Item 1.01 Entry into a Material Definitive Agreement.
The information regarding the Retention Agreement (as defined below) set forth
in Item 5.02 of this Current Report on Form 8-K is incorporated by reference in
this Item 1.01.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
On July 15, 2021, Medmen Enterprises Inc. (the "Company") issued a press release
announcing the appointment of Tom Lynch, the Chairman of the Company's Board of
Directors ("Board") and current interim Chief Executive Officer, as the
permanent Chief Executive Officer of the Company effective July 15, 2021. A copy
of the press release is attached to this Current Report on Form 8-K as Exhibit
99.1.
On July 12, 2021, in connection with Mr. Lynch's appoint as the permanent Chief
Executive Officer ("CEO"), the Company and SierraConstellation Partners LLC
("SCP") entered into a Transaction and Retention Bonus Agreement (the "Retention
Agreement"). Previously, in March 2020, the Company retained SCP, an interim
management and advisory firm, to support the Company in the development and
execution of its turnaround and restructuring plan and Mr. Lynch to serve as the
Company's interim Chief Executive Officer. Mr. Lynch is a Partner and Senior
Managing Director at SCP. As of March 27, 2021, the Company had paid $2,172,709
in fees to SCP for interim management and restructuring support during the
current fiscal year. In addition, during the nine months ended March 27, 2021,
Mr. Lynch received 124,868 stock options.
Pursuant to the Retention Agreement, the Company will pay SCP, in connection
with the CEO's continued service, a bonus award in the aggregate amount of
$750,000 (the "Bonus Award"), $500,000 of which will become payable payable upon
the consummation of a Transaction that occurs prior to June 1, 2022 (the
"Transaction Bonus"), and $250,000 of which will become payable payable on June
1, 2022, each subject to the CEO's continued service (the "Retention Bonus").
The Retention Bonus will be paid regardless of the consummation of a Transaction
prior to June 1, 2022. A "Transaction" means a transaction or series of
transactions that constitute (i) the sale of all or substantially all of the
Company's assets, (ii) the sale of all or substantially all of the equity
interests of the Company, including through a sale or exchange of capital stock
or other equity interest, a merger, consolidation, or other business
combination, or (iii) the recapitalization or restructuring of all or
substantially all of the equity and/or debt securities and/or other indebtedness
of the Company, which recapitalization or restructuring is effected pursuant to
an exchange transaction, tender offer, plan of reorganization, plan of
arrangement, or otherwise. The occurrence of a Transaction and the effective
date will be determined by the Company's Board in its sole discretion. If a
transaction is not consummated prior to June 1, 2022, the Transaction Bonus will
not become payable and will be forfeited.
As a condition of SCP receiving any portion of the Bonus Award, Mr. Lynch must
continuously and actively serve as CEO of the Company on the applicable payment
date of each part of the Bonus Award. If the CEO's service with the Company is
terminated prior to any payment date, the Bonus Award will not become payable.
1
If, prior to both June 1, 2022 and the consummation date of a Transaction, Mr.
Lynch's service as CEO of the Company is terminated by the Company other than
for Cause, or Mr. Lynch terminates service with the Company for Good Reason,
then (i) 100% of the Transaction Bonus will become payable, and (ii) a prorated
portion of the Retention Bonus will become payable, based on the number of
months served between June 1, 2021 and June 1, 2022. If, upon or following the
consummation of a Transaction and prior to June 1, 2022, Mr. Lynch's service as
CEO of the Company is terminated by the Company other than for Cause, or Mr.
Lynch terminates service with the Company for Good Reason, then the Retention
Bonus will be payable in full. If Mr. Lynch's service as CEO of the Company is
terminated for any other reason, any unpaid portion of the Transaction Bonus and
the Retention Bonus will be forfeited. "Cause" means (i) indictment for,
conviction of, or a plea of guilty or no contest to, any indictable criminal
offence or any other criminal offence involving fraud, misappropriation or moral
turpitude, (ii) failure to perform duties to the Company or to follow the lawful
direction of the Board for any reason other than illness or physical or mental
incapacity, or a breach of fiduciary duty, as determined in the sole discretion
of the Board (iii) theft, fraud, or dishonesty or in connection with the CEO's
duties, (iv) violation of the Company's code of conduct or similar written
policies, (v) willful misconduct unrelated to the Company or any of its
affiliates having, or likely to have, a material negative impact on the Company
or any of its affiliates (economically or its reputation), or (vi) an act of
gross negligence or willful misconduct. "Good Reason" means without the CEO's
consent, (i) any material diminution in responsibilities, authorities, title or
duties, (ii) any material reduction in base salary, (iii) a relocation of the
CEO's principal place of service by more than 50 miles; provided that the CEO
has given the Company written notice of termination, setting forth the conduct
of the Company that is alleged to constitute Good Reason, within 30 days
following the occurrence of such event, and the Company fails to cure such
conduct within 30 days. Removal of the CEO from the Board does not constitute
Good Reason.
Tom Lynch, 52, was appointed initially interim Chief Executive Officer of the
Company in March 2020, elected to the Board in November 2020 and appointed as
Chairman in December 2020. Mr. Lynch is currently a Partner and Senior Managing
Director of SierraConstellation Partners. Prior to joining SierraConstellation
Partners in July 2018, Mr. Lynch was the co-founder and Managing Partner of
Woods Hole Capital between July 2014 and July 2018. Prior to founding Woods Hole
Capital, Mr. Lynch was the Chairman and Chief Executive Officer of Frederick's
of Hollywood Group (a publicly traded company). Prior to joining Frederick's,
Mr. Lynch was the CEO of Mellon HBV later renamed Fursa Alternative Strategies.
Mr. Lynch has held executive positions with Mellon Institutional Asset
Management, UBS Global Asset Management and the Dreyfus Corporation. Mr. Lynch
is a graduate of St. Anselm College. In light of his business and executive
officer experience, the Company believes that Mr. Lynch is qualified to serve as
a director of the Company.
Except as described above in this Item 5.02, there are no arrangements or
understandings between Mr. Lynch and any other person pursuant to which he was
appointed to serve as Chief Executive Officer of the Company and Mr. Lynch does
not have a direct or indirect material interest in any "related party"
transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
There are no family relationships between Mr. Lynch and any director or
executive officer of the Company.
A copy of the Retention Agreement is filed as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference. The foregoing
description of the Retention Agreement does not purport to be complete and is
qualified in its entirety by reference to such exhibit.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Exhibit
10.1 Transaction and Retention Bonus Agreement dated July 12, 2021 between
MedMen Enterprises Inc. and SierraConstellation Partners LLC
99.1 Press Release dated July 15, 2021
2
© Edgar Online, source Glimpses
MEDMEN ENTERPRISES INC. 
