Securities Law & Instruments

Headnote

Consent given to an offering corporation under the Business Corporations Act (Ontario) to continue under the Canada Business Corporations Act.

Statutes Cited

Business Corporations Act, R.S.O. 1990, c. B.16, as am., s. 181.

Securities Act, R.S.O. 1990, c. S.5, as am.

Regulations Cited

Regulation made under the Business Corporations Act, Ont. Reg. 289/00, as am., s. 4(b), Securities Act, R.S.O. 1990, c. S.5, as am.

IN THE MATTER OF R.R.O. 1990, REGULATION 289/00, AS AMENDED (the REGULATION) UNDER THE BUSINESS CORPORATIONS ACT (ONTARIO), R.S.O. 1990 c. B.16, AS AMENDED (the OBCA) AND IN THE MATTER OF NEWSTRIKE BRANDS LTD.

CONSENT (Subsection 4(b) of the Regulation)

UPON the application (the Application) of Newstrike Brands Ltd. (the Applicant) to the Ontario Securities Commission (the Commission) requesting the Commission's consent to the Applicant continuing in another jurisdiction pursuant to section 181 of the OBCA (the Continuance);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is an offering corporation under the OBCA.

2. The authorized capital of the Applicant consists of an unlimited number of common shares (the Common Shares), which are not listed or posted for trading on a published market, and of which all of the issued and outstanding Common Shares are owned by HEXO Corp. (HEXO). As at July 23, 2019, the Applicant also has issued and outstanding the following securities:

a. 69,701,500 warrants to purchase 0.06332 of a common share in HEXO at an exercise price of $1.75 with an expiry date of February 16, 2020 issued pursuant to a warrant indenture between Newstrike and TSX Trust Company (TSX Trust) dated February 16, 2018, as supplemented by a Supplemental Warrant Indenture dated as of May 24, 2019 between the Applicant, HEXO and TSX Trust (the February 2020 Warrants);

b. 34,550,000 warrants to purchase 0.06332 of a common share in HEXO at an exercise price of $1.00 with an expiry date of June 19, 2023 issued pursuant to a warrant indenture between Newstrike and TSX Trust dated June 19, 2018, as supplemented by a Supplemental Warrant Indenture dated as of May 24, 2019 between the Applicant, HEXO and TSX Trust (the June 2023 Warrants, and together with the February 2020 Warrants, the Listed Warrants); and

c. 9,445,140 unlisted warrants to purchase 0.06332 of a common share in HEXO.

3. The February 2020 Warrants and June 2023 Warrants are listed and posted for trading on the TSX Venture Exchange (TSXV) under the symbols HIP.WT and HIP.WT.A, respectively. The Listed Warrants are the only securities of the Applicant that are listed for trading on a published market.

4. The Applicant intends to apply to the Director pursuant to section 181 of the OBCA (the Application for Continuance) for authorization to continue as a corporation under the Canada Business Corporations Act, R.S.C., 1985, c. C-44 (the CBCA).

5. The Application for Continuance is being made to facilitate the amalgamation of the Applicant with other wholly-owned subsidiaries of HEXO.

6. The material rights, duties and obligations of a corporation governed by the CBCA are substantially similar to those of a corporation governed by the OBCA.

7. The Applicant is a reporting issuer under the Securities Act, R.S.O. 1990, c. S.5, as amended (the Act) and the securities legislation of each of the provinces of Canada, other than Quebec (together with the Act, the Legislation), and will remain a reporting issuer in these jurisdictions following the Continuance.

8. The Applicant is not in default of any of the provisions of the OBCA or the Legislation, including the regulations made thereunder.

9. The Applicant is not in default of any provision of the rules, regulations or policies of the TSXV.

10. The Applicant is not subject to any proceeding under the OBCA or the Legislation.

11. The Commission is the principal regulator of the Applicant and will remain the Applicant's principal regulator following the Continuance.

12. HEXO, as the sole shareholder, has authorized the Continuance on July 24, 2019.

13. Subsection 4(b) of the Regulation requires the Application for Continuance be accompanied by a consent from the Commission.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

THE COMMISSION CONSENTS to the continuance of the Applicant under the CBCA.

DATED at Toronto, Ontario this 31st day of July, 2019.

"Craig Hayman"
"Tim Moseley"
Part-time Commissioner
Vice Chair
Ontario Securities Commission
Ontario Securities Commission