BGP Acquisition Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer granted relief from certain restricted security requirements under National Instrument 41-101 General Prospectus Requirements -- relief granted subject to conditions.

OSC Rule 56-501 Restricted Shares -- Issuer granted relief from certain restricted share requirements under OSC Rule 56-501 -- relief granted subject to conditions.

Applicable Legislative Provisions

National Instrument 41-101 General Prospectus Requirements, ss. 12.3, and 19.1.

OSC Rule 56-501 Restricted Shares, Part 3, and s. 4.2.ii.

August 17, 2022

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF BGP ACQUISITION CORP. (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, a special purpose acquisition corporation, in connection with a potential future qualifying transaction (the "Qualifying Transaction"), pursuant to which the share capital of Filer will undergo the following changes:

(i) each Class A Restricted Voting Share ("Class A Restricted Voting Share") will, unless previously redeemed, be automatically converted into one subordinate voting share ("Subordinate Voting Share"); and

(ii) each Class B Share ("Class B Share") will, be automatically converted on a 100-for-1 basis into proportionate voting shares ("PV Shares" and, collectively with the Subordinate Voting Shares, the "Shares")

(collectively, the "Share Exchange").

In connection with the Qualifying Transaction and the Share Exchange, the Filer has applied for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that the requirements under:

(i) section 12.3 of National Instrument 41-101 General Prospectus Requirements ("NI 41-101") for a prospectus distribution of restricted securities, or subject securities, or securities that are directly or indirectly convertible into, or exercisable or exchangeable for, restricted securities or subject securities (the "Prospectus Eligibility Exemption"); and

(ii) part 3 of Ontario Securities Commission Rule 56-501 Restricted Shares ("OSC Rule 56-501") relating to the withdrawal of prospectus exemptions for distributions of restricted shares, or subject securities, or securities that are directly or indirectly convertible into, or exercisable or exchangeable for, restricted securities or subject securities (the "OSC Rule 56-501 Withdrawal Exemption") in connection with stock distributions (as defined in OSC Rule 56-501) of the Filer;

shall not apply to the Filer in connection with the Qualifying Transaction and any future distributions of Subordinate Voting Shares, PV Shares, or distributions of securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares or PV Shares.

The Prospectus Eligibility Exemption, together with the OSC Rule 56-501 Withdrawal Exemption will be referred to herein as the Exemptions Sought.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland (together with Ontario, the "Jurisdictions") in respect of the Prospectus Eligibility Exemption.

Interpretation

Terms defined in National Instrument 14-101 -- Definitions, MI 11-102, NI 41-101, and OSC Rule 56-501 have the same meaning if used in this decision, unless otherwise defined.

Representations

The decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated under the laws of British Columbia on May 22, 2020 and its registered and head office is located at Suite 1500 -- 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7.

2. The Filer is a reporting issuer in the Jurisdictions and is not in default under the securities legislation in force in any of the Jurisdictions.

3. The Filer was created for the purposes of effecting, directly or indirectly, an acquisition of one or more businesses or assets. The Filer is specifically focusing its search of the noted acquisition to businesses involved in cannabis production and/or distribution and/or related sectors, however, the Filer is not limited to particular industry or geographic region for the purposes of the Qualifying Transaction.

4. The Class A Restricted Voting Shares were offered to the public pursuant to an initial public offering (the "IPO") under a long form prospectus dated January 28, 2021 (the "Prospectus"). On February 4, 2021, the Filer announced that it raised US$115,000,000 from the sale of "Class A Restricted Voting Units" under the IPO (including $15,000,000 of Class A Restricted Voting Units issued pursuant to the full exercise of the over-allotment option). Each Class A Restricted Voting Unit consisted of one Class A Restricted Voting Share and one-half of a warrant ("Warrant"), with each whole Warrant becoming exercisable 65 days following the Qualifying Transaction at a price of US$11.50 per each Subordinate Voting Share.

5. The authorized capital of the Filer consists of an unlimited number of Class A Restricted Voting Shares, an unlimited number of Class B Shares, an unlimited number of Subordinate Voting Shares and an unlimited number of PV Shares.

6. As at the date hereof, the Filer had outstanding 11,500,000 Class A Restricted Voting Shares, 3,475,001 Class B Shares and 5,940,000 Warrants. The Filer has no other shares or warrants outstanding.

7. The Class A Restricted Voting Shares and Warrants are listed and posted for trading in Canada on the Neo Exchange (the "NEO") under the symbols "BGP.U" and "BGP.WT.U", and on the OTCQX under the symbols "BGPPF" and "BGPAF", respectively. The Class B Shares are not listed or posted for trading on any stock exchange, nor is it anticipated that the Class B Shares will be listed or posted for trading on any exchange in the future.

8. As disclosed in the Prospectus, 100% of the gross proceeds from the sale of the Class A Restricted Voting Shares (and warrants attached to such shares) are held in escrow by Odyssey Trust Company, pending the completion of a Qualifying Transaction (the "Escrow Amount").

9. As the Filer has deposited 100% of the proceeds from the sale of the Class A Restricted Voting Units into escrow, pursuant to the rules of the NEO, the Filer is not required to hold a shareholder meeting to consider the approval of the Qualifying Transaction.

10. As disclosed in the Prospectus, the Class A Restricted Voting Shares are entitled to one vote per share, other than on matters relating to the election and/or removal of the directors and auditors prior to the closing of the Qualifying Transaction. It is not currently expected that any meetings involving the holders of Class A Restricted Voting Shares will take place.

11. However, holders of Class A Restricted Voting Units will have the opportunity to redeem all or a portion of their Class A Restricted Voting Units, provided that they deposit their shares for redemption prior to the deadline specified by the Corporation, following public disclosure of the details of the qualifying transaction and prior to the closing of the qualifying transaction, of which prior notice had been provided to the holders of the Class A Restricted Voting Shares by any means permitted by the Exchange, not less than 21 days nor more than 60 days in advance of such deadline, in each case, with effect, subject to applicable law, immediately prior to the closing of the Qualifying Transaction, for an amount per share, payable in cash, equal to the pro-rata portion (per Class A Restricted Voting Share) of: (A) the Escrow Amount, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) any applicable taxes payable by the Filer on such interest and other amounts earned in the escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the Filer, subject to the limitations described in the Prospectus. Holders of Class A Restricted Voting Shares who exercise the redemption right shall, subject to applicable law, be paid such amount on closing of the Qualifying Transaction (the "Redemption Right").

12. Notwithstanding the foregoing redemption rights, each holder of Class A Restricted Voting Shares, together with any affiliate of such holder or other person with whom such holder or affiliate is acting jointly or in concert, will not be permitted to redeem more than an aggregate of 15% of the number of Class A Restricted Voting Shares issued and outstanding. This limitation will not apply in the event a Qualifying Transaction does not occur within the allowable time period within which the Filer must consummate its Qualifying Transaction (the "Permitted Timeline"), or in the event of an extension to the Permitted Timeline.

13. On July 26, 2022, the Filer announced that it had entered into a non-binding letter of intent in connection with a potential transaction, which would, if consummated, qualify as its Qualifying Transaction. Accordingly, the Filer's Permitted Timeline was automatically extended to November 4, 2022.

14. The Class B Shares are entitled to one vote per share and will receive notice of all shareholder meetings. The holders of Class B Shares are not entitled to access, or benefit from, the proceeds in the Escrow Amount. The holders of Class B Shares are BGP Acquisition Sponsor LP (the "Sponsor"), Ruth Epstein, Don Jennings, Brian Kabot, Lisa Sergi Trager, Erik Ott and Scott Riley (collectively, the "Founders"). The Sponsor and the Founders are involved in the Filer's management. Class B Shares do not have any redemption rights.

15. Immediately prior to the closing of the Qualifying Transaction, the Class B Shares will convert on a 100-for-1 basis into PV Shares and each Class A Restricted Voting Share, not otherwise redeemed pursuant to the Redemption Right, will convert into one (1) Subordinate Voting Share. No other PV Shares or Subordinate Voting Shares will be issued before the closing of the Qualifying Transaction.

16. In connection with the Qualifying Transaction, the Filer will:

(a) prepare and file a long form prospectus containing disclosure about the Qualifying Transaction (the "Qualifying Transaction Prospectus");

(b) mail a notice of redemption to the holders of the Class A Restricted Voting Units at least 21 days prior to the redemption deadline; and

(c) send by prepaid mail or otherwise deliver the Qualifying Transaction Prospectus to the holders of the Class A Restricted Voting Units no later than midnight (Toronto time) on the second business day prior to the deadline for redemption, which delivery may be effected electronically.

17. As disclosed in the Prospectus (and as will be disclosed in the Qualifying Transaction Prospectus), upon closing of the Qualifying Transaction, the Share Exchange will occur.

18. As such, pursuant to the Share Exchange, the Filer will issue one PV Share for each 100 Class B Shares. Each PV Share entitles the holder thereof to 100 votes at subsequent shareholder meetings. Each PV Share is convertible at a ratio of one PV Share for 100 Subordinate Voting Shares. Lastly, in the event of the liquidation, dissolution or winding-up of the Filer, each PV Share is entitled to 100 times the amount distributed per each Subordinate Voting Share.

19. Upon completion of the Qualifying Transaction, the PV Shares will constitute subject securities (as defined in NI 41-101and OSC Rule 56-501) and the Filer's only issued and outstanding subject securities will be the PV Shares, or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for PV Shares.

20. Following the Qualifying Transaction:

(a) The Subordinate Voting Shares may, at any time, at the option of the holder thereof and with the consent of the Filer, be converted into PV Shares on the basis of one (1) Subordinate Voting Share for one one-hundredth (0.01) of a PV Share.

(b) Subject to certain restrictions in place to maintain the Filer's status as a "foreign private issuer" for US securities law purposes, the PV Shares may at any time, at the option of the holder thereof, be converted into Subordinate Voting Shares on the basis of one hundred (100) Subordinate Voting Shares for one (1) PV Share, with fractional PV Shares convertible into Subordinate Voting Shares on the same ration. If the board of directors of the Filer determines that it is no longer advisable to maintain the PV Shares as a separate class of shares, then the PV Shares shall be converted into Subordinate Voting Shares on the basis of one hundred (100) Subordinate Voting Shares for one (1) PV Share, with fractional PV Shares convertible into Subordinate Voting Shares on the same ratio.

(c) Each PV Share will be entitled to dividends if, as and when dividends are declared by the board of directors, with each PV Share being entitled to one hundred (100) times the amount paid or distributed per Subordinate Voting Share (or, if a stock dividend is declared, each PV Share shall be entitled to receive the same number of PV Shares per PV Share as the number of Subordinate Voting Shares entitled to be received per Subordinate Voting Share), and fractional PV Shares will be entitled to the applicable fraction thereof, and otherwise without preference or distinction among or between the Shares.

(d) In the event of the liquidation, dissolution or winding-up of the Filer, the holders of Shares are entitled to participate in the distribution of the remaining property and assets of the Filer, with each PV Share being entitled to one hundred (100) times the amount distributed per Subordinate Voting Share and fractional PV Shares will be entitled to the applicable fraction thereof, and otherwise without preference or distinction among or between the Shares.

(e) The holders of Subordinate Voting Shares and PV Shares will be entitled to receive notice of, attend and vote at any meeting of shareholders of the Filer, except those meetings at which holders of a specific class of shares are entitled to vote separately as a class under the BCBCA.

(f) The Subordinate Voting Shares will carry one (1) vote per share and the PV Shares will carry one hundred (100) votes per share. Fractional PV Shares will be entitled to the number of votes calculated by multiplying the fraction by one hundred (100).

21. The rights, privileges, conditions and restrictions attaching to the Shares may be modified if the amendment is authorized by not less than 2/3 of the votes cast at a meeting of holders of the Shares duly held for that purpose. However, if the holders of PV Shares, as a class, or the holders of Subordinate Voting Shares, as a class, are to be affected in a manner materially different from such other class of Shares, the amendment must, in addition, be authorized by not less than 2/3 of the votes cast at a meeting of the holders of the class of shares which is affected differently.

22. No subdivision or consolidation of the Subordinate Voting Shares or PV Shares may be carried out unless, at the same time, the shares of the other class are subdivided or consolidated in the same manner and on the same basis, so as to preserve the relative rights of the holders of each such class of Shares.

23. In addition to the conversion rights described above, if an offer ("Offer") is made for PV Shares where: (a) by reason of applicable securities legislation or stock exchange requirements, the offer must be made to all holders of the class of PV Shares; and (b) no equivalent offer is made for the Subordinate Voting Shares, the holders of Subordinate Voting Shares shall have the right, at their option, to convert their Subordinate Voting Shares into PV Shares for the purposes of allowing the holders of the Subordinate Voting Shares to tender the Offer.

24. In the event that holders of Subordinate Voting Shares are entitled to convert their Subordinate Voting Shares into PV Shares in connection with an Offer, holders of an aggregate of Subordinate Voting Shares less than one hundred (100) (an "Odd Lot") will be entitled to convert all but not less than all of such Odd Lot of Subordinate Voting Shares into an applicable fraction of one PV Share, provided that such conversion into a fractional PV Share will be solely for the purpose of tendering the fractional PV Share to the Offer in question and that any fraction of a PV Share that is tendered to the Offer but that is not, for any reason, taken up and paid for by the offeror will automatically be reconverted into the Subordinate Voting Share that existed prior to such conversion.

25. The ability for holders of PV Shares to convert their shares to Subordinate Voting Shares is subject to certain conditions in order to maintain the Filer's status as a "foreign private issuer" under U.S. securities laws. The compressed nature of the PV Shares was also established for the purpose of maintaining the Filer's status as a "foreign private issuer" under U.S. securities laws.

26. After the Qualifying Transaction, the Filer will not issue any more Class A Restricted Voting Shares or Class B Shares.

27. 65 days after the closing of the Qualifying Transaction, each whole Warrant becomes exercisable for Subordinate Voting Shares at a price of US$11.50 per Subordinate Voting Share.

28. The Prospectus provides detailed disclosure on the terms of the Class A Restricted Voting Shares, the Class B Shares, the Subordinate Voting Shares and the PV Shares and the conversion of Class A Restricted Voting Shares into Subordinate Voting Shares and Class B Shares into PV Shares in connection with the Qualifying Transaction. The Prospectus also discloses the possibility of future issuance of PV Shares upon the approval of the board of directors of the Filer.

29. Subsequent to the Share Exchange, it is expected that the Subordinate Voting Shares will be listed and posted for trading on the NEO. The PV Shares are not expected to be listed or posted for trading on any exchange.

The Prospectus Eligibility Exemption

30. The Subordinate Voting Shares will be "restricted securities" within the meaning of NI 41-101 and the PV Shares will be "subject securities" within the meaning of NI 41-101.

31. Subject to certain exemptions, subsection 12.3(1) of NI 41-101 provides that an issuer must not file a prospectus under which restricted securities, subject securities, or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, restricted securities or subject securities, are distributed.

32. The Filer cannot rely on the "restricted security reorganization" exemption in paragraph 12.3(1)(b) of NI 41-101 for the future issuance of Subordinate Voting Shares and PV Shares (or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares or PV Shares) under a prospectus as the Subordinate Voting Shares and PV Shares were created in connection with the closing of the IPO.

33. In addition, it is not practicable for the Filer to receive prior shareholder approval pursuant to paragraph 12.3(1)(a) of NI 41-101 each time it wishes to issue Subordinate Voting Shares or PV Shares (or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares or PV Shares) under a prospectus.

34. The exemption provided in paragraph 12.3(3)(b) of NI 41-101 is not available in the circumstances because the Filer is already a reporting issuer and as such, will not be a "private issuer" immediately prior to filing any future prospectus. Further, the Filer will not be able to comply with the exemption provided in paragraph 12.3(3)(c) of NI 41-101 because the Prospectus qualified for distribution Class A Restricted Voting Shares and Class B Shares and any future prospectus would qualify for distribution a different class of shares, being the Subordinate Voting Shares and/or the PV Shares.

OSC Rule 56-501Withdrawal Exemption

35. The Subordinate Voting Shares will be "restricted shares" and the PV Shares will be "subject securities", each within the meaning of OSC Rule 56-501.

36. Subject to certain exemptions, subsection 3.2(1) of OSC Rule 56-501 provides that the prospectus exemptions under Ontario securities law will not available for certain stock distributions of securities, including the distribution of the Subordinate Voting Shares or PV Shares.

37. The Filer cannot rely on the "restricted security reorganization" exemption in subsection 3.2(2) of OSC Rule 56-501 for the future issuance of Subordinate Voting Shares and PV Shares (or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares or PV Shares) under a prospectus exemption as the Subordinate Voting Shares and PV Shares were created in connection with the closing of the IPO.

38. In addition, it is not practicable for the Filer to receive prior shareholder approval pursuant to subparagraph 3.2(1)(d)(i) of OSC Rule 56-501 each time it wishes to distribute Subordinate Voting Shares or PV Shares (or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares or PV Shares) under a prospectus exemption.

39. Further, future issuances of Subordinate Voting Shares and PV Shares will not qualify for either of the exemptions found in subparagraphs 3.2(3)(b)(i) or (ii) of OSC Rule 56-501 since the Filer will be a reporting issuer prior to the distribution of the Subordinate Voting Shares and PV Shares, and the Subordinate Voting Shares and/or PV Shares are different classes of securities than the Class A Restricted Voting Shares and Class B Shares which were distributed in connection with the Filer becoming a reporting issuer.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemptions Sought are granted provided that:

(a) in respect of the Prospectus Eligibility Exemption:

(i) the representations in paragraphs 18-23, above, continue to apply;

(ii) the Filer has no restricted securities (as defined in section 1.1 of NI 41-101) issued and outstanding other than the Subordinate Voting Shares;

(iii) the Qualifying Transaction Prospectus and other prospectuses include disclosure consistent with the representations in paragraphs 18-23 above; and

(iv) any offering of restricted securities, subject securities or securities directly or indirectly, convertible into, or exercisable or exchangeable into restricted securities or subject securities, other than an offering of Subordinate Voting Shares, PV Shares or other securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for Subordinate Voting Shares or PV Shares, complies with the provisions of section 12.3 of NI 41-101; and

(b) in respect of the OSC Rule 56-501Withdrawal Exemption:

(i) the representations in paragraphs 18-23, above, continue to apply;

(ii) the Filer has no restricted shares (as defined in section 1.1 of OSC Rule 56-501) issued and outstanding other than the Subordinate Voting Shares; and

(iii) any stock distribution of restricted shares, subject securities or securities directly or indirectly, convertible into, or exercisable or exchangeable into restricted shares or subject securities, other than a stock distribution of Subordinate Voting Shares, PV Shares or other securities that are directly or indirectly, convertible into, or exercisable or exchangeable for Subordinate Voting Shares or PV Shares, complies with the provisions of section 3.2 of OSC Rule 56-501.

"Lina Creta"

Manager, Corporate Finance Branch

Ontario Securities Commission

OSC File #: 2022/0319