The Flowr Corporation (TSX.V:FLWR) entered into a definitive agreement to acquire Terrace Global Inc. (TSX.V:TRCE) from Directors, senior officers of Terrace Global and others for CAD 68.6 million on October 19, 2020. Under the terms of the transaction, each shareholder of Terrace Global will receive 0.4973 of Flowr Share per Terrace Global share. Upon completion of the Transaction, existing Flowr and Terrace shareholders would own approximately 60.9% and 39.1% of the pro forma company respectively, on a fully diluted in-the-money basis. Terrace Global will pay a termination fee of up to CAD 3 million to Flowr if the deal gets terminated. The Board of Directors of the combined company will be comprised of 5 Flowr existing Directors (including two Directors that are independent), 3 nominees from Terrace Global and a new independent Director mutually agreed to by Flowr and Terrace Global.

The transaction is subject to the approval of the Ontario Superior Court of Justice (Commercial List) and the approval of two thirds of the votes cast by Terrace Global shareholders at a special meeting to be called of Terrace Global shareholders to approve the transaction and will remains subject to certain other customary closing conditions including the receipt of certain approvals, including approval by the TSX Venture Exchange and third party approval. Flowr and Terrace Global agreed that as a condition precedent to closing to the arrangement, certain insiders of Flowr will convert at least CAD 11.9 million aggregate principal amount of the debentures. The Board of Directors of Flowr has unanimously approved the transaction. The Board of Directors of Terrace Global unanimously recommend that Terrace Global shareholders vote in favor of the transaction.

All the Directors, and senior officers of Terrace Global and other certain shareholders of Terrace Global have entered into a support agreement with Flowr, to support the transaction and vote their shares in favor of the transaction. The parties do not anticipate requiring an approval of shareholders of Flowr to complete the transaction. As of December 14, 2020, the transaction has been conditionally approved by the TSX Venture Exchange (“TSXV”). As of December 16, 2020, the transaction was approved by the shareholders of Terrace. Final order of the Ontario Superior Court of Justice is expected to be received on December 18, 2020. The transaction is expected to close by the end of 2020. As of December 21, 2020, the Ontario Superior Court of Justice has issued a final order approving the transaction. As per updated filing, the effective date of the arrangement is currently expected to occur on or about December 22, 2020.

ATB Capital Markets Inc. acted as the financial advisor to Flowr and has provided an independent Fairness Opinion to the Flowr Board. John M. Sabetti and Mitchell Thaw of Fasken Martineau DuMoulin LLP acted as legal counsel to Flowr. Hyperion Capital Inc. acted as financial advisor to Terrace Global and Fairness Opinion provider to Terrace Global's Board. Jeff Hergott, Katie Drury and Katy Pitch of Wildeboer Dellelce LLP acted as legal counsel to Terrace Global. Norton Rose Fulbright Canada LLP acted as legal counsel to the Board of Directors of Terrace Global. Computershare Trust Company of Canada acted as depositary to Terrace Global. Computershare Investor Services Inc. acted as transfer agent to Terrace Global Inc. Dorsey & Whitney LLP acted as a Legal Advisor to The Flowr Corporation.