” of the Company, Mr. Shure’s title or
responsibilities are materially diminished or Mr. Shure is
terminated without cause, he is entitled, upon notice to the
Company given not later than thirty (30) days following such
material diminishment or termination, to the acceleration of
vesting of the remaining unvested portion of the options
granted.
Jenny Montenegro – The Company is a party to an
employment agreement with Jenny Montenegro dated as of August 16,
2021. Ms. Montenegro is entitled to an annual base salary of
$225,000. She is also eligible to receive annual bonuses in such
amounts and subject to such performance metrics or other criteria
determined by the Board or its Compensation and Corporate
Governance Committee from time to time, including performance-based
bonuses or programs as determined at the discretion of the Board.
The employment agreement became effective August 16, 2021, upon
completion of executive relocation, towards which Ms. Montenegro
received $25,000 to defray expenses associated with the relocation.
In the event of Ms. Montenegro’s termination without cause, for a
period of three months from the date of such termination, she is
entitled to receive continued payment of her base salary and
continuation of health insurance benefits. In addition, in the
event that, within twelve months following a “change of control” of
the Company, Ms. Montenegro’s title or responsibilities are
materially diminished or Ms. Montenegro is terminated without
cause, she is entitled, upon notice to the Company given not later
than thirty (30) days following such material diminishment or
termination, to the acceleration of vesting of one half of the
remaining unvested portion of the options granted and for a period
of six months from the date of such termination, she is entitled to
receive continued payment of her base salary and continuation of
health insurance benefits.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information regarding
equity-based awards held by our named executive officers as of
December 31, 2021.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
|
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
|
Option Exercise Price ($)
|
|
|
Option Expiration Date
|
|
Number of Shares or Units of Stock That Have Not
Vested (#)
|
|
|
Market Value of Shares or Units of Stock That Have Not
Vested ($)
|
|
Mark Ainsworth
|
|
|
12,500 |
|
|
|
37,500 |
|
|
|
0.85 |
|
|
1/2/26
|
|
|
66,667 |
|
|
|
73,600 |
|
|
|
|
187,500 |
|
|
|
312,500 |
|
|
|
0.346 |
|
|
4/15/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Shure
|
|
|
62,500 |
|
|
|
237,500 |
|
|
|
1.35 |
|
|
11/9/2026
|
|
|
50,000 |
|
|
|
55,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jenny Montenegro
|
|
|
20,000 |
|
|
|
20,000 |
|
|
|
0.68 |
|
|
12/10/25
|
|
|
56,667 |
|
|
|
62,560 |
|
|
|
|
3,750 |
|
|
|
11,250 |
|
|
|
0.85 |
|
|
1/2/26
|
|
|
|
|
|
|
|
|
|
|
|
112,500 |
|
|
|
187,500 |
|
|
|
0.346 |
|
|
4/15/26
|
|
|
|
|
|
|
|
|
Stock Option Plan and Other Incentive
Plans
Equity Incentive Plan
The Corporation has adopted the Equity Incentive Plan, which was
approved by its shareholders at the special meeting of shareholders
held on January 26, 2019, and amended on April 10, 2020, and again
on February 24, 2021, pursuant to approvals by the Board and the
holder of all of the Super Voting Shares. The principal terms of
the Equity Incentive Plan are described below.
Purpose
The purpose of the Equity Incentive Plan is to promote the
interests of the Corporation and its Shareholders by aiding the
Corporation in attracting and retaining employees, officers,
consultants, advisors and nonemployee directors capable of assuring
the future success of the Corporation, to offer such persons
incentives to put forth maximum efforts for the success of the
Corporation’s business and to compensate such persons through
various stock and cash-based arrangements and provide them with
opportunities for stock ownership in the Corporation, thereby
aligning the interests of such persons with 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 awards, (iii)
restricted stock units (“RSUs”), (iv) stock appreciation rights
(“SARs”), (v) performance compensation awards (“Performance
Awards”), (vi) payments (in cash, Subordinate Voting Shares, other
securities, other awards or other property) equivalent to the
amount of cash dividends paid by the Corporation to holders of
Subordinate Voting Shares with respect to a number of Shares
determined by the Compensation and Corporate Governance Committee
(“Dividend Equivalents”), and (vii) other share-based awards, which
are referred to herein collectively as “Awards,” as more fully
described below.
The Compensation and Corporate Governance Committee may delegate to
one or more officers or directors of the Corporation the authority
to grant Awards, subject to such terms, conditions and limitations
as the Compensation and Corporate Governance Committee may
establish in its sole discretion and provided that such delegation
of authority would not cause the Equity Incentive Plan to be
noncompliant with applicable exchange rules or applicable corporate
law.
Eligibility
Any of the Corporation’s employees, officers, directors,
consultants, independent contractors or advisors providing services
to the Corporation or any of its affiliates, or any such person to
whom an offer of employment or engagement with the Corporation or
any of its affiliates is extended, are eligible to participate in
the Equity Incentive Plan (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 will be
entitled to receive under the Equity Incentive Plan, will be
determined by the Compensation and Corporate Governance Committee
based on its judgment as to the best interests of the Corporation,
and therefore cannot be determined in advance. Notwithstanding the
foregoing, an ISO may only be granted to full-time or part-time
employees, and an ISO shall not be granted to an employee of an
affiliate of the Corporation unless such affiliate is also a
“subsidiary corporation” of the Corporation within the meaning of
Section 424(f) the United States Internal Revenue Code of 1986, as
amended (the “Code”).
The maximum number of Subordinate Voting Shares that may be issued
under all Awards under the Equity Incentive Plan is 13,205,932
Subordinate Voting Shares. The maximum number of Subordinate Voting
Shares that may be issued pursuant to ISOs is 6,000,000 Subordinate
Voting Shares. Any shares subject to an Award under the Equity
Incentive Plan that are forfeited, cancelled, expire unexercised,
are reacquired by the Corporation, 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, Subordinate
Voting Shares, other securities or other property),
recapitalization, forward or reverse stock split, reorganization,
merger, consolidation, split-up, split-off, combination, repurchase
or exchange of Subordinate Voting Shares or other securities of the
Corporation, issuance of warrants or other rights to acquire
Subordinate Voting Shares or other securities of the Corporation,
or other similar corporate transaction or event, which affects the
Subordinate Voting Shares, the Compensation and Corporate
Governance Committee may make such adjustment, which is appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Equity
Incentive Plan, to any or all of (i) the number and type of shares
(or other securities or other property) which may thereafter be
made the subject of Awards, (ii) the number and type of shares (or
other securities or other property) subject to outstanding Awards,
and (iii) the purchase price or exercise price relating to any
Award.
If and so long as the Corporation is listed on the CSE (as is
currently the case), the aggregate number of Subordinate Voting
Shares issued or issuable to persons providing investor relations
activities (as defined in CSE policies) as compensation within a
one-year period, shall not exceed 1% of the total number of
Subordinate Voting Shares then outstanding.
Awards
Options
The Compensation and Corporate Governance Committee is authorized
to grant Options to purchase Subordinate Voting 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 will be subject to the
terms and conditions established by the Compensation and Corporate
Governance Committee.
Under the terms of the Equity Incentive Plan, unless the
Compensation and Corporate Governance Committee determines
otherwise in the case of an Option substituted for another Option
in connection with a corporate transaction, the exercise price of
the Options will not be less than the fair market value (as
determined under the Equity Incentive Plan) of the shares at the
time of grant. In the event that the Subordinate Voting Shares are
listed on the CSE (as is currently the case), the fair market value
shall not be lower than the greater of the closing price of the
Subordinate Voting Shares on the CSE on (i) the trading day prior
to the date of grant of the Options, and (ii) the date of grant of
the Options.
Options granted under the Equity Incentive Plan will be subject to
such terms, including the exercise price and the conditions and
timing of exercise, as may be determined by the Compensation and
Corporate Governance Committee and specified in the applicable
award agreement. The maximum term of an option granted under the
Equity Incentive Plan will be ten years from the date of grant.
Payment in respect of the exercise of an Option may be made, among
other forms, in cash or by check, in Subordinate Voting Shares
(actually or by attestation), in other securities, other Awards or
other property, or in any combination thereof, having a fair market
value on the exercise date equal to the applicable exercise price.
or by such other method as the Compensation and Corporate
Governance Committee may determine to be appropriate. The
Compensation and Corporate Governance Committee may, in its
discretion, permit an Option to be exercised by delivering to the
Participant a number of Subordinate Voting 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
Subordinate Voting Shares underlying the Option being exercised on
the date of exercise, over the exercise price of the Option for
such Subordinate Voting Shares.
Restricted Stock
A restricted stock award is a grant of Subordinate Voting Shares,
which are subject to such restrictions as the Compensation and
Corporate Governance Committee may impose (including, without
limitation, any limitation on the right to vote a Subordinate
Voting Share underlying the restricted stock award or the right to
receive any dividend or right or property with respect thereto),
which restrictions may lapse or in combination at such time or
times, in such installments or otherwise as the Compensation and
Corporate Governance Committee may deem appropriate. The
Compensation and Corporate Governance Committee will determine the
price, if any, to be paid by the Participant for each Subordinate
Voting Share subject to a restricted stock award. Except as
otherwise determined by the Compensation and Corporate Governance
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 Compensation and Corporate Governance
Committee) during the applicable restriction period, all
Subordinate Voting Shares underlying the restricted stock award
held by such Participant at such time shall be forfeited and
reacquired by the Corporation for cancellation at no cost to the
Corporation; provided however, that the Compensation and Corporate
Governance Committee may waive in whole or in part any or all
remaining restrictions with respect to Subordinate Voting Shares
underlying the restricted stock award.
RSUs
An RSU is a unit evidencing the right to receive a Subordinate
Voting Share (or a cash payment equal to the fair market value of a
Subordinate Voting Share) at some future date, provided that in the
case of Participants who are liable to taxation under the
Income Tax Act (Canada) in respect of amounts payable
under the Equity Incentive Plan, that such date shall not be later
than December 31 of the third calendar year following the year the
services were performed in respect of the corresponding RSU
awarded. Unless otherwise provided for in an award agreement, no
Subordinate Voting Shares shall be issued at the time RSUs are
granted. Except as otherwise determined by the Compensation and
Corporate Governance 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 Compensation and
Corporate Governance Committee) during the applicable restriction
period, all Subordinate Voting Shares underlying the RSUs held by
such Participant at such time shall be forfeited and reacquired by
the Corporation for cancellation at no cost to the Corporation;
provided however, that the Compensation and Corporate Governance
Committee may waive in whole or in part any or all remaining
restrictions with respect to Subordinate Voting Shares underlying
the RSUs.
Stock Appreciation Rights
An SAR entitles the recipient to receive, upon exercise of the SAR,
the excess of (i) the fair market value of one Subordinate Voting
Share on the date of exercise over (ii) the grant price of the SAR
as specified by the Compensation and Corporate Governance
Committee, which price shall not be less than 100% of the fair
market value of one Subordinate Voting Share on the date of grant
of the SAR, unless the SAR is granted in substitution for a stock
appreciation right previously granted by an entity that is acquired
by or merged with the Corporation or an affiliate (subject to
applicable law and securities exchange rules). Subject to the terms
of the Equity Incentive Plan and any applicable award agreement,
the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any SAR
shall be as determined by the Compensation and Corporate Governance
Committee, provided that no SAR may be exercised more than ten
years from the grant date.
Performance Awards
Participants may be granted Performance Awards that may be
denominated or payable in cash, Subordinate Voting Shares
(including, without limitation, restricted stock and RSUs), other
securities, other Awards or other property. Performance Awards
granted under the Equity Incentive Plan confer on the holder
thereof the right to receive payments, in whole or in part, upon
the achievement of one or more objective performance goals during
such performance periods as the Compensation and Corporate
Governance Committee shall establish. Subject to the terms of the
Equity Incentive Plan, the performance goals to be achieved during
any performance period, the length of any performance period, the
amount of any Performance Award granted, the amount of any payment
or transfer to be made pursuant to any Performance Award and any
other terms and conditions of any Performance Award will be
determined by the Compensation and Corporate Governance
Committee.
Dividend Equivalents
The Compensation and Corporate Governance Committee may also grant
Dividend Equivalents under which the Participant will be entitled
to receive payments (in cash, Subordinate Voting Shares, other
securities, other awards or other property) equivalent to the
amount of cash dividends paid by the Corporation to holders of
Subordinate Voting Shares with respect to a number of Shares
determined by the Compensation and Corporate Governance Committee.
Subject to the terms of the Equity Incentive Plan and any
applicable award agreement, Dividend Equivalents may have such
terms and conditions as the Compensation and Corporate Governance
Committee determines, provided that (i) the Compensation and
Corporate Governance Committee may not grant Dividend Equivalents
to Participants in connection with grants of Options, SARs or other
Awards the value of which is based solely on an increase in the
value of the Subordinate Voting 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.
Other
The Compensation and Corporate Governance Committee may also grant
other Awards that are denominated or payable in, valued in whole or
in part by reference to, or otherwise based on or related to,
Subordinate Voting Shares (including, without limitation,
securities convertible into Subordinate Voting Shares), as are
deemed by the Compensation and Corporate Governance Committee to be
consistent with the purpose of the Equity Incentive Plan.
General
Awards may be granted for no cash consideration or for any cash or
other consideration as may be determined by the Compensation and
Corporate Governance Committee or required by applicable law.
The Compensation and Corporate Governance Committee may impose
restrictions on the grant, exercise or payment of an Award as it
determines appropriate. Generally, Awards granted under the Equity
Incentive Plan shall be non-transferable except by will or by the
laws of descent and distribution. No Participant shall have any
rights as a shareholder with respect to Subordinate Voting Shares
covered by Options, SARs, restricted stock awards, or RSUs, unless
and until such Awards are settled in Subordinate Voting Shares.
No Option (or, if applicable, SARs) shall be exercisable, no
Subordinate Voting Shares shall be issued, no certificates for
Subordinate Voting Shares shall be delivered and no payment shall
be made under the Equity Incentive Plan except in compliance with
all applicable laws.
The Board may amend, alter, suspend, discontinue or terminate the
Equity Incentive Plan and the Compensation and Corporate Governance
Committee may amend any outstanding Award at any time; provided
that (i) such amendment, alteration, suspension, discontinuation,
or termination shall be subject to the approval of the Shareholders
if such approval is necessary to comply with any tax or regulatory
requirement applicable to the Equity Incentive Plan (including,
without limitation, as necessary to comply with any rules or
requirements of an applicable securities exchange), and (ii) no
such amendment or termination may adversely affect Awards then
outstanding without the Award holder’s permission.
No award agreement may accelerate the exercisability of any Award
or the lapse of restrictions relating to any Award in connection
with a change in control event, unless such acceleration occurs
upon the consummation of (or effective immediately prior to the
consummation of, provided that the consummation subsequently
occurs) such change in control event.
In the event of any reorganization, merger, consolidation,
split-up, spin-off, combination, plan of arrangement, take-over bid
or tender offer, repurchase or exchange of Subordinate Voting
Shares or other securities of the Corporation or any other similar
corporate transaction or event involving the Corporation (or the
Corporation shall enter into a written agreement to undergo such a
transaction or event), the Compensation and Corporate Governance
Committee or the Board may, in its sole discretion, provide for any
(or a combination) of the following to be effective upon the
consummation of the event (or effective immediately prior to the
consummation of the event, provided that the consummation of the
event subsequently occurs):
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termination of the Award, whether or not vested, in exchange for
cash and/or other property, if any, equal to the amount that would
have been attained upon the exercise of the vested portion of the
Award or realization of the Participant’s vested rights,
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replacement of the Award with other
rights or property selected by the Compensation and Corporate
Governance Committee or the Board, in its sole discretion, |
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assumption of the Award by the successor or survivor corporation,
or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of
shares and prices,
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that the Award shall be exercisable or payable or fully vested with
respect to all Subordinate Voting Shares covered thereby,
notwithstanding anything to the contrary in the applicable award
agreement, or
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·
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that the Award cannot vest, be exercised or become payable after a
date certain in the future, which may be the effective date of the
event.
|
To the full extent permitted by law, the members of the Board, the
Compensation and Corporate Governance Committee and each person to
whom the Compensation and Corporate Governance Committee delegates
authority under the Equity Incentive Plan will not be liable for
any action taken or determination made in good faith with respect
to the Equity Incentive Plan or any Award made under the Equity
Incentive Plan, and will be entitled to indemnification by the
Corporation, in addition to such other rights of indemnification
they may have by virtue of their position with the Corporation,
with regard to such actions and determinations.
Tax Withholding
The Corporation may take such action as it deems appropriate to
ensure that all applicable federal, state, local and/or foreign
payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of a Participant, are withheld or collected
from such Participant.
Legacy Incentive Plan
Pursuant to and upon completion of the RTO, the Corporation assumed
the obligations under the Options outstanding at such time issued
by Indus Holding under its 2016 Stock Incentive Plan (the “Legacy
Incentive Plan”) and the obligations under the Legacy Incentive
Plan solely with respect to such assumed Options (no further grants
were made under the Legacy Incentive Plan following completion of
the RTO). The principal terms of the Legacy Incentive Plan, as they
relate to the Options issued thereunder, are described below.
Purpose
The purpose of the Legacy Incentive Plan is to attract, retain,
reward and motivate eligible individuals by providing them with an
opportunity to acquire or increase a proprietary interest in the
Corporation and to incentivize them to expend maximum effort for
the growth and success of the Corporation, so as to strengthen the
mutuality of the interests between the eligible individuals and the
shareholders of Indus.
Eligibility
If the outstanding Subordinate Voting Shares are increased or
decreased or changed into or exchanged for a different number or
kind of shares or other securities by reason of any
recapitalization, reclassification, reorganization, stock split,
reverse split, combination of shares, exchange of shares, stock
dividend or other distribution payable in shares of Indus or other
increase or decrease in such shares effected without receipt of
consideration by Indus, an appropriate and proportionate adjustment
shall be made by the Compensation and Corporate Governance
Committee to: (i) the aggregate number and kind of shares available
under the Legacy Incentive Plan, (ii) the calculation of the
reduction of Subordinate Voting Shares available under the Legacy
Incentive Plan, (iii) the number and kind of shares issuable
pursuant to outstanding awards granted under the Legacy Incentive
Plan and/or (iv) the exercise price of outstanding Options granted
under the Legacy Incentive Plan. No fractional Subordinate Voting
Shares or units or other securities shall be issued pursuant to any
such adjustment under the Legacy Incentive Plan, and any fractions
resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share or unit. Any
adjustments made under the Legacy Incentive Plan with respect to
any incentive stock options must be made in accordance with Section
424 of the Code.
Options
Each Option granted under the Legacy Incentive Plan may be
designated by the Compensation and Corporate Governance Committee,
in its sole discretion, as either (i) an ISO, or (ii) an NQSO.
Options designated as ISOs that fail to continue to meet the
requirements of Section 422 of the Code shall be re-designated as
NQSOs automatically on the date of such failure to continue to meet
such requirements without further action by the Compensation and
Corporate Governance Committee. In the absence of any designation,
Options granted under the Legacy Incentive Plan will be deemed to
be NQSOs.
Subject to the limitations set forth in the Legacy Incentive Plan
relating to ISOs, Options granted under the Legacy Incentive Plan
and all rights to purchase Subordinate Voting Shares thereunder
shall terminate no later than the tenth anniversary of the grant
date of such Options, or on such earlier date as may be stated in
the award agreement relating to such Option. In the case of Options
expiring prior to the tenth anniversary of the grant date, the
Compensation and Corporate Governance Committee may in its
discretion, at any time prior to the expiration or termination of
said Options, extend the term of any such Options for such
additional period as it may determine, but in no event beyond the
tenth anniversary of the grant date thereof.
No Options may be exercised prior to the satisfaction of the
conditions and vesting schedule provided for in the Legacy
Incentive Plan and in the award agreement relating thereto. Unless
otherwise provided in the award agreement, 25% of the Options shall
vest on each anniversary of the grant date, and there shall be no
proportionate or partial vesting in the periods between the vesting
dates and all vesting shall occur only on the aforementioned
vesting dates.
Payment of the exercise price for the Subordinate Voting Shares
purchased pursuant to the exercise of an Option shall be made by
(i) cash, certified or cashier’s check, bank draft or money order
or (ii) any other method which the Compensation and Corporate
Governance Committee, in its sole and absolute discretion and to
the extent permitted by applicable law, may permit.
Unless otherwise provided in an award agreement, upon the
termination of the employment or other service of a participant
with the Corporation for any reason, all of the participant’s
outstanding Options (whether vested or unvested) shall be subject
to the rules of the Legacy Incentive Plan. Upon such termination,
the participant’s unvested Options shall expire. Notwithstanding
anything in the Legacy Incentive Plan to the contrary, the
Compensation and Corporate Governance Committee may provide, in its
sole and absolute discretion, that following the termination of
employment or other service of a participant with the Corporation
for any reason (i) any unvested Options held by the participant
shall vest in whole or in part, at any time subsequent to such
termination of employment or other service, and/or (ii) a
participant or the participant’s estate, devisee or heir at law
(whichever is applicable), may exercise an Option, in whole or in
part, at any time subsequent to such termination of employment or
other service and prior to the termination of the Option pursuant
to its terms that are unrelated to termination of service. Unless
otherwise determined by the Compensation and Corporate Governance
Committee, temporary absence from employment or other service
because of illness, vacation, approved leaves of absence or
military service shall not constitute a termination of employment
or other service.
If a participant’s termination of employment or other service is
for any reason other than death, disability, cause or a voluntary
termination within ninety (90) days after occurrence of an event
which would be grounds for termination of employment or other
service by the Corporation for cause, any Option held by such
participant may be exercised, to the extent exercisable at
termination, by the participant at any time within a period not to
exceed ninety (90) days from the date of such termination, but in
no event after the termination of the Option pursuant to its terms
that are unrelated to termination of service. If a participant dies
while in the employment or other service of the Corporation, any
Option held by such participant may be exercised, to the extent
exercisable at termination, by the participant’s estate or the
devisee named in the participant’s valid last will and testament or
the participant’s heir at law who inherits the Option, at any time
within a period not to exceed one hundred eighty (180) days after
the date of such participant’s death, but in no event after the
termination of the Option pursuant to its terms that are unrelated
to termination of service. In the event the termination is for
cause or is a voluntary termination within ninety (90) days after
occurrence of an event which would be grounds for termination of
employment or other service by the Corporation for cause (without
regard to any notice or cure period requirement), any Option held
by the participant at the time of such termination shall be deemed
to have terminated and expired upon the date of such
termination.
Change in Control
Upon the occurrence of a change in control of the Corporation, the
Compensation and Corporate Governance Committee may in its sole and
absolute discretion, provide on a case by case basis (i) that all
unvested awards, and all vested awards that are required to be
exercised to realize the full benefit thereof that have not been
exercised, shall terminate, provided that participants shall have
the right, immediately prior to the occurrence of such change in
control and during such reasonable period as the Compensation and
Corporate Governance Committee in its sole discretion shall
determine and designate, to exercise any such vested award, (ii)
that all unvested awards, and all vested awards that are required
to be exercised to realize the full benefit thereof that have not
been exercised, shall terminate, provided that participants shall
be entitled to a cash payment equal to the change in control price
with respect to shares subject to the vested portion of the award
net of the exercise price thereof, if applicable, (iii) provide
that, in connection with a liquidation or dissolution of Indus,
awards that are required to be exercised to realize the full
benefit thereof that have not been exercised, to the extent vested,
shall convert into the right to receive liquidation proceeds net of
the exercise price (if applicable), (iv) accelerate the vesting of
awards and (v) any combination of the foregoing. In the event that
the Compensation and Corporate Governance Committee does not
terminate or convert an unvested award, or a vested award that is
required to be exercised to realize the full benefit thereof that
has not been exercised, upon a change in control of Indus, then the
award shall be assumed, or substantially equivalent awards shall be
substituted, by the acquiring, or succeeding corporation (or an
affiliate thereof).
Right of Repurchase
Unless otherwise provided in an award agreement, Indus shall have
the right to repurchase the Subordinate Voting Shares issued with
respect to any participant, following such participant’s
termination of employment and service with the Corporation for any
reason. The price for repurchasing the Subordinate Voting Shares
shall be equal to the fair market value of the Subordinate Voting
Shares, as determined on the day of such termination. Should Indus
fail to exercise such repurchase right within one hundred and
eighty (180) days following the later of (i) the date of such
participant’s termination of employment or service; or (ii) the
date Subordinate Voting Shares are issued to the participant, Indus
shall be deemed to have waived such right.
General
All awards granted pursuant to the Legacy Incentive Plan are to be
evidenced by an award agreement. The terms of each award agreement
need not be identical for eligible individuals provided that each
award agreement shall comply with the terms of the Legacy Incentive
Plan.
A participant may not transfer an award other than by will or the
laws of descent and distribution. Awards may be exercised during
the participant’s lifetime only by the participant. No award shall
be liable for or subject to the debts, contracts, or liabilities of
any participant, nor shall any award be subject to legal process or
attachment for or against such person. Any purported transfer of an
award in contravention of the provisions of the Legacy Incentive
Plan shall have no force or effect and shall be null and void, and
the purported transferee of such award shall not acquire any rights
with respect to such award. Notwithstanding anything to the
contrary, the Compensation and Corporate Governance Committee may
in its sole and absolute discretion permit the transfer of an award
to a participant’s family member under such terms and conditions as
specified by the Compensation and Corporate Governance Committee.
In such case, such award shall be exercisable only by the
transferee approved of by the Compensation and Corporate Governance
Committee. To the extent that the Compensation and Corporate
Governance Committee permits the transfer of an ISO to a family
member, so that such Option fails to continue to satisfy the
requirements of an incentive stock option under the Code, such
Option shall automatically be redesignated as an NQSO.
Subject to the terms and conditions of the Legacy Incentive Plan,
the Compensation and Corporate Governance Committee may modify
outstanding awards, provided that, except as expressly provided in
the Legacy Incentive Plan, no modification of an award shall
adversely affect any rights or obligations of the participant under
the applicable award agreement without the participant’s consent.
Nothing in the Legacy Incentive Plan shall limit the right of the
Corporation to pay compensation of any kind outside the terms of
the Legacy Incentive Plan.
Other than the Equity Incentive Plan and the Legacy Incentive Plan,
the Corporation does not have any incentive or compensation-based
security plans under which awards are granted.
DIRECTOR COMPENSATION
The following table summarizes the compensation paid to our
non-employee directors for the year ended December 31, 2021.
Name
|
|
Stock
Awards
|
|
|
Total
|
|
George Allen
|
|
$ |
- |
|
|
$ |
- |
|
William Anton
|
|
$ |
85,350 |
|
|
$ |
85,350 |
|
Bruce Gates
|
|
$ |
85,350 |
|
|
$ |
85,350 |
|
Stephanie Harkness
|
|
$ |
85,350 |
|
|
$ |
85,350 |
|
Compensation of Directors
The level of compensation for directors is determined on an ad hoc
basis after consideration of various relevant factors, including
the expected nature and quantity of duties and responsibilities,
past performance, comparison with compensation paid by other
issuers of comparable size and stage of development in the cannabis
industry, and the availability of financial and other resources of
the Corporation. The Compensation and Corporate Governance
Committee of the Board is responsible for determining all forms of
compensation to be granted to the directors of the Corporation,
which compensation is recommended to the Board for approval.
APPROVAL
The contents and the sending of this proxy statement have been
approved by the Board of Directors of the Corporation.
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DATED as of August 31, 2022
By Order of the Board of Directors
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/s/ George Allen
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George Allen
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Chairman
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