ARRANGEMENT AGREEMENT FLORA GROWTH CORP. - and

ARRANGEMENT AGREEMENT, DATED OCTOBER 21, 2022

flora_ex991.htm EXHIBIT 99.1

ARRANGEMENT AGREEMENT

FRANCHISE GLOBAL HEALTH INC.

_________________________

ARRANGEMENT AGREEMENT

THIS AGREEMENT is made as of October 21, 2022,

a corporation existing under the laws of the Province of Ontario

FRANCHISE GLOBAL HEALTH INC.,

a company existing under the laws of the Province of British Columbia

WHEREAS the Purchaser wishes to acquire all of the issued and outstanding common shares of the Company in exchange for common shares of the Purchaser;

AND WHEREAS the Board has (i) unanimously (with any interested directors having abstained from voting) determined that the Arrangement is fair to the Company Shareholders and in the best interests of the Company and (ii) resolved to recommend that the Company Shareholders vote in favour of the Arrangement;

AND WHEREAS the Parties intend to carry out the transactions contemplated herein by way of a plan of arrangement under the provisions of the BCBCA;

AND WHEREAS the Purchaser has entered into support and voting agreements with the directors and officers along with certain shareholders of the Company pursuant to which, among other things, such directors, officers and shareholders have agreed to vote all of the Company Common Shares held by them in favour of the Arrangement Resolution, on the terms and subject to the conditions set forth in such agreements;

AND WHEREAS the Parties have entered into this Agreement to provide for the matters referred to in the foregoing recitals and for other matters related to the transactions herein provided for;

AND WHEREAS, the Parties intend that the issuance of the Purchaser Common Shares in exchange for the Company Common Shares will, subject to applicable U.S. Securities Laws, be exempt from the registration requirements of (i) the U.S. Securities Act pursuant to the exemption provided by Section 3(a)(10) thereof and (ii) applicable U.S. state securities laws;

NOW THEREFORE, in consideration of the covenants and agreements herein contained, the Parties agree as follows:

ARTICLE 1 INTERPRETATION

As used in this Agreement, the following terms have the following meanings:

"Acquisition Proposal" means, other than the transactions contemplated by this Agreement and any transaction involving only the Company and/or one or more of its wholly-owned Subsidiaries, any offer, proposal, expression or indication of interest or inquiry (whether written or oral) from any Person or group of Persons other than the Purchaser or one or more of its Affiliates relating to: (i) any direct or indirect sale or disposition (or any lease, joint venture, long-term supply agreement, licence or other arrangement having the same economic effect as a sale) of assets of the Company or any of its Subsidiaries (including any voting or equity securities of any of the Company's Subsidiaries) representing 20% or more of the consolidated assets, or contributing 20% or more of the consolidated revenue or earnings, of the Company and its Subsidiaries taken as whole (in each case based on the consolidated financial statements of the Company most recently filed on SEDAR prior to such offer, proposal or inquiry), or (ii) any direct or indirect acquisition by any Person or group of Persons acting jointly or in concert within the meaning of Securities Laws, of Company Common Shares (including securities convertible into or exercisable or exchangeable for Company Common Shares) representing, when taken together with the Company Common Shares (including securities convertible into or exercisable or exchangeable for Company Common Shares) held by any such Person or group of Persons, 20% or more of the Company Common Shares (assuming, if applicable, the conversion, exchange or exercise of such securities convertible into or exercisable or exchangeable for Company Common Shares), in either case whether by way of take-over bid, tender offer, exchange offer, treasury issuance, plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, share or asset purchase, joint venture, liquidation, dissolution, winding up or other similar transaction involving the Company or any of its Subsidiaries, and whether in a single transaction or a series of related transactions.

"Agent Compensation Options" means the outstanding compensation options of the Company exercisable to purchase Company Common Shares.

"Agreement" means this arrangement agreement, including all schedules annexed hereto, as may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

"Anti-Corruption Laws" means laws, regulations and rules relating to anti-bribery or anti-corruption including the Corruption of Foreign Public Officials Act (Canada), the Criminal Code (Canada), the United States Foreign Corrupt Practices Act of 1977 and any laws, rules, regulations of any relevant jurisdiction covering a similar subject matter.

"Arrangement" means an arrangement under Part 9, Division 5 of the BCBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of this Agreement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the Purchaser, each acting reasonably.

"Arrangement Resolution" means the special resolution approving the Plan of Arrangement to be considered at the Company Meeting, substantially in the form of Schedule B.

"Authorization" means, with respect to any Person, any order, permit, approval, consent, waiver, licence or similar authorization of any Governmental Entity having jurisdiction over the Person, including but not limited to the Cannabis Licenses.

"BCBCA" means the Business Corporations Act (British Columbia).

"Board" means the board of directors of the Company as constituted from time to time. "Board Recommendation" has the meaning specified in Section 2.4(b).

"Business Day" means any day of the year, other than a Saturday, a Sunday or any day on which major banks are closed for business in Vancouver, British Columbia or Toronto, Ontario.

"Cannabis Licenses" means the licenses, certificates and authorizations of the Company and its Subsidiaries set forth in Section 1.1 of the Company Disclosure Letter.

"Change in Recommendation" has the meaning specified in Section 7.2(a)(iv)(B). "Closing" has the meaning specified in Section 2.8(b).

"Code" has the meaning specified in Paragraph 30(e) of Schedule C.

"Collective Agreements" means all collective bargaining agreements and union agreements currently applicable to the Company and/or any of its Subsidiaries which impose any obligations upon the Company and/or any of its Subsidiaries with respect to any Company Employee.

"Company" has the meaning specified in the preamble.

"Company Assets" means all of the assets, property (real or personal), permits, rights, licenses or other privileges (whether contractual or otherwise) of the Company and its Subsidiaries.

"Company Circular" means the notice of the Company Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the Company Shareholders in connection with the Company Meeting, as amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.

"Company Common Shares" means common shares in the authorized share structure of the Company.

"Company Disclosure Letter" means the confidential disclosure letter dated the date of this Agreement and delivered by the Company to the Purchaser with this Agreement.

"Company Employees" means all officers and employees of the Company and/or its Subsidiaries, including unionized, non-unionized, part-time, full-time, active and inactive employees.

"Company Expense Reimbursement Amount" has the meaning specified in Section 7.4(a).

"Company Filings" means all documents publicly filed under the profile of the Company on SEDAR since March 31, 2021.

"Company Meeting" means the special meeting of Company Shareholders, including any adjournment or postponement of such meeting in accordance with the terms of this Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set out in the Company Circular and agreed to in writing by the Purchaser, acting reasonably.

"Company Options" means the outstanding options to purchase Company Common Shares issued pursuant to the Company Stock Option Plan.

"Company RSU Plan" means the Franchise Global Health Inc. Share Unit Plan approved by Company Shareholders on September 20, 2021.

"Company RSUs" means, collectively, the outstanding restricted share units of the Company issued pursuant to the Company RSU Plan.

"Company Shareholders" means the registered and/or beneficial holders of the Company Common Shares, as the context requires.

"Company Stock Option Plan" means the Franchise Global Health Inc. Stock Option Plan last approved by Company Shareholders on September 20, 2021.

"Company Termination Amount" has the meaning specified in Section 7.4(a).

"Company Termination Amount Event" has the meaning specified in Section 7.4(b).

"Competition Act" means the Competition Act (Canada).

"Confidential Information" means, in respect of a Party (the "Disclosing Party"), all information concerning the Disclosing Party that is made available by the Disclosing Party or any of its Representatives to the other Party (the "Receiving Party") or any of its Representatives, whether in verbal, visual, written, electronic or other form, together, in each case, with all notes, memoranda, summaries, analyses, studies, compilations and other writings relating thereto or based thereon prepared by the Receiving Party or any of its Representatives; provided, however, that the term "Confidential Information" does not include information which (i) was lawfully in the possession of the Receiving Party before it was made available by the Disclosing Party or any of its Representatives to the Receiving Party or any of its Representatives; (ii) is independently developed by the Receiving Party without use of the Confidential Information of the Disclosing Party; (iii) is now, or hereafter becomes, available to the public other than as a result of disclosure prohibited by this Agreement; or (iv) becomes available to the Receiving Party or any of its Representatives on a non-confidential basis from a source other than the Disclosing Party or any of its Representatives and such source is not, to the knowledge of the Receiving Party following reasonable inquiry, under any obligation to the Disclosing Party to keep such information confidential.

"Consideration" means the Exchange Ratio (as such term is defined and determined in accordance with the Plan of Arrangement) of a Purchaser Common Share for each Company Common Share.

"Constating Documents" means, in respect of a Party, the articles and notice of articles, articles of incorporation, formation, amalgamation or continuation, as applicable, charters, operating agreements, by-laws or other organizational documents of such Party and all amendments to such articles, charters, operating agreements, by-laws or other organizational documents.

"Contract" means, in respect of a Party, any legally binding agreement, commitment, engagement, contract, franchise, licence, obligation, arrangement or undertaking (written or oral), together with any amendments and modifications thereto, to which such Party or any of its Subsidiaries is a party or by which such Party or any of its Subsidiaries is bound.

"Court" means the Supreme Court of British Columbia, or other court as applicable.

"Depositary" means the trust company, bank or financial institution agreed to in writing between the Purchaser and the Company for the purpose of, among other things, working in connection with the transfer agents for the Company and the Purchaser, the Canadian Depository for Securities Limited and the Depository Trust & Clearing Corporation to distribute the Purchaser Common Shares comprising the Consideration.

"Disclosing Party" has the meaning specified in the definition of Confidential Information.

"Dissent Rights" means the rights of dissent in respect of the Arrangement described in the Plan of Arrangement.

"EDGAR" means Electronic Data Gathering, Analysis, and Retrieval system.

"Effective Date" means the date the Arrangement becomes effective as agreed to by the Parties in accordance with the Final Order.

"Effective Time" means the beginning of the day (Vancouver time) on the Effective Date, or such other time on the Effective Date as the Parties agree to in writing before the Effective Date.

"Employee Plan(s)" means all health, welfare, supplemental unemployment benefit, post-employment benefit, bonus, profit sharing, option, stock appreciation, equity or equity-based, savings, insurance, incentive, incentive compensation, deferred compensation, share purchase, share compensation, termination, severance, change of control, disability, superannuation, pension, supplemental pension or supplemental retirement plans and other employee or director compensation or benefit plans, policies, practices, trusts, funds, agreements, arrangements or undertakings, whether oral or written, formal or informal, funded or unfunded, insured or uninsured, registered or unregistered, and in each case for the benefit of directors or former directors of the Company or any of its Subsidiaries, Company Employees, former Company Employees, or any spouses, dependents, survivors or beneficiaries of such Persons, which are maintained by or binding upon the Company or any of its Subsidiaries or in respect of which the Company or any of its Subsidiaries has any actual or potential liability but, for greater certainty, "Employee Plan(s)" does not include any Collective Agreements.

"Environmental Laws" means all applicable Laws relating to worker health and safety, pollution, natural resources, protection of the natural environment or any species that might make use of the natural environment or the generation, production, import, export, use, handling, storage, treatment, transportation, disposal or Release of Hazardous Substances, including under common law, and all Authorizations issued pursuant to such applicable Laws.

"Fairness Opinion" means the opinion of the Financial Advisor to the effect that, as of the date of such opinion, and subject to the assumptions, qualifications and limitations set forth therein, the Consideration to be received by the Company Shareholders is fair, from a financial point of view, to such holders.

"Final Order" means the final order of the Court made pursuant to Section 291(4) of the BCBCA, after a hearing upon the fairness of the terms and conditions of the Arrangement and after being informed of the intention to rely upon the registration exemption provided in Section 3(a)(10) of the U.S. Securities Act with respect to the issuance of the Purchaser Common Shares to be issued pursuant to the Arrangement in exchange for the Company Common Shares, in a form acceptable to the Company and the Purchaser, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of both the Company and the Purchaser, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both the Company and the Purchaser, each acting reasonably) on appeal.

"Financial Advisor" means Haywood Securities Inc., in its role as financial advisor to the Company in connection with the Arrangement.

"Government Official" means any official, employee, or representative of any Governmental Entity or public international organization, any political party or employee thereof, or any candidate for political office.

"Governmental Entity" means (i) any international, multinational, national, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, commissioner, board, bureau, ministry, agency or instrumentality, domestic or foreign, (ii) any subdivision, agent, authority or representative of any of the above, (iii) any quasi- governmental or private body exercising any regulatory, anti-trust, foreign investment, expropriation or taxing authority under or for the account of any of the foregoing, or (iv) any stock exchange, including but not limited to, Bundesinstitut f r Arzneimittel und Medizinprodukte (Federal Institute for Drugs and Medical Devices) and the Colombian Ministry of Agriculture, Colombian Ministry of Agriculture, Health Canada.

"Hazardous Substances" means (i) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos, asbestos-containing materials and polychlorinated biphenyls and (ii) any substance that is defined, regulated, prohibited, designated or classified as dangerous, hazardous, radioactive, explosive or toxic or a pollutant or a contaminant under or pursuant to any applicable Environmental Laws.

"IFRS" means International Financial Reporting Standards as issued by the International Accounting Standards Board.

"Intellectual Property" means domestic and foreign: (i) patents, applications for patents and reissues, divisions, continuations, renewals, extensions and continuations-in-part of patents or patent applications; (ii) proprietary and non-public business information, including inventions (whether patentable or not), invention disclosures, improvements, discoveries, trade secrets, confidential information, know-how, methods, processes, designs, technology, technical data, schematics, formulae and customer lists, and documentation relating to any of the foregoing; (iii) works of authorship, copyrights, copyright registrations and applications for copyright registration; (iv) mask works, mask work registrations and applications for mask work registrations; (v) designs, design registrations, design registration applications and integrated circuit topographies; (vi) trade names, business names, corporate names, domain names, website names and world wide web addresses, common law trade-marks, trade-mark registrations, trade mark applications, trade dress and logos, and the goodwill associated with any of the foregoing; (vii) Software; and (viii) any other intellectual property and industrial property.

"Interim Order" means the interim order of the Court made pursuant to Section 291(2) of the BCBCA in a form acceptable to the Company and the Purchaser, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting and the voting requirements with respect to the Arrangement Resolution, as such order may be amended by the Court with the consent of the Company and the Purchaser, each acting reasonably.

"Investment Canada Act" means the Investment Canada Act (Canada).

"IT Assets" means any and all Software, hardware, servers, systems, networks, data communications lines, websites, platforms, and other computer, information technology or telecommunications assets and equipment, in each case, owned, leased, licensed, used or held for use by the Company or any of its Subsidiaries.

"Law" means, with respect to any Person, any and all applicable law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, notice, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities and, to the extent that they have the force of law, any policies, guidelines, notices and protocols of any Governmental Entity, as amended unless expressly specified otherwise.

"Leased Premises" means the premises which the Company or its Subsidiaries occupies as a tenant.

"Legal Proceedings" means any litigation, action, application, suit, investigation, inquiry, hearing, claim, deemed complaint, grievance, civil, administrative, regulatory, criminal or arbitration proceeding or other similar proceeding, before or by any Governmental Entity (including any appeal or review thereof and any application for leave for appeal or review).

"Lien" means any mortgage, charge, pledge, hypothec, security interest, lien (statutory or otherwise), or adverse right or claim, or other third party interest or encumbrance of any kind.

"LOI" means the letter of intent dated August 22, 2022 entered into between the Purchaser and the Company.

"Matching Period" has the meaning specified in Section 5.4(a)(iii).

"Material Adverse Effect" means, in respect of either Party, any result, change, event, occurrence, effect, state of facts, development or circumstance that, individually or in the aggregate with other such changes, events, occurrences, effects, state of facts, developments or circumstances, is or would reasonably be expected to be material and adverse to the business, operations, results of operations, assets, properties, capitalization, obligations (whether absolute, accrued, conditional or otherwise), financial condition or liabilities (contingent or otherwise) of such Party and its Subsidiaries, taken as a whole, except any such change, event, occurrence, effect, state of facts or circumstance resulting from, arising in connection with or related to:

provided, however, that (A) with respect to clauses (a) through (g) of this definition, such matter does not have a materially disproportionate effect on such Party and its Subsidiaries, taken as a whole, relative to other comparable companies and entities operating in the industries in which such Party and/or its Subsidiaries operate, in which case such effect may be taken into account in determining whether a Material Adverse Effect in respect of such Party has occurred, and (B) references in this Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a Material Adverse Effect has occurred.

"Material Contract" means any Contract to which the Company or any of its Subsidiaries is a party: (i) that relates to any intellectual property rights of the Company; (ii) relating to indebtedness for borrowed money or pursuant to which the Company or any of its Subsidiaries has guaranteed the liabilities, obligations or indebtedness of any other Person; (iii) restricting, or which may in the future restrict, the incurrence of indebtedness by the Company or any of its Subsidiaries (including by requiring the granting of an equal and rateable Lien), the incurrence of any Liens on any properties or assets of the Company or any of its Subsidiaries, or the payment of dividends or other distributions by the Company or any of its Subsidiaries; (iv) relating to or providing for the establishment, investment in, organization, formation, or governance of any joint venture, limited liability company or partnership with any other Person; (v) that creates an exclusive dealing arrangement or right of first offer or refusal that is material to the Company and its Subsidiaries taken as a whole, to the benefit of a third party, other than industry standard agreements entered into in the Ordinary Course; (vi) providing for the purchase, sale or exchange of, or option to purchase, sell or exchange, any property or asset where the purchase or sale price or agreed value or fair market value of such property or asset exceeds $100,000; (vii) that limits or restricts, or may in the future limit or restrict, the ability of the Company or any Subsidiary to acquire any property, to engage in any line of business or to carry on business in any geographic area, or the scope of Persons to whom the Company or any of its Subsidiaries may sell products or deliver services; (viii) that constitutes a hedge contract, futures contract, swap contract, option contract or similar derivative Contract; (ix) under which the Company or any of its Subsidiaries is obligated to make or expects to receive payments in excess of $100,000 over the remaining term; (x) with any Governmental Entity; (xi) that constitutes an amendment, supplement, renewal or modification in respect of any of the foregoing; or (xii) which, if terminated or if it ceased to be in effect, would have a Material Adverse Effect on the Company.

"MI 61-101" means Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions.

"Misrepresentation" means an untrue statement of a material fact or an omission to state a material fact required or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made.

"Nasdaq" means The Nasdaq Capital Market.

"Nasdaq Rules" means The Nasdaq Stock Market LLC Rules, as may be waived or modified by Nasdaq from time to time.

"Notice" has the meaning specified in Section 8.3.

"officer" has the meaning specified in the Securities Act (British Columbia).

"OHSL" has the meaning specified in Paragraph 30(h) of Schedule C.

"Ordinary Course" means, with respect to an action taken by a Party or its Subsidiary, that such action is consistent with the past practices of such Party or such Subsidiary, and is taken in the usual and ordinary course of the normal day-to-day operations of the business of such Party or such Subsidiary.

"Outside Date" means December 31, 2022, or such later date as may be agreed to in writing by the Parties.

"Parties" means the Company and the Purchaser, and "Party" means any one of them.

"Permitted Liens" means, in respect of the Company or any of its Subsidiaries, any one or more of the following:

"Person" includes any individual, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, body corporate, trust, organization, estate, trustee, executor, administrator, legal representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status.