Auxly Cannabis Group - Capital/Financing Update 2021

March 23, 2021

AUXLY CANNABIS GROUP INC.

EQUITY DISTRIBUTION AGREEMENT

ATB Capital Markets Inc. Suite 3530, TD Bank Tower 66 Wellington Street West Toronto, ON M5K 1A1

Ladies and Gentlemen:

Auxly Cannabis Group Inc., a company incorporated under the Business Corporations Act (British Columbia) (“ Auxly ” or the “ Company ”), confirms its agreement (this “ Agreement ”) with ATB Capital Markets Inc. (the “ Agent ”) to issue and sell common shares of the Company (the “ Shares ”) upon and subject to the terms and conditions contained herein. Capitalized terms used herein and not otherwise defined have the meanings given to them in Section 23 hereof.

1. Issuance and Sale of Shares

The Company agrees that, from time to time during the term of this Agreement, and on the terms and subject to the conditions set forth herein, it may issue and sell through the Agent Shares having an aggregate sales price of up to CDN$30,000,000 (the “ Offering ”). The Shares will be sold on the terms set forth herein at such times and in such amounts as the Company and the Agent shall agree from time to time. The issuance and sale of the Shares through the Agent will be effected pursuant to the Prospectus filed by the Company. The Company’s appointment of the Agent under this Agreement shall be on an exclusive basis during the term of this Agreement, and the Company agrees that, during the term of this Agreement, it will not appoint any other person to act as the Company’s agent with respect to sales of Shares pursuant to the Offering.

2. Placements

(a) Placement Notice. Each time that the Company wishes to issue and sell Shares hereunder (each, a “ Placement ”), it will notify the Agent by e-mail notice (or other method mutually agreed to in writing by the parties) (a “ Placement Notice ”) in the form set forth on Schedule 1 hereto, containing the parameters within which it desires to sell the Shares, which shall at a minimum include the number of Shares to be sold pursuant to this Agreement (“ Placement Shares ”), the time period during which sales are requested to be made, any limitation on the number of Placement Shares that may be sold in any one Trading Day, any minimum price below which sales may not be made and the amount of the Placement Fee. The Placement Notice shall originate from any of the individuals (each an “ Authorized Representative ”) from the Company set forth on Schedule 2 hereto and shall be addressed to each of the respective individuals from the Agent set forth on Schedule 2 hereto, as such Schedule 2 may be amended from time to time. The Placement Notice shall be effective upon delivery to the Agent unless and until: (i) the Agent declines to accept the terms contained therein for any reason, in its sole discretion, in accordance with the notice requirements set forth in Section 4; (ii) the entire amount of the Placement Shares have been sold; (iii) the Company suspends or terminates the Placement Notice in accordance with the notice requirements set forth in Sections 4 or 14, as applicable; (iv) the Company issues a subsequent Placement Notice with parameters superseding those on the earlier Placement Notice; or (v) this Agreement has been terminated under the provisions of Section 14. Notwithstanding the foregoing, the Company may not deliver a Placement Notice to the Agent if the Company has delivered a Placement Notice which remains in effect.

(b) Placement Fee. The amount of compensation to be paid by the Company to the Agent with respect to each Placement for which such Agent acted as sales agent under this Agreement shall be 2.00% of the gross proceeds from such Placement (the “ Placement Fee ”), plus GST/HST (if applicable).

(c) No Obligation. It is expressly acknowledged and agreed that neither the Company nor the Agent will have any obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to the Agent, which Placement Notice has not been declined, suspended or otherwise terminated in accordance with the terms of this Agreement, and then only upon the terms specified therein and under this Agreement. It is also expressly acknowledged that the Agent will be under no obligation to purchase Placement Shares on a principal basis. In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will prevail.

(d) Limitations on Placements. Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares if, after giving effect to the sale of such Placement Shares, the aggregate gross sales proceeds of Placement Shares sold pursuant to this Agreement would exceed the amount authorized from time to time to be issued and sold under this Agreement by the Company’s board of directors and notified to the Agent in writing. Under no circumstances shall the Company cause or request the offer or sale of any Placement Shares pursuant to this Agreement at a price lower than the minimum price authorized from time to time in the applicable Placement Notice.

(e) Acknowledgement of Agent. The decision to distribute the Placement Shares and the determination of the terms of the distribution, were made through negotiations between the Company and the Agent. The Agent will not receive a benefit in connection with the Offering, other than the Placement Fee payable by the Company.

(f) Covenants of Agent. The Agent covenants that: (a) it will not (nor will any affiliate thereof or person or company acting jointly or in concert therewith) over-allot Placement Shares in connection with the distribution of Placement Shares in an "at-the-market distribution" (as defined in NI 44-102) or effect any other transactions that are intended to stabilize or maintain the market price of the Placement Shares in connection with such distribution; and (b) neither the Agent nor any of its affiliates or any Person acting on its behalf will engage in any Directed Selling Efforts or in any form of General Solicitation or General Advertising in the United States with respect to the Placement Shares.

3. Sale of Placement Shares by the Agent

Subject to the terms and conditions of this Agreement, upon the Company’s issuance of a Placement Notice, and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, the Agent will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell on behalf of the Company the Placement Shares in accordance with the terms of such Placement Notice. The Agent covenants and the Company acknowledges that the Agent will conduct the sale of Placement Shares in compliance with applicable laws, rules and regulations including, without limitation, all applicable Canadian Securities Laws, all applicable IIROC dealer member rules and Universal Market Integrity Rules (including section 5.1 thereof) and, if applicable, the rules of the TSXV, and that such compliance may include a delay in commencement of sales efforts after receipt of a Placement Notice. The Agent will provide written confirmation to the Company no later than the opening of the Trading Day immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day (showing the number of Placement Shares sold on the TSXV or on any other “marketplace” (as such term is defined in NI 21-101 in Canada (a “ Marketplace ”) and pursuant to any other sales method used by the Agent), the average price of the Placement Shares sold (showing the average price of the Placement Shares sold on the TSXV or any other Marketplace and pursuant to any other sales method used by the Agent), the gross proceeds, the commissions payable by the Company to the Agent with respect to such sales and the Net Proceeds payable to the Company. Subject to the terms and conditions of the Placement Notice and this Agreement, the Agent may sell Placement Shares by any method permitted by law that constitutes an “at-the-market distribution” under

NI 44-102, including, without limitation, sales made directly on the TSXV or any other Marketplace, provided for greater certainty that no such transactions may be made on any exchange or quotation system outside of Canada.

Notwithstanding anything to the contrary set forth in this Agreement or a Placement Notice, the Company acknowledges and agrees that: (i) there can be no assurance that the Agent will be successful in selling any Placement Shares or as to the price at which any Placement Shares are sold, if at all; and (ii) the Agent will incur no liability or obligation to the Company or any other person or entity if they do not sell Placement Shares for any reason other than a failure by the Agent to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell on behalf of the Company as its agent such Placement Shares as provided under this Section 3.

The Agent hereby covenants and agrees that, during the time the Agent is the recipient of a Placement Notice pursuant to Section 2 hereof that has not been declined, suspended or terminated in accordance with the terms hereof, the Agent will monitor the market's reaction to the trades made on the Marketplaces pursuant to the Placement Notice and this Agreement in order to evaluate the potential market impact of future trades, and that, if the Agent has concerns as to whether a particular sale contemplated by a Placement Notice may have a significant negative effect on the market price of the Shares, the Agent will promptly recommend to the Company against effecting the trade at that time or on the terms proposed.

4. Suspension of Sales

(a) The Company or the Agent may, upon notice to the other party in writing, by telephone (confirmed promptly by e-mail) or by e-mail notice (or other method mutually agreed to in writing by the parties), suspend any sale of Placement Shares for which it has received a Placement Notice, provided that such suspension shall not affect or impair any party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. The Company and the Agent, severally and not jointly, agree that no such notice shall be effective against any other party unless it is made to one of the individuals named on Schedule 2 hereto, as Schedule 2 may be amended from time to time.

(b) Notwithstanding any other provision of this Agreement, during any period in which the Company is in possession of material non-public information, the Company and the Agent (provided the Agent has been given prior written notice of such by the Company, which notice the Agent agrees to treat confidentially) agree that no sale of Placement Shares will take place. The Company and the Agent, severally and not jointly, agree that no such notice shall be effective against any other party unless it is made to one of the individuals named on Schedule 2 hereto, as may be amended from time to time.

5. Settlement

(a) Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the second (2[nd] ) Trading Day on the applicable stock exchange on which the Placement Shares were sold or, if the Placement Shares are not sold on a stock exchange, on the second (2[nd] ) Trading Day (or, in either case, such earlier day as is agreed by the parties to be industry practice for regular-way trading) following the date on which such sales are made (each a “ Settlement Date ”). The amount of proceeds to be delivered to the Company on a Settlement Date against the receipt of the Placement Shares sold (“ Net Proceeds ”) will be equal to the aggregate sales price at which such Placement Shares were sold, after deduction for the commission or other compensation for such sales payable by the Company to the Agent pursuant to Section 2 hereof.

(b) Delivery of Shares. On each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting the Agent’s account or its designee’s account (provided that the Agent shall have given the Company written notice of such designee at least one Trading Day prior to the Settlement Date) at CDS Clearing and Depository Services Inc. through its CDSX system or by such other means of delivery as may be mutually agreed upon by the

parties hereto and, upon receipt of such Placement Shares, which in all cases shall be freely tradeable and transferable shares in good deliverable form, the Agent will, on each Settlement Date, deliver the related Net Proceeds in same day funds to an account designated by the Company prior to the Settlement Date. If the Company defaults in its obligation to deliver Placement Shares on a Settlement Date, the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Section 12 hereto, it will: (i) hold the Agent harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company; and (ii) pay to the Agent any commission, discount, or other compensation to which it would otherwise have been entitled absent such default; provided, however, that with respect to paragraph (ii) above, the Company shall not be obligated to pay the Agent any Placement Fee on any Placement Shares that it is not possible to settle due to: (A) a suspension or material limitation in trading in securities generally on the TSXV; (B) a material disruption in securities settlement or clearance services in Canada; or (C) a material failure by the Agent to comply with its obligations under this Agreement.

(c) Correspondence with Transfer Agent. The Agent covenants and agrees to copy or otherwise include the Company on all correspondence between the Agent and the Company's transfer agent in connection with or arising from or relating to the settlement (whether electronic or otherwise) of any sale of Placement Shares hereunder, and further shall be responsible for taking all actions required to be taken by it within the applicable time periods to ensure that all sales of Placement Shares hereunder are settled without default in accordance with existing industry practice for regular-way trading.

6. Prospectus

The Company has prepared and filed with the Qualifying Authorities in the Qualifying Jurisdictions the Preliminary Base Prospectus and has prepared and filed with the Qualifying Authorities in the Qualifying Jurisdictions the Base Prospectus in respect of an aggregate of up to CDN$200,000,000 in Shares, preferred shares, debt securities, warrants, subscription receipts and units of the Company (collectively, the “ Shelf Securities ”), in each case in accordance with Canadian Securities Laws. The Ontario Securities Commission (the “ Reviewing Authority ”) is the principal regulator of the Company under the passport system procedures provided for under Multilateral Instrument 11-102 – Passport System and National Policy 11-202 – Process for Prospectus Reviews in Multiple Jurisdictions in respect of the Shelf Securities and the Offering. The Reviewing Authority has issued a receipt on behalf of itself and the other Qualifying Authorities for the Preliminary Base Prospectus and a receipt on behalf of itself and the other Qualifying Authorities for the Base Prospectus (the “ Receipt ”). The term “ Base Prospectus ” means the final short form base shelf prospectus dated March 18, 2021 relating to the Shelf Securities at the time the Reviewing Authority issued the Receipt with respect thereto in accordance with Canadian Securities Laws, including NI 44-101 and NI 44-102, and includes all documents incorporated therein by reference and the documents otherwise deemed to be a part thereof or included therein pursuant to Canadian Securities Laws, including but not limited to, all Designated News Releases. As used herein, a “ Designated News Release ” means a news release disseminated by the Company in respect of previously undisclosed information that, in the Company's determination, constitutes a “material fact” (as such term is defined in Canadian Securities Laws) and identified by the Company as a “designated news release” in writing on the face page of the version of such news release that is filed by the Company on SEDAR. As used herein, “ Prospectus Supplement ” means the most recent prospectus supplement to the Base Prospectus relating to the Placement Shares, filed by the Company with the Qualifying Authorities in accordance with Canadian Securities Laws. The Prospectus Supplement shall provide that any and all Designated News Releases shall be deemed to be incorporated by reference in the Base Prospectus.

For purposes of this Agreement, all references to the Base Prospectus, the Prospectus Supplement and the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Base Prospectus, the Prospectus Supplement and the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the filing of any document with the Qualifying Authorities, as applicable, on or after the effective date of the

Base Prospectus, the Prospectus Supplement and the Prospectus, as the case may be, and deemed to be incorporated by reference therein.

All references in this Agreement to financial statements and other information which is “described,” “contained,” “included” or “stated” in the Base Prospectus, the Prospectus Supplement or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements, including the Financial Statements, and other information which is incorporated by reference in or otherwise deemed by Canadian Securities Laws to be a part of or included in the Prospectus.

7. Representations and Warranties of the Company

The Company represents and warrants to, and agrees with, the Agent that as of the date of this Agreement and as of each Applicable Time (as defined below), unless such representation, warranty or agreement specifies a specific date, that:

(a) the Company: (i) has been duly incorporated, amalgamated, continued or organized and is validly existing as a company in good standing under the laws of its jurisdiction of incorporation, amalgamation, continuation or organization, and has the corporate power, capacity and authority to own, lease and operate its property and assets, to conduct its business as now conducted and to carry out the provisions hereof; and (ii) where required, has been duly qualified as an extra-provincial or foreign corporation for the transaction of business and is in good standing under the laws of each jurisdiction in which it owns or leases property, or conducts any business except, in each case, where the failure to so qualify in any such jurisdiction would not, individually or in the aggregate, have a Material Adverse Effect;
(b) the Company has no Subsidiaries other than the Material Subsidiaries, and, other than Sunens, no investment in any person, which in either case is or could be material to the business and affairs of the Company (on a consolidated basis). Other than the Material Subsidiaries, the other Subsidiaries are inactive and do not carry on, and have not carried on, any business or operations. Inverell S.A. and 2368523 Ontario Inc. are no longer carrying on operations. Other than as disclosed the Prospectus, the Company is the direct or indirect registered and beneficial owner of all of the issued and outstanding shares of or other voting securities in each Subsidiary, free and clear of all Encumbrances, liens, mortgages, hypothecations, security interests, charges or adverse interests whatsoever, and no person, firm, corporation or entity has any agreement, option, right or privilege (whether pre-emptive or contractual) capable of becoming an agreement or option, for the purchase from the Company or any Subsidiary of any of the shares or other securities of any Subsidiary;
(c) each Material Subsidiary: (i) has been duly incorporated, amalgamated, continued or organized and is validly existing as a corporation or limited liability company in good standing under the laws of its jurisdiction of incorporation, amalgamation, continuation or organization and has the corporate power, capacity and authority to own, lease and operate its property and assets, to conduct its business as now conducted and to carry out the provisions hereof; and (ii) where required, has been duly qualified as an extraprovincial or foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases property, or conducts any business, and is not precluded from carrying on business or owning property in such jurisdictions by any other commitment, agreement or document;
(d) the Company and each Material Subsidiary (i) are each conducting and have each conducted their business in material compliance with all Applicable Laws of each jurisdiction in which its business is carried on or in which its services are provided and has not received a notice of any material non-compliance, nor knows of, nor has knowledge of, any facts that could give rise to a notice of material non-compliance with
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any such Applicable Laws, (ii) are not in breach or violation of any judgment, order or decree of any Governmental Authority or court having jurisdiction over the Company or any Material Subsidiary, as applicable, and (iii) hold all, and are in substantial compliance with all, Governmental Licences that are material to the conduct of the business of the Company (provided that the Cannabis Licences, other than any Cannabis Licenses held by or in relation to Inverell S.A. or 2368523 Ontario Inc. or their respective businesses, shall be deemed to be material to the conduct of the business of the Company for the purposes of this Section 7(d)) and the Material Subsidiaries and required to carry on their business as now conducted.

(e) none of the Company or any of its Subsidiaries is in violation of the terms of the undertaking of the Company to the TSXV dated January 31, 2019 in respect of the operation of or involvement with any cannabis-related activities;
(f) other than as disclosed the Prospectus, neither the Company nor any Subsidiary has been served with or otherwise received notice of any legal or governmental proceedings and there are no legal or governmental proceedings (whether or not purportedly on behalf of the Company) pending to which the Company or any Subsidiary is a party or of which any property or assets of the Company or any Subsidiary is the subject which is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the consummation by the Company of the transactions contemplated by this Agreement and, to the Company’s knowledge, no such proceedings have been threatened or contemplated by any Governmental Authority or any other parties;
(g) with respect to each of the premises which is material to the Company and any Subsidiary and which the Company or any Subsidiary occupies as tenant (the “ Leased Premises ”), the Company or Subsidiary (as applicable) occupies the Leased Premises and has the exclusive right to occupy and use the Leased Premises and neither the Company nor any Subsidiary is in material breach or violation of or in default under any of the leases pursuant to which the Company or Subsidiary occupies the Leased Premises and to the Company’s knowledge, such leases are valid, in good standing and in full force and effect and are enforceable against the respective lessors thereof;
(h) (A) each of the Properties is 100% beneficially owned by the Company or a Material Subsidiary; (B) the Company or a Material Subsidiary holds the Properties under valid, subsisting and enforceable title documents and such title documents permit the Company and the Material Subsidiaries to carry on their business thereon as currently conducted; (C) except as disclosed in the Prospectus, the Company or a Material Subsidiary has good and marketable freehold title in fee simple to the Properties free and clear of any and all hypothecs, prior claims, mortgages, liens, pledges, charges, security interests, Encumbrances, actions, claims or demands of any nature whatsoever or howsoever arising; and (D) there are currently no facts, circumstances, events or conditions which could reasonably be expected to materially and adversely affect or impair the value or permitted use(s) of any of the Properties;
(i) the Company or a Subsidiary is the absolute legal and beneficial owner, and has good and valid title to, or is the lessee of, all of the material properties and material assets thereof as described the Prospectus free and clear of all Encumbrances and defects of title except such as are disclosed the Prospectus or such as are not material, individually or in the aggregate, to the Company and the Subsidiaries (taken as a whole), and (A) no other material property or assets are necessary for the conduct of the business of the Company or any Subsidiary as currently conducted, (B) the Company has no knowledge of any claim or the basis for any claim that might or could materially and adversely affect the right of the Company or its Subsidiaries to use, transfer or otherwise exploit such property or assets, and (C) neither the Company nor any Subsidiary has the
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responsibility or obligation to pay any commission, royalty, licence fee or similar payment to any person with respect to the property and assets thereof;

the Financial Statements:

(i) have been prepared in accordance with Applicable Securities Laws and IFRS, applied on a consistent basis throughout the periods referred to therein, except as otherwise disclosed therein;
(ii) present fairly, in all material respects, the financial position and condition of the Company and the Subsidiaries (on a consolidated basis) as at the dates thereof and the results of its operations and the changes in its shareholder’s equity and cash flows for the periods then ended, and do not contain a misrepresentation; and
(iii) have been audited (in the case of the annual financial statements comprising the Financial Statements) or reviewed (in the case of the interim financial statements comprising the Financial Statements) by independent public accountants within the meaning of Applicable Securities Laws and the rules of the Chartered Professional Accountants of Canada;
(k) the accountants who audited or reviewed (as the case may be) the Financial Statements are independent with respect to the Company within the meaning of Applicable Securities Laws and there has not been any “reportable event” (within the meaning of NI 51-102) with the current auditors or any former auditors of the Company since May 5, 2017;
(l) there are no material liabilities of the Company or the Subsidiaries, whether direct, indirect, absolute, contingent or otherwise which are not disclosed or reflected in the Financial Statements, except for liabilities incurred in the ordinary course of business since September 30, 2020, and which liabilities would not, individually or in the aggregate, have a Material Adverse Effect;
(m) the audit committee’s responsibilities and composition comply with National Instrument 52-110 - Audit Committees ;
(n) except as disclosed the Prospectus, none of the directors, executive officers or shareholders who beneficially own, directly or indirectly, or exercise control or direction over, more than 10% of the outstanding Shares or any known associate or affiliate of any such person, had or has any material interest, direct or indirect, in any transaction or any proposed transaction (including, without limitation, any loan made to or by any such person) with the Company or any Subsidiary which, as the case may be, materially affects or is material to the Company and the Subsidiaries (taken as a whole);
(o) the Company and each Subsidiary has duly and on a timely basis filed all foreign, federal, state, provincial and municipal tax returns required to be filed by it, has paid, collected, withheld and remitted all taxes due and payable or required to be collected, withheld and remitted by the Company or Subsidiary and has paid all assessments and reassessments and all other taxes, governmental charges, penalties, interest and other fines due and payable by it and which are claimed by any Governmental Authority to be due and owing, except where the failure would not, individually or in the aggregate, have a Material Adverse Effect, and adequate provision has been made for taxes payable for any completed fiscal period for which tax returns are not yet required to be filed; there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return or payment of any tax, governmental charge or deficiency by the Company or the Subsidiaries; there are no actions, suits, proceedings,
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investigations or claims pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary in respect of taxes, governmental charges or assessments; and there are no matters under discussion with any Governmental Authority relating to taxes, governmental charges or assessments asserted by any such authority;

(p) the Company or a Material Subsidiary owns, or has obtained valid and enforceable licenses for, or other rights to use, the Intellectual Property including, for greater certainty, the Intellectual Property described the Prospectus; the Company has no knowledge that the Company or a Material Subsidiary lacks or will be unable to obtain any rights or licenses to use all Intellectual Property necessary and material for the conduct of the business of the Company or the Material Subsidiaries (including the commercialization of the Company’s and its Material Subsidiaries’ products and services candidates) as described the Prospectus; no third parties have rights to any Intellectual Property of the Company or any Material Subsidiary, except as disclosed the Prospectus or except for the ownership rights of the owners of the Licensed IP or except for any licenses of use granted by the Company or any Material Subsidiary therein; there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or enforceability of any Intellectual Property or the Company’s or any Material Subsidiary’s rights in or to any Intellectual Property, the Company has no knowledge of any facts which form a reasonable basis for any such claim, and to the Company’s knowledge, there has been no finding of unenforceability or invalidity of the Intellectual Property; to the Company’s knowledge, there is no patent or published patent application that contains claims that interfere with the issued or pending claims of any of the Intellectual Property of the Company or its Material Subsidiaries; and to the Company’s knowledge, there is no prior art that necessarily renders any patent application owned by the Company or any Material Subsidiary unpatentable;
(q) other than Licensed IP, the Company or a Material Subsidiary is the legal and beneficial owner of, has good and marketable title to, and owns all right, title and interest in and to all Intellectual Property free and clear of all Encumbrances or adverse interests whatsoever, other than covenants, conditions, options to purchase and restrictions or other adverse claims of any kind or nature which could, individually or in the aggregate, have a Material Adverse Effect, and the Company has no knowledge of any claim of adverse ownership in respect thereof; other than the Licensed IP, no consent of any person is necessary to make, use, reproduce, license, sell, modify, update, enhance or otherwise exploit any Intellectual Property and none of the Intellectual Property of the Company or its Material Subsidiaries comprises an improvement to Licensed IP that would give any person any rights to any such Intellectual Property, including, without limitation, rights to license any such Intellectual Property;
(r) other than as disclosed the Prospectus, neither the Company nor any Subsidiary has received any notice or claim (whether written, oral or otherwise) challenging the ownership or right to use of any of the Intellectual Property or suggesting that any other person has any claim of legal or beneficial ownership or other claim or interest with respect thereto, nor to the knowledge of the Company is there a reasonable basis for any claim that any person other than the Company or a Material Subsidiary has any claim of legal or beneficial ownership or other claim or interest in any of the Intellectual Property;
(s) all applications for registration of any Intellectual Property of the Company and its Material Subsidiaries have been properly filed and have been pursued by the Company or its Material Subsidiaries in the ordinary course of business, and neither the Company nor any Material Subsidiary has received any notice (whether written, oral or otherwise) indicating that any application for registration of the Intellectual Property of the Company or its Material Subsidiaries has been finally rejected or denied by the applicable reviewing authority except for any rejection or denial that would not, individually or in the aggregate, have a Material Adverse Effect;
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(t) to the Company’s knowledge, the conduct of the business of the Company and its Material Subsidiaries (including, without limitation, the sale of its products and services, or the use or other exploitation of the Intellectual Property by the Company and its Subsidiaries or any customers, distributors or other licensees thereof) has not infringed, violated, misappropriated or otherwise conflicted with any intellectual property right of any person; and there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others that the Company or any Subsidiary infringes or otherwise violates (or would infringe or otherwise violate upon commercialization of the Company’s or its Subsidiaries’ products or services under development) any intellectual property of others, and the Company has no knowledge of any facts which form a reasonable basis for any such claim;
(u) neither the Company nor any Subsidiary is a party to any action or proceeding, nor, to the Company’s knowledge, is or has any action or proceeding been threatened that alleges that any current or proposed conduct of their respective businesses (including, without limitation, the sale of their respective products and services, or use or other exploitation of any Intellectual Property by the Company or its Subsidiaries or any customers, distributors or other licensees) has infringed, violated or misappropriated or otherwise conflicted, or will infringe, violate or misappropriate or otherwise conflict, with any intellectual property right of any person;
(v) to the Company’s knowledge, no person has infringed or misappropriated, or is infringing or misappropriating, any rights of the Company or its Material Subsidiaries in or to the Intellectual Property;
(w) the Company or a Material Subsidiary has entered into valid and enforceable written agreements pursuant to which the Company has been granted all licenses and permissions to use, reproduce, sub-license, sell, modify, update, enhance or otherwise exploit the Licensed IP to the extent required to operate the business of the Company and the Material Subsidiaries as currently conducted (including, if required, the right to incorporate such Licensed IP into the Intellectual Property). All license agreements in respect to Licensed IP are in full force and effect and neither the Company nor any Material Subsidiary nor, to the Company’s knowledge, any other person, is in default of any material obligations thereunder;
(x) to the extent that any of the Intellectual Property is licensed or disclosed to any person or any person has access to such Intellectual Property (including but not limited to any employee, officer, shareholder, consultant, systems-integrator, distributor or Contract counterparty of the Company or any Subsidiary), the Company or a Material Subsidiary has entered into a valid and enforceable written agreement which contains terms and conditions prohibiting the unauthorized use, reproduction, disclosure or transfer of such Intellectual Property by such person. Other than such agreements that have expired in accordance with their respective terms, all such agreements are in full force and effect and neither the Company nor any Material Subsidiary nor, to the Company’s knowledge, any other person, is in material default of its obligations thereunder;
(y) to the Company’s knowledge, all moral rights as defined under the Copyright Act (Canada) or any other applicable legislation or by operation of law in any applicable jurisdiction have been waived in writing in favour of any of the Company or a Subsidiary and its successors or assignees with respect to the copyrightable works that are owned by the Company or a Subsidiary, except as would not, individually or in the aggregate, have a Material Adverse Effect;
(z) the Company is a reporting issuer in each of the provinces and territories of Canada, is not in default under the Applicable Securities Laws of those provinces and is not on the list of defaulting issuers maintained by the applicable Securities Commissions in those
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provinces. The Company will not at each Applicable Time be in default under the Applicable Securities Laws of any of the Qualifying Jurisdictions and will not be on the list of defaulting issuers maintained by any Securities Commission in such Qualifying Jurisdictions;

(aa) the Company is in compliance with its timely and continuous disclosure obligations under the Applicable Securities Laws of each of the Qualifying Jurisdictions and the policies, rules and regulations of the TSXV and, without limiting the generality of the foregoing, there has not occurred any material change (actual, anticipated, contemplated or threatened) in the business, assets (including intangible assets), affairs, operations, prospects, liabilities (contingent or otherwise), capital, properties, condition (financial or otherwise), results of operations or control of the Company since January 1, 2019 which has not been set forth in the Disclosure Record or otherwise publicly disclosed on a nonconfidential basis, and the Company has not filed any confidential material change reports since January 1, 2019 which remain confidential as at the date hereof;
(bb) to the Company’s knowledge or as otherwise disclosed the Prospectus, no agreement is in force or effect which in any manner affects the voting or control of any of the securities of the Company;
(cc) the Company is authorized to issue an unlimited number of Shares, of which 749,712,690 Shares are issued and outstanding as of the date hereof, and all such issued Shares are validly issued and outstanding, and other than as disclosed in the Disclosure Record or the Prospectus, no person, firm or corporation has any right, agreement or option, present or future, contingent or absolute, or any right capable of becoming such a right, agreement or option or privilege (whether pre-emptive or contractual), for the issue or allotment of any unissued shares in the capital of the Company or any other security convertible into or exchangeable for any such shares, or to require the Company to purchase, redeem or otherwise acquire any of the outstanding securities in the capital of the Company;
(dd) each of the execution and delivery of this Agreement, the performance by the Company of its obligations hereunder, and the consummation of the transactions contemplated in this Agreement, do not and will not:
(i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, and do not and will not create a state of facts which will result in a breach or violation of or constitute a default under, whether after notice or lapse of time or both, (i) any statute, rule, regulation or law applicable to the Company or any Subsidiary, including, without limitation, the Applicable Securities Laws, or any judgment, order or decree of any Governmental Authority or court having jurisdiction over the Company or any Subsidiary; (ii) the constating documents or resolutions of the shareholders, directors or any committee of directors of the Company or any Subsidiary; (iii) any material mortgage, note, indenture, Contract, agreement, joint venture, partnership, instrument, lease or other document to which the Company or any Subsidiary is a party or by which it is bound; or (iv) any judgment, decree or order binding the Company, any Subsidiary or any of their Assets and Properties;
(ii) affect the rights, duties and obligations of any parties to any material indenture, agreement or instrument to which the Company or any Subsidiary is a party, nor give a party the right to terminate any such indenture, agreement or instrument by virtue of the application of terms, provisions or conditions in such indenture, agreement or instrument; or
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(iii) require the consent, approval, authorization, registration or qualification of or with any Governmental Authority, stock exchange, Securities Commission or other third party, except those which have been obtained or those which may be required and shall be obtained prior to the date hereof under Applicable Securities Laws or the rules of the TSXV, and (ii) such post-Placement notice filings with Securities Commissions and the TSXV as may be required in connection with the Offering;
(ee) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby (including the issuance, sale and delivery of the Placement Shares) have been duly authorized by all necessary corporate action of the Company and this Agreement has been duly executed and delivered by the Company and constitutes and will at each Applicable Time constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, provided that enforcement hereof may be limited by laws affecting creditors’ rights generally, that specific performance and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction and that the provisions relating to indemnity, contribution, severability and waiver of contribution may be limited under Applicable Law (the “ Qualification ”);
(ff) the Company has the power, capacity and authority to offer, issue and sell the Placement Shares;
(gg) the Placement Shares have been duly created, authorized, allotted and reserved for issuance and, at each Applicable Time:
(i) the Placement Shares issued pursuant to this Agreement will be duly and validly issued and outstanding as fully paid and non-assessable shares in the capital of the Company;
(ii) the Placement Shares issued pursuant to this Agreement will not have been issued in violation of or subject to any pre-emptive or contractual rights to purchase securities issued or granted by the Company;
(hh) the Shares have the attributes and characteristics and conform in all material respects with the descriptions thereof contained the Prospectus;
(ii) the Shares are listed and posted for trading on the TSXV and, prior to each Applicable Time, all necessary notices and filings will have been made with and all necessary consents, approvals, authorizations will have been obtained by the Company from the TSXV to ensure that, subject to fulfilling the Standard Listing Conditions, the Placement Shares to be issued pursuant to the terms of this Agreement will be listed and posted for trading on the TSXV upon their issuance;
(jj) no default exists under and, to the Company’s knowledge, no event has occurred which, after notice or lapse of time or both, or otherwise, constitutes a default under or breach, by the Company, any Subsidiary or, to the Company’s knowledge, any other person, of any obligation, agreement, covenant or condition contained in any Contract to which the Company or any Subsidiary is a party or by which it or any of its properties may be bound, except in each case for breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect; and no order, ruling or determination having the effect of suspending the sale or ceasing the trading of the Shares or any other security of the Company has been issued or made by any Qualifying Authority or stock exchange or any other regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the
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Company, are contemplated or threatened by any such authority or under any Applicable Securities Laws

(kk) except for the consents and waivers that have been obtained by the Company prior to the date hereof, there are no third party consents required to be obtained in order for the Company to complete the Offering;
(ll) except for the Agent as provided herein, there is no person, firm or corporation acting for the Company entitled to any brokerage or finder’s fee in connection with the Offering;
(mm) each of the documents forming the Disclosure Record filed since May 5, 2017 by or on behalf of the Company with any Qualifying Authority or the TSXV, did not contain a misrepresentation, determined as at the date of filing, which has not been corrected by the filing of a subsequent document which forms part of the Disclosure Record;
(nn) the minute books and records of the Company and each Material Subsidiary made available to counsel for the Agent in connection with their due diligence investigation of the Company for the periods from May 5, 2017 to the date of examination thereof are all of the minute books and records of the Company and the Material Subsidiaries and contain copies of all proceedings (or certified copies thereof) of the shareholders, the boards of directors and all committees of the boards of directors of the Company and the Material Subsidiaries to the date of review of such corporate records and minute books and there have been (A) no other meetings, resolutions or proceedings of the board of directors or any committees of the board of directors of the Company or any Material Subsidiary where any material resolution was passed, or (B) no other meetings, resolutions or proceedings of the shareholders of the Company or any Material Subsidiary, to the date of review of such corporate records and minute books not reflected in such minute books or other records;
(oo) other than as disclosed the Prospectus, no material labour dispute with current and former employees of the Company and the Material Subsidiaries exists or, to the knowledge of the Company, is imminent;
(pp) the Company and each Material Subsidiary is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged, including director and officer insurance, and the Company has no reason to believe that it will not be able to renew the existing insurance coverage of the Company or any Material Subsidiary as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not, individually or in the aggregate, have a Material Adverse Effect;
(qq) except in compliance with Applicable Laws, the Company and its Subsidiaries have not used any of its property or facilities to generate, manufacture, process, distribute, use, treat, store, dispose of, transport or handle any pollutants, contaminants, chemicals or industrial toxic or hazardous waste or substances (“ Hazardous Substances ”) in a manner that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; except in compliance with Applicable Laws, the Company and its Subsidiaries have not caused or permitted the release, in any manner whatsoever, of any Hazardous Substances on or from any of its properties or assets or any such release on or from a facility owned or operated by third parties but with respect to which the Company or any Subsidiary is or may reasonably be alleged to have material liability or has received any notice that it is potentially responsible for a federal, provincial, municipal or local clean-up site or corrective action under any Applicable Laws, statutes, ordinances, by-laws, regulations or any orders, directions or decisions rendered by any ministry, department or administrative regulatory agency relating to the protection of the
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environment, occupational health and safety or otherwise relating to or dealing with Hazardous Substances in a manner that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(rr) there has not been and there is not currently any labour disruption or conflict which is materially adversely affecting or could reasonably be expected to materially adversely affect, the carrying on of the business of the Company or any Material Subsidiary;
(ss) each employee benefit plan that is maintained, administered or contributed to by the Company or any Material Subsidiary for employees or former employees of the Company or any Material Subsidiary has been maintained in compliance with its terms and the requirements of, and is in good standing under, Applicable Laws. Neither the Company nor any Material Subsidiary has a defined benefit plan or defined pension plan. Neither the Company nor any Subsidiary has any outstanding indebtedness or any liabilities or obligations, including any unfunded obligation, under any such employee benefit plan, whether accrued, absolute, contingent or otherwise;
(tt) the forms and terms of the certificates representing the Shares have been approved and adopted by the board of directors of the Company and the form and terms of the certificate representing the Shares do not and will not conflict with any Applicable Laws or the rules of the TSXV;
(uu) Computershare Trust Company of Canada, at its principal offices in Vancouver, British Columbia has been duly appointed as the registrar and transfer agent for the Shares;
(vv) the business and material property and assets of the Company and the Material Subsidiaries conform in all material respects to the descriptions thereof contained the Prospectus;
(ww) all products manufactured and services provided to customers, in whole or in part, by the Company and the Subsidiaries and all component parts which are supplied to the Company or any Subsidiary are, to the Company’s knowledge, manufactured or provided in full compliance with Applicable Regulatory Laws, and the Company’s and the Subsidiaries’ products and services have met and satisfied all product safety standards necessary to permit the sale of the Company’s and the Subsidiaries’ products and services in the jurisdictions in which and to customers to which they are sold, except where the failure to do so would not, individually or in the aggregate, have a Material Adverse Effect;
(xx) the Company and/or its Material Subsidiaries possess as the exclusive owner thereof the Cannabis Licences, which permit the Company and/or its Material Subsidiaries (as applicable) to engage in the activities authorized by each Cannabis Licence; other than the Cannabis Licences, no other licences, permits, consents or approvals are required to be obtained by the Company or its Subsidiaries to carry on the business presently conducted by the Company and the Subsidiaries; each of the officers and directors of the Company (other than Vikram Bawa) and its Material Subsidiaries, as applicable, has successfully undergone a security clearance and obtained a confirmation of security clearance from the applicable Governmental Authorities and such security clearance is valid and in good standing; neither the Company nor any Subsidiary has received any communication from a Governmental Authority as to the invalidity, void, nullification or other cancellation of the Cannabis Licences and, to the knowledge of the Company, there are no facts or circumstances which could invalidate, void, nullify or otherwise cancel any of the Cannabis Licences;
(yy) the Company and each Material Subsidiary is in compliance, in all material respects, with all Cannabis Laws and has made all necessary corresponding filings. The Company and
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its Material Subsidiaries have not received any material adverse inspection report, notice, warning letter, or other materially adverse correspondence or notice from any Governmental Authority in respect of the Company and its Material Subsidiaries’ Cannabis Activities. No notice or communication has been received by the Company or any Material Subsidiary alleging a material defect with, or any issue requiring a material recall or quarantine of product (whether voluntary, required or otherwise) of, the Company or any Material Subsidiary. Neither the Company nor any Material Subsidiary: (i) has engaged in any Cannabis Activities or has any current intention to engage in Cannabis Activities, where such activity would be illegal or prohibited under Cannabis Laws, in the United States or any other federal, provincial, territorial, state, municipal, local or foreign jurisdiction at the time that it was or is intended to be carried on. The Company and each Material Subsidiary actively monitor their respective operations to ensure that the Company and each Material Subsidiary does not carry on any Cannabis Activities in any jurisdiction where such Cannabis Activities are not fully in material compliance with Cannabis Laws;

(zz) all supply agreements entered into between the Company and any of its Material Subsidiaries with the Ontario Cannabis Retail Corporation (operating as the Ontario Cannabis Store) and any other similar provincial Governmental Authorities with respect to the retail sale of cannabis are in good standing and in full force and effect, and each of the Company and its Material Subsidiaries is in material compliance with all of its obligations thereunder;
(aaa) the Company and each Material Subsidiary possesses such permits, certificates, licences, approvals, registrations, qualifications, consents and other authorizations including the Cannabis Licences (collectively, “ Governmental Licences ”), issued by the appropriate federal, provincial, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by the Company and each Material Subsidiary in all jurisdictions in which it carries on business, that are material to the conduct of the business of the Company (as such business is currently conducted) (provided that the Cannabis Licences shall be deemed to be material to the conduct of the business of the Company for the purposes of this Section 7(aaa); (B) the Company and each Material Subsidiary is in material compliance with the terms and conditions of all such Governmental Licences; (C) all of such Governmental Licences are in good standing, valid and in full force and effect; (D) neither the Company nor any Material Subsidiary has received any notice of proceedings relating to the revocation, suspension, termination or modification of any such Governmental Licences and, to the knowledge of the Company, there are no facts or circumstances that could lead to the revocation, suspension, modification or termination of any such Governmental Licences if the subject of an unfavourable decision, ruling or finding; (E) neither the Company nor any Material Subsidiary is in material default with respect to filings to be effected or conditions to be fulfilled in order to maintain such Governmental Licences in good standing; (F) none of such Governmental Licences contains any term, provision, condition or limitation which has or would reasonably be expected to affect or restrict in any material respect the operations or the business of the Company or any Material Subsidiary as now carried on; and (G) neither the Company nor any Material Subsidiary has reason to believe that any party granting any such Governmental Licences is considering limiting, suspending, modifying, withdrawing or revoking the same in any material respect;
(bbb) neither the Offering (including the proposed use of proceeds), nor the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, will have any material adverse impact on the Cannabis Licences or require the Company or any Material Subsidiary to obtain any new licence or consent or approval under Applicable Regulatory Laws;
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(ccc) neither the Company nor any Subsidiary has received any inspection report, notice of adverse finding, warning letter, untitled letter or other correspondence with or notice from Health Canada or any other Governmental Authority in Canada or any other country, alleging or asserting material non-compliance with any Applicable Laws, that has not been resolved or is otherwise being addressed in a timely manner and in compliance with Applicable Laws by the Company or such Subsidiary. The Company and its Subsidiaries are and have been in material compliance with applicable health care, cannabis, privacy and personal health information laws and the regulations promulgated pursuant to such laws and all other federal, provincial, state, municipal, local or foreign laws, manual provisions, policies and administrative guidance relating to the regulation of the Company in Canada or any other country, including Uruguay. Other than as disclosed the Prospectus, neither the Company nor any Subsidiary, either voluntarily or involuntarily, initiated, conducted or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning or other notice or action relating to the alleged safety or efficacy of any product or any alleged product defect or violation and, to the knowledge of the Company, there is no basis for any such notice or action;
(ddd) the Company and its Subsidiaries have reasonable security measures and safeguards in place to protect personal information it collects from its employees and other parties from illegal or unauthorized access or use by its personnel or third parties, and neither the Company nor any of its Subsidiaries are aware of any security breach or unauthorized disclosure of any such personal information.
(eee) the statements under the “Canadian Regulatory Environment” and “Licences and Regulatory Framework in Uruguay” in the Annual Information Form of the Company, dated May 13, 2020 incorporated by reference into the Prospectus provide a fair and accurate summary of the Cannabis Act and the Cannabis Regulations and other Applicable Regulatory Laws as of the date thereof;
(fff) all forward-looking information and statements of the Company contained the Prospectus, including any forecasts and estimates, expressions of opinion, intentions and expectations have been based on assumptions that are, in the opinion of the Company based on relevant information available to it at the time such assumptions were made, reasonable in the circumstances, and the Company has updated such forward-looking information and statements as required by and in compliance with Applicable Securities Laws;
(ggg) the statistical, industry and market related data included the Prospectus are derived from sources which the Company reasonably believes to be accurate, reasonable and reliable, and such data is consistent with the sources from which it was derived;
(hhh) (i) all information which has been prepared by the Company relating to the Company and its Subsidiaries and their businesses, properties and liabilities and provided or made available to the Agent, (ii) all financial, sales and operational information provided to the Agent, and (iii) all information contained in any filing by or on behalf of the Company with any Governmental Authority or stock exchange with respect to the Offering, including, without limitation, the Disclosure Record are, as of the date of such information, true and correct in all material respects, and no fact or facts have been omitted therefrom which would make such information materially misleading;
(iii) (i) the responses given by the Company and its officers at all oral due diligence sessions conducted by the Agent in connection with the Offering and at all oral due diligence sessions in which the Agent participated as an underwriter in the $20 million bought deal public offering of the Company that was completed on February 8 , 2021, as they relate to matters of fact, have been and shall continue to be true and correct in all material
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respects as at the time such responses have been or are given, as the case may be, and such responses have not and shall not omit any fact or information necessary to make any of the responses not misleading in light of the circumstances in which such responses were given or shall be given, as the case may be; and (ii) where the responses reflect the opinion or view of the Company or its officers (including responses or portions of such responses which are forward-looking or otherwise relate to projections, forecasts, or estimates of future performance or results (operating, financial or otherwise)), such opinions or views have been and will be honestly held and believed to be reasonable at the time they are given;

(jjj) the Company and the Material Subsidiaries are not insolvent (within the meaning of Applicable Laws) and are able to pay their liabilities as they become due. As of date of this Agreement and after giving effect to the Offering, to the knowledge of the Company, the Company will have working capital and sources of funds sufficient to fund the operations of the Company and the Material Subsidiaries for at least 12 months from such date, subject to the qualifications contained in the Prospectus;
(kkk) the Company has not withheld from the Agent any adverse material facts relating to the Company or the Offering;
(lll) the Company (i) has not made any significant acquisitions as such term is defined in Part 8 of NI 51-102 in its current financial year or prior financial years in respect of which historical and/or pro forma financial statements or other information would be required to be included or incorporated by reference into the Preliminary Base Prospectus or the Prospectus and for which a business acquisition report has not been filed under NI 51102, (ii) has not entered into any agreement or arrangement in respect of a transaction that would be a significant acquisition for purposes of Part 8 of NI 51-102, and (iii) there are no proposed acquisitions by the Company that have progressed to the state where a reasonable person would believe that the likelihood of the Company completing the acquisition is high and would be a significant acquisition for the purposes of Part 8 of NI 51-102 if completed as of the date of the Prospectus;
(mmm) the Company is not currently party to any agreement in respect of the change of control of the Company (whether by sale or transfer of shares or sale of all or substantially all of the Assets and Properties of the Company or otherwise);
(nnn) all statements made the Prospectus describing the Shares and the Placement Shares and the respective attributes thereof are complete and accurate in all material respects;
(ooo) except as disclosed in the Prospectus, none of the directors, officers or employees of the Company or the Material Subsidiaries, any person who owns, directly or indirectly, more than 10% of any class of securities of the Company or securities of any person exchangeable for more than 10% of any class of securities of the Company, or any associate or affiliate of any of the foregoing, had or has any material interest, direct or indirect, in any transaction or any proposed transaction (including, any loan made to or by any such person) with the Company which, as the case may be, materially affects, is material to or will materially affect the Company or any Material Subsidiary. The Company has no knowledge of any proposed or planned sale of Shares by any shareholder who owns, directly or indirectly, 10% or more of the outstanding Shares and to its knowledge all SEDI filings are up to date.
(ppp) the Company, the Subsidiaries and their respective directors, officers, employees and other representatives are familiar with and have conducted all transactions, negotiations, discussions and dealings in full compliance with anti-bribery and anti-corruption laws and regulations applicable in any jurisdiction in which they are located or conducting business. Neither the Company nor any Subsidiary has made any offer, payment,
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promise to pay, or authorization of payment of money or anything of value to any government official, or any other person while having reasonable grounds to believe that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a government official, for the purpose of (i) assisting the parties in obtaining, retaining or directing business; (ii) influencing any act or decision of a government official in his or its official capacity; (iii) inducing a government official to do or omit to do any act in violation of his or its lawful duty, or to use his or its influence with a government or instrumentality thereof to affect or influence any act or decision of such government or department, agency, instrumentality or entity thereof; or (iv) securing any improper advantage;

(qqq) the operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “ Applicable Anti-Money Laundering Laws ”) and no action, suit or proceeding by or before any Governmental Authority involving the Company or any Subsidiary with respect to Applicable Anti-Money Laundering Laws is, to the knowledge of the Company, pending or threatened;
(rrr) to the knowledge of the Company, none of (i) the Company, (ii) any person controlling or controlled by the Company, (iii) any person having a beneficial ownership interest in the Company and (iv) any person for whom the Company acts as an agent or nominee is (x) a country, territory, individual or entity named on the U.S. Treasury Department’s Office of Foreign Assets Control (“ OFAC ”) list, (y) a person or entity prohibited under the programs administered by OFAC (“ OFAC Programs ”), or (z) a country, territory, individual or entity named on another international sanctions list. To the knowledge of the Company, none of the proceeds of the Offering shall be derived from or used for any purpose prohibited under the OFAC Programs or other international sanctions programs;
(sss) the Company has filed a current annual information form in the form prescribed by NI 51102 in each of the Qualifying Jurisdictions prior to the date of this Agreement; the Company is as of the date hereof an Eligible Issuer in the Qualifying Jurisdictions and, on the dates of and upon filing of the Preliminary Base Prospectus and Prospectus, will be an Eligible Issuer in the Qualifying Jurisdictions and there will be no documents required to be filed under the Applicable Securities Laws of the Qualifying Jurisdictions in connection with the Offering of the Placement Shares that will not have been filed as required as at those respective dates;
(ttt) the Placement Shares will at each Applicable Time qualify as eligible investments as described in the Prospectus under the heading “Eligibility for Investment” and the Company will not take or permit any action within its control which would cause the Shares or Placement Shares to cease to be qualified, during the period of distribution of the Placement Shares, as eligible investments to the extent so described in the Prospectus;
(uuu) the Company has not received any notice of the termination or cancellation of the strategic alliance agreement or shareholders agreement to which the Company is a party in respect of or in connection with Sunens. To the knowledge of the Company, (A) Sunens possesses all permits, certificates, licences, approvals, registrations, qualifications, consents and other authorizations including cannabis licences (collectively, “ Sunens Governmental Licences ”) issued by the appropriate federal, provincial, state, local or foreign regulatory agencies or bodies necessary or required to conduct the business as now operated by Sunens; (B) Sunens is in compliance with the terms and conditions of all such Sunens Governmental Licences except for instances of noncompliance which would
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not, individually or in the aggregate, have a Material Adverse Effect; (C) all of the Sunens Governmental Licences held by Sunens are in good standing, valid and in full force and effect; and (D) Sunens has not received any notice relating to the cancellation, revocation, limitation, suspension, or adverse modification of any such Sunens Governmental Licences; and

(vvv) at the time of delivery thereof to the Agent:
(i) the Preliminary Base Prospectus complied, and the Prospectus and all Supplementary Material, if any, will comply, with the requirements of Applicable Securities Laws;
(ii) the Preliminary Base Prospectus provided, and the Prospectus and all Supplementary Material, if any, will provide, full, true and plain disclosure of all material facts relating to the Company and the Subsidiaries (taken as a whole) and the Placement Shares; and
(iii) the Preliminary Base Prospectus did not, and the Prospectus and all Supplementary Material, if any, will not, contain any misrepresentation.

8. Covenants of the Company.

The Company covenants and agrees with the Agent that:

(a) Prospectus Amendments. After the date of this Agreement and until the completion of the sales contemplated hereunder: (i) the Company will notify the Agent promptly of the time when any subsequent amendment to the Base Prospectus has been filed with any Qualifying Authority and has become effective or where a receipt has been issued therefor, as applicable, or any subsequent supplement to the Prospectus has been filed (each, an “ Amendment Date ”) and of any request by any Qualifying Authority for any amendment or supplement to the Prospectus or for additional information; (ii) the Company will file promptly all other material required to be filed by it with the Qualifying Authorities; (iii) the Company will submit to the Agent a copy of any amendment or supplement to the Prospectus (other than a copy of any documents incorporated by reference into Prospectus if such documents are accessible from SEDAR) a reasonable period of time before the filing thereof and will afford the Agent and the Agent’s counsel a reasonable opportunity to comment on any such proposed filing and to perform any due diligence investigations as may reasonably be required prior to such proposed filing; and (iv) the Company will furnish to the Agent at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference in the Prospectus (provided that the Company shall not be required to deliver documents or information incorporated by reference into the Prospectus if such documents are accessible from SEDAR) and the Company will cause each amendment or supplement to the Prospectus to be filed with the Qualifying Authorities as required pursuant to Shelf Procedures or, in the case of any document to be incorporated therein by reference, to be filed with the Qualifying Authorities as required pursuant to Canadian Securities Laws, within the time period prescribed.

(b) Notice of Stop Orders. The Company will advise the Agent, promptly after it receives notice thereof, of the issuance by the Qualifying Authorities of any stop order or of any order preventing or suspending the use of the Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in the Qualifying Jurisdictions, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Qualifying Authorities for the amending or supplementing of the Prospectus or for additional information relating to the Shares. If there is a Placement Notice that has been issued by the Company that has not been suspended or terminated in accordance with the notice requirements set forth in Sections 4 or 14, as applicable, the Company will use its commercially reasonable efforts to prevent the issuance of any stop order or any order preventing or suspending the use of the Prospectus or other prospectus in respect of the Shares, the suspension of

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any qualification for offering or sale in the Qualifying Jurisdictions, and, in the event of the issuance of any such stop order or any such order preventing or suspending the use of any prospectus relating to the Shares or suspending any such qualification, the Company will use its commercially reasonable efforts to obtain the lifting or withdrawal of such order as soon as possible. If there is no such outstanding Placement Notice, then, if, in the Company’s determination and at the Company’s sole discretion, it is necessary to prevent the issuance of any stop order or have a stop order lifted, the Company will use its commercially reasonable efforts to prevent the issuance of any stop order or any order preventing or suspending the use of the Prospectus or other prospectus in respect of the Shares, the suspension of any qualification for offering or sale in the Qualifying Jurisdictions, and, in the event of the issuance of any such stop order or any such order preventing or suspending the use of any prospectus relating to the Shares or suspending any such qualification, the Company will use its commercially reasonable efforts to obtain the lifting or withdrawal of such order as soon as possible.

(c) Delivery of Prospectus; Subsequent Changes. Within the time during which a prospectus relating to the Shares is required to be delivered by the Agent under Canadian Securities Laws, the Company will comply in all material respects with all requirements imposed upon it by Canadian Securities Laws, as appropriate and as from time to time in force, and will file on or before their respective due dates all reports required to be filed by it with the Qualifying Authorities pursuant to Canadian Securities Laws, as appropriate. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Prospectus to comply with Canadian Securities Laws, the Company will immediately notify the Agent to suspend the Offering of Placement Shares during such period and, if, in the Company’s determination and at the Company’s sole discretion, it is necessary to file an amendment or supplement to the Prospectus to comply with Canadian Securities Laws, the Company will promptly prepare and file with the Qualifying Authorities such amendment or supplement as may be necessary to correct such statement or omission or to make the Prospectus comply with such requirements, and the Company will furnish to the Agent such number of copies of such amendment or supplement as the Agent may reasonably request. In the event the Company fails to immediately notify the Agent to suspend the Offering of Placement Shares where required under this Section 8(c), the Company covenants, in addition to and in no way limiting the rights and obligations set for in Section 12 hereto, to indemnify and hold harmless the Agent with respect to any liabilities incurred by the Agent as a result and with respect to all costs reasonably incurred in the defense thereof.

(d) Prospectus. The Company will furnish to the Agent and its counsel (at the expense of the Company) copies of the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Prospectus that are filed with the Qualifying Authorities during the period in which a prospectus relating to the Shares is required to be delivered by the Qualifying Authorities (including all documents filed with the Qualifying Authorities during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as the Agent may from time to time reasonably request; provided, however, the Company shall not be required to furnish any documents to the Agent that are available on SEDAR.

(e) Company Information. The Company will furnish to the Agent such information in its possession as is reasonably requested by the Agent as necessary or appropriate to fulfill its obligations as agent pursuant to this Agreement and Canadian Securities Laws.

(f) Material Non-Public Information. The Company covenants that it will not issue a Placement Notice to the Agent in accordance with Section 2 hereof if the Company is in possession of material non-public information regarding the Company and its subsidiaries, taken as a whole, or the Shares.

(g) Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated in accordance with Section 14, will pay all expenses relating to the following matters: (i) the preparation and filing of the Prospectus and each amendment and

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supplement thereto; (ii) the preparation, issuance and delivery of the Placement Shares; (iii) all fees and disbursements of the Company Counsel, accountants and other advisors; (iv) the reasonable fees, disbursements and expenses of counsel to the Agent in connection with this Agreement and the Prospectus and ongoing services in connection with the transaction contemplated hereunder (subject to the limitations set forth in Section 3 of the engagement letter between the Company and the Agents dated February 23, 2021); (v) the qualification of the Placement Shares under securities law, including filing fees in connection therewith; (vi) the fees and expenses incurred in connection with the listing or qualification of the Placement Shares for trading on the TSXV; and (vii) the filing fees and expenses related to the Qualifying Authorities. All fees and expenses are to be paid in the currency in which such fees and expenses were incurred.

(h) Use of Proceeds. The Company will use the Net Proceeds as described in the Prospectus.

(i) Change of Circumstances. During the term of this Agreement, the Company will, at any time during a fiscal quarter in which the Company intends to deliver a Placement Notice to the Agent to sell Placement Shares, advise the Agent promptly after it has received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any representation, opinion, certificate, letter or other document provided to the Agent pursuant to this Agreement.

(j) Due Diligence Cooperation. The Company will cooperate with any due diligence review conducted by the Agent or their agent, including, without limitation, providing information and making available documents and senior corporate officers, as the Agent or its counsel may reasonably request, provided that the Company shall be required to make available senior corporate officers only (i) by telephone or at the Company’s principal offices and (ii) during the Company’s ordinary business hours.

(k) Affirmation of Representations, Warranties, Covenants and Other Agreements. Upon commencement of the Offering of the Placement Shares under this Agreement (and upon the recommencement of the Offering of the Placement Shares under this Agreement following any suspension of sales under Section 4), and, upon delivery of each Placement Notice at each Applicable Time, each Settlement Date and each Amendment Date, the Company shall be deemed to have affirmed each representation and warranty contained in this Agreement.

(l) Required Filings Relating to Placement of Placement Shares. In each quarterly report, annual information form or annual financial statements filed by the Company in respect of any period in which sales of Placement Shares were made by the Agent under this Agreement, the Company shall set forth with regard to such period the number and average price of Placement Shares sold through the Agent under this Agreement, aggregate gross proceeds and the Net Proceeds received by the Company and the compensation paid by the Company to the Agent with respect to sales of Placement Shares pursuant to this Agreement. For so long as the Shares are listed on the TSXV, the Company will provide the TSXV with all information it requires with respect to the Offering within the timelines prescribed by the TSXV.

(m) Representation Dates; Certificate. During the term of this Agreement, each time the Company: (i) files a Prospectus relating to the Placement Shares or amends or supplements the Prospectus relating to the Placement Shares by means of an amendment or supplement but not by means of incorporation of document(s) by reference to the Prospectus relating to the Placement Shares; (ii) files or amends an annual information form; (iii) files or amends annual or interim financial statements; or (iv) at any other time reasonably requested by the Agent (each date of filing shall be a “ Representation Date ”), the Company shall furnish the Agent with a certificate, in the form attached hereto as Schedule 3 within three (3) Trading Days of any Representation Date. The requirement to provide a certificate under this Section 8(m) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date. Notwithstanding the foregoing, if the Company subsequently decides to sell Placement Shares following a Representation

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Date when the Company relied on such waiver and did not provide the Agent with a certificate under this Section 8(m), then before the Company delivers the Placement Notice or any Agent sells any Placement Shares, the Company shall provide the Agent with the certificate, in the form attached hereto as Schedule 3, dated the date of the Placement Notice.

(n) Legal Opinions. Upon execution of this Agreement and (i) within three (3) Trading Days of each Representation Date with respect to which the Company is obligated to deliver the certificate in the form attached hereto as Schedule 3 for which no waiver is applicable and (ii) concurrently with the delivery of a certificate pursuant to the last sentence of Section 8(m), the Company will furnish or cause to be furnished to the Agent, the written opinions of Company Counsel, such opinions to be substantially similar to the form attached hereto as Schedule 4, dated the date that the opinion is required to be delivered, in form and substance satisfactory to the Agent and its counsel, acting reasonably, and such other opinions as the Agent or counsel to the Agent may reasonably require in connection with the issuance of the Placement Shares, or, in lieu of such opinions, Company Counsel may furnish the Agent with a letter to the effect that the Agent may rely on such last opinion delivered by the Company Counsel pursuant to this Section 8(n) to the same extent as though it was dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance).

(o) Comfort Letters. Upon execution of this Agreement and (i) within three (3) Trading Days of each Representation Date with respect to which the Company is obligated to deliver the certificate in the form attached hereto as Schedule 3 for which no waiver is applicable and (ii) concurrently with the delivery of a certificate pursuant to the last sentence of Section 8(m), the Company shall cause Ernst & Young LLP, the Company’s auditors, to furnish to the Agent a letter (each, a “ Comfort Letter ”) addressed to the Agent dated the date such Comfort Letter is delivered, in form and substance satisfactory to the Agent, acting reasonably: (A) relating to the verification of certain of the financial information and statistical and accounting data relating to the Company and its Material Subsidiaries, as applicable, contained in the Prospectus or incorporated by reference therein, which comfort letters shall be based on a review having a cut-off date not more than two (2) Business Days prior to the date of such letter; (B) stating that such auditors are independent public accountants within the meaning of Canadian Securities Laws and the rules and regulations thereunder, and that in their opinion the portion of the audited financial statements of the Company incorporated by reference in the Prospectus and audited by such auditors comply as to form in all material respects with the applicable accounting requirements of Canadian Securities Laws (the first such letter in each case, the “ Initial Comfort Letter ”); and (C) if applicable, updating the Initial Comfort Letter with any information which would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Prospectus, as amended and supplemented to the date of such letter.

(p) Market Activities. The Company will not, directly or indirectly: (i) take any action designed to or that would constitute or that might reasonably be expected to cause or result in, under Canadian Securities Laws or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares; or (ii) bid for, or purchase the Placement Shares, or pay anyone any compensation for soliciting purchases of the Placement Shares other than the Agent.

(q) No Offer to Sell. Neither the Agent nor the Company (including its agents and representatives, other than the Agent in each of their capacities as such) will make, use, prepare, authorize, approve or refer to any written communication that constitutes an offer to sell or solicitation of an offer to buy Placement Shares hereunder.

(r) Consent to the Agent’s Trading. The Company consents to the extent permitted under Canadian Securities Laws, the rules of the TSXV and under this Agreement, to the Agent trading in the Shares of the Company: (i) for the account of their clients at the same time as sales of Placement Shares occur pursuant to this Agreement; and (ii) for the Agent’s own accounts provided that no such purchase or sale shall take place by the Agent while such Agent has received a Placement Notice that remains in effect, unless the Company has expressly authorized or consented in writing to any such trades by the Agent.

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(s) Sale of Placement Shares in the United States. The Company will not engage in, and not permit any of its affiliates or any person acting on its behalf to engage in, any Directed Selling Efforts or in any form of General Solicitation or General Advertising in the United States with respect to the Placement Shares.

(t) Listing of Placement Shares. Prior to the date of the first Placement Notice, the Company will use its reasonable best efforts to cause the Placement Shares to be listed on the TSXV.

(u) Notice of Other Sales. During the pendency of any Placement Notice given hereunder, the Company shall provide the Agent notice as promptly as reasonably possible before it offers to sell, contracts to sell, sells, grants any option to sell or otherwise disposes of any Shares (other than Placement Shares offered pursuant to the provisions of this Agreement) or securities convertible or exercisable into or exchangeable for Shares; provided, that such notice shall not be required in connection with the (i) issuance, grant or sale of Shares, options or other rights to purchase or otherwise acquire Shares, or Shares issuable upon the exercise of options or other equity awards, in each case granted pursuant to any stock option, stock bonus or other stock or compensatory plan or arrangement, whether now in effect or hereafter implemented, (ii) issuance of securities in connection with the acquisition, merger, or sale or purchase of assets, and (iii) issuance or sale of Shares upon conversion of securities or the exercise of warrants, options or other rights then in effect or outstanding, and disclosed in filings by the Company available on SEDAR or otherwise in writing to the Agent. If the Company notifies the Agent under this Section of a proposed sale of Shares or Share equivalents, the Agent may suspend any offers and sales of Placement Shares under this Agreement for a period of time deemed appropriate by the Agent.

9. Reporting Relating to Placement of Placement Shares

The Agent will use its commercially reasonable efforts to deliver to the Company as reasonably requested by the Company to enable the Company to meet its reporting requirements under Canadian Securities Laws or any applicable requirements of the TSXV or any other Marketplace, promptly upon a request from the Company, a report providing sufficient information regarding the distribution of the Placement Shares for the Company to meet its reporting requirements under Canadian Securities Laws or any applicable requirements of the TSXV or any other Marketplace.

10. Additional Representations and Covenants of the Company

The Company has not distributed and will not distribute during the term of this Agreement any “marketing materials” (as defined in National Instrument 41-101 – General Prospectus Requirements ) in connection with the Offering and sale of the Placement Shares other than the Prospectus, provided that the Agent covenants with the Company not to take any action that would result in the Company being required to file with the Qualifying Authorities any “marketing materials” that otherwise would not be required to be filed by the Company, but for the action of the Agent.

11. Conditions to the Agent’s Obligations.

The obligations of the Agent hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein, the due performance by the Company of its obligations hereunder, the completion by the Agent of a due diligence review satisfactory to the Agent in its reasonable judgment, and the continuing satisfaction (or waiver by the Agent in its sole discretion) of the following additional conditions:

(a) Prospectus Supplement. The Prospectus Supplement shall have been filed with the Qualifying Authorities under the Shelf Procedures and in accordance with this Agreement, all requests for additional information on the part of the Qualifying Authorities shall have been complied with to the reasonable satisfaction of the Agent and the Agent’s counsel.

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(b) No Material Notices. None of the following events shall have occurred and be continuing: (i) receipt by the Company of any request for additional information from the Qualifying Authorities or any other Governmental Authority during the period of effectiveness of the Prospectus, the response to which would require any amendments or supplements to the Prospectus; (ii) the issuance by the Qualifying Authorities or any other federal or state or foreign or other governmental authority of any stop order suspending the effectiveness of the Prospectus or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (iv) the occurrence of any event that makes any statement made in the Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Prospectus or documents so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company’s reasonable determination that an amendment to the Prospectus would be appropriate.

(c) Material Changes. Except as contemplated and appropriately disclosed in the Prospectus or disclosed in the Company’s reports filed with the Qualifying Authorities, in each case at the time the applicable Placement Notice is delivered, there shall not have been any material change on a consolidated basis in the authorized share capital of the Company, or any development that causes or could reasonably be expected to cause a Material Adverse Effect (financial or otherwise), the effect of which, in the sole judgment of the Agent (without relieving the Company of any obligation or liability it may otherwise have), acting reasonably, is so material as to make it impracticable or inadvisable to proceed with the Offering of the Placement Shares on the terms and in the manner contemplated in the Prospectus.

(d) Certificate. The Agent shall have received the certificate required to be delivered pursuant to Section 8(m) on or before the date on which delivery of such certificate is required pursuant to Section 8(m).

(e) Legal Opinions. The Agent shall have received the opinions of Company Counsel to be delivered pursuant to Section 8(n) on or before the date on which such delivery of such opinions are required pursuant to Section 8(n). In addition, Company Counsel may rely upon the opinions of local counsel as to all matters relating to jurisdictions other than the Province of Ontario, not governed by the laws of the respective jurisdictions in which they are qualified to practice, and may rely, to the extent appropriate in the circumstances, as to matters of fact on certificates of the Company, auditors and public officials, and that the opinions of counsel may be subject to usual qualifications as to equitable remedies, creditors’ rights laws and public policy considerations.

(f) Comfort Letters. The Agent shall have received the Comfort Letter(s) required to be delivered pursuant to Section 8(o) on or before the date on which the delivery of such letter is required pursuant to Section 8(o).

(g) Approval for Listing; No Suspension. The Placement Shares shall have either been (i) approved for listing, subject to notice of issuance, on the TSXV, or (ii) the Company shall have filed an application for listing of the Placement Shares on the TSXV at or prior to the issuance of the Placement Notice. In addition, trading in the Shares shall not have been suspended on such markets.

(h) Other Materials. On each date on which the Company is required to deliver a certificate pursuant to Section 8(m), the Company shall have furnished to the Agent such appropriate further information, certificates and documents as the Agent may reasonably request.

(i) Securities Filings Made. All filings required by the Qualifying Authorities to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Canadian Securities Laws.

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12. Indemnification and Contribution

(a) The Company shall indemnify and hold harmless each of the Agent and the Agent’s affiliates, directors, officers, shareholders, partners, members, agents and employees and each person who controls the Agent or any of its affiliates within the meaning of Canadian Securities Laws (collectively, the “ Indemnified Parties ” and individually, an “ Indemnified Party ”) from and against all liabilities, claims, demands, losses, costs, damages and expenses (including, without limitation, any reasonable legal or other expenses incurred by them in connection with investigating or defending any such liability, claim, demand, loss, damage or expense) in any way caused by or arising directly or indirectly from or in consequence of:

(i) any information or statement (except for the Agent’s Information (as defined below)) in the Prospectus or any amendment thereto or in any other document incorporated therein by reference being alleged to be a misrepresentation or untrue, or any omission or alleged omission to state therein any fact or information (except for the Agent’s Information) required to be stated therein or necessary to make any of the statements therein not misleading in light of the circumstances in which they were made;
(ii) any untrue statement or alleged untrue statement of a material fact in the Prospectus or any amendment thereto, or any omission or alleged omission of a material fact (except for the Agent’s Information) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(iii) the Company not complying with any material requirement of applicable Canadian Securities Laws in connection with the transactions contemplated herein; or
(iv) any order made or any inquiry, investigation (whether formal or informal) or proceeding commenced or threatened by any securities, regulatory or other competent authority based upon the circumstances described in (i), (ii) or (iii) above which operates to prevent or restrict the trading in or the distribution of the Placement Shares or any of them in any of the provinces and territories of Canada,
except that if and to the extent that a court of competent jurisdiction in a final judgment that has become non-appealable determines that the liability, claim, demand, loss, cost, damage or expense was the result of the gross negligence, wilful misconduct or fraudulent misrepresentation of the Indemnified Party, or any material breach of this Agreement by the Indemnified Party, claiming indemnity, such Indemnified Party will promptly reimburse the Company any funds advanced to the Indemnified Party in respect of such liability, claim, demand, loss, cost, damage or expense and the indemnity provided for in this Section 12 shall cease to apply to such Indemnified Party in respect of such liability, claim, demand, loss, cost, damage or expense. For greater certainty, the Company and the Agent agree that they do not intend that any failure by the Agent to conduct such reasonable investigation as necessary to provide the Agent with reasonable grounds for believing the Prospectus contained no misrepresentation shall constitute “gross negligence”, “wilful misconduct” or "fraudulent misrepresentation" for the purposes of this Section 12 or otherwise disentitle the Agent from indemnification hereunder.

The Agent agrees to indemnify and hold harmless each of the Company and the Company’s affiliates, directors, officers, employees and agents and each person who controls the Company within the meaning of Canadian Securities Laws, from and against any and all liabilities, claims, demands, losses (other than lost profits), costs, damages and expenses (including, without limitation, the

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reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted) in any way caused by or arising directly or indirectly from or in consequence of: (i) any untrue statement or alleged untrue statement of a material fact relating solely to the Agent that has been provided in writing to the Company by or on behalf of any Agent specifically for inclusion in and contained in the Prospectus (including any amendment or supplement if the Company shall have furnished any amendments or supplements thereto); or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading made solely in reliance on facts or information relating solely to the Agent or any of them that has been provided in writing to the Company by or on behalf of any Agent specifically for inclusion therein.

The Company acknowledges that the name of the Agent set forth on the cover constitutes the only information furnished in writing by or on behalf of the Agent for inclusion in the Prospectus (collectively, the “ Agent’s Information ”).

(b) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 12(a) hereof is unavailable, in whole or in part, for any reason to an Indemnified Party in respect of any liabilities, claims, demands, losses, costs, damages and expenses referred to therein, the Company shall contribute to the amount paid or payable (or, if such indemnity is unavailable only in respect of a portion of the amount so paid or payable, such portion of the amount so paid or payable) by such Indemnified Party as a result of such liabilities, claims, demands, losses, costs, damages and expenses:

(i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Agent on the other hand from the distribution of the Placement Shares; or
(ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Agent on the other hand in connection with the matters or things referred to in Section 12(a) hereof which resulted in such liabilities, claims, demands, losses, costs, damages or expenses, as well as any other relevant equitable considerations;

provided that the Agent shall not in any event be liable to contribute, in the aggregate, any amount in excess of the Placement Fee or any portion thereof actually received. The relative benefits received by the Company on the one hand and the Agent on the other shall be deemed to be in the same ratio as the total Net Proceeds from the distribution of Placement Shares received by the Company is to the Placement Fee received by the Agent. The relative fault of the Company on the one hand and of the Agent on the other shall be determined by reference to, among other things, whether the matters or things referred to in Section 12(a) hereof which resulted in such liabilities, claims, demands, losses, costs, damages and expenses relate to information supplied by, steps or actions taken or done, or steps or actions not taken or not done by or on behalf of the Company (including indirectly as aforesaid) or to information supplied by, steps or actions taken or done, or steps or actions not taken or not done by or on behalf of the Agent and the relative intent, knowledge, access to information and opportunity to correct or prevent such statement, omission or misrepresentation, or other matter or thing referred to in Section 12(a) hereof. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 12(b) were determined by any method of allocation which does not take into account the equitable considerations referred to above in this Section 12(b).

Notwithstanding the provisions of this Section 12(b), if and to the extent that a court of competent jurisdiction in a final judgment that has become non-appealable determines that a person has been grossly negligent or committed wilful misconduct or a fraudulent misrepresentation, such person shall not be entitled to contribution from the Company hereunder.

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(c) If any matter or thing contemplated by this Section 12 shall be asserted against any Indemnified Party, the Indemnified Party concerned shall promptly notify the indemnifying party (the “ Indemnifying Party ”) and the Agent of the nature of such claim (provided that any failure to so notify the Indemnifying Party promptly shall relieve the Indemnifying Party of liability under this Section 12 only to the extent that such failure materially prejudices the Indemnifying Party’s ability to defend such claim), and the Indemnifying Party shall, subject as hereinafter provided, be entitled (but not required) to assume the defence of any suit or proceeding (including any governmental or regulatory investigation or proceeding) brought to enforce such claim. Any such defence shall be through legal counsel acceptable to the Indemnified Party (whose acceptance shall not be unreasonably withheld) and no admission of liability or settlement shall be made by an Indemnified Party in respect of any of the Indemnified Parties without, in each case, the prior written consent of such Indemnified Party to which such admission of liability or settlement applies. An Indemnified Party shall have the right to employ separate counsel in any such suit and participate in the defence thereof but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless: (i) the Indemnifying Party fails to assume the defence of such suit on behalf of the Indemnified Party within a reasonable period of time; (ii) the employment of such counsel has been authorized in writing by the Indemnifying Party; (iii) the Indemnified Party has reasonably concluded, based on advice of counsel, that there may be one or more legal defences available to the Indemnified Party which are different from or in addition to those available to the Company; or (iv) a conflict or potential conflict exists, based on advice of counsel to the Indemnified Party (and in the case of (iii) and (iv), if such Indemnified Party notifies the Company in writing that it elects to employ separate counsel at the expense of the Company, the Company shall not have the right to assume the defence of such suit or proceeding on behalf of the Indemnified Party and shall be liable to pay the reasonable fees and expenses of counsel for the Indemnified Party), it being understood, however, that the Company shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate law firm for all such Indemnified Parties (other than local counsel).

No Indemnifying Party shall, without the prior written consent of each Indemnified Party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 12 (whether or not any Indemnified Party is a party thereto), unless such settlement, compromise or consent: (i) includes an express and unconditional release of each Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability arising out of such litigation, investigation, proceeding or claim; and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party. It is the intention of the Company to constitute the Agent as trustee for the Agent’s directors, officers, shareholders, agents and employees, and each person who controls the Agent of the covenants of the Company under Sections 12(a) and 12(b) hereof with respect to the Agent’s directors, officers, shareholders, agents and employees, and each person who controls the Agent, and the Agent agrees to accept such trust and to hold and enforce such covenants on behalf of such persons.

The Company agrees that in case any legal proceedings or investigation shall be brought against or initiated against the Company by any governmental commission, regulatory authority, exchange, court or other authority and an Indemnified Party or other representative of the Agent shall be required to testify or respond to procedures designed to discover information regarding, in connection with or relating to the performance of professional services rendered to the Company by the Agent, the Company agrees to pay the Agent the reasonable costs in connection therewith (including an amount to reimburse the Agent for the time spent by the personnel in connection therewith on a per diem basis and out-of-pocket expenses).

(d) The rights provided in this Section 12 shall be in addition to and not in derogation of any other right which the Agent may have by statute or otherwise at law.

13. Representations and Warranties to Survive Delivery

All representations and warranties of the Company herein or in certificates delivered pursuant hereto shall remain operative and in full force and effect regardless of: (i) any investigation made by or on

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behalf of the Agent, its affiliates, directors, officers, shareholders, agents and employees and any controlling persons; (ii) delivery and acceptance of the Placement Shares and payment therefor; or (iii) any termination of this Agreement.

14. Termination

(a) The Agent may terminate this Agreement, by notice to the Company, as hereinafter specified at any time, if:

(i) there has been, since the time of execution of this Agreement or since the date as of which information is given in the Prospectus, any change, or any development in the condition, financial or otherwise, or in the business, properties, earnings, results of operations or prospects of the Company and its Material Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, which individually or in the aggregate, has or would be expected to have, in the reasonable opinion of the Agent, a material adverse change or effect on the business or affairs of the Company and its Subsidiaries or on the market price or the value of the Shares;
(ii) there has occurred any material adverse change in the financial markets in Canada or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis, including as a result of the novel coronavirus (COVID-19) pandemic (but only to the extent that there are material adverse impacts related thereto after March 23, 2021), which individually or in the aggregate, has or would be expected to have, in the reasonable opinion of the Agent, a material adverse change or effect on the business or affairs of the Company and its Subsidiaries or on the market price or the value of the Shares;
(iii) any suspension or limitation of trading of any securities of the Company on any exchange or in the over-the-counter market shall have occurred and be continuing; or
(iv) a major disruption of securities settlements or clearance services in Canada shall have occurred and, in the reasonable opinion of the Agent, is expected to continue for such period as would prohibit any sale of Placement Shares for the foreseeable future.

Any such termination shall be without liability of any party to any other party except that the provisions of Sections 8(g), 12, 13, 14(e), 16, 19 and 20 hereof shall remain in full force and effect notwithstanding such termination. If the Agent elects to terminate this Agreement as provided in this Section 14(a), the Agent shall provide the required notice as specified in Section 15.

(b) The Company shall have the right to terminate this Agreement by giving ten (10) days’ notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Sections 8(g), 12, 13, 14(e), 16, 19 and 20 hereof shall remain in full force and effect notwithstanding such termination.

(c) At any time following June 23, 2021, the Agent shall have the right to terminate its obligations under this Agreement in its sole discretion by giving ten (10) days’ notice (except if terminated by the Agent in accordance with Section 14(a)) as hereinafter specified at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Sections 8(g), 12, 13, 14(e), 16, 19 and 20 hereof shall remain in full force and effect notwithstanding such termination.

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(d) This Agreement shall remain in full force and effect until the earliest to occur of: (i) termination pursuant to Sections 14(a) or 14(b) or 14(c) otherwise by mutual agreement of the parties; (ii) such date that the aggregate gross sales proceeds of Shares sold pursuant to this Agreement equals CDN$30,000,000; or (iii) the date on which the receipt issued for the Base Prospectus ceases to be effective in accordance with Canadian Securities Laws, provided that in the case of any such termination Sections 8(g), 12, 13, 14(e), 16, 19 and 20 shall remain in full force and effect.

(e) Any termination of this Agreement shall be effective on the date specified in such notice of termination, provided that such termination shall not be effective until the close of business on the date of receipt of such notice by the Agent or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement.

(f) In the event that the Company terminates this Agreement, as permitted under Section 14(b), the Company shall be under no continuing obligation, either pursuant to this Agreement or otherwise, to utilize the services of the Agent in connection with any sale of securities of the Company or to pay any compensation to the Agent other than compensation with respect to sales of Placement Shares subscribed on or before the termination date and the Company shall be free to engage other placement agents and underwriters before (except with respect to the sale of securities hereunder), from and after the termination date with no continuing obligation to the Agent.

15. Notices

All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing and:

if sent to the Agent, shall be delivered to:

ATB Capital Markets Inc. Suite 3530, TD Bank Tower 66 Wellington Street West Toronto, ON M5K 1A1

Attention: Adam Carlson Email:

with a copy to:

Stikeman Elliott LLP 199 Bay Street, Suite 5300 Toronto, Ontario M5L 1B9

Attention: Donald Belovich Email:

or if sent to the Company, shall be delivered to:

Auxly Cannabis Group Inc. 777 Richmond St. W. Unit 002 Toronto, ON, M6J 3W3

Attention: Ron Fichter Email:

with a copy to:

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Owens Wright LLP 300-20 Holly Street Toronto, Ontario M4S 3B1 Attention: Paul De Luca Email:

Each party to this Agreement may change such address for notices by sending to the other parties to this Agreement written notice of a new address for such purpose. Each such notice or other communication shall be deemed given: (i) when delivered personally or by e-mail on or before 4:30 p.m. (Toronto time), on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day; (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier; (iii) on the Business Day actually received if deposited in the mail (certified or registered mail, return receipt requested, postage prepaid); and (iv) if sent by email, on the Business Day on which receipt is confirmed by the individual to whom the notice is sent, other than via auto-reply. For purposes of this Agreement, “Business Day” shall mean any day on which the TSXV is open for business.

16. Consent to Jurisdiction

The Company irrevocably: (i) agrees that any legal suit, action or proceeding against the Company brought by the Agent or by any person who controls any Agent arising out of or based upon this Agreement or the transactions contemplated thereby may be instituted in any court of the Province of Ontario; (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding; and (iii) submits to the exclusive jurisdiction of the courts of the Province of Ontario in any such suit, action or proceeding. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in respect of its obligations under the above-referenced documents, to the extent permitted by law. The provisions of this Section 16 shall survive any termination of this Agreement, in whole or in part.

17. Successors and Assigns

This Agreement shall inure to the benefit of and be binding upon the Company and its affiliates, directors, officers, shareholders, agents and employees and the controlling persons referred to in Section 12 hereof. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. No party may assign its rights or obligations under this Agreement without the prior written consent of the other parties.

18. Adjustments for Stock Splits

The parties acknowledge and agree that all Share related numbers contained in this Agreement shall be adjusted to take into account any stock split, stock dividend or similar event effected with respect to the Shares.

19. Entire Agreement; Amendment; Severability

This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the Agent. In the event that any one or

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more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

20. Applicable Law

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

21. Waiver of Jury Trial

The Company and the Agent hereby irrevocably waive any right either may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or any transaction contemplated hereby.

22. Absence of Fiduciary Duties

The parties acknowledge that they are sophisticated in business and financial matters and that each of them is solely responsible for making its own independent investigation and analysis of the transactions contemplated by this Agreement. They further acknowledge that the Agent has not been engaged by the Company to provide, and has not provided, financial advisory services in connection with the terms of the Offering nor has the Agent assumed at any time a fiduciary relationship to the Company in connection with such Offering. The Company hereby waives, to the fullest extent permitted by law, any claims it may have against the Agent for breach of fiduciary duty or alleged breach of fiduciary duty and agrees the Agent shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including shareholders, employees or creditors of Company.

23. Definitions

As used in this Agreement, the following terms have the respective meanings set forth below:

(a) “ Amendment Date ” has the meaning given thereto in Section 8(a) hereof;
(b) “ Applicable Anti-Money Laundering Laws ” has the meaning given thereto in Section 7(qqq) hereof;
(c) “ Applicable Laws ” means, in relation to any person or persons, the Applicable Securities Laws and all other statutes, regulations, rules, orders, by-laws, codes, ordinances, decrees, the terms and conditions of any grant of approval, permission, authority or licence, or any judgment, order, decision, ruling, award, policy or guidance document that are applicable to such person or persons or its or their business, undertaking, property or securities and emanate from a Governmental Authority having jurisdiction over the person or persons or its or their business, undertaking, property or securities, including without limitation, the Applicable Regulatory Laws;
(d) “ Applicable Regulatory Laws ” means, collectively, the laws that govern the cultivation, processing, analytical testing, and sale of, and research involving, cannabis and industrial hemp in each of the jurisdictions in which the Company and the Subsidiaries carry on business, including, without limitation, the Food and Drugs Act, the Cannabis Act and their associated regulations including the Food and Drug Regulations and the Cannabis Regulations;
(e) “ Applicable Securities Laws ” means (i) all applicable securities laws in each of the Qualifying Jurisdictions and the respective rules, regulations, instruments (including
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national and multilateral instruments), blanket orders and blanket rulings under such laws together with applicable published policies, policy statements and notices of the Qualifying Authorities in the Qualifying Jurisdictions and (ii) all applicable securities laws in the United States, including without limitation, the U.S. Securities Act, the U.S. Exchange Act and the rules and regulations promulgated thereunder, and any applicable state securities laws;

(f) “ Applicable Time ” means: (i) each Representation Date, (ii) the time of each sale of any Placement Shares pursuant to this Agreement; and (iii) each Settlement Date;
(g) “ Assets and Properties ” with respect to any person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, tangible or intangible, choate or inchoate, absolute, accrued, contingent, fixed or otherwise, and, in each case, wherever situated), including the goodwill related thereto, operated, owned, licensed or leased by or in the possession of such person;
(h) “ Authorized Representative ” has the meaning given thereto in Section 2(a) hereof;
(i)
“ Base Prospectus ” has the meaning given thereto in Section 6 hereof;
(j) “ Business Day ” means a day, other than a Saturday, a Sunday or a day on which chartered banks are not open for business in Toronto, Ontario;
(k) “ Canadian Securities Laws ” means the Securities Act (Ontario), the equivalent legislation in each of the other Qualifying Jurisdictions and applicable rules and regulations under such laws, together with applicable published national, multilateral and local policy statements, instruments, notices and blanket orders of the Qualifying Authorities in each of the Qualifying Jurisdictions;
(l)
“ Cannabis Act ” means the Cannabis Act, S.C. 2018, c. 16;
(m) “ Cannabis Activities ” means all activities related to, directly or indirectly, (i) the cultivation, production, processing, extraction, importation, exportation, sales or distribution of cannabis and/or cannabinoid products or substances, including the provision of goods, services and/or financial support to businesses operating in those sectors or the use of proceeds derived from such businesses, as applicable and (ii) the targeting or deriving (or reasonably expecting to derive) revenues or funds from, any direct or indirect dealings or transactions with respect to the activities described in subparagraph (i) above;
(n) “ Cannabis Laws ” means all applicable laws (including the Cannabis Act and the Cannabis Regulations), rules, regulations, policies, statutes, ordinances, codes, orders, consents, decrees, judgments, decisions, rulings, awards, or guidelines, the terms and conditions of any authorizations, including any judicial or administrative interpretation thereof, of any Governmental Authority applicable to Cannabis Activities, excluding the federal laws of the United States applicable to Cannabis Activities;
(o) “ Cannabis Licences ” means, collectively, the licences listed in Schedule “5” held by the Company and the Material Subsidiaries, and includes without limitation any other cannabis licences issued to the Company and/or any of the Material Subsidiaries under Applicable Regulatory Laws and licences issued to the Company and/or any of the Material Subsidiaries under laws and regulations relating to cannabis in Uruguay, and “Cannabis Licence” means any one of them, as the context requires or permits;
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(p) “ Cannabis Regulations ” mean the regulations promulgated under the Cannabis Act (including, without limitation, the Industrial Hemp Regulations, SOR/2018-145);
(q) “ Comfort Letter ” has the meaning given thereto in Section 8(o) hereof;
(r) “ Company Counsel ” means the law firm of Owens Wright LLP, counsel for the Company;
(s) “ Contract ” means all agreements, contracts or commitments of any nature, written or oral, including, for greater certainty and without limitation, licenses, leases, loan documents and security documents;
(t) “ Designated News Release ” has the meaning given thereto in Section 6 hereof;
(u) “ Directed Selling Efforts ” means “directed selling efforts” as defined in Regulation S and, without limiting the foregoing, but for greater clarity, means, subject to the exclusions from the definition of directed selling efforts contained in Regulation S, any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the Placement Shares and includes, without limitation, the placement of any advertisement in a publication with a general circulation in the United States that refers to the offering of any of the Placement Shares;
(v) “ Disclosure Record ” means the Company’s prospectuses, annual reports, annual and interim financial statements, annual information forms, business acquisition reports, management discussion and analysis of financial condition and results of operations, information circulars, material change reports, press releases and all other information or documents required to be filed or furnished by the Company under Applicable Securities Laws which have been publicly filed or otherwise publicly disseminated by the Company since May 5, 2017;
(w) “ distribution ” means distribution or distribution to the public, as the case may be, for the purposes of the Applicable Securities Laws;
(x) “ Eligible Issuer ” means an issuer which meets the criteria and has complied with the requirements of NI 44-101 so as to be qualified to offer securities by way of a short form prospectus under Applicable Securities Laws;
(y) “ Encumbrance ” means any charge, mortgage, lien, pledge, claim, restriction, security interest or other encumbrance whether created or arising by agreement, statute or otherwise pursuant to any Applicable Laws, attaching to property, interests or rights;
(z) “ Financial Information ” means the Financial Statements and certain other financial information of the Company (including financial forecasts, auditors’ reports, accounting data, management’s discussion and analysis of financial condition and results of operations) included or incorporated by reference in the Preliminary Base Prospectus, Prospectus and any Supplementary Materials;
(aa) “ Financial Statements ” means, collectively, the (i) audited consolidated financial statements of the Company incorporated by reference the Prospectus as at and for the financial year ended December 31, 2019 (which financial statements include comparative financial information for the 2018 financial year), together with the report of Ernst & Young LLP on those financial statements, and including the notes with respect to those financial statements; and (ii) the unaudited condensed consolidated interim financial statements of the Company incorporated by reference the Prospectus as at and for the
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three and nine months ended September 30, 2020 (which financial statements include comparative financial information for the comparable periods in 2019), and including the notes with respect to those financial statements;

(bb) “ Food and Drugs Act ” means the Food and Drugs Act, R.S.C., 1985, c. F-27;
(cc) “ Food and Drug Regulations ” mean the regulations promulgated under the Food and Drugs Act;
(dd) “ General Solicitation ” and “ General Advertising ” means “general solicitation” and “general advertising”, respectively, as used in Rule 502(c) of Regulation D, including, without limitation, any advertisement, article, notice or other communications published in any newspaper, magazine or similar media or broadcast over the internet, radio or television, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising or in any other manner involving a public offering within the meaning of Section 4(a)(2) of the U.S. Securities Act;
(ee) “ Governmental Authority ” means any: (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, bureau or agency, domestic or foreign; (b) any subdivision, agent, commission, board, or authority of any of the foregoing; or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, and any stock exchange or self-regulatory authority and, for greater certainty, includes the Qualifying Authorities and the TSXV;
(ff) “ Governmental Licenses ” has the meaning given thereto in Section 7(aaa) hereof;
(gg) “ Hazardous Substances ” has the meaning given thereto in Section 7(qq) hereof;
(hh) “ IFRS ” means International Financial Reporting Standards as issued by the International Accounting Standards Board, which were adopted by the Canadian Accounting Standards Board as Canadian generally accepted accounting principles applicable to publicly accountable enterprises;
(ii) " IIROC " means the Investment Industry Regulatory Organization of Canada;
(jj) “ Indemnified Party ” and “ Indemnified Parties ” each has the meaning given thereto in Section 12(a) hereof;
(kk) “ Indemnifying Party ” has the meaning given thereto in Section 12(c) hereof;
(ll) “ Initial Comfort Letter ” has the meaning given thereto in Section 8(o) hereof;
(mm) “ Intellectual Property ” means all of the following which is currently owned by, issued to or licensed to the Company or any Subsidiary, or other rights of the Company or any Subsidiary to use the following, which are in any case material to the conduct of the business of the Company and the Subsidiaries as currently conducted: (i) patent rights, issued patents, patent applications, patent disclosures, and registrations, inventions, discoveries, developments, concepts, ideas, improvements, processes and methods, whether or not such inventions, discoveries, developments, concepts, ideas, improvements, processes, or methods are patentable or registrable, anywhere in the world, (ii) copyrights (including performance rights) to any original works of art or authorship, including source code and graphics, which are fixed in any medium of expression, including copyright registrations and applications therefor, anywhere in the
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world, whether or not registered or registrable, (iii) any and all common law or registered trade-mark rights, trade names, business names, trade-marks, proposed trade-marks, certification marks, service marks, distinguishing marks and guises, logos, slogans, goodwill, domain names and any registrations and applications therefor, anywhere in the world, whether or not registered or registrable, (iv) know-how, show-how, confidential information, trade secrets, (v) any and all industrial design rights, industrial designs, design patents, industrial design or design patent registrations and applications therefor, anywhere in the world, whether or not registered or registrable, (vi) any and all integrated circuit topography rights, integrated circuit topographies and integrated circuit topography applications, anywhere in the world, whether or not registered or registrable, (vii) any reissues, divisions, continuations, continuations-in-part, renewals, improvements, translations, derivatives, modifications and extensions of any of the foregoing, (viii) any other industrial, proprietary or intellectual property rights, anywhere in the world, and (ix) proprietary computer software (including but not limited to data, data bases and documentation); including any of the foregoing respecting the cultivation of cannabis and the design, construction and operation of cultivation facilities;

(nn) “ Leased Premises ” has the meaning given thereto in Section 7(g) hereof;
(oo) “ Licensed IP ” means the Intellectual Property that is necessary and material to the business of the Company as presently conducted and that is owned by any person other than the Company or a Subsidiary;
(pp) “ Marketplace ” has the meaning given thereto in Section 3 hereof;
(qq) “ Material Adverse Effect ” means any change (including a decision to implement such a change made by the board of directors or by senior management who believe that confirmation of the decision by the board of directors is probable), fact, event, violation, inaccuracy, circumstance, state of being or effect that (a) is materially adverse (actually or anticipated, whether financial or otherwise) to the business, assets (including intangible assets), affairs, operations, prospects, liabilities (contingent or otherwise), capital, properties, condition (financial or otherwise), results of operations or control of the Company and the Subsidiaries, taken as a whole, or (b) results or could result in the Prospectus containing a material misrepresentation;
(rr) “ marketing materials ” and “template version” shall have their respective meanings given thereto in NI 41-101;
(ss) “ Material Subsidiaries ” means Dosecann LD Inc., Kolab Project Inc., Robinson’s Cannabis Incorporated, Robinson’s Outdoor Grow Incorporated, KGK Science Inc. and 2368523 Ontario Inc. and “ Material Subsidiary ” means any one of them, as the context requires or permits;
(tt) “ material change ” has the meaning given thereto in the Applicable Securities Laws of the Qualifying Jurisdictions;
(uu) “ material fact ” has the meaning given thereto in the Applicable Securities Laws of the Qualifying Jurisdictions;
(vv) “ misrepresentation ” has the meaning given thereto in the Applicable Securities Laws of the Qualifying Jurisdictions;
(ww) “ Net Proceeds ” has the meaning given thereto in Section 5(a) hereof;
(xx) “ NI 21-101 ” means National Instrument 21-101 – Market Operations;
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(yy) “ NI 44-101 ” means National Instrument 44-101 – Short Form Prospectus Distributions;
(zz) “ NI 44-102 ” means National Instrument 44-102 – Shelf Distributions ;
(aaa) “ NI 51-102 ” means National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators ;
(bbb) “ Offering ” has the meaning given thereto in Section 1 hereof;
(ccc) “ OFAC ” has the meaning given thereto in Section 7(rrr) hereof;
(ddd) “ OFAC Programs ” has the meaning given thereto in Section 7(rrr) hereof;
(eee) “ person ” shall be broadly interpreted and shall include an individual, firm, corporation, syndicate, partnership, trust, association, unincorporated organization, joint venture, investment club, government or agency or political subdivision thereof and every other form of legal or business entity of whatsoever nature or kind;
(fff) “ Placement ” has the meaning given thereto in Section 2(a) hereof;
(ggg) “ Placement Fee ” has the meaning given thereto in Section 2(b) hereof;
(hhh) “ Placement Notice ” has the meaning given thereto in Section 2(a) hereof;
(iii) “ Placement Shares ” has the meaning given thereto in Section 2(a) hereof;
(jjj) “ Preliminary Base Prospectus ” means the amended and restated preliminary short form base shelf prospectus of the Company dated March 15, 2021, amending and restating the preliminary short form base shelf prospectus of the Corporation dated February 22, 2021 in the provinces of Canada, and the preliminary short form base shelf prospectus dated March 15, 2021, in the Northwest Territories and in the territories of Nunavut and Yukon;
(kkk) “ Properties ” means all real property owned or held for use by the Company or any of its Subsidiaries;
(lll) “ Prospectus ” means the Prospectus Supplement (and any additional prospectus supplement prepared in accordance with the provisions of this Agreement and filed with the Qualifying Authorities in accordance with Canadian Securities Laws) together with the Base Prospectus;
(mmm) “ Prospectus Supplement ” has the meaning given thereto in Section 6 hereof;
(nnn) “ Qualification ” has the meaning given thereto in Section 7(ee) hereof;
(ooo) “ Qualifying Authorities ” means the applicable securities commission or securities regulatory authorities in each of the provinces of Canada;
(ppp) “ Qualifying Jurisdictions ” means each of the provinces and territories of Canada;
(qqq) “ Receipt ” has the meaning given thereto in Section 6 hereof;
(rrr) “ Regulation D ” means Regulation D under the U.S. Securities Act;
(sss) “ Regulation S ” means Regulation S under the U.S. Securities Act;
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(ttt) “ Representation Date ” has the meaning given thereto in Section 8(m) hereof;
(uuu) “ Reviewing Authority ” has the meaning given thereto in Section 6 hereof;
(vvv) “ SEDAR ” means the System for Electronic Document Analysis and Retrieval;
(www) “ Settlement Date ” has the meaning given thereto in Section 5(a) hereof;
(xxx) “ Shares ” has the meaning given thereto in Section 1 hereof;
(yyy) “ Shelf Procedures ” has the meaning given in NI 44-102;
(zzz) “ Shelf Securities ” has the meaning given thereto in Section 6 hereof;
(aaaa) “ Standard Listing Conditions ” means the customary and standard conditions imposed by the TSXV for the listing of the Placement Shares to be issued pursuant to the terms of this Agreement, as set forth in the letter of the TSXV to the Company Counsel dated March 17, 2021;
(bbbb) “ Subsidiary ” means those entities that would be considered a subsidiary of the Company pursuant to Applicable Securities Laws of the Province of Ontario and includes the Material Subsidiaries, and “Subsidiaries” means all of them;
(cccc) “ Supplementary Material” means , collectively, any amendment to or amendment and restatement of the Preliminary Base Prospectus and/or the Prospectus, and any further amendment, amendment and restatement or supplemental prospectus thereto or ancillary materials that may be filed by or on behalf of the Company under the Applicable Securities Laws of the Qualifying Jurisdictions relating to the distribution of the Placement Shares thereunder;
(dddd) “ Sunens ” means Sunens Farms Inc.;
(eeee) “ Sunens Governmental Licences ” has the meaning given thereto in Section 7(uuu) hereof;
(ffff) “ Trading Day ” means any day on which the TSXV is open for trading;
(gggg) “ TSXV ” means the TSX Venture Exchange;
(hhhh) “ United States ” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
(iiii) “ U.S. Exchange Act ” means the United States Securities Exchange Act of 1934, as amended; and
(jjjj) “ U.S. Securities Act ” means the United States Securities Act of 1933, as amended.
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24. Language

The parties hereby acknowledge that they have expressly required this Agreement and all notices, statements of account and other documents required or permitted to be given or entered into pursuant hereto to be drawn up in the English language only. Les parties reconnaissent avoir expressment demandées que la présente Convention ainsi que tout avis, tout état de compte et tout autre document à être ou pouvant être donné ou conclu en vertu des dispositions des présentes, soient rédigés en langueanglaise seulement.

25. Counterparts

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by email transmission.

[Remainder of page left intentionally blank. Signature page follows.]

If the foregoing accurately reflects your understanding and agreement with respect to the matters described herein please indicate your agreement by countersigning this Agreement in the space provided below.

Yours very truly,

ATB CAPITAL MARKETS INC.

By: (signed) “Adam Carlson” Name: Adam Carlson Title: Managing Director

ACCEPTED as of the date first written above.

AUXLY CANNABIS GROUP INC.

By: (signed) “Hugo Alves” Name: Hugo Alves Title: Chief Executive Officer

Signature Page to Equity Distribution Agreement

SCHEDULE 1

Form of Placement Notice

From: Auxly Cannabis Group Inc. To: ATB Capital Markets Inc. Attention: ⚫ [email] Date: ⚫, 202⚫ Subject: Placement Notice No. ⚫

Reference is made to the Equity Distribution Agreement dated March 23, 2021 (the “ Equity Distribution Agreement ”) between Auxly Cannabis Group Inc. (the “ Company ”) and ATB Capital Markets Inc. (the “ Agent ”). Unless otherwise defined herein, all capitalized terms referred to in this Placement Notice shall have the meanings attributed to them in the Equity Distribution Agreement.

Trading Instructions

Pursuant to the terms and subject to the conditions contained in the Equity Distribution Agreement, the undersigned hereby requests, as a duly appointed Authorized Representative of the Company, that the Agent sell Placement Shares, as agent of the Company, in accordance with the trading instructions set out in Appendix “A” hereto.

Yours very truly,

AUXLY CANNABIS GROUP INC.

By: Name: Title: Acknowledged this _ day of __, 20__ by the Agent. ATB CAPITAL MARKETS INC. By: Name: Title:

APPENDIX A

TRADING INSTRUCTIONS

Number of Placement Shares to be sold

⚫

Total number of Shares outstanding on the date of this ⚫ Placement Notice

Maximum number of Placement Shares to be sold expressed as a percentage of the total number of Shares outstanding on the date of this Placement Notice (A ÷ B x 100) ⚫% Minimum price per Placement Share to be sold CDN$⚫ Maximum number of Placement Shares that may be sold ⚫ on any one Trading Day First permitted Trading Day of trading ⚫ Last permitted Trading Day of trading ⚫ Placement Fee CDN$⚫

Other trading instructions: ⚫

SCHEDULE 2

The Authorized Representatives of the Company are as follows:

Name and Office / Title	E-mail Address	Telephone Number
Ron Fichter General Counsel
Brian Schmitt Chief Financial Officer

The Authorized Representatives of the Agent are as follows:

Name and Office / Title	E-mail Address	Telephone Number
Paul Sarachman President
Mervin Kopeck Managing Director
Karen Jardim Managing Director
Gail O’Connor Operations Manager

SCHEDULE 3

OFFICER’S CERTIFICATE

I, [name of executive officer] , the [title of executive officer] of Auxly Cannabis Group Inc. (the “ Company ”), a company incorporated under the Business Corporations Act (British Columbia), do hereby certify in such capacity and not in my personal capacity, on behalf of the Company pursuant to Section 8(m) of the equity distribution agreement between the Company and ATB Capital Markets Inc. dated March 23, 2021 (the “ Equity Distribution Agreement ”), and without personal liability, that, to the best of my knowledge:

(i) except as set forth in the Prospectus, the representations and warranties of the Company in Section 7 of the Equity Distribution Agreement are true and correct on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date; and
(ii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied pursuant to the Equity Distribution Agreement at or prior to the date hereof.

Date:

AUXLY CANNABIS GROUP INC.

By: Name: Title:

SCHEDULE 4

MATTERS TO BE COVERED BY INITIAL OPINION OF COMPANY COUNSEL

The following are the matters to be addressed in the opinion of Owens Wright LLP, as Company Counsel, or local counsel, as applicable, to be delivered pursuant to Section 8(n) of the Agreement:

The Company is a company incorporated and existing under the laws of the Province of British Columbia and has the corporate power to conduct its business as described in the Prospectus;
Each Material Subsidiary has been duly incorporated or otherwise formed and organized and is validly existing under the laws of its jurisdiction of incorporation or formation has the corporate power to conduct its business as described in the Prospectus;
The Company has the corporate power to enter into and deliver the Agreement and to perform its obligations thereunder and to carry out the transactions contemplated thereby and the Agreement has been authorized, executed and, to the extent delivery is a matter governed by the laws of the Province of British Columbia or the federal laws of Canada applicable therein, delivered by the Company, and such agreement is a legal, valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms under the laws of the Province of Ontario and the federal laws of Canada applicable therein;
The Company’s authorized share capital consists of an unlimited number of Shares;
The attributes and characteristics of the Shares conform in all material respects with the descriptions thereof in the Prospectus;
All necessary corporate action has been taken by the Company to authorize the issuance and delivery of the Placement Shares;
The Placement Shares to be delivered under the Agreement have been duly allotted and reserved for issuance, and will, when issued, be validly issued as fully paid and non-assessable Shares in the capital of the Company;
The execution and delivery by the Company of and the performance by the Company of its obligations under the Agreement will not contravene any provisions of:
a. the constating documents of the Company, or
b. the laws of the Province of British Columbia applicable to the Offering of the Placement Shares;
No consent, approval, authorization or order of, and no registration, qualification, recording or filing with, any governmental body or agency is required for the issuance, sale and delivery of the Placement Shares, except such as may have been made or obtained;
The TSXV has conditionally approved the listing and posting for trading of up to $30,000,000.00 Placement Shares, subject to the Company fulfilling all of the requirements of such exchange;
A receipt has been obtained in respect of the Base Prospectus from each of the Qualifying Authorities in each Qualifying Jurisdiction, the Prospectus Supplement has been filed with each of the Qualifying Authorities in each Qualifying Jurisdiction in the manner and within the time period required by the Shelf Procedures, and no order having the effect of ceasing or suspending the distribution of the Placement Shares, to the knowledge of Company Counsel or local counsel, as applicable, has been issued by any of the Qualifying Authorities in each Qualifying Jurisdiction and no proceedings for that purpose, to the knowledge of Company Counsel or local counsel, have been instituted or are pending;
All documents have been filed, all proceedings have been taken and all other legal requirements
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have been fulfilled by the Company as required under Canadian Securities Laws to qualify the distribution of the Placement Shares to the public in each of the Qualifying Jurisdictions through dealers duly registered under Canadian Securities Laws who have complied with the relevant provisions of such laws;

The statements under the heading “Eligibility for Investment” in the Prospectus are true and correct, subject to the assumptions, limitations, conditions and restrictions set out therein;
Subject to the qualifications, assumptions, limitations and restrictions referred to under the heading “Certain Canadian Federal Income Tax Considerations” in the Prospectus, the statements made therein, to the extent that such statements summarize matters of law or legal conclusions, fairly summarize the matters described therein in all material respects;
The forms of definitive certificate representing the Shares have been duly approved and adopted by the Company, comply with applicable laws of the Province of British Columbia and the constating documents of the Company; and
Computershare Trust Company of Canada has been appointed as the registrar and transfer agent for the Shares of the Company.

In giving the opinions set out above, Company Counsel or local counsel, as applicable may state that the opinions are limited to the laws of the Provinces of Ontario, British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island and the federal laws of Canada therein, except to the extent such opinions are made in reliance on the opinion of local counsel in other jurisdictions and as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials.

AI assistant

Auxly Cannabis Group — Capital/Financing Update 2021

43847_rns_2021-03-23_8c58600d-f021-42b2-9995-28e5b7482c56.pdf

AUXLY CANNABIS GROUP INC.

EQUITY DISTRIBUTION AGREEMENT

1. Issuance and Sale of Shares

2. Placements

3. Sale of Placement Shares by the Agent

4. Suspension of Sales

5. Settlement

6. Prospectus

7. Representations and Warranties of the Company

8. Covenants of the Company.

9. Reporting Relating to Placement of Placement Shares

10. Additional Representations and Covenants of the Company

11. Conditions to the Agent’s Obligations.

12. Indemnification and Contribution

13.

Representations and Warranties to Survive Delivery

14. Termination

15. Notices

16. Consent to Jurisdiction

17. Successors and Assigns

18. Adjustments for Stock Splits

19. Entire Agreement; Amendment; Severability

20. Applicable Law

21. Waiver of Jury Trial

22. Absence of Fiduciary Duties

23. Definitions

24. Language

25. Counterparts

[Remainder of page left intentionally blank. Signature page follows.]

ATB CAPITAL MARKETS INC.

AUXLY CANNABIS GROUP INC.

SCHEDULE 1

Form of Placement Notice

Trading Instructions

AUXLY CANNABIS GROUP INC.

APPENDIX A

TRADING INSTRUCTIONS

SCHEDULE 2

SCHEDULE 3

OFFICER’S CERTIFICATE

AUXLY CANNABIS GROUP INC.

SCHEDULE 4

MATTERS TO BE COVERED BY INITIAL OPINION OF COMPANY COUNSEL

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Auxly Cannabis Group Capital/Financing Update 2021