UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☒		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☐		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to § 240.14a-12

Harvest Health & Recreation Inc.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

☐		No fee required.
☒		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		1)		Title of each class of securities to which transaction applies:   Subordinate Voting Shares, no par value (“Harvest Subordinate Voting Shares”), of Harvest Health & Recreation Inc. (“Harvest”)
		2)		Aggregate number of securities to which transaction applies:   The maximum number of Harvest Subordinate Voting Shares to which this transaction applies is estimated to be 440,763,643, which consists of: (A) 253,892,315 Harvest Subordinate Voting Shares issued and outstanding as of June 18, 2021; (B) 158,109,200 Harvest Subordinate Voting Shares issuable upon the conversion of Multiple Voting Shares, no par value (“Harvest Multiple Voting Shares”), or Harvest; (C) 2,000,000 Harvest Subordinate Voting Shares issuable upon the conversion of Super Voting Shares, no par value, of Harvest; (D) 6,066,495 Harvest Subordinate Voting Shares issuable pursuant to options to purchase Harvest Subordinate Voting Shares and restricted share units outstanding as of June 18, 2021; (E) 15,591,519 Harvest Subordinate Voting Shares issuable upon the exercise of warrants to purchase Harvest Subordinate Voting Shares or Harvest Multiple Voting Shares as of June 18, 2021; and (F) 5,077,105 Harvest Subordinate Voting Shares issuable upon the conversion of certain convertible debt of Harvest outstanding as of June 18, 2021.
		3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):   Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated by multiplying (x) 440,763,643, the aggregate number of securities to which the transaction applies, by (y) 0.1170, representing the exchange ratio for one Harvest Subordinate Voting Share to one Trulieve Subordinate Voting Shares, no par value, as set forth in the Arrangement Agreement (the “Arrangement Agreement”) dated as of May 10, 2021 between Harvest and Trulieve Cannabis Corp. (the “Trulieve”), which exchange ratio is subject to adjustment in accordance with the terms of the Plan of Arrangement (as defined in the Arrangement Agreement), by (z) US$36.44, representing the average of the high and low prices reported on the Canadian Securities Exchange (converted to USD based on the exchange rate on June 18, 2021 of C$0.8052 = US$1.00) for one share Trulieve Subordinate Voting Shares, no par value, on June 18, 2021.
		4)		Proposed maximum aggregate value of transaction:   $1,879,244,712.56
		5)		Total fee paid:   $205,025.60 (determined by multiplying $1,879,244,712.56 by .0001091)
☐		Fee paid previously with preliminary materials.
☐		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		1)		Amount Previously Paid:

PRELIMINARY PROXY STATEMENT / MANAGEMENT INFORMATION CIRCULAR DATED JUNE 25, 2021 — SUBJECT TO COMPLETION

 

1155 W. Rio Salado Parkway, Suite 201

Tempe, Arizona 85281

Dear Harvest Health & Recreation Inc. Shareholders:

We are excited to invite you to attend the annual and special meeting (the “Meeting”) of shareholders (“Harvest Shareholders”) of Harvest Health & Recreation Inc. (“Harvest”), to take place on                 , 2021 at                Eastern Time, exclusively through remote communication in a virtual meeting format. You will not be able to attend the Meeting in person.

On May 10, 2021, Harvest entered into an arrangement agreement (the “Arrangement Agreement”) with Trulieve Cannabis Corp. (“Trulieve”), pursuant to which, Trulieve has agreed, subject to the terms and conditions thereof, to acquire all of the issued and outstanding subordinate voting shares of Harvest (“Harvest Subordinate Voting Shares”), multiple voting shares of Harvest (“Harvest Multiple Voting Shares”) and super voting shares of Harvest (the “Harvest Super Voting Shares” and, together with the Harvest Subordinate Voting Shares and Harvest Multiple Voting Shares, the “Harvest Shares”), pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia) (the “Arrangement”). If the Arrangement is completed, Harvest Shareholders will be entitled to receive 0.1170 of a subordinate voting share of Trulieve (each whole subordinate voting share, a “Trulieve Subordinate Voting Share”), subject to adjustment in accordance with the provisions of the Plan of Arrangement (the “Exchange Ratio”), for each Harvest Share outstanding immediately prior to the effective time of the Arrangement (the “Effective Time”) with the Harvest Super Voting Shares and Harvest Multiple Voting Shares treated on an as converted to Harvest Subordinate Voting Shares basis pursuant to their respective terms when determining the consideration to be received by the holders thereof. The Exchange Ratio may potentially be adjusted downward upon the occurrence of certain permitted Harvest debt refinancings, as described more fully in the accompanying proxy statement and management information circular (the “Circular”). At the Meeting, you will be asked to consider and vote upon the following proposals:

 

1.

to consider and, if thought advisable, to pass a special resolution (the “Arrangement Resolution”), the full text of which is set forth in Appendix “E” to the Circular, approving the Arrangement under Division 5 of Part 9 of the Business Corporations Act (British Columbia) whereby, among other things, Trulieve will acquire all of the issued and outstanding Harvest Shares, all as more particularly described in the Circular, including in the section entitled “The Arrangement Agreement and Related Agreements” beginning on page 95 of the Circular;

 

2.

to fix the number of directors for the ensuing year at six, subject to such increases as may be permitted by the Articles of Harvest;

 

3.

to elect the nominees proposed by management of Harvest as directors of Harvest for the ensuing year (or, if the Arrangement Resolution is approved and the Arrangement is completed, for the period up to the Effective Time of the Arrangement);

 

4.

to receive the audited consolidated financial statements of Harvest for the year ended December 31, 2020 and the report of the auditors thereon and the unaudited consolidated financial statements of Harvest for the three months ended March 31, 2021;

 

5.

to appoint Haynie & Company, LLC as the auditors of Harvest for the ensuing year and to authorize the board of directors of Harvest (the “Harvest Board”) to fix their remuneration; and

 

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6.

to transact such further or other business as may properly come before the Meeting or any other adjournments or postponements thereof.

After receiving financial and legal advice and following the receipt and review of a unanimous recommendation of the Harvest Special Committee (as defined in the Circular) and the Harvest Fairness Opinions (as defined in the Circular), the Harvest Board has determined that the Arrangement is in the best interests of Harvest and the Harvest Shareholders. In reaching its conclusions that the Arrangement is fair to Harvest Shareholders and that the Arrangement is in the best interests of Harvest and the Harvest Shareholders, the Harvest Board considered and relied upon a number of factors and reasons, including the recommendations of the Harvest Special Committee, and those described under the headings “Description of the Arrangement – Background to the Arrangement,” “Description of the Arrangement – Harvest’s Reasons for the Arrangement” and “Description of the Arrangement – Opinions of Harvest’s Financial Advisors” in the accompanying Circular.

To become effective, the Arrangement Resolution must be approved by at least two-thirds (66 2/3 %) of the votes cast by the holders of the Harvest Shares represented in person or by proxy at the Meeting, voting together as a single class. Under the Arrangement Agreement, it is a condition to closing in favor of Trulieve that holders of no more than 5% of the outstanding Harvest Shares shall have validly exercised dissent rights with respect to the Arrangement that have not been withdrawn as of the Effective Date of the Arrangement. Certain holders of the Harvest Shares that hold an aggregate of more than 55% of the voting power of the Harvest Shares have entered into Harvest Voting Support Agreements or Harvest Voting Support and Lock-Up Agreements, pursuant to which they have agreed to vote in favor of the Arrangement Resolution and any other matters necessary for the consummation of the Arrangement.

The Harvest Board unanimously recommends that Harvest Shareholders vote FOR each of the proposals set forth in the Circular.

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF HARVEST SHARES YOU OWN. Whether or not you attend the Meeting, you are encouraged to provide voting instructions in accordance with the instructions set forth on the enclosed form of proxy or voting instruction form provided to you by your broker, investment dealer or other Intermediary as soon as possible. We urge you to read the enclosed Circular, including the Arrangement Agreement attached as Appendix “B,” carefully and to promptly vote by following the instructions in the enclosed materials.

If you are a Harvest Shareholder and have any questions, please contact Equiniti (US) Services LLC, Harvest’s proxy solicitation agent, by telephone at (833) 434-0271 toll-free in North America or by email at proxyinfo@equiniti.com.

We thank you for your consideration and continued support.

 

Tempe, Arizona

                , 2021

The Circular is dated                 , 2021.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE ARRANGEMENT, PASSED UPON THE MERITS OR FAIRNESS OF THE ARRANGEMENT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION DISCLOSED IN THE ACCOMPANYING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

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NOTICE OF ANNUAL AND SPECIAL MEETING OF HARVEST SHAREHOLDERS

TO BE HELD ON

                    , 2021

NOTICE IS HEREBY GIVEN that, an annual meeting and, pursuant to an order of the Supreme Court of British Columbia (the “Court”) dated                , 2021 (the “Interim Order”), a special meeting (the “Meeting”) of holders (“Harvest Shareholders”) of the Harvest Subordinate Voting Shares, Harvest Multiple Voting Shares, and Harvest Super Voting Shares (collectively, the “Harvest Shares”) of Harvest Health & Recreation Inc. (“Harvest”) will be held on                 , 2021 at                Eastern Time via live webcast at https://web.lumiagm.com/208164211. There will be no physical location for Harvest Shareholders to attend. Online check-in will begin at                Eastern Time, and we encourage you to allow ample time for the online check-in procedures. This Circular contains defined terms. For a glossary of defined terms used herein, see Appendix “A” to this Circular.

The Meeting is being called for the following purposes:

 

1.

to consider and, if thought advisable, to pass a special resolution (the “Arrangement Resolution”), the full text of which is set forth in Appendix “E” to the accompanying proxy statement and management information circular (the “Circular”), approving an arrangement Division 5 of Part 9 of the Business Corporations Act (British Columbia) whereby, among other things, Trulieve Cannabis Corp. (“Trulieve”) will acquire all of the issued and outstanding Harvest Shares, all as more particularly described in the Circular, including in the section entitled “The Arrangement Agreement and Related Agreements” beginning on page 95 of the Circular;

 

2.

to fix the number of directors for the ensuing year at six, subject to such increases as may be permitted by the Articles of Harvest;

 

3.

to elect the nominees proposed by management of Harvest as directors of Harvest for the ensuing year (or, if the Arrangement Resolution is approved and the Arrangement is completed, for the period up to the Effective Time of the Arrangement);

 

4.

to receive the audited consolidated financial statements of Harvest for the year ended December 31, 2020 and the report of the auditors thereon and the unaudited consolidated financial statements of Harvest for the three months ended March 31, 2021;

 

5.

to appoint Haynie & Company, LLC as the auditors of Harvest for the ensuing year and to authorize the board of directors of Harvest (the “Harvest Board”) to fix their remuneration; and

 

6.

to transact such further or other business as may properly come before the Meeting or any other adjournments or postponements thereof.

Specific details of the matters proposed to be put before the Meeting are set forth in the Circular which accompanies this Notice of Annual and Special Meeting of Harvest Shareholders. A copy of the arrangement agreement dated May 10, 2021, between Harvest and Trulieve is attached as Appendix “B” to the Circular and is available for inspection by Harvest Shareholders on the U.S. Securities and Exchange Commission website at www.sec.gov under Harvest’s profile, on SEDAR at www.sedar.com under Harvest’s SEDAR profile and at Harvest’s records office at 1155 W. Rio Salado Parkway, Suite 201, Tempe, Arizona 85281 during normal business hours until the date of the Meeting.

The record date for determining the Harvest Shareholders entitled to receive notice of and vote at the Meeting is the close of business on                 , 2021 (the “Record Date”). Only Harvest Shareholders whose names have

 

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been entered in the register of Harvest Shareholders as of the close of business on the Record Date are entitled to receive notice of and to vote at the Meeting. As of the Record Date, the number of Harvest Subordinate Voting Shares of Harvest outstanding and entitled to vote at the Meeting is                 . Harvest Subordinate Voting Shares are entitled to one vote per share. As of the Record Date, the number of Harvest Multiple Voting Shares outstanding and entitled to vote at the Meeting is                 . Harvest Multiple Voting Shares are entitled to 100 votes per share. As of the Record Date, the number of Harvest Super Voting Shares outstanding and entitled to vote at the Meeting is 2,000,000. Harvest Super Voting Shares are entitled to 200 votes per share.

Whether or not you are able to virtually attend the Meeting, you are encouraged to provide voting instructions in accordance with the instructions set forth on the enclosed form of proxy or voting instruction form provided to you by your broker or other Intermediary as soon as possible by (1) visiting the Internet site listed on the form of proxy or voting instruction form, (2) calling the toll-free number listed on the form of proxy or voting instruction form or (3) submitting your enclosed form of proxy or voting instruction form by mail by using the provided self-addressed, stamped envelope. To be counted at the Meeting, a Harvest Shareholder’s voting instructions must be received by                p.m. (Eastern time) on                 , 2021 or if the Meeting is postponed or adjourned, at least 48 hours (excluding non-Business Days) prior to the date of the postponed or adjourned Meeting). Please note, if you received a voting instruction form and you hold your shares through a broker or other Intermediary, you must provide your instructions to your broker, investment dealer or other Intermediary as specified in the voting instruction form and by the deadline set out therein (which may be an earlier time than set out above). Harvest reserves the right to accept late proxies and to waive the proxy cut-off, with or without notice, but is under no obligation to accept or reject any particular late proxy.

The Harvest Board unanimously recommends that Harvest Shareholders vote “FOR” the Arrangement Resolution in Proposal 1, “FOR” the setting of the number of directors at six in Proposal 2, “FOR” the re-election of the nominees in Proposal 3, or “FOR” the appointment and remuneration of auditors in Proposal 4.

Harvest Shareholders who are planning to provide voting instructions in accordance with the enclosed form of proxy or voting instruction form are encouraged to review the Circular carefully before submitting such form.

Registered Harvest Shareholders have the right to dissent with respect to the Arrangement Resolution and, if the Arrangement becomes effective, to be paid the fair value of their Harvest Shares in accordance with the provisions of Sections 237 to 247 of the Business Corporations Act (British Columbia) (“BCBCA”), as modified by the Interim Order and the plan of arrangement (“Plan of Arrangement”), the Interim Order and any other order of the Court. A registered Harvest Shareholder’s right to dissent is more particularly described in the Circular under the heading “Dissenting Harvest Shareholders’ Rights.” Copies of the Plan of Arrangement, the Interim Order and the text of Section 237 to 247 of the BCBCA are set forth in Appendix “C,” Appendix “D” and Appendix “I” respectively, to the Circular.

It is strongly suggested that any Harvest Shareholder wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions of the BCBCA, as modified by the Plan of Arrangement, the Interim Order and any other order of the Court, may result in the loss of such Harvest Shareholder’s right to dissent.

If you are a Harvest Shareholder and have any questions, please contact Equiniti (US) Services LLC, Harvest’s proxy solicitation agent, by telephone at (833) 434-0271 toll-free in North America or by email at proxyinfo@equiniti.com.

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to Be Held on                 , 2021

The Notice of the 2021 Annual and Special Meeting of Shareholders, the accompanying Proxy Statement/Management Information Circular, form of Proxy Instrument and the 2020 Annual Report to Shareholders are available on the Internet at the following website: https://investor.harvesthoc.com/financials/default.aspx.

 

iv

DATED                 , 2021.

 

 

v

NOTICE TO HARVEST SHAREHOLDERS IN THE UNITED STATES

THE ARRANGEMENT AND THE TRULIEVE SUBORDINATE VOTING SHARES TO BE ISSUED IN CONNECTION WITH THE ARRANGEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR THE SECURITIES REGULATORY AUTHORITY IN ANY STATE IN THE UNITED STATES, NOR HAS THE SEC OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE IN THE UNITED STATES PASSED ON THE ADEQUACY OR ACCURACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Trulieve Subordinate Voting Shares to be issued under the Arrangement have not and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the Securities Laws of any state of the United States. Such securities will be issued in reliance upon the exemption from registration provided by Section 3(a)(10) of the Securities Act on the basis of the approval of the Court, which will consider, among other things, the fairness of the Arrangement to the persons affected. See “Description of the Arrangement – Court Approval.” The Trulieve Subordinate Voting Shares to be issued under the Arrangement will not be subject to resale restrictions under the Securities Act, except for restrictions imposed by the Securities Act on the resale of Trulieve Subordinate Voting Shares received pursuant to the Arrangement by persons who are, or within three months before the resale were, “affiliates” of Trulieve. See “U.S. Securities Law Matters.”

Harvest Shareholders who are citizens or residents of the United States should be aware that the Arrangement described herein may have both U.S. and Canadian tax consequences to them which may not be fully described in this Circular. For a general discussion of the Canadian and U.S. federal income tax consequences to investors who are resident in the United States, see “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations.” U.S. holders are urged to consult their own tax advisors with respect to such U.S. and Canadian income tax consequences and the applicability of any federal, state, local, foreign and other tax laws.

The enforcement by investors of civil liabilities under U.S. Securities Laws may be affected adversely by the fact that Harvest is organized under the laws of a jurisdiction outside the United States, that its officers and directors include residents of countries other than the United States, that some or all of the experts named in this Circular may be residents of countries other than the United States, or that all or a substantial portion of the assets of Harvest and any such persons are located outside the United States. As a result, it may be difficult or impossible for Harvest Shareholders in the United States to effect service of process within the United States on Harvest, or such persons, or to realize against them upon judgments of courts of the United States predicated upon civil liabilities under the Securities Laws of the United States. In addition, Harvest Shareholders in the United States should not assume that the courts of Canada: (a) would enforce judgments of U.S. courts obtained in actions against such persons predicated upon civil liabilities under the Securities Laws of the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the Securities Laws of the United States.

 

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TABLE OF CONTENTS

 

NOTICE OF ANNUAL AND SPECIAL MEETING OF HARVEST SHAREHOLDERS			iii
NOTICE TO HARVEST SHAREHOLDERS IN THE UNITED STATES			iv
TABLE OF CONTENTS			I
PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR			1
NOTICE REGARDING INFORMATION			1
SUMMARY OF THE MATERIAL TERMS OF THE ARRANGEMENT			3
DEFINED TERMS			5
CURRENCY			5
QUESTIONS AND ANSWERS ABOUT THE ARRANGEMENT AND THE MEETING			6
ACCOUNTING PRINCIPLES			17
EXCHANGE RATE INFORMATION			17
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS			18
SUMMARY			22
Meeting and Record Date			22
Purpose of Meeting			22
The Companies			23
Background to the Arrangement			23
Harvest’s Reasons for the Arrangement			24
Recommendations of the Harvest Special Committee			26
Recommendations of the Harvest Board			26
Opinions of Financial Advisors			26
Interests of Harvest’s Directors and Management in the Arrangement			27
Court Approval			27
Letter of Transmittal			29
Regulatory Matters			29
Issue and Resale of Trulieve Subordinate Voting Shares Received in the Arrangement			29
Pro Forma Economic Ownership of the Combined Company			30
Stock Exchange Listing and Reporting Issuer Status			30
Treatment of Outstanding Harvest Convertible Securities			30
The Arrangement Agreement			31
Termination			32
Procedure for the Arrangement to Become Effective			32
Effect of the Arrangement			33
Board of Directors, Executive Officers and Principal Offices of Combined Company			33
Harvest Shareholder Approval			33
Harvest Shareholder Dissent Rights			33
Accounting Treatment			34
Certain Canadian Federal Income Tax Considerations			34
Certain U.S. Federal Income Tax Considerations			35
Voting Support and Lock-Up Agreements			35
No Fractional Shares			35
Risk Factors			35
Summary Unaudited Pro Forma Condensed Combined Financial Information			35
RISK FACTORS			37
GENERAL INFORMATION ABOUT THE MEETING AND VOTING			45
Date, Time and Place			45
Purpose of the Meeting			45
Recommendation of the Harvest Board			45
Record Date			45
Solicitation of Proxies			46

 

I

Quorum			46
Persons Entitled to Vote			47
Beneficial Shareholders			47
Solicitation of Proxies			48
What is a Proxy?			48
Revocation of Proxies			48
Appointing a Proxyholder			49
Voting Support and Lock-Up Agreements			49
Dissenting Harvest Shareholders’ Rights			49
DESCRIPTION OF THE ARRANGEMENT; PROPOSAL 1: ARRANGEMENT AGREEMENT			51
Recommendation of the Harvest Board			51
Recommendation of the Harvest Special Committee			51
Background to the Arrangement			51
Harvest’s Reasons for the Arrangement			56
Description of the Plan of Arrangement			58
Procedure for the Plan of Arrangement to Become Effective			63
Opinions of Harvest’s Financial Advisors			63
Harvest’s Unaudited Financial Projections			73
Interests of Harvest’s Directors and Management in the Arrangement			76
Court Approval			78
Letter of Transmittal			79
Exchange Procedure			80
Regulatory Matters			83
Canadian Securities Law Matters			85
U.S. Securities Law Matters			85
Pro Forma Economic Ownership of the Combined Company			86
Accounting Treatment			86
Stock Exchange Listing			86
Treatment of Harvest Convertible Securities			86
Description of Harvest Indebtedness			88
Dissenting Harvest Shareholders’ Rights			90
Depositary			94
THE ARRANGEMENT AGREEMENT AND RELATED AGREEMENTS			95
Representations and Warranties			95
Covenants			98
Conditions to Completion of the Arrangement			111
Notice and Cure			113
Modifications or Amendment			113
Termination			114
Termination Amounts			115
Adjustment Factor			116
Fees and Expenses			116
Governing Law			117
CANADIAN SECURITIES LAW MATTERS			118
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS			120
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS			127
INFORMATION CONCERNING HARVEST			134
INFORMATION CONCERNING TRULIEVE			144
GOVERNANCE AND MANAGEMENT OF THE COMBINED COMPANY			150
DESCRIPTION OF THE COMBINED COMPANY CAPITAL STOCK			151
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			157
ANNUAL MEETING MATTERS			165

 

II

PROPOSAL 2: SETTING NUMBER OF DIRECTORS			165
PROPOSAL 3: ELECTION OF DIRECTORS			165
FINANCIAL STATEMENTS			170
PROPOSAL 4: APPOINTMENT OF AUDITORS			171
INFORMATION CONCERNING THE HARVEST BOARD AND EXECUTIVE OFFICERS			173
DELINQUENT SECTION 16(A) REPORTS			175
GOVERNANCE			176
INFORMATION CONCERNING EXECUTIVE COMPENSATION			186
DIRECTOR COMPENSATION			195
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			197
INTEREST OF EXPERTS			200
HOUSEHOLDING INFORMATION			200
AUDITORS, TRANSFER AGENTS AND REGISTRARS			200
SHAREHOLDER PROPOSALS			200
ADDITIONAL INFORMATION			201
APPROVAL OF THIS PROXY STATEMENT / MANAGEMENT INFORMATION CIRCULAR			203

Appendix “A” – Glossary of Defined Terms

Appendix “B” – Arrangement Agreement

Appendix “C” – Plan of Arrangement

Appendix “D” – Interim Order

Appendix “E” – Arrangement Resolution

Appendix “F” – Notice of Hearing

Appendix “G” – Moelis Fairness Opinion

Appendix “H” – Haywood Fairness Opinion

Appendix “I” – Dissent Provisions Under the BCBCA

Appendix “J” – Information Concerning Harvest

Appendix “K” – Information Concerning Trulieve

Appendix “L” – Trulieve Charter

 

III

PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR

This Proxy Statement and Management Information Circular (the “Circular”) is being furnished in connection with the solicitation of proxies by management of Harvest Health and Recreation Inc. (“Harvest”) for use at the annual and special meeting of Harvest Shareholders (the “Meeting”) to be held at the date, time and place and for the purposes set forth in the attached Notice of Meeting.

NOTICE REGARDING INFORMATION

NO CANADIAN OR U.S. SECURITIES REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE.

Harvest has not authorized any Person to give any information or to make any representation in connection with the Arrangement or any other matters to be considered at the Meeting other than those contained in this Circular. If any such information or representation is given or made, such information or representation should not be relied upon as having been authorized or as being accurate. For greater certainty, to the extent that any information provided on either Harvest’s website or by the proxy solicitation agent is inconsistent with this Circular, the information provided in this Circular should be relied upon.

This Circular does not constitute an offer to buy, or a solicitation of an offer to sell, any securities, or the solicitation of a proxy, by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such an offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation.

Harvest Shareholders should not construe the contents of this Circular as legal, tax or financial advice and should consult with their own legal, tax, financial or other professional advisors.

All summaries of, and references to, the Arrangement Agreement, the Plan of Arrangement, the Harvest Voting Support Agreement and the Harvest Voting Support and Lock-Up Agreements in this Circular are qualified in their entirety by, in the case of the Arrangement Agreement, the complete text of the Arrangement Agreement, a copy of which is attached as Appendix “B” to this Circular and is available on Harvest’s SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov, in the case of the Plan of Arrangement, the complete text of the Plan of Arrangement, a copy of which is attached as Appendix “C” to this Circular, and in the case of the Harvest Voting Support Agreement and the Harvest Voting Support and Lock-Up Agreements, the complete text of the forms of Harvest Voting Support Agreement and the Harvest Voting Support and Lock-Up Agreement are available on Harvest’s SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. Harvest Shareholders are urged to carefully read the full text of the Arrangement Agreement and the Plan of Arrangement.

This Circular contains industry, market and competitive position data from Harvest’s own internal estimates and research as well as industry and general publications and research surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Harvest’s internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which Harvest operates and Harvest’s management’s understanding of industry conditions. While Harvest believes that each of these studies and publications is reliable, it has not independently verified market and industry data from third party sources. While Harvest believes its internal company research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source.

 

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This Circular is dated                 , 2021, and is first being mailed to Harvest Shareholders on or about                , 2021. Information contained in this Circular is given as of                , 2021, unless otherwise specifically stated and except for information contained in documents incorporated by reference herein, which is given as at the respective dates stated in such documents.

 

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SUMMARY OF THE MATERIAL TERMS OF THE ARRANGEMENT

This summary term sheet, together with the sections entitled “Questions and Answers About the Arrangement and the Meeting” and “Summary,” summarizes certain information contained in this Circular, but does not contain all of the information that may be important to you. You should carefully read this entire Circular, including the attached Appendices, for a more complete understanding of the matters to be considered at the Meeting.

 

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Harvest Health & Recreation Inc., a British Columbia corporation (“Harvest”), is one of the largest multi-state vertically integrated operators in the cannabis industry in the United States that operates from “seed to sale.” Harvest was established in Arizona and received its first license to operate there in 2012. Harvest was formed to own, operate and develop certain businesses related to the cultivation, processing, distribution and sale of cannabis and cannabis related products under the “Harvest” brand in jurisdictions where such cultivation, processing, distribution and sale is authorized under applicable state law.

 

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Trulieve Cannabis Corp., a British Columbia corporation (“Trulieve”), is a multi-state cannabis operator with licenses to operate in six states. Headquartered in Quincy, Florida, Trulieve is the market leader for quality medical cannabis products and services in Florida and aims to be the brand of choice for medical and adult-use customers in all of the markets that Trulieve serves.

 

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On May 10, 2021, Harvest entered into an Arrangement Agreement with Trulieve, pursuant to which Trulieve has agreed, subject to the terms and conditions thereof, to acquire all of the issued and outstanding Harvest Shares, pursuant to the Plan of Arrangement.

 

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Subject to the terms of the Arrangement Agreement and the Plan of Arrangement, Harvest Shareholders will be entitled to receive 0.1170 of a Trulieve Subordinate Voting Share, subject to adjustment in accordance with the provisions of the Arrangement Agreement (the “Exchange Ratio”), for each Harvest Share outstanding immediately prior to the Effective Time of the Arrangement with the Harvest Super Voting Shares and Harvest Multiple Voting Shares treated on an as converted to Harvest Subordinate Voting Share basis pursuant to their respective terms when determining the consideration to be received by the holders thereof. The Exchange Ratio may potentially be adjusted downward upon the occurrence of certain permitted Harvest debt refinancings, as described more fully in this Circular.

 

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Harvest management and the Harvest board of directors (“Harvest Board”) considered various factors in determining whether to approve the Arrangement Agreement and the transactions contemplated thereby, including the recommendation of the Harvest Special Committee, the Harvest Fairness Opinions and those described in the section entitled “Description of the Arrangement – Harvest’s Reasons for the Arrangement.” When you consider the Harvest Board’s recommendation of these proposals, you should keep in mind that Harvest directors and officers have interests in the Arrangement that are different from, or in addition to, the interests of Harvest Shareholders generally. Please see the section entitled “Description of the Arrangement – Interests of Harvest’s Directors and Management in the Arrangement” for additional information. The Harvest Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Arrangement and in recommending to the Harvest Shareholders that they vote “FOR” the proposals presented at the Meeting.

 

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At the Meeting, Harvest Shareholders will be asked to consider and vote on the following proposals:

 

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to consider and, if thought advisable, to pass the Arrangement Resolution, the full text of which is set forth in Appendix “E” to this Circular, the Arrangement under Division 5 of Part 9 of the BCBCA involving, among other things, the acquisition by Trulieve of all of the outstanding Harvest Shares, all as more particularly described in this Circular, including in the section entitled “The Arrangement Agreement and Related Agreements” beginning on page 95 of this Circular;

 

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to fix the number of directors for the ensuing year at six, subject to such increases as may be permitted by the Articles of Harvest;

 

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to elect the nominees proposed by management of Harvest as directors of Harvest for the ensuing year (or, if the Arrangement Resolution is approved and the Arrangement is completed, for the period up to the Effective Time of the Arrangement);

 

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to appoint Haynie & Company, LLC as the auditors of Harvest for the ensuing year and to authorize the Harvest Board to fix their remuneration; and

 

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to transact such further or other business as may properly come before the Meeting or any adjournments or postponements thereof.

 

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Harvest Shareholders will also receive the audited consolidated financial statements of Harvest for the year ended December 31, 2020 and the report of the auditors thereon and the unaudited consolidated financial statements of Harvest for the three months ended March 31, 2021. No shareholder vote is required in connection with this item.

 

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DEFINED TERMS

This Circular contains defined terms. For a glossary of defined terms used herein, see Appendix “A” to this Circular.

CURRENCY

All references to dollars or to “$” are references to United States dollars unless otherwise indicated.

 

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QUESTIONS AND ANSWERS ABOUT THE ARRANGEMENT AND THE MEETING

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the annual and special meeting (the “Meeting”) of Harvest shareholders (“Harvest Shareholders”). The following questions and answers may not include all the information that is important to Harvest Shareholders. We urge Harvest Shareholders to carefully read this entire proxy statement and management information circular (the “Circular”), including the appendices and the other documents referred to herein.

Q: What proposals will be voted on at the Meeting?

A: Harvest Shareholders will be asked to vote on four proposals at the Meeting:

 

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to consider and, if thought advisable, to pass a special resolution (the “Arrangement Resolution”), the full text of which is set forth in Appendix “E” to this Circular, approving an arrangement under Division 5 or Part 9 of the BCBCA involving, among other things, the acquisition by Trulieve, of all of the issued and outstanding Harvest Shares, all as more particularly described in this Circular, including in the section entitled “The Arrangement Agreement and Related Agreements” beginning on page 95 of this Circular;

 

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to fix the number of directors for the ensuing year at six, subject to such increases as may be permitted by the Articles of Harvest;

 

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to elect the nominees proposed by management of Harvest as directors of Harvest for the ensuing year (or, if the Arrangement Resolution is approved and the Arrangement is completed, for the period up to the Effective Time of the Arrangement); and

 

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to appoint Haynie & Company, LLC as the auditors of Harvest for the ensuing year and to authorize the Harvest Board to fix their remuneration.

Harvest Shareholders will also receive the audited consolidated financial statements of Harvest for the year ended December 31, 2020 and the report of the auditors thereon and the unaudited consolidated financial statements of Harvest for the three months ended March 31, 2021. No shareholder vote is required in connection with this item.

Q: How does the Harvest Board recommend I vote on these proposals?

A: After receiving financial and legal advice, and following the receipt and review of a unanimous recommendation of the Harvest Special Committee, the Harvest Board has unanimously determined that the Arrangement is in the best interests of Harvest and unanimously recommends that you vote your Harvest Shares “FOR” each of the proposals described in this Circular.

In making its recommendation, the Harvest Special Committee and the Harvest Board considered a number of factors which are described in this Circular under the headings “Description of the Arrangement – Background to the Arrangement,” “Description of the Arrangement – Harvest’s Reasons for the Arrangement” and “Description of the Arrangement – Opinions of Harvest’s Financial Advisors.”

Q: Has a fairness opinion been provided on the Arrangement?

A: Yes, the Harvest Special Committee received the Haywood Fairness Opinion, and the Harvest Board received the Moelis Fairness Opinion. Haywood delivered an opinion to the Harvest Special Committee to the effect that, as of the date thereof and based on and subject to the analysis referred to therein, the consideration to be received by Harvest Shareholders in respect of the Arrangement was fair, from a financial point of view, to the Harvest Shareholders. Moelis delivered an opinion to the Harvest Board that, as of May 9, 2021 and based upon and

 

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subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis Fairness Opinion, the Exchange Ratio in the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). The Moelis Fairness Opinion can be found in Appendix “G” to this Circular and the Haywood Fairness Opinion can be found in Appendix “H” to this Circular.

See “Description of the Arrangement – Opinions of Harvest’s Financial Advisors.”

Q: Have any existing Harvest Shareholders already agreed to vote in favor of these proposals or lock-up their Harvest Shares?

A: Yes, holders representing more than 55% of the total voting power of Harvest Shares have entered into Harvest Voting Support Agreement or Harvest Voting Support and Lock-Up Agreements to vote in favor of the Arrangement Resolution and any other matters necessary for the consummation of the Arrangement, as further detailed in “General Information About the Meeting and Voting – Lock-Up Agreements.”

Q: When and where is the Meeting?

A: The Meeting will to take place on                 , 2021 at                 Eastern Time, exclusively through remote communication in a virtual meeting format. Harvest Shareholders may participate by logging in online at https://web.lumiagm.com/208164211, where they will be able to virtually attend the Meeting via live webcast. Online check-in will begin at                Eastern Time, and we encourage you to allow ample time for the online check-in procedures. To participate in the Meeting, Harvest Shareholders will need their unique 16-digit control number located on the form or proxy or voting instruction form, as applicable, and a password. The password to attend the live audio webcast of the Meeting is Harvest2021 (which is case sensitive). Online access to the meeting will open approximately 60 minutes prior to the start of the Meeting.

Q: Who can attend and vote at the Meeting?

A: All registered Harvest Shareholders as of the close of business on                 , 2021, the Record Date for the Meeting, are entitled to receive notice of and to attend and vote at the Meeting or any postponement or adjournment thereof.

Q: How do I attend and participate in the Meeting?

A: Harvest is holding the Meeting in a virtual only format, which will be conducted via live audio webcast only. Harvest Shareholders will not be able to attend the Meeting in person nor ask questions during the Meeting other than those submitted in advance in accordance with the process detailed below. Participating in the virtual Meeting online will allow Harvest Shareholders to vote electronically, all in real time. Harvest Shareholders who attend the virtual Meeting will be afforded comparable rights and opportunities to participate as they would at an in-person meeting. Accordingly, shareholders that join the audio webcast of the Meeting will be able to listen and vote regardless of location.

You may log in to the Meeting online by visiting https://web.lumiagm.com/208164211 on your smart phone, tablet or computer. The latest versions of Chrome, Safari, Edge, Firefox or Internet Explorer 11 are required (some operating systems may experience difficulty accessing the Meeting using Internet Explorer). We recommend that you log in at least 15 minutes before the Meeting starts to ensure your browser is compatible. Online access to the meeting will open approximately 60 minutes prior to the start of the Meeting. To enter the Meeting, you will need your assigned 16-digit control number and a password. The 16-digit control number will be included in the Notice of the Annual and Special Meeting (the “Notice”), on your proxy card, voting instruction form or other applicable proxy notices. If you hold your Shares in “street name” through a bank, brokerage firm or other nominee, your assigned 16-digit control number should be included with the voting instructions received from your bank, brokerage firm, or other nominee. The password to attend the live audio webcast of the Meeting is Harvest2021 (which is case sensitive). Instructions on how to attend and participate in the virtual Meeting will also be available at https://web.lumiagm.com/208164211.

 

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Even if you plan to virtually attend the Meeting we recommend that you also vote by Internet, telephone or sign and date the proxy card or voting instruction card and return it promptly to ensure that your vote will be counted if you later decide not to, or are unable to, attend the Meeting.

If you participate in the virtual Meeting, it is important that you remain connected to the Internet during the meeting in order to participate and vote. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the virtual Meeting online and complete the related login procedures.

Q: What if I need technical assistance?

A: If you encounter any technical difficulties accessing the virtual Meeting during the check-in or meeting time, you can click on the Help button provided on the meeting website, access the frequently asked questions portal online at https://go.lumiglobal.com/faq or email Harvest@odysseytrust.com. The operator of the virtual Meeting website will check the functioning of the Meeting website on the day of the Meeting for any problems. The Meeting website also has a “Help” button in the top right corner of the screen in the event that the website is not functioning properly during the Meeting. Please be sure to check in by                Eastern Time on     , 2021, the date of the Meeting, so that any technical difficulties may be addressed before the virtual Meeting live audio webcast begins.

Q: Why is Harvest proposing the Arrangement Resolution Proposal?

A: The Harvest Board believes that both Trulieve and Harvest have built deep, vertically integrated operations in their key markets, becoming leading operators in the United States, the world’s largest regulated cannabis market. As of May 10, 2020, Harvest and Trulieve expected that upon completion of the Arrangement, the combined business will have operations in 11 states, comprised of 22 cultivation and processing facilities with a total capacity of approximately 3.1 million square feet, and 126 dispensaries serving both the medical and adult-use recreational cannabis markets. The following are the key highlights and benefits of the combination, certain of which assumptions and estimates were described in the Current Report on Form 8-K filed by Harvest with the SEC on May 10, 2021 and speak solely as of such date:

 

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Increases Scale Across the Combined Company’s Primary Markets. The Combined Company will create the largest U.S. cannabis operator on a retail and cultivation footprint basis, as of May 10, 2021, the date of the announcement of the Arrangement.

 

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Enhanced Financial Position and Flexibility. The Combined Company will have an attractive financial profile with pro forma revenue of US$753 million for the calendar year ended December 31, 2020, ranking it among the largest U.S. multi-state operators (“MSOs”). As of the date of filing, Trulieve has generated positive Adjusted EBITDA over the prior 14 quarters (since the quarter ended December 31, 2017), which provides a robust platform for future profitability and cash flow generation for the Combined Company. This, collectively with the strength of the Combined Company’s balance sheet and access to capital, is expected to help accelerate national growth and value for the Combined Company’s stakeholders.

 

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Creation of the Most Profitable U.S. MSO. On a pro forma basis, the Combined Company would have had 2020 Adjusted EBITDA of US$266 million and combined 2021E consensus Adjusted EBITDA of U$461 million, based on consensus estimates as of May 7, 2021, the trading day prior to announcement of the Arrangement, ranking it the largest among the U.S. MSOs and delivering an unparalleled platform for continued growth.

 

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Strong and Expanding U.S. Multi-State Presence. The Combined Company will have an expanded presence in the U.S. northeast and southeast hubs in Florida, Pennsylvania and Maryland, and establishes a southwest hub in core markets including Arizona, where recreational adult use of cannabis was recently legalized.

 

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Optimal Nationwide Presence to Pursue Growth. The Combined Company will be well-positioned through established retail and wholesale channels across markets, as well as the ability to reach an estimated total addressable market of US$19.3 billion in 2025E (Arcview market estimate) within the existing markets.

 

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Addition of Premium Brands to Product Portfolio. The Combined Company is expected to deliver a larger portfolio of in-house brands and national brand partners with a successful line of products across multiple form factors.

 

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Leverages Expert MSO Operating Teams and Best Practices. The Combined Company will benefit from enhanced operational excellence by combining unparalleled knowledge of, and success in winning, state license application processes and market deployment and commercialization.

See “Description of the Arrangement – Harvest’s Reasons for the Arrangement” below for additional reasons for the Arrangement considered by the Harvest Board and the Harvest Special Committee.

Q: How many votes do I have?

A: If you are a holder of Harvest’s Subordinate Voting Shares, you are entitled to one vote per share on all matters to be voted on at the Meeting. If you are a holder of Harvest’s Multiple Voting Shares, you are entitled to 100 votes per share on all matters to be voted on at the Meeting. If you are a holder of Harvest’s Super Voting Shares, you are entitled to 200 votes per share on all matters to be voted on at the Meeting.

Q: What constitutes a quorum?

A: Pursuant to Harvest’s Articles, one person who is, or who represents by proxy, one or more Harvest Shareholders who, in the aggregate, hold not less than 5% of the issued and outstanding Shares of Harvest entitled to be voted at the Meeting, constitutes a quorum.

Pursuant to Harvest’s Articles, if within one-half hour from the time appointed for the Meeting, a quorum is not present, the Meeting shall be adjourned to the same day in the following week at the same time and place. If at such adjourned Meeting a quorum is not present within one-half hour from the time appointed, the Harvest Shareholders present in person or by proxy will constitute a quorum.

Q: What vote is required to approve the proposals presented at the Meeting?

A: Except for the Adjournment Proposal, the vote required to approve all of the proposals listed herein assumes the presence of a quorum.

 

No.		Proposal		Votes Necessary
1.		Arrangement Resolution Proposal		Approval requires the affirmative vote of 66 2/3% of votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Arrangement Resolution Proposal.
2.		Setting the Number of Directors		Approval requires the affirmative vote of a majority of the votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Setting the Number of Directors Proposal.

 

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No.		Proposal		Votes Necessary
3.		Director Election Proposal		Approval requires the affirmative vote of a majority of the votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Director Election Proposal.
4.		Auditor Proposal		Approval requires the affirmative vote of a majority of the votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Auditor Proposal.

See “General Information about the Meeting and Voting – Required Vote.”

Q: How do I vote my Harvest Shares?

A: You should carefully read and consider the information contained in this Circular. Registered Harvest Shareholders may vote on matters presented at the Meeting in any of the following ways:

 

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Virtually. Attending the Meeting virtually and casting your vote during the Meeting. You will need your assigned 16-digit control number printed on the proxy card that was sent to you and a password to access and vote your Shares at the Meeting. The password to attend the live audio webcast of the Meeting is Harvest2021 (which is case sensitive);

 

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Via the Internet. Visiting the Internet site listed in the enclosed Harvest form of proxy or voting instruction form;

 

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By Telephone. Calling the toll-free number listed on the enclosed Harvest form of proxy or voting instruction form; or

 

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By Mail. Submitting your enclosed Harvest form of proxy or voting instruction form by mail by using the provided self-addressed, pre-paid envelope.

To be counted at the Meeting, a Harvest Shareholder’s voting instructions must be received by                 p.m. Eastern Time on                 , 2021, or if the Meeting is postponed or adjourned, at least 48 hours (excluding non-Business Days) prior to the date of the postponed or adjourned Meeting. Harvest reserves the right to accept late proxies and to waive the proxy cut-off, with or without notice, but is under no obligation to accept or reject any particular late proxy. See “General Information about the Meeting and Voting – Registered Harvest Shareholders.”

Registered Harvest Shareholders and Non-Registered Harvest Shareholders who wish to appoint a person other than the management nominees identified on the applicable form of proxy or voting instruction form to represent them at the Meeting will also need to appoint such proxyholder online at www.proxyvote.com or by completing the “Appointee” section on the form of proxy or voting instruction form. If you do not designate the “Appointee Information” when completing your form of proxy or voting instruction form or if you do not provide the exact “Appointee Identification Number” and “Appointee Name” to any other person (other than the named proxyholders) who has been appointed to access and vote at the Meeting on your behalf, that other person will not be able to access the Meeting and vote on your behalf.

If you hold your Harvest Shares through an Intermediary, please follow the instructions on the voting instruction form provided by such Intermediary to ensure that your vote is counted at the Meeting.

 

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If you are a Harvest Shareholder and have any questions, please contact Equiniti (US) Services LLC, Harvest’s proxy solicitation agent, by telephone at (833) 434-0271 toll-free in North America or by email at proxyinfo@equiniti.com.

See “General Information about the Meeting and Voting – Voting Instructions – Beneficial Harvest Shareholders.”

Q: Should I send in my proxy now?

A: Yes. To ensure your vote is counted, you should immediately complete and submit the enclosed form of proxy or voting instruction form. You are encouraged to vote well in advance of the proxy cut-off at                p.m. Eastern Business Days) prior to the date of the postponed or adjourned Meeting).

See “General Information about the Meeting and Voting - Voting Instructions.”

Q: Should I send in my Letter of Transmittal and Harvest Share certificates now?

A: Yes. It is recommended that all registered Harvest Shareholders complete, sign and return the Letter of Transmittal with accompanying Harvest Share certificate(s) or Direct Registration System (“DRS”) statement(s) (“DRS Statement”) to the Depositary as soon as possible. Please be sure to use the Letter of Transmittal.

See “Description of the Arrangement – Exchange Procedure.”

Q: If my Harvest Shares are held by an Intermediary, will they vote my Harvest Shares for me?

A: An Intermediary will vote the Harvest Shares held by you only if you provide instructions to such Intermediary on how to vote or which election to make. If you fail to give proper instructions, those Harvest Shares will not be voted on your behalf. Harvest Shareholders should instruct their intermediaries to vote their Harvest Shares on their behalf by following the directions on the voting instruction form provided to them by their intermediaries. Unless your Intermediary gives you its proxy to vote the Harvest Shares at the Meeting, you cannot vote those Harvest Shares owned by you at the Meeting.

See “General Information about the Meeting and Voting—Voting Instructions—Beneficial Harvest Shareholders.”

Q: Can I revoke my vote after I have voted by proxy?

A: Yes. A Harvest Shareholder executing the enclosed form of proxy has the right to revoke it by voting again at the Meeting virtually, on the Internet or by telephone, or by any other means permitted by law. Registered Harvest Shareholders may also revoke their instructions by delivering a signed written notice changing their instructions to Harvest at 1155 W. Rio Salado Parkway, Suite 201, Tempe, Arizona 85281 no later than 5:00 p.m. Eastern Time on

, 2021 or to the chair of the Meeting on the day of the Meeting.

If you hold your Shares through an Intermediary, the methods to revoke your proxy may be different and you should carefully follow the instructions provided to you by your Intermediary.

See “General Information about the Meeting and Voting—Revocation of Proxies.”

Q: When will I receive the Trulieve Subordinate Voting Shares in exchange for my Harvest Shares under the Arrangement?

A: You will receive the Trulieve Subordinate Voting Shares due to you under the Arrangement as soon as

 

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practicable after the Arrangement becomes effective and your Letter of Transmittal, Harvest Share certificate(s) or DRS Statement(s), and all other required documents are properly completed and received by the Depositary. It is anticipated that the Arrangement will be completed on or before February 28, 2022 assuming the Arrangement Resolution is approved, all Court and all other approvals have been obtained, and all other conditions of closing have been satisfied or waived.

Q: What happens if I send in my Harvest Share certificate(s) or DRS Statement(s) and the Arrangement Resolution is not approved or the Arrangement is not completed?

A: If the Arrangement Resolution is not approved or if the Arrangement is not otherwise completed, your Harvest Share certificate(s) or DRS Statement(s) will be returned promptly to you by the Depositary.

Q: What will I receive for my Harvest Shares under the Arrangement?

A: Under the Arrangement and subject to adjustment in accordance with the provisions of the Plan of Arrangement, each Harvest Shareholder will receive, for each Harvest Subordinate Voting Share held, 0.1170 of a Trulieve Subordinate Voting Share with Harvest Super Voting Shares and Harvest Multiple Voting Shares treated on an as converted to Harvest Subordinate Voting Share basis pursuant to their respective terms when determining the consideration to be received by the holders thereof. You will no longer own any Harvest Shares, but will instead own Trulieve Subordinate Voting Shares. As an example, if you owned 1,000 Harvest Subordinate Voting Shares on a fully converted basis on the closing day of the Arrangement, after closing, provided that the Exchange Ratio has not been downwardly adjusted by the Adjustment Factor, you will own 117 Trulieve Subordinate Voting Shares. If you owned 1,000 Harvest Multiple Voting Shares on the closing day of the Arrangement, you will own 11,700 Trulieve Subordinate Voting Shares, after closing. If you owned 1,000 Harvest Super Voting Shares on the closing day of the Arrangement, you will own 117 Trulieve Subordinate Voting Shares, after closing.

Under the Arrangement and subject to the terms of the Plan of Arrangement, (i) all Harvest equity awards granted under Harvest’s Stock and Incentive Plan that are outstanding immediately prior to the Effective Time will be adjusted so that upon exercise, the holder will be entitled to receive Trulieve Subordinate Voting Shares, with the number of shares underlying such award adjusted based on the Exchange Ratio; (ii) each of the warrants to acquire Harvest Subordinate Voting Shares issued by Harvest on May 10, 2019 and on December 30, 2020 that are outstanding immediately prior to the Effective Time will be exercisable, in accordance with the terms, for Trulieve Subordinate Voting Shares, after adjustments to reflect the Arrangement and to account for the Exchange Ratio; (iii) each of the warrants to acquire Harvest Multiple Voting Shares issued by Harvest on April 23, 2020 that are outstanding immediately prior to the Effective Time will be exercisable, in accordance with the terms, for Trulieve Subordinate Voting Shares, after adjustments to reflect the Arrangement and to account for the Exchange Ratio; and (iv) all remaining warrants to acquire Harvest Subordinate Voting Shares issued by Harvest that are outstanding immediately prior to the Effective Time will be exchanged into warrants of Trulieve to acquire Trulieve Subordinate Voting Shares after adjustments to reflect the Arrangement and to account for the Exchange Ratio.

Q: Why am I receiving 0.1170 of a Trulieve Subordinate Voting Share for each of my Harvest Shares on an as-converted basis?

A: The agreed Exchange Ratio is 0.1170, subject to downward adjustment by the Adjustment Factor upon the occurrence of certain permitted Harvest debt refinancings, as set out in the Arrangement Agreement. This means that upon completion of the Arrangement, each holder of Harvest Shares will receive 0.1170 of a Trulieve Subordinate Voting Share for each Harvest Subordinate Voting Share. Since Trulieve currently has approximately 141 million Trulieve Subordinate Voting Shares outstanding and Harvest has approximately 440 million Harvest Subordinate Voting Shares outstanding, each on a fully diluted basis, on the closing of the Arrangement, it is expected (based on the shares of Trulieve and Harvest issued and issuable as of May 10, 2021

 

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on a fully converted to subordinate voting share basis) that the Exchange Ratio will result in Harvest Shareholders owning approximately 26.7% of the outstanding Trulieve Subordinate Voting Shares, and existing holders of Trulieve Subordinate Voting Shares owning approximately 73.3% of the outstanding Trulieve Subordinate Voting Shares. If there is no change in the numbers of issued and outstanding shares of Harvest and Trulieve prior to closing, Trulieve is expected to issue and make available for issuance an aggregate of approximately 51 million Trulieve Subordinate Voting Shares to Harvest Shareholders in exchange for their Harvest Shares (calculated using the treasury stock method).

Q: How will the Adjustment Factor impact the Exchange Ratio?

A: The share consideration receivable by Harvest Shareholders under the Arrangement is based on the Exchange Ratio of 0.1170 of a Trulieve Subordinate Voting Share for each Harvest Subordinate Voting Share, subject to adjustment by the Adjustment Factor. If Harvest enters into a Permitted Refinancing of the Harvest Junior Debt and/or the Harvest Senior Debt prior to the Closing Date, then the Adjustment Factor will result in a downward adjustment to the number of Trulieve Subordinate Voting Shares comprising the share consideration, with the result that you will no longer be entitled to 0.1170 of a Trulieve Subordinate Voting Share for each Harvest Subordinate Voting Share, but instead will be entitled to a lesser number of Trulieve Subordinate Voting Shares per each Harvest Subordinate Voting Share. In general terms, the extent of the downward adjustment will depend on certain costs or deemed costs associated with the Permitted Refinancing of the Harvest Junior Debt and/or the Harvest Senior Debt, as more specifically set out in the definition of “Refinancing Adjustment Factor” contained in Appendix “A.” If Harvest does not enter into a Permitted Refinancing of the Harvest Junior Debt or the Harvest Senior Debt prior to the Closing Date, then the Exchange Ratio will not be affected, and Harvest Shareholders will continue to be entitled to receive 0.1170 of a Trulieve Subordinate Voting Share for each Harvest Subordinate Voting Share under the Arrangement.

Q: Will I receive fractional Trulieve Subordinate Voting Shares?

A: No. If the total number of Trulieve Subordinate Voting Shares that you will be entitled to receive would result in a fraction of a Trulieve Subordinate Voting Share being issued, the number of Trulieve Subordinate Voting Shares you will receive will be rounded down to the nearest whole Trulieve Subordinate Voting Share. You will not receive any additional compensation as a result of such adjustment.

Q: What approvals are required for the Arrangement to be implemented?

A: The completion of the Arrangement requires the approval from the Harvest Shareholders, receipt of the Final Order from the Court, and receipt of the Required Regulatory Approvals. See “Description of the Arrangement –Regulatory Matters – HSR Act Approval,” and “Description of the Arrangement – Court Approval.”

Q: Are Harvest Shareholders entitled to Dissent Rights?

A: Yes. Registered holders of Harvest Shares are entitled to Dissent Rights, provided that only if they follow the procedures specified in the BCBCA, as modified by the Plan of Arrangement, the Interim Order and any other order of the Court. Persons who are beneficial owners of Harvest Shares registered in the name of an Intermediary who wish to dissent should be aware that only registered Harvest Shareholders are entitled to Dissent Rights.

If you wish to exercise Dissent Rights, you should review the requirements summarized in this Circular carefully and consult with your legal advisor. See “Description of the Arrangement – Dissenting Harvest Shareholders’ Rights.”

Q: When will the Arrangement become effective?

A: Subject to obtaining the approvals described above, as well as the satisfaction or waiver of all other conditions

 

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precedent set out in the Arrangement Agreement, it is anticipated that the Arrangement will be completed on or before February 28, 2022.

Q: What will happen to Harvest if the Arrangement is completed?

A: If the Arrangement is completed, Trulieve will acquire all outstanding Harvest Shares and Harvest will become a wholly-owned subsidiary of Trulieve.

Q: Are the Harvest Subordinate Voting Shares and Trulieve Subordinate Voting Shares listed on a stock exchange?

A: Trulieve Subordinate Voting Shares are currently listed on the Canadian Stock Exchange under the symbol “TRUL” and trade in Canadian dollars. Trulieve Subordinate Voting Shares are also currently quoted on the OTCQX under the symbol “TCNNF” and trade in U.S. dollars. Harvest Subordinate Voting Shares are also currently listed on the Canadian Stock Exchange under the symbol “HARV” and trade in Canadian dollars. Harvest Subordinate Voting Shares are also currently quoted on the OTCQX under the symbol “HRVSF” and trade in U.S. dollars. Following the closing of the Arrangement, former Harvest Shareholders will be able to trade their Trulieve Subordinate Voting Shares on either exchange, in either currency. See “The Arrangement Agreement and Related Agreements – Covenants.”

Q: What are the Canadian federal income tax consequences of the Arrangement?

A: Harvest Shareholders who exchange Harvest Shares for Trulieve Subordinate Voting Shares under the Arrangement may obtain tax-deferred rollover treatment for Canadian federal income tax purposes. Harvest Shareholders who are non-residents of Canada for purposes of the Tax Act and that do not hold their Harvest Shares as “taxable Canadian property” will generally not be subject to tax under the Tax Act on the exchange of their Harvest Shares for Trulieve Subordinate Voting Shares under the Arrangement.

For a summary of certain of the principal Canadian federal income tax consequences of the Arrangement applicable to Harvest Shareholders, see below under the heading “Certain Canadian Federal Income Tax Considerations.” Such summary is not intended to be legal, business or tax advice. Harvest Shareholders should consult their own tax advisors as to the tax consequences of the Arrangement to them with respect to their particular circumstances.

Q: What happens if I hold my Harvest Shares in a registered retirement savings plan (“RRSP”), tax-free savings account (“TFSA”) or registered education savings plan (“RESP”) account?

A: For Canadian resident Harvest Shareholders that hold their Harvest Shares in a RRSP, TFSA, RESP or other registered account, no immediate Canadian tax will arise as a result of the Arrangement, whether or not any gain is realized on the disposition of Harvest Shares. Further, Trulieve Subordinate Voting Shares will remain qualified investments for a RRSP, TFSA and RESP or other registered accounts.

For a summary of certain of the principal Canadian federal income tax consequences of the Arrangement applicable to Harvest Shareholders, see below under the heading “Certain Canadian Federal Income Tax Considerations.” Such summary is not intended to be legal, business or tax advice. Harvest Shareholders should consult their own tax advisors as to the tax consequences of the Arrangement to them with respect to their particular circumstances.

Q: What are the U.S. federal income tax consequences of the Arrangement?

A: A U.S. Holder should not recognize gain or loss as a result of the exchange of Harvest Shares for Trulieve Shares pursuant to the Arrangement. Such holder’s aggregate tax basis in Trulieve Shares received in the

 

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Arrangement should equal the aggregate tax basis of the holder’s Harvest Shares surrendered in the Arrangement. Such holder’s holding period for Trulieve Shares received in the Arrangement should include the holder’s holding period for the Harvest Shares surrendered in the Arrangement.

A U.S. Holder who acquired different blocks of Harvest Shares with different holding periods and tax bases must generally apply the foregoing rules separately to each identifiable block of Harvest Shares. Any such holder should consult its tax advisor with regard to identifying the bases or holding periods of the particular Trulieve Shares received in the Arrangement.

However, since your tax circumstances may be unique, you should consult your tax advisor to determine the tax consequences of the Arrangement.

See “Certain U.S. Federal Income Tax Considerations” for a more detailed discussion of the U.S. federal income tax treatment of the Arrangement.

Q: Are there risks I should consider in deciding whether to vote for the proposed Arrangement?

A: Yes. The proposed Arrangement is subject to a number of risks and uncertainties. There can be no certainty that all conditions precedent to the Arrangement will be satisfied or waived, and, accordingly, the Arrangement may not be completed. For example: (i) the Required Regulatory Approvals may not be obtained and, therefore, the market price of Harvest Subordinate Voting Shares and Trulieve Subordinate Voting Shares may be affected; (ii) the Arrangement may be terminated in certain circumstances and the termination amount provided under the Arrangement Agreement may discourage other parties from attempting to acquire Harvest or Trulieve; and (iii) if the Arrangement is consummated, the difficulties that management of the Combined Company may encounter in the process of integrating the business and operations of Harvest and Trulieve could have an adverse effect on the revenues, level of expenses and operating results of the Combined Company.

Before deciding whether to vote for or against the Arrangement Resolution, you should carefully consider these and other risks as well as the more detailed discussion of risks found at “Risk Factors – Risks Related to the Arrangement” and other information included in this Circular.

Q: What is householding?

A: If you and other residents at your mailing address own Harvest Shares in street name, your bank, brokerage firm or other nominee may notify you that your household will receive only one annual report and proxy statement for Harvest if you hold Harvest Shares through that bank, brokerage firm, or other nominee. Pursuant to this practice known as “householding,” you shall be to have consented to receiving only one annual report and proxy statement for your household. Householding benefits both you and Harvest because it reduces the volume of duplicate information received at your household and helps Harvest to reduce expenses. Accordingly, Harvest and your broker or bank will send one copy of the Notice (or Harvest’s annual report and proxy statement if you have requested a physical copy) to your address. Each Harvest Shareholder will continue to be entitled to vote a separate proxy and/or voting instruction card. Harvest will promptly deliver an additional copy of either document to you if you call or write Harvest at the following address or phone number: Investor Relations, Harvest Health & Recreation Inc., 1155 W. Rio Salado Parkway, Suite 201, Tempe Arizona 85281 or (480) 494-2261. If you and other residents at your mailing address are receiving multiple copies of the Notice (or Harvest’s annual report and proxy statement), and you prefer to receive only a single copy of each, you may so request by writing Harvest or contacting Harvest at the address and phone number referred to above.

Q: Who can help answer my questions?

A: If you have any questions about this Circular or the matters described in this Circular, please contact your professional advisor or Equiniti (US) Services LLC, Harvest’s proxy solicitation agent, by telephone at (833) 434-0271 toll-free in North America or by email at proxyinfo@equiniti.com.

 

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Harvest Shareholders who would like additional copies, without charge, of this Circular or have additional questions about the procedures for voting Harvest Shares or making an election, should contact their Intermediary or Equiniti (US) Services LLC, Harvest’s proxy solicitor, by email, or at one of the numbers below.

 

North American Toll-Free Number:		(833) 434-0271
By Email:		proxyinfo@equiniti.com

 

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ACCOUNTING PRINCIPLES

All financial statements and financial data derived therefrom included in this Circular pertaining to Harvest and Trulieve, including the unaudited pro forma condensed combined financial statements, have been prepared and presented in accordance with GAAP. Critical accounting policies, estimates, assumptions and elections may vary between Harvest and Trulieve. Management of Harvest and Trulieve have reviewed the unaudited pro forma condensed combined financial statements included in this Circular. For further details, see the notes to the unaudited pro forma condensed combined financial statements set forth under the heading “Unaudited Pro Forma Condensed Combined Financial Information” below.

Pro forma financial information included in this Circular is for informational purposes only and is unaudited. All unaudited pro forma financial information contained in this Circular has been derived from underlying financial statements prepared and adjusted in accordance with GAAP to illustrate the effect of the Arrangement. The pro forma financial information set forth in this Circular should not be considered to be what the actual financial position or other results of operations would have necessarily been had Harvest and Trulieve operated as a single combined company as, at, or for the periods stated.

EXCHANGE RATE INFORMATION

The following table sets forth, for the periods indicated, the high, low, average and period-end daily average rates of exchange for US$1.00, expressed in Canadian dollars, posted by the Bank of Canada:

 

Year Ended December 31
		2020				2019				2018
		(C$)				(C$)				(C$)
Highest rate during the period			1.45				1.36				1.36
Lowest rate during the period			1.27				1.30				1.23
Average rate for the period			1.34				1.33				1.30
Rate at the end of the period			1.27				1.30				1.36

On June 18, 2021, the closing rate of exchange posted by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was US$1.00 equals C$0.8052.

 

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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This Circular contains statements that Harvest believes are, or may be considered to be, “forward-looking statements.” All statements other than statements of historical fact included in this Circular regarding the prospects of Harvest’s industry or its prospects, plans, financial position or business strategy may constitute forward-looking statements within the meaning of applicable Securities Laws. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plan,” “forecast,” “continue” or “could” or the negative of these terms or variations of them or similar terms. Furthermore, forward-looking statements may be included in various filings that Harvest makes with the SEC and with Canadian securities regulators or press releases or oral statements made by or with the approval of one of Harvest’s authorized executive officers. Although Harvest believes that the expectations reflected in these forward-looking statements are reasonable, it cannot provide assurance that its expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These include, but are not limited, to the risks described under the heading “Risk Factor Summary” and in Item 1A—”Risk Factors” in Harvest’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2020 filed with the SEC on EDGAR and with certain Canadian securities regulators on SEDAR at www.sedar.com, as well as in other periodic reports and filings made by Harvest with the SEC on EDGAR and with such Canadian securities regulators on SEDAR. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Circular which reflect management’s opinions only as of the date hereof. Except as required by law, Harvest undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures Harvest makes in its reports to the SEC. All subsequent written and oral forward-looking statements attributable to Harvest or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this Circular.

Any information or statements that are contained in this Circular, including the documents incorporated by reference herein, that are not statements of historical fact may be deemed to be forward-looking statements including, but not limited to, statements with regards to:

 

•

expectations regarding whether the Arrangement will be consummated, including whether conditions to the consummation of the Arrangement will be satisfied, or the anticipated timing or closing of the Arrangement;

 

•

expectations regarding receipt of all Required Regulatory Approvals and the expiration of relevant waiting periods, shareholder approvals, court approvals and satisfaction of other customary closing conditions;

 

•

estimates of pro-forma financial information of the Combined Company, including in respect of expected revenues, margins, cash flow, profitability, and production of cannabis;

 

•

estimates of future costs applicable to sales, future capital expenditures, future cost reductions, and projected synergies including pre-tax synergies, cost savings and efficiencies;

 

•

the Combined Company anticipating having scalable medical and adult-use cannabis platforms expected to strengthen the leadership position in Canada, internationally, and eventually in the United States;

 

•

the legalization of cannabis in the United States and the Combined Company being well positioned to compete in the United States market;

 

•

the Combined Company expecting to offer a diversified and branded product offering and distribution footprint, world-class cultivation, processing and manufacturing facilities;

 

•

anticipated tax treatment of the Arrangement;

 

•

expectations of future balance sheet strength and future equity, including expectations for the effects of the Arrangement on the Combined Company’s financial position, cash flow and growth prospects;

 

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•

expectations that the Combined Company is expected to unlock significant shareholder value and realize the benefit of the Expected Synergies (as hereinafter defined);

 

•

any other strategic and financial benefits in connection with the Arrangement, including any anticipated future results and pro-forma financial information relating to the Combined Company;

 

•

the anticipated value of the Trulieve Subordinate Voting Shares to be received by Harvest Shareholders, which may fluctuate in value due to trading prices of the Trulieve Subordinate Voting Shares;

 

•

expectations regarding the size and composition of the board of directors of the Combined Company;

 

•

the number of Trulieve Subordinate Voting Shares issuable to Harvest Shareholders and the expected ownership percentages of Trulieve and Harvest shareholders after the closing of the Arrangement; and

 

•

expectations that the Arrangement will allow the Combined Company to benefit from significant geographic diversification and economies of scale.

Certain material factors or assumptions are applied in making forward-looking statements. With respect to the Arrangement and this Circular, the expectations and assumptions expressed or implied in the forward-looking statements, include, but are not limited to the ability of the parties to receive, in a timely manner and on satisfactory terms, Harvest Shareholder Approval (as defined below), Required Regulatory Approvals and stock exchange and Court approvals for the Arrangement, the ability of the parties to satisfy, in a timely manner, the conditions to the closing of the Arrangement and other expectations and assumptions concerning the Arrangement.

The forward-looking statements contained in this Circular are subject to inherent risks and uncertainties and other factors which could cause actual results to differ materially from those anticipated by the forward-looking statements. The factors which could cause results to differ from current expectations include, but are not limited to:

 

•

the inherent uncertainty associated with financial or other projections or outlooks;

 

•

risks assumptions and expectations described in Harvest’s critical accounting policies and estimates;

 

•

the adoption and impact of certain accounting pronouncements;

 

•

Harvest’s future financial and operating performance;

 

•

the commercial and business plans of Harvest and/or the Combined Company

 

•

the intention to grow the business, operations and potential activities;

 

•

the ability of Harvest and Trulieve to complete the Arrangement;

 

•

the ability to maintain a strong financial position and manage costs;

 

•

the ability of Harvest and Trulieve to maximize the utilization of their existing assets and investments;

 

•

that the completion of the Arrangement is subject to the satisfaction or waiver of a number of conditions as set forth in the Arrangement Agreement;

 

•

some or all the expected benefits of the Arrangement may fail to materialize or may not occur within the time periods anticipated;

 

•

the prompt and effective integration of the Combined Company;

 

•

the ability to achieve the anticipated synergies and value-creation contemplated by the Arrangement;

 

•

the risk associated with Harvest’s ability to obtain the approval of the Arrangement by its shareholders required to consummate the Arrangement and the timing of the closing of the Arrangement, including the risk that the conditions to the Arrangement are not satisfied on a timely basis or at all;

 

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•

the risk that a consent or authorization that may be required for the Arrangement is not obtained or is obtained subject to conditions that are not anticipated;

 

•

the risk that Harvest and Trulieve may not obtain the necessary Required Regulatory Approvals to complete the Arrangement;

 

•

the termination of the Arrangement by Trulieve or Harvest and the payment of the termination amounts by Trulieve or Harvest, as applicable, each pursuant to the terms of the Arrangement Agreement;

 

•

the potential payments to Harvest Shareholders who properly exercise their Dissent Rights;

 

•

the inaccuracy or omission of historical information (other than publicly-available information) provided by Trulieve;

 

•

the negative impact on the market price for Trulieve Subordinate Voting Shares following the issuance of Trulieve Subordinate Voting Shares to Harvest Shareholders in connection with the Arrangement;

 

•

the inability of the Combined Company to incur additional debt or to service additional indebtedness incurred;

 

•

the inability of the Combined Company to service existing indebtedness;

 

•

the risk that the costs related to the Arrangement are significantly higher than expected;

 

•

the outcome of any legal proceedings that may be instituted against the parties and others related to the Arrangement Agreement;

 

•

unanticipated difficulties or expenditures relating to the Arrangement, the response of business partners and retention as a result of the announcement and pendency of the Arrangement;

 

•

risks relating to the value of Trulieve Subordinate Voting Shares to be issued in connection with the Arrangement;

 

•

the impact of competitive responses to the announcement of the Arrangement;

 

•

increased competition, particularly from companies with greater financial, technical, marketing and other resources, and the ability of the Combined Company to be competitive;

 

•

the diversion of management time on Transaction-related issues;

 

•

there can be no assurance that the Arrangement will occur or that the anticipated strategic benefits and operational, competitive and cost synergies will be realized;

 

•

there can be no assurance that the market value of the Trulieve Subordinate Voting Shares that the holders of Harvest Shares may receive on the Effective Date will equal or exceed the market value of the Harvest Shares held by such Harvest Shareholders prior to the Effective Date;

 

•

changes in tax laws, regulations or future assessments;

 

•

the risk that the Arrangement does not qualify as a “reorganization” under Section 368(a) of the Code;

 

•

strict enforcement of United States federal law regarding cannabis;

 

•

the inability of the Combined Company to comply with evolving cannabis industry laws, regulations and guidelines;

 

•

the inability of the Combined Company to secure necessary supplies and services from third-party suppliers, manufacturers and contractors;

 

•

the inability to effect service of process within Canada upon the Combined Company or the majority of its directors, officers or experts;

 

•

the inability to enforce judgments obtained in Canadian courts against the Combined Company or certain of its directors, officers or experts;

 

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•

failure to realize anticipated results, including revenue growth, anticipated cost savings or operating efficiencies from the Combined Company’s major initiatives, including those from restructuring;

 

•

assumptions and estimates required for the preparation of the pro forma financial statements may be materially different from the Combined Company’s actual results and experience in the future; and

 

•

risks or delays arising from or relating to the ongoing COVID-19 pandemic.

The foregoing risks or other risks arising in connection with the failure of the Arrangement, including the diversion of management attention from conducting the business of Harvest may have a Material Adverse Effect on Harvest’s business operations, financial results and share price.

Readers are cautioned that the foregoing list of factors is not exhaustive. Other risks and uncertainties not presently known to Harvest or that Harvest presently believes are not material could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein.

Additional information on these and other factors that could affect the operations or financial results of Harvest or the Combined Company are included in reports filed by Harvest with applicable securities regulatory authorities and may be accessed through EDGAR (www.sec.gov) and SEDAR (www.sedar.com), respectively. These risks and other factors are also discussed in more detail in this Circular under the heading “Risk Factors.” Readers are encouraged to read such section in detail.

The forward-looking statements contained in this Circular, including the documents incorporated by reference herein, are expressly qualified in their entirety by this cautionary statement. Harvest cannot guarantee that the results or events expressed or implied in any forward-looking statement and information will materialize and accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Harvest’s expectations only as of the date of this Circular. Harvest disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

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SUMMARY

This summary highlights the key aspects of the matters to be considered at the Meeting, but does not contain all of the information that may be important to you. You should carefully read this entire document and the other documents Harvest refers you to for a more complete understanding of the matters being considered at the Meeting. This summary is qualified in its entirely by the more detailed information appearing elsewhere in this Circular, including the Appendices (which are incorporated into and form part of this Circular). Certain capitalized terms used in this summary are defined in the Glossary of Defined Terms found in Appendix “A” of this Circular.

Meeting and Record Date

The Meeting will be held virtually through a live audio webcast on                 , 2021 at                  Eastern Time. There will be no physical meeting location. The format of the virtual Meeting will ensure that Harvest Shareholders who attend the meeting will be afforded comparable rights and opportunities to participate as they would at an in-person meeting. Accordingly, shareholders that join the audio webcast of the Meeting will be able to listen and vote regardless of location.

To attend the virtual Annual Meeting, log in at https://web.lumiagm.com/208164211. Harvest Shareholders will need their unique 16-digit control number which appears on the Notice of Internet Availability of Proxy Materials or, if you received a paper copy of the proxy materials, the proxy card (printed in the box and marked by the arrow) or the instructions that accompanied the proxy materials, and a password. In the event that you do not have a control 16-digit number, please contact your broker, bank, or other nominee as soon as possible and no later than two (2) Business Days prior to the Meeting, so that you can be provided with a control number and gain access to the meeting. The password to attend the live audio webcast of the Meeting is Harvest 2021 (which is case sensitive).

Online access to the audio webcast of the Meeting will open approximately 60 minutes prior to the start of the Meeting to allow time for you to log in and test the computer audio system. Harvest encourages Harvest Shareholders to access the Meeting at least 15 minutes prior to the start time.

The Harvest Board has fixed the close of business on                 , 2021 as the Record Date for the determination of the Harvest Shareholders entitled to receive notice of, and vote at, the Meeting. Only Harvest Shareholders whose names have been entered in the applicable register of Harvest as of the close of business on the Record Date will be entitled to receive notice of, and to vote at, the Meeting.

See “General Information About the Meeting and Voting – Date, Place and Time” and “General Information About the Meeting and Voting – Record Date.”

Purpose of Meeting

In addition to the consideration of the annual meeting matters, as described in “General Information About the Meeting and Voting – Purpose of the Meeting,” the purpose of the Meeting is for Harvest Shareholders to consider and vote upon the Arrangement Resolution.

To become effective, the Arrangement Resolution must be approved by at least two-thirds (66 ²⁄₃%) of the votes cast by the holders of the Harvest Shares represented in person or by proxy at the Meeting, voting together as a single class.

See “General Information About the Meeting and Voting – Purpose of the Meeting.”

 

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The Companies

Harvest

Harvest is one of the largest multi-state vertically integrated operators in the cannabis industry in the United States that operates from “seed to sale.”

Harvest was established in Arizona and received its first license there in 2012. Harvest was formed to own, operate and develop certain businesses related to the cultivation, processing, distribution and sale of cannabis and cannabis related products under the “Harvest” brand in jurisdictions where such cultivation, processing, distribution and sale is authorized under applicable state law.

Harvest is one of the largest operators in the state of Arizona, which is one of the largest medical cannabis markets in the country and one of the oldest regulated cannabis markets in the world. Building on its success in Arizona, Harvest has consistently grown its revenues and industry footprint every year since founding and currently operates facilities in Arizona, Arkansas, California, Florida, Maryland, Nevada, and Pennsylvania. Since 2013, Harvest has won a variety of operating awards, including seven Best Dispensary awards issued by four independent organizations, four Best Medical Cannabis Strain awards, and one Best Medical Cannabis Product award.

Harvest’s principal office is located at 1155 W. Rio Salado Parkway, Suite 201, Tempe, Arizona 85281 and its telephone number is 480-494-2261.

See “Information Concerning Harvest.”

Trulieve

Trulieve is a multi-state cannabis operator with licenses to operate in six states. Headquartered in Quincy, Florida, Trulieve is the market leader for quality medical cannabis products and services in Florida and aims to be the brand of choice for medical and adult-use customers in all of the markets that Trulieve serves. All of the states in which Trulieve operates have adopted legislation to permit the use of cannabis products for medicinal purposes to treat specific conditions and diseases. Recreational marijuana, or adult-use cannabis, is legal marijuana sold in licensed dispensaries to adults ages 21 and older. Thus far, of the states in which Trulieve operates, only California and Massachusetts have adopted legislation permitting commercialization of adult-use cannabis products. Trulieve is committed to providing patients and adult consumers a consistent and welcoming retail experience across its Trulieve branded stores.

In states that require cannabis companies to be vertically integrated, ownership of the entire supply chain mitigates third-party risks and allows Trulieve to completely control product quality and brand experience. Trulieve believes this results in high patient retention and brand loyalty. Trulieve operates its core business functions of cultivation, production and distribution at scale, and is skilled at rapidly increasing capacity without any interruption to existing operations. The Trulieve brand philosophy of “Patients First” permeates the company’s culture beginning with high-quality cultivation and current good manufacturing practices or cGMP, certified product manufacturing, through the consumer experience at Trulieve stores, at Trulieve’s in-house call center and at patient residences through a robust home delivery program.

Trulieve’s principal office is located at 6749 Ben Bostic Road, Quincy, Florida, 32351 and its telephone number is 1-844 878-5438.

See “Information Concerning Trulieve.”

Background to the Arrangement

On May 10, 2021, Harvest and Trulieve entered into the Arrangement Agreement, which sets out the terms and conditions for implementing the Arrangement. The Arrangement Agreement is the result of extensive arm’s length negotiations conducted since December 2020 among Representatives of Harvest and Trulieve.

 

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A summary of the material events leading to the execution of the Arrangement Agreement and the material meetings, negotiations and discussions between Harvest and Trulieve and their respective advisors that preceded the execution of the Arrangement Agreement and public announcement of the Arrangement is included in this Circular under “Description of the Arrangement – Background to the Arrangement.”

Harvest’s Reasons for the Arrangement

The Harvest Board believes that, at this stage of development and expansion of the U.S. cannabis market, companies with financial strength, an enhanced national footprint and scale, diverse product range, premium brands and operational expertise are most likely to succeed in the long-term. In evaluating the Arrangement and the Arrangement Agreement, and in making their recommendations, the Harvest Board and the Harvest Special Committee each consulted with its legal and financial advisors, reviewed the Harvest Fairness Opinions and gave careful consideration to all of the terms of the Arrangement Agreement and the Plan of Arrangement. The Harvest Special Committee and the Harvest Board considered a number of factors, including the following key strategic and financial benefits of the Arrangement, certain of which assumptions and estimates were described in the Current Report on Form 8-K filed by Harvest with the SEC on May 10, 2021 and speak solely as of such date:

 

•

Attractive Premium to Harvest Shareholders. The consideration under the Arrangement represents a premium of approximately 34% at spot, or approximately 57% based on the 20-day volume-weighted average prices of Trulieve Subordinate Voting Shares and Harvest Shares, on the CSE as of May 7, 2021, the trading day prior to the announcement of the Arrangement.

 

•

Meaningful Participation by Shareholders in the Future Growth of the Combined Company. Under the Arrangement, Harvest Shareholders will receive, in consideration for their Harvest Shares, Trulieve Subordinate Voting Shares. As a result, Harvest Shareholders, as of May 10, 2021, the date of announcement of the Arrangement, will have the opportunity to own approximately 26.7% of the Combined Company on a pro forma basis. The combination is an opportunity to own shares in a larger licensed cannabis operator with a broader geographic footprint, providing Harvest Shareholders with exposure to strong growth opportunities in the United States cannabis industry through the Combined Company’s broader and enhanced profile.

 

•

Strong and Expanding U.S. Multi-State Presence. The Combined Company will have an expanded presence in the U.S. northeast and southeast hubs in Florida, Pennsylvania and Maryland, and establishes a southwest hub in core markets including Arizona, where recreational adult use of cannabis was recently legalized. The Combined Company will also create the largest U.S. cannabis operator on a retail and cultivation footprint basis, as of May 10, 2021, the date of the announcement of the Arrangement.

 

•

Optimal Nationwide Presence to Pursue Growth. The Combined Company will be well-positioned through established retail and wholesale channels across markets, as well as the ability to reach an estimated total addressable market of US$19.3 billion in 2025E (Arcview market estimate) within their existing markets.

 

•

Addition of Premium Brands to Product Portfolio. The Combined Company is expected to deliver a larger portfolio of in-house brands and national brand partners with a successful line of products across multiple form factors.

 

•

Enhanced Financial Position and Flexibility. The Combined Company will have an attractive financial profile with pro forma revenue of US$753 million for the calendar year ended December 31, 2020, ranking it among the largest U.S. MSOs. As of the date of filing, Trulieve has generated positive Adjusted EBITDA over the prior 14 quarters (since the quarter ended December 31, 2017), which provides a robust platform for future profitability and cash flow generation for the Combined Company. This, collectively with the strength of the Combined Company’s balance sheet and access to capital, is expected to help accelerate national growth and value for the Combined Company’s stakeholders.

 

24

•

Creation of the Most Profitable U.S. MSO. On a pro forma basis, the Combined Company would have had 2020 Adjusted EBITDA of US$266 million and combined 2021E consensus Adjusted EBITDA of U$461 million, based on consensus estimates as of May 7, 2021, the trading day prior to announcement of the Arrangement, ranking it the largest among the U.S. MSOs and delivering an unparalleled platform for continued growth.

 

•

Strong Capital Structure Position Allowing for Ability to Absorb Harvest Balance Sheet. Trulieve’s balance sheet strength provides for an opportunity to absorb Harvest’s balance sheet on a non-dilutive basis, providing for lower cost of capital alternatives for Harvest. This, collectively with the enhanced financial position of the Combined Company, is expected to help accelerate growth and value for the Combined Company’s stakeholders.

 

•

Enhanced Capital Markets Profile and Broader Access to Liquidity. The Combined Company’s expanded capital markets profile is expected to appeal to a broader shareholder audience, enhance trading liquidity and increase weighting in index tracking portfolios, as well as provide for more beneficial access to capital.

 

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Leverages Expert MSO Operating Teams and Best Practices. The Combined Company will benefit from enhanced operational excellence by combining unparalleled knowledge of, and success in winning, state license application processes and market deployment and commercialization.

 

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Harvest Board Recommendation. The Harvest Board’s conclusion, after receiving the advice of its legal and financial advisors, and following the unanimous recommendation of the Harvest Special Committee, that the value offered to Harvest Shareholders under the Arrangement is more favorable to the Harvest Shareholders than the potential value that might have resulted from other strategic alternatives reasonably available to Harvest, including Harvest’s standalone business plan, taking into consideration the potential rewards, risks and uncertainties associated with other alternatives.

 

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Harvest Special Committee. The process of evaluating the Arrangement was led by the Harvest Special Committee, which is comprised of members of the Harvest Board who are not members of Harvest management. The members of the Harvest Special Committee met regularly with its and Harvest’s legal and financial advisors and members of Harvest management throughout the process of negotiating the Arrangement.

 

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No Other Bidders. No other potential acquirors have approached Harvest with an acquisition proposal following the May 10, 2021 announcement of the Arrangement.

 

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Fairness Opinions Delivered by Harvest’s Financial Advisors. Moelis delivered an opinion to the Harvest Board that, as of May 9, 2021 and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis Fairness Opinion, the Exchange Ratio in the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). The fairness opinion delivered by Haywood to the Harvest Special Committee, that, as of the date thereof and based on and subject to the analyses referred to therein, the consideration to be received by Harvest Shareholders in respect of the Arrangement was fair, from a financial point of view, to the Harvest Shareholders.

 

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Procedural Safeguards for the Benefit of Harvest Shareholders. Procedural safeguards have been obtained for the benefit of Harvest Shareholders in connection with the Arrangement, including:

 

•

the terms of the Arrangement Agreement allow the Harvest Board to respond, in accordance with its fiduciary duties, to an unsolicited Acquisition Proposal that would be reasonably likely, if consummated in accordance with its terms, to be a Superior Proposal;

 

•

the fact that the Arrangement Resolution must be approved by the Harvest Shareholders entitled to vote thereon at the Meeting in accordance with the Interim Order;

 

•

the fact that the Arrangement must also be approved by the Court, which will consider the substantive and procedural fairness of the Arrangement to all Harvest Shareholders; and

 

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•

that any Harvest Shareholder who opposes the Arrangement may, on strict compliance with certain conditions, exercise Dissent Rights and receive the fair value of such Dissenting Harvest Shareholder’s Harvest Shares.

 

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Arrangement Agreement. The Arrangement Agreement includes, from each of Harvest and Trulieve, representations, warranties and covenants and the conditions to their respective obligations that are reasonable in the judgment of the Harvest Board and Harvest Special Committee following consultations with its advisors, and are the product of arm’s length negotiations between Harvest and its advisors and Trulieve and its advisors.

See “Description of the Arrangement – Harvest’s Reasons for the Arrangement.”

Recommendations of the Harvest Special Committee

The Harvest Special Committee, after consultation with Harvest management and receipt of advice and assistance of its and Harvest’s financial and legal advisors and after careful consideration of a number of alternatives and factors, including, among others, the Haywood Fairness Opinion and the factors set out under the heading “Description of the Arrangement – Harvest’s Reasons for the Arrangement,” unanimously determined that the Arrangement and entry into the Arrangement Agreement and related agreements are in the best interests of Harvest and the Harvest Shareholders and unanimously determined to recommend to the Harvest Board that it approve and authorize Harvest to enter into the Arrangement Agreement and related agreements.

See “Description of the Arrangement—Recommendation of the Harvest Special Committee.”

Recommendations of the Harvest Board

After careful consideration, consultation with its legal and financial advisors and reviewing the Moelis Fairness Opinion, and following the receipt and review of a unanimous recommendation of the Harvest Special Committee, the Harvest Board unanimously determined that the Arrangement is in the best interests of Harvest and that the Arrangement is fair to Harvest Shareholders.

The Harvest Board unanimously recommends that Harvest Shareholders vote FOR the Arrangement Resolution.

The Harvest Board has also considered the annual meeting items, including fixing the number of board members at six, the election of directors and the appointment of the independent auditor and fixing of their remuneration, and unanimously determined their approval to be in the best interest of Harvest.

The Harvest Board unanimously recommends that Harvest Shareholders vote “FOR” the Arrangement Resolution in Proposal 1, “FOR” the setting of the number of directors at six in Proposal 2, “FOR” the re-election of the nominees in Proposal 3, and “FOR” the appointment and remuneration of auditors in Proposal 4.

See “Description of the Arrangement – Recommendation of the Harvest Board.”

Opinions of Financial Advisors

Moelis Fairness Opinion

Harvest retained Moelis & Company LLC (“Moelis”) to act as its financial advisor in connection with the Arrangement, including rendering an opinion to the Harvest Board as to the fairness, from a financial point of view, to Harvest Shareholders of the Exchange Ratio. On May 9, 2021, Moelis delivered its oral opinion, subsequently confirmed in writing, to the Harvest Board that, as of May 9, 2021 and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis

 

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Fairness Opinion, the Exchange Ratio in the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). See “Description of the Arrangement – Opinions of Harvest’s Financial Advisor – Moelis & Company LLC.”

The full text of Moelis’ written opinion dated May 9, 2021, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix “G” to this Circular and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the Harvest Board (solely in its capacity as such) in its evaluation of the Arrangement. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the Exchange Ratio to the holders of Harvest Shares (on an as-converted basis), and does not address Harvest’s underlying business decision to effect the Arrangement or the relative merits of the Arrangement as compared to any alternative business strategies or transactions that might be available to Harvest. Moelis’ opinion does not constitute a recommendation as to how any holder of securities of Harvest or Trulieve should vote or act with respect to the Arrangement or any other matter. Moelis’ opinion was approved by a Moelis fairness opinion committee.

Haywood Fairness Opinion

Pursuant to an engagement letter dated as of April 30, 2021, Harvest retained Haywood Securities Inc. (“Haywood”) to render an opinion to the Harvest Special Committee as to the fairness, from a financial point of view, to Harvest of the Exchange Ratio provided for under the terms of the Arrangement Agreement. On May 9, 2021, Haywood delivered its oral opinion, subsequently confirmed in writing, to the Harvest Special Committee that, as at the date thereof, based upon the scope of review and subject to the assumptions, limitations, qualifications, procedures and other factors set out therein, the Exchange Ratio is fair, from a financial point of view, to the Harvest Shareholders. See “Description of the Arrangement – Opinions of Harvest’s Financial Advisor – Haywood Securities Inc.”

The full text of Haywood’s written opinion dated May 9, 2021, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix “H” to this Circular and is incorporated herein by reference. Haywood’s opinion was provided for the use and benefit of the Harvest Special Committee (solely in its capacity as such) in its evaluation of the Arrangement. Haywood’s opinion is limited solely to the fairness, from a financial point of view, of the Exchange Ratio to the holders of Harvest Shares (on an as-converted basis), and does not address Harvest’s underlying business decision to effect the Arrangement or the relative merits of the Arrangement as compared to any alternative business strategies or transactions that might be available to Harvest. Haywood’s opinion does not constitute a recommendation as to how any holder of securities of Harvest or Trulieve should vote or act with respect to the Arrangement or any other matter.

Interests of Harvest’s Directors and Management in the Arrangement

In considering the recommendation of the Harvest Board with respect to the Arrangement, Harvest Shareholders should be aware that certain members of Harvest’s management team may receive certain benefits in connection with the Arrangement and may have interests which differ from those of other Harvest Shareholders which may create actual or potential conflicts of interest in connection the Arrangement. The Harvest Board is aware of these interests and considered them along with the other matters described under the heading “Description of the Arrangement – Harvest’s Reasons for the Arrangement.”

See “Description of the Arrangement – Interests of Harvest’s Directors and Management in the Arrangement.”

Court Approval

Interim Order

The Arrangement requires approval by the Court under the BCBCA. On                 , 2021, Harvest obtained the Interim Order providing for the calling, holding and conducting of the Meeting and other procedural matters. The

 

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Interim Order does not constitute approval of the Arrangement or the contents of this Circular. Copies of the Interim Order and the Notice of Hearing are attached hereto as Appendix “D” – “Interim Order” and Appendix “F” – “Notice of Hearing,” respectively.

Final Order

Subject to the terms of the Arrangement Agreement, and subject to obtaining Harvest Shareholder Approval in the manner required by the Interim Order, Harvest will apply to the Court for the Final Order approving the Arrangement. The application for the Final Order is scheduled for                 , 2021 at                 a.m. (Vancouver time), or as soon after that date as is practicable or at such other date and time as the Court may direct. At the hearing for the Final Order, any Harvest Shareholder or other interested party who wishes to participate or to be represented or to present evidence or argument may do so, subject to the rules of the Court, the Interim Order and any further order of the Court. Any person desiring to appear at the hearing of the application for the Final Order is required to file with the Court and deliver to Harvest’s legal counsel at the address set out below, by or before                 p.m. (Vancouver Time) on                 , 2021, a Response to Petition and a copy of all materials upon which they intend to rely in respect of the application for the Final Order. In the event that the hearing is postponed, adjourned or rescheduled then, subject to further direction of the Court, only those persons having previously delivered a Response to Petition in compliance with the Interim Order will be given notice of the postponement, adjournment or rescheduled date.

The Response to Petition and supporting materials must be delivered, within the time specified above, to Harvest’s Canadian legal counsel at the following address:

Bennett Jones LLP

Suite 2500, 666 Burrard Street

Vancouver, British Columbia, V6C 2X8

Attention: Alan Gardner

Email: GardnerA@bennettjones.com

Such persons who wish to participate in or be represented at the Court hearing should consult their respective legal advisors as to the necessary requirements.

The Court will be advised, prior to the hearing of the application for the Final Order, that the Court’s approval of the Arrangement (and determination of the fairness thereof), will constitute the basis for reliance on the exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(10) thereof, with respect to the issuance and distribution of the securities to be issued pursuant to the Arrangement, including with respect to the Trulieve Subordinate Voting Shares to be issued by Trulieve to Harvest Shareholders pursuant to the Arrangement, and with respect to the adjustment of the Harvest Options and Harvest RSUs, which shall at the Effective Time cease to represent the rights to acquire Harvest Shares and instead represent a right to receive Trulieve Subordinate Voting Shares, and with respect to the issuance and distribution of the Replacement Warrants to be issued to holders of Harvest Warrants. See “Description of the Arrangement – U.S. Securities Law Matters” and “Description of the Arrangement – Treatment of Harvest Convertible Securities.”

The Court has broad discretion under the BCBCA when making orders with respect to the Arrangement. The Court, in hearing the application for the Final Order, will consider, among other things, the fairness and reasonableness of the Arrangement to the parties affected, including Harvest Shareholders and holders of Harvest Options, Harvest RSUs and Harvest Warrants, as the Court determines appropriate, both from a substantive and a procedural point of view. The Court may approve the Arrangement as proposed or as amended, in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court deems fit. The Court’s approval is required for the Arrangement to become effective. Depending on the nature of any required amendments, Harvest and Trulieve may determine not to proceed with the Arrangement.

See “Description of the Arrangement – Court Approval.”

 

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Letter of Transmittal

A Letter of Transmittal has been mailed, together with this Circular, to each person who was a registered Harvest Shareholder on the Record Date. Each registered Harvest Shareholder must forward a properly completed and signed Letter of Transmittal, with accompanying Harvest Share certificate(s) or DRS Statement(s) and all other required documents, as applicable as set out in the Letter of Transmittal, in order to receive the Trulieve Subordinate Voting Shares to which such Harvest Shareholder is entitled under the Arrangement. It is recommended that Harvest Shareholders complete, sign and return the Letter of Transmittal with accompanying Harvest Share certificate(s) or DRS Statement(s) to the Depositary as soon as possible.

Any Letter of Transmittal, once deposited with the Depositary, shall be irrevocable and may not be withdrawn by a Harvest Shareholder except that all Letters of Transmittal will be automatically revoked if the Depositary is notified in writing by Harvest that the Arrangement Agreement has been terminated or that the Arrangement is not completed. If a Letter of Transmittal is automatically revoked, the Share certificate(s) or DRS Statement(s) for the Harvest Shares received with the Letter of Transmittal will be promptly returned to the Harvest Shareholder submitting the same at the address specified in the Letter of Transmittal.

See “Description of the Arrangement—Letter of Transmittal.”

Regulatory Matters

HSR Act Approval

Under the Hart-Scott Rodino Antitrust Improvements Act (the “HSR Act”), parties to a transaction that meets certain statutory jurisdictional tests and is not otherwise exempted must provide notice of that transaction to the Antitrust Division of the Department of Justice (“DOJ”) and to the Federal Trade Commission (“FTC”), and observe a statutory waiting period before that transaction can close. The Arrangement is subject to these notification and waiting period requirements. On May 20, 2021, the Parties submitted to the DOJ and FTC the notifications required under the HSR Act. The statutory waiting period expired on June 21, 2021.

See “Regulatory Matters—HSR Act Approval.”

Issue and Resale of Trulieve Subordinate Voting Shares Received in the Arrangement

Canada

The distribution of the Trulieve Subordinate Voting Shares pursuant to the Arrangement will constitute a distribution of securities that is exempt from the prospectus requirements of Canadian securities legislation and is exempt from or otherwise is not subject to the registration requirements under applicable securities legislation. The Trulieve Subordinate Voting Shares received pursuant to the Arrangement will not be legended and may be resold in each of the provinces of Canada provided that: (i) the trade is not a “control distribution” (as defined in National Instrument 45-102 – Resale of Securities); (ii) no unusual effort is made to prepare the market or to create a demand for Trulieve Subordinate Voting Shares; (iii) no extraordinary commission or consideration is paid to a person in respect of such sale; and (iv) if the selling securityholder is an insider or officer of Trulieve, as applicable and as the case may be, the selling securityholder has no reasonable grounds to believe that Trulieve is in default of applicable Canadian Securities Laws.

See “Description of the Arrangement – Canadian Securities Law Matters.”

United States

The Trulieve Subordinate Voting Shares to be received by Harvest Shareholders in exchange for their Harvest Shares pursuant to the Arrangement will not be registered under the Securities Act or the Securities Laws of any state of the United States and will be issued and exchanged in reliance upon the exemption from registration

 

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provided by Section 3(a)(10) of the Securities Act and exemptions from or qualifications under the registration requirements under the Securities Laws of applicable states of the United States. Section 3(a)(10) of the Securities Act exempts the issuance of any securities issued in exchange for one or more bona fide outstanding securities, or partly in such exchange and partly for cash, from the registration requirements of the Securities Act, where the terms and conditions of the issuance and exchange of such securities have been approved by a court of competent jurisdiction that is expressly authorized by law to grant such approval, after a hearing upon the substantive and procedural fairness of the terms and conditions of such issuance and exchange at which all persons to whom it is proposed to issue the securities have the right to appear and have received timely and adequate notice thereof. The Court is authorized to conduct a hearing at which the fairness of the terms and conditions of the Arrangement will be considered. Accordingly, the Final Order will, if granted, constitute a basis for the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof with respect to the Trulieve Subordinate Voting Shares to be received by Harvest Shareholders in exchange for their Harvest Shares.

The Trulieve Subordinate Voting Shares to be received by Harvest Shareholders in exchange for their Harvest Shares pursuant to the Arrangement will be freely transferable under U.S. federal Securities Laws, except by persons who are Affiliates of Trulieve after the Effective Date, or were Affiliates of Trulieve within 90 days prior to the Effective Date. Persons who may be deemed to be Affiliates of an issuer include individuals or entities that control, are controlled by, or are under common control with, the issuer, whether through the ownership of voting securities, by contract or otherwise, and generally include executive officers and directors of the issuer as well as principal shareholders of the issuer.

Any resale of Trulieve Subordinate Voting Shares by such an Affiliate (or, if applicable, former Affiliate) may be subject to additional restrictions under the Securities Act, absent an exemption therefrom such as Rule 144 or Rule 904.

See “Description of the Arrangement – U.S. Securities Law Matters.”

Pro Forma Economic Ownership of the Combined Company

Upon completion of the Arrangement (based upon the number of Harvest Shares and Trulieve Shares outstanding as of May 10, 2021), it is estimated that the Exchange Ratio, if it has not been downwardly adjusted by the Adjustment Factor, will result in Harvest Shareholders and Trulieve Shareholders owning approximately 26.7% and 73.3%, respectively, of the outstanding economic interest in the Combined Company on a fully diluted basis.

See “Description of the Arrangement – Pro Forma Economic Ownership of the Combined Company.”

Stock Exchange Listing and Reporting Issuer Status

If the Arrangement is completed, Trulieve intends to have the Harvest Shares delisted from the CSE and no longer quoted on the OTCQX. In addition, Trulieve currently expects to list the Trulieve Subordinate Voting Shares on the CSE at, or as soon as practicable following, the Effective Time, which will trade in Canadian dollars. Consequently, following the closing, Harvest Shareholders are expected to be able to trade their Trulieve Subordinate Voting Shares on either the CSE or the OTCQX.

See “Description of the Arrangement – U.S. Securities Law Matters” and “Description of the Arrangement – Canadian Securities Law Matters.”

Treatment of Outstanding Harvest Convertible Securities

At the Effective Time, (i) all Harvest equity awards granted under Harvest’s Stock and Incentive Plan that are outstanding immediately prior to the Effective Time will be adjusted so that upon exercise, the holder will be entitled to receive Trulieve Subordinate Voting Shares, with the number of shares underlying such award

 

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adjusted based on the Exchange Ratio; (ii) each of the warrants to acquire Harvest Subordinate Voting Shares issued by Harvest on May 10, 2019 and on December 30, 2020 that are outstanding immediately prior to the Effective Time will be exercisable, in accordance with the terms, for Trulieve Subordinate Voting Shares, after adjustments to reflect the Arrangement and to account for the Exchange Ratio; (iii) each of the warrants to acquire Harvest Multiple Voting Shares issued by Harvest on April 23, 2020 that are outstanding immediately prior to the Effective Time will be exercisable, in accordance with the terms, for Trulieve Subordinate Voting Shares, after adjustments to reflect the Arrangement and to account for the Exchange Ratio; and (iv) all remaining warrants to acquire Harvest Subordinate Voting Shares issued by Harvest that are outstanding immediately prior to the Effective Time will be exchanged into warrants of Trulieve to acquire Trulieve Subordinate Voting Shares after adjustments to reflect the Arrangement and to account for the Exchange Ratio.

See “Description of the Arrangement – Treatment of Harvest Convertible Securities.”

The Arrangement Agreement

The Arrangement Agreement provides for, among other things, the conditions that need to be satisfied or waived prior to the effectiveness of the Arrangement and implementation of the Plan of Arrangement. The following is a summary of certain terms of the Arrangement Agreement and is qualified in its entirety by the full text of the Arrangement Agreement, a copy of which is attached to this Circular as Appendix “B” and is available on SEDAR at www.sedar.com under Harvest’s SEDAR profile as well as on EDGAR at www.sec.gov under Harvest’s EDGAR profile.

See “The Arrangement Agreement and Related Agreements.”

Covenants, Representations and Warranties

The Arrangement Agreement contains certain customary and negotiated covenants and representations and warranties for an agreement of this type, which are summarized in this Circular.

See “The Arrangement Agreement and Related Agreements – Covenants” and “The Arrangement Agreement and Related Agreements – Representations and Warranties.”

Conditions to the Arrangement

The obligations of Harvest and Trulieve to consummate the Arrangement are subject to the satisfaction or waiver of certain conditions set out in the Arrangement Agreement, including, but not limited to, (a) obtaining the Harvest Shareholder Approval, (b) obtaining the Interim Order and Final Order, (c) the Required Regulatory Approvals having been obtained, (d) no Law being in effect that makes the Transaction illegal or otherwise prevents the parties from completing the Transaction, (e) no Material Adverse Effect having occurred in respect of the other Party, (f) subject to certain materiality exceptions, the accuracy of the representations and warranties of the other Party, and (g) the performance in all material respects by the other Party of its covenants under the Arrangement Agreement.

See “The Arrangement Agreement and Related Agreements – Conditions to Completion of the Arrangement.”

Non-Solicitation Provisions

Harvest is subject to restrictions on its ability to solicit proposals from third parties with respect to Acquisition Proposals, to provide non-public information to, or to participate or engage in discussions or negotiations with third parties or take certain other actions regarding any Acquisition Proposal, with customary exceptions for unsolicited Acquisition Proposals in the event, among other things, that the Harvest Board determines in good faith that such Acquisition Proposals are, or could reasonably be expected to lead to, a Superior Proposal.

 

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See “The Arrangement Agreement and Related Agreements – Covenants Regarding Non-Solicitation.”

Termination

Termination of the Arrangement Agreement

The Arrangement Agreement contains certain termination rights for each of Harvest and Trulieve, subject to certain limitations on termination set out in the Arrangement Agreement and in certain circumstances the payment of the Harvest Termination Fee (as defined below) or the Trulieve Termination Fee (as defined below), as applicable. Rights to terminate include but are not limited to, the right of either Party to terminate in the event that: (a) the Arrangement has not occurred on or before the Outside Date (provided that a Party may not terminate the Arrangement Agreement if the failure of the Effective Time to so occur was primarily caused by, or is a result of, a breach by such Party of any of its obligations under the Arrangement Agreement), which Outside Date may be automatically extended in the event that the Required Regulatory Approvals have not been obtained by February 28, 2022 until the earlier of (i) the date that is 10 Business Days following the satisfaction or waiver of all conditions to Closing as set out in the Arrangement Agreement, and (ii) December 31, 2022; (b) mutual written agreement of the Parties; (c) no Law being in effect that makes the Arrangement illegal or otherwise prevents the Parties from completing the Arrangement, or (d) the approval of the Arrangement Resolution by Harvest Shareholders is not obtained.

See “The Arrangement Agreement and Related Agreements – Termination.”

Termination Amount

A termination amount of $100 million is payable by Harvest (the “Harvest Termination Fee”), in certain circumstances. These include if the Arrangement Agreement is terminated by: (i) Trulieve, if prior to approval of the Arrangement Resolution at the Meeting, the Harvest Board has effected an Adverse Recommendation Change, (ii) Harvest, prior to the approval of the Arrangement Resolution at the Meeting, in order to enter into an Alternative Transaction Agreement with respect to a Superior Proposal; or (iii) Trulieve, if certain events occur on the basis of a Willful Breach of a covenant and if (A) prior to the date of such termination, an Acquisition Proposal was publicly announced or otherwise communicated to Harvest, the Harvest Board or their respective Representatives and (B) within 12 months following the date of termination of the Arrangement Agreement, Harvest completes an Acquisition Proposal or enters into a definitive agreement in respect of any Acquisition Proposal and such Acquisition Proposal is subsequently completed (provided that the term “Acquisition Proposal” in this paragraph has the meaning given to such term in this Circular except that a reference to “20 per cent” should instead refer to “50 per cent”).

A termination amount of $100 million is payable by Trulieve (the “Trulieve Termination Fee”), if the Effective Time does not occur on or prior to the Outside Date, provided the reason that the Effective Date does not occur prior to the Outside Date is solely due to the failure to obtain the Closing Regulatory Approvals.

See “The Arrangement Agreement and Related Agreements—Termination Amounts.”

Procedure for the Arrangement to Become Effective

The Arrangement will be implemented by way of a Court-approved Plan of Arrangement under the BCBCA pursuant to the terms of the Arrangement Agreement. The following procedural steps must be taken in order for the Arrangement to become effective:

 

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the Arrangement must be approved by the Harvest Shareholders in the manner set forth in the Interim Order; and

 

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the Court must grant the Final Order approving the Arrangement.

 

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If all other conditions precedent to the Arrangement set out in the Arrangement Agreement, including Antitrust Approval, have been satisfied or waived by the appropriate party, the Arrangement will become effective on the date designated by Trulieve and Harvest to be the effective date of the Arrangement, following the completion of the conditions precedent to the Arrangement as set out in the Arrangement Agreement.

For a description of the other conditions precedent see “The Arrangement Agreement and Related Agreements—Conditions to Completion of the Arrangement.”

Effect of the Arrangement

If the Arrangement Resolution is passed, all conditions to closing of the Arrangement (the “Closing”) are satisfied or waived and the Arrangement is completed, among other things, Trulieve will acquire all of the issued and outstanding Harvest Shares and Harvest will become a wholly-owned subsidiary of Trulieve.

Pursuant to the terms of the Arrangement Agreement, each Harvest Shareholder (other than Dissenting Harvest Shareholders) will receive, for each Harvest Share held, 0.1170 of a Trulieve Subordinate Voting Share, with the Super Voting Shares and Multiple Voting Shares treated on an as converted to Subordinate Voting Share basis pursuant to their respective terms; provided, the Exchange Ratio may potentially be adjusted downward upon the occurrence of certain permitted Harvest debt refinancings, as described more fully in this Circular.

See “Description of the Arrangement – Description of the Plan of Arrangement” and “Description of the Arrangement – Recommendation of the Harvest Board.”

The Harvest Board, after careful consideration, consultation with its legal and financial advisors and reviewing the Moelis Fairness Opinion, and following the receipt and review of a unanimous recommendation of the Harvest Special Committee, believes that the Arrangement is in the best interest of Harvest and is fair to the Harvest Shareholders. The Harvest Board unanimously recommends that Harvest Shareholders vote FOR the Arrangement Resolution.

Board of Directors, Executive Officers and Principal Offices of Combined Company

Harvest currently expects the existing management of Trulieve to remain in place at and after the Effective Time. There have been no definitive determinations between Trulieve and Harvest regarding the role that Harvest management may play in the Combined Company. See “Governance and Management of the Combined Company.”

Harvest Shareholder Approval

The procedures for approval of the Arrangement Resolution by Harvest Shareholders are provided for in the Interim Order. In accordance with the Interim Order, each holder of Harvest Shares is entitled to vote on the Arrangement Resolution at the Meeting. To become effective, the Arrangement Resolution must be approved by at least two-thirds (66 2/3 %) of the votes cast by the holders of the Harvest Shares represented in person or by proxy at the Meeting, voting together as a single class (“Harvest Shareholder Approval”).

See “General Information About the Meeting and Voting – Required Vote.”

Harvest Shareholder Dissent Rights

Section 291(2) of the BCBCA provides that the Court may make an order providing registered shareholders of a corporation with the right to dissent (“Dissent Rights”) under the provisions of Sections 237 to 247 of the BCBCA or in any other manner the Court may direct with respect to a shareholder resolution approving a plan of arrangement. The Interim Order expressly provides registered Harvest Shareholders as at the Record Date with the right to dissent from the Arrangement Resolution pursuant to Sections 237 to 247 of the BCBCA in the

 

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manner set forth in Sections 237 to 247 of the BCBCA, as modified and supplemented by the Interim Order, the Plan of Arrangement and any other order of the Court. Any registered Harvest Shareholder as at the Record Date who dissents from the Arrangement Resolution in compliance with Sections 237 to 247 of the BCBCA, as modified or supplemented by the Plan of Arrangement, the Interim Order and any other order of the Court (a “Dissenting Harvest Shareholder”), will be entitled, if ultimately successful and in the event the Arrangement becomes effective, to be paid the fair value of the Harvest Shares held by such Dissenting Harvest Shareholder determined as of the close of business on the last Business Day before the day on which the Arrangement is approved by the Harvest Shareholders at the Meeting.

Failure to strictly comply with the requirements with respect to the Dissent Rights set forth in the BCBCA, the Plan of Arrangement, the Interim Order and any other order of the Court will result in the loss of any right to dissent. Anyone who is a beneficial owner of Harvest Shares registered in the name of an Intermediary (the “Non-Registered Harvest Shareholder”) as at the Record Date and who wishes to dissent should be aware that only registered Harvest Shareholders as at the Record Date are entitled to exercise Dissent Rights. Any Non-Registered Harvest Shareholders who wish that Dissent Rights be exercised in respect of their Harvest Shares should immediately contact their Intermediary.

The failure to strictly comply with the procedures set forth in Sections 237 to 247 of the BCBCA, as modified or supplemented by the Interim Order, Plan of Arrangement and any other order of the Court, will result in the loss of such Harvest Shareholders’ Dissent Rights. As such, if you wish to exercise Dissent Rights, you should, in addition to obtaining your own independent legal advice, carefully read the Plan of Arrangement, the provisions of the BCBCA (including Sections 237 to 247 thereof) and the Interim Order, which are respectively attached to this Circular as Appendix “C” – “Plan of Arrangement,” Appendix “I” – “Dissent Provisions Under the BCBCA” and Appendix “D” – “Interim Order.” Also see “Description of the Arrangement—Dissenting Harvest Shareholders’ Rights” of this Circular.

Accounting Treatment

Harvest and Trulieve prepare financial statements in accordance with GAAP. The Arrangement will be accounted for as a business combination using the acquisition method of accounting with Trulieve being treated as the acquirer. The Arrangement will result in the recognition of assets acquired and liabilities assumed at fair value. Due to timing constraints, as of the date of this Circular, Trulieve has not performed the detailed valuation studies necessary to arrive at the final estimates of the fair value of the Harvest assets to be acquired, the liabilities to be assumed and the related allocations of purchase price. We expect preliminary purchase accounting including valuation to be completed following Required Regulatory Approvals and the Closing of the Arrangement. The final determination of the allocation of the purchase price will be based on the fair values of the assets and liabilities of Harvest as of the Effective Date of the Arrangement.

See “Description of the Arrangement – Accounting Treatment.”

Certain Canadian Federal Income Tax Considerations

Certain Canadian federal income tax considerations applicable to Harvest Shareholders who beneficially own Harvest Shares and exchange their Harvest Shares for Trulieve Subordinate Voting Shares pursuant to the Arrangement are summarized herein under “Certain Canadian Federal Income Tax Considerations.” Harvest Shareholders should carefully review the applicable tax considerations resulting from the Arrangement and should consult their own tax advisors regarding the Canadian federal income tax consequences of the Arrangement.

See “Certain Canadian Federal Income Tax Considerations.”

 

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Certain U.S. Federal Income Tax Considerations

For a summary of certain material United States tax consequences of the Arrangement, see “Certain U.S. Federal Income Tax Considerations.” Such summary is not intended to be legal or tax advice to any particular Harvest Shareholder.

Voting Support and Lock-Up Agreements

Simultaneously with the execution of the Arrangement Agreement, Trulieve and certain Harvest Shareholders entered into voting support agreements (the “Harvest Voting Support Agreements”) and voting support and lock-up agreements (the “Harvest Voting Support and Lock-Up Agreements”), pursuant to which such Harvest Shareholders agreed, among other things, to vote their Harvest Shares in favor of the Arrangement Resolution and any other matters necessary for the consummation of the Arrangement, and, in the case of the Harvest Voting Support and Lock-Up Agreement, to restrictions on the transfer of the Harvest Shares held by such Harvest Shareholders prior to the Effective Time and the Trulieve Shares received as consideration for such Harvest Shareholder’s Harvest Shares, in addition to agreeing that any Trulieve Shares received by such Harvest Shareholder for its Harvest Shares shall continue to be subject to the restrictions on transfer and other restrictions set out in certain existing lock-up agreements. The Harvest Voting Support Agreements and the Harvest Voting Support and Lock-Up Agreements terminate upon the occurrence of certain events, including the termination of the Arrangement Agreement in accordance with its terms.

See “General Information about the Meeting and Voting – Voting Support and Lock-Up Agreements.”

No Fractional Shares

In no event shall any Harvest Shareholder be entitled to a fractional Trulieve Subordinate Voting Share. Where the aggregate number of Trulieve Subordinate Voting Shares to be issued to Harvest Shareholder under the Arrangement would result in a fraction of a Trulieve Subordinate Voting Share being issuable, the number of Trulieve Subordinate Voting Shares to be received by such Harvest Shareholder shall be rounded down to the nearest whole Trulieve Subordinate Voting Share. Harvest Shareholders will not receive any additional compensation as a result of such adjustment.

See “Description of the Arrangement – No Fractional Shares.”

Risk Factors

There are a number of risk factors relating to the Arrangement, the business of Harvest and the business of the Combined Company, all of which should be carefully considered by Harvest Shareholders.

See “Risk Factors - Risks Related to the Arrangement,” “The Arrangement Agreement and Related Agreements – Risks,” “Information Concerning Harvest - Risks and Uncertainties,” and “Risk Factors - Risks Related to the Combined Company.”

Summary Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of Harvest and Trulieve, as adjusted to give effect to the Arrangement. The unaudited pro forma condensed combined balance sheet information as of March 31, 2021 and December 31, 2020 (the “summary pro forma balance sheet”) gives effect to the Arrangement as if it had occurred on December 31, 2020. The unaudited pro forma statement of operations information for the quarter ended March 31, 2021 and the year ended December 31, 2020 (the “summary pro forma statement of operations”) gives effect to the Arrangement as if it had occurred on January 1, 2020. The necessary transaction accounting adjustment will be accounted for in the pro forma financial information to be filed by Trulieve subsequent to the

 

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Effective Date of the Arrangement. Harvest expects preliminary purchase accounting, including valuation, to be completed following Required Regulatory Approvals and the Closing of the Arrangement.

The summary pro forma balance sheet and summary pro forma statement of operations should be read in conjunction with the unaudited pro forma condensed combined financial statements that give effect to the Arrangement, the historical consolidated financial statements and related notes of Harvest and Trulieve in their Quarterly Reports filed on Form 10-Q for the three months ended March 31, 2021 and Annual Reports on Form 10-K for the year ended December 31, 2020.

See “Unaudited Pro Forma Condensed Combined Financial Information” in this Circular.

Selected Pro Forma Financial Information

 

(USD$ in thousands, except share and per share amounts)		Quarter Ended March 31, 2021				Year Ended December 31, 2020
Summary Pro Forma Balance Sheet
Cash and cash equivalents		$	269,398			$	224,768
Total assets		$	1,822,547			$	1,672,747
Notes Payable, net of current portion		$	244,046			$	248,066
Total liabilities		$	966,057			$	850,368
Total stockholders’ equity		$	856,490			$	822,379
Pro Forma Statement of Operations
Revenue		$	282,649			$	752,993
Gross profit		$	183,182			$	488,005
Net income before non-controlling interest		$	7,110			$	4,647
Net income per share - basic		$	0.04			$	0.03
Net income per share - diluted		$	0.04			$	0.03
Weighted average shares used in computation of net income per share - basic			167,585,452				155,078,973
Weighted average shares used in computation of net income per share - diluted			175,282,041				159,832,318

 

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RISK FACTORS

The following risk factors should be considered by Harvest Shareholders in evaluating whether to approve the Arrangement Resolution. These risk factors should be considered in conjunction with the other information contained in this Circular and documents Harvest has filed with the Securities and Exchange Commission. These risk factors relate to the Arrangement.

Risks Related to the Arrangement

There can be no assurance that all of the conditions precedent to closing of the Arrangement will be satisfied.

The completion of the Arrangement is subject to a number of conditions precedent, some of which are outside of Harvest’s control, including receipt of the Final Order, receipt of Harvest Shareholder Approval and receipt of the Required Regulatory Approvals.

In addition, the completion of the Arrangement by Harvest and Trulieve is conditional on, among other things, no Material Adverse Effect having occurred or having been disclosed to the public (if previously undisclosed to the public) in respect of the other Party.

There can be no certainty, nor can Harvest and Trulieve provide any assurance, that all conditions precedent to the Arrangement will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Arrangement may not be completed. If the Arrangement is not completed, the market price of Harvest Shares may be adversely affected.

The Required Regulatory Approvals may not be obtained or, if obtained, may not be obtained on a favorable basis.

To complete the Arrangement, each of Harvest and Trulieve must make certain filings with and obtain certain consents and approvals from various governmental and regulatory authorities. The Required Regulatory Approvals have not been obtained yet. The regulatory approval processes may take a lengthy period of time to complete, which could delay completion of the Arrangement. If obtained, the Required Regulatory Approvals may be conditioned, with the conditions imposed by the applicable Governmental Entity not being acceptable to either Harvest or Trulieve, or, if acceptable, not being on terms that are favorable to the Combined Company. There can be no assurance as to the outcome of the regulatory approval processes, including the undertakings and conditions that may be required for approval or whether the Required Regulatory Approvals will be obtained. If not obtained, or if obtained on terms that are not satisfactory to either Harvest or Trulieve, the Arrangement may not be completed.

If the Arrangement is not completed, the market price of the Harvest Subordinate Voting Shares may be adversely affected.

If, for any reason, the Arrangement is not completed or its completion is materially delayed and/or the Arrangement Agreement is terminated, the market price of Harvest Subordinate Voting Shares may be materially adversely affected. Depending on the reasons for terminating the Arrangement Agreement, Harvest’s business, financial condition or results of operations could also be subject to various material adverse consequences, including as a result of paying the Harvest Termination Fee or the Harvest Reimbursement Fee.

Additionally, the market price for Harvest Subordinate Voting Shares and the market price of stock of other companies operating in the cannabis industry has been extremely volatile. The volatility of the market price for Harvest Subordinate Voting Shares may be based on speculative trading of Harvest Subordinate Voting Shares and merger arbitrage.

During the year ended December 31, 2020, the trading price of Harvest Subordinate Voting Shares ranged between a low sales price of $0.63 and a high sales price of $3.57 and included single day fluctuations as high as

 

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31.8%. The market price of Harvest Subordinate Voting Shares may continue to be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond Harvest’s control, including the following: (i) actual or anticipated fluctuations in Harvest’s quarterly results of operations; (ii) recommendations by securities research analysts; (iii) changes in the economic performance or market valuations of other issuers that investors deem comparable to Harvest; (iv) the addition or departure of Harvest’s executive officers or other key personnel; (v) the release or expiration of lock-up or other transfer restrictions on Harvest Shares; (vi) sales or perceived sales, or the expectation of future sales, of Harvest Shares; (vii) significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving Harvest or Harvest’s competitors; and (viii) news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the cannabis industry or Harvest’s target markets.

Investors may also purchase Harvest Subordinate Voting Shares to hedge existing exposure in Harvest Subordinate Voting Shares or to speculate on the price of Harvest Subordinate Voting Shares. Speculation on the price of Harvest Subordinate Voting Shares may involve long and short exposures. To the extent aggregate short exposure exceeds the number of Harvest Subordinate Voting Shares available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase Harvest Subordinate Voting Shares for delivery to lenders of such Harvest Subordinate Voting Shares. Those repurchases may, in turn, dramatically increase the price of Harvest Subordinate Voting Shares until investors with short exposure are able to purchase additional Harvest Subordinate Voting Shares, as applicable, to cover their short position. This phenomenon is often referred to as a “short squeeze.” A short squeeze could exacerbate volatile price movements in Harvest Subordinate Voting Shares that are not directly correlated to the operating performance or prospects of Harvest. Once investors purchase the Harvest Subordinate Voting Shares necessary to cover their short position, Harvest’s share price will likely decline rapidly and substantially relative to its levels during the short squeeze with such decline being unrelated to operating performance or prospects of Harvest, and may not return to levels at or above those during the short squeeze for a long time or at all. As a result, if an investor purchases Harvest Subordinate Voting Shares during a short squeeze, the investor will be at an increased risk of failing to sell the Harvest Subordinate Voting Shares at a price greater than what the investor paid for them and losing some or all of the investor’s investment.

There can be no assurance that the Arrangement will not be terminated by Harvest or Trulieve in certain circumstances.

Each of Harvest and Trulieve has the right, in certain circumstances, in addition to termination rights relating to the failure to satisfy the conditions of closing, to terminate the Arrangement. Accordingly, there can be no certainty, nor can Harvest provide any assurance that the Arrangement will not be terminated by either of Harvest or Trulieve prior to the completion of the Arrangement. In addition, if the Arrangement is not completed by the Outside Date, which Outside Date may be automatically extended in the event that the Required Regulatory Approvals have not been obtained by February 28, 2022 until the earlier of (i) the date that is 10 Business Days following the satisfaction or waiver of all conditions to Closing as set out in the Arrangement Agreement, and (ii) December 31, 2022, either Harvest or Trulieve may choose to terminate the Arrangement Agreement. The Arrangement Agreement also includes termination amounts payable if the Arrangement Agreement is terminated in certain circumstances. Additionally, any termination will result in the failure to realize the expected benefits of the Arrangement in respect of the operations and business of Harvest and Trulieve.

The termination amounts provided under the Arrangement Agreement may discourage other parties from attempting to acquire Harvest or Trulieve.

Under the Arrangement Agreement, Harvest is required to pay to Trulieve the Harvest Termination Fee of $100 million in the event the Arrangement Agreement is terminated in connection with entry into a Superior Proposal. The Harvest Termination Fee may discourage other parties from attempting to acquire Harvest Subordinate Voting Shares or otherwise make an Acquisition Proposal to Harvest, even if those parties would otherwise be willing to offer greater value to Harvest Shareholders than that offered by Trulieve under the Arrangement.

 

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The uncertainty surrounding the Arrangement could negatively impact Harvest’s current and future operations, financial condition and prospects.

As the Arrangement is dependent upon receipt, among other things, of the Required Regulatory Approvals and satisfaction of certain other conditions, its completion is uncertain. If the Arrangement is not completed for any reason, there are risks that the announcement of the Arrangement and the dedication of Harvest’s resources to the completion thereof could have a negative impact on its relationships with its stakeholders and could negatively impact current and future operations, financial condition and prospects of Harvest.

In addition, Harvest has, and will continue to, incur significant transaction expenses in connection with the Arrangement, regardless of whether the Arrangement is completed.

Restrictions during the pending Arrangement that prevent Harvest from pursuing business opportunities could have an adverse effect on Harvest.

Each of Harvest and Trulieve is subject to customary non-solicitation provisions under the Arrangement Agreement, pursuant to which, the Parties are restricted from soliciting, initiating or knowingly encouraging any Acquisition Proposal, among other things. The Arrangement Agreement also restricts them from taking specified actions until the Arrangement is completed without the consent of the other Party. These restrictions may prevent each Party from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement.

There can be no assurance that the value of the Trulieve Subordinate Voting Shares received by Harvest Shareholders will equal or exceed the value of the Harvest Shares prior to the Effective Date.

The Exchange Ratio will not increase or decrease due to fluctuations in the market price of Harvest Subordinate Voting Shares or Trulieve Subordinate Voting Shares; provided, the Exchange Ratio may potentially be adjusted downward upon the occurrence of certain permitted Harvest debt refinancings. The market price of Harvest Subordinate Voting Shares or Trulieve Subordinate Voting Shares could each fluctuate significantly prior to the Effective Date in response to various factors and events, including, without limitation, as a result of the differences between Harvest’s and Trulieve’s actual financial or operating results and those expected by investors and analysts, changes in analysts’ projections or recommendations, changes in general economic or market conditions, and broad market fluctuations. As a result of such fluctuations, historical market prices are not indicative of future market prices or the market value of the Trulieve Subordinate Voting Shares that holders of Harvest Shares will receive on the Effective Date. There can be no assurance that the market value of the Trulieve Subordinate Voting Shares that the holders of Harvest Shares will receive on the Effective Date will equal or exceed the market value of the Harvest Shares held by such Harvest Shareholders prior to the Effective Date. Similarly, there can be no assurance that the trading price of Trulieve Subordinate Voting Shares will not decline following the completion of the Arrangement.

The foregoing risks or other risks arising in connection with the failure of the Arrangement, including the diversion of management’s attention from conducting the business of Harvest, may negatively impact Harvest’s business operations, financial results and share price.

If the Arrangement is not approved by the Harvest Shareholders, or the Arrangement is otherwise not completed, then the market price for Harvest Subordinate Voting Shares may decline.

If the Arrangement is not approved by the Harvest Shareholders, or the Arrangement is otherwise not completed, then the market price of the Harvest Subordinate Voting Shares may decline to the extent that the current market price of the Harvest Subordinate Voting Shares reflects an assumption by the market that the Arrangement will be completed. If the Arrangement Resolution is not approved and the Harvest Board decides to seek another merger or Arrangement, there can be no assurance that it will be able to find a party willing to pay an equivalent or more attractive price than the value of the Trulieve Subordinate Voting Shares to be transferred pursuant to the Arrangement.

 

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Potential payments to Harvest Shareholders who exercise Dissent Rights could have an adverse effect on the Combined Company’s financial condition or prevent the completion of the Arrangement.

Harvest Shareholders have the right to exercise Dissent Rights and demand payment equal to the fair value of their Harvest Shares. If Dissent Rights are exercised in respect of a significant number of Harvest Shares, a substantial payment may be required to be made to such Harvest Shareholders, which could have an adverse effect on the Combined Company’s financial condition and cash resources. Further, Trulieve’s obligation to complete the Arrangement is conditional upon Harvest Shareholders holding no more than 5% of the outstanding Harvest Shares having exercised Dissent Rights. Accordingly, the Arrangement may not be completed if Harvest Shareholders exercise Dissent Rights in respect of more than 5% of the outstanding Harvest Shares.

Other than publicly-available information, Harvest has relied on information made available by Trulieve.

Other than publicly-available information, all historical information relating to Trulieve presented in this Circular, has been provided in exclusive reliance on the information made available by Trulieve and their respective Representatives. Although Harvest has no reason to doubt the accuracy or completeness of the information provided herein by Trulieve, any inaccuracy or omission in such information contained in this Circular could result in unanticipated liabilities or expenses, increase the cost of integrating the Combined Company or adversely affect the operational plans of the combined entities and its result of operations and financial condition at Trulieve and may negatively affect the price of Trulieve Shares.

The Harvest directors and executive officers have interests in the Arrangement that are different from those of the Harvest Shareholders.

In considering the recommendation of the Harvest Board to vote in favor of the Arrangement Resolution, Harvest Shareholders should be aware that certain members of the Harvest Board and management team have agreements or arrangements that provide them with interests in the Arrangement that differ from, or are in addition to, those of Harvest Shareholders generally. See “Interests of Directors and Officers of Harvest in the Arrangement.”

Another attractive take-over, merger or business combination may not be available if the Arrangement is not completed.

If the Arrangement is not completed and is terminated, there can be no assurance that Harvest will be able to find a party willing to pay equivalent or more attractive consideration than the Consideration to be provided by Trulieve under the Arrangement or be willing to proceed at all with a similar transaction or any alternative transaction.

While the Arrangement is pending, Harvest is restricted from taking certain actions.

The Arrangement Agreement restricts Harvest from taking certain specified actions until the Arrangement is completed without the consent of Trulieve. These restrictions may prevent Harvest from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement and could have an adverse effect on the business, operating results or prospects of Harvest.

Restrictions on Harvest’s ability to solicit acquisition proposals from other potential purchasers.

While the terms of the Arrangement Agreement permit Harvest to consider unsolicited Acquisition Proposals, the Arrangement Agreement restricts Harvest from soliciting third parties to make an Acquisition Proposal. See “The Arrangement Agreement and Related Agreements – Covenants Regarding Non-Solicitation.”

Harvest will incur costs even if the Arrangement is not completed and may have to pay the Harvest Termination Fee.

Certain costs related to the Arrangement, such as legal, accounting and certain financial advisor fees, must be paid by Harvest even if the Arrangement is not completed. Given Harvest’s current financial condition, there is no assurance that Harvest will have the funds to pay these costs which would adversely affect the share price of

 

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Harvest Shares. If the Arrangement Agreement is terminated, Harvest may be required in certain circumstances to pay Trulieve the Harvest Termination Fee.

Following completion of the Arrangement, Former Harvest Shareholders will not have the ability to significantly influence certain corporate actions of Trulieve.

Immediately following the completion of the Arrangement, Former Harvest Shareholders are expected to own approximately 26.7% of the Trulieve Shares on a fully diluted basis (as of May 10, 2021), based on the number of Trulieve Shares outstanding upon completion of the Arrangement and assuming that (i) there are no Dissenting Harvest Shareholders, (ii) there are no Harvest Options exercised prior to the Effective Time and (iii) there are no Harvest Warrants exercised prior to the Effective Time. Former Harvest Shareholders (other than Trulieve and any Dissenting Harvest Shareholders) will not be in a position to exercise significant influence over all matters requiring shareholder approval, including the election of directors, determination of significant corporate actions, amendments to Trulieve’s articles of incorporation and the approval of any business combinations, mergers or takeover attempts.

Risks associated with COVID-19 and disease outbreaks

A local, regional, national or international outbreak of a contagious disease, including the COVID-19 virus could, (i) delay or prevent the satisfaction of the conditions precedent to the completion of the Arrangement, including the receipt of required regulatory or third-party approvals, (ii) result in a reduction in the demand for, and prices of, Harvest’s and Trulieve’s products, (iii) cause shortages of employees to staff Harvest’s and Trulieve’s facilities, (iv) interrupt supplies from third parties upon which Harvest’s and Trulieve’s relies, (v) result in governmental regulation adversely impacting Harvest’s and Trulieve’s respective businesses, including restrictions to contain the virus being imposed which may restrict, among other things, movement of individuals or the operation of certain businesses, and (vi) otherwise have a negative effect on Harvest’s and Trulieve’s respective business, financial condition and results of operations. Such adverse effect could be rapid and unexpected.

Risks Related to the Combined Company

Harvest and Trulieve may not integrate successfully.

Harvest and Trulieve intend to integrate their operations together. However, operational and strategic decisions and staffing decisions have not yet been made. As a result, the Arrangement will present challenges to management, including the integration of management structures, operations, information technology and accounting systems and personnel of the two companies, and special risks, including possible unanticipated liabilities, unanticipated costs, diversion of management’s attention and the loss of key employees or customers. These decisions and the integration of Harvest’s and Trulieve’s operations may present challenges to management, including the integration of systems and personnel, and special risks, including possible unanticipated liabilities, unanticipated costs, and the loss of key employees.

The ability to realize the benefits of the Arrangement may depend in part on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as on the Combined Company’s ability to realize the anticipated growth opportunities and synergies, efficiencies and cost savings from integrating Harvest’s and Trulieve’s businesses following completion of the Arrangement. The performance of the Combined Company after completion of the Arrangement could be adversely affected if the Combined Company cannot retain key employees to assist in the ongoing operations. As a result of these factors, it is possible that the cost reductions and synergies expected will not be realized.

The difficulties that management of the Combined Company encounters in the transition and integration processes could have an adverse effect on the revenues, level of expenses and operating results of the Combined Company. The amount and timing of the synergies the Parties hope to realize may not occur as planned. As a result of these factors, it is possible that any anticipated benefits from the Arrangement will not be realized.

 

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The pro forma financial statements are presented for illustrative purposes only and may not be an indication of the Combined Company’s financial condition or results of operations following the Arrangement.

The pro forma financial statements contained in this Circular are presented for illustrative purposes only and may not be an indication of the Combined Company’s financial condition or results of operations following the Arrangement for a number of reasons. For example, the pro forma financial statements have been derived from the historical financial statements of Harvest and certain adjustments and assumptions have been made regarding the Combined Company after giving effect to the Arrangement. The information upon which these adjustments and assumptions have been made is preliminary, and these types of adjustments and assumptions are difficult to make with complete accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the Combined Company in connection with the Arrangement. For example, the impact of any incremental costs incurred in integrating Harvest and Trulieve is not reflected in the pro forma financial statements. As a result, the actual financial condition and results of operations of the Combined Company following the Arrangement may not be consistent with, or evident from, these pro forma financial statements. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the Combined Company’s financial condition or results of operations following the Arrangement. Any potential decline in the Combined Company’s financial condition or results of operations may cause a significant decrease in the share price of Trulieve.

The issuance and future sale of Trulieve Subordinate Voting Shares could affect the market price for Trulieve Subordinate Voting Shares.

Based on number of outstanding Harvest Shares as of                 , 2021, Trulieve currently expects to issue and make available for issuance at the Effective Time an aggregate of                  Trulieve Subordinate Voting Shares. The issuance of these shares, and the sale of Trulieve Subordinate Voting Shares in the public market from time to time, could depress the market price for Trulieve Subordinate Voting Shares.

It may be challenging for the Combined Company to service additional indebtedness incurred.

The Combined Company may be required to draw down or incur additional indebtedness under its credit facilities or other sources of debt financing. The additional indebtedness will increase the interest payable by the Combined Company from time to time until such amounts are repaid, which will represent an increase in the Combined Company’s cost and a potential reduction in its income. In addition, the Combined Company may need to find additional sources of financing to repay this amount when it becomes due, which could have an adverse effect on the Combined Company.

Enforcement of rights against the Combined Company in Canada may not be possible.

Trulieve is located outside Canada and certain of its directors, officers and experts are expected to continue to reside outside of Canada. Accordingly, it may not be possible for shareholders to effect service of process within Canada upon the Combined Company or the majority of its directors, officers or experts, or to enforce judgments obtained in Canadian courts against the Combined Company or certain of its directors, officers or experts.

Cannabis remains illegal under US federal law

Harvest and Trulieve currently engage in the cannabis industry in the United States, both directly and indirectly, where local and state laws permit such activities. However, cannabis is a Schedule I controlled substance pursuant to the United States Controlled Substances Act and is illegal under U.S. federal law. Even in those states in which the use of cannabis has been legalized, the manufacturing, distributing, selling and possessing cannabis remains a violation of federal law. Since federal law criminalizing the use of cannabis pre-empts state laws that legalize its use, strict enforcement of federal law regarding cannabis would harm each of Harvest’s and Trulieve’s respective businesses, prospects, results of operations, and financial condition. The business activities of Harvest and Trulieve, while believed to be compliant with applicable state and local U.S. law, are illegal under U.S. federal law.

 

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Harvest and Trulieve are subject to a number of other risks relating to the cannabis industry in the United States and the laws and regulations applicable thereto.

To the extent the Combined Company is not able to be competitive, such inability could adversely affect the Combined Company’s results.

The Combined Company expects significant competition from other companies. Some of these companies may have significantly greater financial, technical, marketing and other resources than the Combined Company, may be able to devote greater resources to the development, promotion, sale and support of their products and services, and may have more extensive customer bases and broader customer relationships. The Combined Company’s future success depends upon its ability to achieve competitive per unit costs through increased production and on its ability to produce and sell higher margin products. To the extent that the Combined Company is not able to produce its products at competitive prices or consumers prioritize established low margin products over innovative, higher margin products, the Combined Company’s business, financial condition and results of operations could be materially and adversely affected.

Should the size of the cannabis market increase as projected, the overall demand for products and number of competitors will increase as well, and in order for the Combined Company to be competitive it will need to invest significantly in research and development, market development, marketing, production expansion, new client identification, distribution channels and client support. If the Combined Company is not successful in obtaining sufficient resources to invest in these areas, the Combined Company’s ability to compete in the market may be adversely affected, which could materially and adversely affect the Combined Company’s business, financial condition, results of operations and prospects.

Any ability to secure necessary supplies and services from third-party suppliers, manufacturers and contractors could have a material adverse impact on the Combined Company’s business.

The Combined Company intends to maintain a full supply chain for the provision of products and services to the regulated cannabis industry. Due to the variability surrounding the regulation of cannabis in the U.S., the Combined Company’s third-party suppliers, manufacturers and contractors may elect, at any time, to decline or withdraw services necessary for the Combined Company’s operations. Loss of these suppliers, manufacturers and contractors, including for non-cannabis based products coming from the U.S., may have an adverse effect on the Combined Company’s business, financial condition, results of operations and prospects.

In addition, any significant interruption, negative change in the availability or economics of the supply chain or increase in the prices for the products or services provided by any such third party suppliers, manufacturers and contractors could materially impact the Combined Company’s business, financial condition, results of operations and prospects. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the Combined Company’s business, financial condition, results of operations and prospects.

U.S. state and local regulation of cannabis is uncertain and changing.

There is no assurance that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. If the U.S. federal government begins to enforce U.S. federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing state laws are repealed or curtailed, the Combined Company’s business or operations in those states or under those laws would be materially and adversely affected. Federal actions against any individual or entity engaged in the cannabis industry or a substantial repeal of cannabis related legislation could materially adversely affect the Combined Company, its business and its assets or investments.

The rulemaking process at the state level that applies to cannabis operators in any state will be ongoing and result in frequent changes. As a result, a compliance program is essential to manage regulatory risk. Notwithstanding

 

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the Combined Company’s efforts and diligence, regulatory compliance and the process of obtaining regulatory approvals can be costly and time-consuming. No assurance can be given that the Combined Company will receive the requisite licenses, permits or cards to continue operating its business.

In addition, local laws and ordinances could restrict the Combined Company’s business activity. Although the Combined Company’s operations are legal under the laws of the states in which it will operate, local governments have the ability to limit, restrict and ban cannabis businesses from operating within their jurisdiction. Land use, zoning, local ordinances and similar laws could be adopted or changed and have a material adverse effect on the Combined Company’s business.

Multiple states where medical and/or adult use cannabis is legal have or are considering special taxes or fees on businesses in the marijuana industry. It is uncertain at this time whether other states are in the process of reviewing such additional taxes and fees. The implementation of special taxes or fees could have a material adverse effect upon the Combined Company’s business, prospects, revenue, results of operation and financial condition.

Risk Factors Related to the Operations of Trulieve

Whether or not the Arrangement is completed, Trulieve will continue to face many of the risks that it currently faces with respect to its business and affairs. Certain of these risk factors have been disclosed in Trulieve’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2020 filed with the SEC on EDGAR and with certain Canadian securities regulators on SEDAR.

Risk Factors Related to the Operations of Harvest

Whether or not the Arrangement is completed, Harvest will continue to face many of the risks that it currently faces with respect to its business and affairs. Certain of these risk factors have been disclosed in Harvest’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2020 filed with the SEC on EDGAR and with certain Canadian securities regulators on SEDAR.

Risks Related to Taxes

If the Arrangement does not qualify as a “reorganization” under Section 368(a) of the Code, U.S. Holders may be required to pay substantial U.S. federal income taxes

The Arrangement is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and Harvest and Trulieve intend to report the Arrangement consistent with such qualification. If the IRS or a court determines that the Arrangement should not be treated as a “reorganization” within the meaning of Section 368(a) of the Code, a U.S. Holder of Harvest Shares would generally recognize taxable gain or loss upon the exchange of Harvest Shares for Trulieve Subordinate Voting Shares pursuant to the Arrangement. See the discussion under the heading “Certain U.S. Federal Income Tax Considerations” below.

 

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GENERAL INFORMATION ABOUT THE MEETING AND VOTING

This Circular is being provided to Harvest Shareholders as part of a solicitation of proxies by the Harvest Board for use at the Meeting to be held at the time and place specified below and at any properly convened meeting following an adjournment or postponement thereof. This Circular provides Harvest Shareholders with information they need to know to be able to vote or instruct their vote to be cast at the Meeting.

Date, Time and Place

The Meeting will be held online via live webcast on                 , 2021 at                  Eastern Time. There will be no physical location for Harvest Shareholders to attend. Harvest Shareholders may only participate by logging in at https://web.lumiagm.com/208164211, where you will be able to attend the Meeting via live webcast. Online check-in will begin at                  Eastern Time, and you are encouraged to allow ample time for the online check-in procedures. Harvest intends to mail this Circular and the enclosed form of proxy to the Harvest Shareholders entitled to vote at the Meeting on or about                 , 2021.

Purpose of the Meeting

The Meeting is being called for the following purposes:

 

1.

to consider and, if thought advisable, to pass a special resolution (the “Arrangement Resolution”), the full text of which is set forth in Appendix “E” to the accompanying Circular, the Arrangement under Division 5 of Part 9 of the BCBCA pursuant to which, among other things, Trulieve will acquire all of the issued and outstanding Harvest Shares, all as more particularly described in this Circular, including in the section entitled “The Arrangement Agreement and Related Agreements” beginning on page 95 of this Circular;

 

2.

to fix the number of directors for the ensuing year at six, subject to such increases as may be permitted by the Articles of Harvest;

 

3.

to elect the nominees proposed by management of Harvest as directors of Harvest for the ensuing year (or, if the Arrangement Resolution is approved and the Arrangement is completed, for the period up to the Effective Time of the Arrangement);

 

4.

to receive the audited consolidated financial statements of Harvest for the year ended December 31, 2020 and the report of the auditors thereon and the unaudited consolidated financial statements of Harvest for the three months ended March 31, 2021;

 

5.

to appoint Haynie & Company, LLC as the auditors of Harvest for the ensuing year and to authorize the Harvest Board to fix their remuneration; and

 

6.

to transact such further or other business as may properly come before the Meeting or any adjournments or postponements thereof.

Recommendation of the Harvest Board

The Harvest Board unanimously recommends that Harvest Shareholders vote “FOR” the Arrangement Resolution in Proposal 1, “FOR” the setting of the number of directors at six in Proposal 2, “FOR” the re-election of the nominees in Proposal 3 and “FOR” the appointment and remuneration of auditors in Proposal 4.

Record Date

The record date for determining the Harvest Shareholders entitled to receive notice of and vote at the Meeting is the close of business on                 , 2021 (the “Record Date”). Only Harvest Shareholders whose names have been entered in the register of Harvest Shareholders as of the close of business on the Record Date are entitled to

 

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receive notice of and to vote at the Meeting. The number of Subordinate Voting Shares outstanding and entitled to vote at the Meeting is                 . Harvest Subordinate Voting Shares are entitled to one vote per share. The number of Harvest Multiple Voting Shares outstanding and entitled to vote at the Meeting is                 . Harvest Multiple Voting Shares are entitled to 100 votes per share. The number of Harvest Super Voting outstanding and entitled to vote at the Meeting is                 . Harvest Super Voting Shares are entitled to 200 votes per share.

Solicitation of Proxies

This Circular is furnished by management of Harvest in connection with the solicitation of proxies for use at the Meeting to be held virtually at https://web.lumiagm.com/208164211 on                 , 2021 at                  Eastern Time, and at any postponements or adjournments of the Meeting.

The solicitation of proxies by this Circular is being made by or on behalf of Harvest’s management. It is expected that the solicitation will be made primarily by mail, but proxies may also be solicited by telephone, over the Internet or in writing. In addition, Harvest has retained the services of Equiniti (US) Services LLC to solicit proxies for a fee of approximately $10,000, and Harvest has also agreed to reimburse out-of-pocket expenses of $1,500 and Harvest has also agreed to reimburse certain out-of-pocket expenses and to indemnify it against certain liabilities arising out of or in connection with such engagement. The cost of the solicitation will be borne by Harvest.

Quorum

Subject to the special rights and restrictions attached to the Shares of any class or series of Shares, the quorum for the transaction of business at a meeting of Harvest Shareholders is one person who is, or who represents by proxy, one or more Harvest Shareholders who, in the aggregate, hold at least 5% of the issued Shares entitled to be voted at the meeting as of the Record Date.

Required Vote

 

No.		Proposal		Votes Necessary
1.		Arrangement Resolution Proposal		Approval requires the affirmative vote of 66 2/3% of votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Arrangement Resolution Proposal.
2.		Setting the Number of Directors		Approval requires the affirmative vote of a majority of the votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Setting the Number of Directors Proposal.
3.		Director Election Proposal		Approval requires the affirmative vote of a majority of the votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Director Election Proposal.

 

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No.		Proposal		Votes Necessary
4.		Auditor Proposal		Approval requires the affirmative vote of a majority of the votes cast by the holders of Harvest Shares present in person or represented by proxy and entitled to vote at the Meeting, voting together as a single class.   Abstentions and broker non-votes will not be counted as votes cast and will not affect the voting results of the Auditor Proposal.

Persons Entitled to Vote

If you were a Registered Harvest Shareholder as of the close of business on the Record Date, you are entitled to attend the Meeting and cast that number of votes attaching to each Harvest Share registered in your name on all resolutions put before the Meeting. If Harvest Shares are registered in the name of a corporation, a duly authorized officer of the corporation may attend on its behalf, but documentation indicating such officer’s authority should be presented at the Meeting. If you are a Registered Harvest Shareholder but do not wish to, or cannot, attend the Meeting you can appoint someone who will attend the Meeting and act as your proxyholder to vote in accordance with your instructions. If your Harvest Shares are registered in the name of a “nominee” (usually a bank, trust company, securities dealer or other financial institution) you should refer to the section entitled “Beneficial Shareholders” set out below.

It is important that your Harvest Shares be represented at the Meeting regardless of the number of Harvest Shares you hold. If you will not be attending the Meeting, we invite you to complete, date, sign and return your form of proxy or voting instruction form as soon as possible so that your Harvest Shares will be represented.

Beneficial Shareholders

If your Harvest Shares are not registered in your own name, they will be held in the name of a “nominee,” usually a bank, trust company, securities dealer or other financial institution (“Intermediary”) and, as such, your nominee will be the entity legally entitled to vote your Harvest Shares and must seek your instructions as to how to vote your Harvest Shares.

Accordingly, Non-Registered Harvest Shareholder who have not waived the right to receive the Notice of Meeting, Circular, and form of proxy will typically either:

 

(a)

be given a voting instruction form which is not signed by the Intermediary and which, when properly completed and signed by the Non-Registered Harvest Shareholder and returned to the Intermediary or its service company, will constitute voting instructions (often called a “VIF”) which the Intermediary must follow. Typically, the VIF will consist of a one-page pre-printed form. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”) in Canada and in the United States. Broadridge typically prepares a machine readable VIF, mails those forms to Non-Registered Harvest Shareholder and asks Non-Registered Harvest Shareholder to return the forms to Broadridge or otherwise communicate voting instructions to Broadridge (by way of the Internet or telephone, for example). Additionally, Harvest may utilize Broadridge’s QuickVoteTM service to assist eligible Harvest Shareholders with voting their shares directly over the phone. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of the Shares to be represented at the Meeting. Sometimes, instead of the one-page pre-printed form, the VIF will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label with a bar-code and other information. In order for this form of proxy to validly constitute a voting instruction form, the Non-Registered Harvest Shareholder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and submit it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company; or

 

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(b)

be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of Shares beneficially owned by the Non-Registered Harvest Shareholder but which is otherwise not completed by the Intermediary. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Harvest Shareholder when submitting the proxy. In this case, the Non-Registered Harvest Shareholder who wishes to submit a proxy should properly complete the form of proxy and deposit it with Odyssey.

In either case, the purpose of these procedures is to permit Non-Registered Harvest Shareholder to direct the voting of their Harvest Shares. Should a Non-Registered Harvest Shareholder who receives either a voting instruction form or a form of proxy wish to attend the Meeting and vote (or have another person attend and vote on behalf of the Non-Registered Harvest Shareholder), the Non-Registered Harvest Shareholder should strike out the names of the persons named in the form of proxy and insert the Non-Registered Harvest Shareholder’s (or such other person’s) name in the blank space provided or, in the case of a voting instruction form, follow the directions indicated on the form. In either case, Non-Registered Harvest Shareholder should carefully follow the instructions of their Intermediaries and their service companies, including those regarding when and where the voting instruction form or the proxy is to be delivered.

The Notice of Meeting and this Circular are being sent to both Registered Harvest Shareholders and Non-Registered Harvest Shareholders of Harvest Shares and to non-objecting beneficial owners under NI 54-101. Management of Harvest does not intend to pay for Intermediaries to forward to objecting beneficial owners under NI 54-101 the proxy-related materials and Form 54-101F7—Request for Voting Instructions Made by Intermediary to objecting Non-Registered Harvest Shareholders, so that an objecting beneficial owner will not receive the materials unless the objecting beneficial owner’s Intermediary assumes the cost of delivery. Please carefully review and return your voting instructions as specified in the request for voting instructions form or form of proxy.

If you have any questions or require more information with respect to voting your Harvest Shares at the Meeting, please contact Odyssey by telephone at 1-888-290-1175 or by e-mail at https://odysseytrust.com/Transfer-Agent/Contact.

Solicitation of Proxies

Whether or not you plan to attend the Meeting, management of Harvest, with the support of the Harvest Board, requests that you fill out your form of proxy or proxies to ensure your votes are cast at the Meeting. This solicitation of your proxy or proxies (your vote) is made on behalf of management of Harvest. The cost of this solicitation will be borne by Harvest.

It is expected that the solicitation of proxies will be made primarily by mail, but proxies may also be solicited personally or by telephone, email, internet, facsimile transmission or other electronic or other means of communication by directors, officers, employees, agents or other Representatives of Harvest.

What is a Proxy?

A form of proxy is a document that authorizes someone to attend the Meeting and cast your votes for you. We have enclosed a form of proxy with this Circular. You should use it to appoint a proxyholder, although you can also use any other legal form of proxy.

Revocation of Proxies

If you want to revoke your proxy after you have delivered it, you can do so at any time before it is used. You may do this by (a) attending the Meeting and voting if you were a Registered Harvest Shareholder at the Record

 

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Date; (b) signing a proxy bearing a later date and depositing it in the manner and within the time described above under the heading “Appointment of Proxies”; (c) signing a written statement which indicates, clearly, that you want to revoke your proxy and delivering this signed written statement to the registered office of Harvest at 1155 W. Rio Salado Parkway, Suite 201, Tempe, Arizona 85281; or (d) in any other manner permitted by law.

Appointing a Proxyholder

The persons named in the enclosed form of proxy are directors and officers of Harvest. A Harvest Shareholder who wishes to appoint some other person to represent such Harvest Shareholder at the Meeting may do so by crossing out the name on the form of proxy and inserting the name of the person proposed in the blank space provided in the enclosed form of proxy. Such other person need not be a Harvest Shareholder. To vote your Harvest Shares, your proxyholder must attend the Meeting. If you do not fill a name in the blank space in the enclosed form of proxy, the persons named in the form of proxy are appointed to act as your proxyholder.

Voting Support and Lock-Up Agreements

On May 10, 2021, concurrently with the execution of the Arrangement Agreement, Trulieve entered into Harvest Voting Support Agreements and Harvest Voting Support and Lock-Up Agreements with certain Harvest Shareholders. Such Harvest Shareholders beneficially own, directly or indirectly, or exercise voting control or direction over, in the aggregate, more than 55% of the outstanding Harvest Shares as at the date of this Circular and have agreed, subject to the terms of the Harvest Voting Support Agreements and Harvest Voting Support and Lock-Up Agreements, as applicable, to, inter alia, vote their Harvest Shares in favor of the Arrangement Resolution and any other matters necessary for the consummation of the Arrangement.

In addition, the Harvest Shareholders that entered into the Harvest Voting Support and Lock-Up Agreements, agreed to restrictions on the transfer of the Harvest Shares held by such Harvest Shareholders prior to the Effective Time and the Trulieve Shares received as consideration for such Harvest Shareholder’s Harvest Shares. Further, such Harvest Shareholders agreed that any of their Harvest Shares which are subject to existing lock-up agreements will continue to be subject to such transfer restrictions pursuant to the existing lock-up agreements, and any Trulieve Shares received at the Effective Time in exchange for such locked-up Harvest Shares will be subject to the existing lock-up agreements.

The foregoing is a summary of the principal terms of the Harvest Voting Support Agreements and the Harvest Voting Support and Lock-Up Agreements. This summary does not purport to be complete and is qualified in its entirety by the complete text of the Harvest Voting Support Agreement and the Harvest Voting Support and Lock-Up Agreement, copies of the form of each being available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Dissenting Harvest Shareholders’ Rights

Under the provisions of the Plan of Arrangement, the Interim Order and the BCBCA, Registered Harvest Shareholders will have the right to dissent with respect to the Arrangement Resolution, as further described in this Circular. If the Arrangement becomes effective, any Registered Harvest Shareholder as of the Record Date that dissents and complies with the applicable provisions of the BCBCA as amended or supplemented by the Plan of Arrangement, the Interim Order and any other order of the Court will be entitled to be paid the fair value of such shareholder’s Harvest Shares by Harvest. This right to dissent is described in this Circular, in the Plan of Arrangement which is attached to this Circular as Appendix “C” and in Sections 237 to 247 of the BCBCA, a copy of which is attached to this Circular as Appendix “I.” If you are a Registered Harvest Shareholder and wish to dissent in respect of the Arrangement Resolution, you must provide a written dissent notice containing the information set out in section 242 of the BCBCA, as described in this Circular, to Harvest by writing to Harvest at 1155 W. Rio Salado Parkway, Suite 201, Tempe, Arizona 85281, Attention: Nicole Stanton, Vice President, General Counsel and Corporate Secretary (email: harvestlegalmatters@harvestinc.com), not later than 4:00 p.m.

 

49

(Vancouver Time) on the date that is two Business Days immediately prior to the Meeting or any date to which the Meeting may be postponed or adjourned. If you do not strictly comply with this requirement and the requirements of the BCBCA as amended or supplemented by the Plan of Arrangement, the Interim Order and any other order of the Court, you could lose your right to dissent.

 

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DESCRIPTION OF THE ARRANGEMENT

PROPOSAL 1: ARRANGEMENT RESOLUTION

Recommendation of the Harvest Board

The Harvest Board, after careful consideration, consultation with its legal and financial advisors and reviewing the Moelis Fairness Opinion, and following the receipt and review of a unanimous recommendation of the Harvest Special Committee, believes that the Arrangement is in the best interest of Harvest and is fair to the Harvest Shareholders. The Harvest Board unanimously recommends that Harvest Shareholders vote “FOR” the Arrangement Resolution.

Recommendation of the Harvest Special Committee

The Harvest Special Committee, after consultation with Harvest management and receipt of advice and assistance of its and Harvest’s financial and legal advisors and after careful consideration of a number of alternatives and factors, including, among others, the Haywood Fairness Opinion and the factors set out below under the heading “Harvest’s Reasons for the Arrangement,” unanimously determined that the Arrangement and entry into the Arrangement Agreement and related agreements are in the best interests of Harvest and the Harvest Shareholders and unanimously determined to recommend to the Harvest Board that it approve and authorize Harvest to enter into the Arrangement Agreement and related agreements. The Harvest Special Committee unanimously recommends that Harvest Shareholders vote “FOR” the Arrangement Resolution.

Background to the Arrangement

The execution of the Arrangement Agreement is the result of extensive arm’s length negotiations among representatives of Harvest and Trulieve and their respective legal and financial advisors. The following is a summary of the material events which led to the negotiations of the Arrangement Agreement and the meetings, negotiations, discussions and actions between the parties that preceded the execution and public announcement of the Arrangement Agreement.

The management teams of each of Harvest and Trulieve regularly consider and investigate opportunities to enhance value for their respective shareholders, including monitoring the activities and assets of various industry participants in order to identify possible strategic transactions. Accordingly, each of Harvest and Trulieve had general knowledge of each other’s operations and assets. There was no pre-existing relationship between Harvest and Trulieve.

Harvest did not conduct a formal sales process but has been in active dialogue with a variety of potential counterparties from time to time with respect to a range of possible value enhancing transactions, including financings, acquisitions or mergers with Harvest. In connection with such discussions, Harvest entered into, or proposed to enter into, confidentiality agreements with each such counterparty and maintained a data room to provide access to due diligence information to such parties on a confidential basis. Several advanced-stage discussions, including potential financings and acquisition proposals, were considered from time to time; however, other than as previously disclosed to the market, none ultimately resulted in binding transaction terms.

The CEOs of Trulieve and Harvest have known each other since appearing on an industry panel in 2018. They have exchanged ideas and share a philosophy that profitability metrics are crucial to the health of their respective businesses. As Harvest expanded its operations, it studied a number of competitors, including Trulieve’s Florida business, as models for market penetration. 

In early December 2020, the CEO of Trulieve telephoned the CEO of Harvest. They discussed the prospects for initiating a process to consider a possible transaction between their companies. The CEO of Harvest advised that discussions were ongoing on refinancing proposals and at some point that refinancing may become a higher priority for Harvest than any discussions between their two companies. The CEOs agreed that their respective organizations should negotiate a confidentiality agreement to facilitate further discussions.

 

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Harvest provided a form of confidentiality agreement to Trulieve. Once comments from Trulieve had been considered, the parties agreed to an appropriate form of confidentiality agreement.

On December 3, 2020, Harvest and Trulieve entered into a confidentiality agreement setting out the terms under which Harvest and Trulieve might engage in discussions or the exchange of confidential information.

Once the confidentiality agreement was in place, the CEOs continued discussions. Following discussions on December 10, 2020, the CEO and CFO of each of Harvest and Trulieve met by video conference to present and discuss models for their businesses. Harvest provided its model to the CFO of Trulieve before Christmas of 2020.

The CFO of Harvest and two accounting staff members met with the CFO and accounting staff of Trulieve and Canaccord Genuity Corp. (“Canaccord”), Trulieve’s financial advisor, on January 6, 2021. On January 7, 2021, the CEOs of each of Harvest and Trulieve discussed high level business issues that Harvest considered gating items to further discussions.

On January 8, 2021, Trulieve presented a draft letter of intent to Harvest. Between January 8 and January 11, 2021, the CEO of each of Trulieve and Harvest discussed the draft letter of intent with a focus on considering the refinancing opportunities for Harvest.

On January 11, 2021, Trulieve sent Harvest a revised draft of a preliminary letter of intent outlining its initial proposal. Discussions and due diligence investigations ensued between the senior management teams of Harvest and Trulieve. Certain of the directors and advisors to the Harvest Board became engaged in these discussions. Harvest management, with the authorization of the Harvest Board, continued throughout this period to pursue discussions with a number of other potential merger candidates and targets, and to evaluate refinancing sources.

On January 13, 2021, the Harvest Board met and, among other things, discussed the refinancing and potential opportunities to engage in a merger transaction. The Harvest Board noted receipt of the draft letter of intent from Trulieve and authorized Harvest management to respond to the draft terms.

The CEOs of Harvest and Trulieve appeared at an industry conference on January 14, 2021. Discussions continued that day between the CEOs. In mid-January 2021, Harvest was preoccupied with internal planning and marketing relating to the commencement of recreational sales of cannabis in Arizona, which began on January 22, 2021. The CEOs of the two parties discussed implementation of this business change.

On January 22, 2021, the CEO and CFO of Harvest briefed Dan Reiner and Scott Atkison in relation to the letter of intent and commercial issues between Harvest and Trulieve.

On January 25 and 26, 2021, the CEO of Harvest and the CEO of Trulieve continued discussions regarding face-to-face negotiations of key commercial terms.

On February 3, 2021, Harvest provided Trulieve with financial analysis suggesting amending the initial proposal price.

On February 8, 2021, Trulieve responded with financial analysis outlining certain concerns with Harvest’s February 3, 2021 financial analysis. Representatives of Harvest, including the CEO, CFO and Scott Atkison, Trulieve and Canaccord held discussions regarding comments on the financial analysis prepared by Harvest. Following this meeting, Harvest continued to refine its financial analysis.

On February 17, 2021, Harvest provided additional financial analysis supporting a proposed amendment to the initial proposal.

On February 23, 2021, members of Trulieve and Harvest’s management teams met in Chicago to discuss the initial proposal and the amendments proposed thereto. At this meeting, Trulieve provided Harvest with additional financial analysis supporting a revised proposal.

 

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On February 23 and 24, 2021, Harvest’s CEO met with representatives of another potential merger partner (“Company A”) to discuss a potential transaction between the two companies, as well as management and corporate philosophy.

On February 26, 2021, Harvest received correspondence from Trulieve setting out a revised non-binding proposal letter (the “Proposal Letter”). The Proposal Letter set out non-binding transaction terms, including a proposed merger by way of a share exchange of securities of Trulieve for securities of Harvest, and was subject to, among other things, due diligence investigations, negotiation of transaction documentation, shareholder support, confidentiality and a proposed 45-day exclusivity period.

On March 1, 2021, the Harvest Board, the Harvest CFO and the Harvest VP Legal and General Counsel met, together with Special Advisor Dan Reiner to discuss the Proposal Letter. Harvest’s CEO provided an overview of the Proposal Letter to the Harvest Board and an update on his discussions with Company A. The Harvest Board discussed the two proposals in detail and reviewed, among other things, the financial position of Harvest, the business model of each business, certain performance metrics and implied offer transaction metrics, and it was determined that the Proposal Letter from Trulieve offered enhanced value for Harvest Shareholders relative to a proposed combination with Company A. The Harvest Board instructed Harvest’s CEO, subject to negotiation of certain additional protections and terms for Harvest, to continue negotiations with Trulieve on the Proposal Letter. Representatives of Harvest and Trulieve continued to negotiate the terms of the Proposal Letter.

On March 7, 2021, Harvest entered into the Proposal Letter with Trulieve.

On March 11, 2021, DLA Piper (Canada) LLP (“DLA Piper”), Canadian counsel to Trulieve, provided Harvest’s counsel with an initial draft of the proposed Arrangement Agreement. Throughout the following weeks, representatives and legal advisors of Harvest and Trulieve continued their due diligence investigations, exchanged drafts and negotiated the terms of the Arrangement Agreement, the Plan of Arrangement and the forms of Harvest Voting Support Agreements or Harvest Voting Support and Lock-Up Agreements.

On March 12, 2021, the Harvest Board met and received and considered, among other things, an update on discussions with Trulieve. The Harvest Board determined to continue these discussions in a further meeting to, among other things, consider the formation of any committees and appointment of outside advisors to assist with the potential transaction.

On March 14, 2021, the Harvest Board met with representatives of Harvest management, Harvest’s U.S. legal counsel, Troutman Pepper Hamilton Sanders LLP (“Troutman”), and Canadian legal counsel, Bennett Jones LLP (“Bennett Jones”). The Harvest Board received an update from Harvest management on discussions with Trulieve and the Proposal Letter and a briefing from Bennett Jones in relation to the fiduciary duties of directors in considering and evaluating a material transaction. The Harvest Board authorized the formation of the Harvest Special Committee consisting entirely of independent directors including Mark N. Barnard, as Chair of the Harvest Special Committee, together with Eula L. Adams, Michael Scott Atkison and Ana Dutra. The mandate of the Harvest Special Committee included the review and analysis of the Trulieve Proposal Letter, the engagement of advisors to assist in this work and the consideration of alternatives to the proposal and making any recommendations in relation thereto to the Harvest Board. The Harvest Board received an update regarding potential financial advisors to Harvest in connection with the transaction and authorized engagement with Moelis as financial advisor to Harvest to determine if terms for a financial advisory engagement could be arrived at.

Between March 16 and March 26, 2021, representatives of Harvest and Trulieve conducted reciprocal site visits to review certain of the assets and operations in Arizona and Florida. Following the site visits, the parties continued with their initial due diligence investigations, including completing due diligence reviews of business operations and assets, and continued to discuss the merits and terms of a potential transaction.

On March 29, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones and Moelis. The Harvest Special Committee received a briefing from representatives of Moelis,

 

53

including transaction metrics, due diligence, site visits, and a general transaction timeline. The Harvest Special Committee received a briefing on the draft form of Arrangement Agreement.

Between March 29, 2021 and May 9, 2021, representatives of Harvest and Trulieve and their advisors met frequently via telephone and video conference as a group and individually to review due diligence inquiries and findings, negotiate the representations and warranties of each party and negotiate the form of the Arrangement Agreement.

Between March 31, 2021 and April 2, 2021, representatives of Harvest and Trulieve conducted site visits to review certain of the assets and operations of Harvest in Pennsylvania and Maryland.

Between March 29, 2021 and May 9, 2021, representatives of Harvest and Trulieve and their advisors met frequently via telephone and video conference as a group and individually to review due diligence inquiries and findings, negotiate the representations and warranties of each party and negotiate the form of the Arrangement Agreement.

On April 5, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones and Moelis. The Harvest Special Committee received a briefing from Moelis in relation to transaction considerations, financing scenarios, due diligence and transaction work streams. The Harvest Special Committee discussed the status of negotiations of the proposed transaction terms with Harvest management. Bennett Jones and Troutman discussed the status of legal due diligence, the draft Arrangement Agreement, and representations and warranties contained therein with the Harvest Special Committee.

On April 12, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones, and Moelis. The Harvest Special Committee received a briefing from Moelis in connection with transaction considerations and work streams. The Harvest Special Committee discussed the status of negotiations with Harvest management, Troutman and Bennett Jones.

On April 14, 2021, Harvest entered into a formal engagement letter with Moelis in connection with the provision of financial advisory services to Harvest in connection with the proposed transaction with Trulieve.

On April 19, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones, and Moelis. The Harvest Special Committee received a briefing from Moelis in relation to transaction metrics and transaction work streams. The Harvest Special Committee discussed the status of negotiations of the proposed transaction terms with Harvest management. Bennett Jones and Troutman discussed the status of legal due diligence, the draft Arrangement Agreement, and representations and warranties contained therein with the Harvest Special Committee. The Harvest Special Committee authorized entering into of an extension of the exclusivity period under the Proposal Letter, subject to reconfirming certain transaction expectations.

On April 21, 2021, Harvest and Trulieve entered into an amendment to the Proposal Letter which, among other things, but not including material transaction terms, provided for an extension of the exclusivity period through May 5, 2021.

On April 26, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones, and Moelis. The Harvest Special Committee received a presentation from Moelis regarding transaction metrics, due diligence and the financial rationale for the transaction. Harvest management and the Harvest Special Committee reviewed financial modeling and diligence, and the status of discussions regarding the transaction. The Harvest Special Committee reviewed the status of diligence and draft transaction documentation with Bennett Jones and Troutman. The Harvest Special Committee authorized the retainer of a second financial advisor for the purpose of providing a fairness opinion independent of a success fee and other considerations.

On April 30, 2021, the Harvest Special Committee entered into a formal engagement letter with Haywood in connection with a fairness opinion in relation to the transaction. Haywood was provided with access to due

 

54

diligence and draft transaction documentation in order to assist it in preparing to provide an opinion to the Harvest Special Committee.

On May 3, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones, and Moelis. The Harvest Special Committee received a presentation from Moelis regarding the transaction. Harvest management, the Harvest Special Committee, Troutman and Bennett Jones discussed remaining transaction diligence and negotiation points.

On May 5, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones, and Moelis. The Harvest Special Committee received a presentation from Moelis regarding the proposed exchange ratio adjustment mechanism in relation to interim financing. Harvest management, the Harvest Special Committee, Bennett Jones and Troutman discussed the remaining transaction diligence and negotiation points. The Harvest Special Committee authorized a further extension of the exclusivity period under the Proposal Letter.

On May 6, 2021, the Harvest Special Committee met with representatives of Harvest management, Troutman, Bennett Jones, and Moelis. The Harvest Special Committee considered outstanding transaction terms with input from Harvest’s advisors and Harvest management.

On May 7, 2021, Harvest and Trulieve entered into a further amendment to the Proposal Letter which, among other things, but not including material transaction terms, provided for an extension of the exclusivity period through May 10, 2021.

On May 9, 2021, the Harvest Special Committee held a meeting, which was attended, at the invitation of the Harvest Special Committee, by all directors of the Harvest Board, representatives of Harvest management, Bennett Jones, Troutman, representatives of Haywood, and representatives of Moelis to consider the terms of the Arrangement Agreement. At this meeting, Moelis provided an updated presentation to the Harvest Special Committee describing the Arrangement, the work undertaken by Moelis, pertinent aspects of the parties to the Arrangement and outlining Moelis’ approach to assessing fairness, analyses performed, and other transaction considerations, as well as the overall scope of review. Following discussion on the presentation, Moelis delivered its oral opinion to the Harvest Board that, as of May 9, 2021 and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis Fairness Opinion the Exchange Ratio in respect of the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). The members of the Harvest Board were given the opportunity to ask Moelis, Bennett Jones and Troutman questions. Representatives of Moelis were excused from the meeting and representatives of Haywood joined the meeting. Representatives of Haywood provided a presentation to the Harvest Special Committee describing the Arrangement, the work undertaken by of Haywood, pertinent aspects of the parties to the Arrangement and outlining Haywood’s approach to assessing fairness, analyses performed, and other transaction considerations, as well as the overall scope of review. Following discussion on the presentation, Haywood delivered its oral opinion to the Harvest Special Committee that, on the basis of the assumptions, limitations and qualifications to be set forth in the Haywood Fairness Opinion, as of the date of the Haywood Fairness Opinion, the consideration to be received by Harvest Shareholders in respect of the Arrangement was fair, from a financial point of view, to the Harvest Shareholders. The members of the Harvest Special Committee were given the opportunity to ask Haywood questions. Directors of the Harvest Board, other than members of the Harvest Special Committee, were excused from the meeting to allow for deliberations by the Harvest Special Committee. Following consideration of a number of factors, including consideration of the interests of shareholders, debtholders, employees and other stakeholders in Harvest, the terms of the transaction with Trulieve, and relying on financial, legal and other advisors and discussions with management and their review of the Moelis analysis provided in the Moelis Fairness Opinion and the Haywood analysis provided in the Haywood Fairness Opinion, the Harvest Special Committee resolved to accept the oral fairness opinions received from each of Moelis and Haywood and approved a unanimous recommendation to the Harvest Board that, subject to the outstanding matters on the Arrangement Agreement being resolved on acceptable terms, Harvest

 

55

enter into the Arrangement Agreement with Trulieve and, in particular, made the following recommendations to the Harvest Board:

 

(i)

that the Arrangement was in the best interests of Harvest and fair to the Harvest Shareholders;

 

(ii)

the Arrangement Agreement and the Plan of Arrangement contemplated therein be unanimously approved by the Harvest Board; and

 

(iii)

the Harvest Board unanimously recommend that the Harvest Shareholders approve the Arrangement and vote in favor of the Arrangement Resolution.

Later on May 9, 2021, following the Harvest Special Committee meeting, a meeting of the Harvest Board was called which was attended by representatives of Harvest management and, at the invitation of the Harvest Board, Bennett Jones and Troutman. At the meeting, the Harvest Special Committee provided its unanimous recommendation to the Harvest Board that, subject to the outstanding matters on the Arrangement Agreement being resolved on acceptable terms, Harvest enter into the Arrangement Agreement with Trulieve. In light of the recommendation of the Harvest Special Committee and those factors discussed under the heading “Description of the Arrangement – Harvest’s Reasons for the Arrangement,” and following further discussion, the Harvest Board resolved and determined: (i) to accept the oral fairness opinion received from Moelis that, as of May 9, 2021 and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis Fairness Opinion, the Exchange Ratio in the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis); (ii) that the Arrangement was in the best interests of Harvest and fair to the Harvest Shareholders; (iii) that Harvest enter into the Arrangement Agreement with Trulieve, subject to the finalization of any outstanding items on acceptable terms, and that Harvest perform its obligations thereunder; (iv) that the Harvest Shareholders be asked to consider, and, if thought advisable, approve, the Arrangement Resolution; and (v) to unanimously recommend that Harvest Shareholders vote in favor of the Arrangement Resolution.

In the hours following the May 9, 2021 Harvest Board meeting, representatives of Harvest and Trulieve, along with their respective legal advisors, engaged in continued discussions and negotiations regarding the terms of the Arrangement Agreement, and were able to resolve the outstanding matters on acceptable terms (including the receipt of definitive Harvest Voting Support Agreements or Harvest Voting Support and Lock-Up Agreements from certain officers, directors and significant shareholders of Harvest), which ultimately resulted in Harvest and Trulieve executing the Arrangement Agreement on the morning of May 10, 2021. Harvest and Trulieve subsequently issued a joint press release announcing that the parties had entered into the Arrangement Agreement, and, on May 10, 2021, the parties held a joint conference call presenting the proposed transaction.

Harvest’s Reasons for the Arrangement

The Harvest Board believes that, at this stage of development and expansion of the U.S. cannabis market, companies with financial strength, an enhanced national footprint and scale, diverse product range, premium brands and operational expertise are most likely to succeed in the long-term. In evaluating the Arrangement and the Arrangement Agreement, and in making their recommendations, the Harvest Board and the Harvest Special Committee each consulted with its legal and financial advisors, reviewed the Harvest Fairness Opinions and gave careful consideration to all of the terms of the Arrangement Agreement and the Plan of Arrangement. The Harvest Special Committee and the Harvest Board considered a number of factors, including the following key strategic and financial benefits of the Arrangement, certain of which assumptions and estimates were described in the Current Report on Form 8-K filed by Harvest with the SEC on May 10, 2021 and speak solely as of such date:

 

•

Attractive Premium to Harvest Shareholders. The consideration under the Arrangement represents a premium of approximately 34% at spot, or approximately 57% based on the 20-day volume-weighted average prices of Trulieve Subordinate Voting Shares and Harvest Shares, on the CSE as of May 7, 2021, the trading day prior to the announcement of the Arrangement.

 

•

Meaningful Participation by Shareholders in the Future Growth of the Combined Company. Under the Arrangement, Harvest Shareholders will receive, in consideration for their Harvest Shares,

 

56

Trulieve Subordinate Voting Shares. As a result, Harvest Shareholders, as of May 10, 2021, the date of announcement of the Arrangement, will have the opportunity to own approximately 26.7% of the Combined Company on a pro forma basis. The combination is an opportunity to own shares in a larger licensed cannabis operator with a broader geographic footprint, providing Harvest Shareholders with exposure to strong growth opportunities in the United States cannabis industry through the Combined Company’s broader and enhanced profile.

 

•

Strong and Expanding U.S. Multi-State Presence. The Combined Company will have an expanded presence in the U.S. northeast and southeast hubs in Florida, Pennsylvania and Maryland, and establishes a southwest hub in core markets including Arizona, where recreational adult use of cannabis was recently legalized. The Combined Company will also create the largest U.S. cannabis operator on a retail and cultivation footprint basis, as of May 10, 2021, the date of the announcement of the Arrangement.

 

•

Optimal Nationwide Presence to Pursue Growth. The Combined Company will be well-positioned through established retail and wholesale channels across markets, as well as the ability to reach an estimated total addressable market of US$19.3 billion in 2025E (Arcview market estimate) within their existing markets.

 

•

Addition of Premium Brands to Product Portfolio. The Combined Company is expected to deliver a larger portfolio of in-house brands and national brand partners with a successful line of products across multiple form factors.

 

•

Enhanced Financial Position and Flexibility. The Combined Company will have an attractive financial profile with pro forma revenue of US$753 million for the calendar year ended December 31, 2020, ranking it among the largest U.S. MSOs. As of the date of filing, Trulieve has generated positive Adjusted EBITDA over the prior 14 quarters (since the quarter ended December 31, 2017), which provides a robust platform for future profitability and cash flow generation for the Combined Company. This, collectively with the strength of the Combined Company’s balance sheet and access to capital, is expected to help accelerate national growth and value for the Combined Company’s stakeholders.

 

•

Creation of the Most Profitable U.S. MSO. On a pro forma basis, the Combined Company would have had 2020 Adjusted EBITDA of US$266 million and combined 2021E consensus Adjusted EBITDA of U$461 million, based on consensus estimates as of May 7, 2021, the trading day prior to announcement of the Arrangement, ranking it the largest among the U.S. MSOs and delivering an unparalleled platform for continued growth.

 

•

Strong Capital Structure Position Allowing for Ability to Absorb Harvest Balance Sheet. Trulieve’s balance sheet strength provides for an opportunity to absorb Harvest’s balance sheet on a non-dilutive basis, providing for lower cost of capital alternatives for Harvest. This, collectively with the enhanced financial position of the Combined Company, is expected to help accelerate growth and value for the Combined Company’s stakeholders.

 

•

Enhanced Capital Markets Profile and Broader Access to Liquidity. The Combined Company’s expanded capital markets profile is expected to appeal to a broader shareholder audience, enhance trading liquidity and increase weighting in index tracking portfolios, as well as provide for more beneficial access to capital.

 

•

Leverages Expert MSO Operating Teams and Best Practices. The Combined Company will benefit from enhanced operational excellence by combining unparalleled knowledge of, and success in winning, state license application processes and market deployment and commercialization.

 

•

Harvest Board Recommendation. The Harvest Board’s conclusion, after receiving the advice of its legal and financial advisors, and following the unanimous recommendation of the Harvest Special Committee, that the value offered to Harvest Shareholders under the Arrangement is more favorable to the Harvest Shareholders than the potential value that might have resulted from other strategic

 

57

alternatives reasonably available to Harvest, including Harvest’s standalone business plan, taking into consideration the potential rewards, risks and uncertainties associated with other alternatives.

 

•

Harvest Special Committee. The process of evaluating the Arrangement was led by the Harvest Special Committee, which is comprised of members of the Harvest Board who are not members of Harvest management. The members of the Harvest Special Committee met regularly with its and Harvest’s legal and financial advisors and members of Harvest management throughout the process of negotiating the Arrangement.

 

•

No Other Bidders. No other potential acquirors have approached Harvest with an acquisition proposal following the May 10, 2021 announcement of the Arrangement.

 

•

Fairness Opinions Delivered by Harvest’s Financial Advisors. Moelis delivered an opinion to the Harvest Board that, as of May 9, 2021 and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis Fairness Opinion, the Exchange Ratio in the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). The fairness opinion delivered by Haywood to the Harvest Special Committee, that, as of the date thereof and based on and subject to the analyses referred to therein, the consideration to be received by Harvest Shareholders in respect of the Arrangement was fair, from a financial point of view, to the Harvest Shareholders.

 

•

Procedural Safeguards for the Benefit of Harvest Shareholders. Procedural safeguards have been obtained for the benefit of Harvest Shareholders in connection with the Arrangement, including:

 

•

the terms of the Arrangement Agreement allow the Harvest Board to respond, in accordance with its fiduciary duties, to an unsolicited Acquisition Proposal that would be reasonably likely, if consummated in accordance with its terms, to be a Superior Proposal;

 

•

the fact that the Arrangement Resolution must be approved by the Harvest Shareholders entitled to vote thereon at the Meeting in accordance with the Interim Order;

 

•

the fact that the Arrangement must also be approved by the Court, which will consider the substantive and procedural fairness of the Arrangement to all Harvest Shareholders; and

 

•

that any Harvest Shareholder who opposes the Arrangement may, on strict compliance with certain conditions, exercise Dissent Rights and receive the fair value of such Dissenting Harvest Shareholder’s Harvest Shares.

 

•

Arrangement Agreement. The Arrangement Agreement includes, from each of Harvest and Trulieve, representations, warranties and covenants and the conditions to their respective obligations that are reasonable in the judgment of the Harvest Board and Harvest Special Committee following consultations with its advisors, and are the product of arm’s length negotiations between Harvest and its advisors and Trulieve and its advisors.

Description of the Plan of Arrangement

The following summary of certain transaction steps of the Plan of Arrangement is qualified in its entirety by reference to the full text of the Plan of Arrangement, a copy of which is attached as Appendix “C” to this Circular.

The Arrangement is being implemented pursuant to a plan of arrangement under the laws of the Province of British Columbia. The purpose of the Plan of Arrangement is to facilitate a series of transactions which will occur in a specific sequence and as a consequence of which Trulieve will acquire all of the outstanding Harvest Shares.

 

58

Pursuant to the Arrangement, commencing at the Effective Time, each of the following events or transactions shall occur and be deemed to occur in the following sequence, in each case, without any further authorization, act or formality on the part of any person:

 

(a)

each Dissent Share held by a Dissenting Harvest Shareholder shall be, and shall be deemed to be transferred by the holder thereof, without any further act or formality on its part, to Harvest for cancellation and shall be cancelled and upon such transfer:

 

(i)

such Dissenting Harvest Shareholder will cease to be the holder thereof or to have any rights as a holder in respect of such Dissent Share, other than the right to be paid the fair value of such Dissent Share determined and payable in accordance with their Dissent Rights under the laws of British Columbia, as modified by the Plan of Arrangement and the Interim Order; and

 

(ii)

the former holders of such Dissent Shares (as defined below) shall be removed from Harvest’s central securities register for the Harvest Shares in respect of such Dissent Shares.

 

(b)

each Harvest Multiple Voting Share (other than any Dissent Share) outstanding immediately prior to the Effective Time shall be, and shall be deemed to be, transferred by the holder thereof to Trulieve in exchange for the issuance by Trulieve to such holder of the MVS consideration, and upon such exchange:

 

(i)

the former holder of such exchanged Harvest Multiple Voting Share shall cease to be the holder thereof or to have any rights as a holder thereof, other than the right to receive the MVS consideration issuable in respect of such Harvest Multiple Voting Share;

 

(ii)

the former holders of such exchanged Harvest Multiple Voting Shares shall be removed from Harvest’s central securities register for Harvest Multiple Voting Shares;

 

(iii)

the former holders of such exchanged Harvest Multiple Voting Shares shall be entered in Trulieve’s central securities register for the Trulieve Subordinate Voting Shares in respect of the Trulieve Subordinate Voting Shares issued to such holders; and

 

(iv)

Trulieve will be, and will be deemed to be, the legal and beneficial owner of such transferred Harvest Multiple Voting Shares and will be entered in the central securities register of Harvest as the sole holder thereof;

 

(c)

concurrently with the exchange of Harvest Multiple Voting Shares in accordance with the preceding step there shall be added to the capital of the Trulieve Subordinate Voting Shares, in respect of the Trulieve Subordinate Voting Shares issued pursuant to the preceding step , an amount equal to the product obtained when (i) the paid-up capital of the Harvest Multiple Voting Shares immediately prior to the Effective Time, is multiplied by (ii) a fraction, (A) the numerator of which is the number of Harvest Multiple Voting Shares (excluding any Dissent Shares) outstanding immediately prior to the Effective Time, and (B) the denominator of which is the number of Harvest Multiple Voting Shares (including any Dissent Shares) outstanding immediately prior to the Effective Time;

 

(d)

each Harvest Super Voting Share (other than any Dissent Share) outstanding immediately prior to the Effective Time shall be, and shall be deemed to be, transferred by the holder thereof to Trulieve in exchange for the issuance by Trulieve to such holder of the SVS consideration, and upon such exchange:

 

(i)

the former holder of such exchanged Harvest Super Voting Share shall cease to be the holder thereof or to have any rights as a holder thereof, other than the right to receive the SVS consideration issuable in respect of such Harvest Super Voting Share;

 

(ii)

the former holders of such exchanged Harvest Super Voting Shares shall be removed from Harvest’s central securities register for the Harvest Super Voting Shares;

 

(iii)

the former holders of such exchanged Harvest Super Voting Shares shall be entered in Trulieve’s central securities register for Trulieve Subordinate Voting Shares in respect of the Trulieve Subordinate Voting Shares issued to such holders; and

 

59

(iv)

Trulieve will be, and will be deemed to be, the legal and beneficial owner of such transferred Harvest Super Voting Shares and will be entered in the central securities register of Harvest as the sole holder thereof;

 

(e)

concurrently with the exchange of Harvest Super Voting Shares in accordance with the preceding step, there shall be added to the capital of the Trulieve Subordinate Voting Shares, in respect of the Trulieve Subordinate Voting Shares issued pursuant to the preceding step , an amount equal to the product obtained when (i) the paid-up capital of the Harvest Super Voting Shares immediately prior to the Effective Time, is multiplied by (ii) a fraction, (A) the numerator of which is the number of Harvest Super Voting Shares (excluding any Dissent Shares) outstanding immediately prior to the Effective Time, and (B) the denominator of which is the number of Harvest Super Voting Shares (including any Dissent Shares) outstanding immediately prior to the Effective Time;

 

(f)

each Harvest Subordinate Voting Share (other than any Dissent Share) outstanding immediately prior to the Effective Time shall be, and shall be deemed to be, transferred by the holder thereof to Trulieve in exchange for the issuance by Trulieve to such holder of the Trulieve Subordinate Voting Shares, rounded down to the nearest whole Trulieve Subordinate Voting Share, and upon such exchange:

 

(i)

the former holder of such exchanged Harvest Subordinate Voting Share shall cease to be the holder thereof or to have any rights as a holder thereof, other than the right to receive the 0.1170 of a Trulieve Subordinate Voting Share issuable in respect of such Harvest Subordinate Voting Share;

 

(ii)

the former holders of such exchanged Harvest Subordinate Voting Shares shall be removed from Harvest’s central securities register for the Harvest Subordinate Voting Shares;

 

(iii)

the former holders of such exchanged Harvest Subordinate Voting Shares shall be entered in Trulieve’s central securities register for the Trulieve Subordinate Voting Shares in respect of Trulieve Subordinate Voting Shares issued to such holders; and

 

(iv)

Trulieve will be, and will be deemed to be, the legal and beneficial owner of such transferred Harvest Subordinate Voting Shares and will be entered in the central securities register of Harvest as the sole holder thereof;

 

(g)

concurrently with the exchange of Harvest Subordinate Voting Shares in accordance with the preceding step (1)(f)(1)(f), there shall be added to the capital of the Trulieve Subordinate Voting Shares, in respect of the Trulieve Subordinate Voting Shares issued pursuant to the preceding step, an amount equal to the product obtained when (i) the paid-up capital of the Harvest Subordinate Voting Shares immediately prior to the Effective Time, is multiplied by (ii) a fraction, (A) the numerator of which is the number of Harvest Subordinate Voting Shares (excluding any Dissent Shares) outstanding immediately prior to the Effective Time, and (B) the denominator of which is the number of Harvest Subordinate Voting Shares (including any Dissent Shares) outstanding immediately prior to the Effective Time;

 

(h)

the terms of each Harvest Option outstanding immediately prior to the Effective Time shall be adjusted so that, upon exercise of such Harvest Option, the holder shall, upon payment of the exercise price under such Harvest Option, be entitled to receive, in substitution for the number of Harvest Shares subject to such Harvest Option, the number of Trulieve Subordinate Voting Shares equal to the product obtained when the number of Harvest Shares subject to such Harvest Option immediately prior to the Effective Time is multiplied by the applicable Exchange Ratio. For greater certainty, the Harvest Options shall not be exchanged or otherwise replaced by the Plan of Arrangement, and will continue to be governed by the Stock and Incentive Plan on the same terms and conditions as were applicable to such Harvest Options immediately prior to the Effective Time. Notwithstanding the foregoing, if necessary to satisfy the requirements of subsection 7(1.4) of the Tax Act, the exercise price of a Harvest Option adjusted in accordance with the foregoing shall be increased such that the In-The-Money Amount of the Harvest Option immediately after such adjustment does not exceed the In-The-Money Amount of the Harvest Option immediately before such adjustment. For any Harvest

 

60

Option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code, it is intended that such adjustment will comply with Treasury Regulation Section 1.424-1(a). For any Harvest Option that is a nonqualified option held by a U.S. taxpayer, it is intended that such adjustment will be implemented in a manner intended comply with Section 409A of the Code;

 

(i)

the terms of each Harvest RSU outstanding immediately prior to the Effective Time shall be adjusted so that, upon vesting of such Harvest RSU, the holder shall be entitled to receive, instead of the number of Harvest Shares underlying such Harvest RSU, that number of Trulieve Subordinate Voting Shares equal to the product obtained when the number of Harvest Shares underlying such Harvest RSU immediately prior to the Effective Time is multiplied by the applicable Exchange Ratio. For greater certainty, the Harvest RSUs shall not be exchanged or otherwise replaced by the Plan of Arrangement, and will continue to be governed by the Stock and Incentive Plan on the same terms and conditions as were applicable to such Harvest RSUs immediately prior to the Effective Time;

 

(j)

each Harvest Warrant, other than any Certificated Warrant or MVS Warrant, to the extent it has not been exercised as of the Effective Date, will be exchanged by the holder thereof, without any further act or formality, for a warrant (a “Replacement Warrant”) to purchase a number of Trulieve Subordinate Voting Shares equal to the product obtained when the number of Harvest Subordinate Voting Shares issuable on exercise of such Replacement Warrant immediately prior to the Effective Time is multiplied by the applicable Exchange Ratio, at an exercise price per Trulieve Subordinate Voting Share equal to the exercise price per Share under such Replacement Warrant immediately prior to the Effective Time divided by the applicable Exchange Ratio (provided that if the exercise of Replacement Warrants by a holder would otherwise result in the aggregate number of Trulieve Subordinate Voting Shares issuable to such holder including a fraction of a Trulieve Subordinate Voting Share, the aggregate number of Trulieve Subordinate Voting Shares otherwise issuable upon such exercise shall in each case be rounded down to the nearest whole number without any payment or compensation to the holder, and that the aggregate exercise price payable on any particular exercise of Replacement Warrants shall be rounded up to the nearest whole cent), and otherwise having a term to expiry, conditions to and manner of exercise and other terms and conditions the same as the terms and conditions of such exchanged 2019 Harvest Warrant, and such exchanged Harvest Warrant shall thereupon be cancelled. Any document previously evidencing such Harvest Warrant shall thereafter evidence and be deemed to evidence such Replacement Warrant and no certificates evidencing the Replacement Warrants shall be issued;

 

(k)

each Certificated Warrant outstanding immediately prior to the Effective Time shall be, and shall be deemed to be, adjusted in accordance with its terms for a Trulieve warrant (each, a ”Replacement Certificated Warrant”) which will entitle the holder to purchase from Trulieve that number of Trulieve Subordinate Voting Shares equal to the product obtained when the number of Harvest Subordinate Voting Shares issuable on exercise of such exchanged Certificated Warrant immediately prior to the Effective Time is multiplied by the applicable Exchange Ratio, at an exercise price per Trulieve Subordinate Voting Share equal to the exercise price per Share under such exchanged Certificated Warrant immediately prior to the Effective Time divided by the applicable Exchange Ratio (provided that if the exercise of Replacement Certificated Warrants by a holder would otherwise result in the aggregate number of Trulieve Subordinate Voting Shares issuable to such holder including a fraction of a Trulieve Subordinate Voting Share, the aggregate number of Trulieve Subordinate Voting Shares otherwise issuable upon such exercise shall in each case be rounded down to the nearest whole number without any payment or compensation to the holder, and that the aggregate exercise price payable on any particular exercise of Replacement Certificated Warrants shall be rounded up to the nearest whole cent), and otherwise having a term to expiry, conditions to and manner of exercise and other terms and conditions the same as the terms and conditions of such exchanged Certificated Warrant, and such exchanged Certificated Warrant shall thereupon be cancelled. Any document previously evidencing such Certificated Warrant shall thereafter evidence and be deemed to evidence such Replacement Certificated Warrant and no certificates evidencing the Replacement Certificated Warrants shall be issued;

 

61

(l)

each Harvest MVS Warrant outstanding immediately prior to the Effective Time shall be, and shall be deemed to be, adjusted in accordance with its terms for a Trulieve warrant (each, a ”Replacement MVS Warrant”) which will entitle the holder to purchase from Trulieve that number of Trulieve Subordinate Voting Shares equal to the product obtained when the number of Harvest Multiple Voting Shares issuable on exercise of such exchanged Harvest MVS Warrant immediately prior to the Effective Time is multiplied by the product of, (A) the applicable Exchange Ratio, and (B) the Harvest MVS Conversion Ratio, at an exercise price per Trulieve Subordinate Voting Share equal to the exercise price per Share under such exchanged Harvest MVS Warrant immediately prior to the Effective Time divided by the product of (A) the applicable Exchange Ratio, and (B) the Harvest MVS Conversion Ratio (provided that if the exercise of Replacement MVS Warrants by a holder would otherwise result in the aggregate number of Trulieve Subordinate Voting Shares issuable to such holder including a fraction of a Trulieve Subordinate Voting Share, the aggregate number of Trulieve Subordinate Voting Shares otherwise issuable upon such exercise shall in each case be rounded down to the nearest whole number without any payment or compensation to the holder, and that the aggregate exercise price payable on any particular exercise of Replacement MVS Warrants shall be rounded up to the nearest whole cent), and otherwise having a term to expiry, conditions to and manner of exercise and other terms and conditions the same as the terms and conditions of such exchanged Harvest MVS Warrant, and any document previously evidencing such Harvest MVS Warrant shall thereafter evidence and be deemed to evidence such Replacement MVS Warrant and no certificates evidencing the Replacement MVS Warrants shall be issued;

 

(m)

the Harvest Warrant Indentures dated as of December 20, 2019 and as of October 28, 2020 shall be terminated; and

 

(n)

any other rights of any other Person, other than Trulieve or as otherwise set out in the foregoing paragraphs, in respect of the Harvest Shares, Harvest Warrants and Harvest MVS Warrants shall be extinguished.

Delivery of Trulieve Subordinate Voting Shares

Following receipt of the Final Order and on or prior to the Effective Date, Trulieve shall deliver or arrange to be delivered to the Depositary the Trulieve Subordinate Voting Shares required to be issued to the Harvest Shareholders in accordance with the Plan of Arrangement, which Trulieve Subordinate Voting Shares shall be held by the Depositary as agent and nominee for such Harvest Shareholder for delivery to such Harvest Shareholder in accordance with the provisions of the Plan of Arrangement.

Paramountcy

From and after the Effective Time: (i) the Plan of Arrangement shall take precedence and priority over any and all rights related to the securities of Harvest issued prior to the Effective Time; (ii) the rights and obligations of the holders of the securities of Harvest and any trustee and transfer agent therefor, shall be solely as provided for in the Plan of Arrangement; and (iii) all actions, causes of actions, claims or proceedings (actual or contingent, and whether or not previously asserted) based on or in any way relating to securities of Harvest shall be deemed to have been settled, compromised, released and determined without liability except as set forth in the Plan of Arrangement.

Amendments to the Plan of Arrangement

Harvest and Trulieve reserve the right to amend, modify or supplement the Plan of Arrangement at any time and from time to time prior to the Effective Time, provided that each such amendment, modification or supplement must be (i) set out in writing, (ii) approved by Harvest and Trulieve, (iii) filed with the Court and, if made following the Meeting, approved by the Court, and (iv) communicated to or approved by the Harvest Shareholders if and as required by the Court. Any amendment, modification or supplement to the Plan of Arrangement may be proposed by Harvest at any time prior to the Meeting (provided Trulieve shall have consented thereto, such consent not to be unreasonably withheld, conditioned or delayed) with or without any

 

62

other prior notice or communication and, if so proposed and accepted by the persons voting at the Meeting (other than as may be required under the Interim Order), will become part of the Plan of Arrangement for all purposes. Any amendment, modification or supplement to the Plan of Arrangement that is approved or directed by the Court following the Meeting will be effective only if such amendment, modification or supplement (i) is consented to by each of Harvest and Trulieve and (ii) if required by the Court or applicable law, is consented to by Harvest Shareholders voting in the manner directed by the Court. Any amendment, modification or supplement to the Plan of Arrangement may be made following the Effective Date but shall only be effective if it is consented to by each of the Parties provided that such amendment, modification or supplement concerns a matter which, in the reasonable opinion of Harvest and Trulieve, is of an administrative nature required to better give effect to the implementation of the Plan of Arrangement and is not adverse to the financial or economic interests of Harvest and Trulieve or any former Harvest Shareholder.

Procedure for the Plan of Arrangement to Become Effective

The Arrangement will be implemented by way of a Court approved Plan of Arrangement under Division 5 of Part 9 of the BCBCA pursuant to the terms of the Arrangement Agreement. The following procedural steps must be taken in order for the Arrangement to become effective:

 

•

the Arrangement must be approved by the Harvest Shareholders in the manner set forth in the Interim Order; and

 

•

the Court must grant the Final Order approving the Arrangement.

In addition, the Arrangement will only become effective if all other conditions precedent to the Arrangement set out in the Arrangement Agreement, including Antitrust Approvals, have been satisfied or waived by the appropriate party. For a description of the other conditions precedent see “The Arrangement Agreement and Related Agreements - Conditions to Completion of the Arrangement.”

Opinions of Harvest’s Financial Advisors

Moelis & Company LLC

At the meeting of the Harvest Board on May 9, 2021 to evaluate and approve the Arrangement Agreement and the transactions contemplated by the Arrangement Agreement, Moelis & Company LLC (“Moelis”) delivered an oral opinion, which was confirmed by delivery of a written opinion, dated May 9, 2021, addressed to the Harvest Board that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion, the Exchange Ratio in the Arrangement was fair, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis).

The full text of Moelis’ written opinion dated May 9, 2021, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix “G” to this Circular and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the Harvest Board (solely in its capacity as such) in its evaluation of the Arrangement. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the Exchange Ratio to the holders of Harvest Shares (on an as-converted basis), and does not address Harvest’s underlying business decision to effect the Arrangement or the relative merits of the Arrangement as compared to any alternative business strategies or transactions that might be available to Harvest. Moelis’ opinion does not constitute a recommendation as to how any holder of securities of Harvest or Trulieve should vote or act with respect to the Arrangement or any other matter. Moelis’ opinion was approved by a Moelis fairness opinion committee.

In arriving at its opinion, Moelis, among other things:

 

(i)

reviewed certain publicly available business and financial information relating to Harvest and Trulieve;

 

(ii)

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of Harvest furnished by Harvest, including the Management Financial Projections (as

 

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hereinafter defined) (see “Description of the Arrangement – Harvest Unaudited Financial Projections”);

 

(iii)

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of Trulieve furnished by Trulieve, including financial forecasts provided to or discussed with Moelis by the management of Trulieve and Harvest;

 

(iv)

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of Trulieve furnished to Moelis and adjusted by Harvest (the “Trulieve Adjusted Management Projections”) (see Description of the Arrangement – Harvest Unaudited Financial Projections – Trulieve Financial Projections by Harvest”);

 

(v)

reviewed certain internal information relating to cost savings, synergies and related expenses expected to result from the Arrangement (the “Expected Synergies”) and certain other pro forma financial effects of the Arrangement furnished to Moelis by Harvest and Trulieve;

 

(vi)

reviewed the capitalization of Harvest and Trulieve furnished to Moelis by Harvest and Trulieve;

 

(vii)

conducted discussions with members of the senior managements and representatives of Harvest and Trulieve concerning the information described in clauses (i) through (vi) of this paragraph, as well as the businesses and prospects of Harvest and Trulieve generally;

 

(viii)

reviewed publicly available financial and stock market data of certain other companies in lines of business that Moelis deemed relevant;

 

(ix)

reviewed a draft, dated May 7, 2021, of the Arrangement Agreement;

 

(x)

participated in certain discussions and negotiations among representatives of Harvest and Trulieve and their advisors; and

 

(xi)

conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.

Moelis considered, but did not rely on for purposes of its analysis and opinion, the financial terms of certain other transactions.

In connection with its review, Moelis, with the consent of the Harvest Board, relied on the information supplied to, discussed with or reviewed by Moelis for purposes of its opinion being complete and accurate in all material respects. Moelis did not assume any responsibility for independent verification of (and did not independently verify) any of such information. With the consent of the Harvest Board, Moelis relied upon, without independent verification, the assessment of Harvest and its legal, tax, regulatory and accounting advisors with respect to legal, tax, regulatory and accounting matters. With respect to the financial forecasts and other information relating to Harvest, Trulieve, the Expected Synergies and other pro forma financial effects referred to above, Moelis assumed, at the direction of the Harvest Board, that they were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Harvest or Trulieve, as the case may be, as to the future performance of Harvest and Trulieve, such Expected Synergies (including the amount, timing and achievability thereof) and such other pro forma financial effects. Moelis also assumed, at the direction of the Harvest Board, that the future financial results (including Expected Synergies) reflected in such forecasts and other information would be achieved at the times and in the amounts projected. In addition, at the direction of the Harvest Board, Moelis relied on the assessments of the managements of Harvest and Trulieve as to Trulieve’s ability to retain key employees of Harvest and to integrate the businesses of Harvest and Trulieve. Moelis expressed no views as to the reasonableness of any financial forecasts or the assumptions on which they are based. In addition, with the consent of the Harvest Board, Moelis did not made any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of Harvest or Trulieve, nor was it furnished with any such evaluation or appraisal.

With the consent of the Harvest Board, for purposes of its analysis and opinion Moelis considered the Harvest Multiple Voting Shares and the Harvest Super Voting Shares on an as-converted basis. Moelis’ analysis and

 

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opinion did not address the non-economic aspects of such shares (such as enhanced voting rights) and, at the direction of the Harvest Board, Moelis did not attempt to place any financial value on any non-economic aspects of any such shares prior to their conversion. Also at the direction of the Harvest Board, for purposes of its analysis and opinion, Moelis assumed that each Harvest Share (on an as-converted basis) is of equal value and Moelis did not attempt to place any incremental financial value on any Harvest Shares that form part of a control position.

Moelis’ opinion did not address Harvest’s underlying business decision to effect the Arrangement or the relative merits of the Arrangement as compared to any alternative business strategies or transactions that might be available to Harvest and does not address any legal, regulatory, tax or accounting matters. At the direction of the Harvest Board, Moelis was not asked to, nor did it, offer any opinion as to any terms of the Arrangement Agreement or any aspect or implication of the Arrangement, except for the fairness of the Exchange Ratio, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). Moelis’ opinion related to the relative values of Harvest and Trulieve. With the consent of the Harvest Board, Moelis expressed no opinion as to what the value of Trulieve Shares actually will be when issued pursuant to the Arrangement or the prices at which Harvest Shares or Trulieve Shares may trade at any time. In rendering its opinion, Moelis assumed, with the consent of the Harvest Board, that the final executed form of the Arrangement Agreement would not differ in any material respect from the draft Moelis reviewed, that the Arrangement will be consummated in accordance with its terms without any waiver or modification that could be material to its analysis, and that the parties to the Arrangement Agreement will comply with all the material terms of the Arrangement Agreement. Moelis assumed, with the consent of the Harvest Board, that (i) all governmental, regulatory or other consents or approvals necessary for the completion of the Arrangement will be obtained, except to the extent that would not be material to its analysis and (ii) that there will be no adjustment to the Exchange Ratio relating to the refinancing of existing debt of Harvest prior to completion of the Arrangement. In addition, representatives of Harvest advised Moelis, and Moelis assumed, with the consent of the Harvest Board, that the Arrangement will qualify as a tax-free reorganization for U.S. federal income tax purposes.

Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of the opinion, and Moelis assumed no responsibility to update its opinion for developments after the date of the opinion.

Moelis’ opinion did not address the fairness of the Arrangement or any aspect or implication thereof to, or any other consideration of or relating to, the holders of any class of securities, creditors or other constituencies of Harvest, except for the fairness of the Exchange Ratio, from a financial point of view, to the holders of Harvest Shares (on an as-converted basis). In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the Arrangement, or any class of such persons, relative to the Exchange Ratio or otherwise. Moelis’ opinion was approved by a Moelis fairness opinion committee.

Summary of Financial Analyses

The following is a summary of the material financial analyses presented by Moelis to the Harvest Board at its meeting held on May 9, 2021 in connection with its opinion. This summary describes the material analysis underlying Moelis’ opinion but does not purport to be a complete description of the analyses performed by Moelis in connection with its opinion.

Some of the summaries of financial analyses below include information presented in tabular format. To fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.

 

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For the purposes of Moelis’ analysis:

 

•

“Total Enterprise Value,” which is also referred to as “TEV,” was generally calculated as the market value of the relevant company’s fully diluted common equity based on its closing share price as of May 7, 2021, which is referred to as the “equity value,” (i) plus preferred shares, if any, (ii) plus non-controlling interests, if any (iii) plus debt, and (iv) less cash and cash equivalents (in each of the foregoing cases (i) through (iv), as of the relevant company’s most recently reported quarter end, adjusted for subsequent transactions and events).

 

•

“EBITDA” was generally calculated as the relevant company’s earnings before interest, taxes, depreciation and amortization, as adjusted to exclude: (i) one-time charges and benefits and (ii) EBITDA associated with non-controlling interests because the book value of non-controlling interests was excluded from TEV.

 

•

For Harvest, per share calculations reflected issued and outstanding Harvest Subordinate Voting Shares, Harvest Super Voting Shares and Harvest Multiple Voting Shares as disclosed in the Arrangement Agreement. Per share calculations in respect of Harvest assumed the conversion of all Harvest Super Voting Shares and Harvest Multiple Voting Shares into Harvest Subordinate Voting Shares.

 

•

For Trulieve, per share calculations reflected issued and outstanding Trulieve Subordinate Voting Shares, Trulieve Super Voting Shares, Trulieve Multiple Voting Shares and other securities of Trulieve as disclosed in the Arrangement Agreement. Per share calculations in respect of Trulieve assumed the conversion of all Trulieve Super Voting Shares and Trulieve Multiple Voting Shares into Trulieve Subordinate Voting Shares.

Selected Publicly Traded Companies Analyses

Moelis reviewed financial and stock market information of the selected publicly traded cannabis operators listed below. Financial data for the selected publicly traded companies was based on public filings and other publicly available information available as of May 7, 2021. When utilizing estimated EBITDA for calendar year 2021 (“CY2021E EBITDA”) and estimated EBITDA for calendar year 2022 (“CY2022E EBITDA”), except where specifically noted below, Moelis used the mean of the consensus estimates available on Refinitiv Eikon as of May 7, 2021.

Harvest

For Harvest, Moelis reviewed and analyzed, among other things, TEV as a multiple of both CY2021E EBITDA and CY2022E EBITDA related to the following selected publicly traded mid-cap (defined as having an equity value greater than $750 million and less than $3 billion) U.S.-based cannabis operators, the operations of which Moelis believed, based on its experience and professional judgment, were generally relevant in certain respects to Harvest (the “Harvest Selected Companies”):

 

•

Ayr Wellness, Inc.

 

•

Columbia Care Inc.

 

•

SH Parent, Inc. (d/b/a Parallel), which is referred to herein as Parallel

 

•

Jushi Holdings Inc.

 

•

4Front Ventures Corp.

Information in respect of Parallel, which is not currently listed on any stock exchange, was sourced from management estimates included in an investor presentation relating to Parallel’s pending acquisition by Ceres Acquisition Corp., a publicly listed special purpose acquisition corporation, which was announced on February 22, 2021. (the “Parallel SPAC Acquisition”)

 

66

Moelis noted that it also identified Ascend Wellness Holdings, Inc., which completed its initial public offering on May 4, 2021, as a potential comparable company, but elected to exclude it from the selected publicly traded companies analysis due to its limited trading history and a lack of available analyst estimates.

The Harvest Selected Companies used in this analysis and their implied TEV/EBITDA multiples (with market data as of May 7, 2021) for CY2021E and CY2022E are summarized in the following table:

 

TEV ($ in millions)

TEV/ CY2021E EBITDA

TEV/ CY2022E EBITDA

Harvest Selected Companies

Ayr Wellness, Inc.

$

2,365

15.6x

7.9x

Columbia Care Inc.

$

2,186

22.3x

10.2x

Parallel

$

1,908

18.7x

7.2x

Jushi Holdings Inc.

$

1,481

32.1x

12.9x

4Front Ventures Corp.

$

928

20.5x

12.5x

Mean

21.8x

10.1x

Harvest

Median Analyst Consensus Estimates

$

1,726

21.3x

11.7x

Management Financial Projections

$

1,726

11.8x

5.3x

In light of the foregoing review and based on its professional judgment and experience, Moelis applied ranges of selected multiples derived from the Harvest Selected Companies of (i) 16.0x to 21.0x to Harvest’s CY2021E EBITDA of $146 million, as projected by Harvest management, and (ii) 9.0x to 12.0x to Harvest’s CY2022E EBITDA of $323 million, as projected by Harvest management, to calculate implied equity value ranges for Harvest.

In determining the Harvest selected reference ranges, Moelis assumed that Harvest’s current multiples would establish the top end of the range, while the bottom end of the range would be at a premium to the to the low-end of the Harvest Selected Companies; this is due to Harvest’s geographic diversification in desirable, limited-license states compared to the Harvest Selected Companies. Moelis placed limited weight on Parallel because the Parallel SPAC Acquisition had not yet been completed and, as such, the only available multiples were based on management estimates, as analyst consensus estimates were not yet available.

This analysis indicated the implied per share value ranges for Harvest Subordinate Voting Shares presented below:

 

		Implied Per Share Price
CY2021E EBITDA		$	4.93 - 6.55
CY2022E EBITDA		$	6.21 - 8.35

Moelis noted that the price per Harvest Subordinate Voting Share on May 7, 2021, the last trading day prior to the date of its opinion, was $3.58.

Trulieve

For Trulieve, Moelis reviewed and analyzed, among other things, TEV as a multiple of both CY2021E EBITDA and CY2022E EBITDA related to the following selected publicly traded large-cap (defined as having an equity value greater than $3 billion) U.S.-based cannabis operators the operations of which Moelis believed, based on its experience and professional judgment, were generally relevant in certain respects to Trulieve (the “Trulieve Selected Companies”):

 

•

Curaleaf Holdings, Inc.

 

•

Green Thumb Industries Inc.

 

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•

Verano Holdings Corp.

 

•

Cresco Labs Inc.

 

•

TerrAscend Corp.

The Trulieve Selected Companies used in this analysis and their implied TEV/EBITDA multiples (with market data as of May 7, 2021) for CY2021E and CY2022E are summarized in the following table:

 

TEV ($ in millions)

TEV/ CY2021E EBITDA

TEV/ CY2022E EBITDA

Trulieve Selected Companies

Curaleaf Holdings, Inc.

$

11,082

30.2x

17.6x

Green Thumb Industries Inc.

$

7,082

22.9x

16.8x

Verano Holdings Corp.

$

5,693

16.5x

10.3x

Cresco Labs Inc.

$

5,544

21.3x

13.5x

TerrAscend Corp.

$

3,519

32.0x

19.3x

Mean

24.6x

15.5x

Trulieve

Median Analyst Consensus Estimates

$

5,559

14.6x

11.0x

Trulieve Adjusted Management Projections

$

5,559

12.5x

7.2x

In light of the foregoing review and based on its professional judgment and experience, Moelis applied ranges of selected multiples derived from the Trulieve Selected Companies of (i) 14.0x to 20.0x to Trulieve’s CY2021E EBITDA of $444 million, as projected by Trulieve management and adjusted by Harvest management, and (ii) 10.0x to 14.0x to Trulieve’s CY2022E EBITDA of $774 million, as projected by Trulieve management and adjusted by Harvest management, to calculate implied equity value ranges for Trulieve.

In determining the Trulieve selected reference ranges, Moelis assumed that Trulieve’s current multiples would establish the bottom end of the range, while the top end of the range would be at a discount to the Trulieve Selected Companies mean multiples, due to the limited geographic diversification and the highly concentrated nature of Trulieve’s operations in the Florida market compared to the Trulieve Selected Companies.

This analysis indicated the implied per share price value ranges for the Trulieve Subordinate Voting Shares presented below:

 

		Implied Per Share Price
CY2021E EBITDA			$45.49 - 64.08
CY2022E EBITDA			$56.19 - 77.83

Moelis noted that the price per Trulieve Subordinate Voting Share on May 7, 2021, the last trading day prior to the date of its opinion, was $40.93.

Selected Publicly Traded Companies-Based Implied Exchange Ratio Analysis

Based on the implied per share value ranges presented above, Moelis calculated implied exchange ratio ranges and implied ranges of pro forma ownership percentage of the pre-Arrangement holders of Harvest Subordinate Voting Shares (on an as-converted basis) in the Combined Company after giving effect to the Arrangement (the “pro forma Harvest ownership percentage”), which are presented below:

 

		Implied Exchange Ratio(1)				Implied Pro Forma Harvest Ownership Percentage(2)
CY2021E EBITDA			0.077x - 0.144x				19.2% - 31.0%
CY2022E EBITDA			0.080x - 0.149x				19.8% - 31.7%

 

(1)

The low end of the range of the implied exchange ratio represents the low end of the range of implied value per Harvest Subordinate Voting Share versus the high end of the range of implied value per

 

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Trulieve Subordinate Voting Share. The high end of the range of the implied exchange ratio represents the high end of the range of implied value per Harvest Subordinate Voting Share versus the low end of the range of implied value per Trulieve Subordinate Voting Share.

(2)

The high end of the range of the implied pro forma Harvest ownership percentage represents the high end of the implied equity value range of Harvest versus the low end of the implied equity value range of Trulieve. The low end of the range of the implied pro forma Harvest ownership percentage represents the low end of the implied equity value range of Harvest versus the high end of the implied equity value range of Trulieve.

Moelis compared the implied exchange ratio ranges above to the initial exchange ratio of 0.117x set forth in the Arrangement, and the implied ranges of pro forma Harvest ownership percentage above to the implied pro forma Harvest ownership percentage of approximately 26.6% at the initial exchange ratio of 0.117x.

Discounted Cash Flow Analyses

Moelis performed discounted cash flow (“DCF”) analyses of both Harvest and Trulieve using Management Financial Projections and Trulieve Adjusted Management Projections to calculate the present value of the estimated future unlevered free cash flows projected by Harvest management to be generated by Harvest and Trulieve, respectively, and the present value of the estimated terminal value of each of Harvest and Trulieve. For purposes of the DCF analyses, Moelis, with the consent of the Harvest Board, treated estimates for share-based compensation as cash expenses and assumed that adult recreational use of cannabis will be permitted in Florida beginning at the start of the third quarter of 2023.

Harvest

Moelis calculated Harvest’s unlevered free cash flow as EBITDA, less taxes, less increases in net working capital, plus decreases in net working capital, less share-based compensation costs, and less capital expenditures and acquisition costs, all as provided by Harvest management.

Moelis utilized a range of discount rates of 9.75% to 13.5% based on an estimated range of Harvest’s weighted average cost of capital (“WACC”). Moelis used the foregoing range of discount rates to calculate estimated present values as of March 31, 2021 of (i) estimated after-tax unlevered free cash flows of Harvest for the nine month period ending December 31, 2021 and the calendar years ending December 31, 2022 and December 31, 2023 (in each case, as provided in the Management Financial Projections and discounted using a mid-year discounting convention) and (ii) estimated terminal values derived by applying a range of multiples of 9.0x to 12.0x to the normalized terminal EBITDA provided in the Management Financial Projections that was calculated based on the terminal value method. Moelis’ selection of the foregoing terminal value multiple range was informed by the estimated 2022 trading multiples for the Harvest Selected Companies.

In calculating the implied equity value range of Harvest, Moelis separately valued Harvest’s net operating losses (“NOLs”) (assuming an NOL balance of $98 million as of March 31, 2021 and assuming that all NOLs are utilized during the 2021 calendar year, each as provided by Harvest management) using a cost of equity range of 9.75% to 13.5% and the Management Financial Projections (including with respect to tax rates) for the nine month period ending December 31, 2021, resulting in an implied present value range of approximately $19.5 million to $19.8 million.

Based on the foregoing, Moelis derived stand-alone implied equity value ranges and implied per share price ranges (including NOLs) for Harvest Subordinate Voting Shares as follows:

 

Implied Equity Value ($ in millions)		Implied Per Share Price
$3,908 - 5,784		$8.80 - 12.67

 

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Moelis noted that the implied terminal value represented approximately 92.9% - 94.7% of total implied DCF net present value for Harvest. Moelis also noted that the foregoing ranges resulted in a range of implied perpetuity growth rates of 2.5% to 7.7%.

Trulieve

Moelis calculated Trulieve’s unlevered free cash flow as EBITDA, less taxes, less increases in net working capital, plus decreases in net working capital, less share-based compensation costs, and less capital expenditures and acquisition costs, all as provided by Harvest management in the Trulieve Adjusted Management Projections.

Moelis utilized a range of discount rates of 8.75% to 11.75% based on an estimated range of Trulieve’s WACC. Moelis used the foregoing range of discount rates to calculate estimated present values as of March 31, 2021 of (i) estimated after-tax unlevered free cash flows of Trulieve for the nine month period ending December 31, 2021 and the calendar years ending December 31, 2022 and December 31, 2023 (in each case, as provided in the Trulieve Adjusted Management Projections and discounted using a mid-year discounting convention) and (ii) estimated terminal values derived by applying a range of multiples of 10.0x to 14.0x to the normalized terminal EBITDA provided in the Trulieve Adjusted Management Projections that was calculated based on the terminal value method. Moelis’ selection of the foregoing terminal value multiple range was informed by the estimated calendar year 2022 trading multiples for the Trulieve Selected Companies.

Based on the foregoing, Moelis derived stand-alone implied equity value ranges and implied per share price ranges for the Trulieve Subordinate Voting Shares as follows:

 

Implied Equity Value ($ in million)		Implied Per Share Price
$13,820 - 20,680		$97.04 - 144.96

For reference, Moelis also performed calculations assuming legalization of adult recreational use in Florida is delayed until 2025. Moelis noted that in such a circumstance the implied price per Trulieve Subordinate Voting Share would be $78.32 to $123.06.

Moelis noted that the implied terminal value represented approximately 99.0% - 99.2% of total implied DCF net present value for Trulieve. Moelis also noted that the foregoing ranges resulted in a range of implied perpetuity growth rates of 2.8% to 7.3%.

DCF-Based Exchange Ratio and Ownership Percentage

Based on the stand-alone implied equity value ranges and implied share price ranges for Harvest and Trulieve presented in the DCF analysis above, Moelis calculated implied ranges of the exchange ratio and the pro forma Harvest ownership percentage, which are presented below:

 

Implied Exchange Ratio(1)		Implied Pro Forma Harvest Ownership Percentage(2)
0.061x - 0.131x		15.9% - 29.5%

 

(1)

The low end of the range of the implied exchange ratio represents the low end of the range of implied value per Harvest Subordinate Voting Share versus the high end of the range of implied value per Trulieve Subordinate Voting Share. The high end of the range of the implied exchange ratio represents the high end of the range of implied value per Harvest Subordinate Voting Share versus the low end of the range of implied value per Trulieve Subordinate Voting Share.

(2)

The high end of the range of the implied pro forma Harvest ownership percentage represents the high end of the implied equity value range of Harvest versus the low end of the implied equity value range of Trulieve. The low end of the range of the implied pro forma Harvest ownership percentage represents the low end of the implied equity value range of Harvest versus the high end of the implied equity value range of Trulieve.

 

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For reference, Moelis noted that if the legalization of adult recreational use in Florida is delayed until 2025, the implied exchange ratio would be 0.072x - 0.149x.

Moelis compared the implied range of the exchange ratio above to the initial exchange ratio of 0.117x in the Arrangement and the implied range of pro forma Harvest ownership percentage to the implied pro forma Harvest ownership percentage of approximately 26.6% at the initial exchange ratio of 0.117x.

Transaction Analysis

DCF-Based Has/Gets Analysis

Moelis performed a DCF-based has/gets analysis to calculate value accretion/dilution to the pre-Arrangement holders of Harvest Subordinate Voting Shares (on an as-converted basis) implied by the Arrangement. The DCF-based has/gets analysis compared the standalone implied DCF equity value of Harvest with the implied aggregate value of the pro forma equity in the Combined Company that is owned by the pre-Arrangement holders of Harvest Shares (on an as-converted basis) after giving effect to the Arrangement.

To calculate the pro forma DCF equity value of the Combined Company after giving effect to the Arrangement, Moelis utilized (i) the implied stand-alone DCF equity value range for Harvest and the implied stand-alone DCF equity value range for Trulieve, each described above; (ii) a range of expected cost synergies of $102 million to $134 million (discounted using the same discount rates and calculated by using the same terminal multiple range for Trulieve, each described above); (iii) estimated cost of capital synergies of between $110 million and $226 million (based on the improved implied cost of capital of the Combined Company as compared to Harvest); (iv) estimated tax dis-synergies of $311 million to $563 million (discounted using the Trulieve discount rate described above and calculated by using a perpetuity growth rate of 1.0 to 3.0%); and (v) expected transaction costs of approximately $40 million, each as provided by Harvest management.

The following table summarizes the results of the DCF-based has/gets analysis:

 

($ in million)		Low				High
Standalone per Harvest Share Value		$	8.80			$	12.67
Pro Forma per Harvest Share Value		$	10.33			$	15.35
Increase (%)			17.4	%			21.2	%

Other Information

Moelis also noted for the Harvest Board certain additional factors that were not considered part of Moelis’ financial analysis with respect to its opinion but were referenced for informational purposes only, including, among other things:

 

•

Moelis noted the one-year forward share price targets for Harvest Subordinate Voting Shares in recently published investment banking research analyst reports available on Refinitiv Eikon, which indicated undiscounted low and high share price targets ranging from $4.06 to $8.12 per share (converted from Canadian dollars based on an exchange rate of $0.823 per C$1.00), compared with the closing price per Harvest Subordinate Voting Share of $3.58 per share on May 7, 2021.

 

•

Moelis also reviewed the historical closing trading prices for Harvest Subordinate Voting Shares during the 52-week period ended May 7, 2021, which reflected low and high share prices during such period of $0.86 and $4.70 per share. Moelis noted the closing price per Harvest Subordinate Voting Share of $3.58 as of May 7, 2021.

 

•

Moelis noted the one-year forward share price targets for the Trulieve Subordinate Voting Shares in recently published investment banking research analyst reports available on Refinitiv Eikon, which indicated undiscounted low and high share price targets ranging from $57.67 to $95.84 per share (converted from Canadian dollars based on an exchange rate of $0.823 per C$1.00), compared with the closing price per Trulieve Subordinate Voting Share of $40.93 per share on May 7, 2021.

 

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•

Moelis also reviewed the historical closing trading prices for the Trulieve Subordinate Voting Shares during the 52-week period ended May 7, 2021, which reflected low and high share prices during such period of $11.55 and $55.54 per share. Moelis noted the closing price per Trulieve Subordinate Voting Share of $40.93 as of May 7, 2021.

 

•

Moelis reviewed the exchange ratio implied by the trading prices of Harvest Subordinate Voting Shares and Trulieve Subordinate Voting Shares over various periods ended May 7, 2021 (based on an assumed exchange rate of $0.823 per C$1.00), as set forth in the following table:

 

Implied Exchange Ratio
High (1/17/2020)		Low (8/28/2020)		5-day VWAP		15-day VWAP		30-day VWAP		60-day VWAP
0.328x		0.054x		0.078x		0.076x		0.076x		0.073x
Average Implied Exchange Ratio
1-year		9-month		6-month		3-month		1-month		Since 1/1/2020
0.074x		0.075x		0.072x		0.069x		0.073x		0.102x

Miscellaneous

This summary of the analyses is not a complete description of Moelis’ opinion or the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.

No company used in the analyses described above is identical to Harvest or Trulieve. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above (including much of the information used therein) are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither Harvest nor Moelis or any other person assumes responsibility if future results are materially different from those forecast.

Harvest did not instruct Moelis to prepare, and Moelis has not prepared, a formal valuation of Harvest, Trulieve or any of their respective securities or assets, and Moelis’s fairness opinion should not be construed as such.

Except as described in this summary, Harvest and the Harvest Board imposed no other instructions or limitations on Moelis with respect to the investigations made or procedures followed by Moelis in rendering its opinion. The Exchange Ratio was determined through arms’ length negotiations between Harvest, on the one hand, and Trulieve, on the other, and was approved by the Harvest Board and the Trulieve Board. Moelis did not recommend any specific consideration to Harvest or the Harvest Board, or that any specific amount or type of consideration constituted the only appropriate consideration for the Arrangement.

Moelis acted as the financial advisor to Harvest in connection with the Arrangement and will receive a transaction fee estimated to be approximately $17.2 million for its services contingent upon the consummation of the Arrangement (the “Transaction Fee”). Moelis also became entitled to receive a fee of $2.0 million, which fee became payable upon the delivery of Moelis’ opinion, regardless of the conclusion reached by Moelis therein (the “Opinion Fee”). The Opinion Fee will be credited, to the extent previously paid, against the Transaction Fee. In addition, Harvest agreed to reimburse Moelis for certain costs and expenses, and to indemnify Moelis for certain liabilities, including liabilities under Securities Laws, arising out of its engagement.

 

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Moelis’ affiliates, employees, officers and partners may at any time own securities (long or short) of Harvest, Trulieve or their respective affiliates. In the two years preceding the date of its opinion, Moelis had not provided investment banking or other services to Harvest unrelated to the Arrangement or to Trulieve. In the future Moelis may provide such services to Harvest or Trulieve or their affiliates and may receive compensation for such services.

The Harvest Board selected Moelis as its financial advisor in connection with the Arrangement because Moelis has substantial experience in similar transactions. Moelis is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings, and valuations for corporate and other purposes.

Haywood Securities Inc.

Pursuant to an engagement letter dated as of April 30, 2021, Harvest retained Haywood to render an opinion to the Harvest Special Committee as to the fairness, from a financial point of view, to Harvest of the Exchange Ratio provided for under the terms of the Arrangement Agreement. On May 9, 2021, Haywood delivered its oral opinion, subsequently confirmed in writing, to the Harvest Special Committee that, as at the date thereof, based upon the scope of review and subject to the assumptions, limitations, qualifications, procedures and other factors set out therein, the Exchange Ratio is fair, from a financial point of view, to the Harvest Shareholders.

The full text of Haywood’s written opinion dated May 9, 2021, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Appendix “H” to this Circular and is incorporated herein by reference. Haywood’s opinion was provided for the use and benefit of the Harvest Special Committee (solely in its capacity as such) in its evaluation of the Arrangement. Haywood’s opinion is limited solely to the fairness, from a financial point of view, of the Exchange Ratio to the holders of Harvest Shares (on an as-converted basis), and does not address Harvest’s underlying business decision to effect the Arrangement or the relative merits of the Arrangement as compared to any alternative business strategies or transactions that might be available to Harvest. Haywood’s opinion does not constitute a recommendation as to how any holder of securities of Harvest or Trulieve should vote or act with respect to the Arrangement or any other matter.

Harvest’s Unaudited Financial Projections

Harvest does not as a matter of course make public projections as to future sales, earnings, or other results, and forecasts for extended periods of time are of particular concern to Harvest due to the unpredictability of the underlying assumptions and estimates, particularly during the current pandemic. In connection with the evaluation of the Arrangement, however, in April 2021 Harvest management prepared certain unaudited prospective financial information for fiscal years ending December 31, 2021 through December 31, 2023 for the Harvest Board, Moelis and Haywood (collectively, the “Management Financial Projections”). The Management Financial Projections were prepared treating Harvest on a stand-alone basis, without giving effect to the Arrangement including the impact of negotiating or executing the Arrangement, the expenses that may be incurred in connection with consummating the Arrangement, the potential synergies that may be achieved by the Combined Company as a result of the Arrangement, the effect of any business or strategic decision or action that has been or will be taken as a result of the Arrangement Agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the Arrangement Agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the Arrangement. In April 2021, Harvest management also prepared certain estimates of synergies expected to be realized following the Effective Time of the Arrangement (the “Expected Synergies”). The Expected Synergies represent an estimated $5 million in the first year and an estimated $8 million annually thereafter, as well as the estimated minimum $40 million one-time benefit from the divestiture of a duplicative Florida license. The Expected Synergies assume that the expected benefits of the Arrangement will be realized, including that no restrictions, terms or other conditions would be imposed in connection with the receipt of any necessary governmental, regulatory or other approvals or consents in connection with the consummation of the

 

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Arrangement. The Expected Synergies are not reflected in the Management Financial Projections. In addition, in April 2021, Harvest management reviewed and adjusted the Trulieve Financial Projections (“Trulieve Adjusted Management Projections”) to provide for downward adjustments to 2021 and 2022 revenue projections provided by Trulieve’s management based on estimated market size and market share analyses in Florida and Pennsylvania. Additionally, Harvest management prepared 2023E projections for Trulieve based upon certain key assumptions mentioned below. The Trulieve Adjusted Management Projections can be found below under the heading “Summary of the Trulieve Financial Projections by Harvest.”

The Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections were not prepared with a view toward public disclosure or with a view toward compliance with the published guidelines established by the SEC or the American Institute of Certified Public Accountants or Canadian securities regulators for preparation or presentation of prospective financial information or financial outlooks, or IFRS, but, in the view of Harvest management, were prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of preparation, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Harvest. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this Circular are cautioned not to place undue reliance on the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections. Although Harvest management believes there is a reasonable basis for the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections, Harvest cautions Harvest Shareholders that future results could be materially different from the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections. This summary of the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections is not being included in this Circular to influence your decision whether to vote for the Arrangement Resolution, but because these Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections were shared between Harvest and Trulieve and provided to Harvest’s financial advisors and the Harvest Board for purposes of considering and evaluating the Arrangement Agreement and the Arrangement.

The Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections were prepared by, and are the responsibility of, Harvest’s Management. Harvest’s independent registered public accounting firm has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections. Accordingly, Harvest’s independent registered public accounting firm does not express an opinion or any other form of assurance with respect thereto, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the financial projections. The report of Harvest’s independent registered public accounting firm attached to and incorporated in this Circular relates to Harvest’s historical financial statements; the report does not extend to the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections and should not be read to do so.

The Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections are subject to estimates and assumptions in many respects and, as a result, subject to interpretation. While presented with numerical specificity, the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections are based upon a variety of estimates and assumptions that are inherently uncertain including in respect of the potential or possible impact of COVID-19 on industry conditions or Harvest’s business, though considered reasonable by Harvest management as of the date of their preparation. These estimates and assumptions may prove to be inaccurate for many reasons, including general economic conditions, the unpredictable impacts of COVID-19, challenges related to the COVID-19 pandemic, competition, and the risks discussed in this Circular under the sections entitled “Information Concerning Forward-Looking Statements” and “Risk Factors.” The Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections also reflect assumptions as to certain business decisions that are subject to change. Because the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections were developed for Harvest on a stand-alone basis without giving effect to the Arrangement, they do

 

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not reflect any synergies that may be realized as a result of the Arrangement or any changes to Harvest’s operations or strategy that may be implemented after completion of the Arrangement. There can be no assurance that the Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections will be realized, and actual results may differ materially from those shown. Generally, the further out the period to which Management Financial Projections, Expected Synergies and Trulieve Adjusted Management Projections relate, the less predictable and more unreliable the information becomes.

Key Assumptions by Harvest Management in Preparing Management Financial Projections and Trulieve Adjusted Management Projections

The key assumptions considered by Harvest management in connection with the Management Financial Projections and the Trulieve Adjusted Management Projections include, but are not limited to the following:

 

•

Florida adult recreational cannabis use passes in the second half of 2022 and is reflected in the Management Financial Projections and the Trulieve Adjusted Management Projections in the second half of 2023;

 

•

Florida operations perform at 2.0x current operations once adult recreational use is instituted;

 

•

Capital expenditures increase in 2022E and 2023E to support the transition to adult recreational use in Florida; and

 

•

Terminal year Management Financial Projections and Trulieve Adjusted Management Projections reflect the following:

 

•

Incorporation of a full year of Florida adult recreational use; and

 

•

Reduction in Florida capital expenditures to a maintenance level.

Summary of the Management Financial Projections by Harvest

The following table presents certain unaudited prospective financial information of Harvest prepared by Harvest management for fiscal years ended December 31, 2021 through December 31, 2023 which were approved for use by the Harvest Board, Moelis and Haywood, and, with the consent of the Harvest Board, were used in connection with Moelis rendering the Moelis Fairness Opinion to the Harvest Board and with Haywood rendering the Haywood Fairness Opinion to the Harvest Special Committee.

 

		Fiscal Year Ending December 31,												Terminal Year
(in millions of USD)		2021E				2022E				2023E
Revenue		$	470			$	837			$	1,254			$	1,381
Gross Profit		$	264			$	489			$	753			$	830
EBITDA		$	128			$	299			$	512			$	564
Unlevered Free Cash Flow		$	($52	)		$	99			$	292			$	365

As used above, EBITDA, a non-GAAP financial measure is calculated as net income (loss) before non-controlling interest before net interest and other financing costs, income taxes, depreciation, and amortization expenses and after stock based compensation expense.

Unlevered Free Cash flow, a non-GAAP financial measure is defined as cash flow available to equity and debtholders after all the operating expenses, taxes, capital expenditures, investments in acquisitions, and investments in working capital have been made.

Harvest did not provide reconciliations of the non-GAAP measures included in the Management Financial Projections to the comparable GAAP measure due to the inherent difficulty in forecasting and quantifying the measures that are necessary for such reconciliation.

Summary of the Trulieve Adjusted Management Projections by Harvest

The following table presents the Trulieve Adjusted Management Projections, prepared by Harvest, which were approved for use by Moelis and Haywood by Harvest management and, with the consent of the Harvest Board,

 

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