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Re: kettleman post# 1108

Wednesday, 12/19/2018 6:56:41 PM

Wednesday, December 19, 2018 6:56:41 PM

Post# of 1282
There is still approval
Additional Transaction Details

The Transaction will be effected by way of a court-approved plan of arrangement completed under the Canada Business Corporations Act and will require approval by at least 66 2/3% of the votes cast by the shareholders of Emblem present in person or by proxy at a special meeting of Emblem shareholders.

Upon completion of the Transaction, two (2) independent directors of Emblem will be appointed to serve on the board of directors of Aleafia, being Daniel Milliard and Loreto Grimaldi who will replace two (2) directors of Aleafia.

The Agreement includes customary provisions including reciprocal non-solicitation provisions, subject to the right of each of Emblem and Aleafia to accept a superior proposal/competing transaction in certain circumstances, with both Emblem and Aleafia having a seven (7) business day right to match any such superior proposal/competing transaction for the other party. The Agreement also provides for reciprocal termination fees of $10 million if the Transaction is terminated in certain specified circumstances.

In addition to shareholder approvals, the Transaction is subject to the receipt of certain regulatory, court and stock exchange approvals, the obtaining of material consents / waivers and the satisfaction of other conditions customary in transactions of this nature.

Aleafia has entered into support and voting agreements with each of Emblem’s directors, Emblem’s CEO and CFO, along with additional shareholders who have agreed to support and vote for the Transaction and who represent in aggregate approximately 11.8% of the outstanding Emblem shares.

It is expected that holders of Emblem options will receive replacement Aleafia options (on the same terms as the Emblem options), and holders of Emblem warrants will receive, upon exercise, the same consideration they would have received as if they were Emblem shareholders at the closing of the Transaction.

Aleafia and Emblem have also entered into an agreement with a holder representing 69.44% of the principal amount of Emblem’s convertible debentures pursuant to which such holder has agreed not to accept any change of control offer to the extent one is made, and the parties have agreed to use their commercially reasonable efforts to amend the trust indenture to amend the change of control provisions such that they do not apply to the Transaction, and to reduce the conversion price from $2.30 to $2.00.

Further information regarding the Transaction will be included in the information circular that Emblem will prepare, file, and mail in due course to its shareholders in connection with its special meeting to be held to consider the Transaction which is expected to occur before March 8, 2019. The Agreement will be filed on the SEDAR profiles of Emblem and Aleafia on the SEDAR website at www.sedar.com.

Emblem Board of Director’s Recommendations

The board of directors of Emblem (the “Emblem Board”) has unanimously determined, after receiving the unanimous recommendation of its Special Committee and financial and legal advice, that the consideration to be received by the Emblem shareholders is fair from a financial point of view and that the Arrangement is in the best interests of Emblem and its security holders, and the Emblem Board unanimously recommends that the Emblem shareholders vote in favour of the Transaction.

The Emblem Board and its Special Committee have each obtained a fairness opinion from Eight Capital and Echelon Wealth Partners Inc., respectively, that, as of the date of the opinions, and subject to the assumptions, limitations, and qualifications on which such opinions are based, the consideration to be received by Emblem shareholders pursuant to the Agreement is fair, from a financial point of view, to the Emblem shareholders.

Legal and Financial Advisors

Gowling WLG (Canada) LLP is acting as legal counsel to Aleafia. Deloitte advised Aleafia on financial due diligence. Mackie Research Capital Corporation is acting as financial advisor to Aleafia. In addition to other fees and expenses payable to Mackie, Aleafia is required to pay a success fee (the “Success Fee”) to Mackie upon closing of the Transaction equal to 2.0% of the aggregate fair market value of the share consideration issuable by Aleafia to Emblem’s shareholders and the amount of net debt of Emblem (as of its most recent balance sheet prior to the closing of the Transaction, and calculated as the sum of the long term debt and debentures) which is assumed or acquired by Aleafia, or retired or otherwise extinguished in connection with the Transaction (expected to be $30.5 million). The Success Fee is payable in common shares of Aleafia subject to acceptance of the TSX Venture Exchange.

Dentons Canada LLP is acting as legal counsel to Emblem. Eight Capital is acting as financial advisor to Emblem and Echelon Wealth Partners Inc. is acting as financial advisor to the Special Committee. Eight Capital and Echelon Wealth Partners Inc. have each provided a fairness opinion to the Emblem Board and the Special Committee, respectively.

Conference Call and Slide Presentation

Aleafia and Emblem will hold a webcast conference call, including a slide presentation, to discuss the Transaction.

Date: Wednesday December 19, 2018

Time: 8:30am (Toronto Time)

USA/Canada Toll-Free Participant Call-in: (866) 679-9046; Passcode: 9579635

International Toll-Free Participant Call-in: (409) 217-8323; Passcode: 9579635

Webcast Link: https://edge.media-server.com/m6/p/4pcbtcdd

This conference call will be webcast live over the internet and can be accessed through the link provided. Audio of the call will be available to participants through both the conference call line and webcast, however questions to management may only be submitted via the webcast.

For Additional Information and Support:

Aleafia Health Inc.
Emblem Corp.

Nicholas Bergamini
VP Public Affairs, Aleafia Health Inc.
416-860-5665
ir@aleafiainc.com
Morgan Cates
H+K Strategies
416-413-4649
morgan.cates@hkstrategies.ca

Alex Stojanovic
Chief Financial Officer, Emblem Corp.
647-748-9696
investors@emblemcorp.com

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