Supreme Pharmaceuticals Announces $40 Million Bought Deal Private Placement of Convertible Debenture Units

/NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES/

CSE:SL

TORONTO, Nov. 14, 2016 /CNW/ - Supreme Pharmaceuticals Inc. (the "Company") (CSE: SL) announced today that it has entered into an agreement with Canaccord Genuity Corp. on behalf of a syndicate of underwriters (the "Underwriters") pursuant to which the Underwriters have agreed to purchase, on a bought deal, private placement basis, $40,000,000 aggregate principal amount of convertible debenture units (the "Convertible Debenture Units") at a price of $1,000 per Convertible Debenture Unit. Each Convertible Debenture Unit will consist of $1,000 principal amount of 10% senior unsecured convertible debentures (the "Convertible Debentures") and 770 common share purchase warrants (the "Warrants") of the Company (the "Offering").  Each Warrant will be exercisable to acquire one common share of the Company (a "Warrant Share") at an exercise price of $1.70 per Warrant Share for a period of three years following the Closing Date (as hereinafter defined) of the Offering, , subject to the Company's right to accelerate expiry in certain circumstances.

"This Offering, which is one of the largest financings in the Canadian cannabis sector to date, provides Supreme the capital to complete its 7 ACRES Hybrid Greenhouse and positions Supreme to be one of the world's fastest growing legal cannabis companies," said John Fowler, CEO of Supreme.

The Convertible Debentures will bear interest from the date of closing at 10.0% per annum, payable semi-annually on June 30 and December 31 of each year and will mature on December 31, 2019 (the "Maturity Date"). Subject to any required regulatory approval and provided no event of default has occurred and is continuing, the Company shall have the option to pay such interest by delivering such number of freely tradable common shares of the Company (the "Common Shares") as may be required to a trustee for sale, in which event holders of the Convertible Debentures will be entitled to receive a cash payment equal to the interest owed from the proceeds of the sale of such requisite number of Common Shares by the trustee.

The Convertible Debentures will be convertible at the option of the holder into Common Shares at any time prior to the close of business on the Maturity Date at a conversion price of $1.30 per Common Share (the "Conversion Price"). Beginning on the date that is four months and one day following the Closing Date, the Company may force the conversion of all of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on 30 days prior written notice should the daily volume weighted average trading price of the Common Shares be greater than $1.75 for any 15 consecutive trading days.

The Convertible Debentures will be subject to redemption, in whole or in part, by the Company at any time after 24 months upon giving holders not less than 30 and not more than 60 days' prior written notice, at a price equal to the then outstanding principal amount of the Convertible Debentures plus all accrued and unpaid interest up to and including the redemption date. Upon a change of control of the Company, holders of the Convertible Debentures will have the right to require the Company to repurchase their Convertible Debentures, in whole or in part, on the date that is 30 days following the giving of notice of the change of control, at a price equal to 104% of the principal amount of the Convertible Debentures then outstanding plus accrued and unpaid interest thereon (the "Offer Price"). If 90% or more of the principal amount of the Convertible Debentures outstanding on the date of the notice of the change of control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures at the Offer Price.

The Convertible Debentures and the Warrants comprising the Convertible Debenture Units and any Common Shares issuable upon conversion or exercise thereof, as applicable, will be subject to a statutory hold period lasting four months and one day following the closing date.

The Company intends to use the net proceeds of the Offering for expanding the operating footprint of the Company's Hybrid Greenhouse facility in Kincardine, Ontario, working capital and general corporate purposes. Closing of the Offering is expected to occur on or about December 7, 2016 (the "Closing Date"). The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the Canadian Securities Exchange.

About Supreme

Supreme is a Canadian publicly traded company committed to becoming a leading supplier of affordable medical cannabis through its wholly-owned subsidiary 7 ACRES (formerly AMMCan). 7 ACRES is a federally licensed producer of medical cannabis pursuant to the ACMPR operating a 342,000 sq. ft. Hybrid Greenhouse facility. The Hybrid Greenhouse combines the best technology of indoor production with the efficiencies and sustainability of a greenhouse, in a single large-format production footprint. Please visit www.supreme.ca and www.7acres.com for more information.

Forward Looking Statements

Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in the Company's periodic filings with Canadian securities regulators. When used in this news release, words such as "will, could, plan, estimate, expect, intend, may, potential, believe, should," and similar expressions, are forward-looking statements.

Forward-looking statements may include, without limitation, statements including the anticipated closing and closing date of the Offering including the ability of the Company to satisfy closing conditions under the Offering, anticipated use of proceeds of the Offering and the potential benefits of such investment, and other statements of fact.

Although the Company has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth due to inconsistent public opinion and perception of the medical-use marijuana industry; regulatory or political change; and other risk factors disclosed in the Company's public filings at www.sedar.com.

There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The for-ward-looking statements in this news release are made as of the date of this release. The Company disclaims any intention or obligation to update or revise such information, except as required by applicable law.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This news release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.

SOURCE Supreme Pharmaceuticals Inc

For further information: Investor Relations, 202 - 20 De Boers Dr, Toronto ON M3J 0H1, Phone: (416) 630-7272, Email: info@supreme.ca, Website: www.supreme.ca

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