Full Press Release Details
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| ARTICLE 1 DEFINITIONS AND TERMS | 2 | |||||||||
| Section | 1.1 | Certain Defined Terms | 2 | |||||||
| Section | 1.2 | Other Terms | 12 | |||||||
| Section | 1.3 | Interpretation and Construction | 12 | |||||||
| ARTICLE 2 CORPORATE GOVERNANCE | 13 | |||||||||
| Section | 2.1 | Board Representation | 13 | |||||||
| Section | 2.2 | Altria Approval Rights | 16 | |||||||
| ARTICLE 3 PRE-EMPTIVE RIGHT OF ALTRIA | 18 | |||||||||
| Section | 3.1 | Pre-emptive Rights | 18 | |||||||
| Section | 3.2 | Top-Up Securities | 19 | |||||||
| Section | 3.3 | Exercise of Pre-emptive Rights and Top-Up Rights | 21 | |||||||
| Section | 3.4 | No Obligations Unless Pre-emptive Right or Top-Up Right Exercised | 23 | |||||||
| Section | 3.5 | No Rights as Holder of Pre-emptive Right Securities | 23 | |||||||
| Section | 3.6 | Registration Rights | 23 | |||||||
| ARTICLE 4 INFORMATION RIGHTS; INSPECTION RIGHTS | 23 | |||||||||
| Section | 4.1 | Annual and Quarterly Financial Information | 23 | |||||||
| Section | 4.2 | Additional Information Rights | 23 | |||||||
| Section | 4.3 | Inspection Rights | 26 | |||||||
| Section | 4.4 | Confidentiality | 26 | |||||||
| ARTICLE 5 COVENANTS | 28 | |||||||||
| Section | 5.1 | Covenants of the Company | 28 | |||||||
| Section | 5.2 | Representations and Warranties of Altria | 31 | |||||||
| Section | 5.3 | Covenants of Altria | 32 | |||||||
| Section | 5.4 | Cannabis Business | 32 | |||||||
| ARTICLE 6 TERMINATION; SURVIVAL | 35 | |||||||||
| Section | 6.1 | Termination | 35 | |||||||
| Section | 6.2 | Survival | 36 | |||||||
| ARTICLE 7 GENERAL PROVISIONS | 37 | |||||||||
| Section | 7.1 | Notices | 37 | |||||||
| Section | 7.2 | Expenses | 38 | |||||||
| Section | 7.3 | Severability | 39 | |||||||
| Section | 7.4 | Entire Agreement | 39 | |||||||
| Section | 7.5 | No Third-Party Beneficiaries | 39 | |||||||
| Section | 7.6 | Successors and Assigns | 39 | |||||||
| Section | 7.7 | Amendment or Other Modification; Waiver | 40 |
| Section | 7.8 | Governing Law and Venue; Submission to Jurisdiction; Selection | ||||||||
| of Forum; Waiver of Trial by Jury | 40 | |||||||||
| Section | 7.9 | Injunctive Relief | 41 | |||||||
| Section | 7.10 | Further Assurances | 41 | |||||||
| Section | 7.11 | Publicity | 41 | |||||||
| Section | 7.12 | Counterparts | 42 |
| [Redacted | Schedule to Investor Rights Agreement] | |||
| [Redacted | Schedule to Investor Rights Agreement] | |||
| [Redacted | Schedule to Investor Rights Agreement] | |||
| Schedule 3 | Registration Rights | |||
| [Redacted | Schedule to Investor Rights Agreement] |
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT, dated as of March 8, 2019 (this Agreement ), is entered into by and between Cronos
Group Inc., a corporation organized under the Laws of the Province of Ontario (the Company ), and Altria Group, Inc. a corporation organized under the Laws of the Commonwealth of Virginia ( Altria and, together
with the Company, the Parties and each, a Party ).
WHEREAS, on the date hereof, the Company issued, sold and delivered to (a) Maple Acquireco (Canada) ULC, an unlimited liability corporation
organized and existing under the Laws of the Province of British Columbia and a Wholly Owned Subsidiary of Altria ( Altria Common Shareholder ), pursuant to the designation effected by Purchaser pursuant to Section 8.6 of the
Subscription Agreement, 149,831,154 Common Shares, and (b) Altria Summit LLC, a limited liability company organized and existing under the Laws of Virginia and a Wholly Owned Subsidiary of Altria ( Purchaser ), a warrant (the
Purchased Warrant ) represented and evidenced by a warrant certificate to purchase Common Shares (the Purchased Warrant Certificate ), entitling Purchaser to subscribe for and purchase, acquire, accept and receive
from the Company, 73,990,693 Common Shares (subject to adjustment pursuant to the terms and conditions of the Purchased Warrant Certificate), in each instance, on a private placement basis, pursuant to the Subscription Agreement, dated as of
December 7, 2018 (the Subscription Agreement ), entered into by and between the Company, Purchaser and, solely for certain limited purposes set forth therein, Altria.
WHEREAS, the Parties each desire for Michael Gorenstein to remain the Chief Executive Officer of the Company and the Chair of the Company
Board immediately from and following the consummation of the transactions contemplated by the Subscription Agreement (the Closing );
WHEREAS, as contemplated by the Subscription Agreement and subject to the terms and conditions set forth herein, the Parties each desire to
record their agreement as to the manner in which the Company s affairs shall be conducted and to grant to Altria certain rights with respect to its beneficial ownership of Common Shares; and
WHEREAS, the execution and delivery of this Agreement is a condition to the obligations of the parties to the Subscription Agreement to
consummate the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and agreements set forth in this Agreement, the Parties, intending to be legally bound, agree as follows:
DEFINITIONS AND TERMS
Section 1.1 Certain Defined Terms. Whenever used in this Agreement, except as otherwise specifically provided herein, the
following terms shall have the meanings set forth in this Section 1.1.
Act means the Business Corporations Act
Affiliate means, with respect to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (for purposes of this definition, the term control (including the
correlative meanings of the terms controlled by and under common control with ), as used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by Contract or otherwise); provided, however, that: (a) with respect to the Company and its Subsidiaries, Affiliate at all times excludes any
member of the Altria Group and any Person that directly or indirectly controls or is under common control with any member of the Altria Group (other than, from and following the Closing, the Company and its Subsidiaries); and (b) with respect
to any member of the Altria Group and any Person that directly or indirectly controls or is under common control with any member of the Altria Group, Affiliate at all times excludes the Company and its Subsidiaries.
Agreement has the meaning ascribed to such term in the Preamble.
Anti-bribery Laws has the meaning ascribed to such term in Section 5.1(a).
Applicable Accounting Standard means, IFRS, GAAP, or other accounting or financial reporting standards used by the Company
as of the date or for the period at issue.
Approved Company Agreement has the meaning ascribed to such term in
Altria has the meaning ascribed to such term in the Preamble.
Altria Common Shareholder has the meaning ascribed to such term in the Recitals.
Altria Group means, collectively, Altria, Altria Common Shareholder, Purchaser and each of their respective controlled
Altria Nominees has the meaning ascribed to such term in Section 2.1(b)(ii).
beneficially own or any similar phrase means, with respect to Common Shares, having the power to vote or direct the vote of
Board and Audit Package means all materials prepared for and delivered to
the Company Board or the Company Audit Committee relating to the approval of the Company s annual and quarterly financial statements and MD&A.
Board Observer has the meaning ascribed to such term in Section 2.1(h).
Board Size has the meaning ascribed to such term in Section 2.1(a).
Business Day means any day other than a Saturday, Sunday or other day on which commercial banks in Toronto, Ontario, New
York, New York or Richmond, Virginia are authorized or required by Law to close.
Canadian Securities Regulators means,
collectively, the securities commissions or other securities regulatory authorities in each of the provinces of Canada except Qu bec.
Cannabis means: (a) any plant or seed, whether live or dead, from any species or subspecies of genus Cannabis,
including Cannabis sativa, Cannabis indica and Cannabis ruderalis, Marijuana and Industrial Hemp and any part, whether live or dead, of the plant or seed thereof, including any stalk, branch, root, leaf, flower, or trichome;
(b) any material obtained, extracted, isolated, or purified from the plant or seed or the parts contemplated by clause (a) of this definition, including any oil, cannabinoid, terpene, genetic material or any combination thereof;
(c) any organism engineered to biosynthetically produce the material contemplated by clause (b) of this definition, including any micro-organism engineered for such purpose; (d) any biologically or chemically synthesized version of
the material contemplated by clause (b) of this definition or any analog thereof, including any product made by any organism contemplated by clause (c) of this definition; and (e) any other meaning ascribed to the term
cannabis under applicable Law, including the CDSA and the Cannabis Act.
Cannabis Act means the Cannabis
Act, S.C. 2018, c.16.
Cannabis Opportunity means, subject to Section 5.4(c), a business or commercial
opportunity relating to the development, production, manufacturing, cultivation, advertising, marketing, promotion, sale and/or distribution of Cannabis or Related Products and Services, including licensing or
sub-licensing of intellectual property with respect to Cannabis or Related Products and Services (it being agreed that no business or commercial opportunity within the express exceptions
described in Section 5.4(c) shall constitute a Cannabis Opportunity ).
CDSA means the Controlled
Drugs and Substances Act, S.C. 1996, c. 19.
Chosen Court means the Ontario Superior Court of Justice (Commercial
Claim means any claim, cause of action, action, demand, lawsuit, investigation, review, grievance, citation,
summons, subpoena, inquiry, audit, hearing, originating application to a tribunal, arbitration or other similar proceeding of any nature, civil, criminal, regulatory, administrative or otherwise, whether in equity or at law, in contract, in tort or
Cleansing Announcement means a public announcement which shall:
(a) be prepared by the Company in consultation with Altria; and (b) contain the Cleansing Information.
Document has the meaning ascribed to such term in Section 5.1(f)
Cleansing Information means all
material non-public information relating to the Company or any of its Subsidiaries that: (a) has been provided to the Altria Group and/or the Altria Nominees; and (b) would, without a Cleansing
Announcement, prevent the Altria Group from trading its Common Shares under applicable Laws.
Closing has the meaning
ascribed to such term in the Preamble.
Code means the U.S. Internal Revenue Code of 1986.
Commercial Agreements means, collectively, (a) the Services Agreement entered into by and between the Company and
Altria Ventures Inc., dated as of February 18, 2019, (b) the agreement to be entered into by and between or by and among, Altria or one or more of its Subsidiaries, on the one hand, and the Company or one or more of its Subsidiaries on the
other hand, with respect to certain intellectual property matters and (c) one or more other agreements to be entered into by and between or by and among, Altria or one or more of its Subsidiaries, on the one hand, and the Company or one or more
of its Subsidiaries on the other hand, relating to matters contemplated by Exhibit C of the Subscription Agreement.
Equivalent Security means (a) any Convertible Security and (b) any other security of the Company that, in the case of each of clause (a) and (b), entitles the holder thereof to vote together with the holders of the Common
Shares as a single class.
Common Share means a common share in the capital of the Company, no par value, or such other
shares or other securities into which such common share is converted, exchanged, reclassified or otherwise changed, as the case may be, from time to time.
Company has the meaning ascribed to such term in the Preamble.
Company Audit Committee means the audit committee of the Company Board.
Company Board means the board of directors of the Company.
Company Nominees means, in respect of a meeting of the Company Shareholders at which directors of the Company are to be
elected, such individuals presented by management of the Company to the Company Shareholders for election as directors of the Company at such meeting, including, for the avoidance of doubt, each of the Altria Nominees.
Company Related Person means any Affiliate of the Company (other than any Subsidiary of the Company) and any Person who is
a director, officer or other employee, general partner, partner, manager, principal or member of the Company, any of its Subsidiaries or any of their respective Affiliates, or any Affiliate of any of the foregoing.
Company Shareholders means the beneficial owners of Common Shares.
Confidential Information means any and all information about the
Discloser or any of its Affiliates which is furnished by it or any of its Representatives to the Recipient or any of its Affiliates, whenever furnished and regardless of the manner in which it is furnished, and includes all Information, including
information regarding the business and affairs of the Discloser and its Affiliates, their plans, strategies, operations, financial information (whether historical or forecasted), business methods, systems, practices, analyses, compilations,
forecasts, studies, designs, processes, procedures, formulae, improvements, trade secrets and other documents and other information, prepared or furnished by the Discloser, an Affiliate of the Discloser or any of their Representatives, together with
any reports, analyses, summaries, interpretations, compilations, forecasts, financial statements, memoranda, notes, studies or any other written or electronic materials prepared by or for a Recipient or a Representative thereof to the extent that
they contain, incorporate, reflect or are based upon or generated from such information or derivatives thereof; provided, however, that Confidential Information shall not include, and no obligation under Section 4.4 shall be
imposed on, information that: (a) is or becomes generally known to the public, other than as a result of a breach of this Agreement by the Recipient, its Affiliates or their respective Representatives; (b) is or becomes available to the
Recipient or its Affiliates, or was in the possession of the Recipient or its Affiliates, on a non-confidential basis from a third party; provided, that such third party obtained such information
lawfully and is not and was not prohibited from disclosing such information; or (c) is independently developed by the Recipient or its Affiliates without reference to or use of the Confidential Information of the Discloser.