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Home / Press Releases  / Lineage Provides Update on Harborside RTO and Closing of Harborside $19.65 Million Subscription Receipt Financing

TORONTO, May 28, 2019 (GLOBE NEWSWIRE) — Lineage Grow Company Ltd. (CSE:BUDD) (“Lineage” or the “Company”) is pleased to provide update on the proposed reverse takeover transaction (the “Reverse Takeover”) with FLRish, Inc. d/b/a/ Harborside (“Harborside”).

Lineage Shareholder Approval

At the special meeting of shareholders of Lineage held on May 16, 2019, shareholders approved various matters relating to the Reverse Takeover, including (i) an amendment to the articles of Lineage creating certain special shares, (ii) an amendment to the articles of Lineage consolidating the Lineage common shares (the “Consolidation”) and re-designating the post-Consolidation common shares as subordinate voting shares (the “Subordinate Voting Shares”), creating a new class of multiple voting shares and changing the name of the Company, (iii) a new equity incentive plan for the Company as the resulting issuer from the Reverse Takeover (the “Resulting Issuer”), (iv) an updated set of by-laws which will include advance notice provisions, and (v) a shareholder rights plan for the Resulting Issuer. With respect to the approval of Lineage shareholders of the Reverse Takeover, in addition to the shareholder approval required under corporate law, Lineage obtained a majority of minority approval for the Reverse Takeover, in which Lineage common shares held by Lineage insiders were excluded from voting, to satisfy the requirements under Ontario Securities Commission Rule 56-501 – Restricted Shares,

At the meeting, Lineage shareholders also elected Andrew Berman, Peter Bilodeau, Adam Szweras, Matthew K. Hawkins, Tracy Geldert, Sherri Altshuler and Nayir Felix Munoz as directors of the Corporation taking effect on completion of the Reverse Takeover.

/EIN News/ — Lineage Files Articles of Amendment and Declares Stock Dividend

Lineage filed articles of amendment on May 24, 2019 to create a new class of special shares (the “Special Shares”), issuable in series, the first series to consist of up to 45,000,000 special shares designated as Series A special shares (the “Series A Special Shares”), the second series to consist of up to 12,000,000 special shares designated as Series B special shares (the “Series B Special Shares”), and the third series to consist of up to 15,000,000 special shares designated as Series C special shares (the “Series C Special Shares”).

The Special Shares are non-voting and are not entitled to receive notice of meeting of shareholders, unless otherwise required by law. The Special Shares are not entitled to vote as a separate class, unless otherwise required by law. The Special Shares will not receive any dividend and will not participate in distribution of Lineage’s assets in case of dissolution or winding up.

Each Series A Special Share will be automatically converted into one pre-Consolidation Lineage common share upon the completion of the Reverse Takeover without payment of additional consideration or any further action by the holder. Each Series B Special Share will be automatically converted into one pre-Consolidation Lineage common share upon the completion of the proposed acquisition of shares of Lucrum Enterprises, Inc. d/b/a LUX (the “Lux Acquisition”) without payment of additional consideration or any further action from the holder. Each Series C Special Share will be automatically converted into one pre-Consolidation Lineage common share upon the completion of the proposed acquisition of Walnut Oaks, LLC d/b/a Agris Farms (the “Agris Farms Acquisition”) without payment of additional consideration or any further action from the holder.

The board of directors of Lineage declared a stock dividend on May 24, 2019 to holders of Lineage common shares as at the record date of May 23, 2019, in aggregate (a) 44,775,010 Series A Special Shares; (b) 11,513,533 Series B Special Shares; and (c) 14,072,120 Series C Special Shares, which special shares were issued on May 24, 2019. No certificates will be issued for the Special Shares, and instead, Lineage’s transfer agent will issue Direct Registration Statements DRS (for stock dividend) to the eligible shareholders.

If after the issuance of the Special Shares, the Lineage common shares are consolidated in the Consolidation and are reclassified on a post-Consolidation basis as Subordinate Voting Shares, then the number of underlying shares will be adjusted so that approximately 41.818182 Special Shares will be converted into one Subordinate Voting Share.

Unless all of the Special Shares shall have otherwise been converted on or prior to end of business on July 2, 2019 with respect to Series A Special Shares, or 180 days after the Reverse Takeover closing with respect to Series B Special Shares and Series C Special Shares, the applicable Special Shares shall be automatically redeemed and shall be deemed to be redeemed without any act by holders, at a redemption price of C$0.000001 per Special Share. All Special Shares redeemed by Lineage will be cancelled.

Harborside Financing Closing

The Company is also pleased to announce that Harborside has closed its private placement (the “Financing”) of subscription receipts (the “Subscription Receipts”), for aggregate gross proceeds of approximately C$19.65 million. AltaCorp Capital Inc. (“AltaCorp”) and Foundation Markets Inc. (“FMI”) served as co-lead agents on behalf of a syndicate of agents which included Cormark Securities Inc., Beacon Securities Limited and Haywood Securities Inc. (collectively with AltaCorp and FMI, the “Agents”). The net proceeds from the Financing, following release from escrow, are expected to be used to provide the Resulting Issuer with general working capital and to support Harborside’s initiatives throughout California.

Each Subscription Receipt shall be automatically exchanged, without any further act or formality on the part of the holder of such Subscription Receipt, and for no additional consideration, for (i) one share of Class D common stock in the capital of Harborside (a “Common Share”) and (ii) one Common Share purchase warrant (a “Warrant”) which will entitle the holder to acquire one Common Share at a price of C$8.75 for a period of two years, subject to adjustment and/or acceleration in certain circumstances, immediately prior to the completion of the Reverse Takeover and upon the satisfaction or waiver (to the extent such waiver is permitted) of certain other conditions (the “Escrow Release Conditions”). Pursuant to the Reverse Takeover, if and when completed, holders of the Common Shares will receive one subordinate voting share (a “Subordinate Voting Share”) in the capital of the Resulting Issuer in exchange for each Common Share held, and, following the completion of the Reverse Takeover, the Warrants will be exercisable for Subordinate Voting Shares. The gross proceeds of the Financing, less the Agents’ expenses and 50% of the Agents’ commission, are being held in escrow pending the satisfaction or waiver of the Escrow Release Conditions, which include the completion of the Reverse Takeover.

Harborside Shareholder Approval

At a special meeting of shareholders of Harborside held on May 20, 2019, shareholders approved the principal terms of the Merger Agreement and the transactions contemplated thereby, including the Reverse Takeover. In addition, holders of Harborside’s outstanding preferred stock voted to waive their rights to certain payments they would otherwise have been entitled to as a result of the Reverse Takeover.

No Offer or Solicitation

None of the securities of Harborside or the securities issued in connection with Financing or the Reverse Takeover have been or will be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit of, persons in the United States or “U.S. Persons”, as such term is defined in Regulation S under the U.S. Securities Act, absent registration or an applicable exemption from such registration requirements. This news release shall neither constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

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