Cansortium & RIV Capital Business Combination

The RIV Meeting will be held at the offices of Cassels Brock & Blackwell LLP, Suite 3200, Bay Adelaide Centre – North Tower, 40 Temperance St., Toronto, Ontario on August 27, 2024 at 9:30 a.m. (EDT). 

Registered RIV Shareholders and duly appointed proxyholders (including any Non-Registered RIV Shareholders who have appointed themselves as proxyholder) will be able to attend, ask questions and vote in person at the RIV Meeting, provided that they carefully follow the instructions set out in the Circular and the related proxy materials.

Non-Registered RIV Shareholders may attend the RIV Meeting as guests but will not be able to ask questions or vote in person at the RIV Meeting, unless they have been duly appointed as proxyholders in accordance with the procedures set out below and in the related proxy materials. See “Information Concerning the RIV Meeting – Attending the RIV Meeting” in the Circular for additional information on how to vote and ask questions in person at the RIV Meeting.

Only Registered RIV Shareholders at the close of business on July 12, 2024, the Record Date, or their duly appointed proxyholders, are entitled to vote at the RIV Meeting. Each RIV Shareholder is entitled to one vote for each RIV Share held by such holder as of the close of business on the Record Date.

The quorum for the RIV Meeting is two persons present in person and holding or representing by proxy not less than 20% of the votes attached to all RIV Shares entitled to be voted at the RIV Meeting. 

You will not be entitled to vote RIV Shares acquired after the Record Date at the RIV Meeting. Only persons owning RIV Shares as of the Record Date are entitled to vote at the RIV Meeting.

You are a Registered RIV Shareholder if you have certificate(s) or DRS Statement(s) representing RIV Shares issued in your name and appear on the books of RIV Capital as a holder of RIV Shares. 

You are a Non-Registered RIV Shareholder if your RIV Shares are registered in the name of an Intermediary. If you are not sure whether you are a Registered RIV Shareholder or a Non-Registered RIV Shareholder, please contact Odyssey at 1(888) 290-1175 toll free in North America, or at 1(587) 885-0960 outside of North America, or by e-mail at shareholders@odysseytrust.com.

As a Registered RIV Shareholder, you may either vote by proxy or in person at the RIV Meeting by following the steps below.

Registered RIV Shareholders – Voting by Proxy 
Voting by proxy is the easiest way for Registered RIV Shareholders to cast their vote. Registered RIV Shareholders can vote by proxy in any of the following ways:

• By Internet: Go to https://vote.odysseytrust.com and follow the instructions on the screen. Votes cast electronically are in all respects equivalent to, and will be treated in the exact same manner as, votes cast via a paper form of proxy.
• By Mail: Registered RIV Shareholders can complete, sign and date their form of proxy and return it in the envelope provided for that purpose to Odyssey Trust Company, Attention: Proxy Department, Traders Bank Building, Suite 702, 67 Yonge St, Toronto, Ontario M5E 1J8.

A proxy will not be valid for use at the RIV Meeting unless it is duly completed and received by Odyssey in accordance with the instructions thereon by 9:30 a.m. (EDT) on August 23, 2024, or no later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of any adjourned or postponed RIV Meeting. Late proxies may be accepted or rejected at the discretion of the Chair of the RIV Meeting.

The persons named in the form of proxy are Michael Totzke, Interim Chief Executive Officer and Chief Operating Officer of RIV Capital, or failing him, Edward Lucarelli, Chief Financial Officer of RIV Capital. A RIV Shareholder that wishes to appoint another person or entity (who need not be a RIV Shareholder) to represent such RIV Shareholder at the RIV Meeting may either insert the person or entity’s name in the blank space provided in the form of proxy or complete another proper form of proxy and submit the form of proxy. Each RIV Shareholder may instruct his or her proxy on how to vote his or her RIV Shares by completing the blanks on the form of proxy.

Registered RIV Shareholders – Voting In Person

Registered RIV Shareholders and duly appointed proxyholders who plan to attend and vote in person at the RIV Meeting must register with RIV Capital’s transfer agent, Odyssey, when they arrive at the RIV Meeting to ensure that their vote will be counted. Registered RIV Shareholders who plan to attend and to vote at the RIV Meeting in person should not complete or return the form of proxy. Their vote will be taken and counted at the RIV Meeting.

For more details, please refer to the Circular.

As a Non-Registered RIV Shareholder, you may vote by submitting voting instructions by following the steps below. The information set forth in this section is of significant importance to Non-Registered RIV Shareholders.

Non-Registered RIV Shareholders – Voting by Submitting Voting Instructions

Non-Registered RIV Shareholders should note that only proxies deposited by RIV Shareholders whose names appear on the records of RIV Capital as of the Record Date as the registered RIV Shareholders can be recognized and acted upon at the RIV Meeting. If RIV Shares are listed in an account statement provided to a RIV Shareholder by an Intermediary, then in almost all cases those RIV Shares will not be registered in such RIV Shareholder’s name on the records of RIV Capital. Such RIV Shares will more likely be registered under the name of the RIV Shareholder’s Intermediary. In Canada, the vast majority of such RIV Shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities), which acts as a nominee for many Canadian brokerage firms. RIV Shares held by Intermediaries can only be voted (for, withheld or against resolutions) upon the instructions of the Non-Registered RIV Shareholder. Without specific instructions, Intermediaries are prohibited from voting RIV Shares for their clients. The directors and officers of RIV Capital do not know for whose benefit the RIV Shares registered in the name of CDS & Co., or another Intermediary, are held.

If you are a Non-Registered RIV Shareholder, your Intermediary will send you a voting instruction form that allows you to provide voting instructions to your Intermediary on the Internet, by telephone or by email. Intermediaries are required to seek voting instructions from Non-Registered RIV Shareholders in advance of shareholder meetings. Every Intermediary has its own mailing procedures and provides its own return voting instructions, which should be carefully followed by Non-Registered RIV Shareholders to ensure that their RIV Shares are voted at the RIV Meeting. Often the form of proxy supplied to a Non-Registered RIV Shareholder by its Intermediary is identical to the form of proxy provided by RIV Capital to the Intermediaries. However, its purpose is limited to instructing the Intermediary on how to vote on behalf of the Non-Registered RIV Shareholder. The majority of Intermediaries now delegate responsibility for obtaining instructions on how to vote from clients to Broadridge. Broadridge typically mails a form of proxy or voting instruction form to the Non-Registered RIV Shareholders and asks the Non-Registered RIV Shareholders to return the form of proxy or voting instruction form to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of RIV Shares to be represented at the RIV Meeting. A Non-Registered RIV Shareholder receiving a form of proxy or voting instruction form from Broadridge cannot use that form of proxy or voting instruction form to vote RIV Shares directly at the RIV Meeting. The form of proxy or voting instruction form must be returned to Broadridge or the Intermediary well in advance of the RIV Meeting to have the RIV Shares voted. A Non-Registered RIV Shareholder may revoke a form of proxy or voting instruction form or a waiver of the right to receive RIV Meeting materials and to vote which has been given to their Intermediary at any time by written notice to the Intermediary, provided that the Intermediary is not required to act on a revocation of a form of proxy or voting instruction form or of a waiver of the right to receive RIV Meeting materials and to vote, which is not received by the Intermediary at least seven days prior to the RIV Meeting.

If you have any questions regarding the voting of RIV Shares held through a broker or other Intermediary, please contact your broker or other Intermediary for assistance.

In accordance with the requirements of NI 54-101, RIV Capital is using notice-and-access to send proxy-related materials for use in connection with the RIV Meeting to Non-Registered RIV Shareholders using the “indirect” sending procedures set out in NI 54-101. Accordingly, RIV Capital has distributed copies of the RIV Meeting materials to Broadridge to deliver, on behalf of the Intermediaries, to the Non-Registered RIV Shareholders.

For more details, please refer to the Circular.

Non-Registered RIV Shareholders – Voting in Person

A Non-Registered RIV Shareholder can only vote its RIV Shares in person at the RIV Meeting if it has previously appointed itself as the proxyholder for its RIV Shares by printing its name in the space provided on the voting instruction form and submitting it as directed on the form.

Non-Registered RIV Shareholders who have validly appointed themselves as proxyholders and who plan to attend and vote in person at the RIV Meeting must register with RIV Capital’s transfer agent, Odyssey, when they arrive at the RIV Meeting to ensure that their vote will be counted.

A Non-Registered RIV Shareholder may also appoint someone else (who need not be a RIV Shareholder) as its proxyholder to vote its RIV Shares in person at the RIV Meeting by printing their name in the space provided on the voting instruction form and submitting it as directed on the form.

Duly appointed proxyholders who plan to attend and vote in person at the RIV Meeting must register with RIV Capital’s transfer agent, Odyssey, when they arrive at the RIV Meeting to ensure that their vote will be counted. 

For more details, please refer to the Circular.

The management of RIV Capital is soliciting your proxy. To encourage your vote participation, you may be contacted by directors, officers, employees, consultants or agents of RIV Capital by telephone, email, internet, facsimile, in person or by other means of communication. The total cost of soliciting proxies and mailing the RIV Meeting materials to RIV Shareholder will be borne by RIV Capital. 

The form of proxy, when properly signed, confers authority on the persons named in it as proxies to use their discretion in voting on any amendments or variations to the matters identified in the RIV Notice of Meeting or other matters that may properly come before the RIV Meeting, or any adjournment or postponement thereof. In addition, if you do not give any instruction as to how to vote on a particular matter to be decided at the RIV Meeting, your proxyholder can vote your RIV Shares as he or she thinks fit. Notwithstanding the foregoing, the persons named in the form of proxy will vote or withhold from voting the RIV Shares in respect of which they are appointed in accordance with the direction of the RIV Shareholder appointing them and if the RIV Shareholder specifies a choice with respect to any matter to be voted upon, such RIV Shareholders’ RIV Shares will be voted accordingly. If you sign and return your form of proxy without designating a proxyholder and do not give voting instructions or do not specify that you want your RIV Shares voted against the Arrangement Resolution and the Annual Resolutions, the RIV Capital representatives named in the form of proxy will vote your RIV Shares IN FAVOUR of the Arrangement Resolution and the Annual Resolutions. 

IN THE ABSENCE OF ANY SUCH INSTRUCTION, RIV SHARES REPRESENTED BY PROXIES RECEIVED BY RIV CAPITAL MANAGEMENT WILL BE VOTED IN FAVOUR OF THE ARRANGEMENT RESOLUTION AND THE ANNUAL RESOLUTIONS.

Yes. Once you have carefully read and considered the information in the Circular, you should complete and submit the voting instruction form or form of proxy. You are encouraged to vote well in advance of the proxy cut off time to ensure your vote is received in a timely manner. Your vote will not be valid at the RIV Meeting unless it is duly completed and received by Odyssey in accordance with the instructions thereon by 9:30 a.m. (EDT) on August 23, 2024, or no later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of any adjourned or postponed RIV Meeting. Late proxies may be accepted or rejected at the discretion of the Chair of the RIV Meeting. The Chair is under no obligation to accept or reject any particular late proxy. The time limit for deposit of proxies may be waived or extended by the Chair of the RIV Meeting, at the Chair’s discretion, with or without notice. 

Votes by proxy are counted and tabulated by RIV Capital’s transfer agent, Odyssey.

On May 30, 2024 RIV Capital and Cansortium entered into the Arrangement Agreement pursuant to which Cansortium agreed to acquire all of the issued and outstanding RIV Shares. The Arrangement will be effected by way of a court-approved plan of arrangement under section 182 of the OBCA. Under the Arrangement, each RIV Shareholder (other than any Dissenting Shareholders) will receive 1.245 Cansortium Shares for each RIV Share held. If the Arrangement is completed, RIV Capital will become a wholly-owned Subsidiary of Cansortium.

For more details, please refer to the Circular or the press release.

In reaching their conclusions and formulating their respective unanimous recommendations, the RIV Strategic Growth Committee and the RIV Board consulted with RIV Capital’s senior management and their respective legal and financial advisors. The RIV Strategic Growth Committee and the RIV Board also reviewed a significant amount of financial and technical information relating to RIV Capital and Cansortium and considered a number of factors. A summary of the principal reasons for the unanimous recommendation of the RIV Strategic Growth Committee and the RIV Board that RIV Shareholders vote IN FAVOUR of the Arrangement Resolution is set forth under the heading “The Arrangement – Reasons for the Recommendation of the RIV Strategic Growth Committee and the RIV Board”. 

Additional key transaction highlights include:

• Positioned in Key U.S. Markets: The Combined Company will be geographically diversified across the eastern U.S., spanning four key states (Florida, New York, Texas and Pennsylvania), positioning the Combined Company to cover approximately 25% of the U.S. population. These limited license markets in which the Combined Company is expected to hold a strong position have well-staged regulatory catalysts in the near and medium term.
• Bolstering Balance Sheet: The Combined Company is expected to be well capitalized with a pro forma cash balance of approximately US$74 million as of March 31, 2024, in a capital scarce environment, in order to enable the Combined Company to fund highly accretive growth. The Hawthorne Collective’s intended exchange of its existing convertible notes in RIV Capital for a new class of non-voting exchangeable shares of Cansortium will eliminate US$175 million of debt, which is expected to fundamentally transform the Combined Company’s balance sheet.
• Operational Efficiencies: Cost synergy opportunities are estimated to be approximately US$5-10 million annually over the next few years, which are expected to be realized from anticipated cultivation, processing and operating efficiencies, corporate integration and eliminating duplicative public company costs in the Combined Company.
• Strategic Partnerships: Strategic relationship with The Scotts Miracle-Gro Company (“ScottsMiracle-Gro”) (NYSE: SMG) through its investment in RIV Capital via its wholly- owned subsidiary, The Hawthorne Collective and through innovative growing products sold by its wholly-owned subsidiary, The Hawthorne Gardening Company (together with The Hawthorne Collective, “Hawthorne”). The Hawthorne Collective intends to exchange its existing convertible notes in RIV Capital for a new class of non-voting exchangeable shares of Cansortium at closing, further strengthening and reinforcing its relationship with the Combined Company.
• Scalable Talent-Base: Expanded talent-base through the combination of Cansortium and RIV Capital management and operating personnel. The Combined Company will seek to leverage Cansortium’s operating expertise and best practices across its footprint.
  

Yes. The RIV Board, having undertaken a thorough review of, and having carefully considered the terms of the Arrangement and the Arrangement Agreement, and after consultation with representatives of RIV Capital’s senior management, its financial and legal advisors, having received the unanimous recommendation of the RIV Strategic Growth Committee, following receipt of the INFOR Financial Fairness Opinion, and having received and taken into account the Moelis Fairness Opinion and such other matters as it considered necessary and relevant, including the factors set out below under the heading “The Arrangement – Reasons for the Recommendation of the RIV Strategic Growth Committee and the RIV Board”, unanimously determined that the Arrangement and entering into the Arrangement Agreement are in the best interest of RIV Capital and is fair to the RIV Shareholders and authorized RIV Capital to enter into the Arrangement Agreement and all related agreements.

Yes. The RIV Board unanimously recommends that RIV Shareholders vote IN FAVOUR of the Arrangement Resolution.

If the Arrangement Resolution is approved at the RIV Meeting, the Final Order approving the Arrangement is issued by the Court and the other applicable conditions to the completion of the Arrangement are satisfied or waived, the Arrangement is expected to be completed in the fourth quarter of 2024. 

RIV Capital and Cansortium will issue press releases once all the necessary approvals have been received and conditions to the completion of the Arrangement have been satisfied or waived, other than conditions that, by their terms, cannot be satisfied until the Effective Time.

The Cansortium Shares currently trade on the CSE under the symbol “TIUM.U” and on the OTCQB Venture Market under the symbol “CNTMF”. It is anticipated that, following completion of the Arrangement, the Cansortium Shares will continue to be listed and posted for trading on the CSE under the symbol “TIUM.U” and on the OTCQB Venture Market under the symbol “CNTMF”. 

In order for the Arrangement to become effective, the Arrangement Resolution must be approved by the affirmative vote of (i) at least 662/3% of the votes cast by RIV Shareholders present in person or represented by proxy and entitled to vote at the RIV Meeting and (ii) a simple majority of the votes cast by RIV Shareholders present in person or represented by proxy and entitled to vote at the RIV Meeting, excluding the votes cast in respect of RIV Shares held by any interested party, any related party of an interested party or any joint actor (as such terms are defined in MI 61-101) and such other RIV Shareholders excluded by MI 61-101. 

The RIV Board has unanimously approved the Arrangement and recommends that RIV Shareholders vote IN FAVOUR of the Arrangement Resolution.

No. Cansortium Shareholders are not required to approve the Arrangement. Cansortium Shareholder are however required to approve the Cansortium Shareholder Resolution as a condition precedent to the completion of the Arrangement. 

For more details, please refer to the Circular.

If you have questions regarding the RIV Meeting, please contact Odyssey at 1(888) 290-1175 toll free in North America, or at 1(587) 885-0960 outside of North America, or by e-mail at shareholders@odysseytrust.com