Auxly Cannabis Group — Capital/Financing Update 2021

Jan 22, 2021

January 21, 2021

AMENDED AND RESTATED TERM SHEET

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BOUGHT DEAL PUBLIC OFFERING OF UNITS - INDICATIVE TERMS

A preliminary short form prospectus containing important information relating to the securities described in this document has not yet been filed with the securities regulatory authorities in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. A copy of the preliminary short form prospectus is required to be delivered to any investor that received this document and expressed an interest in acquiring the securities.

There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final short form prospectus has been issued.

This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the preliminary short form prospectus, final short form prospectus and any amendment, for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.

Issuer:	Auxly Cannabis Group Inc. (the “Company”)
Issued Securities:	47,300,000 Units of the Company (each a “Unit” and the offering of such Units, the “Offering”).
	Each Unit to be comprised of one (1) common share in the capital of the Company (each, a
	“Common Share”) and one-half of one Common Share purchase warrant (each whole warrant,
	a “Warrant”).
Size of Issue:	$17,501,000
Issue Price:	$0.37 per Unit (the “Issue Price”).
Warrants:	Each Warrant shall entitle the holder to purchase one Common Share at $0.46 at any time on or
	before the date which is 36 months after the Closing Date.
Over-Allotment Option:	The Underwriters will have an option, exercisable in whole or in part at any time up to 30 days
	following the Closing Date (as defined below), to purchase up to an additional 15% of the Units
	at the Issue Price**,**and/or the components thereof, on the same terms and conditions as set forth
	herein.
Syndicate:	ATB Capital Markets Inc. (“ATB”) and Cantor Fitzgerald Canada Corporation (“CFCC”) will act
	as co-lead underwriters and joint bookrunner on behalf of a syndicate of underwriters (together
	with ATB and CFCC, the “Underwriters”).
Form of Underwriting:	“Bought Deal” offering by way of a short form prospectus, subject to a mutually acceptable
	underwriting agreement containing the industry standard “Disaster Out”, “Regulatory Out”,
	“Material Adverse Change Out” and “Breach of Agreement Out” clauses running until the Closing
	Date (as defined below).
Jurisdictions:	All provinces of Canada, except Quebec. The Units will not be offered or sold in the United States
	except under Rule 144A or Regulation D or in such other manner as to not require registration
	under the United States Securities Act of 1933, as amended. The Units may also be offered in
	those jurisdictions outside of Canada and the United States as agreed to by the Company and
	the Underwriters provided that no prospectus filing or comparable obligation arises and the
	Company does not thereafter become subject to continuous disclosure obligations in such
	jurisdictions.
Underwriters’ Fees:	The Company shall pay the Underwriters a cash commission equal to 6.0% of the gross
	proceeds of the Offering plus broker warrants to purchase up to 5.0% of the number of Units sold
	in the Offering (the “Broker Warrants”). Each Broker Warrant shall entitle the Underwriters to
	purchase one Common Share at the Issue Price at any time on or before the date on which is
	36 months after the Closing Date.
	PRIVATE AND CONFIDENTIAL

January 21, 2021

Use of Proceeds: The net proceeds of the Offering will be used for working capital and general corporate purposes. Listing: Prior to the Closing Date, the Company will obtain all necessary regulatory approvals for the Offering, including TSXV approval of the listing of the Common Shares (including the Common Shares comprising the Units, the Common Shares issuable upon the exercise of the Warrants, and the Common Shares issuable pursuant to the exercise of the Broker Warrants). Eligibility for Eligible under the usual Canadian statutes as well as for RRSPs, RESPs, RRIFs, TFSAs and Investment: DPSPs. Closing Date: On or about February 10, 2021 or such other date as the Company and the Underwriters mutually agree (the “Closing Date”).

Standstill Period: The Company shall not issue, negotiate or enter into any agreement to sell or issue or announce the issue of, any equity securities of the Company, other than: (i) as contemplated herein; (ii) pursuant to the grant of options or other securities in the normal course pursuant to the Company’s employee stock option plan or other equity compensation plan or issuance of securities pursuant to the exercise or conversion, as the case may be, of options or securities of the Company outstanding on the date hereof; or (iii) an issuance of options or securities in connection with a bona fide acquisition by the Company (other than a direct or indirect acquisition, whether by way of one or more transactions, of an entity all or substantially all of the assets of which are cash, marketable securities or financial in nature or an acquisition that is structured primarily to defeat the intent of this provision), for a period of 90 days following the Closing Date (the “Expiry Date”), without the prior written consent of ATB and CFCC, on behalf of the Underwriters, such consent not to be unreasonably withheld.

Insider Lock-Ups: As a condition precedent to the Underwriters’ obligation to close the Offering, all directors and senior officers of the Company shall execute and deliver written undertakings in favour of the Underwriters agreeing not to sell, transfer, pledge, assign, lend, swap, or enter into any other agreement to transfer the economic consequences of, or otherwise dispose of (or publicly announce any intention to do any of the foregoing) any securities of the Company owned, directly or indirectly, by such directors or senior officers, until the Expiry Date, without the prior written consent of ATB and CFCC, on behalf of the Underwriters, such consent not to be unreasonably withheld. Hold Period: In the United States, the Units will be “restricted securities” as defined in Rule 144 or Regulation D under the United States Securities Act of 1933, as amended.

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PRIVATE AND CONFIDENTIAL