ontario superior court of justice ronald ......index tab exh. # sched. # document 1. notice of...

Court File No. 18-CV-78184

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

RONALD TARRANT

Plaintiff

- and -

NAMASTE TECHNOLOGIES, INC., SEAN DOLLINGER and PHILIP VAN DEN BERG

Defendants

Proceeding under the Class Proceedings Act, 1992

MOTION RECORD OF THE PLAINTIFF (Settlement Approval, Notice Approval, and Fee Approval)

Date: February 19, 2020 MORGANTI & CO. P.C. 21 St. Clair Ave. E., Suite 1102

Toronto, ON M4T 1L9

Albert Pelletier (LSO# 46965R) [email protected]

Ian Literovich (LSO# 75121J) [email protected]

Lawyers for the Plaintiff

i

TO: NORTON ROSE FULBRIGHT CANADA LLP 222 Bay Street, Suite 3000 P.O. Box 53 Toronto, Ontario M5K 1E7

Linda Fuerst (LSO#: 22718U) [email protected] Tel: +1-416-216-2951 Fax: +1-416-216-3930

Counsel for Defendants Namaste Technologies Inc. and Philip Van Den Berg

AND TO: HANSELL LLP 161 Bay Street, Suite 2800 Toronto, Ontario M5J 2S1

Susan Kushneryk (LSO#: 45702F) [email protected] Tel: +1-416-649-8498 Fax: +1-416-907-9149

Counsel for Defendant Sean Dollinger

INDEX

Tab Exh. # Sched. # Document

1. Notice of Motion dated February 19, 2020

2. Affidavit of Andrew Morganti sworn February 3, 2020

A. Fresh as Amended Statement of Claim amended February 22, 2019

B. First Order for Certification and Notice Approval

A. Executed Settlement Agreement made as of July 22, 2019 (without schedules)

B. First Notice of Certification and Notice Approval

C. Press Release Announcing Certification and Notice Approval

D. Opt-Out Form

C. Plan of Notice

D. Contingency Fee Agreement

3. Affidavit of Ronald Tarrant sworn February 5, 2020

A. Trading Records

B. Contingency Fee Agreement

4. Affidavit of Ian Literovich, sworn February 19, 2020

A. Second Notice of Settlement and Fee Approval

B. Plan of Allocation

C. Curriculum Vitae of Christophe Shammas

5. Draft Order

A. Executed Settlement Agreement (without schedules)

B. Second Notice

C. Plan of Notice

D. Plan of Allocation

E. Claim Form

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TAB!1!



B E T W E E N: RONALD TARRANT

Plaintiff

- and -


Defendants


NOTICE OF MOTION

THESE MOTIONS are made by the Plaintiff and Morganti & Co., P.C., to the

Honourable Justice Smith on Monday, March 2, 2020 at 10:00 a.m. or as soon after that time as the

motions can be heard, at the courthouse located at 161 Elgin Street, Ottawa, Ontario.

PROPOSED METHOD OF HEARING: The motions are to be heard orally.

THE MOTIONS ARE FOR:

1. A Declaration that for the purposes of this Order, the definitions set out in the settlement

agreement between the Plaintiff and the Defendants made as of July 22, 2019 (the

“Settlement Agreement”) as filed with this motion, apply to and are incorporated into the

resulting Order;

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2. An order:

(a) appointing Paul Battaglia of Trilogy Class Action Services to serve as

Administrator in accordance with the terms of the Settlement Agreement and the

Plan of Allocation;

(b) appointing Christophe Shammas of Loopstra Nixon LLP to serve as Referee in

accordance with the terms of the Settlement Agreement and the Plan of

Allocation;

(c) approving the Settlement of this Action in accordance with the terms of the

Settlement Agreement;

(d) approving an honorarium for the representative plaintiff in the amount of $10,000,

or such other amount as the Court deems fit;

(e) approving the form and content of the proposed Claim Form;

(f) setting the Claims Bar Deadline as July 17, 2020 at 5:00pm EST;

(g) approving the form and content of the proposed Second Notice;

(h) approving the proposed Plan of Notice for the purposes of disseminating the

Second Notice;

(i) that the costs relating to the implementation of this Order, including the costs

associated with the publication of the Second Notice and the fees, disbursements

and taxes of the Administrator, shall be paid by Class Counsel as such costs are

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incurred out of the settlement proceeds and such costs shall be Non-Refundable

Expenses, as defined in the Settlement Agreement;

(j) making such other related and ancillary orders as are required to give effect to the

Settlement of this Action;

(k) giving all necessary directions; and

(l) dismissing the Action with prejudice and without costs;

3. An order:

(a) approving the agreement as to fees, disbursements and taxes between the Plaintiff

and Morganti & Co., P.C.; and

(b) fixing the amount of Morganti & Co., P.C.’s fees, disbursements and taxes;

4. Such further and other relief as counsel may request and this Honourable Court may

permit.

THE GROUNDS FOR THE MOTION ARE:

5. The Plaintiff and the Defendants have agreed to settle the action, subject to Court approval;

6. The Plaintiff supports the proposed Settlement;

7. The proposed Settlement is fair, reasonable and in the best interests of the putative Class

Members;

8. Paul Battaglia of Trilogy Class Action Services consents to serve as Administrator;

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9. Christophe Shammas of Loopstra Nixon LLP consents to serve as Referee;

10. The fees agreed to by the plaintiff and Morganti & Co., P.C. are fair and reasonable;

11. Sections 2, 5, 6, 8(1), 9, 12, 17, 19, 20, 21, 24, 26, 29(2), 29(3), 29(4), 32, 33, 34(1), and 35

of the CPA;

12. Rules 1.04, 2.01, 7.04, 7.08, 12 and 37 of the Rules of Civil Procedure, R.R.O. 1990, Reg.

194; and

13. Such further and other grounds as counsel may advise and this Honourable Court may

permit.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the

motion:

14. The Affidavit of Andrew Morganti sworn February 3, 2020;

15. The Affidavit of Ronald Tarrant sworn February 5, 2020;

16. The Affidavit of Paul Battaglia (the O&O Administrator) to be sworn after the

O&O Deadline (February 21, 2020), and filed separately with the Court before February

25, 2020, regarding objections and opt-outs to the Settlement;

17. The Affidavit of Ian Literovich sworn February 19, 2020; and

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18. Such further and other evidence as counsel may advise and this Honourable Court may

permit.

February 19, 2020

MORGANTI & CO., P.C. 21 St. Clair Ave. E, Suite 1102 Toronto, ON M4T 1L9 Albert Pelletier (LSO# 46965R) [email protected] Ian Literovich (LSO# 75121J) [email protected]

Tel: (647) 344-1900 Fax: (416) 352-7638


TO: NORTON ROSE FULBRIGHT CANADA LLP Royal Bank Plaza, South Tower 220 Bay Street, Suite 3000 P.O. Box 53 Toronto, ON M5K 1E7 Linda Fuerst Tel: (416) 216-2951 Lawyers for the Defendants Namaste and Van den Berg HANSELL LLP 161 Bay Street, Suite 2800 Toronto, ON M5J 2S1 Susan Kushneryk Tel: (416) 649-8500 Lawyers for the Defendant Dollinger

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Court File No. 18-CV

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Tel: (647) 344-1900

Fax: (416) 352-7638


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TAB!2!



B E T W E E N:

RONALD TARRANT

Plaintiff

- and -


Defendants


AFFIDAVIT OF ANDREW MORGANTI (Sworn February 3, 2020)

I, ANDREW MORGANTI, of the Town of Birmingham, in the State of Michigan,

MAKE OATH AND SAY:

INTRODUCTION 1. I am one of the lawyers of record for the Plaintiff in the above-captioned securities class

action. I have been directly involved in this proceeding. As such, I have personal knowledge of

the facts to which I hereinafter depose, except where stated to be on information and belief, in

which case I disclose the source of my information. I believe these facts to be true.

2. Hereonafter, when I use the terms “Class Counsel” or “we” I am referring to myself and

to the other lawyers at Morganti & Co., P.C., who have participated in the prosecution of this

proceeding - primarily myself, Albert Pelletier, and Ian Literovich.

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3. Unless defined herein, the capitalized terms used in this affidavit have the meanings

attributed to them in the settlement agreement reached between the Plaintiff and the Defendants,

made as of July 22, 2019 (the “Settlement Agreement”).

OVERVIEW 4. I swear this affidavit in support of the Plaintiff’s motion for the Court’s approval of the

Settlement, the form and manner of publication of the Second Notice (i.e., the notice of

settlement and fee approval that will be disseminated in accordance with the Plan of Notice if

approved on this motion). I also swear this affidavit in support of Class Counsel’s motion for

payment of Class Counsel’s legal fees and reimbursement of certain disbursements.

5. The Settlement before this Court provides that Namaste Technologies Inc. (“Namaste”)

and its insurer funding the Settlement will pay or cause to be paid the all-inclusive sum of

$2,150,000 U.S. dollars (the “Settlement Amount”) to settle the proceeding, in exchange for the

Plaintiff and the Class providing a release of claims to the Defendants. The Settlement Amount is

subject to deductions for the payment of fees, disbursements, costs, HST and other applicable

taxes or charges of Class Counsel as approved by the Court (hereafter, “Class Counsel Fees”).

6. I believe that the Settlement in fair, reasonable, and in the best interests of the Class

Members. I have considered the result achieved and my corresponding views in light of the

litigation risks associated with a securities class action, the financial situation of the corporate

Defendant, the Defendants’ possible defenses, and the statutory measure of damages.

7. Here, the Settlement we achieved represents 50% of the recoverable damages as

calculated under the OSA. Even if the Plaintiff were to obtain leave to proceed, there would still

have been the risk that the Defendants would succeed at a summary judgment motion or at the

common issues trial. As a result of these factors, as well as other considerations discussed in this

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affidavit, Class Counsel endorse the Settlement and respectfully recommend its approval by this

Honourable Court.

BACKGROUND OF THE LITIGATION

The Parties: 8. The Plaintiff, Ronald Tarrant, is an individual who resides in the City of Ottawa, in the

Province of Ontario. The Plaintiff purchased and sold Namaste securities in the following

manner:

a. On August 10, 2018, the Plaintiff purchased 150 shares of Namaste’s securities on

the TSX Venture Exchange (“TSXV”);

b. On September 20, 2018, the Plaintiff purchased 50 shares of Namaste’s securities

on the TSXV;

c. On September 21, 2018, the Plaintiff purchased 100 shares of Namaste’s

securities on the TSXV; and

d. On October 11, 2018, the Plaintiff realized a loss by selling those 300 total shares

of Namaste on the TSXV. The Plaintiff is a member of the Class.

9. Namaste is an online-focused purveyor of cannabis products to Canadians. The present

action concerns the Defendants making misrepresentations of material fact in Namaste’s core

and non-core documents and public statements related to the divestiture of Namaste’s American

operations in December 2017.

10. During the Class Period, Namaste’s securities were publicly traded, and were listed on

the TSXV, as well as over-the-counter in the United States and on the Frankfurt Stock Exchange

in Germany.

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11. Sean Dollinger was Namaste’s President and Chief Executive Officer, and Director of the

Company at all times during the Class Period. Throughout the Class Period, Dollinger certified

all of Namaste’s annual and interim filings, authorized the dissemination of news releases, and

made other public statements in regards to Namaste’s business.

12. Philip van den Berg was Namaste’s Chief Financial Officer at all times during the Class

Period. Throughout the Class Period, van den Berg certified all of Namaste’s annual and interim

filings.

Procedural History of the Action: 13. On October 19, 2018, this proceeding was commenced by issuance of the Statement of

Claim (the “Claim”). On February 22, 2019, the Claim was amended in the form of the Fresh as

Amended Statement of Claim, a copy of which is attached hereto as Exhibit “A”. None of the

Defendants have served a statement of defence.

14. The Claim alleges that during the period from and including November 29, 2017 to and

including February 3, 2019 (the “Class Period”), the Defendants made material

misrepresentations in Namaste’s core and non-core documents and public statements related to

the divestiture of Namaste’s American operations in December 2017. These misrepresentations

had the alleged effect of artificially inflating the price and value of Namaste’s securities.

15. The Corrective Disclosures had the alleged effect of removing the artificial inflation from

Namaste’s stock price caused by the aforementioned misrepresentations. On October 4, 2018, the

first Corrective Disclosure was released. This caused the price of Namaste’s securities on the

TSXV to drop by 10%. On October 16, 2018, the second Corrective Disclosure was released.

This caused the price of Namaste’s securities to drop by a further 8%. Finally, on February 4,

2019, the final Corrective Disclosure was released causing the price of Namaste’s securities to

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drop another 14.49%. These disclosures caused damage to the Class Members who bought at

artificially inflated price-levels.

16. On or about February 28, 2019, the Plaintiff served his motion record containing a notice

of motion in support for leave to proceed pursuant to section 138.8 of the OSA with the hearing

date scheduled for December 11 – 13, 2019.

17. The Defendants have not served responding materials to the Plaintiff’s motion for leave

to proceed. Rather, the Defendants opened a dialog with the Plaintiff about their views of the

allegations, possible defenses, Namaste’s financial condition, and manners to reach a resolution

of the Claim so its management could focus on improving its business operations.

18. Indeed, since the July 2019 Settlement Agreement was entered into, Namaste’s share

price has increased over 15%, which also benefits the Class Members who continued to hold

their shares of Namaste.

ACTIVITY FOLLOWING EXECUTION OF THE SETTLEMENT AGREEMENT

Motion for Certification and Notice Approval

19. The settlement process stipulated in the Settlement Agreement provides for consent

certification and notice approval to occur prior to the settlement approval hearing. By order dated

November 29, 2019 (the “First Order”), this Honourable Court certified this action as a class

proceeding, approved the Notice of Certification and Settlement Approval Hearing (the “First

Notice”) and approved the Plan of Notice setting out how the First Notice should be

disseminated. Attached hereto as Exhibit “B” is a copy of the First Order.

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Objections and Opt-Outs

20. The First Notice advised Class Members that they had the right to object to the

Settlement by submitting a written objection to the Objections and Opt-Out Administrator (the

“O&O Administrator”) by no later than 5:00 pm EST on February 21, 2020 (the

“O&O Deadline”).

21. The First Notice also informed Class Members that they have the right to opt-out of the

Class. The First Notice advised Class Members that if they wish to opt-out, they must submit an

Opt-Out Form to the O&O Administrator by no later than the O&O Deadline.

22. I am informed by the O&O Administrator that as of the date of this affidavit, there have

been no objections or opt-outs.

23. The O&O Administrator will file with this Honourable Court his sworn report on

objections and opt-outs after the O&O Deadline has passed.

Second Notice

24. If the Settlement Agreement is approved by this Honourable Court, the Second Order and

Second Notice will be disseminated in accordance with the Plan of Notice attached hereto as

Exhibit “C”.

SETTLEMENT APPROVAL

25. Class Counsel is experienced in litigating and resolving complex class action litigation

like this case.

26. During January 2012, I opened the law firm Morganti Legal, n/k/a, Morganti & Co., P.C.,

in Toronto, Ontario. Morganti & Co., P.C. has been involved in the following secondary market

shareholder litigation settlements: Amaya Inc. (2019, C$30 million), PriceWaterHouseCoopers

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LLP re Valeant Pharmaceuticals Inc. (2019, C$30 million partial settlement), Concordia

International Corp. (2018, C$13.9 million), Barkerville Gold Mines Ltd. (2017, C$250,000),

Detour Gold Corp. (2016, C$6 million), Nevsun Resources Ltd. (2014, C$5.35 million), and

NovaGold Resources Inc. (2010, C$7 million).

27. Moreover, Morganti & Co., P.C. has one of the largest plaintiff shareholder class action

practices across Canada and is responsible for more than half of all the jurisprudence concerning

secondary market securities litigation and the related civil procedures in the last two years.

28. I am a resident and lawyer of the State of Michigan (called in 1998), District of Columbia

(called 2001), and Ontario (called 2010). Since 1999, I have litigated and settled plaintiff-side

shareholder matters before the U.S. Federal District Courts for the Southern District of New

York, the Eastern District of Michigan, and the Central District of California, Michigan and

California state courts, and the Ontario Superior Court of Justice. I am currently serving as one

of the lead counsel in the Kauf v. Colt Resources Inc et. al., Stevens v. Ithaca Energy Inc. et al.,

and Wong v. Pretium Resources Inc. et al. class actions.

29. Albert Pelletier is a principal at Morganti & Co. P.C. Albert was called to the Ontario bar

in 2002 after a career as an investment advisor at BMO Nesbitt Burns. Mr. Pelletier has also

worked as a prosecutor at the Ontario Securities Commission and a litigator at two large national

Canadian law firms. Today, he manages a portfolio of plaintiff-side securities class actions on

behalf of the firm.

30. Ian Literovich joined the firm on June 2, 2018, immediately after concluding his articles.

He assists other members of the firm in the prosecution of securities and competition class action

proceedings.

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31. As a result of their involvement in the aforementioned shareholder class proceedings and

settlements, Class Counsel has gained considerable experience in the settlement mechanics and

imperatives, damages methodologies, and risks associated with this type of litigation.

32. We recommend the approval of the Settlement. In our view, its terms are fair and

reasonable in the circumstances. The Settlement Agreement delivers the best possible benefit

given that it represents 50% of the recoverable damages as calculated under the OSA, and the

result was achieved after a considerable amount of due diligence, executing upon creative

litigation strategies, and engaging in arms-length negotiations with the Defendants.

33. Albert, Ian, and myself spoke with Ronald Tarrant several times about the merits of the

Action during the final weeks leading to the Settlement. He has instructed Class Counsel to seek

the Court’s approval of the Settlement Agreement.

Factors Supporting Our Recommendation for Settlement

Risks Relating to Leave under the OSA

34. The most significant risk associated with this action was that the secondary market claims

under s. 138.3 of the OSA would not be granted leave to proceed. The Defendants had

foreshadowed that at the leave to proceed motion, they would argue that the Plaintiff had no

reasonable possibility of success of showing that the omitted facts from the impugned documents

were material facts requiring disclosure, there were defences available to them, and, therefore,

the Plaintiff’s s. 138.8 motion for leave to proceed should be denied.

Risks Inherent with Prolonged Litigation

35. Had Class Counsel continued the proceeding, there would be material risks with the

Plaintiff and Class Members’ claim.

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36. First, there was a real concern that Namaste would cease operations and, therefore,

leaving only the relevant directors and officers insurance to finance the litigation. If the litigation

continued, however, the amount of available insurance would rapidly be depleted from the

Canadian and U.S. class proceedings.

37. Second, the Plaintiff’s s. 138.8 motion was scheduled to be heard during December 2019.

Even if the Plaintiff were successful against all the impugned documents, that decision would not

have been released until, in my experience, late 1Q 2020. Thereon after, the Defendants could

seek leave to appeal to the Divisional Court. It has been my experience that this type of motion

would add an additional 6 months, i.e., 3Q 2020, to the litigation and further depleting the

available insurance.

38. Third, it is my experience that it takes approximately 6 to 9 months to negotiate a

discovery plan that incorporates e-discovery protocols. It is also my experience that it costs a

minimum of C$25,000 to engage a third-party to host the requisite e-discovery with an additional

C$75,000 or more to hire staff lawyers to conduct the review of the e-discovery. The total of

these processes could take over 12 months, e.g. 3Q 2021.

39. Thereon after, it would be up to the Defendants to advance a summary judgment motion.

In doing so, it is likely that it would further deplete the available insurance.

40. Bottom line, with the amount of available insurance and the lack of any funds from the

corporate Defendant, it is my opinion that the Settlement is fair, reasonable, and in the best

interest of the Class Members.

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An Honourable Recovery

41. The Plaintiff alleged that the Defendants are liable for damages sustained by the putative

Class as a result of the alleged misrepresentations. Pursuant to section 138.5 of the OSA, we

measured the liability limits to be approximately C$5.6 million.

42. Concurrently, there was a parallel U.S. class action proceeding on behalf of all investors

that purchased Namaste’s securities within the United States. The U.S. claim was not subject to

any damage caps or liability limits and therefore had a much higher figure for potentially

recoverable damages. I understand from talking to one of the lawyers representing the U.S. class

members that they were seeking over USD$30 million in damages.

43. Class Counsel and the lawyers representing the U.S. class members were under the belief

that Namaste was unable to contribute any funds towards the Settlement.

44. Commencing May 2019, the parties, including the U.S. plaintiffs, engaged in arm’s-

length negotiations concerning the settlement of the claims. The parties decided to participate in

a full-day mediation in New York hosted by Jed Melnick, professional mediator.

45. The mediation resulted in global settlement of all claims in the U.S. and Canada, which

exhausted all available insurance.

46. At the time of the mediation, the value of the Canadian settlement reached U.S. $2.15

million (or C$2.8 million), or 50% of the liability limits. Additionally, we believed that many

Class members still held shares of Namaste. If Namaste resolved the litigation there was a

chance that its management could focus upon improving its business operations, which could

result in its share price stopping its downward trend and, perhaps, increasing over time. Since

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the Settlement Agreement was entered into, the value of Namaste’s shares have increased over

15%.

FEE APPROVAL

47. The First Notice disseminated to Class Members concerning the Settlement Agreement

and posted on the websites maintained in respect of this matter have indicated that Class Counsel

would seek approval of a fee calculated at 30% of USD $2,150,000, plus disbursements and

taxes to be approved by the Court and paid out of the Settlement Amount, subject to any

objections, of which none have to date been received in respect of the fee request of Class

Counsel or at all.

48. The litigation was undertaken on a contingency basis and all of the disbursements have

been funded by Class Counsel. Class Counsel assumed the risk of the time and expense which

would be required to litigate the matter to conclusion without seeking the financial assistance of

the Ontario Class Proceedings Fund or any independent third party funder. As no outside funding

support was sought, Class Counsel also provided all of the support which would traditionally

have been provided by the Class Proceedings Fund or perhaps other such service providers.

49. On October 15, 2018, the Plaintiff entered into a contingency fee agreement with

Morganti & Co., P.C. (the “Contingency Fee Agreement”). Pursuant to the Contingency Fee

Agreement, the recovery of fees and disbursements in respect of the prosecution of this matter,

apart from any costs awared, shall occur only in the event of success and be payable only from

the actual recovery achieved. Attached hereto as Exhibit “D” is a true copy of the Contingency

Fee Agreement.

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50. The Contingency Fee Agreement provides for a fee payable of 30Yo of the value of therecovery plus disbursements and applicable taxes.

51. Class Counsel are requesting that this Honourable Court approve a legal fee plusapplicable taxes in the amount of 28Yo, plus the reimbursement of disbursements. I have decided

to reduce Class Counsel's legal fee request by 2% resulting in USD$43,000, plus the applicable

tax, going to the Class.

52. This request equates to a legal fee of USD$602,000, plus USD$78,260 for HST, andreimbursement of up to C$35,000 in disbursements.l

53. The representative plaintiff approves of the fees and disbursements for which approval issought at this time. His affidavit is also filed in support of the motion.

SWORN BEFORE MEat the City of Toronto,in the Province of Ontario,this 3'd day of February,2020.

Commissioner for Taking Affidavits (oras may be)

J. Morgan

I As of January 31,2020, Class Counsel have engaged in work that is valued at C$240,000. It is my opinion thatupon conclusion of this Motion, if it is approved, Class Counsel will have work-in-progress valued at C$260,000.The largest disbursements were the payment of the mediator, 2 trips to New York to meet with the lawyersrepresenting the U.S. class and to attend the mediation, and the pending trip to Ottawa.

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Exhibit!“A”!

This is Exhibit A referred to in theaffidavit of Andrew Morganti

sworn before me, this 3'd

day ofFebruary,2020

,6A COMMISSIONER FOR TAKING AFFIDAVITS

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Exhibit!“B”!

This is Exhibit B referred to in theaffidavit of Andrew Morganti


day of February,2020

z,A COMMISSIONER FOR TAKING AFFIDAVITS

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Exhibit!“A”!

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Exhibit!“B”!

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Exhibit!“C”!

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Exhibit!“D”!

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Exhibit!“C”!

This is Exhibit C referred to in theaffidavit of Andrew Morganti



"49*2,A COMMISSIONER FOR TAKING AFFIDAVITS

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Court File No.: 18-CV-78184


B E T W E E N:

RONALD TARRANT

Plaintiff

- and -


Defendants


PLAN OF NOTICE

1. The First Notice shall be disseminated as follows:

(a) Class Counsel shall publish the First Notice in English in at least ¼ page size in the business/legal section of the weekend edition of The National Post and of the Montreal Gazette;

(b) Class Counsel shall publish a translation of the First Notice in French in at

least ¼ page size in the business section of the weekend edition of each of Le Soleil and Le Devoir;

(c) Class Counsel shall publish a translation of the First Notice in German online

in Focus Money (an investor-focused publication based in Germany);

(d) Class Counsel shall disseminate a press release in English and French in a form acceptable to counsel for Namaste and Dollinger, respectively, advising of the proposed settlement and certification for settlement purposes, the date, time and place of the hearing to approve the settlement, the right of any class member to object to the settlement and the procedure for doing so, and the right of any class member to opt out of the settlement, and the procedure for doing so;

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(e) Class Counsel shall post the First Notice in English, French and German on the website at www.morgantico.com/namaste-technologies/;

(f) Namaste shall post the First Notice in English, French and German in the

investor relations section of www.namastetechnologies.com; (g) the O&O Administrator shall post the First Notice in English, French and

German on the websites at www.namastesecuritiesclassaction.com; and (h) no later than 10 days after the First Order and receipt of the translations of

the First Notice from Class Counsel, Namaste shall cause the First Notice to be sent by ordinary mail in English, French and German to every registered shareholder for which it has an address that is outside Canada, and in French and English to every registered shareholder for which it has an address that is in the province of Quebec.

2. The Second Notice shall be disseminated as follows:

(a) Class Counsel shall publish the Second Notice in English in at least ¼ page size in the business/legal section of the weekend edition of The National Post and of the Montreal Gazette;

(b) Class Counsel shall publish a translation of the Second Notice in French in at least ¼ page size in the business section of the weekend edition of each of Le Soleil and Le Devoir;

(c) Class Counsel shall publish a translation of the Second Notice in German online in Focus Money (an investor-focused publication based in Germany);

(d) Class Counsel shall disseminate a press release in English and French in a form acceptable to counsel for Namaste advising of the settlement approval, of the Claims Bar Deadline and how to file a Claim Form;

(e) Class Counsel shall post the Second Notice in English, French and German on the website at www.morgantico.com/namaste-technologies/;

(f) Namaste shall post the Second Notice in English, French and German in the investor relations section of www.namastetechnologies.com;

(g) the Administrator shall post the Second Notice in English, French and German on the websites at www.namastesecuritiesclassaction.com; and

(h) no later than 10 days after the Second Order and receipt of the translations of the Second Notice from Class Counsel, Namaste shall cause the Second Notice to be sent by ordinary mail in English, French and German to every registered shareholder for which it has an address that is outside Canada, and in French and English to every registered shareholder for which it has an address that is in the province of Quebec.

92

3. The Second Notice shall also be disseminated to investors through their

Investment Dealers as follows:

(a) No later than 10 business days after the Second Order, the Administrator shall cause copies of the Second Notice, in English, to be sent by electronic mail and/or regular mail to the investment institutions for which it has contact information (approximately 400 institutions including Canadian brokers and investment dealers, insurance companies, trust companies and banks) (together, the “Investment Dealers”) requesting that within 14 business days of receipt of the Second Notice, each Investment Dealer:

i. forward a copy of the Second Notice to all persons or entities for whose benefit the Investment Dealer held Namaste securities during the Class Period (“Beneficial Owners”); and

ii. post the Second Notice on internal electronic bulletin boards to their retail investors, their institutional investors, internal investment advisor and portfolio manager networks

93

C

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94

This is Exhibit D referred to in theaffidavit of Andrew Morganti



ZWA COMMISSIONER FOR TAKING AFFIDAVITS

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102

!

!

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TAB!3!

Court File No. 18-CV-781 84

ONTARIOST]PERIOR COURT OF' JUSTICE

BETWEENRONALD TARRANT

Plaintiff

-and-

NAMASTE TECHNOLOGIES, INC.O SEAN DOLLINGERand PHILIP VAN DEN BERG

Defendants


AFFIDAVIT OF' RONALD TARRANT(SwornFebruary 5 .2020)

I, RONALD TARRANT, of the City of Ottawa, in the Province of Ontario, MAKE

OATH AND SAY:

INTRODUCTION

1. I am the proposed representative plaintiff in this action. I have reviewed and signed theSettlement Agreement made as of July 22,2019 (the "Settlement Agreement") and have also

reviewed all of the documents referred to in this affrdavit. As such, I have personal knowledge

of the facts to which I depose, except where stated to be on information and belief, in which case

I disclose the source of my information and I believe these facts are true.

2. Unless otherwise defined herein or the context otherwise indicates, the capitalized termsused in this affidavit have the meanings attributed to them in the Settlement Agreement.

103

OVERVIEW

3. This affidavit is sworn in support of the motion to approve the proposed Settlement andmy lawyers' request for approval of their fees, disbursements and HST.

MY TRADING IN NAMASTE

4. During the Class Period, I purchased Namaste shares on the TSX and sold those shareson October 11, 2018 after the first Corrective Disclosure. Attached as Exhibit*L', are redacted

copies of my trading slips. Due to my investment in Namaste during the Class Period I

experienced a loss.

MY IIWOLVEMENT IN THE ACTION

5. Since the Action was commenced, Andrew Morganti has regularly reported to me on thestatus of and developments in the Action. I liaised with and provided instructions to

Mr. Morganti as needed, including before, during and after the mediation in July 2019. As

indicated above, I signed the Settlement Agreement, which is subject to Court approval.

6. I understand that my lawyers will ask the Honourable Justice Smith to approve anhonorarium for me as the proposed representative plaintiff.

7. From the time when I first became involved in this Action, I have taken the followingstepso among others, to assist in the prosecution of this Action and to fairly and adequately

represent the interests of the proposed Class:

104

(a) prior to my formal involvement in this Action,I communicated with lawyers atMorganti & Co., P.C. on multiple occasions to discuss the retention of counsel

and the statement of claim, and subsequently retained Morganti & Co., P.C. as

counsel;

(b) I had ongoing communications with my lawyers to discuss my case and in orderto provide them with information and documents to be used in the Action;

(c) I communicated with my lawyers regarding the preparation of materials for mymotion for leave to proceed with statutory secondary market securities claims

pursuant to section 138.8 of the Ontario Securities Acr, which but for the

Settlement was scheduled to be heard in Ottawa on December ll,12 and 13,

2019;

(d) I participated in mediation by communicating with and providing instructions tomy lawyers, including correspondences with Andrew Morganti about settlement

values, mediation strategy and damages;

(e) I reviewed the terms of the proposed Settlement, had regular communicationswith my lawyers regarding the proposed Settlement's terms, and provided

instructions to my lawyers to enter into the Settlement Agreement; and

(0 I assisted in drafting and reviewed this affidavit and communicated with mylawyers regarding the preparation of same.

105

TERMS OF THE PROPOSED SETTLEMENT

8. The proposed Settlement includes, among other things, the following terms:

(a) the Defendants will pay USD $2.15 million in full and final settlement of allclaims in the Action;

(b) all costs, including legal fees, the costs of notices, administration, the Referee andtranslation will be paid from the Settlement Amount; and

(c) the Administrator will calculate the entitlement of each eligible Class Memberaccording to the Plan of Allocation and if a Class Member disputes the

entitlement of the amount allocated to him/her/it, he/she/it can appeal to the

Referee.

THE COMMON ISSUE

The proposed common issue for the purpose of settlement is:

(a) Did the Defendants make a misrepresentation during the Class Period related toNamaste's business, operations and finances by omitting from core documents,

non-core documents and statements, material facts about Namaste's divestiture of

Dollinger Enterprises US, Inc.?

10. I do not believe that I have any conflict with the interests of any Class Member on theproposed common issue.

9

106

I SUPPORT THE SETTLEMENT

11. I have read the affidavit of Andrew Morganti that will be filed on this motion.Mr. Morganti sets out the background and chronology of events in the Action and the risks and

other factors that led to the Settlement.

12. My objective in this litigation was to recover losses incurred by me and other ClassMembers and to hold the Defendants accountable for their actions.

13. I am satisfied, particularly given the statutory liability limit on investor recovery for itssecondary market misrepresentation claim, that the proposed Settlement provides fair recovery

for investors, and for the distribution of reasonable compensation on a fair basis, taking into

account the practical risks, difficulties and costs associated with proceeding to the trial of the

common issues.

TIIE FEE AGREEMENT

14. I retained Morganti & Co., P.C., on a contingency fee basis. The Fee Agreement, a copyof which is attached as Exhibit "B", provides for my lawyers to be paid 30% of the recovery,

plus HST, plus disbursements.

15. I believe that the fees sought are reasonable, not excessive, understandable and inaccordance with my expectations. It was important to me that I bear no legal fees if the matter

was not successful. It was important to me that Morganti & Co., P.C. bear this risk, which it did

As such, I support and approve the fee request ofMorganti & Co., P.C.

107

16. I swear this affidavit for use on the motion seeking an order certiffing this Action as aclass proceeding on consent, and on the motion approving the proposed Settlement and

approving the legal fees, disbursements and taxes of Morganti & Co., P.C.

SWORN BEFORE ME at the City ofOttawa, Province of Ontario, this

day ofFe ,2020

for affidavits

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108

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Exhibit!“A”!

THIS IS EXHIBIT "A"Referred to in the Affidavit of

RONALD TARRANTSworn before me this f, day of

February, A.D.

A Comm ner aking

Amy Lynn JacksonHarrister, Solicitor & Notary public

3_30 Churchitf Ave. tri.Ottawa, ON

Klz 588Telephone: (61 S) 7 22-941 I

[email protected]

109

lnvestorASAGENTS. WECONFIRMTRADEDON AUG10,2O18

MEMBERTHE FOLLOWING PURCHASE FOR YOUR ACCOUNT ON ONE OR MOBE CANADIAN MARKETPLACES

150 NAMASTE TECHNOLOGIES INC @

Suite 1920, One Bentall Center505 Burrard StreetBox 85Vancouver, BC V7X 1M6

CdMdidn in{cilor Frcleclon fuildC"PF

216.008.758.75MARKETPLACE DETAILS ON REQUEST

180810002550,N

1.44 CAD GROSSCOMMISSIONTOTAL CHARGESACCOUNTNUMBEROsA-2BGR-L TFSA

REG ISTER E D R E P R ESENTATI V EOTRADEINVESTOR SKZZISIN CL62987D1087CUSP 62987DL08GST Registration #878548924REF#56007 AUG 10,2018

MR RONALD VINCENT TARRANT#927-2OOCLEARVIEW AVEOT'TAWAON KIZ8It/l2

Transaction Confirmation

NET AMOUNT CAD 224.75FOB SETTLEMENT ON AUG 14,2OI8

E. & O.E. 1PLEASE Rf,TAIN FOR INCOME TAX PIJRPOSES

Payable in Canadlan funds unless otherulse specified. Please indicateyour account number on all documents and instructions sent to us;

lf payment in full is not received on settlement date, interest will becharged on the unpald balance until such balance is pald;

Agent -indicates that we have acted as an intermediary in a securltlestransactlon;

Principal -refers to securitles transactions that are either bought from orsold to our inventory;

The names of the lR/RR or the market place wlll be furnished upon requesq

The Trustee for registered accounts is Canadlan Western Trust Company;

NVS: non voting shares, sVS: subordinate voting shares, MVS: multiplevoting shares, RVS: restricted voting shares, RS: restricted shares;

Qtrade lnvestor and Qtrade Advisor are divisions of CredentialQtrade Securities lnc. - member of IIROC and CIPF

Customer accounts are protected by the Canadian lnvestors ProtectionFund wlthin speclfied llmlts. A brochure describing the nature and limlts ofthe coverage is available upon request.

Without limiting in any way or otheruise affecting our rights under anyother contracts between us, you agree to the followlng:

This transaction, if it has been made on a Stock Exchange, is subject tothe by-laws, rules, regulatlons and customs of such Stock Exchange andof any clearing house involved. ln the case of an exchange transaction,the name of the Exchange (and clearing house, if any) and of the otherbroker will be furnished upon request;

This transaction is subject to the by-laws and customs ofthe securitiesindustry;

Delivery of securitles purchased is subject to avallablllty ln deliverableform notwithstanding the foregoing, payment is due on settlement date;

The client agrees that notices sent to his last designated address shall bedeemed received;

110

C}IPFCdnadian ln!c(l.r P..k.kn enrdlnvestor

AS AGENTS, WE CONFIRMTRADEDON sEP18,2018

MEMBERTHE FOLLOWING PURCHASE FOR YOUR ACCOUNT ON THE TSX VENTURE EXCHANGE

50 NAMASTE TECHNOLOGIES INC @ 3.OO CAD GROSSCOMMISSIONTOTAL CHARGES

150.008.758.75ACCOUNTTYPEOsA-2BGR-L TFSA

Investment AdvlsorOTRADEINVESTOR 5K7.7.rsIN cA62987D1087CUSIP 62987DL08GST Registration #878548924REF#25290 SEP18,2018

PLEASE SEE BACK PAGE FORIMPORTANT INFORMATIONMARKETPLACE DETAILS ON REOUEST180917015023,N

MR RONALD VINCENT TARRANT#92'7 _2OO CLE ARVIEW AVEOTTAWAON KIZ8]I|{2


NET AMOUNT CAD 158,75FOn SETTLEMENT ON SEP 20,2018

E. & O.E. 1PLEASE RETAIN FOR INCOME TAX PURPOSES

Payable in Canadian funds unless otheruise specified. Please indicateyour account number on all documents and instructions sent to usj

lf payment in full is not received on settlement date, interest will becharged on the unpaid balance until such balance is paid;

Agent -indicates that we have acted as an intermediary in a securitiestransaction;

Principal -refers to securities transactions that are either bought from orsold to our inventory;

The names ofthe lR/RR or the market place will be furnished upon request;

The Trustee for registered accounts is Canadian Western Trust Company;

NVS: non voting shares, SVS: subordinate voting shares, MVS: multiplevoting shares, RVS: restricted voting shares, RS: restricted shares;

Qtrade lnvestor and Qtrade Advisor are divisions of CtedentialQtrade Securities lnc. - member of IIROC and CIPF

Customer accounts are protected by the Canadian lnvestors ProtectionFund within specified limits. A brochure describing the nature and limits ofthe coverage is available upon request.

Without limiting in any way or othemise affecting our rights under anyother contracts between us, you agree to the following:

This transaction, if it has been made on a Stock Exchange, is subiect tothe by-laws, rules, regulations and customs of such Stock Exchange andof any clearing house involved. ln the case of an exchange transaction,the name ofthe Exchange (and clearing house, if any) and ofthe otherbroker will be furnished upon request;

This transaction is subject to the by-laws and customs of the securitiesindustry;

Delivery of securities purchased is subject to availability in deliverableform notwlthstanding the foregoing, payment is due on settlement date;


111

C.YPFlnvestor

ASAGENIS, WECONFIRMTRADEDON SEP 19,2018

CJnrdian lh\rltor Frdte.tron Flnd

MEMBERTHE FOLLOWING PURCHASE FOR YOUR ACCOUNT ON THE TSX VENTURE EXCHANGE

1OO NAMASTE TECHNOLOGIES INC @ 3.00 cAD GBOSSCOMMISSIONTOTAL CHARGESPLEASE SEE BACK PAGE FOR

IMPORTANT INFORMATIONMARKETPLACE DETAILS ON REQUEST180919009766,N

300.008.758.75ACCOUNTTYPEOsA-2BGR-L TTSA

Investment AdvisorOTRADEINVESTOR SKZZISIN CA629WDTO87cusrP 62987D108GST Registration #878548924REF #28505 SEP 1.9,201E

MR RONALD VINCENT TARRANT#92'I -2OO CT-E ARVIEW AVEOTTAWAON KIZSNN


NET AMOUNT CAD 308.75FOR SETTLEMENT ON SEP 21,2018

E. & O.E. 1PLEASE RETAIN FOR INCOME TAX PURPOSES

Payable in Canadian funds unless othemise specified. Please indicateyour account number on all documents and instructions sent to us;




The names of the lR/RR or the market place will be furnished upon r€quest;


NVS: non voting shares, SVS: subordinate voting shares, MVs: multiplevoting shares, RVs: restricted voting shares, RS: restricted shares;


Customer accounts are protected by the Canadian lnvestors ProtectionFund within specified limits. A brochure describing the nature and limits ofthe coverage is available upon request.

Without limiting in any way or otheMise affecting our rights under anyother contracts between us, you agree to the following:

This transaction, if it has been made on a Stock Exchange, is subject tothe by-laws, rules, regulations and customs of such stock Exchange andof any clearing house involved. ln the case of an exchange transaction,the name ofthe Exchange (and clearing house, if any) and ofthe otherbroker will be furnished upon request;

This transaction is subject to the by-laws and customs of the securitiesindustry;

Delivery of securities purchased is subject to availability in deliverableform notwithstanding the foregolng, payment ls due on settlement date;

The client agrees that notices sent to hls last designated address shall bedeemed received;

112

O{radel--'Z> Investor

C}TPFC)hadid. rhlrnor Prctecrotr Flnd

MEMBERASAGEA/IS. WECONFIRMTRADEDON OCT9,2018

THE FOLLOWING SALE FOR YOUR ACCOUNT ON THE TSX VENTURE EXCHANGE3OO NAMASTE TECHNOLOGIES INC @ 2.05 CAD GROSS

coMMtsstoNTOTAL CHARGES

615.008.758.75ACCOUNTTYPE

OsA-2RGR-I. TFSAInvestment Advisor

OTRADEINVESTOR SKZZrsIN cA62987D1087cusrP 62987D108GST Registration #878548924REF#25770 OCT9,201E

PLEASE SEE BACK PAGE FORIMPORTANT INFORMATIONMARKETPLACE DETAILS ON REQUEST181006000624,N

MR RONALD VINCENT TARRANT#9N-2OO CLEARVIEW AVEOTTAWAON KIZg},I2

Transaction Conf irmation

NET AMOUNT CAD 606.25FOR SETTLEMENT ON OCT 11,2018

E. & O.E.PLEASE RETAIN FOR INCOME TAX PTJRPOSES

Payable in Canadian funds unless otheruise specified. Please indicateyour account number on all documents and instructions sent to us;




The names ofthe lR/RR orthe market place will be furnished upon request;


NVS: non voting shares, SVS: subordinate voting shares, MVS: multiplevoting shares, RVS: restricted voting shares, RS: restricted shares;


Customer accounts are protected by the Canadian Investors ProtectionFund within specified limits. A brochure describing the nature and limits ofthe coverage is available upon request.

Without limiting in any way or otheruise affecting our rights under anyother contracts between us, you agree to the following:

This transaction, if it has been made on a Stock Exchange, is subject tothe by-laws, rules, regulations and customs of such Stock Exchange andof any clearing house involved. ln the case of an exchange transaction,the name of the Exchange (and clearing house, if any) and of the otherbroker will be furnished upon request;

This transaction is subject to the by-laws and customs ofthe securitiesindustry;

Delivery of securities purchased is subject to availability in deliverableform notwlthstanding the foregoing, payment is due on settlement date;


113

Cour

t File

No.

: CV-

18-7

8184

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120



B E T W E E N:

RONALD TARRANT

Plaintiff

- and -


Defendants


AFFIDAVIT OF IAN LITEROVICH (Sworn February 19, 2020)

I, IAN LITEROVICH, of the City of Toronto, in the Province of Ontario, MAKE

OATH AND SAY:

INTRODUCTION 1. I am a lawyer at Morganti & Co., P.C., which is the law firm of record for the Plaintiff in

the above-captioned securities class action. I have been directly involved in this Action. As such,

I have personal knowledge of the facts to which I hereinafter depose, except where stated to be

on information and belief, in which case I disclose the source of my information. I believe these

facts to be true.

2. Unless defined herein, the capitalized terms used in this affidavit have the meanings

attributed to them in the settlement agreement reached between the Plaintiff and the Defendants,

made as of July 22, 2019 (the “Settlement Agreement”).

121

2

OVERVIEW 3. I swear this affidavit in support of the Plaintiff’s motion for Court approval of the

Settlement and Court approval of the form and manner of publication of the Second Notice (i.e.,

the notice of settlement and fee approval that will be disseminated in accordance with the Plan of

Notice if approved on this motion). I also swear this affidavit in support of Class Counsel’s

motion for payment of the Class Counsel Fees.

4. I concur with my colleague Andrew Morganti’s sworn evidence that the Settlement is

fair, reasonable, and in the best interests of the Class Members for the reasons set out in his

affidavit sworn February 3, 2020. Any reference to “Class Counsel” is to be understood in the

context provided by Mr. Morganti’s affidavit in support of this motion.

EVIDENCE REQUIRED FOR SETTLEMENT

Second Notice: 5. In furtherance of the previously approved Plan of Notice, the Plaintiff now seeks, on his

on behalf and on behalf of the certified class, approval of the Second Notice as found in the form

attached hereto as Exhibit “A”.

Plan of Allocation:

6. The Plaintiff, on behalf of the class, has arrived at a method for computing pro rata

damages that effectively and fairly compensates class members based on their level of

investment in Namaste as compared to their loss on the tenth trading day after the last public

correction (February 15, 2019), up to their actual loss. The Plaintiff therefore recommends that

this Honourable Court approve the Plan of Allocation for the effective dispensation of funds

from the Settlement Amount attached hereto as Exhibit “B”.

122

Referee:

7 ' Class Counsel proposes the appointment of Christophe Shammas as the Refereee toadjudicate claims. The proposed Referee Mr. Shammas has provided us with his biographical

information. A true copy of this curriculum vitae is attached hereto as Exhibit ,,C"

8. The representative plaintiff approves of the fees and disbursements for which approval issought at this time. His affidavit is also filed in support of the motion.

9. I swear this affidavit in support of the Plaintiffls motion for Settlement Approval, NoticeApproval, and Fee Approval and for no other or improper purpose.

SWORN BEF'ORE MEat the City of Toronto,in the Province of Ontario,this lgth day ,2020.

Ian Literovichas may be)

F

C

J

123

!

!

!!!

Exhibit!“A”!

This is Exhibit A referred to in the

affidavit of Ian Literovich

swom before me, this 19th


A SIONER FOR TAKS\TG AFFIDAVITS

124

1

NOTICE OF SETTLEMENT APPROVAL NAMASTE SECURITIES CLASS ACTION

Read this notice carefully as it may affect your rights.

This Notice is directed to all persons and entities, excluding certain persons associated with the Defendants, who acquired securities of Namaste Technologies Inc., prior to November 29, 2017 (“Namaste”) that are or were listed for trading on the Toronto Stock Exchange (“TSX”) in Canada or the Frankfurt Stock Exchange (“FSE”) in Germany during the period of November 29, 2017 to February 3, 2019 (the “Class Period”), and held some or all of those securities at the close of trading on any of October 3, 2018, October 15, 2018 or February 3, 2019 (collectively, the “Class” or “Class Members”).

PURPOSE OF THIS NOTICE:

A class action brought on behalf of Class Members has been settled. The Settlement has been approved by the Ontario Superior Court of Justice. This Notice provides Class Members with information about how to submit a Claim Form to the Administrator in order to participate in the distribution of the Net Settlement Amount on a pro rata basis.

THE ACTION:

On October 19, 2018, a proposed class action was commenced on behalf of investors who purchased Namaste securities on the TSX or FSE during the Class Period, against Namaste and its former CEO and COO in the Ontario Superior Court: Ronald Tarrant v. Namaste Technologies, Inc. et al 18-CV-78184 (the “Action”). The Plaintiff in the Action alleges that the Defendants made misrepresentations of material facts relating to Namaste’s business, operations and finances by omitting from core documents, non-core documents and statements, material facts about Namaste’s divestiture of Dollinger Enterprises US, Inc.

The settlement of the Action, without an admission of liability on the part of the Defendants, was approved by The Honourable Justice Smith on March 2, 2020. This notice provides a summary of the settlement.

SUMMARY OF THE SETTLEMENT TERMS:

Namaste will pay USD $2.15 million, in full and final settlement of all claims against it in the Action. Class Counsel Fees, including out-of-pocket expenses and taxes, were fixed by the Court as a first charge on the Settlement Amount in the amount of thirty (30) percent of USD $2,150,000.00, plus disbursements, plus taxes. The settlement for the Class, less the Class Counsel Fees and disbursements, administrator’s expenses, and taxes, will be distributed to the Class on a pro rata basis in accordance with the Court-approved Plan of Allocation. The Settlement Agreement and Plan of Allocation may be viewed at http://www.morgantico.com/namaste-technologies/, at www.namastesecuritiesclassaction.com, and in the investor relations section of www.namastetechnologies.com.

125

2

HOW TO MAKE A CLAIM FOR COMPENSATION:

CLAIMS FOR COMPENSATION MUST BE RECEIVED BY JULY 17, 2020

Each Class Member must submit a completed Claim Form on or before July 17, 2020 in order to participate in the settlement. The Claim Form can be accessed or downloaded at www.namastesecuritiesclassaction.com or obtained by calling the Administrator at 416-644-3088. If you do not submit a completed Claim Form by July 17, 2020, you will not receive any part of the Net Settlement Amount.

The Court appointed Paul Battaglia of Trilogy Class Action Services as the Administrator of the settlement to, among other things: (i) receive and process Claim Forms; (ii) decide eligibility for compensation; and (iii) distribute the net Settlement Amount to eligible Class Members. The Claim Form should be submitted tothe Administrator by using the secure Online Claims System at www.namastesecuritiesclassaction.com. Youmay submit a paper Claim Form only if you do not have internet access. The paper Claim Form may be sent bymail or courier to:

Administrator, Paul Battaglia, Trilogy Class Action Services 117 Queen Street, P.O. Box. 1000

Niagara-on-the-Lake, Ontario, L0S 1J0 Attention: Namaste Class Action

Fax: 416-342-1761 Email: [email protected]

QUESTIONS:

Questions for the Class Members’ lawyers may be directed to:

Ian Literovich Morganti & Co., P.C. 21 St. Clair Ave. E., Suite 1102 Toronto, ON M4T 1L9 Tel: (647) 344-1900 x 9 Fax: (416) 352-7638 Email: [email protected]

INTERPRETATION:

If there is a conflict between the provisions of this Notice and the Settlement Agreement, the terms of the Settlement Agreement will prevail.

This notice has been approved by the Court. Questions about matters in this notice should NOT be directed to the Court.

126

!

!

!!!

Exhibit!“B”!

This is Exhibit B referred to in the

affidavit of Ian Literovich

sworn before me, this lgth


FORA

127

PLAN OF ALLOCATION

THE DEFINED TERMS

1. The definitions set out in the settlement agreement reached between the Plaintiff and

Defendants made as of July 22, 2019 (“Agreement”), except as modified or defined

herein, apply to and are incorporated into this Plan of Allocation:

(a) “Acquisition Expense” means the total monies paid by the Claimant (including

brokerage commissions) to acquire Qualified Shares;

(b) “Authorized Claimant” means a Class Member who: (i) submitted a properly

completed Claim Form with the calculation of their Maximum Entitlement and all

required Supporting Documentation to the Administrator on or before the Claims

Bar Deadline; and (ii) is eligible to receive a Distribution from the Compensation

Fund;

(c) “Claimant” means a Class Member who submits a properly completed Claim

Form with the calculation of their Maximum Entitlement and all required

Supporting Documentation to the Administrator on or before the Claims Bar

Deadline;

(d) “Class Period” means the period from November 29, 2017 to and including

February 3, 2019;

(e) “Compensation Fund” means the Settlement Amount less Class Counsel Fees,

Administration Expenses and the Honorarium;

(f) “Court” means the Ontario Superior Court of Justice;

(g) “Database” means the web-based database in which the Administrator stores

information received from the Claimants and/or acquired through the claims

process;

128

-2-

(h) “Distribution” means payment to Authorized Claimants in accordance with this

Plan of Allocation, the Agreement and any order of the Court;

(i) “Distribution List” means a list containing the name and address of each

Authorized Claimant, the calculation of his/her/its net loss and the calculation of

the Authorized Claimant’s pro rata share of the Compensation Fund;

(j) “Escrow Account” means the trust account holding the Compensation Fund and

used by the Administrator to make the Distribution in accordance with this Plan of

Allocation;

(k) “FSE” means Frankfurt Stock Exchange;

(l) “Honorarium” means a one-time payment of $5,000 from the Compensation

Fund to the representative plaintiff, Ronald Tarrant, subject to the approval of the

Court;

(m) “LIFO” means the principle of last-in first-out, wherein securities are deemed to

be sold in the opposite order that they were purchased (i.e. the last securities

purchased are deemed to be the first sold);

(n) “Maximum Entitlement” means an Authorized Claimant’s actual loss on

Qualified Shares, as calculated pursuant to the formula set forth in paragraph 6

herein;

(o) “Namaste” means Namaste Technologies, Inc., and, as the context may require,

includes its subsidiaries and affiliates;

(p) “Pro Rata Distribution” means the Distribution per dollar of Total Damages;

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(q) “Qualified Shares” means Shares purchased or acquired during the Class Period

and held until after the close of trading on any of October 3, 2018, October 15,

2018 or February 3, 2019, calculated using LIFO;

(r) “Reference” means the procedure by which a Claimant who disagrees with the

Administrator’s decision relating to their eligibility for compensation, the

determination of the number of Qualified Shares, or the amount of their Maximum

Entitlement, may appeal the Administrator’s decision and have it reviewed by the

Referee;

(s) “Settlement Amount” means $2,150,000 U.S. dollars, inclusive of the

Administration Expenses, Class Counsel Fees, interest, taxes and any other costs

or expenses related to the Action or the Settlement;

(t) “Shares” means securities of Namaste that are or were listed for trading on the

TSX or the FSE;

(u) “Supporting Documentation” means true copies of (i) all trade confirmation

slips in respect of transactions in the Qualified Shares during the Class Period

(and ten days after the end of the Class Period), or (ii) all monthly statements with

information concerning transactions in the Qualified Shares during the Class

Period (and ten days after the end of the Class Period);

(v) “Total Damages” means the aggregate of all Authorized Claimants’ Maximum

Entitlements;

(w) “TSX” means Toronto Stock Exchange; and

(x) “Website” means the website at www.namastesecuritiesclassaction.com.

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THE OVERVIEW

2. This Plan of Allocation sets out the procedure for Class Members to apply for a

Distribution from the Compensation Fund; the guidelines for determination of a Class

Member’s eligibility to same; and if appropriate the manner of allocation and Distribution

to each Authorized Claimant of their proportionate and allocable share of the

Compensation Fund calculated on the basis of the calculation set forth herein, up to the

Maximum Entitlement for each Authorized Claimant.

CALCULATION OF THE DISTRIBUTION AND MAXIMUM ENTITLEMENT

3. The Distribution for each Authorized Claimant will be calculated by the Administrator by

dividing the Compensation Fund by the Total Damages to calculate a per dollar of Total

Damages distribution amount defined herein as the “Pro Rata Distribution”.

4. The Administrator will then multiply the Pro Rata Distribution by the Maximum

Entitlement for each Authorized Claimant to arrive at the Distribution to be paid to each

Authorized Claimant.

5. In no event shall an Authorized Claimant receive a Distribution greater than his/her/its

Maximum Entitlement.

6. The Maximum Entitlement shall be calculated as follows:

(a) For Qualified Shares disposed of on or before the 10th trading day after the last

public correction (February 15, 2019), the difference between the average price

paid for those Qualified Shares (including any commissions paid in respect

thereof) and the price received upon the disposition of those Qualified Shares

(without deducting any commissions paid in respect of the disposition);

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(b) For Qualified Shares disposed of after the 10th trading day after the last public

correction (February 15, 2019), the lesser of:

a An amount equal to the difference between the average price paid for

those Qualified Shares (including any commissions paid in respect

thereof) and the price received upon the disposition of those

Qualified Shares (without deducting any commissions paid in respect

of the disposition); and

b An amount equal to the number of Qualified Shares disposed of by

an Authorized Claimant, multiplied by the difference between the

average price paid for those Qualified Shares (including any

commissions paid in respect thereof determined on a per security

basis) and the ten-day volume-weighted average trading price for

those Qualified Shares following the last public correction on

February 4, 2019.

(c) For Qualified Shares not disposed of when the Claim Form is submitted, an

amount equal to the difference between the average price paid for those Qualified

Shares (including any commissions paid in respect thereof) and the ten-day

volume-weighted average trading price for those Qualified Shares following the

last public correction on February 4, 2019.

GENERAL PRINCIPLES OF THE ADMINISTRATION OF THE SETTLEMENT

7. The administration process to be established shall:

(a) implement and conform to the Plan of Allocation;

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(b) employ secure, paperless, web-based systems with electronic registration and

record keeping, wherever practical, for Claimants to submit their Claim Form and

calculation of their Maximum Entitlement and to upload their Supporting

Documentation;

(c) allow Claim Forms to be submitted in English and French;

(d) offer a bilingual (English and French), toll-free telephone helpline; and

(e) make available a bilingual website (English and French) for Class Members to

download Claim Forms and to receive updates and information in regards to

notice, claims procedure, definitions, Court documents and contact information.

THE ADMINISTRATOR

8. The Administrator shall have such powers and rights reasonably necessary to discharge

its duties and obligations to implement and administer the Escrow Account and the Plan

of Allocation in accordance with their terms, subject to the direction of the Court,

including:

(a) the power to contact Claimants or their representatives to obtain more information

about a claim and/or to audit claims;

(b) if the Administrator reasonably believes that a Claim contains intentional errors

the effect of which if not corrected would increase the Distribution to be awarded

to a Claimant, the Administrator may disallow the Claim in its entirety;

(c) if a Claimant fails to provide the Administrator the required calculations for their

Maximum Entitlement and Supporting Documentation in an organized manner

and clear format to allow the Administrator to readily discern the amount of the

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Claim and the adjudication of the Claim Form, the Administrator may exercise the

right to reject the Claim Form in its entirety; and

(d) where a Claim Form contains minor omissions or errors, the Administrator may

correct such omissions or errors if the information necessary to correct the

omission or error is readily available to the Administrator.

THE ADMINISTRATOR’S DUTIES AND RESPONSIBILITIES

9. The Administrator shall administer the Plan of Allocation pursuant to the guidelines set

out herein under the oversight and direction of the Court and shall act as trustee in respect

of the monies held within the Escrow Account upon receipt from Class Counsel.

10. The Administrator shall, wherever practical, develop, implement and operate an

administration system utilizing web-based technology and other electronic systems for

the following:

(a) receipt of information from the Transfer Agent concerning the identity and contact

information of registered holders or beneficial owners of Shares, respectively;

(b) Class notification, as required;

(c) claim filing and document collection (Claimants must submit their Claims Forms

electronically using the online claims administration portal);

(d) claim evaluation, analysis, and Reference procedures;

(e) distribution analysis and Distributions;

(f) cy près award distribution, if any, and reporting thereon;

(g) Administration Expense payments; and

(h) cash management, audit control and reporting thereon.

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11. The Administrator’s duties and responsibilities shall include the following:

(a) receiving the monies in the Escrow Account from Morganti & Co., P.C. and

investing them in trust in accordance with the Agreement;

(b) preparing any protocols required for submission to and approval of the Court;

(c) providing notice of: (i) the Second Motion, namely that the Settlement was

approved; and (ii) details of how, where, and by when to submit completed Claim

Forms;

(d) providing the hardware, software solutions and other resources necessary for an

electronic web-based bilingual claims processing centre to function in a

commercially-reasonable manner;

(e) the online claims administration portal shall contain fields that require Claimants

to provide all applicable information and Supporting Documentation as required

as part of the Claim, in accordance with this Plan of Allocation;

(f) providing, training and instructing personnel in such reasonable numbers as are

required for the performance of its duties in the most expedient, commercially-

reasonable manner;

(g) developing, implementing and operating electronic web-based systems and

procedures for receiving, processing, evaluating and decision-making respecting

the claims of Class Members, including making all necessary inquiries to

determine the validity of such claims;

(h) if practicable, providing any Claimant whose Claim Form is not properly completed

or does not include some of the required Supporting Documentation, an opportunity

to remedy the deficiency as stipulated in the Agreement;

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(i) in order to remedy any deficiency in the completion of a Claim Form, the

Administrator may require and request that additional information be submitted by

a Claimant who submits a Claim Form. Such Claimant shall have until the later of

thirty (30) days from the date of the request from the Administrator or the Claims

Bar Deadline to rectify the deficiency. Any person who does not respond to such a

request for information within the thirty (30) day period shall be forever barred

from receiving any payments pursuant to the Settlement, subject to any order of the

Court, but will in all other respects be subject to, and bound by, the provisions of

the Agreement and the releases contained therein;

(j) the Administrator will not accept nor process any Claim Form that does not have

the calculation of Maximum Entitlement completed and accompanied with the

required Supporting Documentation;

(k) making timely assessments of eligibility for compensation and providing prompt

notice thereof;

(l) paying all taxes accruing on the interest earned in the Escrow Account and adding

that interest (net of taxes) to the Compensation Fund;

(m) making Distributions from the Compensation Fund in a timely fashion;

(n) dedicating sufficient personnel to communicate with a Claimant in English or

French as the Claimant elects;

(o) using its best efforts to ensure that its personnel provide timely, helpful and

supportive assistance to Claimants in completing the claims application process

and in responding to inquiries respecting claims;

(p) preparing for, attending and defending its decisions at all References;

(q) distributing and reporting on any cy près awards;

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(r) making payments of Administration Expenses;

(s) maintaining a Database with all information necessary to permit the Court to

evaluate the progress of the administration, as may, from time to time, be

required;

(t) reporting to the Court respecting claims received and administered, and

Administration Expenses; and

(u) preparing such financial statements, reports and records as directed by the Court.

12. The Administrator shall disseminate the Court-approved Second Notice substantially in

conformity with the Court-approved Plan of Notice to provide notice of the outcome of

the Second Motion.

13. The Administrator shall pay all of the costs and expenses reasonably and actually

incurred in connection with the provision of notices, locating Class Members for the sole

purpose of providing notice to them, soliciting Class Members to submit a Claim Form,

including the notice expenses reasonably and actually incurred by the Administrator and

brokerage firms in connection with the provision of notice of this Settlement to Class

Members (provided, however, that (i) each brokerage firm submits its invoice and

supporting documentation to the Administrator within thirty (30) calendar days of

receiving the Second Notice from the Administrator, and provided that (ii) the

Administrator shall not pay in excess of CAD$1,000 to any one brokerage firm, and shall

not pay in excess of CAD$10,000.00 in the aggregate to all brokerage firms and, if the

aggregate amount claimed by such brokerage firms exceeds CAD$10,000.00, then the

Administrator shall distribute the sum of CAD$10,000.00 to such brokerage firms on a

pro rata basis).

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14. The Administrator shall cause the information in the Database to be secured and

accessible from the Website to an individual with a user identification name and

password.

15. Information in the Database concerning a claim shall be accessible to the Claimant

electronically. Each Claimant shall use a unique personal user identification name and

personal password that will permit the Claimant to access only his/her/its own

information in the Database.

16. Once a Claim Form and required Supporting Documentation is received by the

Administrator, the Administrator shall:

(a) verify the number of Qualified Shares;

(b) decide whether the Claimant is eligible to participate in the Distribution;

(c) confirm or amend the calculation of the Maximum Entitlement for each

Authorized Claimant; and

(d) calculate the Pro Rata Distribution.

17. Once the Administrator determines that a Claimant is an Authorized Claimant, the

respective number of his, her or its Qualified Shares and his, her or its Maximum

Entitlement and Pro Rata Distribution from the Compensation Fund, the Administrator

shall advise the Claimant of the Administrator’s decision by posting it on the Claimant’s

online claim file.

18. The Administrator may deal with Claimants in a manner that is not through an electronic

medium, as and when it determines that such a step is feasible and/or necessary.

However, in all cases the information acquired concerning Claimants shall be entered into

the Database.

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19. A decision of the Administrator in respect of a claim and any Claimant’s entitlement to

participate in or receive a share of the Distribution, subject to the Claimant’s right to elect

to refer the decision to the Referee for review, will be final and binding upon the

Claimant and the Administrator.

THE REFEREE

20. The Referee shall have such powers and rights as are reasonably necessary to discharge

his or her duties and obligations.

21. The Referee shall establish and employ a summary procedure to review any disputes

arising from a decision of the Administrator, and may enter into such mediation and

arbitration proceedings as the Referee may deem necessary.

22. All decisions of the Referee shall be in writing and shall be final and conclusive and there

shall be no appeal therefrom whatsoever.

THE PROCEDURE FOR REFERENCE

23. If a Claimant disagrees with the Administrator’s decision relating to eligibility to share in

the Distribution, the determination of the number of Qualified Shares, or the amount of

his/her/its Maximum Entitlement, a Claimant may elect a Reference by the Referee by

delivering a written election for review to the Administrator within fifteen (15) days of

receipt of the Administrator’s decision.

24. The election for a Reference must set out the basis for the disagreement with the

Administrator’s decision and attach all documents relevant to the review which have not

previously been delivered to the Administrator. This election for a Reference must be

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accompanied by a certified cheque or money order, payable to the Administrator, in the

amount of $150.

25. Upon receipt of an election for a Reference, the Administrator shall provide the Referee

with online access to a copy of:

(a) the election for a Reference and accompanying documents;

(b) the Administrator’s decision on eligibility, the number of Qualified Shares and its

calculation of the Maximum Entitlement, as a

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