CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[COMMERCIALLY SENSITIVE AND/OR CONFIDENTIAL INFORMATION REDACTED]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND...

1.1

Definitions

1.2

Gender and Number

1.3

Certain Phrases and Calculation of Time

1.4

Other Terms

1.5

Headings, etc.

1.6

References to the Disclosure Letters and Exhibits

1.7

Currency

1.8

Knowledge

1.9

Accounting Terms

1.10

Statutory References

1.11

No Presumption

1.12

Appointment of Sellers’ Representative

1.13

Governing Law

2.1

Purchase and Sale

2.2

Purchase Price

2.3

Payments at Closing

2.4

Adjustment of Purchase Price

2.5

Payment of the Post-Closing Adjustment

2.6

Tax Election

3.1

Incorporation and Corporate Power

3.2

Corporate Authorizations

3.3

No Conflict with Authorizations, Laws, etc.

3.4

Required Authorizations

3.5

No Conflict with Contracts

3.6

Execution and Binding Obligation

3.7

Litigation

3.8

Title to Purchased Shares

3.9

Residency

3.10

No Brokers’ Fees, etc.

4.1

Incorporation and Corporate Power

4.2

Corporate Authorizations

4.3

No Conflict with Authorizations, Laws, etc.

4.4

Required Authorizations

4.5

No Conflict with Contracts

4.6

Execution and Binding Obligation

4.7

Authorized and Issued Capital

4.8

No Other Agreements to Purchase

4.9

Dividends and Other Distributions

4.10

Officers and Directors

4.11

Unanimous Shareholders’ Agreement

4.12

Corporate Records

4.13

Subsidiaries

4.14

HoopCo

4.15

Qualification

4.16

Conduct of Business in Ordinary Course

4.17

Compliance with Laws

4.18

Business Authorizations

4.19

Health Canada

4.20

Sufficiency of Assets

4.21

Title to the Assets

4.22

No Options, etc.

4.23

Condition of Assets

4.24

Owned Property

4.25

Leases and Leased Property

4.26

Government Grants and Subsidies

4.27

Material Contracts

4.28

No Breach of Contracts

4.29

Related Party Transactions

4.30

Intellectual Property

4.31

Information Technology

4.32

Accounts Receivable

4.33

Inventory

4.34

Working Capital

4.35

Books and Records and Internal Financial Controls

4.36

Financial Statements

4.37

No Undisclosed Liabilities

4.38

Accounts and Powers of Attorney

4.39

Customers and Suppliers

4.40

Products and Inventory

4.41

Insurance

4.42

Litigation

4.43

Taxes

4.44

Environmental Matters

4.45

Employee Matters

4.46

Employee Benefit Plans

4.47

Privacy Laws

4.48

Anti-Spam Laws

4.49

Sanctions, Money Laundering Laws and Anti-Corruption Laws

4.50

No Brokers’ Fees, etc.

5.1

Incorporation and Corporate Power

5.2

Corporate Authorization

5.3

No Conflict with Authorizations, Laws, etc.

5.4

Required Authorizations

5.5

No Conflict with Contracts

5.6

Execution and Binding Obligation

5.7

Corporate Records

5.8

Capitalization

5.9

Subsidiaries

5.10

Qualification and Business Authorizations

5.11

Tax Matters

5.12

Securities Law Compliance

5.13

Auditors

5.14

Disclosure Controls and Internal Control over Financial Reporting

5.15

Financial Statements

5.16

Liabilities and Indebtedness

5.17

Stock Exchange Compliance

5.18

Sanctions, Money Laundering Laws and Anti-Corruption Laws

5.19

United States Securities Laws

5.20

Litigation

5.21

Compliance with Laws

5.22

Sufficiency of Funds

5.23

No Brokers’ Fees, etc.

5.24

Investment Canada Act

6.1

Access

6.2

Confidentiality

6.3

Conduct of Business of the Acquired Entities Prior to Closing

6.4

Actions to Satisfy Closing Conditions

6.5

Transfer of the Purchased Shares

6.6

Consents

6.7

Competition Act Approval

6.8

Notice of Untrue Representation or Warranty

6.9

Cooperation Regarding Business Acquisition Report and Obligation to Deliver Certain Financial Statements

6.10

Use of Name and Internet Address

6.11

Books and Records

6.12

Preparation of Tax Returns

6.13

Covenants of the Sellers Regarding Tax Matters

6.14

Cooperation Regarding Tax Matters

6.15

Sufficiency of Funds; Conduct of Business of the Purchaser Prior to Closing

6.16

Post-Closing Contractual Resale Restrictions and Hold Period

6.17

Standstill Restrictions

6.18

Exceptions to Standstill

6.19

Purchaser Shareholders Meeting

6.20

Circular

6.21

Conflicts and Privilege

6.22

Pre-Closing Reorganization

6.23

Restrictive Covenant

6.24

Post-Closing Product Liability and Product Recall Insurance Coverage

6.25

New Equipment

6.26

Environmental Testing

7.1

Date, Time and Place of Closing

7.2

Seller’s Closing Deliveries

7.3

Purchaser’s Closing Deliverables

7.4

Closing Procedures

7.5

Non-Merger

8.1

Mutual Conditions Precedent

8.2

Conditions in Favour of the Purchaser

8.3

Conditions in Favour of the Sellers

9.1

Termination

9.2

Effect of Termination

9.3

Expense Reimbursement

9.4

Waiver of Conditions of Closing

9.5

Dispute Resolution

10.1

Indemnification by each Seller

10.2

Indemnification by the Sellers: General Matters

10.3

Indemnification by the Purchaser

10.4

Indemnification Procedure: Third Party Claims

10.5

Procedure for Tax Matters

10.6

Survival

10.7

Duty to Mitigate

10.8

Limitations on Liability

10.9

Procedures for Indemnification – Direct Claims

10.10

Exclusion of Other Remedies

10.11

Agency for Non-Parties

10.12

Tax Treatment

Article 11 Miscellaneous

11.1

Notices

11.2

Entire Agreement

11.3

Amendments

11.4

Waiver

11.5

Severability

11.6

Assignments

11.7

Third Party Beneficiaries

11.8

Time of the Essence

11.9

Expenses

11.10

Further Assurances

11.11

Announcements

11.12

Counterparts and Electronic Delivery

HEXO CORP., a corporation formed under the laws of the Province of Ontario (the “Purchaser”); and

The Persons set out as signatories to this Agreement and listed and described in Section 3.8 of the Sellers’ Disclosure Letter as selling shareholders (collectively, the “Sellers” and each a “Seller”); and

The Persons set out as signatories to this Agreement and listed and described in Section 3.8 of the Sellers’ Disclosure Letter as the principals of the Sellers as of the date of this Agreement or as of the Closing Date, as applicable (collectively, the “Principals” and each a “Principal”).

The Person listed in Section 1.12 of the Sellers’ Disclosure Letter (the “Sellers’ Representative”).

The Sellers are the registered and beneficial owners of all of the issued and outstanding shares in the capital of the Corporation (as defined below) in the Proportionate Share set out beside each such Seller’s name in Section 3.8 of the Sellers’ Disclosure Letter.

The Corporation is the registered and beneficial owner of all of the issued and outstanding shares in the capital of each of 2526356 Ontario Inc. and 9037136 Canada Inc., which operate the Business (as defined below) under the Redecan and Redecan Pharm trade names.

Each Seller wishes to sell all of the issued and outstanding shares it holds in the capital of the Corporation, and the Purchaser wishes to purchase such shares from each Seller, on and subject to the terms and conditions set out in this Agreement.

Definitions

Gender and Number

Certain Phrases and Calculation of Time

In this Agreement:

the words “including” and “includes” mean “including (or includes) without limitation”; and

in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”. If the last day of any such period is not a Business Day, such period will end on the next Business Day.

When calculating the period of time “within” which or “following” which any act or event is required or permitted to be done, notice given or steps taken, the date which is the reference date in calculating such period is to be excluded from the calculation. If the last day of any such period is not a Business Day, such period will end on the next Business Day.

Without limiting the generality of the foregoing, whenever payments are to be made or an action taken on a day which is not a Business Day, such payment will be made or such action taken on the next Business Day.

Other Terms

the words “real property” include immovable property;

the words “personal property” include movable property;

the words “tangible property” include corporeal property;

the words “intangible property” include incorporeal property;

the phrases “the aggregate of”, “the total of” and “the sum of” and phrases of similar meaning mean “the aggregate (or total or sum), without duplication, of”;

the words “hereof”, “herein”, “hereunder” and “hereto” and similar expressions refer to this Agreement as a whole;

the word “or” is not exclusive;

the words “delivered”, “made available” and “furnished” and similar expressions mean that the information, document or materials referred to have been physically or electronically (included through the on-line virtual data room established by the Sellers, the Corporation or the Purchaser) delivered to the relevant Parties; and

the words “executed” and “signed” include electronic signatures and execution thereby, and an electronic signature shall have the same legal effect, and be as valid and enforceable, as a manually executed signature.

Headings, etc.

References to the Disclosure Letters and Exhibits

The purpose of the Disclosure Letters is to set out the qualifications, exceptions and other information called for in this Agreement. Any information disclosed in the Disclosure Letters shall be deemed to be disclosed to the other Parties for all purposes of this Agreement only if such matter is fully and plainly described in that particular section of the applicable Disclosure Letter or there is, in that particular section, a specific cross-reference to another section of the Disclosure Letter. Neither the specification of any dollar amount in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Disclosure Letters is intended to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material, and no Party shall use the fact of the setting forth of any such amount or the inclusion of any such item in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in the Disclosure Letters is or is not material for purposes of this Agreement.

Unless this Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Disclosure Letters is intended to imply that such item or matter, or other items or matters, are or are not in the Ordinary Course, and no Party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in the Disclosure Letters is or is not in the Ordinary Course for purposes of this Agreement.

The Disclosure Letters and the exhibits form an integral part of this Agreement.

The Disclosure Letters are confidential information and neither of the Disclosure Letters may be disclosed unless (i) it is required to be disclosed pursuant to applicable Law, unless such Law permits the Parties to refrain from disclosing the information for confidentiality or other purposes or (ii) a Party needs to disclose it in order to enforce or exercise its rights under this Agreement.

Currency

Knowledge

Accounting Terms

Statutory References

No Presumption

Appointment of Sellers’ Representative

Subject to Section 1.12(f), each of the Sellers hereby irrevocably appoints and designates the Sellers’ Representative as his, her or its true and lawful attorney in fact, with full power and authority, including power of substitution, to, in its sole and absolute discretion, which is granted to the Sellers’ Representative:

amend or waive any provision of this Agreement;

effect all matters as part of, or related to, the Pre-Closing Reorganization;

do all things and take all other action under or related to this Agreement or any Transaction Document which they may consider necessary or useful to effect the Pre-Closing Reorganization or consummate the Transactions;

take all such action as may be necessary, appropriate, permitted or advisable to be taken by or on behalf of the Sellers under the terms of this Agreement or any Transaction Document in order to consent to, pay, contest, arbitrate, litigate or settle any Claim or alleged Claim related to this Agreement or any Transaction

execute and take any action under the Escrow Agreement;

receive and deliver notices for and on behalf of the Sellers or any one of them; and

on behalf of each and every one of the Sellers, enter into any agreement, instrument or other document to effectuate any of the foregoing items (i) to (vi), inclusively.

The execution and delivery of this Agreement by the Sellers shall constitute approval of the appointment of the Sellers’ Representative and all actions or inactions of the Sellers’ Representative pursuant to this Agreement or any other Transaction Document. Any action taken by the Sellers’ Representative pursuant to this Section 1.12 shall have the effect of binding each of the Sellers, as if each such Seller had personally entered into such agreements, taken such actions or refrained from taking such actions as are described in any of items (i) to (vii) hereinabove. Notwithstanding the foregoing, all actions taken or decisions made by the Sellers’ Representative on behalf of the Sellers shall be taken or made in a manner that is rateable and equitable among all the Sellers. The Sellers’ Representative hereby accepts the present mandate. The Sellers’ Representative may not, and they hereby renounce any right that they may have to terminate this mandate with respect to any Seller or such Sellers’ successors or assigns without the consent of the Purchaser. Each Seller agrees to indemnify and to hold and save harmless the Sellers’ Representative from and against any and all Damages of any nature whatsoever (including reasonable legal fees) that the Sellers’ Representative may sustain or incur as a result of any action taken or omitted to be taken by the Sellers’ Representative in relation to the mandate set forth in this Section 1.12, save for any such Damages attributable to the intentional misconduct or gross negligence of such Sellers’ Representative.

Each Seller agrees that the Sellers’ Representative shall not be liable for any actions taken or omitted to be taken under or in connection with this Agreement or any of the other Transaction Documents, except for such actions taken or omitted to be taken resulting from the gross negligence of the Sellers’ Representative, and this limitation of liability will survive the resignation or removal of the Sellers’ Representative and the Closing and/or the termination of this Agreement or any of the other Transaction Documents. Furthermore, each Seller shall be liable (and shall indemnify the Sellers’ Representative), severally (for greater clarity, not jointly and severally), pro rata based upon such Seller’s Proportionate Share, for any expenses (including, reasonable attorneys’ fees and expenses) paid or incurred by the Sellers’ Representative in connection with the performance of its obligations as the Sellers’ Representative, including in the defense of any indemnification claim brought against the Sellers under Article 10. If a dispute arises among the Sellers and the Sellers’ Representative concerning the provisions of this Section 1.12, without the prior written consent of the Purchaser, only the provisions of this Section 1.12 shall be disclosed as evidence in any proceeding. The Sellers’ Representative shall have the right to demand payment with respect to such expenses solely from each Seller severally (for greater clarity, not jointly and severally), pro rata based upon each such Seller’s Proportionate Share. For greater certainty, the Sellers’ Representative shall solely be entitled to rely on the Sellers for any and all expenses or Damages incurred by it in connection with the performance of its obligations under this Agreement and any other Transaction Document, and the Transactions.

The Purchaser shall be entitled to give to the Sellers’ Representative any notice to be given to the Sellers or any of them hereunder, and to make to the Sellers’ Representative any delivery or payment to be made pursuant to this Agreement to any Seller, and all such

The Purchaser shall be entitled to conclusively rely, without any independent verification or inquiry, on any action taken by the Sellers’ Representative (without any duty to notify or confirm with the Sellers), and each of the Sellers confirms that it, he, she or it shall have no claim or cause of action against the Purchaser by reason of any breach by the Sellers’ Representative of its obligations hereunder or with respect to any action of the Purchaser which results from its reliance on the actions or statements of the Sellers’ Representative.

The Sellers may remove the Sellers’ Representative with or without cause upon the affirmative written consent of the Sellers representing, immediately prior to the date of this Agreement, at least 67% of the issued and outstanding shares in the capital of the Corporation and shall thereupon appoint a successor, which shall be acceptable to the Purchaser, acting reasonably, provided that notice thereof is given by the new Sellers’ Representative to each of the other parties hereto.

Upon the death, disability, incapacity or resignation of the Sellers’ Representative, the Sellers representing, immediately prior to the date of this Agreement, at least 67% of the issued and outstanding shares in the capital of the Corporation shall jointly appoint a successor to fill the vacancy, which shall be acceptable to the Purchaser, acting reasonably.

The Sellers’ Representative shall only have the duties expressly stated in this Agreement and shall have no other duty, express or implied. The Sellers’ Representative may engage attorneys, accountants, investment bankers, advisors, consultants and clerical personnel and obtain such other professional and expert assistance, and maintain such records, as the Sellers’ Representative may deem necessary or desirable and incur out-of-pocket expenses related to such assistance hereunder at the cost and expense of the Sellers. The Sellers’ Representative may in good faith rely conclusively upon information, reports, statements and opinions prepared or presented by such professionals, and any action taken by the Sellers’ Representative based on such reliance shall be deemed conclusively to have been taken in good faith. No provision of this Agreement or any Transaction Document shall require the Sellers’ Representative to expend or risk its own funds or otherwise incur any financial liability in the exercise or performance of any of its powers, rights, duties or privileges under this Agreement or any Transaction Document.

Governing Law

This Agreement is governed by and is to be interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

Each of the Parties irrevocably attorns and submits to the exclusive jurisdiction of the courts of Ontario located in the City of Toronto in any action or proceeding arising out of, or relating to, this Agreement. Each of the Parties waives objection to the venue of any action or proceeding in such court or any argument that such court provides an inconvenient forum.

Each of the Parties irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of, or related to, this Agreement or any other Transaction Document.

Purchase and Sale

Purchase Price

The purchase price payable by the Purchaser to the Sellers for the Purchased Shares shall, subject to adjustment in accordance with the terms of this Agreement, be an aggregate amount equal to:

$925,000,000;

plus the amount of the Cash;

less the amount of the Indebtedness;

less the Transaction Expenses;

plus the amount (if any) by which the Closing Working Capital is greater than the Target Working Capital Amount; and

less the amount (if any) by which the Target Working Capital Amount is greater than the Closing Working Capital;

The Parties acknowledge that it is not possible to determine the definitive Purchase Price until the Closing Date Financial Statements are available. Accordingly, the Sellers’ Representative shall deliver to the Purchaser no later than five (5) Business Days but not earlier than ten (10) Business Days prior to the Closing Date a statement (the “Estimated Purchase Price Statement”) in a form mutually acceptable to the Parties, acting reasonably, that will comprise:

an estimated consolidated balance sheet of the Corporation as at the end of the day immediately preceding the Closing Date, calculated consistent with the methodology used in the Annual Unaudited Financial Statements;

an estimate of the Cash as at the end of the day immediately preceding the Closing Date;

an estimate of the Indebtedness as at the end of the day immediately preceding the Closing Date;

an estimate of the Transaction Expenses as at the end of the day immediately preceding the Closing Date (the “Estimated Closing Transaction Expenses”);

an estimate of the Working Capital as at the end of the day immediately preceding the Closing Date; and

an estimate of the Purchase Price based on paragraphs 2.2(b)(i) to 2.2(b)(v) above (the “Estimated Purchase Price”).

The Sellers’ Representative shall deliver to the Purchaser, at least five (5) Business Days prior to the Closing Date, the pay-out letters (the “Pay-Out Letters”) addressed to the Corporation from the Paid-Out Creditors, in form and substance reasonably satisfactory to the Purchaser. Each Pay-Out Letter will:

set out the aggregate amount of principal and interest of the Indebtedness owed by the Acquired Entity, as of the Closing Date, to the relevant Paid-Out Creditor, together with all accrued and unpaid interest, fees, or other obligations owed to the Paid-Out Creditor as a result of the early repayment thereof (collectively, the “Pay-Out Amount”) and indicate relevant wire transfer instructions; and

contain a release or discharge of any and all Liens related to such Indebtedness conditional on full payment of the Pay-Out Amount.

Payments at Closing

The Estimated Purchase Price shall be paid and satisfied at the Closing as follows (such payments being the “Closing Payments”):

Upfront Cash Consideration. The Purchaser shall pay to the Sellers, at the Closing, by wire transfer of immediately available funds to the account or accounts as specified in writing by the Sellers’ Representative, an amount equal to each Seller’s Proportionate Share of the Estimated Purchase Price, minus the Share Payment Amount and the Working Capital Escrow Amount (the “Upfront Cash Consideration”) as specified in Section 2.3(a)(i) of the Sellers’ Disclosure Letter;

Consideration Shares. The Purchaser shall (A) issue, or cause to be issued to the Persons as specified in Section 2.3(a)(ii) of the Sellers’ Disclosure Letter (as may be amended by the Sellers’ Representative prior to Closing, in which case, such Persons as specified by the Sellers’ Representative in the Flow of Funds Memorandum), such number of Purchaser Shares (the “Consideration Shares”) as is equal to the Share Payment Amount divided by the Purchaser Share Price, (B) ensure the registration of the Persons as specified in Section 2.3(a)(ii) of the Sellers’ Disclosure Letter (as may be amended by the Sellers’ Representative prior to Closing, in which case, such Persons as specified by the Sellers’ Representative in the Flow of Funds Memorandum) as the registered and beneficial holders of such Consideration Shares, and (C) provide a direct registration system advice or similar document evidencing the electronic registration of ownership of securities or other evidence reasonably acceptable to the Sellers’ Representative to properly evidence the issuance of such Consideration Shares to the Persons as specified in Section 2.3(a)(ii) of the Sellers’ Disclosure Letter (as may be amended by the Sellers’ Representative prior to Closing, in which case, such Persons as specified by the Sellers’ Representative in the Flow of Funds Memorandum).

Working Capital Escrow Amount. The Purchaser shall pay the Working Capital Escrow Amount to the Escrow Agent by wire transfer of immediately available funds to the account specified by the Escrow Agent to be held by the Escrow Agent in escrow in accordance with the terms and conditions of the escrow agreement attached as Exhibit 2.3 (the “Escrow Agreement”).

At Closing, the Purchaser shall also make the following payments:

The Purchaser shall pay, on behalf of the relevant Acquired Entities, the relevant Pay-Out Amount to each Paid-Out Creditor (which amount shall be the amount set forth in the applicable Pay-Out Letter) in immediately available funds in such manner as directed by each Paid-Out Creditor in the applicable Pay-Out Letter; and

The Purchaser shall pay, as per the Sellers’ Representative’s instructions, the Estimated Closing Transaction Expenses pursuant to those wire transfer instructions provided by the Sellers’ Representative at least three (3) days prior to Closing.

The Closing Payments and the payments in Section 2.3(b) shall be made pursuant to a flow of funds memorandum in form and substance satisfactory to the Parties to be agreed upon them prior to the Closing Date, acting reasonably (the “Flow of Funds Memorandum”), which shall include a treasury direction to the Purchaser’s transfer agent for delivery of the Consideration Shares as set out in Section 2.3(a)(ii) against delivery by the Sellers of the Purchased Shares.

Adjustment of Purchase Price

Within 60 days following the Closing Date, the Purchaser shall prepare and deliver to the Sellers’ Representative:

the Closing Date Financial Statements prepared in accordance with GAAP consistent with the methodology used in the Annual Unaudited Financial Statements;

the calculation of the Closing Cash, Closing Indebtedness, Closing Transaction Expenses and the Closing Working Capital, in a manner consistent with the method used to calculate the items as delivered by the Sellers’ Representative under Section 2.2(b) based on such Closing Date Financial Statements; and

the calculation of the Purchase Price

The Sellers shall provide the Purchaser and its Representatives access, upon every reasonable request, to all work papers and accounting books and records relating to the Acquired Entities in the possession of the Sellers or their Representatives, to assist the Purchaser in the preparation of the Closing Calculation.

After delivery of the Closing Calculation, the Purchaser shall provide the Sellers’ Representative access, upon every reasonable request, to all work papers of the Purchaser, accounting books and records of the Acquired Entities and the appropriate personnel to verify the accuracy, presentation and other matters relating to the Closing Calculation and the preparation of the Closing Date Financial Statements.

The Sellers’ Representative may object to the Closing Calculation by written notice from the Sellers’ Representative to the Purchaser within thirty (30) days following receipt thereof, which notice shall specify in reasonable detail, to the extent possible, those items or amounts as to which the Sellers’ Representative objects (the “Objection Notice”) and the Parties shall be deemed to have agreed upon all other items and amounts contained in such Closing Calculation which are not impacted by items or amounts objected to in the

If an Objection Notice is delivered in the manner and within the thirty (30) day period specified in the preceding paragraph, the Parties shall in good faith attempt to resolve any matters in dispute with respect to the Closing Calculation as promptly as practicable. If the Purchaser and the Sellers’ Representative are unable to resolve all such items in dispute within twenty (20) days after the receipt of the Objection Notice giving rise to such dispute, then those items or calculations in dispute shall be submitted for resolution within five (5) Business Days following such twenty (20) day period to an independent firm of chartered accountants as the Purchaser and the Sellers’ Representative may agree in writing or, failing such agreement, to Deloitte LLP, or, if Deloitte LLP is unwilling or unable to accept the mandate to resolve such dispute, to KPMG LLP or, if KPMG LLP is also unwilling or unable to accept the mandate to resolve such dispute, an independent firm of chartered accounts as appointed by the Ontario Superior Court of Justice (each being the “Independent Firm”). The Parties shall use commercially reasonable efforts to cause the Independent Firm to submit its determination or opinion in a written statement delivered to the Purchaser and the Sellers’ Representative as promptly as practicable, but in no event later than thirty (30) Business Days after the appointment of such Independent Firm, and such determination or opinion, together with those items accepted by the Purchaser and the Sellers’ Representative in respect of the Closing Calculation or otherwise resolved between the Purchaser and the Sellers’ Representative, shall be conclusive, final and binding on all the Parties without possibility of amendment or appeal and shall constitute the final Closing Calculation.

The Purchaser and the Sellers’ Representative shall cooperate fully in the preparation of the Closing Calculation. While the Independent Firm is making its determination hereunder, the Parties shall not communicate with the Independent Firm on the subject matter of its review, except by joint conference call, joint meeting or letter with copy simultaneously delivered to the other Parties.

The Parties will bear their respective fees and expenses (including those of their respective advisors) in preparing, verifying or reviewing, as the case may be, the Closing Calculation. The fees and expenses of the Independent Firm will be allocated between the Sellers and the Purchaser as determined (and as set forth in the final determination) by the Independent Firm based upon the relative success (in terms of percentages) of each of the Purchaser’s claim, on the one hand, and Sellers’ claim, on the other hand, each in respect of the Closing Calculation. For example, if the final determination reflects a sixty-forty (60-40) compromise of the Parties’ claims, the Independent Firm would allocate forty percent (40%) of the fees and expenses of the Independent Firm to the Party (i.e. either the Purchaser, on the one hand, or Sellers, on the other hand) whose claims were determined to be sixty percent (60%) successful and sixty percent (60%) of such fees and expenses to the Party (i.e. either the Purchaser, on the one hand, or the Sellers, on the other hand) whose claims were determined to be forty percent (40%) successful. The accounting and audit procedures provided for by this Section 2.4 shall be the exclusive and conclusive methodology for determination of the matters covered thereby and shall be binding upon the Parties and shall not be contested by any of them other than as provided for in this Section 2.4.

Payment of the Post-Closing Adjustment

If the Purchase Price as finally determined pursuant to Section 2.4, is less than the Estimated Purchase Price (such difference, represented by a positive number, being the “Over Payment”), then, within five (5) Business Days following such final determination, the Purchaser and the Sellers’ Representative shall give joint written instructions to the Escrow Agent:

to release from the Working Capital Escrow Amount an amount equal to the Over Payment up to the total amount in the Working Capital Escrow Amount by wire transfer of immediately available funds to an account specified by the Purchaser; and

to release the remaining Working Capital Escrow Amount, if any, to the Sellers, in accordance with the Escrow Agreement.

If the Over Payment exceeds the Working Capital Escrow Amount, then the Sellers’ Representative, on behalf of the Sellers, shall, within five (5) Business Days following the final determination, make payment by wire transfer to the Purchaser in immediately available funds of such excess.

If the Purchase Price as finally determined pursuant to Section 2.4 is greater than or equal to the Estimated Purchase Price (such difference, if any, represented by a positive number, being the “Under Payment”), then, within five (5) Business Days following such final determination:

the Purchaser shall make payment to the Sellers by wire transfer to the account specified by the Sellers’ Representative in immediately available funds of an amount equal to the Under Payment; and

the Purchaser and the Sellers’ Representative shall give written instructions to the Escrow Agent to release the Working Capital Escrow Amount to the Sellers.

Tax Election

Incorporation and Corporate Power

If such Seller is a corporation, it is incorporated, organized and existing under the laws of the jurisdiction of its incorporation, and has the corporate power and capacity to own and operate its property and assets, carry on its business and enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party.

If such Seller is a natural Person, he has the legal capacity to enter into and perform his obligations under this Agreement and each of the other Transaction Documents to which it is a party.

Corporate Authorizations

No Conflict with Authorizations, Laws, etc.

result in a breach or a violation of, conflict with, or cause the termination or revocation of, any Authorization held by such Seller necessary to the ownership of the Purchased Shares, the use of the Assets or the operation of the Business;

result in or require the creation of any Lien upon any of the Purchased Shares or any Assets;

result in a breach or a violation of, or conflict with, any judgement, order or decree of any Governmental Authority; or

result in a breach or a violation of, or conflict with, any Law applicable to such Seller.

Required Authorizations

No Conflict with Contracts

Execution and Binding Obligation

Litigation

Title to Purchased Shares

Residency

No Brokers’ Fees, etc.

Incorporation and Corporate Power

Corporate Authorizations

No Conflict with Authorizations, Laws, etc.

result in a breach or a violation of, conflict with, or cause the termination or revocation of, any Authorization held by the Acquired Entities or necessary to the ownership of the Purchased Shares, the use of the Assets or the operation of the Business;

result in or require the creation of any Lien upon any of the Purchased Shares or any Assets;

result in a breach or a violation of, or conflict with, any judgement, order or decree of any Governmental Authority; or

result in a breach or a violation of, or conflict with, any Law applicable to the Acquired Entities.

Required Authorizations

No Conflict with Contracts

result in a breach or a violation of, or conflict with, any Contract binding on or affecting the Acquired Entities, the Purchased Shares or the Assets; or

result in or give any Person the right to seek, or to cause:

the termination, cancellation, amendment or renegotiation of any Contract binding on or affecting the Acquired Entities, the Purchased Shares or the Assets;

the acceleration of any debt or other similar obligation of any Acquired Entity; or

the forfeiture or other loss, in whole or in part, of any benefit which would otherwise accrue to any Acquired Entity.

Execution and Binding Obligation

Authorized and Issued Capital

No Other Agreements to Purchase

the purchase or acquisition from the Sellers of any of the Purchased Shares;

the purchase or acquisition from 2434147 Ontario Inc. or, following the Pre-Closing Reorganization, from the Corporation of any of the HoopCo Shares;

the purchase or acquisition from the Corporation of any of the OpCo Shares or LandCo Shares; or

the purchase, subscription, allotment or issuance of any of the unissued shares or other securities of the Acquired Entities.

Dividends and Other Distributions

Officers and Directors

Unanimous Shareholders’ Agreement

Corporate Records

Subsidiaries

Other than the Acquired Subsidiaries, the Corporation has no Subsidiaries and holds no securities or other ownership, equity or proprietary interests in any other Person.

The authorized capital of LandCo consists of an unlimited number of common shares, of which 375 common shares have been duly issued and are outstanding as fully paid and non-assessable (the “LandCo Shares”). The LandCo Shares represent all of the issued and outstanding securities in the capital of LandCo. All of the LandCo Shares have been issued in compliance with all applicable Laws (including securities Laws).

The authorized capital of OpCo consists of an unlimited number of class A shares and an unlimited number of Class B shares, of which 100 class A shares have been duly issued and are outstanding as fully paid and non-assessable (the “OpCo Shares”). The OpCo Shares represent all of the issued and outstanding securities in the capital of OpCo. All of

The LandCo Shares and OpCo Shares are owned by the Corporation as the registered and beneficial owner thereof with good and valid title thereto, free and clear of all Liens including pre-emptive rights, rights of first refusal or “put” or “call” rights created by statute, the Acquired Entities’ articles or otherwise.

HoopCo

The authorized capital of HoopCo consists of an unlimited number of common shares, of which 100 common shares have been duly issued and are outstanding as fully paid and non-assessable (the “HoopCo Shares”). The HoopCo Shares represent all of the issued and outstanding securities in the capital of HoopCo Shares. All of the HoopCo Shares have been issued in compliance with all applicable Laws (including securities Laws).

As of the date of this Agreement, the HoopCo Shares are owned by 2434147 Ontario Inc. as the registered and beneficial owner thereof with good and valid title thereto, free and clear of all Liens including pre-emptive rights, rights of first refusal or “put” or “call” rights created by statute, HoopCo’s articles or otherwise. Immediately prior to the amalgamation of HoopCo and LandCo pursuant to the Pre-Closing Reorganization, the HoopCo Shares will be owned by the Corporation as the registered and beneficial owner thereof with good and valid title thereto, free and clear of all Liens including pre-emptive rights, rights of first refusal or “put” or “call” rights created by statute, HoopCo’s articles or otherwise.

Immediately prior to the amalgamation of HoopCo and LandCo pursuant to the Pre-Closing Reorganization, HoopCo will not own or possess any property, rights or other assets except for the Haldimand Property and, except as set out in Section 4.14 of the Sellers’ Disclosure Letter, there will be no liabilities of HoopCo, whether or not accrued and whether or not determined or determinable, in respect of which the Purchaser may become liable on or after the consummation of the Transactions.

Qualification

the nature of the Assets or the Business makes such qualification necessary;

the Acquired Entities own or lease any property or assets; or

the Acquired Entities conduct any business.

Conduct of Business in Ordinary Course

sold, transferred or otherwise disposed of any Assets except for:

assets which are obsolete and which, individually or in the aggregate, do not exceed $100,000 in book value; and

inventory sold in the Ordinary Course;

granted or suffered any Lien upon any of the Assets other than a Permitted Lien;

issued or sold any shares, bonds, convertible notes or debentures or other securities of the Corporation;

made any capital expenditures which individually or in the aggregate exceeds $100,000;

paid any secured or unsecured obligation or liability (whether accrued, absolute, contingent or otherwise) which, individually or in the aggregate, exceeds $100,000;

increased its indebtedness for borrowed money or made any loan or advance to any Person, or assumed, guaranteed or otherwise become liable with respect to payment obligations of any Person;

cancelled any debts or claims owed to it or amended, terminated or waived any rights of value to any Acquired Entity;

made any bonus or profit sharing distribution or similar payment of any kind other than in accordance with the Employee Plans;

made any payment to an officer, director, former director or other Related Party other than at the regular rates payable by way of salary or other remuneration or for the reimbursement of expenses incurred in the Ordinary Course;

removed or appointed any auditor or director or terminated or hired any officer or other senior Person;

made any change in the compensation paid or payable to any officer or director of any Acquired Entity or granted any general increase in the rate of wages, salaries, bonuses or other remuneration of any Employees;

suffered any extraordinary loss, damage or destruction, whether or not covered by insurance;

written down the value of any Assets, including inventory, except on account of normal depreciation and amortization;

written off as uncollectible any Accounts Receivable or any part thereof in amounts exceeding $100,000 in any instance or $200,000 in the aggregate;

increased its reserves for contingent liabilities;

suffered any material shortage or any cessation or material interruption of inventory shipments, supplies or ordinary services;

made any forward commitments for the Business either in excess of the requirements of the Acquired Entities for normal operating purposes or at prices higher than current market prices;

compromised or settled any litigation or governmental action relating to the Assets or the Business;

cancelled or reduced any insurance coverage;

permitted any of its facilities located at any of the Owned Properties or the Leased Properties to be shut down for any period of time in excess of 12 hours;

made any change in the method of billing or the credit terms made available to the customers of the Business;

made any change in any method of accounting or auditing practice;

amended its organizational documents or structure; or

authorized, agreed or otherwise committed, whether or not in writing, to do any of the foregoing.

Compliance with Laws

Business Authorizations

Health Canada

Sufficiency of Assets

Title to the Assets

No Options, etc.

Condition of Assets

Owned Property

On the date of this Agreement, LandCo is the absolute, registered and beneficial owner of, and has good and marketable title to, the Owned Properties (excluding the Haldimand Property) free and clear of all Liens other than Permitted Liens and HoopCo is the absolute, registered and beneficial owner of, and has good and marketable title to the Haldimand Property free and clear of all Liens other than Permitted Liens. Following the Pre-Closing Reorganization, LandCo will be the absolute, registered and beneficial owner of, and will have good and marketable title to the Owned Properties free and clear of all Liens other than Permitted Liens.

The Acquired Entities are not now and have never been the owner or lessee of, or subject to any agreement, option or right to own or lease, any real or immovable property or any interest in any real or immovable property, other than the Owned Properties and the Leased Properties.

All of the Owned Properties and the buildings, improvements and fixtures on the Owned Properties (collectively, the “Owned Structures”) are adequate and suitable for the purpose for which they are presently being used by the Acquired Entities. To the Sellers’ knowledge, all of the Owned Structures were constructed in accordance with all applicable Laws. The Acquired Entities have adequate rights of ingress and egress to, from and over the Owned Properties for the operation of the Business. To the Sellers’ knowledge, all the Owned Properties and the Owned Structures are free from structural or material defects (latent or otherwise) and, except as set out and described in Section 4.24(c) of the Sellers’ Disclosure Letter, none of the Owned Properties nor any Owned Structures are currently under construction or renovation or under any commitments in respect thereof and there are no pending or anticipated capital repairs or replacements in respect of any of the Owned Properties or Owned Structures.

To the Sellers’ knowledge: (i) none of the Owned Properties nor any of the Owned Structures, nor their use, operation or maintenance for the purpose of carrying on the Business, violate any restrictive covenant or applicable Laws; (ii) none of the Owned Properties nor any of the Owned Structures encroach on any property owned by any other Person or infringe on rights of way, easements or similar Liens; and (iii) none of the Owned Properties nor any Owned Structures are subject to claims of encroachment by adjoining land owners, nor are there any claims by any Acquired Entity against any adjoining land owners in respect of any encroachment on any of the Owned Properties.

Except as set out in Section 4.24(e) of the Sellers’ Disclosure Letter, none of the Acquired Entities has received any notice of pending condemnation, rezoning, dedication or expropriation proceeding, and to the knowledge of the Sellers, none is threatened against any of the Owned Properties or the Owned Structures.

None of the Acquired Entities has received any notice of any outstanding work orders from any municipality, police department, fire department, sanitation department, health or safety department or any other Governmental Authority and, except as set out and described in Section 4.24(f) of the Sellers’ Disclosure Letter, there are no matters under discussion with or by the Acquired Entities relating to work orders on or in respect of the Owned Properties or the Owned Structures.

Leases and Leased Property

No Acquired Entity is a party to, or under any agreement to become a party to, any real or immovable property lease other than the Leases. Each Lease is in good standing, creates a good and valid leasehold estate in favour of the applicable Acquired Entity in the Leased Property thereby demised and is in full force and effect and, except as set out in Section 4.25(a) of the Sellers’ Disclosure Letter, is unamended. With respect to each Lease where any Acquired Entity is tenant, except as set out in Section 4.25(a) of the Sellers’ Disclosure Letter:

all rents and additional rents are current and not in arrears;

no waiver, indulgence or postponement of the applicable Acquired Entity’s obligations has been granted by the lessor;

there exists no event of default on the Acquired Entity’s part, or to the Sellers’ knowledge event, occurrence, condition or act (including the purchase of the Purchased Shares) which, with the giving of notice, the passage of time or the happening of any other event or circumstance, would become a default under the Lease or give rise to a right of amendment, cancellation or termination of the Lease or restrict the ability of the applicable Acquired Entity to exercise any of its rights as lessee thereunder, including any rights of renewal or first rights of refusal

to the knowledge of the Sellers, all of the covenants to be performed by any party (other than the applicable Acquired Entity) under the Lease have been fully performed; and

except as set out and described in Section 4.25(a) of the Sellers’ Disclosure Letter, no prior consent of any of the lessors is required under any of the Leases for the Transactions.

All of the Leased Properties and the buildings, improvements and fixtures thereon (collectively, the “Leased Structures”) are adequate and suitable for the purpose for which they are presently being used by the Acquired Entities. The Acquired Entities have adequate rights of ingress and egress to, from and over the Leased Properties for the operation of the Business. To the Sellers’ knowledge, there are not any structural or material defects (latent or otherwise) in respect of any of the Leased Structures and, except as set out and described in 4.25(b) of the Sellers’ Disclosure, none of the Leased Properties nor any Leased Structures are currently under construction or renovation or under any commitments in respect thereof and there are no pending or anticipated capital repairs or replacements in respect of any of the Leased Properties or Leased Structures. None of the Acquired Entities has received any notice of: (i) any violation of any restrictive covenant or applicable Laws in respect of their use of the Leased Properties or any of the Leased Structures; (ii) any condemnation, rezoning, dedication or expropriation proceeding in respect of any of the Leased Properties; or (iii) any outstanding work orders from any municipality, police department, fire department, sanitation department, health or safety department or other Governmental Authority in respect of the Leased Properties or the Leased Structures and there are no matters under discussion with or by the Acquired Entities relating to work orders on or in respect of same.

Government Grants and Subsidies

Material Contracts

any distributor, sales, manufacturer representative, franchise, agency, market research, marketing or advertising Contract;

any Contract for the purchase or sale of materials, supplies, equipment or services:

involving, in the case of any such Contract, the payment by any Acquired Entity of more than $100,000 in aggregate in any 12-month period; or

which contains minimum purchase commitments or other terms that restrict or limit the purchasing or selling ability of any Acquired Entity;

any Contract that expires, or may be renewed by a Person other than any Acquired Entity so as to expire, more than one year after the date of this Agreement;

any promissory note, loan agreement or other Contract for the borrowing of money, any currency exchange, commodities or other hedging or swap arrangement or any leasing transaction of the type required to be capitalized in accordance with GAAP;

any Contract for capital expenditures in excess of $100,000 in the aggregate;

any Contract relating to warehousing or storage services;

any confidentiality, secrecy or non-disclosure Contract or any Contract limiting the freedom of any Acquired Entity to engage in any line of business, compete with any Person, solicit any Person, operate its assets at maximum production capacity or otherwise restricting its ability to carry on the Business;

any Contract pursuant to which any Acquired Entity is a lessor or lessee of any machinery, equipment, motor vehicles, office furniture, fixtures or other personal property;

any Contract with a Related Party of the Acquired Entities or the Sellers;

any agreement of guarantee, support, indemnification or assumption or any similar commitment with respect to the obligations, liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness of any other Person;

any partnership, joint venture or other similar Contract, any Contract involving a sharing of profits with any Person or any Contract relating to the acquisition or disposition of any business (whether by merger, sale of shares, sale of assets or otherwise) or any real or immovable property;

any Contract relating to or containing any remediation obligation, assumption of liability, indemnification, or release from liability, in each case involving any Acquired Entity and relating to Hazardous Substances present in the environment;

any Contract relating to grants or other forms of assistance received or receivable by any Acquired Entity from any Governmental Authority; or

any Contract relating to the provision of goods or services to any Governmental Authority.

No Breach of Contracts

Each Acquired Entity has performed all of the obligations required to be performed by it and is entitled to all benefits under, and is not alleged to be in default or breach of, or have violated, any Material Contract. Each Material Contract is enforceable in accordance with its terms and is in full force and effect, unamended, and there exists no default or event of default or event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any other event or circumstance, would become a breach of, or a default or event of default under, or a violation of any Material Contract. Except as set out in Section 4.28 of the Sellers’ Disclosure Letter, no consent of, or notice to, any Person is required in order for the Acquired Entities to continue to have the full benefit of each Material Contract after Closing.

The Corporation has not violated or breached in any material respect any of the terms or conditions of any Contract to which any Acquired Entity is a party or bound (excluding Material Contracts and Specified Material Contracts) and to the knowledge of the Sellers, all the covenants to be performed and the obligations to be fulfilled by any other party to such Contract have been fully performed and fulfilled in all material respects.

Related Party Transactions

Intellectual Property

Section 4.30 of the Sellers’ Disclosure Letter contains a complete and accurate list of:

all material IP Rights owned by any Acquired Entity used in the Business as currently conducted (“Owned IP Rights”); and

all material licences to which any Acquired Entity is a party, either as licensee or licensor, with respect to material IP Rights used in the Business as currently conducted, excluding commercially available off-the-shelf software (“IP License Agreements”).

The Acquired Entities are the exclusive owner of all right, title and interest in and to the Owned IP Rights listed in Section 4.30 of the Sellers’ Disclosure Letter, free and clear of all Liens other than Permitted Liens. Other than as disclosed in Section 4.30 of the Sellers’ Disclosure Letter, no Acquired Entity has assigned, licenced or otherwise conveyed any of its Owned IP Rights.

To the Sellers’ knowledge, the Owned IP Rights (i) are in full force and effect and (ii) have not been used or not used, enforced or not enforced in a manner that will result in their abandonment, cancellation or unenforceability. There is no claim existing or, to the Sellers’ knowledge, threatened alleging adverse ownership, invalidity or other opposition to, or any conflict with, any of the Owned IP Rights. In the past three years, no Acquired Entity has received written notice of any alleged infringement or misappropriation from any Person

To the Seller’s knowledge, (i) each Acquired Entity has the full right and authority to use, and to continue to use after the Closing Date, the Owned IP Rights in connection with the conduct of the Business in the manner presently conducted, and (ii) such use or continuing use does not infringe upon or violate any rights of any other Person. The IP Rights of the Acquired Entities listed in section 4.30 of the Sellers’ Disclosure Letter, together with commercially available off-the-shelf software, are sufficient to conduct the Business as presently conducted. All IP License Agreements to which any Acquired Entity is a party are, to the Sellers’ Knowledge, in good standing, binding and enforceable in accordance with their respective terms and no default exists on the part of such Acquired Entity thereunder.

There are no outstanding or, to the Sellers’ knowledge, threatened disputes or other disagreements with respect to any IP License Agreements, or with respect to infringement by another Person of any of the Owned IP Rights. To the knowledge of the Sellers, no Person is infringing, or is threatening to infringe, upon or otherwise violate, any of the Owned IP Rights.

Except as set out in Section 4.30 of the Sellers’ Disclosure Letter, all of the Owned IP Rights developed or created by employees of the Acquired Entities or pursuant to Contracts with outside consultants or contractors have been assigned to the applicable Acquired Entity in writing or in another enforceable manner, or where such rights, including moral rights (or other similar rights), are incapable of assignment, they have been irrevocably and unconditionally waived by such Person.

Except as set out in Section 4.30 of the Sellers’ Disclosure Letter, no royalty or other fee is required to be paid by any Acquired Entity to any other Person in respect of the use of any Owned IP Rights and, to the Sellers’ knowledge there are no restrictions on the ability of any Acquired Entity to use and exploit any Owned IP Rights.

Each Acquired Entity has used Commercially Reasonable Efforts (including measures to protect secrecy and confidentiality, where appropriate) to protect its Owned IP Rights.

Each Acquired Entity has maintained or caused to be maintained the rights to any of its registered Owned IP Rights in full force and effect and, without limiting the generality of the foregoing, has renewed or has made application for renewal of any registered Owned IP Rights that are material to the Business as currently conducted, and subject to expiration on or prior to the Closing Date.

To the Sellers’ knowledge, no Person has claimed that any current or former employee, agent, consultant or third party contractors of any Acquired Entity that contributed to the development of any Owned IP Rights has, as a result of such contribution, violated the terms and conditions of any Contract with such Person or disclosed or used any trade secret of such Person.

Information Technology

Section 4.31 of the Sellers’ Disclosure Letter sets out a complete and accurate list of all Information Technology used by the Acquired Entities for the conduct of the Business in the Ordinary Course other than off-the-shelf software, specifying whether such Information Technology is owned or licensed (collectively, the “Corporate IT”).

The Corporate IT is sufficient for the conduct of the Business in the Ordinary Course after Closing. The Acquired Entities use reasonable means, consistent with industry practice, to protect the security and integrity of all such Corporate IT. The use of any Corporate IT by the Acquired Entities does not exceed the scope of the rights granted to the Acquired Entities with respect thereto, including any applicable limitation upon the usage, type or number of licences, users, hardware, time, services or systems.

The Acquired Entities have in place appropriate physical, organizational and technological security measures, processes and safeguards intended to secure the Corporate IT and business data from unauthorized use, copying, disclosure, modification, theft, destruction, threats and Disabling Codes that a reasonably prudent and diligent commercial entity would undertake in similar circumstances.

In the past three years, no written notice of a defect or default has been sent or received by any Acquired Entity in respect of any licence or lease under which any Acquired Entity receives or obtains Information Technology.

Each Acquired Entity maintains commercially reasonable data back-up procedures and data recovery procedures and tools to safeguard against loss or corruption of business or customer data in the event of a failure of the Corporate IT. Disaster recovery plans are in place for each Acquired Entity and are designed to ensure that, in the event of a failure of the Corporate IT operated by or on behalf of the Business, such Corporate IT and the data and other material contained therein can be recovered or replaced by such Acquired Entity without material disruption to the Business. To the knowledge of the Sellers, there has been no unauthorized access or breach of or security incident relating to the Corporate IT.

Accounts Receivable

recorded in the financial Books and Records;

actual and bona fide receivables resulting from the ordinary and usual conduct of the business of the Acquired Entities;

subject to customary trade terms; and

collectible without set-off or counterclaim.

Inventory

Working Capital

Books and Records and Internal Financial Controls

All accounting and financial Books and Records have been fully, properly and accurately kept and are complete in all material respects. Such Books and Records are not recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which are not or will not be available to the Acquired Entities in the Ordinary Course after Closing.

Each Acquired Entity has designed disclosure controls and procedures so that material information relating to the Acquired Entities is made known to its management by Persons within the Acquired Entities. Each Acquired Entity has, in connection with the preparation of its financial statements, evaluated such Acquired Entity’s internal controls and procedures to detect any deficiencies in their design or operation which could adversely affect such Acquired Entity’s ability to record, process, summarize and report financial data. No senior manager, officer or director of any Acquired Entity nor, to the knowledge of the Sellers, the Acquires Entities’ independent auditors has identified or been made aware of any fraud involving Employees (including senior management) who prepare or review the financial statements (or any inputs to such financial statements) of any Acquired Entity or any claim or allegation regarding same.

Financial Statements

the assets, liabilities, sales, income, losses, retained earnings, accruals, reserves, adjustments and financial condition of the Acquired Entities;

the results of operations of the Acquired Entities; and

the changes in financial position of the Acquired Entities,

No Undisclosed Liabilities

Accounts and Powers of Attorney

all bank and securities accounts (including any blocked accounts) of the Acquired Entities, the name and address of each bank or securities intermediary within which any Acquired Entity has an account or safety deposit box and the names of all Persons authorized to draw on the account or to have access to the safety deposit box; and

the names of all Persons holding powers of attorney for each Acquired Entity.

Customers and Suppliers

Products and Inventory

Except as disclosed in Section 4.40 of the Sellers’ Disclosure Letter, to the knowledge of the Sellers, the Inventory:

is of a quality in conformity in all material respects with the warranties given by the Acquired Entities pursuant to supply Contracts or any other Contracts to which they are a party;

is of a quality in conformity in all material respects with industry standards;

is not subject to a voluntary recall by any Acquired Entity, by the manufacturer or distributor of the Inventory or any Governmental Authority, and to the Sellers’ knowledge, there is no threat of any such recall;

with respect to the portion of the Inventory consisting of finished products, is saleable;

with respect to the portion of the Inventory consisting of raw materials and work-in-progress, is of quality usable in the production of finished products; and

has been manufactured and produced in accordance, in all material respects with, and meet all material requirements of, applicable Law, and meet the material specifications in all Contracts with customers of the Acquired Entities relating to the sale of such products, in each case, except to the extent written off or written down to fair market value or for which adequate reserves have been established.

All Inventory is owned by the Acquired Entities free and clear of all Liens other than Permitted Liens, and no Inventory is held on a consignment basis from others. The level of Inventory is consistent with the level of inventories that has been maintained in the operation of the Business in the Ordinary Course prior to the date hereof.

Without limiting the generality of the foregoing, all products previously or currently produced, distributed or sold by, and all services provided by, the Acquired Entities, have been produced, packaged, labeled, advertised, distributed and sold (or in the case of services, provided) in accordance with, and meet all material requirements of, applicable Laws, in all material respects, and meet the material specifications in all Contracts with customers of the Acquired Entities relating to the sale of such products in the Ordinary Course, and (x) there have been no material claims against any Acquired Entity pursuant to any product warranty or with respect to the production, distribution or sale of defective or inferior products or with respect to any warnings or instructions concerning such products and (y) other than as disclosed in Section 4.40(c) of the Sellers’ Disclosure Letter, there have been no recalls regarding any of the products produced, distributed or sold by any Acquired Entity, and, to the Sellers’ knowledge, there are no grounds for such recall.

Insurance

Litigation

Taxes

Each Acquired Entity has prepared and filed all Tax Returns within the prescribed period with the appropriate Tax Authority in accordance with applicable Laws. Each Acquired Entity has reported all income and all other amounts and information required by applicable Laws to be reported on each such Tax Return. Each such Tax Return is true, correct and complete in all material respects.

Each Acquired Entity has paid, within the prescribed period, all Taxes and instalments of Taxes which are required to be paid to any Tax Authority pursuant to applicable Laws. No deficiency with respect to the payment of any Taxes or Tax instalments has been asserted against it by any Tax Authority. Since the Reference Date, no Acquired Entity has:

incurred any liability for Taxes;

engaged in any transaction or event which would result in any liability for Taxes; or

realized any income or gain for Tax purposes,

No Acquired Entity has applied for, claimed or received a refund of Tax (or amount deemed for purposes of the Tax Act to be an overpayment of Tax) to which it was not entitled pursuant to applicable Laws.

Each Acquired Entity has duly and timely withheld and collected all Taxes required by applicable Laws to be withheld or collected by it and has duly and timely remitted to the appropriate Tax Authority all such Taxes as and when required by applicable Laws.

Except as disclosed in Section 4.43 of the Sellers’ Disclosure Letter, there are no proceedings, investigations or audits pending or, to the knowledge of the Sellers, threatened against any Acquired Entity in respect of any Taxes. No event has occurred or circumstance exists which would reasonably be expected to give rise to or serve as a valid basis for the commencement of any such proceeding, investigation or audit. There are no matters under discussion, audit or appeal with any Tax Authority relating to Taxes. All Tax Returns of the Acquired Entities for taxation years ending on or before December 31, 2019 have been assessed by the relevant Tax Authority and have been made available to the Purchaser for review.

No Acquired Entity has requested, entered into any agreement or other arrangement, or executed any waiver providing for, any extension of time within which:

to file any Tax Return;

to file any elections, designations or similar filings relating to Taxes;

it is required to pay or remit any Taxes or amounts on account of Taxes; or

any Tax Authority may assess or collect Taxes.

No Acquired Entity has entered into any agreement with, or provided any undertaking to, any Person pursuant to which it has assumed liability for the payment of Taxes owing by such Person.

Each Acquired Entity has, at all relevant times, been and is a “taxable Canadian corporation” within the meaning of the Tax Act. No Acquired Entity has ever been required to file any Tax Return with, and has never been liable to pay any Taxes to, any Tax Authority outside Canada. No request to file a Tax Return has ever been made by a Tax Authority in a jurisdiction where the Acquired Entities do not file Tax Returns.

No Acquired Entity has claimed any reserve for tax purposes, if as a result of such claim any amount could be included in its or the Purchaser’s income for a taxation year ending after the Closing. No Acquired Entity has made any payment, nor is it obligated to make any payment, and is not a party to any agreement under which it could be obligated to make any payment, that may not be deductible by virtue of section 67 of the Tax Act.

No Acquired Entity has made any Tax elections pursuant to any Law except as described in Section 4.43 of the Sellers’ Disclosure Letter.

No Acquired Entity has entered into any agreements contemplated by section 191.3 of the Tax Act.

No Person (other than the Purchaser) has ever acquired or had the right to acquire control the Corporation for purposes of the Tax Act.

None of section 17, sections 78, 80, 80.01, 80.02, 80.03 and 80.04 of the Tax Act, or any equivalent provision of the Laws of any other jurisdiction, has applied or will apply to any Acquired Entity at any time on or before the Closing Date.

No Acquired Entity has acquired property from a Person not dealing at “arm’s length” (within the meaning of the Tax Act) with such Acquired Entity, for consideration, the value of which is less than the fair market value of the property, in circumstances which could subject it to a liability under section 160 of the Tax Act or section 325 of the Excise Tax Act (Canada) or any equivalent section in any other Laws relating to Taxes. The value of the consideration paid or received by any Acquired Entity for the acquisition, sale, transfer or provision of property (including intangibles) or the provision of services (including financial transactions) from or to a non-arm’s length person is equal to the estimated fair market value of such property acquired, provided or sold or services purchased or provided.

No Acquired Entity has received any requirement pursuant to section 224 of the Tax Act or the equivalent provision of any provincial law which remains unsatisfied in any respect.

For all transactions between any Acquired Entity and any non-resident Person with whom it was not dealing at “arm’s length” (within the meaning of the Tax Act), such Acquired Entity has made or obtained records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Tax Act.

Each Acquired Entity is duly registered under Part IX of the Excise Tax Act (Canada) with respect to the goods and services tax and harmonized sales tax and under Division I of Chapter VIII of Title I of the Quebec Sales Tax Act with respect to the Quebec sales Tax and as a collector under the Provincial Sales Tax Act (British Columbia) and the registration numbers are as specified in Section 4.43 of the Sellers’ Disclosure Letter.

No Acquired Entity has made an “excessive eligible dividend designation” as defined in subsection 89(1) of the Tax Act in respect of any dividend paid, or deemed to have been paid on any class of shares of its capital.

No Acquired Entity has made a capital dividend election under subsection 83(2) of the Tax Act in an amount which exceeded the amount in its capital dividend account at the time such election was made.

Each Acquired Entity has correctly calculated and duly filed all claims for federal and provincial Tax credits (including refundable or reimbursable Tax credits). No Acquired Entity has received any refund of Taxes in respect of any such Tax credits to which it is not entitled.

Environmental Matters

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, the Acquired Entities, the Business and the Assets are and have always been in material compliance with all applicable Environmental Laws and no Acquired Entity has ever been charged with any offence under any Environmental Laws.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, no Acquired Entity has received any notice of, nor have the Sellers any knowledge of, any issued, outstanding, pending or threatened orders, complaints, claims, allegations, actions, prosecutions, administrative monetary penalties or investigations with respect to the Business or the Assets, in regards to any alleged material non-compliance with, or material liability under Environmental Laws.

Each Acquired Entity has obtained all Authorizations required by Environmental Laws for the operation of the Business and the Assets, and the Acquired Entities have always been and are now in material compliance with all such Authorizations. All such Authorizations are listed in Section 4.44 of the Sellers’ Disclosure Letter.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, no Acquired Entity has received written notice of, nor have the Sellers any knowledge of, any proceeding, order, or decision (judicial or administrative) pending or threatened by any Governmental Authority to revoke, suspend, modify, or limit any Authorization required by Environmental Laws for the operation of the Business or the ownership of the Assets.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, no Authorizations issued to any Acquired Entity pursuant to Environmental Laws will become void or voidable as a result of the completion of the Transactions.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, the Acquired Entities and the Business are in compliance with all financial assurance requirements prescribed by Environmental Laws or any orders or Authorizations issued pursuant to Environmental Laws, and no Acquired Entity has received written notice and the Sellers have no knowledge of any proceeding or decision (judicial or administrative), pending or threatened, by any Governmental Authority to modify or increase any applicable financial assurance requirements. All financial assurance requirements applicable to the Acquired Entities or the Business are listed in Section 4.44 of the Disclosure Letter.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, no Acquired Entity has caused or permitted any Release of a Hazardous Substance, at any location, except where such Release is in material compliance with applicable Environmental Laws or any Authorizations issued pursuant to applicable Environmental Laws.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, to the knowledge of the Sellers having not completed any environmental testing or site assessments, there are no Hazardous Substances, in excess of the applicable Site Condition Standards in the soil, sediment, and/or, groundwater on, at, under, migrating from, or migrating to the Owned Properties or the Leased Properties.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, no Acquired Entity has received any notice of, nor do the Sellers have any knowledge of, any issued, outstanding, pending, or threatened orders, claims, allegations, actions, prosecutions, administrative monetary penalties, or investigations, with respect to:

any Hazardous Substances on, at, under, migrating from, or migrating to the Owned Properties or the Leased Properties; or

any Release of any odour, heat, sound, vibration, or radiation from the Owned Properties or the Leased Properties.

The Sellers have disclosed to the Purchaser (i) all environmental reports, including site assessments, environmental sampling results and environmental audits, (ii) occupational health and safety compliance audits , prepared by or on behalf of the Acquired Entities, and (iii) material occupational health and safety inspection reports and workplace inspection reports prepared in 2020 or 2021, in the case of each of (i), (ii) or (iii), in the possession of the Sellers or the Acquired Entities that relate to the Acquired Entities, the Business, the Owned Properties, the Leased Properties or any of the other Assets, including reports relating to any offsite migration of Hazardous Substances, and all such reports are listed in Section 4.44 of the Sellers’ Disclosure Letter.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, the Acquired Entities and the Business currently meet all applicable greenhouse gas emission standards or limits prescribed by applicable Environmental Laws and no cost or expenditure, including the payment of charges, fees, or the purchase of compliance credits or units, will be required for the current compliance period.

Except as set out in Section 4.44 of the Sellers’ Disclosure Letter, no unbudgeted work or additional expenditure is required or planned in relation to the Business, the Owned Properties, the Leased Properties or any of the other Assets to ensure compliance with applicable Environmental Laws or Authorizations issued pursuant to applicable Environmental Laws.

The representations and warranties contained in Section 4.44 are the exclusive representations relating to environmental matters.

Employee Matters

Except for the Contracts listed in Section 4.45 of the Sellers’ Disclosure Letter (the “Employee Material Contracts”) and the Employee Plans, no Acquired Entity is a party to, subject to, or affected by, as of the date hereof:

any written employment Contract with any Employee whose base salary or wage for the 2021 calendar year is in excess of $100,000;

any verbal employment Contract that is not terminable upon providing reasonable notice at common law;

any written Contract with a Person acting as an agent, independent contractor or dependent contractor providing services to such Acquired Entity and providing for annual fees or remuneration in excess of $200,000;

any certification orders;

any collective agreement; or

any written policies, procedures, practices or programs that set out material terms and conditions of employment or engagement.

True, correct and complete copies of the Employee Material Contracts, or, in the case of Employee Material Contracts in respect of clauses (i) and (iii) above, the applicable standard form agreement, have been provided to the Purchaser.

Except as set out in Section 4.45 of the Sellers’ Disclosure Letter, the terms and conditions of the agreements set forth in Section 4.45 of the Sellers’ Disclosure Letter in respect of clauses (i) and (iii) above are not materially different than the terms and conditions in the applicable standard form agreement provided to the Purchaser.

Section 4.45 of the Sellers’ Disclosure Letter includes a complete and accurate list of all Employees, agents, independent contractors and dependent contractors of the Acquired Entities as of the date hereof. The list has been prepared in compliance with applicable Privacy Laws and includes, to the extent applicable, each Person’s:

position or title with the applicable Acquired Entity;

current salary or hourly rate of pay or fee for service;

bonus (whether monetary or otherwise) paid since the beginning of the most recently completed financial year or payable in the current financial year of the applicable Acquired Entity to such Person;

the date upon which such Person was first hired or engaged;

the Employee Plans in which such Person participates;

status with any union;

age;

status with respect to leaves of absence, whether approved or not; and

accrued vacation, if any.

Except as set out in Section 4.45 of the Sellers’ Disclosure Letter, no Employee is on a leave of absence as of the date hereof.

Each Acquired Entity has, in all material respects, performed all of the obligations required to be performed by it and is entitled to all benefits under, and, to the knowledge of the Sellers, is not alleged to be in material default of, any Employee Material Contract. Each of the Employee Material Contracts is in full force and effect, and unamended.

Except as set out in Section 4.45 of the Sellers’ Disclosure Letter, no material complaint, grievance, claim, proceeding, civil action, work order or investigation has been filed, made

The Corporation has, in all material respects, observed and complied with the provisions of all applicable Laws respecting employment, including employment standards Laws as well as Laws relating to human rights, occupational health and safety, workplace safety and insurance, labour relations and pay equity.

Except as set out in Section 4.45 of the Sellers’ Disclosure Letter, there are no actions, suits or proceedings, at law or in equity, by any Person (including the Acquired Entities), nor any action, suit, arbitration, administrative proceeding or other proceeding by or before (or to the knowledge of the Sellers any investigation by) any Governmental Authority, pending, or, to the knowledge of the Sellers, threatened against or affecting the Acquired Entities in respect of employment matters, that, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Acquired Entities or the Business. To the knowledge of the Sellers, no event has occurred or circumstance exists which is reasonably be expected to give rise to or serve as a valid basis for the commencement of any such action, suit, investigation, arbitration, administrative proceeding or other proceedings by or against any Acquired Entity in respect of employment matters. No Acquired Entity is subject to any judgment, order or decree entered in any lawsuit or proceeding.

There are no outstanding decisions or settlements or pending settlements under any applicable employment Laws which place any material financial obligation upon such Acquired Entity.

In the past three years, no Acquired Entity has received any material written remedial order, notice of offence or conviction from a Governmental Authority under occupational health and safety, pay equity or employment standards Laws. Each Acquired Entity has performed in all material respects all its financial obligations under such Laws which are owed to the Employees and the Governmental Authority having jurisdiction over such matters.

Except as set out in Section 4.45 of the Sellers’ Disclosure Letter, no Acquired Entity is party to a collective agreement (including any related documents or agreements including letters of understanding, letters of intent and other written communications with bargaining agents for Employees which impose any obligations upon any Acquired Entity), has entered into and/or is bound by any Contract with any labour union or employee association, has made commitments to or conducted negotiations with any labour union or employee association with respect to any future agreements, and is not party to any certification of any such union with regard to a bargaining unit.

To the knowledge of the Sellers, there are no ongoing union drives. No trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent:

holds bargaining rights with respect to any of the Employees by way of certification, interim certification, voluntary recognition, designation or successor rights;

to the knowledge of the Sellers, has applied to be certified as the bargaining agent of any of the Employees; or

to the knowledge of the Sellers, has applied to have any Acquired Entity declared a related employer pursuant to the provisions of the applicable Laws.

There is no labour strike, picketing, slow down, work stoppage or lock out, existing, pending, or to knowledge of the Sellers, threatened against or directly or indirectly affecting the Business, the Acquired Entities or any of its operations. No Acquired Entity has, in the past three years, experienced any labour strike, picketing, slowdown, work stoppage, lock out or other collective labour action by or with respect to its Employees. There are no charges or complaints pending, or to the knowledge of the Sellers, threatened with respect to or relating to any Acquired Entity before any Governmental Authority in relation to unlawful labour practices. In the past three years, no Acquired Entity has received any written notice from any such Governmental Authority responsible for the enforcement of labour Laws of an intention to conduct an investigation of such Acquired Entity or any of its business concerning its labour practices and no such investigation is, to the knowledge of the Sellers, threatened.

Since January 1, 2020, (i) the Acquired Entities have taken all steps reasonable in the circumstances to protect the health and safety of their Employees, including implementing and enforcing policies and procedures to ensure compliance with COVID-19 Measures, including rules relating to social distancing, the use of face masks or personal protective equipment, and a limitation on activities that may increase the risk of transmission of COVID-19, and (ii) to the knowledge of the Sellers, no COVID-19 transmission has occurred or is suspected to have occurred in any of the Acquired Entities’ workplaces (including for greater certainty, all locations where work is performed or where employees or contractors are representing any Acquired Entity).

Employee Benefit Plans

Section 4.46 of the Sellers’ Disclosure Letter sets out a true, correct and complete list of all retirement, pension, supplemental pension, savings, retirement savings, retiring allowance, bonus, profit sharing, stock purchase, stock option, phantom stock, share appreciation rights, deferred compensation, severance or termination pay, change of control, life insurance, medical, hospital, dental care, vision care, drug, sick leave, short term or long term disability, salary continuation, supplementary unemployment benefits, incentive, compensation or other employee benefit plan, program, arrangement, policy or practice whether written or oral, funded or unfunded, registered or unregistered, insured or self-insured, that is maintained or otherwise contributed to, or required to be contributed to, by or on behalf of each Acquired Entity for the benefit of current or former employees, directors, officers, shareholders, independent contractors or agents of such Acquired Entity other than government sponsored pension, employment insurance, workers’ compensation and health insurance plans (collectively, the “Employee Plans”).

Except as set out in Section 4.46 of the Sellers’ Disclosure Letter, each Employee Plan:

has been maintained and administered in all material respects in compliance with its terms and with the requirements of all applicable Laws; and

is in good standing in respect of such requirements and Laws.

Each Employee Plan that is required to be registered under applicable Laws is duly registered with the appropriate Governmental Authorities.

All contributions or premiums required to be paid, deducted or remitted and all material obligations required to be performed by any Acquired Entity pursuant to the terms of any Employee Plan or by applicable Laws, have been paid, deducted, remitted or performed, as the case may be, in a timely fashion in all material respects and there are no outstanding material defaults or violations with respect to same.

There are no actions, suits, claims, demands, investigations, arbitrations or other proceedings pending or, to the knowledge of the Sellers, threatened with respect to the Employee Plans (other than routine claims for benefits), and, to the knowledge of the Sellers, no event has occurred or circumstance exists that is reasonably be expected to result in such a proceeding.

Except as set out in Section 4.46 of the Sellers’ Disclosure Letter, no Employee Plan that is required to be funded has a funding deficit and the liabilities of the Acquired Entities in respect of all Employee Plans are properly accrued and reflected in the Annual Unaudited Financial Statements and the Interim Financial Statements in accordance with GAAP.

None of the Employee Plans is a registered pension plan within the meaning of applicable Laws.

The Sellers have delivered true, correct and complete copies of each of the following to the Purchaser, to the extent existing or applicable:

the text of all Employee Plans (where no text exists, a summary has been provided) and any related trust agreements, insurance contracts or other documents governing those plans, all as amended to the date of this Agreement;

all booklets and other material communications relating to the Employee Plans distributed to new or existing members of such plan in the last two years;

the most recent actuarial valuation of each Employee Plan filed with applicable Governmental Authorities for which such valuation is required by applicable Laws and, where an actuarial valuation has been prepared in respect of an Employee Plan but has not been filed with a Governmental Authority, the most recent of such valuations;

the most recent accounting or certified financial statement relating to each Employee Plan for which such statement is made;

all legal opinions relating to the administration or funding of any Employee Plan; and

the most recent annual information return filed with Governmental Authorities in respect of each Employee Plan for which such filing is required by applicable Laws.

No event has occurred and, to the knowledge of the Sellers, there has been no failure to act on the part of either any Acquired Entity or a trustee or administrator of any Employee Plan that could reasonably be expected to subject any Acquired Entity or the Employee Plan to the imposition of any Tax, penalty or other liability, whether by way of indemnity or otherwise.

No legally binding promises or commitments have been made by any Acquired Entity to amend any Employee Plan, to provide increased benefits or to establish any new benefit plan, except as required by applicable Laws or as set out in Section 4.46 of the Sellers’ Disclosure Letter.

Except as set out in Section 4.46 of the Sellers’ Disclosure Letter, the consummation of the Transactions will not, alone or together with any additional or subsequent event, result in or require any payment or severance, or the acceleration of vesting or an increase in benefits, under any Employee Plan.

Other than the continuation of benefits for a limited period after an Employee’s termination of employment as required by applicable Laws, the Acquired Entities have no obligation to provide any post-employment benefits to any current, former or retired employees of any Acquired Entity.

All data necessary to administer each Employee Plan is in the possession of the Acquired Entities or its agents and is in a form which is sufficient for the proper administration of such Employee Plan in accordance with its terms and applicable Laws and such data is complete and correct in all material respects.

None of the Employee Plans which are funded or administered through an insurance contract require or permit retroactive increases in premiums or payments thereunder.

No Acquired Entity contributes or is required to contribute to any multi-employer pension plan within the meaning of applicable Laws. None of the Employee Plans is a multi-employer benefit plan.

Subject to applicable Laws, the terms of such Employee Plan and the provision of reasonable notice to affected Employees to the extent required by applicable Law, each of the Employee Plans can be amended or terminated without restrictions and the applicable Acquired Entity has the power and authority to amend or terminate the Employee Plans.

Privacy Laws

Each Acquired Entity has complied and is complying with all applicable Privacy Laws, including in connection with its collection, maintenance, use, disclosure, processing or transmission of Personal Information, including medical records, patient information or other personal information made available to or collected by the Acquired Entities in connection with the operation of the Business (the “Healthcare Data Requirements”). No Acquired Entity has received written complaint or notice of any breach or violation by it of any such Privacy Laws. All Personal Information of the Acquired Entities:

has been collected, used or disclosed with the consent of each individual to which such Personal Information relates (if such consent was required under applicable Privacy Laws);

has been used only for the purposes for which the Personal Information was initially collected or for a subsequent purpose for which consent was subsequently obtained; and

has been collected, used or disclosed for a purpose in respect of which consent may, under applicable Privacy Laws, be implied.

The Acquired Entities have taken commercially reasonable steps to implement appropriate confidentiality, security and other protective measures required by the Healthcare Data Requirements.

Except as set out in Section 4.47 of the Sellers’ Disclosure Letter, no Acquired Entity has disclosed, made available or provided Personal Information to third parties for any purpose except in compliance with, or as required by, applicable Laws.

Each Acquired Entity has at all times provided proper notice of its privacy practices and obtained any necessary consents from data subjects required by applicable Privacy Laws for the processing of Personal Information by or on its behalf. Such notices have not been misleading, deceptive or in violation of applicable Privacy Laws.

To the knowledge of the Sellers, there has been no unauthorized use, unauthorized access or unauthorized disclosure of any of the Acquired Entities’ data, including Personal Information.

Anti-Spam Laws

Each Acquired Entity is in material compliance with applicable Anti-Spam Laws.

No Acquired Entity has received any written complaints regarding a breach of Anti-Spam Laws.

Sanctions, Money Laundering Laws and Anti-Corruption Laws

For purposes of this Section 4.49, a reference to the Sellers or the Acquired Entities includes its directors, officers, employees and other Persons acting on their behalf, directly or indirectly.

Each Acquired Entity is in material compliance with all AML Laws applicable to it. No Acquired Entity is the subject of any examination, investigation, inquiry or enforcement proceedings by or before any Governmental Authority regarding any offense or alleged offences under any AML Laws and, to the Sellers’ knowledge, no such examination, investigation, inquiry or proceeding is pending or has been threatened.

No Acquired Entity has carried on business in a manner which violates or has ever violated any Sanctions nor is it the subject of any investigation or inquiry relating to Sanctions or Sanctioned Persons by a Governmental Authority and, to the Sellers’ knowledge, no such investigation or inquiry is pending or has been threatened. Neither of the Sellers nor any Acquired Entity is a Sanctioned Person or engages in any dealings or transactions, or is otherwise associated, with a Sanctioned Person.

No Acquired Entity has directly or indirectly:

made or authorized a contribution, payment, reward, benefit or gift of funds or property to any official, employee or agent of any Governmental Authority or public international organization, or to any Person for the benefit of any Governmental Authority or public international organization;

for the purpose of bribing any Governmental Authority, kept accounts which do not appear in its financial Books and Records, entered into transactions that are not recorded or that are inadequately identified, recorded non-existent expenditures, entered liabilities with incorrect identification of their object, knowingly used false documents, or intentionally destroyed accounting Books and Records earlier than permitted by law; or

made any contribution to any candidate for public office; where either the payment or the purpose of such contribution, payment, loan, reward or gift was, is, or would be prohibited under the Criminal Code of Canada, the Corruption of Foreign Public Officials Act (Canada) or any other applicable Laws of similar purpose and scope (collectively, “Anti-Corruption Laws”).

No Acquired Entity has breached or violated any reporting, recordkeeping, or ongoing monitoring obligations under applicable AML Laws or Anti-Corruption Laws.

No Acquired Entity has breached or violated any Law regulating lobbying, accounting, bids or conflicts of interest. To the knowledge of the Sellers, no change, fact, event, circumstance, condition or omission has occurred in respect of the Business that would result in any Acquired Entity being suspended or debarred from doing business with a Governmental Authority or otherwise prevent any Acquired Entity from bidding on or applying for Contracts with a Governmental Authority after Closing.

No Brokers’ Fees, etc.

Incorporation and Corporate Power

Corporate Authorization

No Conflict with Authorizations, Laws, etc.

result in a breach or a violation of, conflict with, or cause the termination or revocation of, any Authorization held by the Purchaser or necessary to the ownership and transfer of the Purchased Shares;

result in or require the creation of any Lien upon any of the Purchased Shares or any other property of the Purchaser;

result in a breach or a violation of, or conflict with, any judgement, judicial order or decree of any Governmental Authority; or

result in a breach or a violation of, or conflict with, any Law applicable to the Purchaser;

Required Authorizations

No Conflict with Contracts

result in a breach or a violation of, or conflict with, any Contract binding on or affecting the Purchaser or the Purchased Shares; or

result in or give any Person the right to seek, or to cause:

the termination, cancellation, amendment or renegotiation of any Contract binding on or affecting the Purchaser;

the acceleration of any payment amount or other similar obligation of the Purchaser; or

the forfeiture or other loss, in whole or in part, of any benefit which would otherwise accrue to the Purchaser;

Execution and Binding Obligation

Corporate Records

Capitalization

The authorized capital of the Purchaser consists of: (i) an unlimited number of common shares; and (ii) an unlimited number of special shares.

Section 5.8 of the Purchaser’s Disclosure Letter sets forth the number of common shares of the Purchaser issued and outstanding as of the close of business on the date of this Agreement.

There are no shareholder agreements, voting trusts or other agreements or understandings to which the Purchaser is a party with respect to the voting of the capital stock or other equity interests of the Purchaser.

As of the date hereof, except as set out in Section 5.8 of the Purchaser’s Disclosure Letter, there are no shares, options, warrants, stock appreciation rights, restricted stock units, conversion privileges or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever to which the Purchaser or any of its Subsidiaries is a party or by which any of the Purchaser or its Subsidiaries may be bound, obligating or which may obligate the Purchaser or any of its Subsidiaries to issue, grant, deliver, extend, or enter into any such share, option, warrant, stock appreciation right, restricted stock unit, conversion privilege or other right, agreement, arrangement or commitment.

All outstanding Purchaser Shares have been duly authorized and validly issued and are fully paid and non-assessable.

The Consideration Shares, when delivered by the Purchaser under this Agreement, shall have been duly and validly authorized and issued as fully-paid and non-assessable shares in accordance with applicable Law, free and clear of all Liens, and shall be conditionally approved for listing and trading on the TSX and NYSE subject to satisfaction of customary conditions and shall be freely transferable, subject to the terms of this Agreement.

Subsidiaries

Qualification and Business Authorizations

Tax Matters

Securities Law Compliance

The Purchaser has filed all documents, reports, forms, schedules, statements or other information required to be filed by it under Applicable Securities Laws (collectively, the “Purchaser Public Documents”). All of the Purchaser Public Documents, as of their respective dates, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading as at the time at which they were filed with applicable securities regulatory authorities. All of the Purchaser Public Documents, as of their respective dates (and as of the dates of any amendments thereto), complied as to both form and content in all material respects with the requirements of Applicable Securities Laws or were amended on a timely basis to correct deficiencies identified by securities commissions or similar securities regulatory authorities. The Purchaser has not filed any confidential material change report with any securities regulatory authority that at the date hereof remains confidential.

The Purchaser is a “reporting issuer” under the Applicable Securities Laws of each Province and Territory of Canada and is not in default of any Applicable Securities Laws. No delisting, suspension of trading in or cease trading order with respect to the Purchaser Shares is pending or, to the knowledge of the Purchaser, threatened.

Auditors

Disclosure Controls and Internal Control over Financial Reporting

Financial Statements

Liabilities and Indebtedness

Except as disclosed in the Purchaser Financial Statements (including any notes related thereto), or in the Purchaser Public Documents filed subsequently to January 31, 2021, the Purchaser and its Subsidiaries do not have any material liabilities or obligations of any nature (whether accrued, absolute, determined, contingent or otherwise), other than any such liabilities or obligations incurred in the ordinary course of business since January 31, 2021 or pursuant to the terms of this Agreement.

Except as otherwise disclosed in the Purchaser Financial Statements or in the Purchaser Public Documents filed subsequently to January 31, 2021, the Purchaser and its Subsidiaries do not have any obligations to issue any debt securities, or guarantee, endorse or otherwise become responsible for material obligations of any other person, other than such obligations incurred in the ordinary course of business since January 31, 2021.

Stock Exchange Compliance

Sanctions, Money Laundering Laws and Anti-Corruption Laws

For purposes of this Section 5.18, a reference to the Purchaser includes its directors, officers, employees and other Persons acting on their behalf, directly or indirectly.

The Purchaser is in material compliance with all AML Laws applicable to it. The Purchaser is not the subject of any examination, investigation, inquiry or enforcement proceedings by or before any Governmental Authority regarding any offense or alleged offences under any AML Laws and, to the Purchaser’s knowledge, no such examination, investigation, inquiry or proceeding is pending or has been threatened.

The Purchaser has not carried on business in a manner which violates or has ever violated any Sanctions nor is it the subject of any investigation or inquiry relating to Sanctions or Sanctioned Persons by a Governmental Authority and, to the Purchaser’s knowledge, no such investigation or inquiry is pending or has been threatened. The Purchaser is not a Sanctioned Person nor engages in any dealings or transactions, or is otherwise associated, with a Sanctioned Person.

The Purchaser has not, directly or indirectly:

made or authorized a contribution, payment, reward, benefit or gift of funds or property to any official, employee or agent of any Governmental Authority or public international organization, or to any Person for the benefit of any Governmental Authority or public international organization;

for the purpose of bribing any Governmental Authority, kept accounts which do not appear in its financial Books and Records, entered into transactions that are not recorded or that are inadequately identified, recorded non-existent expenditures, entered liabilities with incorrect identification of their object, knowingly used false documents, or intentionally destroyed accounting Books and Records earlier than permitted by law; or

made any contribution to any candidate for public office; where either the payment or the purpose of such contribution, payment, loan, reward or gift was, is, or would be prohibited under Anti-Corruption Laws.

The Purchaser has not breached or violated any reporting, recordkeeping, or ongoing monitoring obligations under applicable AML Laws or Anti-Corruption Laws.

The Purchaser has not breached or violated any Law regulating lobbying, accounting, bids or conflicts of interest. To the knowledge of the Purchaser, no change, fact, event, circumstance, condition or omission has occurred in respect of the Purchaser’s business that would result in the Purchaser being suspended or debarred from doing business with a Governmental Authority or otherwise prevent the Purchaser from bidding on or applying for Contracts with a Governmental Authority after Closing.

United States Securities Laws

The Purchaser is a “foreign private issuer” within the meaning of Rule 405 under the U.S. Securities Act.

The Purchaser Shares are registered under Section 12 of the U.S. Exchange Act and Purchaser has reporting obligations under Section 15(d) of the U.S. Exchange Act.

The Purchaser is not registered or required to be registered as an “investment company” pursuant to the United States Investment Company Act of 1940, as amended.

Litigation

if adversely determined, would reasonably be expected to be, individually or in the aggregate, material to the business of the Purchaser and its Subsidiaries as presently conducted; or

would reasonably be expected to prevent, prohibit, restrict, or seek to enjoin, or materially delay the consummation of the Transactions.

Compliance with Laws

Sufficiency of Funds

No Brokers’ Fees, etc.

Investment Canada Act

Access

Confidentiality

From the date hereof, each Seller shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning: (a) the Purchaser; and (b) following Closing, the Acquired Entities and the Business, except to the extent that such Seller can show that such information: (x) is generally available to, and known by, the public through no fault of the Seller, any of its Affiliates or any of their respective Representatives; or (y) is lawfully acquired by the Seller, any of its Affiliates or any of their respective Representatives from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Seller, any of its Affiliates or any of their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Applicable Law, such Seller shall promptly notify the Purchaser in writing and shall disclose only that portion of such information that the Seller is advised by its counsel in writing is legally required to be disclosed; provided that the Seller shall use its reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Each Seller agrees that irreparable damage may occur in the event of non-compliance with this Section 6.2(a) and that Purchaser and its Affiliates shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy at law or equity.

From the date hereof, the Purchaser shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning: (a) the Sellers; and (b) prior to Closing, the Acquired Entities and the Business, except to the extent that such Purchaser can show that such information: (x) is generally available to, and known by, the public through no fault of the Purchaser, any of its Affiliates or any of their respective Representatives; or (y) is lawfully acquired by the Purchaser, any of its Affiliates or any of their respective Representatives from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Purchaser, any of its Affiliates or any of their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Applicable Law, the Purchaser shall promptly notify the Sellers in writing and shall disclose only that portion of such information that the Purchaser is advised by its counsel in writing is legally required to be disclosed; provided that the Purchaser shall use its reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. The Purchaser agrees that irreparable damage may occur in the event of non-compliance with this Section 6.2(b) and that Sellers and their respective Affiliates shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy at law or equity.

Conduct of Business of the Acquired Entities Prior to Closing

Except as contemplated by this Agreement (including the Pre-Closing Reorganization) or as specifically described in Section 6.3 of the Sellers’ Disclosure Letter, during the Closing Period, the Sellers shall cause the Acquired Entities to conduct the Business in the Ordinary Course.

Without limiting the generality of Section 6.3(a), but subject to the exceptions provided for therein, the Sellers shall use Commercially Reasonable Efforts and shall cause the Acquired Entities to use Commercially Reasonable Efforts to:

preserve intact the current organization of the Acquired Entities, keep available the services of the Employees (other than those who resign, are temporarily laid off, are terminated for just cause or whose employment ceases due to death or

other than in the Ordinary Course, retain possession and control of their Assets and the other property and assets used by them in the Business, maintain insurance coverage commensurate with existing coverage and preserve the confidentiality of any confidential or proprietary information of the Business or the Acquired Entities;

promptly notify the Purchaser of the occurrence of any event that would reasonably be expected to result in the failure of one or more of the conditions to Closing set out in Article 8 to be met by the Outside Date; and

notify the Purchaser promptly, first orally and then in writing, of any oral or written communications, material and adverse to any Acquired Entity, with any Governmental Authority (including any Cannabis regulatory agency), and promptly provide the Purchaser copies of all such written correspondence and any responses by such Acquired Entity thereto.

Upon written request by the Sellers, the Purchaser may consent, in its sole discretion, to an action any Acquired Entity proposes to take that is not being taken in the Ordinary Course.

Actions to Satisfy Closing Conditions

Except as otherwise provided in this Agreement, the Sellers shall take all such actions as are within their control and shall use Commercially Reasonable Efforts to cause other actions to be taken which are not within their control, so as to ensure compliance with all of the conditions set forth in Section 8.1 and Section 8.2, including ensuring that during the Closing Period and at Closing, there is no breach of any of the representations and warranties contained in Article 3 and Article 4.

Except as otherwise provided in this Agreement, the Purchaser shall take all such actions as are within its control and shall use Commercially Reasonable Efforts to cause other actions to be taken which are not within its control, so as to ensure compliance with all of the conditions set forth in Section 8.1 and Section 8.3 including ensuring that during the Closing Period and at Closing, there is no breach of any of its representations and warranties contained in Article 5.

Transfer of the Purchased Shares

Consents

Competition Act Approval

As soon as practicable and in any event within fifteen Business Days after execution of this Agreement, unless otherwise agreed by the Parties, (i) the Purchaser shall, and the Sellers shall cause the Corporation to, file a notification pursuant to section 114(1) of the Competition Act and (ii) the Purchaser shall file a request for an advance ruling certificate under section 102 of the Competition Act or in the alternative a No Action Letter, in respect of the Transactions.

Subject to compliance at all times with applicable Law and the other provisions of the Agreement, the Purchaser shall and the Sellers shall and shall cause the Corporation to, coordinate and cooperate with each other in exchanging information and supplying such assistance as is reasonably requested in connection with the foregoing including providing each Party with all notices and information supplied to or filed with or received from any Governmental Authority (except for notices and information which the Corporation or the Purchaser, in each case acting reasonably, considers highly confidential and sensitive and which may be filed on a confidential basis).

Each of the Purchaser and Sellers may, acting reasonably, designate any competitively sensitive materials provided to the other Party under this Section 6.7 as “Outside Counsel Only Material”. Such materials and the information therein will be given only to the outside legal counsel of the recipient and, subject to any additional agreements between the Parties, will not be disclosed by such outside legal counsel to employees, officers or directors of the recipient unless express written permission is obtained in advance from the source of the materials or its legal counsel.

Without limiting the generality of the foregoing, each of the Sellers and the Purchaser shall, and the Sellers shall cause the Corporation to:

comply, at the earliest practicable date and after consultation with the other Party, with any request for additional information or documentary material received by it from the Commissioner of Competition or any other antitrust Governmental Authority, as applicable;

cooperate with one another in connection with any filings or other submission aimed at resolving any investigation or other inquiry concerning the Transactions initiated by the Commissioner of Competition, or any other antitrust Governmental Authority, including keeping the other Party informed of the status of the Competition Act Approval and promptly notifying the other Party of receipt of any material communication from a Governmental Authority and provide the other Party with copies thereof; and providing each other with copies of any notifications, filings, correspondence, applications and other submissions in draft form so that the other Party can review and comment upon any proposed submissions or written communications to any Governmental Authority and can confirm that information contained within is consistent and accurate, which comments the other Party must consider in good faith; and

use Commercially Reasonable Efforts to cause any applicable waiting periods under the Competition Act or any other applicable antitrust Law to terminate or expire at the earliest possible date and to obtain the Competition Act Approval, and any other necessary approvals of the Transactions. For purposes of Section 6.7(d)(iii), Commercially Reasonable Efforts shall not require the Purchaser or any Affiliate to propose, negotiate, agree to and effect, by undertaking, commitment, consent agreement, trust, hold separate agreement or otherwise: (a) the sale, divestiture, licensing, holding separate or disposition of any part of the businesses or assets of the Purchaser, its Affiliates, the Acquired Entities or their Affiliates;

Notwithstanding any other provision of this Agreement, the Purchaser shall pay any filing fees under the Competition Act or any other applicable antitrust laws.

Notice of Untrue Representation or Warranty

Cooperation Regarding Business Acquisition Report and Obligation to Deliver Certain Financial Statements

The Sellers shall cause the Acquired Entities to provide, and shall use Commercially Reasonable Efforts to cause each of their employees and accountants and auditors to provide, such cooperation and assistance to the Purchaser to prepare and complete a Business Acquisition Report required under NI 51-102 as may reasonably be requested, from time to time, by the Purchaser (or such other instrument, rule or regulation under Applicable Securities Laws which incorporates the Business Acquisition Report requirements of NI 51-102). For certainty, such cooperation shall include, but is not limited to, affording the Purchaser and its officers, directors, employees, agents and advisors with such access to the Books and Records and other financial, legal, or tax materials as may be reasonably requested by the Purchaser for use by it in connection with the preparation of such Business Acquisition Report. For certainty, the provisions of this Section 6.9 shall continue until such time as the disclosure of the Purchaser contemplated by this Section 6.9 has been filed on SEDAR or is otherwise determined by the Purchaser, acting reasonably, to not be required under Applicable Securities Laws.

Without limiting the generality of the foregoing, the Sellers shall, and shall cause the Corporation to provide reasonable assistance (and cause the Acquired Entities to provide reasonable assistance) to the Purchaser with the preparation of disclosure to be included in a business acquisition report required to be filed by the Purchaser pursuant to Part 8 of NI 51-102, as may be modified by exemptive relief granted pursuant to Applicable Securities Laws, and with the preparation and filing by the Purchaser or one of its Affiliates of a short-form prospectus and/or prospectus supplement (the “Prospectus”) to comply with the requirements of Part 8 of NI 51-102 pursuant to National Instrument 44-101 Short Form Prospectus Distributions and/or National Instrument 44-102 Shelf Distributions or an offering memorandum with similar level of disclosure, as applicable, as may be modified by exemptive relief granted pursuant to Applicable Securities Laws, with respect to one or more financing transactions undertaken by the Purchaser pursuant to, and required to comply with, Applicable Securities Laws, including using Commercially Reasonable Efforts to:

provide the Purchaser no later than June 15, 2021 with a consolidated statement of comprehensive income, a consolidated statement of changes in equity, a consolidated statement of cash flows and a consolidated statement of financial position for the Corporation in each case audited by the Corporation’s auditor and

provide the Purchaser no later than June 15, 2021 with a consolidated balance sheet as at March 31, 2021 and a consolidated balance sheet as at December 31, 2020, a consolidated income statement, a consolidated statement of retained earnings and consolidated cash flow statement, all for the year-to-date three (3) month period ended March 31, 2021, and comparative financial information for the corresponding three (3) month interim period ended March 31, 2020 and notes to such financial statements (the “Interim Financial Statements”);

provide the Purchaser no later than June 15, 2021 with a constructed pro forma income statement for the twelve (12) month period ended September 30, 2020 in accordance with Part 8 of NI 51-102;

within 45 days of the completion of any interim quarterly period following March 31, 2021, provide to the Purchaser consolidated financial statements for the Corporation in respect of such period;

request the Corporation’s auditor(s) to provide to the Purchaser as requested by the Purchaser during the Closing Period with an audit opinion with respect to the Audited Financial Statements and customary comfort letters and consents to the underwriters with respect to financial information relating to the Acquired Entities included or incorporated by reference in a business acquisition report, a Prospectus, and/or offering memorandum as applicable (including, for greater certainty, comfort with respect to (a) the Corporation’s comparative financial results for the year ended December 31, 2019, (b) the Interim Financial Statements (including the Corporation’s comparative three (3) month period ended March 31, 2020) and (c) the financial information pertaining to the Corporation included in the pro forma statements including any constructed results and pro forma adjustments to align to the Purchaser’s IFRS accounting policies); and

provide the Corporation’s auditor(s) with customary and required management representation letters and other customary information and documents as may be reasonably requested by such auditor(s) in order to provide a customary auditor’s report and customary comfort letters to the underwriters.

For certainty, the provisions of this Section 6.9 shall continue until such time as the disclosure of the Purchaser contemplated by this Section 6.9 has been filed on SEDAR or is otherwise determined by the Purchaser, acting reasonably, to not be required under Applicable Securities Laws.

Use of Name and Internet Address

Books and Records

Preparation of Tax Returns

The Purchaser shall cause the Acquired Entities to prepare and file all Tax Returns of the Acquired Entities which are due after the Closing Date in respect of all Pre-Closing Tax Periods, which Tax Returns shall be prepared and filed on a timely basis and in a manner consistent with prior practice with respect to the treatment of specific items on such Tax Returns (to the extent such treatment is reasonable in the circumstances and not prohibited by applicable Laws) and consistent with the Closing Calculation. Not less than 30 days prior to the due date of any such Tax Return, the Purchaser shall provide the Sellers with a substantially final draft of the Tax Return (the “Draft Return”). The Sellers and their accountants shall have the right to review the Draft Return and any working papers relating to its preparation. Within ten days after the date that the Sellers receive the Draft Return, the Sellers shall advise the Purchaser in writing that they either:

agree that the Draft Return was prepared in accordance with the principles set out above; or

do not agree that it was so prepared, in which case the Sellers shall set out, in reasonable detail, the basis for such disagreement.

If the Sellers notify the Purchaser of a disagreement pursuant to Section 6.12(a)(ii) the Sellers and the Purchaser shall attempt to resolve such disagreement; provided, however, that if the Sellers and the Purchaser fail to reach agreement, then the disagreement shall be resolved by a nationally recognized firm of independent public accountants to be designated by mutual agreement of the Sellers and the Purchaser, failing which the firm will be Deloitte LLP. The fees and expenses of the accountants in making any such determination will be borne 50% by the Sellers and 50% by the Purchaser.

The decision as to whether or not to make an election under subsection 256(9) of the Tax Act in respect of the taxation year of the Corporation ending as a result of the completion of the Transactions is within the control of the Purchaser.

The Sellers shall cause the Acquired Entities to prepare and file all Tax Returns of such Acquired Entities due on or prior to the Closing Date, which Tax Returns must be prepared and filed on a timely basis consistent with existing procedures for preparing such Tax Returns and in a manner consistent with prior practice with respect to the treatment of specific items on the Tax Returns (to the extent such treatment is reasonable in the circumstances and not prohibited by applicable Laws).

Subject to the terms of the Sellers’ indemnification obligations set out in Article 10 of this Agreement with respect to such matters, the Sellers shall pay or cause to be paid on or before their respective due dates all Taxes due with respect to any Pre-Closing Tax Period. In the case of Taxes which relate to the portion of a Straddle Period that falls prior to Closing, the portion of any such Taxes that are treated as attributable to the Pre-Closing Tax Period for purposes of this Agreement shall be:

in the case of Taxes based upon, or related to, income or receipts, deemed equal to the amount which would be payable if the Tax period ended immediately prior to the Closing Time; and

in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on and including the Closing Date and the denominator of which is the number of days in the entire period.

To the extent that an Acquired Entity is entitled to a rebate, refund or credit of Taxes with respect to any Pre-Closing Tax Period and such rebate, refund or credit (i) is not accounted for in the Closing Calculation, (ii) is not consequential to the increase in another period in an item of revenue, income or gain or the decrease in another period of a deduction, refund, allowance, credit, loss, loss carry-back, overpayment or deemed overpayment of Tax, and (iii) is actually received on or before the second anniversary of the Closing, the Purchaser shall deliver such amount (net of any Taxes and expenses incurred with respect thereto) to the Sellers or as otherwise directed by the Sellers’ Representative, within 30 days of receipt of such refund, rebate or credit; it being understood that, subject to the Sellers’ indemnity set out in Article 10 of this Agreement, should the amount of such rebate, refund or credit of Taxes be subsequently reduced, assessed or reassessed by a Governmental Authority, the Sellers shall pay to the Purchaser an amount equal to such reduction, assessment or reassessment (including any applicable interest and penalties).

Any payment made by or on behalf of a Party pursuant to Section 6.12(e) or Section 6.12(f) shall be treated as an adjustment to the Purchase Price for all purposes of this Agreement.

Covenants of the Sellers Regarding Tax Matters

to pay within the time prescribed by applicable Tax legislation the proper amount of instalments of Taxes;

to make adequate provision in the financial statements of the Acquired Entities for Taxes which relate to a Pre-Closing Tax Period;

to withhold from each payment made by them the amount of all Taxes and other deductions required to be withheld therefrom and to pay the same to the proper Tax Authority within the time prescribed under any applicable Laws;

not amend or re-file any Tax Return, make, amend or rescind any Tax election, or settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, in each case except with the prior written consent of the Purchaser, such consent not to be unreasonably withheld, conditioned or delayed;

not change any of their methods of accounting for income Tax purposes from those employed in the preparation of their income Tax Returns for the taxation year ended December 31, 2020, except as may be required by applicable Laws; and

not to request from any Tax Authority an advance tax ruling or determination or enter into any arrangements to provide for an extension of time with respect to the assessment or reassessment of Tax or the filing of any Tax Returns, payment of Tax by, or the levying of any governmental charge against, any Acquired Entity, without the consent of the Purchaser, which consent shall not unreasonably be withheld.

Cooperation Regarding Tax Matters

The Sellers, the Purchaser and the Acquired Entities shall cooperate fully with each other (and following the Closing Date, the Purchaser shall cause the Acquired Entities to cooperate fully with the Sellers) and shall make available to each other in a timely fashion such data and other information as may reasonably be required for the preparation and filing of all Tax Returns and in order to contest any audit, assessment or reassessment of Taxes or to pursue any objection or appeal, and shall preserve such data and other information until the expiry of any applicable limitation period under applicable Laws with respect to the periods covered by such Tax Returns.

If it is determined that the Corporation or any of its predecessors has made an “excessive eligible dividend designation” (as defined in subsection 89(1) of the Tax Act (and any equivalent provision of applicable provincial Law)), at the request of the Purchaser, the Sellers shall concur (or cause the recipient(s) of the relevant dividend to concur) in the making of an election under subsection 185.1(2) of the Tax Act (and any equivalent provision of applicable provincial Law) in respect of the full amount thereof, and such election shall be made by the Corporation in the manner and within the time prescribed by subsections 185.1(2) and 185.1(3) of the Tax Act (and any equivalent provision of applicable provincial law).

If it is determined that the Corporation or any of its predecessors has made an election under subsection 83(2) of the Tax Act (and any equivalent provision of applicable provincial Law) in respect of any dividend paid or payable by it on shares of any class of its capital stock and the full amount of such dividend exceeded the amount of the Corporation’s “capital dividend account” (as defined in the Tax Act and (any equivalent provision of applicable provincial Law)) immediately before the dividend became payable, at the request of the Purchaser, the Sellers shall concur (or cause the recipient(s) of the relevant dividend to concur) in the making of an election under subsection 184(3) of the Tax Act (and any equivalent provision of applicable provincial law) in respect of such dividend.

The Purchaser covenants that, unless required by applicable Laws or permitted or required by Sections 6.14(b) or 6.14(c), it will not, nor will it cause or permit the Acquired Entities to, without the prior written consent of the Sellers (which consent may not be unreasonably withheld or delayed), (i) make any election or deemed election or change any election that has retroactive effect to any Pre-Closing Tax Period that may result in any increased Tax liability for any of the Sellers or any indemnity claim against any of the Sellers under this Agreement, or (ii) amend any Tax Return relating to a Pre-Closing Tax Period that may result in any increased Tax liability for any of the Sellers or any indemnity claim against any of the Sellers under this Agreement.

Sufficiency of Funds; Conduct of Business of the Purchaser Prior to Closing

During the Closing Period, the Purchaser shall maintain the financial capability that will provide the Purchaser with sufficient sources of immediately available cash funds necessary to consummate the Transactions upon the terms contemplated by this Agreement and pay all fees, costs, expenses and other amounts payable by the Purchaser hereunder or in connection with the Transactions.

The Purchaser covenants and agrees that, during the Closing Period, the Purchaser shall use Commercially Reasonable Efforts to maintain and preserve its and its Subsidiaries’ business organization, properties, employees, goodwill and business relationships with customers, suppliers, partners and other Persons with which the Purchaser or any of its Subsidiaries has material business relations, and shall not, directly or indirectly:

split, combine, reclassify or amend the terms of the Purchaser Shares;

amend its articles, by-laws or other constating documents in any manner that would have a material and adverse impact on the value of the Purchaser Shares;

declare, set aside or pay any dividend or other distribution (whether in cash, securities or property or any combination thereof) in respect of any Purchaser Shares;

take any action that would result in the need for any shareholder approval of the Purchaser relating to the Transactions other than the Transaction Resolution;

issue, deliver or sell, or authorize the issuance, delivery or sale, of any Purchaser Shares or other equity or voting interests of the Purchaser, other than and except for any of the following: (A) the issuance of awards under the Purchaser’s equity compensation plans; (B) the Purchaser Shares and securities of the Purchaser to be issued (or that are reserved for issuance) contemplated in Section 5.8 of the Purchaser’s Disclosure Letter; (C) any issuance of equity or voting interests of the Purchaser pursuant to a prospectus or a prospectus supplement in connection with a public offering of securities; (D) any issuance of equity or voting interests of the Purchaser pursuant to a private placement or prospectus-exempt offering that does not require shareholder approval under the rules and policies of TSX; and/or (E) any issuance of equity or voting interests of the Purchaser in connection with an arm’s length acquisition or other strategic investment or other similar transaction by the Purchaser;

adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of the Purchaser; or

authorize, agree, resolve or otherwise commit to do any of the foregoing.

Post-Closing Contractual Resale Restrictions and Hold Period

Subject to the remainder of this Section 6.16, and subject to the terms of customary brokerage account agreements that may apply to any of the Consideration Shares held in brokerage accounts, the Sellers shall not, without the prior written consent of the Purchaser, directly or indirectly, Transfer any of the Consideration Shares they hold, or their economic interest therein, for a period (the “Hold Period”) commencing on the Closing Date and expiring up to twenty four (24) months after that date.

On the Closing Date and subsequently on the last day of each calendar month during the Hold Period, 1/24^th of the initial amount of each Seller’s Consideration Shares subject to the restriction on Transfer contained in paragraph 6.16(a) (“Restricted Consideration Shares”) shall be released from such restrictions and the monthly number of Restricted Consideration Shares that are released shall be proportionally adjusted to account for any additional release of Restricted Consideration Shares under Section 6.16(c) or otherwise.

If at any point during the Hold Period, the market price of a Purchaser Share (as determined by calculating the volume-weighted average price of Purchaser Shares on the TSX for a consecutive 5 trading day period) is equal to or greater than 200% of the Purchaser Share Price, then 50% of each Seller’s remaining Restricted Consideration Shares shall immediately be released from the restriction on Transfer contained in paragraph 6.16(a).

The restriction on Transfer contained in paragraph 6.16(a) shall not prevent or restrict any Seller from

tendering or disposing of any or all of the Purchaser Shares such Seller holds in connection with a take-over bid, merger, amalgamation, statutory arrangement, business combination or other similar transaction involving the Purchaser Shares or assets of the Purchaser that has been approved by the Board of Directors or recommended to the Purchaser’s shareholders for approval by the Board of Directors,

dealing with any Restricted Consideration Shares pursuant to the terms of customary brokerage account agreements that apply to any Consideration Shares held in brokerage accounts, including activities that may involve a Transfer to a bank, broker-dealer or other financial institution for the purpose of giving collateral or as settlement for a debt, or otherwise;

transferring any or all of the Purchaser Shares such Seller holds to any affiliate, family member, trust for the sole benefit of such Seller’s or Seller’s family members or registered retirement savings plan, provided the transferee agrees to be bound by the terms of the restriction on Transfer contained in paragraph 6.16(a); or

entering into a lock-up agreement relating to any agreement referred to in clause 6.16(d)(i) above pursuant to which the Seller would agree to vote in favour of, or tender its Purchaser Shares to, any such transaction.

For greater certainty, the Parties acknowledge that the Consideration Shares will be issued pursuant to the takeover bid exemption under section 2.16 of National Instrument 45-106 – Prospectus Exemptions and, except for the restrictions applicable to any Transfer of Consideration Shares that would constitute a “control distribution” within the meaning of National Instrument 45-102—Resale of Securities and Applicable Securities Laws, will not be subject to any Canadian statutory hold period or restricted period under Applicable Securities Laws. The Sellers undertake to comply in all respects with the provisions of Section 2.8 of National Instrument 45-102—Resale of Securities, if applicable, with respect to the Transfer of Consideration Shares (whether or not Restricted Consideration Shares) pursuant to the provisions of this Section 6.16 that would so constitute a “control distribution, if any, as well as with any substantially comparable “affiliate” resale restrictions and other provisions under Applicable Securities Laws of the United States.

Each of the Sellers hereby agrees and undertakes to comply, in all respects with: (i) Applicable Securities Laws; and (ii) to the extent any Seller or, if the Seller is not an individual or a natural person, each individual or natural person who beneficially owns or exercises control over 10% or more of the Seller’s outstanding equity or voting power or who is a director or officer of the Seller, is, at the relevant time, a director or officer of the Purchaser, the Purchaser’s disclosure and trading (or “blackout”) policy and all “blackout” trading periods imposed thereunder, at the time such Seller intends to Transfer any number of Restricted Consideration Shares following their release from the aforementioned Transfer restrictions, the whole in accordance with the foregoing.

Standstill Restrictions

Exceptions to Standstill

Purchaser Shareholders Meeting

The Purchaser shall convene and conduct the Meeting in accordance with its constating documents, and applicable Laws as soon as reasonably practicable (provided that the Purchaser shall use its Commercially Reasonable Efforts to convene the Meeting on or before August 10, 2021 and in any event no later than August 19, 2021), for the purpose of considering the Transactions.

The Purchaser shall, in consultation with the Sellers, fix (i) a record date for the purposes of determining the Purchaser Shareholders entitled to receive notice of and to vote at the Meeting in accordance with its constating documents, and applicable Laws, and (ii) the date for the Meeting.

Except as required for quorum purposes, the Purchaser shall not adjourn, postpone or cancel (or propose, publicly announce or permit the adjournment, postponement or cancellation of the Meeting, without the prior written consent of the Sellers, such consent not to be unreasonably withheld.

The Purchaser shall give notice to the Sellers of the Meeting and allow Representatives of the Sellers to attend the Meeting.

The Purchaser shall (i) solicit proxies in favour of the approval of the Transaction Resolution and against any resolution submitted by any Person that is inconsistent with the Transaction Resolution and the completion of any of the transactions contemplated by this Agreement, (ii) if requested by the Sellers and determined by the Purchaser to be beneficial or advantageous, acting reasonably, retain a proxy solicitation firm to solicit proxies in favour of the approval of the Transaction Resolution and against any resolution submitted by any Person that is inconsistent with the Transaction Resolution and the completion of any of the transactions contemplated by this Agreement, and (iii) recommend to the Purchaser Shareholders that they vote in favour of the Transaction Resolution and the completion of any other transaction contemplated by this Agreement, provided, however, that the Purchaser shall have no such obligations in the case of (i) and (ii) where there has been a material breach by the Sellers of this Agreement that has not been cured.

The Purchaser shall provide the Sellers with copies of, or access to, all information regarding the Meeting generated by any dealer or proxy solicitation services firm in the possession or control of the Purchaser or available to the Purchaser upon request, as may be reasonably requested from time to time by the Sellers.

The Purchaser shall promptly advise the Sellers of any communication (written or oral) from or claims brought by (or threatened to be brought by) any Person in opposition to the Transactions or the Transaction Resolution.

Circular

As promptly as reasonably practicable following execution of this Agreement, the Purchaser shall (i) prepare and complete, in consultation with the Sellers, the Circular together with any other documents required by Applicable Securities Laws in connection with the Meeting and the Transactions, (ii) file the Circular in all Canadian jurisdictions where the same is required to be filed under applicable Laws, and (iii) send the Circular as required under Applicable Securities Laws, in each case so as to permit the Meeting to be held in compliance with Applicable Securities Laws.

The Purchaser shall ensure that the Circular complies in all material respects with applicable Laws, does not contain any Misrepresentation other than, in each case, with respect to: (i) any information furnished by and relating to the Sellers, their affiliates and their respective Representatives for inclusion in the Circular (including any historical consolidated financial statements of the Corporation); and (ii) information derived from the materials described in clause (i) above (including any pro forma financial statements), if approved in writing by the Sellers (such exceptions, collectively, the “Sellers’ Information”).

Prior to the printing of the Circular, the Sellers and Sellers’ legal counsel shall be given a reasonable opportunity to review and comment on drafts of the Circular and other documents related thereto, and reasonable consideration shall be given to any comments made by the Sellers and Sellers’ legal counsel, provided that all Sellers’ Information, the description of the background to the Transactions and the summary of the terms, conditions and effects of the Transactions must be in a form and content satisfactory to the Sellers, acting reasonably.

The Sellers shall promptly provide the Purchaser with all necessary Sellers’ Information that is required by Law or any Governmental Authorities to be included by the Purchaser in the Circular or other related documents and use Commercially Reasonable Efforts to obtain any necessary consents from any of its auditors and any other advisors to the use of any financial, technical or other expert information required to be included in the Circular and to the identification in the Circular of each such advisor and shall ensure that all Sellers’ Information does not contain any Misrepresentation concerning the Sellers, any of its Subsidiaries or the Purchased Shares.

Each Party shall promptly notify the other Party if it becomes aware that the Circular contains a Misrepresentation, or otherwise requires an amendment or supplement. The Parties shall cooperate in the preparation of any such amendment or supplement as required or appropriate, and the Purchaser shall promptly mail, file or otherwise publicly disseminate any such amendment or supplement to any Person to whom the Circular was required to be mailed under Applicable Securities Laws and, if required by Law, file the same with any Governmental Authority as required.

Conflicts and Privilege

Pre-Closing Reorganization

The Sellers shall cause the Pre-Closing Reorganization to be completed prior to the Closing Date substantially in accordance with the step transaction memorandum attached as Section 6.22 to the Sellers’ Disclosure Letter, which such Section 6.22 to the Sellers’ Disclosure Letter may be amended at any time and from time to time after the date hereof with the prior written consent of the Purchaser (which consent may not be unreasonably withheld or delayed). The Pre-Closing Reorganization shall (i) be duly authorized by all necessary actions in compliance with the terms or provisions of the constating documents, by-laws and other similar documents of the applicable entities, (ii) be effected in compliance with all agreements binding on the applicable entities and (iii) be effected in compliance with applicable Laws.

The Sellers shall take all actions useful or necessary to implement the Pre-Closing Reorganization. The Sellers will provide the Purchaser with final drafts of all documents relating to the Pre-Closing Reorganization for review no later than ten (10) days prior to

Restrictive Covenant

Post-Closing Product Liability and Product Recall Insurance Coverage

New Equipment

The Acquired Entities are in the process of discussing orders for the purchase, on behalf of OpCo, of two new machines for the production of [Commercially Sensitive and/or Confidential Information Redacted] products (“Equipment No. 2 and No. 3”) from certain suppliers. The Sellers shall cause the Acquired Entities to cooperate with the Purchaser during the Closing Period in confirming applicable specifications, pricing and other terms and conditions for the ordering of Equipment No. 2 and No. 3, which shall have been confirmed as acceptable by the applicable suppliers (“Equipment Terms”). If requested in writing by the Purchaser, the Sellers shall, and shall cause the Acquired Entities to, and, if necessary shall further cause any applicable Affiliates of the Sellers to, order Equipment No. 2 and No. 3 reflecting the Equipment Terms on behalf and for the account of OpCo not later than July 31, 2021. During the Closing Period, the Sellers shall, and shall cause the Acquired Entities to, and, if necessary shall further cause any applicable Affiliates of the Sellers to, use Commercially Reasonable Efforts to continue with the acquisition process relating to Equipment No. 2 and No. 3 for OpCo if the order is made in accordance with the preceding sentence and to allow the Purchaser to participate in all exchanges with the applicable suppliers. For greater certainty, neither the Sellers nor any Acquired Entity shall have any obligation to purchase Equipment No. 2 and No. 3 if not requested to do so by the Purchaser in writing in accordance with the terms of this Section 6.25(a).

In addition, in respect of the [Commercially Sensitive and/or Confidential Information Redacted] equipment currently on order by OpCo (copies of which purchase order and other related documentation has been provided to the Purchaser) (“Equipment No. 1”) and for Equipment No. 2 and No. 3, once firm orders are effected, the Sellers shall permit the Purchaser to participate in the ordering and acquisition process and to provide input in connection with negotiation and finalization of mutually satisfactory equipment supply and maintenance agreements with the applicable suppliers thereof. The Parties agree that, to the extent any Acquired Entity makes any deposit or payment to an applicable supplier for Equipment No. 2 and No. 3, or any of them individually, or any other related equipment for the benefit of OpCo during the Closing Period, any such deposit or payment shall be entirely for the account of the Purchaser and shall accordingly be disregarded by the Parties for purposes of calculating the Closing Working Capital as contemplated under this Agreement.

Environmental Testing

As soon as reasonably practicable following the date hereof, the Purchaser shall be entitled (but shall not be obligated) to engage a qualified environmental consultant of its choosing, who possesses appropriate insurance for the work to be completed, to conduct additional environmental testing in accordance with the instructions provided by the Purchaser with respect to: a) the two historical natural gas ▇▇▇▇▇, and any Hazardous Substances associated with the presence of these ▇▇▇▇▇ on the Haldimand Property as described in the Draft Phase I Environmental Site Assessment, dated May 25, 2021 at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, prepared by Blue Frog Environmental Consulting Inc.; and b) the two former above ground fuel storage tanks, and any associated Hazardous Substances released from or in connection with the use of such storage tanks, present on ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, as described in the Draft Phase I Environmental Site Assessment, dated May 25, 2021, for ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, prepared by Blue Frog Environmental Consulting Inc. (the “Effingham Site”, and together with the Haldimand Property, the “Sites”) (collectively, the “Environmental Testing”).

To the extent that the Environmental Testing identifies Hazardous Substances in the soil or groundwater that are in excess of the Site Condition Standards and that are associated with the above ground storage tanks or the historic natural gas ▇▇▇▇▇ at the Sites, or to the extent that the Environmental Testing identifies the presence of Hazardous Substances at the Haldimand Property associated with the natural gas ▇▇▇▇▇ that reasonably pose a risk to the environment or to human health and safety or any required well decommissioning or plugging obligations, then the consultant shall be instructed by the Purchaser to develop and submit a remedial action plan (“RAP”) detailing the scope of work required to remove or otherwise address such Hazardous Substances in accordance with applicable Laws, which for greater certainty, may include pumping, collecting, sampling, treating or disposing of any contaminants and/or remedial work required to prevent the migration of any contaminants onto or from the Sites, excavation, plugging and backfilling work and monitoring any contaminants, including without limitation all physical improvements, protective systems, monitoring systems, collection systems, treatment systems, tanks, pipes, equipment, connections, barriers, drainage systems, valves, couplings and other features and all associated equipment as may be required for any of the aforesaid purposes, and provided further that risk assessment shall be conducted, where possible, with respect to any Hazardous Substances that are located under a structure or building or that are not otherwise easily accessible (all such activity required or recommended by the RAP being collectively referred to as “Remediation”).

The Purchaser shall promptly provide to the Sellers a copy of the RAP and any information, data, or reports obtained in connection with the Environmental Testing and Remediation.

The actual costs of such Remediation shall be paid by the Sellers or, if paid by the Purchaser or any Acquired Entity, shall promptly be reimbursed by the Sellers, up to a maximum amount of $7,500,000 in the aggregate for both Sites, provided that the Purchaser shall complete the Remediation within 18 months of the date hereof. If the Purchaser decides to proceed with Environmental Testing, it agrees to initiate such Environmental Testing during the Closing Period. If the Environmental Testing is not commenced during the Closing Period or if the Remediation is not completed within 18 months of the date hereof, then the Sellers shall no longer have any obligations under this Section 6.26.

The Purchaser shall be responsible for any damage or personal injury caused by the conduct of the Environmental Testing or Remediation, and shall indemnify and save the Sellers’ Indemnified Persons harmless from, and shall pay for, any Damages suffered by, imposed upon or asserted against any of them as a result of or arising out of the conduct of the Environmental Testing or the Remediation, subject however to the Sellers’ obligation

Date, Time and Place of Closing

Seller’s Closing Deliveries

share certificates representing the Purchased Shares endorsed in blank for transfer or accompanied by irrevocable stock transfer powers of attorney executed in blank, in either case, by the applicable Seller;

certified copies of the resolutions of the shareholders and the board of directors of the Corporation, as applicable, approving the entering into of this Agreement and completion of the Transactions, in form and substance satisfactory to the Purchaser, acting reasonably;

evidence of the termination of any shareholders agreement affecting the Corporation, in form and substance satisfactory to the Purchaser, acting reasonably;

a certificate of status, compliance, good standing or like certificate with respect to each of the Acquired Entities issued by appropriate government officials of their respective jurisdictions of incorporation and of each other jurisdiction in which such Acquired Entity is registered to carry on its business as set out in Section 4.15 of the Sellers’ Disclosure Letter;

the certificates referred to in Section 8.2(a) and Section 8.2(b);

evidence, satisfactory to the Purchaser, of the release and discharge of the Liens specified in Section 7.2(f) of the Sellers’ Disclosure Letter;

an estoppel certificate substantially in the form set out in Exhibit 7.2(g) from the lessor of each of the Leased Properties identified in Section 4.25(a) of the Sellers’ Disclosure Letter as requiring an estoppel certificate to be delivered pursuant to this Section 7.2(g);