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
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Filed by a Party other than the Registrant |
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| 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 Rule 14a-12 |
BODY AND MIND INC. |
(Name of Registrant as Specified in Its Charter) |
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| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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| 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. |
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BODY AND MIND INC.
Suite 750, 1095 West Pender Street, Vancouver, British Columbia, Canada V6E 2M6
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on January 23, 2020March 31, 2023
Dear Stockholder:
The annual meeting of stockholders (the “Annual Meeting”) of Body and Mind Inc. (the “Company”) will be held at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7, on January 23, 2020,March 31, 2023, at 10:00 a.m. (Vancouver time).
At the Annual Meeting stockholders will be asked to:
| 1. | elect |
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| 2. | ratify the appointment of |
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| 3. | approve |
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| 4. | approve, on a non-binding advisory basis, the compensation of our named executive officers; and |
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transact any other business properly brought before the Annual Meeting or any adjournment thereof. |
On or about DecemberFebruary 10, 2019,2023, the Company mailed to all stockholders of record, as of November 27, 2019,February 3, 2023 (the “Record Date”), a Notice of Internet Availability of Proxy Materials (the “Notice”). Please carefully review the Notice for information on how to access the Notice of Annual Meeting, Proxy Statement, Proxy Card and our Annual Report on Form 10-K for the fiscal year ended July 31, 20192022 (the “Annual Report on Form 10-K”), on www.proxyvote.com, in addition to instructions on how you may request to receive a paper or email copy of these documents. There is no charge to you for requesting a paper copy of these documents. Our Annual Report on Form 10-K, including financial statements for such period, does not constitute any part of the material for the solicitation of proxies.
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only stockholders of record of the Company’s common stock at the close of business on November 27, 2019,February 3, 2023, are entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
It is important that your shares be represented and voted at the Annual Meeting. If you are the registered holder of the Company’s common stock, you can vote your shares by completing and returning the enclosed proxy card, even if you plan to attend the Annual Meeting. You may vote your shares of common stock in person even if you previously returned a proxy card. Please note, however, that if your shares of common stock are held of record by a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must obtain a proxy issued in your name from such broker, bank or other nominee. Please carefully review the instructions on the proxy card or the information forwarded by your broker, bank or other nominee regarding voting instructions.
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If you are planning to attend the Annual Meeting in person, you will be asked to register before entering the Annual Meeting. All attendees will be required to present government-issued photo identification (e.g., driver’s license or passport) to enter the Annual Meeting. If you are a stockholder of record, your ownership of the Company’s common stock will be verified against the list of stockholders of record as of November 27, 2019,the Record Date, prior to being admitted to the Annual Meeting. If you are not a stockholder of record and hold your shares of common stock in “street name” (that is, your shares of common stock are held in a brokerage account or by a bank or other nominee), you must also provide proof of beneficial ownership as of November 27, 2019,the Record Date, such as your most recent account statement dated prior to November 27, 2019,February 3, 2023, and a copy of the voting instruction card provided by your broker, bank or nominee or similar evidence of ownership.
By Order of the Board of Directors
BODY AND MIND INC.
/s/ Michael Mills | ||
Michael Mills President and Chief Executive Officer | ||
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Dated: |
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 23, 2020:MARCH 31, 2023:
The Proxy Statement and form of Proxy, as well as the
Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 20192022
are available on the Internet at:
www.proxyvote.com
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BODY AND MIND INC.
Suite 750, 1095 West Pender Street, Vancouver, British Columbia, Canada V6E 2M6
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
To be held on January 23, 2020March 31, 2023
THE ANNUAL MEETING
General
This proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors”) of Body and Mind Inc. (“we”, “us”, “our” or the “Company”) for use in connection with our annual meeting of our stockholders (the “Annual Meeting”) to be held on January 23, 2020,March 31, 2023, at 10:00 a.m. (Vancouver time), at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7, or at any adjournment thereof, for the purposes set forth in the accompanying Notice of Meeting.
In accordance with rules and regulations adopted by the United States Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each stockholder of record, we may furnish proxy materials to our stockholders on the Internet. On or about DecemberFebruary 10, 2019,2023, the Company mailed to all stockholders of record, as of November 27, 2019February 3, 2023 (the “Record Date”), a Notice of Internet Availability of Proxy Materials (the “Notice”). If you received only a Notice by mail, you will not receive a printed copy of the proxy materials.
Please carefully review the Notice for information on how to access our proxy materials, consisting of the Notice of Annual Meeting, Proxy Statement and Proxy Card, available at www.proxyvote.com.www.proxyvote.com. You may also access our Annual Report on Form 10-K for each of our fiscal year ended July 31, 20192022 (the “Annual Report on Form 10-K”), including our financial statements for such periods. However, our Annual Report on Form 10-K dodoes not constitute any part of the material for the solicitation of proxies.
The Notice also includes instructions as to how you may submit your proxy on the Internet or over the telephone.
If you received only a Notice of Internet Availability (the “Notice”) by mail and you would like to receive a printed copy of our proxy materials, including a Proxy Card, or a copy of our Annual Report on Form 10-K, you should follow the instructions for requesting such materials included in the Notice. There is no charge to you for requesting a paper copy of these documents.
Our principal offices are located at Suite 750, 1095 West GeorgiaPender Street, Vancouver, British Columbia, Canada, V6E 2M6. Our telephone number is: (800) 361-6312 and our website address is: www.bamcannabis.comwww.bodyandmind.com
Manner of Solicitation and Expenses
This proxy solicitation is made on behalf of our Board of Directors. Solicitation of proxies may be made by our directors, officers and employees personally, by telephone, mail, facsimile, e-mail, internet or otherwise, but they will not be specifically compensated for these services. We will bear the expenses incurred in connection with the solicitation of proxies for the Annual Meeting. Upon request, we will also reimburse brokers, dealers, banks or similar entities acting as nominees for their reasonable expenses incurred in forwarding copies of the proxy materials to the beneficial owners of the shares of our common stock as of the Record Date.
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Record Date and Voting Shares
Our Board of Directors has fixed the close of business on November 27, 2019,February 3, 2023, as the Record Date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. As of the Record Date there were 101,853,217146,636,974 shares of common stock issued, outstanding and entitled to vote at the Annual Meeting. Holders of shares of common stock are entitled to one vote at the Annual Meeting for each share of common stock held of record as of the Record Date. There is no cumulative voting in the election of directors.
Quorum
A quorum is necessary to hold a valid meeting of our stockholders. The required quorum for the transaction of business at the Annual Meeting is ten (10) percent of our issued and outstanding shares of common stock as of the Record Date.
In order to be counted for purposes of determining whether a quorum exists at the Annual Meeting, shares of common stock must be present at the Annual Meeting either in person or represented by proxy. Shares that will be counted for purposes of determining whether a quorum exists will include:
| · | shares of common stock represented by properly executed proxies for which voting instructions have been given, including proxies which are marked “Abstain” or “Withhold” for any matter; |
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| · | shares of common stock represented by properly executed proxies for which no voting instruction has been given; and |
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| · | broker non-votes. |
Broker non-votes occur when shares of common stock held by a broker for a beneficial owner are not voted with respect to a particular proposal because the broker has not received voting instructions from the beneficial owner and the broker does not have discretionary authority to vote such shares.
Entitlement to Vote
If you are a registered holder of shares of our common stock as of November 27, 2019,February 3, 2023, the Record Date for the Annual Meeting, you may vote those shares of our common stock in person at the Annual Meeting or by proxy in the manner described below under “Voting of Proxies”. If you hold shares of our common stock in “street name” through a broker or other financial institution, you must follow the instructions provided by your broker or other financial institution regarding how to instruct your broker or financial institution in respect of voting your shares.
Voting of Proxies
You can vote the shares of common stock that you own of record on the Record Date by either attending the Annual Meeting in person or by filling out and sending in a proxy in respect of the shares that you own. Your execution of a proxy will not affect your right to attend the Annual Meeting and to vote in person. You may also submit your proxy on the Internet or over the telephone by following the instructions contained in the Notice.
You may revoke your proxy at any time before it is voted by:
| (a) | filing a written notice of revocation of proxy with our Corporate Secretary at any time before the taking of the vote at the Annual Meeting; |
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| (b) | executing a later-dated proxy and delivering it to our Corporate Secretary at any time before the taking of the vote at the Annual Meeting; or |
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| (c) | attending at the Annual Meeting, giving affirmative notice that you intend to revoke your proxy and voting in person. Please note that your attendance at the Annual Meeting will not, in and of itself, revoke your proxy. |
All shares of common stock represented by properly executed proxies received at or prior to the Annual Meeting that have not been revoked will be voted in accordance with the instructions of the stockholder who has executed the proxy. If no choice is specified in a proxy, the shares represented by the proxy will be voted FOR all matters to be considered at the Annual Meeting as set forth in the accompanying Notice of Meeting. The shares represented by proxy will also be voted for or against such other matters as may properly come before the Annual Meeting in the discretion of the persons named in the proxy as proxyholders. We are currently not aware of any other matters to be presented for action at the Annual Meeting other than those described herein.
Any written revocation of a proxy or subsequent later-dated proxy should be delivered to the Company at Suite 750, 1095 West GeorgiaPender Street, Vancouver, British Columbia, Canada, V6E 2M6, Attention: Corporate Secretary.
Votes Required
Proposal One – Election of Directors: The affirmative vote of the holders of a plurality of our shares of common stock represented at the Annual Meeting in person or by proxy is required for the election of our directors. This means that the nominees who receive the greatest number of votes for each open seat will be elected. Votes may be cast in favor of the election of directors or withheld. Votes that are withheld and broker non-votes will be counted for the purposes of determining the presence or absence of a quorum, but will have no effect on the election of directors.
Proposal Two – Appointment of Independent Registered Public Accountants: The affirmative vote of the holders of a majority of our shares of common stock represented at the Annual Meeting in person or by proxy is required for the ratification of the appointment of our independent registered public accountants. Stockholders may vote in favor or against this Proposal or they may abstain. Abstentions are deemed to be “votes cast” and will have the same effect as a vote against this Proposal.
Proposal Three – Ratification and Approval of Continuation ofthe 2023 Stock Optionand Incentive Plan: The affirmative vote of the holders of a majority of our shares of common stock represented at the Annual Meeting in person or by proxy is required for the ratification and approval of continuation of the Company’s 20122023 Stock and Incentive Stock Option Plan. Stockholders may vote in favor or against this Proposal or they may abstain. Abstentions are deemed to be “votes cast” and will have the same effect as a vote against this Proposal. Broker non-votes are not deemed to be votes cast and, therefore, will have no effect on the vote with respect to this Proposal.
Proposal Four – Say-on-Pay for Executive Compensation – Advisory Resolution: The vote to approve the compensation of our named executive officers (commonly known as a “say-on-pay” vote) is advisory and, therefore, not binding on the Company, the Compensation Committee or our Board of Directors. The affirmative vote of the holders of a majority of our common stock represented at the Annual Meeting in person or by proxy is required for the non-binding advisory vote on executive compensation. Stockholders may vote in favor of or against the Proposal or they may abstain. Abstentions are deemed to be “votes cast” and will have the same effect as a vote against this Proposal. Broker non-votes are not deemed to be votes cast and, therefore, will have no effect on the vote with respect to this Proposal.
Proposal Five – Frequency of Executive Compensation Votes – Advisory Resolution: The vote on how often the Company should include a say-on-pay vote in its proxy materials for future annual meetings of stockholders is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. The affirmative vote of the holders of a majority of our common stock represented at the Annual Meeting in person or by proxy is required for the non-binding vote on frequency of executive compensation votes. Stockholders may vote to have the say-on-pay vote every year, every two years or every three years. Broker non-votes are not deemed to be votes cast and, therefore, will have no effect on the vote with respect to this Proposal. The option receiving the greatest number of votes (every one, two or three years) will be considered the frequency selected by stockholders.
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Stockholder Proposals
No proposals have been received from any stockholder for consideration at the Annual Meeting.
Other Matters
It is not expected that any matters other than those referred to in this Proxy Statement will be brought before the Annual Meeting. If other matters are properly presented, however, the persons named as proxyholders will vote in accordance with their best judgment on such matters. The grant of a proxy also will confer discretionary authority on the persons named as proxyholders to vote in accordance with their best judgment on matters incidental to the conduct of the Annual Meeting.
No Rights of Appraisal
There are no rights of appraisal or similar rights of dissenters with respect to the matters that are the subject of this proxy solicitation under the laws of the State of Nevada, our certificate of incorporation or our bylaws.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the following persons has any substantial interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Annual Meeting, other than elections to office and as named executive officers in respect of whose compensation the non-binding advisory vote on executive compensation will be held:
| · | each person who has been one of our directors or executive officers at any time since the beginning of our last fiscal year; |
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| · | each nominee for election as one of our directors; or |
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| · | any associate of any of the foregoing persons. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of November 27, 2019,February 3, 2023, by:
| · | each person who is known by us to beneficially own more than 5% of our shares of common stock; and |
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| · | each executive officer, each director and all of our directors and executive officers as a group. |
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The number of shares beneficially owned and the related percentages are based on 101,853,217146,636,974 shares of common stock outstanding as of November 27, 2019.February 3, 2023.
For the purposes of the information provided below, Common Shares that may be issued upon the exercise or conversion of stock options, warrants and other rights to acquire shares of our common stock that are exercisable or convertible within 60 days following November 27, 2019,February 3, 2023, when there were deemed to be 101,853,217146,636,974 Common Shares of the Company outstanding and beneficially owned by the stockholders for the purpose of computing the number of Common Shares and percentage ownership of each holder are reported below, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.
Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership(1) | Percentage of Beneficial Ownership | |||||||
Directors and Officers: |
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Michael Mills, President, c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 |
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Darren Tindale, Corporate Secretary c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 |
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Brent Reuter, Director c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 | 500,000(4) |
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c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 | 1,457,000(5) | 1.0% | |||||||
c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 | * | ||||||||
c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 | 250,000(7) | * | |||||||
c/o Suite 750,1095 West Pender Street Vancouver, British Columbia, Canada, V6E 2M6 | 60,437,087(8) |
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All directors and executive officers as a group ( | 66,116,547(9) | 33.6% |
Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership(1) | Percentage of Beneficial Ownership | |||||||
Major Stockholders: |
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6608 E 2nd Street Scottsdale, AZ 85251 | 53,492,643(10) | 27.9% | |||||||
BAM I, A Series of Bengal Catalyst Fund SPV, LP 6608 E 2nd Street Scottsdale, AZ 85251 | 41,250,000(11) | 22.0% | |||||||
| 54,159,310(12) | ||||||||
28.3% |
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Less than one percent. | |
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Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of such security; and (ii) investment power, which includes the power to dispose or direct the disposition of the security. Certain shares of common stock may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares of common stock are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares of common stock outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of common stock of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of the date of this Proxy Statement. As of | |
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This figure represents (i) 188,000 shares of common stock held by Mr. Mills, (ii) 18,000 shares of common stock held by Mr. Mills’ wife, | |
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This figure represents (i) | |
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This figure represents stock options to purchase | |
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This figure represents (i) | |
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This figure represents (i) | |
(7) | This figure represents stock options to purchase 250,000 shares of common stock which have vested. |
(8) | This figure represents (i) |
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(9) | This figure represents (i) 15,951,547 shares of common stock, (ii) |
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(11) | This figure represents (i) BAM I Note in the principal amount of $2,750,000, and (ii) BAM I Warrants exercisable for 13,750,000 shares of common stock. BAM I is managed by the Manager, which has sole investment control and voting power over securities held by BAM I. The Manager disclaims beneficial ownership of the shares of common stock held by BAM I, except to the extent of its pecuniary interest therein. Does not take into account any beneficial ownership limitations set forth in the BAM I Note and the BAM I Warrants, which were waived in February 2023. Also, these figures exclude shares of common stock issuable at the election of BAM I upon conversion of accrued interest (both past and future) into shares of common stock. |
(12) | This figure represents (i) 666,667 shares of common stock held directly Mr. Tolia, (ii) 1,333,333 shares of common stock held by the Manager, which Mr. Tolia shares investment control and voting power over the Manager with Joshua Rosen, (iii) 7,159,310 shares of common stock held by Bengal Catalyst Fund, LP, which is managed by the Manager, (iv) BAM I Note in the principal amount of $2,750,000, (v) BAM I Warrants exercisable for 13,750,000 shares of common stock, (vi) Mindset Notes in the principal amount of $250,000, and (vii) Mindset Warrants exercisable for 1,250,000 shares of common stock. BAM I is managed by the Manager, which has sole investment control and voting power over securities held by BAM I. Pursuant to that |
Changes in Control
We are unaware of any contract, or other arrangement or provision, the operation of which may at a subsequent date result in a change of control of our Company.
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PROPOSAL NUMBER ONE:
ELECTION OF DIRECTORS TO OUR BOARD OF DIRECTORS
Election of Directors
Each of our directors is elected at the annual meeting of our stockholders and, upon the director’s election, will hold office until our next annual meeting or until his or her successor is elected and qualified.
The persons named in the enclosed form of proxy as proxyholders intend to vote for the election of the nominees listed below as directors unless instructed otherwise, or unless a nominee is unable or unwilling to serve as a director of the Company. Our Board of Directors has no reason to believe that any nominee is unable or unwilling to serve, but if a nominee should determine not to serve, the persons named in the form of proxy as proxyholders will have the discretion and intend to vote for another candidate that would be nominated by our Board of Directors.
The affirmative vote of a plurality of the votes present in person or by proxy at the Annual Meeting and entitled to vote on the election of directors is required for the election of each nominee as a director. Our constating documents do not provide for cumulative voting in the election of directors.
Nominees for Election as Directors
Robert Hasman, Dong Shim, David WengerMichael Mills, Brent Reuter, Stephen Hoffman, Alexis Podesta and Brent Reuter,Joshua Rosen, each of whom is a current director, and Michael Mills, who is our President and Interim Chief Executive Officer, is a new director nominee, have been nominated for election as directors. It is the intention of the persons named in the accompanying form of proxy as proxyholders to vote proxies for the election of each of these individuals as a director and each of the nominees has consented to being named in this Proxy Statement and to serve as a director, if elected.
Directors and Executive Officers
Our current directors and executive officers and their respective ages as of November 27, 2019,February 3, 2023, are as follows:
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Michael Mills |
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Darren Tindale |
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Stephen ‘Trip’ Hoffman |
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| Chief Operating Officer (“COO”) and a director |
Brent Reuter |
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Dong Shim |
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| Chief Financial Officer |
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Joshua Rosen | 49 |
| A director |
The following describes the business experience of each nominee for election to our Board of Directors, including other directorships held in reporting companies:
Robert Hasman.Michael Mills. Mr. HasmanMills was appointed President and Interim Chief Executive Officer on August 21, 2019 and was previously the Vice-President, Communications of the Company from June 2018 to August 21, 2019. On January 23, 2020, Mr. Mills was elected as a director and on April 30, 2020, Mr. Mills was appointed as full-time CEO. Prior to joining the Company, Mr. Mills was the President of Fairlawn Capital Partners Ltd., a consulting company offering finance, communications and capital market solutions to public and private businesses. Mr. Mills has experience in industries including media, manufacturing and technology and held increasingly senior roles at the Financial Post and National Post newspapers. Mr. Mills obtained a Bachelors of Business Administration from Bishop’s University.
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Brent Reuter. Mr. Reuter has been a Board member since November 14, 2017. He isOctober 16, 2019. Mr. Reuter has deep experience driving new revenue growth and managing businesses in the banking and investment sectors, most recently as principal investor relations for Onex Corp., a pioneerprivate equity firm, vice-president of the Nevada marijuana marketasset management for Canadian Imperial Bank of Commerce and as managing director at Royal Bank of Canada with roles in Hong Kong and New York. In these roles, he built high-value client and strategic partnerships, recruited and developed sales teams, and implemented and executed high-impact revenue coverage models. In addition, Mr. Reuter is the foundersenior vice-president of investor relations and the Presidentstrategy of NMG.Australis Capital Inc. Mr. Hasman was responsible for building NMG, which included directing all aspects of strategy, growth, coordinating and supervising all phases of construction & business development process from conceptual through final construction. He is also the Managing Director of Sperry Van Ness,Reuter obtained a NV commercial real estate brokerage firm involved in the original and syndication of more than $1billion of commercial real estate acquisitions. Mr. Hasman has over 10 years’ experience in business development and operations. Mr. Hasman obtained his Bachelor of Arts degreeBusiness Administration from Lakehead University in Political Science at Ohio State University.Thunder Bay, Ontario in 1990.
Dong Shim.Stephen Hoffman. Mr. ShimHoffman has been a Board member since March 1, 2020 and was appointed as Chief Operating Officer (“COO”) of the Company on November 15, 2018. Mr. Hoffman was previously the Chief Executive Officer of Bolder Venture Ltd., a privately held medical and recreational marijuana cultivation and dispensary company located in Boulder, Colorado, from 2016 until his appointment as Chief Operating Officer of the Company. From 2011 to 2016, Mr. Hoffman was the Chief Executive Officer of Trading Block Holdings Inc., a financial technology company located in Chicago, Illinois. Mr. Hoffman obtained a PhD in physics from Purdue University in December 1991.
Alexis Podesta. Ms. Podesta has served in senior roles in both the public and private sector. Known for her talent to skillfully navigate complex policy and political issues, her broad portfolio has included problem-solving on high-profile policies in both government and the corporate world. Ms. Podesta was entrusted by both Governor Gavin Newsom and Governor Edmund G. Brown, Jr. to manage the sprawling California Business, Consumer Services and Housing Agency. As Secretary of the Cabinet-level Agency, she directed its $4.75 billion budget and nearly 6,100 employees. Ms. Podesta oversaw twelve departments, boards, a commission, a panel and a council whose job is to license and regulate professionals and businesses in California to protect consumers; regulate businesses engaged in financial transactions; preserve, expand and fund safe and affordable housing opportunities; to provide solutions to address homelessness in California; to investigate and research earthquake related issues to advise on ways to reduce earthquake risk; and to protect the civil rights of all Californians from acts of hate violence and unlawful discrimination in employment, housing and public accommodations. Additionally, the departments under the agency provided $1.9 billion in funding for affordable housing; made $3.5 billion annually in loans for first-time homebuyers; made $600 million annually in loans for affordable multi-family properties; and provided $650 million in assistance to local jurisdictions to combat homelessness. Additionally, the Department of Fair Employment and Housing filed more than 22,500 civil rights cases. Prior to being appointed to lead the Agency, Ms. Podesta served as the Director of External and International Affairs for Governor Brown. She directed outreach, communication and partnerships with stakeholder groups, and provided key support for the Governor’s special projects. In addition, Ms. Podesta was the Governor’s lead representative on international affairs and served as Chief of Protocol.
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Joshua Rosen. Mr. Rosen has been a Board member since February 1, 2023 and is a director nominee of BaM I, A Series of Bengal Catalyst Fund SPV, LP (“Bengal”) pursuant to the Securities Purchase Agreement between Bengal and the Company, dated December 19, 2022, whereby until the later of (a) the repayment or conversion of the principal amount of the debenture purchased by Bengal from the Company, and (b) Bengal (or any of its affiliates) ceasing to own at least 10% of the issued and outstanding common stock of the Company on an as-converted-basis in the aggregate, Bengal shall be entitled to nominate one (1) director to the Board of Directors. Mr. Rosen is the Interim President of Goodness Growth Holdings Inc. (Dec. 5, 2022 to present) and has been serving as a director of Goodness Growth Holdings Inc. since August 2021. Mr. Rosen also serves as the Managing Partner of Bengal Capital, a cannabis investment and advisory firm since December 2020. From 2011 to May of 2021, Mr. Rosen was a director of 4Front Ventures Corporation and was previously the Executive Chairman and CEO of 4Front and its predecessor companies, having founded 4Front in 2011. Previously, Mr. Rosen gained private equity experience managing the investment arm for a large Phoenix-based family office and also worked extensively in the public markets as an equity analyst having held positions at Credit Suisse and ABN AMRO Bank N.V. Mr. Rosen is also on the Board of Managers of Ninety Plus Coffee, LLC. Mr. Rosen holds a Bachelor of Arts in Economics and Philosophy from Beloit College.
The following describes the business experience of the non-director officers of the Company:
Dong Shim. Mr. Shim was a Board member from December 15, 2016 to February 1, 2023 and was appointed as the Chief Financial Officer of the Company on August 21, 2019. Mr. Shim is a partner and founder of Shim & Associates LLP (June 2013 to present) and Golden Tree Capital Corp. (November 2015 to present) providing accounting and other business advisory services to numerous companies in various industries. Mr. Shim is a director of National Securities Administrators Ltd. (May 2017 to present), Chief Financial Officer for E-Play Digital Inc. (November 2016 to present), Chief Financial Officer for Arizona Silver Exploration Inc. (August 2017 to present), Chief Financial Officer for Canamex Resources Corp. (August 2017 to present), Chief Financial Officer for Mission Ready Solutions Inc. (June 2017 to present), Chief Financial Officer for Organimax Nutrient Corp. (April 2018 to present), Chief Financial Officer for Vanc PharmaceuticalsAvricore Health Inc. (February 2018 to September 2018), and interim Chief Financial Officer of Reliq Health Technologies Inc. (November 2018 to present)March 2020). Mr. Shim also serves as the CFO for International Private Vault Inc., a private company based in British Columbia, Canada, and as a director of National Issuer Services Ltd., a transfer agent company based in British Columbia, Canada.
David Wenger. Mr. Wenger has been a Board member since October 1, 2019. Mr. Wenger is a member of the US Senate Cannabis Working Group and the US House of Representatives Cannabis Working Group. In those roles, he has the historic opportunity to work with senior Congressional staffers on advancing federal cannabis legislation. David wrote a seminal White Paper on the US cannabis industry widely read across the world: The Green Regulatory Arbitrage: A Case for Investing in US Multi-State Vertically-Integrated Cannabis Companies. Mr. Wenger is also an accomplished lawyer and for 13 years he represented foreign government and major corporate clients in high-stakes complex cross-border disputes and transactions. Working in the New York office of the global law firm DLA Piper, he coordinated multi-jurisdictional teams acting for clients around the world such as Kingdom of Thailand, Petrobras, Ruler of Dubai, Afghanistan, PPG, Irving Shipbuilding, Pfizer, Troy (Vietnam), and Oman. As a law student, he interned for federal court judge Honorable Harold Baer Jr. in the US District Court for the Southern District of New York. Mr. Wenger is a Global Advisory Council member for Bhang Corporation (CSE: BHNG); advisor to RCVR, a NYC-based manufacturer of organic athletic recovery products; advisor to Asia Horizon, which is involved in hemp cultivation/processing and product distribution in China and strategic Asia opportunities; and an advisory board member of America Israel Cannabis Association.
Brent Reuter. Mr. Reuter has been a Board member since October 16, 2019. Mr. Reuter has deep experience driving new revenue growth and managing businesses in the banking and investment sectors, most recently as principal investor relations for Onex Corp., a private equity firm, vice-president of asset management for Canadian Imperial Bank of Commerce and as managing director at Royal Bank of Canada with roles in Hong Kong and New York. In these roles, he built high-value client and strategic partnerships, recruited and developed sales teams, and implemented and executed high-impact revenue coverage models. In addition, Mr. Reuter is the senior vice-president of investor relations and strategy of Australis Capital Inc. Mr. Reuter obtained a Bachelor of Business Administration from Lakehead University in Thunder Bay, Ontario in 1990.
Michael Mills. Mr. Mills was appointed President and Interim Chief Executive Officer on August 21, 2019 and was previously the Vice-President, Communications of the Company from June 2018 to August 21, 2019. Prior to joining the Company, Mr. Mills was the President of Fairlawn Capital Partners Ltd., a consulting company offering finance, communications and capital market solutions to public and private businesses. Mr. Mills has experience in industries including media, manufacturing and technology and held increasingly senior roles at the Financial Post and National Post newspapers. Mr. Mills obtained a Bachelors of Business Administration from Bishop’s University.
The following describes the business experience of each of the non-director executive officers of the Company other than Michael Mills who is a director nominee and whose business experience is disclosed above:
Darren Tindale. Mr. Tindale has beenwas our Chief Financial Officer sincefrom March 6, 2017 to August 20, 2019 and has been our Corporate Secretary since August 20, 2019. Mr. Tindale brings over 17 years of financial accounting and management experience and has worked for both public and private companies. Mr. Tindale has served as Chief Financial Officer for numerous TSX Venture listed companies.
Stephen ‘Trip’ Hoffman. Mr. Hoffman was appointed as Chief Operating Officer (“COO”) of the Company on November 15, 2018. Mr. Hoffman was previously the Chief Executive Officer of Bolder Venture Ltd., a privately held medical and recreational marijuana cultivation and dispensary company located in Boulder, Colorado, from 2016 until his appointment as Chief Operating Officer of the Company. From 2011 to 2016, Mr. Hoffman was the Chief Executive Officer of Trading Block Holdings Inc., a financial technology company located in Chicago, Illinois. Mr. Hoffman obtained a PhD in physics from Purdue University in December 1991.
Term of Office
All of our directors, when elected, hold office until the next annual meeting of our stockholders or until their successors are elected and qualified. Our officers are appointed by our Board of Directors and hold office until their successors are appointed and qualified.
Significant Employees
There are no significant employees of the Company other than our executive officers who provide their services on a consulting basis. NMG, our wholly-ownedOur operating subsidiary has 95subsidiaries have an aggregate of 127 employees at all of itsour locations.
Family Relationships
There is no family relationship between any of our executive officers or directors.
-11- |
Involvement in Certain Legal Proceedings
Except as disclosed in this proxy statement, during the past ten years none of the following events have occurred with respect to any of our directors and officers:
| 1. | A petition under any legislation relating to bankruptcy laws or insolvency laws was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; |
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| 2. | Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
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| 3. | Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
| i. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | |
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| ii. | Engaging in any type of business practice; or | |
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| iii. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of applicable securities legislation, whether federal, state or provincial or any applicable commodities legislation; |
| 4. | Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) above, or to be associated with persons engaged in any such activity; |
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| 5. | Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; |
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| 6. | Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
-12- |
| 7. | |
Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| i. | Any Federal or State securities or commodities law or regulation; or | |
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| ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or | |
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| iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 8. | Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the U.S. Securities Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
In 2010, Mr. Hasman was acting as manager of Resort Holdings 2, LLC (“Resort 2”). Resort 2 filed Chapter 11 for a default of a commercial loan. Mr. Hasman was the personal guarantor for the commercial loan on a property located in Las Vegas, Nevada that was owned by Resort 2. The property was foreclosed and a judgment was filed against Mr. Hasman. On July 28, 2017, Mr. Hasman signed an official settlement agreement.
There are currently no legal proceedings to which any of our directors or officers is a party adverse to us or in which any of our directors or officers has a material interest adverse to us.
Meetings of Directors during the last Fiscal Year ended July 31, 20192022
The Company’s Board of Directors held 56 meetings in person, or by teleconference or summaries of actions during the fiscal year ended July 31, 20192022 (“Fiscal 20192022”). No director attended fewer than 60%100% of the total number of the meetings of the Board of Directors held during Fiscal 2019.2022.
The Company does not have a formal policy with respect to director attendance at annual stockholders’ meetings; however, all directors are encouraged to attend. It is anticipated that fourfive directors will attend the 20192023 annual meeting of stockholders in person or by teleconference.
Board Independence
The Board of Directors has determined that David Wenger, Brent Reuter and Kevin HooksAlexis Podesta each qualify as independent directors under the listing standards of the NYSE American. Messrs. ShimMills and HasmanHoffman are not considered independent directors. Mr. Shim isdirectors as they are each an officer of the Company and Mr. HasmanRosen is the President of the Company’s indirect wholly-owned operating subsidiary. In addition, the Board of Directors has determined that Michael Mills, who is a new director nominee, does not qualify asconsidered an independent director under the listing standardsdue to his relationship with Bengal Impact Partners, LLC and BAM I, A Series of the NYSE American as he is an officer of the Company.Bengal Catalyst Fund SPV, LP, a significant investor.
Board Committees
Nominating Committee
We do not have a Nominating Committee and our Board of Directors as a whole is responsible for identifying and nominating qualified individuals to our Board of Directors. Since our formation we have relied upon the personal relationships of our President and directors to attract individuals to our Board of Directors.
-13- |
Our Board of Directors considers its size each year when it considers the number of directors to recommend to the shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board’s duties effectively and to maintain a diversity of views and experience.
We do not have a policy regarding the consideration of any director candidates, which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of thesesuch policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relativethe size and lackcapitalization of directors and officers insurance coverage,our Company, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.
Compensation Committee
Our Compensation Committee is comprised of Mr. Reuter, Mr. WengerHoffman and Mr. Hasman.Ms. Podesta. This committee reviews and recommends to our Board of Directors the salaries, and benefits of all employees, consultants, directors and other individuals compensated by us.
Audit Committee
The Audit Committee is comprised of Mr. Shim,Rosen, Mr. WengerReuter and Mr. Reuter.Ms. Podesta.
Our Board of Directors has determined that we have at least one financial expert.expert on the Audit Committee. Mr. WengerReuter and Mr. ReuterMs. Podesta are considered independent.
An audit committee financial expert means a person who has the following attributes:
| (a) | An understanding of generally accepted accounting principles and financial statements; |
| (b) | The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; |
| (c) | Experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the small business |
| (d) | An understanding of internal control over financial reporting; and |
| (e) | An understanding of audit committee functions. |
The audit committee’s primary function is to provide advice with respect to our financial matters and to assist the Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting and legal compliance. The audit committee’s primary duties and responsibilities are to:
| · | serve as an independent and objective party to monitor our financial reporting process and internal control system; | |
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| · | review and appraise the audit efforts of our independent accountants; | |
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| · | evaluate our quarterly financial performance as well as our compliance with laws and regulations; | |
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| · | oversee management’s establishment and enforcement of financial policies and business practices; and | |
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| · | provide an open avenue of communication among the independent accountants, management and the Board of Directors. |
Stockholder Communications
Stockholders may contact an individual director, the Board of Directors as a group or a specified Board of Directors’ committee or group, including any non-employee directors as a group, either by: (i) writing to Body and Mind Inc., c/o Suite 750, 1095 West Pender Street, Vancouver, British Columbia Canada V6E 2M6, Canada, Attention: Corporate Secretary; or (ii) sending an e-mail message to info@bamcannabis.com.ir@bodyandmind.com.
Our Corporate Secretary will conduct an initial review of all such stockholder communications and will forward the communications to the persons to whom it is addressed, or if no addressee is specified, to our President and Interim CEO, the appropriate members of the Board of Directors or the entire Board of Directors depending on the nature of the communication. Such communications will be assessed by the recipients as soon as reasonably practicable taking into consideration the nature of the communication and whether expedited review is appropriate.
Certain Relationships and Related Party Transactions
Except as described herein, none of the following parties (each a “Related Party”) has had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
| · | any of our directors or officers; |
| · | any person proposed as a nominee for election as a director; |
| · | any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock; or |
| · | any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the above persons. |
Related Party Transactions during the year ended July 31, 20192022
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| Accounts Payable |
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| Consulting Fees |
| ||
Dong Shim (Director and CFO) |
| $ | 5,127 |
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| $ | 37,791 |
|
Leonard Clough (Former CEO & Former Director) |
| $ | Nil |
|
| $ | 90,696 |
|
Darren Tindale (Former CFO & Corporate Secretary) |
| $ | Nil |
|
| $ | 62,353 |
|
Michael Mills (President & Interim CEO) |
| $ | 7,825 |
|
| $ | 50,072 |
|
Robert Hasman (Director) |
| $ | Nil |
|
| $ | 225,992 |
|
Kevin Hooks (Director) |
| $ | Nil |
|
| $ | Nil |
|
Scott Dowty (Director) |
| $ | Nil |
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| $ | Nil |
|
Stephen (Trip) Hoffman (COO) |
| $ | Nil |
|
| $ | 90,000 |
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| Accounts Payable |
|
| Consulting Fees |
| ||
Dong Shim (CFO) |
| $ | 10,780 |
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| $ | 134,693 |
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Darren Tindale (Former CFO & Corporate Secretary) |
| $ | 18,898 |
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| $ | 87,748 |
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Michael Mills (President & CEO) |
| $ | 102,480 |
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| $ | 284,533 |
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Included in stock-based compensation for the year ended July 31, July 20192022 is $579,904 (2018$262,180 (2021 - $377,443)$673,097) related to stock options issued to directors and officers of the Company.
During the year ended 31 July 2019, the Company entered into an agreement to purchase the remaining 70% of NMG Ohio for total cash payments of $1,575,000 and issuance of 3,173,864 common shares of the Company, of which cash of $461,251 and 929,488 common shares are payable to Robert Hasman and Kevin Hooks, who are both directors of the Company.
Our Board reviews any proposed transaction involving Related Parties and considers whether such transactions are fair and reasonable and in the Company’s best interests.
-15- |
Conflicts of Interest
To our knowledge, and other than as disclosed in this Proxy Statement, there are currently no known existing or potential conflicts of interest among us, our promoters, directors and officers, or other members of management, or any proposed director, officer or other member of management as a result of their outside business interests, except that certain of the directors and officers serve as directors and officers of other companies and, therefore, it is possible that a conflict may arise between their duties to us and their duties as a director or officer of such other companies.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the fiscal year ended July 31, 2019,2022, except as follows:
Name |
| Position Held |
| Late or Unfiled Report |
Michael Mills |
| President, |
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Stephen Hoffman |
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| Form |
Australis Capital Inc. |
| Shareholder |
| Two Form |
EXECUTIVE COMPENSATION
General
For the purposes of this section:
“CEO” means an individual who acted as the Chief Executive Officer of Body and Mind, or acted in a similar capacity, for any part of the most recently completed financial year;
“CFO” means an individual who acted as the Chief Financial Officer of Body and Mind, or acted in a similar capacity, for any part of the most recently completed financial year;
“incentive plan” means any plan providing compensation that depends on achieving certain performance goals or similar conditions within a specified period;
“incentive plan award” means compensation awarded, earned, paid or payable under an incentive plan;
“NEO” means each of the following individuals:
| (a) | a CEO; |
| (b) | a CFO; |
| (c) | each of Body and Mind’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000 for that financial year; and |
| (d) | each individual who would be a NEO under paragraph (c) but for the fact that the individual was neither an executive officer of Body and Mind, nor acting in a similar capacity, at the end of that financial year; |
-16- |
“option-based award” means an award under an equity incentive plan of options, including, for greater certainty, share options, share appreciation rights and similar instruments that have option-like features; and
“share-based award” means an award under an equity incentive plan of equity-based instruments that do not have option-like features, including, for greater certainty, common shares, restricted shares, restricted share units, deferred share units, phantom shares, phantom share units, common share equivalent units, and stock.
Compensation Discussion and Analysis
Compensation Program Objectives
We have not established a strategy for setting executive salary levels, creating standards it applieswe apply in setting compensation levels or what factors it intendswe intend to encourage by establishing compensation levels. Since we acquired NMG, raised equity capital and have been generativegenerating revenues from the sale of our products, we have been compensating our NEOs at levels comparable to executive officers of companies within itsour industry at similar stages of growth.
Our Compensation Committee reviews and recommends to our Board of Directors the salaries, and benefits of all employees, consultants, directors and other individuals compensated by us. The Board of Directors assumes responsibility for reviewing the recommendations of the Compensation Committee and monitoring the long-range compensation strategy for our senior management. The Compensation Committee and the Board of Directors reviews the compensation of senior management on a semi-annual basis taking into account compensation paid by other issuers of similar size and activity. The Compensation Committee and the Board of Directors receives independent competitive market information on compensation levels for executives. It uses salary data of comparable private and public companies as a benchmark for setting executive compensation. This data is obtained from various sources including online research and market surveys.
Although permitted, at this time no NEO or director has or intends to purchase financial instruments that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director.
Elements of the Compensation Program
The total compensation plan for NEOs consists of a base compensation structure and equity-based compensation program in the form of stock options. The compensation program for our senior management is designed with a view that the level and form of compensation achieves certain objectives, including:
| (a) | attracting and retaining qualified executives; |
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| (b) | motivating the short and long-term performance of these executives; and |
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| (c) | better aligning their interests with those of the Company’s shareholders. |
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In compensating our senior management, we have arranged for equity participation through our 2012 Incentive Stock Option Plan.
Base Salary
The base salary component of NEO compensation is intended to provide a fixed level of competitive pay that reflects each NEO’s primary duties and responsibilities. The policy of Body and Mind is that salaries for its NEOs are competitive within its industry and generally set at the median salary level among entities its size.
Stock Options
Effective October 25, 2012,On February 3, 2023, our Board of Directors adopted the 20122023 Stock and Incentive Stock Option Plan (the “20122023 Stock and Incentive Stock Option Plan”). The purpose of the 2023 Stock and Incentive Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors and non-employee directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock and cash‑based arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s stockholders.
The 2023 Stock and Incentive Plan supersedes, replaces and is in substitution for the Company’s 2012 Incentive Stock Option Plan, is to enhancewhich was originally ratified by the long-term shareholder valueBoard on October 25, 2012, as was ratified by offering opportunities to our directors, executive officers, key employees and eligible consultants to acquire our Common Shares in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in the servicestockholders of the Company.Company at the Company’s annual meeting held on December 10, 2012. There are 7,553,000 stock options outstanding under the 2012 Incentive and Stock Option Plan as of the date of adoption of the 2023 Stock and Incentive Plan, which will be covered under the 2023 Stock and Incentive Plan, and which is subject to the approval of the stockholders at this Annual Meeting.
Previous grants will be taken into account when considering new grants under the 2023 Stock and Incentive Plan and a maximum of 10% of the number of our25,000,000 common shares may be issued and outstanding Common Shares are available for issuanceunder all awards under the 20122023 Stock and Incentive Stock Option Plan. There are currently 8,775,000 options issued under the 2012 Incentive Stock Option Plan.
Compensation Governance
Our Compensation Committee is responsible for recommending to our Board of Directors the compensation to be paid to our directors and executive officers. We do not have any formal compensation policies and the practices adopted by the Compensation Committed and our Board of Directors to determine the compensation for our directors and executive officers is described above.
-18- |
Summary Compensation Table
Michael Mills, our President, Chief Executive Officer and director, Dong Shim, our Chief Financial Officer, and director, Darren Tindale, our Corporate Secretary and former Chief Financial Officer, Leonard Clough our President and Chief Executive Officer until August 21, 2019, Stephen Hoffman, our Chief Operating Officer and Robert Hasman, a director and the President of our indirect wholly-owned subsidiary NMG are NEOs for the purposes of the following disclosure.
The compensation for those NEOs, directly or indirectly, for our most recently completed financial years ended July 31, 20192022 and 20182021 are as follows:
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Name and Principal Position |
| Fiscal Year |
| Salary (CAD$) |
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| based awards (CAD$) |
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| based awards (CAD$) |
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| Annual incentive plans |
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| Long-term incentive plans |
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| compensation earnings ($) |
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| All other compensation ($) |
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Dong Shim(1) |
| 2019 |
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| 50,001 |
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| - |
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| 142,087 |
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| - |
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| - |
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| - |
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| - |
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| 192,088 |
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Director and CFO |
| 2018 |
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| 49,600 |
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| - |
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| 47,917 |
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| - |
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| - |
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| - |
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| - |
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| 97,517 |
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Darren Tindale(2) |
| 2019 |
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| 82,500 |
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| - |
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| 142,087 |
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| - |
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| - |
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| - |
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| - |
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| 224,587 |
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Former CFO |
| 2018 |
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| 60,000 |
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| - |
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| 47,917 |
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| - |
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| - |
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| - |
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| - |
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| 107,917 |
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|
Leonard Clough(3) |
| 2019 |
|
| 120,000 |
|
|
| - |
|
|
| 142,087 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 262,087 |
|
Former CEO and director |
| 2018 |
|
| 66,759 |
|
|
| - |
|
|
| 47,917 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 114,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Hoffman(4) |
| 2019 |
|
| 119,080 |
|
|
| - |
|
|
| 99,461 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 218,541 |
|
COO |
| 2018 |
| Nil |
|
|
| - |
|
| Nil |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| Nil |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Hasman(5) |
| 2019 |
|
| 299,010 |
|
|
| - |
|
|
| 142,087 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 441,097 |
|
Director, and President of NMG |
| 2018 |
|
| 184,018 |
|
|
| - |
|
|
| 188,722 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 372,740 |
|
Share- Option- Non-equity incentive plan compensation ($) Nonqualified deferred Name and Principal Position Fiscal Year Salary (US$) based awards (US$) based awards (US$) Annual incentive plans Long-term incentive plans compensation earnings ($) All other compensation ($) Total compensation (US$) Michael Mills(1) 2022 President, CEO and Director 2021 Dong Shim(2) 2022 CFO 2021 - 123,074 - - - - 232,561 Darren Tindale(3) 2022 Secretary and Former CFO 2021 Stephen Hoffman(4) 2022 COO and Director 2021 210,000 - 93,090 100,000 - - - 403,090 159,656 - 169,567 - - - - 329,223 120,000 - 55,332 20,000 - - - 195,332 109,487 70,182 - 21,020 - - - - 91,202 70,989 - 63,219 - - - - 134,208 210,000 - 92,735 100,000 - - - 402,735 185,000 - 212,776 - - - - 397,776
Notes:
| (1) | Mr. Mills was appointed a President and Interim CEO on Aug. 21, 2019. Mr. Mills was elected as a director on January 23, 2020 and was appointed full-time CEO on April 30, 2020. |
(2) | Mr. Shim was appointed CFO and a director in December 2016. He resigned as CFO on March 6, 2017 and was reappointed as interim CEO in August 2017 and resigned as interim CEO on November 14, | |
|
| Mr. Tindale was appointed CFO on March 7, 2017. Mr. Tindale resigned as the CFO on August 21, |
|
| |
| (4) | Mr. Hoffman was appointed COO on November 15, |
|
|
During our most recently completed financial years ended July 31, 2022 and 2021, we did not pay any other executive compensation to our NEOs.
Effective November 14, 2017, we entered into a formal consulting agreement with Toro, whereby Toro will provide the services of our new Chief Executive Officer, Leonard Clough, for an annual salary of CAD$120,000. Leonard Clough, through Toro, is also entitled to a severance fee of CAD$60,000. However, Mr. Clough resigned on August 21, 2019, and the consulting agreement with Toro is no longer in force or effect.
Effective November 14, 2017, we entered into a formal consulting agreement with TI Nevada, whereby TI Nevada will provide the services of NMG’s President, Robert Hasman, for an annual salary of $200,000. Robert Hasman, through TI Nevada, is also entitled to a severance fee of $100,000. On November 2, 2018, the consulting agreement with TI Nevada was amended to extend the non-competition and non-solicitation provisions to include the State of Ohio as well as Nevada.
Incentive Plan Awards
The only stock options to purchase shares of our common stock that we granted to our NEOs during the fiscal year ended July 31, 20192022 was on December 11, 2018November 30, 2021 as set out in the table below.
|
| # of Options |
|
| Fair Value (CAD$) |
| ||
Leonard Clough |
|
| 250,000 |
|
| $ | 142,087 |
|
Dong Shim |
|
| 250,000 |
|
| $ | 142,087 |
|
Darren Tindale |
|
| 250,000 |
|
| $ | 142,087 |
|
Stephen Hoffman |
|
| 175,000 |
|
| $ | 99,461 |
|
Robert Hasman |
|
| 250,000 |
|
| $ | 142,087 |
|
Date of Option Grant # of Options Fair Value (CAD$) Michael Mills November 30, 2021 224,000 62,962 Stephen Hoffman November 30, 2021 224,000 62,962
Outstanding Equity Awards Held by Named Executive Officers at Fiscal Year End
The following table sets forth information as of July 31, 2019,2022, relating to outstanding equity awards held by each NEO:
Outstanding Equity Awards at Year End
| Option Awards | Stock Awards | |||||||
Name | Number of Securities Underlying Unexer- cised Options (#) (exercise- able) | Number of Securities Underlying Unexer- cised Options (#) (unexer- ciseable) | Equity Incentive Plan Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | Option Exercise Price (CAD$) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
Dong Shim(1) | 200,000 250,000 | N/A N/A | N/A N/A | 0.66 0.57 | 11/24/2022 12/10/2023 | N/A | N/A | N/A | N/A |
Darren Tindale (2) | 200,000 250,000 | N/A N/A | N/A N/A | 0.66 0.57 | 11/24/2022 12/10/2023 | N/A | N/A | N/A | N/A |
Leonard Clough (3) | 200,000 250,000 | N/A N/A | N/A N/A | 0.66 0.57 | 11/24/2022 12/10/2023 | N/A | N/A | N/A | N/A |
Stephen Hoffman (4) | 175,000 | N/A | N/A | 0.57 | 12/10/2023 | N/A | N/A | N/A | N/A |
Robert Hasman (5) | 1,000,000 250,000 | N/A N/A | N/A N/A | 0.66 0.57 | 11/24/2022 12/10/2023 | N/A | N/A | N/A | N/A |
Option Awards | Stock Awards | ||||||||
Name | Number of Securities Underlying Unexer- cised Options (#) (exercise- able) | Number of Securities Underlying Unexer- cised Options (#) (unexer- ciseable) | Equity Incentive Plan Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | Option Exercise Price (CAD$) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
Michael Mills(1) | 175,000 100,000 250,000 200,000 275,000 125,000 56,000 | N/A N/A N/A N/A N/A 125,000 168,000 | N/A N/A N/A N/A N/A N/A N/A | 0.41 0.57 0.88 0.88 0.67 0.68 0.44 | 06/06/2023 12/10/2023 08/21/2024 01/23/2025 04/30/2025 03/06/2026 11/30/2026 | N/A | N/A | N/A | N/A |
Dong Shim(2) | 200,000 250,000 250,000 200,000 125,000 | N/A N/A N/A N/A 125,000 | N/A N/A N/A N/A N/A | 0.66 0.57 0.88 0.67 0.68 | 11/24/2022 12/10/2023 08/21/2024 04/30/2025 03/06/2026 | N/A | N/A | N/A | N/A |
Darren Tindale (3) | 200,000 250,000 250,000 50,000 50,000 | N/A N/A N/A N/A 50,000 | N/A N/A N/A N/A N/A | 0.66 0.57 0.88 0.67 0.68 | 11/24/2022 12/10/2023 08/21/2024 04/30/2025 03/06/2026 | N/A | N/A | N/A | N/A |
Stephen Hoffman (4) | 175,000 350,000 250,000 250,000 125,000 56,000 | N/A N/A N/A N/A 125,000 168,000 | N/A N/A N/A N/A N/A N/A | 0.57 0.88 0.405 0.67 0.68 0.44 | 12/10/2023 08/21/2024 03/01/2025 04/30/2025 03/06/2026 11/30/2026 | N/A | N/A | N/A | N/A |
-20- |
Notes:
| (1) | Mr. Mills was appointed a President and Interim CEO on Aug. 21, 2019. Mr. Mills was elected as a director on January 23, 2020 and was appointed full-time CEO on April 30, 2020. |
(2) | Mr. Shim was appointed CFO and a director in December 2016. He resigned as CFO on March 6, 2017 and was reappointed as interim CEO in August 2017 and resigned as interim CEO on November 14, | |
|
| Mr. Tindale was appointed CFO on March 7, 2017. Mr. Tindale resigned as the CFO on August 21, |
|
| |
| (4) | Mr. Hoffman was appointed COO on November 15, |
|
|
Pension Plan Benefits
We have no pension plans that provide for payments or benefits at, following or in connection with retirement.
Director Compensation
We do not currently provide any compensation to our directors in their capacity as such. As a result, none of our directors received any cash compensation in any form during our most recently completed financial year. However, on December 11, 2018,During the fiscal year ended July 31, 2022, we granteddid not grant stock options to the following directors, which haswere not already been disclosed above as stock options granted to NEOs:
|
| # of Options |
|
| Fair Value (CAD$) |
| ||
Kevin Hooks |
|
| 250,000 |
|
| $ | 142,087 |
|
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR”
THE ELECTION OF THE DIRECTOR NOMINEES SET FORTH ABOVE
__________
PROPOSAL NUMBER TWO:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants,Sadler, Gibb & Associates, LLC (“Sadler”), certified public accountants of 344 W 13800 S, Draper, UT 84020, have been selected as the independent registered public accountants of the Company for the fiscal year ending July 31, 2020. Dale Matheson Carr-Hilton Labonte LLP2023. Sadler audited the Company’s financial statements for the fiscal yearyears ended July 31, 2018 (“Fiscal 2018”)2022 and for the fiscal year ended July 31, 2019 (“Fiscal 2019”).2021.
Representatives of Dale Matheson Carr-Hilton Labonte LLP are expected toSadler will not be present at the Annual Meeting and will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions at the Annual Meeting.
In the event ratification by the stockholders of the appointment of Dale Matheson Carr-Hilton Labonte LLPSadler as the Company’s independent registered public accountants is not obtained, our Board of Directors will reconsider such appointment.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Dale Matheson Carr-Hilton Labonte LLP was appointed as our independent registered public accountants on March 9, 2018 and for the year ending July 31, 2018, replacing Adam Sung Kim Ltd. Dale Matheson Carr-Hilton Labonte LLP audited the Company’s financial statements for the years ended July 31, 2018 and July 31, 2019 and Adam Sung Kim Ltd. audited the Company’s financial statements for the year ended July 31, 2017.
The Company anticipates that a representative of Dale Matheson Carr-Hilton Labonte LLP will be present at the Annual Meeting. The representative will have the opportunity to make a statement if they desire to do so. It is expected the representative will not be available to respond to questions.
In the event ratification by the stockholders of the appointment of Dale Matheson Carr-Hilton Labonte LLP as the Company’s independent registered public accountants is not obtained, our Board of Directors will reconsider such appointment.
Principal Accountant Fees and Services
The following is an aggregate of fees billed for each of the last two fiscal years for professional services rendered by our current and prior principal accountants:
|
| 2019 |
|
| 2018 |
| ||
Audit fees |
| $ | 110,000 |
|
| $ | 50,000 |
|
Audit-related fees |
|
| 40,500 |
|
| Nil |
| |
Tax fees |
|
| 4,000 |
|
| Nil |
| |
All other fees |
| Nil |
|
|
| 30,000 |
| |
Total fees paid or accrued to our principal accountants |
| $ | 154,500 |
|
| $ | 80,000 |
|
2022 2021 Audit fees Audit-related fees Tax fees Nil Nil All other fees Nil Nil Total fees paid or accrued to our principal accountants $ 279,920 $ 225,850 $ 107,560 4,858 $ 387,480 $ 230,708
Audit Fees
Audit fees are the aggregate fees billed for professional services rendered by our independent auditors for the audit of our annual financial statements, the review of the financial statements included in each of our quarterly reports and services provided in connection with statutory and regulatory filings or engagements.
Audit Related Fees
Audit related fees are the aggregate fees billed by our independent auditors for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not described in the preceding category.
Tax Fees
Tax fees are billed by our independent auditors for tax compliance, tax advice and tax planning.
All Other Fees
All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories.
Pre-Approval of Services by the Independent Auditor
Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Under our audit committee’scommittee's policy, pre-approval is generally provided for particular services or categories of services, including planned services, project based services and routine consultations. In addition, the audit committee may also pre-approve particular services on a case-by-case basis. We approved all services that our independent accountants provided to us in the past two fiscal years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL TO RATIFY THE APPOINTMENT OF DALE MATHESON CARR-HILTON LABONTE LLP SADLER, GIBB & ASSOCIATES, LLCAS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE COMPANY’S FISCAL YEAR ENDING JULY 31, 20202023
__________
PROPOSAL NUMBER THREE:
APPROVAL OF CONTINUATION OF THE 20122023 STOCK AND INCENTIVE STOCK OPTION PLAN
At the Annual Meeting the Board of Directors will seek shareholder ratification and approval for continuation of the 2023 Stock and Incentive Plan to authorize up to 25,000,000 shares of our common stock for issuance pursuant to awards as described below.
Summary of 2023 Stock and Incentive Plan
Background and Purpose
On February 3, 2022, our Board of Directors adopted our 2023 Stock and Incentive Plan (the “Plan”), subject to, and effective upon, the approval of shareholders at the Annual Meeting. The Plan provides flexibility to the Company to grant equity-based incentive awards (each, an “Award”) in the form of Options, Stock Appreciation Rights (“SARs”), Restricted Stock and Restricted Stock Units (“RSUs”), Performance Awards, Dividend Equivalents and Other Stock-Based Awards, as described in further detail below. All future grants of equity-based Awards will be made pursuant to, or as otherwise permitted by, the Plan, and no further equity-based awards will be made pursuant to the Company’s prior Incentive Stock Option Plan. The Plan supersedes and replaces the Company’s 2012 Incentive Stock Option Plan, to authorize additional Common Shares for issuance pursuant to new grants,dated as described below.
Summaryoriginally adopted by the Board of 2012 Incentive Stock Option Plan
EffectiveDirectors on October 25, 2012, our Board of Directors authorized and approvedratified by the adoption of the 2012 Incentive Stock Option Plan (the “Option Plan”), pursuant to which a maximum of 10% of the issued and outstanding Common Sharesshareholders of the Company from time to time, at the date of each option grant, are available for reserve for exercise of options granted to Eligible Persons as defined in the Option Plan. Our shareholders first approved the Option Plan at theCompany’s annual general meeting held on December 10, 2012. At the Record Date there were a total of 8,775,000 Options outstanding pursuant to the Option Plan, being approximately 8.6% of the current issued and outstanding Common Shares and leaving 1,401,023 Options available for grant, being approximately 1.4% of the issued and outstanding Common Shares available for reserve for issuance upon exercise of stock options. Details of the Option Plan are set out below.
Material Terms
The purpose of the Option Plan is to enhanceis to promote the long-term shareholder valueinterests of the Company and its shareholders by offering opportunities toaiding the Company in attracting and retaining employees, officers, consultants, advisors and non-employee directors executive officers, key employees and eligible consultantscapable of assuring the future success of the Company, to acquire Common Sharesoffer such persons incentives to giveput forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock and cash‑based arrangements and provide them the opportunity to participatewith opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s growth and success, and to encourage them to remain in the serviceshareholders.
Key Terms of the Company. The stock options are non-transferable and will expire upon the sooner of the expiry date stipulated in the particular stock option agreement, or after a certain period following the date the optionee ceases to be a qualified party by reason of death or termination of such optionee’s engagement with the Company.Plan
Grants of options pursuantShares Subject to the Option Plan are at the discretion of the Board of Directors. Accordingly, allocation of future benefits under the Option Plan among individual Eligible Persons, or among groups of Eligible Persons (such as executive officers, non-executive directors and non-executive employees), is not determinable at this time. The Eligible Persons pursuant to the Option Plan include: a bona fide Employee, Consultant, Director or Officer of the Company, or a corporation wholly owned by such Employee, Consultant, Director or Officer.
The stock options granted underPlan is a fixed number share plan which provides that the Option Plan, together with all of the Company’s other previously established plans or grants, will not result at any time in: (a) the number of Common Shares reserved for issuance pursuant to stock options granted to insiders exceeding 10% of the issued and outstanding Common Shares; (b) the grant to insiders within a 12 month period of a number of stock options exceeding 10% of the outstanding Common Shares; (c) the grant to any one optionee within a 12-month period of a number of stock options exceeding 5% of the issued and outstanding Common Shares; (d) the grant to all persons engaged by the Company to provide investor relations activities within any 12-month period of a number of stock options exceeding 2% of the issued and outstanding Common Shares; or (e) the grant to any one eligible consultant in any 12-month period of stock options exceeding, in aggregate 2% of the issued and outstanding Common Shares.
The Board determines the price per Common Share and themaximum number of Common Shares that may be allottedissued upon the exercise or settlement of Awards granted under it shall not exceed 25,000,000 shares of common stock (“Common Shares”), subject to the adjustment provisions provided for therein (including those that apply in the event of a subdivision or consolidation of Common Shares) required to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Such maximum number of Common Shares consists of (i) 7,553,000 Common Shares issuable pursuant to Awards previously granted and that remain outstanding under the Company’s Incentive Stock Option Plan, which Awards will be covered by the Plan upon its ratification by the shareholders, and (ii) 17,447,000 additional Common Shares that may be issued pursuant to Awards to be granted under the Plan.
Administration of the Plan
The Plan will be administered by the Compensation Committee of the Board of Directors, subject to the ability of the Compensation Committee to delegate to directors or officers of the Company the authority to grant Awards. However, the Board of Directors retain the power and authority to administer the Plan without further action by the Compensation Committee in certain circumstances.
-23- |
Under the Plan, the Compensation Committee has the power and authority to designate Participants (as defined in the Plan), determine the type of Awards to be granted to each Eligible PersonParticipant, determine the number of Common shares to be covered by each Award, determine the terms and all otherconditions or any Award or Award Agreement (as defined in the Plan), amend the terms and conditions of any Award or Award Agreement, accelerate the stock options, subjectexercisability of any Award, and determine whether and to what extent and under what circumstances Awards may be exercised in cash, Common Shares, other securities, other Awards or other property, or canceled, forfeited or suspended.
In addition, the Compensation Committee interprets and administers the Plan, and any instrument or agreement relating to it. The Compensation Committee may establish, amend, suspend or waive rules and regulations, and appoint agents it deems appropriate for the proper administration of the Plan. Furthermore, the Compensation Committee may adopt modifications, rules, procedures and subplans to comply with applicable laws, or make any determination and take any action for the administration of the Plan.
Eligibility
All employees, officers, directors and consultants that provide services to the rulesCompany or any Affiliate (as defined in the Plan), or any such persons to whom the Company or any Affiliate makes an offer of employment or engagement, are eligible to participate in the Plan. In determining eligibility, the Compensation Committee may consider the nature of the CSE; provided however,services rendered by such persons, the present and potential contributions to the success of the Company by such persons, and/or other factors that the price per Common Share set byCompensation Committee deems relevant, in its discretion. However, an Incentive Stock Option (as defined in the Board mustPlan), may only be at least equalgranted to the minimum exercise price of $0.10 per Common Share,employees and may not be granted to an employee of an Affiliate (as defined in the Plan) unless such Affiliate is also a “subsidiary corporation” of the Company with the meaning of Section 424(f) of the U.S. Internal Revenue Code of 1986 (the “Code”), as amended from time to time, and any regulations promulgated thereunder.
Types of Awards
Awards of Options, SARs, Restricted Stock and RSUs, Performance Awards, Dividend Equivalents and Other Stock-Based Awards may be made under the Plan. All of the Awards described below are subject to the terms, conditions, limitations, restrictions, exercise price, vesting, settlement and forfeiture provisions determined by the Compensation Committee, in its sole discretion, subject to such limitations provided in the Plan, and will generally be evidenced by an Award Agreement. In addition, subject to the limitations provided in the Plan and in accordance with applicable law, the Compensation Committee may accelerate or defer the vesting or payment of Awards, cancel or modify outstanding Awards and waive any condition imposed with respect to Awards or Common Shares issued pursuant to Awards.
Options
An Option entitles a holder thereof to purchase a prescribed number of treasury Common Shares at an exercise price set at the time of the grant. The Compensation Committee will establish the exercise price at the time each Option is granted, which exercise price must in all cases be not less than the “Fair Market Value”. For the purposes of establishing the exercise price of any Options, the Fair Market Value will be the greater of the closing market price of the Common Shares on the Canadian Securities Exchange on (i) the trading day immediately precedingprior to the date of grant and (ii) the date of grant of the option, less any applicable discount allowedOptions. The term of each Option shall be fixed by the Exchange, if any. Stock options granted within 90 daysCompensation Committee at the date of a public distributiongrant but shall not be longer than 10 years from the date of grant, subject to any automatic extension in certain circumstances described in the Plan. The Compensation Committee will determine the time at which an Option may be exercised in whole or in part and the method by prospectus, thenwhich payment of the minimum exercise price shallmay be the greater of $0.10 per Common Share and the price per Common Share paid by the investors for Common Shares acquired under the public distribution. The 90 day period shall commence on the date the Company is issued a final receipt for the prospectus.made.
In addition
Additional provisions will apply to any resale restrictions under applicable securities laws, any stock option grantedOptions intended to qualify as an Incentive Stock Options, including: (i) the maximum number of Common Shares that may be issued pursuant to Incentive Stock Options will not exceed 25,000,000, subject to adjustment under the Plan; (ii) all Incentive Stock Options must be granted within ten years from the date on which the Plan was adopted by the Board of Directors; (iii) all Incentive Stock Options will expire no later than ten years after the date of grant, and no later than five years if the Inventive Stock Option was granted to a Participant who at the time of grant owned stock possessing more than 10% of the combined voting power of all classes of stock of the Company or its Affiliates; (iv) if the Participant owned stock possessing more than 10% of the combined voting power of all classes of stock of the Company or its Affiliates at the time of grant, the exercise price will not be less than 110% of the Fair Market Value; and (v) any Incentive Stock Option will contain any provisions the Compensation Committee deems advisable and will be consistent with all provisions required in order to qualify as an Incentive Stock Option.
SARs
An SAR granted under the Plan and any Common Shares issuedshall confer on the holder thereof a right to receive upon due exercise of any such stock option willthe SAR the excess of (i) the Fair Market Value (as defined in the Plan) of one Common Share on the date of exercise over (ii) the grant price of the SAR as specified by the Compensation Committee, which price shall generally not be subject to a hold periodless than the Fair Market Value of four months and a day commencing fromone Common Share on the date of grant of the SAR.
RSUs
An RSU is a unit evidencing the right to receive a Common Share, or a cash payment equal to the Fair Market Value of a Common Share, at some future date, provided that in the case of Participants who are liable to taxation under the Income Tax Act (Canada) in respect of amounts payable under the Plan, that such date is not later than December 31st of the third calendar year following the year services were performed in respect of the corresponding RSU awarded. Common Shares of Restricted Stock and RSUs shall be subject to such restrictions as the Compensation Committee may impose (including, without limitation, any limitation on the right to vote a Common Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Compensation Committee may deem appropriate, subject to limitations described in Section 6(e) of the Plan.
Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Compensation Committee may deem appropriate. Common Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered to the Participant promptly after the applicable restrictions lapse or are waived. In the case of RSUs, no Common Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to RSUs evidencing the right to receive Common Shares, such Common Shares shall be issued and delivered to the holder of the RSUs.
Except as otherwise determined by the Compensation Committee or as provided in an Award Agreement, upon a Participant’s termination of employment or service or resignation or removal as a director during the applicable restriction period, all Common Shares of Restricted Stock and all RSUs held by such Participant at such time will be forfeited and reacquired by the Company for cancellation at no cost to the Company. However, the Compensation Committee may waive any or all remaining restrictions.
Performance Awards
A Performance Award granted under the Plan (i) may be denominated or payable in cash, Common Shares (including, without limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of one or more objective performance goals during such performance periods as the Compensation Committee shall establish. Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Compensation Committee.
-25- |
Dividend Equivalents
Dividend Equivalents are entitlements to receive payments (in cash, Common Shares, other securities, other Awards or other property as determined in the discretion of the Compensation Committee) equivalent to the amount of cash dividends paid by the Company to holders of Common Shares with respect to a number of Common Shares determined by the Compensation Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Compensation Committee shall determine. However, the Compensation Committee may not grant Dividend Equivalents to Participants in connection with grants of Options, SARs or other Awards the value of which is based solely on an increase in the value of the Common Shares after the date of grant of such Award, and (ii) dividend and Dividend Equivalent amounts may be accrued but shall not be paid unless and until the date on which all conditions or restrictions relating to such Award have been satisfied, waived or lapsed.
Other Stock-Based Awards
Other Stock-Based Awards are other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Shares (including, without limitation, securities convertible into Common Shares), as are deemed by the Compensation Committee to be consistent with the purpose of the Plan. The Compensation Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. Such Other Stock-Based Awards shall not contain a purchase right or an option‑like exercise feature
General Terms of Awards
Consideration
Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Compensation Committee or required by applicable law.
Limits on Transfer
Except as otherwise provided by the Compensation Committee in its discretion and fully-vested and unrestricted Common Shares issued pursuant to any Award, no Award nor any right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution. Additionally, no Award nor any right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. Where the Compensation Committee does permit the transfer of an Award other than a fully vested and unrestricted Common Share, such permitted transfer shall be for no value and in accordance with all applicable securities rules. The Compensation Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death.
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Restrictions
All Common Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof will be subject to such restrictions as the Compensation Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Compensation Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Common Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Common Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
Prohibition on Option and SAR Repricing
Except as provided in Section 4(c) of the Plan, the Compensation Committee may not, without prior approval of the Company’s shareholders and applicable stock option, ifexchange approval, seek to effect any repricing of any previously granted, “underwater” Option or SAR by: (i) amending or modifying the terms of the Option or SAR to lower the exercise price; (ii) canceling the underwater Option or SAR and granting either (A) replacement Options or SARs having a lower exercise price; or (B) Restricted Stock, RSUs, Performance Award or Other Stock‑Based Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock Appreciation Right for cash or other securities. An Option or SAR will be deemed to be “underwater” at any time when the Fair Market Value of the Common Shares covered by such Award is less than the exercise price of the stock option is granted at less than the Market Price. “Market Price” means the closing priceAward.
Section 409A of the Common Shares on the CSE on the last business day prior to the date of grant. In the event that the Common Shares did not trade on such business day, the Market Price shall be the average of the bid and asked prices in respect of such Common Shares at the close of trading on such date.Code
The term of a stock option shall be set at the time of grant of each stock option, but in any case will be not more than a maximum of 10 years from the date the stock option is granted. If an optionee ceases to be a director, officer, employee or eligible consultant of the Company for any reason other than death, the optionee may, but only within 90 days after the optionee’s ceasing to be a director, officer, employee or eligible consultant (or 30 days in the case of an optionee engaged in investor relations activities) or prior to the expiry of the exercise period, whichever is earlier, exercise any stock option held by the optionee, but only toTo the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A of the optionee was entitledCode and applicable guidance thereunder is otherwise payable or distributable to exercisea Participant under the stock option atPlan or any Award Agreement solely by reason of the occurrence of a change in control or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Compensation Committee determines in good faith that (i) the circumstances giving rise to such change in control event, disability or separation from service meet the definition of a change in control event, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a “specified employee” under the Code (as determined by the Compensation Committee in good faith) on account of separation from service may not be made before the date of such cessation. In the event of the death of an optionee, the stock option previously granted to such optionee shall be exercisable within 12which is six months following the date of death of the optionee or prior to the expiry of the exercise period, whichever is earlier, and then only: (a) by the person or persons to whom the optionee’s rights under the stock option shall pass by the optionee’s will or the laws of descent and distribution, or by the optionee’s legal personal representative; and (b) to the extent that the optionee was entitled to exercise the stock option atafter the date of the optionee’s death.specified employee’s separation from service (or if earlier, upon the specified employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise.
Acceleration of Vesting or Exercisability
No Award Agreement will accelerate the exercisability of any Award or the lapse of restrictions relating to any Award in connection with a change-in-control event, unless such acceleration occurs at or upon the consummation of such change-in-control event.
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Amendment and Termination
Amendments to the Plan and Awards
The Board of Directors may from time to time amend, suspend or terminate the Plan, and the Compensation Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange. The Board of Directors may amend, suspend, terminate or discontinue the Plan, and the Compensation Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders of the Company in order to:
(i) | amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan; | |
(ii) | amend any terms relating to the granting or exercise of Awards, or otherwise waive any conditions or rights of the Company under any outstanding Award, prospectively or retroactively; | |
(iii) | make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange; and | |
(iv) | amend any terms relating to the administration of the Plan. |
Prior approval of the shareholders of the Company is required for any amendment to the Plan or an Award that would:
(i) | require shareholder approval under the rules or regulations of securities exchange that is applicable to the Company; | |
(ii) | increase the number of shares authorized under the Plan; | |
(iii) | permit repricing of Options or SARs; | |
(iv) | permit the award of Options or SARs at a price less than the Fair Market Value of a Common Share on the date of grant of such Option or SAR; | |
(v) | permit Options to be transferable other than as provided in Section 6(g)(ii) of the Plan; | |
(vi) | amend Section 7(a) (the amendment and termination provisions) of the Plan; or | |
(vii) | increase the maximum term permitted for Options and Stock Appreciation Rights or extend the terms of any Options beyond their original expiry date. |
Corporate Transactions
In the event of (a) any dispositionreorganization, amalgamation, merger, consolidation, split-up, spin-off, combination, plan of allarrangement, take-over bid or substantially alltender offer, repurchase or exchange of the assetsCommon Shares or other securities of the Company or the dissolution, merger, amalgamation or consolidation of the Company with or into any other corporationsimilar corporate transaction or of such corporation into the Company, or (b) any change in control ofevent involving the Company, the Option Plan gives the Company the power to make such arrangements as it deems appropriate for the exerciseCompensation Committee or continuance of outstanding options, including to amend any stock option agreement to permit the exercise of any or all of the remaining stock options prior to the completion of any such transaction.
Subject to any required approvals under applicable securities laws or stock exchange rules, the Company may amend or modify the Option Plan or the terms of any stock option as the Board of Directors deems necessary or advisable provided that no such amendment shall adversely affectmay, in its sole discretion, provide for any accrued and vested rights of an Optionee or alter or impair any stock option previously granted to that Optionee, without the consent of the Optionee (provided such a change would materially prejudicefollowing upon the Optionee’sconsummation of the event:
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(i) | the termination the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the vested portion of the Award or realization of the Participant’s vested rights; | |
(ii) | the replacement of the Award with other rights or property selected by the Compensation Committee or the Board of Directors; | |
(iii) | the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; | |
(iv) | the Award be exercisable or payable or fully vested with respect to all Common Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement, subject to Section 6(g)(vi) of the Plan; or | |
(v) | the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event. |
Correction of Defects, Omissions and Inconsistencies
The Compensation Committee may, without prior approval of the shareholders of the Company, correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement.
Clawback or Recoupment
All Awards under the Option Plan).Plan will be subject to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time to time, or (ii) any applicable law, rule or regulation or applicable stock exchange rule.
Term
The Plan will terminate on the earlier of (i) February 3, 2033, or (ii) the tenth anniversary of the date the Plan is approved by the shareholders of the Company, or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted before that time may extend beyond such dates, and the authority of the Compensation Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board of Directors to amend the Plan, will extend beyond the termination of the Plan.
A copy of the Option Plan will be available for inspection at the Meeting.
At the Meeting, the shareholders will be asked to approve the Option Plan for continuation. Management recommends that the shareholders vote FOR approval of the Option Plan for continuation.
Unless a proxy specifies that the Common Shares it represents should be voted against approving the Option Plan, proxies received in favour of management of the Company will be voted FOR approval of the Option Plan.
The foregoing summary of the 2012key terms of the 2023 Stock and Incentive Stock Option Plan is not complete and is qualified in its entirety by reference to the 20122023 Stock and Incentive Stock Option Plan;Plan, a copy of which has been included as Schedule “A”A to this Proxy Statement regarding this matter as filed electronically with the SEC, which is available under the Company’s filings at www.sec.gov.
Resolution for Stockholder Approval of 20122023 Stock and Incentive Stock Option Plan
Accordingly, the Company is asking our stockholders to indicate their support for continuationratification and approval of the 20122023 Stock and Incentive Stock Option Plan as described in this Proxy Statement by voting “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders hereby ratify and approve the 20122023 Stock and Incentive Stock Option Plan of the Company for continuation until the next Annual Meeting of Stockholders.with immediate effect.”
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL TO RATIFY AND APPROVE THE 20122023 STOCK INCENTIVE STOCK OPTION PLAN FOR CONTINUATION.PLAN.
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PROPOSAL NUMBER FOUR:
NON-BINDING VOTE TO APPROVE EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act) and the related rules of the SEC, we are providing the Company’s stockholders with the opportunity to vote on a non-binding advisory resolution to approve the compensation of the Company’s Named Executive Officers as described in this Proxy Statement in accordance with the SEC’s compensation disclosure rules. This Proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our Named Executive Officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific Named Executive Officer, but rather the overall compensation of all of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement.
Our Board of Directors has determined to hold such votes on an annual basis until the next vote on the frequency of say-on-pay votes. Accordingly, the next say-on-pay votesvote will be held at the Company’s annual meeting of stockholders to be held in 2020.2024.
The say-on-pay vote is advisory and, therefore, not binding on the Company, the Compensation Committee or our Board of Directors. The say-on-pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the Named Executive Officer compensation as disclosed in this Proxy Statement, we may communicate directly with stockholders to better understand the concerns that influenced the vote, but in all events we will consider our stockholders’ concerns and will share them with the Compensation Committee which will evaluate whether any actions are necessary to address those concerns.
The key points of our executive compensation program are set forth in the “Executive Compensation” section of this Proxy Statement.
Stockholder Approval of Say-on-Pay Resolution
We believe that the information provided above and within the Executive Compensation section of this Proxy Statement demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, the Company is asking our stockholders to indicate their support for our Named Executive Officer compensation as described in this Proxy Statement by voting “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders hereby approve, on an advisory basis, the compensation of the Named Executive Officers as disclosed in the Company’s Proxy Statement for the 2019this Annual Meeting of Stockholders.”
Adoption of this resolution will require the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the same effect as votes against this Proposal. Brokers and other nominee holders do not have discretion to vote uninstructed shares with respect to this Proposal. Accordingly, if brokers or other nominee holders do not receive voting instructions from beneficial owners of the shares, they will not be able to vote the shares and broker non-votes may occur with respect to this Proposal. However, broker non-votes will not affect the outcome of the voting on this Proposal because it requires the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting (as opposed to a majority of the shares outstanding).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
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PROPOSAL NUMBER FIVE:
NON-BINDING VOTE ON THE FREQUENCY OF
THE NON-BINDING VOTE ON EXECUTIVE COMPENSATION
As described in Proposal 4 above, the Company’s shareholders are being provided the opportunity to cast votes on a non-binding advisory resolution concerning the compensation of the Company’s Named Executive Officers. The advisory vote on executive compensation described in Proposal 4 is commonly referred to as a “say-on-pay” vote. Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act) and the related rules of the SEC also enables the Company’s shareholders to indicate, at least once every six years, how frequently the Company should seek a non-binding advisory “say-on-pay” vote.
This Proposal 5 affords shareholders the opportunity to cast votes on a non-binding advisory resolution concerning how often the Company should include a say-on-pay vote in its proxy materials for future annual shareholder meetings (or a special shareholder meeting for which the Company must include executive compensation information in the proxy statement for that meeting). Shareholders have the option, under this Proposal 5, to choose to vote either to have the say-on-pay vote every year, or every two years or every three years.
Our Board of Directors believes that say-on-pay votes should be conducted every year so that our stockholders may provide us with their direct feedback on our named executive officer compensation decisions, as disclosed in our proxy statement each year. If say-on-pay votes are held less frequently than annually, then it would be more difficult for us to understand which compensation decisions are supported by our stockholders and which are not.
The Board of Directors makes decisions regarding the Company’s executive compensation program, so they value the opinions expressed by shareholders in these votes and will consider the outcome of these votes in making their decisions on executive compensation.
We understand that our stockholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our stockholders on this Proposal.
Stockholder Approval of Frequency of Say-on-Pay Vote
The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. However, because this vote is advisory and not binding on the Company or the Board of Directors in any way, the Board of Directors may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS AN ANNUAL VOTE AS THE FREQUENCY WITH WHICH STOCKHOLDERS ARE PROVIDED AN ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION. THE OPTION RECEIVING THE GREATEST NUMBER OF VOTES (EVERY ONE, TWO OR THREE YEARS) WILL BE CONSIDERED THE FREQUENCY SELECTED BY STOCKHOLDERS.
FUTURE STOCKHOLDER PROPOSALS
Stockholders who intend to submit a proposal for the annual meeting of stockholders to be held in 20202024 and desire that such proposal be included in the proxy materials for such meeting must follow the procedures prescribed by Rule 14a-8 under the Exchange Act. To be eligible for inclusion in the proxy materials, stockholder proposals must be received at either of the Company’s principal offices by the Corporate Secretary of the Company no later than August 9, 2020.October 14, 2023. Upon receipt of such a proposal, the Company will determine whether or not to include the proposal in such proxy statement and form of proxy in accordance with applicable law.
A stockholder that wishes to present a proposal at the next annual meeting of stockholders to be held in 20202024 must submit such proposal to the Company on or before September 22, 2020,October 14, 2023, or management will have discretionary authority to vote proxies received for such meeting with respect to any such proposal.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act. We file reports, proxy statements and other information with the SEC. You may read and copy these reports, proxy statements and other information at the SEC’s Public Reference Section, located at One Station Place, 100 F Street, NE, Washington, DC, U.S.A., 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website, located at www.sec.gov, that contains reports, proxy statements and other information regarding the Company.
By Order of the Board of Directors of Body and Mind Inc.
/s/ Michael Mills
Michael Mills
President and Chief Executive Officer
Dated: February 7, 2023.
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Schedule A
Body and Mind Inc.
(the “Company”)
2023 STOCK AND INCENTIVE PLAN
Section 1. Purpose
The purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors and Non-Employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock and cash‑based arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s shareholders.
This Plan supersedes, replaces and is in substitution for the Company’s “2012 Incentive Stock Option Plan”, dated as originally ratified by the Board of Directors of the Company on October 25, 2012, as was ratified by the shareholders of the Company at the Company’s annual meeting held on December 10, 2012. Any securities issued under the 2012 Incentive Stock Option Plan that are outstanding as of the date hereof are covered by this Plan. The maximum aggregate number of shares of the Company which may be issued pursuant to all awards under this Plan is set forth in Section 4(a) hereof.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
(a) | |
“Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company. | |
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Schedule A
Body and Mind Inc.
(the “Company”)
2012 Incentive Stock Option Plan
PART 1
INTERPRETATION
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(c) | “ | |
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(d) | “ | |
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(e) | “ | |
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(f) | “Committee” shall mean the Compensation Committee of the Board or such other committee designated by the Board to administer the Plan, or if no such committee is appointed, the Board itself. At any time that the Company |
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(g) | “Common Shares” shall mean the shares of common stock of the Company (or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan). |
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(h) | “Company” shall mean Body and Mind Inc., a Nevada company, and any successor corporation. |
(i) | “ |
| (i) | is engaged to provide on | |
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| (ii) | provides | |
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| (iii) | in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an | |
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| (iv) | has a relationship with the Company or an Affiliate of the Company that enables the individual to be knowledgeable about the business and affairs of the |
(j) | “Consultant | |
partner. | ||
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(k) | “CSE” means the |
PART 2
PURPOSE
PART 3
GRANTING OF OPTIONS
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(l) | “Director” shall mean a member of |
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(m) | ||
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(n) | “Effective Date” shall |
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(o) | “Eligible Person” shall mean any employee, officer, Non‑Employee Director, or Consultant providing services to the Company | |
PART 4
RESERVE OF SHARES
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(p) | “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended. |
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(q) | “Fair Market Value” with respect to one Common Share as of any date shall mean (a) if the Common Shares |
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(r) | “Incentive Stock Option” shall mean an option |
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(s) | “Non-Employee Director” shall mean a Director who is not also an |
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(t) | “Non‑Qualified Stock Option” shall mean an option |
PART 5
CONDITIONS GOVERNING THE GRANTING AND EXERCISING OF OPTIONS
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(u) | “Option” shall mean an Incentive Stock Option or a Non‑Qualified Stock Option to purchase shares of |
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(v) | “Other Stock‑Based Award” shall |
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(w) | “Participant” shall mean an |
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(x) | “Performance Award” shall mean any right granted under Section 6(d) of |
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(y) | “Person” shall mean any individual or |
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(z) | “Plan” shall mean the Company’s 2023 Stock and Incentive Plan, |
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(aa) | “Related Person” means: |
PART 6
CHANGES IN OPTIONS
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PART 7
SECURITIES LAWS AND EXCHANGE POLICIES
PART 8
AMENDMENT
PART 9
EFFECT OF PLAN ON OTHER COMPENSATION OPTIONS
PART 10
OPTIONEE’S RIGHTS AS A SHAREHOLDER
PART 11
EFFECTIVE DATE OF PLAN
SCHEDULE “A”
BODY AND MIND INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT is dated as of ____________________, 20____ between Body and Mind Inc. (the “Company”) and ____________________ (the “Optionee”).
WHEREAS:
Affiliate; or | |
In consideration of the foregoing and the mutual agreements contained herein (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:
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| (iii) | a permitted assign of a Director or executive officer of the Company or an Affiliate. |
(bb) | “Restricted Stock” shall mean any Common Share granted under Section 6(c) of the Plan. |
(cc) | “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Common Share (or a cash payment equal to the Fair Market Value of a Common Share) at some future date, provided that in the case of Participants who are liable to taxation under the Tax Act in respect of amounts payable under this Plan, that such date shall not be later than December 31 of the third calendar year following the year services were performed in respect of the corresponding Restricted Stock Unit awarded. |
(dd) | “Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder. |
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(ee) | “Securities Act” shall mean the U.S. Securities Act of 1933, as amended. |
(ff) | “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A. |
(gg) | “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan. |
(hh) | “Tax Act” means the Income Tax Act (Canada). |
(ii) | “U.S. Award Holder” shall mean any holder of an Award who is a “U.S. person” (as defined in Rule 902(k) of Regulation S under the Securities Act) or who is holding or exercising Awards in the United States. |
Section 3. Administration
(a) | Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the |
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(b) | Delegation. The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall not delegate such authority in such a manner as would cause the Plan not to comply with applicable exchange rules or applicable corporate law. |
(c) | Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, (i) the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of all applicable securities rules and (ii) only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of any applicable securities exchange where |
(d) | Indemnification. To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company. |
Section 4. Common Shares Available for Awards
(a) | Common Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Common Shares that may be issued under all Awards under the Plan shall be 25,000,000 Common Shares (the “Maximum Number”) (being approximately 17% of the number of Common Shares outstanding as of the Effective Date of the Plan). The Maximum Number consists of (i) 7,553,000 Common Shares issuable pursuant to Awards previously granted and outstanding under the Company’s 2012 Incentive Stock Option Plan and (ii) 17,447,000 additional Common Shares that may be issued pursuant to Awards to be granted under this Plan. The aggregate number of Common Shares that may be issued under all Awards under the Plan shall be reduced by Common Shares subject to Awards issued under the Plan in accordance with the Common Share counting rules described in Section 4(b) below. |
(b) | Counting Common Shares. For purposes of this Section 4, if an Award entitles the holder thereof to receive or purchase Common Shares, the number of Common Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Common Shares available for granting Awards under the Plan. |
(i) | Common Shares Added Back to Reserve. If any Common Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company (including any Common Shares withheld by the Company or Common Shares tendered to satisfy any tax withholding obligation on Awards or Common Shares covered by an Award that are settled in cash), or if an Award otherwise terminates or is cancelled without delivery of any Common Shares, then the number of Common Shares counted against the aggregate number of Common Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan. |
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(ii) | Cash‑Only Awards. Awards that do not entitle the holder thereof to receive or purchase Common Shares shall not be counted against the aggregate number of Common Shares available for Awards under the Plan. | |
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| (iii) | Substitute Awards Relating to Acquired Entities. Common Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the |
(c)
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IN WITNESS WHEREOF, the Company and Optionee have caused this Agreement to be duly executed as of the date first written above.
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| Award Grant Limitations. The Board or Committee shall only grant Awards under this Plan in accordance with Section 6 hereof and, for greater certainty, may not grant any Awards under this Plan unless there is an available exemption from the registration requirements under the Securities Act and applicable state securities laws, unless the Plan and the securities underlying the Awards are registered under the Securities Act on Form S-8, as well as an available prospectus exemption under National Instrument 45-106 – Prospectus Exemptions (“NI 45-106”). If, and so long as, the Company is listed on the CSE, Section 2.24 of NI 45-106 shall not apply to the Plan and all Awards granted thereunder to any employee or Consultant who is engaged in investor relations activities for the Company, any associated Consultant, any executive officer of the Company, a Director of the Company, or a permitted assign of those persons if, after the grant: |
| (i) | the number of securities, calculated on a fully diluted basis, reserved for issuance under Options granted to |
(A) | ||
Related Persons, exceeds 10% of the outstanding securities of the Company, or | ||
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| (B) | A Related Person, exceeds 5% of the outstanding securities of the Company, or |
SCHEDULE “B”
BODY AND MIND INC.
(ii) | the number of securities, calculated in a fully diluted basis, issued within 12 months to |
EXERCISE NOTICE
The undersigned hereby subscribes for __________ shares of the common stock of Body and Mind Inc. (the “Company”) at a price of $______ per share, pursuant to the provisions of the Incentive Stock Option Agreement entered into between the undersigned and the Company dated ____________________, 20____.
Dated this ____ day of _______________, 20____.
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(A) | Related Persons, exceeds 10% of the outstanding securities of the Company, or | |
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| (B) | A Related Person and the associates of the Related Person, exceeds 5% of the outstanding securities of the Company; |
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unless the Company obtains security holder approval (as defined in Section 2.22 of NI 45-106) and otherwise satisfies all other requirements of Section 2.25(3) of NI 45-106.
(e) | Additional Award Limitations. If, and so long as, the Company is listed on the CSE, the aggregate number of Common Shares issued or issuable to persons providing “investor relations activities” (as defined in CSE policies) as compensation within a 12 month period, shall not exceed 2% of the total number of Common Shares then outstanding. |
Section 5. Eligibility
Any Eligible Person shall be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company and/or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full‑time or part‑time employees (which term, as used herein, includes, without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision.
Section 6. Awards
(a) | Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan, as the Committee shall determine: |
(i) | Exercise Price. The purchase price per Common Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Common Share on the date of grant of such Option; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate. | |
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| (ii) | Option Term. The term of each Option shall be fixed by the Committee at the date of grant but shall not be longer than 10 years from the date of grant. Notwithstanding the foregoing, in the event that the expiry date of an Option held by a non-U.S. Award Holder falls within a trading blackout period imposed by the Company (a “Blackout Period”), and neither the Company nor the individual in possession of the Options is subject to a cease trade order in respect of the Company’s securities, then the expiry date of such Option shall be automatically extended to the 10th business day following the end of the Blackout Period. |
(iii) | Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms, including, but not limited to, cash, Common Shares (actually or by attestation), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price, in which payment of the exercise price with respect thereto may be made or deemed to have been made. |
(A) | Promissory Notes. Notwithstanding the foregoing, the Committee may not permit payment of the exercise price, either in whole or in part, with a promissory note. | |
(B) | Net Exercises. The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Common Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Common Shares underlying the Option being exercised on the date of exercise, over the exercise price of the Option for such Common Shares. |
(iv) | Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options: |
(A) | Subject to adjustment pursuant to Section 4(c) of the Plan, the maximum number of Common Shares that may be issued pursuant to Incentive Stock Options shall not exceed 25,000,000 (being approximately 17% of the number of Common Shares outstanding as of the Effective Date of the Plan). | |
(B) | All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board or the date this Plan was approved by the shareholders of the Company. | |
(C) | Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant. | |
(D) | The purchase price per Common Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Common Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, the purchase price per Common Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Common Share on the date of grant of the Incentive Stock Option. | |
(E) | Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option. |
(b) | Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Common Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Common Share on the date of grant of the Stock Appreciation Right; provided, however,that, subject to applicable law and stock exchange rules, the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the same limitations in Section 6(a)(ii) of the Plan applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. |
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(c) | Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: |
(i) | Restrictions. Common Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Common Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(e) of the Plan. | |
(ii) | Issuance and Delivery of Common Shares. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book‑entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Common Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book‑entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Common Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Common Shares, such Common Shares shall be issued and delivered to the holder of the Restricted Stock Units. | |
(iii) | Forfeiture. Except as otherwise determined by the Committee or as provided in an Award Agreement, upon a Participant’s termination of employment or service or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Common Shares of Restricted Stock and all Restricted Stock Units held by such Participant at such time shall be forfeited and reacquired by the Company for cancellation at no cost to the Company; provided, however, that the Committee may waive in whole or in part any or all remaining restrictions with respect to Common Shares of Restricted Stock or Restricted Stock Units. |
(d) | Performance Awards. The Committee is hereby authorized to grant Performance Awards to Eligible Persons. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Common Shares (including, without limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of one or more objective performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. |
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(e) | Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Common Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Common Shares with respect to a number of Common Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights or other Awards the value of which is based solely on an increase in the value of the Common Shares after the date of grant of such Award, and (ii) dividend and Dividend Equivalent amounts may be accrued but shall not be paid unless and until the date on which all conditions or restrictions relating to such Award have been satisfied, waived or lapsed. |
(f) | Other Stock‑Based Awards. The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Shares (including, without limitation, securities convertible into Common Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. No Award issued under this Section 6(f) shall contain a purchase right or an option‑like exercise feature. |
(g) | General |
(i) | Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law | |
(ii) | Limits on Transfer of Awards. Except as otherwise provided by the Committee in its discretion and subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Common Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Common Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. Where the Committee does permit the transfer of an Award other than a fully vested and unrestricted Common Share, such permitted transfer shall be for no value and in accordance with all applicable securities rules. The Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. | |
(iii) | Restrictions; Securities Exchange Listing. All Common Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Common Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Common Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied. |
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(iv) | Prohibition on Option and Stock Appreciation Right Repricing. Except as provided in Section 4(c) of the Plan, the Committee may not, without prior approval of the Company’s shareholders and applicable stock exchange approval, seek to effect any repricing of any previously granted, “underwater” Option or Stock Appreciation Right by: (i) amending or modifying the terms of the Option or Stock Appreciation Right to lower the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right and granting either (A) replacement Options or Stock Appreciation Rights having a lower exercise price; or (B) Restricted Stock, Restricted Stock Units, Performance Award or Other Stock‑Based Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock Appreciation Right for cash or other securities. An Option or Stock Appreciation Right will be deemed to be “underwater” at any time when the Fair Market Value of the Common Shares covered by such Award is less than the exercise price of the Award. | |
(v) | Section 409A Provisions. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a change in control or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such change in control event, disability or separation from service meet the definition of a change in control event, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short‑term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short‑term deferral exemption or otherwise. | |
(vi) | Acceleration of Vesting or Exercisability. No Award Agreement shall accelerate the exercisability of any Award or the lapse of restrictions relating to any Award in connection with a change‑in‑control event, unless such acceleration occurs upon the consummation of (or effective immediately prior to the consummation of, provided that the consummation subsequently occurs) such change‑in‑control event. |
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Section 7. Amendment and Termination; Corrections
(a) | Amendments to the Plan and Awards. The Board may from time to time amend, suspend or terminate this Plan, and the Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange, and any such amendment, alteration, suspension, discontinuation or termination of an Award will be in compliance with CSE policies. For greater certainty and without limiting the foregoing, the Board may amend, suspend, terminate or discontinue the Plan, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders of the Company in order to: |
(i) | amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan; | |
(ii) | amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively; | |
(iii) | make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to Awards necessary or desirable to avoid any adverse tax results under Section 409A), and no action taken to comply shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof; or | |
(iv) | amend any terms relating to the administration of the Plan, including the terms of any administrative guidelines or other rules related to the Plan. | |
Notwithstanding the foregoing and for greater certainty, prior approval of the shareholders of the Company shall be required for any amendment to the Plan or an Award that would: |
(i) | require shareholder approval under the rules or regulations of securities exchange that is applicable to the Company; | |
(ii) | increase the number of shares authorized under the Plan as specified in Section 4 of the Plan; | |
(iii) | permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6(g)(iv) of the Plan; | |
(iv) | permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Common Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan; | |
(v) | permit Options to be transferable other than as provided in Section 6(g)(ii) of the Plan; | |
(vi) | amend this Section 7(a); or | |
(vii) | increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Section 6(a) and Section 6(b) of the Plan or extend the terms of any Options beyond their original expiry date. |
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(b) | Corporate Transactions. In the event of any reorganization, amalgamation, merger, consolidation, split‑up, spin‑off, combination, plan of arrangement, take‑over bid or tender offer, repurchase or exchange of Common Shares or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter the rights of any holder of an Award or beneficiary thereof: |
(i) | either (A) termination of the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the vested portion of the Award or realization of the Participant’s vested rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event described in this Section 7(b)(i)(A), the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of the Award or realization of the Participant’s rights, then the Award may be terminated by the Company without any payment) or (B) the replacement of the Award with other rights or property selected by the Committee or the Board, in its sole discretion; | |
(ii) | that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; | |
(iii) | that, subject to Section 6(g)(vi) of the Plan, the Award shall be exercisable or payable or fully vested with respect to all Common Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or | |
(iv) | that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event. |
(c) | Correction of Defects, Omissions and Inconsistencies. The Committee may, without prior approval of the shareholders of the Company, correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan. |
Section 8. Income Tax Withholding
In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, in order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Common Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (subject to any applicable limitations under ASC Topic 718 to avoid adverse accounting treatment) or (b) delivering to the Company Common Shares other than Common Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes. The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.
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Section 9. U.S. Securities Laws
Neither the Awards nor the securities which may be acquired pursuant to the exercise of the Awards have been registered under the Securities Act or under any securities law of any state of the United States of America and are considered “restricted securities” (as such term is defined in Rule 144(a)(3) under the Securities Act) and any Common Shares shall be affixed with an applicable restrictive legend as set forth in the Award Agreement unless the Plan and the Common Shares underlying the Awards have been registered under the Securities Act on a Form S-8, or other applicable registration statement. At this time the Awards may not be offered or sold, directly or indirectly, in the United States except pursuant to registration under the Securities Act and the securities laws of all applicable states or available exemptions therefrom, however, the Company intends to register the Plan and the Common Shares underlying the Awards under the Securities Act on Form S-8, failing which could result in such U.S. Award Holder not being able to dispose of any Common Shares issued on exercise of Awards for a considerable length of time. Each U.S. Award Holder or anyone who becomes a U.S. Award Holder, who is granted an Award in the United States, who is a resident of the United States or who is otherwise subject to the Securities Act or the securities laws of any state of the United States will be required to complete an Award Agreement which sets out the applicable United States restrictions.
Section 10. Furnishing of Financial Information to U.S. Participants
The Company shall furnish summary financial information (audited or unaudited) of the Company’s financial condition and results of operations, consistent with the requirements of applicable laws, at least annually to each U.S. Participant during the period such Participant has one or more Awards outstanding, and in the case of an individual who acquired Common Shares pursuant to the Plan, during the period such Participant owns such Common Shares; provided, however, the Company shall not be required to provide such information if the issuance is limited to key persons whose duties in connection with the Company assure their access to equivalent information.
Section 11. General Provisions
(a) | No Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. |
(b) | Award Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. |
(c) | Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control. |
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(d) | No Rights of Common Shareholders. Except with respect to Common Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards pursuant to Section 6(c)(i) or Section 6(e) of the Plan, neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to any Common Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Common Shares have been issued. |
(e) | No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases. |
(f) | No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. |
(g) | Governing Law. The Plan shall be governed by the laws of the State of Nevada; provided, however, that any Award Agreement may provide by its terms that it shall be governed by the laws of any other jurisdiction as may be deemed appropriate by the parties thereto. |
(h) | Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. |
(i) | No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. |
(j) | Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan. |
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(k) | No Fractional Common Shares. No fractional Common Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Common Share or whether such fractional Common Share or any rights thereto shall be canceled, terminated or otherwise eliminated. |
(l) | Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. |
Section 12. Clawback or Recoupment
All Awards under this Plan shall be subject to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time to time, or (ii) any applicable law, rule or regulation or applicable stock exchange rule.
Section 13. Effective Date of the Plan
The Plan was approved by the Board on February 3, 2023 (the “Effective Date”).
Section 14. Term of the Plan
No Award shall be granted under the Plan, and the Plan shall terminate, on the earlier of (i) the tenth anniversary of the Effective Date, or (ii) the tenth anniversary of the date the Plan is approved by the shareholders of the Company, or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.
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Schedule B
Body and Mind Inc. (the
(the “Company”)
AUDIT COMMITTEE CHARTER
This Charter establishes the composition, the authority, roles and responsibilities and the general objectives of the Company’s audit committee, or its Board of Directors (the “Board”) in lieu thereof (the “Audit Committee”). The roles and responsibilities described in this Charter must at all times be exercised in compliance with the laws and regulations governing the Company and any subsidiaries.
Composition
(a) | Number of |
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(b) | Chair. If there is more than one member of the Audit Committee, members will appoint a chair of the Audit Committee (the “Chair”) to serve for a term of one (1) year on an annual basis. The Chair may serve as the chair of the Audit Committee for any number of consecutive terms. |
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(c) | Financially Literacy. All members of the Audit Committee must be financially literate as defined by applicable legislation. If upon appointment a member of the Audit Committee is not financially literate, such member will have a period of three (3) months to acquire the required level of financial literacy. |
Meetings
Meetings
(a) | Quorum. The quorum required to constitute a meeting of the Audit Committee is set at a majority of members. |
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(b) | Agenda. The Chair will set the agenda for each meeting, after consulting with management and the Company’s external auditor (the “Auditor”). Agenda materials such as draft financial statements must be circulated to all Audit Committee members for members to have a reasonable amount of time to review the materials prior to the meeting. |
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(c) | Notice to |
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(d) | Minutes. Minutes of Audit Committee meetings will be accurately recorded, with such minutes recording the decisions reached by the committee. |
Roles and Responsibilities
The roles and responsibilities of the Audit Committee include the following:
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External Auditor
The Audit Committee will:
(a) | Selection of |
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(b) | Scope of |
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(c) | Compensation. Recommend to the Board the compensation to be paid to the Auditor. |
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(d) | Replacement of Auditor. If necessary, recommend the replacement of the Auditor to the Board. |
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(e) | Approve Non-Audit Related |
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(f) | Responsibility for Oversight. Oversee the work of the Auditor, who must report directly to the Audit Committee. |
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(g) | Resolution of Disputes. Assist with resolving any disputes between management and the Auditor regarding financial reporting. |
Financial Statements and Financial Information
The Audit Committee will:
(a) | Review Audited Financial Statements. Review the Company’s audited financial statements, discuss those statements with management and with the Auditor, and recommend their approval to the Board. |
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(b) | Review Interim Financial Statements. Review and discuss with management the Company’s quarterly financial statements, and if appropriate, recommend their approval by the Board. |
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(c) | MD&A, Annual and Interim Earnings Press Releases, Audit Committee Reports. Review management’s discussion and analysis, interim and annual press releases, and Audit Committee reports before the Company publicly discloses such information. |
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(d) | Auditor Reports and Recommendations. Review and consider any significant reports and recommendations issued by the Auditor, together with management’s response, and the extent to which recommendations made by the Auditor have been implemented. |
Risk Management, Internal Controls and Information Systems
The Audit Committee will:
(a) | Internal Controls. Review with management and the Auditor the general policies and procedures used by the Company with respect to internal accounting and financial controls, and remain informed, through communications with the Auditor, of any weaknesses in internal controls that could cause errors or deficiencies in financial reporting or deviations from the accounting policies of the Company or from applicable laws or regulations. |
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(b) | Financial |
(c)
Accounting Policies and Practices. Review management plans regarding any changes in accounting practices or policies and the financial impact thereof. | |
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(d) | Litigation. Review with the Auditor and the Company’s legal counsel any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Company and the manner in which these matters are being disclosed in the Company’s financial statements. |
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(e) | Other. Discuss with management and the Auditor correspondence with regulators, employee complaints, or published reports that raise material issues regarding the Company’s financial statements or disclosure. |
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Complaints
The Audit Committee will:
(a) | Accounting, Auditing and Internal Control Complaints. Establish a procedure for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters. |
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(b) | Employee Complaints. Establish a procedure for the confidential transmittal on condition of anonymity by the Company’s employees of concerns regarding questionable accounting or auditing matters. |
Authority
Authority
(a) | Auditors. The Auditor, and any internal auditor hired by the Company, will report directly to the Audit Committee. |
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(b) | Independent |
Reporting
The Audit Committee will report to the Board on:
(a) | the independence of the Auditor; |
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(b) | the performance of the Auditor and any recommendations of the Audit Committee in relation thereto; |
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(c) | the reappointment and termination of the Auditor; |
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(d) | the adequacy of the Company’s internal controls and disclosure controls; |
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(e) | the Audit Committee’s review of the Company’s financial statements, both annual and interim; |
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(f) | the Audit Committee’s review of management’s discussion and analysis, both annual and interim; |
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(g) | the Company’s compliance with legal and regulatory matters to the extent they affect the its financial statements; and |
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(h) | all other material matters dealt with by the Audit Committee. |
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