Medmen Enterprises, Inc. Form S-1 Filed 2021-03-08

SECURITIES AND EXCHANGE COMMISSION

FORM S-1 General form of registration statement for all companies including face-amount certificate companies

Filing Date: 2021-03-08 SEC Accession No. 0001477932-21-001299

(HTML Version on secdatabase.com)

FILER MedMen Enterprises, Inc. Mailing Address Business Address 10115 JEFFERSON 10115 JEFFERSON CIK:1776932| IRS No.: 981431779 | State of Incorp.:A1 | Fiscal Year End: 0630 BOULEVARD BOULEVARD Type: S-1 | Act: 33 | File No.: 333-253980 | Film No.: 21721362 CULVER CITY CA 90232 CULVER CITY CA 90232 SIC: 5990 Retail stores, nec 4243302082

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MEDMEN ENTERPRISES INC. (Exact name of registrant as specified in its charter)

British Columbia 5912 98-1431779 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number)

10115 Jefferson Boulevard Culver City, CA 90232 (424) 330-2082 (Address and telephone number of registrant’s principal executive offices)

Reece Fulgham Chief Financial Officer 10115 Jefferson Boulevard Culver City, CA 90232 (424) 330-2082 (Name, Address and Telephone Number of Agent for Service)

Copy to: Thomas J. Poletti, Esq. Katherine J. Blair, Esq. Manatt, Phelps & Phillips, LLP 695 Town Center Drive, 14th Floor Costa Mesa, CA 92646 (714) 312-7500

(Approximate date of commencement of proposed sale to the public) As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

CALCULATION OF REGISTRATION FEE

Proposed Proposed Maximum Maximum Offering Aggregate Amount of Amount to be Price per Offering Registration Title of Securities to be Registered Registered (1) Share Price Fee Class B Subordinate Voting Shares (2) 37,383,208 $ 0.35(3) $ 13,016,231.32 $ 1,420.07

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Class B Subordinate Voting Shares issuable upon exercise of warrants 174,595,005 $ 0.25(4) $ 43,648,751.25 $ 4,762.08 Class B Subordinate Voting Shares issuable upon conversion of convertible notes 32,132,350 $ 0.20(5) $ 6,426,470.07 $ 701.13 Total $ 6,883,28

(1) This Registration Statement includes an indeterminate number of additional Class B Subordinate Voting Shares issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of Class B Subordinate Voting Shares. In the event of a stock split, stock dividend or similar transaction involving our Common Stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(b) under the Securities Act of 1933, as amended (the “Securities Act”). (2) Represents Class B Subordinate Voting Shares registered for resale by the selling shareholders named in this prospectus. (3) Estimated in accordance with Rule 457(c) and (h) under the Securities Act, solely for the purpose of calculating the registration fee on the basis of an assumed price of $0.35 per share, which is the average of the high (C$0.51) and low (C$0.44) prices of the Registrant’s Class B Subordinate Voting Shares in Canadian dollars (“C$”) as reported on the Canadian Securities Exchange on March 4, 2021, which date is within five business days prior to filing this registration statement, and as converted from Canadian dollars to United States dollars based on the foreign exchange rate (1.2637) as published by the Bank of Canada on March 4, 2021. (4) In accordance with Rule 457(g) of the Securities Act, based upon the weighted average exercise price per share of Class B Subordinate Voting Shares issuable upon exercise of warrants. (5) In accordance with Rule 457(g) of the Securities Act, based upon the weighted average conversion price per share of Class B Subordinate Voting Shares issuable upon conversion of convertible notes.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where the offer or sale of these securities is not permitted.

SUBJECT TO COMPLETION, DATED March 5, 2021

PRELIMINARY PROSPECTUS

MEDMEN ENTERPRISES INC.

244,110,563 Class B Subordinate Voting Shares

This prospectus relates the offer and sale or other disposition from time to time of up to an aggregate of 244,110,563 Class B Subordinate Voting Shares (the “Subordinate Voting Shares”) of MedMen Enterprises Inc. by the selling shareholders named in this prospectus, (together with their respective donees, transferees or other successors in interest, referred to as the “selling shareholders”), which consists of 37,383,208 Subordinate Voting Shares, 174,595,005 Subordinate Voting Shares issuable upon exercise of warrants, and 32,132,350 Subordinate Voting Shares issuable upon conversion of convertible notes (the “Resale Shares”). Registration of the Resale Shares does not mean that the selling shareholders will actually offer or sell any of these shares.

We will not receive any proceeds from the sale or other disposition of the Resale Shares offered by the selling shareholders. We will, however, receive the exercise price of any warrants exercised for cash. To the extent that we receive cash upon exercise of any warrants, we expect to use that cash for working capital and general corporate purposes.

The selling shareholders or their transferees may, from time to time, sell, transfer or otherwise dispose of any or all of their Subordinate Voting Shares or interests in Subordinate Voting Shares on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. For additional information, you should refer to the section entitled “Plan of Distribution” of this prospectus. We are paying all expenses of registration incurred in connection with this offering, except any underwriting discounts and commissions incurred by the selling stockholders.

Our Subordinate Voting Shares trade on the Canadian Securities Exchange (“CSE”) under the symbol “MMEN”. The closing sales price of our Subordinate Voting Shares on the CSE on March 4, 2021 was C$0.46 per share. Our Subordinate Voting Shares also trade on the OTCQX under the symbol “MMNFF.” The last reported sales price of our Subordinate Voting Shares on the OTCQX on March 4, 2021 was $0.37 per share.

We are an “emerging growth company”, as defined under the federal securities laws and, as such, we may continue to elect to comply with certain reduced public company reporting requirements in future reports. Certain implications of being an “emerging growth company” are described on page 3 of this prospectus.

Investing in our Subordinate Voting Shares involves a high degree of risk. You should refer to the discussion of risk factors, beginning on page 10 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is dated , 2021

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Page ABOUT THIS PROSPECTUS 1

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document PROSPECTUS SUMMARY 2 OVERVIEW 2 THE OFFERING 4 FORWARD-LOOKING INFORMATION 6 RISK FACTORS 10 USE OF PROCEEDS 26 DIVIDEND POLICY 26 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 26 BUSINESS 77 PROPERTIES 109 LEGAL PROCEEDINGS 110 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 111 EXECUTIVE COMPENSATION 117 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 121 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 123 SELLING SHAREHOLDERS 125 DESCRIPTION OF CAPITAL STOCK 130 PLAN OF DISTRIBUTION 136 LEGAL MATTERS 143 EXPERTS 143 WHERE YOU CAN FIND MORE INFORMATION 144 FINANCIAL STATEMENTS F-1

ABOUT THIS PROSPECTUS

As permitted under the rules of the Securities and Exchange Commission, or the SEC, this prospectus includes important business information about MedMen Enterprises Inc. that is also contained in documents that we file with the SEC. A prospectus supplement may also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement modifies or supersedes such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus. You may obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov, as well as other sources. See “Where You Can Find More Information.”

Before you invest in our securities, you should read carefully the registration statement (including the exhibits thereto) of which this prospectus forms a part, this prospectus, any prospectus supplement, or any accompanying prospectus supplement. You should rely only on the information contained in this prospectus. Neither we nor the selling shareholders have authorized anyone to provide you with additional or different information from that contained in this prospectus. We and the selling shareholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. You should assume that the information contained in this prospectus is accurate only as of any date on the front cover of this prospectus regardless of the time of delivery of this prospectus, or any applicable prospectus supplement, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.

The Resale Shares are being offered to sell, and offered to buy only in jurisdictions where offers and sales are permitted. We have not taken any action to permit a public offering of our Subordinate Voting Shares or the possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

References herein to “MedMen Enterprises”, “MedMen” or the “Company”, “we”, “us” or “our” refer to MedMen Enterprises Inc. and its subsidiaries.

In this prospectus, currency amounts are stated in U.S. dollars (“$”), unless specified otherwise. All references to C$ are to Canadian dollars.

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PROSPECTUS SUMMARY

This summary highlights information contained throughout this prospectus. This summary does not contain all of the information that should be considered before investing in our securities. Investors should read the entire prospectus carefully, including the more detailed information regarding our business, the risks of purchasing our securities discussed in this prospectus. Investors should read the entire prospectus carefully. See “Risk Factors” beginning on page 10 of this prospectus.

OVERVIEW

General

MedMen is a cannabis retailer based in the U.S. with flagship locations in Los Angeles, Las Vegas, Chicago, and New York. MedMen offers a robust selection of high- quality products, including MedMen-owned brands [statemade], LuxLyte, and MedMen Red through its premium retail stores and proprietary delivery service, as well as curbside and in-store pick up.

The Company currently operates 24 store locations across California (11), Florida (4), Nevada (3), Illinois (1), New York (4) and Arizona (1), which are classified as discontinued operations as the Company is seeking to sell the operations in Arizona. The Company’s retail stores are located in strategic locations across key cities and neighborhoods in each of its markets. The Company has plans to open additional retail stores over the next twelve months in the following cities:

· Emeryville, CA · San Francisco, CA · Chicago, IL

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · Boston, MA · Newton, MA · Miami, FL · Jacksonville, FL · Orlando, FL · Deerfield Beach, FL

The Company expects to continue strengthening its pipeline of stores through acquisitions, partnerships and applications for new licenses, with a focus on recreational states such as California, Nevada and Illinois and medical states such as Florida.

The Company previously announced its intention to sell its assets in Arizona in order to focus on other markets that the Company believes may have greater potential for near-term profitability. The Company is currently in discussions with various parties and expects to discontinue all Arizona-related operations by the end of fiscal year 2021.

In addition to e xpanding its physical store network in markets across the U.S., the Company plans to continue scaling its digital platform. The Company launched statewide same-day delivery in California on August 19, 2019. The Company launched delivery in Nevada on September 16, 2019. See “Business - Retail Operations - In-Store Pickup and Delivery” for further information about the Company’s delivery operations.

The Company launched MedMen Buds, the Company’s loyalty program, on July 3, 2019. The program currently is offered in all of the Company’s stores in Arizona, Nevada, Florida and California and has more than 425,000 members. See “Business - Retail Operations - Loyalty Program” for further information about the Company’s loyalty program.

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MedMen currently operates five cultivation and production facilities across Nevada, California, New York, Florida and Arizona. Given the regulatory environment and lack of robust wholesale market in Florida and New York, the Company expects to continue cultivation and production activities in these markets. In California and Nevada, the Company is in discussions for the potential sale of its cultivation and production facilities so that the Company can focus on its retail operations. The Company has not entered into any definitive agreements at this time. The Company currently intends to sub-lease the California and Nevada facilities to a third party that would acquire and/or take over the operations for the cultivation and production facilities. As a result, the Company would no longer operate cultivation and production facilities in California and Nevada. The Company also operates a cultivation and production facility in Arizona. Although no definitive agreements have been entered into, the Company is currently in discussions to sell the operation, and as such has classified its Arizona business as discontinued operations. As part of the discontinuation of Arizona operations, the Company will not have a cultivation and production facility in Arizona.

In New York and Florida, the cultivation and production facilities are or will be focused primarily on the commercialization of cannabis (both medical and recreational, as permitted under applicable laws) and, in select locations, the research and development of new strains of cannabis and cultivation techniques. The procedures at each facility place an emphasis on customer and patient safety, with a strict quality control process. See “Description of the Business - Cultivation and Production Operations” for further information about the Company’s cultivation and production operations.

The Company currently holds licenses within California, Nevada, Florida, Arizona, Illinois, New York and Massachusetts. The Company views Nevada, California, New York, Illinois, Florida and Massachusetts as providing ongoing opportunities for growth due to their market depth, current supply-demand dynamics and regulatory framework.

In addition to owning its own cannabis licenses and operations, the Company also provides management services to third-party cannabis license-holders. The Company currently has management services contracts at two licensed retail dispensaries in California. See “Business - Management Services” for further information about the Company’s management services.

The Company is operated by an executive team that has significant experience in the cannabis industry and other analogous industries such as retail, technology, consumer packaged goods, alcohol and apparel. The Company had approximately 830 employees as of December 26, 2020 across its operating jurisdictions. See “Business - Employees” for further information about the Company’s employees.

MedMen Enterprises USA has 41 wholly owned (either directly or indirectly) material subsidiaries. Such subsidiaries were incorporated or otherwise organized under the laws of California, Nevada, Delaware, New York, Florida, Arizona, Illinois and Massachusetts. See “Business - Corporate Structure”.

Emerging Growth Company

We are an ‘‘emerging growth company’’ within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company.

Smaller Reporting Company

We are a “smaller reporting company” and will remain a smaller reporting company while either (i) the market value of our stock held by non-affiliates was less than $250 million as of the last business day of our most recently completed second fiscal quarter or (ii) our annual revenue was less than $100 million during our most recently completed fiscal year and the market value of our stock held by non-affiliates was less than $700 million as of the last business day of our most recently completed second fiscal quarter. We intend to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies, such as reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. For so long as we remain a smaller reporting company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not smaller reporting companies.

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MedMen Enterprises Inc. was incorporated in the Province of British Columbia under the Business Corporations Act (British Columbia).

The Company operates through its wholly-owned subsidiaries, MM CAN USA, Inc., a California corporation (“MM CAN” or “MedMen Corp.”), and MM Enterprises USA, LLC, a Delaware limited liability company (“MM Enterprises USA”, or “the LLC”).

THE OFFERING

Class B Subordinate Voting Shares outstanding prior to this offering (as 549,658,529 shares of February 24, 2021):

Class B Subordinate Voting Shares offered for sale by the selling 244,110,563 shares (1) shareholders:

Class B Subordinate Voting Shares to be outstanding after this offering: 762,869,895 shares (1)

Use of Proceeds We will not receive any proceeds from the sale or other disposition of the 244,110,563 Subordinate Voting Shares by the selling shareholders under this prospectus. We will, however, receive up to $42.8 million in the aggregate from the selling shareholders if they exercise, for cash, unexercised warrants to acquire 174,595,005 Subordinate Voting Shares. To the extent that we receive cash upon exercise of any warrants, we expect to use that cash for working capital and general corporate purposes.

Risk Factors: See the section entitled “Risk Factors” beginning on page 10 and other information included in this prospectus for a discussion of factors you should consider before making an investment decision.

CSE symbol: MMEN ______(1) Includes (a) 174,595,005 Subordinate Voting Shares issuable upon the exercise of warrants (including warrants exercisable for Redeemable Shares of MM CAN that can be redeemed and exchanged for Subordinate Voting Shares) held by the selling shareholders, (b) 32,132,350 Subordinate Voting Shares issuable upon the conversion of convertible notes held by the selling shareholders, and (c) an aggregate of 6,484,001 Subordinate Voting Shares issued subsequent to February 24, 2021. Assumes no other shares are issued by the Company or exercised or converted under other warrants, options or notes for Subordinate Voting Shares.

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Unless otherwise indicated, all information in this prospectus relating to the number of shares of our Subordinate Voting Shares outstanding is based on 549,658,529 Subordinate Voting Shares outstanding as of February 24, 2021 and does not include:

· 12,855,137 Subordinate Voting Shares issuable upon the exercise of options outstanding as of February 24, 2021, with a weighted-average exercise price of C$1.63 per share;

· 23,472,305 Subordinate Voting Shares issuable from time to time upon the settlement of Restricted Stock Units (“RSUs”);

· 356,283,821 Subordinate Voting Shares issuable upon the exercise of warrants outstanding as of February 24, 2021, with a weighted average exercise price of $0.61;

· 1,069,451,560 Subordinate Voting Shares issuable upon conversion of the aggregate principal amount, and if applicable, accrued interest, of convertible notes with a weighted average conversion price of $0.23 per share;

· 725,017 Subordinate Voting Shares issuable upon redemption of Redeemable Units of MM Enterprises USA, LLC (“MedMen LLC “);

· 19,323,878 Subordinate Voting Shares issuable upon redemption of Redeemable Units, which are issuable upon conversion of LTIP Units. See “MedMen LLC LTIP Units” under the Section “Description of Capital Stock”

· 128,879,262 Subordinate Voting Shares issuable upon redemption of Class B Redeemable Shares of MM CAN USA, Inc. (“Redeemable Shares”);

· 147,508,519 Subordinate Voting Shares issuable upon redemption of Redeemable shares of MM CAN, which are issuable upon exercise of warrants with a weighted average conversion price of $0.24 per share (does not include 1,671,278 Subordinate Voting Shares issuable upon the exercise of warrants with an exercise price of $0.4810 per share that were issued subsequent to February 24, 2021); and

· 200,000,000 additional Subordinate Voting Shares reserved for future issuance under our 2018 Stock and Incentive Plan.

Unless otherwise indicated, all information in this prospectus reflects or assumes no exercise or termination of options or warrants, vesting of RSUs, no conversion of any convertible notes, and no redemption of Redeemable Units or Redeemable Shares outstanding as of February 24, 2021.

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FORWARD-LOOKING INFORMATION

This registration statement includes “forward-looking information” and “forward-looking statements” within the meaning of Canadian securities laws and United States securities laws (collectively, “forward-looking information”). All information, other than statements of historical facts, included in this registration statement that addresses activities, events or developments that the Company expects or anticipates will or may occur in the future is forward-looking information. Forward- looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes, among others, information and statements regarding:

· the business, revenue, results and future activities of, and developments related to, the Company after the date of this MD&A, including as a result of the impact of COVID-19, and planned reductions of operating expenses,

· future business strategy, competitive strengths, goals, future expansion and growth of the Company’s business and operations,

· the successful implementation of cost reduction strategies and plans, expectations and any targets for such strategies and plans, including expected additional improvements in reduction of Corporate SG&A (Non-GAAP) in upcoming quarters,

· whether any proposed transactions will be completed on the current terms and contemplated timing,

· expectations for the effects of any such proposed transactions, including the potential number and location of dispensaries or licenses to be acquired or disposed of,

· the ability of the Company to successfully achieve its business objectives as a result of completing such proposed acquisitions or dispositions,

· the contemplated use of proceeds remaining from previously completed capital raising activities,

· the application for additional licenses and the grant of licenses or renewals of existing licenses for which the Company has applied or expects to apply,

· the rollout of new dispensaries, including as to the number of planned dispensaries to be opened in the future and the timing and location in respect of the same, and related forecasts,

· the expansion into additional markets,

· expectations as to the development and distribution of the Company’s brands and products,

· new revenue streams,

· the impact of the Company’s digital and online strategy,

· the implementation or expansion of the Company’s in-store and curbside pickup services,

· the ability of the Company to successfully execute its strategic plans,

· any changes to the business or operations as a result of any potential future legalization of adult-use and/or medical cannabis under U.S. federal law,

· expectations of market size and growth in the United States and the states in which the Company operates or contemplates future operations and the effect that such growth will have on the Company’s financial performance,

· statements that imply or suggest that returns may be experienced by investors or the level thereof,

· expectations for other economic, business, regulatory and/or competitive factors related to the Company or the cannabis industry generally, and

· other events or conditions that may occur in the future.

Readers are cautioned that forward-looking information and statements are not based on historical facts but instead are based on assumptions, estimates, analysis and opinions of management of the Company at the time they were provided or made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements.

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Forward-looking information and statements are not a guarantee of future performance and are based upon estimates and assumptions of management at the date the statements are made including among other things estimates and assumptions about:

· the impact of epidemic diseases, such as the recent outbreak of the COVID-19 illness,

· contemplated dispositions being completed on the current terms and current contemplated timeline,

· development costs remaining consistent with budgets,

· the ability to raise sufficient capital to advance the business of the Company and to fund planned operating and capital expenditures and acquisitions,

· the ability to manage anticipated and unanticipated costs,

· achieving the anticipated results of the Company’s strategic plans,

· the amount of savings, if any, expected from cost-cutting measures and divestitures of non-core assets,

· favorable equity and debt capital markets,

· the availability of future funding under the Company’s equity and debt finance facilities,

· stability in financial and capital markets,

· the ability to sustain negative operating cash flows until profitability is achieved,

· the ability to satisfy operational and financial covenants under the Company’s existing debt obligations,

· favorable operating and economic conditions,

· political and regulatory stability,

· obtaining and maintaining all required licenses and permits,

· receipt of governmental approvals and permits,

· sustained labor stability,

· favorable production levels and sustainable costs from the Company’s operations,

· consistent or increasing pricing of various cannabis products,

· the ability of the Company to negotiate favorable pricing for the cannabis products supplied to it,

· the level of demand for cannabis products, including the Company’s and third-party products sold by the Company,

· the continuing availability of third-party service providers, products and other inputs for the Company’s operations, and

· the Company’s ability to conduct operations in a safe, efficient and effective manner.

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While the Company considers these estimates and assumptions to be reasonable, the estimates and assumptions are inherently subject to significant business, social, economic, political, regulatory, public health, competitive and other risks and uncertainties, contingencies and other factors that could cause actual performance, achievements, actions, events, results or conditions to be materially different from those projected in the forward-looking information and statements. Many estimates and assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct. Risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements include, among others:

· uncertain and changing U.S. regulatory landscape and enforcement related to cannabis, including political risks,

· risks and uncertainties related to the recent outbreak of COVID-19 and the impact it may have on the global economy and retail sector, particularly the cannabis retail sector in the states in which the Company operates, and on regulation of the Company’s activities in the states in which it operates, particularly if there is any resurgence of the pandemic in the future,

· the inability to raise necessary or desired funds,

recurring losses from operations and a net working capital deficiency that raises substantial doubt about the Company’s ability to continue as a going · concern,

· the inability to satisfy operational and financial covenants under the Company’s existing debt obligations and other ongoing obligations as they become payable,

· funds being raised on terms that are not favorable to the Company, to the ability to operate the Company’s

· business or to existing shareholders, including as a result of the anti-dilution protections that have been provided under the terms of the company’s credit facilities,

· the inability to consummate the proposed dispositions and the inability to obtain required regulatory approvals and third-party consents and the satisfaction of other conditions to the consummation of the proposed dispositions on the proposed terms and schedule,

· the potential adverse impacts of the announcement or consummation of the proposed dispositions on relationships, including with regulatory bodies, employees, suppliers, customers and competitors,

· the diversion of management time on the proposed dispositions,

· risks related to future acquisitions or dispositions, resulting in unanticipated liabilities,

· reliance on the expertise and judgment of senior management of the Company,

· adverse changes in public opinion and perception of the cannabis industry,

· risks relating to anti-money laundering laws and regulation,

· risks of new and changing governmental and environmental regulation,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · risk of costly litigation (both financially and to the brand and reputation of the Company and relationships with third parties),

· risks related to contracts with and the inability to satisfy obligations to third-party service providers,

· risks related to the unenforceability of contracts,

· the limited operating history of the Company,

· risks inherent in an agricultural business,

· risks related to proprietary intellectual property and potential infringement by third parties,

· risks relating to financing activities including leverage,

· the inability to effectively manage growth,

· errors in financial statements and other reports,

· costs associated with the Company being a publicly-traded company, including given the loss of foreign private issuer status under U.S. securities laws,

· the dilutive impact of raising additional financing through equity or convertible debt given the decline in the Company’s share price,

· increasing competition in the industry,

· increases in energy costs,

· risks associated with cannabis products manufactured for human consumption, including potential product recalls,

· inputs, suppliers and skilled labor being unavailable or available only at uneconomic costs,

· breaches of and unauthorized access to the Company’s systems and related cybersecurity risks,

· constraints on marketing cannabis products,

· fraudulent activity by employees, contractors and consultants,

· tax and insurance related risks, including any changes in cannabis or cultivation tax rates,

· risks related to the economy generally,

· conflicts of interest of management and directors,

· failure of management and directors to meet their duties to the Company, including through fraud or breaches of their fiduciary duties,

· risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of Canada,

· sales by existing shareholders negatively impacting market prices,

· the limited market for securities of the Company, and

· limited research and data relating to cannabis.

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Readers are cautioned that the foregoing lists are not exhaustive of all factors, estimates and assumptions that may apply to or impact the Company’s results. Although the Company has attempted to identify important factors that could cause actual results to differ materially from the forward-looking information and statements contained in this this registration statement, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information and statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. The forward-looking information and statements contained herein are presented to assist readers in understanding the Company’s expected financial and operating performance and the Company’s plans and objectives and may not be appropriate for other purposes. The forward-looking information and statements contained in this registration statement represents the Company’s views and expectations as of the date of this prospectus unless otherwise indicated. The Company anticipates that subsequent events and developments may cause its views and expectations to change. However, while the Company may elect to update such forward-looking information and statements at a future time, it has no current intention of and assumes no obligation for doing so, except to the extent required by applicable law.

Readers should read this registration statement and the documents that the Company references herein and has filed with the Securities and Exchange Commission at www.sec.gov completely and with the understanding that the Company’s actual future results may be materially different from what it expects.

For further discussion of these and other factors see “Risk Factors” in this prospectus. This prospectus and all other written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in or referred to in this section.

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RISK FACTORS

The risks and uncertainties described below could materially and adversely affect our business, financial condition and results of operations and could cause actual results to differ materially from our expectations. The risk factors described below include the considerable risks associated with the current economic environment and the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document related potential adverse effects on our financial condition and results of operations. You should read these risk factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and related notes for the fiscal year ended June 27, 2020. There also may be other factors that we cannot anticipate or that are not described in this report generally because we do not currently perceive them to be material. Those factors could cause results to differ materially from our expectations.

RISKS ASSOCIATED WITH THE BUSINESS OF THE COMPANY

Since cannabis continues to be a Controlled Substance under the United States Federal Controlled Substances Act (the “CSA”), there can be no assurance that the operations of the Company may be deemed to be criminal in nature and/or subject the Company to substantial civil penalties.

MedMen both directly and indirectly engages in the medical and adult-use marijuana industry in the United States where local state law permits such activities. Investors are cautioned that in the United States, cannabis is largely regulated at the state level. To MedMen’s knowledge, there are to date a total of 33 states, and the District of Columbia, that have now legalized cannabis in some form, including the states in which MedMen operates. Notwithstanding the permissive regulatory environment of cannabis at the state level, cannabis continues to be categorized as a controlled substance under the CSA and as such, cultivation, distribution, sale and possession of cannabis violates federal law in the United States. The inconsistency between federal and state laws and regulations is a major risk factor.

The recent change in Presidential administration will result in a change of leadership including the appointment of a new Attorney General of the United States of America. At this time it is uncertain what policies the new President or Attorney General will take regarding the enforcement of federal cannabis laws. Under the prior administration, federal prosecutors were free to utilize their prosecutorial discretion to decide whether to prosecute cannabis activities despite the existence of state-level laws that may be inconsistent with federal prohibitions, but there were no such prosecutions. Due to the fact the leadership of the Department of Justice is changing and has not therefore introduced policies regarding the enforcement of the federal cannabis laws, there can be no assurance that the federal government will not seek to prosecute cases involving cannabis businesses that are otherwise compliant with state law.

Federal law pre-empts state law in these circumstances, so that the federal government can assert criminal violations of federal law despite state law. The level of prosecutions of state-legal cannabis operations is entirely unknown, and the current administration and Department of Justice has not articulated a policy regarding state legal cannabis. It is unclear what position the new Attorney General, once confirmed by the United States Senate, will take. If the Department of Justice policy were to be to aggressively pursue financiers or equity owners of cannabis-related business, and United States Attorneys followed such Department of Justice policies through pursuing prosecutions, then MedMen could face (i) seizure of its cash and other assets used to support or derived from its cannabis subsidiaries; and (ii) the arrest of its employees, directors, officers, managers and investors, who could face charges of ancillary criminal violations of the CSA for aiding and abetting and conspiring to violate the CSA by virtue of providing financial support to state-licensed or permitted cultivators, processors, distributors, and/or retailers of cannabis. Additionally, as has recently been affirmed by U.S. Customs and Border Protection, employees, directors, officers, managers and investors of MedMen who are not U.S. citizens face the risk of being barred from entry into the United States for life.

If the new Administration and Attorney General do not adopt a policy incorporating some or all of the policies articulated in the Cole Memo, then the Department of Justice or an aggressive federal prosecutor could allege that MedMen and the MedMen Board and, potentially its shareholders, “aided and abetted” violations of federal law by providing finances and services to its operating subsidiaries. Under these circumstances, it is possible that a federal prosecutor could seek to seize the assets of MedMen, and to recover the “illicit profits” previously distributed to shareholders resulting from any of the foregoing financing or services. In these circumstances, MedMen’s operations would cease, MedMen Shareholders may lose their entire investment and directors, officers and/or MedMen Shareholders may be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison.

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Violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture. This could have a material adverse effect on MedMen, including its reputation and ability to conduct business, its holding (directly or indirectly) of medical and adult-use cannabis licenses in the United States, the listing of its securities on the CSE or other applicable exchanges, its capital, financial position, operating results, profitability or liquidity or the market price of its listed securities.

Overall, an investor’s contribution to and involvement in MedMen’s activities may result in federal civil and/or criminal prosecution, including forfeiture of his, her or its entire investment.

The Company’s business is highly regulated and dependent in large part on the ability to obtain or renew government permits and licenses for its current and contemplated operations, of which there can be no assurance.

MedMen’s business is subject to a variety of laws, regulations and guidelines relating to the cultivation, manufacture, management, transportation, storage, sale and disposal of marijuana, including laws and regulations relating to health and safety, the conduct of operations and the protection of the environment. Achievement of MedMen’s business objectives are contingent, in part, upon compliance with applicable regulatory requirements and obtaining all requisite regulatory approvals. Changes to such laws, regulations and guidelines due to matters beyond the control of MedMen may cause material adverse effects to MedMen.

MedMen is required to obtain or renew government permits and licenses for its current and contemplated operations. Obtaining, amending or renewing the necessary governmental permits and licenses can be a time-consuming process potentially involving numerous regulatory agencies, involving public hearings and costly undertakings on MedMen’s part. The duration and success of MedMen’s efforts to obtain, amend and renew permits and licenses are contingent upon many variables not within its control, including the interpretation of applicable requirements implemented by the relevant permitting or licensing authority. MedMen may not be able to obtain, amend or renew permits or licenses that are necessary to its operations. In August 2020, the Company received a notice from the City of Pasadena that a determination was made that there had been a material change in ownership and/or management of MedMen such that the initial application was no longer valid, resulting in losing the right to proceed through the cannabis permitting process in Pasadena. In response, the Company filed a lawsuit challenging the city’s determination. Any unexpected delays or costs associated with the permitting and licensing process could impede the ongoing or proposed operations of MedMen. To the extent necessary permits or licenses are not obtained, amended or renewed, or are subsequently suspended or revoked, MedMen may be curtailed or prohibited from proceeding with its ongoing operations or planned development and commercialization activities. Such curtailment or prohibition may result in a material adverse effect on MedMen’s business, financial condition, results of operations or prospects.

While MedMen’s compliance controls have been developed to mitigate the risk of any material violations of any license or certificate it holds arising, there is no assurance that MedMen’s licenses or certificates will be renewed by each applicable regulatory authority in the future in a timely manner. Any unexpected delays or costs associated with the licensing renewal process for any of the licenses or certificates held by MedMen could impede the ongoing or planned operations of MedMen and have a material adverse effect on MedMen’s business, financial condition, results of operations or prospects.

MedMen may become involved in a number of government or agency proceedings, investigations and audits. The outcome of any regulatory or agency proceedings, investigations, audits, and other contingencies could harm MedMen’s reputation, require MedMen to take, or refrain from taking, actions that could harm its operations or require MedMen to pay substantial amounts of funds, harming its financial condition. There can be no assurance that any pending or future regulatory or agency proceedings, investigations and audits will not result in substantial costs or a diversion of management’s attention and resources or have a material adverse impact on MedMen’s business, financial condition, results of operations or prospects.

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Public Opinion and Perception

Government policy changes or public opinion may also result in a significant influence over the regulation of the cannabis industry in the United States, Canada or elsewhere. Public opinion and support for medical and adult-use marijuana has traditionally been inconsistent and varies from jurisdiction to jurisdiction. While public opinion and support appears to be rising for legalizing medical and adult-use marijuana, it remains a controversial issue subject to differing opinions surrounding the level of legalization (for example, medical marijuana as opposed to legalization in general). Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana with illness or other negative effects or events, could have a material adverse effect on MedMen’s business, results of operations or prospects. There is no assurance that such adverse publicity reports or other media attention will not arise. A negative shift in the public’s perception of cannabis, including vaping or other forms of cannabis administration, in the United States, Canada or any other applicable jurisdiction could affect future legislation or regulation. Among other things, such a shift could cause state jurisdictions to abandon initiatives or proposals to legalize medical and/or adult-use cannabis, thereby limiting the number of new state jurisdictions into which MedMen could expand and perception of negative health effects from the use of vaporizers to consume cannabis could result in state and local prohibitions on the sale of vaping products for an indefinite period of time. Any inability to fully implement MedMen’s expansion strategy may have a material adverse effect on MedMen’s business, results of operations or prospects. Among other things, such a shift could also cause states that have already legalized medical and/or adult-use cannabis to reevaluate the extent of, and introduce new restrictions on, the permitted activities and permitted cannabis products within their jurisdictions, which may have a material adverse effect on the Company’s business, results of operations or prospects. Recent medical alerts by the Centers for Disease Control and Prevention (the “CDC”) and state health agencies on vaping related illness and other issues directly related to cannabis consumption could potentially create an inability to fully implement the Company’s expansion strategy or could restrict the products which the Company sells at its existing operations, which may have a material adverse effect on the Company’s business, results of operations or prospects.

Adverse legal, regulatory or political changes could have a material adverse effect on the Company’s current and planned operations.

The success of the business strategy of MedMen depends on the legality of the cannabis industry. The political environment surrounding the cannabis industry in general can be volatile and the regulatory framework remains in flux. To MedMen’s knowledge, there are to date a total of 47 states, and the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam that have legalized cannabis in some form, including the states in which MedMen operates; however, the risk remains that a shift in the regulatory or political realm could occur and have a drastic impact on the industry as a whole, adversely impacting MedMen’s business, results of operations, financial condition or prospects.

Delays in enactment of new state or federal regulations could restrict the ability of MedMen to reach strategic growth targets and lower return on investor capital. The strategic growth strategy of MedMen is reliant upon certain federal and state regulations being enacted to facilitate the legalization of medical and adult-use cannabis. If such regulations are not enacted, or enacted but subsequently repealed or amended, or enacted with prolonged phase-in periods, the growth targets of MedMen, and thus, the effect on the return of investor capital, could be detrimental. MedMen is unable to predict with certainty when and how the outcome of these complex regulatory and legislative proceedings will affect its business and growth.

Further, there is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. If the federal government begins to enforce federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, MedMen’s business, results of operations, financial condition and prospects would be materially adversely affected. It is also important to note that local and city ordinances may strictly limit and/or restrict the sale of cannabis in a manner that will make it extremely difficult or impossible to transact business that is necessary for the continued operation of the cannabis industry. Federal actions against individuals or entities engaged in the cannabis industry or a repeal of applicable cannabis related legislation could adversely affect MedMen and its business, results of operations, financial condition and prospects.

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MedMen is aware that multiple states are considering special taxes or fees on businesses in the cannabis industry. It is a potential yet unknown risk at this time that other states are in the process of reviewing such additional fees and taxation. This could have a material adverse effect upon MedMen’s business, results of operations, financial condition or prospects.

The commercial medical and adult-use cannabis industry is in its infancy and MedMen anticipates that such regulations will be subject to change as the jurisdictions in which MedMen does business matures. MedMen has in place a detailed compliance program headed by its SVP of Legal who oversees, maintains, and implements the compliance program and personnel. In addition to MedMen’s robust legal and compliance departments, MedMen also has local regulatory/compliance counsel engaged in every jurisdiction (state and local) in which it operates. Such counsel regularly provides legal advice to MedMen regarding compliance with state and local laws and regulation and MedMen’s legal and compliance exposures under United States federal law. MedMen’s compliance program emphasizes security and inventory control to ensure strict monitoring of cannabis and inventory from delivery by a licensed distributor to sale or disposal. Additionally, MedMen has created comprehensive standard operating procedures that include detailed descriptions and instructions for receiving shipments of inventory, inventory tracking, recordkeeping and record retention practices related to inventory, as well as procedures for performing inventory reconciliation and ensuring the accuracy of inventory tracking and recordkeeping. MedMen will continue to monitor compliance on an ongoing basis in accordance with its compliance program, standard operating procedures, and any changes to regulation in the cannabis industry.

Overall, the medical and adult-use cannabis industry is subject to significant regulatory change at the local, state and federal levels. The inability of MedMen to respond to the changing regulatory landscape may cause it to not be successful in capturing significant market share and could otherwise harm its business, results of operations, financial condition or prospects.

Risk of Civil Asset Forfeiture

Because the cannabis industry remains illegal under U.S. federal law, any property owned by participants in the cannabis industry which are either used in the course of conducting such business, or are the proceeds of such business, could be subject to seizure by law enforcement and subsequent civil asset forfeiture. Even if the owner of the property were never charged with a crime, the property in question could still be seized and subject to an administrative proceeding by which, with minimal due process, it could be subject to forfeiture.

In the event that any of MedMen’s operations in the United States were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime.

MedMen is subject to a variety of laws and regulations domestically and in the United States that involve money laundering, financial recordkeeping and proceeds of crime, including the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Sections 1956 and 1957 of U.S.C. Title 18 (the Money Laundering Control Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Banks often refuse to provide banking services to businesses involved in the cannabis industry due to the present state of the laws and regulations governing financial institutions in the United States. The lack of banking and financial services presents unique and significant challenges to businesses in the marijuana industry. The potential lack of a secure place in which to deposit and store cash, the inability to pay creditors through the issuance of checks and the inability to secure traditional forms of operational financing, such as lines of credit, are some of the many challenges presented by the unavailability of traditional banking and financial services.

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In February 2014, FinCEN issued a memo (the “FinCEN Memo”) providing instructions to banks seeking to provide services to cannabis-related businesses. The FinCEN Memo states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws. It refers to supplementary guidance that former Deputy Attorney General James M. Cole issued to federal prosecutors relating to the prosecution of money laundering offenses predicated on cannabis-related violations of the CSA. While the FinCEN Memo has not been rescinded by the Department of Justice at this time, it remains unclear whether the current administration will follow its guidelines. Overall, the Department of Justice continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state, including in states that have legalized the applicable conduct and the Department of Justice’s current enforcement priorities could change for any number of reasons, including a change in the opinions of the President of the United States or the United States Attorney General. A change in the Department of Justice’s enforcement priorities could result in the Department of Justice prosecuting banks and financial institutions for crimes that previously were not prosecuted.

In the event that any of MedMen’s operations, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such operations in the United States were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could restrict or otherwise jeopardize the ability of MedMen to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada. Furthermore, while there are no current intentions to declare or pay dividends on the Subordinate Voting Shares in the foreseeable future, in the event that a determination was made that MedMen’s proceeds from operations (or any future operations or investments in the United States) could reasonably be shown to constitute proceeds of crime, MedMen may decide or be required to suspend declaring or paying dividends without advance notice and for an indefinite period of time.

There remains doubt and uncertainty that MedMen will be able to legally enforce contracts it enters into.

It is a fundamental principle of law that a contract will not be enforced if it involves a violation of law or public policy. Because cannabis remains illegal at a federal level, judges in multiple U.S. states have on a number of occasions refused to enforce contracts, including for the repayment of money when the loan was used in connection with activities that violate federal law, even if there is no violation of state law. There remains doubt and uncertainty that MedMen will be able to legally enforce contracts it enters into if necessary. MedMen cannot be assured that it will have a remedy for breach of contract, which could have a material adverse effect on MedMen’s business, revenues, operating results, financial condition and prospects.

Failure to comply with applicable environmental laws, regulations and permitting requirements may result in enforcement actions thereunder.

MedMen’s operations are subject to environmental regulation in the various jurisdictions in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors (or the equivalent thereof) and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect MedMen’s operations.

Government approvals and permits are currently, and may in the future, be required in connection with MedMen’s operations. To the extent such approvals are required and not obtained, MedMen may be curtailed or prohibited from its current or proposed production, manufacturing or sale of marijuana or marijuana products or from proceeding with the development of its operations as currently proposed.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. MedMen may be required to compensate those suffering loss or damage by reason of its operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

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Amendments to current laws, regulations and permits governing the production, manufacturing or sale of marijuana or marijuana products, or more stringent implementation thereof, could have a material adverse impact on MedMen and cause increases in expenses, capital expenditures or production or manufacturing costs or reduction in levels of production, manufacturing or sale or require abandonment or delays in development.

Since Section 280E of the Code, as amended, prohibits businesses from deducting certain expenses associated with trafficking controlled substances, the Company will be precluded from claiming certain deductions otherwise available to non-marijuana businesses and, as a result, an otherwise profitable business may in fact operate at a loss after taking into account its income tax expenses.

Section 280E of the Code, as amended, prohibits businesses from deducting certain expenses associated with trafficking controlled substances (within the meaning of Schedule I and II of the CSA). The IRS has invoked Section 280E in tax audits against various cannabis businesses in the U.S. that are licensed under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly, and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E favorable to cannabis businesses.

Overall, under Section 280E of the Code, normal business expenses incurred in the business of selling marijuana and its derivatives are not deductible in calculating income tax liability. Therefore, the Company will be precluded from claiming certain deductions otherwise available to non-marijuana businesses and, as a result, an otherwise profitable business may in fact operate at a loss after taking into account its income tax expenses. There is no certainty that the impact that Section 280E has on the Company’s margins will ever be reduced.

If MedMen were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to MedMen’s United States operations, which would materially adversely affect prospects of MedMen and on the rights of lenders to and securityholders of MedMen.

Because the use of cannabis is illegal under federal law, many courts have denied cannabis businesses bankruptcy protections, thus making it very difficult for lenders to recoup their investments in the cannabis industry in the event of a bankruptcy. If MedMen were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to MedMen’s United States operations, which could have a material adverse effect on the business, capital, financial condition and prospects of MedMen and on the rights of lenders to and securityholders of MedMen.

The audited financial statements of MedMen have been prepared on a going concern basis.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The audited financial statements of MedMen for the fiscal year ended June 27, 2020 have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. MedMen’s primary sources of capital resources are anticipated to be comprised of cash and cash equivalents and the issuance of equity and debt securities. MedMen will continuously monitor its capital structure and, based on changes in operations and economic conditions, may adjust the structure by issuing new shares or new debt as necessary. MedMen’s ability to continue as a going concern in the near-term is expected to be dependent on obtaining additional financing to settle its liabilities. In the long-term, MedMen’s ability to continue as a going concern is expected to be dependent on achieving and maintaining profitable operations. While MedMen has been successful in securing both equity and debt financing from the public and private capital markets to date as applicable in Canada, the United States and internationally, there are no guarantees that MedMen will be able to secure any such public or private equity or debt financing in the future on terms acceptable to MedMen, if at all, or be able to achieve profitability. This could in turn have a material adverse effect on MedMen’s business, financial condition, results of operations, cash flows or prospects.

As a high growth enterprise, MedMen does not have a history of profitability. As such, MedMen has no immediate prospect of generating profit from its intended operations. MedMen is therefore subject to many of the risks common to high growth enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources and lack of earnings. In addition, the Company is currently incurring expenditures related to its operating activities that have generated negative operating cash flows. There is no assurance that the Company will generate sufficient revenues in the near future, and it may continue to incur negative operating cash flows for the foreseeable future. There is no assurance that MedMen will be successful in achieving a return on shareholders’ investment.

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MedMen will require additional financing to achieve its business objectives.

The continued development of the Company will require additional financing. There is no guarantee that the Company will be able to achieve its business objectives. The Company intends to fund its business objectives by way of additional offerings of equity and/or debt financing. The failure to raise or procure such additional funds could result in the delay or indefinite postponement of current business objectives. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, will be on terms acceptable to the Company. If additional funds are raised by offering equity securities or convertible debt, existing MedMen Shareholders could suffer significant dilution. Any debt financing secured in the future could involve the granting of security against assets of the Company and also contain restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. The Company has completed the sale and leaseback of certain properties and is contemplating completing the same in respect of additional properties. The reduction in the Company’s real estate assets could cause securing any additional debt financing to be more difficult or on less favorable terms to the Company, such as on higher interest rates, than as otherwise may have been expected. The Company will require additional financing to fund its operations until positive cash flow is achieved. Although the Company believes that it will be able to obtain the necessary funding as in the past, there can be no assurance of the success of these plans.

MedMen’s operations and financial condition could be adversely impacted by a material downturn in global financial conditions.

Following the onset of the credit crisis in 2008, global financial conditions were characterized by extreme volatility and several major financial institutions either went into bankruptcy or were rescued by governmental authorities. While global financial conditions subsequently stabilized, there remains considerable risk in the system given the extraordinary measures adopted by government authorities to achieve that stability. Global financial conditions could suddenly and rapidly destabilize in response to future economic shocks, as government authorities may have limited resources to respond to future crises.

Future economic shocks may be precipitated by a number of causes, including a rise in the price of oil, geopolitical instability and natural disasters. Any sudden or rapid destabilization of global economic conditions could impact MedMen’s ability to obtain equity or debt financing in the future on terms favorable to MedMen. Additionally, any such occurrence could cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. Further, in such an event, MedMen’s operations and financial condition could be adversely impacted.

Furthermore, general market, political and economic conditions, including, for example, inflation, interest and currency exchange rates, structural changes in the cannabis industry, supply and demand for commodities, political developments, legislative or regulatory changes, social or labor unrest and stock market trends will affect MedMen’s operating environment and its operating costs and profit margins and the price of its securities. Any negative events in the global economy could have a material adverse effect on MedMen’s business, financial condition, results of operations or prospects.

The global COVID-19 pandemic has and will continue to have an adverse effect on our results of operations.

The novel strain of coronavirus, COVID-19, is believed to have been first identified in China in late 2019 and has spread globally. The rapid spread has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders and shutdowns. These measures may continue to impact all or portions of our workforce, operations, investors, suppliers and customers. We have taken steps to manage the effect of the pandemic on our corporate business and on the assets we manage, which has included: (i) suspending any unnecessary capital improvements; (ii) furloughing any non-essential employees; and (iii) having constant communications with lenders to receive additional facilities and suspend compliance with certain financial covenants.

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Despite being deemed as an essential retailer in its core markets, the Company has experienced a negative impact on sales in certain markets as a result of shelter-at- home orders, social distancing efforts, restrictions on the maximum allowable number of people within a retail establishment and declining tourism. For the fiscal fourth quarter of 2020, system-wide retail revenue was $27.4 million across the Company’s operations in California, Nevada, New York, Illinois and Florida, representing a 40% decrease, or $18.0 million, over the fiscal third quarter of 2020 of $45.4 million. The decrease in system-wide revenue was driven primarily by decreased sales as a result of COVID-19. In particular, certain retail locations in California and Nevada experienced a slowdown in sales during the fiscal fourth quarter of 2020 due to shelter-at-home orders, reduced store hours and reduced tourism. During the three months ended June 27, 2020, the Company temporarily closed all three of its locations in Nevada for eight weeks due to a state-level mandate post-COVID-19. All three locations were open as of June 27, 2020. Furthermore, during the year ended June 27, 2020, the Company recognized impairments of long-lived assets and other assets totaling $239.5 million due to changes in anticipated revenue projections as a result of recent economic and market conditions related to the COVID-19 pandemic and current regulatory environment. On March 27, 2020, the CARES Act was signed into law. Other markets, such as Illinois, Florida and New York, have not been as significantly impacted by COVID-19 and in some cases, stores in those markets have generated increased sales. Due to its strong vendor partnerships in each market, the Company has not experienced a significant impact to its supply chain in each market.

The CARES Act provides a substantial stimulus and assistance package intended to address the impact of COVID-19, including tax relief and government loans, grants and investments. The Company did not utilize any relief provided by the CARES Act and, as a cannabis retailer, the Company is not eligible to obtain a loan under the Paycheck Protection Program under the CARES Act. The Paycheck Protection Program is governed by the rules of the Small Business Administration, which considers as ineligible for loans business concerns that are engaged in any illegal activity; the cultivation, distribution, sale and possession of cannabis violates federal law in the United States. Accordingly, the CARES Act did not have a material impact on the Company’s consolidated financial statements during the year ended June 27, 2020.

While the Company continues to execute on its efforts to improve store profitability, reduce selling, general and administrative expense and delay capital-intensive projects, the Company is reassessing the timing of these cash flow milestones due to the potential impact of COVID-19 on its turnaround plan. To date, the Company has

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document implemented certain safety measures to ensure the safety of its customers and associates, which may have the effect of discouraging shopping or limiting the occupancy of our stores. Store operations in California and Nevada have been modified, with an increased focus on direct-to-consumer delivery and enabling a curbside pickup option for its customers. The Company leveraged its technology team to build the enhanced omni-channel functionality in, and expects to continue offering, a variety of purchasing options for its customers. These measures, and any additional measures that have been and may continue to be taken in response to the COVID-19 pandemic, have substantially decreased, and may continue to decrease, the number of customers that visit our stores which has had, and will likely continue to have, a material adverse effect on our business, financial condition and results of operations.

In recent weeks, the COVID-19 pandemic has also significantly increased economic uncertainty and has led to disruption and volatility in the global capital markets, which could increase the cost of and accessibility to capital. Given that the COVID-19 pandemic has caused a significant economic slowdown, it appears increasingly likely that it could cause a global recession, which could be of an unknown duration. A global recession would have a significant impact on our ongoing operations and cash flows. There has been a recent spike in the number of reported COVID-19 cases in many states where a substantial portion of the Company’s business and operations are located. The Company is unable to currently quantify the economic effect, if any, of this increase on the Company’s results of operations.

The ultimate magnitude of COVID-19, including the extent of its overall impact on our financial and operational results cannot be reasonably estimated at this time; however, the Company has experienced significant declines in sales. The overall impact will depend on the length of time that the pandemic continues, the extent to which it affects our ability to raise capital, and the effect of governmental regulations imposed in response to the pandemic, as well as uncertainty regarding all of the foregoing.

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The Company’s existing credit facilities impose significant restrictive provisions on MedMen’s current and planned operations.

MedMen and MedMen Corp. have significant outstanding indebtedness further to which the assets of the Company and its subsidiaries as well as the ownership interests of certain subsidiaries of the Company, have been pledged as security for the obligations thereunder. In addition, the terms and conditions of the Company’s credit facilities contain restrictive covenants that limit the Company’s ability to engage in activities that may be in the Company’s long-term best interest. In addition, the terms and conditions thereof contain financial, operational and reporting covenants, and compliance with the covenants by the Company may increase the Company’s legal and financial costs, make certain activities, such as the payment of dividends or other distributions, more difficult or restricted, time-consuming or costly and increase demand on the Company’s systems and resources. The Company’s failure to comply with any such covenants, which may be affected by events beyond the Company’s control, could result in an event of default which, if not cured or waived, could result in the acceleration of repayment of the Company’s debt or realization on the security granted or trigger cross-default or cross-acceleration provisions in any other agreements, including as between agreements pertaining to the Company’s existing credit facilities, any of which would have a material adverse effect on the Company’s business, capital, financial condition, results of operations, cash flows and prospects.

The Company has substantial indebtedness and may not be able to refinance, extend or repay this indebtedness on a timely basis or at all.

The Company has a substantial amount of existing indebtedness. If the Company is unable to raise sufficient capital to repay these obligations at maturity and is otherwise unable to extend the maturity dates or refinance these obligations, the Company would be in default. The Company cannot provide any assurances that it will be able to raise the necessary amount of capital to repay these obligations, that any obligations that are convertible will be converted into equity or that it will be able to extend the maturity dates or otherwise refinance these obligations. Upon a default, the lenders under such debt would have the right to exercise their rights and remedies to collect, which would include the ability to foreclose on the Company’s assets. Accordingly, a default by the Company would have a material adverse effect on the Company’s business, capital, financial condition and prospects, and the Company would likely be forced to seek bankruptcy protection.

MedMen is a holding company and essentially all of its assets are the capital stock of its material subsidiaries.

MedMen is a holding company and essentially all of its assets are the capital stock of its material subsidiaries. As a result, investors in MedMen are subject to the risks attributable to its subsidiaries. Consequently, MedMen’s cash flows and ability to complete current or desirable future opportunities are dependent on the earnings of its subsidiaries. The ability of these entities to pay dividends and other distributions will depend on their operating results and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained by such entities and contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation or reorganization of any of MedMen’s material subsidiaries, holders of indebtedness and trade creditors may be entitled to payment of their claims from the assets of those subsidiaries before MedMen.

Adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana with illness or other negative effects or events, could have such a material adverse effect on the Company’s results of operations.

MedMen believes the adult-use and medical marijuana industries are highly dependent upon consumer perception regarding the safety, efficacy and quality of the marijuana produced. Consumer perception can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of marijuana products. There can be no assurance that future scientific research or findings, regulatory investigations, litigation, media attention or other publicity will be favorable to the marijuana market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory investigations, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or other publicity could have a material adverse effect on the demand for adult- use or medical marijuana and on the business, results of operations, financial condition, cash flows or prospects of MedMen. Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana with illness or other negative effects or events, could have such a material adverse effect. There is no assurance that such adverse publicity reports, findings or other media attention will not arise.

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MedMen may be subject to various product liability claims, including, among others, that the marijuana product caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances.

As a manufacturer and distributor of products designed to be ingested by humans, MedMen faces an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury. In addition, the manufacture and sale of marijuana involve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of marijuana alone or in combination with other medications or substances could occur. As a manufacturer, distributor and retailer of adult-use and medical marijuana, or in its role as an investor in or service provider to an entity that is a manufacturer, distributor and/or retailer of adult-use or medical marijuana, MedMen may be subject to various product liability claims, including, among others, that the marijuana product caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against MedMen could result in increased costs, could adversely affect MedMen’s reputation with its clients and consumers generally, and could have a material adverse effect on the business, results of operations, financial condition or prospects of MedMen. There can be no assurances that MedMen will be able to maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to maintain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of MedMen’s potential products or otherwise have a material adverse effect on the business, results of operations, financial condition or prospects of MedMen.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If one of MedMen’s brands were subject to product recalls, the image of that brand and MedMen could be harmed.

Cultivators, manufacturers, distributors and retailers of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. Such recalls cause unexpected expenses of the recall and any legal proceedings that might arise in connection with the recall. This can cause loss of a significant amount of sales. In addition, a product recall may require significant management attention. There can be no assurance that any of the products that MedMen sells will not be the subject of a product recall, regulatory action or lawsuit. Although MedMen has detailed procedures in place for testing its products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if one of MedMen’s brands were subject to recall, the image of that brand and MedMen could be harmed. Additionally, product recalls can lead to increased scrutiny of operations by applicable regulatory agencies, requiring further management attention and potential legal fees and other expenses.

MedMen is subject to those risks inherent in an agricultural business.

Adult-use and medical marijuana are agricultural products. There are risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although the products are usually grown indoors under climate-controlled conditions, with conditions monitored, there can be no assurance that natural elements will not have a material adverse effect on the production of MedMen’s products.

Adult-use and medical marijuana growing operations consume considerable energy, making MedMen potentially vulnerable to rising energy costs. Rising or volatile energy costs may adversely impact the business, results of operations, financial condition or prospects of MedMen.

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Dependence on Suppliers and Skilled Labor.

The ability of MedMen to compete and grow will be dependent on it having access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts and components. No assurances can be given that MedMen will be successful in maintaining its required supply of skilled labor, equipment, parts and components. It is also possible that the final costs of the major equipment contemplated by MedMen’s capital expenditure plans may be significantly greater than anticipated by MedMen’s management, and may be greater than funds available to MedMen, in which circumstance MedMen may curtail, or extend the timeframes for completing, its capital expenditure plans. This could have an adverse effect on the business, financial condition, results of operations or prospects of MedMen.

The Company has been and may in the future be subject to investigations, civil claims, lawsuits and other proceedings.

The Company may be subject to investigations (regulatory or otherwise), civil claims, lawsuits and other proceedings in the ordinary course of its business, across the various aspects of the Company’s business, including securities, employment, regulatory, intellectual property, commercial, real estate and other matters. In this regard, in late January 2019, Mr. Parker, the Company’s former Chief Financial Officer, filed a complaint against the LLC in the Superior Court of California, County of Los Angeles, seeking damages for claims relating to his employment. The Company is currently defending against this lawsuit, which seeks damages for wrongful termination, breach of contract, and breach of implied covenant of good faith and fair dealing. Mr. Parker’s employment agreement provided for the payment of severance in the event of termination without cause. The Company disputes the claims set forth in Mr. Parker’s lawsuit. See the Statement of Executive Compensation of the Company available under the Company’s profile on SEDAR at www.sedar.com for a summary of certain terms of Mr. Parker’s employment agreement. The results of any legal proceedings to the which the Company is or may become subject cannot be predicted with certainty due to the uncertainty inherent in regulatory actions and litigation, the difficulty of predicting decisions of regulators, judges and juries and the possibility that decisions may be reversed on appeal. Defense and settlement costs of legal disputes can be substantial, even with claims that have no merit. There can be no assurance that any pending or future litigation, regulatory, agency or civil proceedings, investigations and audits will not result in substantial costs or a diversion of management’s attention and resources. The cannabis industry is a new industry and the Company is a fast growing and relatively new enterprise. It is therefore more difficult to predict the types of claims, proceedings and allegations and the quantum of costs related to such claims and proceedings and the direct and indirect effects of such allegations that the Company may face or experience. Management is committed to conducting business in an ethical and responsible manner, which it believes will reduce the risk of legal disputes and allegations. However, if the Company is subject to legal disputes or negative allegations, there can be no assurances that these matters will not have a material adverse effect on the Company’s business, financial condition, capital, results of operations, cash flows or prospects. Should any litigation, proceeding or audit in which the Company becomes involved be determined against the Company, such a decision could adversely affect the Company’s business, financial condition, capital, results of operations, cash flows or prospects and the market price for the Subordinate Voting Shares and other listed securities of the Company. Any such litigation, proceeding or audit may also create a negative perception of the Company’s brand.

MedMen faces intense competition from other companies.

MedMen faces intense competition from other companies, some of which have longer operating histories and more financial resources and experience than MedMen. MedMen also expects to face additional competition from new entrants. To become and remain competitive, MedMen will require research and development, marketing, sales and support. MedMen may not have sufficient resources to maintain research and development, marketing, sales and support efforts on a competitive basis which could materially and adversely affect the business, financial condition, results of operations or prospects of MedMen. Increased competition could materially and adversely affect the business, financial condition, results of operations or prospects of MedMen.

In addition, the pharmaceutical industry may attempt to dominate the marijuana industry through the development and distribution of synthetic products which emulate the effects and treatment of organic marijuana. If they are successful, the widespread popularity of such synthetic products could change the demand, volume and profitability of the marijuana industry. This could adversely affect the ability of MedMen to secure long-term profitability and success through the sustainable and profitable operation of its business. There may be unknown additional regulatory fees and taxes that may be assessed in the future.

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Intellectual property risks.

MedMen has certain proprietary intellectual property, including but not limited to brands, trademarks, trade names, patents and proprietary processes. MedMen relies on this intellectual property, know-how and other proprietary information, and require employees, consultants and suppliers to sign confidentiality agreements. However, these confidentiality agreements may be breached, and MedMen may not have adequate remedies for such breaches. Third parties may independently develop substantially equivalent proprietary information without infringing upon any proprietary technology. Third parties may otherwise gain access to MedMen’s proprietary information and adopt it in a competitive manner. Any loss of intellectual property protection may have a material adverse effect on MedMen’s business, results of operations or prospects.

As long as cannabis remains illegal under U.S. federal law as a Schedule I controlled substance pursuant to the CSA, the benefit of certain federal laws and protections which may be available to most businesses, such as federal trademark and patent protection regarding the intellectual property of a business, may not be available to MedMen. As a result, MedMen’s intellectual property may never be adequately or sufficiently protected against the use or misappropriation by third parties. In addition, since the regulatory framework of the cannabis industry is in a constant state of flux, MedMen can provide no assurance that it will ever obtain any protection of its intellectual property, whether on a federal, provincial, state or local level. While many states do offer the ability to protect trademarks independent of the federal

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document government, patent protection is wholly unavailable on a state level, and state-registered trademarks provide a lower degree of protection than would federally-registered marks.

MedMen is substantially reliant on the continued services of its management.

The success of MedMen is dependent upon the ability, expertise, judgment, discretion and good faith of its senior management. While employment agreements or management agreements are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. Any loss of the services of such individuals could have a material adverse effect on MedMen’s business, operating results, financial condition or prospects.

MedMen is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity.

MedMen is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent unauthorized conduct that violates: (i) government regulations; (ii) manufacturing standards; (iii) federal and provincial healthcare fraud and abuse laws and regulations; (iv) laws that require the true, complete and accurate reporting of financial information or data; or (v) contractual arrangements, including confidentiality requirements. It may not always be possible for MedMen to identify and deter misconduct by its employees and other third parties, and the precautions taken by MedMen to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting MedMen from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with applicable laws or regulations or contractual requirements. If any such actions are instituted against MedMen, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on MedMen’s business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of MedMen’s operations, any of which could have a material adverse effect on MedMen’s business, financial condition, results of operations or prospects.

The failure of MedMen’s information systems or the effect of any cyber-attacks may adversely impact MedMen’s reputation and results of operations.

MedMen’s operations depend, in part, on how well it and its suppliers protect networks, equipment, information technology (“IT”) systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. MedMen’s operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact MedMen’s reputation and results of operations.

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MedMen has not experienced any material losses to date relating to cyber-attacks or other information security breaches, but there can be no assurance that MedMen will not incur such losses in the future. MedMen’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, MedMen may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

In addition, MedMen collects and stores personal information about its customers and is responsible for protecting that information from privacy breaches. A privacy breach may occur through procedural or process failure, information technology malfunction, or deliberate unauthorized intrusions. Theft of data for competitive purposes, particularly customer lists and preferences, is an ongoing risk whether perpetrated via employee collusion or negligence or through deliberate cyber-attack. Any such theft or privacy breach would have a material adverse effect on MedMen’s business, financial condition, results of operations and prospects.

Risk associated with acquisitions.

As part of MedMen’s overall business strategy, MedMen has in the past and intends to continue to pursue select strategic acquisitions. The Company currently does not have any pending acquisitions. The success of any such acquisitions depends, in part, on the ability of MedMen to realize the anticipated benefits and synergies from integrating the applicable acquired entities or assets into the businesses of MedMen’s past and future acquisitions may expose it to potential risks, including risks associated with: (i) the integration of new operations, services and personnel; (ii) unknown or undisclosed liabilities; (iii) the diversion of resources from MedMen’s existing businesses; (iv) potential inability to generate sufficient revenue to offset new costs; (v) the expenses of acquisitions; and (vi) the potential loss of or harm to relationships with both employees and consultants and existing customers, vendors, suppliers, contractors and other applicable parties resulting from its integration of new businesses. In addition, any proposed acquisitions may be subject to regulatory approval.

While MedMen intends to conduct reasonable due diligence in connection with such strategic acquisitions, there are risks inherent in any acquisition. Specifically, there could be unknown or undisclosed risks or liabilities of such entities or assets for which MedMen is not sufficiently indemnified. Any such unknown or undisclosed risks or liabilities could materially and adversely affect MedMen’s financial performance and results of operations. MedMen could encounter additional transaction and integration related costs or other factors such as the failure to realize all of the benefits from the acquisition. All of these factors could cause dilution to MedMen’s revenue per share or decrease or delay the anticipated accretive effect of the acquisition and cause a decrease in the market price of the Subordinate Voting Shares and other listed securities of MedMen.

MedMen may not be able to successfully integrate and combine the operations, personnel and technology infrastructure of any such strategic acquisition with its existing operations. If integration is not managed successfully by MedMen’s management, MedMen may experience interruptions in its business activities, deterioration in its employee, customer or other relationships, increased costs of integration and harm to its reputation, all of which could have a material adverse effect on MedMen’s business, prospects, financial condition, results of operations and cash flows.

MedMen may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls.

The ability of MedMen to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of MedMen to deal with this growth may have a material adverse effect on MedMen’s business, financial condition, results of operations or prospects.

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Effective internal controls, including financial reporting and disclosure controls and procedures, are necessary for MedMen to provide reliable financial reports, to effectively reduce the risk of fraud and to operate successfully as a public company. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm MedMen’s results of operations or cause it to fail to meet its reporting obligations. If MedMen or its auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in MedMen’s consolidated financial statements and materially adversely affect the trading price of the Subordinate Voting Shares and of other listed securities of MedMen.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Situations may arise in connection with potential acquisitions or opportunities where the other interests of interested directors and officers conflict with or diverge from the Company’s interests.

Certain of the Company’s directors and officers are, and may continue to be, or may become, involved in other business ventures through their direct and indirect participation in, among other things, corporations, partnerships and joint ventures, that are or may become competitors of the products and services the Company provides or intends to provide. Situations may arise in connection with potential acquisitions or opportunities where the other interests of these directors and officers conflict with or diverge from the Company’s interests. In accordance with applicable corporate law, directors who have a material interest in a contract or transaction or a proposed contract or transaction with the Company that is material to the Company are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the transaction. In addition, the directors and officers are required to act honestly and in good faith with a view to the Company’s best interests. However, in conflict of interest situations, the Company’s directors and officers may owe the same duty to another company and will need to balance their competing interests with their duties to the Company. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavorable to the Company.

Certain remedies may be limited.

MedMen’s governing documents may provide that the liability of MedMen Board and its officers is eliminated to the fullest extent permitted under the laws of the Province of British Columbia. Thus, MedMen and the MedMen Shareholders may be prevented from recovering damages for alleged errors or omissions made by the members of MedMen Board and its officers. MedMen’s governing documents may also provide that MedMen will, to the fullest extent permitted by law, indemnify members of the MedMen Board and its officers for certain liabilities incurred by them by virtue of their acts on behalf of MedMen.

The directors and officers of MedMen reside outside of Canada. Some or all of the assets of such persons may be located outside of Canada. Therefore, it may not be possible for investors to collect or to enforce judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable Canadian securities laws against such persons. Moreover, it may not be possible for investors to effect service of process within Canada upon such persons.

United States Tax Classification of the Company

The Company, which is and will continue to be a Canadian corporation as of the date of this prospectus, would be classified as a non-United States corporation under general rules of United States federal income taxation. Section 7874 of the Code, however, contains rules that can cause a non-United States corporation to be treated as a United States corporation for United States federal income tax purposes.

The Company intends to be treated as a United States corporation for United States federal income tax purposes under section 7874 of the Code and is expected to be subject to United States federal income tax on its worldwide income. However, for Canadian tax purposes, the Company will be treated as a Canadian corporation (as defined in the Tax Act) for Canadian income tax purposes regardless of any application of section 7874 of the Code. As a result, the Company can be subject to taxation both in Canada and the United States which could have a material adverse effect on its financial condition and results of operations.

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We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate any material weaknesses or if we fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

During the year ended June 27, 2020, the Company’s independent auditors identified a material weakness in the Company’s internal control over financial reporting relating to its assessment of goodwill and long-lived asset for impairment. In connection with the SEC’s review of this Form 10, we determined that we had a material weakness in our internal control over financial reporting relating to the appropriate review of the presentation and disclosure of non-routine transactions, including impairments of goodwill and long-lived assets, changes in the fair value of contingent consideration and restructuring expenses. To address these material weaknesses, we have instituted a number of accounting processes and procedures, which includes i) formal, documented process to identify, assess and calculate impairment on goodwill and long-lived assets, and ii) the preparation of presentation and disclosure requirement checklists to be reviewed by management for all new transactions and accounting standards.

To remediate the material weakness related to the assessment of goodwill and long-lived asset for impairment, the Company has implemented the new control procedures for the fiscal year beginning June 28, 2020, however, this internal control weakness will not be considered fully remediated until the new control procedures operate for a sufficient period of time and management has concluded that these controls are operating effectively. To remediate the material weakness related to the financial statement presentation of non-routine transactions, the Company has implemented additional controls around the review of financial statement presentation and disclosure for such transactions, including the preparation and review of a quarterly disclosure checklist. The Company is actively engaged in the implementation of its remediation efforts to address this internal control weakness. Accordingly, the material weakness will not be considered fully remediated until the new control procedures are implemented for a sufficient period of time and management has concluded that these controls are operating effectively. The actions we have taken are subject to continued review, supported by confirmation and testing by management. While we have implemented a plan to remediate the material weaknesses, we cannot assure you that we will be able to remediate this weakness, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows.

Our failure to remediate the material weaknesses identified above or the identification of additional material weaknesses in the future, could adversely affect our ability to report financial information, including our filing of quarterly or annual reports with the SEC on a timely and accurate basis. Moreover, our failure to remediate the material weaknesses identified above or the identification of additional material weaknesses could prohibit us from producing timely and accurate financial statements, which may adversely affect the market price of our shares and we may be unable to maintain compliance with exchange listing requirements.

RISKS ASSOCIATED WITH THE SECURITIES OF THE COMPANY

Voting control by Gotham Green Partners, LLC and other shareholders may limit your ability to influence the outcome of director elections and other matters requiring shareholder approval.

As of December 31, 2020, Gotham Green Partners, LLC (“GGP”) beneficially owns approximately 21.1% of the Company's Subordinate Voting Shares. Furthermore, pursuant to the GGP Facility, GGP has the right to nominate a majority of the Company’s Board of Directors while the aggregate principal amount outstanding under the Notes is more than $25.0 million, and, while the Notes are outstanding, the lenders will be entitled to the collective rights to appoint a representative to attend all meetings of the Board of Directors in a non-voting observer capacity. Plus, the Company may not hire or terminate any “C-level” employee without GGP’s prior written consent. This concentration of control may adversely affect the trading price for the Subordinate Voting Shares because investors often perceive disadvantages in owning stock in companies with controlling stockholders. Also, some or all of our significant stockholders, if they were to act together, would be able to control our management and affairs and matters requiring shareholder approval, including the election of directors and the approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. In addition, GGP’s interests may not align with our interests as a company or the interests of our other shareholders. Accordingly, GGP could cause us to enter into transactions or agreements of which our shareholders would not approve or make decisions with which our shareholders would disagree. This concentration of ownership may have the effect of delaying or preventing a change of control, including a merger, consolidation or other business combination

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change of control would benefit our other shareholders and may prevent our shareholders from realizing a premium over the current market price for their shares of common stock. Furthermore, our significant shareholders may also have interests that differ from yours and may vote their Subordinate Voting Shares in a way with which you disagree and which may be adverse to your interests.

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Unpredictability caused by MedMen’s capital structure.

Given the other unique features of the capital structure of MedMen, including the existence of a significant amount of redeemable equity securities that have been issued by, and are issuable pursuant to the exercise, conversion or exchange of the applicable convertible securities of, certain subsidiaries of MedMen, such subsidiaries being MedMen Corp. and the LLC, which equity securities are redeemable from time to time for Subordinate Voting Shares or cash, in accordance with their terms, MedMen is not able to predict whether this structure and control will result in a lower trading price for or greater fluctuations in the trading price of the Subordinate Voting Shares or will result in adverse publicity to MedMen or other adverse consequences.

Additional issuance of securities may result in dilution.

MedMen may issue additional securities in the future, which may dilute a MedMen shareholder’s holdings in MedMen. MedMen’s articles permit the issuance of an unlimited number of Subordinate Voting Shares, and MedMen shareholders will have no pre-emptive rights in connection with such further issuance. The MedMen Board has discretion to determine the price and the terms of further issuances. Moreover, additional Subordinate Voting Shares will be issued by MedMen on the exercise, conversion or redemption of certain outstanding securities of MedMen, MedMen Corp. and the LLC in accordance with their terms. While the Company currently does not have any pending acquisitions, it may also issue Subordinate Voting Shares to finance future acquisitions. MedMen cannot predict the size of future issuances of Subordinate Voting Shares or the effect that future issuances and sales of Subordinate Voting Shares will have on the market price of the Subordinate Voting Shares. Issuances of a substantial number of additional Subordinate Voting Shares, or the perception that such issuances could occur, may adversely affect prevailing market prices for the Subordinate Voting Shares. With any additional issuance of Subordinate Voting Shares, investors will suffer dilution to their voting power and MedMen may experience dilution in its revenue per share.

Additionally, the subsidiaries of MedMen, such as MedMen Corp. and the LLC, may issue additional securities that may be redeemed into Subordinate Voting Shares of MedMen, including MedMen Corp Redeemable Shares, LLC Redeemable Units and LTIP Units to new or existing shareholders, members or securityholders, including in exchange for services performed or to be performed on behalf of such entities or to finance future acquisitions. Any such issuances could result in substantial dilution to the indirect equity interest of the holders of Subordinate Voting Shares in the Company.

The market price of the Company’s Subordinate Voting Shares is volatile and subject to wide fluctuations.

The market price of the Subordinate Voting Shares has been and may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond MedMen’s control. This volatility may affect the ability of holders of Subordinate Voting Shares or such other securities to sell their securities at an advantageous price. Market price fluctuations in the Subordinate Voting Shares or such other securities may be due to MedMen’s operating results failing to meet expectations of securities analysts or investors in any period, downward revision in securities analysts’ estimates, adverse changes in general market conditions or competitive, regulatory or economic trends, adverse changes in the economic performance or market valuations of companies in the industry in which MedMen operates, acquisitions, dispositions, strategic partnerships, joint ventures, capital commitments or other material public announcements by MedMen or its competitors or government and regulatory authorities, operating and share price performance of the companies that investors deem comparable to MedMen, addition or departure of MedMen’s executive officers, directors and other key personnel, along with a variety of additional factors. These broad market fluctuations may adversely affect the market price of the Subordinate Voting Shares or such other securities.

Financial markets have at times historically experienced significant price and volume fluctuations that have particularly affected the market prices of equity and convertible securities of companies and that have often been unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the Subordinate Voting Shares and other listed securities of MedMen from time to time, including the September Warrants and the December Warrants, may decline even if MedMen’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue or arise, MedMen’s operations may be adversely impacted and the trading price of the Subordinate Voting Shares and such other securities may be materially adversely affected.

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USE OF PROCEEDS

We will not receive any proceeds from the sale or other disposition of the Subordinated Voting Shares offered by the selling shareholders. We will, however, receive the exercise price of any warrants exercised for cash. To the extent that we receive cash upon exercise of any warrants, we expect to use that cash for working capital and general corporate purposes.

DIVIDEND POLICY

The Company has not declared distributions on Subordinate Voting Shares in the past. The Company currently intends to reinvest all future earnings to finance the development and growth of its business. As a result, the Company does not intend to pay dividends on Subordinate Voting Shares in the foreseeable future. Any future determination to pay distributions will be at the discretion of the Board and will depend on the financial condition, business environment, operating results, capital requirements, any contractual restrictions on the payment of distributions and any other factors that the Board deems relevant. The Company is not bound or limited in any way to pay dividends in the event that the Board determines that a dividend is in the best interest of its shareholders.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements and the accompanying note that are included elsewhere in this prospectus. Except for historical information, the discussion in this section contains forward-looking statements that involve risks and uncertainties. Future results could differ materially from those discussed below for many reasons, including the risks described in “Disclosure Regarding Forward-Looking Statements,” Risk Factors” and elsewhere in this prospectus.

You should read this discussion in conjunction with the consolidated financial statements and the related notes contained in this prospectus.

Basis of Presentation

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document All references to “$” and “dollars” refer to U.S. dollars. References to C$ refer to Canadian dollars. Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding.

Fiscal Period

The Company’s fiscal year is a 52/53 week year ending on the last Saturday in June. In a 52-week fiscal year, each of the Company’s quarterly periods will comprise 13 weeks. The additional week in a 53-week fiscal year is added to the fourth quarter, making such quarter consist of 14 weeks. The Company’s first 53-week fiscal year will occur in fiscal year 2024. The three months ended December 26, 2020 and December 28, 2019 refer to the 13 weeks ended therein, and the six months ended December 26, 2020 and December 28, 2019 refer to the 26 weeks ended therein. The Company’s fiscal years ended June 27, 2020 and June 29, 2019 included 52 weeks.

Selected Financial Data

The following table sets forth the Company’s selected consolidated financial data for the periods, and as of the dates, indicated. The Condensed Consolidated Statements of Operations data for the three and six months ended December 26, 2020 and December 28, 2019 have been derived from the unaudited interim Condensed Consolidated Financial Statements of the Company and its subsidiaries, which are included with this prospectus. The Consolidated Statements of Operations data for the fiscal years ended June 27, 2020 and June 29, 2019 have been derived from the audited Consolidated Financial Statements of the Company and its subsidiaries, which are also included with this prospectus.

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The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and the unaudited interim Condensed Consolidated Financial Statements and the audited Consolidated Financial Statements and related notes included in this prospectus. The Company’s unaudited interim Condensed Consolidated Financial Statements and audited Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and on a going concern basis that contemplates continuity of operations and realization of assets and liquidation of liabilities in the ordinary course of business.

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, ($ in Millions) 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited)

Revenue $ 33.8 $ 44.1 $ 69.4 $ 83.7 Gross Profit $ 17.9 $ 12.8 $ 34.8 $ 32.2 Loss from Operations $ (26.4) $ (68.7) $ (34.5) $ (120.2) Total Other Expense $ 19.7 $ 2.4 $ 31.4 $ 28.2 Net Loss from Continuing Operations $ (70.1) $ (56.4) $ (100.2) $ (116.1) Net Loss from Discontinued Operations $ 1.2 $ (36.8) $ (1.5) $ (39.9) Net Loss $ (68.9) $ (93.2) $ (101.7) $ (156.0) Net Loss Attributable to Non-Controlling Interest $ (19.2) $ (52.0) $ 30.1 $ (90.6) Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (49.7) $ (41.3) $ (71.6) $ (65.5)

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (63.1) $ (36.8) $ (105.0) $ (69.8) EBITDA from Continuing Operations (Non-GAAP) $ (19.5) $ (53.4) $ (16.1) $ (109.8) Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (11.8) $ (33.4) $ (23.5) $ (66.1)

Three Months Ended Year Ended June 27, June 29, June 27, June 29, ($ in Millions) 2020 2019 2020 2019

Revenue $ 27.4 $ 35.9 $ 157.1 $ 119.9 Gross Profit $ 11.0 $ 16.1 $ 58.1 $ 55.5 Loss from Operations $ (284.8) $ (67.9) $ (447.4) $ (250.0) Total Other Expense $ 13.8 $ 5.7 $ 67.9 $ 13.0 Net Loss from Continuing Operations $ (231.2) $ (61.2) $ (475.7) $ (256.7) Net Loss from Discontinued Operations $ (1.4) $ 0.2 $ (50.8) $ (1.3) Net Loss $ (232.5) $ (60.9) $ (526.5) $ (257.9) Net Loss Attributable to Non-Controlling Interest $ (135.3) $ (58.7) $ (279.3) $ (188.8) Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (97.3) $ (2.2) $ (247.3) $ (69.1)

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (37.9) $ (48.7) $ (217.1) $ (208.3) EBITDA from Continuing Operations (Non-GAAP) $ (267.6) $ (52.0) $ (423.2) $ (219.6) Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (23.3) $ (37.7) $ (115.9) $ (169.7)

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Fiscal Year-End and Quarterly Highlights

Continued Strategic Partnership with Gotham Green Partners

On April 23, 2019, the Company secured a senior secured convertible credit facility (the “GGP Facility”) to provide up to $250.0 million in gross proceeds, arranged by Gotham Green Partners, LLC (“GGP”). The GGP Facility has been accessed through issuances to the lenders of convertible senior secured notes (“GGP Notes”) co-issued by the Company and MM Can USA, Inc. (“MM CAN” or “MedMen Corp.”). During the fiscal year ended June 27, 2020, the Company completed the First Amendment of the GGP Facility on August 12, 2019, the Second Amendment on October 29, 2019 and the Third Amendment on March 27, 2020. Refer to “Note 18 - Senior Secured Convertible Credit Facility” of the audited Consolidated Financial Statements for the years ended June 27, 2020 and June 29, 2019. During the three months ended September 26, 2020, the Company amended and restated the GGP Facility on July 2, 2020. Refer to “Note 13 - Senior Secured Convertible Credit Facility” of the unaudited interim condensed consolidated financial statements for the three months ended September 26, 2020 and September 28, 2019 originally filed with the SEC on December 7, 2020, and as subsequently amended. As of December 26, 2020, the Company has drawn down on a total of $155,000,000 on the GGP Facility.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On July 12, 2019, the Company had drawn down $25,000,000 through Tranche 2 of the GGP Facility. In connection with the funding of Tranche 2, the Company issued 2,967,708 and 857,336 warrants to the lenders at an exercise price of $3.16 and $3.65 per share, respectively.

On November 27, 2019, the Company had drawn down $10,000,000 through Tranche 3 of the GGP Facility. In connection with the funding of Tranche 2, the Company issued 3,708,772 and 1,071,421 warrants to the lenders at an exercise price of $1.01 and $1.17 per share, respectively.

On March 27, 2020, the Company had drawn down $12,500,000 through Tranche 4 of the GGP Facility. In connection with the funding of Tranche 4, the Company issued 48,076,923 warrants to the lenders at an exercise price of $0.26 per share.

On April 24, 2020, the Company closed on an incremental advance in the amount of $2,500,000 under the GGP Facility at a conversion price of $0.26 per share. In connection with the incremental advance, the Company issued 9,615,385 warrants with an exercise price of $0.26 per share. In addition, 540,128 Existing Warrants were cancelled and replaced with 6,490,385 warrants with an exercise price of $0.26 per share.

On September 14, 2020, the Company had drawn down $5,000,000 through Tranche IA-2 of the GGP Facility. In connection with the funding of Tranche IA-2, the Company issued 25,000,000 warrants to the lenders at an exercise price of $0.20 per share. In addition, 1,080,255 existing warrants were cancelled and replaced with 16,875,001 warrants with an exercise price of $0.20 per share.

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On September 16, 2020, the down round feature on the convertible notes and warrants issued in connection with Tranche 4, Incremental Advances and certain amendment fees was triggered wherein the exercise price was adjusted to $0.17 per share. The value of the effect of the down round feature on convertible notes and warrants was determined to be $21,672,272 and $4,883,467, respectively. The effect related to convertible notes was recognized as additional debt discount and an increase in additional paid-in-capital. The effect related to warrants was recognized as a deemed distribution and an increase in additional paid-in capital.

On September 28, 2020, the down round feature on the convertible notes and warrants in connection with Tranche 4, Incremental Advances, and certain amendment fees was triggered wherein the exercise price was adjusted to $0.15 per share. The value of the effect of the down round feature on convertible notes and warrants was determined to be $11,072,498 and $1,840,487, respectively. The effect related to convertible notes was recognized as additional debt discount and an increase in additional paid-in-capital. The effect related to warrants was recognized as a deemed distribution and an increase in additional paid-in capital.

For information about further amendments to the GGP Facility, see “Business – Recent Developments” and Note 25. Subsequent Events in the Notes to the Interim Condensed Consolidated Financial Statement for the three and six months ended December 26, 2020 and December 28, 2019.

2018 Secured Term Loan

In October 2018, MedMen Corp. completed a $77,675,000 senior secured term loan (the “2018 Term Loan”) with funds managed by Hankey Capital, LLC (“Hankey”) and with an affiliate of Stable Road Capital. On January 14, 2020, the 2018 Term Loan was amended wherein the maturity date was extended to January 31, 2022 and the interest rate was increased to a fixed rate of 15.5% per annum, of which 12.0% will be payable monthly in cash based on the outstanding principal and 3.5% will accrue monthly to the principal amount of the debt as a payment-in-kind. Certain ownership interests of the Company’s subsidiaries have been pledged as security for the obligations under the 2018 Term Loan. Additionally, the Company guaranteed the obligations of MedMen Corp. under the 2018 Term Loan. The principal amount of the 2018 Term Loan has been and is anticipated to be used for acquisitions, capital expenditures and other corporate purposes.

On January 14, 2020, the Company executed an amendment to the 2018 Term Loan wherein the maturity date was extended to January 31, 2022 and the interest rate was increased to a fixed rate of 15.5% per annum, of which 12.0% will be payable monthly in cash based on the outstanding principal and 3.5% will accrue monthly to the principal amount of the debt as a payment-in-kind. The Company may prepay without penalty, in whole or in part, at any time and from time to time, the amounts outstanding under the 2018 Term Loan (on a non-revolving basis) upon 15 days’ notice. MedMen Corp., a subsidiary of the Company, cancelled the existing warrants issued to the lenders, being 16,211,284 warrants exercisable at $4.97 per share and 1,023,256 warrants exercisable at $4.73 per share, and issued to the lenders a total of 40,455,729 warrants with an exercise price of $0.60 per share that are exercisable until December 31, 2022. The newly issued warrants may be exercised at the election of their holders on a cashless basis.

On July 2, 2020, the Company further amended the 2018 Term Loan wherein the interest rate of 15.5% per annum will accrue monthly to the principal amount of the debt as a payment-in-kind effective March 1, 2020 through July 2, 2021 and thereafter until maturity on January 31, 2022, 7.75% interest per annum will be payable monthly in cash and 7.75% interest per annum will be paid-in-kind. Certain reporting and financial covenants were added and amended, and the minimum liquidity covenant was waived until September 30, 2020. The Company was permitted request an increase to the 2018 Term Loan through December 31, 2020 to be funded through incremental term loans. As consideration for the amendment, the Company cancelled 20,227,863 existing warrants exercisable at $0.60 per share held by the lenders of the 2018 Term Loan, and MM CAN issued 20,227,863 warrants at $0.34 per share that are exercisable until July 2, 2025.

On September 16, 2020, the Company executed an amendment to the 2018 Term Loan in which the funds available under the facility was increased by $12,000,000 through incremental term loans, of which $5,700,000 was fully committed by the lenders through October 31, 2020. The principal amount of the 2018 Term Loan, as amended, has been and is anticipated to be used for ongoing operations, capital expenditures and other corporate purposes. The additional funds accrue interest at 18.0% per annum wherein 12.0% will be paid in cash monthly in arrears and 6.0% per annum accrues monthly as payment-in-kind. The warrants issued in connection with the 2020 Term Loan are subject to a down round feature wherein the exercise price would be decreased in the event of the exercise of a down-round price reset of select warrants under the GGP Facility. As consideration for the amendment, the Company cancelled 20,227,863 existing warrants held by the lenders exercisable at $0.60 per share, and MM CAN issued 20,227,863 warrants exercisable at $0.34 per share until September 16, 2025.

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On September 16, 2020, the Company closed on an incremental term loan of $3,000,000 under the 2018 Term Loan. In connection with the incremental term loan, MM CAN issued 30,000,000 warrants with an exercise price of $0.20 per share exercisable until December 31, 2025. The newly issued warrants may be exercised at the election of the holders on a cashless basis.

On September 16, 2020, the down round feature on the warrants issued in connection with the incremental term loan of $3,000,000 on September 16, 2020 was triggered wherein the exercise price was adjusted to $0.17 per share. The value of the effect of the down round feature was determined to be $259,736 and recognized as an increase in additional paid-in capital.

On September 28, 2020, the down round feature on the warrants issued in connection with the incremental term loan of $3,000,000 on September 16, 2020 was triggered wherein the exercise price was adjusted to $0.15 per share. The value of the effect of the down round feature was determined to be $145,744 and recognized as an increase in additional paid-in capital.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On October 30, 2020, the Company closed on an incremental term loan of $7,705,279 under the 2018 Term Loan. In connection with the incremental term loan, MM CAN issued 77,052,790 warrants with an exercise price of $0.20 per share until September 14, 2025. The newly issued warrants may be exercised at the election of their holders on a cashless basis. As of December 26, 2020, the Company has received total gross proceeds of $10,705,279 under the 2018 Term Loan.

For information about further amendments to the 2018 Term Loan, see “Business – Recent Developments” and Note 25. Subsequent Events in the Notes to the Interim Condensed Consolidated Financial Statement for the three and six months ended December 26, 2020 and December 28, 2019.

Unsecured Convertible Facility

On September 16, 2020, the Company entered into an unsecured convertible debenture facility (the “Unsecured Convertible Facility”) for total available proceeds of $10,000,000 wherein the convertible debentures will have a conversion price equal to the closing price on the trading day immediately prior to the closing date, a maturity date of 24 months from the date of issuance and will bear interest at a rate of 7.5% per annum payable semi-annually in cash. The unsecured facility is callable in additional tranches in the amount of $1,000,000 each, up to a maximum of $10,000,000 under all tranches. The timing of additional tranches can be accelerated based on certain conditions. The debentures provide for the automatic conversion into Subordinate Voting Shares in the event that the VWAP is 50% above the conversion price on the CSE for 45 consecutive trading days. The principal amounts funded under the Unsecured Convertible Facility has been and is anticipated to be used for ongoing operations, capital expenditures and other corporate purposes.

On September 16, 2020, the Company closed on an initial $1,000,000 under the facility with a conversion price of $0.17 per Subordinate Voting Share. In connection with the initial tranche, the Company issued 3,293,413 warrants with an exercise price of $0.21 per share. On September 28, 2020, the Company closed on a second tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the second tranche, the Company issued 3,777,475 warrants for an equal number of Shares with an exercise price of $0.17 per share. On November 20, 2020, the Company closed on a third tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the third tranche, the Company issued 3,592,425 warrants for an equal number of Shares with an exercise price of $0.17 per share. On December 17, 2020, the Company closed on a fourth tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the fourth tranche, the Company issued 3,597,100 warrants for an equal number of Shares with an exercise price of $0.18 per share. As of December 26, 2020, the Company has received total gross proceeds of $4,000,000 under the Unsecured Convertible Facility.

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Equity Financing Transactions

On December 10, 2019, the Company executed a term sheet for a non-brokered private placement wherein Wicklow Capital participated in the offering. On January 14, 2020, the Company announced the closing of its previously announced approximately $20,000,000 non-brokered offering of Class B Subordinate Voting Shares (the “Equity Placement”). The Equity Placement was funded and closed in tranches, with the final closing occurring on January 13, 2020. As a result, 46,962,645 Class B Subordinate Voting Shares were issued in the Equity Placement at a price of $0.43 per Class B Subordinate Voting Share for gross proceeds of approximately $20,200,000. Participants in the Equity Placement included existing investor, Wicklow Capital, and certain insiders of the Company, being Adam Bierman, the former Chief Executive Officer and director of the Company, Andrew Modlin, a former President and director of the Company, and Christopher Ganan, a former director of the Company. Such insiders of the Company subscribed for and purchased an aggregate of 4,651,161 of such Class B Subordinate Voting Shares, for aggregate proceeds of $2,000,000, comprising approximately 10% of the total amount raised. Proceeds raised from the Equity Placement were used to finance working capital requirements.

At-the-Market Equity Financing Program

On April 10, 2019, the Company established an At-the-Market equity financing program (the “ATM Program”) with Canaccord Genuity Corp. (“Canaccord”) pursuant to which the Company may, from time to time, sell Class B Subordinate Voting Shares at prevailing trading prices at the time of sale for aggregate gross proceeds of up to C$60,000,000. Since Class B Subordinate Voting Shares are distributed under the ATM Program at trading prices prevailing at the time of sale, prices may vary between purchasers and during the period of distribution. The Company has used and intends to use the net proceeds from the sale of Class B Subordinate Voting Shares under the ATM Program principally for general and administrative expenses, working capital needs and other general corporate purposes.

During the fiscal year ended June 27, 2020, the Company sold an aggregate of 9,789,300 Subordinate Voting Shares under the ATM Program for net proceeds of $12,400,000. During the six months ended December 26, 2020, the Company did not sell any Subordinate Voting Shares under the ATM Program.

Real Estate Sale and Leaseback Transactions

During the year ended June 27, 2020, the Company sold and subsequently leased back two properties to the Treehouse Real Estate Investment Trust (the “REIT”), resulting in total gross proceeds of $20,400,000. The Company has used and intends to use such net proceeds from the sale of properties with Stable Road Capital and the REIT to assist in funding the build-out of its national footprint. The Company has leased such properties sold at market rates for cannabis businesses under long-term leases.

All current real estate assets of the Company have been offered for sale to the REIT. It is expected that additional sale and leaseback transactions will occur between the REIT and the Company over the next twelve months. These additional potential transactions include real estate related to retail stores and cultivation and production facilities. Any such sale of properties remains subject to ongoing due diligence by the REIT, successful negotiation and execution of definitive documentation, final approval of the Company and the REIT board and the satisfaction of customary closing conditions. The REIT has a three-year right of first offer on additional MedMen- owned facilities and development projects. The Company expects to lease all properties sold at market rates for cannabis businesses under long-term leases.

Overall, the purpose of the sale and leaseback transactions is to allow MedMen to raise cash equal to the excess of the sale price of the applicable property over any debt tied to the applicable property, repay any such debt and reduce interest expense related to any such debt. In the longer term, removing real property from MedMen’s Consolidated Balance Sheets is intended to free up capital for uses that MedMen believes will result in a greater return on capital for its investors. It will also transfer the risk and opportunity of fluctuating real estate prices from MedMen to the purchasers of the applicable properties.

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Landlord Support for Company Turnaround

The Company currently has lease arrangements with affiliates of the REIT, which include 14 retail and cultivation properties across the U.S. On July 3, 2020, the Company announced modifications to its existing lease arrangements with the REIT, in which the REIT agreed to defer a portion of total current monthly base rent for the 36-month period between July 1, 2020 and July 1, 2023. The total amount of all deferred rent accrues interest at 8.6% per annum during the deferral period. As consideration for the rent deferral, the Company issued 3,500,000 warrants to the REIT, each exercisable at $0.34 per share for a period of five years. As part of the agreement, the Company will pursue a partnership with a cannabis cultivation company for the Company’s Desert Hot Springs and Mustang facilities that are leased from the REIT in order to continue the Company’s focus on retail operations.

On October 17, 2019, the Company entered into a securities transfer agreement to sell a portion of its interest in Old Pal LLC. The interests sold consisted of 86.80 Class B Units, or 6.9% of the outstanding units, at a price per unit of $57,060, resulting in an aggregate sale price of approximately $5,000,000.

In November 2019, the Company completed the sale of all of its interests in LCR Manager, LLC, the manager of the general partner of the REIT resulting in net proceeds of $12,500,000.

Amended Business Acquisitions

On January 30, 2020, the Company amended the secured promissory note issued in connection with the acquisition of Kannaboost Technology Inc. and CSI Solutions LLC (collectively referred to as "Level Up") wherein the principal amount was amended from $15,000,000 to $13,000,000 and the maturity date was extended to April 8, 2020. On April 8, 2020, the Company entered into an amendment of the Level Up secured promissory note wherein the maturity date was extended to the earlier of December 31, 2020 or in the event of default. No payments shall be due prior to the maturity date unless certain events occur. The balance of the secured promissory note will bear interest at a rate of 9.0% per annum until paid in full. The effectiveness of the amendment on April 8, 2020 is currently in dispute with the counterparty.

On November 12, 2019, the Company entered into an agreement to amend a potential $15,000,000 cash earn out due in December 2020 for a previously announced acquisition to $10.0 million in Class B Subordinate Voting Shares due in December 2019. In conjunction with the amendment to settle the contingent consideration, the Company issued 10,691,455 Subordinate Voting Shares in full settlement.

Termination of Merger Agreement with PharmaCann

On October 8, 2019, MedMen and PharmaCann, LLC announced the mutual agreement to terminate their business combination (“Termination of Merger”). As part of the agreement to terminate, the Company and PharmaCann agreed to accept a transfer of assets in exchange for repayment of the existing line of credit to PharmaCann (the “Line of Credit”), which totaled approximately $21,000,000, including accrued interest. The assets transferred were 100% of the membership interests (“Transfer of Interest”) in three entities holding the following assets:

· MME Evanston Retail, LLC, which holds a retail location in Evanston, Illinois and related licenses, and a retail license for Greater Chicago, Illinois;

· PharmaCann Virginia, LLC, which holds a license for a vertically-integrated facility in Staunton, Virginia; and

· PC 16280 East Twombly LLC, which holds an operational cultivation and production facility in Hillcrest, Illinois and related licenses.

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Each delivery of the Transfer of Interest, after successful regulatory approval, if any, will relieve one-third of the line of credit and any accrued interest due from PharmaCann. On December 2, 2019, the Company closed on its acquisition of PharmaCann’s Evanston, Illinois location and the associated additional retail license for Greater Chicago. The Company began operating the store in Evanston on December 3, 2019. During the year ended June 27, 2020, the Company also sold its rights to acquire the cultivation and manufacturing license in Hillcrest, Illinois and the related facility for a total gross proceeds of $17.0 million. Subsequent to the Termination of Merger, the Transfer of Interests related to the license in Staunton, Virginia was completed. In June 2020, the Virginia Board of Pharmacy rescinded the conditional license and the Company has filed a notice of appeal, subject to customary appellate court procedures.

Business Acquisitions

MattnJeremy, Inc., d/b/a One Love Beach Club

On September 3, 2019, the Company completed the acquisition of MattnJeremy, Inc., d/b/a One Love Beach Club (“One Love”), a licensed medical and recreational cannabis dispensary located in Long Beach, California. The assets consist primarily of the state of California issued dispensary license and customer relationships. The Company acquired all of the issued and outstanding shares of One Love for aggregate consideration of $12,708,000 which is comprised of $1,000,000 in cash at closing, $1,000,000 deferred payment to be paid six months after closing, $1,000,000 deferred payment to be paid one year after closing and the issuance of 5,112,263 Subordinate Voting Shares with an aggregate value of $9,833,000 at closing.

MME Evanston Retail, LLC

In connection with the Termination of Merger with PharmaCann, on December 2, 2019, the Company received 100% of the membership interests in MME Evanston Retail, LLC (“Evanston”), which includes a retail location in Evanston, Illinois and related licenses, and a retail license in Greater Chicago, Illinois. The Company acquired all of the issued and outstanding shares of Evanston for aggregate consideration of $6,930,557.

Assets Held for Sale

On July 1, 2020, the Company executed definitive agreements, which were amended and restated on October 30, 2020, to sell all outstanding membership interests in MME Evanston Retail, LLC (the “Evanston Sale Agreement”), which owns the retail store located in Evanston, Illinois, for total consideration of $20,000,000 of which $10,000,000 was received at closing. On November 17, 2020, the Company received $8,000,000 cash (“Closing Cash Payment”) of the total sales price. On October 1, 2020, three months following the Closing Date, $2,000,000 in the form of a secured promissory note was payable which, pursuant to the lender and landlord support agreements entered into during the first quarter of fiscal 2021, was used to paydown amounts outstanding under the GGP Facility. Transfer of the cannabis license is pending regulatory approval. On August 10, 2020, the Company transferred governance and control of MME Evanston Retail, LLC. All assets and liabilities related to Evanston as of December 26, 2020 are excluded from the Company’s Condensed Consolidated Balance Sheets and all profits or losses from the Evanston operations subsequent to August 10, 2020 are excluded from the Company’s Condensed Consolidated Statements of Operations.

During the six months ended December 26, 2020, the Company received net proceeds of approximately $620,000 for the sale of a cannabis retail license located in Seaside, California for a total sales price of $1,500,000, of which the remaining cash consideration is to be received from escrow and $750,000 is to be paid in equal installments over twelve months through a promissory note. The Company transferred all outstanding membership interests in PHSL, LLC (“Seaside”) in October 2020. All assets and liabilities related to Seaside are excluded from the Company’s Condensed Consolidated Balance Sheets as of December 26, 2020 and all profits or losses from the Seaside location subsequent to October 9, 2020 are excluded from the Company’s Condensed Consolidated Statements of Operations.

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In December 2020, the Company entered into a purchase agreement to sell a non-operational cannabis license in California for a total consideration of $3,750,000 of which $3,500,000 will be received in cash and $250,000 will be received in equity consideration. Accordingly, the assets and liabilities related to this subsidiary were classified as held for sale in the Condensed Consolidated Balance Sheets as of December 26, 2020. As of December 26, 2020, the contemplated sale is pending customary closing conditions.

Discontinued Operations

On November 15, 2019, the Company announced its plan to sell its operations in the state of Arizona. As a result, assets and liabilities allocable to the operations within the state of Arizona were classified as held for sale. In addition, revenue and expenses, gains or losses relating to the discontinuation of Arizona operations were classified as discontinued operations and were eliminated from profit or loss from the Company’s continuing operations for all periods presented. Discontinued operations are presented separately from continuing operations in the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows.

On November 5, 2020, the Company sold and transferred 100% of the outstanding membership interests in Kannaboost Technology Inc. and CSI Solutions LLC (collectively referred to as “Level Up”) for a total sales price of $25,150,000, of which the Company has not received any cash proceeds as of December 26, 2020. Refer to “Note 24 - Discontinued Operations” of the unaudited interim condensed consolidated financial statements for the three and six months ended December 26, 2020 and December 28, 2019 for further information. All assets and liabilities related to Level Up as of December 26, 2020 are excluded from the Company’s Condensed Consolidated Balance Sheets and all profits or losses from Level Up have been excluded from net loss from discontinued operations.

Management Changes and Shareholder Meeting Results

On November 11, 2020, the Company held an annual general meeting of shareholders at which the number of Board of Directors (the “Board”) of the Company was set to seven, subject to permitted increases. Benjamin Rose, Niki Christoff, Mel Elias, Al Harrington, Tom Lynch, Errol Schweizer and Cameron Smith were elected as members of the Board of Directors of the Company until the next annual general meeting of shareholders.

On December 3, 2020, the Company named Tracy McCourt to the Company’s new role of Chief Revenue Officer who will lead the omni-channel marketing strategy as well as the Company’s buying, merchandising and business intelligence efforts.

On December 16, 2020, the Company announced that Benjamin Rose resigned as Chairman of the Board of Directors and as a Board member. Tom Lynch, the Company’s Chief Executive Officer, was elected as Chairman of the Board of Directors.

On December 18, 2020, the Company announced that Zeeshan Hyder resigned as Chief Financial Officer and Reece Fulgham, managing director at SierraConstellation Partners, was appointed to the role of Chief Financial Officer.

Cancellation of Super Voting Shares

On December 24, 2020, the Company announced the cancellation of 815,295 Class A Super Voting Shares which had been held by Andrew Modlin and granted via proxy to Benjamin Rose since December 2019. Effective as of December 10, 2020, the Company has only one class of outstanding shares, the Class B Subordinate Voting Shares as a result of the share cancellation.

Adoption of New Accounting Pronouncements Effective June 30, 2019

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASC 842”), which replaces ASC 840, “Leases” and related interpretations. The standard introduces a single lessee accounting model and requires lessees to recognize assets and liabilities for all leases with a term exceeding twelve months, unless the underlying asset is insignificant. A lessee is required to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The Company adopted the standard on June 30, 2019 using the modified retrospective method, which provides lessees a method for recording existing leases at adoption with no restatement of prior comparative periods.

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The Company’s adoption of ASC 842 resulted in higher current and non-current assets and liabilities, the replacement of rent expense previously recorded in cost of goods sold and general and administrative expense with depreciation expense, and increased finance costs related to the accretion and interest expense of the lease liabilities. The new standard does not change the amount of cash transferred between the lessor and lessees but impacts the presentation of the Company’s operating and financing cash flows.

Factors Affecting Performance

Company management believes that the nascent cannabis industry represents an extraordinary opportunity in which the Company’s performance and success depend on a number of factors:

• Market Expansion. The Company’s success in achieving a desirable retail footprint is attributable to its market expansion strategy, which was a key driver of revenue growth. The Company exercises discretion in focusing on investing in retail locations that can deliver near term increased earnings to the Company.

• Retail Growth. MedMen stores are located in premium locations in markets such as New York, California, Nevada, Illinois and Florida. As it continues to increase sales, the Company expects to leverage its retail footprint to develop a robust distribution model.

• Direct-to-Consumer Channel Rollout. MedMen Delivery is available in California. The Company benefited from increased traction with in-store pickup as well as delivery service, curbside pickup and loyalty rewards program.

• COVID-19. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. While the ultimate severity of the outbreak and its impact on the economic environment is uncertain, the Company is monitoring this closely. The Company’s business depends on the uninterrupted operation of its stores and facilities. In the event that the Company were to experience widespread transmission of the virus at one or more of the Company’s stores or other facilities, the Company could suffer reputational harm or other potential liability. To date, the Company has generally implemented certain safety measures to ensure the safety of its customers and associates, which may have the effect of discouraging shopping or limiting the occupancy of our stores. These measures, and any additional measures that have been and may continue to be taken in response to the COVID-19 pandemic, have substantially decreased and may continue to decrease, the number of customers that visit our stores which has had, and will likely continue to have a material adverse effect on our business, financial condition and results of operations. The ultimate magnitude of COVID-19, including the extent of its overall impact on our financial and operational results cannot be reasonably estimated at this time; however, the Company has experienced significant declines in sales. The overall impact will depend on the length of time that the pandemic continues, the extent to which it affects our ability to raise capital, and the effect of governmental regulations imposed in response to the pandemic as well as uncertainty regarding all of the foregoing. At this time, it is unclear how long these measures may remain in place, what additional measures maybe imposed, or when our operations will be restored to the levels that existed prior to the COVID-19 pandemic.

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Trends

MedMen is subject to various trends that could have a material impact on the Company, its financial performance and condition, and its future outlook. A deviation from expectations for these trends could cause actual results to differ materially from those expressed or implied in forward-looking information included in this MD&A and the Company’s financial statements. These trends include, but are not limited to, the following:

· Liberalization of Cannabis Laws. The Company is reliant on the existing legal and regulatory administration as to the sale and consumption of cannabis in the states in which the Company operates not being repealed or overturned and on the current approach to enforcement of federal laws by the federal government. The Company is also reliant on the continuation of the trend toward increased liberalization of cannabis laws throughout the United States, including the adoption of medical cannabis regulations in states without cannabis programs and the conversion of medical cannabis laws to recreational cannabis laws in states with medical cannabis programs. Although the Company is focused on California, New York, Nevada, Arizona, Illinois and Florida, this trend provides MedMen with new opportunities to deploy capital and expand geographically. The opportunity for geographic expansion is important because some jurisdictions with existing cannabis programs limit the number of retail locations that can be owned by a single entity.

· Popular Support for Cannabis Legalization. The Company is reliant on the continuation of the trend toward increased popular support and acceptance of cannabis legalization. This trend could change if there is new research conducted that challenges the health benefits of cannabis or that calls into question its safety or efficacy or significant product recalls or broad-based deleterious health effects. This trend could also be influenced by a shift in the political climate, or by a decision of the United States government to enforce federal laws that make cannabis illegal. Such a change in popular support could undermine the trend toward cannabis legalization and possibly lead states with existing cannabis programs to roll them back, either of which would negatively impact the Company’s growth plans.

· Balanced Supply and Demand in States. The Company is reliant on the maintenance of a balance between supply and demand in the various states in which it operates cannabis retail stores. Federal law provides that cannabis and cannabis products may not be transported across state lines in the United States. As a result, all cannabis consumed in a state must be grown and produced in that same state. This dynamic could make it more difficult, in the short term, to maintain a balance between supply and demand. If excess cultivation and production capacity is created in any given state and this is not matched by increased demand in that state, then this could exert downward pressure on the retail price for products. A substantial increase in retail licenses offered by state authorities in any given state could result in increased competition and exert downward pressure on the retail pricing. If cultivation and production in a state fails to match demand, there could be insufficient supply of product in a state to meet demand, causing retail revenue in that state to fall or stagnate, including due to retail locations closing while supply is increased.

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Components of Results of Operations

Revenue

The Company derived the majority of its revenue from direct sales to customers in its retail stores. For the three and six months ended December 26, 2020 and the fiscal year ended June 27, 2020, approximately 60% and 70% of revenue, respectively, was generated from operations in California, with the remaining 40% and 30%, respectively, from operations in New York, Nevada, Illinois and Florida. Revenue through retail stores is recognized upon delivery of the goods to the customer and when collection is reasonably assured, net of an estimated allowance for sales returns.

Cost of Goods Sold and Gross Profit

Gross profit is revenue less cost of goods sold. Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles and concentrates, as well as packaging and other supplies, fees for services and processing, and also includes allocated overhead, which includes allocations of rent, administrative salaries, utilities and related costs. Cannabis costs are affected by various state regulations that limit the sourcing and procurement of cannabis product, which may create fluctuations in gross profit over comparative periods as the regulatory environment changes. Gross margin measures gross profit as a percentage of revenue.

Expenses

General and administrative expenses represent costs incurred in MedMen’s corporate offices, primarily related to personnel costs, including salaries, incentive compensation, benefits, share-based compensation and other professional service costs, including legal and accounting. Sales and marketing expenses consist of third-party listing fees, billboards, marketing collateral and other similar selling related expenses. It also includes an investment in marketing and brand activities and the corporate infrastructure required to support the ongoing business.

Income Taxes

MedMen is subject to income taxes in the jurisdictions in which it operates and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events. As the Company operates in the cannabis industry, the Company is subject to the limits of Internal Revenue Code (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E and a higher effective tax rate than most industries. However, the state of California does not conform to IRC Section 280E and, accordingly, the Company deducts all operating expenses on its California Franchise Tax Returns.

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Results of Operations

Three Months Ended December 26, 2020 Compared to Three Months Ended December 28, 2019

Three Months Ended December 26, December 28, $ % ($ in Millions) 2020 2019 Change Change (unaudited) (unaudited)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Revenue $ 33.8 $ 44.1 $ (10.3) (23)% Cost of Goods Sold 15.8 31.2 (15.4) (49)% Gross Profit 18.0 12.9 5.1 40%

Expenses: General and Administrative 33.6 60.3 (26.7) (44)% Sales and Marketing 0.2 3.6 (3.4) (94)% Depreciation and Amortization 9.7 6.6 3.1 47% Realized and Unrealized Loss on Changes in Fair Value of Contingent Consideration 0.1 5.2 (5.1) (98)% Other Operating Expense 0.8 5.7 (4.9) (86)%

Total Expenses 44.4 81.4 (37.0) (45)%

Loss from Operations (26.4) (68.5) 42.1 (61)%

Other Expense (Income): Interest Expense 10.2 8.1 2.1 26% Interest Income (0.5) (0.3) (0.2) 67% Amortization of Debt Discount and Loan Origination Fees 6.9 1.8 5.1 283% Change in Fair Value of Derivatives 0.2 (2.9) 3.1 (107)% Realized and Unrealized Loss (Gain) on Investments and Assets Held for Sale 2.0 (5.0) 7.0 (140)% Loss on Extinguishment of Debt 0.9 0.7 0.2 29%

Total Other Expense 19.7 2.4 17.3 721%

Loss from Continuing Operations Before Provision for Income Taxes (46.1) (70.9) 24.8 (35)% Provision for Income Tax (Expense) Benefit (24.0) 14.6 (38.6) (264)%

Net Loss from Continuing Operations (70.1) (56.3) (13.8) 25% Net Loss from Discontinued Operations, Net of Taxes 1.2 (36.8) 38.0 (103)%

Net Loss (68.9) (93.1) 24.2 (26)%

Net Loss Attributable to Non-Controlling Interest (19.2) (52.0) 32.8 (63)%

Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (49.7) $ (41.1) $ (8.6) 21%

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (63.1) $ (36.8) $ (26.3) 71% EBITDA from Continuing Operations (Non-GAAP) $ (19.5) $ (53.4) $ 33.9 (63)% Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (11.8) $ (33.4) $ 21.6 (65)%

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Revenue

Revenue for the three months ended December 26, 2020 was $33.8 million, a decrease of $10.3 million, or 23%, compared to revenue of $44.1 million for the three months ended December 28, 2019. The decrease in revenue was primarily due to the impact of COVID-19 in overall retail traffic and tourism as further discussed below. During the three months ended December 26, 2020, MedMen had 24 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which one retail location located within the state of Arizona was classified as discontinued operations, compared to 32 active retail locations for the comparative prior period. During the fiscal second quarter of 2021, five retail locations in the state of Florida remained temporarily closed in order to redirect inventory from its Eustis facility to its highest performing stores and thus excluded from the number of active retail locations as of December 26, 2020. Also during the fiscal second quarter of 2021, the Company completed the sale of two retail stores in Arizona (Scottsdale and Tempe) as a result of the Company’s plan to divest non-core assets. As of December 26, 2020, the Company had 23 active retail locations related to continuing operations, a decrease of 6 active retail locations, compared to 29 active retail locations related to continuing operations for the comparative prior period.

The decrease in revenue was primarily related to the impact of the COVID-19 pandemic as well as the number of active retail locations related to continuing operations. The Company experienced decreased sales in certain locations within California and Nevada due to reduced foot traffic as a result of shelter-at-home orders, declining tourism, and social distancing restrictions within a retail establishment. Retail revenue for the three months ended December 26, 2020 in California and Nevada decreased $12.6 million and $2.8 million, respectively, compared to the three months ended December 28, 2019. In Illinois, Florida and New York, revenues have not been significantly impacted by COVID-19 and in some cases, retail locations in those markets have increased sales during the three months ended December 26, 2020. During the three months ended December 26, 2020, the Company continues to enhance its retail experience through better product assortment, customer service and purchasing options with an emphasis on curbside pickup and delivery in response to the COVID-19 pandemic. During the fiscal second quarter of 2021, the Company has maintained modified store operations based on Centers for Disease Control and Prevention guidelines and local ordinances which limit in-store traffic for certain locations and consequently increased focus on direct-to-consumer delivery, including curbside pickup. MedMen expects to continue offering a variety of purchasing options for its customers to navigate through the COVID-19 pandemic, which is expected to increase revenues in the coming periods.

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Cost of Goods Sold and Gross Profit

Cost of goods sold for the three months ended December 26, 2020 was $15.8 million, a decrease of $15.4 million, or 49%, compared with $31.2 million of cost of goods sold for the three months ended December 28, 2019. Gross profit for the three months ended December 26, 2020 was $18.0 million, representing a gross margin of 53%, compared with gross profit of $12.9 million, representing a gross margin of 29%, for the three months ended December 28, 2019. The increase in gross margin is primarily due to the Company’s retail optimization efforts in which improvements in the Company’s product sourcing and favorable changes to pricing and payment terms in key vendor agreements resulted in improved margins for the fiscal second quarter of 2021. In addition, the Company’s shrink-to-grow plan in Florida continues to drive results in which improving plant yield and quality has resulted in an increase in average revenue per box.

For the three months ended December 26, 2020, the Company had 24 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which one located within the state of Arizona was classified as discontinued operations, compared to 32 active retail locations for the comparative prior period. For

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the three months ended December 26, 2020, MedMen operated five cultivation and production facilities compared to six cultivation facilities for the three months ended December 28, 2019. During the fiscal second quarter of 2021, the Company completed the sale of one facility in Arizona (Tempe) as a result of the Company’s plan to divest non-core assets. As of the fiscal second quarter of 2021, the Company continues to evaluate strategic partnerships for its cultivation and production facilities in California and Nevada. During the fiscal fourth quarter of 2020, five retail locations in Florida were temporarily closed in order to shift supply levels from its Eustis facility to the Company’s highest-performing stores in Florida which remain closed as of December 26, 2020. MedMen expects margins to improve in the coming periods as the Company restructures certain operations and divests licenses in non-core markets.

Total Expenses

Total expenses for the three months ended December 26, 2020 were $44.4 million, a decrease of $37.0 million, or 45%, compared to total expenses of $81.4 million for the three months ended December 28, 2019, which represents 131% of revenue for the three months ended December 26, 2020, compared to 185% of revenue for the three months ended December 28, 2019. The decrease in total expenses was attributable to the factors described below.

General and administrative expenses for the three months ended December 26, 2020 and December 28, 2019 were $33.6 million and $60.3 million, respectively, a decrease of $26.7 million, or 44%. General and administrative expenses have decreased primarily due to the Company’s efforts to reduce company-wide selling, general and administrative expenses (“SG&A”). Key drivers of the decrease in general and administrative expenses include overall corporate cost savings, strategic headcount reductions across various departments, and elimination of non-core functions and overhead in several departments, resulting in a decrease in payroll and payroll related expenses of $14.0 million, a decrease in share-based compensation expense of $0.9 million, and a decrease in professional fees of $1.5 million. In addition, licenses, fees and taxes decreased $4.1 million from the comparative prior period due to the decrease in the number of active retail locations and facilities for the three months ended December 26, 2020.

Sales and marketing expenses for the three months ended December 26, 2020 and December 28, 2019 were $0.2 million and $3.6 million, respectively, a decrease of $3.4 million, or 94%. The decrease in sales and marketing expenses is primarily attributed to the reduction in marketing and sales related spending compared to the same period in the prior year as part of the Company’s corporate cost reduction initiatives. During the three months ended December 26, 2020, the Company continued to redefine its marketing initiatives and focus on strategies that provide higher returns on customer connection. For the fiscal second quarter of 2021, sales and marketing initiatives focused on the Company’s loyalty customers through the Buds Loyalty program which personalizes shopping recommendations and gives priority product access through local initiatives that relatively are low in cost and more based on human capital, compared to a traditional and digital paid media marketing campaign of $2.3 million during the three months ended December 28, 2019.

Depreciation and amortization for the three months ended December 26, 2020 and December 28, 2019 was $9.7 million and $6.6 million, respectively, an increase of $3.1 million, or 47%. The increase was primarily related to $6.0 million of intellectual property that the Company began amortizing in the fiscal third quarter of 2020 in which the Company also recognized additional amortization during the three months ended December 26, 2020.

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Realized and unrealized changes in fair value of contingent consideration for the three months ended December 26, 2020 and December 28, 2019 was $0.1 million and $5.2 million, respectively, a decrease of $5.1 million, or 98%. The contingent consideration is related to an acquisition of a California dispensary license during the fiscal first quarter of 2020 wherein the liability is remeasured at each reporting period. The lock-up period expired during the fiscal second quarter of 2021 related to the contingent consideration of the acquired California dispensary.

Other operating expenses for the three months ended December 26, 2020 and December 28, 2019 was $0.8 million and $5.7 million, respectively, a decrease of $4.9 million, or 86%. Other expenses include loss on disposal of assets, restructuring fees, loss on settlement of accounts payable, and gain on lease terminations. The decrease was primarily attributable to the $5.3 million of restructuring fees recognized during the three months ended December 26, 2019 versus $0.6 million during the current period.

Total Other Expense

Total other expense for the three months ended December 26, 2020 was $19.7 million, an increase of $17.3 million compared to total other expense of $2.4 million, or 721%, for the three months ended December 28, 2019. The increase in total other expense was primarily attributable to the Company’s higher debt balance as of December 26, 2020 which increased $25.0 million compared to December 28, 2019 as a result of the 2020 Term Loan and the Unsecured Convertible Facility as well as issuances from the GGP Facility. Accordingly, amortization of debt discount and loan origination fees of $6.9 million for the three months ended December 26, 2020 increased by $5.1 million compared to $1.8 million for the three months ended December 28, 2019 and interest expense of $10.2 million for the three months ended December 26, 2020 increased by $2.1 million compared to $8.1 million for the three months ended December 28, 2019. In addition, the Company recognized a gain on assets held for sale of $5.0 million in the prior period versus a loss of $2.0 million in the current period. During the three months ended December 28, 2019, $2.9 million of other income was recognized for change in fair value of derivatives compared to other expense of $0.2 million for the three months ended December 26, 2020.

Provision for Income Taxes

The provision for income tax expense for the three months ended December 26, 2020 was $24.0 million compared to the provision for income tax benefit of $14.6 million for the three months ended December 28, 2019, primarily due to the Company reporting increased expenses subject to IRC Section 280E relative to pre-tax book loss. The Company incurred a large amount of expenses that were not deductible due to IRC Section 280E limitations which resulted in income tax expense being incurred while there were pre-tax losses for the three months ended December 26, 2020.

Net Loss

Net loss from continuing operations for the three months ended December 26, 2020 was $70.1 million, an increase of $13.8 million, or 25%, compared to a net loss from continuing operations of $56.3 million for the three months ended December 28, 2019. The increase in net loss from continuing operations was mainly attributable to the change in the Company’s income tax provision as discussed above, offset by the Company’s continued focus on cost efficiency within the corporate structure which includes strategic headcount reductions, elimination of non-core functions and overhead in several departments, renegotiation of ancillary cost to the business, as well as modifying sales and marketing strategies for the changing customer base. Net loss attributable to non-controlling interest for the three months ended December 26, 2020 was $19.2 million, resulting in net loss of $49.7 million attributable to the shareholders of MedMen Enterprises Inc. compared to $41.1 million for the three months ended December 28, 2019.

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Six Months Ended December 26, 2020 Compared to Six Months Ended December 28, 2019

Six Months Ended December 26, December 28, $ %

Revenue $ 69.4 $ 83.7 $ (14.3) (17%) Cost of Goods Sold 34.6 51.5 (16.9) (33%)

Gross Profit 34.8 32.2 2.6 8%

Expenses: General and Administrative 65.3 114.4 (49.1) (43%) Sales and Marketing 0.4 9.4 (9.0) (96%) Depreciation and Amortization 18.3 16.1 2.2 14% Realized and Unrealized Loss on Changes in Fair Value of Contingent Consideration 0.4 7.5 (7.1) (95%) Impairment Expense 0.8 - 0.8 100% Other Operating Expense (Income) (15.9) 5.0 (20.9) (418%)

Total Expenses 69.3 152.4 (83.1) (55%)

Loss from Operations (34.5) (120.2) 85.7 (71%)

Other Expense (Income): Interest Expense 21.4 16.3 5.1 31% Interest Income (0.5) (0.6) 0.1 (17%) Amortization of Debt Discount and Loan Origination Fees 10.1 4.9 5.2 106% Change in Fair Value of Derivatives (0.1) (8.0) 7.9 (99%) Realized and Unrealized Gain on Investments and Assets Held for Sale (10.5) (16.5) 6.0 (36%) Loss on Extinguishment of Debt 11.1 32.2 (21.1) (66%)

Total Other Expense 31.5 28.3 3.2 11%

Loss from Continuing Operations Before Provision for Income Taxes (66.0) (148.5) 82.5 (56%) Provision for Income Tax (Expense) Benefit (34.3) 32.3 (66.6) (206%)

Net Loss from Continuing Operations (100.3) (116.2) 15.9 (14%) Net Loss from Discontinued Operations, Net of Taxes (1.5) (39.9) 38.4 (96%)

Net Loss (101.8) (156.1) 54.3 (35%)

Net Loss Attributable to Non-Controlling Interest (30.1) (90.6) 60.5 (67%)

Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (71.7) $ (65.5) $ (6.2) 9%

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (105.0) $ (69.8) $ (35.2) 50% EBITDA from Continuing Operations (Non-GAAP) $ (16.1) $ (109.8) $ 93.7 (85%) Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (23.5) $ (66.1) $ 42.6 (64%)

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Revenue

Revenue for the six months ended December 26, 2020 was $69.4 million, a decrease of $14.3 million, or 17%, compared to revenue of $83.7 million for the six months ended December 28, 2019. The decrease in revenue was driven by the impact of COVID-19 during the six months ended December 26, 2020. Retail revenue for the six months ended December 26, 2020 in California and Nevada decreased $21.9 million and $4.7 million, respectively, compared to the six months ended December 28, 2019 offset by increased retail sales in Illinois, Florida and New York during the six months ended December 26, 2020. During the six months ended December 26, 2020, the Company modified its retail operations in select markets to include curbside pickup and delivery in response to the COVID-19 pandemic. MedMen expects to continue offering a variety of purchasing options for its customers to navigate through the COVID-19 pandemic, which is expected to increase revenues in the coming periods. Further, overall decreased sales was also related to temporary closures and the divestiture of certain retail locations as part of the Company’s turnaround plan implemented in November 2019. For the six months ended December 26, 2020, MedMen had 24 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which one retail location within the state of Arizona was classified as discontinued operations, compared to 32 active retail locations with three located within the state of Arizona classified as discontinued operations for the comparative prior period. Since December 28, 2019, the Company opened their Coral Shores location and temporarily closed five retail locations in the state of Florida to redirect inventory from its Eustis facility to its highest performing stores. The Company also divested four retail locations in California, Illinois, and Arizona since December 28, 2019 to raise non-dilutive financing through the sale of non-core assets. As of December 26, 2020, the Company had 23 active retail locations related to continuing operations.

Cost of Goods Sold and Gross Profit

Cost of goods sold for the six months ended December 26, 2020 was $34.6 million, a decrease of $16.9 million, or 33%, compared with $51.5 million of cost of goods sold for the six months ended December 28, 2019. The decrease in cost of goods sold is primarily driven by the decrease in active retail locations and cultivation and manufacturing facilities. For the six months ended December 26, 2020, the Company had 24 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which one located within the state of Arizona was classified as discontinued operations, compared to 32 active retail locations for the comparative prior period. Gross profit for the six months ended December 26, 2020 was $34.8 million, representing a gross margin of 50%, compared with gross profit of $32.2 million, representing a gross margin of 38%, for the six months ended December 28, 2019. The increase in gross margin is primarily due to the Company’s focus on retail profitability and improvements in its supply chain and cultivation facilities. During the six months ended December 26, 2020, the Company strategically closed five retail locations in Florida to provide better and consistent supply for its patients. While these dispensaries remain temporarily closed as of December 26, 2020, the Company saw improved plant yields and quality driving improved margins. For the six months ended December 26, 2020, MedMen operated five cultivation and production facilities compared to six cultivation facilities in the comparative prior period. In November 2020, the Company completed the sale of one facility in Arizona (Tempe) as a result of the Company’s plan to divest non-core assets. During the six months ended December 26, 2020, the Company also reduced the cash burn associated with cultivation and manufacturing operations in California and Nevada and continues to evaluate strategic partnerships for these facilities. MedMen expects margins to improve in the coming periods as the Company restructures certain operations and divests licenses in non-core markets.

Total Expenses

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total expenses for the six months ended December 26, 2020 were $69.3 million, a decrease of $83.1 million, or 55%, compared to total expenses of $152.4 million for the six months ended December 28, 2019, which represents 100% of revenue for the six months ended December 26, 2020, compared to 182% of revenue for the six months ended December 28, 2019. The decrease in total expenses was attributable to the factors described below.

General and administrative expenses for the six months ended December 26, 2020 and December 28, 2019 were $65.3 million and $114.4 million, respectively, a decrease of $49.1 million, or 43%. General and administrative expenses have decreased primarily due to the Company’s focus on right-sizing its corporate infrastructure by reducing company-wide SG&A while improving efficiency. Key drivers of the decrease in general and administrative expenses include overall corporate cost savings, strategic headcount reductions across various departments, and elimination of non-core functions and overhead in several departments. The decrease of $49.1 million compared to the six months ended December 28, 2019 was related to a decrease in payroll and payroll related expenses of $24.9 million, a decrease in share-based compensation expense of $6.3 million, a decrease in professional fees of $3.2 million, a decrease in licenses, fees and taxes of $3.2 million.

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Sales and marketing expenses for the six months ended December 26, 2020 and December 28, 2019 were $0.4 million and $9.4 million, respectively, a decrease of $9.0 million, or 96%. The decrease in sales and marketing expenses is primarily attributed to the reduction in marketing and sales related spending due to the implementation of the Company’s cost-cutting strategy. In the fiscal second quarter of 2021, the Company continues to be extremely disciplined on budget allocation to marketing and has redefined its marketing initiatives to target its changing customer base. The Company shifted its approach from third-party listing services to integration efforts with its point-of-sale systems to increase awareness in local customers and improve the customer experience while providing higher returns. Traditional and digital paid media marketing campaign of $6.3 million in the comparative prior period was reduced to $0.1 million during the six months ended December 26, 2020.

Depreciation and amortization for the six months ended December 26, 2020 and December 28, 2019 was $18.3 million and $16.1 million, respectively, an increase of $2.2 million, or 14%. The increase was primarily related to $6.0 million of intellectual property that the Company began amortizing in the fiscal third quarter of 2020, resulting in amortization expense of $0.8 million during the six months ended December 26, 2020 versus nil in the comparative prior period.

Realized and unrealized changes in fair value of contingent consideration for the six months ended December 26, 2020 and December 28, 2019 was $0.4 million and $7.5 million, respectively, a decrease of $7.1 million, or 95%. The contingent consideration is related to an acquisition of a California dispensary license during the fiscal first quarter of 2020 wherein the expiration of the lock-up period occurred during the fiscal second quarter of 2021.

Impairment expense for the six months ended December 26, 2020 and December 28, 2019 was $0.8 million and nil, respectively, an increase of $0.8 million, or 100%. The increase relates to the impairment of a California dispensary license transferred to assets held for sale during the fiscal first quarter of 2021 in which the asset was measured at the lower of its carrying amount or FVLCTS upon classification

Other operating expense (income) for the six months ended December 26, 2020 and December 28, 2019 was $(15.9) million and $5.0 million, respectively, a decrease of $20.9 million, or 418%. Other expenses include loss on disposal of assets, restructuring fees, loss on settlement of accounts payable, and gain on lease terminations. The change was primarily attributable to the $16.3 million gain related to the lease deferral with the REIT during the fiscal first quarter of 2021 as the decrease in present value of lease payments was greater than the remaining net asset balance of finance lease assets. The Company also recognized a $2.9 million gain on lease terminations in Florida and Illinois during the six months ended December 26, 2020. In addition, restructuring fees totaled $1.2 million for the six months ended December 26, 2020, a decrease of $4.5 million compared to $5.6 million in the comparative prior period.

Total Other Expense

Total other expense for the six months ended December 26, 2020 was $31.5 million, an increase of $3.2 million compared to total other expense of $28.3 million, or 11%, for the six months ended December 28, 2019. The increase in total other expense was primarily attributable to a loss on extinguishment of debt of $32.2 million related to the First Amendment of the GGP Facility during the six months ended December 28, 2019 compared to a loss on extinguishment of debt of $11.1 million during the current period primarily related to the July 2, 2020 amendment of the GGP Facility, resulting in a $21.1 million decrease in loss on extinguishment of debt. This was offset by a $7.9 million decrease in the changes in fair value of derivatives which are based on the closing price of the Company’s warrants related to bought deals traded on the Canadian Securities Exchange under the ticker symbol “MMEN.WT” which have stabilized during the six months ended December 26, 2020, compared to the same period prior. In addition, interest expense of $21.4 million for the six months ended December 26, 2020 increased by $5.1 million compared to $16.3 million for the six months ended December 28, 2019 as a result of the Company’s higher debt balance. Similarly, amortization of debt discount of $10.1 million for the six months ended December 26, 2020 increased by $5.2 million compared to $4.9 million for the comparative prior period. During the current period, proceeds from issuances of the GGP Facility were $5.5 million and proceeds from issuances of notes payable, including the 2020 Term Loan and the Unsecured Convertible Facility, totaled $14.8 million.

Provision for Income Taxes

The provision for income tax expense for the six months ended December 26, 2020 was $34.3 million compared to the provision for income tax benefit of $32.3 million for the six months ended December 28, 2019, primarily due to the Company reporting increased expenses subject to IRC Section 280E relative to pre-tax book loss. The Company incurred a large amount of expenses that were not deductible due to IRC Section 280E limitations which resulted in income tax expense being incurred while there were pre-tax losses for the six months ended December 26, 2020.

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Net Loss

Net loss from continuing operations for the six months ended December 26, 2020 was $100.3 million, a decrease of $15.9 million, or 14%, compared to a net loss from continuing operations of $116.2 million for the six months ended December 28, 2019. The decrease in net loss from continuing operations was mainly attributable to the decrease in general and administrative expenses and sales and marketing expenses as a direct result of the Company’s turnaround plan which includes efforts to optimize SG&A and right-size the Company’s corporate infrastructure. In addition to the decrease loss on extinguishment of debt, the Company recognized a $16.3 million gain related to the REIT lease deferral during the fiscal first quarter of 2021. This was offset by the increase in provision for income taxes as discussed above. Net loss attributable to non-controlling interest for the six months ended December 26, 2020 was $30.1 million, resulting in net loss of $71.7 million attributable to the shareholders of MedMen Enterprises Inc. compared to $65.5 million for the six months ended December 28, 2019.

Year Ended June 27, 2020 Compared to Year Ended June 29, 2019

Year Ended June 27, June 29, $ % ($ in Millions) 2020 2019 Change Change

Revenue $ 157.1 $ 119.9 $ 37.2 31% Cost of Goods Sold 99.0 64.5 34.5 53%

Expenses: General and Administrative 200.3 239.3 (39.0) (16)% Sales and Marketing 10.6 27.5 (16.9) (61)% Depreciation and Amortization 40.0 22.1 17.9 81% Realized and Unrealized Gain on Changes in Fair Value of Contingent Consideration 9.0 - 9.0 -% Impairment Expense 239.5 - 239.5 -% Loss on Disposals of Assets, Restructuring Fees and Other Expense 6.2 16.5 (10.3) (62)%

Total Expenses 505.6 305.4 200.2 66%

Loss from Operations (447.5) (250.0) (197.5) 79%

Other Expense (Income): Interest Expense 40.4 12.4 28.0 226% Interest Income (0.8) (0.7) (0.1) 14% Amortization of Debt Discount and Loan Origination Fees 9.1 8.3 0.8 10% Change in Fair Value of Derivatives (8.8) (3.9) (4.9) 126% Realized and Unrealized Gain on Investments, Assets Held for Sale and Other Assets (16.4) (4.3) (12.1) 281% Loss on Extinguishment of Debt 44.4 1.2 43.2 3,600% Total Other Expense 67.9 13.0 54.9 422%

Loss from Continuing Operations Before Provision for Income Taxes (515.4) (263.0) (252.4) 96% Provision for Income Tax (Expense) Benefit 39.6 6.4 33.2 (519)%

Net Loss from Continuing Operations (475.8) (256.6) (219.2) 85% Net Loss from Discontinued Operations, Net of Taxes (50.8) (1.3) (49.5) 3,808%

Net Loss (526.6) (257.9) (268.7) 104%

Net Loss Attributable to Non-Controlling Interest (279.3) (188.8) (90.5) 48%

Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (247.3) $ (69.1) $ (178.2) 258%

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (217.1) $ (208.3) $ (8.8) 4% EBITDA from Continuing Operations (Non-GAAP) $ (423.2) $ (219.6) $ (203.6) 93% Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (115.9) $ (169.7) $ 53.8 (32)%

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Revenue

Revenue for the year ended June 27, 2020 was $157.1 million, an increase of $37.2 million, or 31%, compared to revenue of $119.9 million for the year ended June 29, 2019. The increase in revenue was driven by the acquisitions of dispensaries and the operationalization of related licenses in several states during 2018 through fiscal year ending June 27, 2020. More specifically, for the fiscal year ended June 27, 2020, MedMen had 26 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which three were located within the state of Arizona and were classified as discontinued operations, compared to 23 active retail locations for the same period in the prior year, of which three were located within the state of Arizona and were classified as discontinued operations. In total, during the year ended June 27, 2020, the Company opened seven new retail locations in Florida and acquired two additional retail locations, one in California and one in Illinois - at one point totaling 32 active retail locations which resulted in revenues of $16.5 million for the current fiscal year. In particular, revenue from the state of Florida was $7.0 million from eight operational dispensaries for the year ended June 27, 2020 compared to a trivial amount from one dispensary opened on June 14, 2019 during the year ended June 29, 2019. As of June 27, 2020, the Company had 23 active retail locations related to continuing operations as a result of store closures in the third and fourth quarter of 2020. During the fiscal third quarter of 2020, the Company permanently closed its Seaside, California store location, which is classified as an asset held for sale in the Consolidated Balance Sheet as of June 27, 2020. During the fiscal fourth quarter of 2020, the Company temporarily closed five retail locations in the state of Florida to redirect inventory from its Eustis facility to its highest performing stores.

Cost of Goods Sold and Gross Profit

Cost of goods sold for the fiscal year ended June 27, 2020 was $99.0 million, an increase of $34.5 million, or 53%, compared with $64.5 million of cost of goods sold for fiscal year ended June 29, 2019. The increase in cost of goods sold is primarily driven by the acquisitions of dispensaries and cultivation and manufacturing facilities and the operationalization of related licenses in several states during 2018 through fiscal year 2020, resulting in increased revenues as well as product, labor and overhead costs associated with the Company’s retail, cultivation and manufacturing expansion. For the fiscal year ended June 27, 2020, the Company had 26 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which three were located within the state of Arizona and were classified as discontinued operations, compared to 23 active retail locations. At one point during the year ended June 27, 2020, the Company had 32 active retail locations as a result of new store openings in Florida and the acquisition of two operational dispensaries, resulting in cost of goods sold of $15.5 million for the current fiscal year. In particular, cost of goods sold from the state of Florida was $10.1 million for the year ended June 27, 2020 compared to $1.5 million for the year ended June 29, 2019 as a result of new store openings. Gross profit for the year ended June 27, 2020 was $58.1 million, representing a gross margin of 37%, compared with gross profit of $55.4 million, representing a gross margin of 46%, for the year ended June 29, 2019. The change in gross profit was attributable to cost of goods sold increasing at a higher rate than the increase in revenues, primarily due to ramping up the Company’s Florida operations during the year ended June 27, 2020. Gross profit in the state of Florida was $(3.1) million for the year ended June 27, 2020, representing a negative gross margin of 44%, was due to higher production costs as economies of scale were not yet realized in the Company's first full year of operations in Florida, a vertically-integrated state. Despite continuous improvements in Florida, a vertically integrated state, the Eustis cultivation facility is in the process of increasing its production levels to service its existing retail locations in Florida, and thus allow the reopening of the five locations temporarily closed, and additional retail locations in the future, with a total of 13 stores to be expected in Florida upon stabilization.

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For the fiscal years ended June 27, 2020 and June 29, 2019, MedMen operated six cultivation and production facilities in the states of Nevada, California, New York, Florida and Arizona, of which two were related to the operations within the state of Arizona that were classified as discontinued operations. Third-party wholesale revenue

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and cost of goods sold was not significant for the year ended June 27, 2020 and June 29, 2019 and is classified as discontinued operations as it relates to the Company’s operations in the state of Arizona. Intercompany wholesale revenue and cost of goods are eliminated upon consolidation. During the fiscal fourth quarter of 2020, the Company began evaluating strategic partnerships for its cultivation and production facilities in California and Nevada so it can focus on retail operations. MedMen expects costs of goods sold to increase at a slower rate than the increase in revenue in the coming periods as the Company restructures certain operations and divests licenses in non-core markets.

Total Expenses

Total expenses for the fiscal year ended June 27, 2020 were $505.6 million, an increase of $200.2 million, or 66%, compared to total expenses of $305.4 million for the fiscal year ended June 29, 2019, which represents 322% of revenue for the fiscal year ended June 27, 2020, compared to 255% of revenue for the fiscal year ended June 29, 2019. The increase in total expenses was attributable to the factors described below.

General and administrative expenses for the year ended June 27, 2020 and June 29, 2019 were $200.3 million and $239.3 million, respectively, a decrease of $39.0 million, or 16%. General and administrative expenses have decreased primarily due to the Company’s efforts to reduce company-wide selling, general and administrative expenses (“SG&A”). See “Recent Developments” for further information on the reduction in SG&A. Key drivers of the decrease in general and administrative expenses include overall corporate cost savings, strategic headcount reductions across various departments, and elimination of non-core functions and overhead in several departments, resulting in a decrease in payroll and payroll related expenses of $25.9 million and a decrease in share-based compensation expense of $21.5 million. Such decreases were offset by an increase in rent expense of $9.8 million due to new leases entered into as part of the Company’s expansion in Florida.

Sales and marketing expenses for the year ended June 27, 2020 and June 29, 2019 were $10.6 million and $27.5 million, respectively, a decrease of $16.9 million, or 61%. The decrease in sales and marketing expenses is primarily attributed to the reduction in marketing and sales related spending compared to the same period in the prior year as part of the Company’s corporate cost reduction initiatives. Specifically, marketing spending on paid media decreased by $9.2 million, public relations decreased by $1.4 million, and online and print advertising decreased by $0.8 million. During fiscal year 2019, the Company launched The New Normal, a campaign that focused on normalizing cannabis and reinforcing the leadership position of MedMen to drive customer visits in all of the Company’s markets, that totaled over $5.0 million, compared to no marketing campaign of the same scale during fiscal year 2020.

Depreciation and amortization for the year ended June 27, 2020 and June 29, 2019 was $40.0 million and $22.1 million, respectively, an increase of $17.9 million, or 81%. The increase is attributed to the growth of the Company’s operations through acquisitions, as well as significant property and equipment acquired in recent periods as compared to the same period in the prior year. During the year ended June 27, 2020, total cash and non-cash additions to property and equipment was $102.3 million, resulting in an increase in depreciation expense of $12.5 million compared to year ended June 29, 2019. In addition, the increase in depreciation and amortization was also related to depreciation expense of $2.8 million recorded during the year ended June 27, 2020 for finance leases as a result of the Company’s adoption of ASC 842 on June 30, 2019.

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Unrealized changes fair value of contingent consideration of $9.0 million for the year ended June 27, 2020 was related to the acquisition on One Love Beach Club wherein additional shares are required to be paid upon the expiration of the lock-up which were initially measured at nil on the closing date. The liability is remeasured at each reporting period in which the Company recognized a loss on changes in fair value of contingent consideration of $9.0 million.

During the year ended June 27, 2020, the Company recognized impairments of long-lived assets and other assets totaling $239.5 million due to changes in anticipated revenue projections as a result of recent economic and market conditions related to the COVID-19 pandemic and current regulatory environment. At year-end, the Company recognized an impairment expense of $143.0 million on property and equipment, $39.0 million on intangible assets, $26.3 million on goodwill, $19.8 million on operating lease right-of-use assets, $5.9 million on other assets, and $5.6 million on assets held for sale. See “Critical Accounting Policies, Significant Judgments and Estimates and Recent Accounting Pronouncements” for further information on impairment expense. No impairment expense was recognized during the year ended June 29, 2019.

Loss on disposals, restructuring fees and other expenses decreased $10.3 million compared to the year ended June 29, 2019 primarily due to a decrease in loss from disposal of assets of $9.2 million as a result of a decrease in sales and leaseback transactions during the current year, and a decrease in restructuring fees of $1.1 million.

Total Other Expense

Total other expense for the fiscal year ended June 27, 2020 was $67.9 million, an increase of $54.9 million compared to total other expense of $13.0 million, or 422%, for the fiscal year ended June 29, 2019. The increase in total other expense was primarily attributable to a loss on extinguishment of debt of $42.5 million related to First and Third Amendment of the GGP Facility recognized during the current period. See “Note 18 - Senior Secured Convertible Credit Facility” in the audited Consolidated Financial Statements as of June 27, 2020 and June 29, 2019. Interest expense increased $28.0 million compared to the year ended June 29, 2019 as a result of the Company’s higher debt balance primarily due to the funding of additional tranches totaling $50.0 million under the GGP Facility and the related interest paid-in-kind. In addition, the increased interest expense was also related to the Company’s adoption of ASC 842 on June 30, 2019, resulting in interest expense related to capital leases of $6.3 million during the fiscal year ended June 27, 2020. Additionally, the increase in total other expense was also attributed to a write-off of assets of $9.0 million during the year ended June 27, 2020. This was offset by a $12.1 million increase in realized and unrealized gain on investments, assets held for sale and other assets which includes a gain of $16.4 million related to the assets acquired from the Termination of Merger with PharmaCann and sold during the fiscal year ended June 27, 2020.

Provision for Income Taxes

The provision for income tax benefit for the fiscal year ended June 27, 2020 was $39.6 million, an increase of $33.2 million, or 519% compared to the provision for income tax benefit of $6.4 million for the year ended June 29, 2019, primarily attributable to the reduction of the Company’s deferred tax liabilities through impairment of the underlying property, plant and equipment and intangible assets under U.S. GAAP. Deferred tax liabilities were $48.9 million and $84.6 million as of June 27, 2020 and June 29, 2019, respectively, representing a decrease of $35.6 million. During the year ended June 27, 2020, the Company recognized an impairment of $143.0 million on property and equipment and $39.0 million on intangible assets.

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Net Loss

Net loss from continuing operations for the year ended June 27, 2020 was $475.8 million, an increase of $219.2 million, or 85%, compared to a net loss from continuing operations of $256.6 million for the year ended June 29, 2019. The increase in net loss from continuing operations was mainly attributable to the impairment expense recognized during the fiscal fourth quarter of 2020 as described above, an increase in provision for income taxes as a result of such impairments, and an increase in interest expense given the Company’s higher debt balance. The loss on the extinguishment of debt related to amendments to credit facilities during the year ended June 27, 2020 was partially offset by gains on investments, assets held for sale and other assets. The increase in overall expenses were offset by a decrease in general and administrative expenses compared to the same period in the prior year as part of the Company’s efforts to reduce SG&A. Net loss attributable to non-controlling interest for the year ended June 27, 2020 was $279.3 million, resulting in net loss of $247.3 million attributable to the shareholders of MedMen Enterprises Inc. compared to $69.1 million for the year ended June 29, 2019.

In addition to providing financial measurements based on GAAP, the Company provides additional financial metrics that are not prepared in accordance with GAAP. Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision-making, for planning and forecasting purposes and to evaluate the Company’s financial performance. These non-GAAP financial measures (collectively, the “non-GAAP financial measures”) are:

Adjusted Net Loss from Continuing Net Loss from Continuing Operations adjusted for transaction costs, restructuring costs, share-based compensation, and Operations other non-cash operating costs. This non-GAAP measure represents the profitability of the Company excluding unusual and infrequent expenditures and non-cash operating costs.

EBITDA from Continuing Operations Net Loss from Continuing Operations adjusted for interest and financing costs, income taxes, depreciation, and amortization. This non-GAAP measure represents the Company’s current operating profitability and ability to generate cash flow.

Adjusted EBITDA from Continuing EBITDA from Continuing Operations (Non-GAAP) adjusted for transaction costs, restructuring costs, share-based Operations compensation, and other non-cash operating costs, such as changes in fair value of derivative liabilities and unrealized changes in fair value of investments. This non-GAAP measure represents the Company’s current operating profitability and ability to generate cash flow excluding non-recurring, irregular or one-time expenditures in order improve comparability.

Working Capital Current assets less current liabilities. This non-GAAP measure represents operating liquidity available to the Company.

Corporate SG&A Selling, general and administrative expenses related to the Company’s corporate functions. This non-GAAP measure represents scalable expenditures that are not directly correlated with the Company’s retail operations.

Retail Revenue Consolidated revenue less non-retail revenue, such as cultivation and manufacturing revenue. This non-GAAP measure provides a standalone basis of the Company’s performance as a cannabis retailer in the U.S. considering the Company’s long- term viability is correlated with cash flows provided by or used in retail operations.

Retail Cost of Goods Sold Consolidated cost of goods sold less non-retail cost of goods sold. This non-GAAP measure provides a standalone basis of the Company’s performance as a cannabis retailer in the U.S. considering the Company’s long-term viability is correlated with cash flows provided by or used in retail operations.

Retail Gross Margin Retail Revenue (Non-GAAP) less the related Retail Cost of Goods Sold (Non-GAAP). Retail Gross Margin (Non-GAAP) is reconciled to consolidated gross margin as follows: consolidated revenue less non-retail revenue reduced by consolidated cost of goods sold less non-retail cost of goods sold. This non-GAAP measure provides a standalone basis of the Company’s performance as a cannabis retailer in the U.S. considering the Company’s long-term viability is correlated with cash flows provided by or used in retail operations.

Retail Gross Margin Rate Retail Gross Margin (Non-GAAP) divided by Retail Revenue (Non-GAAP). Retail Gross Margin Rate (Non-GAAP) is reconciled to consolidated gross margin rate as follows: consolidated revenue less non-retail revenue reduced by consolidated cost of goods sold less non-retail cost of goods sold, divided by consolidated revenue less non-retail revenue. This non- GAAP measure provides a standalone basis of the Company’s performance as a cannabis retailer in the U.S. considering the Company’s long-term viability is correlated with cash flows provided by or used in retail operations.

Retail Adjusted EBITDA Margin Retail Gross Margin (Non-GAAP) less direct store operating expenses, including rent, payroll, security, insurance, office supplies and payment processing fees, local cannabis and excise taxes, distribution expenses, and inventory adjustments. This non-GAAP measure provides a standalone basis of the Company’s performance as a cannabis retailer in the U.S. considering the Company’s long-term viability is correlated with cash flows provided by or used in retail operations.

Retail Adjusted EBITDA Margin Rate Retail Adjusted EBITDA Margin (Non-GAAP) divided by Retail Revenue (Non-GAAP), which is calculated as consolidated revenue less non-retail revenue. This non-GAAP measure provides a standalone basis of the Company’s performance as a cannabis retailer in the U.S. considering the Company’s long-term viability is correlated with cash flows provided by or used in retail operations.

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Non-GAAP financial measures are financial measures that are not defined under GAAP. Management believes that these non-GAAP financial measures assess the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. The Company uses these non-GAAP financial measures and believes they enhance an investors’ understanding of the Company’s financial and operating performance from period to period. Management also believes that these non-GAAP financial measures enable investors to evaluate the Company’s operating results and future prospects in the same manner as management.

In particular, the Company continues to make investments in its cannabis properties and management resources to better position the organization to achieve its strategic growth objectives which have resulted in outflows of economic resources. Accordingly, the Company uses these metrics to measure its core financial and operating performance for business planning purposes. In addition, the Company believes investors use both GAAP and non-GAAP measures to assess management’s past and future decisions associated with its priorities and allocation of capital, as well as to analyze how the business operates in, or responds to, swings in economic cycles or to other events that impact the cannabis industry. However, these measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies in the Company’s industry. Accordingly, these non-GAAP financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

These non-GAAP financial measures exclude certain material non-cash items and certain other adjustments the Company believes are not reflective of its ongoing operations and performance. These financial measures are not intended to represent and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. These non-GAAP financial measures have important limitations as analytical tools and should not be considered in isolation or as a substitute for any standardized measure under GAAP. For example, certain of these non-GAAP financial measures:

· exclude certain tax payments that may reduce cash available to the Company;

· do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

· do not reflect changes in, or cash requirements for, working capital needs; and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on debt.

Other companies in the cannabis industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.

Retail Performance

Within the cannabis industry, MedMen is uniquely focused on the retail component of the value chain. For the fiscal quarters ended December 26, 2020 and June 27, 2020, the Company is providing detail with respect to earnings before interest, taxes, depreciation and amortization (“EBITDA”) attributable to the Company’s national retail operations to show how it is leveraging its retail footprint and strategically investing in the future. The table below highlights the Company’s national Retail Adjusted EBITDA Margin (Non-GAAP), which excludes corporate marketing expenses, distribution expenses, inventory adjustments, and local cannabis and excise taxes. Entity- wide Adjusted EBITDA (Non-GAAP) is presented in “Reconciliations of Non-GAAP Financial Measures”.

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Fiscal Quarter Ended December 26, 2020

Fiscal Quarter Ended December 26, September 26, $ % 2020 2020 Change Change Gross Profit $ 18.0 $ 16.8 $ 1.2 7%

Gross Margin Rate 53% 47% 6% 13%

Cultivation & Wholesale Revenue - (0.3) 0.3 100% Cultivation & Wholesale Cost of Goods Sold (1.2) (2.5) 1.3 (52)% Non-Retail Gross Margin (1.2) (2.2) 1.0 (45)%

Retail Gross Margin (Non-GAAP) $ 19.2 $ 19.0 $ 0.2 1%

Retail Gross Margin Rate (Non-GAAP) 57% 54% 3% 6%

Fiscal Quarter Ended December 26, September 26, $ % 2020 2020 Change Change

Net Loss $ (68.9) $ (32.8) $ (36.1) 110% Net Loss from Discontinued Operations, Net of Taxes (1.2) 2.7 (3.9) (144%) Provision for Income Tax Expense 24.0 10.3 13.7 133% Other Expense 19.7 11.7 8.0 68% Excluded Items (1) 0.9 (15.6) 16.5 (106%) Loss from Operations Before Excluded Items $ (25.5) $ (23.7) $ (1.8) 8%

Non-Retail Gross Margin (1.2) (2.2) 1.0 (45%) Non-Retail Operating Expenses (2) (30.1) (28.3) (1.8) 6% Non-Retail EBITDA Margin (31.3) (30.5) (0.8) 3%

Retail Adjusted EBITDA Margin (Non-GAAP) $ 5.8 $ 6.8 $ (1.0) (15%) Retail Adjusted EBITDA Margin Rate (Non-GAAP) 17% 19% (7%) (36%) ______(1)Items adjusted from Net Loss for the fiscal quarters ended December 26, 2020 and September 26, 2020 include realized and unrealized loss on changes in fair value of contingent consideration of $0.1 million and $0.3 million, respectively, impairment expense of nil and $0.8 million, respectively, and loss (gain) on disposals of assets, restructuring fees and other expenses of $0.8 million and $(16.7) million, respectively.

(2)Non-retail operating expenses is comprised of the following items:

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Fiscal Quarter Ended December 26, September 26, $ % 2020 2020 Change Change Cultivation & Wholesale $ 1.3 $ 0.4 $ 0.9 225% Corporate SG&A 15.3 16.2 (0.9) (6%) Depreciation & Amortization 9.7 8.6 1.1 13% Other (3) 3.8 3.1 0.7 23% Non-Retail Operating Expenses 30.1 28.3 1.8 6%

Direct Store Operating Expenses (4) 13.4 12.2 1.2 10% Excluded Items (1) 0.9 (15.6) 16.5 (106%) Total Expenses $ 44.4 $ 24.9 $ 19.5 78%

(3) Other non-retail operating expenses excluded from Retail Adjusted EBITDA Margin (Non-GAAP) for the fiscal quarters ended December 26, 2020 and September 26, 2020 primarily consist of transaction costs and restructuring costs of $2.7 million and $2.7 million, respectively, and share-based compensation of $1.6 million and $1.0 million, respectively, as commonly excluded from Adjusted EBITDA from Continuing Operations (Non-GAAP). Refer to “Reconciliations of Non-GAAP Financial Measures” below.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (4) For the current period, direct store operating expenses now includes local taxes of nil and $0.4 million for the fiscal quarters ended December 26, 2020 and September 26, 2020. Local taxes include cannabis sales and excise taxes imposed by municipalities in which the Company has active retail operations and vary by jurisdiction. Local taxes are not a cost required to directly operate the Company’s stores, but rather a byproduct of retail operations. In addition, distribution expenses of $1.4 million and $0.8 million and inventory adjustments of nil and $(1.8) million for the fiscal quarters ended December 26, 2020 and September 26, 2020, respectively, are also included in direct store operating expenses for the current reporting period. Distribution expenses relate to additional porter fees. Inventory adjustments consist of one-time write-offs related to unusual or infrequent events. Such expenses were presented as additional adjustments to arrive at Retail Adjusted EBITDA Margin (Non-GAAP) in prior periods and are now presented within retail operating expenses for a condensed presentation of Retail Adjusted EBITDA Margin (Non-GAAP).

The non-GAAP retail performance measures demonstrate the Company’s four-wall margins which reflect the sales of the Company’s retail operations relative to the direct costs required to operate such dispensaries. Retail revenue is related to net sales from the Company’s stores, excluding non-retail revenue, such as cultivation and manufacturing revenue. Similarly, retail cost of goods sold and direct store operating expenses are directly related to the Company’s retail operations. Non-Retail Revenue includes revenue from third-party wholesale sales. Non-Retail Cost of Goods Sold includes costs directly related to third-party wholesale sales produced by the Company’s cultivation and production facilities, such as packaging, materials, payroll, rent, utilities, security, etc. While third-party sales were not significant for the fiscal quarter ended December 26, 2020, Non-Retail Cost of Goods Sold related to cultivation and wholesale operations was $1.2 million due to unallocated overages from increased production burn rate. Non-Retail Operating Expenses include ongoing costs related to the Company’s cultivation and wholesale operations, corporate spending, and depreciation and amortization. Non-Retail EBITDA Margin reflects the gross margins of the Company’s cultivation and wholesale operations excluding any related operating expenses. To determine the Company’s four-wall margins, certain costs that do not directly support the Company’s retail function are excluded from Retail Adjusted EBITDA Margin (Non-GAAP).

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For the fiscal second quarter of 2021, system-wide retail revenue was $33.8 million across the Company’s operations in California, Nevada, New York, Illinois and Florida. This represents a 4% decrease, or $1.5 million, over the fiscal first quarter of 2021 of $35.3 million. The decrease in system-wide revenue was driven primarily by decreased consumer spending during the fiscal second quarter of 2021 wherein certain states like California and Nevada were impacted by the rise of COVID-19 cases. In particular, California, which is the largest market in which the Company operates in, and Nevada enacted a second stay-at-home order during the fiscal second quarter of 2021. In addition, during the fiscal second quarter of 2021, the Company did not recognize any retail revenue from Evanston, Illinois which was deconsolidated during the prior quarter in which revenue was recognized through August 10, 2020. During the fiscal first quarter of 2021, the Company recorded $2.0 million revenue from Evanston. Adjusting for Evanston, the fiscal second quarter of 2021 retail revenue increased $0.5 million compared to the fiscal first quarter of 2021 due to increases in retail revenue from Florida and New York which were partially offset by decreases in retail revenue from California and Nevada.

Retail Gross Margin Rate (Non-GAAP), which is Retail Gross Margin (Non-GAAP) divided by Retail Revenue (Non-GAAP), for the fiscal second quarter of 2021 was 57%, compared to the fiscal first quarter of 2021 of 54% as a result of the Company’s continued focus on optimizing its retail model, including improvements in product sourcing and positive changes to key vendor arrangements. Retail Gross Margin (Non-GAAP) is Retail Revenue (Non-GAAP) less the related Retail Cost of Goods Sold (Non-GAAP). The Company had an aggregate Retail Adjusted EBITDA Margin Rate (Non-GAAP), which is Retail Adjusted EBITDA Margin (Non-GAAP) divided by Retail Revenue (Non-GAAP), of 17% for the fiscal second quarter of 2021 which represents a decrease compared to the 19% realized in the fiscal first quarter of 2021 primarily due to direct store operating expenses which include, but are not limited to, rent, utilities, payroll and payroll related expenses, employee benefits, and security. Direct store operating expenses increased $1.2 million, or 10%, compared to the fiscal first quarter of 2021, primarily driven by a one-time bad debt reserve of $1.0 million related to discontinued retail shelf fee program.

Fiscal Quarter Ended June 27, 2020

Fiscal Quarter Ended June 27, March 28, $ % 2020 2020 Change Change Gross Profit $ 11.0 $ 14.8 $ (3.8) (26)% Gross Margin Rate 40% 32% 8% 25%

Cultivation & Wholesale Revenue - (0.5) 0.5 (100)% Cultivation & Wholesale Cost of Goods Sold (3.1) (7.1) 4.0 (56)%

Non-Retail Gross Margin (3.1) (6.6) 3.5 (53)%

Retail Gross Margin (Non-GAAP) $ 14.1 $ 21.4 $ (7.3) (34)% Retail Gross Margin Rate (Non-GAAP) 51% 47% 4% 9%

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Fiscal Quarter Ended June 27, March 28, $ % 2020 2020 Change Change Net Loss $ (232.5) $ (81.4) $ (151.1) 186% Net Loss from Discontinued Operations, Net of Taxes 1.4 1.9 (0.5) (26)% Provision for Income Tax (Expense) Benefit (67.4) 15.5 (82.9) (535)% Other Expense 13.7 21.1 (7.4) (35)% Excluded Items (1) 239.8 2.9 236.9 8,169% Loss from Operations Before Excluded Items (45.0) (40.0) (5.0) 13%

Non-Retail Gross Margin (3.1) (6.6) 3.5 (53)% Non-Retail Operating Expenses (2) (42.3) (37.0) (5.3) 14% Non-Retail EBITDA Margin (45.4) (43.6) (1.8) 4%

Retail Adjusted EBITDA Margin (Non-GAAP) $ 0.4 $ 3.6 $ (3.2) (89)% Retail Adjusted EBITDA Margin Rate (Non-GAAP) 1% 8% -7% (88)% ______(1) Items adjusted from Net Loss for the fiscal quarters ended June 27, 2020 and March 28, 2020 include realized and unrealized loss on changes in fair value of contingent consideration of $0.5 million and $1.0 million, respectively, impairment expense of $239.5 million and nil, respectively, and loss on disposals of assets, restructuring fees and other expenses of $(0.2) million and $1.9 million, respectively. (2) Non-retail operating expenses is comprised of the following items:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fiscal Quarter Ended June 27, March 28, $ % 2020 2020 Change Change Cultivation & Wholesale $ 1.6 $ 1.9 $ (0.3) (16)% Corporate SG&A 19.9 22.1 (2.2) (10)% Depreciation & Amortization 15.9 8.0 7.9 99% Other (3) 4.9 5.0 (0.1) (2)% Non-Retail Operating Expenses 42.3 37.0 5.3 14%

Direct Store Operating Expenses (4) 13.7 17.9 (4.2) (23)% Excluded Items (1) 239.8 2.9 236.9 8,169% Total Expenses $ 295.8 $ 57.8 $ 238.0 412%

(3) Other non-retail operating expenses excluded from Retail Adjusted EBITDA from Continuing Operations (Non-GAAP) for the fiscal quarters ended June 27, 2020 and March 28, 2020 primarily consist of transaction costs and restructuring costs of $5.7 million and $3.7 million, respectively, and share-based compensation of $(0.4) million and $1.8 million, respectively, as commonly excluded from Adjusted EBITDA (Non-GAAP). Refer to “Reconciliations of Non-GAAP Financial Measures” below. (4) For the current period, direct store operating expenses now includes local taxes of $1.1 million and $1.9 million for the fiscal quarters ended June 27, 2020 and March 28, 2020. Local taxes include cannabis sales and excise taxes imposed by municipalities in which the Company has active retail operations and vary by jurisdiction. Local taxes are not a cost required to directly operate the Company’s stores, but rather a byproduct of retail operations. In addition, distribution expenses of $0.8 million and $0.9 million and inventory adjustments of $(0.6) million and $(1.9) million for the fiscal quarters ended June 27, 2020 and March 28, 2020, respectively, are also included in direct store operating expenses for the current reporting period. Distribution expenses relate to additional porter fees. Inventory adjustments consist of one-time write-offs related to unusual or infrequent events. Such expenses were presented as additional adjustments to arrive at Retail Adjusted EBITDA Margin (Non-GAAP) in prior periods and are now presented within retail operating expenses for a condensed presentation of Retail Adjusted EBITDA Margin (Non-GAAP).

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The non-GAAP retail performance measures demonstrate the Company’s four-wall margins which reflect the sales of the Company’s retail operations relative to the direct costs required to operate such stores. Retail revenue is related to net sales from the Company’s stores. Similarly, retail cost of goods sold and direct store operating expenses are directly related to the Company’s retail operations. Non-retail revenue includes revenue from third-party wholesale sales. Non-retail cost of goods sold includes costs directly related to third-party wholesale sales produced by the Company’s cultivation and production facilities, such as packaging, materials, payroll, rent, utilities, security, etc. While third-party sales were not significant for the fiscal quarter ended June 27, 2020, non-retail cost of goods sold related to cultivation and wholesale operations was $3.1 million due to unallocated overages from increased production burn rate. Non-retail operating expenses include ongoing costs related to the Company’s cultivation and wholesale operations, corporate spending, and depreciation and amortization. Non-retail EBITDA margin reflects the gross margins of the Company’s cultivation and wholesale operations excluding any related operating expenses. To determine the Company’s four-wall margins, certain costs that do not directly support the Company’s retail function are excluded from retail EBITDA margin.

For the fiscal fourth quarter of 2020, system-wide retail revenue was $27.4 million across the Company’s operations in California, Nevada, New York, Illinois and Florida. This represents a 40% decrease, or $18.0 million, over the fiscal third quarter of 2020 of $45.4 million. The decrease in system-wide revenue was driven primarily by decreased sales as a result of COVID-19. In particular, certain retail locations in California and Nevada experienced a slowdown in sales during the fiscal fourth quarter of 2020 due to shelter-at-home orders and reduced tourism. The initiative of mobilizing curbside pickup and delivery during the fiscal quarter ended June 27, 2020 allowed more captured revenues and will continue to be a significant part of the Company’s future as consumer purchasing habits continue to evolve. During the fiscal fourth quarter of 2020, the Company temporarily closed five of its eight retail stores in Florida as a part of the Company’s efforts to optimize their current retail portfolio. The five locations were Sarasota, Orlando (International Drive), Tallahassee, Jacksonville and Key West. The Company will look to re-open the locations as additional supply is available through its Eustis cultivation and manufacturing facility as a result of upgrades and process improvements that are currently underway at the facility. Subsequent to June 27, 2020, the Company opened its Coral Shores location near Fort Lauderdale, Florida.

Retail Gross Margin Rate (Non-GAAP) for the fiscal fourth quarter of 2020 was 51%, compared to the fiscal third quarter of 2020 of 47% as a result of the factors described above. The Company had an aggregate Retail Adjusted EBITDA Margin Rate (Non-GAAP) of 1% for the fiscal fourth quarter of 2020 which represents a decrease compared to the 8% realized in the fiscal third quarter of 2020 primarily due to direct store operating expenses and other adjustments. Direct store operating expenses include, but are not limited to, rent, utilities, payroll and payroll related expenses, employee benefits, and security, which decreased $4.2 million, or 23%, compared to the fiscal third quarter of 2020. The change was primarily driven by a decrease in payroll expense and security fees as a result of the Company’s cost-rationalization plan to reduce retail-level operating expenses in addition to modifications to the Company’s retail operations during the COVID-19 pandemic. The decrease in direct store operating expenses of 23% was not commensurate with the decrease in revenues of 40% during the fiscal fourth quarter of 2020, resulting in an overall decrease in Retail Adjusted EBITDA Margin Rate (Non-GAAP) compared to the fiscal third quarter of 2020.

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Corporate SG&A

Corporate-level general and administrative expenses across various functions including Marketing, Legal, Retail Corporate, Technology, Accounting and Finance, Human Resources and Security (collectively referred to as “Corporate SG&A”) are combined to account for a significant proportion of the Company’s total general and administrative expenses. Corporate SG&A now includes pre-opening expenses of $6.1 million and $5.9 million for the fiscal quarter ended December 26, 2020 and September 26, 2020, respectively, and $5.3 million and $4.7 million for the fiscal quarter ended June 27, 2020 and March 28, 2020, respectively, which were presented as non-Corporate SG&A in prior periods. Pre-opening expenses is excluded from Retail Adjusted EBITDA Margin (Non-GAAP) and thus more appropriately classified as Corporate SG&A.

Fiscal Quarter Ended December 26, 2020

Fiscal Quarter Ended December 26, September 26, $ % ($ in Millions) 2020 2020 Change Change

General and Administrative $ 33.6 $ 31.7 $ 1.9 6% Sales and Marketing 0.2 0.2 - -

Consolidated SG&A 33.8 31.9 1.9 6%

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Direct Store Operating Expenses (1) 13.4 12.2 1.2 10% Cultivation & Wholesale 1.3 0.4 0.9 225% Other (2) 3.8 3.1 0.7 23% Less: Non-Corporate SG&A 18.5 15.7 2.8 18%

Corporate SG&A as a Component of Adjusted EBITDA from Continuing Operations (Non-GAAP) $ 15.3 $ 16.2 $ (0.9) (6)% ______(1) For the periods presented, direct store operating expenses now include local taxes of nil and $0.4 million, distribution expenses of $1.4 million and $0.8 million and inventory adjustments of nil and $(1.8) million for the fiscal quarters ended December 26, 2020 and September 26, 2020, respectively. Refer to “Retail Performance” and notes therein for further information. (2) Other non-Corporate SG&A for the fiscal quarters ended December 26, 2020 and September 26, 2020 primarily consist of transaction costs and restructuring costs of $2.7 million and $2.7 million, respectively, and share-based compensation of $1.6 million and $1.0 million, respectively, as commonly excluded from Adjusted EBITDA (Non-GAAP). Refer to “Retail Performance” and notes therein for further information.

For the fiscal second quarter of 2021, Corporate SG&A (Non-GAAP) contributed $15.3 million to Adjusted EBITDA from Continuing Operations (Non-GAAP), representing a decrease of $0.9 million, or 6%, from the $16.2 million that Corporate SG&A (Non-GAAP) contributed to Adjusted EBITDA Loss from Continuing Operations (Non-GAAP) in the fiscal first quarter of 2021. The largest driver of the improvement was the Company’s continual effort to right-size its corporate infrastructure as a result of the successful implementation of the Company’s cost-cutting plans.

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Fiscal Quarter Ended June 27, 2020

Fiscal Quarter Ended June 27, March 28, $ % ($ in Millions) 2020 2020 Change Change

General and Administrative $ 39.9 $ 45.9 $ (6.0) (13)% Sales and Marketing 0.2 1.0 (0.8) (80)%

Consolidated SG&A 40.1 46.9 (6.8) (14)%

Direct Store Operating Expenses (1) 13.7 17.9 (4.2) (23)% Cultivation & Wholesale 1.6 1.9 (0.3) (16)% Other (2) 4.9 5.0 (0.1) (2)% Less: Non-Corporate SG&A 20.2 24.8 (4.6) (19)%

Corporate SG&A as a Component of Adjusted EBITDA from Continuing Operations (Non-GAAP) $ 19.9 $ 22.1 $ (2.2) (10)% ______(1) For the periods presented, direct store operating expenses now include local taxes of $1.1 million and $1.9 million distribution expenses of $0.8 million and $0.9 million and inventory adjustments of $(0.6) million and $(1.9) million for the fiscal quarters ended June 27, 2020 and March 28, 2020, respectively. See “Retail Performance” and notes therein for further information. (2) Other non-Corporate SG&A for the fiscal quarters ended June 27, 2020 and March 28, 2020 primarily consist of transaction costs and restructuring costs of $5.7 million and $3.7 million, respectively, and share-based compensation of $(0.4) million and $1.8 million, respectively, as commonly excluded from Adjusted EBITDA (Non-GAAP). See “Retail Performance” and notes therein for further information.

For the fiscal fourth quarter of 2020, Corporate SG&A (Non-GAAP) contributed $19.9 million to Adjusted EBITDA from Continuing Operations (Non-GAAP), representing a decrease of $2.2 million, or 10%, from the $22.1 million that Corporate SG&A (Non-GAAP) contributed to Adjusted EBITDA Loss from Continuing Operations (Non-GAAP) in the fiscal third quarter of 2020. The largest driver of the improvement was a reduction in headcount and marketing and technology related expenses as a result of the successful implementation of the Company’s cost-cutting plans announced on November 15, 2019. See below “Recent Developments”. As part of its efforts to optimize Corporate SG&A (Non-GAAP), marketing spend is now focused on consumer engagement through digital content, retail programming and retail partnerships that have an identifiable impact on store visits. Technology spend is now focused on driving revenue-generating activities, such as scaling MedMen’s curbside pickup and delivery platform. The Company expects additional improvements in reduction of Corporate SG&A (Non-GAAP) in the upcoming quarters.

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Reconciliations of Non-GAAP Financial Measures

Three and Six Months Ended December 26, 2020 and December 28, 2019

The table below reconciles Net Loss to Adjusted Net Loss from Continuing Operations (Non-GAAP) for the periods indicated.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, ($ in Millions) 2020 2019 2020 2019

Net Loss $ (68.9) $ (93.1) $ (101.8) $ (156.1)

Less: Net Loss from Discontinued Operations, Net of Taxes (1.2) 36.8 1.5 39.9 Add (Deduct) Impact of: Transaction Costs & Restructuring Costs 2.7 17.8 5.4 18.9 Share-Based Compensation 1.6 2.6 2.6 9.0 Other Non-Cash Operating Costs (1) 3.4 (0.4) (15.4) 15.8 Income Tax Effects (2) (0.8) (0.4) 2.7 2.6

Total Adjustments 6.9 19.6 (4.7) 46.3

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (63.1) $ (36.8) $ (105.0) $ (69.8)

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The table below reconciles Adjusted Net Loss to EBITDA from Continuing Operations (Non-GAAP) and Adjusted EBITDA from Continuing Operations (Non-GAAP) for the periods indicated.

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, ($ in Millions) 2020 2019 2020 2019

Net Loss $ (68.9) $ (93.1) $ (101.8) $ (156.1)

Less: Net Loss from Discontinued Operations, Net of Taxes (1.2) 36.8 1.5 39.9 Add (Deduct) Impact of: Net Interest and Other Financing Costs 9.7 7.8 20.8 15.6 Provision for Income Taxes 24.0 (14.6) 34.3 (32.3) Amortization and Depreciation 16.9 9.8 29.0 23.0

Total Adjustments 50.6 3.0 84.1 6.3

EBITDA from Continuing Operations (Non-GAAP) $ (19.5) $ (53.4) $ (16.1) $ (109.8)

Add (Deduct) Impact of: Transaction Costs & Restructuring Costs 2.7 17.8 5.4 18.9 Share-Based Compensation 1.6 2.6 2.6 9.0 Other Non-Cash Operating Costs (1) 3.4 (0.4) (15.4) 15.8

Total Adjustments 7.7 20.0 (7.4) 43.7

Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (11.8) $ (33.4) $ (23.5) $ (66.1) ______(1) Other non-cash operating costs for the periods presented were as follows:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Change in Fair Value of Derivative Liabilities $ 0.2 $ (2.9) $ (0.1) $ (8.0) Change in Fair Value of Investments 2.0 (5.0) (10.5) (16.5) Change in Fair Value of Contingent Consideration 0.1 5.2 0.4 7.5 Gain/Loss on Lease Modifications (1.3) - (17.9) (0.2) Gain/Loss on Extinguishment of Debt 0.9 0.7 11.1 32.2 Gain/Loss from Disposal of Assets 0.5 1.1 0.4 0.2 Impairment Expense - - 0.8 - Other Non-Cash Operating Costs 0.9 0.6 0.4 0.6

Total Other Non-Cash Operating Costs $ 3.4 $ (0.4) $ (15.4) $ 15.8

(2) Income tax effects to arrive at Adjusted Net Loss from Continuing Operations (Non-GAAP) are related to temporary tax differences in which a future income tax benefit exists, such as changes in fair value of investments, changes in fair value of contingent consideration, gain/loss from disposal of assets, and impairment expense. The income tax effect is calculated using the federal statutory rate of 21.0% and statutory rate for the state in which the related asset is held or the transaction occurs, most of which is in California with a statutory rate of 8.84%.

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Adjusted Net Loss from Continuing Operations (Non-GAAP) represents the profitability of the Company excluding unusual and infrequent expenditures and non-cash operating costs. The change in Adjusted Net Loss from Continuing Operations (Non-GAAP) was primarily due to reductions in SG&A as a direct result of successful implementation of the Company’s cost reduction initiatives as well as a decrease in transaction costs and restructuring costs as the Company scales back its expansion strategy and executes its turnaround plan. This was offset by an increase in the Company’s provision for income taxes driven by IRC Section 280E. Accordingly, Adjusted Net Loss from Continuing Operations (Non-GAAP) increased in the fiscal second quarter of 2021 compared to the prior period.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EBITDA from Continuing Operations (Non-GAAP) represents the Company’s current operating profitability and ability to generate cash flow and includes significant non-cash operating costs. Net Loss is adjusted for interest and financing costs as a direct result of debt financings, income taxes, and amortization and depreciation expense to arrive at EBITDA from Continuing Operations (Non-GAAP). Considering these adjustments, the Company had EBITDA from Continuing Operations (Non-GAAP) of $(19.5) million and $(16.1) million for the three and six months ended December 26, 2020 improved compared to the comparative prior periods. The change in EBITDA from Continuing Operations (Non-GAAP) was primarily due to the Company’s continued focus on its cost-reduction initiatives. In addition, the Company recognized a loss on extinguishment of debt of $32.2 million during the six months ended December 28, 2019 compared to $11.1 million in the current period, offset by a $16.3 million gain on lease modifications on the deferral of lease payments with the REIT in the fiscal first quarter of 2021.

For the three and six months ended December 26, 2020, the Company saw an improvement in Adjusted EBITDA from Continuing Operations (Non-GAAP) of $(11.8) million and $(23.5) million, respectively, compared to $(33.4) million and $(66.1) million for the three and six months ended December 28, 2019, respectively. The improvement was primarily related to a decrease in transaction costs and restructuring costs as the Company executes its strategic plan during fiscal year 2021. The financial performance of the Company is expected to further improve as the Company continues to focus on its turnaround plan and cost-optimization efforts and once all newly active retail locations have acclimatized to the geographic market and are fully operational.

Years Ended June 27, 2020 and June 29, 2019

The table below reconciles Net Loss to Adjusted Net Loss from Continuing Operations (Non-GAAP) for the periods indicated.

Three Months Ended Year Ended June 27, June 29, June 27, June 29, ($ in Millions) 2020 2019 2020 2019

Net Loss $ (232.5) $ (60.9) $ (526.5) $ (257.9)

Less: Net Loss from Discontinued Operations, Net of Taxes 1.4 (0.2) 50.8 1.3 Add (Deduct) Impact of: Transaction Costs & Restructuring Costs 5.7 6.7 28.2 15.7 Share-Based Compensation (0.4) 3.4 10.4 32.1 Other Non-Cash Operating Costs(1) 238.9 4.2 268.8 2.0 Income Tax Effects(2) (51.0) (1.8) (48.7) (1.5) Total Adjustments 193.2 12.5 258.7 48.3

Adjusted Net Loss from Continuing Operations (Non-GAAP) $ (37.9) $ (48.7) $ (217.1) $ (208.3)

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The table below reconciles Net Loss to EBITDA from Continuing Operations (Non-GAAP) and Adjusted EBITDA from Continuing Operations (Non-GAAP) for the periods indicated.

Three Months Ended Year Ended June 27, June 29, June 27, June 29, ($ in Millions) 2020 2019 2020 2019

Net Loss $ (232.5) $ (60.9) $ (526.5) $ (257.9)

Less: Net Loss from Discontinued Operations, Net of Taxes 1.4 (0.2) 50.8 1.3 Add (Deduct) Impact of: Net Interest and Other Financing Costs 15.0 5.1 39.7 11.5 Provision for Income Taxes (67.4) (12.4) (39.3) (6.4) Amortization and Depreciation 15.9 16.5 52.2 31.9

Total Adjustments (36.5) 9.2 52.6 37.0

EBITDA from Continuing Operations (Non-GAAP) $ (267.6) $ (52.0) $ (423.2) $ (219.6)

Add (Deduct) Impact of: Transaction Costs & Restructuring Costs 5.7 6.7 28.2 15.7 Share-Based Compensation (0.4) 3.4 10.4 32.1 Other Non-Cash Operating Costs(1) 239.0 4.2 268.7 2.1

Total Adjustments 244.3 14.3 307.3 49.9

Adjusted EBITDA from Continuing Operations (Non-GAAP) $ (23.3) $ (37.7) $ (115.9) $ (169.7) ______(1) Other non-cash operating costs for the periods presented were as follows:

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Three Months Ended Year Ended June 27, June 29, June 27, June 29, 2020 2019 2020 2019

Change in Fair Value of Derivative Liabilities (0.8) (1.6) (8.8) (3.9) Change in Fair Value of Investments 0.2 (2.0) (16.4) (4.3) Change in Fair Value of Contingent Consideration 0.5 - 7.5 - Gain/Loss on Extinguishment of Debt - - 43.8 1.2 Gain/Loss from Disposal of Assets (0.9) 7.9 1.0 9.3 Impairment Expense 239.5 - 239.5 -

Total Other Non-Cash Operating Costs $ 238.9 $ 4.2 $ 268.8 $ 2.0

Despite reductions in SG&A due to implementation of the Company’s cost reduction initiatives, the change in Adjusted Net Loss from Continuing Operations was primarily due to other non-cash operating costs, such as impairment and gains and losses on disposal of assets. This is adjusted for interest and financing costs as a direct result of debt financings, income taxes related to the number of retail locations and cultivation and production facilities operated, and amortization and depreciation expense related to the Company’s retail stores, cultivation and production facilities. Considering these adjustments, the Company had EBITDA from Continuing Operations (Non-GAAP) of $(423.2) million for the year ended June 27, 2020 compared to $(219.6) million for the year ended June 29, 2019, noting EBITDA from Continuing Operations (Non- GAAP) includes significant non-cash operating costs incurred during fiscal year 2020.

For the fiscal year ended June 27, 2020, the Company saw an improvement in Adjusted EBITDA from Continuing Operations (Non-GAAP) of $(115.9) million compared to $(169.7) million for the year ended June 29, 2019. The Company utilizes equity compensation as a tool to attract and retain employees and compensate corporate governance which was a focus of the Company’s expansion strategy executed during the fiscal year ended June 29, 2019. Other non-cash operating costs, such as impairment and gains and losses on disposal of assets, are excluded from Adjusted EBITDA from Continuing Operations (Non-GAAP) to reflect earnings from regular operations. The financial performance of the Company is expected to improve as the Company continues to focus on its turnaround plan and cost-optimization efforts and once all newly active retail locations have acclimatized to the geographic market and are fully operational. See “Liquidity and Capital Resources” for further discussion of management’s future outlook and executed strategic plan.

Refer to “Liquidity and Capital Resources” for further discussion of management’s future outlook and executed strategic plan. Refer to “Retail Performance” above for reconciliations of Retail Adjusted EBITDA.

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Cash Flows

Six Months Ended December 26, 2020 and December 28, 2019

Six Months Ended December 26, December 28, $ % ($ in Millions) 2020 2019 Change Change

Net Cash Used in Operating Activities $ (29.7) $ (69.7) $ 40.0 (57%) Net Cash Provided by (Used in) Investing Activities 15.4 (26.5) 41.9 (158%) Net Cash Provided by Financing Activities 11.8 88.9 (77.1) (87%)

Net Decrease in Cash and Cash Equivalents (2.5) (7.3) 4.8 (66%) Cash and Cash Equivalents, Beginning of Period 10.1 33.2 (23.1) (70%)

Cash and Cash Equivalents, End of Period $ 7.5 $ 26.0 $ (18.5) (71%)

Cash Flow from Operating Activities

Net cash used in operating activities was $29.7 million for the six months ended December 26, 2020, a decrease of $40.0 million, or 57%, compared to $69.7 million for the six months ended December 28, 2019. The decrease in cash used was primarily due to results of the Company’s cost rationalization strategy implemented since November 2019. Specifically, general and administrative expenses as well as sales and marketing include corporate-level expenses across various functions including Marketing, Legal, Retail Corporate, Technology, Accounting and Finance, Human Resources and Security which are combined to account for a significant proportion of the Company’s total general and administrative and sales and marketing expenses, which decreased $49.1 million and $9.0 million, respectively, compared to the six months ended December 28, 2019. The decrease in cash used was coupled with gains recognized on certain modifications to lease agreements of $17.9 million, a deferred tax recovery in the amount of $13.5 million, a decrease in change of contingent consideration related to a previously acquired California license of $7.1 million as well as a decrease in loss on extinguishment of debt and settlement of accounts payable and accrued liabilities of $21.8 million during the six months ended December 26, 2020.

Cash Flow from Investing Activities

Net cash provided by investing activities was $15.4 million for the six months ended December 26, 2020, a decrease of $41.9 million, or 158%, compared to $26.5 million of cash used in the six months ended December 28, 2019. The decrease in net cash used in investing activities was primarily due the Company’s strategic plan to limit cash outlays and divest non-core assets as compared to the six months ended December 28, 2019. Net cash was positively impacted by a decrease in purchases of property and equipment of $46.8 million. In addition, the Company received proceeds from the sale of assets held for sale of $18.8 million during the six months ended December 26, 2020, an increase of $13.8 million, compared to $5.0 million in the same period prior, offset by a decrease of $21.8 million in proceeds from the sale of investments and property.

Cash Flow from Financing Activities

Net cash provided by financing activities was $11.8 million for the six months ended December 26, 2020, a decrease of $77.1 million, or 87%, compared to $88.9 million for the six months ended December 28, 2019. The decrease in change of net cash provided by financing activities was primarily due to a decrease of $52.6 million in the issuance of equity instruments for cash, and a decrease of $29.5 million in proceeds from the credit facility with Gotham Green Partners. The decrease in debt and equity financings was coupled with a decrease of $12.3 million in principal repayments on notes payable offset by an increase of $8.0 million in principal repayments of the GGP Facility during the six months ended December 26, 2020 compared to the same period in the prior year.

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Years Ended June 27, 2020 and June 29, 2019

Year Ended

Net Cash Used in Operating Activities $ (110.1) $ (243.0) $ 132.9 (55)% Net Cash Used in Investing Activities (19.4) (146.5) 127.1 (87)% Net Cash Provided by Financing Activities 107.1 344.1 (237.0) (69)%

Net Decrease in Cash and Cash Equivalents (22.4) (45.4) 23.0 (51)% Cash Included in Assets Held for Sale (1) (0.7) (0.5) (0.2) 40% Cash and Cash Equivalents, Beginning of Period 33.2 79.2 (46.0) (58)%

Cash and Cash Equivalents, End of Period $ 10.1 $ 33.2 $ (23.1) (70)%

Cash Flow from Operating Activities

Net cash used in operating activities was $110.1 million for the fiscal year ended June 27, 2020, a decrease of $132.9 million, or 55%, compared to $243.0 million for the year ended June 29, 2019. The decrease in cash used was primarily due to implementation of the Company’s cost rationalization strategy during the fiscal year ended June 27, 2020. Specifically, general and administrative expenses include corporate-level expenses across various functions including Marketing, Legal, Retail Corporate, Technology, Accounting and Finance, Human Resources and Security which are combined to account for a significant proportion of the Company’s total general and administrative expenses. Several retail locations were opened during the fiscal year ended June 29, 2019 and became fully operational during the fiscal year ended June 27, 2020, resulting in increased revenues as well as increased operating costs.

Cash Flow from Investing Activities

Net cash used in investing activities was $19.4 million for the fiscal year ended June 27, 2020, a decrease of $127.1 million, or 87%, compared to $146.5 million for the year ended June 29, 2019. The decrease in net cash used in investing activities was primarily due the Company’s strategic plan to limit cash outlays and divest non-core assets. Net cash was positively impacted by a decrease in purchases of property and equipment of $60.2 million, a decrease in purchases of investments of $8.8 million, and a decrease in business combinations and asset acquisitions of $45.4 million. In addition, the Company received proceeds from the sale of investments of $12.5 million and proceeds from the sale of assets held for sale and other assets of $21.9 million, offset by a decrease in proceeds from the sale of property of $14.8 million.

Cash Flow from Financing Activities

Net cash provided by financing activities was $107.1 million for the fiscal year ended June 27, 2020, a decrease of $237.0 million, or 69%, compared to $344.1 million for the year ended June 29, 2019. The decrease in change of net cash provided by financing activities was primarily due to a decrease of $66.0 million in the issuance of equity instruments for cash, a decrease of $152.4 million in proceeds from the issuance of notes payable, and a decrease of $50.0 million in proceeds from the credit facility with Gotham Green Partners. The decrease in debt and equity financings was offset by a decrease of $40.2 million in principal repayments on notes payable during the year ended June 27, 2020 compared to the same period in the prior year.

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Financial Condition

The following table summarizes certain aspects of the Company’s financial condition as of December 26, 2020 and June 27, 2020:

December 26, June 27, $ % ($ in Millions) 2020 2020 Change Change

Cash and Cash Equivalents $ 7.5 $ 10.1 $ (2.6) (26)% Total Current Assets $ 68.3 $ 84.0 $ (15.7) (19)% Total Assets $ 503.6 $ 574.3 $ (70.7) (12)% Total Current Liabilities $ 220.4 $ 189.2 $ 31.2 16% Notes Payable, Net of Current Portion $ 337.3 $ 319.2 $ 18.1 6% Total Liabilities $ 750.5 $ 751.2 $ (0.7) (0)% Total Shareholders' Equity $ (246.9) $ (176.9) $ (70.0) 40% Working Capital Deficit $ (152.1) $ (105.2) $ (47.0) 45%

As of December 26, 2020, the Company had $7.5 million of cash and cash equivalents and $152.1 million of working capital deficit, compared to $10.1 million of cash and cash equivalents and $105.2 million of working capital deficit as of June 27, 2020. The reduction in cash and cash equivalents was associated with principal repayments of the GGP Facility of $8.0 million during the six-month period versus none in the prior year, which was offset by cash savings from execution of the Company’s financial restructuring and turnaround plan to defer approximately $32.0 million in cash commitments. On July 2, 2020, the Company amended the GGP Facility and 2018 Term Loan wherein all interest payable through June 2021 will be paid-in-kind. Further, on July 2, 2020, the Company also amended its lease terms with the REIT wherein a portion of the total current monthly base rent will be deferred for the 36-month period between July 1, 2020 and July 1, 2023.

The $47.0 million increase in working capital deficit was primarily related to a decrease of $13.0 million assets held for sale related to the Company’s divestiture of non- core assets during the six months ended December 26, 2020 and a decrease of $3.4 million in other current assets related to the outstanding portion of the consideration for the sale of retail locations in Evanston, Illinois and Seaside, California and a settlement in excise tax receivable. The net decrease in current assets was coupled with an increase of $47.7 million in income taxes payable offset by a decrease of $6.8 million in other current liabilities primarily due to decreases in accrued interest which was capitalized to non-current notes payable as paid-in-kind, a decrease of $6.3 million in liabilities held for sale, and a decrease of $4.9 million in the current portion of lease liabilities.

The Company’s working capital will be significantly impacted by continued growth in retail operations, operationalizing existing licenses, and the success of the Company’s cost-cutting measures. The ability to fund working capital needs will also be dependent on the Company’s ability to raise additional debt and equity financing.

The following table summarizes certain aspects of the Company’s financial condition as of June 27, 2020 and June 29, 2019:

June 27, June 29, $ % ($ in Millions) 2020 2019 Change Change

Cash and Cash Equivalents $ 10.1 $ 33.2 $ (23.1) (70)% Total Current Assets $ 84.0 $ 106.1 $ (22.1) (21)% Total Assets $ 574.3 $ 687.5 $ (113.2) (16)% Total Current Liabilities $ 189.2 $ 109.7 $ 79.5 72%

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Notes Payable, Net of Current Portion $ 319.2 $ 237.6 $ 81.6 34% Total Liabilities $ 751.2 $ 476.2 $ 275.0 58% Total Shareholders' Equity $ (176.9) $ 211.3 $ (388.2) (184)% Working Capital Deficit $ (105.2) $ (3.6) $ (101.6) 2,822%

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As of June 27, 2020, the Company had $10.1 million of cash and cash equivalents and $105.2 million of working capital deficit, compared to $33.2 million of cash and cash equivalents and $3.6 million of working capital deficit as of June 29, 2019. Reductions in cash and cash equivalents were primarily due to the Company’s investments in its retail expansion in which MedMen increased the number of active retail locations from 23 operating retail stores during the year ended June 29, 2019 up to 32 operating retail stores during the year ended June 27, 2020, of which three retail stores are located in the state of Arizona that were classified as discontinued operations, noting as of June 27, 2020, the Company had 26 active retail locations following recent permanent and temporary closures. The decrease in cash and cash equivalents was also associated with significant payments on lease liability, notes payable and costs associated with the issuances of debt. The foregoing uses of cash were partially offset by cash generated from the sale of assets and significant debt and equity financing during the fiscal year ended June 27, 2020.

The $101.6 million increase in working capital deficit was primarily related to an increase of $31.9 million in accounts payable and accrued liabilities, an increase of $24.9 million in income taxes payable, an increase of $15.0 million in liabilities held for sale related to discontinued operations and subsidiaries held for sale that do not meet the definition of discontinued operations, and an increase of $16.1 million in other current liabilities primarily due to increases in contingent consideration and accrued interest, offset by a decrease of $8.8 million in derivative liabilities due to changes in fair value, and a decrease of $5.8 million in the current portion of notes payable. The current portion of operating and finance lease liabilities in the net amount of $7.2 million is also included in the working capital deficit as a part of the Company’s adoption of ASC 842 on June 30, 2019 compared to nil as of June 29, 2019. The net increase in current liabilities was offset by an increase of $26.0 million in assets held for sale related to the Company’s divestiture of non-core assets in addition to a decrease of $23.1 million in cash and cash equivalents for the factors described above, a decrease of $9.2 million in prepaid expenses, and a decrease of $9.8 million in other current assets due to sale of investments during the fiscal year ended June 27, 2020.

Liquidity and Capital Resources

The primary need for liquidity is to fund working capital requirements of the business, including operationalizing existing licenses, capital expenditures, debt service and acquisitions. The primary source of liquidity has primarily been private and/or public financing and to a lesser extent by cash generated from sales. The ability to fund operations, to make planned capital expenditures, to execute on the growth/acquisition strategy, to make scheduled debt and rent payments and to repay or refinance indebtedness depends on the Company’s future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business and other factors, some of which are beyond its control. Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due.

Fiscal Year Ended June 27, 2020

As of June 27, 2020, the Company had $10.1 million of cash and cash equivalents and $105.2 million of working capital deficit, compared to $33.2 million of cash and cash equivalents and $3.6 million of working capital deficit as of June 29, 2019. For the fiscal year ended June 27, 2020, the Company’s monthly burn rate, which was calculated as cash spent per month in operating activities, was approximately $9.2 million compared to a monthly burn rate of approximately $20.3 million for the fiscal year ended June 29, 2019. Since its inception, the Company focused on an aggressive expansion strategy in the form of mergers, acquisitions, and management contracts with the understanding that such strategy may result in short-term operating losses and significant acquisition related debt and costs. During the fiscal year ending June 27, 2020, management executed on a strategic plan to limit significant cash outlays and reduce the overall cash burn. As of June 27, 2020, cash generated from ongoing operations may not be sufficient to fund operations and, in particular, to fund the Company’s growth strategy in the short-term or long-term.

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Subsequent to June 27, 2020, management continued to execute on its financial restructuring and turnaround plan to support the expansion of the Company’s retail footprint. The strategic plan includes, but is not limited to, capital raised subsequent to year-end, restructuring plans that have already been put in place to reduce corporate-level expenses, amendments that have been agreed to with lenders and landlords to defer cash interest and rent payments, reduction in capital expenditures through a slow-down in new store buildouts, plans to divest non-core assets to raise non-dilutive capital, enhancements to its digital offering, including direct-to-consumer delivery and curbside pick-up in light of COVID-19 and a change in retail strategy to pass certain local taxes and payment processing fees to customers. Despite the continuously evolving capital market, the Company has indefinitely postponed buildouts and retail store expansions to reduce capital expenditures as needed. The Company has executed a successful initiative to defer rent and cash interest payments which will further reduce the Company’s overall cash outlay. In addition, the Company will continue to focus on the optimization of SG&A expenses. Management is in the process of leveraging the Company’s operating scale with a focus on high ROI initiatives through strategic opportunities that will allow the Company to maintain its leadership within the industry. Management is also exploring joint ventures on certain capital intensive projects that will bring in qualified partners to enable the Company to maintain their strong retail presence without having to deploy upfront capital. In addition, the Company is looking at new customer acquisition tools that will increase traffic and sales within existing stores and e-commerce platform as well as third-party technology and software to increase the returns on the Company’s existing tools. Further, the Company will continue to streamline operations and invest in core markets, with a focus on markets in which MedMen already has a leadership position in. The Company’s restructuring plan includes a market-based approach wherein strategic decisions vary by market considering regulatory and economic conditions, potential partnerships and synergies, and the Company’s position in that market. The Company continues to execute on its efforts to improve store profitability, reduce corporate SG&A and delay capital-intensive projects. Subsequent to June 27, 2020, management has executed strategic transactions to better position itself for long-term viability.

The Company has also raised additional funds from debt and equity financing subsequent to the fiscal year ended June 27, 2020 to mitigate any potential liquidity risk. The Company intends to continue raising capital by utilizing debt and equity financings on an as needed basis. Management evaluated its financial condition as of June 27, 2020 in conjunction with recent financings and transactions which provide capital subsequent to the fiscal year ended June 27, 2020 as discussed below.

Partnership with Gotham Green Partners

On July 2, 2020, the Company amended the GGP Facility wherein 100% of the cash interest due prior to June 2021 will be paid-in-kind, and 50% of the cash interest due thereafter for the remainder of the term of the GGP Facility will be paid-in-kind. The threshold for the minimum liquidity covenant has been waived until September 30, 2020, resetting to $5.0 million thereafter, to $7.5 million effective on March 31, 2021 and then to $15.0 million effective on December 31, 2021. GGP has also agreed to the release of certain assets from its collateral pool in order to provide the Company with greater flexibility to generate proceeds through the sale of non-core assets. In connection with the amendments to the GGP Facility, the Company is now subject to certain additional covenants that are consistent with the Company’s turnaround plan. The Company is required to adhere to its turnaround plan for certain cash expenditures such as corporate expenses, capital expenditures and leases.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On September 14, 2020, the Company closed on an incremental advance in the amount of $5.0 million under the GGP Facility at a conversion price of $0.20 per share. In connection with the incremental advance, the Company issued 25,000,000 warrants with an exercise price of $0.20 per share. In addition, 1,080,255 existing warrants were cancelled and replaced with 16,875,000 warrants with an exercise price of $0.20 per share.

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Continued Support from Lenders of the Senior Secured Term Loan

On July 2, 2020, the Company amended terms under the Senior Secured Term loan wherein 100% of the total interest payable prior to June 2021 will be paid-in-kind and 50% of the cash interest due thereafter for the remainder of the term will be paid-in-kind. The threshold for the minimum liquidity covenant has been waived until September 30, 2020, resetting to $5.0 million thereafter, to $7.5 million effective on March 31, 2021 and then to $15.0 million effective on December 31, 2021. In connection with the amendments to the Senior Secured Term Loan, the Company is now subject to certain additional covenants which are consistent with those included as a part of the amendments to the GGP Facility as described above.

On September 16, 2020, the Company entered into further amendments wherein the potential size of the Senior Secured Term Loan was increased by $12.0 million, of which $5.7 million is fully committed by the lenders. On September 16, 2020, the Company closed on $3.0 million of the incremental notes which bears interest at a rate of 18.0% per annum wherein 12.0% shall be paid in cash monthly in arrears and 6.0% shall accrue monthly as payment-in-kind. In connection with the amendment, the Company issued 30,000,000 warrants with an exercise price of $0.34 per share. On September 30, 2020, the Company closed on the remaining $2.7 million and issued 27,000,000 warrants to the lenders.

Unsecured Convertible Facility

On September 16, 2020, the Company entered into a $10.0 million unsecured convertible debenture facility (“Unsecured Convertible Facility”) with certain institutional investors. Subject to certain conditions, the Company has the right to call additional tranches of $1.0 million each, no later than 20 trading days following the issuance of each tranche, including the initial tranche, up to a maximum of $10.0 million under all tranches. The timing of additional tranches can be accelerated based on certain conditions. The Investors have the right to at least four additional tranches, with any such subsequent tranche to be at least $1.0 million.

Also on September 16, 2020, the Company closed on an initial $1.0 million under the Unsecured Convertible Facility at a conversion price of $0.17 per share. In connection with the initial tranche, the Company issued 3,293,413 warrants with an exercise price of $0.21 per share. On September 28, 2020, the Company closed on an additional $1.0 million and issued 3,777,475 warrants with an exercise price of $0.17 per share.

Treehouse Real Estate Investment Trust

On July 3, 2020, the Company announced modifications to its existing lease arrangements with the REIT in which the REIT agreed to defer a portion of total current monthly base rent for the 36-month period between July 1, 2020 and July 1, 2023. The total amount of all deferred rent accrues interest at 8.6% per annum during the deferral period. As consideration for the rent deferral, the Company issued 3,500,000 warrants to the REIT, each exercisable at $0.34 per share for a period of five years.

Sale of Assets

On July 2, 2020, the Company received $10,000,000 at the signing of definitive documents for the sale of one of its retail licenses outside of California. Management continues to seek buyers for divestiture of the Company’s other non-core assets, which include licenses and investments, to provide additional capital. Given the Company’s specialization in retail, management is revaluating its vertical integration strategy and identifying opportunities to realign the Company’s focus on the retail market.

Interim Period Ended December 26, 2020

As of December 26, 2020, the Company had $7.5 million of cash and cash equivalents and $152.1 million of working capital deficit, compared to $10.1 million of cash and cash equivalents and $105.2 million of working capital deficit as of June 27, 2020. For the six months ended December 26, 2020, the Company’s monthly burn rate, which was calculated as cash spent per month in operating activities, was approximately $5.0 million compared to a monthly burn rate of approximately $11.6 million for the six months ended December 28, 2019. During fiscal year 2020, in November 2019, the Company shifted its focus from an aggressive expansion strategy to a revised growth strategy focused on achieving profitability. During the six months ended December 26, 2020, management continued their efforts of executing the Company’s strategic plan to limit significant cash outlays and reduce the overall cash burn. As of December 26, 2020, cash generated from ongoing operations may not be sufficient to fund operations and, in particular, to fund the Company’s growth strategy in the short-term or long-term.

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Subsequent to December 26, 2020, management continued to execute on its financial restructuring and turnaround plan to support the expansion of the Company’s retail footprint. The strategic plan includes, but is not limited to, capital raised subsequent to year-end, modifying covenants for additional flexibility and restructuring plans that have already been put in place to reduce corporate-level expenses, reduction in capital expenditures through a slow-down in new store buildouts, plans to divest non-core assets to raise non-dilutive capital, enhancements to its digital offering, including direct-to-consumer delivery and curbside pick-up in light of COVID-19 and a change in retail strategy to pass certain local taxes and payment processing fees to customers. The Company has also revamped its procurement process to restructure new vendor contracts with better margins. The Company will continue to focus on the optimization of SG&A expenses, including reducing payroll spend at retail locations by implementing a dynamic staffing model, reducing banking and payment processing fees, and reducing security spend. Management is in the process of leveraging the Company’s operating scale with a focus on high ROI initiatives through strategic opportunities that will allow the Company to maintain its leadership within the industry. Management continues to explore joint ventures on certain capital-intensive projects that will bring in qualified partners to enable the Company to maintain their strong retail presence without having to deploy upfront capital. Further, the Company will continue to streamline operations and invest in core markets, with a focus on markets in which MedMen already has a leadership position in. The Company’s restructuring plan includes a market-based approach wherein strategic decisions vary by market considering regulatory and economic conditions, potential partnerships and synergies, and the Company’s position in that market. The Company continues to execute on its plan to achieve its growth and profitability goals. As the economic environment improves and the pandemic is better managed and controlled, the Company expects its improved assortment, customer experience and marketing initiatives to drive continued revenue growth.

The Company continues to explore avenues of raising additional funds from debt and equity financing subsequent to December 26, 2020 to mitigate any potential liquidity risk. The Company intends to continue raising capital by utilizing debt and equity financings on an as needed basis. Management evaluated its financial condition as of December 26, 2020 in conjunction with recent financings and transactions which provide capital subsequent to the three months ended December 26, 2020 as discussed below.

Continued Support from Gotham Green Partners

On January 11, 2021, the Company entered into a Third Amended and Restated Securities Purchase Agreement (the “Third Restatement”) to the GGP Facility wherein the minimum liquidity covenant was modified to extend the period during which it is waived from December 31, 2020 to June 30, 2021, to reset the minimum liquidity threshold to $7,500,000 effective on July 1, 2021 through December 31, 2021, and $15,000,000 thereafter, and to waive the minimum liquidity covenant if the Company

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document is current on cash interest. Furthermore, covenants with regards to non-operating leases, capital expenditures and corporate SG&A will now be tied to a board of directors approved budget. In addition, the conversion price of certain notes and the exercise price of certain warrants was adjusted as part of the Third Restatement. Refer to “Note 25 - Subsequent Events” of the unaudited interim condensed consolidated financial statements for the three and six months ended December 26, 2020.

Subsequent to December 26, 2020, the Company received an additional advance of $10,000,000 in the form of senior secured convertible notes with a conversion price of $0.16 per Subordinate Voting Share. In connection with the incremental advance, the Company issued 62,174,567 warrants exercisable for five years at a purchase price of $0.16 per Subordinate Voting Share.

Unsecured Convertible Facility

On January 29, 2021, the Company closed on a fifth tranche of $1,000,000 under its existing unsecured convertible facility with a conversion price of $0.16 per Subordinate Voting Share. In connection with the fifth tranche, the Company issued 3,355,000 warrants with an exercise price of $0.19 per share.

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Private Placement

On February 16, 2021, the Company executed documents for the sale of 7,800,000 units at a purchase price of $0.37 per unit through a private placement for gross proceeds of $2,896,315. The units consist of 7,800,000 Subordinate Voting Shares and 7,800,000 warrants with an exercise price of $0.46 per Subordinate Voting Share for a period of five years.

Sale of Assets

The Company will receive an additional $2,000,000 related to the divestiture of the Evanston retail license located in Illinois on or before the three-month anniversary of November 16, 2020 (“Closing Date”) The $2,000,000 will be paid in the form of a secured promissory note in which interest will accrue at a rate of 2.0% interest rate per annum compounded annually and will mature as agreed upon between the Company and borrower. Management continues to seek buyers for divestiture of the Company’s other non-core assets, which include licenses and investments, to provide additional capital. Given the Company’s specialization in retail, management is revaluating its vertical integration strategy and identifying opportunities to realign the Company’s focus on the retail market.

Contractual Obligations

As of June 27, 2020 and June 29, 2019 and in the normal course of business, the Company has the following obligations to make future payments, representing contracts and other commitments that are known and committed. The Company had the following contractual obligations as of June 27, 2020:

June 26, June 25, June 24, June 29, June 28, 2021 2022 2023 2024 2025 Thereafter TOTAL

Accounts Payable and Accrued Liabilities $79,530,930 $ - $ - $ - $ - $ - $ 79,530,930 Other Liabilities $19,732,305 $ 617,447 $ 566,627 $ 566,627 $ 566,627 $ 1,898,204 $ 23,947,838 Derivative Liabilities $ 546,076 $ - $ - $ - $ - $ - $ 546,076 Operating Lease Liabilities $34,049,366 $ 34,040,450 $34,224,191 $31,289,161 $30,837,827 $ 134,553,668 $298,994,663 Finance Lease Liabilities $ 1,439,200 $ 1,579,608 $ 1,790,448 $ 2,021,743 $ 2,279,010 $ 51,103,533 $ 60,213,542 Notes Payable $16,188,668 $ 77,675,000 $ - $ - $ - $ 85,916,225 $179,779,893 Senior Secured Convertible Credit Facility $ - $166,368,463 $ - $ - $ - $ - $166,368,463 Due to Related Party $ 4,556,814 $ - $ - $ - $ - $ - $ 4,556,814

The Company had the following contractual obligations as of June 29, 2019:

June 27, June 26, June 25, June 24, June 29, 2020 2021 2022 2023 2024 Thereafter TOTAL

Accounts Payable and Accrued Liabilities $47,610,197 $ - $ - $ - $ - $ - $ 47,610,197 Other Liabilities $ 3,646,380 $20,764,316 $ 566,627 $ 566,627 $ 566,627 $ 2,464,829 $ 28,575,407 Derivative Liabilities $ 9,343,485 $ - $ - $ - $ - $ - $ 9,343,485 Finance Lease Liabilities $24,401,378 $27,543,166 $28,225,713 $27,225,684 $23,511,470 $ 121,201,096 $252,108,507 Notes Payable $21,998,522 $19,163,915 $76,002,878 $ 2,576,274 $ 2,774,390 $ 62,002,850 $184,518,829 Senior Secured Convertible Credit Facility $ - $86,855,415 $ - $ - $ - $ - $ 86,855,415 Due to Related Party $ 5,640,817 $ - $ - $ - $ - $ - $ 5,640,817

For future minimum lease payments, refer to “Note 16 - Leases” of the Consolidated Financial Statements for the fiscal years ended June 27, 2020 and June 29, 2019.

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Off-Balance Sheet Arrangements

The Company has no material undisclosed off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies, Significant Judgments and Estimates and Recent Accounting Pronouncements

A detailed description of our critical accounting policies and recent accounting pronouncements are set forth in the Company’s annual Consolidated Financial Statements included in this prospectus. See “Note 2 - Summary of Significant Accounting Policies” in the unaudited interim condensed consolidated financial statements in “Financial Statements” for recently adopted accounting standards.

The Company makes judgments, estimates and assumptions about the future that affect the policies and reported amounts of assets and liabilities, and revenues and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The preparation of the Company’s annual Consolidated Financial Statements and unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities at the dates of the financial statements and the reported amounts of total net revenue and expenses during the reporting period which are not readily apparent from other sources. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results the Company experiences may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations.

Significant judgments, estimates and assumptions that have the most significant effect on the amounts recognized in the annual Consolidated Financial Statements are described below.

Depreciation of Property and Equipment

Depreciation of property and equipment is dependent upon estimates of useful lives which are determined through the terms and methods in accordance with GAAP. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets.

Amortization of Intangible Assets

Amortization of intangible assets is dependent upon estimates of useful lives and residual values which are determined through the exercise of judgment. Intangible assets that have indefinite useful lives are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions.

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Inventory Valuation

The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items and reserves. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory is written down to net realizable value. The reserve estimate for excess and obsolete inventory is dependent on expected future use.

Business Combinations

In a business combination, all identifiable assets, liabilities and contingent liabilities acquired are accounted for using the acquisition method. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. Contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Management exercises judgment in estimating the probability and timing of when earn-outs are expected to be achieved which is used as the basis for estimating fair value. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with ASC 450, “Contingencies”, as appropriate, with the corresponding gain or loss being recognized in earnings in accordance with ASC 805, “Business Combinations”. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied.

Convertible Instruments and Derivative Liabilities

The identification of components embedded within financial instruments is based on interpretations of the substance of the contractual arrangement and therefore requires judgment from management. The separation of the components affects the initial recognition of the financial instruments at issuance and the subsequent recognition of interest on the liability component. Where the conversion option has a variable conversion rate, the conversion option is recognized as a derivative liability measured at fair value, with changes in fair value reported in the Consolidated Statements of Operations. The instrument is recognized as a financial liability and subsequently measured at amortized cost. The determination of the fair value of the liability is also based on a number of assumptions, including contractual future cash flows, discount rates and the presence of any derivative financial instruments.

Share-Based Compensation

The Company uses the Black-Scholes option-pricing model or the Monte-Carlo simulation model to determine the fair value of equity-based grants. In estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility of the Company’s future share price, risk-free rates, future dividend yields and estimated forfeitures at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results.

Goodwill Impairment, Other Intangible Assets, Long-Lived Assets and Purchase Asset Valuations

Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill has been impaired. In the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount to the estimated fair value of the reporting unit. The carrying amount of each reporting unit is determined based upon the assignment of the Company’s assets and liabilities, including existing goodwill, to the identified reporting units. The Company relies on a number of factors, including historical results, business plans, forecasts and market data. Changes in the conditions for these judgments and estimates can significantly affect the recoverable amount.

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Long-lived assets, including amortizable intangible assets, are tested annually for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. Once a triggering event has occurred, the impairment test employed is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. The impairment test for assets held for use requires a comparison of cash flows expected to be generated over the useful life of an asset group to the carrying value of the asset group. An asset group is established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and could include assets used across multiple businesses or segments. If the carrying value of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the group’s long-lived assets and the carrying value of the group’s long-lived assets. The impairment is only to the extent the carrying value of each asset is above its fair value. For assets held for sale, to the extent the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of the asset groups, estimates of future cash flows and the discount rate used to determine fair values.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the year ended June 27, 2020, the Company noted indications of impairment of its goodwill associated with a decrease in anticipated operating profits and cash flows for the next five years as it relates to the current economic environment subject to the impacts of COVID-19. In addition, goodwill was analyzed for impairment for its assets that were determined to be assets held for sale as required under ASC 360-10-35-39. The Company tested its goodwill for impairment. The fair value of reporting unit was determined using a discounted cash flow method (income approach) using managements estimates based upon its future undiscounted and discounted cash flows. The remaining goodwill, after impairment, is allocated to California, Illinois, and New York with amount of $23.1 million, $9.8 million, and $1.0 million, respectively.

The following are the reporting units at risk for impairment by which an impairment analysis was performed, but no impairment recorded and by which the percentage of fair value was greater than the allocated carrying value.

Percentage by which fair value exceeded Allocated Reporting Unit Carrying Value

California 29% Illinois 52%

During the year ended June 27, 2020, the Company noted indications of impairment of its other intangible assets, and long-lived (i.e. property and equipment, long-term deposits, and ROU Lease Assets) assets in California, Nevada, and Florida which was due to the change in use of these asset groups and the impacts of COVID-19 and as required under ASC 360-10-35-39 when the asset group were classified as assets held for sale. The Company tested its other indefinite-lived intangible assets and long- lived assets for impairment. The Company used various Level 3 inputs and a discounted cash flow model using managements estimates based upon its future undiscounted and discounted cash flows to determine the fair value of these asset groups.

These estimates and assumptions used in managements impairment analysis are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about its impairment analysis. The impairment estimates and assumptions bear the risk of change due to its inherent nature and subjectivity. The unanticipated effects of a longer or more severe COVID-19 outbreaks and decreases in consumer demand could reasonably expected to negatively affect the key assumptions and estimates.

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The total impairment expense recorded for the fiscal year ended June 27, 2020 is $240 million from continuing operations. See below for the impairment expense allocation by component.

Remaining Impairment Assets Not Expense Impaired Component (in $ millions) (in $ millions) Property, Plant and Equipment, Net $ 143 $ 175 Intangible Assets 39 148 Goodwill 26 34 Assets Held for Sale 6 33 Other Assets 6 17 Operating Lease Right-of-Use Assets 20 116 Total Impairment Expense from Continuing Operations $ 240 $ 523

The total impairment expense recorded as a component of loss from discontinued operations for fiscal 2020 is $47 million. See below for the impairment expense allocation by component.

Remaining Impairment Assets Not Expense Impaired Component (From Discontinued Operations) (in $ millions) (in $ millions) Property, Plant and Equipment, Net $ 2 $ 4 Intangible Assets 12 7 Goodwill 32 - Operating Lease Right-of-Use Assets 1 5 Total Impairment Expense from Discontinuing Operations $ 47 $ 16

Deferred Tax Assets

Deferred tax assets, including those arising from tax loss carryforwards, require management to assess the likelihood that the Company will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

Income Taxes

Current tax assets and/or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document strategies, and results of recent operations. If it is determined that the Company would be able to realize deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax asset valuation allowance is recorded, which would reduce the provision for income taxes.

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Right-of-Use Assets and Lease Liabilities

Right-of-use assets are measured at cost, which is calculated as the amount of the initial measurement of lease liability plus any lease payments made at or before the commencement date, any initial direct costs and related restoration costs. The right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term or estimates of economic life. The Company’s lease liability is recognized net of lease incentives receivable. The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the lessee’s incremental borrowing rate. The period over which the lease payments are discounted is the expected lease term, including renewal and termination options that the Company is reasonably certain to exercise. Refer to “Note 2 - Summary of Significant Accounting Policies” of the Consolidated Financial Statements for the fiscal years ended June 27, 2020 and June 29, 2019 in this prospectus.

Assets Held for Sale and Discontinued Operations

Assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell (“FVLCTS”) unless the asset held for sale meets the exceptions as denoted by ASC 360. FVLCTS is the amount obtainable from the sale of the asset in an arm’s length transaction, less the costs of disposal. A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale.

Down Round Features

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260)” wherein the amendments change the classification of certain equity-linked financial instruments (or embedded features) with down round features. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with ASC 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. For freestanding equity-classified financial instruments, the value of the effect of the down round feature is measured as the difference in fair value of the financial instrument without the down round feature with a strike price corresponding to the stated strike price versus the reduced strike price upon the down round feature being triggered. The fair value is measured in accordance with the measurement guidance in ASC 820, “Fair Value Measurement” in which the Company utilizes the Black-Scholes pricing model. Convertible instruments with embedded conversion options that have down round features are subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). During the six months ended December 26, 2020, a down round feature present in the GGP Facility and the 2020 Term Loan was triggered. Refer to Note 12 and Note 13 of the Consolidated Financial Statements for the three and months ended December 26, 2020 in “Financial Statements”.

Financial Risk Management

Credit Risk

The operating results and financial position of the Company are reported in U.S. dollars. Some of the Company’s financial transactions are denominated in currencies other than the U.S. dollar. The results of the Company’s operations are subject to currency transaction and translation risks. The Company’s main risk is associated with fluctuations in Canadian dollars. The Company holds cash in U.S. dollars, investments denominated in U.S. dollars, debt denominated in U.S. dollars, and equity, which is denominated in U.S. and Canadian dollars. Such assets and liabilities denominated in currencies other than the U.S. dollar are translated based on the Company’s foreign currency translation policy.

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As of December 26, 2020 and June 27, 2020, the Company had no hedging agreements in place for foreign exchange rates. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Cash and cash equivalents bear interest at market rates. The Company’s financial liabilities have fixed rates of interest and therefore expose the Company to a limited interest rate fair value risk.

Equity Price Risks

Price risk is the risk of variability in fair value due to movements in equity or market prices. The Company’s investments are susceptible to price risk arising from uncertainties about their future outlook, future values and the impact of market conditions. The fair value of investments held in privately-held entities is based on a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Transactions with Related Parties

All related party balances due from or due to the Company as of December 26, 2020 and June 27, 2020 did not have any formal contractual agreements regarding payment terms or interest. For amounts due from and to related parties, refer to “Note 22 - Related Party Transactions” of the Consolidated Financial Statements for the three and six months ended December 26, 2020 and December 28, 2019 in “Financial Statements”.

Gotham Green Partners

As discussed in in “Liquidity and Capital Resources” and “Fiscal Year-End and Quarterly Highlights”, the Company has engaged in a strategic partnership with Gotham Green Partners, a related party. The arrangement is to provide financing to the Company in the form of a credit facility up to $250.0 million accessed through issuances of convertible senior secured notes (the “Notes”) co-issued by the Company and MM CAN USA, Inc. The Notes are convertible, at the option of the holder, into Subordinate Voting Shares at any time prior to the close of business on the last business day immediately preceding the maturity date of April 23, 2022. In addition, upon issuance of any Notes, the lenders are issued share purchase warrants (the “Warrants”) of the Company, each of which are exercisable to purchase one Subordinate Voting Share for 36 months from the date of issue. The Notes and the Warrants, and any Subordinate Voting Shares issuable as a result of a conversion of the Notes or exercise of the Warrants, will be subject to a four-month hold period from the date of issuance of such Notes or such Warrants, as applicable, in accordance with applicable Canadian securities

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document laws. While the Notes are outstanding, the lenders will be entitled to the collective rights to appoint a representative to attend all meetings of the Board of Directors in a non-voting observer capacity. GGP has the right to nominate a majority of the Company’s Board of Directors while the aggregate principal amount outstanding under the Notes being more than $25.0 million. The convertible facility bears interest at a rate of LIBOR plus 6.0% per annum. All convertible notes will have a maturity date of 36 months from the maturity date, with a twelve-month extension feature available to the Company on certain conditions. As of February 9, 2021, the Company has drawn down on approximately $155,000,000 of the Facility. Refer to “Note 13 - Senior Secured Convertible Credit Facility” of the Consolidated Financial Statements for the three and six months ended December 26, 2020 and December 28, 2019 in “Financial Statements”.

Sierra Constellation Partners

In March 2020, the Company entered into restructuring plan and retained interim management and advisory firm, SierraConstellation Partners (“SCP”), to support the Company in the development and execution of its turnaround and restructuring plan. As part of the engagement, Tom Lynch was appointed as Chief Executive Officer and Chief Restructuring Officer, and Tim Bossidy was appointed as Chief Operating Officer. Mr. Lynch is a Partner and Senior Managing Director at SCP. Mr. Bossidy is a Director at SCP. In December 2020, Mr. Lynch was elected as Chairman of the Board and Reece Fulgham, a Managing Director at SCP, was appointed as Chief Financial Officer. As of February 9, 2021, the Company had paid $1,694,683 in fees to SCP for interim management and restructuring support during the current fiscal year.

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Emerging Growth Company Status

The Company is an “emerging growth company” as defined in the Section 2(a) of the Exchange Act, as modified by the Jumpstart Our Business Start-ups Act of 2012, or the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act for complying with new or revised accounting standards applicable to public companies. The Company has elected to take advantage of this extended transition period and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Internal Control over Financial Reporting

During the year ended June 27, 2020, the Company identified a material weakness in its internal control over financial reporting relating to its impairment assessment and measurement standards. In connection with the preparation of interim financial statements, we determined that we had a material weakness in our internal control over financial reporting relating to the appropriate review of the presentation and disclosure of non-routine transactions including impairments of goodwill and long-lived assets, changes in the fair value of contingent consideration and restructuring expenses, and income taxes. To address these material weaknesses, we have instituted a number of accounting processes and procedures which includes: (i) formal, documented process to identify, assess and calculate impairment on goodwill and long-lived assets, and (ii) the preparation of presentation and disclosure requirement checklists to be reviewed by management for all new transactions and accounting standards.

The actions we have taken are subject to continued review, supported by confirmation and testing by management. While we have completed a plan to remediate these weaknesses, we cannot assure you that we will be able to remediate these weaknesses, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows. Our failure to remediate the identification of additional material weaknesses in the future, could adversely affect our ability to report financial information, including our filing of quarterly or annual reports with the Commission on a timely and accurate basis, which may adversely affect the market price of shares of our common stock.

BUSINESS

CORPORATE STRUCTURE

MedMen Enterprises Inc. was incorporated in the Province of British Columbia under the Business Corporations Act (British Columbia).

MM CAN converted into a California corporation from a Delaware corporation on May 16, 2018 and is based in Culver City, California. The head office and principal address of MM CAN is 10115 Jefferson Boulevard, Culver City, California 90232.

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MM Enterprises USA was formed as a joint venture to own, operate and develop certain businesses related to the cultivation, manufacturing, distribution and sale of cannabis and cannabis-related products under the “MedMen” brand in jurisdictions where such cultivation, manufacturing, distribution and sale is authorized under applicable law. The contributors to the joint venture were MMMG, LLC (“MMMG”), a Nevada limited liability company, MedMen Opportunity Fund, LP (“Fund I”), a Delaware limited partnership, MedMen Opportunity Fund II, LP (“Fund II”), a Delaware limited partnership, The MedMen of Nevada 2, LLC (“MMNV2”), a Nevada limited liability company, DHSM Investors, LLC (“DHS Owner”), an Ohio limited liability company, and Bloomfield Partners Utica, LLC (“Utica Owner”) , a New York limited liability company (collectively, the “Joint Venture Parties”). Pursuant to the Formation and Contribution Agreement dated January 24, 2018 among the LLC and the Joint Venture Parties (the “Formation and Contribution Agreement”), the Joint Venture Parties contributed to the LLC 100% of their respective interests in certain of their assets. Specifically:

· Fund I, Fund II, MMNV2, DHS Owner and Utica Owner (“SPE Owners”) contributed 100% of their respective equitable interests in certain of their subsidiaries that own and operate one or more businesses licensed and/or authorized under applicable laws to cultivate, manufacture and/or sell cannabis and related products (these subsidiaries collectively referred to as, the “SPE Entities”);

· Such SPE Entities held dispensaries, cultivation and production facilities, real estate, leases, licenses and equitable interests in other cannabis operators, and other assets, all of which were contributed by the SPE Owners through the contribution of their equitable interests in the SPE Entities; and

· MMMG contributed to the LLC all intellectual property, tangible personal property, contracts, agreements/arrangements, and leases and licenses held by MMMG in connection with its business operations at such time, including certain administrative and management services agreements with certain of the SPE Entities.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Joint Venture Partners received 217,184,382 MM Enterprises USA Class B Units. The Agreement was entered into by and among MM Enterprises Manager, LLC, the sole manager of MM Enterprises; MMMG LLC (“MMMG”); MedMen Opportunity Fund, LP (“Fund I”); MedMen Opportunity Fund II, LP (“Fund II”); The MedMen of Nevada 2 LLC (“MMNV2”); DHSM Investors, LLC (“DHS Owner”); and Bloomfield Partners Utica, LLC (“Utica Owner”). On May 28, 2018, a reverse takeover of Ladera Ventures Corp. was completed by MM Enterprises USA (the “Business Combination”). This Business Combination resulted in a reorganization of MM Enterprises USA and Ladera Ventures Corp. pursuant to which Ladera became the indirect parent of MM Enterprises USA and Ladera changed its name to “MedMen Enterprises Inc.” On May 29, 2018, the Company’s Class B Subordinate Voting Shares began trading on the Canadian Securities Exchange (“CSE”) under the symbol “MMEN”.

References herein to “MedMen Enterprises”, “MedMen” or the “Company”, “we”, “us” or “our” as of a date or a period of time prior January 29, 2018 refer to the Joint Venture Parties. References on or after January 29, 2018 through May 28, 2018 refer to MM Enterprises USA and its subsidiaries. References on or after May 28, 2018 refer to MedMen Enterprises Inc. and its subsidiaries.

DESCRIPTION OF THE BUSINESS

General

MedMen is a cannabis retailer based in the U.S. with flagship locations in Los Angeles, Las Vegas, Chicago, and New York. MedMen offers a robust selection of high- quality products, including MedMen-owned brands [statemade], LuxLyte, and MedMen Red through its premium retail stores, proprietary delivery service, as well as curbside and in-store pick up.

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· Emeryville, CA · San Francisco, CA · Chicago, IL · Boston, MA · Newton, MA · Miami, FL · Jacksonville, FL · Orlando, FL · Deerfield Beach, FL

In addition to expanding its physical store network in markets across the U.S., the Company plans to continue scaling its digital platform. The Company launched statewide same-day delivery in California on August 19, 2019. The Company launched delivery in Nevada on September 16, 2019. See “Retail Operations - In-Store Pickup and Delivery” for further information about the Company’s delivery operations.

The Company launched MedMen Buds, the Company’s loyalty program, on July 3, 2019. The program currently is offered in all of the Company’s stores in Arizona, Nevada, Florida and California and has more than 425,000 members. See “Retail Operations - Loyalty Program” for further information about the Company’s loyalty program.

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In addition to owning its own cannabis licenses and operations, the Company also provides management services to third-party cannabis license-holders. The Company currently has management services contracts at two licensed retail dispensaries in California. See “Management Services” for further information about the Company’s management services.

The Company is operated by an executive team that has significant experience in the cannabis industry and other analogous industries such as retail, technology, consumer packaged goods, alcohol and apparel. The Company had approximately 830 employees as of December 26, 2020 across its operating jurisdictions. See “Employees” for further information about the Company’s employees.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MedMen Enterprises USA has 41 wholly owned (either directly or indirectly) material subsidiaries. Such subsidiaries were incorporated or otherwise organized under the laws of California, Nevada, Delaware, New York, Florida, Arizona, Illinois, Massachusetts and Virginia. See “Corporate Structure” above.

Market Opportunity

Management expects the legalization of cannabis throughout the United States to continue to expand both recreationally and medically. There are currently eleven states in which the recreational sale of cannabis has been approved. These states are Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington. In these markets, recreational sales are expected to grow as cannabis retailers, as permitted by law, benefit from a shift in consumers from illegal sales to legal sales and from new cannabis consumers. MedMen plans on capitalizing on the projected increase in cannabis consumption in these recreational markets through both an expansion of its retail footprint in markets such as California, Nevada, Illinois and Massachusetts, as well an entry into other sizable recreational markets across the U.S.

With respect to medical marijuana, as more research centers study the effects of cannabis-based products in treating or addressing therapeutic needs, and assuming that research findings demonstrate that such products are effective in doing so, management believes that the size of the U.S. medical cannabis market will also continue to grow as more states expand their medical marijuana programs and new states legalize medical marijuana. Given MedMen’s existing operations in New York and Florida, MedMen is well-versed in operating within a medical-only market and will continue to seek opportunities to expand. These markets provide the Company a national platform to execute on its medical strategy, allowing the Company to serve both medical and recreational consumers.

Retail Operations

MedMen prides itself on providing a best in class, inclusive and informative environment where the customer can comfortably navigate its extensive selection of cannabis products with the assistance of highly trained employees.

MedMen operates its retail operations through a number of wholly-owned subsidiaries in California, Nevada, Florida, Arizona, Illinois and New York. MedMen currently operates 11 retail stores in California that serve both recreational and medical marijuana customers, three retail stores in Nevada that serve both recreational and medical marijuana customers, four retail stores in Florida that serve medical marijuana patients, one retail store in Illinois that serves both recreational and medical marijuana patients and four retail stores in New York that serve medical marijuana patients. Of the Company’s 11 retail stores in California, the Company owns and operates nine retail stores and manages the operations of two through long term management services agreements. The Company also operates one retail store in Arizona. However, the Company is currently discussions to sell the operation and as such has classified its Arizona business as discontinued operations.

Expanding upon its omni-channel experience, the Company launched its same-day delivery platform in California on August 19, 2019. On September 16, 2019, MedMen’s delivery service was launched in Nevada. Over time, the Company expects to expand its delivery service in each of its states. Delivery service is available seven days a week, 365 days a year. Both MedMen Buds and MedMen Delivery cement the Company’s commitment to continuously evolving the consumer experience.

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Real Estate Strategy

MedMen is focused on entering geographic markets which it believes has significant demand potential for cannabis (assessed through industry research, such as financial analyst reports covering the cannabis industry and consumer and retail information from data providers, and management estimates, such as top-down estimates that evaluate the total addressable market (factoring in potential penetration of cannabis consumption within a specific market) as well as using the Company’s own store performance in similar markets to evaluate potential revenue and profitability), and high barriers to entry, such as limited retail licenses, zoning restrictions and licensing requirements. MedMen’s real estate strategy is focused on prime locations with significant foot traffic and proximity to popular attractions (restaurants, malls, sports arenas, hotels, etc.). MedMen targets retail spaces with a footprint of 2,000 to 5,000 square feet, depending on the market and available real estate. MedMen utilizes both its internal real estate team and a network of real estate brokers to negotiate leases on behalf of the Company. MedMen typically prefers to secure long-term leases for its store locations instead of acquiring real estate. Where leasing of the applicable property is not possible, the Company will generally seek a financing partner to assign the purchase and sale agreement to prior to closing and after the Company has secured the license, and then enter into a leaseback transaction with that purchaser.

Branding and Marketing

MedMen utilizes consistent branding and messaging across its dispensaries under the “MedMen” name. In order to support its retail operations, MedMen has a dedicated marketing team that engages potential customers through in-store demos, social media and promotions, including the MedMen Buds loyalty program, which is described below.

MedMen continues to focus on growing market share and allocating capital to maximize shareholder value, which begins with providing a superior retail experience for its consumers. This includes building and supporting spaces where customers feel safe and educated, while discovering the benefits of cannabis.

The Company curates unique cannabis products and resources that reflect the interests of its customers.

MedMen works diligently to identify emerging cannabis trends and influencers within beauty, wellness, fashion, sports, and entertainment lifestyle verticals. As cannabis gains popularity across these categories, MedMen aims to become a leading lifestyle destination for the next-generation cannabis consumer.

In order to continue enhancing its customer experience, the Company recently launched MedMen Buds, a rewards program that encompasses over 425,000 individual participants and continues to grow daily, with members across California, Florida, Illinois, Arizona and Nevada. MedMen understands that in the current retail landscape, building loyalty with core customers is a key driver of continued growth. The Company’s understanding of what its customers value, and how it can meet those needs is critical in deepening its connection with its core customers.

Creating a true omni-channel experience for customers has been a priority for the Company since its inception. In support of that endeavor, the Company successfully launched a fully-owned and operated delivery service in the California and Nevada markets. MedMen is held to the highest standard as it releases “first-to-market” goods and services to cannabis consumers, and as such, the Company takes great pride in the initial positive feedback towards its enhanced omni-channel offering.

Banking and Processing

MedMen deposits funds from its dispensary operations into its banking partners in each respective market. The banks are fully aware of the nature of MedMen’s business and continue to remain supportive of MedMen’s growth plans. MedMen’s dispensaries currently accept only cash and debit card and do not process credit card payments. The Company believes that, as regulations continue to evolve, over time most forms of payment will be accepted, however, it is unclear exactly when this may occur.

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Product Selection and Offerings

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Product selection decisions are currently made by MedMen’s team of buyers, which negotiates and receives bids from potential brand vendors across all product categories including flower, vape pens, oils, extracts, edibles and pre-rolls. MedMen bases its product selection decisions on product quality, margin potential, consumer feedback and the ability for the respective brands to scale.

MedMen currently sells its own branded products in California, Nevada, New York and Florida under MedMen RED, [statemade] and LuxLyte brands. MedMen manufactures its own products in New York and Florida, and expects to leverage contract manufacturers in California, Nevada and Illinois for its own branded products.

MedMen’s retail locations in California, Illinois, and Nevada make available a variety of MedMen and third party (resale) cannabis and cannabis products. Cannabis and cannabis products for sale include but are not limited to: cannabis dry flower, concentrated cannabis oil, vaporizer forms of cannabis, cannabis edible products and other cannabis products.

MedMen is approved in New York to produce tinctures, vape pens, lotion, topical pain spray, ground flower and capsules. MedMen currently produces five (5) THC:CBD ratios for tinctures, vape pens, lotions, sprays and capsules and thus offers a total of fifteen products at each of its retail locations in New York, as follows: Wellness (0:1), Harmony (1:1), Awake (20:1), Calm (50:1) and Sleep (100:1).

Product Pricing

MedMen’s prices vary based on the market conditions and product pricing of vendor partners. Generally, MedMen strives to keep pricing consistent across all store locations within a state. Cannabis product pricing is usually based on operating costs, materials costs, distribution costs, and quality and strength of ingredients.

The states of California, Nevada, Florida, Illinois and Massachusetts do not regulate pricing and licensed dispensing organizations within such states may set their own prices for cannabis and cannabis products. The state of New York does regulate pricing of all approved medical marijuana products.

Notwithstanding that most of the foregoing states do not regulate pricing of cannabis and cannabis products permitted to be sold in such states, many of them impose taxes on the sale of the same, as follows. Permitted products sold:

· in California, are subject to a 15% cannabis excise tax, a local cannabis excise tax which varies by city and/or county, and state sales tax of 7.25% with an additional local sales tax of up to 3%.

· in Nevada, are subject to a 10% cannabis excise and sales tax.

· in Florida, are not currently subject to an excise or sales tax.

· in New York, are subject to a 7% excise tax.

· in Illinois, Medial cannabis sales are not currently subject to an excise tax but are subject to a sales tax which is identified as a 1% Retailer’s Occupational Tax because the permitted medical cannabis products are considered medicine. Recreational cannabis sales are subject to the following cannabis excise and sales tax structure:

o 10% of taxable receipts from the sale of adult use cannabis, other than cannabis- infused products, sold with 35% THC or less;

o 25% of taxable receipts from the sale of adult use cannabis, other than cannabis- infused products, sold with greater than 35% THC;

o 20% of taxable receipts from the sale of adult use cannabis-infused products; and

o 6.25 % Retailer’s Occupation Tax (sales tax)

o Up to a 3% Municipal Cannabis Retailer’s Occupation Tax (sales tax)

o County Cannabis Retailer’s Occupation Tax:

§ Up to 3.75% in unincorporated areas of the county

§ Up to 3% in a municipality located in a county

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In-Store Pickup and Delivery

MedMen offers in-store pickup in most California and Nevada retail locations, accessible from MedMen’s website. Measures to enhance this offering and expand its availability into certain of the Company’s other operating states, where permitted under applicable laws and regulations, are underway.

The Company launched statewide same-day delivery in California in August 2019. The Company launched delivery in Nevada in September 2019.

Loyalty Program

MedMen launched its new loyalty program, MedMen Buds, in July 2019. In addition to providing exclusive access to sales and discounts, members of MedMen Buds earn points for every purchase that lead to rewards. MedMen Buds is currently live in all of the Company’s stores across California, Nevada, and Florida and counts over 425,000 members.

Inventory Management

MedMen has comprehensive inventory management procedures, which are compliant with the rules set forth by the California Department of Consumer Affairs’ Bureau of Cannabis Control (“BCC”) and all other applicable state and local laws, regulations, ordinances, and other requirements. These procedures ensure strict control over MedMen’s cannabis and cannabis product inventory from delivery by a licensed distributor to sale or delivery to a consumer, or disposal as cannabis waste. Such inventory management procedures also include measures to prevent contamination and maintain the safety and quality of the products dispensed at MedMen’s retail locations. MedMen understands its responsibility to the greater community and the environment and is committed to providing consumers with a consistent and high-quality supply of cannabis.

Managed Dispensaries

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MedMen uses the same proprietary, best-practices policies and procedures in both owned and managed dispensaries in order to ensure systematic operations and consistent customer experience. By design, a customer or employee should notice no distinct differences between owned and managed stores. Additionally, MedMen enters into long-term management services agreements, as further described under “Management Services” below.

Cultivation and Production Operations

MedMen currently operates five cultivation and production facilities across Nevada, California, New York, Florida and Arizona. Given the regulatory environment and lack of robust wholesale market in Florida and New York, the Company expects to continue cultivation and production activities in these markets. In California and Nevada, the Company is in discussions with operating partners for its cultivation and production facilities so it can focus on retail operations. The Company has not entered into any definitive agreements at this time. The Company currently intends to sub-lease the California and Nevada facilities to a third party that would acquire and/or take over the operations for the cultivation and production facilities. As a result, the Company would no longer operate cultivation and production facilities in California and Nevada. The Company also operates a cultivation and production facility in Arizona. Although no definitive agreements have been entered into, the Company is currently in discussions to sell the operation, and as such has classified its Arizona business as discontinued operations.

Nevada (Mustang)

MedMen operates a cultivation and production facility in northern Nevada. The combined facility is comprised of a 30,000 square foot cultivation facility and a 15,000 square foot production facility and sits on a total of 4.27 acres of land. The 30,000 square foot high-tech Dutch hybrid greenhouse allows for 22,000 square feet of canopy space. The production facility includes state-of-the-art production and extraction equipment.

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California (Desert Hot Springs)

MedMen operates a cultivation and production facility in Desert Hot Springs, California. The combined facility is comprised of a 30,000 square foot cultivation facility and a 15,000 square foot production facility and its design is based on the Mustang facility.

New York (Utica)

MedMen operates a temporary cultivation and production facility in Utica, New York in order to service medical marijuana patients in the state through its master license, which allows for cultivation, production and retail sales.

Florida (Eustis)

MedMen operates a temporary cultivation and production facility in Eustis, Florida, which is approximately an hour’s drive north from Orlando.

Arizona (Mesa)

The Company also operates a cultivation and production facility in Mesa, Arizona. However, the Company is currently in discussions to exit the Arizona market and as such as designated its Arizona business as discontinued operations.

Management Services

In addition to owning its own retail licenses, MedMen has signed long-term management services contracts with third-party license owners seeking MedMen’s management services. Management services include the use of the “MedMen” brand, retail operations support, human resources, finance and accounting, marketing, sales, legal and compliance. MedMen currently has two management services agreements in place with license owners in California. The two managed dispensaries are located in Venice Beach (Abbot Kinney) and the Los Angeles Airport area.

The management services agreements are typically 30 years in length with 10-year renewals and significant penalties if an operator sells its interest in a managed licensed entity (20% of net sale price of licensee with respect to a change of control transaction). The management services agreements currently in place comprise of the following fees: (i) 1.5% of gross revenue for marketing and soft costs, (ii) $20,000 per month shared services fee, (iii) 25% of monthly EBITDA, (iv) 1.5% of construction budget for construction design services, and (v) 5% of construction budget for construction management services.

Employees

As of December 26, 2020, MedMen had approximately 830 employees across its operating jurisdictions, approximately 125 of which were employed at the corporate level. The remaining employees are employed at retail, cultivation, production, quality assurance/quality control and supply chain/distribution.

MedMen is committed to:

· Providing equal employment opportunities to all employees and applicants: These policies extend to all aspects of MedMen’s employment practices, including but not limited to, recruiting, hiring, discipline, termination, promotions, transfers, compensation, benefits, training, leaves of absence, and other terms and conditions of employment.

· Providing a work environment that is free of unlawful harassment, discrimination and retaliation: In furtherance of this commitment, MedMen strictly prohibits all forms of unlawful discrimination and harassment.

· Complying with all laws protecting qualified individuals with disabilities, as well as employees’, independent contractors’ and vendors’ religious beliefs and observances.

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MedMen is committed to all of the above without regards to race, ethnicity, religion, color, sex, gender, gender identity or expression, sexual orientation, national origin, ancestry, citizenship status, uniform service member and veteran status, marital status, pregnancy, age, protected medical condition, genetic information, disability, or any other protected status in accordance with all applicable federal, state, provincial and local laws.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MedMen’s employees are highly-talented individuals who have educational achievements ranging from Ph.D, Masters, and undergraduate degrees in a wide range of disciplines, as well as staff who have been trained on the job to uphold the highest standards as set by MedMen. It is a requirement that all of MedMen’s employees pass background checks and drug screening. MedMen recruits, hires and promotes individuals that are best qualified for each position, priding itself on using a selection process that recruits people who are trainable, cooperative and share its core values as a company.

In addition, the safety of MedMen’s employees is a priority and MedMen is committed to the prevention of illness and injury through the provision and maintenance of a healthy workplace. MedMen takes all reasonable steps to ensure staff is appropriately informed and trained to ensure the safety of themselves as well as others around them.

MedMen partners with the United Food and Commercial Workers (the “UFCW”). The UFCW is a national labor union that represents cannabis workers throughout the United States. The eligible staff of all current retail locations of MedMen in California is represented by the UFCW. MedMen entered into a collective bargaining agreement with UFCW Local 770 and its sister locals in Southern California in 2018 and has expanded that relationship to include UFCW Local 5 in Northern California. In New York, MedMen has entered into a collective bargaining agreement with the Retail, Wholesale and Department Store Union, a division of the UFCW, which represents MedMen’s cultivation and retail staff in New York state.

Competition

With respect to retail operations, MedMen expects to compete with other retail license holders across the states in which it operates, and additional states, as it expands its retail operations into those states either organically or by way of acquisition. Many of MedMen’s competitors in the markets in which MedMen operates in are small local operators. In certain markets such as Los Angeles, there are also a number of illegally operating dispensaries, which serve as competition. In addition to physical dispensaries, MedMen also competes with third-party delivery services, which provide direct-to-consumer delivery services.

Further, as more U.S. jurisdictions pass state legislation allowing recreational use of cannabis, the Company expects an increased level of competition in the U.S. market. For example, since January 1, 2018, the legalization of recreational cannabis in California has spurred an increase of new entrants. A number of companies listed on the CSE are expanding operations to states that have decriminalized cannabis consumption. The increasingly competitive U.S. state markets may adversely affect the business, financial condition, results of operations and prospects of the Company.

Intellectual Property

MedMen has developed numerous proprietary technologies and processes. These proprietary technologies and processes include its seed-to-sale software, cultivation and extraction techniques, and cultivation equipment and irrigation systems. While actively exploring the patentability of these techniques and processes, MedMen relies on non-disclosure/confidentiality arrangements and trade secret protection.

MedMen has invested significant resources towards developing a recognizable and unique brand consistent with premium, high-end retailers in analogous industries. To date, MedMen has 13 registered federal trademarks with the United States Patent and Trademark Office, three registered trademarks in Mexico, one registered trademark in California, sixteen registered trademarks in Nevada, three registered trademarks in Florida and three registered trademarks in New York. All U.S. federal registered trademarks are further described below.

MedMen’s in-house and outside legal counsel vigorously monitor and swiftly respond to potential intellectual property infringement. Additionally, MedMen maintains strict standards and operating procedures regarding its intellectual property, including the regular use of non-disclosure, confidentiality, and intellectual property assignment agreements.

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Trademarks

As of the date hereof, MedMen has registered the following 11 federal trademarks in the United States, including the “MedMen” name itself, related logos, and design marks distinctive to MedMen’s brand:

· “MEDMEN” was registered under registration number 4916626 on March 15, 2016, registration numbers 5301055, 5301056, 5301058, and 5301059 on October 3, 2017 and registration number 5612033 on November 20, 2018. This mark was registered for use in association with providing a range of services including “arranging of seminars; conducting workshops and seminars in the fields of business management, entrepreneurship, and investing”, “private equity fund investment services; management of private equity funds; providing venture capital, development capital, private equity and investment funding”, “business advice and information; business consultation; business consultation services”, “on-line journals, namely, blogs featuring social and medical benefits of cannabis” and for use in association with the following products: “hoodies; jackets; shirts; sweatshirts; long-sleeved shirts; t-shirts” and “plastic water bottles sold empty”.

· “MYMEDMEN” was registered under registration number 5301054 on October 3, 2017 for use in association with “computer software that provides real-time, integrated business management intelligence by combining information from various databases and presenting it in an easy-to-understand user interface”.

· The stylized red text logo for “MedMen”, as registered under registration number 4788802 on August 11, 2015 for use in association with “business consultancy; business consultation services”.

· The stylized red “M”, was registered under registration number 4825297 on October 5, 2015 for use in association with “business consultancy; business consultation; business consultation services”.

· The stylized geometric marijuana leaf, was registered under registration numbers 5333804 and 5333805 on November 14, 2017 and registration number 5421419 on March 13, 2018. This design mark was registered for use in association with products, namely “hoodies; long- sleeved shirts; shirts; sweat shirts; t-shirts” and for use in association with services including “private equity fund investment services; management of private equity funds; providing venture capital, development capital, private equity and investment funding” and “business management consultancy services not including services related to supply chain and inventory management”.

· The stylized text logo for “EMBER”, was registered under registration number 5616303 on November 27, 2018 for use in association with “general feature magazine in the field of cannabis, general feature magazines”.

All federal registered trademarks in the United States described above are subject to renewal 10 years from the date of registration.

UNITED STATES REGULATORY ENVIRONMENT

Federal Regulatory Environment

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The federal government of the United States regulates controlled substances through the CSA, which places controlled substances on one of five schedules. Currently, marijuana is classified as a Schedule I controlled substance. A Schedule I controlled substance means the Drug Enforcement Agency considers it to have a high potential for abuse, no accepted medical treatment, and a lack of accepted safety for the use of it even under medical supervision. Overall, the United States federal government has specifically reserved the right to enforce federal law in regards to the sale and disbursement of medical or adult-use marijuana even if such sale and disbursement is sanctioned by state law. Accordingly, there are a number of significant risks associated with the business of the Company and unless and until the United States Congress amends the CSA with respect to medical and/or adult-use cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a significant risk that federal authorities may enforce current federal law, and the business of the Company may be deemed to be producing, cultivating, extracting, or dispensing cannabis or aiding or abetting or otherwise engaging in a conspiracy to commit such acts in violation of federal law in the United States.

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The following table provides a list of the licenses granted to and disclosed as applied for by the Company.

Expiry Date License Entity Address Jurisdiction License Type (if applicable) Number(s) State Adult use and Medical Retail 07/23/2021 C10-0000499-LIC 0002086145-0001-8: Fund/ City Adult Use Retail 12/31/2020 735 S. Broadway, Los Angeles, CA 90014 Class J020 Advanced Patients' Collective 0002086145-0001-8: Fund/ City Medical Retail 12/31/2020 Class J010 2430 Porter St., Los Angeles, CA 90021 State Adult use and Medical Distribution 07/02/2021 C11-0000635-LIC State Adult use and Medical Retail 07/15/2021 C10-0000426-LIC 0002053218-0001-8: Fund/ City Adult Use Retail 12/31/2020 MME CYON Retail, Inc. 110 S Robertson Blvd, Los Angeles CA 90048 Class J020 0002181643-0001-9 Fund City Medical Retail 12/31/2020 Class J010 State Adult Use and Medicinal Distributor 06/24/2021 C11-0000490-LIC State Adult use and Medical Manufacturing - Type 7 05/10/2021 CDPH-10003152 State Adult use and Medical Cultivation 09/13/2020 CAL19-0004050 Desert Hot Springs Green 13300 Little Morongo Road, Desert Hot Springs, City Business License - Cultivator/Distributor 09/15/2020 2071 Horizons, Inc. CA 92240 City Business License - Manufacturing 09/15/2020 2070 Cannabis Regulatory Permit - Cultivation, City N/A 2017-00000396 Distribution, and Manufacturing City CUP N/A CUP 14-16 State Adult use/Medical Retail 07/14/2021 C10-0000421-LIC Farmacy Collective 8208 Santa Monica Blvd, Santa Monica CA 90046 City TUP (TEMP CITY APPROVAL) 09/28/2020 17-0013 City West Hollywood Business License - Public Eating 05/31/2021 PBL-004537 State Adult use and Medical Retail 07/07/2021 C10-0000385-LIC 3996 San Pablo Avenue Suites A, B, C, D; Rochambeau, Inc. City Adult use and Medical Retail 08/21/2020 EPD 19-006 Emeryville, CA 94608 City CUP for Retail 02/22/2021 CUP-18-001 State Adult use and Medical Retail 07/04/2021 C10-0000379-LIC Sure Felt, LLC 10715 Sorrento Valley Rd., San Diego, CA 92121 City Medical Marijuana Consumer Cooperative Permit 04/17/2020* Form DS-191 City CUP 06/18/2023 CUP 1865509 1291580 City CUP 06/25/2020* 5125 Convoy St., #211 PTS# 369478 MMOF San Diego Retail, Inc. San Diego, CA 92111 City Medical Marijuana Consumer Cooperative Permit 05/23/2020* Form DS-191 State Adult use and Medical Retail 07/04/2021 C10-0000378-LIC State Adult use and Medical Retail 06/11/2021 C10-0000177-LIC 0002181643-0001-9: Fund/ City Adult-Use Retail 12/31/2020 The Compassion Network 410 Lincoln Blvd., Venice, CA 90291 Class J020 0002181643-0001-9: Fund/ City Medical Retail 12/31/2020 Class J010 State Adult-Use and Medicinal Retailer 07/15/2021 C10-0000442-LIC The Source Santa Ana 2141 S Wright Street, Santa Ana CA 92705 City Regulatory Safety Permit 01/13/2021 2018-16

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Expiry Date License Entity Address Jurisdiction License Type (If Applicable) Number(s) State Adult use and Medical Microbusiness 07/04/2021 C12-0000144-LIC City of San Jose - Medical Cannabis Cultivation, Medical Cannabis Distribution, Medical Cannabis Viktoriya's Medical Supplies, LLC Manufacturing, Medical Cannabis Retail, Non- 1075 10th St, N. San Jose, CA 95112 City 12/14/2020 101-568997 Medical Cannabis Cultivation, Non-Medical Cannabis Distribution, Non-Medical Cannabis Manufacturing, Non-Medical Cannabis Retail 840 Broadway Ave, Suite B-4 City Business License 06/30/2021 9992017926 PHSL, LLC Seaside, CA 93955 State Adult use and Medical Retail 07/15/2021 C10-0000425-LIC Business License - Dispensary with Delivery - Adult City 08/03/2023 MJ21908299 2767 E. Broadway Use MATTNJEREMY, INC Long Beach, CA 90803 City Adult use and Medical Retail 01/04/2023 MJ21908296 State Adult use and Medical Retail 07/15/2021 C10-0000438-LIC State Adult use and Medical Retail 06/24/2021 C10-0000273-LIC Milkman, LLC 923 Huber Street, Grover Beach, California 93433 City Use Permit for Manufacturing, Distribution, Retail N/A Resolution No. 18-19 Pending Local and State 12071 Wilshire Retail LLC 12071 Wilshire Blvd, Los Angeles, CA 90025 State and City Adult use and Medical Retail N/A Approval

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pending Local and State MME Pasadena Retail LLC 536 S. Fair Oaks, Pasadena, CA 91105 State and City Adult use and Medical Retail N/A Approval Pending Local and State MME Sutter Retail Inc. 532 Sutter Street, San Francisco CA 94102 State and City Adult use and Medical Retail N/A Approval Pending Local and State MME Union Retail, LLC 1861 Union St, San Francisco, CA 94123 State and City Adult use and Medical Retail N/A Approval Marijuana Master License Retail Store/Medical 12/31/2020 County Dispensary 2000169.MMR-301 Certificate: 06/30/2021 04045523128584413069 Code: MMOF Vegas Retail Inc 4503 Paradise Rd St. 210 A-B, Las Vegas, NV 8916 State Retail Marijuana Store RD078 Certificate: 06/30/2021 3465297098641153293 MME State Medical Marijuana Dispensary Code: D078 City Medical Retail Business License 01/01/2021 License #: M66-00014 City Recreational Retail Business License 01/01/2021 License #: M66-00015 Certificate: 06/30/2021 67501179020484699802 Code: MMOF Fremont Retail, Inc. 823 S 3rd Street, Las Vegas, NV 89101 State Retail Marijuana Store RD178 Certificate: State Medical Marijuana Dispensary 06/30/2021 51798010886861416556 Code: D178 Marijuana Master License Retail Store/Medical 12/31/2020 City Dispensary 2000104.MMR-301 Certificate: 06/30/2021 10756476132829656560 Code: MMOF Vegas Retail 2, Inc. 6332 S Rainbow Blvd #105, Las Vegas, NV 89118 State Retail Marijuana Store RD092 Certificate: 06/30/2021 55740439531874846857 Code: State Medical Marijuana Dispensary D092 Certificate: 07/31/2021 07912568590104527553 Code: State Marijuana Cultivation Facility RC025 Certificate: Medical Marijuana Cultivation Registration 06/30/2021 17870088520850390544 Code: State Certificate C025 County Marijuana Cultivation Facility 01/01/2021 W000009ME-LIC MMNV2 Holdings I, LLC 12000 Truckee Canyon Court, Sparks NV 89434 Certificate: 07/31/2021 28332017443877189253 Code: State Marijuana Product Manufacturing Facility RP016 Certificate: Medical Marijuana Production Registration 06/30/2021 42811321585035807243 Code: State Certificate P016 County Marijuana Product Manufacturing Facility 01/01/2021 W000005ME-LIC

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Expiry Date License Entity Address Jurisdiction License Type (If Applicable) Number(s) Approval to Operate - Dispensary, Cultivation 08/07/2022 8729 E Manzanita Dr., Scottsdale, AZ 85258 State (offsite) 00000072DCMU00762354 EBA Holdings, Inc. City CUP 03/01/2022 8-UP-2012#2 2832 N. Omaha, Mesa, AZ 85125 State Approval to Operate -Cultivation (offsite) 08/07/2022 00000072DCMU00762354 1113 Herkimer Road, Utica, NY 13501 State Manufacturing License 07/31/2021 MM0501M 2001 Marcus Avenue, Lake Success, NY 11042 State Dispensing License 07/31/2021 MM0502D MedMen NY, Inc 433 Fifth Avenue, New York, NY 10116 State Dispensing License 07/31/2021 MM0503D 1304 Buckley Road, Syracuse, NY 13212 State Dispensing License 07/31/2021 MM0504D 6850 Main Street, Buffalo, NY 14221 State Dispensing License 07/31/2021 MM0506D 25540 County Road 44A, Eustis, Florida 32736 State Cultivation and Manufacturing Authorization 5048 Bayou Blvd. Pensacola, Florida 32503 State Dispensing Authorization 326 5th Avenue North, St. Petersburg, Florida 33701 State Dispensing Authorization MME Florida, LLC 2949 North Federal Highway Fort Lauderdale, 07/13/2022 MMTC-2017-0012 Florida 33306 Dispensing Authorization 537-539 Clematis Street, West Palm Beach, Florida 33401 State Dispensing Authorization 120 Brookline Avenue, Boston, Massachusetts Pending Additional Approvals. MedMen Boston, LLC TBD 02215 State and City Adult-Use and Medicinal Retailer State Provisional Obtained Pending Local and State MME Newton Retail, LLC TBD 232 Boylston Street, Newton, MA 02459 State and City Adult-Use and Medicinal Retailer Approval State Medical Dispensing License 08/22/2021 DISP.000041 Future Transactions Holdings, LLC 1132 Lake Street, Oak Park, Il 60301 State Adult Use License 03/31/2021 AUDO.000033 State Medical Dispensing License 11/09/2020 DISP.000009 MME Evanston Retail LLC 1804 Maple Ave. Evanston, IL 60201 State Adult Use License 03/31/2021 AUDO.000020

______* A renewal application has been submitted by the Company in respect of the noted license/permit. The license/permit remains effective during the renewal process. The Company expects to receive a renewal for such a license in the ordinary course of business.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Disclosure that a license has been granted to or applied for by the Company does not imply that all required regulatory steps have been satisfied to operate a cannabis facility under that license, as licensing commonly requires multiple levels of approval at the state and local level, as well as securing compliant real estate, and licenses listed as having been granted are often provisional in nature.

The Company’s operations are in compliance with applicable state laws, regulations and licensing requirements. Additionally, the Company uses the same proprietary, best-practices policies and procedures in its managed dispensaries as in its owned dispensaries in order to ensure systematic operations and, as such, to the Company’s knowledge, the dispensaries that the Company manages are in compliance with applicable state laws, regulations and licensing requirements.

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Nonetheless, for the reasons described above and the risks further described under the “Risk and Uncertainties” section herein, there are significant risks associated with the business of the Company. Readers are strongly encouraged to carefully read all the risk factors contained herein.

The following sections describe the legal and regulatory landscape in respect of the states in which the Company currently operates and as such in which it is currently contemplated that the Company will be operating upon completion of announced transactions.

While the Company’s compliance controls have been developed to mitigate the risk of any material violations of a license arising, there is no assurance that the Company’s licenses will be renewed in the future in a timely manner. Any unexpected delays or costs associated with the licensing renewal process could impede the ongoing or planned operations of the Company and have a material adverse effect on the Company’s business, financial condition, results of operations or prospects.

ARIZONA

Arizona Regulatory Landscape

The Arizona Medical Marijuana Program (the “AZDHS Program”) is governed by Title 9; Chapter 17 Department of Health Services Medical Marijuana Program (the “AZDHS Rules”) and A.R.S. § 36-2801 et seq., as amended from time to time (the “Arizona Act”) (the AZDHS Rules and the Arizona Act collectively referred to herein as the “AMMA”). The Arizona Act, which was approved by the Arizona voters in 2010 provides the legal requirements and restrictions in conjunction with the applicable rules, guidelines and requirements, promulgated by the Arizona Department of Health Services (“AZDHS”). The AZDHS Program provides for a limited number of Medical Marijuana Dispensary Registration Certificates (each, an “Arizona License”). The program currently allows 131Arizona Licenses. A variety of product types are allowed in the state including medical marijuana and manufactured and derivative products which contain medical marijuana.

Licenses

Arizona state licenses are renewed biennially. Licensees are required to submit a renewal application, an annual financial statement, an audit of the annual financial statement prepared by an independent certified public accountant for the previous licensing period and fees outlined in the AZDHS rules. There is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner along with the necessary supporting documents, and regulatory requirements are met, the licensee would expect to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Arizona, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. A single license holder is provided with the ability to cultivate, harvest, process, transport, sell and dispense cannabis and cannabis products, and is not required to participate in all of the allowable activities. Delivery is allowed from dispensaries to patients.

Reporting Requirements

The AZDHS has not selected a state mandated seed-to-sale system at this time. Licensed entities are permitted to choose their own provider or to track marijuana products from seed-to-sale using proprietary methods. The state however, tracks patient dispensing limits through a proprietary state system. Although there are no periodic reporting requirements to the state, full seed-to-sale tracking is required by all licensees and is periodically audited by the AZDHS. Additionally, all sales transactions are manually entered into the state dispensing tracking system at the time of transaction.

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COVID-19

Medical Marijuana dispensaries were not explicitly identified as essential businesses in the Governor’s March 23, 2020 executive order outlining essential services. However, dispensaries continued to operate as they were considered essential as part of Arizona’s healthcare and public health operations sector. Licensed dispensaries have remained open during the stay-at-home order.

Businesses that physically operate in Arizona and serve the public must establish and implement policies based on guidance from the CDC, Department of Labor, Occupational Safety and Health Administration (“OSHA”) and ADHS to limit and mitigate the spread of COVID-19 including limiting the congregation of groups of no more than ten persons when feasible and in relation to the size of the location.

CALIFORNIA

California Regulatory Landscape

In 1996, California was the first state to legalize medical marijuana through Proposition 215, the Compassionate Use Act of 1996 (“CUA”). This legalized the use, possession and cultivation of medical marijuana by patients with a physician recommendation for treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief.

In 2003, Senate Bill 420 was signed into law establishing an optional identification card system for medical marijuana patients.

In September 2015, the California legislature passed three bills collectively known as the “Medical Cannabis Regulation and Safety Act” (“MCRSA”). The MCRSA established a licensing and regulatory framework for medical marijuana businesses in California. The system created multiple license types for dispensaries, infused products manufacturers, cultivation facilities, testing laboratories, transportation companies and distributors. Edible infused product manufacturers would require either volatile solvent or non-volatile solvent manufacturing licenses depending on their specific extraction methodology. Multiple agencies would oversee different aspects of the program and businesses would require a state license and local approval to operate. However, in November 2016, voters in California overwhelmingly passed Proposition 64, the “Adult Use of Marijuana Act”(“AUMA”) creating an adult-use marijuana program for adult-use 21 years of age or older. AUMA had some conflicting

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document provisions with MCRSA, so in June 2017, the California State Legislature passed Senate Bill No. 94, known as Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which amalgamates MCRSA and AUMA to provide a set of regulations to govern medical and adult-use licensing regime for cannabis businesses in the state of California. MAUCRSA went into effect on January 1, 2018. The three agencies that regulate marijuana at the state level are the California Department of Consumer Affairs’ Bureau of Cannabis Control (“BCC”), California Department of Food and Agriculture(“CDFA”), California Department of Public Health(“CDPH”). The California Department of Tax and Fee Administration(“CDTFA”) oversees.

In order to legally operate a medical or adult-use cannabis business in California, the operator must have both a local and state license. This requires license holders to operate in cities with marijuana licensing programs. Therefore, cities in California are allowed to determine the number of licenses they will issue to marijuana operators or can choose to outright ban marijuana.

Licenses

The Company is licensed to operate as a Medical and Adult-Use Retailer, Cultivator, Manufacturer and Distributor under applicable California and local jurisdictional law. The Company’s licenses permit it to possess, cultivate, manufacture, distribute, dispense and sell medical and adult-use cannabis in the state of California pursuant to the terms of the various licenses issued by the BCC, CDFA, and CDPH under the provision of the MAUCRSA and California Assembly Bill No. 133.

On August 27, 2020, MME Pasadena Retail, Inc. (“MME Pasadena”), a subsidiary of the Company, received a notice from the City of Pasadena that a determination was made that there had been a material change in ownership and/or management of MedMen such that the initial application was no longer valid, resulting in MME Pasadena losing the right to proceed through the cannabis permitting process in the City of Pasadena. On October 21, 2020, MME Pasadena filed a Writ of Mandate in the Superior Court of the State of California for the County of Los Angeles against the City of Pasadena, followed by a First Amended Verified Petition for Writ of Mandate on December 8, 2020, seeking, among other things, an order requiring the city to revoke its denial of MME Pasadena’s application.

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The licenses are independently issued for each approved activity for use at the Company’s facilities in California. California state and local licenses are generally renewed annually. License renewal applications are submitted per guidelines published by local cannabis regulators, BCC, CDFA and CDPH. While renewals are generally annual, there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and there are no material violations noted against the applicable license, the Company would expect to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of California, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. The Company has the capabilities to cultivate, harvest, process, manufacture, distribute, and sell/dispense/deliver adult-use and medical cannabis and cannabis products. The state also allows the Company to make wholesale purchase of cannabis and cannabis products from, or a distribution of cannabis and cannabis product to, another licensed entity within the state.

Reporting Requirements

The state of California has selected Franwell Inc.’s METRC solution (“METRC”) as the state’s track-and-trace (“T&T”) system used to track commercial cannabis activity and movement across the distribution chain (“seed-to- sale”). The METRC system is mandatory for all licensed operators in the state of California. The system allows for other third-party system integration via application programming interface (“API”).

COVID-19 Regulations

On March 19, 2020, Governor Gavin Newsom issued a stay at home order to protect the health and well-being of all Californians and to establish a consistent approach across the state to slow the spread of COVID-19. This order went into effect on March 19, 2020, and is in place until further notice, with certain modification in May 2020.

The order identified certain services as essential, including food, prescriptions, and healthcare. These services can continue despite the stay at home order. Because cannabis is an essential medicine for many residents, licensees were permitted to operate so long as their operations comply with local rules and regulations.

In response to Governor Newsom’s emergency declaration regarding COVID-19, BCC licensees who are unable to comply with specific regulatory requirements were able to request relief from specific licensing requirements pursuant to section 5038 of the Bureau’s regulations. MedMen and numerous other retailers requested and were granted relief from certain regulation to perform curbside pickup for cannabis and cannabis product sales.

Certain jurisdictions where MedMen operates, or seeks to operate, implemented additional operational guidelines/limitations which MedMen continues to observe until further updates from local and state regulatory bodies.

FLORIDA

Florida Regulatory Landscape

In June 2014, the Florida Legislature and Governor enacted the Compassionate Medical Cannabis Act (SB1030) (the “CMCA”) to provide a comprehensive, safe and effective medical marijuana program to meet the needs of Florida residents. The Florida State Department of Health’s Office of Medical Marijuana Use (the “OMMU”) is the regulatory agency overseeing the medical marijuana program.

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While Florida regulations discuss manufacturing of edible products, such products were not permitted until the Florida Department of Health created rules for edibles manufacturing. As of March 16, 2020, new regulations outlining a path to edibles manufacturing were published. License holders must meet many requirements to manufacture edibles including but not limited to: updating their business plan, obtain and maintain a food establishment permit, and obtain approval from the OMMU.

In addition, the OMMU is in the process of promulgating new lab testing rules which will enhance the current lab testing program and product safety requirements.

Licenses

Florida state licenses are issued unnumbered and are renewed biennially. Licensees are required to submit a renewal application and fees per guidelines published by OMMU. While renewals are biennial, there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and regulatory requirements are met, the Company would expect to receive the applicable renewed license in the ordinary course of business.

In the state of Florida, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. Florida is a “vertically-integrated” system, which gives a single license holder the ability to cultivate, harvest, process, manufacture, transport, sell and dispense cannabis and cannabis products. In Florida, license holders must participate in all aspects of the value chain in order to dispense cannabis and cannabis products to patients. Delivery to patients is permitted under the license with approval from the OMMU. The state of Florida recently updated lab testing related regulations putting more stringent controls on products in the supply chain, for the benefit of the medical marijuana patients. MedMen’s products were not impacted from the change due to stringent internal controls which exceeded previous regulatory requirements for product safety.

Reporting Requirements

The OMMU has not selected a state mandated seed-to-sale system at this time. The state however, tracks patient dispensing limits through a proprietary state system. Although there are no periodic reporting requirements to the State, full seed-to-sale tracking is required by all licensees and is periodically audited by the OMMU. Additionally, all sales transactions are manually entered into the state dispensing tracking system at the time of transaction.

COVID-19

Medical Marijuana Treatment Centers (“MMTC”) were not explicitly identified as essential businesses in the Governor’s April 1st stay-at-home order. However, MMTCs were considered essential as part of Florida’s health-care sector. Licensed MMTCs have remained open during the stay-at-home order.

On March 16, 2020, the Florida Department of Health issued Emergency Order 20-002, which allowed the use of telemedicine by qualified physicians for recertification of already-existing medical marijuana patients. Under the order, qualified physicians under section 381.986, Florida Statutes, may issue a physician certification only for an existing qualified patient with an existing certification that was issued by that qualified physician without the need to conduct a physical examination while physically present in the same room as the patient.

ILLINOIS

Illinois Regulatory Landscape

In 2013, the Illinois General Assembly passed the Compassionate Use of Medical Cannabis Pilot Program Act (410 ILCS 130), Public Act 98-0122 (the “Illinois Act”), which was signed into law by the Governor on August 1, 2013 and went into effect on January 1, 2014. The Illinois Act allows an individual who is diagnosed with a debilitating condition to register with the state to obtain cannabis for medical use. The program currently allows 60 Dispensing Organizations (each, a “DO”) and 22 cultivation centers statewide. A large variety of medical cannabis products are allowed in the state, including the smoking of cannabis flower. Overall, the program is administered by the Illinois Department of Public Health (the “IDPH”), the Illinois Department of Financial and Professional Regulations (the “IDFPR”) is the regulatory agency overseeing the medical marijuana program for DOs and the Illinois Department of Agriculture (the “IDOA”) is the regulatory agency overseeing the medical marijuana program for cultivation centers.

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In June 2019, Illinois governor signed legislation legalizing marijuana for recreational use. The Cannabis Regulation and Tax Act, legalizing and regulating marijuana for recreational use, went into effect on June 25, 2019, however recreational sales of marijuana began in the state on January 1, 2020. The adult use program allowed existing medical marijuana license holders to apply for Early Approval Adult Use Dispensing Organization (“EAAUDO”) licenses to be able to sell adult use product at existing medical marijuana dispensaries (known as “co-located” or “same site” dispensaries) on January 1, 2020, and to have the privilege of opening a secondary adult use only retail site for every medical marijuana dispensary location the DO already had in its portfolio. All EAAUDO license holders were also required to commit to the state’s groundbreaking Social Equity program either through a financial contribution, grant agreement, donation, incubation program, or sponsorship program.

IDFPR will also be issuing an additional 75 Adult Use Dispensing Organization (“AUDO”) licenses in 2020. IDFPR is also expected to issue an additional 110 AUDO licenses by December 21, 2021. No single person or entity can have direct or indirect financial interest in more than 10 adult use dispensary licenses.

Licenses

Licensees are required to submit an annual renewal application and fees per guidelines published by the IDFPR and the Department of Agriculture respectively. While renewals are annual, there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and regulatory requirements are met, the licensee would expect to receive the applicable renewed license in the ordinary course of business.

Under the adult use program, AUDO licenses are eligible for renewal every other year.

Regulations

In the state of Illinois, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. DO license holders are provided the ability to dispense cannabis and cultivation centers are provided with the ability to cultivate, harvest, process, manufacture, and transport cannabis products. Delivery is not allowed from dispensaries to patients or consumers. Only designated caregivers may deliver medical cannabis to qualified patients.

Reporting Requirements

The state of Illinois has selected BioTrackTHC’s solution as the state’s track and trace system used to track commercial cannabis activity and seed-to-sale Licensed entities are permitted to choose their own provider to track marijuana products from seed-to-sale, provided that it has the ability integrate with BioTrackTHC via an API. License holders are required to provide IDFPR an annual financial report.

COVID-19

The Governor of Illinois declared all counties in the State of Illinois as a disaster area on March 9, 2020 in response to the outbreak of Coronavirus Disease 2019 (COVID-19) under Executive Order 2020-10. Under the order, all cannabis operations, medical and adult-use, were deemed an essential business and permitted to remain operational with required modifications to general business operations to meet social distancing and other safety requirements.

On March 16, 2020, the IDFPR issued emergency regulations permitting the sale of medical cannabis and cannabis products outside of the dispensary as long as certain protective measures were in place. Adult-use cannabis sale process was unchanged. The permissible activity is currently extended through May 30, 2020.

MASSACHUSETTS

Massachusetts Regulatory Landscape

The use of cannabis for medical use was legalized in Massachusetts by a voter approval of the Massachusetts Marijuana Initiative in 2012. The law took effect on January 1, 2013, eliminating criminal and civil penalties for the possession and use of up to a 60-day or ten-ounce supply of marijuana for medical use for patients possessing a state issued registration card.

On November 8, 2016, Massachusetts voters approved Question 4 or the Massachusetts Marijuana Legalization Initiative, which allowed for recreational or “adult use” cannabis in the Commonwealth. On September 12, 2017, the Cannabis Control Commission (“CCC”) was established under Chapter 55 of the Acts of 2017 (the “Massachusetts Act”) to implement and administer laws enabling access to medical and adult-use cannabis.

On November 16, 2018, the CCC issued the first notices for retail marijuana establishments to commence adult-use operations in Massachusetts.

Under the current program there are no statewide limits on the total number of licenses permitted however, no individual or entity shall be a controlling person over more than three licenses in a particular class of license. Similarly, no individual, corporation or other entity shall be in a position to control the decision making of more than three licenses in a particular class of license. In addition, all Marijuana Establishments are required to enter into host community agreements with the municipality in which they are located.

Licenses

Provisional Marijuana Establishment licenses are renewed annually. There is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, the applicable licensee provides an accounting of the financial benefits accruing to the municipality as the result of the host community agreement, and regulatory requirements are met, the licensee would expect to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Massachusetts, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. A Marijuana Retailer may purchase and transport marijuana products from Marijuana Establishments and transport, sell or otherwise transfer marijuana products to Marijuana Establishments. Delivery currently permissible to medical patients only. Licensed cultivators and product manufacturers may cultivate, harvest, process, manufacture, package and sell marijuana products to Marijuana Establishments.

Reporting Requirements

The state of Massachusetts has selected METRC solution as the state’s T&T system used to track commercial cannabis activity and seed-to-sale. Licensed entities are permitted to choose their own provider to track marijuana products from seed-to-sale provided. The system allows for other third-party system integration via API.

NEVADA

Nevada Regulatory Landscape

Medical marijuana use was legalized in Nevada by a ballot initiative in 2000. In November 2016, voters in Nevada passed an adult-use marijuana measure to allow for the sale of recreational marijuana in the state. The first dispensaries to sell adult-use marijuana began sales in July 2017. The Nevada Department of Taxation (“DOT”) is the regulatory agency overseeing the medical and adult use cannabis programs. Similar to California, cities and counties in Nevada are allowed to determine the number of local marijuana licenses they will issue.

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The Company only operates in Nevada cities or counties with clearly defined marijuana programs. Currently the Company is located in the City of Las Vegas, Clark County and Washoe County jurisdictions.

Licenses

Licenses are renewed annually and there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner along with the necessary supporting documents, and regulatory requirements are met, the licensee would expect to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Nevada, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. In Nevada, the Company has the capabilities to cultivate, harvest, process, manufacture, and sell/dispense/deliver adult-use and medical cannabis and cannabis products. The state also allows the Company to make wholesale purchase of cannabis and cannabis products from another licensed entity within the state.

Reporting Requirements

The state of Nevada uses METRC as the state’s computerized T&T system used to track commercial cannabis activity and seed-to-sale. Individual licensees whether directly or through third-party integration systems are required to provide data to the state to meet certain reporting requirements. The system allows for other third-party system integration via application programming interface (“API”).

COVID-19 Regulations

On March 12, 2020, Governor Sisolak declared a state of emergency in Nevada. Retail cannabis stores and medical cannabis businesses were deemed essential and allowed to operate. Through additional emergency regulation issued on March 20, cannabis businesses could operate by delivery only and all in-store sales were prohibited. The Governor’s office released Directive 16 on April 29, allowing cannabis dispensaries to conduct curbside transactions beginning May 1, with pre-approval from the Department of Taxation after submission of a written plan. Further, on May 7, the Governor issued an updated emergency directive stating that the Department of Taxation in conjunction with the Cannabis Compliance Board will allow medical dispensaries and retail marijuana stores to re-open with limited in- store access beginning Saturday, May 9, with pre-approval after submission of a written plan.

NEW YORK

In July 2014, the New York Legislature and Governor enacted the Compassionate Care Act (A06357E, S07923) (the “CCA”) to provide a comprehensive, safe and effective medical marijuana program to meet the needs of New Yorkers. The program currently allows 10 Registered Organizations (each, an “RO”) to hold “vertically-integrated” licenses, which gives a license holder the ability to cultivate, harvest, process, manufacture, transport, sell and dispense cannabis and cannabis products. Limited product types are allowed in the state. The New York State Department of Health (the “NYSDOH”) is the regulatory agency overseeing the medical marijuana program.

Licenses

State licenses in New York are renewed biennially. Before the two-year period ends, licensees are required to submit a renewal application per guidelines published by the NYSDOH. While renewals are granted every two years, there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and there are no material violations noted against the applicable license, the licensee would expect to receive the applicable renewed license in the ordinary course of business.

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Regulations

In the state of New York, only cannabis that is grown and manufactured in the state by a licensed establishment may be sold in the state. In New York, ROs are permitted to wholesale manufactured product and extracted cannabis. Delivery is allowed from dispensaries to patients with prior approval.

Reporting Requirements

The state of New York has selected BioTrackTHC’s solution as the state’s T&T system used to track commercial cannabis activity and seed-to-sale. The BioTrackTHC system is required to serve as all ROs’ patient verification system, but is optional as the RO facing tracking system. In addition to entering all dispensing transactions into the BioTrackTHC system, every month the NYSDOH requests a dispensing report in Excel format, via email, showing all products dispensed for the month.

COVID-19

On March 17, the Department of Health released guidance to all ROs noting that Registered Organizations are considered essential businesses because they are considered medical providers.

Additionally, ROs were permitted to dispense medical marijuana products at the door of the dispensing facility to limit potential exposure to RO staff and other patients. ROs were permitted to dispense from the doors of the dispensing facilities provided that you maintain compliance with all current laws, rules and regulations including but not limited to dispensing on camera, checking the PMP as required and validating registry ID cards.

Regulatory Affairs Program

The Company’s Senior Vice President of Legal Affairs oversees, maintains, and implements the compliance program and personnel. In addition to the Company’s robust legal and regulatory affairs departments, the Company also has local regulatory/compliance counsel engaged in the jurisdictions (state and local) in which it operates. Such counsel provides legal advice to the Company regarding compliance with state and local laws and regulations and the Company’s legal and compliance exposures under United States federal law. The Senior Vice President of Legal Affairs and Compliance Affairs Managers serve as liaisons to state and local regulators during both regular business hours and after hours. The Compliance Department, in partnership with the Retail, Human Resources, Legal, and Supply Chain Departments, is responsible for ensuring operations and employees strictly comply with applicable laws, regulations and licensing conditions and ensure that operations do not endanger the health, safety or welfare of the community. The Senior Vice President of Legal Affairs coordinates with the Security Department to ensure that the operation and all employees are following and complying with the Company’s written security procedures.

The Compliance Department oversees training for all employees, including on the following topics:

· Compliance with State and Local Laws

· Safe Cannabis Use

· Dispensing Procedures

· Security & Safety Policies and Procedures

· Inventory Control

· Track-and-Trace Training Session

· Transportation Procedures

The Company’s compliance program emphasizes security and inventory control to ensure strict monitoring of cannabis and inventory from delivery by a licensed distributor to sale or disposal. Only authorized, properly trained employees are allowed to access the Company’s computerized seed-to-sale system.

The Company has created comprehensive standard operating procedures, operating plans, trackers and checklists that include detailed descriptions and instructions for receiving shipments of inventory, inventory tracking, recordkeeping and record retention practices related to inventory, as well as procedures for performing inventory reconciliation and ensuring the accuracy of inventory tracking and recordkeeping. The Company maintains accurate records of its inventory at all licensed facilities. Adherence to the Company’s standard operating procedures is mandatory and ensures that the Company’s operations are compliant with the rules set forth by the applicable state and local laws, regulations, ordinances, licenses and other requirements.

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SERVICE PROVIDERS

As a result of any adverse change to the approach in enforcement of United States cannabis laws, adverse regulatory or political change, additional scrutiny by regulatory authorities, adverse change in public perception in respect of the consumption of marijuana or otherwise, third party service providers to the Company could suspend or withdraw their services, which may have a material adverse effect on the Company’s business, revenues, operating results, financial condition or prospects.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In addition to the above disclosure, please see “Risk Factors - Risks Associated with the Business of the Company - Service Providers” in the Company’s Annual Information Form.

ABILITY TO ACCESS PUBLIC AND PRIVATE CAPITAL

The Company has historically had access to equity and debt financing from the public and private markets in Canada and private markets in the United States and internationally. While the company is not able to obtain bank financing in the U.S. or financing from other U.S. federally regulated entities, subject to market conditions, it has the ability to access to such equity and debt financing in Canada, the United States and internationally, both on a brokered and non- brokered basis. The Company’s executive team and the MedMen board have extensive relationships with sources of private capital (such as funds, high net worth individuals and family offices), which has facilitated its ability to complete non-brokered financing transactions.

If such equity and/or debt financing was no longer available in the public markets in Canada due to changes in applicable law or on terms which are acceptable, then the Company would endeavor to raise equity and/or debt financing privately. Commercial banks have approached the cannabis industry cautiously to date. However, there are increasing numbers of high net worth individuals, family offices, private equity and venture capital firms and other funds that have made meaningful investments in cannabis companies, including those with U.S. operations. Although there has been an increase in the amount of private financing available to cannabis companies over the last several years, there can be no assurance that additional financing will be available to the Company when needed or on terms which are acceptable.

The Company’s inability to raise financing to fund operating or capital expenditures or acquisitions could limit its ability to operate or its growth and may have a material adverse effect upon the Company’s business, financial condition, cash flows, results of operations or prospects.

RECENT DEVELOPMENTS

TURNAROUND PLAN

Beginning in its fiscal third quarter 2019, the Company executed on a number of initiatives to restructure the business and reduce its operating expenses and cash burn:

Focus on Core Markets:

On October 8, 2019, the Company announced the mutual termination of its business combination agreement with PharmaCann, LLC (“PharmaCann”) pursuant to which the Company would acquire PharamaCann in an all-stock transaction and PharmaCann securityholders would, as a result, hold approximately 25% of the fully-diluted equity of the Company. The termination was in light of the general decline of the U.S. and Canadian capital markets in the cannabis industry since the initial announcement of execution of the definitive documents on December 24, 2018. For example, from March 2019 to September 2019, the Horizons Marijuana Life Sciences Index (HMMJ) had declined 47%. Furthermore, the Company had also changed its business strategy to focus on the Company’s retail brand in its core markets, including California, Nevada, Florida, Illinois, New York and Massachusetts.

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As compensation for the termination of the transaction, PharmaCann transferred certain assets to the Company and the Company forgave all outstanding amounts under its existing line of credit to PharmaCann, which totaled approximately $21.0. million. The assets transferred were 100% of the membership interests in three entities holding the following assets:

· MME Evanston Retail, LLC (“Evanston”), which holds a retail location in Evanston, Illinois and related licenses, and a retail license for Greater Chicago, Illinois;

· PharmaCann Virginia, LLC (“Staunton”), which holds a cannabis license in Staunton, Virginia; and

· PC 16280 East Twombly LLC (“Hillcrest”), which holds an operational cultivation and production facility in Hillcrest, Illinois and related licenses

The Company acquired all of the issued and outstanding shares of Evanston for aggregate consideration of $6,930,557. During the year ended June 27, 2020, the Company recorded $6,870,833 in assets held for sale related to Staunton and subsequently determined that the fair value less cost to sell was less than its carrying amount and wrote down the asset by $1,050,833. As of June 27, 2020, the Company determined the remaining balance, excluding the land value of approximately $212,000 was unrecoverable and wrote off the remaining balance of $5,607,600 which is included as a component of impairment expense in the accompanying Consolidated Statement of Operations. The Company determined that the cost of the Hillcrest assets was equal to the fair value of the assets given up as consideration, being the portion of the line of credit relieved. The Company sold its rights to the Hillcrest assets for total gross proceeds of approximately $17,000,000 to an unrelated third party. Accordingly, the Company recorded a gain of $9,490,800 upon successful sale of the Hillcrest assets.

On November 15, 2019, the Company announced its intention to sell non-core assets to raise non-dilutive financing. These non-core assets included its three cannabis licenses in Arizona. The Company determined that the sale of non-core assets would allow for management to further focus on deepening its market share in its core markets.

Reduction in SG&A:

On November 15, 2019, the Company announced plans to reduce corporate SG&A through a reduction in headcount, scaling back of marketing and technology spend and the renegotiation of ancillary costs to the business.

On May 27, 2020, the Company announced its fiscal third quarter 2020 financial results and reported corporate SG&A of $69.0 million on an annualized basis, representing 35% decrease from the previous quarter and 51% decrease from the prior year period. Through the end of fiscal third quarter 2020, the Company had reduced overall corporate SG&A by over $100.0 million on annualized basis since its cost-cutting efforts began in fiscal second year 2019.

Executive Management:

On January 31, 2020, the Company announced that co-founder Adam Bierman resigned as Chief Executive Officer of the Company. Effective February 1, 2020, Ryan Lissack, the Company’s Chief Technology Officer, began serving as the Company’s Chief Executive Officer. In addition, it was announced that co-founder Andrew Modlin

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document no longer held the position as President of the Company or a member of its Board of Directors. Effective January 30, 2020, Mr. Modlin’s title became Chief Brand Officer of the Company. Mr. Modlin’s employment contract with the Company expired in May 2020 and he is no longer with the Company.

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Effective February 1, 2020, Mr. Bierman and Mr. Modlin agreed to surrender all of their respective Super Voting Shares to the Company. Mr. Bierman’s Super Voting Shares have been cancelled, and, as a result of the share cancellation, Mr. Bierman does not hold any Super Voting Shares nor any securities convertible or exchangeable into Super Voting Shares. In connection with his departure and surrender of his Super Voting Shares, the Company will compensate Mr. Bierman in the form of securities in an amount based on a third-party valuation, which provides an analysis and value of the Super Voting Shares as of February 1, 2020. In conducting the valuation the following factors were considered: the nature of the business and the history of the Company, the macroeconomic outlook, the condition and outlook of the Company’s specific industry, and its own circumstances at the time of the valuation, the book value of the stock and the financial condition of the business, the earning and paying capacity of the Company. whether or not the enterprise has goodwill or other intangible value, sales of the stock and the size of the block of stock to be valued, the market prices of stocks of corporations engaged in the same or a similar line of business having their stocks actively traded in a free and open market, either on an exchange or over-the-counter, and the market prices of similar shares conveying voting rights disproportionate to their economic share of the company. As of June 27, 2020, $475,650 was accrued in current liabilities for the amount owed to Adam Bierman related to the cancellation of his Super Voting Shares. The securities to be issued to Mr. Bierman will comprise of 50% Class B Subordinate Voting Shares and 50% restricted stock units of the Company and the number of securities to be issued will be based on the 20-day volume weighted average price of the Company’s Subordinate Shares on the date prior to issuance of the securities.

Mr. Modlin’s Super Voting Shares were automatically cancelled on December 10, 2020. As a result, Mr. Modlin does not hold any Super Voting Shares nor any securities convertible or exchangeable into Super Voting Shares. Based on the cancellation of the Super Voting Shares, the Company only has one class of outstanding shares, the Class B Subordinate Voting Shares.

On March 30, 2020, the Company announced it had retained interim management and advisory firm, SierraConstellation partners (“SCP”), to support the company in the development and execution of its turnaround and restructuring plan. As part of the engagement, Tom Lynch was appointed as Chief Executive officer and Chief Restructuring Officer, succeeding Ryan Lissack. Mr. Lynch is a Partner and Senior Managing Director at SCP and previously served as Chairman and Chief Executive Officer of Frederick’s of Hollywood Group, a publicly traded specialty retailer, and more recently Chief Executive Officer of David’s Bridal. Tim Bossidy, Director at SCP, was appointed as Chief Operating Officer. Mr. Bossidy has previously served in interim management and financial advisory roles across the cannabis and consumer/retail sectors. In December 2020, Reece Fulgham, a Managing Director at SCP, was appointed as Chief Financial Officer.

Lender and Landlord Support Agreement:

On July 3, 2020, the Company announced the execution of definitive agreements (collectively referred to as the “Lender and Landlord Support Agreement”) with certain lenders, including Gotham Green Partners, Stable Road Capital and affiliates, and the landlord for several of its retail, cultivation and manufacturing facilities, Treehouse Real Estate Investment Trust. In the announcement, the Company noted that the Lender and Landlord Support Agreement would defer approximately $32 million of cash commitments over the next twelve months through a combination of cash interest and rent deferrals.

COVID-19

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. While the ultimate severity of the outbreak and its impact on the economic environment is uncertain, the Company is monitoring this closely. The Company currently operates 24 store location across California (11), Florida (4), Nevada (3), Illinois (1), New York (4) and Arizona (1) and five cultivation and production facilities across Nevada, California, New York, Florida and Arizona. Our business depends on the uninterrupted operation of these stores and facilities. The Company’s priority during the COVID-19 pandemic is protecting the safety of its employees and customers and it is following the recommended guidelines of applicable government and health authorities. Despite being deemed as an essential retailer in its core markets, the Company has experienced a negative impact on sales in certain markets as a result of shelter-at-home orders, social distancing efforts, restrictions on the maximum allowable number of people within a retail establishment and declining tourism. Although the Company only permanently closed one store as a result of COVID-19, certain markets, such as California and Nevada, experienced a greater impact on sales due to reduced store hours and foot traffic in certain locations, as well as limits on the number of customers that may be in a store at any one time. Other markets, such as Illinois, Florida and New York have not been significantly impacted by COVID-19 and in some cases, stores in those markets have generated increased sales. Due to its strong vendor partnerships in each market, the Company has not experienced a significant impact to its supply chain in each market. In the event that the Company were to experience widespread transmission of the virus at one or more of the Company’s stores or other facilities, the Company could suffer reputational harm or other potential liability. Further, the Company’s business operations may be materially and adversely affected if a significant number of the Company’s employees are impacted by the virus.

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For the fiscal fourth quarter of 2020, system-wide retail revenue was $27.4 million across the Company’s operations in California, Nevada, New York, Illinois and Florida, representing a 40% decrease, or $18.0 million, over the fiscal third quarter of 2020 of $45.4 million. The decrease in system-wide revenue was driven primarily by decreased sales as a result of COVID-19. In particular, certain retail locations in California and Nevada experienced a slowdown in sales during the fiscal fourth quarter of 2020 due to shelter-at-home orders, reduced store hours and reduced tourism. During the fiscal fourth quarter ended June 27, 2020, the Company temporarily closed all three of its locations in Nevada for eight weeks due to a state-level mandate post-COVID-19. All three locations were open as of June 27, 2020. Furthermore, during the year ended June 27, 2020, the Company recognized impairments of long-lived assets and other assets totaling $239.5 million due to changes in anticipated revenue projections as a result of recent economic and market conditions related to the COVID-19 pandemic and current regulatory environment. Furthermore, during the year ended June 27, 2020, the Company recognized impairments of long-lived assets and other assets totaling $239.5 million due to changes in anticipated revenue projections as a result of recent economic and market conditions related to the COVID-19 pandemic and current regulatory environment. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of COVID-19, including tax relief and government loans, grants and investments. The Company did not utilize any relief provided by the CARES Act and, as a cannabis retailer, the Company is not eligible to obtain a loan under the Paycheck Protection Program under the CARES Act. The Paycheck Protection Program is governed by the rules of the Small Business Administration, which considers as ineligible for loans business concerns that are engaged in any illegal activity; the cultivation, distribution, sale and possession of cannabis violates federal law in the United States. Accordingly, the CARES Act did not have a material impact on the Company’s consolidated financial statements during the year ended June 27, 2020.

To date, the Company has generally implemented certain safety measures to ensure the safety of its customers and associates, which may have the effect of discouraging shopping or limiting the occupancy of our stores. Store operations in California and Nevada have been modified, with an increased focus on direct-to-consumer delivery and enabling a curbside pickup option for its customers. The Company leveraged its technology team to build the enhanced omni-channel functionality in, and expects to continue offering, a variety of purchasing options for its customers. These measures, and any additional measures that have been and may continue to be taken in response to the COVID-19 pandemic, have substantially decreased and may continue to decrease, the number of customers that visit our stores which has had, and will likely continue to have a material adverse effect on our business, financial condition and results of operations. The ultimate magnitude of COVID-19, including the extent of its overall impact on our financial and operational results cannot be reasonably estimated at this time; however, the Company has experienced significant declines in sales.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The overall impact will depend on the length of time that the pandemic continues, the extent to which it affects our ability to raise capital, and the effect of governmental regulations imposed in response to the pandemic, as well as uncertainty regarding all of the foregoing. At this time, it is unclear how long these measures may remain in place, what additional measures may be imposed, or when our operations will be restored to the levels that existed prior to the COVID-19 pandemic.

In addition, our business depends on consumer discretionary spending, and as such, our results are particularly sensitive to economic conditions and consumer confidence. COVID-19 has significantly impacted economic conditions, resulting in, among other things, unprecedented increases in the number of people seeking jobless benefits and a significant decline in global financial markets. As a result, even when all of our store locations are fully operational, there can be no guarantee that our revenue will return to its pre-COVID-19 levels.

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Strategic Partnership with Gotham Green Partners

On April 23, 2019, the Company secured a senior secured convertible credit facility (the “GGP Facility” or “Convertible Facility”) to provide up to $250.0 million in gross proceeds, arranged by Gotham Green Partners (“GGP”). The GGP Facility had been accessed through issuances to the lenders of convertible senior secured notes (“GGP Notes”) co-issued by the Company and MM CAN.

On August 12, 2019, the Company and the lenders executed amendments to the GGP Facility and, as a result, the Company committed to pay an amendment fee of $18.8 million, which was subsequently converted into additional GGP Notes (the “Amendment Fee Notes”).

On October 29, 2019, the Company further amended the GGP Facility (the “Second Amendment”) wherein certain reporting and financial covenants were modified. The amount of available credit in the remaining tranches was amended to $10.0 million for Tranche 3 and $115.0 million for Tranche 4. The aggregate amount available to be borrowed with the consent of the lenders remained the same. Further, the Second Amendment provided that the funding of Tranche 4 would require the consent of both the Company and the lenders under the GGP Facility. On October 29, 2019, the Company issued the Amendment Fee Notes in the principal amount of $18.8 million with a conversion price of $1.28 per Class B Subordinate Voting Share. On November 27, 2019, the Company issued an additional $10.0 million of GGP Notes under Tranche 3. Among other changes, the Second Amendment provided greater flexibility to the Company by:

· Allowing the prepayment at any time following the Second Amendment, in whole or in part, of the then outstanding principal amount together with accrued and unpaid interest and fees, of which the prepayment right was subsequently amended on March 27, 2020;

· Permitting the sale of certain non-core assets; and

· Removing the senior debt to market capitalization ratio test covenant

On March 30, 2020, the Company announced that it received $12.5 million of additional proceeds under the GGP Facility as an advance under Tranche 4 in relation to which it co-issued with MedMen Corp. GGP Notes with a conversion price of $0.26 per Class B Subordinate Voting Share. In connection with the also issued 48,076,923 warrants, each of which is exercisable to purchase one Subordinate Voting Share for a period of five years at an exercise price equal to $0.26.

In addition, the Company amended and restated the securities purchase agreement with the lenders that governs the GGP Facility. The amendments provided the Company with greater access to capital and additional operating flexibility. Subject to the funding requirements of the Company and certain other conditions, GGP committed to use commercially reasonable efforts to fund up to $150.0 million under the GGP Facility through Tranche 4 and subsequent tranches, to be funded over time (each such subsequent tranche, an “Incremental Advance”), for a total of up to $285.0 million in gross proceeds under the GGP Facility. The final $25.0 million of this amount was subject to acceptance by the Company. Under the agreement, GGP had a period of 90 days in which to provide the Company with funding commitments for the Incremental Advances (each, a “Funding Commitment”), which period was be extended to a total of 180 days if the Funding Commitments reached at least $50.0 million (inclusive of the Tranche 4 Notes) during the initial 90-day period.

The Company issued GGP Notes to the lenders participating in an Incremental Advance (“Incremental Notes”) with a conversion price per Subordinate Voting Share equal to the five (5) day volume weighted average trading price (“VWAP”) of the Subordinate Voting Shares as of the trading day immediately preceding the date of completion of such Incremental Advance, subject to a minimum price of $0.20 and maximum price of $0.40 (in respect of each Incremental Advance, a “Restatement Conversion Price”), provided that the first Incremental Advance will have a Restatement Conversion Price of $0.26. The Company also issued to the lenders participating in an Incremental Advance share purchase warrants of the Company (“Incremental Warrants”), representing 100% coverage on the aggregate principal amount of such Incremental Advance, each of which are exercisable to purchase one Subordinate Voting Share for a period of five (5) years from the date of issuance, at an exercise price per Subordinate Voting Share equal to the Restatement Conversion Price for such Incremental Advance. The Tranche 4 Warrants and any Incremental Warrants that are issued are exercisable on a cashless (net exercise) basis.

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All GGP Notes continued to bear interest from their date of issuance at the higher of (i) 2.5%, and (ii) LIBOR, plus 6.0% per annum. All GGP Notes also continued to be subject to the existing maturity date of April 23, 2022 (the “Maturity Date”), with a twelve-month extension feature available to the Company on certain conditions, including payment of an extension fee of 1.0% of the aggregate principal amount outstanding under the GGP Notes, provided that if the Tranche 4 Notes and Funding Commitments reached at least $100.0 million in the aggregate, the lenders would have certain options to extended the Maturity Date of the outstanding Notes to up to April 23, 2027 at the latest. As a related matter, the Company’s prepayment right would not be exercisable as to any of the GGP Notes for eighteen months from the date of completion of Tranche 4 and if the Tranche 4 Notes and Funding Commitments reached at least $100.0 million in the aggregate, the lenders would have the option to eliminate the Company’s prepayment right. In the event that the Company was able to and exercised its prepayment right to prepay, in whole or in part, any of the principal amount outstanding under the GGP Notes prior to their maturity, a fee of 3% on the amount being prepaid would be payable by the Company to the applicable lenders.

Certain of the financial covenants under the GGP Facility were also modified to provide the Company with additional balance sheet flexibility. The modifications included a reduction in the required go-forward minimum cash balance and the removal of the fixed charge coverage ratio requirement that was to become effective in calendar 2021.

As additional consideration for the purchase of the Tranche 4 Notes, the lenders participating in Tranche 4 were paid an advance fee of 1.5% of the aggregate principal amount of the Tranche 4 Notes, which fee will also be paid in respect of any Incremental Advances. In connection with the amendments made to the GGP Facility, a fee of approximately $8.2 million (the “Restatement Fee Amount”) was paid through the issuance of additional GGP Notes to the applicable lenders in an aggregate principal amount equal to the Restatement Fee Amount, which GGP Notes have a conversion price per Subordinate Voting Share equal to $0.26 (the “Restatement Fee Notes”). Up to the same aggregate principal amount of additional GGP Notes would be issuable as a fee if the Incremental Advances total at least $87.5 million, whereby if less than $87.5 million in Incremental Advances is raised, the aggregate principal amount of such additional fee GGP Notes would be proportionately lower.

As additional consideration for the amendment of the GGP Facility, the conversion price for 12.5% of the existing GGP Notes outstanding prior to Tranche 4 (including paid-in-kind (“PIK”) interest accrued on such GGP Notes) (collectively, the “Existing Notes”), being 12.5% of an aggregate principal amount of $164.0 million, was

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document amended to $0.26 per Subordinate Voting Share. In addition, 2,700,634 of the 21,605,067 existing share purchase warrants of the Company issued under the GGP Facility and outstanding prior to Tranche 4 (collectively, the “Existing Warrants”) were cancelled and replaced by 32,451,923 share purchase warrants of the Company (the “Tranche 4 Replacement Warrants”), each of which is exercisable to purchase one Subordinate Voting Share for a period of five (5) years from the date of issuance at an exercise price equal to $0.26 per share.

As any Incremental Advances are funded, the conversion price of additional Existing Notes would be amended and additional Existing Warrants would be cancelled and replaced by new share purchase warrants of the Company (the “Incremental Replacement Warrants” and, collectively with the Tranche 4 Replacement Warrants, the “Replacement Warrants”), each of which will be exercisable to purchase one Subordinate Voting Share for a period of five (5) years from the date of issuance. The principal amount of the Existing Notes that are repriced and the number of Existing Warrants that are cancelled and replaced upon an Incremental Advance would be based on the percentage that the amount of such Incremental Advance is of a total funding target of $100.0 million (the “Funding Target Percentage”). The applicable Existing Notes would be repriced to the Restatement Conversion Price for such Incremental Advance. The Incremental Replacement Warrants issued as a part of such Incremental Advance would represent 50% coverage on the amount determined by multiplying the Funding Target Percentage by $135.0 million (the “Existing Funded Amount”), and would have an exercise price per Subordinate Voting Share equal to the Restatement Conversion Price for such Incremental Advance. The Replacement Warrants are exercisable on a cashless (net exercise) basis.

Notwithstanding the foregoing, no Replacement Warrants are able to be exercised by the applicable lenders prior to the eighteen (18) month anniversary of their issuance. In addition, if the Company’s retail operations achieve two consecutive three-month periods of positive after-tax free cash flow during any time prior to the expiry date for the Replacement Warrants, then all outstanding Replacement Warrants are automatically cancelled upon achieving the milestone.

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In addition, if the Tranche 4 Notes and Funding Commitments reached at least $100.0 million in the aggregate, subject to certain limited exceptions, the lenders would be entitled to a preemptive right to participate in future securities issuances by the Company in the event that such an issuance would cause the fully-diluted ownership percentage of the lenders in the Company (such percentage, calculated using a formula provided in the GGP Facility purchase agreement) to fall below 51%. Additionally, subject to certain limited exceptions, in the event that the Company completes a security issuance, the price of which is less than the higher of (i) $0.26, and (ii) the highest Restatement Conversion Price determined for any Incremental Advances completed up to the time of such new security issuance, the lenders are entitled to a repricing of the conversion price and exercise price, as applicable, of the outstanding Tranche 4 Notes (including the Restatement Fee portion thereof), Incremental Notes (including the Restatement Fee portion thereof), portion of the Existing Notes that have previously been repriced as a result of the completion of an Incremental Advance, Tranche 4 Warrants and Incremental Warrants, to the same pricing as such new security issuance completed by the Company.

As part of the amendments to the GGP Facility, the Company agreed that the committee previously formed to select independent directors to be appointed or elected to the Board, are responsible for selecting five (5) (increased from four (4)) of the seven (7) members of the Board. At the time, four (4) of the seven (7) members of the Board had been approved by the committee. In accordance with the existing process, in the future, the Company will propose director candidates to this committee for consideration and approval.

On April 24, 2020, the Company received $2.5 million in additional proceeds as a portion of the first Incremental Advance, in relation to which it co-issued with MM CAN additional GGP Notes with a conversion price of $0.26 per Class B Subordinate Voting Share. In connection with completing the initial portion of the first Incremental Advance, the Company issued 9,615,385 warrants with an exercise price of $0.26. In addition, the Company cancelled 540,128 of the Existing Warrants and issued 6,490,385 Replacement Warrants with an exercise price per share equal to $0.26.

On July 3, 2020, as part of the Lender and Landlord Support Agreement the Company and GGP further amended and restated the securities purchase agreement that governs the Convertible Facility. All notes under the Convertible Facility continue to bear interest at the higher of (i) 2.5%, and (ii) LIBOR, plus 6.0% per annum. However, the payment-in-kind (“PIK”) feature on the Convertible Facility was extended, such that 100% of the cash interest due prior to June 2021 will be paid-in-kind, and 50% of the cash interest due thereafter for the remainder of the term of the Convertible Facility will be paid-in-kind. The PIK feature will expire if Section 280E tax reform occurs and the Company begins to be taxed similar to other U.S. corporations.

The threshold for the minimum liquidity covenant, which was previously $15.0 million, was waived until September 30, 2020, resetting to $5.0 million thereafter, to $7.5 million effective on March 31, 2021 and then to $15.0 million effective on December 31, 2021.

GGP agreed to the release of certain assets from its collateral pool in order to provide the Company with greater flexibility to generate proceeds through the sale of non-core assets.

As consideration for the amendment of the Convertible Facility, the conversion price for 52% of the existing notes outstanding under the Convertible Facility prior to the $15.0 million advance under Tranche 4 of the Convertible Facility (including PIK interest accrued on such notes), being 52% of an aggregate principal balance of $167.7 million as of June 30, 2020, was amended to $0.34 per Class B Subordinate Voting Share of the Company (each, a “Subordinate Voting Share”). As additional consideration, a fee of $2.0 million was paid to the lenders under the Convertible Facility through the issuance of additional notes, which notes have a conversion price per Subordinate Voting Share equal to $0.28, which represents a 30% premium to the 5-day volume-weighted average trading price of the Subordinate Voting Shares as of and including June 30, 2020.

In connection with the amendments to the Convertible Facility, the Company is subject to certain additional covenants thereunder, which are consistent with the Company’s internal business plan (“Turnaround Plan”). The Company is required to adhere to its Turnaround Plan for certain cash expenditures such as corporate expenses, capital expenditures and leases. The covenants expire once the Company achieves two consecutive fiscal quarters of being free cash flow positive.

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On September 14, 2020, the Company was advanced an additional $5,000,000 in gross proceeds (the “Incremental Advance”) under the GGP Facility. In connection therewith, the Company co-issued, with its subsidiary MedMen Corp. additional senior secured convertible notes (the “Notes”) to the lenders under the GGP Facility in an aggregate principal amount equal to such Incremental Advance with a conversion price per share equal to $0.20. As consideration for the purchase of the additional Notes, participating lenders received a $468,564 fee with a conversion price of $0.20 per Share (the “Restatement Fee Notes”), consistent with the terms of the GGP Facility.

Pursuant to the terms of the GGP Facility, the conversion price for 5.0% of the existing Notes outstanding prior to Tranche 4 and Incremental Advance (including paid-in- kind interest accrued on such Notes), being 5.0% of an aggregate principal amount of $170,729,923, was amended to $0.20 per share. The Company issued to the lenders 25,000,000 share purchase warrants of the Company (the “Incremental Advance Warrants”), each of which is exercisable to purchase one share for a period of five (5) years from the date of issuance at an exercise price equal to $0.20 per Share, and cancelled 1,080,255 share purchase warrants of the Company (the “Existing Warrants”) held by holders of the existing Notes and, in exchange, issued 16,875,000 share purchase warrants of the Company (the “Replacement Warrants”) at an exercise price equal to $0.20 per Share. The Notes issued in connection with the Incremental Advance, the Restatement Fee Notes, the Incremental Advance Warrants, the Replacement Warrants and any shares issuable as a result of conversion or exercise of the same, will be subject to a hold period from the date of issuance of such Notes or such Warrants, as applicable.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The GGP Facility was amended to include, among other things, a modification to the minimum liquidity covenant, which extends the period during which it is waived from September 30, 2020 to December 31, 2020. The minimum liquidity threshold resets to $5.0 million thereafter to $7.5 million effective on March 31, 2021 and then to $15.0 million effective on December 31, 2021.

On January 11, 2021, the Company entered into a Third Amended and Restated Securities Purchase Agreement (the “Third Restatement”) to the GGP Facility led by funds affiliated with GGP (collectively, the “Lenders”) pursuant to which the Company received an additional advance of $10.0 million evidenced by the issuance of senior secured convertible notes (the “ 2021 Notes”) with a conversion price of $0.1608 per Subordinate Voting Shar. In connection with the Third Restatement, the Company paid a fee to the Lenders of $937,127, which amount is also evidenced by the issuance of senior secured convertible notes with a conversion price of $0.1608 per Share (the “Restatement Fee Notes”). The Company also issued to the Lenders 62,174,567 share purchase warrants exercisable for five years at a purchase price of $0.1608 per Share (the “2021 Warrants”). The 2021 Notes, Restatement Fee Notes and 2021 Warrants include down round adjustment provisions, with certain exceptions, if the Company issues securities at a lower price.

Pursuant to the terms of the Third Restatement, of the $168.1 million senior secured convertible notes outstanding prior to Tranche 4 and the Incremental Advances thereunder (including paid-in-kind interest accrued on such notes), the conversion price of $47.1 million of the notes was changed to $0.17 per share ($16.8 million of which will continue to be subject to down round adjustment provisions), and the Company cancelled an aggregate of 2,160,507 share purchase warrants that were issued with such notes and, in exchange, issued 41,967,832 share purchase warrants with an exercise price of $0.1608 per share.

The GGP Facility includes certain negative covenants, including restrictions on incurring liens and debt, sale of assets, conducting mergers, investments and affiliate transactions and making certain payments. The GGP Facility was also amended to, among other things, modify the minimum liquidity covenant, which extends the period during which it is waived from December 31, 2020 to June 30, 2021, reset the minimum liquidity threshold to $7.5 million effective on July 1, 2021 through December 31, 2021, and $15.0 million thereafter, and waiver of the minimum liquidity covenant if the Company is current on cash interest. Furthermore, covenants with regards to non-operating leases, capital expenditures and corporate SG&A will now be tied to a board of directors approved budget.

Certain events are considered events of default, which may result in the accelerated maturity of the amounts outstanding or an increase in the interest rate under the GGP Facility, including but not limited to: failure to pay any amounts owed to the Lenders, failure to comply with covenants, the filing of certain judgements and liens against the Company, filing of bankruptcy, prohibition by a governmental authority to conduct the Company’s material business or a material adverse change to business, loss of a cannabis license that results in a material adverse effect, default under any material agreement, a change of control, or de-listing from a securities stock exchange.

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As a result of issuances of convertible debentures pursuant to the Company’s unsecured convertible debenture facility entered into on September 16, 2020, under the terms of the GGP Facility (prior to the Third Restatement), the conversion prices of a total of approximately $63.9 million senior secured convertible notes and the exercise prices of 130,804,447 warrants were reduced to $0.1529 per share. As of January 11, 2021, as a result of the Third Restatement and the price adjustment of the senior secured convertible notes and warrants, an aggregate of 1,332,311,349 Subordinate Voting Shares are issuable upon conversion and exercise of the senior secured convertible notes (including accrued interest) and warrants outstanding under the GGP Facility.

2018 Secured Term Loan

In October 2018, MedMen Corp. completed a $77.7 million senior secured term loan (the “2018 Term Loan”) with funds managed by Hankey Capital, LLC and with an affiliate of Stable Road Capital (the “Term Loan Lenders”). The ownership interests of certain of the Company’s subsidiaries have been pledged as security for the obligations under the 2018 Term Loan. Additionally, the Company guaranteed the obligations of MedMen Corp. under the 2018 Term Loan.

On December 10, 2019, the Company executed a binding term sheet in respect of certain amendments to the 2018 Term Loan. The Company subsequently announced the execution and closing of definitive documentation on January 14, 2020. Amendments included:

· The maturity date was extended to January 31, 2022.

· To reflect current market conditions, the interest rate was increased from a fixed rate of 7.5% per annum, payable monthly in cash, to a fixed rate of 15.5% per annum, of which 12.0% will be payable monthly in cash based on the outstanding principal and 3.5% will accrue monthly to the principal amount of the debt as a payment-in-kind.

· The Company may prepay without penalty, in whole or in part, at any time and from time to time, the amounts outstanding under the 2018 Term Loan (on a non-revolving basis) upon 15 days’ notice.

· MedMen Corp., a subsidiary of the Company, cancelled the existing warrants issued to the Term Loan Lenders, being 16,211,284 warrants exercisable for Class B Common Shares of MedMen Corp. (also called MedMen Corp. Redeemable Shares) at $4.97 per share and 1,023,256 warrants exercisable at $4.73 per share, and issued to the Term Loan Lenders a total of 40,455,729 warrants exercisable for MedMen Corp. Redeemable Shares with an exercise price of $0.60 per share that are exercisable until December 31, 2022. The new warrants issued to the Term Loan Lenders may be exercised at the election of their holders on a cashless basis.

On July 3, 2020, as part of the Lender and Landlord Support Agreement, the Company and the Term Loan Lenders further amended the commercial loan agreement that governs the 2018 Term Loan. Pursuant to the further amendment, 100% of the total interest payable prior to June 2021 will be paid-in-kind and 50% of the cash interest due thereafter for the remainder of the term of the 2018 Term Loan will be paid-in-kind. The PIK feature will expire if Section 280E tax reform occurs and the Company begins to be taxed similar to other U.S. corporations.

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As consideration for the amendment of the 2018 Term Loan, MedMen Corp. issued to the lenders a total of 20.2 million warrants, each exercisable for MedMen Corp. Redeemable Shares at $0.34 per share for a period of five years. As additional consideration, a fee of $834,000 was paid-in-kind. The Company also canceled 20.2 million warrants of the total 40.4 million warrants already held by the Term Loan Lenders, which were each exercisable at $0.60 per share.

In connection with the amendments to the 2018 Term Loan, the Company is now subject to certain additional covenants thereunder, which are consistent with those included as a part of the amendments to the Convertible Facility.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On September 16, 2020, the Company entered into a further amendment to the 2018 Term Loan. The amendments include, among other things, an increase in the potential size of the facility by $12,000,000, of which $5,700,000 (“Incremental Notes”) is fully committed by the Term Loan Lenders. On September 16, 2020, the Company closed on $3,000,000, with the remaining US$2,700,000 funded on September 30, 2020.

The principal amount of the Incremental Notes carry an interest rate of 18.0% per annum, to be paid as follows: (a) 12.0% shall be paid in cash monthly in arrears; and (b) 6.0% shall accrue monthly to the outstanding principal as payment-in-kind. The 2018 Term Loan was also amended to include, among other things, a modification to the minimum liquidity covenant, which extends the period during which it is waived from September 30, 2020 to December 31, 2020. The minimum liquidity threshold resets to $5.0 million thereafter to $7.5 million effective on March 31, 2021 and then to $15.0 million effective on December 31, 2021.

As consideration for the increase in the size of the facility under the 2018 Term Loan and the amendment to the covenant, MedMen Corp. issued warrants as follows: on the closing of the initial $3,000,000, MedMen Corp. issued to the Term Loan Lenders a total of 30,000,000 warrants, exercisable for MedMen Corp. Redeemable Shares at $0.20 per share for a period of five years and 20,227,865 warrants for MedMen Corp. Redeemable Shares exercisable at $0.34 per share for a period of five years; and on closing of the remaining $2,700,000 tranche, MedMen Corp. issued to the Term Loan Lenders an additional 27,000,000 warrants exercisable for MedMen Corp. Redeemable Shares at the greater of (a) $0.20 per share and (b) 115% multiplied by the volume-weighted average trading price of the shares for the five consecutive trading days ending on the trading day immediately prior to the applicable funding date of the second tranche.

On October 30, 2020, the Company closed on incremental term loans totaling approximately $7.7 million under the 2018 Term Loan at an interest rate of 18.0% per annum of which 12.0% shall be paid in cash monthly in arrears; and 6.0% shall accrue monthly to the outstanding principal as payment-in-kind. In connection with the funding, MedMen Corp. issued 77,052,790 warrants each exercisable at $0.20 per share for a period of five years.

On February 25, 2021, MM CAN entered into a side letter (the “Side Letter”) with Hankey pursuant to which any circumstance that would have triggered an obligation by MM CAN to reset the exercise price of certain warrants in accordance with existing down round provisions in the 2018 Term Loan, MM CAN will issue additional warrants or Subordinate Voting Shares. In accordance therewith, on March 1, 2021, MM CAN issued warrants exercisable for 1,671,278 shares of MM CAN. The warrants have a term ending on September 14, 2025 and an exercise price of $0.481 per share.

The parties also amended certain covenants in the 2018 Term Loan to include a required minimum liquidity, board approval of the annual budget, restrictions on corporate expenditures, and the delivery of certain financial information. The Side Letter also amended the 2018 Term Loan by providing MM CAN the ability to cure within 10 days after written notice any failure to satisfy certain covenants.

Furthermore, with respect to the Investment Agreement with AWH (as described below under “Investment Agreement”), if the Milestone is not achieved by January 31, 2022, MM CAN will issue a note to Hankey (the “Note”), which will accrue interest and compound at 12% per annum and mature the earlier of (a) upon the payment of the $10.0 million based on achievement of the Milestone pursuant to the Investment Agreement, or (b) 12 months from the date of issuance of the Note. In addition, the Note will include an origination fee in an amount equal to 12% per annum interest rate on the principal amount of the Note deemed to have accrued between the period commencing on the date of the initial closing of the Investment Agreement and ending on the date of the Note.

September 2020 Unsecured Convertible Facility

On September 16, 2020, the Company entered into a $10,000,000 unsecured convertible debenture facility (“Convertible Facility”) with certain institutional investors (collectively, the “Investors”) and closed on an initial $1,000,000 (“Initial Tranche”), with subsequent tranches expected to be closed in the coming months, subject to certain conditions. Under the Convertible Facility, the convertible debentures (“Debentures”) will have a conversion price equal to the closing price on the trading day immediately prior to the closing date, a maturity date of 24 months from the date of issuance and will bear interest from the date of issuance at 7.5% per annum, payable semi-annually in cash. The Debentures issued to the Investors for the initial tranche have a conversion price of $0.1670 (“Conversion Price”) per Class B Subordinate Voting Share.

The Debentures also provide for the automatic conversion into Shares in the event that the Shares trade at a volume weighted average trading price that is 50% above the Conversion Price on the CSE for 45 consecutive trading days. Upon an event of default, including failure to pay amounts then due under the Debenture, to perform or comply (without remedying such noncompliance) with the Debenture terms, or to pay debts, or commencement of bankruptcy proceedings or appointment of a trustee, all outstanding amounts under the debentures become immediately due and payable.

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Subject to certain conditions, the Company has the right to call additional tranches, totaling $1,000,000 each, no later than 20 trading days following the issuance of each tranche, including the initial tranche, up to a maximum of $10,000,000 under all tranches. The timing of additional tranches can be accelerated based on certain conditions. The Investors have the right to at least four additional tranches, with any such subsequent tranche to be at least $1,000,000.

At the closing of each additional tranche, the Company will issue share purchase warrants equal to 55% of the number of shares a debenture is convertible into for a particular tranche. Each warrant will be exercisable to purchase one share for a period of 24 months from the date of issuance at an exercise price equal to 120% of the volume weighted average price of the Shares on the CSE for ending on the trading day immediately prior to the applicable closing of each tranche. As part of the Initial Tranche, the Company issued to the Investors a total of 3,293,413 warrants, each exercisable at $0.21 per share for a period of 24 months from the date of issuance.

On September 30, 2020, the Company closed on a second tranche of $1,000,000. The debentures issued to the Investors for the second tranche have a conversion price of $0.1456 per Class B Subordinate Voting Share. As part of the second tranche, the Company issued to the Investors a total of 3,777,472 warrants, each exercisable at $0.17 per share for a period of 24 months from the date of issuance.

On November 20, 2020, the Company closed on an additional $1.0 million third tranche issuing Debentures with a conversion price of $0.15 per share and warrants to purchase 3,592,326 Class B Subordinate Voting Share at an exercise price of $0.17 per share.

On December 17, 2020, the Company closed on a fourth tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the fourth tranche, the Company issued 3,597,100 warrants for an equal number of Shares with an exercise price of $0.18 per share.

On January 29, 2021, the Company closed on a fifth tranche of $1,000,000 with a conversion price of $0.16 per Subordinate Voting Share. In connection with the fifth tranche, the Company issued 3,355,000 warrants with an exercise price of $0.19 per share.

Equity Private Placement

On February 16, 2021, the Company entered into subscription agreements with institutional investors (the “Purchasers”) for the sale of up to 7,800,000 Units (the “Units” and each, a “Unit”) at a purchase price of $0.3713 per Unit (the “Issue Price”) for an aggregate purchase price of approximately $2.9 million. Each Unit consists of one Subordinate Voting Share of the Company and one warrant (each, a “Warrant”). Each Warrant is exercisable for a period of five years to purchase one Share at an exercise price of $0.4642 per Share, subject to the terms and conditions set forth in the Warrant (together with the Shares, the “Purchased Securities”). Pursuant to the terms of the Subscription Agreements, the Company further granted the Purchasers the right, under a second tranche, to purchase up to 7,800,000 additional Units at the Issue Price for a period of 45 days following the closing.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For a period of one year, the Purchasers have the right, within 24 hours from first notice, if an overnight raise or a commercially reasonable time in all other circumstances, to commit to participate in up to 25% on any broadly syndicated equity raises, convertible note offerings or unit deals via a bank or brokerage firm. The Purchasers, however, cannot exercise this right in the following events: any capital found through a strategic capital raise conducted by Moelis & Company, any straight debt instruments, capital transactions involving a change of control, any funding by Gotham Green Partners, or capital transactions with a strategic or non-strategic counterparty that takes place in conjunction with any restriction or conversion of debt to equity. The total amount of any such individual participation cannot exceed $20.0 million.

As part of the transaction, the Company has agreed to file with the Securities and Exchange Commission, within 15 days of the closing, a registration statement on Form S-1 registering for resale the Shares, the Shares underlying the Warrants and Subordinate Voting Shares underlying convertible debentures and warrants issued pursuant to an Investment Agreement dated September 16, 2020 among the Company and the Purchasers.

Investment Agreement

On February 25, 2021, MedMen NY, Inc. (“MMNY”), the New York subsidiary of the Company, and its parent, MM Enterprises USA, entered into an investment agreement (the “Investment Agreement”) with Ascend Wellness Holdings, LLC, a New York limited liability company (“AWH NY”), and Ascend Wellness Holdings, LLC, a Delaware limited liability company (“AWH”, and collectively, the “Investors”) whereby, subject to approval from the New York State Department of Health and other applicable regulatory bodies, AWH agreed to purchase shares of common stock of MMNY for an aggregate purchase price of up to $73.0 million as follows: (a) $35.0 million in cash to be invested in MMNY (as may be adjusted in accordance with the Investment Agreement), (b) AWH NY will issue a senior secured promissory note with a principal amount of $28.0 million, guaranteed by AWH, (c) and within five business days after the first sale by MMNY of adult use cannabis products at one or more of its retail store locations (the “Milestone”), AWH will purchase additional shares of MMNY for $10.0 million in cash, which cash investments and note will be used to reduce the amounts owed to the Company’s senior secured lender.

AWH also agreed to provide MMNY a working capital advance of $10.0 million, which may be increased up to $17.5 million, with no interest rate or prepayment penalty, which amount will be converted into shares of MMNY at the closing of the transaction. The terms of the advance include certain negative covenants, including restrictions on the assumption or incurrence of debts and liens, sale of assets, conducting mergers, declaring dividends, affiliated transactions outside the ordinary course of business or any fundamental change to equity interests or capital structure. Plus, certain events are considered events of default, which may result in the accelerated maturity of the amounts outstanding, a setoff of any obligation AWH may owe to MMNY or other remedies provided for in the related promissory note. These events of default include any failure to pay loan obligations, any failure to perform covenants required for in the agreement for the advance, any misstatement that is false or misleading made with respect to any representation or warranty or the insolvency of MMNY.

Following completion of the investment, AWH will hold a controlling interest in MMNY equal to at least 86.7% of the equity in MMNY. The Company also granted AWH the exclusive and irrevocable right to purchase the remaining outstanding shares of MMNY until the earlier of (i) ten years from the anniversary date and (ii) one year from the anniversary date that AWH is allowed by applicable law to purchase such shares.

In connection with the Investment Agreement, MMNY and AWH also entered into a management agreement (the “Management Agreement”) for a monthly fee of 35% of MMNY’s EBITDA pursuant to which AWH will advise on MMNY’s operations pending regulatory approval of the investment transaction. The Management Agreement is effective until December 31, 2021 and will automatically renew for an additional six months unless terminated earlier by MMNY or AWH.

TREEHOUSE REAL ESTATE INVESTMENT TRUST

The Company has lease arrangements with affiliates of Treehouse Real Estate Investment Trust (“Treehouse”), which include 14 retail and cultivation properties across the U.S. As part of the Lender and Landlord Support Agreement, Treehouse agreed to defer a portion of total current monthly base rent for the 36-month period between July 1, 2020 and July 1, 2023. The total amount of all deferred rent accrues interest at 8.6% per annum during the deferral period. As consideration for the rent deferral, the Company issued to Treehouse 3,500,000 warrants, each exercisable at $0.34 per share for a period of five years. As part of the agreement, the Company is pursuing a partnership with a cannabis cultivation company for the Company’s Desert Hot Springs and Mustang facilities that are leased from Treehouse in order to continue the Company’s focus on retail operations.

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PROPERTIES

The Company leases certain business facilities from third parties under operating lease agreements that specify minimum rentals. The leases expire through 2038 and contain certain renewal provisions. The Company’s net rent expense related to continuing operations for the years ended June 27, 2020 and June 29, 2019 was $34.0 million and $24.0 million, respectively, of which $1.6 million and $1.8 million, respectively, was included in cost of goods sold.

Future minimum lease payments under non-cancelable operating leases having an initial or remaining term of more than one year are as follows:

Scheduled Fiscal Year Ending Payments

June 26, 2021 $ 34,049,336 June 25, 2022 34,040,450 June 24, 2023 34,224,191 June 29, 2024 31,289,161 June 28, 2025 30,837,827 June 27, 2026 and Thereafter 134,553,668

Total Future Minimum Lease Payments $ 298,994,663

The following tables set forth the Company’s principal physical properties as of December 26, 2020:

Purpose Location Leased/Owned Purpose Location Leased/Owned Corporate 10115 Jefferson Blvd Lease Operations 6600 International Drive Lease Corporate 5870 Jefferson Blvd Lease Operations 539-37 Clematis Street Lease Corporate 5880 Jefferson Blvd Lease Operations 326 5th Avenue Lease Corporate 5890 Jefferson Blvd Lease Operations 2949 Federal Hwy Lease Corporate 823 Las Vegas Blvd Lease Operations 5900 Florida Avenue Lease Corporate 5324 Washington Blvd Lease Operations 5048 Bayou Blvd Lease Corporate 100 Adelaide Street Lease Operations 1126 Thomasville Road Lease Operations 8729 E Manzanita Drive Lease Operations 308 3rd Street Lease Operations 106-110 Robertson Blvd Lease Operations 1410 Main Street Lease Operations 2430 Porter Street Lease Operations 12000 Truckee Canyon Court Lease Operations 733-735 Broadway Lease Operations 338 49th Street Lease

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Operations 410-416 Lincoln Blvd Lease Operations 33 Ninth Avenue Lease Operations 8208 Santa Monica Blvd Lease Operations 433 Fifth Avenue Lease Operations 2141 Wright Street Lease Operations 52 Union Road Lease Operations 8740 Sepulveda Blvd Lease Operations 6842-6850 Main Street Lease Operations 8740 Sepulveda Blvd (expansion) Lease Operations 2001 Marcus Avenue Lease Operations 532-536 Sutter Street Lease Operations 1304 Buckley Road Lease Operations 1861-1863 Union Street Lease Operations 3180 Erie Blvd East Lease 3996 San Pablo Avenue Suites A Operations & B Lease Operations 840 Broadway Ave. Suite B-4 Lease 3996 San Pablo Avenue Suites C Operations & D Lease Operations 5125 Convoy Street Suite 211 Lease Operations 10715 Sorrento Valley Blvd Lease Operations 2767 E. Broadway Lease Operations 1136-1140 Lake St Lease Operations 538 S. Fair Oaks Ave Lease Operations 4503 Paradise Suite A Lease Operations 25540 County Road 44A Lease Operations 4503 Paradise Suite B Lease Operations 2000 International Speedway Lease Operations 823 3rd Street Lease Operations 11190 San Jose Blvd. Lease Operations 6332 Rainbow Blvd Lease Operations 2009 NE 2nd St. Lease Operations 3025 & 3035 Highland Drive Lease Operations 550 Collins Ave Lease Operations 2832 N Omaha Street Lease Operations 1804 Maple Ave Lease Operations 13300 Little Morongo Road Lease Operations 1001 W North Ave Lease Operations 1308-1312 Abbot Kinney Blvd Lease Operations 942 W. Fulton Market Lease Operations 8724 Bradley Avenue Lease Operations 120 Brookline Ave Lease Operations 1075 N. 10th Street Lease Operations 232 Boylston St. Lease Operations 1428-1438 Alton Road Lease Operations 1113 Herkimer Rd. Lease Operations 1059 Park Street Lease Operations 923 Huber St Lease Operations 130 Duval Street Lease Operations 3 industry Way Owned Operations 11551 University Blvd Lease

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LEGAL PROCEEDINGS

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of September 15, 2020, other than those described below, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. As of September 15, 2020, there are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest.

On July 20, 2018, a legal claim was filed in Ontario Superior Court of Justice (Toronto), Canada, by Corriente Master Fund II, LP against the Company relating to a financial transaction and seeking damages of approximately $2.2 million. The action was commenced by an investor and alleges various statutory and common law claims relating to alleged misrepresentations in respect of a financing completed by the Company in May 2018 concurrently with going public. The Company believes the likelihood of a loss contingency is remote. As a result, no amount has been set up for potential damages in these financial statements.

On January 29, 2019, the Company’s former Chief Financial Officer filed a complaint against MM Enterprises USA in the Superior Court of California, County of Los Angeles, seeking damages for claims relating to his employment. including but not limited to contractual, compensatory, and punitive damages, interest, costs and fees, and any further relief the court deems proper. The Company is currently defending against this lawsuit, which alleges wrongful termination, breach of contract, and breach of implied covenant of good faith and fair dealing. The former CFO’s employment agreement provided for the payment of severance in the event of termination without cause. The Company disputes the claims set forth in this lawsuit and believes that the outcome is neither probable nor estimable; therefore, no amounts have been accrued in relation to the claim.

The Company is a party to three lawsuits related to previous acquisitions that closed in December 2018 and February 2019. Whitestar Solutions, LLC and Adakai Holdings, LLC filed a complaint on March 11, 2020 and Unisys Technical Solutions, LLC, Michael Colburn and Daryll DeSantis filed a complaint on May 26, 2020, each in Superior Court of the State of Arizona, Maricopa County, and Ryan Rayburn and South Cord Management LLC filed a complaint on April 21, 2020 in Superior Court for the State of California, County of Los Angeles. The lawsuits allege fraudulent inducement and breach of contract, breach of contract, breach of implied covenant of good faith and fair dealing, common law fraud and securities fraud. The plaintiffs seek damages including, rescission, declaratory judgment, specific performance, monetary damages to be proven at trial and costs and reasonable attorneys’ fees. The Company believes the likelihood of a loss contingency is neither probable nor remote and the amount cannot be estimated reliably. As such, no amount has been accrued in the financial statements.

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In connection with a pending litigation matter that was filed by Unisys Technical Solutions, LLC, Michael Colburn and Daryll DeSantis on May 26, 2020, which is further described in the Company’s registration statement on Form 10, in December 2020, the Company filed motions with the court regarding the Level Up auction sales for $25,150,000 demanding that the net proceeds from the auction sale be paid to the Company. The plaintiffs allege that they are not obligated to remit the net proceeds from the auction sale to the Company. The Company is currently awaiting the court’s ruling on the matter.

A legal dispute that was filed against the Company in February 2020 alleging breach of contract was settled in December 2020 for approximately $2,400,000. As of December 26, 2020, the remaining amount has been accrued in the Company’s Consolidated Balance Sheet.

In September 2020, a legal dispute was filed against the Company related to the separation of a former officer in which the severance issued is currently being disputed. The Company believes the likelihood of loss is remote. As a result, no amount has been set up for potential damages in these financial statements.

On January 7, 2021, JTM Construction Group, Inc. filed a cross-complaint against MM Enterprises USA, LLC, a subsidiary of the Company, in the Los Angeles Superior Court alleging breach of contract, quantum merit and implied indemnity seeking damages at $11,069,815.13. While it is too early to predict the outcome of the case or whether an adverse result would have a material adverse impact on our operations or financial position, we believe we have meritorious defenses and intend to defend this legal matter vigorously.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors

The following are our executive officers and directors and their respective ages and positions as of December 31, 2020.

Tom Lynch Chief Executive Officer and Director 52 Tim Bossidy Chief Operating Officer 32 Reece Fulgham Chief Financial Officer 59 Mike Lane Chief Information Officer 49 Tracy McCourt Chief Revenue Officer 52 Niki Christoff Director 42 Melvin Elias Director 51 Errol Schweizer Director 44 Cameron Smith Director 54 Al Harrington Director 40

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Business Experience

The following is a brief overview of the education and business experience of each of our directors and executive officers during at least the past five years, including their principal occupations or employment during the period, the name and principal business of the organization by which they were employed, and certain of their other directorships:

Tom Lynch was appointed Chief Executive Officer in March 2020, elected to the Board in November 2020 and appointed as Interim 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.

Timothy Bossidy has served as Chief Operating Officer since March 2020. Mr. Bossidy is currently a Senior Director at SierraConstellation Partners where he has developed their cannabis practice and served in a number of interim management roles in cannabis and in retail. Prior to joining SierraConstellation Partners, Mr. Bossidy served as an investment banker at Goldman Sachs. Prior to joining Goldman Sachs, Mr. Bossidy served as a fixed income analyst at The Travelers Companies. Mr. Bossidy received a B.A. in Economics and English from the University of Notre Dame and an MBA from Kellogg School of Management at Northwestern University.

Reece Fulgham was appointed Chief Financial Officer in December 2020. Mr. Fulgham, a Managing Director of SierraConstellation Partners since January 2013, has over 30 years of accounting, financial management and restructuring experience. Reece’s experience as a CPA, auditor, board member, interim operating manager and advisor to both debtors and creditors encompasses more than 60 engagements across a broad range of industries. Prior to joining SCP, Mr. Fulgham spent seven years in public accounting in the audit and business advisory groups with Kenneth Leventhal & Company in Los Angeles, California. He joined Davis Wire in 1989 as the vice president of finance, subsequent to the company’s Chapter 11 filing, to develop and implement a plan of reorganization. The company successfully emerged from bankruptcy protection in 1991. Since then, Mr. Fulgham has provided interim management, financial and strategic advisory services to both companies in transition and their creditors. Currently, he serves as a board member and audit committee chair of Trussway Holdings, Inc. and Cornerstone Healthcare Group Holdings, Inc. Mr. Fulgham received his bachelor’s degree in Accounting from Texas State University and also practiced as a CPA in California.

Mike Lane has served as Chief Information Officer since June 2020 and previously held other positions with the Company since April 2018. Mike Lane leads the development of digital products that differentiate and extend the MedMen customer experience both online and in-store. Prior to joining MedMen, from April 2016 to May 2018, Mr. Lane was Vice President of Product at global technology innovator Grindr, a location-based social network connecting the LGBTQ community, and prior to that, starting in August 2013, he held various positions at Ticketmaster (Live Nation Entertainment), with his last position being SVP, Consumer Products. Mr. Lane brings more than 20 years of experience in product development and design at major brands like Live Nation, Ticketmaster, FOX Broadcasting, Adobe, and Accenture. Mike studied at Colorado St. University and abroad at the London School of Economics, where he obtained his B.Sc. with a double major in Mathematics and Statistics.

Tracy McCourt has served as Chief Revenue Officer Since December 7, 2020. From September 2016 until October 2020, Ms. McCourt worked with Zappos, most recently as Chief Strategist, Brand Awareness Marketing leading the strategy for the brand affinity team, and from January 2015 to June 2016, she was a customer lifecycle and CRM marketing consultant for Zappos. Prior to that, from April 2016 to September 2016, Ms. McCourt developed marketing and global customer experience at Guess? Before joining Zappos, she was the Chief Marketing Officer for Frederick’s of Hollywood. Ms. McCourt holds a Bachelor's Degree from University of California, Irvine.

Melvin Elias has been a director since February 2020. Mr. Elias is an active investor, entrepreneur and developer in Los Angeles. He has past and present board experience in CPG and consumer facing businesses both in the US and internationally. Since October 2019, Mr. Elias has been actively involved with DivergentIP, LLC, a start-up he recently co-founded, which will be launching a coffee capsule system in the U.S., and is currently an advisor to various venture funds and businesses. He was President and CEO of The Coffee Bean & Tea Leaf for six years, until it was sold to private equity in 2013 where he was responsible for almost 1,000 stores and a global omni-channel business in excess of $500 million in systemwide sales. He remained on the board of The Coffee Bean & Tea Leaf with additional advisory duties until the company was recently sold again in September 2019. Prior to his career in coffee retail, Mr. Elias was the Managing Director of the Tower Records Franchise in Malaysia and practiced law in Singapore for two years. Mr. Elias graduated from the London School of Economics and served in the Singapore Military for two and a half years.

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Errol Schweizer has been a director since March 2020. Mr. Schweizer has over 25 years of experience in the food and cannabis industries, including 15 years at Whole Foods Market, where he held a number of roles within the organization, including Vice President of Grocery. In this role, Mr. Schweizer oversaw merchandising, product assortment, promotional programs and financial performance for over 80 product categories and $5 billion in annual sales. Mr. Schweizer departed Whole Foods Market in 2016 and since then has been a strategic advisor to several high-growth retailers and brands.

Cameron Smith has been a director since February 2020. Since July 2017, Mr. Smith has operated a private angel investment and advisory fund that focuses on better-for- you foods. Prior to his investment and advisory business, since October 2007, Mr. Smith was the President of Quantlab Financial, a Houston based quantitative trading company that trades globally in multiple asset classes. Mr. Smith came to Quantlab after working for various electronic markets that pioneered the introduction of fair, open, transparent stock exchanges in the United States, Europe and Canada. Mr. Smith began his career at the United States Securities and Exchange Commission and was the General Counsel for Island ECN, Inc.

Niki Christoff has been a director since May 2020. From July 2017 until June 2020, Ms. Christoff previously served as a Senior Vice President of Strategy and Government Relations at Salesforce. Prior to joining Salesforce, Ms. Christoff served as Senior Director of Public Policy at Uber between December 2015 and June 2017. Ms. Christoff

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document also held a number of positions at Google over a span of eight years, including most recently, serving as Director of Global Communications and Public Affairs. In 2019, Ms. Christoff was named one of Fortune’s “25 Most Powerful Women in Politics.”

Al Harrington was appointed to the Board in August 2020. In January 2014, Mr. Harrington founded Viola, Inc., a premium cannabis company that focuses on increasing minority ownership, reinvesting in the community, and creating opportunity through social equity, and since June 2014 he has served as Chief Executive Officer. Additionally, he is also the founder of Harrington Wellness, a manufacturing company of non-psychoactive cannabinoid products, which currently produces cannabis topical solutions. Prior to his entry into the cannabis industry, Mr. Harrington was a professional basketball player for 16 seasons in the NBA, playing for the Indiana Pacers, the Atlanta Hawks, the Golden State Warriors, as well as the New York Knicks, among others. He also currently serves as an active member of the Minority Cannabis Business Association, the Cannabis Trade Federation and Tidal Royalty’s Advisory Board.

Family Relationships

There are no family relationships among any of our executive officers or directors.

Code of Ethics

MedMen Enterprises Inc. and its subsidiaries, including MM Enterprises USA, LLC have adopted the Code of Business Conduct and Ethics (the “Code”) to assist all directors, officers, employees (whether temporary, fixed-term or permanent), consultants and contractors (collectively, the “MedMen Representatives”) of the Company and its subsidiaries to maintain the highest standards of ethical conduct in corporate affairs. Our Code also includes codes of ethics for our chief executive and principal financial officers and any persons performing similar functions.

The purpose of this Code is to encourage among MedMen Representatives a culture of honesty, accountability and fair business practice. We believe our Code is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the Code. Each MedMen Representative must adhere to this Code and cooperate fully in any investigations initiated by MedMen under this Code or by securities regulators or other competent legal authorities.

The Code is not intended to limit, prevent, impede or interfere in any way with any MedMen Representatives’ right, without prior notice to the Company, to provide information to the government, participate in investigations, testify in proceedings regarding the Company’s past or future conduct, or engage in any activities protected under whistleblower statutes.

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Further information on the Company’s Code can be found on the investor relations portal on our website at investors.medmen.com. Any waivers of the application, and any amendments to, our code of ethics must be made by our board of directors. Any waivers of, and any amendments to, our code of ethics will be disclosed promptly on our Internet website.

Director Independence

Our board of directors is composed of six “independent directors” as defined under the rules of NASDAQ. We use the definition of “independence” of NASDAQ to make this determination. Nasdaq Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

· the director is, or at any time during the past three (3) years was, an employee of the company;

· the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of twelve (12) consecutive months within the three (3) years preceding the independence determination (subject to certain exemptions, including, among other things, compensation for board or board committee service);

· the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exemptions);

· the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three (3) years, any of the executive officers of the company served on the compensation committee of such other entity; or

· the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three (3) years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

Under such definitions, our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board has determined that Mel Elias, Cameron Smith, Errol Schweizer, Al Harrington and Niki Christoff are all independent directors of the Company. However, our shares are not currently quoted or listed on any national exchange or interdealer quotation system with a requirement that a majority of our Board be independent and, therefore, the Company is not subject to any director independence requirements.

Board Leadership Structure

Our board of directors does not have a policy on whether or not the role of the Chief Executive Officer and Chairman should be separate or, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. Currently, we operate with Mr. Lynch serving as our Chairman and our Chief Executive Officer. We currently believe that Mr. Lynch serving in both capacities best serves the Company and suits the talents, expertise and experience that Mr. Lynch brings to the Company.

Board Committees

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until as otherwise determined by our board of directors.

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We have established an audit committee consisting of Mel Elias, Errol Schweizer and Tom Lynch. In addition, our Board has determined that Mel Elias, Chairman of the audit committee, is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:

· assist the Board in the discharge of its duties relating to the Corporation’s financial reporting, including the audits of the Corporation’s financial statements and the integrity of the Corporation’s financial statements and internal controls;

· establish and maintain a direct line of communication with the Corporation’s external auditor and assess their performance and independence;

· oversee the work of the external auditor engaged to prepare or issue an auditor’s report or to prepare other audit, review or attest services for the Corporation, including resolution of disagreements between management and the external auditor regarding financial reporting;

· ensure that management has designed, implemented and is maintaining an effective system of internal controls and disclosure controls and procedures;

· monitor the credibility and objectivity of the Corporation’s financial reports;

· report regularly to the Board on the fulfillment of the Committee’s duties, including any issues that arise with respect to the quality or integrity of the Corporation’s financial statements, the Corporation’s compliance with legal or regulatory requirements, the performance and independence of the external auditor or the internal audit function;

· assist, with the assistance of the Corporation’s legal counsel, the Board in discharging its duties relating to the Corporation’s compliance with legal and regulatory requirements; and

· assist the Board in discharging its duties relating to risk assessment and risk management.

Compensation Committee

Our compensation committee currently consists of Cameron Smith, who is the chair of the committee, and Errol Schweizer, each of whom are independent in accordance with the standards of Nasdaq. Each member of our compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The functions of the compensation committee include:

● reviewing and, if deemed appropriate, recommending to our board of directors policies, practices and procedures relating to the compensation of our directors, officers and other managerial employees and the establishment and administration of our employee benefit plans; ● determining or recommending to the board of directors the compensation of our executive officers; and ● advising and consulting with our officers regarding managerial personnel and development.

Our compensation committee operates under a written charter adopted by our board of directors, a current copy of which is available on our website at http://medmen.com/ investors.

Corporate Governance and Nominating Committee

Our corporate governance and nominating committee currently consists of Niki Christoff and Al Harrington. The corporate governance and nominating committee has adopted a committee charter, which details the principal functions of the committee, including::

· Develop and recommend to the Board a set of corporate governance guidelines, policies and procedures, and annually assess the Company’s corporate governance guidelines, policies and procedures, as well as the charter for the Board committees.

· Make recommendations regarding the size and composition of the Board with a view to maintain the composition of the Board in a way which provides the best mix of skills, experience, age, gender and diversity to guide the long-term strategy and ongoing business operations of the Company.

· Establish and recommend to the Board, qualification criteria for the selection of directors to serve on the Board and annually review the appropriate experience, skills and characteristics required of each existing and new director of the Company.

· Approve an appropriate orientation and education program for directors and oversee the training and orientation of directors, and evaluate the performance and effectiveness of the Board, the Chair, and each committee.

· Review and recommend to the Board, succession planning programs for Senior Executives and contingency preparedness.

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In recommending nominations to the Board, the Nominating Committee is to (i) consider whether the candidate’s competencies, skills and personal qualities are aligned with the Company’s needs and any criteria for selecting new directors established by the Nominating Committee; (ii) consider the commitment of time and resources that the candidate is able to devote to the Company as a member of the Board in light of what the Company expects from the candidate; (iii) consider the recommendations of the Chair of the Board, if any; and (iv) ensure that the candidate understands the demands and expectations of being a director of the Company.

Director Compensation

The following table sets forth all compensation paid to or earned by each non-employee director of the Company during fiscal year 2020.

Fees Earned or Stock Paid in Awards Name Cash ($) ($)(1) Total ($)

Benjamin Rose (Former) (2) $ 62,499 $ 2,062,315 $ 2,124,814 Niki Christoff ------Melvin Elias (3) $ 62,499 -- $ 62,499 Christopher Ganan (Former) ------Errol Schweizer (4) $ 49,305 -- $ 49,305

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cameron Smith (5) $ 62,499 -- $ 62,499 Andrew Modlin (Former) (6) ------Andrew Rayburn (Former) (7) $ 259,375 -- $ 259,375 Mark Hutchinson (Former) (8) $ 259,375 -- $ 259,375 Antonio Villaraigosa (Former) (9) $ 296,528 -- $ 296,528 Stacey Hallerman (Former) (10) $ 29,452 -- $ 29,452 Jay Brown (Former) (11) $ 259,375 -- $ 259,375 ______(1) The amounts disclosed above reflect the full grant date fair values in accordance with FASB ASC Topic 718. See “Note 18-Share Based Compensation” to our consolidated financial statements for the year ended June 29, 2019 (2) Mr. Rose was granted in December 2019, and holds as of fiscal year-end 2020, 5,458,749 RSUs. Mr. Rose also received $29,166 in cash and $33,333 in Subordinate Voting Shares. Mr. Rose resigned as a director on December 14, 2020. (3) Mr. Elias received $29,166 in cash and $33,333 in Subordinate Voting Shares. (4) Mr. Schweizer received $23,009 in cash and $26,296 in Subordinate Voting Shares. (5) Mr. Smith received $29,166 in cash and $33,333 in Subordinate Voting Shares. (6) Mr. Modlin resigned as a director in May 2020. (7) Mr. Rayburn’s term as a director expired in February 2020. He received an aggregate of $250,000 in Subordinate Voting Shares and $9,375 in cash for the period between August 2019 and February 2020. (8) Mr. Hutchinson’s term as a director expired in February 2020. He received an aggregate of $250,000 in Subordinate Voting Shares and $9,375 in cash for the period between August 2019 and February 2020. (9) Mr. Villaraigosa’s term as a director expired in February 2020. He received an aggregate of $250,000 in Subordinate Voting Shares and $46,528 in cash for the period between August 2019 and February 2020. (10) Ms. Hallerman resigned in October 2019. She was issued $29,452 in Subordinate Voting Shares. (11) Mr. Brown resigned as a director in March 2020. He received an aggregate of $250,000 in Subordinate Voting Shares and $9,375 in cash for the period between August 2019 and February 2020.

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Compensation Committee Interlocks and Insider Participation

None of the Company’s executive officers served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company or on the Compensation Committee, during fiscal 2020. None of the Company’s executive officers served as a director of another entity, one of whose executive officers served on the Compensation Committee, during fiscal 2020.

EXECUTIVE COMPENSATION

Overview of Executive Compensation

The Board is authorized to review and approve annually all compensation decisions relating to the executive officers of the Company. In accordance with reduced disclosure rules applicable to emerging growth companies as set forth in Item 402 of Regulation S-K, this section explains how the Company’s compensation program is structured for its Chief Executive Officer and the other executive officers named in the Summary Compensation Table (the “named executive officers”).

Compensation Governance

The Board has not adopted any formal policies or procedures to determine the compensation of the Company’s directors or executive officers. The compensation of the directors and executive officers is determined by the Board, based on the recommendations of the Compensation Committee. Recommendations of the Compensation Committee are made giving consideration to the objectives discussed below and, if applicable, considering applicable industry data.

The Compensation Committee currently consists of three directors: Errol Schweizer, Niki Christoff and Cameron Smith (Chairman), all of whom have direct and indirect experience relevant to their roles as members of the Compensation Committee. For details regarding the experience of the members of the Compensation Committee, see “Director and Executive Officers.”

The role and responsibility of the Compensation Committee is to assist the Board in fulfilling its responsibilities for establishing compensation philosophy and guidelines. Additionally, the Compensation Committee has responsibility for fixing compensation levels for the directors and executive officers and for entering into employment, severance protection, change in control and related agreements and plans for the CEO and other executive officers, provided that any individual agreement with the CEO is subject to Board approval. In addition, the Compensation Committee is charged with reviewing the Stock and Incentive Plan (as hereinafter defined) and proposing changes thereto, approving any awards of options under the Stock and Incentive Plan and recommending any other employee benefit plans, incentive awards and perquisites with respect to the directors and executive officers. The Compensation Committee is also responsible for reviewing, approving and reporting to the Board annually (or more frequently as required) on the Company’s succession plans for its executive officers.

The Compensation Committee endeavors to ensure that the philosophy and operation of the Company’s compensation program reinforces its culture and values, creates a balance between risk and reward, attracts, motivates and retains executive officers over the long-term and aligns their interests with those of the Company’s shareholders. In addition, the Compensation Committee is to review the Company’s annual disclosure regarding executive compensation for inclusion where appropriate in the Company’s disclosure documents.

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Elements of Compensation

Base Salary

Base salary is the fixed portion of each executive officer’s total compensation. It is designed to provide income certainty. In determining the base level of compensation for the executive officers, weight is placed on the following factors: the particular responsibilities related to the position, salaries or fees paid by companies of similar size in the industry, level of experience of the executive and overall performance and the time which the executive officer is required to devote to the Company in fulfilling his or her responsibilities.

Short-Term Incentive Awards

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A cash incentive payment or bonus is a short-term incentive that is intended to reward each executive officer for his or her individual contribution and performance of personal objectives in the context of overall corporate performance. Cash bonuses are designed to motivate executive officers to achieve personal business objectives and to be accountable for their relative contribution to the Company’s performance, as well as to attract and retain executives. In determining compensation and, in particular, bonuses, the Compensation Committee and the Board consider factors over which the executive officer can exercise control, such as their role in identifying and completing acquisitions and integrating such acquisitions into the Company’s business, meeting any budget targets established by controlling costs, taking successful advantage of business opportunities and enhancing the competitive and business prospects of the Company.

Long-Term Equity Incentive Awards

Long-term incentives are intended to align the interests of the Company’s directors and executive officers with those of the shareholders and to provide a long-term incentive that rewards these parties for their contribution to the creation of shareholder value. In establishing the number of, Long-Term Incentive Plan Units, (“LTIP”), nonqualified stock options (“NQSOs”), incentive stock options (“ISOs”) (collectively, “Options”) and restricted stock units (“RSU Awards”) to be granted, reference is made to the recommendations made by the Compensation Committee as well as, from time to time, the number of similar awards granted to officers and directors of other publicly-traded companies of similar size in the same business as the Company. The Compensation Committee and the Board also consider previous grants of Options or RSU Awards and the overall number of Options or RSU Awards that are outstanding relative to the number of outstanding securities in determining whether to make any new grants of Options or RSU Awards and the size and terms of any such grants. With respect to executive officers, the Compensation Committee and the Board also consider the level of effort, time, responsibility, ability, experience and level of commitment of the executive officer in determining the level of long-term equity incentive awards. With respect to directors, the Compensation Committee and the Board also consider committee assignments and committee chair responsibilities, as well as the overall time requirements of the Board members in determining the level of long-term equity incentive awards.

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Summary Compensation Table

The following table sets forth all compensation paid to or earned by the named executive officers of the Company in the last fiscal year.

Stock Option All Other Fiscal Awards Awards Compensation Total Name and Principal Position Year Salary ($) Bonus ($) ($) (1) ($) (1) ($) ($)

Tom Lynch Chief Executive Officer and Chief Restructuring Officer (2) 2020 ------

Zeeshan Hyder Former Chief Financial Officer(3) 2020 $ 541,563 -- $ 350,706 -- -- $ 892,269

Mike Lane Chief Information Officer (4) 2020 $ 253,717 -- $ 27,500 $ 76,903 -- $ 358,120

Adam Bierman Former Chief Executive Officer (5) 2020 $ 157,733 ------$ 996,745 $ 959,233

Ryan Lissack Former Interim Chief Executive Officer (6) 2020 $ 609,386 $ 249,110 $ 350,706 -- $ 511,588 $ 1,720,790

Chris Ganan Former Chief Strategy Officer (7) 2020 $ 666,667 ------$ 666,667

Michael Kramer Former Chief Financial Officer (8) 2020 $ 288,203 -- $ 350,706 -- $ 133,334 $ 772,243 ______(1) The amounts disclosed above reflect the full grant date fair values in accordance with FASB ASC Topic 718. See “Note 18-Share Based Compensation” to our consolidated financial statements for the year ended June 29, 2019. (2) Mr. Lynch became Chief Executive Officer in March 2020. Mr. Lynch is a Partner and Senior Managing Director at SierraConstellation Partners LLC (“SCP”), which in March 2020 was retained to support the Company in the development and execution of its turnaround and restructuring plan. For a description of the terms of the Management Services Agreement, see “Item 7-Certain Relationships and Related Transactions.” (3) Mr. Hyder became Chief Financial Officer in October 2019 and resigned on December 16, 2020. (4) Mr. Lane became Chief Information Officer in June 2020 and has been employed by the Company since 2018. (5) Mr. Bierman resigned as Chief Executive Officer effective February 1, 2020 and as a director in June 2020. He did not receive any compensation in his role as a director of the Company. Other compensation includes $890,561 in estimated benefits related to executive protection provided by the Company, and $106,183 for car lease and insurance payments. See “Employment and Severance Agreements” below. (6) Mr. Lissack was appointed as Interim Chief Executive Officer in February 2020 and resigned in March 2020. Mr. Lissack was also formerly the Chief Operating Officer and, previous to that, since March 2019, the Chief Technology Officer. The dollar amount of Mr. Lissack’s bonus represents the issuance of 889,680 Subordinate Voting Shares and is based on a deemed price of $0.28 per share. Other compensation consists of $111,588, representing the issuance of 429,185 Subordinate Voting Shares based on a deemed price of $0.26 per share and $400,000 related to the forgiveness of an outstanding promissory note, which includes the principal amount and interest. See “Employment and Severance Agreements” below. (7) Mr. Ganan was Chief Strategy Officer of the Company from May 2018 until May 2020. (8) Mr. Kramer was Chief Financial Officer from December 2018 until October 2019. Other compensation consists of $133,334 paid pursuant to a consulting agreement. See “Employment and Severance Agreements” below.

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Employment and Severance Agreements

The Company does not have employment agreements with any of its named executive officers. For fees paid to SCP, of which Mr. Lynch, the Company’s Chief Executive Officer, is a Partner and Senior Managing Director, see Item 7. Certain Relationships and Related Transactions.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In connection with his departure effective February 1, 2020, Adam Bierman, Co-Founder and former Chief Executive Officer, surrendered all of his 815,295 Super Voting Shares, which each provided 1,000 votes per share, to the Company. In connection with his departure and cancellation of his Super Voting Shares, the Company will compensate Mr. Bierman in the form of securities of which the number of issued securities and the aggregate amount is yet to be determined. The Company also amended Mr. Bierman’s 9,661,939 LTIPs, such that they will not vest as a result of his departure and will continue to be outstanding for a period of ten years and vest upon the price for the Subordinate Voting Shares achieving the thresholds of C$10, C$15 and C$20, and vest upon on a change of control of the Company. The Company also paid for Mr. Bierman’s security protection for 90 days after his departure and will also pay for his car lease and related insurance for one year.

In connection with the departure of Ryan Lissack, the Company’s former Interim Chief Executive Officer, in March 2020, the Company forgave the outstanding principal and interest on a $400,000 promissory note, issued to Mr. Lissack an aggregate of 429,185 Subordinate Voting Shares, accelerated the vesting on option to purchase 103,921 Subordinate Voting Shares and agreed to reimburse Mr. Lissack for up to 12 months of COBRA coverage.

In connection with the departure of Michael Kramer, the Company’s former Chief Financial Officer, in October 2019, the Company allowed Mr. Kramer to retain $200,000 that was originally paid to him as a signing bonus. The Company and Mr. Kramer also entered into a Consulting Agreement with a term ending on December 31, 2019 pursuant to which the Company paid Mr. Kramer $66,666.67 per month for financial and accounting services.

On December 31, 2020, in connection with the resignation of Zeeshan Hyder as Chief Financial Officer, the Company and Mr. Hyder entered into a Separation Agreement. Pursuant to the terms of the Separation Agreement, (a) Non-Qualified Stock Options exercisable for 377,644 shares of Class B Subordinate Voting Shares, which were granted to Mr. Hyder on September 9, 2020 with an exercise price per share of CAD$0.22, will remain exercisable for a period of three months after the filing by the Company of a Registration Statement on Form S-8 that includes the shares underlying such options, (b) 248,268 Restricted Stock Units (“RSUs”), which were part of an award of 1,324,098 RSUs granted on September 9, 2020, immediately vested, and (c) 123,007 shares, which were part of a Restricted Stock Award of 173,656 shares granted on July 30, 2019, immediately vested. As of December 31, 2020, Mr. Hyder also held vested stock options exercisable for 162,291 shares at an exercise price of CAD$5.25 per share, which were granted on May 29, 2018, that will be exercisable for a period of three months after his departure. All remaining unvested awards held by Mr. Hyder were immediately forfeited and terminated pursuant to the terms of the 2018 Stock and Incentive Plan and applicable award agreements.

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Outstanding Equity Awards Table

The following table sets forth outstanding equity awards for the named executive officers of the Company at fiscal 2020 year-end.

Option Awards Stock Awards Market Value of Number of Number of Number of Shares or Securities Securities Shares or Units of Underlying Underlying Option Units of Stock That Unexercised Unexercised Exercise Option Stock that Have Not Options (#) Options (#) Price Expiration Have Not Vested ($) Name Exercisable Unexercisable ($) (1) Date Vested (#) (1) Tom Lynch ------Zeeshan Hyder (2) 147,186 33,976 $ 4.14 May 2028 173,656 $ 39,712 Mike Lane (3) -- 543,471 $ 2.10 July 2029 -- -- 56,361 40,259 $ 4.14 May 2028 -- -- Adam Bierman ------Ryan Lissack ------Chris Ganan ------Michael Kramer ------______(1) Assumes CAD/USD exchange rate of 1.2681. Market value of is based on the closing price per share on June 27, 2020. Options vest as follows: 25% on the one-year anniversary of the grant date of May 29, 2018 and 1/48 per month thereafter. RSUs vest as follows: 100% on the two- (2) year anniversary of the grant date of July 31, 2019. Mr. Hyder resigned on December 16, 2020. See “Employment and Severance Agreements” above for a description of his separation agreement. Options exercisable for 543,471 Subordinate Voting Shares vest as follows: 33% when the share price surpasses C$15.00, 33% when the share price surpasses C$30.00 (3) and 33% when the share price surpasses C$60.00. Options exercisable for 40,259 Subordinate Voting Shares vest as follows: 25% on the one-year anniversary of the grant date of May 29, 2018 and 1/48 per month thereafter.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Transactions with Related Parties

All related party balances due from or due to the Company as of June 27, 2020 and June 29, 2019 did not have any formal contractual agreements regarding payment terms or interest. For amounts due from and to related parties, refer to “Note 24 - Related Party Transactions” of the Consolidated Financial Statements for the fiscal years ended June 27, 2020 and June 29, 2019.

Gotham Green Partners

As discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business – Recent Developments”, the Company has engaged in a strategic partnership with Gotham Green Partners, a related party. The arrangement is to provide financing to the Company in the form of a credit facility up to $250.0 million accessed through issuances of convertible senior secured notes (the “Notes”) co-issued by the Company and MM CAN USA, Inc. The Notes are convertible, at the option of the holder, into Subordinate Voting Shares at any time prior to the close of business on the last business day immediately preceding the maturity date of April 23, 2022. In addition, upon issuance of any Notes, the lenders are issued share purchase warrants (the “Warrants”) of the Company, each of which are exercisable to purchase one Subordinate Voting Share for 36 months from the date of issue. The Notes and the Warrants, and any Subordinate Voting Shares issuable as a result of a conversion of the Notes or exercise of the Warrants, will be subject to a four-month hold period from the date of issuance of such Notes or such Warrants, as applicable, in accordance with applicable Canadian securities laws. While the Notes are outstanding, the lenders will be entitled to the collective rights to appoint a representative to attend all meetings of the Board of Directors in a non-voting observer capacity. GGP has the right to nominate a majority of the Company’s Board of Directors while the aggregate principal amount outstanding under the Notes being more than $25.0 million.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The convertible facility bears interest at a rate of LIBOR plus 6.0% per annum. All convertible notes will have a maturity date of 36 months from the maturity date, with a twelve-month extension feature available to the Company on certain conditions. As of December 3, 2020, the Company has drawn down on approximately $155.0 million of the GGP Facility.

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Subsequent to June 27, 2020, the Company entered into amendments to the Facility with GGP to provide greater flexibility to the Company. Refer to “Note 18 - Senior Secured Convertible Credit Facility” and “Note 27 - Subsequent Events” of the Consolidated Financial Statements for the fiscal years ended June 27, 2020 and June 29, 2019 and “Note 12 - Senior Secured Convertible Credit Facility” of the Consolidated Financial Statements for the three and six months ended December 26, 2020 and December 28, 2019 included in this prospectus.

Wicklow Capital, Inc.

In August 2019, Benjamin Rose became the non-executive Chairman of the Board and later became the Executive Chairman of the Board in May 2019. Mr. Rose is the Chief Investment Officer of Wicklow Capital, Inc. On December 11, 2019, the Company announced that Mr. Rose was granted a limited proxy of 815,295 Class A Super Voting Shares, which represented 50% of the total Class A Super Voting Shares, for a period of one year, which expired on December 10, 2020. As a result of the proxy, Mr. Rose had joint control of the Company. Mr. Rose resigned as a director on December 14, 2020.

In August 2019, GGP and Wicklow Capital completed a $30.0 million non-brokered financing of Subordinate Voting Shares at a price equal to $2.37 per share wherein the Company issued 14,634,147 Subordinate Voting Shares to the investors. In December 2019, the Company engaged in a non-broker partner placement wherein Wicklow Capital in the offering in which the Company issued 23,720,929 Subordinate Voting Shares for aggregate gross proceeds of $10.2 million to the investors. In April 2020, the Company granted 5,458,749 restricted stock units to Benjamin Rose, the former Executive Chairman of the Board. The units will vest on December 10, 2020 or upon a change in control of the Company.

SierraConstellation Partners

In March 2020, the Company retained interim management and advisory firm, SierraConstellation Partners (“SCP”), to support the Company in the development and execution of its turnaround and restructuring plan. As part of the engagement, Tom Lynch was appointed as Chief Executive Officer and Chief Restructuring Officer, and Tim Bossidy was appointed as Chief Operating Officer. Mr. Lynch is a Partner and Senior Managing Director at SCP. Mr. Bossidy is a Director at SCP. As of February 9, 2021, the Company had paid $1,694,683 in fees to SCP for interim management and restructuring support during the current fiscal year.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our Subordinate Voting Shares for:

Each person who we know beneficially owns more than five percent of our Subordinate Voting Shares.

· Each of our directors.

· Each of our named executive officers.

· All of our directors and executive officers as a group.

Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o MedMen Enterprises Inc., 10115 Jefferson Boulevard, Culver City, California, 90232.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of Subordinate Voting Shares that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership is based on 549,658,529 Subordinate Voting Shares outstanding at February 24, 2021. There are no Class A Super Voting Shares outstanding. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares subject to options, warrants, units, Redeemable Units, LTIP Units and MedMen Corp. Redeemable Shares held by that person that are currently exercisable or exercisable within 60 days of February 24, 2021. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than one percent is denoted with an “*”.

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Shares Beneficially Owned Subordinate Voting Shares(1)

Name of Beneficial Owner Shares %

Named Executive Officers and Directors Tom Lynch -- -- Tim Bossidy -- -- Mike Lane (2) 102,165 * Mel Elias 410,076 * Errol Schweizer 696,095 * Cameron Smith 410,076 * Niki Christoff 271,436 * Al Harrington 423,155 *

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document All executive officers and directors as a group (10 persons) (2) 2,313,003 * 5% Security Holders Gotham Green Partners, LLC (3) 212,584,041 20.0% Wicklow Capital, Inc. (4) 76,285,807 13.6% Parallax Partners, LLC (5) 69,482,634 11.2% Hankey Capital, LLC (6) 56,490,288 9.3% Mekita Investments Ltd. (7) 40,000,000 6.8% Stable Road Capital, LLC (8) 38,859,114 6.6% Serenity Investments, LLC (9) 31,338,655 5.4% ______(1) A holder of MedMen Corp Redeemable Shares (other than MedMen) has the right to cause MedMen Corp. to redeem its MedMen Corp Redeemable Shares. If a holder of MedMen Corp Redeemable Shares (other than MedMen) exercises its redemption or exchange right, MedMen Corp. will repurchase for cancellation each such MedMen Corp Redeemable Share submitted for redemption or exchange in consideration for either, at the election of MedMen Corp., one Subordinate Voting Share or a cash amount equal to the cash settlement amount applicable to such MedMen Corp Redeemable Share (which cash settlement amount would be equal to the five-day VWAP for the Subordinate Voting Shares on the principal securities exchange on which the Subordinate Voting Shares are traded, ending on the last trading day immediately prior to the applicable date of redemption or exchange); provided that MedMen Corp. may assign to MedMen its rights and obligations to effect a redemption or exchange directly with the redeeming holder. (2) Includes options to purchase 71,775 Subordinate Voting Shares. (3) Based on information provided in a Schedule 13G filed on February 16, 2021 with amounts as of January 11, 2021. Consists of (a) 121,936 Subordinate Voting Shares, notes convertible into 4,559,764 Subordinate Voting Shares and warrants to purchase[4,207,856 Subordinate Voting Shares directly held by Gotham Green Fund I, L.P.; (b) 487,820 Subordinate Voting Shares, 246,215 MedMen Corp. Redeemable Shares, notes convertible into 18,236,576 Subordinate Voting Shares, and warrants to purchase 16,834,054 Subordinate Voting Shares directly held by Gotham Green Fund I (Q), L.P.; (c) 268,226 Subordinate Voting Shares, notes convertible into 3,696,571 Subordinate Voting Shares and warrants to purchase 3,220,059 Subordinate Voting Shares directly held by Gotham Green Fund II, L.P.; (d) 1,561,043 Subordinate Voting Shares, notes convertible into 21,515,345 Subordinate Voting Shares, and warrants to purchase 17,017,425 Subordinate Voting Shares directly held by Gotham Green Fund II (Q), L.P.; (e) notes convertible into 21,832,217 Subordinate Voting Shares and warrants to purchase 9,854,727 Subordinate Voting Shares directly held by Gotham Green Partners SPV IV, L.P.; and (f) notes convertible into 32,041,254 Subordinate Voting Shares and warrants to purchase 56,882,953 Subordinate Voting Shares directly held by Gotham Green Partners SPV VI, L.P. Gotham Green Partners LLC is the SEC registered investment adviser to the Gotham funds. Gotham Green GP 1 LLC is the general partner of Gotham Green Fund I, LP and Gotham Green Fund I (Q) LP. Gotham Green GP 2 LLC is the general partner to Gotham Green Fund II LP and Gotham Green Fund II (Q) LP. Gotham Green Partners SPV IV GP, LLC is the general partner of Gotham Green Partners SPV IV, L.P., and Gotham Green Partners SPV VI GP, LLC is the general partner of Gotham Green Partners SPV VI, L.P. Jason Adler is the Managing Member of each general partner. The address of Gotham Green Partners is 1437 4th Street, Santa Monica, CA 90401. (4) Based on information provided in a Schedule 13G filed on February 3, 2021. Consists of (a) 22,353,472 Subordinate Voting Shares and 9,813,234 MedMen Corp Redeemable Shares directly held by Clarence LP (“Clarence”), and 6,395,433 Subordinate Voting Shares that have been loaned to a third party but for which Clarence retains voting rights, (b) 17,090,743 MedMen Corp Redeemable Shares directly held by Wicklow Capital, Inc. (“Wicklow”), and (c) 25,528,546 Subordinate Voting Shares directly held by Milestone Investments, LP (“Milestone”) and 12,195,122 Subordinate Voting Shares that have been loaned to a third party but for which Clarence retains voting rights. Wicklow is the general partner of Milestone and Clarence. The Daniel V. Tierney 2003 Trust (the “Trust”) is the sole stockholder of Wicklow and the sole limited partner of Milestone and Clarence. Interactive Brokers LLC is a wholly-owned subsidiary of Milestone. Mr. Daniel V. Tierney is the trustee and sole beneficiary of the Trust and has sole voting and dispositive power over the securities held by the Trust. The address for such persons is 737 N. Michigan Ave., Suite 2100, Chicago, IL 60311. (5) Based on information provided in a Schedule 13G filed on March 4, 2021. Consists of 36,781,522 Subordinate Voting Shares issuable on conversion of a Senior Secured Convertible Note and 32,701,112 Subordinate Voting Shares issuable on exercise of Warrants, each dated as of January 11, 2021. Parallax Volatility Advisers, L.P. (the “Parallax Advisers”), and Parallax Partners, LLC (the “Parallax Partners”), are the investment adviser and general partner, respectively, of investment funds, including the Parallax Master Fund, L.P. (the “Master Fund”), S. Daniel Hutchison and William F. Bartlett are the control persons of Parallax Advisors and Parallax Partners. Such persons share voting and investment power. Each disclaims membership in a group and disclaims beneficial ownership of such Subordinate Voting Shares except to the extent of that person’s pecuniary interest therein. The address for such holders is 88 Kearny Street, 20th Floor, San Francisco, California 94108. (6) Based on information provided in a Schedule 13G filed on February 16, 2021. Consists of warrants exercisable for 31,383,504 MedMen Corp. Redeemable Shares issuable to Hankey Capital, LLC (“Hankey Capital”), and 12,553,392 MedMen Corp. Redeemable Shares issuable to each of Westlake Capital Finance, LLC (“Westlake”) and Knight Insurance Company, Ltd. (“Knight”). See also footnote (2) above for further information about MedMen Corp. Redeemable Shares. Does not include warrants exercisable for 286,673, 114,669 and 144,669 MedMen Corp. Redeemable Shares issuable to Hankey Capital, Westlake and Knight, respectively, on March 1, 2021. For further information about the warrants, see “Selling Shareholders - Senior Secured Term Loan Facility” below. Don Hankey is the Manager of Hankey Capital, and the Chairman of each of Westlake and Knight. Hankey Capital is managed by Hankey Investment Company, LP. Westlake is managed by Westlake Services, LLC, which is managed by Westlake Services Holding Company. Don Hankey has the sole voting and dispositive power over the shares held by Hankey Capital, Westlake and Knight. The address for the shareholder and related entities is 4751 Wilshire Blvd., Suite 110, Los Angeles, California 90010. (7) Represents warrants exercisable for MedMen Corp. Redeemable Shares. See also footnote (2) above for further information about MedMen Corp. Redeemable Shares. Does not include warrants exercisable for 624,469 MedMen Corp. Redeemable Shares issued on March 1, 2021. For further information about the warrants, see “Selling Shareholders - Senior Secured Term Loan Facility” below. Mekita Investments Ltd (“Mekita”) is owned by Konstantin Sintsov and Konstantin Zasov (beneficiaries) and managed by Segetia (UK) Ltd., whose CEO and controlling person is Wilfred Abbott. The address for Mekita is Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. (8) Based on information provided in a Schedule 13G filed on February 16, 2021. Consists of 6,350,000 MM CAN Shares issuable to Stable Road Capital, LLC (“Stable Road Capital”) and 21,129,004 MM CAN Shares issuable to SRC MME Credit, LP (“SRC MME”). See also footnote (2) above for further information about MedMen Corp. Redeemable Shares. Does not include warrants exercisable for 374,681 MedMen Corp. Redeemable Shares issuable to SRC MME. For further information about the warrants, see “Selling Shareholders - Senior Secured Term Loan Facility” below. See also footnote (2) above for further information about MedMen Corp. Redeemable Shares. Edward K. Freedman is the Manager of Stable Road Capital and SRC MME Credit GP, LLC, the general partner of SRC MME, and has the sole voting and dispositive power over the shares held by Stable Road Capital and SRC MME. The address for the shareholder and related entities is 1345 Abbot Kinney Blvd., Venice, California 90291. (9) Reported securities are beneficially owned by Serenity Investments, LLC, Stephen G. Schuler and Mary Jo Schuler as a group (“Serenity Group”). Consists of (a) 3,817,401 Subordinate Voting Shares and (b) 27,521,254 MedMen Corp Redeemable Shares, all of which are directly held by Serenity Investments, LLC. Mr. Schuler and Ms. Schuler separately hold all of the membership interests in Serenity Investments, LLC. Serenity Group’s address is 1010 Lake Street, #200, Oak Park, IL 60301.

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SELLING SHAREHOLDERS

This prospectus covers the resale by the selling shareholders identified below of an aggregate of 244,110,563 Subordinate Voting Shares. When we refer to the “selling shareholders” in this prospectus, we mean the persons listed in the table below, as well as their donees, pledges, assignees, transferees, or other successors in interest.

We cannot advise you as to whether the selling shareholders will in fact sell any or all of such securities. In addition, the selling shareholders may sell, transfer or otherwise dispose of, at any time and from time to time, the securities in transactions exempt from the registration requirements of the Securities Act after the date of this prospectus,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document subject to applicable law. Because the selling shareholders may not sell or otherwise dispose of some or all of the securities covered by this prospectus and because there are currently no agreements, arrangements or understandings with respect to the sale or other disposition of any of the securities, we cannot estimate the number of securities that will be held by the selling shareholders after completion of the offering. However, for purposes of this table, we have assumed that all of the Subordinate Voting Shares beneficially owned by the selling shareholders that are covered by this prospectus will be sold by them.

We have determined beneficial ownership in accordance with the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. The table below identifies each of the selling shareholders and provides other information regarding the beneficial ownership of the Subordinate Voting Shares by each of the selling shareholders. The first column lists the number of Subordinate Voting Shares and the percentage beneficially owned by each selling shareholder, based on ownership of our securities as of February 24, 2021. As of February 24, 2021, there were 549,658,529 Subordinate Voting Shares issued and outstanding. In accordance with SEC rules, individuals and entities below are shown as having beneficial ownership over shares they own or have the right to acquire within 60 days, as well as shares for which they have the right to vote or dispose of such shares. Also in accordance with SEC rules, for purposes of calculating percentages of beneficial ownership, shares which a person has the right to acquire within 60 days are included both in that person’s beneficial ownership as well as in the total number of shares issued and outstanding used to calculate that person’s percentage ownership but not for purposes of calculating the percentage for other persons. For purposes of this column, the selling shareholders that are holders of convertible notes are viewed as having beneficial ownership of the Subordinated Voting Shares issuable upon conversion of their convertible notes because they have a right to convert the principal of the convertible notes they own at a conversion price equal to $0.17 or $0.15 per share, as applicable. See “September 2020 Unsecured Convertible Facility” below for a further description of the convertible notes.

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Unless otherwise indicated below, to our knowledge, the persons and entities named in the tables have sole voting and sole investment power with respect to all securities that they beneficially own, subject to community property laws where applicable. Beneficial ownership representing less than one percent is denoted with an “*”.

Subordinate Voting Shares Prior to the Offering Being After the Offering (1) Subordinate Voting Offered by Subordinate Voting Shares(2) Selling Shares(2) Name of Selling Shareholder Shares % Shareholder Shares % Mekita Investments Ltd. (3) 40,624,469 6.9% 40,624,469 — — SRC MM Credit, LP (3) (4) 32,883,795 5.6% 32,883,795 — — Hankey Capital, LLC (3) (5) 31,670,177 5.5% 31,670,177 — — Anson Investments Master Fund LP (7) 24,505,336 4.3% 24,505,336 — — Nomis Bay LTD. (8) 19,604,269 3.5% 19,604,269 — — Christopher Ganan (2)(12) 18,628,733 3.3% 323,193 18,305,540 3.2% BPY Limited (8) 13,069,511 2.3% 13,069,511 — — Westlake Capital Finance, LLC(3)(5) 12,668,061 2.3% 12,668,061 — — Knight Insurance Company, Ltd. (3)(5) 12,668,061 2.3% 12,668,061 — — Anson East Master Fund LP (7) 8,168,444 1.5% 8,168,444 — — Stable Road Capital, LLC (3) (5) 6,350,000 1.1% 6,350,000 — — Ben Rose (6)(12) 6,087,198 1.1% 6,087,198 — — Inceptacon-VII, LLC (3) 5,078,059 * 5,078,059 — — Matthew J. Lucero (9) 4,305,148 * 4,305,148 — — Elzinga & Volkers, Inc. (9) 3,185,866 * 3,185,866 — — Yoram Heller Living Trust (3) 2,539,029 * 2,539,029 — — Arnon and Robin Heller Family Trust (3) 2,539,029 * 2,539,029 — — Adnant Consulting LLC (9) 2,178,863 * 2,178,863 — — BWS Commercial, LLC (9) 2,082,890 * 2,082,890 — — Brian Kabot (3) 1,183,594 * 1,183,594 — — Claudio Stabile (Planit Construction USA, Inc.) (9) 1,811,730 * 1,811,730 — — David G Walker (Dacos Realty, LLC) (9) 1,785,334 * 1,785,334 — — PJ Callaghan Company, Inc. (9) 1,070,655 * 1,070,655 — — CV Energy Developers, LLC (9) 1,024,118 * 1,024,118 — — Ken Leonard (3) 975,520 * 975,520 — — Wilhelm Oehl (Eight - San Francisco, Inc.) (9) 961,941 * 961,941 — — Errol Schweizier (10) 696,095 * 696,095 — — NL Extracts, Inc. (9) 551,976 * 551,976 — — Al Harrington (10) 423,155 * 423,155 — — Mel Elias (10) 410,076 * 410,076 — — Cameron Smith (10) 410,076 * 410,076 — — Michael Kramer (13) 370,346 * 370,346 — — Mark Hutchinson (12) 320,892 * 320,892 — — Andy Raybrun (12) 320,892 * 320,892 — — Antonio Villaragiosa (12) 320,892 * 320,892 — — Laurence Brown (12) 320,892 * 320,892 — — Nicole Christoff (10) 271,436 * 271,436 — — Eduard Linetskiy (12) 143,419 * 143,419 — — Palmcypress, LLC (9) 128,168 * 128,168 — — Stacey Hallerman (10) 77,957 * 77,957 — — ______* Represents less than 1% of the total.

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(1) Assumes shares outstanding following completion of this offering, based on (a) 549,658,529 Subordinate Voting Shares as of February 24, 2021, (b) 174,595,005 Subordinate Voting Shares issued upon the exercise of warrants held by selling shareholders (including warrants exercisable for Redeemable Shares of MM CAN that can be redeemed and exchanged for Subordinate Voting Shares), (c) 32,132,350 Subordinate Voting Shares issued upon the conversion of convertible notes held by the selling shareholders, and (d) an aggregate of 6,484,001 Subordinate Voting Shares issued subsequent to February 24, 2021. Assumes no other shares are issued by the Company or exercised or converted under other warrants, options or notes for Subordinate Voting Shares. (2) A holder of MedMen Corp Redeemable Shares (other than MedMen) has the right to cause MedMen Corp. to redeem its MedMen Corp Redeemable Shares. If a holder of MedMen Corp Redeemable Shares (other than MedMen) exercises its redemption or exchange right, MedMen Corp. will repurchase for cancellation each such MedMen Corp Redeemable Share submitted for redemption or exchange in consideration for either, at the election of MedMen Corp., one Subordinate Voting Share or a cash amount equal to the cash settlement amount applicable to such MedMen Corp Redeemable Share (which cash settlement amount would be equal to the five-day VWAP for the Subordinate Voting Shares on the principal securities exchange on which the Subordinate Voting Shares are traded, ending on the last trading day immediately prior to the applicable date of redemption or exchange); provided that MedMen Corp. may assign to MedMen its rights and obligations to effect a redemption or exchange directly with the redeeming holder. (3) Represents warrants that are exercisable for MedMen Corp Redeemable Shares. See footnote (2) above. For further information about the securities acquired from the Company, see “Senior Secured Term Loan Facility” below. Mekita is owned by Konstantin Sintsov and Konstantin Zasov (beneficiaries) and managed by Segetia (UK) Ltd., whose CEO and controlling person is Wilfred Abbott. The address for Mekita is Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. Inceptacon-VII, LLC is managed by Meridian Capital LLC, which is managed by Meridian RE Investments Inc, and Omar R. Mangalji is the control person of such entities. The address for Inceptacon is 5847 San Felipe, Suite 4650, Houston, Texas 77057. Yoram Heller is trustee of the Yoram Heller Living Trust with an address of 1417 Kellam Ave., Los Angeles, CA 90026. Arnon Heller is the trustee of the Arnon and Robin Heller Family Trust with an address of 4221 Wilshire Blvd, Suite 300a, Los Angeles, CA 90010. Brian Kabot and Ken Leonard have the same address as Stable Road Capital in footnote (4) below. (4) Represents warrants that are exercisable for MedMen Corp Redeemable Shares. See footnote (2) above. For further information about the securities acquired from the Company, see “Senior Secured Term Loan Facility” below. Edward K. Freedman is the Manager of Stable Road Capital and SRC MME GP. Stable Road Capital is the sole member of SRC MME GP. Edward K. Freedman has the sole voting and dispositive power over the shares held by Stable Road Capital and SRC MME. The address for each selling shareholder is 1345 Abbot Kinney Blvd., Venice, California 90291. (5) Represents warrants that are exercisable for MedMen Corp Redeemable Shares. See footnote (2) above. For further information about the securities acquired from the Company, see “Senior Secured Term Loan Facility” below. Don Hankey is the Manager of Hankey Capital and the Chairman of each of Westlake and Knight. Hankey Capital is managed by Hankey Investment Company, LP. Westlake is managed by Westlake Services, LLC, which is managed by Westlake Services Holding Company. Don Hankey has the sole voting and dispositive power over the shares held by Hankey Capital, Westlake and Knight. The address for each selling shareholder is 4751 Wilshire Blvd., Suite 110, Los Angeles, California 90010. (6) Mr. Rose was a director of the Company until December 14, 2020. Includes 5,458,749 Subordinate Voting Shares that were issued upon vesting of Restricted Stock Units. (7) With respect to Anson Investments Master Fund LP, includes warrants exercisable for an aggregate of 9,530,704 Subordinate Voting Shares and notes convertible into 12,049,632 Subordinate Voting Shares. With respect to Anson East Master Fund LP, includes warrants exercisable for an aggregate of 3,176,901 Subordinate Voting Shares and notes convertible into 4,016,543 Subordinate Voting Shares. For further information about the securities acquired from the Company, see “September 2020 Unsecured Convertible Facility” and “February 2021 Equity Private Placement” below. Anson Advisors Inc. and Anson Funds Management LP, the Co-Investment Advisers of each of the Anson Funds, hold voting and dispositive power over the securities held by Anson. Bruce Winson is the managing member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of these securities except to the extent of their pecuniary interest therein. The principal business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. (8) With respect to Nomis Bay LTD, includes warrants exercisable for an aggregate of 7,624,563 Subordinate Voting Shares and notes convertible into 9,639,706 Subordinate Voting Shares. With respect to BPY Limited, includes warrants exercisable for an aggregate of 5,083,042 Subordinate Voting Shares and notes convertible into 6,426,469 Subordinate Voting Shares. For further information about the securities acquired from the Company, see “September 2020 Unsecured Convertible Facility” and “February 2021 Equity Private Placement” below. Peter Poole is the natural person with voting and dispositive power over the shares held by Nomis Bay Ltd. And BPY Limited. The address for each is 45 Reid Street, Wessex House, Hamilton, Bermuda HM12. (9) Shares offered by such selling shareholder were issued between September 2020 and March 2021 in connection with settlement of debt obligations, vendor services and amounts due on leases. The addresses for such shareholders are as follows: Elzinga & Volkers, Inc. – 86 E. 6th Street, Holland, MI 49423; BWS Commercial, LLC - 35 Marsh Hawk Rd, Fernandina Beach, FL, 32034; Planit Construction USA, Inc. - 4949 Cote Vertu, Montreal, QC H45-1E1, CAN; Dacos Realty, LLC – 232 Boylston St., Chestnut Hill, MA 02467; Adnant Consulting LLC – 11516 Downey Ave., Downey, CA 90241; PJ Callaghan Company, Inc. - 3251 Morris Street N Saint Petersburg, FL 33713; CV Energy Developers, LLC - 78571 Blackstone Ct STE 1, Bermuda Dunes, CA 92203; Eight - San Francisco, Inc. - 675 California St FL 3, San Francisco, CA, 94108; NL Extracts, Inc. - 26500 Agoura Rd #102-225 Calabasas CA 91302; Palmcypress, LLC - 7011 Cypress Terrace, Fort Myers, FL 33907. (10) Such person is a current director of the Company. The Shares were issued during August November of 2020 and February of 2021 as director fees. (11) Includes an aggregate of 18,057,432 MedMen Corp Redeemable Shares, (a) 828,722 of which are owned directly by Mr. Ganan, (b) 8,448,832 of which are owned by CS Ganan Family Trust, of which Mr. Ganan is the trustee, (c) 1,506,703 of which are owned by The Three Kisses Trust, of which Mr. Ganan is the trustee, and (d) 7,273,175 of which are owned indirectly through SL2 Holdings LLC, representing Mr. Ganan’s indirect one-third ownership of such entity. Mr. Ganan is a former director of the Company. (12) Such person is a former director of the Company. The Shares were issued during November and December of 2020 as director fees. (13) Such person is a former employee of the Company. The Shares to be offered are being issued pursuant to the terms of a severance agreement.

No Selling Shareholder has had any material relationship with us or any of our affiliates within the past three fiscal years, other than as described above. Except as described above or immediately below, during the last two fiscal years, no selling shareholder has been or will be a party, in which the amount involved exceeded or will exceed the lesser of $120,000 or 1% of the average of the Company's total assets and in which any of the selling shareholders, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest.

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Senior Secured Term Loan Facility

On October 1, 2018, the Company closed a $73,275,000 senior secured term loan facility (the “Facility”) with funds managed by Hankey Capital and with an affiliate of Stable Road Capital (the “Lenders”). On October 3, 2018, the Company closed an additional tranche of the Facility, which increased the principal amount of the loan to $77,675,000. The principal amount under the Facility will accrue interest at a rate of 7.5% per annum, paid monthly, with a maturity date of 24 months following the date of closing on October 1, 2018. The Company may repay the balance of the Facility at any time and from time to time, in whole or in part, with a prepayment penalty of 1% of the outstanding principal amount repaid if repaid before December 31, 2019. The existing loan facility is subject to certain covenant clauses whereby the Company is required to meet certain key financial ratios.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Additionally, MM CAN issued to the Lenders 8,105,642 warrants, each being exercisable for one Class B Common Share of such company at a purchase price per share of $4.97 for 30 months. Such Class B Common Shares are redeemable in accordance with their terms for Class B Subordinate Voting Shares of the Company. The Facility will be used for acquisitions, capital expenditures and general corporate purposes.

In connection with the increased principal under the Facility, MM CAN issued to the Lenders an additional 511,628 warrants, each being exercisable for one Class B Common Share of such affiliate at a purchase price per share of $4.73 for a period of 30 months. Such Class B Common Shares are redeemable in accordance with their terms for Class B Subordinate Voting Shares of the Company.

In addition to providing a portion of the Facility, Stable Road Capital provided advisory services to the Company. Advisory services included introducing the Company to brands and various service providers, advice on the Facility and providing advice with respect to the Company’s planned structured sale of real estate assets. For its advisory services, MM CAN issued to Stable Road Capital 8,105,642 warrants at a purchase price per share of $4.97 and 511,628 warrants at a purchase price per share of $4.73, each being exercisable for one Class B Common Share of such company for a period of 30 months. Such Class B Common Shares are redeemable in accordance with their terms for Class B Subordinate Voting Shares of the Company.

On January 13, 2020, the Company completed an amendment of its existing term loan facility in the principal amount of $77,675,000 with Hankey Capital wherein the maturity date was extended from October 1, 2020 to January 31, 2022 and the interest rate was increased from a fixed rate of 7.5% per annum to 15.5% per annum. In addition, the Company may prepay the amounts outstanding, on a non-revolving basis, at any time and from time to time, in whole or in part, without penalty. Further, the Company cancelled the existing 16,211,284 and 1,023,256 warrants issued to the lenders exercisable at $4.97 and $4.73 per share, respectively, representing 100% of the loan amount. The Company issued new warrants to the lenders totaling 40,455,729 warrants exercisable at $0.60 per share until December 31, 2022. The new warrants may be exercised at the election of their holders on a cashless basis.

On September 16, 2020, the Facility was amended in which the funds available under the facility was increased by $12,000,000 available through incremental term loans. The additional funds accrue interest at 18.0% per annum wherein 12.0% will be paid in cash monthly in arrears and 6.0% per annum accrues monthly as payment-in-kind. The warrants issued in connection with the amended Facility are subject to a down round feature wherein the exercise price would be decreased in the event of the exercise of a down-round price reset of select warrants under the GGP Facility.

On October 30, 2020, the Company closed on an incremental term loan of $7,705,279 under the 2020 Term Loan. In connection with the incremental term loan, MM CAN issued 77,052,790 warrants with an exercise price of $0.20 per share until September 14, 2025. The newly issued warrants may be exercised at the election of their holders on a cashless basis. As of December 26, 2020, the Company has received total gross proceeds of $10,705,279 under the 2020 Term Loan.

September 2020 Unsecured Convertible Facility

On September 16, 2020, the Company entered into an unsecured convertible debenture facility with the Purchasers (as defined below) for total available proceeds of $10,000,000 wherein the convertible debentures will have a conversion price equal to the closing price on the trading day immediately prior to the closing date, a maturity date of 24 months from the date of issuance and bear interest at a rate of 7.5% per annum payable semi-annually in cash. The unsecured facility is callable in additional tranches in the amount of $1,000,000 each, up to a maximum of $10,000,000 under all tranches. The timing of additional tranches can be accelerated based on certain conditions. The Company has the right to prepay, in whole or in part, the outstanding principal amount and accrued interest prior to maturity, upon payment of 7.5% of the principal amount being repaid, less the amount of interest paid during the year of prepayment. The debentures provide for the automatic conversion into Subordinate Voting Shares in the event that the VWAP is greater than $0.25 on the CSE for 45 consecutive trading days, at a conversion price per Subordinate Voting Share equal to $0.17.

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On September 28, 2020, the Company closed on a second tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the second tranche, the Company issued 3,777,475 warrants for an equal number of Shares with an exercise price of $0.17 per share.

On November 20, 2020, the Company closed on a third tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the third tranche, the Company issued 3,592,425 warrants for an equal number of Shares with an exercise price of $0.17 per share.

February 2021 Equity Private Placement

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subscription Agreements, the Company further granted the Purchasers the right, under a second tranche, to purchase up to 7,800,000 additional Units at the Issue Price for a period of 45 days following the closing.

For a period of one year, the Purchasers have the right, within 24 hours from first notice, if an overnight raise or a commercially reasonable time in all other circumstances, to commit to participate in up to 25% on any broadly syndicated equity raises, convertible note offerings or unit deals via a bank or brokerage firm. The Purchasers, however, cannot exercise this right in the following events: any capital found through a strategic capital raise conducted by Moelis & Company, any straight debt instruments, capital transactions involving a change of control, any funding by Gotham Green Partners, or capital transactions with a strategic or non-strategic counterparty that takes place in conjunction with any restriction or conversion of debt to equity. The total amount of any such individual participation cannot exceed $20.0 million.

As part of the transaction, the Company agreed to file with the SEC, within 15 days of the closing, a registration statement on Form S-1 registering for resale the Shares, the Shares underlying the Warrants and Subordinate Voting Ahares underlying convertible debentures and warrants issued pursuant to an Investment Agreement dated September 16, 2020 among the Company and the Purchasers.

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MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market Information

The Subordinate Voting Shares of the Company are traded on the CSE under the symbol “MMEN.” The Subordinate Voting Shares are also quoted on the OTCQX under the symbol “MMNFF”; over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Holders

As of March 1, 2021, there were approximately 294 holders of record of our Subordinate Voting Shares.

Securities Authorized for Issuance under Equity Compensation Plans

The Company has a stock and equity incentive plan (the “Incentive Plan”) under which the Company may issue various types of equity instruments to any employee, officer, consultant, advisor or director. The types of equity instruments issuable under the Incentive Plan encompass, among other things, stock options, stock grants, restricted stock grants, LTIP units and warrants (together, “Awards”). To the extent that the Company has not appointed a Compensation Committee, all rights and obligations under the Incentive Plan shall be those of the full Board of Directors. The maximum number of Awards that may be issued under the Incentive Plan shall be determined by the Compensation Committee or the Board in the absence of a Compensation Committee. Any shares subject to an Award under the Incentive Plan that are forfeited, canceled, expire unexercised, are settled in cash, or are used or withheld to satisfy tax withholding obligations, shall again be available for Awards under the Incentive Plan. Vesting of Awards will be determined by the Compensation Committee or the Board in absence of one. The exercise price for Awards (if applicable) will generally not be less than the fair market value of the Award at the time of grant and will generally expire after 10 years.

The following table sets forth securities authorized for issuance under the Stock and Incentive Plan as of fiscal 2020 year-end.

(c) Number of securities remaining (a) available Number of (b) for future issuance securities to Weighted- under equity be issued average compensation upon exercise exercise price plans of outstanding of outstanding (excluding options, options, securities warrants and warrants reflected in Plan Category rights and rights column (a)) Equity compensation plans approved by security holders 7,579,788 C$ 3.52 Unlimited (1) Equity compensation plans not approved by security holders NA NA NA Total 7,579,788 Unlimited(1) ______(1) The aggregate number of Subordinate Voting Shares that may be issued under all Awards under the Incentive Plan shall be the number of Subordinate Voting Shares as determined by the Board from time to time. Currently, the amount reserved for future issuance under the Incentive Plan is 200,000,000 Subordinate Voting Shares.

DESCRIPTION OF CAPITAL STOCK

The following information describes our Subordinate Voting Shares, Super Voting Shares and preferred stock, as well as options and warrants to purchase our Subordinate Voting Shares and provisions of our Articles. This description is only a summary. You should also refer to our Articles which are filed with the Securities and Exchange Commission as exhibits to this registration statement, of which this prospectus forms a part, and to the applicable provisions of British Columbia law.

Capital Stock

As of February 24, 2021, our issued and outstanding capital consisted of: (i) 549,658,529 Subordinate Voting Shares; (ii) nil preferred Shares and (iii) nil Super Voting Shares.

The authorized share capital of the Company is comprised of the following:

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Unlimited Number of Class B Subordinate Voting Shares

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Holders of Subordinate Voting Shares are entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company will have the right to vote. At each such meeting, holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held. As long as any Subordinate Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Subordinate Voting Shares by separate special resolution, prejudice or interfere with any right attached to the Subordinate Voting Shares. Holders of Subordinate Voting Shares are entitled to receive as and when declared by the directors of the Company, dividends in cash or property of the Company.

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding up its affairs, the holders of MedMen Subordinate Voting Shares are, subject to the prior rights of the holders of any shares of the Company ranking in priority to the MedMen Subordinate Voting Shares (including, without restriction, the MedMen Super Voting Shares as to the issue price paid in respect thereof), entitled to participate ratably along with all other holders of MedMen Subordinate Voting Shares. Holders of MedMen Subordinate Voting Shares are not entitled to a right of first refusal to subscribe for, purchase or receive any part of any issue of MedMen Subordinate Voting Shares, or bonds, debentures or other securities of the Company.

Unlimited Number of Class A Super Voting Shares

Unlimited Number of Preferred Shares

The Preferred Shares may be issued at any time or from time to time in one or more series. The Board of Directors of the Company may, by resolution, alter its Notice of Articles of the Company to create any series of Preferred Shares and to fix before issuance, the designation, rights, privileges, restrictions and conditions to attach to the Preferred Shares of each series, including the rate, form, entitlement and payment of preferential dividends, the dates and place for payment thereof, the redemption price, terms, procedures and conditions of redemption, if any, voting rights and conversion rights, if any, and any sinking fund, purchase fund or other provisions attaching to the Preferred Shares of such series; provided, however, that no Preferred Shares of any series shall be issued until the Company has filed an alteration to its Notice of Articles with the British Columbia Registrar of Companies.

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Summary of Outstanding Share Data

The Company had the following securities issued and outstanding and reserved for issuance as of February 24, 2021:

Number Securities of Shares

Issued and Outstanding: Subordinate Voting Shares 549,658,529 Super Voting Shares 0

Additional Subordinate Voting Shares Reserved for Issuance: (1)

MedMen Enterprises Inc.: Stock Options (2) 12,855,137 Warrants (3) 356,283,821 Restricted Share Units 23,472,305 Convertible Notes Payable (4) 1,069,936,260

MM Enterprises USA, LLC: LTIP Units 19,323,878 Redeemable Units 725,017

MM CAN USA, Inc.: Redeemable Shares 128,879,262 Warrants (3) 147,508,519

Total Additional Subordinate Voting Shares Reserved for Issuance: 1,760,583,551 Total Shares Issued, Outstanding and Reserved for Issuance: 2,310,242,080 ______(1) Subordinate Voting Shares reserved for issuance pursuant to redemption rights attached to certain outstanding but unlisted shares and common units of MM CAN USA, Inc. and MM Enterprises USA, LLC, which are subsidiaries of MedMen Enterprises Inc. and in connection with certain outstanding convertible or exchangeable securities of such subsidiaries.

(2) The aggregate number of Subordinate Voting Shares that may be issued under all Awards under the Incentive Plan shall be the number of Subordinate Voting Shares as determined by the Board from time to time. Currently, the amount reserved for future issuance under the Incentive Plan is 200,000,000 Subordinate Voting Shares.

(3) Warrants outstanding as of February 24, 2021, with a weighted average exercise price of $0.61 per share with varying expirations date up until February 2026; does not include 1,671,278 Subordinate Voting Shares issuable upon the exercise of warrants with an exercise price of $0.4810 that were issued subsequent to February 24, 2021.

(4) Convertible notes payable based on accreted balance (including principal and payment-in-kind interest) as of February 24, 2021 with a weighted average conversion price of $0.23 per share.

MedMen Corp Redeemable Shares

The share capital of MM Can USA, Inc., a corporation existing under the laws of the State of California (“MedMen Corp”) consists of Class A common shares (“MedMen Corp Voting Shares”) and Class B Common Shares (“MedMen Corp Redeemable Shares”).

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Holders of MedMen Corp Voting Shares are entitled to receive notice of, attend and vote at meetings of the securityholders of MedMen Corp. (other than meetings at which only holders of another class or series of shares are entitled to vote separately as a class or series). Each MedMen Corp Voting Share entitles the holder thereof to one vote on all matters upon which holders of MedMen Corp Voting Shares are entitled to vote.

MedMen Corp Redeemable Shares do not entitle the holders thereof to receive notice of, attend or vote at meetings of the securityholders of MedMen Corp. Holders of MedMen Corp Redeemable Shares are entitled to exchange or redeem their MedMen Corp Redeemable Shares for Subordinate Voting Shares pursuant to the terms specified in the articles of incorporation of MedMen Corp.

A holder of MedMen Corp Redeemable Shares (other than MedMen) has the right to cause MedMen Corp. to redeem its MedMen Corp Redeemable Shares. If a holder of MedMen Corp Redeemable Shares (other than MedMen) exercises its redemption or exchange right, MedMen Corp. will repurchase for cancellation each such MedMen Corp Redeemable Share submitted for redemption or exchange in consideration for either, at the election of MedMen Corp., one Subordinate Voting Share or a cash amount equal to the cash settlement amount applicable to such MedMen Corp Redeemable Share (which cash settlement amount would be equal to the five-day VWAP for the Subordinate Voting Shares on the principal securities exchange on which the Subordinate Voting Shares are traded, ending on the last trading day immediately prior to the applicable date of redemption or exchange); provided that MedMen Corp. may assign to MedMen its rights and obligations to effect a redemption or exchange directly with the redeeming holder.

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The holders of MedMen Corp Voting Shares and MedMen Corp Redeemable Shares, on a pro rata basis, are entitled to receive, when and as declared by the board of directors of MedMen Corp., out of any assets of MedMen Corp. legally available therefor, such dividends as may be declared from time to time by the board of directors of MedMen Corp.

Upon the dissolution or liquidation of MedMen Corp., whether voluntary or involuntary, holders of MedMen Corp Voting Shares and MedMen Corp Redeemable Shares, on a pro rata basis, are entitled to receive all assets of MedMen Corp. available for distribution to its stockholders.

No holder of any shares of MedMen Corp. may transfer such shares, whether by sale, transfer, assignment, pledge, encumbrance, gift, bequest, appointment or otherwise, whether with or without consideration and whether voluntary or involuntary or by operation of law, without the prior written consent of the board of directors of MedMen Corp., which consent may not be unreasonably withheld, other than in respect of a permitted transfer. Such permitted transfers are (i) a redemption of MedMen Corp Redeemable Shares in accordance with their terms, (ii) a transfer by a shareholder to the Company or any of its subsidiaries, including MedMen Corp., (iii) a transfer by a shareholder to such shareholder’s spouse, any lineal ascendants or descendants or trusts or other entities in which such shareholder or shareholder’s spouse, lineal ascendants or descendants hold (and continue to hold while such trusts or other entities hold MedMen Corp Voting Shares or MedMen Corp Redeemable Shares) 50% or more of such entity’s beneficial interests, (iv) a transfer under the laws of descent and distribution, (v) a transfer to a partner, shareholder, member or affiliated investment fund of the applicable shareholder, and (vi) a transfer to any other shareholder of MedMen Corp.

MedMen LLC LTIP Units

MedMen Corp. is the sole manager of the MM Enterprises USA, LLC, a limited liability company existing under the laws of the State of Delaware (“MedMen LLC “) and has the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of the LLC, subject to the terms of the A&R LLC Agreement and applicable laws.

MedMen LLC may issue MedMen LLC LTIP Units in exchange for services performed or to be performed on behalf of MedMen LLC. “MedMen LLC LTIP Units” are the long-term incentive plan units in the capital of MedMen LLC issued in accordance with the third amended and restated limited liability company agreement of MedMen LLC dated as of May 28, 2018, as amended (the “A&R LLC Agreement”), which entitle the holders thereof to certain rights and privileges, including the right to receive MedMen LLC Redeemable Units in exchange for such MedMen LLC LTIP Units, subject to the restrictions, qualifications and limitations provided for in the A&R LLC Agreement. MedMen LLC LTIP Units are intended to qualify as “profits interests” for U.S. federal income tax purposes in MedMen LLC. The number of MedMen LLC LTIP Units that may be issued by MedMen LLC is not limited.

MedMen LLC LTIP Units are created and issued pursuant to and subject to the limitations of the terms of the A&R LLC Agreement. MedMen LLC LTIP Units may, in the sole discretion of MedMen Corp., a subsidiary of the Corporation and the sole manager of MedMen LLC, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of an award, vesting or other similar agreement. The terms of any such award, vesting or similar agreement may be modified by MedMen Corp. from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant award, vesting or similar agreement or by the terms of any plan pursuant to which the MedMen LLC LTIP Units are issued, if applicable. In the event of any inconsistency between any such award, vesting or similar agreement or plan and the terms of the A&R LLC Agreement, the A&R LLC Agreement would prevail.

Unless otherwise specified in the relevant award, vesting or other similar agreement, upon the occurrence of any event specified in such an agreement resulting in either the forfeiture of any MedMen LLC LTIP Units or the repurchase thereof by MedMen LLC at a specified purchase price, then, upon the occurrence of the circumstances resulting in such forfeiture or repurchase by MedMen LLC, the relevant MedMen LLC LTIP Units shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose or as transferred to MedMen LLC.

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MedMen LLC LTIP Units convert automatically, with no action required by the holder, into MedMen LLC Redeemable Units immediately upon vesting. This conversion into MedMen LLC Redeemable Units may range from a conversion into zero units to up to a one-for-one basis in accordance with and subject to the terms and conditions of the A&R LLC Agreement.

Subject to the terms and conditions of the A&R LLC Agreement, a holder of MedMen LLC Redeemable Units has the right to cause MedMen LLC to redeem such units. If such a holder of MedMen LLC Redeemable Units exercises its redemption right, MedMen LLC will repurchase for cancellation each such MedMen LLC Redeemable Unit submitted for redemption in consideration for either, as determined by MedMen Corp., one MedMen Subordinate Voting Share or a cash amount equal to the cash settlement amount applicable to such MedMen LLC Redeemable Unit (which cash settlement amount would be equal to the five-day volume weighted average price for the MedMen Subordinate Voting Shares on the principal securities exchange on which the MedMen Subordinate Voting Shares are traded, ending on the last trading day immediately prior to the applicable date of redemption).

Certain Provisions of Our Charter Documents and British Columbia Law

Anti-takeover Provisions of our Articles

In addition to the board of directors’ ability to issue preferred shares, our Articles, as amended, contain other provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of our Company unless such takeover or change in control is approved by our board of directors.

All provinces and territories of Canada have adopted National Instrument 62-104 entitled “Take-Over Bids and Issuer Bids” and related forms to harmonize and consolidate take-over bid and issuer bid regimes nationally (“NI 62-104”). The Canadian Securities Administrators, or CSA, have also issued National Policy 62-203 entitled “Take- Over Bids and Issuer Bids” (the “National Policy”) which contains regulatory guidance on the interpretation and application of certain provisions of NI 62-104 and on the conduct of parties involved in a bid. The National Policy and NI 62-104 are collectively referred to as the “Bid Regime.” The National Policy does not have the force of law, but is an indication by the CSA of what the intentions and desires of the regulators are in the areas covered by their instruments. Unlike some jurisdictions where the take-over bid rules are primarily policy-driven, in Canada the regulatory framework for take-over bids is primarily rules-based, which rules are supported by policy.

A “take-over bid” is an offer to acquire outstanding voting or equity securities of a class made to any person who is in one of the provinces or territories of Canada or to any securityholder of an offeree issuer whose last address as shown on the books of the offeree issuer is in such province or territory, where the securities subject to the offer to acquire, together with the securities beneficially owned or controlled or directed by the offeror, or any other person acting jointly or in concert with the offeror, constitute in the aggregate 20% or more of the outstanding securities of that class of securities at the date of the offer to acquire. For the purposes of the Bid Regime, a security is deemed to be beneficially owned by an offeror as of a specific date if the offeror is the beneficial owner of a security convertible into the security within 60 days following that date, or has a right or obligation permitting or requiring the offeror, whether or not on conditions, to acquire beneficial ownership of the security within 60 days by a single transaction or a series of linked transactions. Offerors are also subject to early warning requirements, where an offeror who acquires beneficial ownership of, or control or direction over, voting or equity securities of any class of a reporting issuer or securities convertible into voting or equity securities of any class of the reporting issuer that, together with the offeror’s securities, would constitute 10% or more of the outstanding securities of that class must promptly publicly issue and file a news release containing certain prescribed information, and, within two business days, file an early warning report containing substantially the same information as is contained in the news release and certain additional prescribed information.

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In addition, where an offeror is required to file an early warning report and the offeror acquires or disposes of beneficial ownership of, or the power to exercise control or direction over, an additional 2% or more of the outstanding securities of the class or securities convertible into 2% or more of the outstanding securities of the class, or disposes of beneficial ownership of or control or direction over outstanding securities of the class to below 10%, the offeror must issue an additional press release and file a new early warning report. Any material change in a previously filed early warning report also triggers the issuance and filing of a new press release and early warning report. During the period commencing on the occurrence of an event in respect of which an early warning report is required and terminating on the expiry of one business day from the date that the early warning report is filed, the offeror may not acquire or offer to acquire beneficial ownership or control or direction of any securities of the class in respect of which the early warning report was required to be filed or any securities convertible into securities of that class. This requirement does not apply to an offeror that has beneficial ownership of, or control or direction over, securities that comprise 20% of more of the outstanding securities of the class.

Business combinations, related party transactions, issuer bids and insider bids are subject to additional regulation that may differ depending on the particular jurisdiction of Canada in which it occurs.

Indemnification of Directors and Officers

MedMen is incorporated under the laws of British Columbia.

(1) Section 160 of the Business Corporations Act (British Columbia) provides that the Company may indemnify an individual who: (i) is or was a director or officer of the Company; (ii) is or was a director or officer of another corporation: (A) at a time when such other corporation is or was an affiliate of the Company; or (B) at the request of the Company; or (iii) at the request of the Company, is or was, or holds or held a position equivalent to that of, a director or officer of a partnership, trust, joint venture or other unincorporated entity, and his or her heirs and personal or other legal representatives of that individual, or an Eligible Party. Such indemnity may provide for indemnification against any judgment, penalty, fine or settlement paid in respect of a proceeding in which such individual, by reason being or having been an Eligible Party, is or may be joined as a party, or is or may be liable for provided, (a) he or she acted honestly and in good faith with a view to the best interests of the applicable corporation; and (b) in the case of an eligible proceeding other than a civil proceeding, the Eligible Party had reasonable grounds for believing that the Eligible Party’s conduct in respect of which the proceeding was brought was lawful. (2) In addition to the powers of the Company to indemnify under (1), a court may, on the application of the Company or an Eligible Party: (i) order the Company to indemnify an Eligible Party; (ii) order the enforcement of, or any payment under, an agreement of indemnification entered into by the Company; or (iii) order the Company to pay some or all of the expenses incurred by any person in obtaining an order for indemnification under this item (2). (3) An Eligible Party is entitled to indemnity from the Company in respect of all costs, charges and expenses reasonably incurred by him or her in connection with the defense of any proceeding to which he or she is made a party by reason of being an Eligible Party, if the person seeking indemnity, (a) was substantially successful on the merits in his or her defense of the action or proceeding; and (b) fulfils the conditions set out in clauses (1)(a) and (b). (4) The Company may purchase and maintain insurance for the benefit of an Eligible Party against any liability that may be incurred by reason of the Eligible Party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the Company or an associated corporation.

In addition to limitations of liability pursuant to the Business Corporations Act (British Columbia) and applicable law, the Articles provide that, subject to the Business Corporations Act (British Columbia), the Company may indemnify a director, former director, officer or former officer of the Company and his or her heirs and legal personal representatives against any judgment, penalty, fine or settlement paid in respect of a proceeding or investigative action in which such individual, by reason of being or having been a director, former director, officer or former officer of the Company, is or may be joined as a party or in respect of which is or may be liable, to which such person is or may be liable, and the Company may, after final disposition of such a proceeding or action, pay the expenses reasonably incurred by such person in respect of that proceeding or action. Each director and officer is deemed to have contracted with the Company on such terms of indemnity.

We expect to purchase directors’ and officers’ liability insurance for the members of the board of directors and certain other officers, substantially in line with that purchased by similarly situated companies.

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Each director is also a party to an indemnification agreement with the Company, pursuant to which the Company has agreed, to the fullest extent not prohibited by law and promptly upon demand, to indemnify and hold harmless such director, his heirs and legal representatives from and against (i) all costs, charges and expenses incurred by such director in respect of any claim, demand, suit, action, proceeding or investigation in which such director is involved or is subject by reason of being or having been a director and (ii) all liabilities, damages, costs, charges and expenses whatsoever that the director may sustain or incur as a result of serving as a director in respect of any act, matter, deed or thing whatsoever made, done, committed, permitted or acquiesced in by such director in his capacity as a director, whether before or after the effective date of such indemnification agreement.

Exchange Listing

Our Subordinate Voting Shares are listed on the CSE under the symbol “MMEN.”

Transfer Agent and Registrar

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The transfer agent and registrar for our Subordinate Voting Shares is Odyssey Trust Company.

PLAN OF DISTRIBUTION

We are registering the Resale Shares covered by this prospectus to permit the selling shareholders to conduct public secondary trading of the Resale Shares from time to time after the date of this prospectus.

We will not receive any of the proceeds of the sale of the Resale Shares offered by this prospectus. We will receive up to an aggregate of approximately $42.8 million from the exercise of the Resale Warrants, assuming the exercise in full of the Resale Warrants for cash. See the section titled “Use of Proceeds.” The aggregate proceeds to the Selling Shareholders from the sale of the Resale Shares will be the purchase price of the Resale Shares less any discounts and commissions. We will not pay any brokers’ or underwriters’ discounts and commissions in connection with the registration and sale of the Resale Shares covered by this prospectus. The Selling Shareholders reserve the right to accept and, together with their respective agents, to reject, any proposed purchases of Resale Shares to be made directly or through agents.

The Resale Shares offered by this prospectus may be sold from time to time to purchasers (1) directly by the Selling Shareholders, or (2) through underwriters, broker- dealers or agents, who may receive compensation in the form of discounts, commissions or agent’s commissions from the Selling Shareholders or the purchasers of the Resale Shares. The Resale Shares may be distributed at a fixed price or prices, which may be changed, market prices prevailing at the time of sale, prices related to the prevailing market prices, or negotiated prices.

Any underwriters, broker-dealers or agents who participate in the sale or distribution of the Resale Shares may be deemed to be “underwriters” within the meaning of the Securities Act. As a result, any discounts, commissions or concessions received by any such broker-dealer or agents who are deemed to be underwriters will be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters are subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities under the Securities Act and the Exchange Act. We will make copies of this prospectus available to the Selling Shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. To our knowledge, there are currently no plans, arrangements or understandings between the Selling Shareholders and any underwriter, broker-dealer or agent regarding the sale of the Resale Shares by the Selling Shareholders.

The Resale Shares may be sold in one or more transactions at:

· fixed prices;

· prevailing market prices at the time of sale;

· prices related to such prevailing market prices;

· varying prices determined at the time of sale; or

· negotiated prices.

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These sales may be effected in one or more transactions:

· on any national securities exchange or quotation service on which the Resale Shares may be listed or quoted at the time of sale, including the CSE;

· in the over-the-counter market;

· in transactions otherwise than on such exchanges or services or in the over-the-counter market;

· distribution to members, limited partners or stockholders of Selling Shareholders;

· any other method permitted by applicable law; or

· through any combination of the foregoing.

These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade.

At the time a particular offering of the Resale Shares is made, a prospectus supplement, if required, will be distributed, which will set forth the name of the Selling Shareholders, the aggregate amount of Resale Shares being offered and the terms of the offering, including, to the extent required, (1) the name or names of any underwriters, broker-dealers or agents, (2) any discounts, commissions and other terms constituting compensation from the Selling Shareholders and (3) any discounts, commissions or concessions allowed or reallowed to be paid to broker-dealers. We may suspend the sale of Resale Shares by the Selling Shareholders pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to be supplemented or amended to include additional material information.

The Selling Shareholders will act independently of us in making decisions with respect to the timing, manner, and size of each resale or other transfer. There can be no assurance that the Selling Shareholders will sell any or all of the Resale Shares under this prospectus. Further, we cannot assure you that the Selling Shareholders will not transfer, distribute, devise or gift the Resale Shares by other means not described in this prospectus. In addition, any Resale Shares covered by this prospectus that qualify for sale under Rule 144 of the Securities Act may be sold under Rule 144 rather than under this prospectus. The Resale Shares may be sold in some states only through registered or licensed brokers or dealers. In addition, in some states the Resale Shares may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification is available and complied with.

The Selling Shareholders and any other person participating in the sale of the Resale Shares will be subject to the Exchange Act. The Exchange Act rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the Resale Shares by the Selling Shareholders and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the Resale Shares to engage in market-making activities with respect to the particular Resale Shares being distributed. This may affect the marketability of the Resale Shares and the ability of any person or entity to engage in market-making activities with respect to the Resale Shares.

For additional information regarding expenses of registration, see the section titled “Use of Proceeds.”

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF OUR SUBORDINATE VOTING SHARES

The following is a summary of material U.S. federal income tax considerations of the ownership and disposition of our Subordinate Voting Shares acquired in this offering by a “non-U.S. holder” (as defined below) but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Code, Treasury Regulations promulgated thereunder and administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax considerations different from those set forth below. We have not sought, and do not intend

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to seek, any ruling from the Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.

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This summary also does not address the tax considerations arising under the laws of any U.S. state or local jurisdiction, non-U.S., or under any U.S. non-income tax laws, such as federal gift and estate tax rules, or the effect, if any, of the Medicare contribution tax on net investment income. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

· banks, insurance companies, regulated investment companies, real estate investment trusts or other financial institutions;

· persons subject to the alternative minimum tax;

· accrual method taxpayers subject to special tax accounting rules under Section 451(b) of the Code;

· tax-exempt organizations and government organizations;

· “qualified foreign pension funds” as defined in Section 897(1)(2) of the Code, entities all of the interests of which are held by qualified foreign pension fund and tax-qualified retirement plans;

· controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;

· brokers or dealers in securities or currencies;

· traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

· persons who own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below);

· certain former citizens or long-term residents of the United States;

· persons who hold our Subordinate Voting Shares as a position in a hedging transaction, “straddle,” “conversion transaction,” synthetic security, or other risk reduction transaction;

· persons who hold or receive our Subordinate Voting Shares pursuant to the exercise of any option or otherwise as compensation;

· persons who do not hold our Subordinate Voting Shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment); or

· persons deemed to sell our Subordinate Voting Shares under the constructive sale provisions of the Code.

In addition, if a partnership (or other entity or arrangement classified as a pass-through or disregarded entity for U.S. federal income tax purposes) holds our Subordinate Voting Shares, the tax treatment of a partner or member in the partnership or other entity generally will depend on the status of the partner or member and upon the activities of the partnership or other entity or arrangement. A partner or member in a partnership that will hold our Subordinate Voting Shares should consult his, her or its own tax advisor regarding the tax considerations of the purchase, ownership and disposition of our Subordinate Voting Shares through a partnership or other entity or arrangement.

You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax considerations of the purchase, ownership and disposition of our Subordinate Voting Shares arising under the U.S. federal gift or estate tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.

Non-U.S. Holder Defined

For purposes of this discussion, you are a “non-U.S. holder” if you are a beneficial owner of our Subordinate Voting Shares that, for U.S. federal income tax purposes, is neither a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) nor:

· an individual who is a citizen or resident of the United States;

· a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or any political subdivision thereof, or otherwise treated as such for U.S. federal income tax purposes;

· an estate whose income is subject to U.S. federal income tax regardless of its source; or

· a trust (x) whose administration is subject to the primary supervision of a U.S. court and that has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) that has made a valid election under applicable Treasury Regulations to be treated as a U.S. person.

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Distributions

As described in the section titled “Dividend Policy,” we have never declared or paid cash dividends on our Subordinate Voting Shares, and we do not anticipate paying any dividends on our Subordinate Voting Shares following the completion of this offering. However, if we do make distributions on our Subordinate Voting Shares, those payments will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, the excess will constitute a return of capital and will first reduce your basis in our Subordinate Voting Shares, but not below zero, and then will be treated as gain from the sale of stock as described below under “—Gain on Disposition of Subordinate Voting Shares.”

Subject to the discussions below regarding effectively connected income, backup withholding and Foreign Account Tax Compliance Act, or FATCA, withholding, any dividend paid to you generally will be subject to U.S. federal withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty between the United States and your country of residence. In order to receive a reduced treaty rate, you must provide us or the applicable paying agent with an IRS Form W-8BEN or W-8BEN-E or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. We may

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document withhold up to 30% of the gross amount of the entire distribution even if the amount constituting a dividend, as described above, is less than the gross amount to the extent provided for in the Treasury Regulations. A non-U.S. holder of shares of our Subordinate Voting Shares may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds our Subordinate Voting Shares through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

Dividends received by you that are treated as effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, that are attributable to a permanent establishment or fixed base maintained by you in the United States) are generally exempt from the 30% U.S. federal withholding tax if you satisfy applicable certification and disclosure requirements, subject to the discussions below regarding backup withholding and FATCA withholding. In order to obtain this exemption, you must provide us with a properly executed IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying that such dividends are effectively connected with your conduct of a trade or business within the United States. Such effectively connected dividends, although not subject to U.S. federal withholding tax, generally are taxed at the same rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty between the United States and your country of residence. You should consult your tax advisor regarding the tax consequences of the ownership and disposition of our Subordinate Voting Shares, including the application of any applicable tax treaties that may provide for different rules.

Gain on Disposition of Subordinate Voting Shares

Subject to the discussions below regarding backup withholding and FATCA withholding, you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our Subordinate Voting Shares unless:

· the gain is effectively connected with your conduct of a U.S. trade or business (and, if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or fixed base maintained by you in the United States);

· you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or

· our Subordinate Voting Shares constitute a United States real property interest by reason of our status as a “United States real property holding corporation,” or a USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding your disposition of, or your holding period for, our Subordinate Voting Shares.

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We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our United States real property interests relative to the fair market value of our U.S. and worldwide real property interests plus our other assets used or held for use in a trade or business, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our Subordinate Voting Shares are regularly traded on an established securities market (as defined under applicable Treasury Regulations), your Subordinate Voting Shares will be treated as United States real property interests only if you actually (directly or indirectly) or constructively hold more than five percent of such regularly traded Subordinate Voting Shares at any time during the shorter of the five-year period preceding your disposition of, or your holding period for, our Subordinate Voting Shares. In such case, a non-U.S. holder generally will be taxed on its net gain derived from the disposition of Subordinate Voting Shares at the U.S. federal income tax rates applicable to United States persons (as defined in the Code).

If you are a non-U.S. holder described in the first bullet above, you generally will be required to pay tax on the gain derived from the sale (net of certain deductions and credits) under regular U.S. federal income tax rates applicable to U.S. persons, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be subject to tax at 30% (or such lower rate specified by an applicable income tax treaty) on the net gain derived from the sale, which gain may be offset by U.S. source capital losses for the year, provided you have timely filed U.S. federal income tax returns with respect to such losses. You should consult your tax advisor regarding any applicable income tax or other treaties that may provide for different rules.

Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.

Payments of dividends on or of proceeds from the disposition of our Subordinate Voting Shares made to you may be subject to backup withholding at the applicable statutory rate (currently, 24%) unless you establish an exemption, for example, by properly certifying your non-U.S. status on a properly completed and signed IRS Form W-8BEN, W-8BEN-E or IRS Form W-8ECI (or successor form) or otherwise establish an exemption. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.

Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

Additional Withholding Requirements under the Foreign Account Tax Compliance Act

Sections 1471 through 1474 of the Code and the Treasury Regulations and other official IRS guidance issued thereunder, or, collectively, FATCA, generally impose a U.S. federal withholding tax of 30% on dividends on, and subject to the discussion below, the gross proceeds from a sale or other disposition of, our Subordinate Voting Shares, paid to a “foreign financial institution” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners) or otherwise establishes an exemption. A foreign financial institution must certify its compliance with FATCA by delivering a completed and signed IRS Form W-8BEN-E to us, along with such other documentation as may be required to establish such institution’s exemption from FATCA withholding.

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FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on, and, subject to the discussion below, the gross proceeds from a sale or other disposition of, our Subordinate Voting Shares paid to a “non-financial foreign entity” (as specially defined under these rules) unless such entity provides the withholding agent with a certification identifying the substantial direct and indirect U.S. owners of the entity, certifies that it does not have any substantial U.S. owners, or otherwise establishes an exemption. A non-financial foreign entity must certify its status as such and identify any substantial U.S. owners of the entity by delivering a completed and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document signed IRS Form W-8BEN-E to us, along with such other documentation as may be required to establish such entity’s exemption from FATCA withholding. The purpose of FATCA is to insure that foreign entities receiving payments from U.S. sources disclose all of their direct or indirect U.S. owners.

The withholding tax under FATCA will apply regardless of whether the payment otherwise would be exempt from withholding tax, including under the exemptions described above for effectively connected income and under applicable tax treaties. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of FATCA withholding taxes. An intergovernmental agreement for FATCA between the United States and the non-U.S. holder’s country of residence may modify the requirements described in this section. Prospective investors should consult with their own tax advisors regarding the application of FATCA withholding to their investment in, and ownership and disposition of, our Subordinate Voting Shares.

The preceding discussion of U.S. federal income tax considerations is for general information only. It is not tax advice to investors in their particular circumstances. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax considerations of purchasing, owning and disposing of our Subordinate Voting Shares, including the consequences of any proposed change in applicable laws.

CANADIAN TAX CONSIDERATIONS

The Company believes it is, and will continue to be treated as, a U.S. corporation for purposes of the Internal Revenue Code of 1986 although for purposes of the Income Tax Act (Canada), the Company will be treated as a taxable Canadian corporation. Prospective investors should carefully review the following sections as well as the discussion under the headings “Material U.S. Federal Income Tax Considerations for Non-U.S. Holders of Our Subordinate Voting Shares” and “Risk Factors – United States Tax Classification of the Company”.

The following is, as of the date of this prospectus, a summary of the principal Canadian federal income tax considerations pursuant to the Income Tax Act (Canada) and the regulations thereunder (the “Tax Act”) that generally apply to the acquisition of Subordinate Voting Shares by a person who, at all material times, is neither resident nor deemed to be resident in Canada for purposes of the Tax Act, is a resident of the U.S. for purposes of the Canada – United States Tax Convention (1980), as amended, (the “Treaty”) and acquires a beneficial interest in Subordinate Voting Shares (a “U.S. Holder”).

This summary applies only to a U.S. Holder who, at all relevant times, for purposes of the Tax Act:

· holds Subordinate Voting Shares as capital property;

· does not, and is not deemed to, use or hold Subordinate Voting Shares in the course of carrying on a business in Canada;

· deals at arm’s length and is not affiliated with the selling shareholders; and

· is a “qualifying person” or otherwise entitled to benefits under the Treaty.

Generally, Subordinate Voting Shares will be considered to be capital property to a U.S. Holder unless they are held or acquired in the course of carrying on a business of trading or dealing in securities or as part of an adventure or concern in the nature of trade.

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This summary is not applicable to a U.S. Holder that is an insurer that carries on an insurance business in Canada and elsewhere or an “authorized foreign bank” (as defined in the Tax Act).

Any such U.S. Holder to which this summary does not apply should consult its own tax advisor with respect to the tax consequences of this offering.

This summary is based on the current provisions of the Tax Act, all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (“Tax Proposals”), and an understanding of the current administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) made publicly available prior to the date hereof. This summary assumes the Tax Proposals will be enacted in the form proposed, however, no assurance can be given that the Tax Proposals will be enacted in the form proposed, or at all. Except for the Tax Proposals, this summary does not take into account or anticipate any changes in law or administrative policies or assessing practices of the CRA, whether by legislative, governmental or judicial action, nor does it take into account other federal or any provincial, territorial or foreign income tax legislation or considerations, which may differ significantly from those discussed herein.

Generally, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Subordinate Voting Shares (including dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated U.S. dollars must be converted into Canadian dollars using the applicable rate of exchange (for the purposes of the Tax Act) quoted by the Bank of Canada on the date such amounts arose, or such other rate of exchange as is acceptable to the CRA.

This summary is not exhaustive of all possible Canadian federal income tax considerations that apply to an investment in Subordinate Voting Shares. Moreover, the income and other tax consequences of acquiring, holding or disposing of Subordinate Voting Shares will vary depending on an investor’s particular circumstances. Accordingly, this summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any investor. Consequently, investors should consult their own tax advisors for advice with respect to the income tax consequences of an investment in Subordinate Voting Shares based on their particular circumstances.

Adjusted Cost Base of Subordinate Voting Shares

The adjusted cost base to a U.S. Holder of a Subordinate Voting Share acquired pursuant to this prospectus will be determined by averaging the cost of the Subordinate Voting Share with the adjusted cost base (determined immediately before the acquisition of the Subordinate Voting Share) of all other Subordinate Voting Shares (if any) held as capital property by the U.S. Holder immediately prior to such acquisition.

Dividends on Subordinate Voting Shares

Dividends paid or credited on Subordinate Voting Shares (or deemed to be paid or credited on Subordinate Voting Shares) to a U.S. Holder that is the beneficial owners of the dividends will generally be subject to Canadian withholding tax at the rate of 15%. The Company will be required to withhold the applicable withholding tax from any dividend and remit it to the Canadian government for the U.S. Holder’s account. U.S. Holders who may be eligible for a reduced rate of withholding tax on dividends pursuant to any applicable income tax convention should consult with their own tax advisors with respect to taking all appropriate steps in this regard.

Dispositions of Subordinate Voting Shares

A U.S. Holder will not be subject to tax under the Tax Act on any capital gain realized on a disposition or deemed disposition of Subordinate Voting Shares (other than a disposition to the Company, unless purchased by the Company in the open market in the manner in which Subordinate Voting Shares are normally purchased by any member of the public in the open market, in which case other considerations may arise), unless the Subordinate Voting Shares are “taxable Canadian property” of the U.S. Holder for purposes of the Tax Act and the U.S. Holder is not entitled to relief under the Treaty.

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Generally, Subordinate Voting Shares will not constitute “taxable Canadian property” of a U.S. Holder at a particular time provided that the Subordinate Voting Shares are listed at that time on a “designated stock exchange” as defined in the Tax Act (which currently includes the CSE), unless at any particular time during the 60-month period that ends at that time both of the following are true:

(i) 25% or more of the issued shares of any class or series of the capital stock of the Company were owned by

(a) the U.S. Holder,

(b) persons with whom the U.S. Holder does not deal with at arm’s length (for purposes of the Tax Act),

(c) partnerships in which the U.S. Holder or a person described in (b) holds an interest directly or indirectly through one or more partnerships, or

(d) any combination of (a) to (c). and

(ii) more than 50% of the fair market value of the Subordinate Voting Shares was derived directly or indirectly from one or any combination of:

(a) real or immovable properties situated in Canada,

(b) “Canadian resource properties” (as defined in the Tax Act),

(d) options in respect of, or interests in, or for civil law rights in, property in any of the foregoing whether or not the property exists.

Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, Subordinate Voting Shares may be deemed to be taxable Canadian property. U.S. Holders whose Subordinate Voting Shares may constitute taxable Canadian property should consult their own tax advisors.

LEGAL MATTERS

The validity of the Subordinate Voting Shares being offered hereby has been passed upon by Cassels Brock & Blackwell LLP.

EXPERTS

The consolidated financial statements of the Company at June 27, 2020 and June 29, 2019, and for each of the 52 week periods then ended, have been included herein in reliance upon the report of MNP LLP, independent registered public accounting firm, appearing elsewhere herein, and upon authority of said firm as experts in accounting and auditing. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act of 1934 and, therefore, we file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Copies of such periodic reports, proxy statements and other information are available for inspection without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of these filings may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov.

These filings and other documents are available and may be accessed on our website at www.medmen.com/investors. You may request a copy of these filings at no cost, by writing 10115 Jefferson Boulevard, Culver City, California.

We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference in this prospectus.

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MEDMEN ENTERPRISES INC. Index to Consolidated Financial Statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six months ended December 26, 2020 and December 28, 2019

Unaudited Interim Condensed Consolidated Balance Sheets as of December 26, 2020 and June 27, 2020 F-2 Unaudited Interim Condensed Consolidated Statements of Operations for the three months ended December 26, 2020 and December 28, 2019 F-3 Unaudited Interim Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended December 26, 2020 and December 28, F-4 2019 Unaudited Interim Condensed Consolidated Statements of Cash Flows for the Three Months December 26, 2020 and December 28, 2019 F-5 Notes to Unaudited Interim Condensed Consolidated Financial Statements F-7

Consolidated Financial Statements as of June 27, 2020 and June 29, 2019 and for the Years Ended June 27, 2020 and June 29, 2019

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Report of Independent Registered Public Accounting Firm F-40 Consolidated Balance Sheet as of June 27, 2020 and June 29, 2019 F-41 Consolidated Statement of Operations for the Years Ended June 27, 2020 and June 29, 2019 F-42 Consolidated Statement of Changes in Shareholders’ Equity for the Years Ended June 27, 2020 and June 29, 2019 F-43 Consolidated Statement of Cash Flows for the Years Ended June 27, 2020 and June 29, 2019 F-45 Notes to Consolidated Financial Statements F-47

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MEDMEN ENTERPRISES INC. Unaudited Interim Condensed Consolidated Balance Sheets As of December 26, 2020 and June 27, 2020 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

December 26, June 27, 2020 2020 (unaudited) (audited) ASSETS

Current Assets: Cash and Cash Equivalents $ 7,549,841 $ 10,093,925 Restricted Cash 6,010 9,873 Accounts Receivable and Prepaid Expenses 5,927,363 5,626,761 Inventory 25,495,872 22,638,120 Current Assets Held for Sale 20,499,209 33,459,879 Other Current Assets 5,733,682 9,105,457 Due from Related Party 3,109,717 3,109,717

Total Current Assets 68,321,694 84,043,732

Operating Lease Right-of-Use Assets 98,236,694 116,354,828 Property and Equipment, Net 152,427,173 174,547,867 Intangible Assets, Net 133,580,466 148,081,030 Goodwill 33,861,150 33,861,150 Other Assets 17,137,917 17,374,997

TOTAL ASSETS $ 503,565,094 $ 574,263,604

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

LIABILITIES: Current Liabilities: Accounts Payable and Accrued Liabilities $ 80,635,429 $ 79,530,930 Income Taxes Payable 86,342,631 38,599,349 Other Current Liabilities 13,462,163 20,278,381 Current Portion of Operating Lease Liabilities 5,882,032 9,757,669 Current Portion of Finance Lease Liabilities 617,592 1,644,044 Current Portion of Notes Payable 16,761,052 16,188,668 Current Liabilities Held for Sale 12,367,699 18,659,038 Due to Related Party 4,374,727 4,556,814

Total Current Liabilities 220,443,325 189,214,893

Operating Lease Liabilities, Net of Current Portion 116,211,645 131,045,238 Finance Lease Liabilities, Net of Current Portion 27,630,404 58,569,498 Other Non-Current Liabilities 3,932,218 4,215,533 Deferred Tax Liabilities 44,910,274 48,928,492 Senior Secured Convertible Credit Facility 159,592,165 166,368,463 Notes Payable, Net of Current Portion 177,752,061 152,809,937

TOTAL LIABILITIES 750,472,092 751,152,054

MEZZANINE EQUITY: Super Voting Shares (no par value, unlimited shares authorized, nil and 815,295 shares issued and outstanding as of December 26, 2020 and June 27, 2020, respectively) - 82,500

SHAREHOLDERS’ EQUITY: Preferred Shares (no par value, unlimited shares authorized and no shares issued and outstanding) - - Subordinate Voting Shares (no par value, unlimited shares authorized, 512,315,834 and 403,907,218 shares issued and outstanding as of December 26, 2020 and June 27, 2020, respectively) - - Additional Paid-In Capital 840,119,302 791,172,613 Accumulated Deficit (674,420,245) (631,365,866)

Total Equity Attributable to Shareholders of MedMen Enterprises Inc. 165,699,057 159,889,247 Non-Controlling Interest (412,606,055 ) (336,777,697)

TOTAL MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (246,906,998) (176,888,450)

TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY $ 503,565,094 574,263,604

The accompanying notes are an integral part of these unaudited interim Condensed Consolidated Financial Statements.

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MEDMEN ENTERPRISES INC. Unaudited Interim Condensed Consolidated Statements of Operations Three and Six Months Ended December 26, 2020 and December 28, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited)

Revenue $ 33,775,662 $ 44,065,882 $ 69,401,630 $ 83,735,878 Cost of Goods Sold 15,832,057 31,238,909 34,633,967 51,516,729

Gross Profit 17,943,605 12,826,973 34,767,663 32,219,149

Expenses: General and Administrative 33,568,436 60,318,947 65,252,040 114,413,896 Sales and Marketing 217,254 3,609,997 410,639 9,392,777 Depreciation and Amortization 9,705,254 6,643,252 18,330,962 16,127,433 Realized and Unrealized Loss on Changes in Fair Value of Contingent Consideration 87,893 5,215,271 390,727 7,499,325 Impairment Expense - - 789,709 - Other Operating Expense (Income) 775,896 5,705,408 (15,921,965) 5,007,446

Total Expenses 44,354,733 81,492,875 69,252,112 152,440,877

Loss from Operations (26,411,128) (68,665,902) (34,484,449) (120,221,728)

Other Expense (Income): Interest Expense 10,237,737 8,095,033 21,380,601 16,258,650 Interest Income (539,855) (265,378) (541,065) (634,720) Amortization of Debt Discount and Loan Origination Fees 6,900,770 1,831,425 10,103,664 4,898,960 Change in Fair Value of Derivatives 177,879 (2,901,284) (127,500) (8,029,704) Realized and Unrealized Loss (Gain) on Investments and Assets Held for Sale 1,960,871 (5,034,158) (10,454,608) (16,514,480) Loss on Extinguishment of Debt 943,706 660,119 11,073,361 32,230,235

Total Other Expense 19,681,108 2,385,757 31,434,453 28,208,941

Loss from Continuing Operations Before Provision for Income Taxes (46,092,236) (71,051,659) (65,918,902) (148,430,669) Provision for Income Tax (Expense) Benefit (23,970,469) 14,649,487 (34,309,031) 32,310,218

Net Loss from Continuing Operations (70,062,705) (56,402,172) (100,227,933) (116,120,451) Net Loss from Discontinued Operations, Net of Taxes 1,201,766 (36,845,653 ) (1,480,409) (39,926,048)

Net Loss (68,860,939) (93,247,825 ) (101,708,342) (156,046,499)

Net Loss Attributable to Non-Controlling Interest (19,165,455) (51,997,293) (30,092,996) (90,573,223)

Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (49,695,484) $ (41,250,532 ) $ (71,615,346) $ (65,473,276)

Loss Per Share - Basic and Diluted: From Continuing Operations Attributable to Shareholders of MedMen Enterprises Inc. $ (0.11) $ (0.02) $ (0.17) $ (0.13)

From Discontinued Operations Attributable to Shareholders of MedMen Enterprises Inc. $ 0.00 $ (0.17) $ (0.00) $ (0.20)

Weighted-Average Shares Outstanding - Basic and Diluted 482,903,106 220,467,070 452,806,117 196,211,921

The accompanying notes are an integral part of these unaudited interim Condensed Consolidated Financial Statements.

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MEDMEN ENTERPRISES INC. Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity Six Months Ended December 26, 2020 and December 28, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

Mezzanine Equity TOTAL EQUITY $ Units Amount Units $ Amount ATTRIBUTABLE Super Super Subordinate Subordinate Additional TO Non- TOTAL Voting Voting Voting Voting Paid-In Accumulated SHAREHOLDERS Controlling SHAREHOLDERS’ Shares Shares Shares Shares Capital Deficit OF MEDMEN Interest EQUITY

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document BALANCE AS OF JUNE 29, 2019 1,630,590 $ 164,999 173,010,922 $ - $ 613,356,006 $ (370,382,824) $ 243,138,181 $ (31,867,406) $ 211,270,775

Net Loss - - - - - (65,473,276) (65,473,276) (90,573,223) (156,046,499)

Controlling Interest Equity Transactions: At-the-Market Equity Financing Program, Net - - 9,789,300 - 12,399,249 - 12,399,249 - 12,399,249 Shares Issued for Cash - - 38,355,076 - 40,200,000 - 40,200,000 - 40,200,000 Shares Issued to Settle Debt - - 1,231,280 - 2,441,912 - 2,441,912 - 2,441,912 Shares Issued to Settle Contingent Consideration - - 10,691,455 - 10,811,219 - 10,811,219 - 10,811,219 Asset Acquisitions - - 7,373,034 - 4,904,381 - 4,904,381 - 4,904,381 Equity Component of Debt - New and Amended - - - - 2,517,014 - 2,517,014 - 2,517,014 Redemption of MedMen Corp Redeemable Shares - - 6,225,620 - 23,362,740 (24,037,868) (675,128) 675,128 - Shares Issued for Vested Restricted Stock Units - - 67,038 ------Shares Issued for Other Assets - - 3,107,315 - 2,397,659 - 2,397,659 - 2,397,659 Shares Issued for Acquisition Costs - - 214,716 - 421,497 - 421,497 - 421,497 Shares Issued for Business Acquisition - - 5,112,263 - 9,833,000 - 9,833,000 - 9,833,000 Stock Grants for Compensation - - 1,889,646 - 2,698,902 - 2,698,902 35,217 2,734,119 Share-Based Compensation - - - - 5,465,147 - 5,465,147 - 5,465,147 Deferred Tax Impact On Conversion Feature - - - - - (260) (260) - (260)

Non-Controlling Interest Equity Transactions: Distributions ------(310,633) (310,633) Equity Component of Debt - New and Amended ------(1,444,676) (1,444,676) Share-Based Compensation ------1,313,059 1,313,059

BALANCE AS OF DECEMBER 28, 2019 1,630,590 $ 164,999 257,067,665 $ - $ 730,808,726 $ (459,894,228) $ 271,079,497 $ (122,172,534) $ 148,906,963

BALANCE AS OF JUNE 28, 2020 815,295 $ 82,500 403,907,218 $ - $ 791,172,613 $ (631,365,866) $ 159,889,247 $ (336,777,697) $ (176,888,450)

Net Loss - - - - - (71,615,346) (71,615,346) (30,092,996) (101,708,342)

Controlling Interest Equity Transactions Shares Issued to Settle Accounts Payable and Liabilities - - 7,205,754 - 1,159,071 - 1,159,071 - 1,159,071 Equity Component of Debt - New and Amended - - - - 33,589,921 - 33,589,921 - 33,589,921 Redemption of MedMen Corp Redeemable Shares - - 88,945,434 - 13,655,293 34,925,150 48,580,443 (48,580,443) - Shares Issued for Vested Restricted Stock Units - - 7,173,256 - 437,386 - 437,386 - 437,386 Shares Issued for Acquisition Costs - - 2,082,890 - 318,095 - 318,095 - 318,095 Stock Grants for Compensation - - 3,001,282 - 817,252 - 817,252 - 817,252 Deemed Dividend - Down Round Feature of Warrants - - - - 6,364,183 (6,364,183) - - - Deferred Tax Impact On Conversion Feature - - - - (10,023,232) - (10,023,232 ) (1,210,052) (11,233,284) Share-Based Compensation - - - - 2,546,220 - 2,546,220 - 2,546,220 Cancellation of Super Voting Shares (815,295) (82,500) - - 82,500 - - - -

Non-Controlling Interest Equity Transactions: Equity Component on Debt and Debt Modification ------4,055,133 4,055,133

BALANCE AS OF DECEMBER 26, 2020 - $ - 512,315,834 $ - $ 840,119,302 $ (674,420,245) $ 165,699,057 $ (412,606,055) $ (246,906,998)

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MEDMEN ENTERPRISES INC. Unaudited Interim Condensed Consolidated Statements of Cash Flows Six Months Ended December 26, 2020 and December 28, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

Six Months Ended December 26, December 28, 2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss from Continuing Operations $ (100,227,933) $ (116,120,451) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Deferred Tax (Recovery) Expense (13,457,855) (44,914,110) Depreciation and Amortization 18,889,212 17,476,078 Non-Cash Operating Lease Costs 15,692,972 14,964,892 Accretion of Debt Discount and Loan Origination Fees 10,103,664 4,898,960 Loss on Disposal of Asset 669,601 - Gain on Lease Modifications (17,908,817) - Accretion of Deferred Gain on Sale of Property (283,315) (283,313) Impairment of Assets 789,709 - Realized and Unrealized Gain on Investments, Assets Held for Sale and Other Assets (10,454,608) (16,514,480) Unrealized Gain on Changes in Fair Value of Contingent Consideration 390,727 7,499,325 Change in Fair Value of Derivative Liabilities (127,500) (8,029,704) Loss on Extinguishment of Debt and Settlement of Accounts Payables and Accrued Liabilities 10,429,797 32,182,825 Share-Based Compensation 3,800,858 9,512,324 Shares Issued for Acquisition Costs 318,095 421,497

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Changes in Operating Assets and Liabilities: Accounts Receivable and Income Taxes Receivable (300,602) (1,100,239) Prepaid Rent - Related Party - 2,712,237 Prepaid Expenses (172) 7,245,054 Inventory (2,857,752) (9,441,420) Other Current Assets 5,498,567 1,330,104 Due from Related Party - 994,170 Other Assets 237,080 (9,317,551) Accounts Payable and Accrued Liabilities 4,997,688 39,897,922 Income Taxes Payable 47,743,296 11,506,388 Other Current Liabilities 16,953,294 7,482,398 Interest Payments on Finance Leases (1,984,118) (2,982,699) Cash Payments - Operating Lease Liabilities (16,077,196) (17,329,775) Due to Related Party (182,087) (717,848) Other Non-Current Liabilities - (11,984)

NET CASH USED IN CONTINUED OPERATING ACTIVITIES (27,347,395) (68,639,400)

Net Cash Used in Discontinued Operating Activities (2,347,948) (1,041,277)

NET CASH USED IN OPERATING ACTIVITIES (29,695,343) (69,680,677)

CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of Property and Equipment (1,490,447) (48,295,906) Additions to Intangible Assets (1,891,526) (2,359,664) Sale of Investments - 12,500,000 Proceeds from Sale of Assets Held for Sale and Other Assets 18,752,185 4,952,822 Proceeds from Sale of Property - 9,300,000 Acquisition of Businesses, Net of Cash Acquired - (1,000,001) Restricted Cash 3,863 (60,256)

NET CASH PROVIDED BY (USED IN) CONTINUED INVESTING ACTIVITIES 15,374,075 (24,963,005)

Net Cash Used in Discontinued Investing Activities - (1,491,328)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 15,374,075 (26,454,333)

CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Subordinate Voting Shares for Cash - 52,599,249 Cash Received in Advance for Issuance of Equity - 2,000,000 Proceeds from Issuance of Senior Secured Convertible Credit Facility 5,468,565 35,000,000 Proceeds from Issuance of Notes Payable 14,830,279 13,850,000 Principal Repayments of Senior Secured Convertible Credit Facility (8,000,000) - Principal Repayments of Notes Payable (481,780) (12,745,839) Principal Repayments of Finance Lease Liability (39,880) (297,588) Debt and Equity Issuance Costs - (1,186,187) Distributions - Non-Controlling Interest - (310,633)

NET CASH PROVIDED BY FINANCING ACTIVITIES 11,777,184 88,909,002

NET DECREASE IN CASH AND CASH EQUIVALENTS (2,544,084) (7,226,008) Cash and Cash Equivalents, Beginning of Period 10,093,925 33,226,370

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,549,841 $ 26,000,362

The accompanying notes are an integral part of these unaudited interim Condensed Consolidated Financial Statements.

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Six Months Ended December 26, December 28, 2020 2019

SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION Cash Paid for Interest $ 4,542,208 $ 4,204,613

Non-Cash Investing and Financing Activities: Net Assets Transferred to Held for Sale $ 6,614,987 $ 11,823,655 Receivable Recorded on Asset Held for Sale $ 2,876,792 $ - Adoption of ASC 842 - Leases $ - $ 162,551,190 Lease Termination and Amendments $ 36,767,595 $ - Recognition of Right-of-Use Assets for Finance Leases $ 350,249 $ 45,614,041 Paid-in-Kind Interest Capitalized to Debt $ 24,032,739 $ - Settlement of Contingent Consideration with Shares $ - $ 10,811,219 Increase in Fair Value of Contingent Consideration Related to Asset Acquisition $ - $ 9,374,487 Issuance of Subordinate Voting Shares for Intangible Assets and Other Assets $ - $ 7,302,040 Redemption of MedMen Corp Redeemable Shares $ 48,580,443 $ 675,128

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Release of Investments for Liabilities $ 750,000 $ - Shares Issued to Settle Accounts Payable and Liabilities $ 1,159,071 $ 2,028,342 Equity Component of Debt - New and Amended $ 5,310,375 $ - Net Effect of Equity on Debt $ - $ 2,517,014 Deferred Tax Impact on Conversion Feature $ 11,233,284 $ 260

The accompanying notes are an integral part of these unaudited interim Condensed Consolidated Financial Statements.

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MEDMEN ENTERPRISES INC. Notes to Unaudited Interim Condensed Consolidated Financial Statements Three and Six Months Ended December 26, 2020 and December 28, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

1. NATURE OF OPERATIONS

MedMen Enterprises Inc. (“MedMen Enterprises” or the “Company”), formerly known as Ladera Ventures Corp., was incorporated under the Business Corporations Act (British Columbia) on May 21, 1987. The Company’s Class B Subordinate Voting Shares are listed on the Canadian Securities Exchange under the symbol “MMEN”, on the OTCQX under the symbol “MMNFF”, on the Frankfurt Stock Exchange under the symbol “OJS.F”, on the Stuttgart Stock Exchange under the symbol “OJS.SG”, on the Munich Stock Exchange under the symbol “OJS.MU”, on the Berlin Stock Exchange under the symbol “OJS.BE” and on the Dusseldorf Stock Exchange under the symbol “OJS.DU”. The head office and principal address of the Company is 10115 Jefferson Boulevard, Culver City, California 90232. The Company’s registered and records office address is 885 West Georgia Street, Suite 2200, Vancouver, British Columbia Canada V6C 3E8. The Company operates through its principal wholly-owned subsidiaries, MM CAN USA, Inc., a California corporation (“MM CAN” or “MedMen Corp”), and MM Enterprises USA, LLC, a Delaware limited liability company (“MM Enterprises USA”).

MM CAN was converted into a California corporation (from a Delaware corporation) on May 16, 2018 and is based in Culver City, California. The head office and principal address of MM CAN is 10115 Jefferson Boulevard, Culver City, California 90232.

MM Enterprises USA was formed on January 9, 2018 and is based in Culver City, California. The head office and principal address of MM Enterprises USA is 10115 Jefferson Boulevard, Culver City, California 90232. MM Enterprises USA was formed as a joint venture whose contributors were MMMG, LLC (“MMMG”); MedMen Opportunity Fund, LP (“Fund I”); MedMen Opportunity Fund II, LP (“Fund II”), The MedMen of Nevada 2, LLC (“MMNV2”); DHSM Investors, LLC (“DHS Owner”); and Bloomfield Partners Utica, LLC (“Utica Owner”) (collectively, the “MedMen Group of Companies”).

On January 24, 2018, pursuant to a Formation and Contribution Agreement (the “Agreement”), a roll-up transaction was consummated whereby the assets and liabilities of the MedMen Group of Companies were transferred into MM Enterprises USA. In return, the MedMen Group of Companies received 217,184,382 MM Enterprises USA Class B Units. The Agreement was entered into by and among MM Enterprises Manager, LLC, the sole manager of MM Enterprises USA; MMMG; Fund I; Fund II; MMNV2; DHS Owner; and Utica Owner.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited interim Condensed Consolidated Financial Statements include the accounts of MedMen Enterprises, its subsidiaries and variable interest entities (“VIEs”) where the Company is considered the primary beneficiary, if any, after elimination of intercompany accounts and transactions. Investments in entities in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of December 26, 2020 and June 27, 2020, the consolidated results of operations for the three and six months ended December 26, 2020 and December 28, 2019, and the consolidated statements of cash flows for the six months ended December 26, 2020 and December 28, 2019 have been included.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Going Concern

As reflected in the Condensed Consolidated Financial Statements, the Company had an accumulated deficit and a negative net working capital (current liabilities greater than current assets) as of December 26, 2020, as well as a net loss and negative cash flow from operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of these unaudited interim Condensed Consolidated Financial Statements.

Management believes that substantial doubt of our ability to meet our obligations for the next twelve months from the date these financial statements were first made available has been alleviated due to, but not limited to, (i) capital raised between February 2021 and February 2022, (ii) restructuring plans that have already been put in place to reduce corporate-level expenses, (iii) debt amendments that have been agreed to with lenders and landlords to defer cash interest and rent payments, (iv) reduction in capital expenditures through a slow-down in new store buildouts, (v) plans to divest non-core assets to raise non-dilutive capital, (vi) enhancements to its digital offering,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document including direct-to-consumer delivery and curbside pick-up in light of COVID-19 and (vii) a change in retail strategy to pass certain local taxes and payment processing fees to customers.

However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Management also cannot provide any assurance as to unforeseen circumstances that could occur at any time within the next twelve months or thereafter which could increase our need to raise additional capital on an immediate basis.

The Company will continually monitor its capital requirements based on its capital and operational needs and the economic environment and may raise new capital as necessary. The Company’s ability to continue as a going concern will depend on its ability to raise additional equity or debt in the private or public markets, reducing operating expenses, divesting of certain non-core assets, achieving cash flow profitability. While the Company has been successful in raising equity and debt to date, there can be no assurances that the Company will be successful in completing a financing in the future. If the Company is unable to raise additional capital whenever necessary, it may be forced to divest additional assets to raise capital and/or pay down its debt, amend its debt agreements which could potentially have a dilutive effect on the Company’s shareholders, further reduce operating expenses and temporarily pause the opening of new store locations. Furthermore, COVID-19 and the impact the global pandemic has had and will continue to have on the broader retail environment could also have a significant impact on the Company’s financial operations.

COVID-19

The COVID-19 pandemic promoted unparalleled procedures from governments and businesses such as restrictions on travel and business operations, temporary closures of businesses, and quarantine and shelter-in-place orders. During the current reporting period, aspects of the Company’s business continue to be affected by the COVID-19 pandemic, with the Company’s offices and retail stores operating within local rules and regulations. While the ultimate severity of the outbreak and its impact on the economic environment is uncertain, the Company is monitoring this closely. In the event that the Company were to experience widespread transmission of the virus at one or more of the Company’s store or other facilities, the Company could suffer reputational harm or other potential liability. Further, the Company’s business operations may be materially and adversely affected if a significant number of the Company’s employees are impacted by the virus.

Emerging Growth Company

The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”) under which emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.

Functional Currency

The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These unaudited interim Condensed Consolidated Financial Statements are presented in U.S. dollars as this is the primary economic environment of the group. All references to “C$” refer to Canadian dollars.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Significant Accounting Policies

The significant accounting policies and critical estimates applied by the Company in these unaudited interim Condensed Consolidated Financial Statements are the same as those applied in the Company’s audited Consolidated Financial Statements and accompanying notes included in this prospectus, unless otherwise disclosed in these accompanying notes to the Condensed Consolidated Financial Statements for the six months ended December 26, 2020.

Restricted Cash

Restricted cash balances are those which meet the definition of cash and cash equivalents but are not available for use by the Company. As of December 26, 2020 and June 27, 2020, restricted cash was $6,010 and $9,873, respectively, which is used to pay for lease costs and costs incurred related to building construction in Reno, Nevada. This account is managed by a contractor and the Company is required to maintain a certain minimum balance.

Down-Round Provisions

The Company calculates down-round features under Accounting Standards Update (“ASU”) No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features” (“ASU 2017-11”), in which down round features do not meet the criteria for derivative accounting and no liability is to be recorded until an actual issuance of securities triggers the down-round feature.

Loss per Share

The Company calculates basic loss per share by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is determined by adjusting profit or loss attributable to common shareholders and the weighted-average number of common shares outstanding, for the effects of all dilutive potential common shares, which comprise convertible debentures, DSU, RSU, warrants and stock options issued.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Adopted Accounting Standards

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which replaces the incurred loss model with a current expected credit loss (“CECL”) model and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. Under the new standard, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the trade receivable. The Company is not required to track the changes in credit risk. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings in the period of adoption. The Company adopted ASU 2016-13 on June 28, 2020. The adoption of the standard did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04 “Intangibles— Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which provides a simplified assessment method whether goodwill is impaired by removing the requirement to determine the fair value of individual assets and liabilities in order to calculate a reporting unit’s implied goodwill. Per ASU 2017-04, the Company performed its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company should recognize a goodwill impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value. If fair value exceeds the carrying amount, no impairment should be recorded. Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Impairment losses on goodwill cannot be reversed once recognized. ASU 2017-04 must be applied prospectively and is effective in fiscal years beginning after December 15, 2019. The Company adopted the new standard on June 28, 2020. The adoption of the standard did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Standards

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

In January 2020, the FASB issued ASU 2020-01, “Investments – Equity Securities (Topic 321)”, “Investments – Equity Method and Joint Ventures (Topic 323)”, and “Derivatives and Hedging (Topic 815)”, which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The standard is effective for the Company beginning January 1, 2021. The Company is currently evaluating the effect of adopting this ASU on the Company’s financial statements.

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20)” and “Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible instruments and contracts in an Entity’s Own Equity”, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Adoption is applied on a modified or full retrospective transition approach. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

3. INVENTORIES

As of December 26, 2020 and June 27, 2020, inventory consists of the following:

December 26, June 27, 2020 2020

Raw Materials $ 3,326,636 $ 2,055,500 Work-in-Process 9,173,021 8,807,137 Finished Goods 12,996,215 11,775,483

Total Inventory $ 25,495,872 $ 22,638,120

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4. OTHER CURRENT ASSETS

As of December 26, 2020 and June 27, 2020, other current assets consist of the following:

December 26, June 27, 2020 2020

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investments $ 3,036,791 $ 3,786,791 Excise Tax Receivable - 5,254,595 Note Receivable (1) 2,549,302 - Other Current Assets 147,589 64,071

Total Other Current Assets $ 5,733,682 $ 9,105,457 ______(1) See “Note 5 – Assets Held for Sale” for further information.

As of December 26, 2020 and June 27, 2020, investments included in other current assets consist of the following:

The Hacienda ToroVerde Company, Other Inc. (1) LLC (2) Old Pal (3) Investments TOTAL

Fair Value as of June 27, 2020 $ - $ 750,000 $ 1,970,000 $ 1,066,791 $ 3,786,791

Settlement of Liabilities - (750,000) - - (750,000)

Fair Value as of December 26, 2020 $ - $ - $ 1,970,000 $ 1,066,791 $ 3,036,791 ______(1) In July 2018, the Company purchased 9,000,000 common shares of ToroVerde Inc., an investment company focused on emerging international cannabis markets, for an aggregate purchase price of $5,000,000, or $0.56 per common share, amounting to 14.3% of the outstanding common shares. As the Company was not deemed to exert any significant influence, the investment was recorded at FVTPL as of December 26, 2020 and June 27, 2020. As of December 26, 2020 and June 27, 2020, the Company holds 14.3% of the equity ownership and voting interests in this investment. (2) In July 2018, the Company purchased units of The Hacienda Company, LLC, a California limited liability company, which owns Lowell Herb Co., a California-based cannabis brand known for its pack of pre-rolls called Lowell Smokes, for an aggregate purchase price of $1,500,000, amounting to 3.2% of the outstanding units. Pursuant to SEC guidance under ASC 323, “Investments - Equity Method and Joint Ventures” the application of equity method to investments applies to limited liability companies and are required unless the investor holds less than 3-5%. Accordingly, the Company was deemed to have significant influence resulting in equity method accounting. The Company has elected the fair value option under ASC 825, “Financial Instruments” and the investment was recorded at FVTPL. As of December 26, 2020 and June 27, 2020, the Company holds 0% and 3.2%, respectively, of the equity ownership and voting interests in this investment. (3) In October 2018 and March 2019, the Company purchased an aggregate of 125.3 units of Old Pal, a California-based brand that provides high-quality cannabis flower for its customers, for an aggregate purchase price of $2,000,000, amounting to approximately 10.0% of the outstanding units with 8.7% voting interests. Pursuant to SEC guidance under ASC 323, the application of equity method to investments applies to limited liability companies and are required unless the investor holds less than 3-5%. Accordingly, the Company was deemed to have significant influence resulting in equity method accounting. During the year ended June 27, 2020, the Company decreased their level of ownership in which Old Pal no longer qualified under equity method accounting. The Company has elected the fair value option under ASC 825 and the investment was recorded at FVTPL as of June 27, 2020 and continues to measure Old Pal at the previously elected FVTPL under ASC 323 as of December 26, 2020. As of December 26, 2020, the Company holds 2.6% of the equity ownership and 1.4% of the voting interests in this investment.

As of December 26, 2020, the Company’s investment balance in ToroVerde Inc. and The Hacienda Company, LLC was nil and nil, respectively. In August 2020, the Company entered into an agreement to exchange all of its investment in The Hacienda Company, LLC to settle outstanding balances totaling approximately $750,000. The Company determined that the fair value of its investment in Old Pal LLC was $1,970,000 as of December 26, 2020.

The fair value of investments included in other current assets is considered a Level 3 categorization in the fair value hierarchy. Investments are measured at fair value using a market approach that is based on unobservable inputs.

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5. ASSETS HELD FOR SALE

A reconciliation of the beginning and ending balances of assets held for sale for the six months ended December 26, 2020 is as follows:

Available PharmaCann for Sale Discontinued Assets (1) Subsidiaries (2) Operations (3) TOTAL

Balance at Beginning of Period $ 212,400 $ 12,066,428 $ 21,181,051 $ 33,459,879

Transferred In - 6,614,987 - 6,614,987 Gain on the Sale of Assets Held for Sale - 10,454,608 - 10,454,608 Proceeds from Sale - (20,907,879) - (20,907,879) Ongoing Activity from Discontinued Operations - (1,621,372) (7,501,013) (9,122,385)

Balance at End of Period $ 212,400 $ 6,606,772 $ 13,680,038 $ 20,499,209 ______(1) During the year ended June 27, 2020, PharmaCann LLC, (“PharmaCann”) transferred 100% of the membership interests for MME Evanston Retail, LLC (“Evanston”), PharmaCann Virginia, LLC (“Staunton”), and PC 16280 East Twombly LLC (“Hillcrest”). As of December 27, 2020, the Company has 100% of membership interests in Staunton which holds land and a license for a vertically-integrated facility in Staunton, Virginia. The Staunton land and license were classified as assets held for sale in accordance with ASC 360, “Long-Lived Assets Classified as Held for Sale” and are measured at the lower of its carrying amount or fair value less costs to sell (“FVLCTS”) which was determined as $212,400 and $0, respectively, as of December 26, 2020. (2) Long-lived assets classified as held for sale that do not qualify as discontinued operation and classified as held for sale. Significant classes of assets and liabilities are presented in the notes to the Condensed Consolidated Financial Statements in accordance with ASC 360-10. (3) See “Note 24 - Discontinued Operations” for further information.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the six months ended December 26, 2020, the Company agreed to transfer all outstanding membership interests in MME Evanston Retail, LLC (“Evanston”), for a dispensary operation located in Evanston, Illinois, to an unaffiliated third party (“Purchaser”). The Company received an aggregate consideration of $20,000,000, of which, $10,000,000 cash was received at closing on July 1, 2020 (“Closing Date”), an additional $8,000,000 cash was received on November 17, 2020 and an additional $2,000,000 in the form of a secured promissory note will be payable three months following the Closing Date in exchange for all of the Company’s membership interests in Evanston. On August 10, 2020 (“Effective Date”), all operational control and risk of loss was transferred to the Purchaser and the Company had no further obligation to fund operations of Evanston through a Consulting Agreement. Management performed an assessment and determined that the Company no longer has a controlling financial interest as of the Effective Date. The transfer of the cannabis license is pending regulatory approval as of the issuance of these Condensed Consolidated Financial Statements and the Company will take all commercially reasonable steps to maintain all permits for Evanston to operate its business. The Company recognized a gain upon sale of membership interests equal to the difference between the aggregate consideration and the book value of the assets as of the disposition date, less direct costs to sell, which is recognized on the Condensed Consolidated Statements of Operations during the six months ended December 26, 2020.

During the six months ended December 26, 2020, the Company decided to divest two cannabis licenses and entered into separate agreements to sell 100% of its membership interests in these two locations, located in California. On June 26, 2020, the Company entered into a non-binding term sheet for the retail location located in Seaside, California for an aggregate sales price of $1,500,000 wherein $750,000 is to be paid upon the date of close in addition to $750,000 paid in equal monthly installments over twelve months through a promissory note. The transaction closed in October 2020 and the Company transferred all outstanding membership interests in PHSL, LLC. Upon deconsolidation, the Company will not have any continuing involvement with the former subsidiary. The Company recognized a loss upon sale of membership interests of $332,747 for the difference between the aggregate consideration and the book value of the assets as of the disposition date, less direct costs to sell, which is recognized on the Condensed Consolidated Statements of Operations during the six months ended December 26, 2020.

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5. ASSETS HELD FOR SALE (Continued)

Subsidiaries classified as assets held for sale that do not qualify as discontinued operations as of December 26, 2020 and June 27, 2020 consists of the following:

December 26, June 27, 2020 2020

Carrying Amounts of the Assets Included in Assets Held for Sale:

Cash and Cash Equivalents $ - $ 743,271 Prepaid Expenses 103 7,798 Inventory - 520,464 Other Current Assets - 81,427

TOTAL CURRENT ASSETS (1)

Property and Equipment, Net 166,657 717,952 Operating Lease Right-of-Use Assets 965,558 190,986 Intangible Assets, Net 5,474,454 5,227,288 Goodwill - 4,577,242

TOTAL NON-CURRENT ASSETS (1)

TOTAL ASSETS OF SUBSIDIARIES CLASSIFIED AS HELD FOR SALE $ 6,606,772 $ 12,066,428

Carrying Amounts of the Liabilities Included in Assets Held for Sale:

Accounts Payable and Accrued Liabilities $ 10,698 $ 963,255 Income Taxes Payable - 159,053 Other Current Liabilities - 27,854 Current Portion of Operating Lease Liabilities 272,119 -

TOTAL CURRENT LIABILITIES (1)

Operating Lease Liabilities, Net of Current Portion 965,592 296,694 Deferred Tax Liabilities 1,793,659 2,151,879

TOTAL NON-CURRENT LIABILITIES (1)

TOTAL LIABILITIES OF SUBSIDIARIES CLASSIFIED AS HELD FOR SALE $ 3,042,068 $ 3,598,735 ______(1) The assets and liabilities of subsidiaries classified as held for sale are classified as current on the Condensed Consolidated Balance Sheets as of December 26, 2020 and June 27, 2020 because it is probable that the sale will occur and proceeds will be collected within one year.

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MEDMEN ENTERPRISES INC.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Notes to Unaudited Interim Condensed Consolidated Financial Statements Three and Six Months Ended December 26, 2020 and December 28, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

6. PROPERTY AND EQUIPMENT

As of December 26, 2020 and June 27, 2020, property and equipment consists of the following:

December 26, June 27, 2020 2020

Land and Buildings $ 37,421,326 $ 37,400,378 Finance Lease Right-of-Use Assets 12,650,946 26,194,566 Furniture and Fixtures 14,042,105 13,970,449 Leasehold Improvements 67,534,535 63,976,372 Equipment and Software 29,700,665 29,277,120 Construction in Progress 36,404,721 38,470,016

Total Property and Equipment 197,754,298 209,288,901

Less Accumulated Depreciation (45,327,125) (34,741,034)

Property and Equipment, Net $ 152,427,173 $ 174,547,867

Depreciation expense related to continuing operations of $3,960,243 and $9,512,628 was recorded for the three and six months ended December 26, 2020, respectively, of which $278,719 and $558,250, respectively, is included in cost of goods sold. Depreciation expense related to continuing operations of $3,344,124 and $10,410,880 was recorded for the three and six months ended December 28, 2019, respectively, of which $406,103 and $1,348,645, respectively, is included in cost of goods sold. The amount of depreciation recognized for the right of use assets for capital leases during the three and six months ended December 26, 2020 was $83,427 and $397,569, respectively, see “Note 11 – Leases” for further information.

During the three and six months ended December 28, 2019, borrowing costs totaling $1,432,632 and $2,308,728, respectively, were capitalized using an average capitalization rate of 15% and 15%, respectively. Borrowing costs were not capitalized as there were no active construction projects in progress during the three and six months ended December 26, 2020.

In addition, during the three and six months ended December 26, 2020, total labor related costs of $71,000 and $507,164, respectively, were capitalized to Construction in Progress, of which $12,000 and $148,386, respectively, was share-based compensation. During the three and six months ended December 28, 2019, total labor related costs of $339,905 and $776,069, respectively, were capitalized to Construction in Progress, of which $36,269 and $172,655, respectively, was share-based compensation.

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7. INTANGIBLE ASSETS

As of December 26, 2020 and June 27, 2020, intangible assets consist of the following:

December 26, June 27, 2020 2020

Dispensary Licenses $ 133,053,216 $ 139,736,881 Customer Relationships 18,586,200 18,586,200 Management Agreement 7,594,937 7,594,937 Capitalized Software 9,343,352 9,255,026 Intellectual Property 7,850,517 8,520,121

Total Intangible Assets 176,428,222 183,693,165

Dispensary Licenses (23,064,894) (19,162,587) Customer Relationships (13,407,729) (8,113,913) Management Agreement (665,276) (565,972) Capitalized Software (3,462,896) (2,273,432) Intellectual Property (2,246,961) (5,496,231)

Less Accumulated Amortization (42,847,756) (35,612,135)

Intangible Assets, Net $ 133,580,466 $ 148,081,030

The Company recorded amortization expense related to continuing operations of $6,023,730 and $9,376,584 for the three and six months ended December 26, 2020, respectively. The Company recorded amortization expense related to continuing operations of $3,705,231 and $7,065,198 for the three and six months ended December 28, 2019, respectively. During the three and six months ended December 26, 2020, $13,300 and $38,119, respectively, of share-based compensation was capitalized to capitalized software. During the three and six months ended December 28, 2019, $70,988 and $272,242, respectively, of share-based compensation was capitalized to capitalized software.

8. OTHER ASSETS

As of December 26, 2020 and June 27, 2020, other assets consist of the following:

December 26, June 27,

Long-Term Security Deposits for Leases $ 9,271,565 $ 9,752,611 Loans and Other Long-Term Deposits 7,769,757 7,568,738 Other Assets 96,595 53,648

Total Other Assets $ 17,137,917 $ 17,374,997

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9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

As of December 26, 2020 and June 27, 2020, accounts payable and accrued liabilities consist of the following:

December 26, June 27, 2020 2020

Accounts Payable $ 57,692,382 $ 58,614,619 Accrued Liabilities 13,234,560 10,532,715 Other Accrued Liabilities 9,708,487 10,383,596

Total Accounts Payable and Accrued Liabilities $ 80,635,429 $ 79,530,930

10. OTHER CURRENT LIABILITIES

As of December 26, 2020 and June 27, 2020, other current liabilities consist of the following:

December 26, June 27, 2020 2020

Accrued Interest Payable $ 1,857,304 $ 9,051,650 Contingent Consideration 87,893 8,951,801 Derivatives 418,576 546,076 Other Current Liabilities 11,098,390 1,728,854

Total Other Current Liabilities $ 13,462,163 $ 20,278,381

Contingent Consideration

Contingent consideration recorded relates to a business acquisition during the year ended June 27, 2020. The contingent consideration related to the acquisition of One Love Beach Club is based upon fair value of the additional shares required to be paid upon the expiration of the lock-up and is based upon the fair market value of the Company’s trading stock and is considered a Level 1 categorization in the fair value hierarchy. Contingent consideration classified as a liability and measured at fair value in accordance with ASC 480, “Distinguishing Liabilities from Equity”. The contingent consideration is remeasured at fair value at each reporting period with changes recorded in profit and loss in the Condensed Consolidated Statements of Operations. During the six months ended December 26, 2020, the lock-up period expired and the contingent consideration was reclassified as other current liabilities on the Condensed Consolidated Balance Sheets as of December 26, 2020.

Derivative Liabilities

A reconciliation of the beginning and ending balance of derivative liabilities and change in fair value of derivative liabilities for the six months ended December 26, 2020 is as follows:

December 26, 2020

Balance at Beginning of Period $ 546,076

Change in Fair Value of Derivative Liabilities (127,500)

Balance at End of Period $ 418,576

Fair value was measured based on Level 1 inputs on the fair value hierarchy since there are quoted prices in active markets for these warrants. The Company used the closing price of the publicly-traded warrants to estimate fair value of the derivative liability as of December 26, 2020.

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11. LEASES

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In accordance with ASU 2016-02, the Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right‐of‐use (“ROU”) assets and accrued obligations under operating lease (current and non-current) liabilities in the Condensed Consolidated Balance Sheets. Finance lease ROU assets are included in property and equipment, net and accrued obligations under finance lease (current and noncurrent) liabilities in the Condensed Consolidated Balance Sheets.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The Company has lease extension terms at its properties that have either been extended or are likely to be extended. The terms used to calculate the ROU assets for these properties include the renewal options that the Company is reasonably certain to exercise.

The below are the details of the lease cost and other disclosures regarding the Company’s leases for the three and six months ended December 26, 2020 and December 28, 2019:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Finance Lease Cost: Amortization of Finance Lease Right-of-Use Assets $ 83,426 $ 546,157 $ 397,569 $ 2,616,924 Interest on Lease Liabilities 460,297 1,549,769 1,984,118 2,982,699 Operating Lease Cost 8,034,052 7,978,593 15,692,972 14,964,892

Total Lease Expenses $ 8,577,775 $ 10,074,519 $ 18,074,659 $ 20,564,515

2020 2019 2020 2019

Gain on Sale and Leaseback Transactions, Net $ - $ - $ - $ (704,207) Cash Paid for Amounts Included in the Measurement of Lease Liabilities: Financing Cash Flows from Finance Leases $ - $ 297,588 $ 39,880 $ 297,588 Operating Cash Flows from Operating Leases $ 6,918,798 $ 10,157,732 $ 16,077,196 $ 17,329,775 Non-Cash Additions to Right-of-Use Assets and Lease Liabilities: Recognition of Right-of-Use Assets for Finance Leases $ - $ 2,937,513 $ 350,249 $ 45,614,041 Recognition of Right-of-Use Assets for Operating Leases $ - $ 20,993,959 $ - $ 162,551,190

The weighted-average remaining lease term and discount rate related to the Company’s finance lease liabilities as of December 26, 2020 were 42 years and 15.93%, respectively. The weighted-average remaining lease term and discount rate related to the Company’s operating lease liabilities as of December 26, 2020 were 8 years and 13.38%, respectively. The Company’s lease discount rates are generally based on estimates of its incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

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11. LEASES (Continued)

Future lease payments under non-cancelable operating leases and finance leases as of December 26, 2020 are as follows:

Operating Fiscal Year Ending Leases Finance Leases

June 26, 2021 $ 14,166,912 $ 2,388,782 June 25, 2022 28,762,223 5,344,591 June 24, 2023 28,896,785 5,504,327 June 29, 2024 33,130,642 9,880,306 June 28, 2025 40,475,748 6,542,077 December 27, 2026 and Thereafter 109,374,556 1,076,344,422

Total Lease Payments 254,806,866 1,106,004,505 Less Interest (132,713,189) (1,077,756,509) Present Value of Lease Liability $ 122,093,677 $ 28,247,996

Finance leases noted above contain required security deposits, refer to “Note 8 – Other Assets”.

Lease Deferral Arrangements

During the six months ended December 26, 2020, the Company modified its existing lease arrangements with the Treehouse Real Estate Investment Trust (the “REIT”) in which the REIT agreed to defer a portion of total current monthly base rent on certain cultivation facilities and ground leases for the 36-month period between July 1, 2020 and July 1, 2023 for a total of fourteen properties. Amendments for eight of the properties were accounted for as lease modifications in accordance with ASC 842 “Leases”, whereas six leases related to failed leaseback transactions in which the related finance obligation was modified and accounted for in accordance with ASC 470, “Debt”, see “Note 12 – Notes Payable”, for further discussion. The total amount of all deferred rent accrues interest at 8.6% per annum during the deferral period. As consideration for the rent deferral, the Company issued 3,500,000 warrants to the REIT, each exercisable at $0.34 per share for a period of five years. Upon the analysis of the warrants issued under ASC 815, the Company determined that the warrants are accounted for as a direct cost in relation to the lease and to be measured at fair value and accounted for as an equity instrument. As a result of the modification to the leases discussed above, a gain on lease modification was recognized in the amount of $16,274,615 and is included in gain on disposals of assets, restructuring fees and other expenses in the accompanying Condensed Consolidated Statements of Operations during the six months ended December 26, 2020.

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12. NOTES PAYABLE

As of December 26, 2020 and June 27, 2020, notes payable consist of the following:

December 26, June 27, 2020 2020

Financing liability incurred on various dates between January 2019 through September 2019 with implied interest rates ranging from 0.7% to 17.0% per annum. $ 83,400,000 $ 83,576,661

Non-revolving, senior secured term notes dated between October 1, 2018 and October 30, 2020, issued to accredited investors, which mature on January 31, 2022, and bear interest at a rate of 15.5% and 18.0% per annum. 100,712,185 77,675,000

Convertible debentures dated between September 16, 2020 and December 17, 2020, issued to accredited investors and qualified institutional buyers, which mature two years from issuance, and bear interest at a rate of 7.5% per annum. 4,000,000 -

Promissory notes dated between January 15, 2019 through March 29, 2019, issued for deferred payments on acquisitions, which mature on varying dates from August 3, 2019 to June 30, 2020 and bear interest at rates ranging from 8.0% to 9.0% per annum. 15,992,000 16,173,250

Promissory notes dated November 7, 2018, issued to Lessor for tenant improvements as part of sales and leaseback transactions, which mature on November 7, 2028, bear interest at a rate of 10.0% per annum and require minimum monthly payments of $15,660 and $18,471. 2,221,112 2,339,564

Other 15,417 15,418

Total Notes Payable 206,340,714 179,779,893 Less Unamortized Debt Issuance Costs and Loan Origination Fees (11,827,601) (10,781,288)

Net Amount $ 194,513,113 $ 168,998,605 Less Current Portion of Notes Payable (16,761,052) (16,188,668)

Notes Payable, Net of Current Portion $ 177,752,061 $ 152,809,937

A reconciliation of the beginning and ending balances of notes payable for the six months ended December 26, 2020 is as follows:

Balance at Beginning of Period $ 168,998,605

Cash Additions 14,830,279 Non-Cash Addition - Debt Modification 877,439 Debt Discount Recognized on Modification (947,918) Paid-In-Kind Interest Capitalized 11,454,467 Cash Payments (481,780) Equity Component of Debt (5,310,375) Cash Paid for Debt Issuance Costs 70,479 Accretion of Debt Discount 5,021,917

Balance at End of Period $ 194,513,113

Less Current Portion of Notes Payable (16,761,052)

Notes Payable, Net of Current Portion $ 177,752,061

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12. NOTES PAYABLE (Continued)

Amendments to Senior Secured Term Loan Facility

On July 2, 2020, the Company completed the amendment of its existing term loan facility (the “Facility”) in the principal amount of $77,675,000 with funds managed by Hankey Capital and with an affiliate of Stable Road Capital (the “Lenders”) wherein the entirety of the interest at a rate of 15.5% per annum shall accrue monthly to the outstanding principal as payment-in-kind effective March 1, 2020 through July 2, 2021. Thereafter until maturity on January 31, 2022, one-half of the interest (7.75% per annum) shall be payable monthly in cash and one-half of the interest (7.75% per annum) shall be paid-in-kind. In addition, the Company may request an increase to the Facility through December 31, 2020 to be funded through incremental term loans. Certain reporting and financial covenants were added, and the minimum liquidity covenant was waived until September 30, 2020 wherein the amount of required cash balance thereafter was amended. The amendment to the Facility was not deemed to be a substantial modification under ASC 470-50, “Modifications and Extinguishments”.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company incurred an amendment fee of $834,000 that was added to the outstanding principal balance. As consideration for the amendment, the Company issued approximately 20,227,863 warrants exercisable at $0.34 per share until July 2, 2025. The Company also cancelled 20,227,863 existing warrants held by the lenders exercisable at $0.60 per share until December 31, 2022. The warrants may be exercised at the election of their holders on a cashless basis. The warrants issued in connection with the term loan facility met the scope exception under ASC 815, “Derivatives and Hedging” and are classified as equity instruments. The change in fair value of the warrants was recorded as a debt discount in connection with the Facility. As a result of the modification, the Company recorded an additional debt discount of $906,436 related to the change in terms of the warrants. See “Note 15 – Share-Based Compensation” for further information regarding the valuation method and assumptions used in determining the fair value of these equity instruments.

On September 16, 2020, the Company entered into further amendments wherein the amount of funds available under the Facility was increased by $12,000,000, of which $5,700,000 was fully committed by the lenders through October 31, 2020. The additional amounts are funded through incremental term loans at an interest rate of 18.0% per annum wherein 12.0% shall be paid in cash monthly in arrears and 6.0% shall accrue monthly as payment-in-kind. In connection with each incremental draw under the amended Facility, the Company shall issue warrants equal to 200% of the incremental term loan amount, divided by the greater of (a) $0.20 per share and (b) 115% multiplied by the volume-weighted average trading price (“VWAP”) of the shares for the five consecutive trading days ending on the trading day immediately prior to the applicable funding date of the second tranche, which shall be the exercise price of the issued warrant. Such warrants are subject to a down round feature wherein the exercise price would be decreased in the event of the exercise of a down-round price reset of select warrants under the senior secured convertible credit facility with Gotham Green Partners (“GGP”). Refer to “Note 13 – Senior Secured Convertible Credit Facility” for further information. In addition, certain covenants and terms were added or amended, and the minimum liquidity covenant was waived until December 31, 2020. The amendment to the Facility was not deemed to be a substantial modification under ASC 470-50, “Modifications and Extinguishments”. As consideration for the amendment, the Company issued approximately 20,227,863 warrants exercisable at $0.34 per share until September 16, 2025. The Company also cancelled 20,227,863 existing warrants held by the lenders exercisable at $0.60 per share until December 31, 2022. The change in fair value of the warrants was recorded as a debt discount in connection with the Facility. Accordingly, the Company recorded an additional debt discount of $542,986 related to the change in terms of the warrants.

On September 16, 2020, the Company closed on an incremental term loan of $3,000,000 under the amended Facility and issued 30,000,000 warrants with an exercise price of $0.20 per share until September 16, 2025. On October 30, 2020, the Company closed on an incremental term loan of $7,705,279 under the amended Facility and issued 77,052,790 warrants with an exercise price of $0.20 per share until September 14, 2025. The warrants may be exercised at the election of their holders on a cashless basis and are classified as equity instruments. See “Note 15 – Share-Based Compensation” for further information.

On September 16, 2020 and September 28, 2020, the down round feature on the warrants issued in connection with the incremental term loan of $3,000,000 on September 16, 2020 was triggered wherein the exercise price was adjusted to $0.17 and $0.15 per share, respectively. The value of the effect of the down round feature was determined to be $405,480 and recognized as an increase in additional paid-in capital.

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12. NOTES PAYABLE (Continued)

Unsecured Convertible Facility

On September 16, 2020, the Company entered into an unsecured convertible debenture facility for total available proceeds of $10,000,000 wherein the convertible debentures shall have a conversion price equal to the closing price on the trading day immediately prior to the closing date, a maturity date of 24 months from the date of issuance and will bear interest at a rate of 7.5% per annum payable semi-annually in cash. The unsecured facility is callable in additional tranches in the amount of $1,000,000 each, up to a maximum of $10,000,000 under all tranches. The timing of additional tranches can be accelerated based on certain conditions. The Company has the right to prepay, in whole or in part, the outstanding principal amount and accrued interest prior to maturity, upon payment of 7.5% of the principal amount being repaid, less the amount of interest paid during the year of prepayment. The debentures provide for the automatic conversion into Subordinate Voting Shares in the event that the VWAP is greater than $0.25 on the CSE for 45 consecutive trading days, at a conversion price per Subordinate Voting Share equal to $0.17.

On September 16, 2020, the Company closed on an initial $1,000,000 of the facility with a conversion price of $0.17 per Subordinate Voting Share. In connection with the initial tranche, the Company issued 3,293,413 warrants with an exercise price of $0.21 per share. On September 28, 2020, the Company closed on a second tranche of $1,000,000 under its existing unsecured convertible facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the second tranche, the Company issued 3,777,475 warrants with an exercise price of $0.17 per Subordinate Voting Share. On November 20, 2020, the Company closed on a third tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the third tranche, the Company issued 3,592,425 warrants with an exercise price of $0.17 per share. On December 17, 2020, the Company closed on a fourth tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate Voting Share. In connection with the fourth tranche, the Company issued 3,597,100 warrants with an exercise price of $0.18 per share. Under ASC 815, the conversion option and warrants were recorded as an equity instrument. As of December 26, 2020, the relative fair value of the warrants with a value of $650,933 has been recorded to equity.

Financing Liability

In connection with the Company’s failed sale and leaseback transactions described in “Note 11 – Leases”, a financing liability was recognized equal to the cash proceeds received upon inception. The cash payments made on the lease less the portion considered to be interest expense, will decrease the financing liability. The financing liability was modified due to an amended lease agreement during the six months ended December 26, 2020 in which the new terms of the amended agreement do not qualify as a substantial modification under ASC 470-50, “Modifications and Extinguishments”.

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13. SENIOR SECURED CONVERTIBLE CREDIT FACILITY

As of December 26, 2020 and June 27, 2020, senior secured convertible credit facility consists of the following:

December 26, June 27,

Senior secured convertible notes dated April 23, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 1A $ 16,092,152 $ 21,660,583 Senior secured convertible notes dated May 22, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 1B 90,698,233 86,053,316 Senior secured convertible notes dated July 12, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 2 28,340,475 26,570,948 Senior secured convertible notes dated November 27, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 3 10,974,012 10,288,815 Senior secured convertible notes dated March 27, 2020, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 4 13,327,075 12,500,000 Amendment fee converted to senior secured convertible notes dated October 29, 2019, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. - 20,717,133 19,423,593 Senior secured convertible notes dated April 24, 2020, issued to accredited investors, which mature on April 23, IA-1 2022 and bear interest at LIBOR plus 6.0% per annum. 2,894,053 2,734,282 Senior secured convertible notes dated September 14, 2020, issued to accredited investors, which mature on April IA-2 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 5,596,564 - Restatement fee issued in senior secured convertible notes dated March 27, 2020, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. - 8,745,997 8,199,863 Second restatement fee issued in senior secured convertible notes dated July 2, 2020, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. - 2,092,538 -

Total Drawn on Senior Secured Convertible Credit Facility 199,478,232 187,431,400

Less Unamortized Debt Discount (39,886,067) (21,062,937)

Senior Secured Convertible Credit Facility, Net $ 159,592,165 $ 166,368,463

A reconciliation of the beginning and ending balances of senior secured convertible credit facility for the six months ended December 26, 2020 is as follows:

2nd Incremental Incremental Amendment Restatement Restatement Tranche 1 Tranche 2 Tranche 3 Tranche 4 Advance - 1 Advance - 2 Fee Notes Fee Notes Fee Notes TOTAL

Balance as of June 27, 2020 $ 102,833,447 $ 25,352,687 $ 9,680,433 $ 286,691 $ 2,168,540 $ - $ 18,964,600 $ 7,082,065 $ - $ 166,368,463

Cash Additions - - - - - 5,468,565 - - - 5,468,565 Repayments (8,000,000) ------(8,000,000) Fees Capitalized to Debt Related to Debt Modifications - - - - - (468,564) - - 2,000,000 1,531,436 Paid-In-Kind Interest Capitalized 7,076,486 1,769,530 685,198 827,075 159,771 128,000 1,293,540 546,134 92,538 12,578,272 Net Effect on Debt from Extinguishment 4,812,996 962,750 497,175 2,167,870 (453,979) - 455,792 630,758 - 9,073,362 Net Effect on Equity Component of New and Amended Debt (13,190,673) (3,412,171) (1,454,451) (2,839,602) (1,296,844) (3,239,508) (2,349,451) (4,551,980) - (32,334,680) Cash Paid for Debt Issuance Costs - - - - - (175,000) - - - (175,000) Amortization of Debt Discounts 2,185,753 566,800 241,271 676,309 215,283 329,917 351,577 514,837 - 5,081,747

Balance as of December 26, 2020 $ 95,718,009 $ 25,239,596 $ 9,649,626 $ 1,118,343 $ 792,771 $ 2,043,410 $ 18,716,058 $ 4,221,814 $ 2,092,538 $ 159,592,165

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13. SENIOR SECURED CONVERTIBLE CREDIT FACILITY (Continued)

On July 2, 2020, the Company amended and restated the securities purchase agreement with Gotham Green Partners (“GGP”) under the senior secured convertible credit facility (the “Convertible Facility”) (the “Fourth Amendment”) wherein the minimum liquidity covenant was waived until September 30, 2020 and resetting at $5,000,000 thereafter with incremental increases on March 31, 2021 and December 31, 2021. The payment-in-kind feature on the Convertible Facility was also extended, such that 100% of the cash interest due prior to June 2021 will be paid-in-kind and 50% of the cash interest due thereafter will be paid-in-kind. The Fourth Amendment released certain assets from its collateral to allow greater flexibility to generate proceeds through the sale of non-core assets. The Fourth Amendment allows for immediate prepayment of amounts under the Convertible Facility with a 5% prepayment penalty until 2nd anniversary of the Fourth Amendment and 3% prepayment penalty thereafter. As part of the Fourth Amendment, holders of notes under the Convertible Facility were provided down-round protection where issuances of equity interests (including securities that are convertible or exchangeable for equity interests) by the Company at less than the higher of (i) lowest conversion price under the amended and restated notes of the Convertible Facility amendment dated March 27, 2020 and (ii) the highest conversion price determined for any incremental advances, will automatically adjust the conversion/exercise price of the previous tranches and incremental tranche 4 warrants and the related replacement warrants to the price of the newly issued equity interests. Certain issuances of equity interests are exempted such as issuances to existing lenders, equity interests in contemplation at the time of Fourth

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Amendment and equity interests issued to employees, consultants, directors, advisors or other third parties, in exchange for goods and services or compensation. Pursuant to ASU 2017-11, the down-round protection was not considered a derivative and will be recognized when the down-round protection adjustments are triggered.

As consideration for the amendment, the conversion price for 52% of the tranches 1 through 3 and the first amendment fee notes outstanding under the Convertible Facility were amended to $0.34 per share. An amendment fee of $2,000,000 was also paid through the issuance of additional notes at a conversion price of $0.28 per share. The Fourth Amendment to the Convertible Facility was deemed to be a substantial modification under ASC 470-50, “Modifications and Extinguishments,” and a loss on extinguishment of $10,129,655 was recorded in the Condensed Consolidated Statements of Operations for the six months ended December 26, 2020.

On September 14, 2020, the Company closed on an incremental advance in the amount of $5,000,000 under its existing Convertible Facility with GGP at a conversion price of $0.20 per share. In connection with the incremental advance, the Company issued 25,000,000 warrants with an exercise price of $0.20 per share. In addition, 1,080,255 Existing warrants were cancelled and replaced with 16,875,001 warrants with an exercise price of $0.20 per share. Pursuant to the terms of the GGP Facility, the conversion price for 5.0% of the existing Notes outstanding prior to Tranche 4 and Incremental Advance (including paid-in-kind interest accrued on such Notes), being 5.0% of an aggregate principal amount of $170,729,923, was amended to $0.20 per share. As consideration for the additional advance, the Company issued convertible notes as consideration for a $468,564 fee with a conversion price of $0.20 per share.

On September 16, 2020 and September 28, 2020, the down round feature on the convertible notes and warrants issued in connection with Tranche 4, Incremental Advances and certain amendment fees was triggered wherein the exercise price was adjusted to $0.17 and $0.15 per share, respectively. The value of the effect of the down round feature on convertible notes and warrants was determined to be $32,744,770 and $6,723,954, respectively, for the six months ended December 26, 2020. The effect related to convertible notes was recognized as additional debt discount and an increase in additional paid-in-capital. The effect related to warrants was recognized as a deemed distribution and an increase in additional paid-in capital.

On November 1, 2020, the Company repaid $8,000,000 of borrowings under the Convertible Facility and recorded a loss $943,706 on the partial extinguishment of debt and is included in the net effect on equity component of new and amended debt in the reconciliation of the beginning and ending balances of senior secured convertible credit facility for the six months ended December 26, 2020.

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14. SHAREHOLDERS’ EQUITY

Issued and Outstanding

A reconciliation of the beginning and ending issued and outstanding shares is as follows:

MM CAN USA MM Subordinate Super Class B Enterprises Voting Voting Redeemable USA Shares Shares Units Common Units

Balance as of June 27, 2020 403,907,218 815,295 236,123,851 725,016

Cancellation of Super Voting Shares - (815,295) - - Shares Issued to Settle Accounts Payable and Liabilities 7,205,754 - - - Redemption of MedMen Corp Redeemable Shares 88,945,434 - (88,945,434) - Shares Issued for Vested Restricted Stock Units 7,173,256 - - - Shares Issued for Acquisition Costs 2,082,890 - - - Stock Grants for Compensation 3,001,282 - - -

Balance as of December 26, 2020 512,315,834 - 147,178,417 725,016

Cancellation of Super Voting Shares

Effective as of December 10, 2020, the Company cancelled the remaining 815,295 Class A Super Voting Shares that were granted via proxy to Benjamin Rose wherein no consideration was paid. The effect of the cancellation was recognized as a reduction in the mezzanine equity for the book value of $82,500 and the difference over the repurchase price of nil was recorded to additional paid-in capital. There was no effect on total shareholders’ equity as a result of this cancellation. As of December 26, 2020, there are no outstanding Class A Super Voting Shares.

Non-Controlling Interests

Non-controlling interest represents the net assets of the subsidiaries that the holders of the Subordinate Voting Shares do not directly own. The net assets of the non- controlling interest are represented by the holders of MM CAN USA Redeemable Shares and the holders of MM Enterprises USA Common Units. Non-controlling interest also represents the net assets of the entities the Company does not directly own but controls through a management agreement. As of December 26, 2020 and June 27, 2020, the holders of the MM CAN USA Redeemable Shares represent approximately 22.32% and 36.89%, respectively, of the Company and holders of the MM Enterprises USA Common Units represent approximately 0.11% and 0.11%, respectively, of the Company.

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14. SHAREHOLDERS’ EQUITY (Continued)

Variable Interest Entities

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The below information are entities the Company has concluded to be variable interest entities (“VIEs”) as the Company possesses the power to direct activities through management services agreements (“MSAs”). Through these MSAs, the Company can significantly impact the VIEs and thus holds a controlling financial interest.

The following table represents the summarized financial information about the Company’s consolidated VIEs. VIEs include the balances of LAX Fund II Group, LLC, Natures Cure, Inc. and Venice Caregiver Foundation, Inc. This information represents amounts before intercompany eliminations.

As of and for the six months ended December 26, 2020, the balances of the VIEs before any intercompany eliminations consists of the following:

Venice Caregivers Foundation, LAX Fund II Natures Cure, Inc. Group, LLC Inc. TOTAL

Current Assets $ 772,010 $ (8,795,281) $ 10,407,949 $ 2,384,678 Non-Current Assets 13,461,338 3,129,112 5,002,478 21,592,928

Total Assets $ 14,233,348 $ (5,666,169) $ 15,410,427 $ 23,977,606

Current Liabilities $ 12,147,006 $ (566,336) $ 5,070,565 $ 16,651,235 Non-Current Liabilities 9,214,775 2,558,486 1,146,329 12,919,590

Total Liabilities $ 21,361,781 $ 1,992,150 $ 6,216,894 $ 29,570,825

Non-Controlling Interest $ (7,128,433) $ (7,658,319) $ 9,193,533 $ (5,593,219)

Revenues $ 4,398,883 $ (823) $ 6,549,799 $ 10,947,859 Net Income (Loss) Attributable to Non-Controlling Interest $ (1,203,248) $ (1,587,992) $ 2,413,906 $ (377,334)

As of and for the year ended June 27, 2020, the balances of the VIEs consists of the following:

Venice Caregivers Foundation, LAX Fund II Natures Cure, Inc. Group, LLC Inc. TOTAL

Current Assets $ 1,233,188 $ 811,025 $ 6,639,231 $ 8,683,444 Non-Current Assets 16,867,824 3,259,563 5,032,428 25,159,815

Total Assets $ 18,101,012 $ 4,070,588 $ 11,671,659 $ 33,843,259

Current Liabilities $ 12,831,161 $ 7,481,953 $ 3,745,710 $ 24,058,824 Non-Current Liabilities 11,196,585 2,662,078 1,146,322 15,004,985

Total Liabilities $ 24,027,746 $ 10,144,031 $ 4,892,032 $ 39,063,809

Non-Controlling Interest $ (5,926,734) $ (6,073,443) $ 6,779,627 $ (5,220,550)

Revenues $ 10,949,458 $ - $ 13,976,810 $ 24,926,268 Net Income (Loss) Attributable to Non-Controlling Interest $ (6,132,528) $ (3,777,079) $ 3,143,437 $ (6,766,170)

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14. SHAREHOLDERS’ EQUITY (Continued)

The net change in the consolidated VIEs and other non-controlling interest are as follows for the six months ended December 26, 2020:

Venice Caregivers Other Non- Foundation, LAX Fund II Natures Cure, Controlling Inc. Group, LLC Inc. Interests TOTAL

Balance as of June 27, 2020 $ (5,925,185) $ (6,070,327) $ 6,779,627 $ (331,561,812) $ (336,777,697)

Net Income (Loss) (1,203,248) (1,587,992) 2,413,906 (29,715,662) (30,092,996)

Equity Component on Debt and Debt Modification - - - 4,055,133 4,055,133 Deferred Tax Impact on Conversion Feature - - - (1,210,052) (1,210,052) Redemption of MedMen Corp Redeemable Shares - - - (48,580,443) (48,580,443)

Balance as of December 26, 2020 $ (7,128,433) $ (7,658,319) $ 9,193,533 $ (407,012,836) $ (412,606,055)

Le Cirque Rouge, LP (the Operating Partnership,” or the “OP”) is a Delaware limited partnership that holds substantially all of the real estate assets owned by the REIT, conducts the REIT’s operations, and is financed by the REIT. Under ASC 810, “Consolidation”, the OP was determined to be a variable interest entity in which the Company has a variable interest. The Company was determined to have an implicit variable interest in the OP based on the leasing relationship and arrangement with the REIT. The Company was not determined to be the primary beneficiary of the VIE as the Company does not have the power to direct the activities of the VIE that

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document most significantly affect its economic performance. As of December 26, 2020, the Company continues to have a variable interest in the OP. During the six months ended December 26, 2020, the Company did not provide any financial or other support to the REIT other than the REIT being a lessor on various leases as described in “Note 11 – Leases”. Accordingly, Le Cirque Rouge, LP is not consolidated as a variable interest entity within the unaudited interim Condensed Consolidated Financial Statements.

15. SHARE-BASED COMPENSATION

The Company has a stock and equity incentive plan (the “Incentive Plan”) under which the Company may issue various types of equity instruments to any employee, officer, consultant, advisor or director. The types of equity instruments issuable under the Incentive Plan encompass, among other things, stock options, stock grants, deferred stock units, restricted stock grants, LTIP, P units and warrants (together, “Awards”). Stock based compensation expenses are recorded as a component of general and administrative to the extent that the Company has not appointed a Compensation Committee, all rights and obligations under the Incentive Plan shall be those of the full Board of Directors. The maximum number of Awards that may be issued under the Incentive Plan shall be determined by the Compensation Committee or the Board of Directors in the absence of a Compensation Committee. Any shares subject to an Award under the Incentive Plan that are forfeited, canceled, expire unexercised, are settled in cash, or are used or withheld to satisfy tax withholding obligations, shall again be available for Awards under the Incentive Plan. Vesting of Awards will be determined by the Compensation Committee or Board of Directors in absence of one. The exercise price for Awards (if applicable) will generally not be less than the fair market value of the Award at the time of grant and will generally expire after 10 years.

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15. SHARE-BASED COMPENSATION (Continued)

A summary of share-based compensation expense for the three and six months ended December 26, 2020 and December 28, 2019 is as follows:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Stock Options $ 1,537,682 $ 967,231 $ 2,546,220 $ 2,654,504 LTIP Units - 479,528 - 1,313,059 Stock Grants for Services (60,357) 1,524,698 121,232 1,889,646 Restricted Stock Grants 279,909 1,130,018 437,386 2,810,643

Total Share-Based Compensation $ 1,757,234 $ 4,101,475 $ 3,104,838 $ 8,667,852

For the six months ended December 26, 2020 and December 28, 2019, the fair value of stock options granted with a fixed exercise price was determined using the Block- Scholes option-pricing model with the following assumptions at the time of grant:

Six Months Ended December 26, December 28, 2020 2019

Weighted-Average Risk-Free Annual Interest Rate 1.05% 1.70% Weighted-Average Expected Annual Dividend Yield 0.0% 0.0% Weighted-Average Expected Stock Price Volatility 116.5% 85.1% Weighted-Average Expected Life in Years 7.50 7.50 Weighted-Average Estimated Forfeiture Rate 40.0% 40.0%

Stock Options

A reconciliation of the beginning and ending balance of stock options outstanding is as follows:

Weighted- Number of Weighted- Number of Average Stock Options Average Stock Options Exercise Price Exercisable Exercise Price

Balance as of June 27, 2020 8,618,204 $ 2.78 4,248,393 $ 2.78 Granted 7,318,669 $ 0.17 8,257,087 $ 0.36 Forfeited (1,051,917) $ (3.00) - $ -

Balance as of December 26, 2020 14,884,956 $ 1.48 12,505,480 $ 1.42

The aggregate intrinsic value of options outstanding was nil at both December 26, 2020 and June 27, 2020.

LTIP Units and LLC Redeemable Units

A reconciliation of the beginning and ending balances of the LTIP Units and LLC Redeemable Units issued for compensation outstanding is as follows:

Weighted LTIP Units LLC Average Issued and Redeemable Grant Date Outstanding Units Fair Value

Balance as of June 27, 2020 and December 26, 2020 19,323,878 725,016 $ 0.52

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15. SHARE-BASED COMPENSATION (Continued)

Deferred Stock Units

Effective December 10, 2019, the Company’s board of directors approved a Deferred Share Unit (“DSU”) award under the Company’s Incentive Plan. The DSU award was for units to the Company’s non-management directors. Each director will be provided the Company’s Subordinate Voting Shares based on the duration of their term as a director up to $250,000 for a year of service ending August 2020. As of December 26, 2020, and June 27, 2020, there was nil and 1,283,567 units issued and outstanding, respectively. For the three and six months ended December 26, 2020, compensation expense related to the DSU award was nil and nil, respectively, was included in accounts payable and stock-based compensation expense on the Company’s Condensed Consolidated Balance Sheets. As of December 26, 2020, the corresponding Subordinate Voting Share had been issued to the directors. A reconciliation of the beginning and ending balance of DSUs outstanding is as follows:

Weighted- Issued and Average Fair Outstanding Value

Balance as of June 27, 2020 1,283,567 $ 0.38

Settled (1,283,567) $ (0.38)

Balance as of December 26, 2020 - $ -

Restricted Stock Grants

During the six months ended December 26, 2020, the Company granted an entitlement to 27,508,063 of restricted Subordinate Voting Shares to certain officers, directors and employees. A reconciliation of the beginning and ending balance of restricted stock grants outstanding is as follows:

Weighted- Issued and Average Fair Outstanding Vested Value

Balance as of June 27, 2020 7,159,164 192,459 $ 0.68

Granted (1) 27,508,063 - $ 0.16 Forfeiture of Restricted Stock (2) (2,156,155) - $ (0.15) Redemption of Vested Stock (7,173,258) (7,173,258) $ (0.18) Vesting of Restricted Stock - 7,584,358 $ 0.18

Balance as of December 26, 2020 25,337,814 603,559 $ 0.30 ______(1) Issued on December 11, 2020 to certain officers and employees of the Company and vest 37.5%, 12.5%, 37.5%, 12.5% on the 1st, 2nd, 3rd and 4th anniversary, respectively. (2) 2,156,155 of the restricted stock grants were forfeited upon the resignation of certain employees prior to their vesting.

Certain restricted stock granted has vesting which is based on market conditions. For restricted stock that have no market condition vesting, the fair value was determined using the trading value of the Subordinate Voting Shares on the date of grant. For the restricted stock that have market condition vesting, these shares were valued using a Monte Carlo simulation model taking into account the trading value of the Company’s Subordinate Voting Shares on the date of grant and into the future encompassing a wide range of possible future market conditions. During the six months ended December 26, 2020, there were no restricted stock grants with a market vesting condition.

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15. SHARE-BASED COMPENSATION (Continued)

Warrants

A reconciliation of the beginning and ending balance of warrants outstanding is as follows:

Number of Warrants Outstanding MedMen Corp Weighted- Subordinate Redeemable Average Voting Shares Shares Total Exercise Price

Balance as of June 27, 2020 114,998,915 40,455,731 155,454,646 $ 0.71

Issued 114,305,552 147,508,516 261,814,068 $ 0.18 Cancelled (1,080,226) (40,455,731) (41,535,957) $ (0.50)

Balance as of December 26, 2020 228,224,241 147,508,516 375,732,757 $ 0.36

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the six months ended December 26, 2020, 40,455,726, 30,000,000 and 77,052,790 warrants were issued for MedMen Corp Redeemable Shares with an exercise price of $0.34, $0.20 and $0.20, respectively, and expire through October 30, 2025. Additionally, 41,875,000, 3,293,413, 3,500,000, 3,777,475, 3,592,326, 3,597,000 and 54,670,338 warrants were issued for Subordinate Voting Shares with an exercise price of $0.20, $0.21, $0.34, $0.17, $0.17, $0.18 and $0.15, respectively, and expire through July 2, 2025.

The fair value of warrants exercisable for MedMen Corp Redeemable Shares was determined using the Black-Scholes option-pricing model with the following assumptions on the date of issuance:

December 26, June 27 2020 2020

Weighted-Average Risk-Free Annual Interest Rate 0.13% 2.20% Weighted-Average Expected Annual Dividend Yield 0% 0% Weighted-Average Expected Stock Price Volatility 92.06% 88.19% Weighted-Average Expected Life of Warrants 1 year 1 year

The fair value of warrants exercisable for the Company’s Subordinate Voting Shares was determined using the Black-Scholes option-pricing model with the following assumptions on the latest modification of December 17, 2020:

Weighted-Average Risk-Free Annual Interest Rate 0.09% Weighted-Average Expected Annual Dividend Yield 0% Weighted-Average Expected Stock Price Volatility 91.82% Weighted-Average Expected Life of Warrants 1 year

Stock price volatility was estimated by using the historical volatility of the Company’s Subordinate Voting Shares and the average historical volatility of comparable companies from a representative peer group of publicly-traded cannabis companies. The expected life in years represents the period of time that warrants issued are expected to be outstanding. The risk-free rate was based on U.S. Treasury bills with a remaining term equal to the expected life of the warrants. 55,817,248 of warrants are cancelable if the Company meets certain cash flow metrics for six consecutive months. The effects of contingent cancellation feature were included in determining the fair value of the related warrants.

As of December 26, 2020 and June 27, 2020, warrants outstanding have a weighted-average remaining contractual life of 4 and 4 years, respectively.

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16. LOSS PER SHARE

The following is a reconciliation for the calculation of basic and diluted loss per share for the three and six months ended December 26, 2020 and December 28, 2019:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Net Loss from Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (50,897,250) $ (4,404,879) $ (70,134,937) $ (25,547,228) Less: Deemed Dividend - Down Round Feature of Warrants (1,480,716) - (6,364,183) - Net Loss from Continuing Operations Available to Shareholders of MedMen Enterprises, Inc. $ (52,377,966) $ (4,404,879) $ (76,499,120) $ (25,547,228)

Net Income (Loss) from Discontinued Operations 1,201,766 (36,845,653 ) (1,480,409) (39,926,048)

Total Net Loss $ (51,176,200) $ (41,250,532 ) $ (77,979,529) $ (65,473,276)

Weighted-Average Shares Outstanding – Basic and Diluted 482,903,106 220,467,070 452,806,117 196,211,921

Loss Per Share - Basic and Diluted:

From Continuing Operations Attributable to Shareholders of MedMen Enterprises Inc. $ (0.11) $ (0.02) $ (0.17) $ (0.13)

From Discontinued Operations Attributable to Shareholders of MedMen Enterprises Inc. $ 0.00 $ (0.17) $ (0.00) $ (0.20)

Diluted loss per share is the same as basic loss per share as the issuance of shares on the exercise of convertible debentures, LTIP share units, warrants and share options is anti-dilutive.

17. GENERAL AND ADMINISTRATIVE EXPENSES

During the three and six months ended December 26, 2020 and December 28, 2019, general and administrative expenses consisted of the following:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Salaries and Benefits $ 9,601,502 $ 23,614,626 $ 19,642,206 $ 44,515,961 Professional Fees 3,602,429 5,142,056 7,201,764 10,427,325 Rent 8,977,156 9,274,734 17,584,889 16,409,249

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Licenses, Fees and Taxes 1,713,267 5,857,171 4,964,145 8,179,070 Other General and Administrative 9,674,082 16,430,360 15,859,036 34,882,291

Total General and Administrative Expenses $ 33,568,436 $ 60,318,947 $ 65,252,040 $ 114,413,896

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18. OTHER OPERATING EXPENSE

During the three and six months ended December 26, 2020 and December 28, 2019, other operating expenses consisted of the following:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Loss on Disposals of Assets $ 527,944 $ 1,088,299 $ 384,577 $ 226,335 Restructuring and Reorganization Expense 591,488 5,284,661 1,180,410 5,636,590 Loss on Settlement of Accounts Payable 1,186,333 - 1,025,688 - Gain on Lease Terminations (1,279,533) (23,815) (17,908,817) (217,127) Other Income (250,336) (643,737) (603,823) (638,352)

Total Other Operating Expense (Income) $ 775,896 $ 5,705,408 $ (15,921,965) $ 5,007,446

19. REALIZED AND UNREALIZED LOSS (GAIN) ON INVESTMENTS AND ASSETS HELD FOR SALE

During the three and six months ended December 26, 2020 and December 28, 2019, realized and unrealized loss (gain) on investments and assets held for sale consisted of the following:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Loss (Gain) on Assets Held for Sale $ 1,960,871 $ (3,000) $ (10,454,608) $ - Gain on Changes in Fair Value of Investments - (5,031,158) - (16,514,480)

Total Realized and Unrealized Loss (Gain) on Investments and Assets Held for Sale $ 1,960,871 $ (5,034,158) $ (10,454,608) $ (16,514,480)

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20. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES

The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended December 26, 2020 and December 28, 2019:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Loss from Continuing Operations Before Provision for Income Taxes $ (46,092,236) $ (71,051,659) $ (65,918,902) $ (148,430,669) Income Tax (Expense) Benefit (23,970,469) 14,649,487 (34,309,031) 32,310,218 Effective Tax Rate (52.04)% 20.87% (52.04)% 20.87%

Historically, the Company has computed its provision for income taxes under the discrete method which treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis. For the three and six months ended December 26, 2020, the Company has calculated its provision for income taxes during its interim reporting periods by applying an estimate of the annual effective tax rate for the full year “ordinary” income or loss for the respective reporting period. Historically, the discrete method was applied due to the reliability of the estimate the annual effective tax rate. The Company believes that, at this time, the use of the estimated annual tax rate is more appropriate under FASB Interpretation No. 18 an interpretation of APB Opinion No. 28 than the discrete method given the Company’s utilization of its forecast.

As the Company operates in the legal cannabis industry, the Company is subject to the limits of IRC Section 280E for U.S. federal, Illinois state, Florida state and New York state income tax purposes under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. However, the State of California does not conform to IRC Section 280E and, accordingly, the Company deducts all operating expenses on its California Franchise Tax Returns.

Since IRC Section 280E was not applied in the California Franchise Tax returns, the Company has approximately $76,700,000 of gross California net operating losses which begin expiring in 2038 as of June 27, 2020. The Company has evaluated the realization of its California net operating loss tax attribute and has determined under the more likely than not standard that $2,500,000 will not be realized.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The effective tax rate for the three and six months ended December 26, 2020 varies widely from the three and six months ended December 28, 2019, respectively, primarily due to the Company reporting increased expenses subject to IRC Section 280E relative to pre-tax book loss. The Company incurred a large amount of expenses that were not deductible due to IRC Section 280E limitations which resulted in income tax expense being incurred while there were pre-tax losses for the three months ended September 2020.

The federal statute of limitation remains open for the 2017 tax year to the present. The state income tax returns generally remain open for the 2016 tax year through the present. Net operating losses arising prior to these years are also open to examination if and when utilized.

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21. COMMITMENTS AND CONTINGENCIES

Contingencies

The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of these regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulations as of December 26, 2020 and June 27, 2020, marijuana regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future.

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of December 26, 2020, there were no pending or threatening lawsuits that could be reasonably assessed to have resulted in a probable loss to the Company in an amount that can be reasonably estimated. As such, no accrual has been made in the Consolidated Financial Statements relating to claims and litigations. As of December 26, 2020, there are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest.

In July 2018, a legal claim was filed against the Company related to alleged misrepresentations in respect of a financing transaction completed in May 2018. The claimant is seeking damages of approximately $2,200,000. The Company believes the likelihood of a loss contingency is remote. As a result, no amount has been set up for potential damages in these financial statements.

In late January 2019, the Company’s former Chief Financial Officer (“CFO”) filed a complaint against MM Enterprises in the Superior Court of California, County of Los Angeles, seeking damages for claims relating to his employment. The Company is currently defending against this lawsuit, which seeks damages for wrongful termination, breach of contract, and breach of implied covenant of good faith. The former CFO’s employment agreement provided for the payment of severance in the event of termination without cause. The Company disputes the claims set forth in this lawsuit and believes that the outcome is neither probable nor estimable; therefore, no amounts have been accrued in relation to the claim in these financial statements.

In March 2020, litigation was filed against the Company related to a purchase agreement for a previous acquisition. The Company is currently defending against this lawsuit, which seeks damages for fraudulent inducement and breach of contract. The Company believes the likelihood of a loss contingency is neither probable nor remote and the amount cannot be estimated reliably. As such, no amount has been accrued in these financial statements.

In May 2020, litigation was filed against the Company related to a purchase agreement and secured promissory note for a previous acquisition. The Company is currently defending against this lawsuit, which claims for breach of contract, breach of implied covenant of good faith and fair dealing, common law fraud and securities fraud. The plaintiffs are seeking damages for such claims in which the amount is currently not reasonably estimable. Therefore, pursuant to ASC 450, “Contingencies” (“ASC 450”), a liability has not been recorded in these Condensed Consolidated Financial Statements. As a result of the pending claims, access to records were withheld by the plaintiffs prior to the Company’s deconsolidation of the entity. See “Note 24 – Discontinued Operations” for further discussion. In response, the Company filed a counterclaim and is seeking entitlement to proceeds of the sale, net of amounts owed under the secured promissory note which is in dispute. In accordance with ASC 450, any loss recoveries related to the Company’s counterclaim have not been recorded. In addition, net proceeds resulting from the sale was not recognized as a receivable as the amount is not reasonably estimable. See “Note 12 – Notes Payable” for the secured promissory note that remains as of December 26, 2020.

In February 2020, a legal dispute was filed against the Company and settled in December 2020 for approximately $2,400,000. As of December 26, 2020, the remaining amount has been accrued in the Consolidated Balance Sheet.

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22. RELATED PARTY TRANSACTIONS

All related party balances due from or due to the Company as of December 26, 2020 and June 27, 2020 did not have any formal contractual agreements regarding payment terms or interest.

As of December 26, 2020 and June 27, 2020, amounts due from related parties were as follows:

December 26, June 27, Name and Relationship to Company Transaction 2020 2020

MMOF GP II, LLC (“Fund LP II”), an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Management Christopher Ganan each holds 33.3% indirect voting interest. The shareholders each hold 27.1% of indirect Fees $ 1,820,204 $ 1,820,204

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document equity interest in Fund LP II, the General Partner of Fund II, which both hold equity interests in a subsidiary of the Company. (1)

MedMen Opportunity Fund GP, LLC (“Fund LP”), an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Ganan each holds 33.3% indirect voting interest. The shareholders each hold 24.2% of indirect equity interest in Fund LP, the General Partner of Fund I, which both hold equity interests in a Management subsidiary of the Company. (1) Fees 1,289,513 1,289,513

Total Amounts Due from Related Parties $ 3,109,717 $ 3,109,717 ______(1) As of February 2020 and May 2020, Mr. Adam Bierman and Mr. Andrew Modlin, respectively, no longer held board or management positions and therefore as of December 26, 2020 are not related parties, however they were during the fiscal year ended June 27, 2020. As of November 2020, Chris Ganan was no longer a member of the Company’s board of directors and therefore is not considered a related party under ASC 850, “Related Party Disclosures” as of December 26, 2020, however Mr. Ganan was a related party during the fiscal year ended June 27, 2020.

As of December 26, 2020 and June 27, 2020, amounts due to related parties were as follows:

December 26, June 27, Name and Relationship to Company Transaction 2020 2020

Fund LP II, an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Ganan Working Capital, each holds 33.3% indirect voting interest. The shareholders each hold 27.1% of indirect equity Construction and Tenant interest in Fund LP II, the General Partner of Fund II, which both hold equity interests in a subsidiary Improvements, Lease of the Company. (1) Deposits and Cash Used for Acquisitions $ (1,093,896) $ (1,093,896)

Fund LP, an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Ganan each Working Capital, holds 33.3% indirect voting interest. The shareholders each hold 24.2% of indirect equity interest in Management Fees and Fund LP, the General Partner of Fund I, which both hold equity interests in a subsidiary of the Cash Used for Company. (1) Acquisitions (1,986,697) (1,986,697)

Other (1,294,134) (1,476,221)

Total Amounts Due to Related Parties $ (4,374,727) $ (4,556,814) ______(1) As of February 2020 and May 2020, Mr. Adam Bierman and Mr. Andrew Modlin, respectively, no longer held board or management positions and therefore as of December 26, 2020 are not related parties, however they were during the fiscal year ended June 27, 2020. As of November 2020, Chris Ganan was no longer a member of the Company’s board of directors and therefore is not considered a related party under ASC 850, “Related Party Disclosures” as of December 26, 2020, however Mr. Ganan was a related party during the fiscal year ended June 27, 2020.

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22. RELATED PARTY TRANSACTIONS (Continued)

On December 11, 2019, the Company announced that Benjamin Rose, the previous Executive Chairman of the Board, was granted a limited proxy of 815,295 Class A Super Voting Shares, which represents 50% of the total Class A Super Voting Shares, for a period of one year. As a result of the proxy, Mr. Rose had joint control of the Company and was a related party under ASC 850, “Related Party Disclosures” until December 2020 in which Mr. Rose resigned as Chairman of the Board and as a board member and the proxy of Super Voting Shares granted to Mr. Rose expired. See “Note 14 – Shareholders’ Equity” for further information on the cancellation of Super Voting Shares. In August 2020 and November 2020, the Company granted 102,519 restricted stock units to Mr. Rose. As of December 26, 2020, the corresponding Class B Subordinate Voting Shares for the November 2020 grant have yet to be issued to Mr. Rose.

Pursuant to the Side Letter executed on October 29, 2019 in conjunction with the second amendment of the Convertible Facility with GGP, Wicklow Capital and GGP have the right to nominate a majority of the Company’s Board of Directors while the aggregate principal amount outstanding under the Convertible Facility is more than $25,000,000. The ability to elect the majority of the Company’s Board of Directors meets the definition of control under ASC 850, “Related Party Disclosures” and accordingly, Wicklow Capital is a related party of the Company.

As of December 26, 2020, the Company determined GGP to be a related party as a result of GGP having significant influence over the Company. See “Note 13 – Senior Secured Convertible Credit Facility” for a full disclosure of transactions and balances related to GGP.

In March 2020, the Company entered into restructuring plan and retained interim management and advisory firm, Sierra Constellation Partners (“SCP”). As part of the engagement, Tom Lynch was appointed as Interim Chief Executive Officer and Chief Restructuring Officer, and Tim Bossidy was appointed as Interim Chief Operating Officer. Mr. Lynch is a Partner and Senior Managing Director at SCP. Mr. Bossidy is a Director at SCP. In December 2020, Mr. Lynch was elected as Chairman of the Board and Reece Fulgham, a Managing Director at SCP, was appointed as Interim Chief Financial Officer. During the six months ended December 26, 2020, the Company had paid $844,042 in fees to SCP for interim management and restructuring support. During the six months ended December 26, 2020, Mr. Lynch and Mr. Bossidy each received 124,868 stock options.

The Company’s Board of Directors each receive quarterly fees of $200,000 of which one-third is paid in cash and two-thirds is paid in Class B Subordinate Voting Shares. The Class B Subordinate Voting Shares is recorded as a restricted stock unit until settled.

23. SEGMENTED INFORMATION

The Company currently operates in one segment, the production and sale of cannabis products, which is how the Company’s Chief Operating Decision Maker manages the business and makes operating decisions. The Company’s cultivation operations are not considered significant to the overall operations of the Company. Intercompany sales and transactions are eliminated in consolidation.

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24. DISCONTINUED OPERATIONS

During the six months ended December 26, 2020, the Company contemplated the divesture of non-core assets and management entered into a plan to sell its operations in the state of Arizona. Consequently, assets and liabilities allocable to the operations within the state of Arizona were classified as a disposal group. The assets associated with the Arizona disposal group have been measured at the lower of its carrying amount or FVLCTS. Revenue and expenses, gains or losses relating to the discontinuation of Arizona operations have been eliminated from profit or loss from the Company’s continuing operations and are shown as a single line item in the Condensed Consolidated Statements of Operations.

During the fiscal year ended June 27, 2020, the Company began separate negotiations to sell its operations in the state of Arizona, including the related management entities. In October 2020, Kannaboost Technology Inc. and CSI Solutions LLC (collectively referred to as “Level Up”) was sold at auction for a total sales price of $25,150,000, of which the Company has not received the proceeds as of December 26, 2020. Refer to “Note 21 - Commitments and Contingencies” for further information. All outstanding membership interests in Level Up and all operational control and risk of loss was transferred to the purchaser on November 5, 2020. Upon deconsolidation, the Company will not have any continuing involvement with the former subsidiary outside of the litigation disclosed in “Note 21 – Commitments and Contingencies”. The Company recognized a loss upon sale of membership interests of $1,628,124 for the net carrying value of the assets as of the disposition date which was determined as the book value less direct costs to sell and is recognized on the Condensed Consolidated Statements of Operations during the six months ended December 26, 2020. On June 29, 2020, the Company entered into a non-binding term sheet for the remaining subsidiary classified as discontinued operations for total gross proceeds of $9,000,000, subject to certain adjustments. As of December 26, 2020, the contemplated transaction is subject to customary closing conditions and is expected to close within the next twelve months. After the close of the transaction, there will be no continued involvement with the sellers.

For the six months ended December 26, 2020, net loss from discontinued operations does not include revenue and expenses and gains or losses from Level Up as a result of the deconsolidation in November 2020. Net operating loss of the discontinued operations and the gain or loss from re-measurement of assets and liabilities classified as held for sale are summarized as follows:

Three Months Ended Six Months Ended December 26, December 28, December 26, December 28, 2020 2019 2020 2019

Revenue $ 1,741,505 $ 4,276,771 $ 3,341,495 $ 8,581,520 Cost of Goods Sold 1,223,372 2,054,833 2,492,124 5,935,439

Gross Profit 518,133 2,221,938 849,371 2,646,081

Expenses: General and Administrative 718,101 1,961,132 1,694,712 3,784,884 Sales and Marketing 10,600 42,057 17,101 43,005 Depreciation and Amortization 32,060 662,393 81,202 1,161,721 Impairment Expense - 46,702,659 - 46,702,659

Total Expenses 760,761 49,368,241 1,793,015 51,692,269

Loss from Operations (242,628) (47,146,303) (943,644) (49,046,188)

Other Expense (Income): Other Expense (34,391) 232 2,665 5,592

Total Other Expense (34,391) 232 2,665 5,592

Loss on Discontinued Operations Before Provision for Income Taxes (208,237) (47,146,535) (946,309) (49,051,780) Provision for Income Tax Benefit (Expense) 1,410,003 10,300,882 (534,100) 9,125,732

Income (Loss) on Discontinued Operations $ 1,201,766 $ (36,845,653) $ (1,480,409) $ (39,926,048)

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24. DISCONTINUED OPERATIONS (Continued)

The carrying amounts of assets and liabilities in the disposal group are summarized as follows:

December 26, June 27, 2020 2020

Carrying Amounts of the Assets Included in Discontinued Operations:

Cash and Cash Equivalents $ 148,106 $ 522,966 Accounts Receivable 386,391 274,886 Prepaid Expenses 124,262 74,622 Inventory 1,663,909 3,323,978

TOTAL CURRENT ASSETS (1)

Property and Equipment, Net 2,548,041 4,288,808 Operating Lease Right-of-Use Assets 4,998,953 5,257,327 Intangible Assets, Net 3,756,780 7,260,288 Other Assets 4,860 113,576

TOTAL NON-CURRENT ASSETS (1)

TOTAL ASSETS OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE $ 13,680,038 $ 21,181,051

Carrying Amounts of the Liabilities Included in Discontinued Operations:

Accounts Payable and Accrued Liabilities $ 1,069,500 $ 2,126,162 Income Taxes Payable 1,803,056 946,679 Other Current Liabilities 13,015 22,748 Current Portion of Operating Lease Liabilities 173,929 385,699

TOTAL CURRENT LIABILITIES (1)

Operating Lease Liabilities, Net of Current Portion 4,941,099 5,300,936 Deferred Tax Liabilities 1,325,032 6,278,079

TOTAL NON-CURRENT LIABILITIES (1)

TOTAL LIABILITIES OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE $ 9,325,631 $ 15,060,303 ______(1) The assets and liabilities of the disposal group classified as held for sale are classified as current on the Condensed Consolidated Balance Sheets as of December 26, 2020 because it is probable that the sale will occur and proceeds will be collected within one year.

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25. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through February 16, 2021, which is the date these unaudited interim Condensed Consolidated Financial Statements were issued, and has concluded that the following subsequent events have occurred that would require recognition in the Condensed Consolidated Financial Statements or disclosure in the notes to the Condensed Consolidated Financial Statements.

Senior Secured Convertible Credit Facility

On January 11, 2021, the Company amended and restated the securities purchase agreement under the GGP Convertible Facility (the “Fifth Amendment”) in which the Company received an additional advance of $10,000,000 evidenced by the issuance of senior secured convertible notes with a conversion price of $0.16 per Subordinate Voting Share. In connection with the Fifth Amendment, the Company paid a fee to the Lenders of $937,127 evidenced by the issuance of senior secured convertible notes with a conversion price of $0.16 per Subordinate voting Share. The Company also issued 62,174,567 warrants exercisable for five years at a purchase price of $0.16 per Subordinate Voting Share. The notes, restatement fee notes and warrants are subject to down round adjustment provisions, with certain exceptions, if the Company issues securities at a lower price.

Pursuant to the terms of the Fifth Amendment, of the $168,100,000 senior secured convertible notes outstanding prior to Tranche 4 and the Incremental Advances thereunder (including paid-in-kind interest accrued on such notes), the conversion price of $47,100,000 of the notes was changed to $0.17 per Share, of which $16,800,000 of the notes will continue to be subject to down round adjustment provisions. In addition, the Company cancelled an aggregate of 2,160,507 warrants that were issued with such notes and, in exchange, issued 41,967,832 warrants with an exercise price of $0.16 per Subordinate Voting Share.

The GGP Facility was also amended to, among other things, modify the minimum liquidity covenant, which extends the period during which it is waived from December 31, 2020 to June 30, 2021, reset the minimum liquidity threshold to $7,500,000 effective on July 1, 2021 through December 31, 2021, and $15,000,000 thereafter, and waiver of the minimum liquidity covenant if the Company is current on cash interest. Furthermore, covenants with regards to non-operating leases, capital expenditures and corporate SG&A will now be tied to a board of directors approved budget.

Unsecured Convertible Facility

Private Placement

26. RECLASSIFICATIONS

Certain comparative amounts have been reclassified to conform with current period presentation.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of MedMen Enterprises Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of MedMen Enterprises Inc. (the “Company”) as of June 27, 2020 and June 29, 2019, and the related consolidated statements of operations, changes in shareholders' equity and cash flows for the 52 week periods then ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 27, 2020 and June 29, 2019, and the results of its operations and its cash flows for the 52 week periods then ended, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty Related to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of June 30, 2019 due to the adoption of Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic 842, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ MNP LLP

We have served as the Company’s auditor since 2018.

Calgary, Alberta, Canada

October 15, 2020, except for the Note 28 as to which the date is January 15, 2021

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MEDMEN ENTERPRISES INC. Consolidated Balance Sheets As of June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2020 2019

ASSETS

Current Assets: Cash and Cash Equivalents $ 10,093,925 $ 33,226,370 Restricted Cash 9,873 55,618 Accounts Receivable 963,997 621,945 Current Portion of Prepaid Rent - Related Party - 1,580,205 Prepaid Expenses 4,662,764 13,897,904 Inventory 22,638,120 25,481,122 Current Assets Held for Sale 33,459,879 7,395,018 Other Current Assets 9,105,457 18,913,039 Due from Related Party 3,109,717 4,921,455

Total Current Assets 84,043,732 106,092,676

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Prepaid Rent - Related Party, Net of Current Portion - 4,327,077 Operating Lease Right-of-Use Assets 116,354,828 - Property and Equipment, Net 174,547,867 232,895,281 Intangible Assets, Net 148,081,030 201,101,415 Goodwill 33,861,150 53,786,872 Non-Current Assets Held for Sale - 56,970,526 Other Assets 17,374,997 32,302,547

TOTAL ASSETS $ 574,263,604 $ 687,476,394

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES: Current Liabilities: Accounts Payable and Accrued Liabilities $ 79,530,930 $ 47,610,197 Income Taxes Payable 38,599,349 13,658,111 Other Current Liabilities 19,732,305 3,646,380 Derivative Liabilities 546,076 9,343,485 Current Portion of Operating Lease Liabilities 9,757,669 - Current Portion of Finance Lease Liabilities 1,644,044 4,153,935 Current Portion of Notes Payable 16,188,668 21,998,522 Current Liabilities Held for Sale 18,659,038 3,641,620 Due to Related Party 4,556,814 5,640,817

Total Current Liabilities 189,214,893 109,693,067

Operating Lease Liabilities, Net of Current Portion 131,045,238 - Finance Lease Liabilities, Net of Current Portion 58,569,498 12,230,848 Other Non-Current Liabilities 4,215,533 24,929,028 Non-Current Liabilities Held for Sale - 7,185,447 Deferred Tax Liabilities 48,928,492 84,562,776 Senior Secured Convertible Credit Facility 166,368,463 86,855,415 Notes Payable, Net of Current Portion 152,809,937 150,749,037

TOTAL LIABILITIES 751,152,054 476,205,618

MEZZANINE EQUITY Super Voting Shares (no par value, unlimited shares authorized, 815,295 and 1,630,590 shares issued and outstanding as of June 27, 2020 and June 29, 2019, respectively) 82,500 164,999

SHAREHOLDERS’ EQUITY: Preferred Shares (no par value, unlimited shares authorized and no shares issued and outstanding) - - Subordinate Voting Shares (no par value, unlimited shares authorized, 403,907,218 and 173,010,922 shares issued and outstanding as of June 27, 2020 and June 29, 2019, respectively) - - Additional Paid-In Capital 791,172,612 613,356,006 Accumulated Deficit (631,365,865) (370,382,824)

Total Equity Attributable to Shareholders of MedMen Enterprises Inc. 159,889,247 243,138,181 Non-Controlling Interest (336,777,697) (31,867,405)

TOTAL SHAREHOLDERS’ EQUITY (176,888,450) 211,270,776

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 574,263,604 $ 687,476,394

The accompanying notes are an integral part of these consolidated financial statements.

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MEDMEN ENTERPRISES INC. Consolidated Statement of Operations Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2020 2019

Revenue $ 157,112,281 $ 119,919,169 Cost of Goods Sold 98,991,307 64,468,357

Gross Profit 58,120,974 55,450,812

Expenses: General and Administrative 200,273,872 239,344,688 Sales and Marketing 10,641,912 27,548,784 Depreciation and Amortization 39,953,805 22,055,590 Realized and Unrealized Gain on Changes in Fair Value of Contingent Consideration 8,951,801 - Impairment Expense 239,509,415 - Loss on Disposals of Assets, Restructuring Fees and Other Expense 6,233,034 16,542,840

Total Expenses 505,563,839 305,491,902

Loss from Operations (447,442,865) (250,041,090)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Other Expense (Income): Interest Expense 40,425,315 12,381,121 Interest Income (766,035) (701,790) Amortization of Debt Discount and Loan Origination Fees 9,061,967 8,308,751 Change in Fair Value of Derivatives (8,797,409) (3,908,722) Realized and Unrealized Gain on Investments, Assets Held For Sale and Other Assets (16,373,788) (4,259,000)

Loss on Extinguishment of Debt 44,355,401 1,164,054

Total Other Expense 67,905,451 12,984,414

Loss from Continuing Operations Before Provision for Income Taxes (515,348,316) (263,025,504) Provision for Income Tax Benefit 39,598,946 6,369,046

Net Loss from Continuing Operations (475,749,370) (256,656,458) Net Loss from Discontinued Operations, Net of Taxes (50,781,039) (1,264,196)

Net Loss (526,530,409) (257,920,654)

Net Loss Attributable to Non-Controlling Interest (279,266,058) (188,840,766)

Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (247,264,351) $ (69,079,888)

Loss Per Share - Basic and Diluted: From Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (0.73) $ (0.64) From Discontinued Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (0.19) $ (0.01) Weighted-Average Shares Outstanding - Basic and Diluted 270,418,842 105,915,105

The accompanying notes are an integral part of these consolidated financial statements.

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MEDMEN ENTERPRISES INC. Consolidated Statements of Changes in Shareholders’ Equity Fiscal Year Ended June 27, 2020 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

Mezzanine Equity TOTAL $ Units Amount Units $ Amount ATTRIBUTABLE Super Super Subordinate Additional TO Non- TOTAL Voting Voting Subordinate Voting Paid-In Accumulated SHAREHOLDERS Controlling SHAREHOLDERS’ Voting Shares Shares Shares Shares Capital Deficit OF MEDMEN Interest EQUITY

BALANCE AS OF JUNE 30, 2019 1,630,590 $164,999 173,010,922 $ - $ 613,356,006 $ (370,382,824) $ 243,138,181 $ (31,867,405) $ 211,270,776

Net Loss - - - - - (247,264,351) (247,264,351) (279,266,058) (526,530,409)

Controlling Interest Equity Transactions At-the-Market Equity Financing Program, Net - - 9,789,300 - 12,399,252 - 12,399,252 - 12,399,252 Shares Issued for Cash - - 61,596,792 - 50,193,938 - 50,193,938 - 50,193,938 Shares Issued to Settle Debt and Accrued Interest - - 6,801,790 - 5,255,172 - 5,255,172 - 5,255,172 Shares Issued to Settle Accounts Payable and Liabilities - - 24,116,461 - 7,477,045 - 7,477,045 - 7,477,045 Shares Issued to Settle Contingent Consideration - - 13,737,444 - 11,559,875 - 11,559,875 - 11,559,875 Asset Acquisitions - - 7,373,034 - 4,904,381 - 4,904,381 - 4,904,381 Equity Component of Debt - New and Amended - - - - 23,781,053 - 23,781,053 - 23,781,053 Redemption of MedMen - - 83,119,182 - 44,878,551 (12,685,751 ) 32,192,800 (32,192,800 ) -

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Corp Redeemable Shares Shares Issued for Vested Restricted Stock Units - - 329,548 ------Shares Issued for Other Assets - - 13,479,589 - 7,802,182 - 7,802,182 - 7,802,182 Shares Issued for Acquisition Costs - - 765,876 - 564,464 - 564,464 - 564,464 Shares Issued for Business Acquisition - - 5,112,263 - 9,833,000 - 9,833,000 - 9,833,000 Stock Grants for Compensation - - 4,675,017 - 3,621,769 - 3,621,769 35,157 3,656,926 Deferred Tax Impact On Conversion Feature - - - - (10,452,700 ) (557,289) (11,009,989 ) - (11,009,989 ) Share-Based Compensation - - - - 5,916,125 - 5,916,125 - 5,916,125 Repurchase and Cancellation of Super Voting Shares (815,295) (82,500) - - 82,500 (475,650) (475,650) - (475,650) Non-Controlling Interest Equity Transactions ------Distributions ------(310,633) (310,633) Equity Component on Debt and Debt Modification ------5,331,969 5,331,969 Share-Based Compensation ------1,492,073 1,492,073

BALANCE AS OF JUNE 27, 2020 815,295 $ 82,500 403,907,218 $ - $ 791,172,613 $ (631,365,865) $ 159,889,247 $ (336,777,697) $ (176,888,450)

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MEDMEN ENTERPRISES INC. Consolidated Statements of Changes in Shareholders’ Equity Fiscal Year Ended June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

BALANCE AS OF JULY 1, 2018 1,630,590 $164,999 45,215,976 $ - $ 172,441,570 $ (63,757,867) $ 108,848,702 $ 85,728,414 $ 194,577,116

Net Loss - - - - - (69,079,888) (69,079,888) (188,840,766) (257,920,654)

Controlling Interest Equity Transactions Bought Deal Equity Financing, net - - 29,321,818 - 115,289,679 - 115,289,679 - 115,289,679 Derivative Liability Incurred on Issuance of Equity - - - - (13,252,207) - (13,252,207) - (13,252,207) At-the-Market Equity Financing Program, net - - 5,168,500 - 13,306,096 - 13,306,096 - 13,306,096

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Shares Issued to Settle Debt - - 632,130 - 2,170,163 - 2,170,163 - 2,170,163 Shares Issued for Debt Issuance Costs - - 2,691,141 - 5,836,550 - 5,836,550 - 5,836,550 Equity Component of Debt - - - - 7,548,720 - 7,548,720 - 7,548,720 Redemption of MedMen Corp Redeemable Shares - - 58,095,821 - 204,400,820 (212,084,052) (7,683,232) 7,683,232 - Redemption of LLC Redeemable Units - - 5,566,993 - 16,768,120 7,671,349 24,439,469 (24,439,469) - Other Assets - - 919,711 - 2,986,501 - 2,986,501 - 2,986,501 Acquisition Costs - - 159,435 - 515,500 - 515,500 - 515,500 Acquisition of Non- Controlling Interest - - 9,736,870 - 33,035,817 (33,132,366) (96,549) 96,549 - Business Acquisitions - - 10,875,929 - 34,402,179 - 34,402,179 - 34,402,179 Asset Acquisitions - - 1,658,884 - 5,097,436 - 5,097,436 - 5,097,436 Vested Restricted Stock Units - - 333,479 ------Stock Grants for Compensation - - 2,634,235 - 5,712,872 - 5,712,872 - 5,712,872 Share-Based Compensation Expense - - - - 13,935,569 - 13,935,569 - 13,935,569 Options Issued - Other Assets - - - - 633,837 - 633,837 - 633,837 Deferred Tax Impact on Conversion Feature - - - - (7,473,216) - (7,473,216) - (7,473,216) Non-Controlling Interest Equity Transactions ------Cash Contributions ------290,000 290,000 Conversion of Convertible Debentures ------3,802,381 3,802,381 Asset Acquisitions ------41,154,986 41,154,986 Equity Component of Debt ------13,590,104 13,590,104 Shares Issued to Settle Debt ------6,759,125 6,759,125 Exercise of Warrants ------8,521,268 8,521,268 Other Assets ------343,678 343,678 Acquisition Costs ------597,320 597,320 Share-Based Compensation ------12,845,773 12,845,773

BALANCE AS OF JUNE 29, 2019 1,630,590 $164,999 173,010,922 $ - $ 613,356,006 $ (370,382,824) $ 243,138,181 $ (31,867,405) $ 211,270,776

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MEDMEN ENTERPRISES INC. Consolidated Statements of Cash Flows Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net Loss from Continuing Operations $ (475,749,370) $ (256,656,458) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Deferred Tax (Recovery) Expense (58,422,755) (26,144,449) Depreciation and Amortization 42,943,366 23,679,315 Non-Cash Operating Lease Costs 30,661,411 - Accretion of Debt Discount and Loan Origination Fees 9,061,967 8,308,751 Loss on Disposals of Asset - 9,315,073 Accretion of Deferred Gain on Sale of Property (566,625) (368,309) Impairment of Assets 239,509,415 - Realized and Unrealized Gain on Investments, Assets Held For Sale and Other Assets (16,373,788) (4,259,000) Unrealized Gain on Changes in Fair Value of Contingent Consideration 8,951,801 - Change in Fair Value of Derivative Liabilities (8,797,409) (3,908,722) Loss on Extinguishment of Debt and Settlement of Accounts Payable and Accrued Liabilities 44,355,401 1,164,054 Share-Based Compensation 11,065,124 32,494,214 Shares Issued for Acquisition Costs 564,464 1,112,820 Changes in Operating Assets and Liabilities: Accounts Receivable (342,052) (303,786) Prepaid Rent - Related Party 2,712,237 (1,356,270) Prepaid Expenses 9,227,342 (4,511,307) Inventory 3,265,309 (18,394,457) Other Current Assets 6,846,673 923,471 Due from Related Party 1,524,738 (1,412,420) Other Assets (10,833,928) (19,896,170) Accounts Payable and Accrued Liabilities 49,815,754 30,555,656 Interest Payments on Finance Liabilities (6,262,019) - Cash Payments - Operating Lease Liability (27,304,389) - Income Taxes Payable 20,015,975 9,705,252 Other Current Liabilities 16,308,233 (17,507,245) Due to Related Party (1,084,003) (6,752,861) Other Non-Current Liabilities 787,492 (774,000)

NET CASH USED IN CONTINUED OPERATING ACTIVITIES (108,119,636) (244,986,848)

Net Cash (Used in) Provided by Discontinued Operating Activities (2,007,113) 1,986,260

NET CASH USED IN OPERATING ACTIVITIES (110,126,749) (243,000,588)

CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of Property and Equipment (56,687,761) (116,897,412) Additions to Intangible Assets (4,140,786) (3,084,097) Proceeds from Sale of Investments 12,500,000 - Purchase of Investments - (8,759,791) Proceeds from Sale of Assets Held for Sale and Other Assets 21,947,797 - Proceeds from Sale of Property 9,300,000 24,073,319 Cash Payments for Asset Acquisitions - (19,780,494) Acquisition of Businesses, Net of Cash Acquired (1,000,000) (26,661,541) Restricted Cash 45,745 6,107,981

NET CASH USED IN CONTINUED INVESTING ACTIVITIES (18,035,005) (145,002,035)

Net Cash Used in Discontinued Investing Activities (1,356,211) (1,458,866)

NET CASH USED IN INVESTING ACTIVITIES (19,391,216) (146,460,901)

CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Subordinate Voting Shares for Cash 62,593,190 128,595,775 Exercise of Warrants for MedMen Corp Redeemable Shares - 8,521,268 Payment of Loan Amendment Fee (500,000) - Proceeds from Issuance of Senior Secured Convertible Credit Facility 50,000,000 100,000,000 Proceeds from Issuance of Notes Payable 13,850,000 166,243,539 Principal Repayments of Notes Payable (14,779,090) (55,007,057) Principal Repayments of Finance Lease Liability (1,785,282) (492,030) Debt and Equity Issuance Costs (1,939,394) (4,096,229) (Distributions) Contributions - Non-Controlling Interest (310,633) 290,000

NET CASH PROVIDED BY FINANCING ACTIVITIES 107,128,791 344,055,266

NET DECREASE IN CASH AND CASH EQUIVALENTS (22,389,174) (45,406,223) Cash Included in Assets Held for Sale (743,271) (527,377) Cash and Cash Equivalents, Beginning of Period 33,226,370 79,159,970

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,093,925 $ 33,226,370

The accompanying notes are an integral part of these consolidated financial statements.

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MEDMEN ENTERPRISES INC. Consolidated Statements of Cash Flows Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION Cash Paid for Interest $ 38,608,975 $ 13,471,532

Non-Cash Investing and Financing Activities: Net Assets Transferred to Held for Sale $ 23,890,069 $ 49,785,079 Adoption of ASC 842 - Leases $ 152,141,639 $ - Recognition of Right-of-Use Assets for Finance Leases $ 45,614,041 $ - Settlement of Contingent Consideration with Shares $ 11,559,875 $ - Increase in Fair Value of Contingent Consideration Related to Asset Acquisition $ 9,374,487 $ 8,438,690 Derivative Liability Incurred on Issuance of Equity $ - $ 13,252,207 Issuance of Subordinate Voting Shares for Intangible Assets and Other Assets $ 12,706,563 $ 2,986,501 Issuance of MedMen Corp Redeemable Shares for Other Assets $ - $ 343,678 Redemption of MedMen Corp Redeemable Shares $ 32,192,800 $ 7,683,232 Redemption of MedMen LLC Redeemable Shares $ - $ 24,439,469 Acquisition of Non-Controlling Interests $ - $ 96,549 Options Issued for Other Assets $ - $ 633,837 Equity Component of Debt Modification - Non-Controlling Interest $ 5,331,969 $ 21,138,824 Shares Issued for Debt Issuance Costs $ - $ 5,836,550 Conversion of Convertible Debentures $ - $ 3,802,381 Shares Issued to Settle Debt and Accrued Interest $ 6,908,194 $ - Shares Issued to Settle Accounts Payable and Liabilities $ 4,798,343 $ 8,929,288 Equity Component of Debt - New and Amended $ 23,781,053 $ - Accrued Interest Added to Senior Secured Convertible Debt $ 10,247,255 $ - Finance Lease Assets Acquired Under Sale and Leaseback Transactions $ - $ 16,876,813 Deferred Tax Impact on Property Purchases $ 15,948,592 $ 26,230,572 Deferred Tax Impact on Intangible Purchases $ (362,125) $ 36,154,740 Deferred Tax Impact on Conversion Feature $ 11,009,989 $ 7,473,216 Deferred Tax Impact on Intangible Asset Acquisitions $ - $ - Accrual for the Repurchase of Class A Super Voting Shares $ 475,650 $ - Deferred Gain on Sale and Leaseback Transactions $ - $ 5,666,274

The accompanying notes are an integral part of these consolidated financial statements.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

1. NATURE OF OPERATIONS

MedMen Enterprises Inc. (“MedMen Enterprises” or the “Company”), formerly known as Ladera Ventures Corp., was incorporated under the Business Corporations Act (British Columbia) on May 21, 1987. The Company’s Class B Subordinate Voting Shares are listed on the Canadian Securities Exchange under the symbol “MMEN”, on the OTCQX under the symbol “MMNFF”, on the Frankfurt Stock Exchange under the symbol “OJS.F”, on the Stuttgart Stock Exchange under the symbol “OJS.SG”, on the Munich Stock Exchange under the symbol “OJS.MU”, on the Berlin Stock Exchange under the symbol “OJS.BE” and on the Dusseldorf Stock Exchange under the symbol “OJS.DU”. The head office and principal address of the Company is 10115 Jefferson Boulevard, Culver City, California 90232. The Company’s registered and records office address is 885 West Georgia Street, Suite 2200, Vancouver, British Columbia Canada V6C 3E8. The Company operates through its principal whole-owned subsidiaries, MM CAN USA, Inc., a California corporation (“MM CAN” or “MedMen Corp”), and MM Enterprises USA, LLC, a Delaware limited liability company (“MM Enterprises USA”).

On January 24, 2018, pursuant to a Formation and Contribution Agreement (the “Agreement”), a roll-up transaction was consummated whereby the assets and liabilities of The MedMen Group of Companies were transferred into MM Enterprises USA. In return, the MedMen Group of Companies received 217,184,382 MM Enterprises USA Class B Units. The Agreement was entered into by and among MM Enterprises Manager, LLC, the sole manager of MM Enterprises USA; MMMG; Fund I; Fund II; MMNV2; DHS Owner; and Utica Owner.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The accompanying consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect the accounts and operations of the Company and those of the Company’s subsidiaries in which the Company has a controlling financial interest.

All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position of the Company as of June 27, 2020 and June 29, 2019, the consolidated results of operations and cash flows for the years ended June 27, 2020 and June 29, 2019 have been included. In accordance with the provisions of FASB ASC 810, “Consolidation” (“ASC 810”), the Company consolidates any variable interest entity (“VIE”), of which the Company is the primary beneficiary.

Fiscal Year-End

Going Concern

As reflected in the consolidated financial statements, the Company had an accumulated deficit and a negative net working capital (current liabilities greater than current assets) as of June 27, 2020, as well as a net loss and negative cash flow from operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements.

Management believes that substantial doubt of our ability to meet our obligations for the next twelve months from the date these financial statements were first made available has been alleviated due to, but not limited to, (i) capital raised between July 2020 and July 2021, (ii) restructuring plans that have already been put in place to reduce corporate-level expenses, (iii) debt amendments that have been agreed to with lenders and landlords to defer cash interest and rent payments, (iv) reduction in capital expenditures through a slow-down in new store buildouts, (v) plans to divest non-core assets to raise non-dilutive capital, (vi) enhancements to its digital offering, including direct-to-consumer delivery and curbside pick-up in light of COVID-19 and (vii) a change in retail strategy to pass certain local taxes and payment processing fees to customers.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Emerging Growth Company

Functional Currency

The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These consolidated financial statements are presented in U.S. dollars as this is the primary economic environment of the group. All references to “C$” refer to Canadian dollars.

Consolidation of Variable Interest Entities (“VIE”)

ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company’s involvement with the VIE. The equity method of accounting is applied to entities in which the Company is not the primary beneficiary or the entity is not a VIE and the Company does not have effective control, but can exercise influence over the entity with respect to its operations and major decisions. The Company does not consolidate a VIE in which it is not considered the primary beneficiary. The Company evaluates its relationships with all the VIE’s on an ongoing basis to reassess if it continues to be the primary beneficiary.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Consolidation of Variable Interest Entities (“VIE”) (Continued)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The following are the Company’s VIE that are included in these consolidated financial statements as of and for the fiscal years ended June 27, 2020 and June 29, 2019:

Retail Entities

Ownership Entity Location Purpose 2020 2019

Nature’s Cure, Inc. Los Angeles - LAX Dispensary (1)(3) Airport 0% 0% LAX Fund II Group, LLC (1)(4) 0% 0% Venice Caregiver Venice Beach - Abbot Dispensary Foundation, Inc. (2)(3) Kinney 0% 0%

(1) Nature’s Cure, Inc. is wholly-owned by MedMen Opportunity Fund II, LP, a related party, and under control of the Company through a management agreement. The Company does not hold any ownership interests in the entity. (2) Venice Caregivers Foundation, Inc. is wholly-owned by MedMen Opportunity Fund II, LP, a related party, and under control of the Company through a management agreement. The Company does not hold any ownership interests in the entity. (3) California Corporation (4) California Limited Liability Company

Basis of Consolidation

These consolidated financial statements as of and for the year ended June 27, 2020 and June 29, 2019 include the accounts of the Company, its wholly-owned subsidiaries and entities over which the Company has control as defined in ASC 810. Subsidiaries over which the Company has control are fully consolidated from the date control commences until the date control ceases. Control exists when the Company has ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity. In assessing control, potential voting rights that are currently exercisable are taken into account.

The following are the Company’s principal whole-owned subsidiaries that are included in these consolidated financial statements as of and for the fiscal years ended June 27, 2020 and June 29, 2019:

Corporate Entities

Ownership Entity Location Purpose 2020 2019

MM CAN USA, Inc. Manager of MM California (5) Enterprises USA, LLC 100% 100% MM Enterprises USA, Delaware Operating Entity LLC (8) 100% 100% Convergence Management Canada Public Relations Entity Services, Ltd. (17) 100% 0%

Management Entities

Ownership Subsidiaries Location Purpose 2020 2019

LCR SLP, LLC (8) Delaware Holding Company 100% 100% LCR Manager, LLC Delaware Manager of the Real Estate Investment (16) Trust 0% 70%

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following are MM Enterprises USA’s wholly-owned subsidiaries and entities over which the Company has control that are included in these consolidated financial statements as of and for the fiscal years ended June 27, 2020 and June 29, 2019:

Real Estate Entities

Ownership Subsidiaries Location Purpose 2020 2019

MMOF Venice Parking, LLC Venice Beach - Lincoln Parking Lot (6) Blvd. 100% 100% MME RE AK, LLC Venice Beach - Abbot Building (6) Kinney 100% 100% MMOF RE SD, LLC San Diego - Kearny Building (6) Mesa 100% 100% MMOF RE Vegas 2, LLC (10) Las Vegas - The Strip Building 100% 100% MMOF RE Fremont, LLC Las Vegas - Downtown Building (10) Arts District 100% 100%

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MME RE BH, LLC Los Angeles - Beverly Building (6) Hills 100% 100% NVGN RE Holdings, LLC Genetics Nevada (10) R&D Facility 100% 100%

Retail Entities

Ownership Subsidiaries Location Purpose 2020 2019

Manlin I, LLC Los Angeles - West Dispensary (1)(2)(6) Hollywood 100% 100% Farmacy Collective Los Angeles - West Dispensary (1)(3)(7) Hollywood 100% 100% The Source Santa Ana Orange County - Santa Dispensary (1(4)(6) Ana 100% 100% SA Fund Group RT, LLC 100% 100% CYON Corporation, Inc. Los Angeles - Beverly Dispensary (5) Hills 100% 100% BH Fund II Group, LLC (6) 100% 100% MMOF Downtown Collective, LLC Los Angeles - Dispensary (6) Downtown 100% 100% Advanced Patients’ Collective (5) 100% 100% DT Fund II Group, LLC (5) 100% 100% MMOF San Diego Retail, Inc. San Diego - Kearny Dispensary (6) Mesa 100% 100% San Diego Retail Group II, LLC (5) 100% 100% MMOF Venice, LLC Venice Beach - Lincoln Dispensary (6) Blvd. 100% 100% The Compassion Network, LLC (5) 100% 100% MMOF PD, LLC (6) Palm Desert Dispensary 100% 100% MMOF Palm Desert, Inc. (5) 100% 100% MMOF SM, LLC (6) Santa Monica Dispensary 100% 100% MMOF Santa Monica, Inc. (5) 100% 100% MMOF Fremont, LLC Las Vegas - Downtown Dispensary (10) Arts District 100% 100% MMOF Fremont Retail, Inc. (9) 100% 100% MME SF Retail, Inc. (5) San Francisco Dispensary 100% 100% MMOF Vegas, LLC Las Vegas - North Las Dispensary (10) Vegas 100% 100% MMOF Vegas Retail, Inc. (9) 100% 100% MMOF Vegas 2, LLC Las Vegas - Dispensary (10) Cannacopia 100% 100% MMOF Vegas Retail 2, Inc. (9) 100% 100% MME VMS, LLC (7) San Jose Dispensary 100% 100% Viktoriya’s Medical Supplies, LLC (7) 100% 100% Project Compassion Venture, LLC (9) 100% 100% Project Compassion Capital, LLC (9) 100% 100% Project Compassion NY, LLC (9) 100% 100% MedMen NY, Inc. New York (Manhattan / Syracuse Dispensaries / Lake Success / (11) Buffalo) 100% 100% MME IL Group LLC (15) Oak Park, Illinois Dispensary 100% 100% Future Transactions Holdings, LLC (15) 100% 100% MME Seaside, LLC (6) Seaside, California Dispensary 100% 100% PHSL, LLC (6) 100% 100% MME Sorrento Valley, LLC San Diego - Sorrento Dispensary (6) Valley 100% 100% Sure Felt, LLC (6) 100% 100% Rochambeau, Inc. (5) Emeryville, California Dispensary 100% 100% Kannaboost Technology, Inc. Scottsdale and Tempe, Dispensaries (14) Arizona 100% 100% CSI Solutions, LLC (13) 100% 100% MME AZ Group, LLC (13) Mesa, Arizona Dispensary 100% 100% EBA Holdings, Inc. (14) 100% 100% MattnJeremy, Inc. (5) Long Beach, California Dispensary 100% 0% Milkman, LLC Grover Beach, Dispensary (6) California 100% 0% MME 1001 North Retail, LLC (15) Chicago, Illinois Dispensary 100% 0% MME Evanston Retail, LLC (15) Evanston, Illinois Dispensary 100% 0%

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cultivation Entities

Project Mustang Cultivation and Northern Nevada Development, LLC (10) Production Facility 100% 100% The MedMen of Nevada 2, LLC (10) 100% 100% MMNV2 Holdings I, LLC (10) 100% 100% MMNV2 Holdings II, LLC (10) 100% 100% MMNV2 Holdings III, LLC (10) 100% 100% MMNV2 Holdings IV, LLC (10) 100% 100% MMNV2 Holdings V, LLC (10) 100% 100% Manlin DHS Development, Desert Hot Springs, Cultivation and LLC (10) California Production Facility 100% 100% Desert Hot Springs Green Horizon, Inc. (7) 100% 100% Project Compassion Cultivation and Utica, New York Venture, LLC (8) Production Facility 100% 100% EBA Holdings, Inc. Cultivation and Mesa, Arizona (14) Production Facility 100% 100% Kannaboost Technology, Cultivation and Mesa, Arizona Inc. (14) Production Facility 100% 100% CSI Solutions, LLC (13) 100% 100% MME Florida, LLC Cultivation and Eustis, Florida (12) Production Facility 100% 100%

(1) Subsidiary over which the Company previously controlled under a management agreement. See “Note 2 - Consolidation of Variable Interest Entities” for further information. All intercompany balances and transactions are eliminated on consolidation. (2) Manlin I, LLC contains the operations of the MedMen West Hollywood dispensary (“WeHo”). The Company had a management agreement with i5 Holdings Ltd. (“i5”) to manage WeHo, which was wholly-owned by i5, an entity controlled or owned by Captor Capital. Prior to January 25, 2019, the Company consolidated the entity as a VIE. On January 25, 2019, the Company acquired all non-controlling interest from i5. See “Note 19 - Shareholders’ Equity” for further information. (3) Farmacy Collective contains the operations of WeHo. The Company had a management agreement with i5 to manage WeHo, which was wholly-owned by i5, an entity controlled or owned by Captor Capital. Prior to January 25, 2019, the Company consolidated the entity as a VIE. On January 25, 2019, the Company acquired all non-controlling interest from i5. See “Note 19 - Shareholders’ Equity” for further information. (4) The Source Santa Ana contains the operations of the MedMen Santa Ana dispensary (“Santa Ana”). The Company had a management agreement with i5 to manage Santa Ana, which was wholly-owned by i5, an entity controlled or owned by Captor Capital. Prior to January 25, 2019, the Company consolidated the entity as a VIE. On January 25, 2019, the Company acquired all non-controlling interest from i5. See “Note 19 - Shareholders’ Equity” for further information. (5) California Corporation (6) California Limited Liability Company (7) California Non-Profit Corporation (8) Delaware Limited Liability Company (9) Nevada Corporation (10) Nevada Limited Liability Company (11) New York Corporation (12) Florida Limited Liability Company (13) Arizona Limited Liability Company (14) Arizona Corporation (15) Illinois Liability Company (16) Delaware Limited Liability Company

Non-Controlling Interest

Non-controlling interest represents equity interests owned by parties that are not shareholders of the ultimate parent. The share of net assets attributable to non-controlling interests is presented as a component of equity. Their share of net income or loss is recognized directly in equity. Changes in the parent company’s ownership interest that do not result in a loss of control are accounted for as equity transactions.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of total net revenue and expenses during the reporting period. The Company regularly evaluates significant estimates and assumptions related to the consolidation or non-consolidation of variable interest entities, estimated useful lives, depreciation of property and equipment, amortization of intangible assets, inventory valuation, stock-based compensation, business combinations, goodwill impairment, long-lived asset impairment, purchased asset valuations, fair value of financial instruments, compound financial instruments, derivative liabilities, deferred income tax asset valuation allowances, incremental borrowing rates, lease terms applicable to lease contracts and going concern. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses that are not readily apparent from other sources. The actual results the Company experiences may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations.

Cash and Cash Equivalents

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash and cash equivalents comprised of cash and highly liquid investments that are readily convertible into known amounts of cash with original maturities of three months or less.

Restricted Cash

Restricted cash balances are those which meet the definition of cash and cash equivalents but are not available for use by the Company. As of June 27, 2020 and June 29, 2019, restricted cash was $9,873 and $55,618 which is used to pay for lease costs and costs incurred related to building construction in Reno, Nevada. This account is managed by a contractor and the Company is required to maintain a certain minimum balance.

Inventory

Inventory is comprised of raw materials, finished goods and work-in-process such as pre-harvested cannabis plants and by-products to be extracted. The costs of growing cannabis, including but not limited to labor, utilities, nutrition and supplies, are capitalized into inventory until the time of harvest. All direct and indirect costs related to inventory are capitalized when incurred, and subsequently classified to cost of goods sold in the Consolidated Statement of Operations. Raw materials and work-in-process is stated at the lower of cost or net realizable value, determined using the weighted average cost. Finished goods inventory is stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out (“FIFO”) method of accounting. Net realizable value is determined as the estimated selling price in the ordinary course of business less estimated costs to sell. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items and reserves. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory is written down to net realizable value. Packaging and supplies are initially valued at cost. The reserve estimate for excess and obsolete inventory is based on expected future use. The reserve estimates have historically been consistent with actual experience as evidenced by actual sale or disposal of the goods. As of June 27, 2020 and June 29, 2019, the Company determined that no reserve was necessary.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments

Investments in unconsolidated affiliates are accounted as follows:

Equity Method and Joint Venture Investments

The Company accounts for investments in which it can exert significant influence but does not control as equity method investments in accordance with ASC 323, “Investments-Equity Method and Joint Ventures”. In accordance with ASC 825, the fair value option (“FVO”) to measure eligible items at fair value on an instrument by instrument basis can be applied. Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Investments in joint ventures are accounted for under the equity method. These investments are recorded at the amount of the Company’s investment and adjusted each period for the Company’s share of the investee’s income or loss, and dividends paid.

Investments at Fair Value

Equity investments not accounted for using the equity method are carried at fair value, with changes recognized in profit or loss (“FVTPL”) in accordance with ASC 321, “Investments-Equity Securities”.

Investments in Equity without Readily Determinable Fair Value

Investments without readily determinable fair values (which are classified as Level 3 investments in the fair value hierarchy) use a determinable available measurement alternative in accordance with ASC 321, “Investments-Equity Securities”. The measurement alternative requires the investments to be held at cost and adjusted for impairment and observable price changes, if any.

Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods:

Land Not Depreciated Buildings and Improvements 39 Years Finance Lease Asset Shorter of Lease Term or Economic Life Right of Use Assets 10 - 20 Years Furniture and Fixtures 3 - 7 Years Leasehold Improvements Shorter of Lease Term or Economic Life Equipment and Software 3 - 7 Years Construction in Progress Not Depreciated

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

Intangible Assets

Intangible assets are recorded at cost, less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization of definite life intangibles is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values and amortization methods are reviewed at each reporting period, and any changes in estimates are accounted for prospectively. Intangible assets with an indefinite life or not yet available for use are not subject to amortization. Amortization is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods

Dispensary Licenses 15 Years Customer Relationships 5 Years Management Agreement 30 Years Intellectual Property 10 Years Capitalized Software 3 Years

Goodwill

Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired, and liabilities assumed in a business acquisition. In accordance with ASC 350, “Intangibles-Goodwill and Other”, goodwill and other intangible assets with indefinite lives are no longer subject to amortization. The Company reviews the goodwill and other intangible assets allocated to each of the Company’s reporting units for impairment on an annual basis as of year-end or whenever events or changes in circumstances indicate carrying amount it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The carrying amount of each reporting unit is determined based upon the assignment of the Company’s assets and liabilities, including existing goodwill, to the identified reporting units. Where an acquisition benefits only one reporting unit, the Company allocates, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. In order to determine if goodwill is impaired, the Company measures the impairment of goodwill by comparing a reporting unit’s carrying amount to the estimated fair value of the reporting unit. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess. A goodwill impairment loss associated with a discontinued operation is included within the results of discontinued operations.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of Long-Lived Assets

For purposes of the impairment test, long-lived assets such as property, plant and equipment and definite-lived intangible assets are grouped with other assets and liabilities at the lowest level for which identifiable independent cash flows are available (“asset group”). The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In order to determine if assets have been impaired, the impairment test is a two-step approach wherein the recoverability test is performed first to determine whether the long-lived asset is recoverable. The recoverability test (Step 1) compares the carrying amount of the asset to the sum of its future undiscounted cash flows using entity-specific assumptions generated through the asset’s use and eventual disposition. If the carrying amount of the asset is less than the cash flows, the asset is recoverable and an impairment is not recorded. If the carrying amount of the asset is greater than the cash flows, the asset is not recoverable and an impairment loss calculation (Step 2) is required. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. The reversal of impairment losses is prohibited.

Leased Assets

On June 30, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842)” (“ASC 842”) using the modified retrospective approach, which provides a method for recording existing leases at adoption using the effective date as its date of initial application. In adoption of ASC 842, the Company applied the practical expedient which provides an additional transition method which allows entities to elect not to recast comparative periods presented. The Company elected the package of practical expedients provided by ASC 842, which forgoes reassessment of the following upon adoption of the new standard: (1) whether contracts contain leases for any expired or existing contracts, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing or expired leases. In addition, the Company elected an accounting policy to exclude from the balance sheet the right-of-use assets and lease liabilities related to short-term leases, which are those leases with a lease term of twelve months or less that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise.

The Company applies judgment in determining whether a contract contains a lease and if a lease is classified as an operating lease or a finance lease. The Company applies judgement in determining the lease term as the non-cancellable term of the lease, which may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. All relevant factors that create an economic incentive for it to exercise either the renewal or termination are considered. The Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate. In adoption of ASC 842, the Company applied the practical expedient which applies hindsight in determining the lease term and assessing impairment of right-of-use assets by using its actual knowledge or current expectation as of the effective date. The Company also applies judgment in allocating the consideration in a contract between lease and non-lease components. It considers whether the Company can benefit from the right-of-use asset either on its own or together with other resources and whether the asset is highly dependent on or highly interrelated with another right of-use asset. Lessees are required to record a right of use asset and a lease liability for all leases with a term greater than twelve months. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The incremental borrowing rate is determined using estimates which are based on the information available at commencement date and determines the present value of lease payments if the implicit rate is unavailable.

If a previous sale and leaseback transaction was accounted for as a sale and capital leaseback under ASC 840, then the entity continues recognizing any deferred gain or loss under ASC 842. Sale and leaseback transactions are assessed to determine whether a sale has occurred under ASC 606. If a sale is determined not to have occurred, the underlying “sold” assets are not derecognized and a financing liability is established in the amount of cash received. At such time that the lease expires, the assets are then derecognized along with the financing liability, with a gain recognized on disposal for the difference between the two amounts, if any. On the date of adoption, the Company recognized right of use assets and lease liabilities on its Consolidated Balance Sheets, which reflect the present value of the Company's current minimum lease payments over the lease terms, which include options that are reasonably certain to be exercised, discounted using the Company’s incremental borrowing rate. Refer to “Note 16 - Leases” for further discussion.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Tax expense recognized in profit or loss comprises the sum of current and deferred taxes not recognized in other comprehensive income or directly in equity.

Current Tax

Deferred Tax

Deferred tax assets are recognized to the extent that the Company believe that these assets are more likely than not to be realized. In making such a determination, all available positive and negative evidence are considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If it is determined that the Company would be able to realize deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax asset valuation allowance is recorded, which would reduce the provision for income taxes.

Change in Tax Policy

During the year ended June 27, 2020, the Company elected to change its policy on how it treats deferred taxes on its lease transactions. Upon the adoption of ASC 842, the Company elects to treat deferred taxes related to lease transactions subject to IRC Section 280E as permanent differences. Prior to this election, lease transactions were treated as temporary differences. Accordingly, the Company retrospectively applied this change to the prior year. As of June 29, 2019, the effect of the retrospective adjustments consists of the following:

Increase (Decrease) Consolidated Balance Sheet Property and Equipment, Net $ (6,105,588) Deferred Tax Liabilities $ (9,540,007) Accumulated Deficit $ 3,434,419

Consolidated Statement of Operations Provision for Income Taxes $ 3,355,935 Net Loss and Comprehensive Loss Attributable to Shareholders of MedMen Enterprises Inc. $ 3,355,935 Loss Per Share - Basic and Diluted Attributable to Shareholders of MedMen Enterprises Inc. $ 0.03

Consolidated Statement of Cash Flows Deferred Tax (Recovery) Expense $ (3,355,935) Depreciation and Amortization $ (78,484) Non - Cash Deferred Tax Impact on Property Purchases $ (6,184,072)

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”. Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance ASC 470, “Accounting for Convertible Securities with Beneficial Conversion Features”, as those professional standards pertain to “Certain Convertible Instruments”. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Derivative Liabilities

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the Consolidated Statements of Operations. In calculating the fair value of derivative liabilities, the Company uses a valuation model when Level 1 inputs are not available to estimate fair value at each reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the Consolidated Balance Sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the Consolidated Balance Sheets date. Critical estimates and assumptions used in the model are discussed in “Note 15 - Derivative Liabilities”.

Business Combinations

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value at the date of acquisition. Acquisition related transaction costs are expensed as incurred and included in the Consolidated Statements of Operations. Identifiable assets and liabilities, including intangible assets, of acquired businesses are recorded at their fair value at the date of acquisition. When the Company acquires control of a business, any previously held equity interest also is remeasured to fair value. The excess of the purchase consideration and any previously held equity interest over the fair value of identifiable net assets acquired is goodwill. If the fair value of identifiable net assets acquired exceeds the purchase consideration and any previously held equity interest, the difference is recognized in the Consolidated Statements of Operations immediately as a gain on acquisition. See “Note 9 - Business Acquisitions” for further details on business combinations.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. The Company allocates the total cost of the acquisition to the underlying net assets based on their respective estimated fair values. As part of this allocation process, the Company identifies and attributes values and estimated lives to the intangible assets acquired. These determinations involve significant estimates and assumptions regarding multiple, highly subjective variables, including those with respect to future cash flows, discount rates, asset lives, and the use of different valuation models, and therefore require considerable judgment. The Company’s estimates and assumptions are based, in part, on the availability of listed market prices or other transparent market data. These determinations affect the amount of amortization expense recognized in future periods. The Company bases its fair value estimates on assumptions it believes to be reasonable but are inherently uncertain. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with ASC 450, “Contingencies”, as appropriate, with the corresponding gain or loss being recognized in earnings in accordance with ASC 805.

Assets Held for Sale

The Company classifies assets held for sale in accordance with ASC 360, “Property, Plant, and Equipment”. When the Company makes the decision to sell an asset or to stop some part of its business, the Company assesses if such assets should be classified as an asset held for sale. To classify as an asset held for sale, the asset or disposal group must meet all of the following conditions: i) management, having the authority to approve the action, commits to a plan to sell the asset, ii) the asset is available for immediate sale in its present condition subject to certain customary terms, iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated, iv) the sale of the asset is probable, the transfer of the asset is expected to qualify for recognition as a completed sale, within one year, subject to certain exceptions, v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current value, and vi) actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or withdrawn. Assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell (“FVLCTS”). FVLCTS is the amount obtainable from the sale of the asset in an arm’s length transaction, less the costs of disposal. Once classified as held for sale, any depreciation and amortization cease to be recorded. For long-lived assets or disposals groups that are classified as held for sale but do not meet the criteria for discontinued operations, the assets and liabilities are presented separately on the balance sheet of the initial period in which it is classified as held for sale. The major classes of assets and liabilities classified as held for sale are disclosed in the notes to the consolidated financial statements. See “Note 7 - Assets Held for Sale” and “Note 26 - Discontinued Operations”.

Discontinued Operations

A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. Under ASC 205-20, “Discontinued Operations”, a discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale and represents a strategic shift that has or will have a major effect on the entity’s operations and financial results, or a newly acquired business or nonprofit activity that upon acquisition is classified as held for sale. Discontinued operations are presented separately from continuing operations in the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows. See “Note 26 - Discontinued Operations”.

Revenue Recognition

Revenue is recognized by the Company in accordance with ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. Through application of the standard, the Company recognizes revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

In order to recognize revenue under ASU 2014-09, the Company applies the following five (5) steps:

· Identify a customer along with a corresponding contract; · Identify the performance obligation(s) in the contract to transfer goods or provide distinct services to a customer;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods or services to a customer; · Allocate the transaction price to the performance obligation(s) in the contract; · Recognize revenue when or as the Company satisfies the performance obligation(s).

Revenues consist of wholesale and retail sales of cannabis, which are generally recognized at a point in time when control over the goods have been transferred to the customer and is recorded net of sales discounts. Payment is typically due upon transferring the goods to the customer or within a specified time period permitted under the Company’s credit policy. Sales discounts were not material during the years ended June 27, 2020 and June 29, 2019.

Revenue is recognized upon the satisfaction of the performance obligation. The Company satisfies its performance obligation and transfers control upon delivery and acceptance by the customer. Based on the Company’s assessment, the adoption of this new standard had no impact on the amounts recognized in its consolidated financial statements.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Dispensary Revenue

The Company recognizes revenue from the sale of cannabis for a fixed price upon delivery of goods to customers at the point of sale since at this time performance obligations are satisfied.

Cultivation and Wholesale

The Company recognizes revenue from the sale of cannabis for a fixed price upon the shipment of cannabis goods as the Company has transferred to the buyer the significant risks and rewards of ownership of the goods and the Company does not retain either continuing material involvement to the degree usually associated with ownership nor effective control over the goods sold and the amount of revenue can be measured reliably and collectible and the costs incurred in respect of the transaction is reliably measured.

Delivery Revenue

The Company recognizes revenue from the sale of cannabis delivered to its customer for a fixed price at the point of delivery since at this time performance obligations are satisfied.

Stock-Based Compensation

The Company has a stock-based compensation plan comprised of stock options, stock grants, deferred share units (“DSU”), restricted stock units (“RSU”) and three classes of member units: 1) Common Units; 2) Appreciation Only Long-Term Incentive Performance Units (“AO LTIP Units”); and 3) Fair Value Long-Term Incentive Performance Units (“FV LTIP Units”). AO LTIP Units and FV LTIP Units are convertible into Long-Term Incentive Performance Units (“LTIP Units”). LTIP Units are convertible into Common Units on a one-for-one basis.

The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation - Stock Compensation”, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards made to employees and directors, including restricted stock awards. For stock options, the Company estimates the fair value using a closed option valuation (Black-Scholes) model. When there are market-related vesting conditions to the vesting term of the share-based compensation, the Company uses a valuation model to estimate the probability of the market-related vesting conditions being met and will record the expense. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value is then expensed over the requisite service periods of the awards, net of estimated forfeitures, which is generally the performance period and the related amount is recognized in the Consolidated Statements of Operations.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss per Share

Financial Instruments

Classification

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company classifies its financial assets and financial liabilities in the following measurement categories: (i) those to be measured subsequently at fair value through profit or loss (“FVTPL”); (ii) those to be measured subsequently at fair value through other comprehensive income (“FVOCI”); and (iii) those to be measured subsequently at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and whether the contractual cash flows represent solely payments of principal and interest (“SPPI”). Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains or losses are either recorded in profit or loss or other comprehensive income. The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified.

Measurement

All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial asset or financial liability not at FVTPL, transaction costs that are directly attributable to the acquisition or issuance of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or loss. Financial assets and financial liabilities with embedded derivatives are considered separately when determining whether their cash flows are solely payment of principal and interest. Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken through profit and loss or other comprehensive income (irrevocable election at the time of recognition). For financial liabilities measured subsequently at FVTPL, changes in fair value due to credit risk are recorded in other comprehensive income.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. There have been no transfers between fair value levels during the year.

Financial instruments are measured at amortized cost or at fair value. Financial instruments measured at amortized cost consist of accounts receivable, due from and due to related party, other liabilities, and accounts payable and accrued liabilities wherein the carrying value approximates fair value due to its short-term nature. Other financial instruments measured at amortized cost include notes payable and senior secured convertible credit facility wherein the carrying value at the effective interest rate approximates fair value as the interest rate for notes payable and the interest rate used to discount the host debt contract for senior secured convertible credit facility approximate a market rate for similar instruments offered to the Company.

Cash and cash equivalents and restricted cash are measured at Level 1 inputs. Acquisition related liabilities resulting from business combinations are measured at fair value using Level 1 or Level 3 inputs. Investments that are measured at fair value use Level 3 inputs. Refer to “Note 6 - Other Current Assets” for assumptions used to value investments. Refer to “Note 14 - Contingent Consideration” for assumptions used to value the contingent consideration related to business combinations. Derivative liabilities are measured on quoted market prices in active markets at Level 1 inputs. Refer to “Note 15 - Derivative Liabilities” for assumptions used to value the derivative liabilities.

The individual fair values attributed to the different components of a financing transaction, notably derivative financial instruments, convertible debentures and loans, are determined using valuation techniques. The Company uses judgment to select the methods used to make certain assumptions and derive estimates. Significant judgment is also used when attributing fair values to each component of a transaction upon initial recognition, measuring fair values for certain instruments on a recurring basis and disclosing the fair values of financial instruments subsequently carried at amortized cost. These valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of instruments that are not quoted or observable in an active market.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following table summarizes the Company’s financial instruments as of June 27, 2020:

Financial Assets: Cash and Cash Equivalents $ - $ 10,093,925 $ 10,093,925 Restricted Cash $ - $ 9,873 $ 9,873 Accounts Receivable $ 963,997 $ - $ 963,997 Due from Related Party $ 3,109,717 $ - $ 3,109,717 Investments $ - $ 3,786,791 $ 3,786,791

Financial Liabilities: Accounts Payable and Accrued Liabilities $ 79,530,930 $ - $ 79,530,930 Other Liabilities $ 10,780,504 $ - $ 10,780,504 Acquisition Consideration Related Liabilities $ - $ 8,951,801 $ 8,951,801 Notes Payable $ 168,998,605 $ - $168,998,605 Due to Related Party $ 4,556,814 $ - $ 4,556,814 Derivative Liabilities $ - $ 546,076 $ 546,076 Senior Secured Convertible Credit Facility $ 166,368,463 $ - $166,368,463

The following table summarizes the Company’s financial instruments as of June 29, 2019:

Amortized Cost FVTPL TOTAL

Financial Assets: Cash and Cash Equivalents $ - $33,226,370 $ 33,226,370 Restricted Cash $ - $ 55,618 $ 55,618 Accounts Receivable $ 621,945 $ - $ 621,945 Due from Related Party $ 4,921,455 $ - $ 4,921,455 Investments $ - $13,018,791 $ 13,018,791

Financial Liabilities: Accounts Payable and Accrued Liabilities $ 47,610,197 $ - $ 47,610,197 Other Liabilities $ 2,872,380 $ - $ 2,872,380 Acquisition Consideration Related Liabilities $ - $ 774,000 $ 774,000 Notes Payable $172,747,559 $ - $172,747,559 Due to Related Party $ 5,640,817 $ - $ 5,640,817 Derivative Liabilities $ - $ 9,343,485 $ 9,343,485 Senior Secured Convertible Credit Facility $ 86,855,415 $ - $ 86,855,415

Impairment

The Company assesses all information available, including on a forward-looking basis the expected credit loss associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset at the reporting date with the risk of default at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information. For accounts receivable only, the Company applies the simplified approach as permitted by ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the trade receivable.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting Standards

In December 2019, FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

In January 2020, the FASB issued ASU 2020-01, “Investments-Equity Securities (Topic 321)”, “Investments-Equity Method and Joint Ventures (Topic 323)”, and “Derivatives and Hedging (Topic 815)”, which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU 2020-01 is effective for the Company beginning January 1, 2021. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt With Conversion and Other Options (Subtopic 470-20)” and “Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document December 15, 2020, and interim periods within those fiscal years. Adoption is applied on a modified or full retrospective transition approach. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

3. CONCENTRATIONS OF BUSINESS AND CREDIT RISK

The Company maintains cash with various U.S. banks and credit unions with balances in excess of the Federal Deposit Insurance Corporation and National Credit Union Share Insurance Fund limits, respectively. The failure of a bank or credit union where the Company has significant deposits could result in a loss of a portion of such cash balances in excess of the insured limit, which could materially and adversely affect the Company’s business, financial condition and results of operations.

The Company provides credit in the normal course of business to customers located throughout the U.S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. There were no customers that comprised more than 10% of the Company’s revenue for the years ended June 27, 2020 and June 29, 2019.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

4. PREPAID EXPENSES

As of June 27, 2020 and June 29, 2019, prepaid expenses consist of the following:

2020 2019

Prepaid Expenses $ 3,962,686 $ 9,471,692 Prepaid Rent - 2,077,771 Prepaid Insurance 700,078 2,348,441

Total Prepaid Expenses $ 4,662,764 $ 13,897,904

5. INVENTORIES

As of June 27, 2020 and June 29, 2019, inventory consists of the following:

2020 2019

Raw Materials $ 2,055,500 $ 3,696,177 Work-in-Process 8,807,137 6,527,407 Finished Goods 11,775,483 15,257,538

Total Inventory $ 22,638,120 $ 25,481,122

6. OTHER CURRENT ASSETS

As of June 27, 2020 and June 29, 2019, other current assets consist of the following:

2020 2019

Investments $ 3,786,791 $ 13,018,791 Excise Tax Receivable 5,254,595 5,721,945 Other Current Assets 64,071 172,303

Total Other Current Assets $ 9,105,457 $ 18,913,039

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

6. OTHER CURRENT ASSETS (Continued)

As of June 27, 2020 and June 29, 2019, investments included in other current assets consist of the following:

The Hacienda ToroVerde Company, Other Inc. LLC Old Pal Investments TOTAL (1) (2) (3)

Fair Value as of July 1, 2018 $ - $ - $ - $ - $ -

Additions 5,000,000 1,500,000 2,000,000 259,791 8,759,791 Unrealized Gain on Changes in Fair Value of Investments 600,000 709,000 2,430,000 520,000 4,259,000

Non-Cash Additions - - - 287,000 287,000 Unrealized Gain on Changes in Fair Value of Investments - 1,294,843 2,492,822 - 3,787,665 Unrealized Loss on Changes in Fair Value of Investments (5,600,000) (2,753,843) - - (8,353,843) Transfer to Assets Held For Sale - (3,503,843) (4,952,822) - (8,456,665) Transferred Back from Assets Held for Sale - 3,503,843 - - 3,503,843

Fair Value as of June 27, 2020 $ - $ 750,000 $ 1,970,000 $ 1,066,791 $ 3,786,791 ______(1) In July 2018, the Company purchased 9,000,000 common shares of ToroVerde Inc., an investment company focused on emerging international cannabis markets, for an aggregate purchase price of $5,000,000, or $0.56 per common share, amounting to 14.3% of the outstanding common shares. As the Company was not deemed to exert any significant influence, the investment was recorded at FVTPL as of June 27, 2020 and June 29, 2019. As of June 27, 2020, the Company holds 14.3% of the equity ownership and voting interests in this investment. (2) In July 2018, the Company purchased units of The Hacienda Company, LLC, a California limited liability company, which owns Lowell Herb Co., a California- based cannabis brand known for its pack of pre-rolls called Lowell Smokes, for an aggregate purchase price of $1,500,000, amounting to 3.2% of the outstanding units. Pursuant to SEC guidance under ASC 323, the application of equity method to investments applies to limited liability companies and are required unless the investor holds less than 3-5%. Accordingly, the Company was deemed to have significant influence resulting in equity method accounting. The Company has elected the fair value option under ASC 825 and the investment was recorded at FVTPL as of June 27, 2020 and June 29, 2019. As of June 27, 2020, the Company holds 3.2% of the equity ownership and voting interests in this investment. (3) In October 2018 and March 2019, the Company purchased an aggregate of 125.3 units of Old Pal, a California-based brand that provides high-quality cannabis flower for its customers, for an aggregate purchase price of $2,000,000, amounting to approximately 10.0% of the outstanding units with 8.7% voting interests. Pursuant to SEC guidance under ASC 323, the application of equity method to investments applies to limited liability companies and are required unless the investor holds less than 3-5%. Accordingly, the Company was deemed to have significant influence resulting in equity method accounting. During the year ended June 27, 2020, the Company decreased their level of ownership in which Old Pal no longer qualified under equity method accounting. The Company has elected the fair value option under ASC 825 and the investment was recorded at FVTPL as of June 29, 2019 and continues to measure Old Pal at the previously elected FVTPL under ASC 323 as of June 27, 2020. As of June 27, 2020, the Company holds 2.6% of the equity ownership and 1.4% of the voting interests in this investment.

During the year ended June 27, 2020, the Company recorded a net loss on changes in fair value of investments of $4,566,178. As of June 27, 2020, the Company’s investment balance in ToroVerde Inc. and The Hacienda Company, LLC was nil and $750,000, respectively. The Company determined that the fair value of its investment in Old Pal LLC was $1,970,000 as of June 27, 2020.

7. ASSETS HELD FOR SALE

A reconciliation of the beginning and ending balances of assets held for sale for the year ended June 27, 2020 is as follows:

Available for Discontinued PharmaCann Sale Operations Assets(1) Subsidiaries(2) (3) Investments TOTAL

Balance at Beginning of Period $ - $ - $ 64,365,544 $ - $ 64,365,544

Transferred In 6,870,833 12,066,428 - 8,456,665 27,393,926 Transferred Out - - - (3,503,843) (3,503,843) Changes in Fair Value of Assets Held for Sale (1,050,833) - - - (1,050,833) Proceeds from Sale - - - (4,952,822) (4,952,822) Ongoing Activity from Discontinued Operations - - (43,184,493) - (43,184,493) Impairment of Assets (5,607,600) - - - (5,607,600)

Total Assets Held for Sale at End of Period $ 212,400 $ 12,066,428 $ 21,181,051 $ - $ 33,459,879 ______(1) See “Note 10 - Termination of Previously Announced Acquisition” for further information. (2) Long-lived assets classified as held for sale that do not qualify as discontinued operation and classified as held for sale. Significant classes of assets and liabilities are presented in the notes to the consolidated financial in accordance with ASC 360-10. (3) See “Note 26 - Discontinued Operations” for further information.

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7. ASSETS HELD FOR SALE (Continued)

On October 17, 2019, the Company entered into an agreement to sell a portion of its interest in Old Pal LLC to Gotham Green Partners, a related party, and a third party. As a result, the Company classified the portion available for sale as an asset held for sale and recorded a gain on fair value of $2,492,822 during the year ended June 27, 2020. The interests sold consist of 86.80 Class B Units, or 6.9% of the outstanding units, resulting in an aggregate sale price of $4,952,822. As of June 27, 2020, the Company holds 38.50 Class B Units, or 2.6% of the outstanding units, in Old Pal LLC as an investment. See “Note 6 - Other Current Assets” for further information.

On November 13, 2019, the Company entered into an agreement to sell its investment in The Hacienda Company, LLC for an aggregate sale price of $3,503,843. As a result, the Company classified the investment as an asset held for sale and recorded a net loss on fair value of $1,459,000 during the fiscal year ended June 27, 2020. The parties subsequently withdrew from the agreement and management retracted its commitment to sell the investment in the current or near future. Accordingly, the Company reclassified the asset as an investment as of June 27, 2020. See “Note 6 - Other Current Assets” for discussion on the change in fair value of the Company’s investment. See “Note 27 - Subsequent Events” for further discussion.

During the year ended June 27, 2020, the Company decided to divest two cannabis licenses and entered into separate agreements to sell 100% of its membership interests in these two locations, located in California and Illinois, for an aggregate sale price of $21,500,000 of which $10,000,000 was paid upon the signing of the definitive agreement subsequent to June 27, 2020, and an additional $10,000,000 due within six months following the signing of the definitive agreement. See “Note 27 - Subsequent

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Events” for further discussion. A non-binding term sheet was entered on June 26, 2020 in which $750,000 is to be paid upon the date of close and $750,000 paid in equal monthly installments over twelve months through a promissory note. The contemplated sale of these locations are pending customary closing conditions and are expected to be completed within a one year period. The assets and liabilities related to these subsidiaries were classified as held for sale in accordance with ASC 360-10 and are measured at the lower of its carrying amount or FVLCTS. The California assets and Illinois assets received from PharmaCann do not qualify as discontinued operations under ASC 205, “Discontinued Operations”.

In accordance of ASC 360-10, the company performed an analysis of any impairments prior to reclassifying certain assets as held for sale and recorded an impairment charge of $53,389,260 of which $46,702,660 is included as a component of loss from discontinued operations,$1,050,833 which is included as a component of realized and unrealized gain on investments and assets held for sale in the Consolidated Statements of Operations and $5,635,767 is included as a component of impairment expense in the accompanying Consolidated Statements of Operations.

Subsidiaries classified as assets held for sale that do not qualify as discontinued operations as of June 27, 2020 consists of the following:

2020

Carrying Amounts of the Assets Included in Assets Held for Sale:

Cash and Cash Equivalents $ 743,271 Prepaid Expenses 7,798 Inventory 520,464 Other Current Assets 81,427

TOTAL CURRENT ASSETS (1)

Property and Equipment, Net 717,952 Operating Lease Right-of-Use Assets 190,986 Intangible Assets, Net 5,227,288 Goodwill 4,577,242

TOTAL NON-CURRENT ASSETS (1)

TOTAL ASSETS OF SUBSIDIARIES CLASSIFIED AS HELD FOR SALE $12,066,428

Carrying Amounts of the Liabilities Included in Assets Held for Sale: Accounts Payable and Accrued Liabilities $ 963,255 Income Taxes Payable 159,053 Other Current Liabilities 27,854

TOTAL CURRENT LIABILITIES (1)

Operating Lease Liabilities, Net of Current Portion 296,694 Deferred Tax Liabilities 2,151,879

TOTAL NON-CURRENT LIABILITIES (1)

TOTAL LIABILITIES OF SUBSIDIARIES CLASSIFIED AS HELD FOR SALE $3,598,735

(1) The assets and liabilities of subsidiaries classified as held for sale are classified as current on the Consolidated Balance Sheets as of June 27, 2020 because it is probable that the sale will occur and proceeds will be collected within one year.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

8. PROPERTY AND EQUIPMENT

As of June 27, 2020 and June 29, 2019, property and equipment consists of the following:

2020 2019

Land and Buildings $ 37,400,378 $ 68,005,575 Finance Lease Right-of-Use Assets 26,194,566 17,081,955 Furniture and Fixtures 13,970,449 14,273,678 Leasehold Improvements 63,976,372 36,186,686 Equipment and Software 29,277,120 36,175,978 Construction in Progress 38,470,016 75,997,268

Total Property and Equipment 209,288,901 247,721,140

Less Accumulated Depreciation (34,741,034) (14,825,859)

Property and Equipment, Net $174,547,867 $232,895,281

Depreciation expense related to continuing operations of $23,621,713 and $11,040,843 was recorded for the year ended June 27, 2020 and June 29, 2019, respectively, of which $22,989,561 and $1,424,358, respectively, is included in cost of goods sold. The amount of depreciation recognized for the right of use assets for capital leases during the years ended June 27, 2020 and June 29, 2019 was $2,752,022 and $896,176, respectively, see “Note 16 - Leases” for further information.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the year ended June 27, 2020 and June 29, 2019, borrowing costs totaling $1,749,467 and $2,724,118, respectively, were capitalized using an average capitalization rate of 10.2% and 10.5%, respectively. In addition, during the year ended June 27, 2020 and June 29, 2019, total labor related costs of $448,086 and $2,183,419, respectively, were capitalized to Construction in Progress, of which $207,664 and $320,917, respectively, was share-based compensation.

During the year ended June 27, 2020, management noted indicators of impairment of its long-lived assets of certain cultivation assets in California and Nevada as well as certain long-lived assets relating to operations in Florida which was due to the change in use of these asset groups and the impacts of COVID-19. Accordingly, the Company recorded an impairment of $143,005,028 of its property which are included as a component of impairment expense in the accompanying Consolidated Statement of Operations. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups.

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9. BUSINESS ACQUISITIONS

A summary of business acquisitions completed during the years ended June 27, 2020 and June 29, 2019 is as follows:

2019 Acquisitions 2020 Acquisitions

Kannaboost Viktoriya’s Future Technology MME Medical Transactions Inc. and CSI Evanston Supplies Holdings Solutions PHSL, 2019 MattnJeremy, Retail, 2020 LVMC, LLC Monarch LLC LLC LLC LLC TOTAL Inc. LLC TOTAL December February December October 9, 3, January 15, February 4, 13, March 29, September 3, 2, Closing Date: 2018 2018 2019 2019 2019 2019 2019 2019

Total Consideration

Cash $10,075,000 $ 6,986,541 $ 3,800,000 $ 3,050,000 $ 2,000,000 $ 750,000 $ 26,661,541 $ 1,000,000 $ - $ 1,000,000 Note Payable - - 6,500,000 3,000,000 15,000,000 2,250,000 26,750,000 - - - Relief of Credit ------6,930,557 6,930,557 Stock Issued: Subordinate Voting Shares - 13,337,471 - 6,895,270 14,169,438 - 34,402,179 - - - Present Value of Deferred Payments ------1,875,000 - 1,875,000 Contingent Consideration - 774,000 - - - - 774,000 9,833,000 - 9,833,000

Total Consideration $10,075,000 $ 21,098,012 $ 10,300,000 $ 12,945,270 $ 31,169,438 $3,000,000 $ 88,587,720 $ 12,708,000 $ 6,930,557 $ 19,638,577

Number of Shares Issued: Subordinate Voting Shares - 4,019,065 - 2,117,238 4,739,626 - 10,875,929 5,112,263 - 5,112,263

Preliminary Accounting Estimate of Net Assets Acquired

Current Assets $ - $ 1,670,296 $ 200,000 $ 88,142 $ 1,857,589 $ 114,645 $ 3,930,672 $ 405,000 $ 537,771 $ 942,771 Fixed Assets - 162,560 - 436,499 3,220,955 - 3,820,014 - 430,621 430,621 Non-Current Assets - - 3,328 - - - 3,328 - - - Liabilities Assumed - (647,800) - (24,481) - (67,989) (740,270) - - - Deferred Tax ) ) ) Liabilities (1,028,307) (1,229,995) (1,539,744) (1,444,940) (6,059,814) (474,158) (11,776,958) (1,844,465 (1,583,745 (3,428,210 Intangible Assets: - Customer Relationships 770,000 1,820,000 1,650,000 1,550,000 3,390,000 659,000 9,839,000 830,000 300,000 1,130,000 Dispensary License 4,889,000 2,410,000 3,510,000 2,530,000 13,900,000 930,000 28,169,000 5,100,000 4,500,000 9,600,000

Total Intangible Assets 5,659,000 4,230,000 5,160,000 4,080,000 17,290,000 1,589,000 38,008,000 5,930,000 4,800,000 10,730,000

Total Identifiable Net Assets 4,630,693 4,185,061 3,823,584 3,135,220 16,308,730 1,161,498 33,244,786 4,490,535 4,184,647 8,675,182

Goodwill (1) 5,444,307 16,912,951 6,476,416 9,810,050 14,860,708 1,838,502 55,342,934 8,217,465 2,745,910 10,963,375

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total Preliminary Accounting Estimate of Net Assets Acquired $10,075,000 $ 21,098,012 $ 10,300,000 $ 12,945,270 $ 31,169,438 $3,000,000 $ 88,587,720 $ 12,708,000 $ 6,930,557 $ 19,638,577

Acquisition Costs Expensed (3) $ 650,000 $ 1,147,320 $ 528,888 $ 252,492 $ - $ - $ 2,578,700 $ 421,497 $ - $ 421,497 Net Income (Loss) $ (2,108,596) $ (1,369,842) $ (1,462,801) $ (455,441) $ (1,143,117) $ 91,646 $ (6,448,151) $ (11,293,305) $ 870,289 $(10,423,016) Revenues $ 1,914,479 $ 3,905,002 $ 2,960,376 $ 1,665,602 $ 6,139,233 $ 331,535 $ 16,916,227 $ 3,199,684 $ 6,283,249 $ 9,482,933 Pro Forma Net Income (Loss) (2) $ (140,000) $ (219,000) $ (755,000) $ (250,000) $ 2,511,000 $ (235,000) $ 912,000 $ 10,000 $ (132,726) $ (122,726) Pro Forma Revenues (2) $ - $ 5,770,000 $ 5,334,000 $ 1,664,000 $ 11,044,000 $1,232,000 $ 25,044,000 $ 50,000 $ 4,488,035 $ 4,538,035 ______(1) Goodwill arising from acquisitions represent expected synergies, future income and growth, and other intangibles that do not qualify for separate recognition. Generally speaking, goodwill related to dispensaries acquired within a state adds to the footprint of the MedMen dispensaries within the state, giving the Company’s customers more access to the Company’s branded stores. Goodwill related to cultivation and wholesale acquisitions provide for lower costs and synergies of the Company’s growing and wholesale distribution methods which allow for overall lower costs.

(2) If the acquisition had been completed on July 1, 2018 or July 1, 2019 for the 2019 Acquisitions and 2020 Acquisitions, respectively, the Company estimates it would have recorded increases in revenues and net income (loss) shown in the pro forma amounts above.

(3) Acquisition costs include amounts paid in cash and equity. Of the acquisition costs paid in equity during 2019, the Company issued 159,435 Subordinate Voting Shares valued at the trading price of the Subordinate Voting Shares upon grant ($515,500) and 169,487 MedMen Corp Redeemable Shares valued at the trading price of the Subordinate Voting Shares upon grant ($597,320). Of the acquisition costs paid in equity during 2020, the Company issued 214,716 Subordinate Voting Shares valued at the trading price of the Subordinate Voting Shares upon grant ($421,497).

The purchase price allocations for the acquisitions, as set forth in the table above, reflect various preliminary fair value estimates and analyses that are subject to change within the measurement period as valuations are finalized. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair values of certain tangible assets, the valuation of intangible assets acquired and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition in the Company’s consolidated financial statements and, depending on the nature of the adjustments, other periods subsequent to the period of acquisition could be affected. All the acquisitions noted below were accounted for in accordance with ASC 805, “Business Combinations”

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

9. BUSINESS ACQUISITIONS (Continued)

Business acquisitions completed during the year ended June 27, 2020 is as follows:

MattnJeremy, Inc., d/b/a One Love Beach Club

On September 3, 2019, the Company completed the acquisition of MattnJeremy, Inc., d/b/a One Love Beach Club (“One Love”), a licensed medical and recreational cannabis dispensary located in Long Beach, California. The Company acquired all of the issued and outstanding shares of One Love for aggregate consideration of $12,708,000 which is comprised of $1,000,000 in cash at closing, $1,000,000 deferred payment to be paid six months after closing, $1,000,000 deferred payment to be paid one year after closing and the issuance of 5,112,263 Subordinate Voting Shares with an aggregate value of $9,833,000 at closing. Pursuant to a Lock-Up Agreement with the sellers, the shares cannot be sold or transferred for a period of one year from the closing date. As consideration for the lock up of the shares, the Company agreed to issue additional shares if the value of the shares decline prior to the expiration of the lock up period. The shares were valued at the present value of the $10,000,000 over a one year period. The deferred payments were present valued at $1,875,000, of which $958,500 remain as of June 27, 2020 and were included in other current liabilities in the Consolidated Balance Sheets. During the fiscal year ended June 27, 2020, the Company settled the first deferred payment of $1,000,000 by cash payment and by the issuance of 3,045,989 Subordinate Voting Shares valued at $748,658 based on the closing trading price on the issuance date. The Company recorded a loss on extinguishment of debt of $248,656. The loss was recorded as a component of other expense in the Consolidated Statement of Operations for the fiscal year ended June 27, 2020. In no case will the Company be required to pay additional consideration. However, if the working capital adjustment is negative, the Company will not be required to pay some deferred payments. There was no working capital adjustment based upon the closing inventory.

MME Evanston Retail, LLC

In connection with the termination of the PharmaCann Acquisition, on December 2, 2019, the Company received 100% of the membership interests in MME Evanston Retail, LLC (“Evanston”), which includes a retail location in Evanston, Illinois and related licenses, and a retail license in Greater Chicago, Illinois. The Company acquired all of the issued and outstanding shares of Evanston for aggregate consideration of $6,930,557. See “Note 10 - Termination of Previously Announced Acquisition” for further information.

Business acquisitions completed during the year ended June 29, 2019 is as follows:

LVMC, LLC, d/b/a Cannacopia

On October 9, 2018, the Company completed the acquisition of LVMC, LLC, d/b/a Cannacopia, a Nevada limited liability company (“LVMC”). The assets consist primarily of the state of Nevada issued dispensary license and customer relationships. The Company began retail operations at its current location in November 2018 with the intention of moving operations to real property purchased at 3035 Highland Drive, Las Vegas, Nevada 89109 and 3025 South Highland Drive, Las Vegas, Nevada 89109. The Company acquired all of the issued and outstanding shares of LVMC for aggregate consideration of $10,075,000 in cash.

On December 3, 2018, the Company completed the acquisition of Monarch, a Scottsdale, Arizona-based licensed medical cannabis license holder with dispensary, cultivation and processing operations, from WhiteStar Solutions LLC (“WhiteStar”) through the acquisition of Omaha Management Services, LLC. In addition, the Company acquired from WhiteStar their exclusive co-manufacturing and licensing agreements with Kiva, Mirth Provisions and HUXTON for the state of Arizona. The Company acquired all of the issued and outstanding shares of Monarch for aggregate consideration of $21,098,012, composed of $6,986,541 in cash, the issuance of 4,019,065 Subordinate Voting Shares at the trading price of $3.32 per share on the acquisition date and an earn out payment. As part of the purchase price, the sellers are entitled up to $1,000,000, payable in Subordinate Voting Shares of the Company, if certain revenue targets are met within one year after the close of the acquisition. The Company determined the present value of the Company’s estimates of future outcomes of revenue targets being met (revenue targets ranged from $7,000,000 to $10,000,000) and the likelihood of the earn out being paid which was valued at $774,000. The contingent consideration no longer considered contingent and is a component of accounts payable and accrued liabilities in the Consolidated Balance Sheets.

Viktoriya’s Medical Supplies LLC, d/b/a Buddy’s Cannabis

On January 15, 2019, the Company completed the acquisition of Viktoriya’s Medical Supplies LLC (“VMS”), d/b/a Buddy’s Cannabis. VMS owns a microbusiness license to retail, distribute, cultivate and manufacture cannabis onsite in San Jose, California. The Company acquired all of the issued and outstanding shares of VMS for aggregate consideration of $10,300,000, which included $3,800,000 in cash and $6,500,000 in note payable.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

9. BUSINESS ACQUISITIONS (Continued)

Future Transactions Holdings LLC d/b/a Seven Point

On February 4, 2019, the Company completed the acquisition of Future Transactions Holdings LLC (“Future Transactions”), d/b/a Seven Point, a licensed medical cannabis dispensary located in Oak Park, Illinois. The Company acquired all of the issued and outstanding shares of Future Transactions for aggregate consideration of $12,945,270, which is comprised of $3,050,000 in cash, $3,000,000 in note payable, and 2,117,238 Subordinate Voting Shares at the trading price of $3.26 per share on the acquisition date.

Kannaboost Technology Inc. and CSI Solutions LLC

On February 13, 2019, the Company completed the acquisition of Kannaboost Technology Inc. and CSI Solutions LLC (collectively referred to as “Level Up”). Level Up holds licenses for two vertically-integrated operations in Arizona, which include retail locations in Scottsdale and Tempe, as well as 25,000 square feet of cultivation and production capacity in Tempe and Phoenix. The Company acquired all of the issued and outstanding shares of Level Up for aggregate consideration of $31,169,438 which is comprised of $2,000,000 in cash, $15,000,000 in note payable, and 4,739,626 Subordinate Voting Shares at the trading price of $2.99 per share on the acquisition date. As part of the transaction, the Company also received a 40% stake in top-selling brand K.I.N.D. Concentrates, which is currently distributed in over 90% of the dispensaries in Arizona.

PHSL, LLC, d/b/a SugarLeaf Trading Co.

On March 29, 2019, the Company completed the acquisition of PHSL, LLC, d/b/a SugarLeaf Trading Co. (“SugarLeaf”), an adult and medical use cannabis license holder in Seaside, California. The Company acquired 100% of the equity interest for aggregate consideration of $3,000,000 which is comprised of $750,000 in cash and $2,250,000 in note payable.

10. TERMINATION OF PREVIOUSLY ANNOUNCED ACQUISITION

On October 11, 2018, the Company entered into a binding letter of intent with PharmaCann, LLC (“PharmaCann”) to acquire all outstanding equity interests in PharmaCann in an all-stock transaction (the “PharmaCann Acquisition”), valued at $682,000,000 based on the closing price of the Subordinate Voting Shares on October 9, 2018 (such value being subject to change based on the daily closing price of the Subordinate Voting Shares). In connection with the letter of intent, the Company provided PharmaCann with a $20,000,000 line of credit which bears interest at a rate of 7.5% per annum paid-in-kind. In the event the PharmaCann Acquisition does not close, any outstanding principal and interest shall become due and payable within twelve months of termination.

On October 7, 2019, the Company and PharmaCann entered into a mutual agreement to terminate the PharmaCann Acquisition. As compensation for the termination, the Company and PharmaCann agreed to accept a transfer of assets in exchange for repayment of the line of credit. The assets transferred were 100% of the membership interests (“Transfer of Interest”) in three entities holding the following assets:

MME Evanston Retail, LLC (“Evanston”), which holds a retail location in Evanston, Illinois and related licenses, and a retail license for Greater Chicago, • Illinois; • PharmaCann Virginia, LLC (“Staunton”), which holds land and a license for a vertically-integrated facility in Staunton, Virginia; and • PC 16280 East Twombly LLC (“Hillcrest”), which holds an operational cultivation and production facility in Hillcrest, Illinois and related licenses.

Each delivery of the Transfer of Interest, after successful regulatory approval, if any, will relieve one-third of the line of credit and any accrued interest due from PharmaCann. Concurrent with the termination agreement, the Company and PharmaCann entered into a membership interest purchase agreement which detailed the assets to be delivered to the Company. The Company entered into plans to sell the Staunton and Hillcrest assets while the Evanston assets will be owned and operated by the Company. As of June 27, 2020, the Company successfully received the membership interests in Evanston and Staunton, and transferred the rights to receive the equity interest in Hillcrest to a third party, and relieved the full amount due from PharmaCann.

The Evanston assets received were accounted for as a business combination in accordance with ASC 805, “Business Combinations” as the Evanston assets met the definition of a business. Pursuant to ASC 805, the fair value of the consideration paid, which is the portion of the line of credit relieved, approximates its carrying value. See “Note 9 - Business Acquisitions” for further information on the acquisition of Evanston.

The Company determined that the cost of the Staunton assets received was equal to the fair value of the assets given up as consideration, being the portion of the line of credit relieved. Accordingly, no gain or loss was recorded upon receipt of the Staunton assets. The Staunton assets were classified as assets held for sale in accordance with ASC 360, “Long-Lived Assets Classified as Held for Sale” and are measured at the lower of its carrying amount or FVLCTS. During the year ended June 27, 2020, the Company recorded $6,870,833 in assets held for sale related to Staunton and subsequently determined that the FVLCTS was less than its carrying amount and wrote down the asset by $1,050,833 which is included as a component of realized and unrealized gain on investments and assets held for sale in the accompanying Consolidated Statement of Operations. As of June 27, 2020, the Company determined the remaining balance, excluding the land value of approximately $212,000 was unrecoverable

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and wrote off the remaining balance of $5,607,600 which is included as a component of impairment expense in the accompanying Consolidated Statement of Operations. See “Note 7 - Assets Held for Sale” for further information.

The Company determined that the cost of the Hillcrest assets was equal to the fair value of the assets given up as consideration, being the portion of the line of credit relieved. The Company sold its rights to the Hillcrest assets for total gross proceeds of approximately $17,000,000 to an unrelated third party. Accordingly, the Company recorded a gain of $9,490,800 upon successful sale of the Hillcrest assets. The gain was recorded as a component of the realized and unrealized gain on changes in investments, assets held for sale, and other assets in the Consolidated Statements of Operations.

11. INTANGIBLE ASSETS

As of June 27, 2020 and June 29, 2019, intangible assets consist of the following:

2020 2019

Dispensary Licenses $139,736,881 $179,628,706 Customer Relationships 18,586,200 18,415,200 Management Agreement 7,594,937 7,594,937 Capitalized Software 9,255,026 4,010,454 Intellectual Property 8,520,121 8,212,764

Total Intangible Assets 183,693,165 217,862,061

Less Accumulated Amortization (35,612,135) (16,760,646)

Intangible Assets, Net $148,081,030 $201,101,415

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

11. INTANGIBLE ASSETS (Continued)

As of June 27, 2020, accumulated amortization for dispensary licenses, customer relationships, management agreement, capitalized software and intellectual property is $19,162,587, $8,113,913, $565,972, $2,273,432 and $5,496,231 respectively. As of June 29, 2019, accumulated amortization for dispensary licenses, customer relationships, management agreement, capitalized software and intellectual property is $9,330,150, $6,484,668, $366,667, $579,161 and nil, respectively.

The Company recorded amortization expense related to continuing operations of $16,880,094 and $12,439,105 for the year ended June 27, 2020 and June 29, 2019, respectively. During the year ended June 27, 2020 and June 29, 2019, $346,180 and $276,847, respectively, of share-based compensation was capitalized to capitalized software.

During the year ended June 27, 2020, management noted indicators of impairment of its long-lived assets of certain asset groups in California, Nevada and Florida. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups. Accordingly, the Company recorded an impairment of $38,959,000 which is included as a component of impairment expense in the accompanying Consolidated Statement of Operations.

12. GOODWILL

As of June 27, 2020 and June 29, 2019, goodwill was $33,861,150 and $53,786,872, respectively. See “Note 9 - Business Acquisitions” and Note 26 - Discontinued Operations” for further information. As of June 27, 2020 and June 29, 2019, the carrying amounts of goodwill were allocated to each group of reporting units as follows:

California Illinois Nevada Arizona New York TOTAL

Balance as of July 1, 2018 $ 8,427,925 $ - $ 11,111,980 $ - $10,677,692 $ 30,217,597

Acquired Goodwill 8,314,918 9,810,050 5,444,307 31,773,659 - 55,342,934 Transferred to Assets Held for Sale - - - (31,773,659) - (31,773,659)

Balance as of June 29, 2019 $ 16,742,843 $ 9,810,050 $ 16,556,287 $ - $10,677,692 $ 53,786,872

Acquired Goodwill 8,217,465 2,745,910 - - - 10,963,375 Transferred to Assets Held for Sale (1,869,900) (2,745,910) - - - (4,615,810) Impairment Losses - - (16,556,287) - (9,717,000) (26,273,287)

Balance as of June 27, 2020 $ 23,090,408 $ 9,810,050 $ - $ - $ 960,692 $ 33,861,150

Goodwill is assigned to the reporting unit, which is the operating segment level or one level below the operating segment. Goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities. Goodwill is reviewed annually for impairment or more frequently if impairment indicators arise. The Company adopted ASU 2017-04 which eliminates Step 2 from the quantitative assessment of the goodwill impairment test wherein the goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with its carrying amount. As amendment, the goodwill impairment test consists of one step comparing the fair value of a reporting unit with its carrying amount. The amount by which the carrying amount exceeds the reporting unit’s fair value is recognized as a goodwill impairment loss.

The Company conducts its annual goodwill impairment assessment as of the last day of the year. For the purpose of the goodwill impairment test, the Company performed a quantitative assessment wherein the fair value of each reporting unit is determined using a discounted cash flow method (income approach). The earnings forecast for the reporting unit impaired was revised based on a decrease in anticipated operating profits and cash flows for the next five years as it relates to the current economic environment related to COVID-19. The fair value of that reporting unit was estimated using the expected present value of future cash flows. As of June 27, 2020, the Company recorded a goodwill impairment loss in the amount of $26,273,287 as a result of its assessment which is included as a component of impairment expense in the Consolidated Statement of Operations.

13. OTHER ASSETS

2020 2019

Long Term Security Deposits for Leases $ 9,752,611 $ 10,451,381 Loans and other Long-Term Deposits 7,568,738 20,501,166 Other Assets 53,648 1,350,000 Total Other Assets $ 17,374,997 $ 32,302,547

During the year ended June 27, 2020, management noted indicators of realizability for certain loans and assets. Accordingly, the Company recorded an impairment of $5,944,143 which is included as a component of impairment expense in the Consolidated Statements of Operations.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

14. OTHER CURRENT LIABILITIES AND OTHER NON-CURRENT LIABILITIES

As of June 27, 2020 and June 29, 2019, other current liabilities consist of the following:

2020 2019

Accrued Interest Payable $ 9,051,650 $ 2,819,594 Contingent Consideration 8,951,801 774,000 Other Current Liabilities 1,728,854 52,786

Total Other Current Liabilities $ 19,732,305 $ 3,646,380

As of June 27, 2020 and June 29, 2019, other non-current liabilities, net of current portion, consist of the following:

2020 2019

Deferred Gain on Sale of Assets (1)(2) $ 4,164,713 $ 4,731,338 Contingent Consideration - 20,197,690 Other Long Term Liabilities 50,820 -

Total Other Non-Current Liabilities $ 4,215,533 $ 24,929,028 ______(1) See “Note 16 - Leases” for further information. (2) The current portion of Deferred Gain on Sale of Assets of $566,627 is recorded in Accounts Payable and Accrued Liabilities.

Contingent Consideration

Contingent consideration recorded relates to a business acquisition (see “Note 9 - Business Acquisitions”). The contingent consideration related to the acquisition of One Love Beach Club is based upon fair value of the additional shares required to be paid upon the expiration of the lock-up and is based upon the fair market value of the Company’s trading stock and is considered a Level 1 categorization in the fair value hierarchy. Contingent consideration classified as a liability and measured at fair value in accordance with ASC 480, “Distinguishing Liabilities from Equity”. The contingent consideration is remeasured at fair value at each reporting period with changes recorded in profit and loss in the Consolidated Statement of Operations.

As of June 29, 2019, the Company evaluated the contingent consideration related to an asset acquisition and remeasured the liability at fair value of $20,197,689. The increase in the contingent consideration of $8,438,690 was capitalized to the assets acquired, which was a dispensary license. Refer to “Note 11 - Intangible Assets”. On November 12, 2019, the Company entered into an agreement to amend the cash earn out due in December 2020 to $10,000,000 in Class B Subordinate Voting Shares due in December 2019. In conjunction with the amendment to settle the contingent consideration, the Company issued 10,691,455 Subordinate Voting Shares in full settlement valued at $10,811,219. The value of the acquired assets was adjusted for the change in fair value of the liability upon settlement of $9,386,471. As of June 27, 2020, there is no contingent consideration resulting from asset acquisitions on the Consolidated Balance Sheet. Remeasurement of the contingent liability after the date of acquisition is capitalized as part of the cost of the assets acquired and is allocated to increase the eligible assets on a relative fair value basis. The value of amortizable or depreciable identifiable assets are adjusted when contingent consideration is recognized at a later date in accordance with ASC 450 wherein the change in amortization or depreciation expense is recognized on a prospective basis.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

15. DERIVATIVE LIABILITIES

During the year ended June 29, 2019, the Company issued the following warrants related to bought deals. The exercise price of the warrants is denominated in Canadian dollars. Upon the analysis of the warrants issued under ASC 815, the Company determined that the warrants are to be accounted as derivative liabilities. The warrants are traded on the Canadian stock exchange. The following are the warrants issued related to the bought deals that were accounted for as derivative liabilities:

Number of Warrants

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document September Bought Deal Equity Financing 7,840,909 (1)(2)(3) December Bought Deal Equity Financing 13,640,000 (1)(2)(4) 21,480,909 ______(1) The exercise price of the warrants was denominated in a price other than the Company’s functional currency. In accordance with ASC 815-40, a share warrant denominated in a price other than the functional currency of the Company fails to meet the definition of equity. Accordingly, such a contract or instrument would be accounted for as a derivative liability and measured at fair value with changes in fair value recognized in the Consolidated Statement of Operations at each period-end. (2) Measured based on Level 1 inputs on the fair value hierarchy since there are quoted prices in active markets for these warrants. The Company used the closing price of the publicly-traded warrants to estimate fair value of the derivative liability at issuance and at each reporting date. (3) See “Note 19 - Shareholders’ Equity - September Bought Deal Equity Financing” for further information. (4) See “Note 19 - Shareholders’ Equity - December Bought Deal Equity Financing” for further information.

A reconciliation of the beginning and ending balance of derivative liabilities and change in fair value of derivative liabilities for the years ended June 27, 2020 and June 29, 2019 is as follows:

2020 2019

Balance as of Beginning of Year $ 9,343,485 $ -

Initial Recognition of Derivative Liabilities - 13,252,207 Change in Fair Value of Derivative Liabilities (8,797,409) (3,908,722)

Balance as of End of Year $ 546,076 $ 9,343,485

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

16. LEASES

As a result of the adoption of ASC 842 on June 30, 2019, the Company has changed its accounting policy for leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right‐of‐use (“ROU”) assets and accrued obligations under operating lease (current and non-current) liabilities in the Consolidated Balance Sheets. Finance lease ROU assets are included in property and equipment, net and accrued obligations under finance lease (current and noncurrent) liabilities in the Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are classified as a finance lease or an operating lease. A finance lease is a lease in which 1) ownership of the property transfers to the lessee by the end of the lease term; 2) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise; 3) the lease is for a major part of the remaining economic life of the underlying asset; 4) The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already included in the lease payments equals or exceeds substantially all of the fair value; or 5) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. The Company classifies a lease as an operating lease when it does not meet any one of these criteria.

As of the adoption date, the Company capitalized operating and finance right-of-use assets totaling $153,851,114 and $24,852,891, respectively. The Company leases land, buildings, equipment and other capital assets which it plans to use for corporate purposes and the production and sale of cannabis products. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and are expensed in the Consolidated Statements of Operations on the straight-line basis over the lease term.

During the year ended June 27, 2020, management noted indicators of impairment of its long-lived assets of certain asset groups in California, Nevada and Florida which included right-of-use assets related to operating leases. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups. Accordingly, the Company recorded an impairment of $19,785,621 on its right-of-use assets related to operating leases, which is included as a component of impairment expense in the accompanying Consolidated Statement of Operations.

The below are the details of the lease cost and other disclosures regarding the Company’s leases as of June 27, 2020:

2020

Finance Lease Cost: Amortization of Finance Lease Right-of-Use Assets $ 2,752,022 Interest on Lease Liabilities 6,262,019 Operating Lease Cost 30,661,411

Total Lease Expenses $ 39,675,453

2020

(Gain) and Loss on Sale and Leaseback Transactions, Net $ (704,207) Cash Paid for Amounts Included in the Measurement of Lease Liabilities: Financing Cash Flows from Finance Leases $ 1,785,282 Operating Cash Flows from Operating Leases $ 27,304,389 Non-Cash Additions to Right-of-Use Assets and Lease Liabilities: Recognition of Right-of-Use Assets for Finance Leases $ 45,614,041

2020

Weighted-Average Remaining Lease Term (Years) - Finance Leases 48 Weighted-Average Remaining Lease Term (Years) - Operating Leases 9 Weighted-Average Discount Rate - Finance Leases 10.68% Weighted-Average Discount Rate - Operating Leases 12.15%

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Finance Leases

Certain lease monthly payments may escalate up to 3.0% each year, other lease monthly payments will increase to the greater of 3.0% or the consumer price index from the United States Department of Labor in which variability is included within the current and noncurrent finance lease liabilities.

Future minimum principal payments under finance leases are as follows:

Finance Fiscal Year Ending Leases

June 26, 2021 $ 1,439,200 June 25, 2022 1,579,608 June 24, 2023 1,790,448 June 29, 2024 2,021,743 June 28, 2025 2,279,010 June 27, 2026 and Thereafter 51,479,265

Total Future Minimum Lease Payments $ 60,589,274

Finance leases noted above contain required security deposits, refer to “Note 11 - Other Assets”.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

16. LEASES (Continued)

Sale and Leaseback Transactions

During the years ended June 27, 2020 and June 29, 2019, the Company sold and subsequently leased back several of its properties in transactions with the Treehouse Real Estate Investment Trust (the “REIT”) and other third parties for total proceeds of $20,400,000 and $96,373,000, respectively. The Company determined that certain transactions of these sales did not qualify for sale-leaseback treatment under ASC 840 due to prohibited forms of continuing involvement in the assets sold by the Company. Following the adoption of ASC 842 on June 30, 2019, the previously unqualified transactions under ASC 840 were reassessed under criteria provided in the adopted guidance, resulting in no changes in classification of previously unqualified transactions because the lease classification would be a finance lease under ASC 842. Accordingly, the “sold” assets remain within land, building and leasehold improvements, as appropriate, for the duration of the lease and a finance liability equal to the amount of proceeds received was recorded within notes payable. Refer to “Note 17 - Notes Payable”. Upon lease termination, the sale will be recognized by removing the remaining carrying values of the assets and financing liability with any difference recognized as a gain.

During the year ended June 27, 2020, the Company sold two properties and subsequently leased them back. One of the transactions did not qualify for sale leaseback accounting as the resulting lease was a finance lease under ASC 842 and thus did not meet the criteria for transfer of control under ASC 606. Accordingly, the asset remained on the Company’s Consolidated Balance Sheet as of June 27, 2020 at its cost basis and the Company recorded a financing liability for the amount of consideration received. The financing liability is included in notes payable on the Consolidated Balance Sheets. Refer to “Note 17 - Notes Payable” for further information. The other transaction qualified for sale leaseback accounting and the Company recognized a gain immediately upon sale. During the year ended June 29, 2019, of the sale and leaseback transactions, two of the sold properties qualified as a finance lease in which any gains are recognized over the term of the new lease while losses are recognized immediately recognized under ASC 840. Gains recognized upon the sale and leaseback transactions were deferred under ASC 840 as noted below.

As of June 27, 2020 and June 29, 2019, the total deferred gain recorded for the sale and leaseback transactions was as follows:

2020 2019

Balance at Beginning of Year $ 5,297,965 $ -

Additions - 5,666,274 Amortization (566,625) (368,309)

Balance at End of Year 4,731,340 5,297,965

Less Current Portion of Deferred Gain (566,627) (566,627)

Deferred Gain on Sale of Assets, Net of Current Portion $ 4,164,713 $ 4,731,338

The current portion and non-current portion of deferred gains are included as a component of accounts payable and other non-current liabilities in the Consolidated Balance sheet.

The Company leases certain business facilities from third parties under operating lease agreements that specify minimum rentals. The leases expire through 2038 and contain certain renewal provisions with implied interest rates ranging from 19.2% through 11.7%. The operating leases require monthly payments ranging from $446 to $195,780. Certain lease monthly payments may escalate up to 3.0% each year, other lease monthly payments will increase to the greater of 3.0% or the consumer price index from the United States Department of Labor in which variability is included within the current and noncurrent operating lease liabilities.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

16. LEASES (Continued)

Operating Lease Liabilities (Continued)

Future minimum operating lease payments under non-cancelable operating leases is as follows:

Operating Fiscal Year Ending Leases

June 26, 2021 $ 34,049,336 June 25, 2022 34,040,450 June 24, 2023 34,224,191 June 29, 2024 31,289,161 June 28, 2025 30,837,827 June 27, 2026 and Thereafter 134,553,668

Total Future Minimum Lease Payments $298,994,663

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

17. NOTES PAYABLE

As of June 27, 2020 and June 29, 2019, notes payable consist of the following:

2020 2019

Secured promissory note dated November 27, 2019, issued to refinance property acquisition loans, which matures on May 31, 2020 and bears interest at a rate of 9.5% per annum. - 6,050,000

Finance liabilities incurred on various dates between January 2019 through September 2019 with implied interest rates ranging from 0.7% to 17.0% per annum. 83,576,661 71,538,352

Non-revolving, senior secured term note dated October 1, 2018, issued to accredited investors, which matures on January 31, 2022, and bears interest at a fixed rate of 15.5% per annum and requires monthly interest payments of 12.0% and 3.5% will accrue monthly as payment-in-kind. 77,675,000 77,675,000

Other 15,418 21,120

Total Notes Payable 179,779,893 184,518,829 Less Unamortized Debt Issuance Costs and Loan Origination Fees (10,781,288) (11,771,270)

Net Amount $168,998,605 $172,747,559 Less Current Portion of Notes Payable (16,188,668) (21,998,522)

Notes Payable, Net of Current Portion $152,809,937 $150,749,037

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

17. NOTES PAYABLE (Continued)

A reconciliation of the beginning and ending balances of notes payable for the years ended June 27, 2020 and June 29, 2019 is as follows:

2020 2019

Balance at Beginning of Period $172,747,559 $ 55,946,959

Cash Additions 13,850,000 166,243,539 Non-Cash Additions - Business Acquisition - 26,750,000 Non-Cash Addition - Debt Modification 1,000,000 - Debt Discount Recognized on Modification (1,000,000) - Payment of Amendment Fee (500,000) - Cash Payments (14,779,091) (55,007,057) Equity Component of Debt (5,331,969) (13,590,104) Shares Issued for Debt Issuance Costs - (1,857,431) Conversion of Convertible Debentures - (3,802,381) Shares Issued to Settle Debt (4,393,342) (8,929,288) Cash Paid for Debt Issuance Costs (61,500) (2,019,472) Accretion of Debt Discount 6,895,051 7,848,740 Non-Cash Loss on Extinguishment of Debt 571,897 1,164,054

Balance at End of Period $168,998,605 $172,747,559

Less Current Portion of Notes Payable (16,188,668) (21,998,522)

Notes Payable, Net of Current Portion $152,809,937 $150,749,037

Scheduled maturities of debt are as follows:

Scheduled Fiscal Year Ending Maturity

June 26, 2021 $ 16,188,668 June 25, 2022 77,675,000 June 24, 2023 - June 29, 2024 - June 28, 2025 - June 27, 2026 and Thereafter 85,916,225

Total Notes Payable $179,779,893

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

17. NOTES PAYABLE (Continued)

Senior Secured Term Loan Facility

On October 1, 2018, the Company closed a $73,275,000 senior secured term loan facility (the “Facility”) with funds managed by Hankey Capital and with an affiliate of Stable Road Capital (the “Lenders”). On October 3, 2018, the Company closed an additional tranche of the Facility, which increased the principal amount of the loan to $77,675,000. The principal amount under the Facility will accrue interest at a rate of 7.5% per annum, paid monthly, with a maturity date of 24 months following the date of closing on October 1, 2018. The Company may repay the balance of the Facility at any time and from time to time, in whole or in part, with a prepayment penalty of 1% of the outstanding principal amount repaid if repaid before December 31, 2019. In connection with the Facility, the Company’s equity interests in MMOF SD LLC, MMOF VENICE LLC, MMOF DOWNTOWN COLLECTIVE LLC, MMOF BH LLC, and MMOF VEGAS 2 LLC were pledged as security.

Additionally, MM CAN issued to the Lenders 8,105,642 warrants, each being exercisable for one Class B Common Share of such company at a purchase price per share of $4.97 for 30 months. Such Class B Common Shares are redeemable in accordance with their terms for Class B Subordinate Voting Shares of the Company. The Facility will be used for acquisitions, capital expenditures and general corporate purposes.

Amendment to Senior Secured Term Loan Facility

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On January 13, 2020, the Company completed the amendment of its existing term loan facility in the principal amount of $77,675,000 with Hankey Capital wherein the maturity date was extended from October 1, 2020 to January 31, 2022 and the interest rate was increased from a fixed rate of 7.5% per annum to 15.5% per annum. In addition, the Company may prepay the amounts outstanding, on a non-revolving basis, at any time and from time to time, in whole or in part, without penalty. The amendment secured the Facility by a pledge of 100% of the equity interest in Project Compassion NY, LLC, which includes MedMen NY, Inc. and MMOF NY Retail, LLC. The amendment to the term loan facility was not deemed to be a substantial modification under ASC 470-50, “Modifications and Extinguishments”.

Further, the Company cancelled the existing 16,211,284 and 1,023,256 warrants issued to the lenders exercisable at $4.97 and $4.73 per share, respectively, representing 100% of the loan amount. The Company issued new warrants to the lenders totaling 40,455,729 warrants exercisable at $0.60 per share until December 31, 2022. The new warrants may be exercised at the election of their holders on a cashless basis. The warrants issued in connection with the term loan facility met the scope exception under ASC 815, “Derivatives and Hedging” and are classified as equity instruments. The warrants are measured at fair value and recorded as a debt discount in connection with the term loan facility. See “Note 20 - Share-Based Compensation” for further information regarding the valuation method and assumptions used in determining the fair value of these equity instruments. As a result of the modification, the Company recorded an additional debt discount of $5,331,969 related to the change in terms of the warrants.

The existing loan facility is subject to certain covenant clauses whereby the Company is required to meet certain key financial ratios. As of June 27, 2020, the lenders waived certain covenant clauses. Refer to “Note 27 - Subsequent Events” for amendments to the existing loan facility subsequent to June 27, 2020.

Amendment to Secured Promissory Note

On January 30, 2020, the Company amended the secured promissory note issued in connection with the acquisition of Kannaboost Technology Inc. and CSI Solutions LLC (collectively referred to as “Level Up”) wherein the principal amount was amended from $12,000,000 to $13,000,000 and the maturity date was extended to April 8, 2020. On February 10, 2020, the secured promissory note was amended in which the Company was required to pay a $500,000 extension fee wherein the amendment was deemed to be a substantial modifications under ASC 470-50, “Modifications and Extinguishment”. Accordingly, the Company recorded a loss on extinguishment of debt of $571,897. The loss was recorded as a component of other expense in the Consolidated Statements of Operations for the fiscal year ended June 27, 2020.

On April 8, 2020, the Company entered into a third amendment of the Level Up secured promissory note wherein the maturity date was extended to the earlier of December 31, 2020 or in the event of default. No payments shall be due prior to the maturity date unless certain events occur. The balance of the secured promissory note will bear interest at a rate of 9.0% per annum until paid in full. The effectiveness of the amendment on April 8, 2020 is currently in dispute with the counterparty. The Company disputes the claims filed by the counterparty. The Company also disputes any default of the promissory note, has entered into a counterclaim and continues to seek resolution of the undisputed portion of the promissory note.

Settlement of Debt

During the fiscal year ended June 27, 2020, the Company entered into agreements with various noteholders to settle debt and accrued interest by the issuance of 6,801,790 Subordinate Voting Shares valued at $5,255,172 based on the closing trading prices on the agreement dates. The remaining principal and interest of the promissory notes at the settlement dates were $4,393,342 and $405,000, respectively. The Company recorded a loss on extinguishment of debt of $456,830. The loss was recorded as a component of other expense in the Consolidated Statements of Operations for the fiscal year ended June 27, 2020.

Financing Liability

In connection with the Company’s failed sale and leaseback transactions described in “Note 16 - Leases”, a financing liability was recognized equal to the cash proceeds received. The cash payments made on the lease less the portion considered to be interest expense, will decrease the financing liability.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

18. SENIOR SECURED CONVERTIBLE CREDIT FACILITY

As of June 27, 2020 and June 29, 2019, senior secured convertible credit facility consists of the following:

Tranche 2020 2019

Senior secured convertible notes dated April 23, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 1A $ 21,660,583 $ 20,000,000

Senior secured convertible notes dated May 22, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 1B 86,053,316 80,000,000

Senior secured convertible notes dated July 12, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 2 26,570,948 -

Senior secured convertible notes dated November 27, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 3 10,288,815 -

Senior secured convertible notes dated March 27, 2020, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 4 12,500,000 -

Amendment fee converted to senior secured convertible notes dated October 29, 2019, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. - 19,423,593 -

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Senior secured convertible notes dated April 24, 2020, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per IA-1 annum. 2,734,282 -

Restatement fee issued in senior secured convertible notes dated March 27, 2020, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. - 8,199,863 -

Total Drawn on Senior Secured Convertible Credit Facility 187,431,400 100,000,000

Less Unamortized Debt Discount (21,062,937) (13,144,585)

Senior Secured Convertible Credit Facility, Net $166,368,463 $ 86,855,415

A reconciliation of the beginning and ending balances of senior secured convertible credit facility for the years ended June 27, 2020 and June 29, 2019 is as follows:

Amendment Restatement Tranche 1 Tranche 2 Tranche 3 Tranche 4 Fee Notes Fee Notes TOTAL

Balance as of July 1, 2018 $ - $ - $ - $ - $ - $ - $ -

Cash Additions 100,000,000 - - - - - 100,000,000 Net Effect on Equity Component of New and Amended Debt (7,548,720) - - - - - (7,548,720) Shares Issued for Debt Issuance Costs (3,979,119) - - - - - (3,979,119) Cash Paid for Debt Issuance Costs (2,076,757) - - - - - (2,076,757) Amortization of Debt Discounts 460,011 - - - - - 460,011

Balance as of June 29, 2019 $ 86,855,415 $ - $ - $ - $ - $ - $ 86,855,415

Cash Additions - 25,000,000 10,000,000 15,000,000 - - 50,000,000 Fees Capitalized to Debt Related to Debt Modifications - - - 234,282 18,750,000 8,199,863 27,184,145 Paid-In-Kind Interest Capitalized 7,713,899 1,570,948 288,815 - 673,593 - 10,247,255 Net Effect on Equity Component of New and Amended Debt 6,942,719 (1,137,637) (172,786) (12,161,866) (511,900) (1,245,676) (8,287,146) Cash Paid for Debt Issuance Costs - (482,998) (641,689) (673,435) - - (1,798,122) Amortization of Debt Discounts 1,321,414 402,374 206,093 56,250 52,907 127,878 2,166,916

Balance as of June 27, 2020 $102,833,447 $25,352,687 $ 9,680,433 $ 2,455,231 $ 18,964,600 $ 7,082,065 $166,368,463

On March 22, 2019, the Company signed a binding term sheet for a senior secured convertible credit facility (the “Convertible Facility”) of up to $250,000,000 from funds managed by Gotham Green Partners (“GGP”), an investor in the global cannabis industry. The Company subsequently entered into definitive documentation on April 23, 2019 and closed on a portion of the initial funding tranche.

The Convertible Facility will be accessed through issuances to the lenders of convertible senior secured notes (“Notes”) co-issued by the Company and MM CAN, in an aggregate amount of up to $250,000,000. Under the definitive terms, Notes will be issuable in up to five tranches, with each tranche being issuable at the option of the Company, subject to certain conditions and, in certain cases, price thresholds for the Class B Subordinate Voting Shares of the Company. The initial tranche, which the Company and MM CAN have drawn down on April 23, 2019 and May 22, 2019, was for gross proceeds of $100,000,000 (“Tranche 1”). The balance of the Convertible Facility will be funded through additional tranches.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

18. SENIOR SECURED CONVERTIBLE CREDIT FACILITY (Continued)

All Notes will have a maturity date of 36 months from the Closing Date (the “Maturity Date”), with a 12-month extension feature available to the Company on certain conditions, including payment of an extension fee of 1.0% of the principal amount under the outstanding Notes. All Notes will bear interest from their date of issue at LIBOR plus 6.0% per annum. During the first 12 months, interest may be paid-in-kind (“PIK”) at the Company’s option such that any amount of PIK interest will be added to the outstanding principal of the Notes. The Company shall have the right after the first year, to prepay the outstanding principal amount of the Notes prior to maturity, in whole or in part, upon payment of 105% of the principal amount in the second year and 103% of the principal amount thereafter.

The Notes (including all accrued interest and fees thereon) will be convertible, at the option of the holder, into Subordinate Voting Shares at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The conversion price for each tranche of Notes is determined based upon a predefined formula as defined in the agreement immediately prior to funding of each tranche.

The Company may force the conversion of up to 75% of the then outstanding Notes if the VWAP of the Subordinate Voting Shares (converted to U.S. dollars) is at least $8.00 for any 20 consecutive trading day period, at a conversion price per Subordinate Voting Share equal to $8.00. If 75% of the then outstanding Notes are converted by the Company, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months (if such extended period is longer than the maturity date of such Notes), subject to an outside date of 48 months from the Closing Date.

Upon issuance of Notes pursuant to any tranche, the lenders will be issued share purchase warrants of the Company (“Warrants”), each of which would be exercisable to purchase one Subordinate Voting Share for 36 months from the date of issue. The number of Warrants to be issued will represent an approximate 50% Warrant coverage for each tranche. The exercise prices for each tranche of Warrants are determined based upon a predefined formula as defined in the agreement immediately prior to funding of each tranche.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subordinate Voting Shares valued at an aggregate price of $3,979,119 using the trading share price of the Company at the issuance date. The cash consideration and Subordinate Voting Shares issued were allocated between debt and equity.

As additional consideration for the purchase of the Notes, at the time of each Tranche closing, the lenders will be paid an advance fee of 1.5% of the principal amount of the Notes purchased in such Tranche. While the Notes are outstanding, the lenders will be entitled to the collective rights (a) to nominate an individual to the board of directors of the Company, and (b) to appoint a representative to attend all meetings of the board of directors in a non-voting observer capacity. The Notes and the Warrants, and any Subordinate Voting Shares issuable as a result of a conversion of the Notes or exercise of the Warrants, will be subject to a four-month hold period from the date of issuance of such Notes or such Warrants, as applicable, in accordance with applicable Canadian securities laws.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

18. SENIOR SECURED CONVERTIBLE CREDIT FACILITY (Continued)

As of June 29, 2019, the Company has drawn down $20,000,000 from Tranche 1A, $80,000,000 from Tranche 1B. As of June 27, 2020, the Company has drawn down $100,000,000 from Tranche 1A and 1B, $25,000,000 from Tranche 2, $10,000,000 from Tranche 3, $12,500,000 from Tranche 4 and $2,500,000 from an incremental advance (see below).

On August 12, 2019, the Company amended certain provisions of the Convertible Facility led by GGP (the “First Amendment”). The Company agreed to pay GGP 15% of the $125,000,000 drawn down prior to entering into the amendment as an amendment fee, which was calculated at $18,750,000 and was subsequently converted into convertible notes on October 29, 2019 at a conversion price of $1.28 per Class B Subordinate Voting Share (the “Amendment Fee Notes”). The Amendment Fee Notes may be cancelled in the event that either: the obligations, excluding the amendment fee, are paid in full, whether by prepayment or when due; or the lender elects to convert a portion of the obligations and the price per share is greater than $2.95. Tranche 1 and Tranche 2 had been fully drawn down as of May 22, 2019 and July 12, 2019, respectively. The amount of funds available to the Company in Tranche 3 and Tranche 4 was amended to $50,000,000 and $75,000,000, respectively. The aggregate amount available to be borrowed remained the same. The new terms of the First Amendment were deemed to be substantial modifications under ASC 470-50, “Modifications and Extinguishments”. Accordingly, the Company recorded a loss on extinguishment of debt of $31,816,659. The loss was recorded as a component of other expense in the Consolidated Statements of Operations for the fiscal year ended June 27, 2020.

On October 29, 2019, the Company completed the second amendment of the Convertible Facility with GGP (the “Second Amendment”) wherein certain reporting and financial covenants were modified. The Amendment removed the senior debt to market capitalization ratio covenant. The conversion of any portion of the obligations into shares is restricted until on or after October 29, 2020. As a result of the Second Amendment, the Company has the right to repay, in whole or in part, the outstanding principal amount of the Note together with accrued and unpaid interest and fees, plus the applicable premium which is five percent (5%) of the principal amount being repaid before the second anniversary of the date of issuance of each convertible note, and three percent (3%) of the principal amount being repaid thereafter. The amount of available credit in the remaining tranches was amended to $10,000,000 for Tranche 3 and $115,000,000 for Tranche 4, of which the full amount of Tranche 3 was funded on November 27, 2019. The aggregate amount available to be borrowed remained the same. Further, the Second Amendment provided that the funding of Tranche 4 will require the consent of both the Company and the lenders under the Convertible Facility. The new terms of the Second Amendment do not qualify as a substantial modification under ASC 470-50, “Modifications and Extinguishments”.

On March 27, 2020, the Company amended and restated the securities purchase agreement with GGP (the “Third Amendment”) wherein GGP committed to fund up to $150,000,000 through Tranche 4 and subsequent tranches (each such subsequent tranche, an “Incremental Advance”) subject to the funding requirements of the Company and certain other conditions. The maximum funding capacity under the Convertible Facility, as amended on March 27, 2020 is $285,000,000 of which $135,000,000 had been drawn down in prior tranches. The final $25,000,000 is subject to acceptance by the Company. Certain financial covenants were also modified which include a reduction in the required go-forward minimum cash balance and the removal of the fixed charge coverage ratio requirement that was to become effective in calendar 2021. The Third Amendment removed the accelerated and forced conversion rights previously held by GGP under the agreement as amended on August 12, 2019.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

18. SENIOR SECURED CONVERTIBLE CREDIT FACILITY (Continued)

The Company agreed to pay GGP 10% of the existing Notes outstanding prior to Tranche 4, including paid-in-kind interest accrued on such Notes (the “Existing Notes”), or $163,997,255, as a restatement fee (the “Restatement Fee”), of which the first 50% of the Restatement Fee was paid through the issuance of additional Notes in an aggregate principal amount equal to $8,199,863 at a conversion price of $0.26 (the “Restatement Fee Notes”). The remaining 50% of the Restatement Fee, or $8,199,863, will be due upon each Incremental Advance on a pro-rata basis of $87,500,000. As additional consideration for the purchase of the Tranche 4 Notes, the lenders participating in Tranche 4 Advance were paid an advance fee of 1.5% (the “Advance Fee”) of the aggregate principal amount, or $187,500, which was withheld from the Tranche 4 funding amount. The 1.5% Advance Fee will also be paid in respect of any Incremental Advances.

Under the Amended and Restated SPA, each Incremental Advance will be issued at a conversion price per Subordinate Voting Share equal to the five (5) day VWAP of the Subordinate Voting Shares as of the trading day immediately preceding the date of completion of such Incremental Advance, subject to a minimum price of $0.20 and maximum price of $0.40 (in respect of each Incremental Advance, a “Restatement Conversion Price”), provided that the first Incremental Advance (the “Tranche 4 Advance”) will have a Restatement Conversion Price of $0.26. In addition, as any Incremental Advances are funded, the conversion price of the relative portion of the Existing Notes will be amended to the Restatement Conversion Price.

In connection with each Incremental Advance, the Company will also share purchase warrants of the Company (“Incremental Warrants”) representing 100% coverage on the aggregate principal amount of such Incremental Advance, each of which will be exercisable to purchase one Subordinate Voting Share for a period of five (5) years from the date of issuance, at an exercise price per Subordinate Voting Share equal to the Restatement Conversion Price for such Incremental Advance. In addition, as any Incremental Advances are funded, the relative portion of the existing share purchase warrants issued under the Convertible Facility and outstanding prior to Tranche 4 (the “Existing Warrants”) will be cancelled and replaced by new share purchase warrants of the Company (the “ Replacement Warrants”), each of which will be exercisable to purchase one Subordinate Voting Share for a period of five (5) years from the date of issuance at an exercise price equal to the Restatement Conversion Price for such Incremental Advance. The Incremental Warrants, including the Tranche 4 Warrants, and the Replacement Warrants will be exercisable on a cashless (net exercise) basis.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In addition, if the Company’s retail operations achieve two (2) consecutive three-month periods of positive after-tax free cash flow during any time prior to the expiry date for the Replacement Warrants, then all outstanding Replacement Warrants will be automatically cancelled upon achieving the milestone.

The principal amount of the Existing Notes that will be repriced and the number of Existing Warrants that will be cancelled and replaced upon an Incremental Advance will be based on the percentage that the amount of such Incremental Advance is of a total funding target of $100,000,000 (the “Funding Target Percentage”). The applicable Existing Notes will be repriced to the Restatement Conversion Price for such Incremental Advance. The Incremental Replacement Warrants issued as a part of such Incremental Advance will represent 50% coverage on the amount determined by multiplying the Funding Target Percentage by $135,000,000. The Third Amendment was a substantial modification in accordance ASC 470-50, “Modifications and Extinguishments”. As a result of the Third Amendment, the Company recorded a loss on extinguishment of debt in the amount of $10,706,883. The loss was recorded as a component of other expense in the Consolidated Statements of Operations for the fiscal year ended June 27, 2020.

As a result of the amendments during fiscal year ended June 27, 2020, all convertible notes will have a maturity date of 36 months from April 23, 2019 (the “Maturity Date”), with a twelve-month extension feature available to the Company on certain conditions, including payment of an extension fee of 1.0% of the principal amount under the outstanding Convertible Facility, provided that if the Tranche 4 Notes and Funding Commitments reach at least $100,000,000 in the aggregate, GGP will have certain options to extend the Maturity Date up to April 23, 2027. The Convertible Facility will bear interest from their date of issue at LIBOR plus 6.0% per annum. During the first twelve months, interest may be paid-in-kind (“PIK”) at the Company’s option such that any amount of PIK interest will be added to the outstanding principal of the Convertible Facility. The Company shall have the right after the first year, to prepay the outstanding principal amount of the Convertible Facility prior to maturity, in whole or in part, upon payment of 105% of the principal amount in the second year and 103% of the principal amount thereafter. The Notes (including all accrued interest and fees thereon) will be convertible, at the option of the holder, into Subordinate Voting Shares at any time prior to the close of business on the last business day immediately preceding the Maturity Date.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

18. SENIOR SECURED CONVERTIBLE CREDIT FACILITY (Continued)

The Convertible Facility is subject to certain covenant clauses, whereby the Company is required to meet certain key financial ratios. As of June 27, 2020, the Company did not fulfill certain minimum liquidity debt covenants for the Convertible Facility as required in the agreement. However, subsequent to year-end, in addition to amendments to the Facility, the Company obtained a waiver of the violations as well as amendments to the covenants. The Company believes it will meet the amended covenants for the following 12-month period and has classified the balance of the Convertible Facility as non-current in the Consolidated Balance Sheets. Refer to “Note 2 - Summary of Significant Accounting Policies, Going Concern” for discussion of the Company’s plans for the 12-month period after the issuance of the consolidated financial statements and “Note 27 - Subsequent Events” for further details of the amendment subsequent to June 27, 2020.

Upon funding of Tranche 2 in the amount of $25,000,000 on July 12, 2019, the Company issued 2,967,708 and 857,336 warrants to the lenders at an exercise price of $3.16 and $3.65 per share, respectively. Upon funding of Tranche 3 in the amount of $10,000,000 on November 27, 2019, the Company issued 3,708,772 and 1,071,421 warrants to the lenders at an exercise price of $1.01 and $1.17 per share, respectively.

Upon funding of the Tranche 4 Advance in the amount of $12,500,000 on March 27, 2020, the Company issued 48,076,923 Warrants with an exercise price of $0.26, representing 100% coverage of the Tranche 4 Advance. Additionally, in accordance with the Third Amendment, the Company cancelled 2,700,628 of the 21,605,061 Existing Warrants issued under Tranche 1, Tranche 2 and Tranche 3 and reissued 32,451,923 Replacement Warrants with an exercise price per share equal to $0.26. Upon funding of the Tranche 4 Advance on March 27, 2020, the conversion price for $20,499,657 of the convertible notes, representing 12.5% of each under Tranche 1, Tranche 2 and Tranche 3 was amended to $0.26 per Subordinate Voting Share. Upon funding of the incremental advance in the amount of $2,500,000 on April 24, 2020, the Company issued 9,615,385 warrants with an exercise price of $0.26. In addition, 540,128 Existing Warrants were cancelled and replaced with 6,490,385 warrants with an exercise price of $0.26 in accordance with the Third Amendment.

Warrants issued pursuant to the Third Amendment may be exercised at the election of their holders on a cashless basis. All Existing and Replacement Warrants issued in connection with the Convertible Facility met the scope exception under ASC 815, “Derivatives and Hedging” and classified as equity instruments. The warrants are measured at fair value and recorded as a debt discount in connection with the Convertible Facility. See “Note 20 - Share-Based Compensation” for further information regarding the valuation method and assumptions used in determining the fair value of these equity instruments.

While the Notes are outstanding, the lenders will be entitled to the collective rights to (a) nominate an individual to the Board of Directors of the Company, and (b) appoint a representative to attend all meetings of the Board of Directors in a non-voting observer capacity. Pursuant to the Side Letter executed on October 29, 2019 in conjunction with the Amendment, GGP has the right to nominate a majority of the Company’s Board of Directors while the aggregate principal amount outstanding under the Notes being more than $25,000,000. The Notes are secured by substantially all assets of the Company.

The Notes and the Warrants, and any Subordinate Voting Shares issuable as a result of a conversion of the Notes or exercise of the Warrants, will be subject to a four-month hold period from the date of issuance of such Notes or such Warrants, as applicable, in accordance with applicable Canadian securities laws. Closing of any tranche of the Convertible Facility subsequent to Tranche 1 is subject to certain conditions being satisfied including, but not limited to, there is no event of default, reconfirmation of representations and warranties and compliance with applicable covenants and agreements.

19. SHAREHOLDERS’ EQUITY

Authorized

The authorized share capital of the Company is comprised of the following:

Unlimited Number of Class B Subordinate Voting Shares

Holders of Subordinate Voting Shares are entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company will have the right to vote. At each such meeting, holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held. As long as any Subordinate Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Subordinate Voting Shares by separate special resolution, prejudice or interfere with any right attached to the Subordinate Voting Shares. Holders of Subordinate Voting Shares are entitled to receive as and when declared by the directors of the Company, dividends in cash or property of the Company. In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders, the holders of Class B Subordinate Voting Shares shall, subject to the prior rights of the holders of any shares of the Company ranking in priority rights of the holders of any shares of the Company ranking in priority to the Class B Shares (including without restriction the Class A Super Voting Shares) be entitled to participate ratably along with all other holders of Class B Shares.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

19. SHAREHOLDERS’ EQUITY (Continued)

Authorized (Continued)

Unlimited Number of Class A Super Voting Shares

Holders of Super Voting Shares are not entitled to receive dividends. They are entitled to notice of and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company have the right to vote. At each such meeting, holders of Super Voting Shares are entitled to 1,000 votes in respect of each Super Voting Share held. Provided that the founders hold more than 50% of the issued and outstanding non-voting common shares of MM Corp and Common Units of LLC, otherwise each holders of Super Voting Shares are entitled to 50 votes in respect of each Super Voting Share held. As long as any Super Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Super Voting Shares by separate special resolution, prejudice or interfere with any right or special right attached to the Super Voting Shares. The Super Voting Shares are redeemable by the Company at a fixed rate of $0.10119 per share at the option of the current holder (the founders) in certain circumstances. In all other circumstances, the Company has the option to redeem the Super Voting Shares at the aforementioned fixed rate. The total amount due if redeemed, is approximately $82,500. The Company determined that the Super Voting are temporary equity in accordance with ASC 480, “Distinguishing Liabilities from Equity” and has reflected the amount as mezzanine equity in the Consolidated Balance Sheets.

In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders, the Company will distribute its assets firstly and in priority to the rights of holders of any other class of shares of the Company (including the holders of preferred shares of any series and Class B Subordinate Voting Shares) to return the issue price of the Class A Super Voting Shares. If there are insufficient assets to fully return the issue price, such holders will receive an amount equal to the holders of the Class A Super Voting Shares such holders will receive an amount equal to their pro rata share in proportion to the issue price of their Class A Super Voting Shares along with all other holders of Class A Super Voting Shares.

On January 31, 2020, the Company announced that Adam Bierman and Andrew Modlin agreed to surrender all of their Class A Super Voting Shares to the Company. The value of the Super Voting Shares will be determined by a special committee of the Board (the “Special Committee”) through a process that includes hiring a third-party supervised by the Special Committee. As of June 27, 2020, the third-party valuation has not been completed. Accordingly, 815,295 Super Voting Shares previously held by Mr. Bierman were cancelled during the fiscal year ended June 27, 2020. On July 12, 2020, the valuation of the Super Voting Shares was completed. As of June 27, 2020, $475,650 was accrued in current liabilities for the amount owed to Adam Bierman related to the Super Voting Shares cancelled. This liability is to be settled in Class B Subordinate Voting Shares and RSUs. Mr. Modlin’s surrender will occur in December 2020 upon the expiration of the limited proxy granted to Benjamin Rose, Executive Chairman of the Board. As a result, the Company expects to have no outstanding Class A Super Voting Shares by the end of calendar year 2020.

Unlimited Number of Preferred Shares

The Preferred Shares may be issued at any time or from time to time in one or more series. The board of directors of the Company may, by resolution, alter its Notice of Articles of the Company to create any series of Preferred Shares and to fix before issuance, the designation, rights, privileges, restrictions and conditions to attach to the Preferred Shares of each series, including the rate, form, entitlement and payment of preferential dividends, the dates and place for payment thereof, the redemption price, terms, procedures and conditions of redemption, if any, voting rights and conversion rights, if any, and any sinking fund, purchase fund or other provisions attaching to the Preferred Shares of such series; provided, however, that no Preferred Shares of any series shall be issued until the Company has filed an alteration to its Notice of Articles with the British Columbia Registrar of Companies. Preferred shares shall be entitled to preference over other classes of shares, dividends when declared and any distribution of assets in event of liquidation, dissolution or winding up the Company, whether voluntary or involuntary.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

19. SHAREHOLDERS’ EQUITY (Continued)

Authorized (Continued)

2,000,000,000 Units of MM CAN USA Redeemable Shares

The Company’s subsidiary, MM CAN USA, Inc. has two authorized classes of units, Class A and Class B Redeemable Stock with a $0.001 USD par value, having an authorized limit of 1,000,000,000 units each. Class A Units are not redeemable, while Class B Redeemable Units are redeemable into shares of the Company’s Class B Subordinate Voting Shares. Holders of Class B Redeemable Units can redeem at their election. There are no mandatory redemption features. Class A Units are entitled to vote per unit held while Class B Redeemable Units are non-voting. Each Class share on a pro-rata basis dividends when declared. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Class B Redeemable Units, together with holders of Class A Units on a pro-rata basis, will be entitled to receive all assets of the Corporation available for distribution to its stockholders.

Unlimited Number of MM Enterprises USA Common Units

Issued and Outstanding

A reconciliation of the beginning and ending issued and outstanding shares is as follows:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MM CAN MM USA Enterprises Subordinate Super Class B USA Voting Voting Redeemable Common Shares Shares Units Units

Balance as of July 1, 2018 45,215,976 1,630,590 365,961,334 1,570,064

Bought Deal Equity Financing 29,321,818 - - - At-the-Market Equity Financing Program 5,168,500 - - - Shares Issued to Settle Debt 632,130 - 3,932,415 - Debt Issuance Costs 2,691,141 - - - Redemption of MedMen Corp Redeemable Shares 58,095,821 - (58,095,821) - Redemption of LLC Redeemable Units 5,566,993 - 4,274,566 (9,841,559) Other Assets 919,711 - 72,464 - Acquisition Costs 159,435 - 169,487 - Acquisition of Non-Controlling Interest 9,736,870 - - - Business Acquisitions 10,875,929 - - - Asset Acquisitions 1,658,884 - - 8,996,511 Vested Restricted Stock Units 333,479 - - - Exercise of Warrants - - 2,878,770 - Stock Grants for Compensation 2,634,235 - - -

Balance as of June 29, 2019 173,010,922 1,630,590 319,193,215 725,016

Cancellation of Super Voting Shares - (815,295) - - At-the-Market Equity Financing Program, Net 9,789,300 - - - Shares Issued for Cash 61,596,792 - - - Shares Issued to Settle Debt and Accrued Interest 6,801,790 - - - Shares Issued to Settle Accounts Payable and Liabilities 24,116,461 - - - Shares Issued to Settle Contingent Consideration 13,737,444 - - - Asset Acquisitions 7,373,034 - - - Redemption of MedMen Corp Redeemable Shares 83,119,182 - (83,119,182) - Shares Issued for Vested Restricted Stock Units 329,548 - - - Shares Issued for Other Assets 13,479,589 - - - Shares Issued for Acquisition Costs 765,876 - - - Shares Issued for Business Acquisition 5,112,263 - - - Stock Grants for Compensation 4,675,017 - 49,818 -

Balance as of June 27, 2020 403,907,218 815,295 236,123,851 725,016

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

19. SHAREHOLDERS’ EQUITY (Continued)

September Bought Deal Equity Financing

On September 27, 2018, MedMen Corp completed a bought deal financing (the “September Offering”) of 15,681,818 units (the “September Units”) at a price of C$5.50 per September Unit (the “September Issue Price”), which included the exercise in full by the Underwriters of their over-allotment option, for aggregate gross proceeds of approximately C$86,250,000 (or $65,935,325 U.S. dollars).

Each September Unit consisted of one Subordinate Voting Share and one-half of one share purchase warrant of the Company (each whole share purchase warrant, a “September Warrant”). Each September Warrant entitles the holder thereof to acquire, subject to adjustment in certain circumstances, one Subordinate Voting Share at an exercise price of C$6.87 for a period of 36 months following the closing of the September Offering. On September 27, 2018, the September Warrants commenced trading under the ticker symbol “MMEN.WT”. See “Note 15 - Derivative Liabilities” for further information.

December Bought Deal Equity Financing

On December 5, 2018, MedMen Corp completed a bought deal financing (the “December Offering”) of 13,640,000 units (the “December Units”) at a price of C$5.50 per December Unit (the “December Issue Price”) for aggregate gross proceeds of approximately C$75,020,000 (or $55,976,720 U.S. dollars).

Each December Unit consisted of one Subordinate Voting Share and one share purchase warrant of the Company (“December Warrant”). Each December Warrant entitles the holder thereof to acquire, subject to adjustment in certain circumstances, one Subordinate Voting Share at an exercise price of C$6.87 ($5.28) until September 27, 2021. The December Warrants are traded under the ticker symbol “MMEN.WT” with the September Warrants. See “Note 15 - Derivative Liabilities” for further information.

At-the-Market Equity Financing Program

On April 10, 2019, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Canaccord Genuity Corp. pursuant to which the Company may, from time to time, sell Subordinate Voting Shares for aggregate gross proceeds of up to C$60,000,000. The At-the-Market equity financing program (the “ATM program”) is designed to enable the Company to issue Subordinate Voting Shares from treasury at a lower cost than traditional offerings, without discount and at prevailing trading prices. The Company intends to use the net proceeds from the sale of Subordinate Voting Shares under the ATM program principally for general and administrative expenses, working capital needs and other general corporate purposes. As of June 27, 2020 and June 29, 2019, the Company had issued 9,789,300 and 5,168,500, respectively for net proceeds of $12,399,252 and $13,306,096, respectively.

Non-Controlling Interests

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Non-controlling interest represents the net assets of the subsidiaries the holders of the Subordinate Voting Shares do not directly own. The net assets of the non-controlling interest are represented by the holders of the MM CAN USA Redeemable Shares. and the holders of MM Enterprises USA Common Units. Non-controlling interest also represents the net assets of the entities the Company does not directly own but controls through a management agreement. As of June 27, 2020 and June 29, 2019, the holders of the MM CAN USA Redeemable Shares represent approximately 36.89% and 64.85%, respectively, of the Company and holders of the MM Enterprises USA Common Units represent approximately 0.11% and 0.15%, respectively, of the Company.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

19. SHAREHOLDERS’ EQUITY (Continued)

Variable Interest Entities

The below information are entities the Company has concluded to be variable interest entities (“VIEs”) as the Company possesses the power to direct activities through management services agreements (“MSAs”). Through these MSAs, the Company can significantly impact the VIEs and thus holds a controlling financial interest.

Acquisition of Previously Consolidated VIE

Prior to January 25, 2019, the Company VIE’s also included The Source Santa Ana and The Farmacy Collective. On January 25, 2019, the Company completed the acquisition of the Source Santa Ana and The Farmacy Collective from Captor Capital Corp. (“Captor”), a related party for $33,035,817 pursuant to a stock purchase agreement entered into on January 9, 2019 (the “SPA”). Under the terms of the SPA, the Company acquired all of the shares of ICH California Holdings, Ltd., a wholly- owned subsidiary of Captor that held assets including the ownership interests in its MedMen branded retail cannabis dispensaries located in Santa Ana and West Hollywood. The purchase price was paid with 9,736,870 Subordinate Voting Shares at an aggregate value of $33,035,817. Additionally, 1,051,902 Subordinate Voting Shares issued as part of the purchase price are contractually restricted from trading for six months from the closing date. Accordingly, The Source Santa Ana is now consolidated as a wholly owned subsidiary of the Company.

As of and for the year ended June 27, 2020, the balances of the VIEs consist of the following:

Venice Caregivers LAX Fund Natures Foundation, II Cure, Inc. Group, LLC Inc. TOTAL

Current Assets $ 1,233,188 $ 811,025 $ 6,639,231 $ 8,683,444 Non-Current Assets 16,867,824 3,259,563 5,032,428 25,159,815

Total Assets 18,101,012 4,070,588 11,671,659 33,843,259

Current Liabilities $ 12,831,161 $ 7,481,953 $ 3,745,710 $ 24,058,824 Non-Current Liabilities 11,196,585 2,662,078 1,146,322 15,004,985

Total Liabilities 24,027,746 10,144,031 4,892,032 39,063,809

Non-Controlling Interest $ (5,926,734) $ (6,073,443) $ 6,779,627 $ (5,220,550)

Revenues $ 10,949,458 $ - $ 13,976,810 $ 24,926,268 Net (Loss) Income Attributable to Non-Controlling Interest $ (6,132,528) $ (3,777,079) $ 3,143,437 $ (6,766,170)

As of and for the year ended June 29, 2019, the balances of the VIEs consist of the following:

Venice Caregivers Foundation, LAX Fund II Natures Inc. Group, LLC Cure, Inc. TOTAL

Current Assets $ 1,793,174 $ 1,156,113 $ 1,437,604 $ 4,386,891 Non-Current Assets 6,133,804 1,753,897 4,000,000 11,887,701

Total Assets 7,926,978 2,910,010 5,437,604 16,274,592

Current Liabilities $ 6,375,156 $ 5,203,258 $ 1,801,414 $ 13,379,828 Non-Current Liabilities 1,344,479 - - 1,344,479

Total Liabilities 7,719,635 5,203,258 1,801,414 14,724,307

Non-Controlling Interest $ 207,343 $ (2,293,248) $ 3,636,190 $ 1,550,285

Revenues $ 9,767,302 $ - $ 11,630,475 $ 21,397,777 Net (Loss) Income Attributable to Non-Controlling Interest $ (5,563,148) $ (5,264,296) $ 3,345,828 $ (7,481,616)

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19. SHAREHOLDERS’ EQUITY (Continued)

The net change in the consolidated VIEs and other non-controlling interest are as follows for the year ended June 27, 2020:

Venice LAX Fund Caregivers II Natures Other Non- Foundation, Group, Cure, Controlling Inc. LLC Inc. Interests TOTAL

Balance as of June 29, 2019 $ 207,343 $(2,293,248) $ 3,636,190 $ (33,417,690) $ (31,867,405)

Net Income (Loss) (6,132,528) (3,777,079) 3,143,437 (272,499,888) (279,266,058)

Cash Distributions from Non-Controlling Members - - - (310,633) (310,633) Stock Grants for Compensation - - - 35,157 35,157 Equity Component on Debt and Debt Modification - - - 5,331,969 5,331,969 Redemption of MedMen Corp Redeemable Shares - - - (32,192,800) (32,192,800) Share-Based Compensation - - - 1,492,073 1,492,073

Balance as of June 27, 2020 $ (5,925,185) $(6,070,327) $ 6,779,627 $(331,561,812) $(336,777,697)

The net change in the consolidated VIEs and other non-controlling interest are as follows for the year ended June 29, 2019:

Farmacy Collective Venice and The Caregivers LAX Fund Source Other Non- Foundation, II Group, Natures Santa Controlling Inc. LLC Cure, Inc. Ana Interests TOTAL

Balance as of June 30, 2018 $ 5,770,491 $ 2,971,048 $ 290,362 $ (692,837) $ 77,389,350 $ 85,728,414

Net Income (Loss) (5,563,148) (5,264,296) 3,345,828 596,288 (181,955,438) (188,840,766)

Cash Contributions from Non-Controlling Members - - - - 290,000 290,000 Conversion of Convertible Debentures - - - - 3,802,381 3,802,381 Asset Acquisitions - - - - 41,154,986 41,154,986 Fair Value of Warrants Issued for Debt - - - - 13,590,104 13,590,104 Issuance of Equity for the Repayment of Notes Payable - - - - 6,759,125 6,759,125 Exercise of Warrants - - - - 8,521,268 8,521,268 Other Assets - - - - 343,678 343,678 Acquisition Costs - - - - 597,320 597,320 Share-Based Compensation - - - - 12,845,773 12,845,773 Acquisition of Non-Controlling Interest - - - 96,549 - 96,549 Redemption of MedMen Corp Redeemable Shares - - - - 7,683,232 7,683,232 Redemption of LLC Redeemable Units - - - - (24,439,469) (24,439,469)

Balance as of June 29, 2019 $ 207,343 $(2,293,248) $3,636,190 $ - $ (33,417,690) $ (31,867,405)

The consolidated financial statements for the fiscal year ended June 29, 2019 presented herein include LCR Manager, LLC as described in “Note 2 - Basis of Consolidation”. LCR Manager, LLC holds less than 0.01% of the total outstanding units in Le Cirque Rouge, LP (the “Operating Partnership,” or the “OP”) in which the investment was accounted for under the equity method due to the Company’s significant influence as a result of LCR Manager, LLC being the manager of the OP and owning equity interests in the OP. In addition, certain members of management of the Company are also members of management to the REIT (see below). The amount of initial investment in the OP was nominal, and thus the equity interests in the OP, and accordingly, the amount of investment, was determined to be insignificant and therefore has not been recorded in these financial statements. Accordingly, the Company’s maximum exposure to loss as a result of its involvement with the OP is not significant. During the fiscal year ended June 27, 2020, the Company sold its interests in LCR Manager, LLC for gross proceeds of $12,500,000.

Le Cirque Rouge, LP is a Delaware limited partnership that holds substantially all of the real estate assets owned by the REIT, conducts the REIT’s operations, and is financed by the REIT. Under ASC 810, “Consolidation”, the OP was determined to be a variable interest entity in which the Company has a variable interest. The Company was determined to have an implicit variable interest in the OP based on the leasing relationship and arrangement with the REIT. The Company was not determined to be the primary beneficiary of the VIE as the Company does not have the power to direct the activities of the VIE that most significantly affect its economic performance. As of September 2019, the Company and the REIT no longer had members of common management and in November 2019, the Company sold its interests in the Manager. However, the Company continues to have a variable interest in the OP as of June 27, 2020. During the fiscal years ended June 27, 2020 and June 29, 2019, the Company did not provide any financial or other support other completion of the sale and leaseback transactions and the REIT being a lessor on various leases as described in “Note 16 - Leases”. Accordingly, Le Cirque Rouge, LP is not consolidated as a variable interest entity within the consolidated financial statements.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019

20. SHARE-BASED COMPENSATION

The Company has a stock and equity incentive plan (the “Incentive Plan”) under which the Company may issue various types of equity instruments to any employee, officer, consultant, advisor or director. The types of equity instruments issuable under the Incentive Plan encompass, among other things, stock options, stock grants, deferred stock units, restricted stock grants, LTIP, P units and warrants (together, “Awards”). Stock based compensation expenses are recorded as a component of general and administrative expenses. To the extent that the Company has not appointed a Compensation Committee, all rights and obligations under the Incentive Plan shall be those of the full Board of Directors. The maximum number of Awards that may be issued under the Incentive Plan shall be determined by the Compensation Committee or the Board of Directors in the absence of a Compensation Committee. Any shares subject to an Award under the Incentive Plan that are forfeited, canceled, expire unexercised, are settled in cash, or are used or withheld to satisfy tax withholding obligations, shall again be available for Awards under the Incentive Plan. Vesting of Awards will be determined by the Compensation Committee or Board of Directors in absence of one. The exercise price for Awards (if applicable) will generally not be less than the fair market value of the Award at the time of grant and will generally expire after 10 years.

A summary of share-based compensation expense for the years ended June 27, 2020 and June 29, 2019 is as follows:

2020 2019

Stock Options $ 1,876,225 $ 11,699,796 Deferred Stock Units 484,932 - LTIP Units 1,492,073 12,845,773 Stock Grants for Services 3,656,926 5,712,872 Restricted Stock Grants 3,554,968 2,235,773 Warrants - 227,244

Total Share-Based Compensation $ 11,065,124 $ 32,721,458

On February 1, 2020, Adam Bierman resigned as Chief Executive Officer of the Company and surrendered all Class A Super Voting Shares to the Company. See “Note 19 - Shareholders’ Equity” for further information on Mr. Bierman’s Super Voting Shares. As payment of severance to Mr. Bierman, the Company will compensate Mr. Bierman in the form of securities of which the number of issued securities and the aggregate amount is approximately 3,700,000 of which half are in Class B Subordinate Voting Shares and half are in RSUs. The RSUs have a term of 10 years and vest when the Company’s Class B Subordinate Voting Shares have a daily VWAP of at least $2.05 for 25 consecutive days. As of June 27, 2020, $475,650 was accrued in current liabilities for the amount owed to Adam Bierman related to the Super Voting Shares cancelled. This liability is to be settled in Class B Subordinate Voting Shares and RSUs. In addition, the Company amended the terms of the 9,661,939 LTIP Units held by Mr. Bierman wherein the vesting period was extended to ten years from February 1, 2020. The Company analyzed the impact of the modification on its consolidated financial statements and determined the modification did not have a significant impact on its Consolidated Statements of Operations and its Consolidated Balance Sheets as of and for the year ended June 27, 2020.

Stock Options

A reconciliation of the beginning and ending balance of stock options outstanding is as follows:

Weighted- Number of Average Stock Exercise Options Price

Balance as of July 1, 2018 5,793,374 $ 4.14

Granted 10,374,075 $ 3.45 Forfeited (2,629,347) $ (4.32)

Balance as of June 29, 2019 13,538,102 $ 4.31

Granted 6,812,552 $ 1.34 Forfeited (11,732,450) $ (2.79)

Balance as of June 27, 2020 8,618,204 $ 2.79

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

20. SHARE-BASED COMPENSATION (Continued)

The following table summarizes the stock options that remain outstanding as of June 27, 2020:

Stock Stock Exercise Expiration Options Options Price Security Issuable Date Outstanding Exercisable

Subordinate Voting Shares February $ 3.26 2029 316,085(3) 316,085 Subordinate Voting Shares August $ 3.41 2021 32,974(4) 32,974 Subordinate Voting Shares $ 3.84 July 2023 200,000(6) 200,000 Subordinate Voting Shares $ 4.03 May 2028 1,916,739(5) 1,426,900 Subordinate Voting Shares August $ 4.05 2028 61,950(7) 61,950

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subordinate Voting Shares August $ 4.05 2028 376,746(7) - Subordinate Voting Shares October $ 4.03 2028 35,000(5) 16,041 Subordinate Voting Shares October $ 5.71 2028 466,075(5) 251,968 Subordinate Voting Shares January $ 3.42 2029 394,980(5) 298,046 Subordinate Voting Shares $ 2.64 None -(1) - Subordinate Voting Shares February $ 3.36 2029 207,842(2) 207,842 Subordinate Voting Shares $ 3.06 April 2029 238,064(5) 132,262 Subordinate Voting Shares $ 2.79 April 2029 225,106(5) 71,847 Subordinate Voting Shares $ 2.36 May 2029 35,895(5) 14,014 Subordinate Voting Shares $ 2.66 June 2029 63,250(5) 16,291 Subordinate Voting Shares $ 2.17 June 2029 724,645(8) 724,645 Subordinate Voting Shares $ 2.02 July 2029 578,623(5) - Subordinate Voting Shares August $ 1.99 2029 467,660(5) - Subordinate Voting Shares September $ 1.55 2029 269,655(5) - Subordinate Voting Shares $ 2.02 None 645,705(5) - Subordinate Voting Shares October $ 1.38 2029 144,260(5) - Subordinate Voting Shares December $ 0.44 2029 249,908(5) - Subordinate Voting Shares January $ 0.53 2030 161,395(5) - Subordinate Voting Shares January $ 0.53 2030 231,630(5) 231,630 Subordinate Voting Shares January $ 0.47 2030 289,119(5) - Subordinate Voting Shares February $ 0.27 2030 32,000(5) - Subordinate Voting Shares March $ 0.11 2030 46,608(5) 46,608 Subordinate Voting Shares March $ 0.38 2030 7,000(5) - Subordinate Voting Shares $ 0.18 May 2030 199,290(5) 199,290 8,618,204 4,248,393 ______(1) Issued to certain officers of the Company under the Company’s stock and incentive plan. Such options will vest contingent upon achievement of certain price targets in respect of the Subordinate Voting Shares, whereby 1,585,288 of such options, one third will vest when the price of the Subordinate Voting Shares reaches US$10 in the open market, another third will vest when such share price reaches US$15 in the open market and another third will vest when such share price reaches US$20 in the open market, and 1,714,699 of such options, one third will vest when the price of the Subordinate Voting Shares reaches US$15 in the open market, another third will vest when such share price reaches US$30 in the open market and another third will vest when such share price reaches US$60 in the open market. These options have no expiration date. Such share price will be determined as a 5-day volume weighted-average trading price on any exchange on which the Subordinate Voting Shares are traded. (2) Issued to a certain officer of the Company under the Company’s stock and incentive plan. Such options expire in ten years from the date of grant and 1/36th of the options will vest upon each successive month after the grant date. (3) Issued to a consultant in connection with services rendered under the Company’s stock and incentive plan. Such options expire in one year from the date of grant and 1/12th of the options will vest upon each successive month after March 1, 2019. (4) Issued to certain directors of the Company under the Company’s stock and incentive plan. Such options expire in August 2021 and 1/8th of the options will vest upon each successive month after the grant date. (5) Issued to employees of certain subsidiaries of the Company under the Company’s stock and incentive plan. Such options expire in ten years from the date of grant and have the following vesting conditions: Such option will vest over a period of four years from the employees hire date as 1/4th of the options vest on the first anniversary of the hire date and, 1/48th of the options will vest upon each successive month after the first anniversary of the employee’s hire date for a period of three years. (6) Issued to a consultant in connection with services rendered under the Company’s stock and incentive plan. Such options fully vest on the grant date. Such options expire in five years from the grant date. (7) Issued to certain directors of the Company under the Company’s stock and incentive plan. 61,950 of such options vest at the end of the first year of service and 376,746 of such options vest at the end of three years of service. All options expire in ten years from the date of grant. (8) Issued to a certain officer of the Company under the Company’s stock and incentive plan. Such options expire in ten years from the date of grant and were vested immediately upon the grant date.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

20. SHARE-BASED COMPENSATION (Continued)

For the years ended June 27, 2020 and June 29, 2019, the fair value of stock options granted with a fixed exercise price was determined using the Block-Scholes option- pricing model with the following assumptions at the time of grant:

2020 2019

Weighted-Average Risk-Free Annual Interest Rate 1.60% 1.95% Weighted-Average Expected Annual Dividend Yield 0.0% 0.0% Weighted-Average Expected Stock Price Volatility 91.0% 87.8%

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Weighted-Average Expected Life in Years 7.50 6.15 Weighted-Average Estimated Forfeiture Rate 40.0% 33.0%

Stock price volatility was estimated by using the average historical volatility of comparable companies from a representative peer group of publicly-traded cannabis companies. The expected life represents the period of time that stock options granted are expected to be outstanding. The risk-free rate was based on Bank of Canada zero coupon bond with a remaining term equal to the expected life of the options. For the year ended June 27, 2020, the fair value of stock options granted with vesting contingent upon achievement of certain price targets was determined using a Monte Carlo simulation model taking into account the fair value of the Company’s Subordinate Voting Shares on the date of grant and into the future encompassing a wide range of possible future market conditions. The following assumptions were used at the time of grant:

2020 2019

Weighted-Average Stock Price C$2.65 C$4.10 Weighted-Average Probability 6.0% 6.0% Weighted-Average Term in Years 3.0 3.0 Weighted-Average Volatility 83.3% 72.0%

During the years ended June 27, 2020 and June 29, 2019, the weighted-average fair value of stock options granted was $0.98 and $2.67, respectively, per option. As of June 27, 2020 and June 29, 2019, stock options outstanding have a weighted-average remaining contractual life of 7.5 years and 9.1 years, respectively.

In the fourth quarter of the year ended June 29, 2019, the Company modified the Company’s stock option plan for all outstanding employee options, allowing the vesting period to begin on the date of hire. Previously, the vesting period commenced on the grant date. The Company analyzed the impact of the modification on its financials and determined the modification accelerated the vesting and expense recognition. The Company determined the amount of additional expense recognized for this modification did not have a significant impact on its Consolidated Statement of Operations for the years ended June 27, 2020 and June 29, 2019.

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20. SHARE-BASED COMPENSATION (Continued)

LTIP Units and LLC Redeemable Units

A reconciliation of the beginning and ending balances of the LTIP Units and LLC Redeemable Units issued for compensation outstanding is as follows:

Weighted LTIP Units LLC Average Issued and Redeemable Grant Date Outstanding Units Fair Value

Balance as of July 1, 2018 30,314,333 1,570,064 $ 1.56

Redemptions - (845,048) $ (3.38) Forfeiture of LTIP Units (2) (3,962,422) - $ (3.38) Cancellation of LTIP Units (2) (724,645) - $ (3.38) Vesting and Converted (1)(3) (4,744,911) - $ (3.38)

Balance as of June 29, 2019 20,882,355 725,016 $ 0.74

Vesting and Converted (1)(3) (1,558,477) - $ (3.38)

Balance as of June 27, 2020 19,323,878 725,016 $ 0.74 ______(1) LTIP Units and LLC Redeemable Units will vest as follows:

• 19,323,878 of the LTIP Units will vest contingent upon achievement of certain price targets in respect of the Subordinate Voting Shares, whereby one third of such aggregate LTIP Units will vest when the price of the Subordinate Voting Shares reaches C$10 in the open market, another third will vest when such share price reaches C$15 in the open market and the final third will vest when such share price reaches C$20 in the open market. Such share price will be determined as a 5-day volume weighted-average trading price on any exchange on which the Subordinate Voting Shares are traded. 9,661,939 of the LTIPs were modified to extend the vesting periods to 10 years from the modification date of February 1, 2020.

• 6,038,712 of the LTIP Units will vest as follows: (a) 25% vested immediately on issuance; and (b) the remaining 75% vest ratably, on a monthly basis, beginning on May 17, 2018 and concluding with all LTIP Units being fully vested on March 15, 2020.

• 4,227,098 of the FV LTIP Units will vest as follows: (a) 14.3% vested immediately on issuance; and (b) the remaining 85.7% vest ratably, on a monthly basis, beginning on May 17, 2018 and concluding with all FV LTIP Units being fully vested on March 15, 2022.

• 724,645 of the LTIP Units will vest ratably, on a monthly basis, beginning on May 17, 2018 and concluding with all LTIP Units being fully vested on March 15, 2021.

(2) 3,237,778 of the LTIP Units were forfeited upon the resignation of an employee. In addition, 724,645 of the LTIP Units and the vested amounts were cancelled/ forfeited by the employee. (3) For the year ended June 27, 2020 and June 29, 2019, 1,558,477 and 4,744,991, respectively, of the LTIP Units were vested and converted to zero LLC Redeemable Units pursuant to the formula determined by the Third Amended and Restated LLC Agreement of MM Enterprises USA, LLC.

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20. SHARE-BASED COMPENSATION (Continued)

Deferred Stock Units

Effective December 10, 2019, the Company’s board of directors approved a Deferred Share Unit (“DSU”) award under the Company’s Incentive Plan. The DSU award was for units to the Company’s non-management directors. Each director will be provided the Company’s Subordinate Voting Shares based on the duration of their term as a director up to $250,000 for a year of service ending August 2020. At June 27, 2020 and June 29, 2019, there was 1,276,169 units and nil units, respectively, issued and outstanding. For the years ended June 27, 2020 and June 29, 2019, compensation expense related to the DSU award was $484,932 and nil, respectively, was included in accounts payable and stock based compensation expense on the Company’s Consolidated Balance Sheets. As of June 27, 2020, the corresponding Subordinate Voting Share have not yet been issued to the directors. A reconciliation of the beginning and ending balance of DSUs outstanding is as follows:

Weighted- Issued and Average Outstanding Fair Value

Balance as of July 1, 2018 - $ -

Balance as of June 29, 2019 - $ -

Granted 1,283,567 $ 0.38

Balance as of June 27, 2020 1,283,567 $ 0.38

Restricted Stock Grants

During the years ended June 27, 2020 and June 29, 2019, the Company granted an entitlement to 7,443,954 and 4,352,340, respectively, restricted Subordinate Voting Shares to certain officers and directors.

A reconciliation of the beginning and ending balance of restricted stock grants outstanding is as follows:

Weighted- Issued and Average Outstanding Vested (1) Fair Value

Balance as of July 1, 2018 - - $ -

Granted 4,352,340 336,441 $ 3.89 Forfeiture of Restricted Stock (2) (3,000,000) - $ (4.25) Redemption of Vested Shares (333,479) (333,479) $ (3.07)

Balance as of June 29, 2019 1,018,861 2,962 $ 3.89

Granted 7,443,954 - $ 0.73 Forfeiture of Restricted Stock (2) (974,103) - $ 2.69 Redemption of Vested Stock (329,548) (329,548) $ 3.14 Vesting of Restricted Stock - 519,045 $ 2.28

Balance as of June 27, 2020 7,159,164 192,459 $ 0.68

(1) Restricted stock grants will vest as follows: • 3,000,000 of the restricted stock grants will vest as follows: one-fourth upon the 12-month employment anniversary, with the remaining three-fourths vesting in amounts of one third each when the trading price of the Subordinate Voting Shares on the then current stock exchange at any time during the term of employment reaches a minimum of C$10, C$15 and C$20, respectively. • 46,331 of the restricted stock grants on July 11, 2018 will vest in four (4) equal quarterly installments on each three-month anniversary of the Date of Grant. • 131,859 of the restricted stock grants on August 29, 2018 will vest in four (4) equal quarterly installments on each three-month anniversary of the Date of Grant. • 918,785 of the restricted stock grants will vest ratably as follows: one-fourth within 30-days of the grant date, with the remaining three-fourths in three equal installments on every anniversary of the grant date, beginning on December 18, 2018 and concluding with all restricted stock grants being fully vested on December 18, 2021. • 23,082 of the restricted stock grants will vest on a straight-line basis, beginning on January 3, 2019, and concluding with all restricted stock grants being fully vested on August 28, 2019. • 162,455 of the restricted stock units will vest as follows: one-fourth of the total number of restricted stock shall vest on March 26, 2019. Thereafter, 1/36 of the remainder shall vest on the first day of each month over a period of three years until all restricted stock shall have vested. • 72,202 of the restricted stock units will vest as follows: one-fourth of the total number of restricted stock shall vest on May 7, 2019. Thereafter, 1/36 of the remainder shall vest on the first day of each month over a period of three years until all restricted stock shall have vested. • 5,458,749 of the restricted stock units will vest as follows on the first anniversary of the grant date, December 10, 2020. • 1,885,408 of the restricted stock units will vest as follows: on the second anniversary of the grant date, July 30, 2021. • 50,181 of the restricted stock units will vest as follows: on the first anniversary of the grant date, August 26, 2020. • 49,616 of the restricted stock units will vest as follows: on August 1, 2021. (2) 3,000,000 and 974,103 of the restricted stock grants were forfeited upon resignation of an employee prior to their vesting for the fiscal years ended June 29, 2019 and June 27, 2020, respectively.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

20. SHARE-BASED COMPENSATION (Continued)

Restricted Stock Grants (Continued)

For the years ended June 27, 2020 and June 29, 2019, the Company had nil and one restricted stock grant that was forfeited, respectively, with a market vesting condition. The fair value at grant was based on a Monte Carlo simulation model using the following assumptions at the time of grant:

2020 2019

Weighted-Average Stock Price Nil C$5.07 Weighted-Average CDN to USD Conversion Rate Nil 0.76 Weighted-Average Volatility Nil 72.0% Weighted-Average Months Nil 28.72

For the years ended June 27, 2020 and June 29, 2019, the market vesting restricted stock grant was forfeited and the expense recorded as reversed as no vesting conditions were met.

Warrants

A reconciliation of the beginning and ending balance of warrants outstanding is as follows:

Number of Warrants Outstanding MedMen Weighted- Subordinate Corp Average Voting Redeemable Exercise Shares Shares Total Price

Balance as of July 1, 2018 2,415,485 8,797,019 11,212,504 $ 3.53

Issued 12,999,815 17,234,540 30,234,355 $ 4.48 Exercised (897,863) (3,701,040) (4,598,903) $ (3.50) Expired (1,517,622) (5,095,979) (6,613,601) $ (3.54)

Balance as of June 29, 2019 12,999,815 17,234,540 30,234,355 $ 4.48

Issued 105,239,862 40,455,729 145,695,591 $ 0.58 Cancelled (3,240,762) (17,234,540) (20,475,302) $ 4.66

Balance as of June 27, 2020 114,998,915 40,455,729 155,454,644 $ 0.71

The following table summarizes the warrants that remain outstanding as of June 27, 2020:

Exercise Number of Expiration Security Issuable Price Warrants Date

MedMen Corp Redeemable Shares December 31, $ 0.60 40,455,729 2022

Total MedMen Corp Redeemable Shares 40,455,729

Subordinate Voting Shares $ 3.72 1,647,391 April 23, 2022 Subordinate Voting Shares $ 4.29 562,578 April 23, 2022 Subordinate Voting Shares $ 3.72 6,589,559 May 22, 2022 Subordinate Voting Shares $ 4.29 2,250,314 May 22, 2022 Subordinate Voting Shares $ 3.16 2,522,554 July 12, 2022 Subordinate Voting Shares $ 3.65 728,737 July 12, 2022 Subordinate Voting Shares November 27, $ 1.01 3,152,457 2022 Subordinate Voting Shares November 27, $ 1.17 910,709 2022 Subordinate Voting Shares March 27, $ 0.26 80,528,846 2025 Subordinate Voting Shares $ 0.26 16,105,770 April 24, 2025

Total Subordinate Voting Shares 114,998,915

Total Warrants Outstanding 155,454,644

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

20. SHARE-BASED COMPENSATION (Continued)

Warrants (Continued)

The fair value of warrants exercisable for MedMen Corp Redeemable Shares was determined using the Black-Scholes option-pricing model with the following assumptions on the date of issuance:

2020 2019

Weighted-Average Risk-Free Annual Interest Rate 2.20% 2.82% Weighted-Average Expected Annual Dividend Yield 0% 0% Weighted-Average Expected Stock Price Volatility 88.19% 82.93% Weighted-Average Expected Life of Warrants 1 year 1 year

2020 2019

Weighted-Average Risk-Free Annual Interest Rate 0.16% 2.20% Weighted-Average Expected Annual Dividend Yield 0% 0% Weighted-Average Expected Stock Price Volatility 111.76% 88.19% Weighted-Average Expected Life of Warrants 0.8 year 1 year

Stock price volatility was estimated by using the historical volatility of the Company’s Subordinate Voting Shares and the average historical volatility of comparable companies from a representative peer group of publicly-traded cannabis companies. The expected life in years represents the period of time that warrants issued are expected to be outstanding. The risk-free rate was based on U.S. Treasury bills with a remaining term equal to the expected life of the warrants. 77,884,615 of warrants are cancelable if the Company meets certain cash flow metrics for two consecutive quarters. The effects of contingent cancellation feature were included in determining the fair value of the related warrants.

As of June 27, 2020 and June 29, 2019, warrants outstanding have a weighted-average remaining contractual life of 46.2 and 26.9 months respectively.

21. LOSS PER SHARE

The following is a reconciliation for the calculation of basic and diluted loss per share for the years ended June 27, 2020 and June 29, 2019:

Note 2 2020 2019

Net Loss from Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc. $(196,483,312) $ (67,815,692) Net Loss from Discontinued Operations (50,781,039) (1,264,196)

Total Net Loss and Comprehensive Loss $(247,264,351) $ (69,079,888)

Weighted-Average Number of Shares Outstanding 270,418,842 105,915,105

Earnings (Loss) Per Share - Basic and Diluted:

From Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (0.73) $ (0.64)

From Discontinued Operations $ (0.19) $ (0.01)

Diluted loss per share is the same as basic loss per share as the issuance of shares on the exercise of convertible debentures, LTIP share units, warrants and share options is anti-dilutive.

22. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES

The Company intends to be treated as a United States corporation for United States federal income tax purposes under Section 7874 of the U.S. Tax Code and is expected to be subject to United States federal income tax. However, for Canadian tax purposes, the Company is expected, regardless of any application of Section 7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the Income Tax Act (Canada) (the “ITA”) for Canadian income tax purposes. As a result, the Corporation will be subject to taxation both in Canada and the United States.

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22. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES (Continued)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company has approximately gross $6,720,000 (tax effected $1,780,000) of Canadian non-capital losses and $6,915,000 (tax effected $1,833,000) of share issuance cost balance. The loss tax attribute has been determined to be more likely than not that the tax attribute would not yield any tax benefit. As such, the Company has recorded a full valuation allowance against the benefit. Since IRC Section 280E was not applied in the California Franchise Tax returns, the Company has approximately $76,700,000 of gross California net operating losses which begin expiring in 2038 as of June 27, 2020. The Company has evaluated the realization of its California net operating loss tax attribute and has determined under the more likely than not standard that $2,500,000 will not be realized.

Provision for income taxes consists of the following for the years ended June 27, 2020 and June 29, 2019:

2020 2019 Current: Federal $ 21,675,826 $ 17,380,191 State 2,471,663 2,401,365

Total Current 24,147,489 19,781,556

Deferred: Federal (52,822,427) (17,388,695) State (12,153,888) (7,977,922)

Total Deferred (64,976,315 (25,366,617)

Total Provision for Income Taxes $(40,828,826) $ (5,585,061)

As of June 27, 2020 and June 29, 2019, the components of deferred tax assets and liabilities were as follows:

2020 2019

Deferred Tax Assets: Sale and Leaseback $ 1,378,229 $ 1,563,839 Net Operating Loss 14,773,963 2,960,466 Fair Value of Investments 1,019,919 - Lease Liability 30,545,899 - Held for Sale 16,580,885 - Notes Payable 16,156,489 11,368,955

Total Deferred Tax Assets 80,455,384 15,893,260 Deferred Tax Assets Not Recognized (49,939,139) (2,465,506)

Net Deferred Tax Assets $ 30,516,245 $13,427,754

2020 2019

Deferred Tax Liabilities: Leases $(14,974,482) $ - Property, Plant & Equipment $(25,286,947) (42,916,321) Intangible Assets (37,731,096) (54,108,705) Senior Secured Convertible Credit Facility (9,420,472) (6,880,066) Fair Value of Investments - (1,270,885)

Total Deferred Tax Liabilities (87,412,297) (105,175,977)

Net Deferred Tax Liabilities $(56,896,752) $ (91,748,223)

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22. PROVISION FOR INCOME TAXES AND DEFERRED INCOME TAXES (Continued)

The reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:

2020 2019

Expected Income Tax Benefit at Statutory Tax Rate $(113,915,623) $(55,276,377) Section 280E Permanent and Other Non-Deductible Items 89,883,278 54,421,363 State Rate 2,471,663 2,401,365 Tax Gain on Sale Leaseback 8,377,927 4,732,502 Benefit on Failed Sale Lease back - (11,368,955) Effect of GAAP Impairment (37,651,440) - Effect of Held for Sale (16,580,885) - Effect of ASC 842 Implementation (15,571,417) - Benefit on Recognized California Net Operating Loss (2,935,116) (2,960,466) Valuation Allowance 45,092,787) 2,465,505

Reported Income Tax Expense $ (40,828,826) $ (5,585,061)

Effective Tax Rate 7.09% 1.03%

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the years ended June 27, 2020 and June 29, 2019, the movement in net deferred tax liabilities was as follows:

2020 2019

Balance at Beginning of Period $(91,748,223) $(11,160,195)

Recognized in Profit or Loss 64,976,314 26,183,289 Recognized in Property, Plant & Equipment and Intangible Assets (15,586,467) (88,625,236) Recognized in Goodwill (3,428,210) (11,776,956) Recognized in Equity (11,110,166) (7,407,693) Recognized in Retained Earnings - 1,038,568

Balance at End of Period $(56,896,752) $(91,748,223)

23. COMMITMENTS AND CONTINGENCIES

Contingencies

The Company’s operations are subject to a variety of local and state regulations. Failure to comply with one or more of these regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulations as of June 27, 2020 and June 29, 2019, marijuana regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future.

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of June 27, 2020, there were no pending or threatening lawsuits that could be reasonably assessed to have resulted in a probable loss to the Company in an amount that can be reasonably estimated. As such, no accrual has been made in the Consolidated Financial Statements relating to claims and litigations. As of June 29, 2019, there are also no proceedings in which any of the Company’s directors, officers or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest.

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23. COMMITMENTS AND CONTINGENCIES (Continued)

Claims and Litigation (Continued)

A legal dispute has been filed against the Company and is currently in arbitration. The dispute is at an early stage and the Company believes that a loss contingency as a result of the settlement is reasonably possible; however the amount is not estimable. Accordingly, no amount has been accrued in relation to the dispute.

24. RELATED PARTY TRANSACTIONS

All related party balances due from or due to the Company as of June 27, 2020 and June 29, 2019 did not have any formal contractual agreements regarding payment terms or interest.

As of June 27, 2020 and June 29, 2019, amounts due from related parties were as follows:

Name and Relationship to Company Transaction 2020 2019

MMOF GP II, LLC (“Fund LP II”), an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Ganan each holds 33.3% indirect voting interest. The Management shareholders each hold 27.1% of indirect equity interest in Fund LP II, the General Fees Partner of Fund II, which both hold equity interests in a subsidiary of the Company. (1) $ 1,820,204 $ 1,820,904

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document MedMen Opportunity Fund GP, LLC (“Fund LP”), an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Ganan each holds 33.3% indirect voting interest. The shareholders each hold 24.2% of indirect equity interest in Fund LP, the Management General Partner of Fund I, which both hold equity interests in a subsidiary of the Fees Company. (1) 1,289,513 1,228,259

MedMen Canada Inc., a 50/50 joint venture partnership between the Company and Advance Cronos Group Inc. - 1,153,200

Other - 719,092

Total Amounts Due from Related Parties $ 3,109,717 $ 4,921,455

(1) As of February 2020 and May 2020, Mr. Adam Bierman and Mr. Andrew Modlin, respectively, no longer held board or management positions and therefore as of June 27, 2020 are not related parties, however they were during the fiscal years ended June 27, 2020 and June 29, 2019.

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24. RELATED PARTY TRANSACTIONS (Continued)

As of June 27, 2020 and June 29, 2019, amounts due to related parties were as follows:

Name and Relationship to Company Transaction 2020 2019

Fund LP II, an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Working Ganan each holds 33.3% indirect voting interest. The shareholders each hold 27.1% Capital, of indirect equity interest in Fund LP II, the General Partner of Fund II, which both hold Construction equity interests in a subsidiary of the Company. (1) and Tenant Improvements, Lease Deposits and Cash Used for Acquisitions $(1,093,896) $(1,093,896)

Fund LP, an entity which Mr. Adam Bierman, Mr. Andrew Modlin and Mr. Christopher Working Ganan each holds 33.3% indirect voting interest. The shareholders each hold 24.2% Capital, of indirect equity interest in Fund LP, the General Partner of Fund I, which both hold Management equity interests in a subsidiary of the Company. (1) Fees and Cash Used for Acquisitions (1,986,697) (2,862,647)

Other (1,476,221) (1,684,274) Total Amounts Due to Related Parties $(4,556,814) $(5,640,817)

The Company sells and subsequently leases back several of its properties in transactions with the REIT wherein the properties are leased to the Company at market rates under long-term leases. Refer to “Note 16 - Leases” for information on the sale and leaseback transactions during the years ended June 27, 2020 and June 29, 2019. The REIT was determined to be a related party under ASC 850, “Related Party Disclosures” as a result of certain members of common management between the Company and the REIT. Due to a reorganization of the REIT during September 2019, common management is no longer shared between the Company and the REIT. In addition, the REIT conducted its business through the Operating Partnership managed by LCR Manager, LLC, a subsidiary of the Company. In November 2019, the Company sold all of its interest, which is 70% of the total outstanding units, in LCR Manager, LLC and terminated the management agreement with LCR Manager, LLC. Accordingly, as of June 27, 2020, the REIT was no longer determined to be a related party. Refer to “Note 19 - Shareholders’ Equity” for discussion of the REIT as a variable interest entity.

On December 11, 2019, the Company announced that Benjamin Rose, the Executive Chairman of the Board, was granted a limited proxy of 815,295 Class A Super Voting Shares, which represents 50% of the total Class A Super Voting Shares, for a period of one year. As a result of the proxy, Mr. Rose has joint control of the Company. Under ASC 850, “Related Party Disclosures”, Mr. Rose is a member of the key management personnel of Wicklow Capital, Inc. and accordingly, Wicklow Capital is a related party of the Company. In April 2020, the Company granted 5,458,749 restricted stock units to Mr. Rose. The units will vest on December 10, 2020 or upon a change in control of the Company.

On July 10, 2019, the Company announced an equity commitment from its existing creditor, Gotham Green Partners, with participation from Wicklow Capital, in the amount of $30,000,000. As a result, the Company issued 14,634,147 Subordinate Voting Shares to the investors at a price equal to $2.18 per share. As of June 27, 2020, the Company determined GGP to be a related party as a result of GGP having significant influence over the Company. See “Note 18 - Senior Secured Convertible Credit Facility” for a full disclosure of transactions and balances related to GGP.

On December 10, 2019, the Company executed a term sheet for a non-brokered private placement wherein Wicklow Capital participated in the offering and the Company issued 46,962,645 Subordinate Voting Shares at a price of $0.43 per share for gross proceeds of approximately $20,190,000 in connection with the equity investment.

25. SEGMENTED INFORMATION

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company currently operates in one segment, the production and sale of cannabis products, which is how the Company’s Chief Operating Decision Maker managers the business and makes operating decisions. The Company’s cultivation operations are not considered significant to the overall operations of the Company. Intercompany sales and transactions are eliminated in consolidation.

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26. DISCONTINUED OPERATIONS

On December 3, 2018, the Company acquired EBA Holdings, Inc. d/b/a Monarch Wellness Center, an Arizona-based medical cannabis license holder with dispensary, cultivation and processing operations, through the acquisition of Omaha Management Services, LLC (collectively, “Monarch”). As part of the acquisition of Monarch, the Company acquired a dispensary license and customer relationships, including co-manufacturing and licensing agreements within the state of Arizona. The Company recorded goodwill of $16,912,951 as a result of the business acquisition, as further discussed in “Note 9 - Business Acquisitions”.

On February 13, 2019, the Company acquired Level Up. As part of the acquisition of Level Up, the Company acquired licenses for two vertically-integrated operations in Arizona, which include retail locations in Scottsdale and Tempe and cultivation and production facilities in Tempe and Phoenix. The Company recorded goodwill of $14,860,708 as a result of the business acquisition, as further discussed in “Note 9 - Business Acquisitions”.

During the fiscal second quarter of 2020, the Company contemplated the divesture of non-core assets and management entered into a plan to sell its operations in the state of Arizona. During the fiscal year ended June 27, 2020, the Company entered into binding and non-binding term sheets and began separate negotiations to sell its operations in the state of Arizona, including the related management entities, for total gross proceeds of approximately $25,500,000. The contemplated transactions are subject to customary closing conditions and is expected to close within the next twelve months. After the close of the transaction, there will be no continued involvement with the sellers.

Consequently, assets and liabilities allocable to the operations within the state of Arizona were classified as a disposal group. Revenue and expenses, gains or losses relating to the discontinuation of Arizona operations have been eliminated from profit or loss from the Company’s continuing operations and are shown as a single line item in the Consolidated Statements of Operations. The assets associated with the Arizona disposal group have been measured at the lower of its carrying amount or FVLCTS.

The Company will continue to operate the Arizona operations until the ultimate sale of the disposal group. Net operating loss of the discontinued operations and the gain or loss from re-measurement of assets and liabilities classified as held for sale are summarized as follows:

2020 2019

Revenue $ 15,164,131 $ 10,044,235 Cost of Goods Sold 11,947,208 4,010,987

Gross Profit 3,216,923 6,033,248

Expenses: General and Administrative 6,905,155 4,702,461 Sales and Marketing 81,489 - Depreciation and Amortization 1,532,792 1,280,090

Total Expenses 8,519,436 5,982,551

Loss from Operations (5,302,513) 50,697

Other Expense (Income): Impairment of Assets 46,702,660 - Other Expense 5,385 167,550

Total Other Expense 46,708,045 167,550

Loss on Discontinued Operations Before Provision for Income Taxes (52,010,559) (116,853) Provision for Income Tax (Expense) Benefit 1,229,520 (1,147,343)

Loss on Discontinued Operations $(50,781,039) $ (1,264,196)

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

26. DISCONTINUED OPERATIONS (Continued)

The carrying amounts of assets and liabilities in the disposal group are summarized as follows:

2020 2019

Carrying Amounts of the Assets Included in Discontinued Operations:

Cash and Cash Equivalents $ 522,966 $ 527,377 Accounts Receivable 274,886 865,485

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Prepaid Expenses 74,622 249,309 Inventory 3,323,978 5,752,847 Other Current Assets 64,600 -

TOTAL CURRENT ASSETS (1) 7,395,018

Property and Equipment, Net 4,288,808 4,633,289 Operating Lease Right-of-Use Assets 5,257,327 - Intangible Assets, Net 7,260,288 20,449,002 Goodwill - 31,773,659 Other Assets 113,576 114,576

TOTAL NON-CURRENT ASSETS (1) 56,970,526

TOTAL ASSETS OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE $ 21,181,051 $ 64,365,544

Carrying Amounts of the Liabilities Included in Discontinued Operations: Accounts Payable and Accrued Liabilities $ 2,126,162 $ 1,742,133 Income Taxes Payable 946,679 1,899,487 Other Current Liabilities 22,747 - Current Portion of Operating Lease Liabilities 385,699 -

TOTAL CURRENT LIABILITIES (1) 3,641,620

Operating Lease Liabilities, Net of Current Portion 5,300,936 - Deferred Tax Liabilities 6,278,079 7,185,447

TOTAL NON-CURRENT LIABILITIES (1) 7,185,447

TOTAL LIABILITIES OF THE DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE $ 15,060,302 $ 10,827,067

(1) The assets and liabilities of the disposal group classified as held for sale are classified as current on the Consolidated Balance Sheets as of June 27, 2020 because it is probable that the sale will occur and proceeds will be collected within one year.

27. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through October 15, 2020, which is the date these consolidated financial statements were issued, and has concluded that the following subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

27. SUBSEQUENT EVENTS (Continued)

Senior Secured Convertible Credit Facility

On July 2, 2020, the Company amended and restated the securities purchase agreement with GGP (the “Fourth Amendment”) wherein the minimum liquidity covenant was waived until September 30, 2020 and resetting at $5,000,000 thereafter with incremental increases on March 31, 2021 and December 31, 2021. The payment-in-kind feature on the Convertible Facility was also extended, such that 100% of the cash interest due prior to June 2021 will be paid-in-kind and 50% of the cash interest due thereafter will be paid-in-kind. The Fourth Amendment released certain assets from its collateral to allow greater flexibility to generate proceeds through the sale of non- core assets. As consideration for the amendment, the conversion price for a portion of the existing notes outstanding under the Convertible Facility was amended to $0.34 per share. An amendment fee of $2,000,000 was also paid through the issuance of additional notes at a conversion price of $0.28 per share.

Senior Secured Term Loan Facility

On July 2, 2020, the Company amended the term loan facility wherein the minimum liquidity covenant was waived until September 30, 2020 and resetting at $5,000,000 thereafter with incremental increases on March 31, 2021 and December 31, 2021. Effective March 1, 2020 through July, the entirety of the interest (15.5%) shall accrue monthly to the outstanding principal as payment-in-kind. In addition, 100% of the total interest payable prior to June 2021 will be paid-in-kind and 50% of the cash interest due thereafter will be paid-in-kind. As consideration for the amendment, the Company issued approximately 20,227,863 warrants, each exercisable at $0.34 per share. The Company also cancelled 20,227,863 warrants of the total issued warrants held by the lenders which were each exercisable at $0.60 per share. An amendment fee of $834,000 was also paid-in-kind.

On September 16, 2020, the Company entered into further amendments wherein the potential size of the Senior Secured Term Loan Facility was increased by $12,000,000, of which $5,700,000 is fully committed by the lenders. On September 16, 2020, the Company closed on $3,000,000 of the incremental notes which bears interest at a rate of 18.0% per annum wherein 12.0% shall be paid in cash monthly in arrears and 6.0% shall accrue monthly as payment-in-kind. As consideration for the increase in available funding, the Company issued 20,227,863 warrants with an exercise price of $0.34 and 30,000,000 warrants with an exercise price of $0.20 per share each exercisable at the greater of (a) $0.20 per share and (b) 115% multiplied by the volume-weighted average trading price of the shares for the five consecutive trading days ending on the trading day immediately prior to the applicable funding date of the second tranche. On September 30, 2020, the Company closed on the remaining $2,700,000 of the incremental notes.

On September 16, 2020, the Company entered into an unsecured convertible debenture facility for total available proceeds of $10,000,000 wherein the convertible debentures shall have a conversion price equal to the closing price on the trading day immediately prior to the closing date, a maturity date of 24 months from the date of issuance and will bear interest at a rate of 7.5% per annum payable semi-annually in cash. The unsecured facility is callable in additional tranches in the amount of $1,000,000 each up to a maximum of $10,000,000 under all tranches. The timing of additional tranches can be accelerated based on certain conditions. The debentures provide for the automatic conversion into Subordinate Voting Shares in the event that the volume weighted average trading price is 50% above the conversion price on the CSE for 45 consecutive trading days.

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MEDMEN ENTERPRISES INC. Notes to Consolidated Financial Statements Fiscal Years Ended June 27, 2020 and June 29, 2019 (Amounts Expressed in United States Dollars Unless Otherwise Stated)

27. SUBSEQUENT EVENTS (Continued)

Treehouse Real Estate Investment Trust

On July 2, 2020, the Company announced modifications to its existing lease arrangements with the REIT in which the REIT agreed to defer a portion of total current monthly base rent for the 36-month period between July 1, 2020 and July 1, 2023. The total amount of all deferred rent accrues interest at 8.6% per annum during the deferral period. As consideration for the rent deferral, the Company issued 3,500,000 warrants to the REIT, each exercisable at $0.34 per share for a period of five years.

Sale of Assets

Subsequent to June 27, 2020, the Company entered into definitive agreements for the sale of one of its retail licenses outside of California for a total purchase price of $20,000,000 wherein $10,000,000 was due at signing, $8,000,000 due at or around the four-month anniversary of signing, and the remaining $2,000,000 shall be due three months following the prior payment.

In August 2020, the Company entered into an agreement to exchange all of its investment in The Hacienda Company, LLC to settle outstanding balances totaling approximately $700,000.

28. Correction of Error in Previously Issued Financial Statements

Subsequent to the issuance of the Consolidated Financial Statements as of and for the fiscal years ended June 27, 2020 and June 29, 2019 on October 15, 2020, potential misclassifications were noted in the following financial statement line items in the statements of operations for the fiscal years ended June 27, 2020 and June 29, 2019: realized and unrealized loss on changes in fair value of contingent consideration, impairment expense and loss on disposals of assets, restructuring fees and other expenses. Following the identification of these potential misclassifications, the Company reviewed applicable accounting guidance and as a result adjusted the presentation of these line items to be included in the subtotal of total expenses and loss from operations. The misclassification was deemed to be an error in previously issued financial statements under ASC 250, “ Accounting Changes and Error Corrections ”. Management performed additional reviews and analysis of other financial statement line items on the statement of operations, reviewed our accounting policies and noted no additional corrections were required.

The following tables present the summary impacts of the adjustments on our previously reported consolidated statements of operations for the fiscal years ended June 27, 2020 and June 29, 2019:

Fiscal Year Ended June 27, 2020 Fiscal Year Ended June 29, 2019 Previously As Previously As Reported Adjustment Corrected Reported Adjustment Corrected

Revenue $ 157,112,281 $ - $ 157,112,281 $ 119,919,169 $ - $ 119,919,169 Cost of Goods Sold 98,991,307 - 98,991,307 64,468,357 - 64,468,357 Gross Profit 58,120,974 - 58,120,974 55,450,812 - 55,450,812

Expenses: General and Administrative 200,273,872 - 200,273,872 239,344,688 - 239,344,688 Sales and Marketing 10,641,912 - 10,641,912 27,548,784 - 27,548,784 Depreciation and Amortization 39,953,805 - 39,953,805 22,055,590 - 22,055,590 Realized and Unrealized Gain on Changes in Fair Value of Contingent Consideration - 8,951,801 8,951,801 - - - Impairment Expense - 239,509,415 239,509,415 - - - Loss on Disposals of Assets, Restructuring Fees and Other Expenses - 6,233,034 6,233,034 - 16,542,840 16,542,840

Total Expenses 250,869,589 254,694,250 505,563,839 288,949,062 16,542,840 305,491,902

Loss from Operations (192,748,615) (254,694,250) (447,442,865) (233,498,250) (16,542,840) (250,041,090)

Other Expense (Income): Interest Expense 40,425,315 - 40,425,315 12,381,121 - 12,381,121 Interest Income (766,035) - (766,035) (701,790) - (701,790) Amortization of Debt Discount and Loan Origination Fees 9,061,967 - 9,061,967 8,308,751 - 8,308,751 Change in Fair Value of Derivatives (8,797,409) - (8,797,409) (3,908,722) - (3,908,722) Realized and Unrealized Gain on Investment, Assets Held For Sale and Other Assets (16,373,788) - (16,373,788) (4,259,000) - (4,259,000)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Realized and Unrealized Gain on Changes in Fair Value of Contingent Consideration 8,951,801 (8,951,801) - - - - Impairment Expense 239,509,415 (239,509,415) - - - - Loss on Disposals of Assets, Restructuring Fees and Other Expenses 50,588,435 (50,588,435) - 16,542,840 (16,542,840) - Loss on Extinguishment of Debt - 44,355,401 44,355,401 1,164,054 - 1,164,054

Total Other Expenses 322,599,701 (254,694,250) 67,905,451 29,527,254 (16,542,840) 12,984,414

Loss from Continuing Operations Before Provision for Income Taxes (515,348,316) - (515,348,316) (263,025,504) - (263,025,504) Provision for Income Tax Benefit 39,598,946 - 39,598,946 6,369,046 - 6,369,046

Net Loss from Continuing Operations (475,749,370) - (475,749,370) (256,656,458) - (256,656,458) Net Loss from Discontinued Operations, Net of Taxes (50,781,039) - (50,781,039) (1,264,196) - (1,264,196)

Net Loss (526,530,409) - (526,530,409) (257,920,654) - (257,920,654)

Net Loss Attributable to Non-Controlling Interest (279,266,058) - (279,266,058) (188,840,766) - (279,266,058)

Net Loss Attributable to Shareholders of MedMen Enterprises Inc. $ (247,264,351) $ - $(247,264,351) $ (69,079,888) $ - $ 21,345,404

Loss Per Share - Basic and Diluted: From Continuing Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (0.73) $ - $ (0.73) $ (0.64) $ - $ (0.64) From Discontinued Operations Attributable to Shareholders of MedMen Enterprises, Inc. $ (0.19) $ - $ (0.19) $ (0.01) $ - $ (0.01) Weighted-Average Shares Outstanding - Basic and Diluted 270,418,842 - 270,418,842 105,915,105 - 105,915,105

There was no effect on retained earnings or other appropriate components of equity or net assets in the statement of financial position as of and for the fiscal years ended June 27, 2020 and June 29, 2019 as a result of the correction of error in previously issued financial statements.

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MEDMEN ENTERPRISES INC.

PROSPECTUS

244,110,563 Subordinate Voting Shares

, 2021

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth various expenses that will be incurred in connection with this offering as it relates to this Registration Statement:

SEC Filing Fee $ 6,883.28 + State Securities Filing Fees 5,000.00* Legal Fees and Expenses 75,000.00* Accounting Fees and Expenses 5,000.00* Printing Expenses 10,000.00* Miscellaneous Expenses 8,116.72 * Total $ 110,000.00*

* Estimated + Paid herewith

Item 14. Indemnification of Directors and Officers

MedMen is incorporated under the laws of British Columbia.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document or other unincorporated entity, and his or her heirs and personal or other legal representatives of that individual, or an Eligible Party. Such indemnity may provide for indemnification against any judgment, penalty, fine or settlement paid in respect of a proceeding in which such individual, by reason being or having been an Eligible Party, is or may be joined as a party, or is or may be liable for provided, (a) he or she acted honestly and in good faith with a view to the best interests of the applicable corporation; and (b) in the case of an eligible proceeding other than a civil proceeding, the Eligible Party had reasonable grounds for believing that the Eligible Party’s conduct in respect of which the proceeding was brought was lawful. (2) In addition to the powers of the Company to indemnify under (1), a court may, on the application of the Company or an Eligible Party: (i) order the Company to indemnify an Eligible Party; (ii) order the enforcement of, or any payment under, an agreement of indemnification entered into by the Company; or (iii) order the Company to pay some or all of the expenses incurred by any person in obtaining an order for indemnification under this item (2). (3) An Eligible Party is entitled to indemnity from the Company in respect of all costs, charges and expenses reasonably incurred by him or her in connection with the defense of any proceeding to which he or she is made a party by reason of being an Eligible Party, if the person seeking indemnity, (a) was substantially successful on the merits in his or her defense of the action or proceeding; and (b) fulfils the conditions set out in clauses (1)(a) and (b). (4) The Company may purchase and maintain insurance for the benefit of an Eligible Party against any liability that may be incurred by reason of the Eligible Party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the Company or an associated corporation.

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Item 15. Recent Sales of Unregistered Securities

The following information represents securities sold by the Company within the past three years which were not registered under the Securities Act. Included are new issues, securities issued in exchange for property, services or other securities, securities issued upon conversion from other Company share classes and new securities resulting from the modification of outstanding securities. The Company sold all of the securities listed below pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act, or Regulation D or Regulation S promulgated thereunder.

During the year ended June 30, 2018, the Company had the following issuance of unregistered securities:

• 1,449,291 Subordinate Voting Shares to the shareholders of the Ladera in conjunction with the RTO. • 16,025,648 Subordinate Voting Shares in redemption of 16,025,648 MedMen Corp Redeemable Shares. • 27,301,729 subordinate Voting Shares for net proceeds of $101,802,288. • 24,153 and 415,155 Subordinate Voting Shares for services and exercise of warrants, respectively. • 1,630,590 Super Voting Shares to two executives of the Company. • 365,352,075 MedMen Corp Redeemable Shares upon rollup. • 415,155 MedMen Corp Redeemable Shares upon exercise of MedMen Corp warrants. • 195,104 MedMen Corp Redeemable Shares for various services. • 1,570,064 MedMen Enterprises USA, LLC Common Units granted to executive management. • 5,793,374 stock options to various employees with a weighted average exercise price of $4.14 and exercisable into Subordinate Voting Shares of the Company. • 30,314,333 MedMen LLC LTIP Units to the founders of the Company and certain executive management with various vesting terms. • 2,415,485 warrants exercisable into Subordinate Voting Shares and 9,212,174 warrants exercisable into MedMen Corp Redeemable Shares issued for services and debt. The aforementioned warrants have a weighted average exercise price of $3.52.

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During the year ended June 29, 2019, the Company had the following issuance of unregistered securities:

• 29,321,818 Subordinate Voting Shares for net proceeds of $115,289,679. • 5,168,500 Subordinate Voting Shares for net proceeds of $13,306,096 under the Company’s At-the-Market equity financing program. • 632,130 Subordinate Voting Shares for the settlement of debt. • 2,691,141 Subordinate Voting Shares in relation to debt issuance costs. • 58,095,821 Subordinate Voting Shares for the redemption of MedMen Corp Redeemable Shares. • 5,566,993 Subordinate Voting Shares for the redemption of LLC Redeemable Shares. • 919,711 Subordinate Voting Shares for other assets. • 159,435 Subordinate Voting Shares for acquisition related costs. • 9,736,870 Subordinate Voting Shares to acquire additional interest in a variable interest entity. • 10,875,929 Subordinate Voting Shares in conjunction with a business combination. • 1,658,884 Subordinate Voting Shares in conjunction with various asset acquisitions. • 333,479 Subordinate Voting Shares for vested restricted stock units. • 2,634,235 Subordinate Voting Shares for employee stock compensation. • 21,480,909 warrants exercisable into Subordinate Voting Shares issued in connection with the September and December 2018 bought deals at an exercise price of $3.11 per warrant. • 3,932,415 MedMen Corp Redeemable Shares for the conversion of debt to equity. • 4,274,566 MedMen Corp Redeemable Shares upon redemption of MedMen Enterprises USA, LLC Common Units. • 72,464 MedMen Corp Redeemable Shares for the purchase of various assets. • 169,487 MedMen Corp Redeemable Shares issued for acquisition related costs. • 8,996,511 MedMen Enterprises USA, LLC Common Units for an asset acquisition.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document • 10,374,075 stock options to various employees with a weighted average exercise price of $3.45 and exercisable into Subordinate Voting Shares of the Company. • 4,352,340 restricted stock units of Subordinate Voting Shares issued to certain employees and board members with various vesting dates. • 12,999,815 warrants exercisable into Subordinate Voting Shares and 17,234,540 warrants exercisable into MedMen Corp Redeemable Shares issued for services and debt. The warrants have a weighted average exercise price of $4.48.

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During the year ended June 27, 2020, the Company had the following issuance of unregistered securities:

• 61,596,792 Subordinate Voting Shares for net proceeds of $50,193,938. • 9,789,300 Subordinate Voting Shares for net proceeds of $12,399,252 under the Company’s At-the-Market equity financing program. • 6,801,790 Subordinate Voting Shares for the settlement of debt. • 15,847,581 Subordinate Voting Shares to settle various vendor payables. • 13,737,444 Subordinate Voting Shares to settle a contingent consideration. • 7,373,034 Subordinate Voting Shares in conjunction with various asset acquisitions. • 27,090,259 Subordinate Voting Shares for the redemption of MedMen Corp Redeemable Shares. • 13,479,589 Subordinate Voting Shares for other assets. • 269,817 Subordinate Voting Shares for acquisition related costs. • 5,112,263 Subordinate Voting Shares in conjunction with the Business Combination. • 329,548 Subordinate Voting Shares for vested restricted stock units. • 2,531,763 Subordinate Voting Shares for employee stock compensation. • 49,818 MedMen Corp Redeemable Shares for compensation. • 6,222,689 stock options to various employees with a weighted average exercise price of $1.40 and exercisable into Subordinate Voting Shares of the Company. • 1,985,205 restricted stock units of Subordinate Voting Shares issued to certain employees and board members with various vesting dates. • 89,134,092 warrants exercisable into Subordinate Voting Shares and 40,455,729 warrants exercisable into MedMen Corp Redeemable Shares issued related debt, debt modifications and amendments. The warrants have a weighted average exercise price of $0.62. • $10,000,000 unsecured convertible debenture facility with a conversion price equal to the closing price on the trading day immediately prior to the closing date and 3,293,413 warrants exercisable at US$0.21 per share for a period of 24 months from the date of issuance. 30,000,000 warrants exercisable at $0.20 per share for a period of five years and 20,227,865 Warrants exercisable at $0.34 per share for a period of five years • issued related to debt modifications and amendments.

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During the fiscal quarter ended September 26, 2020, the Company issued the securities listed below:

• On July 2, 2020, pursuant to amending the 2018 Term Loan, MM CAN issued 20,227,863 warrants exercisable for shares of Class B Common Stock of MM CAN at $0.34 per share. The Company also cancelled 20,227,863 warrants of the total issued warrants held by the lenders which were each exercisable at $0.60 per share. An amendment fee of $834,000 was also paid-in-kind. • On July 2, 2020, in connection with modifications to its existing lease arrangements with the Treehouse Real Estate Investment Trust, the Company issued 3,500,000 warrants exercisable at $0.34 per Subordinate Voting Share for a period of five years. • On July 2, 2020, as consideration for the amendment of the GGP Facility, the conversion price for 52% of the existing notes outstanding under the GGP Facility prior to the $15.0 million advance under Tranche 4 of the GGP Facility (including PIK interest accrued on such notes), being 52% of an aggregate principal balance of $168.7 million as of June 30, 2020, was amended to $0.34 per Subordinate Voting Share. As additional consideration, a fee of $2.0 million was paid to the lenders under the GGP Facility through the issuance of additional notes, which notes have a conversion price per Subordinate Voting Share equal to $0.28. • On July 6, 2020, the Company issued 1,318,865 Subordinate Voting Shares and 9,490 options for employee bonuses and severance. • On August 21, 2020, the Company issued 614,206 Subordinate Voting Shares to its Board of Directors. • September 10, 2020, the Company issued 1,070,655 Subordinate Voting Shares related to a vendor settlement. • On September 14, 2020, the Company closed on an incremental advance in the amount of $5,000,000 under its existing Convertible Facility with GGP at a conversion price of $0.20 per Subordinate Voting Share. In connection with the incremental advance, the Company issued 25,000,000 warrants with an exercise price of $0.20 per Subordinate Voting Share. In addition, 1,080,255 existing warrants were cancelled and replaced with 16,875,001 warrants with an exercise price of $0.20 per Subordinate Voting Share. Pursuant to the terms of the GGP Facility, the conversion price for 5.0% of the existing Notes outstanding prior to Tranche 4 and Incremental Advance (including paid-in-kind interest accrued on such Notes), being 5.0% of an aggregate principal amount of $170,729,923, was amended to $0.20 per Subordinate Voting Share. As consideration for the additional advance, the Company issued convertible notes as consideration for a $468,564 fee with a conversion price of $0.20 per Subordinate Voting Share. • On September 16, 2020, pursuant to a $10.0 million unsecured convertible debenture facility, the Company issued a $1.0 million convertible debenture with a conversion price a conversion price of $0.1670 per Subordinate Voting Share and 3,293,413 warrants exercisable at $0.21 per Subordinate Voting Share for a period of 24 months from the date of issuance. • On September 16, 2020, pursuant to further amendment to the 2018 Term Loan, MM CAN issued 30,000,000 warrants exercisable at $0.34 per share for a period of five years and 20,227,865 exercisable at the greater of (a) $0.20 per share and (b) 115% multiplied by the volume-weighted average trading price of the shares for the five consecutive trading days ending on the trading day immediately prior to the applicable funding date of the second tranche. • On September 17, 2020, the Company issued 551,976 Subordinate Voting Shares related to a vendor settlement. • On September 24, 2020, the Company issued 961,941 Subordinate Voting Shares related to a vendor settlement. • On September 25, 2020, the Company issued 1,024,118 Subordinate Voting Shares related to a vendor settlement.

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During the fiscal quarter ended December 26, 2020, the Company issued the securities listed below:

· On September 28, 2020, pursuant to a $10.0 million unsecured convertible debenture facility entered into on September 16, 2020, the Company issued to institutional investors a $1.0 million convertible debenture with a conversion price of $0.1456 per Subordinate Voting Share and 3,777,475 warrants exercisable at $0.17 per Subordinate Voting Share for a period of 24 months from the date of issuance.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · On September 16, and September 28, 2020, the down round feature on certain convertible notes and warrants issued in connection with Tranche 4, Incremental Advances and certain amendment fees related to the GGP Facility was triggered wherein the conversion price and exercise price was adjusted to $0.17 and $0.1529 per share, respectively. As a result of the price adjustment, the warrants are exercisable for an aggregate of 54,670,338 Subordinate Voting Shares at an exercise price of $0.1529 per share and the value of the effect of the down round feature on convertible notes was determined to be $32,744,770 for the six months ended December 26, 2020.

· On October 30, 2020, in connection with the issuance of incremental term loans totaling approximately $7.7 million pursuant the Senior Secured Commercial Loan Agreement dated October 1, 2018, as amended, entered into with funds managed by Hankey Capital, LLC and with an affiliate of Stable Road Capital, MedMen Corp. issued 77,052,790 five-year warrants exercisable for MedMen Corp. Class B Common Shares at an exercise price of $0.20 per share.

· On November 5, 2020, the Company issued 1,811,730 Subordinate Voting Shares related to a vendor settlement.

· On November 20, 2020, pursuant to the $10.0 million unsecured convertible debenture facility entered into on September 16, 2020, the Company issued to institutional investors a $1.0 million convertible debenture with a conversion price of $0.1456 per Subordinate Voting Share and 3,592,326 warrants exercisable at $0.17 per Subordinate Voting Share for a period of 24 months from the date of issuance, which was previously reported on the Company’s Current Report on Form 8-K filed with the SEC on November 25, 2020.

· On November 23, and December 8, 2020, the Company issued an aggregate of 1,100,301 Subordinate Voting Shares to its non-employee directors as quarterly compensation for service on the Board of Directors.

· On December 10, 2020, the Company issued 1,785,334 Subordinate Voting Shares related to a vendor settlement.

· On December 11, 2020, the Company issued 2,082,890 Subordinate Voting Shares related to a vendor settlement.

· On December 11, 2020, the Company issued 5,458,749 Subordinate Voting Shares to a former director in connection with the vesting of previously granted Restricted Stock Units.

· On December 14, 2020, the Company issued an aggregate of 1,682,417 Subordinate Voting Shares to former directors in connection with quarterly compensation for service on the Board of Directors during a previous period.

· On December 17, 2020, pursuant to the $10.0 million unsecured convertible debenture facility entered into on September 16, 2020, the Company issued to institutional investors a $1.0 million convertible debenture with a conversion price a conversion price of $0.1456 per Subordinate Voting Share and 3,597,100 warrants exercisable at $0.18 per Subordinate Voting Share for a period of 24 months from the date of issuance.

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Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits. The exhibits are incorporated by reference from the Exhibit Index attached hereto.

(b) Financial Statements. The financial statements filed herewith are set forth on the Index to Consolidated Financial Statements on page F-1 of the separate financial section which accompanies this registration statement, which is incorporated herein by reference.

Item 17. Undertakings

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer and sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on March 5, 2021.

MEDMEN ENTERPRISES INC.

By: /s/ Reece Fulgham Reece Fulgham Chief Financial Officer

POWER OF ATTORNEY

We, the undersigned officers and directors of MedMen Enterprises Inc., do hereby constitute and appoint Tom Lynch and Reece Fulgham, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution for him in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

Name and Signature Title Date

/s/ Tom Lynch Tom Lynch Chief Executive Officer, Chairman of the Board and Director March 5, 2021 (Principal Executive Officer) /s/ Reece Fulgham Reece Fulgham Chief Financial Officer March 5, 2021 (Principal Financial and Accounting Officer) /s/ Nicole Christoff Nicole Christoff Director March 5, 2021

/s/ Melvin Elias Melvin Elias Director March 5, 2021

/s/ Errol Schweizer Errol Schweizer Director March 5, 2021

/s/ Cameron Smith Cameron Smith Director March 5, 2021

/s/ Albert Harrington Albert Harrington Director March 5, 2021

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EXHIBIT INDEX

Exhibit No. Description 3.1* Articles of MedMen Enterprises Inc., as amended, dated May 28, 2018 4.1* Subordinate Voting share Purchase Warrant Indenture dated September 27, 2018 between the Registrant and Odyssey Trust Company 4.1(a)* Supplemental Subordinate Voting Share Purchase Warrant Indenture dated December 5, 2018 between the Registrant and Odyssey Trust Company 5.1** Legal Opinion of Cassels Brock & Blackwell LLP 10.1* Amended and Restated Articles of Incorporation of MM Can USA, Inc. dated May 28, 2018 10.2* Third Amended and Restated Limited Liability Company Agreement of MM Enterprises USA, LLC dated May 28, 2018 10.3* Formation and Contribution Agreement dated January 24, 2018 among MM Enterprises USA, LLC and MMMG, LLC, MedMen Opportunity Fund, LP, MedMen Opportunity Fund II, LP, The MedMen of Nevada 2, LLC, DHSM Investors, LLC and Bloomfield Partners Utica, LLC 10.4* Letter Agreement dated April 27, 2018 between the Ladera Ventures Corp. and MM Enterprises USA, LLC 10.5* Support Agreement dated May 28, 2018 between the Registrant, MM Can USA, Inc. and MM Enterprises, LLC 10.6* Tax Receivable Agreement dated May 28, 2018 among MM Enterprises USA, LLC, certain members and LTIP Unitholders

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.7* Senior Secured Commercial Loan Agreement dated October 1, 2018 between the Registrant, MM Can USA, Inc. and Hankey Capital, LLC 10.7(a) * First Modification to Senior Secured Commercial Loan Agreement dated April 10, 2019 10.7(b)* Second Modification to Senior Secured Commercial Loan Agreement dated January 13, 2020, with form of Amended and Restated Senior Secured Term Note 10.7(c)* Third Modification to Senior Secured Commercial Loan Agreement dated July 2, 2020, with form of Second Amended and Restated Senior Secured Term Note, Form of Amended and Restated Warrant exercisable for Class B Common Shares of MM CAN USA, Inc. at an exercise price of $0.60 per share, and Form of Warrant exercisable for Class B Common Shares of MM CAN USA, Inc. at an exercise price of $0.34 per share 10.7(d) * Fourth Modification to Senior Secured Commercial Loan Agreement dated September 16, 2020, with Form of Secured Term Note, Form of Warrant exercisable for Class B Common Shares of MM CAN USA, Inc. at an exercise price of $0.34 per share (B1 Warrants), and Form of Warrant exercisable for Class B Common Shares of MM CAN USA, Inc. (B2 Warrants) 10.7(e) Side Letter dated February 25, 2021 between the Registrant, MM CAN USA, Inc. and Hankey Capital, LLC and Form of Warrant issued by MM CAN USA, Inc. 10.8* Business Combination Agreement dated December 23, 2018 among the Registrant and The PharmaCann LLC Majority Members 10.8(a) * Termination and Release Agreement dated October 7, 2019 between the Registrant and PharmaCann, LLC 10.9* Canadian Equity Distribution Agreement dated April 10, 2019 between the Registrant and Canaccord Genuity Corp 10.10* Master Lease Agreement dated November 25, 2019 with Treehouse Real Estate Investment Trust, Inc., First Amendment dated January 30, 2020 and Second Amendment dated July 2, 2020 10.11* Management Support Agreement dated March 30, 2020 between the Registrant and SierraConstellation Partners. 10.12†* MedMen Equity Incentive Plan dated May 28, 2018 10.12(a) †* Form of Option Award Agreement for MedMen Equity Incentive Plan 10.12(b) †* Form of Restricted Stock Unit Award Agreement for MedMen Equity Incentive Plan 10.13* Second Amended and Restated Securities Purchase Agreement (with forms of Replacement Warrant and Incremental Warrant) dated July 2, 2020 among the Registrant, the Other Credit Parties named therein, the Purchasers named therein and Gotham Green Admin 1, LLC 10.13(a)* First Amendment dated September 14, 2020 to Second Amended and Restated Securities Purchase Agreement (with form of Senior Secured Convertible Note - Incremental Note) 10.13(b)* Securities Purchase Agreement dated April 23, 2019 among the Registrant, the Other Credit Parties named therein, the Purchasers named therein and Gotham Green Admin 1, LLC 10.13(c)* First Amendment dated August 12, 2019 to Securities Purchase Agreement, Tranche 1 Notes and Tranche 2 Notes

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10.13(d)* Second Amendment dated October 29, 2019 to Securities Purchase Agreement and Notes 10.13(e)* Amended and Restated Securities Purchase Agreement dated March 27, 2020 among the Registrant, the Other Credit Parties named therein, the Purchasers named therein and Gotham Green Admin 1, LLC 10.13(f)* Side Letter dated July 2, 2020 among the Registrant, MMC CAN USE, Inc. and the Purchasers named therein and Gotham Green Admin 1, LLC 10.13(g) Third Amended and Restated Securities Purchase Agreement (with forms of Replacement Warrant and Note) dated January 11, 2021 among the Registrant, the Other Credit Parties named therein, the Purchasers named therein and Gotham Green Admin 1, LLC 10.14* Lender and Landlord Support Agreement dated July 3, 2020 among the Registrant and certain lender including Gotham Green Partners, Stable Road Capital and affiliates, and Treehouse Real Estate Investment Trust 10.15* Investment Agreement dated September 16, 2020 between the Registrant and certain Institutional Investors for issuance of 7.5% Convertible Unsecured Debentures 10.15(a)* Securities Lending Agreement dated September 16, 2020 between the Registrant and certain Institutional Investors 10.15(b)* Form of 7.5% Unsecured Convertible Debenture 10.15(c)* Form of Warrant Certificate 10.16* Membership Interest Purchase Agreement dated November 5, 2019 between Le Cirque Rouge, LP and LCR SLP, LLC 10.17* Membership Interest Purchase Agreement dated November 22, 2019 between Le Cirque Rouge, LP and LCR SLP, LLC 10.18* Stock Purchase Agreement dated May 24, 2019 between Equityholders of One Love Beach Club and MM Enterprises USA, LLC 10.19* Securities Transfer Agreement dated September 6, 2019 between MM Enterprises USA, LLC, the transferees named therein and Old Pal, LLC 10.20* Form of Subscription Agreement for December 2019 Non-Brokered Private Placement of 46,962,645 Class B Subordinate Voting Shares 10.21* Amended and Restated Membership Interest Purchase Agreement dated October 30, 2020 between Verano Evanston, LLC and MM Enterprises USA, LLC 10.21(a)* Membership Interest Purchase Agreement dated July 1, 2020 between Verona Evanston, LLC and MM Enterprises USA, LLC 10.22*† Severance Agreement and Release dated April 10, 2020 between MM Enterprises USA, LLC and Ryan Lissack 10.23*† Severance Agreement and Release dated October 7, 2019 between MM Enterprises USA, LLC and Michael W. Kramer 10.24*† Separation Agreement and Release dated January 30, 2020 between the Registrant, MM Enterprises USA, LLC and Adam Bierman 10.25*† Separation Agreement dated December 31, 2020 between MM Enterprises USA, LLC and Zeeshan Hyder 10.26 Form of Subscription Agreement for Equity Private Placement dated February 16, 2021 10.26(a) Form of Warrant for Equity Private Placement dated February 16, 2021 10.27 Investment Agreement dated February 25, 2021 among MedMen NY, Inc., MM Enterprises USA, LLC, AWH New York, LLC and Ascend Wellness Holdings, LLC 21* List of Subsidiaries 23.1 Consent of MNP LLP

101.INS# XBRL Instance Document 101.SCH# XBRL Taxonomy Extension Schema Document 101.CAL# XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB# XBRL Taxonomy Extension Labels Linkbase Document 101.PRE# XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF# XBRL Taxonomy Extension Definition Linkbase Document ______* Incorporated by reference to the Company’s Registration Statement on Form 10 filed with the SEC on August 24, 2020, as amended by Amendment No.1 filed on October 7, 2020, Amendment No. 2 filed on October 19, 2020, Amendment No. 3 filed on December 7, 2020, Amendment No. 4 filed on January 15, 2021 and Amendment No. 5 filed on January 27, 2021.

** To be filed by amendment.

† Indicates a management contract or compensatory plan or arrangement.

# Filed Herewith. Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

STRICTLY PRIVATE AND CONFIDENTIAL

February 25, 2021

Hankey Capital, LLC 4751 Wilshire Blvd., Suite 110 Los Angeles, CA 90010 Attention: Don R. Hankey, Manager

Dear Sirs:

Reference is made to: (i) that certain letter agreement dated July 2, 2020 (the “July 2020 Letter”) entered into by and between MM CAN USA, INC. (the “Borrower”) and HANKEY CAPITAL, LLC (the “Lender”); (ii) that certain letter agreement dated December 16, 2020 entered into by and between Borrower and Lender (the “December 2020 Letter”); and (iii) that certain Senior Secured Commercial Loan Agreement between the Borrower and the Lender dated October 1, 2018 (as modified to date, the “Loan Agreement”). Capitalized terms used but not otherwise defined in this letter agreement (this “Letter Agreement”) shall have the meaning set forth in the Loan Agreement. The Borrower and the Lender hereby agree as follows:

(1) Investment Agreement; Lender Consent. Pursuant to that certain Investment Agreement dated as of the date hereof (the “Investment Agreement”), MedMen NY, Inc. (“MMNY”) agreed to assume, approximately $73,000,000 of Borrower’s Obligations under the Loan Agreement and issue stock to AWH New York, LLC (“Ascend”) for an aggregate purchase price of $73,000,000 (as may be adjusted, the “Purchase Price”) payable as follows: (a) $35,000,000 in cash paid at closing (subject to adjustment and reduction in accordance with Article II of the Investment Agreement) (the “Closing Cash”); (b) $28,000,000 in seller financing (the “Seller Note”); and (c) $10,000,000 paid in cash (the “Earn-Out”) within five business days following the first adult-use marijuana sale by MMNY. In consideration of the mutual execution of this Letter Agreement, Lender shall issue its consent to the Investment Agreement in the form required by the parties thereunder as of the date hereof (the “Lender Consent”). The effectiveness of this Letter Agreement shall be conditioned on the timely issuance of the Lender Consent and the execution of the Investment Agreement.

(2) Application of Purchase Price to Obligations. The Purchase Price received by MMNY or its affiliates in connection with the transaction, net of Transaction Expenses (as defined in the December 2020 Letter) (the “Net Proceeds”), shall be used to prepay in part the Obligations outstanding under the Loan Agreement. Pursuant to the December 2020 Letter, the Borrower instructed Ascend to pay the Closing Cash (net of the Deposit (as defined in the December 2020 Letter and assuming paid to Lender in accordance with the December 2020 Letter) and Transaction Expenses) and the Earn-Out directly to Lender and to assign or issue the Seller Note in favor of Lender at the Initial Closing (as defined in the Investment Agreement), and in consideration thereof, the Obligations under the Loan Agreement shall be equally reduced as of the date of the Initial Closing (as defined in the Investment Agreement) by the Net Proceeds (which for clarity shall equal the (i) the sum of the Closing Cash, the principal amount of the Seller Note and the Earn-Out, minus (ii) the Transaction Expenses).

(3) Assignment of Company Debt; Earn-Out Note. Notwithstanding anything to the contrary contained herein, in the Investment Agreement, the December 2020 Letter or in the Loan Documents, if on or prior to January 31, 2022, the State of New York has not passed legislation authorizing the sale of marijuana for recreational adult-use (which for clarity will occur prior to a Milestone Event as defined in the Investment Agreement), the Lender may elect, upon written notice to the Borrower to assign the right to receive the Milestone Shares Purchase Price (in accordance with Section 2.3(c) of the Investment Agreement) to the Borrower, in exchange for a promissory note (the “Earn-Out Note”) issued by the Borrower in favor of the Lender. The Earn-Out Note shall accrue interest at twelve percent (12%) per annum (which interest shall compound on the same terms as the Loan Agreement and be paid upon maturity of the Earn-Out Note) and have a maturity date of the earlier of (i) the payment of the Milestone Shares

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Purchase Price in accordance with the Investment Agreement, or (ii) twelve (12) months after the date of the Earn-Out Note; provided, that all or any portion of the Earn-Out Note may be pre-paid at any time without premium or penalty. In addition, the Earn-Out Note shall include an origination fee in an amount equal to twelve percent (12%) per annum interest rate on the principal amount of the Earn-Out Note deemed to have accrued between the period commencing on the date of the Initial Closing and ending on the date of the Earn-Out Note. The origination fee shall be payable in cash or added to the principal balance of the Earn-Out Note as of the date of the Earn-Out Note, as elected by the Borrower on such date. In connection with the assignment of the right to receive the Milestone Shares Purchase Price, Lender and Borrower will instruct a third-party escrow agent mutually acceptable to Lender and Borrower to receive such Milestone Shares Purchase Price and to pay down any amounts owing under the Earn-Out Note prior to distribution the distribution of any portion of the Milestone Shares Purchase Price to Borrower.

(4) Covenant Amendments. As a condition to, and effective upon the filing the Registration Statement in accordance with Section 5 below, Lender agrees that:

(a) Section 5.02(r) of the Loan Agreement shall be amended to replicate Section 7.19(a) (inclusive of modifications to corresponding defined terms) of that certain Third Amended and Restated Securities Purchase Agreement dated as of January 11, 2021 (the “GGP SPA”) and entered into between MedMen Enterprises Inc. (“Parent”) and Gotham Green Admin 1, LLC;

(b) Section 5.02(v), 5.02(w), 5.02(x) and 5.02(y) of the Loan Agreement shall be deleted in their entirety and new sections shall be added to the Loan Agreement to replicate Sections 7.19(b) and 7.19(c) (inclusive of modifications to corresponding defined terms) of the GGP SPA;

(c) The provision at the end of Section 5.02 of the Loan Agreement added pursuant to Section 14 of that certain Third Modification to Senior Secured Commercial Loan Agreement dated as of July 2, 2020 shall be deleted in its entirety;

(d) Section 5.01(c)(vii) of the Loan Agreement shall be deleted in its entirety and replaced with the following “(vii) Commencing on July 1, 2021, each week on or before Thursday of such week, a rolling 13-week cash forecast of the Guarantor, in the same form and so long as required by the Borrower’s senior lender;” and

(e) The provision “such failure shall continue for a period of ten (10) days after receipt of written notice of such failure by the Lender” shall be added to the end of Section 6.01(b)(i) of the Loan Agreement.

(5) Registration Rights.

(a) The Borrower shall or shall cause Parent, as soon as reasonably practicable, and in any event within fifteen (15) calendar days after the date of this Letter Agreement, to file with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1 (the “Registration Statement”) under the U.S. Securities Act covering the issuance and/or resale of all Warrant Shares (as defined in the Loan Agreement) (collectively, the “Registrable Securities”), and use its reasonable best efforts to keep the Registration Statement, and any qualification, exemption or compliance under state securities laws which Parent determines to obtain, continuously effective with respect to the Warrant Shares. Lender and its affiliates will be indemnified by Borrower and Parent for any liability arising from any material misstatements or omissions in the Registration Statement except to the extent such misstatement or omission arises from the information specifically provided by Lender for inclusion in the Registration Statement. A security shall cease to be a Registrable Security upon sale pursuant to the Registration Statement, Rule 144 under the U.S. Securities Act, or otherwise in a transaction in which the transferee received unlegended securities. Lender agrees to cooperate as reasonably requested by Borrower or Parent in connection with the preparation and filing of the Registration Statement hereunder, and Parent agrees to cooperate as reasonably requested by Lender to facilitate the disposition of the Registrable Securities, including, without limitation, opinion(s) of counsel as may be reasonably necessary in order for the Lender to sell any Registrable Securities, and remove, or cause to be removed, the notation of any restrictive legend on Lender’s book-entry account maintained by Parent’s transfer agent, and bear all costs associated with the removal of such legend in Parent’s books.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) For not more than thirty (30) consecutive days or for a total of not more than ninety (90) days in any twelve (12) month period, Borrower or Parent may suspend the use of the prospectus included in the Registration Statement contemplated by this Section 5 in the event that Borrower or the Parent determines in good faith that such suspension is necessary to (i) delay the disclosure of material non-public information concerning the Borrower or Parent, the disclosure of which at the time is not, in the good faith opinion of Borrower or Parent, in the best interests of Borrower or Parent; or (ii) amend or supplement the affected Registration Statement or the related prospectus so that such Registration Statement or prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the prospectus in light of the circumstances under which they were made, not misleading (an “Allowed Delay”); provided, that Borrower or Parent shall promptly (1) notify Lender in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of Lender) disclose to such Lender any material non-public information giving rise to an Allowed Delay, (2) advise Lender in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (3) use reasonable best efforts to terminate an Allowed Delay as promptly as practicable. Lender agrees that, upon receipt of any notice from the Borrower or Parent of either (x) the commencement of an Allowed Delay or (y) the discovery that, or upon the happening of any event as a result of which, the prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, Lender will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until Lender is advised by Borrower or Parent that such dispositions may again be made.

(c) In the case of the registration effected by Parent pursuant to this Letter Agreement, the Parent shall deliver notice to Lender upon the occurrence of:

(1) the Registration Statement or any post-effective amendment thereto has become effective;

(2) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for such purpose; and

(3) the receipt by Parent of any notification with respect to the suspension of the qualification of the Warrant Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.

(d) The additional registration expenses and selling expenses incurred by Parent, Borrower or Lender in connection with any registration, qualification or compliance pursuant to this Section 5 shall be borne by Lender, on a pro rata basis, based on all securities registered under the then current or effective Registration Statement, provided that Lender’s obligation to reimburse Parent and Borrower under this clause (d) with respect to the additional expenses of Parent and Borrower shall not exceed $40,000 per annum in the aggregate.

(6) Amendment to Loan Agreement and Warrants.

(a) The parties agree to amend the last two sentences contained in Section 4 of that certain Fourth Modification to Senior Commercial Loan Agreement dated as of September 16, 2020 (the “Fourth Modification” which sentences commence with “Notwithstanding the foregoing, in the event…” and “By way of example, if Lender…” together with the requirements set forth in Section 11(f) in the B2 Warrants (as defined in the Fourth Modification) (collectively, the “Downround Provisions”) such that, upon any circumstance that would have triggered an obligation of the Borrower to reset the exercise price of the B2 Warrants (the “Downround Price Adjustment”) in accordance with the Downround Provisions the Borrower shall issue or instead shall cause Parent to issue to Lender or as directed by Lender additional warrants in the form substantially attached as Exhibit B2 to the Fourth Modification (as amended hereby and assuming issuance by Parent if applicable) (the “Downround Warrants”) covering a number Warrant Shares (as defined in the Fourth Amendment) or Class B subordinate voting shares of Parent (the "Subordinate Voting Shares") set forth in cell G28 of the Black-Scholes Option Value methodology excel model titled “MMEN Option Value Hankey Stable 2-24 v6” attached hereto as Schedule 1 using the following inputs:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) cell C4 (Stock Price 5-Day VWAP (P) – USD) equal to the five (5) day volume-weighted average trading price of the Subordinate Voting Shares for the five (5) consecutive trading days ending on the trading day immediately prior to the issuance of the Downround Warrants;

(ii) cell C5 (Exercise Price of Option (EX) – USD) shall be the exercise price of the B2 Warrants assuming the exercise price was adjusted to reflect a Downround Price Adjustment (for example, if the exercise price of the B2 Warrants is $0.20 and the Downround Price Adjustment is $0.05, cell C5 should equal $0.15) ; (iii) cell C6 (Warrant Issuance Date) shall be the date of issuance of the Downround Warrants; (iv) cell C7 (Compounded Risk-Free Interest Rate (3-yr swap)(rf)) shall be the three (3)-year swap rate as of the day immediately prior to the issuance of the Downround Warrants; (v) cell C8 (Historic LTM Standard Deviation Times 80% (annualized s) shall be the twelve (12) month actual historical standard deviation of the trading price of the Subordinate Voting Shares multiplied by eighty percent (80%); and (vi) cell G5 (Exercise Price of Down Round Option (EX) – USD) shall be the exercise price of the B2 Warrants assuming the exercise price is adjusted to reflect the current Downround Price Adjustment.

With respect to the existing Downround Price Adjustment obligation as of the date hereof, the parties agree that the numerator used to determine the number of Downround Warrants to be issued equal six hundred sixty four thousand three hundred thirty three dollars ($664,333) and the denominator shall equal the amount set forth in cell G27 after inputting the information set forth in subparagraphs (i) through (vi) above based upon the date of issuance.

(b) The Downround Warrants issued pursuant to this Section 6 shall have an exercise period ending on September 14, 2025, and an exercise price per Warrant Share or Subordinate Voting Share as applicable equal to the five day volume-weighted average trading price of the Subordinate Voting Shares for the five (5) consecutive trading days ending on the trading day immediately prior the date that the agreement to issue the Downround Warrants is announced by Parent by way of press release or the filing of a Form 9 with the Canadian Securities Exchange in respect of such issuances, subject to the minimum price permitted by the policies of the Canadian Securities Exchange (with conversion from Canadian dollars to U.S. dollars being determined based on the exchange rate published by the Bank of Canada for the day immediately prior to the applicable funding date).

(7) Miscellaneous.

(a) This Letter Agreement, the July 2020 Letter, the December 2020 Letter and the Loan Documents constitute the entire agreement between Borrower and the Lender relative to the subject matter hereof. No provision of the July 2020 Letter, the December 2020 Letter or the Loan Agreement has been waived or modified by this Letter Agreement except as expressly provided herein. No provision of this Letter Agreement shall be deemed to have been waived unless such waiver is given in writing, and no such waiver shall be deemed to be a waiver of any other or further obligation or liability of the party or parties in whose favor such waiver is given.

(b) The provisions of this Letter Agreement are intended solely to benefit the Borrower and the Lender and to the fullest extent permitted by applicable law, shall not be construed as conferring any benefit upon any other creditor of the Borrower, or any other person or entity (and no such person or entity shall be a third-party beneficiary of this Letter Agreement).

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) Each of the parties hereto shall, and shall cause their respective affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

(e) This Letter Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such term or provision may be enforced to the maximum extent permitted by law and, in any event, such illegality or invalidity shall not affect the validity of the remainder of this Letter Agreement.

(f) The parties agree to keep the terms of this Letter Agreement in strict confidence and shall only disclose such terms to their officers, directors, managers, agents, advisors, financing sources and professional representatives on a need-to-know basis or to otherwise comply with applicable law.

(g) This Letter Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the principle of conflicts of laws.

(h) Sections 7.04, 7.14 and Section 7.15 of the Loan Agreement are hereby incorporated into and made a part of this Letter Agreement by reference hereof.

(i) This Letter Agreement may be executed in any number of counterparts, any one of which need not contain the signatures of more than one party, but all of such counterparts together shall constitute one agreement. In order to expedite the execution of this Letter Agreement, a facsimile signature or emailed PDF copy of such signature shall be binding and of the same force and effect as the original signature.

IN WITNESS WHEREOF, the parties have duly executed this Letter Agreement as of the date first above written.

MM CAN USA, INC.

By: /s/ Timothy Bossidy Name:Timothy Bossidy Title: COO

MEDMEN ENTERPRISES INC.

By: /s/ Timothy Bossidy Name:Timothy Bossidy Title: COO

AGREED AND ACCEPTED:

HANKEY CAPITAL, LLC

By: /s/ Don R. Hankey Name:Don R. Hankey Title: Manager

WARRANT CERTIFICATE

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 OR (ii) 144A UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, (D) IN COMPLIANCE WITH ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (E) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C)(i) OR (D) ABOVE, A LEGAL OPINION REASONABLY SATISFACTORY TO THE CORPORATION MUST FIRST BE PROVIDED TO THE TRANSFER AGENT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

THIS WARRANT AND THE UNDERLYING SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR PERSON IN THE UNITED STATES AND THE UNDERLYING SHARES MAY NOT BE DELIVERED WITHIN THE UNITED STATES UNLESS THE WARRANT AND THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE, AND THE HOLDER HAS DELIVERED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. "UNITED STATES" AND "U.S. PERSON" ARE USED HEREIN AS SUCH TERMS ARE DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”

THIS WARRANT IS EXERCISABLE ONLY PRIOR TO 5:00 P.M., PACIFIC TIME, ON SEPTEMBER 16, 2025, AFTER WHICH TIME THESE WARRANTS SHALL BE NULL AND VOID.

Warrant Certificate No. 2021-03-01 Warrants to acquire ______Class B Common Shares at the Exercise Price

WARRANTS TO PURCHASE CLASS B COMMON SHARES

MM CAN USA, INC. (the “Corporation”)

(a corporation existing under the laws of the State of California)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document THIS CERTIFIES THAT, for value received, ______located at ______(the “Holder”) is entitled, at any time prior to the Expiry Time, to purchase, at the Exercise Price, one Class B Common Share for each Warrant evidenced by this certificate (this “Warrant Certificate”) on and subject to the terms and conditions set forth below.

Nothing contained herein shall confer any right upon the Holder to subscribe for or purchase any Class B Common Shares at any time after the Expiry Time, and from and after the Expiry Time, the Warrants and all rights hereunder shall be void and of no value.

This Warrant Certificate is being issued to Holder as part of a series of similar warrant certificates (collectively the “Related Warrant Certificates”) issued to holders thereof (collectively, with Holder, the “Holders”) in connection with the making of that certain term loan (the “Loan”), which Loan is evidenced by that certain Senior Secured Term Note dated September 16, 2020 and governed by that certain Senior Secured Term Loan Agreement dated as of October 1, 2018, as modified by that certain First Modification to Senior Secured Commercial Loan Agreement dated April 8, 2019, and further modified by that certain Second Modification to Senior Secured Commercial Loan Agreement dated January 13, 2020; and further modified by that certain Third Modification to Senior Secured Commercial Loan Agreement dated July 2, 2020, and further modified by that certain Fourth Modification to Senior Secured Commercial Loan Agreement dated September 16, 2020 (the “Fourth Modification”).

1. Definitions

In this Warrant Certificate, including the preamble, unless there is something in the subject matter or context inconsistent therewith, the following expressions shall have the following meanings namely:

(a) “Business Day” means a day which is not a Saturday, Sunday, or a civic or statutory holiday in Los Angeles, California or Toronto, Ontario;

(b) “Class B Common Shares” means the Class B Common Shares in the capital of the Corporation as such shares were constituted on the date hereof, as the same may be reorganized, reclassified or redesignated pursuant to any of the events set out in Section 11;

(c) “Corporation” means MM CAN USA, Inc., a corporation existing under the laws of the State of California and its successors and assigns;

(d) “Current Market Price” at any date shall be the volume-weighted average sale price per Class B Common Share for the 20 consecutive trading days ending immediately before such date on the Canadian Securities Exchange or such other principal stock exchange on which the Class B Common Shares may then be listed, or, if the Class B Common Shares are not listed on any stock exchange, the Current Market Price shall equal the volume-weighted average sale price per Subordinate Voting Share for the 20 consecutive trading days ending immediately before such date on the Canadian Securities Exchange (and in such case translated into U.S. dollars at the exchange rate reported by Bloomberg.com as of 5 pm Eastern Time on the 20th consecutive trading day) or such other principal stock exchange on which the Subordinate Voting Shares may then be listed, and if the Subordinate Voting Shares are not listed on any stock exchange, then the Current Market Price shall be determined by the directors, acting reasonably and in good faith, which determination shall be conclusive. The volume-weighted average sale price per Class B Common Share or Subordinate Voting Share (as applicable) shall be determined by dividing the aggregate sale price of all such shares sold on the said exchange during the said 20 consecutive trading days by the total number of such shares so sold.

(e) “Exercise Price” means U.S. $0.481 per Class B Common Share unless such price shall have been adjusted in accordance with the provisions of Section 11, in which case it shall mean the adjusted price in effect at such time.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (f) “Exercised Shares” means, upon any exercise of the Holder’s right of purchase pursuant to this Warrant Certificate, the amount of Class B Common Shares for which subscription is being made as specified in the Subscription Form.

(g) “Expiry Time” means 5:00 p.m., Pacific time, on September 16, 2025;

(h) “Form of Transfer” means the form of transfer annexed hereto as Schedule “B”;

(i) “Majority in Interest” the Holders of Related Warrant Certificates representing Warrants to acquire a majority of the Class B Common Shares that remain available for purchase under the Related Warrant Certificates.

(j) “Parent Corporation” means MedMen Enterprises Inc., a corporation existing under the laws of the Province of British Columbia;

(k) “person” means an individual, corporation, limited liability company, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof;

(l) “Subordinate Voting Shares” means the Class B Subordinate Voting Shares in the capital of the Parent Corporation.

(m) “Subscription Form” means the form of subscription annexed hereto as Schedule “A”;

(n) “subsidiary” has the meaning ascribed to such term in the Securities Act;

(o) “Securities Act” means the United States Securities Act of 1933, as amended; and

(p) “Warrants” means the Class B Common Share purchase warrants represented by this Warrant Certificate, with each Warrant being exercisable to acquire one Class B Common Share at the Exercise Price at any time prior to the Expiry Time.

2. Expiry Time

At the Expiry Time, all rights under any Warrants evidenced hereby, in respect of which the right of subscription and purchase herein provided for shall not theretofore have been exercised, shall wholly cease and terminate and such Warrants shall be void and of no value or effect.

3. Exercise Procedure

The Holder may exercise the right of purchase herein provided for by surrendering or delivering to the Corporation prior to the Expiry Time at its principal office this Warrant Certificate, with the Subscription Form duly completed and executed by the Holder or its legal representative or attorney, duly appointed by an instrument in writing in form and manner satisfactory to the Corporation, and:

(a) a certified check, money order or wire transfer in readily available funds payable to or to the order of the Corporation in U.S. dollars in an amount equal to the Exercise Price multiplied by the number of Exercised Shares (such amount, the “Aggregate Exercise Price”); or

(b) in lieu of paying cash for the Aggregate Exercise Price, the Holder may elect to receive a number of Class B Common Shares equal to the number of Exercised Shares, minus that number of Class B Common Shares having an aggregate Current Market Price equal to such Aggregate Exercise Price as of the Exercise Date.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Any Warrants referred to in the foregoing clauses shall be deemed to be surrendered only upon delivery of such Warrants, and, if applicable, a certified check, money order or wire transfer to the Corporation at its principal office in the manner provided in Section 26. The date of such surrender shall be deemed the “Exercise Date” for purposes of this Warrant Certificate.

This Warrant Certificate is exchangeable, upon the surrender hereof by the Holder, for one or more new Warrant Certificates of like tenor representing, in the aggregate, the right to subscribe for the number of Class B Common Shares which may be subscribed for hereunder; provided, that notwithstanding the foregoing, after any election to exercise, the number of Class B Common Shares covered by this Warrant Certificate shall be deemed automatically reduced by the number of Exercised Shares.

4. Entitlement to Certificate

Upon exercise of the Warrants represented hereby and upon making all deliveries and payments as provided in Section 3, the Corporation shall cause to be issued to the Holder the Class B Common Shares subscribed for not exceeding those which such Holder is entitled to purchase pursuant to this Warrant Certificate and the Holder shall become a shareholder of record of the Corporation in respect of such Class B Common Shares with effect from the date of such delivery and payment and shall be entitled to delivery of a certificate or certificates or direct registration system (DRS) advice(s) evidencing such Class B Common Shares and the Corporation shall use commercially reasonable efforts to cause such certificate or certificates or DRS Advice(s) to be mailed to the Holder at the address or addresses specified in such subscription within five (5) Business Days of such delivery and payment.

5. Register of Warrantholders and Transfer of Warrants

The Corporation shall cause a register to be kept in which shall be entered the names and addresses of all holders of the Warrants and the number of Warrants held by them. The Warrants may be transferred by a Holder, in whole or in part in conformance with this Warrant Certificate. No transfer of Warrants shall be valid unless made by the Holder or its executors, administrators or other legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Corporation upon compliance with such reasonable requirements as the Corporation may prescribe, including compliance with the Securities Act and all other applicable state, provincial and federal securities laws, and recorded on the register of holders of Warrants maintained by the Corporation, nor until stamp or governmental or other charges arising by reason of such transfer have been paid. The transferee of a Warrant shall, after a Form of Transfer is duly completed and the Warrant is delivered to the Corporation and upon compliance with all other reasonable requirements of the Corporation and requirements of law, be entitled to have its name entered on the register as the owner of such Warrant, free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Warrant, save in respect of equities or rights of which the Corporation is required to take notice by statute or by order of a court of competent jurisdiction. The Corporation may treat the registered holder of this Warrant Certificate as the absolute owner of the Warrants represented hereby for all purposes, and the Corporation shall not be affected by any notice or knowledge to the contrary except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

6. Partial Exercise

The Holder may subscribe for and purchase a number of Exercised Shares less than the number the Holder is entitled to purchase pursuant to this Warrant Certificate. In the event of any such subscription and purchase prior to the Expiry Time, the Holder shall be entitled to receive, without charge, a new Warrant Certificate in respect of the balance of the Class B Common Shares to which the Holder was entitled to purchase pursuant to this Warrant Certificate and which were then not purchased.

7. No Fractional Shares

Notwithstanding any adjustments provided for in Section 11 or otherwise, the Corporation shall not be required upon the exercise of any Warrants, to issue fractional Class B Common Shares in satisfaction of its

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document obligations hereunder and no amount shall be payable by the Corporation in respect of any such fraction of a Class B Common Share.

8. Not a Shareholder

Nothing in this Warrant Certificate or in the holding of the Warrants evidenced hereby shall be construed as conferring upon the Holder any right or interest whatsoever as a shareholder of the Corporation.

9. No Obligation to Purchase

Nothing herein contained or done pursuant hereto shall obligate the Holder to purchase or pay for or the Corporation to issue any Class B Common Shares except those Class B Common Shares in respect of which the Holder shall have exercised its right to purchase hereunder in the manner provided herein.

10. Covenants

(a) The Corporation covenants and agrees that:

(i) so long as any Warrants evidenced hereby remain outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Class B Common Shares to satisfy the right of purchase herein provided for should the Holder determine to exercise its rights in respect of all the Class B Common Shares for the time being called for by such outstanding Warrants; and

(ii) all Class B Common Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment therefor of the amount at which such Class B Common Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable Class B Common Shares.

(b) The Corporation covenants and agrees that, so long as any Warrants evidenced hereby remain outstanding, it shall use commercially reasonable efforts to preserve and maintain its corporate existence.

11. Adjustment to Exercise Price

The Exercise Price in effect at any time is subject to adjustment from time to time in the events and in the manner provided as follows:

(a) If and whenever, at any time after the date hereof and prior to the Expiry Time, the Corporation:

(i) issues Class B Common Shares or securities exchangeable for or convertible into Class B Common Shares to all or substantially all the holders of the Class B Common Shares as a stock dividend;

(ii) makes a distribution on its outstanding Class B Common Shares payable in Class B Common Shares or securities exchangeable for or convertible into Class B Common Shares;

(iii) subdivides its outstanding Class B Common Shares into a greater number of Class B Common Shares; or

(iv) consolidates its outstanding Class B Common Shares into a smaller number of Class B Common Shares;

(any of such events being called a “Share Reorganization”), then the Exercise Price will be adjusted effective immediately after the effective date or record date for a Share Reorganization, as the case may be, at which the holders of Class B Common Shares are determined for the purpose of the Share Reorganization by multiplying the Exercise Price in effect immediately prior to such effective date or record date, as the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document case may be, by a fraction, the numerator of which is the number of Class B Common Shares outstanding on such effective date or record date, as the case may be, before giving effect to such Share Reorganization and the denominator of which is the number of Class B Common Shares outstanding immediately after giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Class B Common Shares are distributed, the number of Class B Common Shares that would have been outstanding had all such securities been exchanged for or converted into Class B Common Shares on such effective date or record date).

(b) If and whenever, at any time after the date hereof and prior to the Expiry Time, the Corporation fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Class B Common Shares under which such holders are entitled to subscribe for or purchase Class B Common Shares or securities exchangeable for or convertible into Class B Common Shares, where:

(i) the right to subscribe for or purchase Class B Common Shares, or securities exchangeable for or convertible into Class B Common Shares, expires not more than forty-five (45) days after the record date of such issue (such period being the “Rights Period”); and

(ii) the cost per Class B Common Share (inclusive of any cost of acquisition of securities exchangeable for or convertible into Class B Common Shares in addition to any direct cost of Class B Common Shares) (in this Section 11 called the “Per Share Cost”) is less than 95% of the Current Market Price of the Class B Common Shares on the record date,

(any of such events being called a “Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(A) the numerator of which is the aggregate of:

the number of Class B Common Shares outstanding as of the record date for the Rights Offering; (1) and

(2) a number determined by dividing the product of the Per Share Cost and:

(I) where the event giving rise to the application of this Section 11(b) was the issue of rights, options or warrants to the holders of Class B Common Shares under which such holders are entitled to subscribe for or purchase additional Class B Common Shares, the number of Class B Common Shares so subscribed for or purchased during the Rights Period, or

(II) where the event giving rise to the application of this Section 11(b) was the issue of rights, options or warrants to the holders of Class B Common Shares under which such holders are entitled to subscribe for or purchase securities exchangeable for or convertible into Class B Common Shares, the number of Class B Common Shares for which those securities so subscribed for or purchased during the Rights Period could have been exchanged or into which they could have been converted during the Rights Period,

by the Current Market Price of the Class B Common Shares as of the record date for the Rights Offering; and

(B) the denominator of which is:

in the case described in paragraph 11(b)(A)(2)(I), the number of Class B Common Shares (1) outstanding, or

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document in the case described in paragraph 11(b)(A)(2)(II), the number of Class B Common Shares that (2) would be outstanding if all the Class B Common Shares described in paragraph 11(b)(A)(2)(II) had been issued,

as at the end of the Rights Period.

Any Class B Common Shares owned by or held for the account of the Corporation or any subsidiary of the Corporation will be deemed not to be outstanding for the purpose of any such computation.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 11(b) as a result of the fixing by the Corporation of a record date for the distribution of rights, options or warrants referred to in this Section 11(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the Exercise Price which would then be in effect based upon the number of Class B Common Shares actually issued and remaining issuable after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

(c) If and whenever, at any time after the date hereof and prior to the Expiry Time, the Corporation fixes a record date for the issue or the distribution to the holders of all or substantially all its Class B Common Shares of:

(i) shares of the Corporation of any class other than Class B Common Shares;

rights, options or warrants to acquire Class B Common Shares or securities exchangeable for or (ii) convertible into Class B Common Shares;

(iii) evidence of indebtedness; or

(iv) any securities, property or other assets,

and if such issuance or distribution does not constitute (A) a Share Reorganization, or (B) a Rights Offering (any of such non-excluded events being called a “Special Distribution”), then the Exercise Price will be adjusted effective immediately after such record date to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(A) the numerator of which is:

(1) the product of the number of Class B Common Shares outstanding on such record date and the Current Market Price of the Class B Common Shares on such record date; less

(2) the aggregate fair market value (as determined by action by the directors of the Corporation, acting reasonably and in good faith, whose determination shall be conclusive) to the holders of the Class B Common Shares of such securities, evidence of indebtedness, property or other assets so issued or distributed in the Special Distribution; and

(B) the denominator of which is the number of Class B Common Shares outstanding on such record date multiplied by the Current Market Price of the Class B Common Shares on such record date.

Any Class B Common Shares owned by or held for the account of the Corporation or any subsidiary of the Corporation will be deemed not to be outstanding for the purpose of any such computation.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d)If and whenever, at any time after the date hereof and prior to the Expiry Time, there is a capital reorganization of the Corporation or a reclassification or other change in the Class B Common Shares, or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation, arrangement or merger which does not result in any reclassification or redesignation of the outstanding Class B Common Shares or a change or exchange of the Class B Common Shares into or for other shares, securities or property), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being called a “Capital Reorganization”), the Holder, upon exercising the Warrants after the effective date of such Capital Reorganization, will be entitled to receive in lieu of the number of Class B Common Shares to which such Holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which such Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Class B Common Shares to which such Holder was theretofore entitled upon exercise of the Warrants. If determined appropriate by action of the directors of the Corporation, acting reasonably and in good faith, appropriate adjustments will be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Warrant Certificate with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Warrant Certificate will thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise hereof. Any such adjustment must be made by and set forth in an amendment to this Warrant Certificate approved by action by the directors of the Corporation and will for all purposes be conclusively deemed to be an appropriate adjustment.

(e)If at any time after the date hereof and prior to the Expiry Time any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Sections 11(a), (b) or (c), then the number of Class B Common Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Class B Common Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

12. Rules Regarding Adjustments

(a) The adjustments provided for in Section 11 are cumulative and will, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent and will be made successively whenever an event referred to therein occurs, subject to the following subsections of this Section 12.

(b) No adjustment in the Exercise Price is required to be made unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price; provided, however, that any adjustments which, except for the provisions of this Section 12(b), would otherwise have been required to be made, will be carried forward and taken into account in any subsequent adjustments.

(c) No adjustment in the Exercise Price will be made in respect of any event described in Section 11 if the Holder is entitled to participate in such event on the same terms, mutatis mutandis, as if the Holder had exercised the Warrants prior to or on the effective date or record date of such event.

(d) No adjustment in the Exercise Price (or the number of Class B Common Shares issuable upon exercise hereof) will be made under Section 11 in respect of any dividends paid in the ordinary course to holders of Class B Common Shares, whether in (i) cash, (ii) shares of the Corporation, (iii) warrants or similar rights to purchase any shares of the Corporation or property or other assets of the Corporation, and any such dividend will be deemed not to be a Share Reorganization, a Rights Offering or a Special Distribution, or in respect of any distribution of Class B Common Shares pursuant to the exercise of stock options granted under incentive plans of the Corporation or pursuant to the redemption or exchange in accordance with their terms of securities of any subsidiaries of the Corporation.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) If at any time a dispute arises with respect to adjustments provided for in Section 11, such dispute will be conclusively determined by the auditors of the Corporation or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the directors of the Corporation, acting reasonably and in good faith, and any such determination will be binding upon the Corporation, the Holder and shareholders of the Corporation. The Corporation will provide such auditors or accountants with access to all necessary records of the Corporation.

(f) If, after the date of issuance of the Warrants, the Corporation takes any action affecting the Class B Common Shares, other than an action described in Section 11, which in the opinion of the board of directors of the Corporation, acting reasonably and in good faith, would materially affect the rights of the Holder, the Exercise Price will be adjusted in such manner, if any, and at such time, as determined by action by the directors of the Corporation, but subject in all cases to any necessary regulatory approval.

(g) If the Corporation sets a record date to determine the holders of the Class B Common Shares for the purpose of entitling them to receive any dividend or distribution or sets a record date to take any other action and, thereafter and before the distribution to such shareholders of any such dividend or distribution or the taking of any other action, decides not to implement its plan to pay or deliver such dividend or distribution or take such other action, then no adjustment in the Exercise Price will be required by reason of the setting of such record date.

(h) In the absence of a resolution of the directors of the Corporation fixing a record date for a Special Distribution or Rights Offering, the Corporation will be deemed to have fixed as the record date therefor the date on which the Special Distribution or Rights Offering is effected.

(i) As a condition precedent to the taking of any action which would require any adjustment to the Warrants evidenced by this Warrant Certificate, including the Exercise Price, the Corporation must take any corporate action which may be necessary in order that the Corporation have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which the Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof.

(j) The Corporation will from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 11, forthwith give notice to the Holder specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Exercise Price.

(k) The Corporation covenants to and in favour of the Holder that so long as the Warrants remain outstanding, it will give notice to the Holder of its intention to fix a record date or effective date for any event referred to in Sections 11(a), (b) or (c) (other than the subdivision or consolidation of the Class B Common Shares) which may give rise to an adjustment in the Exercise Price, and, in each case, such notice must specify the particulars of such event and the record date and the effective date for such event; provided that the Corporation is only required to specify in such notice such particulars of such event as have been fixed and determined on the date on which such notice is given.

13. Consolidation and Amalgamation

(a) The Corporation shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a “successor corporation”) whether by way of reorganization, reconstruction, consolidation, arrangement, amalgamation, merger, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Corporation and the successor corporation shall have executed such instruments and done such things as the Company, acting reasonably, considers are necessary or advisable to establish that upon the consummation of such transaction:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) the successor corporation will have assumed all the covenants and obligations of the Corporation under this Warrant Certificate, and

(ii) the Warrants will be valid and binding obligations of the successor corporation entitling the Holder, as against the successor corporation, to all the rights of the Holder under this Warrant Certificate.

(b) Whenever the conditions of Section 13(a) shall have been duly observed and performed the successor corporation shall possess, and from time to time may exercise, each and every right and power of the Corporation under this Warrant Certificate in the name of the Corporation or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Corporation may be done and performed with like force and effect by the like directors or officers of the successor corporation.

14. Legends

Any certificate representing the Class B Common Shares issued upon the exercise of the Warrants will bear the following legend:

“THE COMMON SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH COMMON SHARES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH COMMON SHARES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT AND ANY APPLICABLE SECURITIES LAWS.

THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO RESTRICTION AS SET FORTH IN THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MM CAN USA, INC.”

15. Representation and Warranty

(a) The Corporation hereby represents and warrants with and to the Holder that the Corporation is duly authorized and has the corporate power and authority to create and issue the Warrants evidenced by this Warrant Certificate and the Class B Common Shares issuable upon the exercise hereof and to perform its obligations hereunder.

(b) By accepting this Warrant Certificate on the date hereof, the Holder hereby represents and warrants with and to the Corporation that the Holder:

(i) is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act and, was not formed for the specific purpose of acquiring the Class B Common Shares and is entering into this Warrant Certificate for his, her or its own account for investment purposes only, and not with a view toward the distribution or the resale thereof and that the Warrants and the Class B Common Shares into which they are exercisable must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or unless such disposition is exempt from registration thereunder;

(ii) UNDERSTANDS THAT THE ISSUANCE OF THE WARRANTS HAS NOT BEEN REGISTERED UNDER THE LAWS OF ANY JURISDICTION (INCLUDING THE SECURITIES ACT), OR THE LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA OR THE LAWS OF ANY FOREIGN JURISDICTION); AND FURTHER UNDERSTANDS THAT THE CORPORATION HAS NOT BEEN, AND IS NOT ANTICIPATED TO BE, REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”);

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) understands that the Warrants are not part of a public offering facilitated by means of any form of general solicitation or general advertising not permitted by Regulation D under the Securities Act and understands that the Warrants may not be offered, resold or otherwise transferred (including by pledge or by hypothecation) unless such offer, resale or transfer (x) is pursuant to a valid registration statement under the Securities Act and any applicable state or foreign securities or “blue sky” laws or (y) is pursuant to an exemption from the registration requirements of the Securities Act, and, in each case, in compliance with any applicable state or foreign securities or “blue sky” laws (which imposes substantial restrictions on transfer) and determination by the Corporation that any such resale or transfer will not cause the Corporation to be required to register as an investment company under the Investment Company Act;

(iv) the representations and warranties of the Holder contained in that certain Warrant Subscription Certificate dated as of January 13, 2020 and entered into by the Holder, are true and correct in all material respects as of the date hereof and shall survive the issuance of the Warrants.

(v) if required by applicable securities laws, the Corporation or the Parent Corporation, the Holder covenants and agrees to execute, deliver and file or assist, including by way of providing requisite information, the Corporation or the Parent Corporation, as applicable, in filing such reports, undertakings and other documents with respect to the issuance of the Warrants, the Class B Common Shares or any shares of the Parent Corporation as may be required by any securities commission, stock exchange or other regulatory authority;

(vi) acknowledges and consents to the collection, use and disclosure of the information provided by the Holder or collected by the Corporation, the Parent Corporation or their agents as reasonably necessary in connection with the Holder’s subscription of the Warrants, the Class B Common Shares or any shares of the Parent Corporation. Such information is being collected by the Corporation or the Parent Corporation for the purposes of completing such issuance and subscription, which includes, without limitation, determining the Holder’s eligibility to subscribe for the Warrants, the Class B Common Shares or the shares of the Parent Corporation under applicable securities laws, preparing and registering the securities to be issued to the Holder and completing filings required by any stock exchange or securities regulatory authority. The Holder’s information may be disclosed by the Corporation or the Parent Corporation to: (i) stock exchanges or securities regulatory authorities (with may thereafter publicly disclose such information in accordance with their rules and policies); (ii) the Canada Revenue Agency, the Internal Revenue Service or other taxing authorities; and (iii) any of the other parties involved in the transactions described within this Warrant Certificate, including legal counsel, and may be included in record books prepared in connection with the transactions described herein. By accepting this Warrant Certificate, the Holder is deemed to be consenting to the foregoing collection, use and disclosure of the Holder’s information; and

(vii) hereby provides consent to the disclosure of his, her or its information to the Canadian Securities Exchange (the “CSE”) pursuant to Form 9 – Notice of Issuance or Proposed Issuance of Listed Securities of the CSE or otherwise pursuant to such filing and the collection, use and disclosure of his, her or its information by the CSE in the manner and for the purposes described in Appendix A of such Form 9 or as otherwise identified by the CSE, from time to time.

16. If Share Transfer Books Closed

The Corporation shall not be required to deliver certificates for or other evidence of Class B Common Shares while the share transfer books of the Corporation are properly closed, prior to any meeting of shareholders or for the payment of dividends or for any other purpose, and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment for the Class B Common Shares called for thereby during any such period, delivery of certificates for or other evidence of Class B Common Shares may be postponed for a period not exceeding five (5) Business Days after the date of the re-opening of said share transfer books.

Subject to as herein provided, all or any of the rights conferred upon the Holder may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement herein contained or in any of the Warrants represented hereby shall be taken against any shareholder, employee, consultant, officer or director of Parent Corporation, the Corporation or any of their subsidiaries, either directly or through Parent Corporation, the Corporation or such subsidiaries, it being expressly agreed and declared that the obligations under the Warrants evidenced hereby, are solely corporate obligations of the Corporation and that no personal liability whatever shall attach to or be incurred by the shareholders, employees, consultants, officers or directors of Parent Corporation, the Corporation or any of their subsidiaries or any of them in respect thereof, any and all rights and claims against every such shareholder, employee, consultant, officer or director being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants evidenced hereby.

18. Lost Certificate

If this Warrant Certificate becomes stolen, lost, mutilated or destroyed the Corporation may, on such terms, as it may in its discretion impose, issue and countersign a new certificate of like denomination, tenor and date as this Warrant Certificate. The applicant for the issue of a new Warrant Certificate pursuant to this Section 18 shall bear the cost of the issue thereof and in the case of mutilation shall as a condition precedent to the issue thereof, deliver to the Corporation the mutilated Warrant Certificate, and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation in its discretion, acting reasonably, and the applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation in its discretion, acting reasonably, and shall pay the reasonable charges of the Corporation in connection therewith.

19. Governing Law; Arbitration

This Warrant Certificate and the Warrants shall be governed by, and construed in accordance with, the laws of the State of California, without giving effect to conflicts of laws principles. Any claim or controversy arising out of or relating to the Warrants or this Warrant Certificate or any breach thereof between the parties shall be submitted to FINAL AND BINDING ARBITRATION BEFORE JAMS IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF LOS ANGELES, PURSUANT TO THE JAMS COMPREHENSIVE ARBITRATION RULES AND PROCEDURES. ALL PARTIES FURTHER AGREE THAT THE ARBITRATION SHALL BE CONDUCTED BEFORE A SINGLE JAMS ARBITRATOR WHO IS A RETIRED CALIFORNIA OR FEDERAL JUDGE OR JUSTICE. The parties shall mutually agree on one arbitrator from the list provided by the arbitrating organization; provided that if the parties cannot agree, then each party shall select one arbitrator from the list, and the two (2) arbitrators so selected shall agree upon a third (3rd) arbitrator chosen from the same list, which third (3rd) arbitrator shall determine the dispute. The arbitrator shall, to the fullest extent permitted by law, have the power to grant all legal and equitable remedies including provisional remedies and award compensatory damages provided by law, however, the arbitrator shall not have authority to award punitive or exemplary damages. The arbitrator shall award costs and attorneys’ fees in accordance with the terms and conditions of this Warrant Certificate. The prevailing party in any arbitration or litigation shall be reimbursed for its arbitration costs (including attorneys’ fees) by the non-prevailing party. The parties further agree that, upon application of the prevailing party, any Judge of the Superior Court of the State of California, for the County of Los Angeles, may enter a judgment based on the final arbitration award issued by the JAMS arbitrator, and the parties expressly agree to submit to the jurisdiction of this Court for such a purpose. No action at law or in equity based upon any claim arising out of or related to this Warrant Certificate shall be instituted in any court by any party (or their respective equity holders) except (A) an action to compel arbitration pursuant to this Section 19 or (B) an action to enforce an award obtained in an arbitration proceeding in accordance with this Section 19. THE PARTIES UNDERSTAND THAT BY AGREEMENT TO BINDING ARBITRATION THEY ARE GIVING UP THE RIGHTS THEY MAY OTHERWISE HAVE TO TRIAL BY A COURT OR A JURY AND ALL RIGHTS OF APPEAL AND TO AN AWARD OF PUNITIVE OR EXEMPLARY DAMAGES.

20. Severability

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If any one or more of the provisions or parts thereof contained in this Warrant Certificate should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom and:

(a) the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and

(b) the invalidity, illegality or unenforceability of any provision or part thereof contained in this Warrant Certificate in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Warrant Certificate in any other jurisdiction.

21. Headings

The headings of the articles, sections, subsections, clauses and paragraphs of this Warrant Certificate have been inserted for convenience and reference only and do not define, alter, limit or enlarge the meaning of any provision of this Warrant Certificate.

22. Numbering of Articles, etc.

Unless otherwise stated, a reference herein to a numbered or lettered article, section, subsection, clause, paragraph or schedule refers to the article, section, subsection, clause, paragraph or schedule bearing that number or letter in this Warrant Certificate.

23. Gender

Whenever used in this Warrant Certificate, words importing the singular number only shall include the plural, and vice versa, and words importing gender shall include the masculine, feminine and neuter genders.

24. Day not a Business Day

25. Binding Effect

This Warrant Certificate and all of its provisions shall enure to the benefit of the Holder and its successors and permitted assigns and shall be binding upon the Corporation and its successors and assigns. This Warrant Certificate may be executed in counterparts, each of which will be deemed to be an original and both of which together will constitute a single agreement. The exchange of copies of this Warrant Certificate via email or other electronic means and of electronic signatures shall constitute effective execution and delivery of this Warrant Certificate as to the parties hereto. Electronic signatures transmitted via email or other electronic means shall be deemed to be an original signature for all purposes.

26. Notice

Any notice, document or communication required or permitted by this Warrant Certificate to be given by a party hereto shall be in writing and is sufficiently given to the other party if delivered personally, or if sent by prepaid registered mail, or if transmitted by any form of recorded telecommunication tested prior to transmission, to such party addressed as follows:

(a) to the Holder, at:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Hankey Capital, LLC 4751 Wilshire Blvd., Suite 110 Los Angeles, CA 90010 Attn: W. Scott Dobbins, President

(b) to the Corporation, at: MM CAN USA, Inc. 10115 Jefferson Boulevard Culver City, California U.S.A. 90232

Attention:Dan Edwards, SVP, Legal Affairs E-mail: [email protected]

Notice so mailed shall be deemed to have been given on the fifth (5th) Business Day after deposit in a post office or public letter box. Neither party shall mail any notice, request or other communication hereunder during any period in which applicable postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notice transmitted by a form of recorded telecommunication or delivered personally shall be deemed given on the day of transmission or personal delivery, as the case may be. Any party may from time to time notify the other in the manner provided herein of any change of address which thereafter, until change by like notice, shall be the address of such party for all purposes hereof.

27. Time of Essence

Time shall be of the essence of this Warrant Certificate.

28. Currency

All dollar amounts referred to in this Warrant Certificate are in U.S. Dollars, except where expressly indicated otherwise.

29. Modification

Unless otherwise provided, no modification or amendment of any provision of this Warrant Certificate or consent to departure from the terms of this Warrant Certificate will be effective unless in writing and approved by the Corporation and a Majority in Interest.

[Remainder of the page intentionally left blank]

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer as of this 1st day of March, 2021.

MM CAN USA, inc., a California corporation

By: Name: Its:

Each Warrant evidenced hereby and each Class B Common Share issuable on exercise of such Warrants shall have attached to it a right (a “Right”) that shall entitle the Holder to receive one Class B Subordinate Voting Share of MedMen Enterprises Inc. (each a “Subordinate Voting Share”) upon the redemption or exchange of such Class B Common Shares in accordance with their terms. The Rights will not be tradable separately from the Warrants nor the Class B Common Shares. This Warrant Certificate shall evidence the Rights. The Holder acknowledges that the Rights and the Subordinate Voting Shares are issued by MedMen Enterprises Inc. and may be subject to resale restrictions under applicable Canadian securities laws and that this legend shall be deemed to be on the certificate that represents the Rights: Unless permitted under securities legislation, the holder of this security must not trade the security before July 2, 2021.

MEDMEN ENTERPRISES INC.

By: Name: Its:

SCHEDULE “A” SUBSCRIPTION FORM

TO:TO: MM CAN USA, INC. 10115 Jefferson Boulevard Culver City, California U.S.A. 90232

The undersigned holder of the within Warrant Certificate dated as of March 1, 2021 (the “Warrant Certificate”) hereby irrevocably subscribes for ______Class B Common Shares (the “Shares”) of MM CAN USA, Inc., a California corporation (the “Corporation”) pursuant to the Warrant Certificate at the Exercise Price per Warrant specified in the said Warrant Certificate and encloses herewith cash or a certified check, money order or wire transfer payable to or to the order of the Corporation in payment of the subscription price therefor or has selected below to exercise the applicable Warrants on a cashless basis pursuant to Section 3(b) of the within Warrant Certificate. Capitalized terms used herein have the meanings set forth in the within Warrant Certificate.

☐ Please check box if the undersigned holder is exercising Warrants on a cashless basis pursuant to Section 3(b) of the within Warrant Certificate and specify the number of Exercised Shares ______.

The undersigned represents, warrants and certifies that the undersigned:

(i) is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act and, was not formed for the specific purpose of acquiring the Shares and is acquiring the Shares for his, her or its own account for investment purposes only, and not with a view toward the distribution or the resale thereof and that the Shares must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or unless such disposition is exempt from registration thereunder;

(ii) UNDERSTANDS THAT THE OFFERING AND THE SALE OF THE SHARES HAS NOT BEEN REGISTERED UNDER THE LAWS OF ANY JURISDICTION (INCLUDING THE SECURITIES ACT), OR THE LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA OR THE LAWS OF ANY FOREIGN JURISDICTION); AND FURTHER UNDERSTANDS THAT THE CORPORATION HAS NOT BEEN, AND IS NOT ANTICIPATED TO BE, REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”);

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) understands that the Shares purchased by him, her or it is not part of a public offering facilitated by means of any form of general solicitation or general advertising not permitted by Regulation D under the Securities Act and understands that the Shares may not be offered, resold or otherwise transferred (including by pledge or by hypothecation) unless such offer, resale or transfer (x) is pursuant to a valid registration statement under the Securities Act and any applicable state or foreign securities or “blue sky” laws or (y) is pursuant to an exemption from the registration requirements of the Securities Act, and, in each case, in compliance with any applicable state or foreign securities or “blue sky” laws (which imposes substantial restrictions on transfer) and determination by the Corporation that any such resale or transfer will not cause the Corporation to be required to register as an investment company under the Investment Company Act;

(iv) if required by applicable securities laws, the Corporation or the Parent Corporation, the undersigned covenants and agrees to execute, deliver and file or assist, including by way of providing requisite information, the Corporation or the Parent Corporation, as applicable, in filing such reports, undertakings and other documents with respect to the issuance of the Shares or any shares of the Parent Corporation as may be required by any securities commission, stock exchange or other regulatory authority;

(v) acknowledges and consents to the collection, use and disclosure of the information provided by the undersigned or collected by the Corporation, the Parent Corporation or their agents as reasonably necessary in connection with the undersigned’s subscription of the Shares or any shares of the Parent Corporation. Such information is being collected by the Corporation or the Parent Corporation for the purposes of completing such issuance and subscription, which includes, without limitation, determining the undersigned’s eligibility to subscribe for the Shares or the shares of the Parent Corporation under applicable securities laws, preparing and registering the securities to be issued to the undersigned and completing filings required by any stock exchange or securities regulatory authority. The undersigned’s information may be disclosed by the Corporation or the Parent Corporation to: (i) stock exchanges or securities regulatory authorities (with may thereafter publicly disclose such information in accordance with their rules and policies); (ii) the Canada Revenue Agency, the Internal Revenue Service or other taxing authorities; and (iii) any of the other parties involved in the transactions described within this Subscription Form, including legal counsel, and may be included in record books prepared in connection with the transactions described herein. By executing this Subscription Form, the undersigned is deemed to be consenting to the foregoing collection, use and disclosure of the undersigned’s information;

(vi) hereby provides consent to the disclosure of his, her or its information to the Canadian Securities Exchange (the “CSE”) pursuant to Form 9 – Notice of Issuance or Proposed Issuance of Listed Securities of the CSE or otherwise pursuant to such filing and the collection, use and disclosure of his, her or its information by the CSE in the manner and for the purposes described in Appendix A of such Form 9 or as otherwise identified by the CSE, from time to time; and

(vii) the representations and warranties of the undersigned (or its successor in interest) contained in that certain Warrant Subscription Certificate dated as of January 13, 2020 and entered into by the undersigned (or its successor in interest), are true and correct in all material respects with respect to the undersigned as of the date hereof and shall survive the issuance of the Shares.

[Signature Page to Follow]

DATED this _____ day of ______, 20______.

NAME: Signature: Registration Instructions:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ☐ Please check box if the Class B Common Share certificates or other applicable evidence for the Shares subscribed for hereunder are to be delivered at the office where this Warrant Certificate is surrendered, failing which the Class B Common Share certificates or other applicable evidence will be mailed to the subscriber at the address set out above.

If any Warrants represented by this certificate are not being exercised, a new Warrant certificate will be issued and delivered with the Class B Common Share certificates or other applicable evidence for the Class B Common Shares subscribed for hereunder.

SCHEDULE “B” FORM OF TRANSFER

FOR VALUE RECEIVED, the undersigned Warrantholder hereby sells, assigns and transfers unto ______(the “Transferee”), at the address of ______, an aggregate of ______Warrants to purchase Class B Common Shares in the capital of MM CAN USA, Inc., a California corporation (the “Corporation”) registered in the name of the undersigned on the records of the Corporation represented by the within Warrant Certificate, and irrevocably appoints the Chief Financial Officer of the Corporation as the attorney of the undersigned to transfer the said securities on the books or register of transfer, with full power of substitution. Capitalized terms used herein have the meanings set forth in the within Warrant Certificate.

DATED the ______day of ______, 20_____.

Witness Signature Signature of Warrantholder (if Warrantholder is an individual)

Acknowledged and accepted by the Transferee as of the above date:

Witness Signature Signature of Transferee (if Transferee is an individual)

Execution Version

THIRD AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

by and among

MEDMEN ENTERPRISES INC.

as the Company

EACH OTHER CREDIT PARTY SIGNATORY HERETO,

THE PURCHASERS PARTY HERETO,

as the Purchasers, and

GOTHAM GREEN ADMIN 1, LLC

as the Collateral Agent

January 11, 2021

Table of Contents

Page

ARTICLE I Definitions 2

1.1 Definitions. 2 1.2 Other Definitional or Interpretive Provisions 30

ARTICLE II Authorization and Sale of Securities. 31

2.1 Authorization 31 2.2 Sale of the Securities to the Purchaser 31

ARTICLE III Closing; Delivery; Amendments to notes 32

3.1 Closing 32 3.2 Delivery; Advances. 32 3.3 Waiver of Existing Defaults. 33 3.4 Amendments to Notes 33 3.5 Amendment to Warrants 33

ARTICLE IV Conditions to Closing by the Purchasers 33

4.1 Prior Advances 33 4.2 Third Restatement Closing 33

5.1 Existence and Power 35 5.2 Authorization; No Contravention; Equity Interests 36 5.3 Governmental Authorization 36 5.4 Binding Effect 37 5.5 Litigation 37 5.6 Compliance with Laws 38 5.7 No Event of Default 39 5.8 ERISA/Canadian Pension Plan Compliance 39 5.9 Use of Proceeds; Margin Regulations 40 5.10 Title to Properties 40 5.11 Taxes 41 5.12 Financial Condition 41 5.13 Environmental Matters 43 5.14 Operative Documents 43 5.15 Regulated Entities 43 5.16 Labor Relations 43 5.17 Copyrights, Patents, Trademarks and Licenses, Etc 44 5.18 Subsidiaries 44 5.19 Brokers’ Fees; Transaction Fees 44 5.20 Insurance 44

5.21 Material Facts Disclosed 44 5.22 Anti-Terrorism Laws 45 5.23 Solvency; Separate Entities 45 5.24 Security Documents 45 5.25 Material Agreements. 46 5.26 Survival 46 5.27 Private Offering 46

ARTICLE VI Representations and Warranties of the Purchasers 47

6.1 Purchase for Investment 47 6.2 Investor Qualifications 47 6.3 Fees and Commissions 47 6.4 Power, Authority and Authorization 48 6.5 Acknowledgements Regarding Notes 48

ARTICLE VII Affirmative Covenants 49

7.1 Financial Statements 49 7.2 Certificates; Other Information 50 7.3 Notices 51 7.4 Preservation of Existence, Etc 54 7.5 Maintenance of Property 54 7.6 Property Insurance and Business Interruption Insurance 54 7.7 Payment of Liabilities 54 7.8 Compliance with Laws 55 7.9 Inspection of Property and Books and Records 55 7.10 Use of Proceeds 55 7.11 Further Assurances 56 7.12 Additional Collateral 56

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7.13 Anti-Terrorism Laws 58 7.14 Fees and Expenses 58 7.15 Taxes 58 7.16 Right of First Refusal 59 7.17 Regulatory Disclosures 59 7.18 Board Observer 59 7.19 Financial Covenants 59 7.20 Post Closing Matters 60 7.21 Chief Restructuring Officer; Turnaround Plan; Executive Personnel 60

ARTICLE VIII Negative Covenants 61

8.1 Liens 61 8.2 Indebtedness 62 8.3 Disposition of Assets 63 8.4 Consolidations, Conversions and Mergers 65 8.5 Loans and Investments 66

8.6 Transactions with Affiliates 66 8.7 Use of Proceeds 66 8.8 Contingent Obligations 67 8.9 Compliance with ERISA 67 8.10 Restricted Payments 67 8.11 Change in Business 67 8.12 Change in Structure 67 8.13 Accounting Changes; Fiscal Year 67 8.14 Subsidiaries 67 8.15 Environmental 68 8.16 Limits on Restrictive Agreements 68 8.17 Sale-Leaseback Transactions 68 8.18 No Other Negative Pledges 68 8.19 Press Release 69 8.20 Changes to Certain Documents; New Material Agreements 69 8.21 Limitations on Activities of Certain Credit Parties 69 8.22 Issuance of Securities 70

ARTICLE IX Events of Default 71

9.1 Events of Default Defined; Acceleration of Maturity 71 9.2 Remedies 75 9.3 Delays or Omissions 76 9.4 Remedies Cumulative 76 9.5 Set-off 77

ARTICLE X COLLATERAL AGENT 77

10.1 Appointment and Authorization. 77 10.2 Delegation of Duties. 78 10.3 Liability of Agents 79 10.4 Reliance by Collateral Agent 79 10.5 Notice of Default 80 10.6 Credit Decision; Disclosure of Information by Collateral Agent 80 10.7 Indemnification. 81 10.8 Successor Agents 81

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 10.9 Collateral Agent May File Proofs of Claim 82 10.10Collateral and Guaranty Matters 82 10.11Withholding Tax Indemnity 83

ARTICLE XI Miscellaneous 84

11.1 Consent to Amendments; Waivers. 84 11.2 Survival of Terms 84 11.3 Successors and Assigns 84 11.4 Severability 86 11.5 Descriptive Headings 86

iii

11.6 Notices 86 11.7 Governing Law 87 11.8 Exhibits and Schedules 87 11.9 Exchange, Transfer, or Replacement of Note 87 11.10Final Agreement; Release 88 11.11Execution in Counterparts. 88 11.12Taxes; Etc 88 11.13Intentionally Omitted 92 11.14Construction 92 11.15Further Cooperation 92 11.16WAIVERS BY THE CREDIT PARTIES 92 11.17CONSENT TO FORUM 93 11.18Indemnification 93 11.19Patriot Act Notification 93 11.20Confidential Information 94 11.21Amendment and Restatement 94

EXHIBITS

Exhibit A Form of Amended and Restated Note Exhibit B Form of Third Restatement Warrant Exhibit Form of U.S. Tax Compliance Certificate C-1 Exhibit Form of U.S. Tax Compliance Certificate C-2 Exhibit Form of U.S. Tax Compliance Certificate C-3 Exhibit Form of U.S. Tax Compliance Certificate C-4

THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

THIS THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (as amended, restated, supplemented or otherwise modified and in effect from time to time, this “Agreement”) is entered into as of January 11, 2021, by and among MEDMEN ENTERPRISES INC., a company incorporated under the laws of the Province of British Columbia (the “Company”), MM CAN USA, INC., a California corporation (“Holdings” and,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document with the Company, collectively, the “Initial Borrowers”, and each is an “Initial Borrower”), each other Credit Party party hereto, each Purchaser (defined herein) party hereto and Gotham Green Admin 1, LLC, a Delaware limited liability company (the “Collateral Agent”).

RECITALS

Subject to the terms and conditions of that certain Securities Purchase Agreement dated April 23, 2019, by and among the parties hereto, as amended by the First Amendment and Second Amendment (each as hereinafter defined) (collectively, the “First Agreement”), the Borrowers (as hereinafter defined) issued and sold to the Purchasers first priority senior secured convertible notes in an aggregate initial principal amount of $153,750,000, which were Tranche 1 Notes, Tranche 2 Notes, Tranche 3 Notes and Amendment Fee Notes (each as hereinafter defined), and the Company issued and sold to the Purchasers warrants to purchase Shares, which were Tranche 1 Warrants, Tranche 2 Warrants and Tranche 3 Warrants (each as hereinafter defined).

The parties entered into an Amended and Restated Securities Purchase Agreement dated March 27, 2020, by and among the parties hereto (the “First Amendment and Restatement”), pursuant to which the parties amended certain provisions of the First Agreement and Existing Notes (as hereinafter defined) and the Purchasers purchased senior secured convertible notes and warrants from the Borrowers and Company, respectively.

The parties subsequently entered into a Second Amended and Restated Securities Purchase Agreement dated July 2, 2020, by and among the parties hereto, as amended by the First Amendment to Second Amended and Restated SPA (the “Existing Agreement”), pursuant to which the parties amended certain provisions of the First Amendment and Restatement and certain Notes (as hereinafter defined) and the Purchasers purchased senior secured convertible notes and warrants from the Borrowers and Company, respectively.

Subject to the terms and conditions set forth herein, (a) the parties hereto desire to amend and restate the Existing Agreement in its entirety and amend and restate all Notes outstanding immediately prior to the execution hereof, (b) the Purchasers have agreed to waive the Existing Defaults, (c) certain Purchasers have agreed to make additional first priority senior secured convertible loans in an aggregate initial principal amount of $10,000,000, such loans to be evidenced by the Amended and Restated Notes (as hereinafter defined) issued by Borrowers (as hereinafter defined), and (d) the Company desires to issue and to sell to the Purchasers, and the Purchasers desire to purchase from the Company, additional warrants to purchase Shares.

AGREEMENTS

In consideration of the recitals and the mutual agreements and covenants herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which hereby are acknowledged, the parties hereto hereby agree, effective as of the Third Restatement Closing Date, as follows:

ARTICLE I DEFINITIONS

1.1 Definitions. In addition to the capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the following respective meanings when used in this Agreement:

“2020 Amendment Fee Notes” means the Notes issued on the Second Restatement Closing Date by the Borrowers to certain Purchasers in the initial aggregate principal amount of $2,000,000, as evidenced as of the Third Restatement Closing Date by the Amended and Restated Notes.

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of securities carrying more than fifty percent (50%) of the voting rights of any Person or otherwise causing any Person to become a Subsidiary of any Credit Party, (c) any other acquisition of Property outside the Ordinary Course of Business, or (d) a merger or consolidation or any other combination with another Person.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Adjusted Conversion/Exercise Price” means, collectively, (a) the Conversion Price as defined in the Amended and Restated Notes that is applicable to the portion of the principal amount thereof represented by each Incremental Advance and the Third Restatement Advance (fully accreted as of the relevant date of determination with respect to interest and other unpaid fees and expenses), (b) the Conversion Price as defined in the Amended and Restated Notes that is applicable to the Restatement Fee portion of the principal amount thereof (fully accreted as of the relevant date of determination with respect to interest and other unpaid fees and expenses), (c) the Conversion Price as defined in the Amended and Restated Notes that is applicable to the Tranche 4 Advance and the Amended Portion of the Existing Notes Principal, and (d) the Exercise Price as defined in each of the Tranche 4 Warrants, Incremental Warrants and Third Restatement Warrants (as set forth in Schedule 1.1(d) as of the relevant date of determination), in each case with respect to the foregoing clauses (a) through (d), if and only to the extent such Notes and Warrants (1) are identified on Schedule 1.1(d) as subject to Down-Round Price Reset protection and (2) are outstanding at the applicable time.

“Advances” means, collectively, the Tranche 1 Advances, Tranche 2 Advance, Tranche 3 Advance, Tranche 4 Advance, the Incremental Advances and the Third Restatement Advance, and each is an “Advance”.

“Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise. Without limitation, any director, manager (within the meaning of any applicable limited liability company law) or beneficial owner of securities carrying more than ten percent (10%) of the voting rights attached to all securities of a Person shall, for the purposes of this Agreement, be deemed to control the other Person. Notwithstanding the foregoing, none of the Purchasers shall be deemed an “Affiliate” of any Credit Party or of any Subsidiary of any Credit Party.

“Amended and Restated Notes” means the first priority senior secured convertible notes issued on the Third Restatement Closing Date by the Borrowers to the Purchasers, in an aggregate principal amount set forth therein, with the conversion prices set forth therein (provided, that any share price set out in this Agreement shall be subject to adjustment from time to time in the same manner as is set out in Section 4.5 of the Notes with respect to the Conversion Price), in substantially the form attached hereto as Exhibit A, as amended, modified, supplemented or restated from time to time, together with all notes issued in substitution or exchange therefor.

“Amended Portion of the Existing Notes Principal” means the portion of the Fully Accreted Principal Amount, fully accreted as of the relevant date of determination with respect to interest and other unpaid fees and expenses, that has, as of the relevant date of determination, already been adjusted under Section 4.3 of the Notes issued on the Tranche 4 Funding Date or any Incremental Funding Date (to the extent applicable) (as in effect on its original date of issuance).

“Amendment Fee Notes” means the first priority senior secured convertible notes issued on the Second Amendment Effective Date by the Borrowers to the Purchasers in the aggregate principal amount of $18,750,000, as amended and restated by the Amended and Restated Notes.

“Arizona Subsidiaries” means MME AZ Group, LLC, a Delaware limited liability company, Omaha Management Services, LLC, a Delaware limited liability company, and EBA Holdings, Inc., an Arizona corporation, , and their respective Subsidiaries.

“Attorney Costs” means and includes all reasonable and invoiced fees and disbursements of any law firm or other external counsel.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.).

“Borrowers” means, collectively, the Initial Borrowers and each other Person that becomes a party hereto as a “Borrower”, and each is a “Borrower.”

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Business Day” any day except Saturday, Sunday or any day on which banks are generally not open for business in the City of Los Angeles, California, City of Toronto, Ontario or New York, New York.

“Canadian Pension Plan” means a “registered pension plan”, as such term is defined in subsection 248(1) of the Income Tax Act, or is subject to the funding requirements of applicable pension benefits legislation in any Canadian jurisdiction and which is or was sponsored, administered or contributed to, or required to be contributed to, by any Credit Party or under which any Credit Party has or may incur any actual or contingent liability, and for the avoidance of doubt, a “Canadian Pension Plan” shall not include a Pension Plan.

“Canadian Securities Laws” means, collectively, all applicable securities laws of each of the provinces and territories of Canada and the respective rules and regulations under such laws together with applicable published policy statements, blanket orders, instruments, and notices of the Securities Commissions having the force of law, including NI 45-106 and NI 45-102 and all discretionary orders or rulings, if any, of the Securities Commissions made in connection with the transactions contemplated by this Agreement or applicable to the Company.

“Cannabis Law” means any Law relating to the farming, growth, production, processing, packaging, sale or distribution of cannabis or any cannabidiol product (other than Excluded Laws).

“Cannabis License” means a Permit issued by any Governmental Authority pursuant to applicable Cannabis Laws, including, without limitation, those issued to any Credit Party as set forth on Schedule 1.1(a).

“Cannabis License Holder” means any Person to whom a Cannabis License has been issued that (i) is a Credit Party or any Subsidiary, (ii) has a Material Agreement with a Credit Party or any Subsidiary or (iii) has received or is the subject of any Investment made by any Credit Party or any Subsidiary as and to the extent permitted by applicable Laws. In the context used, if “Cannabis License Holder” is used in the same list as the term “Subsidiary” or “Subsidiary of the Company”, the meaning of “Cannabis License Holder” shall not include clause (i) of the definition thereof.

“Capital Lease” means, as to any Person, any leasing or similar arrangement which, in accordance with GAAP or IFRS, as applicable, is or should be classified as a capital lease on the balance sheet of such Person.

“Capital Lease Obligations” means, as to any Person, all monetary obligations of such Person under any Capital Leases.

“Cash Equivalents” means as to any Person: (a) securities issued or fully guaranteed or insured by the United States Government or any agency thereof having maturities of not more than six (6) months from the date of acquisition; (b) certificates of deposit, time deposits, repurchase agreements, reverse repurchase agreements, or bankers’ acceptances, having in each case a tenor of not more than six (6) months, issued by any U.S. commercial bank or any branch of agency of a non-U.S. bank licensed to conduct business in the U.S., in either case having combined capital and surplus of not less than $250,000,000; (c) commercial paper of an issuer rated at least A 1 by Standard & Poor’s Financial Services LLC or P 1 by Moody’s Investors Service Inc. (or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally), in either case having a tenor of not more than three (3) months; (d) securities issued or directly and fully guaranteed or insured by the government of Canada or any province or any agency or instrumentality thereof (provided that the full faith and credit of the government of Canada is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such Person; (e) term deposits and certificates of deposit of any bank organized under the laws of Canada having capital, surplus and undivided profits aggregating in excess of $2,500,000,000, having maturities of not more than six months from the date of acquisition by such Person; (f) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in (d) entered into with any bank meeting the qualifications specified in (e); or (g) investments in money market funds substantially all of whose assets are comprised of securities of the types described in (a) through (f) above.

“Change of Control” means any event as a result of or following which:

(a) any person or entity or group thereof “acting jointly or in concert” within the meaning of Canadian Securities Laws, other than a Holder or group of Holders or any Affiliates thereof, whether independently or acting jointly or in concert, and other than any Person(s) acting jointly or in concert with one or more Holders or any Affiliate thereof, acquires beneficial ownership or control or direction over an aggregate of more than fifty percent (50%) of the then outstanding votes attached to the shares of the Company, other than pursuant to any exercise of rights of the Purchasers provided for in Section 8.22;

(b) any transaction or event, or series of transactions or events, resulting in the Company having control of less than one hundred percent (100%) of the voting securities of Holdings (which voting securities shall exclude any voting rights granted to non-voting securities by operation of Law);

(c) any transaction or event, or series of transactions or events, resulting in Holdings having control of (i) less than ninety percent (90%) of the voting securities of MM Opco (which voting securities shall exclude any voting rights granted to non-voting securities by operation of Law) or (ii) less than fifty percent (50%) of all of the Equity Interests of MM Opco; or

(d) the sale or transfer of all or substantially all of the consolidated assets of the Company, other than transfers permitted under Section 8.3.

“Closing” means the completion of each of the various transactions contemplated by this Agreement in accordance with Section 2.2.

“Closing Date” means April 23, 2019.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral Agent” means Gotham Green Admin 1, LLC, a Delaware limited liability company, in its capacity as collateral agent for the Purchasers.

“Collateral Assignment of Material Agreements” means that certain Amended and Restated Collateral Assignment of Material Agreements dated as of the Third Restatement Closing Date, among the Credit Parties and the Collateral Agent, as amended, restated, supplemented or otherwise modified from time to time.

“Commission” means the Securities and Exchange Commission.

“Company Public Disclosure Record” means all documents and information filed by the Company on SEDAR under Canadian Securities Laws since May 28, 2018.

“Company Security Agreements” means (a) that certain Amended and Restated Guaranty and Pledge Agreement dated as of the Third Restatement Closing Date, made by the Company in favor of the Collateral Agent, and (b) that certain Amended and Restated General Security Agreement dated as of the Second Restatement Closing Date, made by the Company in favor of the Collateral Agent (the “Canadian Security Agreement”), in each case as amended, restated, supplemented or otherwise modified from time to time.

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of such Person: (a) with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; (b) with respect to any letter of credit issued for the account of such Person or as to which such Person is otherwise liable for reimbursement of drawings; (c) under any Rate Contracts; (d) to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement; or (e) for the obligations of another through any agreement to purchase, repurchase or otherwise acquire such obligation or any Property constituting security therefor, to provide funds for the payment or discharge of such obligation or to maintain the solvency, financial condition or any balance sheet item or level of income of another Person. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed or supported.

“Contractual Obligations” means, as to any Person, any provision of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its Property is bound.

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Collateral Agent, executed and delivered by the applicable Credit Party, the Collateral Agent and the applicable securities intermediary or bank, which agreement is sufficient to give the Collateral Agent, on behalf of the Holders, “control” over each of such Credit Party’s securities accounts, deposit accounts or investment property, as the case may be.

“Controlled Group” means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control and all members of an affiliated service group which, together with a Credit Party, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

“Conversion Price” shall have the meaning provided in the applicable Note(s), but to the extent there is a conflict between the “Conversion Price” as defined in any Note and the conversion price set forth in Schedule 1.1(d) with respect to such Note (or the relevant Advances or portion thereof described in the Notes or such schedule), the conversion price set forth in Schedule 1.1(d) shall control.

“Credit Parties” means, collectively, the Borrowers, the Initial Credit Parties, the Subsequent Credit Parties, and each other Person that becomes a Credit Party after the Third Restatement Closing Date, and each is a “Credit Party”.

“CRO” means a chief restructuring officer engaged under an engagement letter reasonably acceptable to the Gotham Purchasers (such acceptance not to be unreasonably withheld) who (a) reports directly to the board of directors of the Company, (b) may be removed as provided for in this Agreement, (c) is tasked with forming the Turnaround Plan, and (d) may take all necessary actions in accordance with the Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect, subject to the oversight of the board of directors of the Company.

“CSE” means the Canadian Securities Exchange.

“Debt Service Coverage Ratio” means, with respect to any period of four consecutive Fiscal Quarters of the Borrowers on a consolidated basis, the ratio of (a) net income of the Credit Parties on a consolidated basis for such period, plus interest paid with respect to indebtedness for borrowed money to the extent such amount reduced such net income, plus taxes paid during such period, plus depreciation and amortization expenses to the extent such amount reduced such net income, to (b) the sum of payments made in cash by the Credit Parties during such period with respect to (i) interest and fees in connection with indebtedness for borrowed money of the Credit Parties, (ii) scheduled principal payments on indebtedness for borrowed money of the Credit Parties, (iii) Capital Lease Obligations of the Credit Parties.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Debtor Relief Laws” means the Bankruptcy Reform Act of 1996 as amended or any Canadian counterpart, Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States, any state or other applicable jurisdictions from time to time in effect, other than Excluded Laws.

“Default” means any event that, if it continues uncured, will, with the lapse of time or the giving of notice, or both, constitute an Event of Default.

“Disclosure Letter” means that certain Disclosure Letter dated as of the Third Restatement Closing Date, pursuant to which the Company delivered the disclosure schedules required hereby.

“Disposition” means (a) the sale, lease, conveyance or other disposition of Property (excluding sales, leases or other dispositions expressly permitted under clauses (a), (e) and (f) of Section 8.3), and (b) the statutory division, sale or transfer by any Credit Party or any Subsidiary of any securities issued by any Subsidiary and held by such transferor Person.

“Dollars”, “dollars” and “$” each mean lawful money of the United States of America.

“Employee Benefit Plan” means an “employee benefit plan” within the meaning of Section 3(3) of ERISA which any Credit Party or any Subsidiary, or any professional employer organization acting as co-employer with respect to such Credit Party or Subsidiary, establishes for the benefit of its employees or for which any Credit Party or any Subsidiary has liability to make a contribution, including by reason of being an ERISA Affiliate, other than a Multiemployer Plan.

“Environment” means indoor air, ambient air, surface water, groundwater, drinking water, land surface, subsurface strata and natural resources such as wetlands, flora and fauna.

“Environmental Claims” means all written claims by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the Environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental, placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in, or from Property, whether or not owned by any Credit Party or any Subsidiary.

“Environmental Laws” means all applicable federal, provincial, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental matters, including pollution, protection of the Environment and natural resources, and the control, shipment, storage or disposal of Hazardous Materials, pollutants, environmental contaminants or other toxic or hazardous substances; including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, and/or the Emergency Planning and Community Right-to-Know Act.

“Equity Interests” means the membership interests, partnership interests, capital stock of any class or type or any other equity interests of any type or class of any Person and options, warrants and other rights to acquire, or exercisable or convertible into, membership interests, partnership interests, capital stock or other equity interests of any type or class or any other equity interest of such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “ERISA Affiliates” means, collectively, all Credit Parties and all Subsidiaries, and each other Person, trade or business (whether or not incorporated) under common control or treated as a single employer with any Credit Party or any Subsidiary within the meaning of Section 414(b), 414(c) or 414(m) of the Code.

“ERISA Event” means (a) a Reportable Event with respect to a Title IV Plan or a Multiemployer Plan; (b) a withdrawal by any Credit Party, any Subsidiary or any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) by any Credit Party, any Subsidiary or any ERISA Affiliate from a Multiemployer Plan which results in the imposition of withdrawal liability; (d) the receipt by any Credit Party, any Subsidiary or any ERISA Affiliate of notice of intent to terminate with the PBGC or the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA of a Title IV Plan; (e) the commencement of proceedings by the PBGC to terminate a Title IV Plan or Multiemployer Plan; (f) a failure by any Credit Party, any Subsidiary or any ERISA Affiliate to make required contributions to a Title IV Plan or any Multiemployer Plan unless such failure is not reasonably expected to result in any material liability to any Credit Party or any Subsidiary; (g) an event or condition which would reasonably be expected to constitute grounds under Section 4041A or 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or any Multiemployer Plan; (h) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party, any Subsidiary or any ERISA Affiliate; (i) a non- exempt prohibited transaction occurs with respect to any Employee Benefit Plan which would reasonably be expected to result in a material liability to any Credit Party or any Subsidiary; (j) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a)(2) of the Code by any fiduciary or disqualified Person with respect to any Employee Benefit Plan for which any Credit Party, any Subsidiary or any ERISA Affiliate may be directly or indirectly liable which would reasonably be expected to result in a material liability to any Credit Party or any Subsidiary; or (k) as of the last day of any plan year, the Unfunded Benefit Liabilities of any Title IV Plan exceed $275,000.

“Evanston Sale Documents” means that certain Membership Interest Purchase Agreement dated as of July 1, 2020, entered into by and between Verano Evanston, LLC and MM OpCo, the Evanston Seller Note, together with any exhibits and attachments thereto, as the same may be amended from time to time.

“Excluded JV Subsidiary” means (a) each joint venture which is a Subsidiary of a Credit Party and is described as an “Excluded JV Subsidiary” on Schedule 1.1(c), so long as such joint venture did not, as of the last day of the most recently ended Fiscal Quarter, (i) have assets with a value in excess of ten percent (10%) of the assets of the Company and its Subsidiaries on a consolidated basis or (ii) generate revenues representing in excess of ten percent (10%) of the gross revenue of the Company and its Subsidiaries on a consolidated basis (the “JV Materiality Requirement”), (b) each other joint venture which is or becomes a Subsidiary of a Credit Party, so long as such joint venture complies with the JV Materiality Requirement, and (c) each Subsidiary of a joint venture described in clauses (a) and (b) of this definition.

“Excluded Subsidiary” means each Excluded JV Subsidiary, Hankey Subsidiary, Installment Sale Subsidiary and Immaterial Subsidiary; provided that, (i) an Excluded JV Subsidiary will cease to be an Excluded Subsidiary at such time as such Subsidiary ceases to be an Excluded JV Subsidiary; (ii) a Hankey Subsidiary will cease to be an Excluded Subsidiary upon the earlier to occur of (a) the Equity Interests of such Hankey Subsidiary that were pledged as collateral under the Hankey Loan Documents as of the Closing Date are no longer pledged as collateral under the Hankey Loan Documents or the loan documents of any successor lender as a result of a refinancing of the Hankey Loan, or (b) at such time as the Indebtedness incurred by such Hankey Subsidiary under the Hankey Loan Documents, and any refinancing, renewal, replacement or extension of such Indebtedness, shall have been paid in full; (iii) an Installment Sale Subsidiary will cease to be an Excluded Subsidiary at such time as the Indebtedness, existing as of the Closing Date or otherwise incurred by an Installment Sale Subsidiary after the Closing Date in compliance with Section 8.2(n), and any refinancing, renewal, replacement or extension of such Indebtedness, shall have been paid in full; and (iv) an Immaterial Subsidiary will cease to be an Excluded Subsidiary at such time as such Subsidiary ceases to be an Immaterial Subsidiary.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Holder or required to be withheld or deducted from a payment to a Holder: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case imposed as a result of such Holder being organized under the laws of, or having its principal office or, in the case of any Holder, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof); (b) Other Connection Taxes; (c) U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Holder with respect to an applicable interest in an Advance pursuant to a law in effect on the date on which (i) such Holder acquires such interest in the Advance, or if the Holder is an intermediary partnership or other flow-through entity for U.S. tax purposes, the date on which the relevant beneficiary, partner or member of the Holder becomes a beneficiary, partner or member thereof, if later or (ii) such Holder changes its lending office, except in each case to the extent that, pursuant to Section 11.12, amounts with respect to such Taxes were payable either to such Holder’s assignor immediately before such purchaser became a party hereto or to such Holder immediately before it changed its lending office; (d) Taxes attributable to such Holder’s failure to comply with Section 11.12(f); (e) any Taxes imposed under FATCA; (f) any Canadian withholding Taxes imposed on a payment by or on account of any obligation of the Company by reason of (i) the Holder not dealing at arm's length (for purposes of the Income Tax Act (Canada)) with the Company at the time of making such payment, or (ii) the payment being in respect of a debt or other obligation to pay an amount to a person with whom the payer is not dealing at arm’s length (for purposes of the Income Tax Act (Canada)) at the time of such payment; and (g) any Taxes imposed on a Holder by reason of such Holder (i) being a “specified shareholder” (as defined in subsection 18(5) of the Income Tax Act (Canada)) of the Company, or (ii) not dealing at arm’s length (for purposes of the Income Tax Act (Canada)) with a “specified shareholder” (as defined in subsection 18(5) of the Income Tax Act (Canada)) of the Company.

“Exercise Price” shall have the meaning provided in the applicable Warrant(s), but to the extent there is a conflict between the “Exercise Price” as defined in any Warrant and the exercise price set forth in Schedule 1.1(d) with respect to such Warrant (or the relevant Advances or portion thereof described in the Warrants or such schedule), the exercise price set forth in Schedule 1.1(d) shall control.

“Existing Notes” means, collectively, the Tranche 1 Notes, Tranche 2 Notes, Tranche 3 Notes and Amendment Fee Notes.

“Existing Purchasers” means, collectively, the Purchasers who purchased Existing Notes and Existing Warrants.

“Existing Warrants” means, collectively, the Tranche 1 Warrants, Tranche 2 Warrants and Tranche 3 Warrants.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code, any applicable intergovernmental agreement entered into between any Governmental Authorities, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any such intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.

“Fee Letter” means that certain Second Amended and Restated Fee Letter dated as of the Third Restatement Closing Date, among the Company, Holdings and the Purchasers.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “First Amendment” means that certain First Amendment to Securities Purchase Agreement, Tranche 1 Notes and Tranche 2 Notes, dated as of August 12, 2019, by and among the Borrowers, the other Credit Parties party thereto, the Existing Purchasers party thereto and the Collateral Agent.

“First Amendment Effective Date” means September 14, 2020.

“First Amendment to Second Amended and Restated SPA” means the First Amendment to Second Amended and Restated Securities Purchase Agreement dated as of the First Amendment Effective Date, by and among the Company, the Borrowers, the other Credit Parties, the Purchasers and the Collateral Agent.

“Fiscal Quarter” means each of fiscal quarters of a Fiscal Year, each consisting of a 13 week period.

“Fiscal Year” means the fiscal year of each Credit Party ending on or about June 30 of each year.

“Foreign Holder” means a Holder that is not a U.S. Person.

“Free Cash Flow” means cash proceeds from the sale of product from continuing operations in the ordinary course minus all cash expenses in the ordinary course or as approximated from Credit Parties statement of cash flows via the indirect method of net cash used in operating activities minus purchases of property and equipment.

“Fully Accreted Principal Amount” means, with respect to any Note(s), the initial principal amount thereof (including any portion attributable to Restatement Fee and any amendment fee) plus all interest paid in kind under such Note(s) as of the applicable Funding Date or other date of determination. As of the Third Restatement Closing Date, the Fully Accreted Principal Amount of the Notes is $211,200,986.39.

“Funded Amount” means, with respect to any Note, the amount funded by the Holder of such Note in connection with the Advance made to purchase such Note (for purposes of clarity, including in such amount any original issue discount or closing fee earned by such Purchaser in respect of such Note). As of the Third Restatement Closing Date, the Funded Amount of the Existing Notes is $135,000,000.

“Funding Date” means, as applicable, the Tranche 1-B Funding Date, Tranche 2 Funding Date, the Tranche 3 Funding Date, the Tranche 4 Funding Date, each Incremental Funding Date (which for the avoidance of doubt includes April 24, 2020 and September 14, 2020) and the Third Restatement Closing Date.

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), which are applicable to the circumstances as of the date of determination, and consistently applied.

“Gotham Purchasers” means, collectively, Gotham Green Fund 1, L.P., Gotham Green Fund 1 (Q), L.P., Gotham Green Fund II, L.P., Gotham Green Fund II (Q), L.P., Gotham Green Partners SPV IV, L.P., Gotham Green Partners SPV VI, L.P. and each Related Fund of such Purchasers, in each case which becomes a Purchaser under this Agreement.

“Governmental Authority” means any nation or government, any state, province or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guaranties” means, collectively, each guaranty of any of the Obligations now or hereafter executed and delivered by any Person to the Holders, and “Guaranty” means any of the Guaranties, including, without limitation, the Amended and Restated Guaranty and Security Agreement dated as of the Third Restatement Closing Date and the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Guaranty and Pledge Agreement dated as of the Third Restatement Closing Date, among the Credit Parties and the Purchasers.

“Guarantors” means, collectively, each party to a Guaranty (other than the Purchasers and the Collateral Agent) and each other guarantor of all or any portion of the Obligations, which shall at all times include each Subsidiary of a Borrower (other than any Excluded Subsidiary). Schedule 1.1(c) sets forth the Guarantors as of the Third Restatement Closing Date.

“Hankey Loan Documents” means that certain Senior Secured Commercial Loan Agreement dated as of October 1, 2018, as amended by that certain First Modification to Senior Secured Commercial Loan Agreement dated April 8, 2019 and further amended by that certain Second Modification to Senior Secured Commercial Loan Agreement dated January 13, 2020 and further amended by that certain Third Modification to Senior Secured Commercial Loan Agreement dated July 2, 2020 and further amended by that certain Fourth Modification to Senior Secured Commercial Loan Agreement dated September 14, 2020, each by and between Hankey Capital, LLC and Holdings, and all other agreements, instruments and documents entered into in connection therewith, as the same may be amended or modified or terms waived from time to time; provided, that any modification thereof or waiver requested or granted thereunder shall require the prior written consent of the Majority Holders.

“Hankey Subsidiaries” means Project Compassion NY, LLC, Project Compassion Capital NY, LLC, MMOF SD, LLC, MMOF Venice, LLC, MMOF Downtown Collective, LLC, MMOF BH, LLC, MMOF RE SD, LLC, MMOF Vegas 2, LLC, MedMen NY, Inc., MMOF San Diego Retail, Inc., The Compassion Network, Advanced Patients’ Collective, MME CYON Retail, Inc. and MMOF Vegas Retail 2, Inc., and their respective Subsidiaries, and each is a “Hankey Subsidiary”.

“Hazardous Materials” means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law.

“Holder” means, at any time of determination, a holder of a Note, and “Holders” means all such holders of a Note. For the sake of clarity, the Purchasers shall be the initial Holders of the Notes.

“Holding Companies” means, collectively, the Company and Holdings, and each is a “Holding Company”.

“IFRS” means the international financial reporting standards adopted by the International Accounting Standards Board.

“Immaterial Subsidiary” means any Subsidiary of the Company that (a) did not, as of the last day of the most recently ended Fiscal Quarter, have (i) assets with a value in excess of two percent (2%) of the assets of the Company and its Subsidiaries on a consolidated basis or (ii) revenues representing in excess of two percent (2%) of the gross revenue of the Company and its Subsidiaries on a consolidated basis, (b) taken together with all Persons deemed to be Immaterial Subsidiaries in the foregoing clause (a) as of the last day of the Fiscal Quarter of the Company most recently ended, did not have (i) assets with a value in excess of five percent (5%) of the assets of the Company and its Subsidiaries on a consolidated basis or (ii) revenues representing in excess of five percent (5%) of the gross revenue of the Company and its Subsidiaries on a consolidated basis, (c) is not a Cannabis License Holder, and (d) is not an IP Subsidiary. The Immaterial Subsidiaries in existence on the Third Restatement Closing Date are set forth on Schedule 1.1(c), and such schedule shall be updated on each applicable Funding Date.

“Income Tax Act” means the Income Tax Act (Canada), as amended from time to time.

“Incremental Advance” means the aggregate amount funded by the Purchasers to the Borrowers on an Incremental Funding Date.

“Incremental Funding Date” means the Third Restatement Closing Date and the date on which an Incremental Advance was made in accordance with Section 4.5 of the Existing Agreement, such dates having been April 24, 2020 and September 14, 2020.

“Incremental Notes” means the first priority senior secured convertible notes issued on an Incremental Funding Date by the Borrowers to the Incremental Purchasers in the aggregate principal amount of the applicable Incremental Advance plus the Restatement Fee payable on the applicable Incremental Funding Date, with the Conversion Price for each Incremental Note set forth in Schedule 1.1(d) (provided, that any share price set out in this Agreement shall be subject to adjustment from time to time in the same manner as is set out in the Notes with respect to the Conversion Price), as amended by the Amended and Restated Notes.

“Incremental Purchaser” means any Purchaser that made an Incremental Advance.

“Incremental Replacement Warrants” means warrants to purchase Shares, issued by the Company on an Incremental Funding Date to the Existing Purchasers, representing in the aggregate fifty percent (50%) coverage of (x) the Funded Amount of the Existing Notes multiplied by (y) (a) the relevant Incremental Advance divided by (b) $100,000,000 with an exercise price per Share set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor. The Incremental Replacement Warrants may not be exercised prior to the 18-month anniversary of the Funding Date on which such Incremental Replacement Warrants were issued, and shall be subject to cancellation under the terms thereof in connection with the Retail Cash Flow Milestone.

“Incremental Warrants” means warrants to purchase Shares, issued by the Company on an Incremental Funding Date to the Incremental Purchasers participating in such Incremental Advance representing in the aggregate one hundred percent (100%) coverage with respect to the Incremental Advance funded on such Incremental Funding Date and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Indebtedness” of any Person means, without duplication, all of the following as to such Person: (a) all indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as the deferred purchase price of Property or services (other than trade payables incurred in the Ordinary Course of Business or accrued expenses paid or payable on customary terms in the Ordinary Course of Business which payables or expenses are not past due for more than (x) one hundred twenty (120) days if such 120-day period would end on or prior to September 30, 2021, and (y) ninety (90) days if such 90-day period would end after September 30, 2021); (c) all reimbursement or payment obligations (whether or not contingent) with respect to letters of credit, surety bonds and other similar instruments; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of Property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to Property acquired by such Person (even though the rights and remedies of the seller or the Person providing financing under such agreement in the event of default are limited to repossession or sale of such Property); (f) all Capital Lease Obligations; (g) all Equity Interests of such Person subject to repurchase or redemption (other than at the sole option of such Person and other than redemptions or exchanges of common shares of Holdings and units of MM Opco which are redeemable or exchangeable in accordance with the Organization Documents of Holdings or MM Opco, as applicable, for Equity Interests); (h) all “earnouts” and similar payment obligations under merger, acquisition, purchase or similar or related agreements; (i) all obligations under Rate Contracts; (j) all Indebtedness and obligations referred to in clauses (a) through (i) above secured by (or for which the holder of such Indebtedness or obligations has an existing right, contingent or otherwise, to be secured by) any Lien upon or in Property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness or obligations; and (k) all Contingent Obligations described in clause (a) of the definition of “Contingent Obligations” in respect of indebtedness or obligations of another Person and that is described in clauses (a) through (j) above.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Initial Credit Parties” means collectively, the Persons set forth on Schedule 1.1(c) as of the Closing Date, and “Initial Credit Party” means any such Person.

“Installment Sale Subsidiaries” means Viktoriya’s Medical Supplies and its respective Subsidiaries, and each is an “Installment Sale Subsidiary”.

“Intercompany Note” means that certain Second Amended and Restated Intercompany Global Note dated as of the Third Restatement Closing Date, by and among the Credit Parties, as amended, restated, replaced, supplemented or otherwise modified from time to time.

“Interim Budget” means the interim budget of the Company agreed upon between the Collateral Agent and the Company that was in effect prior to the implementation of the Turnaround Plan.

“IP Subsidiaries” means collectively, the Persons listed on Schedule 1.1(c) and described as “IP Subsidiaries”, and “IP Subsidiary” means any such Person.

“knowledge” or “aware” means the (a) actual knowledge or awareness of any of the officers, directors or managers of any Credit Party or any Subsidiary, including their successors in their respective capacities and (b) the knowledge or awareness which a prudent business person would have obtained in the conduct of his or her business after making reasonable inquiry and reasonable diligence with respect to the particular matter in question.

“Laws” means all laws, statutes, codes, ordinances, decrees, rules, regulations, treaty, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, policies, voluntary restraints, guidelines or other legal requirement of any Governmental Authority, or any provisions of the foregoing, including general principles of common and civil law and equity, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject, whether applicable in Canada or the United States or any other jurisdiction; and “Law” means any one of them. Notwithstanding the foregoing, the definition of Laws excludes any U.S. federal laws, statutes, codes, ordinances, decrees, rules, regulations which apply to the production, trafficking, distribution, processing, extraction, and/or sale of marijuana (cannabis) and related substances (collectively, the “Excluded Laws”); provided, however, that Excluded Laws shall not include any provision of the Code, including, without limitation, Section 280E of the Code.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including, but not limited to, those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the UCC or any comparable law), and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease which is not a Capital Lease.

“Majority Holders” means Holders holding more than fifty percent (50%) of the aggregate unpaid principal amount outstanding under the Notes.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

“Market Capitalization” means, as of any date, the amount equal to the price per Share multiplied by the number of issued and outstanding Shares of the Company, determined on an as- converted and as-exercised basis with respect to securities issued by a Credit Party which are convertible into or redeemable for Shares, and warrants and stock options exercisable for Shares, in each case which are in the money as of the date of determination.

“Material Adverse Effect” means a material adverse effect on (a) the operations, business, assets, properties or financial condition of the Credit Parties taken as a whole, (b) the ability of any Credit Party to perform its

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document material obligations under the Operative Documents, (c) the legality, validity or enforceability of any of the Operative Documents, (d) the rights and remedies of the Purchasers under any of the Operative Documents or (e) the validity, perfection or priority of any security interest or other Lien in favor of the Collateral Agent for the benefit of the Purchasers, or of the Purchasers directly if the Collateral Agent ceases to hold such Liens on their behalf, under the Operative Documents on any portion of the assets of a Credit Party with a fair market value in excess of five million dollars ($5,000,000); provided, however, in determining whether there has been a “Material Adverse Effect”, any adverse effect attributable to the following shall be disregarded: (i) events, changes, developments, conditions or circumstances in worldwide, national or local conditions or circumstances (political, economic, regulatory or otherwise) that adversely affect cannabis consumable products industries generally, (ii) an outbreak or escalation of war, armed hostilities, acts of terrorism, political instability or other national calamity, crisis or emergency, or any governmental response to any of the foregoing, in each case, whether occurring within or outside of Canada or the United States, (iii) any change in accounting policies (and any changes in enforcement or interpretation thereof resulting therefrom) which do not impede the Credit Parties’ ability to perform their material obligations under the Operative Documents, (iv) any action or omission of any Credit Party taken with the prior written consent of the Majority Holders, where such consent is specifically required pursuant to this Agreement, (v) any failure, in and of itself, of the Company and its Subsidiaries to meet any published or internally prepared projections, budgets, plans or forecasts of revenues, earnings or other financial performance measures or operating statistics, in each case with respect to this clause (v) other than failure to comply with the Interim Budget, Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect, as required under the Operative Documents, or (vi) a breach by Purchasers of their obligation to make an Advance hereunder (it being understood that the Purchasers’ election not to fund an Advance shall not be a breach by the Purchasers if such election was based on or due to any failure by a Credit Party to satisfy conditions set forth in Section 4.1 or Section 4.2).

“Material Agreement” means any Contractual Obligation (a) between, among, made or accepted by, as applicable, any Credit Party on the one hand, and a Cannabis License Holder on the other hand and has generated and/or is reasonably expected to generate revenue to the Company on a consolidated basis in excess of $250,000 in the Fiscal Year at the time of determination, or (b) which has generated and/or is reasonably expected to generate revenue to the Company on a consolidated basis in excess of $1,000,000 in the Fiscal Year at the time of determination. Schedule 1.1(e) sets forth all Material Agreements in existence as of the Third Restatement Closing Date.

“Material Indebtedness” means (a) Indebtedness of the Credit Parties, whether individually or in the aggregate, and whether owed to one or more obligees, in an aggregate principal amount exceeding $1,000,000; and (b) obligations under the Treehouse REIT Documents.

“Material Real Property” means (a) any Owned Real Property and improvements thereon which (i) Treehouse REIT elects not to purchase pursuant to the Treehouse REIT Documents, (ii) which a Credit Party has owned for a period of at least six (6) months from the later of the Closing Date or the acquisition of such Owned Real Property by a Credit Party and such Credit Party has not actively listed such Owned Real Property for sale, and (iii) which has a fair market value in excess of $8,000,000, and (b) any real property leased by any Credit Party or any Subsidiary (other than an Excluded Subsidiary) (i) on which any Credit Party or any Subsidiary (other than an Excluded Subsidiary) develops improvements thereon with a fair market value in excess of $8,000,000, or (ii) which is necessary for any Credit Party’s ability to comply with applicable Laws in any material respect.

“Maturity Date” means the earlier of (a) the later of (i) the Initial Maturity Date (as defined in the Notes), and (ii) the Extended Maturity Date (as defined in the Notes), if and as extended by the Borrowers in accordance with the Notes, and (b) such earlier date as accelerated under the Notes or any other Operative Agreement.

“Minimum Liquidity Amount” means, for the period beginning July 1, 2021 and ending December 31, 2021, $7,500,000; and at all times thereafter, $15,000,000.

“MM Opco” means MM Enterprises USA, LLC, a Delaware limited liability company.

“Mortgaged Property” means, collectively, the Material Real Properties owned by any Credit Party or any Subsidiary, in each case set forth on Schedule 1.1(f) and as encumbered by a Mortgage pursuant to any Operative

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Document, and each additional Material Real Property encumbered by a Mortgage pursuant to Section 4.2(a) and Section 7.12.

“Mortgages” means, collectively, the deeds of trust, trust deeds, deeds to secure debt, hypothecs and mortgages made by any Credit Party in favor or for the benefit of the Holders creating and evidencing a Lien on a Mortgaged Property in form and substance reasonably satisfactory to the Majority Holders with such terms and provisions as may be required by the applicable Laws of the relevant jurisdiction, and any other mortgages executed and delivered pursuant to Section 4.2(a) or Section 7.12, in each case, as the same may from time to time be amended, restated, supplemented, or otherwise modified.

“Multiemployer Plan” means a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) as to which any ERISA Affiliate is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions.

“NI 45-106” means National Instrument 45-106 – Prospectus Exemptions as such instrument is in effect in the Province of Ontario at Closing.

“NI 51-102” means National Instrument 51-102 – Continuous Disclosure Obligations as such instrument is in effect in the Province of Ontario at Closing.

“Note Holder Ownership Percentage” means, as of any date, (A) the total number of Shares beneficially owned by the Holders divided by (B) the total number of Shares outstanding, in each case (A) and (B) assuming the following have occurred as of such date:

(i) all Notes outstanding on such date have been converted into Shares as of such date (after taking into account any amendment that would occur assuming the issuance of the securities contemplated in clause (iii));

(ii) all Warrants outstanding on such date have been exercised for Shares as of such date (after taking into account any cancellation that would occur assuming the issuance of the securities contemplated in clause (iii));

(iii) any Dilutive Issuance (without duplication of the Dilutive Interests that may be issuable pursuant to the exercise of the Pre-Emptive Right Offer under consideration) or Down-Round Price Reset reasonably anticipated as of such date has occurred as of such date;

(iv) all other convertible notes, options, warrants, restricted share units and other convertible, exchangeable or exercisable securities issued by the Company have been converted or exercised into Shares as of such date; and

(v) the redemption in full (in exchange for Shares) of all redeemable securities of Holdings and MM Opco has occurred as of such date, but otherwise assuming that all other convertible, exercisable or exchangeable securities of Holdings and MM Opco remain outstanding, in each case (i) through (vi) without regard to (x) any Class A Super Voting Shares or preferred shares outstanding at such date, (y) any restrictions on the conversion, exercise, exchange or redemption contained in the terms of such securities, nor (z) whether such securities are “in-the- money”.

“Notes” means, collectively, the Amended and Restated Notes and all other notes evidencing the principal and interest owing from the Borrowers to the Holders under this Agreement, in each case, as amended, restated, supplemented or otherwise modified from time to time, and each is a “Note”.

“Obligations” means all loans, advances, indebtedness, obligations and liabilities of the Company and each other Credit Party to the Holders under the Notes or any of the other Operative Documents, together with all other indebtedness, obligations and liabilities whatsoever of the Company and each other Credit Party to the Holders arising under or in connection with this Agreement or any other Operative Documents, in each case whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several, due or to become due, now existing or hereafter arising; provided, however, that for purposes of calculating the Obligations outstanding under this Agreement or any of the Operative Documents, the direct and absolute and contingent obligations of Company and each other Credit Party shall be determined without duplication.

“Observer Agreement” means the amended and restated agreement among the Purchasers, the Company and the Observer entered into on the Second Restatement Closing Date.

“Operative Documents” means this Agreement, the Notes, the Warrants, the Fee Letter, the Observer Agreement, the Security Agreement, the Company Security Agreements, the Collateral Assignment of Material Agreements, the Intercompany Note, the Perfection Certificate, the Trademark Security Agreement, the Patent Security Agreement, each Mortgage, each Control Agreement, each Subordination Agreement, the Reaffirmation Agreements, and each other document, instrument or agreement executed in connection herewith.

“Ordinary Course of Business” means, in respect of any transaction involving any Credit Party or any Subsidiary, the ordinary course of such Person’s business, as conducted by any such Person consistent with past practice and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Operative Document.

“Organization Documents” means (a) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of designations or instrument relating to the rights of shareholders of such corporation and any shareholder rights agreement, (b) for any partnership, the partnership agreement and, if applicable, certificate of limited partnership, (c) for any limited liability company, the operating agreement, limited liability company agreement or other similar agreement and articles or certificate of formation, or (d) for any Person (including any corporation, partnership or limited liability company), any agreement, instrument or document comparable to the foregoing.

“Other Connection Taxes” means, with respect to a Holder, Taxes imposed as a result of a present or former connection between such Holder and the jurisdiction imposing such Taxes (other than a connection arising solely from such Holder having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to or enforced, the Agreement).

“Owned Real Property” means each parcel of real property that is owned in fee by the Company or any Credit Party.

“Patent Security Agreement” means that certain Patent Security Agreement dated as of the Second Restatement Closing Date, made by the Credit Parties party thereto and each other Credit Party which joins and becomes bound by such agreement as “Grantors”, in favor of Collateral Agent and as amended, restated, supplemented or otherwise modified from time to time.

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any of its principal functions under ERISA.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Pension Plan” means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Pension Plan) and as to which any Credit Party has or may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA, and, for the avoidance of doubt, “Pension Plan” shall not include a Canadian Pension Plan.

“Perfection Certificate” means the Perfection Certificate executed by each Credit Party and delivered to the Purchasers on the Closing Date and to the Holders on each Funding Date (in the case of any Funding Date, such Perfection Certificate shall give effect to any transactions anticipated to be completed on such Funding Date or using funds advanced on such Funding Date).

“Permit” means a license, permit, approval, consent, certificate, registration or authorization (whether governmental, regulatory or otherwise).

“Permitted Acquisitions” means any Acquisitions, in a single transaction or series of related transactions, if immediately before and after giving effect thereto: (i) no Event of Default shall have occurred or be continuing or would result from such acquisition or purchase, (ii) any acquired or newly formed Subsidiary of a Credit Party shall not be liable for any Indebtedness except for Indebtedness otherwise permitted by Section 8.2, (iii) the Credit Parties have complied with this Agreement in connection with such Investment, and (iv) the Borrowers would be in compliance with the financial covenants set forth in Section 7.19 for the most recent calculation period and as of the last day thereof, if such acquisition or purchase had been completed on the first day of such calculation period.

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other form of entity.

“Personal Information” means any information about a Person and includes information contained in this Agreement and the documents to be delivered by such Person in connection with the transactions contemplated herein.

“Property” means any property or interest of any type in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

“Purchasers” means, collectively, the parties signatory to this Agreement as “Purchasers” and each Person who becomes a Purchaser hereunder, together with their respective successors and assigns as permitted under this Agreement, and each is a “Purchaser”.

“Qualified Plan” means an employee benefit plan (within the meaning of Section 3(3) of ERISA) intended to be tax-qualified under Section 401(a) of the Code and which any Credit Party or any Subsidiary sponsors, maintains, or to which any Credit Party or any Subsidiary makes, is making or is obligated to make contributions, including as a result of being an ERISA Affiliate, but excluding any Multiemployer Plan.

“Rate Contract” means swap agreements (as such term is defined in Section 101 of the Bankruptcy Code) and any other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates, including any agreement or arrangement which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

“Reaffirmation Agreements” means, collectively, the Reaffirmation Agreements made by the Credit Parties in favor of the Holders and the Collateral Agent, for the benefit of the Holders, including, without limitation, those executed on the Restatement Closing Date, Second Restatement Closing Date, and Third Restatement Closing Date.

“Related Fund” means (a) any fund, trust or similar entity that invests in commercial loans in the ordinary course of business and is advised or managed by (i) any Purchaser or any other Holder, (ii) an Affiliate of any Purchaser or any Holder, (iii) the same investment advisor that manages a Holder or (iv) an Affiliate of an investment advisor that manages a Holder or (b) any finance company, insurance company or other financial institution which temporarily warehouses loans for any Holder or any Person described in clause (a) above.

“Related Persons” means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor (including those retained in connection with the satisfaction or attempted satisfaction of any condition set forth in this Agreement) and other consultants and agents of or to such Person or any of its Affiliates.

“Reportable Event” means, as to any Employee Benefit Plan, any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

“Responsible Officer” means, as to each Credit Party, the chief executive officer, chief financial officer, vice president of finance or the president of such Credit Party, or any other officer having substantially the same authority and responsibility.

“Restatement Closing Date” means March 27, 2020.

“Restatement Fee” shall have the meaning provided in the Fee Letter.

“Retail Cash Flow Milestone” shall have the meaning provided in the Tranche 4 Replacement Warrants and Incremental Replacement Warrants.

“Second Amendment” means that certain Second Amendment to Securities Purchase Agreement and Notes dated as of the Second Amendment Effective Date, by and among the Borrowers, each other Credit Party signatory thereto, each Purchaser signatory thereto and the Collateral Agent.

“Second Restatement Closing Date” means July 2, 2020.

“Second Amendment Effective Date” means October 29, 2019.

“Securities Commissions” means collectively, the applicable securities commission or securities regulatory authority in each of the provinces and territories of Canada, the United States and any other jurisdiction in which the Shares are listed. Laws.

“Securities Laws” means, collectively, the U.S. Securities Laws and Canadian Securities

“Security Agreement” means that certain Second Amended and Restated Guaranty and Security Agreement dated as of the Third Restatement Closing Date, made by Holdings, the other Credit Parties party thereto and each other Credit Party which joins and becomes bound by such agreement as “Guarantors” and/or “Grantors”, in favor of Collateral Agent and as amended, restated, supplemented or otherwise modified from time to time.

“Shares” means Class B Subordinate Voting Shares of the Company.

“Subordination Agreement” means each subordination or intercreditor agreement entered into for the purpose of subordinating Indebtedness or Liens to the Obligations, or subordinating the Obligations to any other Indebtedness or Liens, in form and substance reasonably requested by or acceptable to Purchasers, as applicable.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Subsequent Credit Parties” means each Subsidiary of the Company, and each Subsidiary of each Borrower, whether existing on the Tranche 1-B Funding Date or joined to this Agreement and the Operative Documents under Section 7.11, Section 7.12 or Section 7.20, subsequent to the Tranche 1-B Funding Date other than the Excluded Subsidiaries, and “Subsequent Credit Party” means any such Person.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of equity or voting securities entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity, a majority of the limited liability company, partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control (or have the power to be or control) the general partner or other governing body of such limited liability company, partnership, association or other business entity. In the absence of designation to the contrary, reference to a Subsidiary or Subsidiaries shall be deemed to be a reference to Subsidiaries of the applicable Credit Party.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Third Restatement Advance” means the $10,000,000 funded by the Third Restatement Purchasers to the Borrowers on the Third Restatement Closing Date.

“Third Restatement Closing Date” means the date of this Agreement.

“Third Restatement Operative Documents” means the Security Agreement, the Collateral Assignment of Material Agreements, the Intercompany Note, and the Third Restatement Reaffirmation Agreement.

“Third Restatement Purchasers” means the Purchasers that make a portion of the Third Restatement Advance.

“Third Restatement Reaffirmation Agreement” means that certain Reaffirmation Agreement dated as of the Third Restatement Closing Date, made by the Credit Parties in favor of the Holders and the Collateral Agent, for the benefit of the Holders.

“Third Restatement Replacement Warrants” means (a) all Incremental Replacement Warrants issued prior to the Third Restatement Closing Date and (b) additional Incremental Replacement Warrants issued in connection with the Third Restatement Advance, in each case as evidenced by amended and restated warrant certificates issued to the Holders in the form attached hereto as Exhibit B-2 and exercisable for the number of Shares at the exercise price(s) set forth in Schedule 1.1(d) with respect to such Incremental Replacement Warrants and as set forth in the warrant certificate(s) issued to each Holder. All such Incremental Replacement Warrants may not be exercised prior to the 18-month anniversary of the Funding Date on which such Incremental Replacement Warrants were issued, and shall be subject to cancellation under the terms thereof in connection with the Retail Cash Flow Milestone. For the avoidance of doubt, the definitive number of Shares for which such Warrants are exercisable and the corresponding exercise price therefor is set forth in Schedule 1.1(d).

“Third Restatement Warrants” means (a) warrants to purchase Shares, issued by the Company on the Third Restatement Closing Date to the Third Restatement Purchasers representing in the aggregate one hundred percent (100%) coverage with respect to the Third Restatement Advance and with an exercise price of $0.1608 and (b) all Tranche 1 Warrants, Tranche 2 Warrants, Tranche 3 Warrants, Tranche 4 Warrants and Incremental Warrants that were

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document issued prior to the Third Restatement Closing Date and were not canceled prior to the Third Restatement Closing Date in accordance with the Existing Agreement, with respect to Warrants described in clause (b) with exercise prices as set forth therein with respect to each such tranche or class; in each case with respect to Warrants described in clauses (a) and (b), as evidenced by amended and restated warrant certificates issued to the Holders in the form attached hereto as Exhibit B-1, as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor. For the avoidance of doubt, the definitive number of Shares for which such Warrants are exercisable and the corresponding exercise price therefor is set forth in Schedule 1.1(d).

“Title IV Plan” means any employee benefit plan (within the meaning of Section 3(3) of ERISA) subject to the provisions of Title IV of ERISA other than a Multiemployer Plan, as to which any Credit Party or any Subsidiary is making, or is obligated to make contributions, including as a result of being an ERISA Affiliate, or, during the preceding six calendar years, has made, or been obligated to make, contributions.

“Trademark Security Agreement” means that certain Trademark Security Agreement dated as of the Second Restatement Closing Date, made by the Credit Parties party thereto and each other Credit Party which joins and becomes bound by such agreement as “Grantors”, in favor of Collateral Agent and as amended, restated, supplemented or otherwise modified from time to time.

“Tranche 1 Advances” means, collectively, the Tranche 1-A Advance and the Tranche 1- B Advance, and each is a “Tranche 1 Advance”.

“Tranche 1-A Advance” means the $20,000,000 funded by certain Purchasers to the Borrowers on the Closing Date.

“Tranche 1-A Notes” means the first priority senior secured convertible notes issued on the Closing Date by the Borrowers to the applicable Purchasers in the aggregate amount of the Tranche 1-A Advance, as amended by the Amended and Restated Notes.

“Tranche 1-A Warrants” means, collectively, the Tranche 1-A(1) Warrants and Tranche 1-A(2) Warrants, and each is a “Tranche 1-A Warrant”.

“Tranche 1-A(1) Warrants” means the warrants to purchase Shares, issued on the Closing Date by the Company to the applicable Purchasers, representing in the aggregate thirty seven and one half percent (37.5%) coverage with respect to the Tranche 1-A Advance and with the exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 1-A(2) Warrants” means the warrants to purchase Shares, issued on the Closing Date by the Company to the applicable Purchasers, representing in the aggregate twelve and one half percent (12.5%) coverage with respect to the Tranche 1-A Advance and with the exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 1-B Advance” means the $80,000,000 funded by certain Purchasers to the Borrowers on the Tranche 1-B Funding Date.

“Tranche 1-B Funding Date” means May 22, 2019.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Tranche 1-B Notes” means the first priority senior secured convertible notes issued on the Tranche 1-B Funding Date by the Borrowers to the Purchasers in the aggregate amount of the Tranche 1-B Advance, as amended by the Amended and Restated Notes.

“Tranche 1-B Warrants” means collectively, the Tranche 1-B(1) Warrants and Tranche 1-B(2) Warrants, and each is a “Tranche 1-B Warrant”.

“Tranche 1-B(1) Warrants” means the warrants to purchase Shares, issued on the Tranche 1-B Funding Date by the Company to the Purchasers, representing in the aggregate thirty seven and one half percent (37.5%) coverage with respect to the Tranche 1-B Advance and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 1-B(2) Warrants” means the warrants to purchase Shares, issued on the Tranche 1-B Funding Date by the Company to the Purchasers, representing in the aggregate twelve and one half percent (12.5%) coverage with respect to the Tranche 1-B Advance and with an exercise price with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 1 Notes” means, collectively, the Tranche 1-A Notes and Tranche 1-B Notes.

“Tranche 1 Warrants” means, collectively, the Tranche 1-A(1) Warrants, Tranche 1-A(2) Warrants, Tranche 1-B(1) Warrants and Tranche 1-B(2) Warrants, and each is a “Tranche 1 Warrant”.

“Tranche 2 Advance” means the $25,000,000 funded by certain Purchasers to the Borrowers on the Tranche 2 Funding Date.

“Tranche 2 Funding Date” means July 12, 2019.

“Tranche 2 Notes” means the first priority senior secured convertible notes issued on the Tranche 2 Funding Date by the Borrowers to the Purchasers in the aggregate amount of the Tranche 2 Advance, as amended by the Amended and Restated Notes.

“Tranche 2 Warrants” means, collectively, the Tranche 2-A Warrants and Tranche 2-B Warrants, and each is a “Tranche 2 Warrant”.

“Tranche 2-A Warrants” means warrants to purchase Shares, issued by the Company on the Tranche 2 Funding Date to the Purchasers, representing in the aggregate thirty seven and one half percent (37.5%) coverage with respect to the Tranche 2 Advance and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 2-B Warrants” means warrants to purchase Shares, issued by the Company on the Tranche 2 Funding Date to the Purchasers, representing in the aggregate twelve and one half percent (12.5%) coverage with respect to the Tranche 2 Advance and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 3 Advance” means the $10,000,000 funded by the Purchasers to the Borrowers on the Tranche 3 Funding Date.

“Tranche 3 Funding Date” means November 27, 2019.

“Tranche 3 Notes” means the first priority senior secured convertible notes issued on the Tranche 3 Funding Date by the Borrowers to the Purchasers in the aggregate principal amount of the Tranche 3 Advance, as amended by the Amended and Restated Notes.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Tranche 3 Warrants” means, collectively, the Tranche 3-A Warrants and Tranche 3-B Warrants, and each is a “Tranche 3 Warrant”.

“Tranche 3-A Warrants” means warrants to purchase Shares, issued by the Company on the Tranche 3 Funding Date to the Purchasers, representing in the aggregate thirty seven and one half percent (37.5%) coverage with respect to the Tranche 3 Advance and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 3-B Warrants” means warrants to purchase Shares, issued by the Company on the Tranche 3 Funding Date to the Purchasers, representing in the aggregate twelve and one half percent (12.5%) coverage with respect to the Tranche 3 Advance and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Tranche 4 Advance” means the $12,500,000 funded by certain Purchasers to the Borrowers on the Tranche 4 Funding Date.

“Tranche 4 Funding Date” means March 27, 2020.

“Tranche 4 Replacement Warrants” means warrants to purchase Shares, issued by the Company on the Tranche 4 Funding Date to the Existing Purchasers, representing coverage in an aggregate amount of $8,437,500, with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor. The Tranche 4 Replacement Warrants may not be exercised prior to the 18-month anniversary of the Tranche 4 Funding Date, and shall be subject to cancellation under the terms thereof in connection with the Retail Cash Flow Milestone.

“Tranche 4 Warrants” means warrants to purchase Shares, issued by the Company on the Tranche 4 Funding Date to the Purchasers who participate in the Tranche 4 Advance, representing in the aggregate one hundred percent (100%) coverage with respect to the Tranche 4 Advance and with an exercise price set forth on Schedule 1.1(d), as amended, modified, supplemented or restated from time to time, together with all warrants issued in substitution or exchange therefor.

“Treehouse REIT” means Treehouse Real Estate Investment Trust.

“Treehouse REIT Documents” means that certain Management Agreement dated as of January 3, 2019, entered into by and among LCR Manager, LLC, a Delaware limited liability company, Treehouse Real Estate Investment Trust, Inc., a Maryland corporation and Le Cirque Rouge, LP, a Delaware partnership, that certain Limited Partnership Agreement dated as of January 3, 2019, and all other agreements, instruments and documents entered into in connection therewith as the same may be amended or modified or terms waived from time to time, including the Second Amendment to Master Lease Agreement dated July 2, 2020 and the Forbearance Agreement effective as of April 15, 2020, as amended by the First Amendment to Forbearance Agreement dated as of May 31, 2020; provided, that any modification thereof or waiver requested or granted thereunder that is adverse to the Holders shall require the prior written consent of the Majority Holders not to be unreasonably withheld.

“Treehouse REIT Transactions” means the sale of certain Credit Parties’ real property and leasehold interests to Treehouse REIT and simultaneous lease of such real property or leasehold back to such Credit Parties in accordance with the Treehouse REIT Documents.

“Unencumbered Liquid Assets” means (a) the following assets which (i) are not the subject of any Lien or other arrangement with any creditor to have its claim satisfied out of the asset (or proceeds thereof) prior to the general creditors of the owner of the asset (other than Permitted Liens), (ii) are held solely in the name of a Credit Party (with no other Person having ownership rights therein), and (iii) may be converted to cash within five (5) days, and: (x) Cash Equivalents, (y) United States Treasury or governmental agency obligations which constitute full faith and credit

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of the United States of America, or (z) medium and long-term securities rated investment grade by Moody’s or S&P, and (b) any other assets which are otherwise acceptable to the Holders in their reasonable discretion.

“Unfunded Benefit Liabilities” means the excess of a Title IV Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Title IV Plan’s assets, determined in accordance with the actuarial assumptions used by the Title IV Plan’s actuaries for Title IV Plan funding purposes for the applicable plan year.

“United States” and “U.S.” each means the United States of America and political subdivisions thereof.

“Unproductive Leases” means leases or other agreements relating to the use or license of premises located at the addresses specified in the Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect.

“U.S. Accredited Investor” means an “accredited investor” as defined in Rule 501(a) under Regulation D.

“U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

“U.S. Securities Act” means the United States Securities Act of 1933, as amended.

“U.S. Securities Laws” means the United States federal securities laws, including, without limitation, the U.S. Securities Act and the U.S. Exchange Act, and applicable state securities laws.

“Virginia Subsidiaries” means, collectively, PharmaCann Virginia LLC.

“Warrants” means, collectively, the Tranche 1 Warrants, Tranche 2 Warrants, Tranche 3 Warrants, Tranche 4 Warrants, Tranche 4 Replacement Warrants, Incremental Warrants, Incremental Replacement Warrants, Third Restatement Replacement Warrants, and Third Restatement Warrants, and each is a “Warrant”.

“Warrant Shares” means the Shares of the Company issuable upon exercise of the Warrants.

Table of Defined Terms

Additional Mortgage Section 7.12(c) Agent-Related Persons Section 10.2 Agreement Preamble Anti-Terrorism Laws Section 5.22 Collateral Agent Section 10.8, Preamble Company Preamble Company Historical Financial Statements Section 5.12(a) . Compliance Certificate Section 7.2(b) Debt Offering Section 7.16 Default Rate Section 9.1 Dilutive Interests Section 8.22(a) Dilutive Issuance Section 8.22(b) Disposition Section 8.3 Down Round Section 8.22(a)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Down-Round Price Reset Section 8.22(a) Environmental Permits Section 5.13 Event of Default Section 9.1 Excluded Issuances Section 8.22(a) Executive Order Section 5.22 Existing Agreement Recitals, Recitals Indemnified Liabilities Section 10.7 Indemnitee Section 11.18 Initial Borrower Preamble Initial Borrowers Preamble Investments Section 8.5 Last Audited Financial Statements Section 5.12(a) Last Unaudited Financial Statements Section 5.12(a) New Subsidiary Section 7.12(a) Observer Section 7.18 OFAC Section 5 22 Original Agreement Recitals Originating Holder Section 11.3(a) Other Payments Section 9.1 Participant Section 11.3(a) Participant Register Section 11.3 Permitted Liens Section 8.1 Pre-Emptive Right Offer Section 8.22(b) Pro Forma Balance Sheet Section 5.12(d) Regulatory Disclosure Requirement Section 7.17 Reinvestment Period Section 8.3(D) Restricted Payments Section 8.10 Securities Section 11.9(a) Subsidiary Sales Section 8.3(B)(I) Turnaround Plan Section 7.21(b) USA Patriot Act Section 5.22

Accounting Principles. Calculations and determinations of financial and accounting terms used and not otherwise specifically defined under this Agreement (including the Exhibits hereto) shall be made and determined, both as to classification of items and as to amount, in accordance with GAAP or IFRS, as applicable. If any changes in accounting principles or practices from GAAP or IFRS, as applicable, are occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor thereto or agencies with similar functions) with respect to GAAP, and the International Accounting Standards Board with respect to IFRS, which results in a change in the method of accounting in the calculation of financial covenants, standards or terms contained in this Agreement or any other Operative Document, the parties hereto agree to enter into negotiations to amend such provisions so as equitably to reflect such changes to the end that the criteria for evaluating financial and other covenants, financial condition and performance will be the same after such changes as they were before such changes; and if the parties fail to agree on the amendment of such provisions, Credit Parties shall continue to provide calculations for all financial covenants, perform all financial covenants and otherwise observe all financial standards and terms in the Operative Documents in accordance with GAAP or IFRS, as applicable, as in effect immediately prior to such changes.

1.2 Other Definitional or Interpretive Provisions.

(a) Unless otherwise noted, all references to currency shall be United States dollars and all payments contemplated herein shall be paid in United States funds, by certified check, bank draft or wire transfer of immediately available funds.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Whenever the context so requires, the neuter gender includes the masculine and feminine, the singular number includes the plural, and vice versa. The words “include,” “includes” and “including” shall in any event be deemed to be followed by the phrase “without limitation.”

(c) All references in this Agreement to “this Agreement”, “herein”, “hereunder”, “hereof” shall be deemed to refer to this Agreement and the Exhibits hereto (including their annexes) unless the context requires otherwise. All references in this Agreement to Articles, Sections, Exhibits and Annexes shall be construed to refer to Articles and Sections of, and Exhibits and Annexes to, this Agreement unless the context requires otherwise. Unless the context otherwise requires, all references in this Agreement to Schedules shall be construed to refer to the disclosure schedules delivered by the Company to Purchasers on the Third Restatement Closing Date pursuant to the Disclosure Letter on or prior to the Third Restatement Closing Date. Any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Operative Document).

(d) Except as otherwise provided herein, any reference to a statute refers to the statute or any successor thereto, in each case as amended, reformed or modified from time to time and to all rules and regulations promulgated under or implementing the statute as in effect at the relevant time and a reference to a specific provision of a statute, rule or regulation includes any successor provision or provisions.

ARTICLE II AUTHORIZATION AND SALE OF SECURITIES.

2.1 Authorization. Prior to the Closing, the Company and Holdings will authorize the issuance and sale of the Notes and Warrants to the Purchasers, in the amounts provided in Section 2.2.

2.2 Sale of the Securities to the Purchaser.

(a) Prior Advances. Prior to the Third Restatement Closing Date and in accordance with the Existing Agreement, the Borrowers sold to the Purchasers various Notes, and the Company sold to the Purchasers various Warrants, respectively, for the consideration set forth in the Existing Agreement. The terms of the Notes and Warrants issued prior to the Third Restatement Closing Date by the Borrowers and the Company, respectively, are set forth in the Amended and Restated Notes and in such Warrants, respectively, as updated or amended as set forth on Schedule 1.1(d) or as required to be amended after the Third Restatement Closing Date under Section 8.22 as of any date of determination.

(b) Advances on the Third Restatement Closing Date.

Subject to the satisfaction of the terms and conditions herein and in reliance upon the respective representations and warranties of the Credit Parties set forth herein and in the other Operative Documents, at the Closing, the Borrowers shall issue to the Purchasers the Amended and Restated Notes (which shall reflect the Fully Accreted Principal Amount of the obligations of the Borrowers to the Holders as of the Third Restatement Closing Date, including all Advances made on or prior to the Third Restatement Closing Date), and the Company shall issue to the Third Restatement Purchasers the Third Restatement Warrants and Third Restatement Replacement Warrants. As consideration therefor, the Purchasers shall have made, or shall make, as applicable, Advances under the Existing Agreement and/or this Agreement, as applicable.

Schedule 1.1(d) has been updated as of the Third Restatement Closing Date to reflect all Advances made on or prior to the Third Restatement Closing Date and adjustments required to have been made to such date under Section

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 8.22, such updated schedule being attached to the Disclosure Letter. Notwithstanding anything to the contrary in any Warrant issued or any other Operative Document executed prior to the Third Restatement Closing Date, the applicable Exercise Prices for each Warrant and Conversion Prices for each Note issued under the Existing Agreement and this Agreement are set forth in Schedule 1.1(d).

ARTICLE III CLOSING; DELIVERY; AMENDMENTS TO NOTES

3.1 Closing. Each Closing was or is to be held at the offices of Honigman LLP, located at 2290 First National Building, 660 Woodward Avenue, Detroit, Michigan 48226, on the applicable Funding Date, or virtually by exchange of electronic documents, at 10:00 a.m., local time, or at such other time, date and place as may be agreed to in writing by the Company and the Purchasers.

3.2 Delivery; Advances.

(a) On each Funding Date prior to the Third Restatement Closing Date, the Borrowers and the Company delivered certain Notes and Warrants, respectively, and the Purchasers made Advances as consideration therefor by wire transfer to accounts designated by the Borrowers and Company.

(b) On the Third Restatement Closing Date, subject to the terms and conditions herein, (i) the Borrowers and the Company will deliver the Amended and Restated Notes, Third Restatement Warrants and Third Restatement Replacement Warrants, respectively, and (ii) the Third Restatement Purchasers will pay the Third Restatement Advance (net of fees and expenses due to such Purchasers hereunder) to the Borrowers and the Company by wire transfer to accounts designated by the Borrowers and the Company prior to the Third Restatement Closing Date.

(c) The Company and the Purchasers agree as between the Company and the Purchasers, that the fair market value of (i) the Tranche 1 Warrants and the rights to acquire the Tranche 2 Warrants, Tranche 3 Warrants and Tranche 4 Warrants in the aggregate was equal to $400,000 and (ii) the Incremental Warrants and Third Restatement Warrants will be agreed upon in good faith by the Company and the Collateral Agent, as agent for the Purchasers, at the time of their issuance. The Company and the Purchasers further agree that, pursuant to Treas. Reg. § 1.1273-2(h), $400,000 of the issue price of the investment unit consisting of (A)(1) the Tranche 1- A Notes and (2) the Tranche 1-B Notes, on the one hand, and (B)(1) the Tranche 1 Warrants and (2) the rights to acquire the Tranche 2 Warrants, Tranche 3 Warrants and Tranche 4 Warrants, on the other hand, will be allocable to the Tranche 1 Warrants and the right to acquire the Tranche 2 Warrants, Tranche 3 Warrants and Tranche 4 Warrants. The Company and the Purchasers further agree that, pursuant to Treas. Reg. § 1.1273-2(h), the agreed-upon portion of the issue price of the investment unit consisting of (x) the Incremental Notes and (y) the Incremental Warrants will be allocable to the Incremental Warrants. The Company and the Purchasers shall prepare and file all Tax and information reports in a manner consistent with the foregoing allocation and shall not take any position on any Tax return, before any Governmental Authority or in any proceeding relating to Taxes that is inconsistent with such allocation unless required by a determination within the meaning of Section 1313(a) of the Code. The Company and the Purchasers shall use commercially reasonable efforts to defend such allocation in any such tax proceeding.

3.3 Waiver of Existing Defaults.

Subject to the satisfaction of the conditions set forth in Section 4.2, and in reliance on the representations in Section 5.7, the Holders and Collateral Agent hereby waive any Defaults or Events of Default existing and disclosed or otherwise known to the Holders on or prior to the Third Restatement Closing Date (the “Existing Defaults”). Nothing in this Section 3.3 shall constitute a waiver of compliance by Borrowers or any other Credit Party or any agreement to waive or forbear with respect to any future Event of Default in any other circumstances for any period after the Third Restatement Closing Date or waive compliance by Borrowers or any other Credit Party with any other term, provision or condition of this Agreement, any other Operative Document or any other instrument or agreement referred to therein.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3.4 Amendments to Notes. The parties agree to amend and restate each Note issued prior to the date hereof in the form substantially attached hereto as Exhibit A.

3.5 Amendment to Warrants. The parties agree to amend and restate each Warrant issued prior to the date hereof that was not issued as an Incremental Replacement Warrant in the form substantially attached hereto as Exhibit B-1. The parties agree to amend and restate each Incremental Replacement Warrant issued prior to the date hereof in the form substantially attached hereto as Exhibit B-2.

ARTICLE IV CONDITIONS TO CLOSING BY THE PURCHASERS

4.1 Prior Advances. The obligation of the Purchasers to make Advances prior to the date hereof was subject to certain terms and conditions, which were set forth in Article IV of the Existing Agreement. Such terms and conditions are incorporated by reference herein to the extent they remain applicable as of the Third Restatement Closing Date.

4.2 Third Restatement Closing. The waivers of the Existing Defaults as set forth in Section 3.3 and the amendments contemplated hereby shall become effective subject to the fulfillment of each of the following conditions on or prior to the Third Restatement Closing Date in a manner, form and substance reasonably satisfactory to the Gotham Purchasers:

(a) The Credit Parties shall have delivered this Agreement and the Third Restatement Operative Documents to the Holders and the Collateral Agent, duly executed by the Borrowers and the Credit Parties, on or prior to the Third Restatement Closing Date;

(b) The Borrowers shall have delivered on the Third Restatement Closing Date the Amended and Restated Notes, Third Restatement Warrants and Third Restatement Replacement Warrants duly executed by the Borrowers and the Company, respectively, to the Purchasers;

(c) The Purchasers shall have delivered evidence reasonably satisfactory to the Company that the Warrants issued prior to the date hereof which were required to be cancelled in connection with the issuance of Incremental Replacement Warrants under the Existing Agreement have been canceled, and that a corresponding proportional number of such Warrants are canceled in connection with the issuance of Warrants described in clause (b) of the definition of Third Restatement Replacement Warrants (as though they had been required to be canceled in accordance with the Existing Agreement).

(d) The Purchasers shall have delivered evidence reasonably satisfactory to the Company that the Notes issued prior to the date hereof which were required to be cancelled in connection with the issuance of Amended and Restated Notes hereunder have been canceled.

(e) The Credit Parties shall have paid or reimbursed the Purchasers and Collateral Agent for all fees and expenses incurred by the Purchasers and Collateral Agent on or prior to the Third Restatement Closing Date which are payable or reimbursable by the Company under the Operative Documents and which have not yet been paid;

(f) The Credit Parties shall have delivered to the Purchasers copies of each of the following on or before the Third Restatement Closing Date, in each case, certified to be in full force and effect on the Third Restatement Closing Date or unchanged since the last copy certified as required under this Agreement, in each case by the general partner, secretary, assistant secretary or other officer or manager of such Credit Party and in form and substance satisfactory to the Purchasers:

(i) the certificate of incorporation or certificate of formation, as applicable, of such Credit Party as of the Third Restatement Closing Date, certified by the Secretary of State of the State under the laws of which such Credit Party is incorporated or organized as of a recent date prior to the Third Restatement Closing Date;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (ii) the limited partnership agreement, by-laws or operating agreement, as applicable, of such Credit Party as of the Third Restatement Closing Date; and

(iii) resolutions of the general partner, board of directors and/or board of managers, and, if necessary, the resolution of the partners, stockholders or members, as applicable, of such Credit Party, authorizing the execution, delivery and performance of the Third Restatement Operative Documents and the Amended and Restated Notes to which such Credit Party is a party and the transactions contemplated hereby.

(g) The representations and warranties of the Credit Parties contained in ARTICLE V hereof and in the other Operative Documents shall be true and correct as of the Third Restatement Closing Date as if made on the Third Restatement Closing Date (except to the extent expressly made as of a prior date (other than the Closing Date, Restatement Closing Date or Second Restatement Closing Date, which shall be read to be the Third Restatement Closing Date), in which case such representations and warranties shall be true and correct as of such earlier date), with exceptions to the foregoing being disclosed to the Purchasers in the form of updated Schedules to this Agreement; provided that any such exception does not represent a change occurring since the Closing Date, Restatement Closing Date or Second Restatement Closing Date, as applicable or an event or circumstance which the Credit Parties failed to disclose in the Schedules hereto on the Closing Date, Restatement Closing Date or Second Restatement Closing Date, as applicable, that has resulted or could reaonably be expected to result in a Material Adverse Effect;

(h) Each Credit Party shall have performed and complied with all of the terms, covenants, agreements and conditions to be performed or complied with by it on or prior to the Third Restatement Closing Date (other than any failure to perform or comply with such terms, covenants, agreements and conditions which the Purchasers have waived in writing), and, to the extent that any schedules hereto are incomplete or inaccurate as of the Third Restatement Closing Date, the Credit Parties shall deliver updated schedules;

(i) After giving effect to the Purchasers’ waiver of the Existing Defaults granted on the Third Restatement Closing Date, no Default or Event of Default shall have occurred and be continuing, or would result from, the parties execution, delivery or performance of this Agreement or the Third Restatement Operative Documents;

(j) To the extent that the Perfection Certificate last delivered to Purchasers by the Credit Parties is incomplete or inaccurate as of the Third Restatement Closing Date, the Credit Parties shall execute and deliver to the Purchasers an updated Perfection Certificate on or before the Third Restatement Closing Date; and

(k) The Company and the other Borrowers shall have executed and delivered to the Purchasers a certificate executed by a Responsible Officer of the Company and the other Borrowers, dated as of the Third Restatement Closing Date, as to the satisfaction of the applicable conditions set forth in this Section 4.2.

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

Each Credit Party hereby represents and warrants to the Purchasers as set forth below, and acknowledges that the Purchasers are entering into this Agreement and the other Operative Documents in reliance on the truth and accuracy of such representations and warranties. For purposes of this Agreement, except as otherwise specifically provided in this Agreement, all representations and warranties in this ARTICLE V shall be deemed to be made on the Third Restatement Closing Date.

5.1 Existence and Power. Each Credit Party: (a) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated, amalgamated, continued, formed or organized as the case may be; (b) has the corporate, limited liability company or limited partnership (as applicable) power and capacity and all governmental licenses, authorizations, consents and approvals to (i) own its assets and properties and carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification (except where the failure to do so would not reasonably be expected to have a Material Adverse Effect),

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and (ii) execute, deliver, and perform its obligations under, the Operative Documents to which it is a party; and (c) is in compliance in all material respects with all Laws other than Excluded Laws.

5.2 Authorization; No Contravention; Equity Interests.

(a) The execution, delivery and performance by each Credit Party of this Agreement, and by each Credit Party of each other Operative Document to which such Person is a party, have been duly authorized by all necessary corporate, partnership or limited liability company action, as applicable, and do not: (i) contravene the terms of any of such Person’s Organization Documents; (ii) conflict with or result in any breach or contravention of any document evidencing any Contractual Obligation to which such Person is a party, except where such conflict, breach or contravention would not reasonably be expected to result in a Material Adverse Effect; (iii) conflict with or result in any breach or contravention of any order, injunction, writ or decree of any Governmental Authority to which such Person or its Property is subject; (iv) violate any Law applicable to such Credit Party; or (v) result in the creation of any Lien on any asset or property of any Credit Party, other than Liens in favor of the Collateral Agent for the benefit of the Holders.

(b) As of the Third Restatement Closing Date, Schedule 5.2 sets forth the authorized and issued securities of each Credit Party and each Subsidiary after giving effect to the consummation of the transactions contemplated by this Agreement. All issued and outstanding securities of each Credit Party and each Subsidiary (to the extent applicable) are duly authorized and validly issued and fully paid, and where applicable, non-assessable, and (excluding any Permitted Liens or Liens with respect to Excluded Subsidiaries) free and clear of all Liens other than Permitted Liens, and such securities were issued in compliance with all applicable state, provincial and federal laws concerning the issuance of securities. As of the Third Restatement Closing Date, (i) all of the issued and outstanding securities of each Credit Party and each Subsidiary other than the Company and Holdings, are owned by the Credit Parties or their Subsidiaries in the amounts set forth on Schedule 5.2 and (ii) the total amount, but specifying the class, series or type, as applicable, of issued and outstanding securities of the Company and Holdings are set forth on Schedule 5.2, along with a list of all Persons who, whether individually or in a group of Affiliated Persons, to the Company’s knowledge, beneficially own more than ten percent (10%) of the voting rights attached to the issued and outstanding securities of the Company or Holdings. As of the Third Restatement Closing Date, except as set forth on Schedule 5.2, there are no pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any shares of any such Person.

5.3 Governmental Authorization. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the execution, delivery, and performance of its obligations under, the Operative Documents to which it is a party, the receipt of the extensions of credit hereunder, the performance by the Credit Parties of the Operative Documents, the perfection or maintenance of the Liens created under the Security Agreement or the exercise by the Holders of their rights under the Operative Documents or remedies in respect of the Collateral, except for (a) the filing of Uniform Commercial Code financing statements (with respect to Credit Parties formed in the U.S.) and filings under the Personal Property Security Act (with respect to Credit Parties formed in Canada), (b) recordation of Mortgages, (c) such as have been made or obtained and are in full force and effect or is reasonably expected to be timely made or obtained and be in full force and effect, (d) such actions, consents and approvals the failure of which to be obtained or made would not reasonably be expected to have a Material Adverse Effect, (e) filings or other actions listed on Schedule 5.3, and (e) as may be limited by any Excluded Laws. Each Credit Party and each Subsidiary is in compliance with all Laws, orders, regulations and ordinances of all Governmental Authorities relating to its business, operations and assets, except where the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5.4 Binding Effect. Each Operative Document to which any Credit Party or Subsidiary is a party constitutes the legal, valid and binding obligations of each Credit Party and each Subsidiary that is a party thereto, enforceable against such Person in accordance with their respective terms, except as enforceability may be limited by Excluded Laws or applicable Debtor Relief Laws or by equitable principles relating to enforceability.

5.5 Litigation. Except as set forth on Schedule 5.5, (a) there are no actions, suits, judgments, investigations, inquires or proceedings of any kind whatsoever outstanding (whether or not purportedly on behalf of any such Person), or, to the knowledge of the Company, pending or threatened, against or affecting any Credit Party or any of their respective directors or officers, at law or in equity or before or by any Governmental Authority of any kind whatsoever and, to the knowledge of the Company, there is no basis therefor, and none of the Credit Parties is subject to any judgment, order, writ, injunction, decree, award, rule, policy or regulation of any Governmental Authority which in the case of any of the foregoing, either individually or in the aggregate, could reasonably be expected to have Material Adverse Effect or could materially and adversely affect the ability of the Company or any Credit Party to perform its obligations under any Operative Document; and (b) to the Company’s knowledge, there are no actions, suits, judgments, investigations, inquires or proceedings of any kind whatsoever outstanding (whether or not purportedly on behalf of any such Person), or, to the knowledge of the Company, pending or threatened, against or affecting any Cannabis License Holder or any of their respective directors or officers, at law or in equity or before or by any Governmental Authority of any kind whatsoever and, to the knowledge of the Company, there is no basis therefor, and, to the Company’s knowledge, none of the Cannabis License Holders is subject to any judgment, order, writ, injunction, decree, award, rule, policy or regulation of any Governmental Authority which, either separately or in the aggregate, could reasonably be expected to have Material Adverse Effect, could adversely affect the ability of the Cannabis License Holder to perform its obligations under any Material Agreement in any material respect, could result in the revocation or modification of any certificate, authority, Cannabis License or other Permit necessary to conduct the business now owned or operated by any such Person which, if the subject of an unfavorable decision, ruling or finding could reasonably be expected to have a Material Adverse Effect and, to the knowledge of the Company, no such legal or governmental proceedings or inquiries have been threatened against or are contemplated with respect to any Credit Party or their property or assets which, either separately or in the aggregate, could reasonably be expected to have Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement, any other Operative Document or directing that the transactions provided for herein or therein not be consummated as herein or therein provided.

5.6 Compliance with Laws.

(a) Neither any Credit Party nor any Subsidiary or their respective properties or assets is in violation of (nor will the continued operation of their material properties and assets as currently conducted violate) any Law (other than any Excluded Law) or any restriction of record or agreement affecting any Mortgaged Property, or is in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) The Company is a reporting issuer in good standing under the Canadian Securities Laws and is in material compliance with the requirements of such Canadian Securities Laws and is not included in a list of defaulting issuers maintained by the Securities Commissions. The outstanding Shares are listed and posted for trading on the CSE, and all necessary notices and filings have been made or will be made with, the CSE to ensure that the Shares to be issued as described in the Operative Documents, including, without limitation, the Shares issuable upon conversion of the Notes and exercise of the Warrants, will be listed and posted for trading on the CSE upon their issuance.

(c) No order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of the Credit Party has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by any Governmental Authority.

(d) The Company is in compliance in all material respects with its continuous and timely disclosure obligations under applicable Securities Laws and the policies of the CSE or any other exchange on which the Shares

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document are traded, and has filed all documents required to be filed by it with the Securities Commissions under applicable Securities Laws, and no document has been filed on a confidential basis with the Securities Commissions that remains confidential at the date hereof. None of the documents filed in accordance with applicable Canadian Securities Laws contained, as at the date of filing thereof, a misrepresentation.

(e) No Securities Commission, stock exchange or comparable authority has issued any order preventing the distribution of the Shares nor instituted proceedings for that purpose, nor is any such proceeding pending, and, to the knowledge of the Company, no such proceedings are pending or contemplated.

(f) Neither the Company nor any of its Subsidiaries, any employee or agent thereof, has made any unlawful contribution or other payment to any official of, or candidate for, any federal, state, provincial or foreign office, or failed to disclose fully any contribution, in violation of any law, or made any payment to any foreign, Canadian, governmental officer or official, or other Person charged with similar public or quasi-public duties, other than payments required or permitted by applicable Laws.

(g) The Company has provided to the Purchasers copies of all Cannabis Licenses and other Permits to the extent requested by the Purchasers. Each Credit Party, each of its Subsidiaries and, to the Company’s knowledge, each Cannabis License Holder is in compliance in all material respects with all Cannabis Laws that are applicable to such Person and its businesses and all Cannabis Licenses. None of the Credit Parties, no Subsidiary and, to the Company’s knowledge, no Cannabis License Holder or their respective properties or assets is in violation of (nor will the continued operation of their material properties and assets as currently conducted violate) any Cannabis Law in any material respect, or is in default with respect to any judgment, writ, injunction or decree of any Governmental Authority with respect to any Cannabis Law in any material respect. Neither any Credit Party nor any Subsidiary has received any notice or communication from any Person or Governmental Authority in the United States or any state or municipality thereof alleging a material defect, default, violation, breach or claim in respect of any of its or their Cannabis Licenses. To the knowledge of the Company, all product research and development activities, including quality assurance, quality control, testing, and research and analysis activities, conducted by any Credit Party, any Subsidiary, and, to the Company’s knowledge, any Cannabis License Holder, in connection with their business is being conducted in compliance, in all material respects, with all industry, laboratory safety, management and training standards applicable to its current and proposed business, and all such processes, procedures and practices, required in connection with such activities are in place as necessary and are being complied with, in all material respects.

(h) The Company, each other Credit Party, each Subsidiary and, to the Company’s knowledge, each Cannabis License Holder has security measures and safeguards in place to protect personal information it collects from registered patients and customers and other parties from illegal or unauthorized access or use by its personnel or third parties or access or use by its personnel or third parties in a manner that violates the privacy rights of third parties. The Company, the Credit Parties and, to the knowledge of the Company, each Cannabis License Holder, have complied, in all material respects, with all applicable privacy and consumer protection legislation and none has collected, received, stored, disclosed, transferred, used, misused or permitted unauthorized access to any information protected by privacy laws, whether collected directly or from third parties, in an unlawful manner.

5.7 No Event of Default. No Event of Default exists or would result from the issuance of the Notes or the incurrence of any other Obligations by any Credit Party. Neither any Credit Party nor any Subsidiary is in default under or with respect to any Contractual Obligation which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect. No Credit Party knows of any dispute regarding any Contractual Obligation of any Credit Party or Subsidiary that could reasonably be expected to have a Material Adverse Effect. In addition to the foregoing, the Credit Parties hereby represent and warrant that they have no knowledge of any Defaults or Events of Default as of the Third Restatement Closing Date other than those that have been disclosed by the Credit Parties to the Holders prior to the Third Restatement Closing Date.

5.8 ERISA/Canadian Pension Plan Compliance. No steps have been taken to terminate any Pension Plan or any Canadian Pension Plan. No contribution failure under Section 430 of the Code, Section 303 of ERISA or the terms of any Pension Plan has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 303(k) of ERISA or Section 430(k) of the Code. The minimum funding standard under Section 412(a) of the Code

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and Section 302(a) of ERISA has been met with respect to each Pension Plan and the equivalent funding requirements and other assessments under applicable Canadian federal and provincial Laws have been met and paid with respect to each Canadian Pension Plan, and no condition exists or event or transaction has occurred with respect to any Pension Plan or Canadian Pension Plan which could reasonably be expected to result in the incurrence by any Credit Party of any material liability, fine or penalty. All contributions (if any) have been made to any Multiemployer Pension Plan that are required to be made by any Credit Party or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable law; neither any Credit Party nor any member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could reasonably be expected to result in a withdrawal or partial withdrawal from any such plan, and neither any Credit Party nor any member of the Controlled Group has received any notice that that increased contributions may be required to any Multiemployer Pension Plan to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Sections 412 or 431 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.

5.9 Use of Proceeds; Margin Regulations. The proceeds of the Notes are intended to be and shall be used solely for the purposes set forth in and permitted by Section 7.10, and are intended to be and shall be used in compliance with this Agreement. Neither any Credit Party nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. Proceeds of the Notes shall not be used for the purpose of purchasing or carrying Margin Stock.

5.10 Title to Properties.

(a) As of (i) the Closing Date, (ii) the date on which any Material Real Property is acquired or leased by any Credit Party or a Subsidiary and (iii) the applicable date of the delivery of each Mortgage, each of the Credit Parties has or will have, excluding any option or other obligation to sell under the Treehouse REIT Documents, (A) good and marketable fee simple title to, or valid leasehold interests in, or easements or other limited property interests in, all its Material Real Properties and (B) good title to its personal property and assets, in each case, except for Permitted Liens. The Mortgaged Properties are free from defects that materially adversely affect, or could reasonably be expected to materially adversely affect, the Mortgaged Properties’ suitability, taken as a whole, for the purposes for which they are contemplated to be used (as contemplated under the Operative Documents). Each parcel of real property and the use thereof (as contemplated under the Operative Documents) complies in all material respects with all applicable Laws (including building and zoning ordinances and codes, but excluding Excluded Laws) and with all insurance requirements except such failure which could not reasonably be expected to have a Material Adverse Effect.

(b) (i) Each Credit Party has complied in all material respects with all obligations under all material leases to which it is a party, (ii) all leases to which it is a party are legal, valid, binding and in full force and effect and are enforceable in accordance with their terms, except where such failure could not reasonably be expected to have a Material Adverse Effect, and (iii) neither any Credit Party nor any of its Subsidiaries has defaulted, or with the passage of time would be in default, under any leases to which it is a party, except for such defaults as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Credit Party enjoys peaceful and undisturbed possession under the leases to which it is a party, except for leases in respect of which the failure to enjoy peaceful and undisturbed possession could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim is being asserted or, to the knowledge of the Company, threatened, with respect to any lease payment under any lease other than any such Lien or claim that could not reasonably be expected to have a Material Adverse Effect.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (c) None of the Credit Parties have received any written notice of, nor is there, to the knowledge of Company, any pending, threatened or contemplated condemnation proceeding affecting any portion of the Mortgaged Properties in any material respect or any sale or disposition thereof in lieu of condemnation.

(d) None of the Credit Parties is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein, other than as set forth in the Treehouse REIT Documents.

(e) Each Mortgaged Property is served by installed, operating and adequate water, electric, gas, telephone, sewer, sanity sewer, storm drain facilities and other public utilities necessary for the uses contemplated under the Operative Documents to the extent required by applicable Law, except such failure to be served that would not reasonably be expected to cause a Material Adverse Effect.

5.11 Taxes. Each Credit Party and each Subsidiary has filed all Tax returns and reports required to be filed, and has paid all Taxes, assessments, fees and other governmental charges levied or imposed upon it or its Properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently prosecuted and for which adequate reserves have been provided in accordance with IFRS or GAAP, as applicable. There is no Tax assessment proposed in writing by a Governmental Authority against any Credit Party or any Subsidiary that would, if the assessment were made, be reasonably expected to have a Material Adverse Effect.

5.12 Financial Condition.

(a) Credit Parties have delivered to the Purchasers the audited annual financial statements of the Company dated as of June 30, 2020 and June 29, 2019, respectively, including the statement of financial position and the related statements of operations and comprehensive loss as of and for the periods then ended (the “Last Audited Financial Statements”), and the unaudited quarterly financial statements of the Company dated as of September 30, 2020, including the statement of financial position and the related statements of operations and comprehensive loss as of and for the periods then ended (the “Last Unaudited Financial Statements” and, with the Last Audited Financial Statements, collectively, the “Company Historical Financial Statements”).

(b) The Company Historical Financial Statements have been prepared in accordance with IFRS consistently applied during the periods involved (except for normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be material)). The Company Historical Financial Statements fairly present in all material respects the assets, liabilities and financial position of the Company and its results of operations and changes in financial position and cash flows as of the respective dates and for the periods specified, all in accordance with IFRS consistently applied during the periods involved. The Company Historical Financial Statements are consistent with the books and records of the Company, which books and records are accurate and complete in all material respects. The Company has made and kept true, correct and complete books and records and accounts, which accurately and fairly reflect, in reasonable detail, the activities of the Company in all material respects and which have been maintained in accordance with sound business practices and applicable law. There has been no material change in the accounting methods or practices of the Company since the earliest date covered by the Company Historical Financial Statements, except as disclosed therein or in subsequent financial statements forming part of the Company Public Disclosure Record.

(d) Neither any Credit Party nor any Subsidiary has any Indebtedness (other than Indebtedness permitted pursuant to Section 8.2) or any Contingent Obligations (other than Contingent Obligations permitted pursuant to Section 8.8) other than as set forth in the Last Unaudited Financial Statements. Pro forma consolidated statement of financial position of the Company and its Subsidiaries as of the Third Restatement Closing Date after giving effect to the issuance of the Notes (the “Pro Forma Balance Sheet”) but not any application of the proceeds have been delivered to the Purchasers. The Pro Forma Balance Sheet presents fairly in all material respects, the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document estimated financial position of the Company and the Subsidiaries in accordance with IFRS as of the Third Restatement Closing Date.

(e) The Company’s auditors, who audited the Last Audited Financial Statements (as applicable) and who provided their audit report thereon, are independent public accountants as required under applicable securities Laws and there has never been a reportable event (within the meaning of NI 51-102) between the Company and the Company’s auditors.

(f) Except as set forth in Schedule 5.12 or the Company Public Disclosure Record, none of the directors, officers or employees of the Company or any of its Subsidiaries or any person who owns, directly or indirectly, more than ten percent (10%) of any class of securities of the Company or Holdings or securities of any person exchangeable for more than ten percent (10%) of any class of securities of the Company or Holdings, or to the knowledge of the Company, any associate or affiliate of any of the foregoing had or has any material interest, direct or indirect, in any transaction or any proposed transaction with the Company or Holdings or any of either of their Subsidiaries.

5.13 Environmental Matters. The operations of each Credit Party and each Subsidiary comply in all respects with all Environmental Laws, except where the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Credit Party and each Subsidiary has obtained all licenses, permits, authorizations and registrations required under any Environmental Law (“Environmental Permits”) and necessary for its respective Ordinary Course of Business, all such Environmental Permits are in good standing, and each Credit Party and each Subsidiary is in compliance with all material terms and conditions of such Environmental Permits, except whether the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Neither any Credit Party nor any Subsidiary, nor any of their respective Property or operations, is subject to any outstanding written order from or agreement with any Governmental Authority, or subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material. Neither any Credit Party nor any Subsidiary has received any written notice that alleges any of them is in violation of or potentially liable under any Environmental Laws which could reasonably be expected to have a Material Adverse Effect. There are no Hazardous Materials or other environmental conditions or circumstances existing with respect to any real Property owned, leased or operated by any Credit Party or any Subsidiary, or, to each Credit Party’s knowledge, arising from operations thereon prior to the Closing Date, except where such Hazardous Materials or other environmental conditions or circumstances, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. In addition, neither any Credit Party nor any Subsidiary has any underground storage tanks that are (a) not properly registered or permitted under applicable Environmental Laws or (b) to each Credit Party’s knowledge, leaking or releasing Hazardous Materials, except where such failure to register, leaks or releases of Hazardous Materials could not reasonably be expected to have a Material Adverse Effect.

5.14 Operative Documents. All representations and warranties of each Credit Party or any other party (other than the Purchasers and the Collateral Agent) to any Operative Document contained in any Operative Document are true and correct in all material respects (except to the extent such representations and warranties expressly refer to a specific date, in which case they are true and correct in all material respects as of such date).

5.15 Regulated Entities. None of any Credit Party, any Subsidiary or any Person controlling any such Person is (a) an “investment company” or required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness.

5.16 Labor Relations. Except where any non-compliance could not reasonably be expected to have a Material Adverse Effect, (a) the Company and each of its Subsidiaries is in compliance with all Laws respecting employment and employment practices, terms and conditions of employment, pay equity and wages, including, without limitation, the U.S. Fair Labor Standards Act, and neither the Company nor any of its Subsidiaries has engaged in any unfair labour practice, (b) the Company and each of its Subsidiaries has complied with all applicable Laws relating to work

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document authorization and immigration and (c) all payments due from the Company or any of its Subsidiaries on account of employee wages and health and welfare and other benefits insurance have been paid or accrued as a liability on the books of the relevant Person. Except as set forth in Schedule 5.16, there are no strikes, lockouts or other general labor disputes against any Credit Party or any Subsidiary, or, to each Credit Party’s knowledge, threatened against or affecting any Credit Party or any Subsidiary, and no significant unfair labor practice complaint is pending against any Credit Party or any Subsidiary or, to the knowledge of each Credit Party, threatened against any Credit Party or any Subsidiary before any Governmental Authority.

5.17 Copyrights, Patents, Trademarks and Licenses, Etc. Schedule 5.17 identifies as of the Third Restatement Closing Date (a) all material United States, state and foreign patents, trademarks, service marks, trade names and copyrights, and all registrations and applications for registration thereof and all licenses thereof, owned or held by any Credit Party or any Subsidiary (other than off-the-shelf licensed software), (b) any material licenses granted to third parties for the use of such intellectual property and (c) the jurisdictions in which such registrations and applications have been filed. Except as otherwise disclosed in Schedule 5.17, each Credit Party and each Subsidiary is the sole beneficial owner of, or has the right to use, free from any Lien (other than Liens in favor of the Collateral Agent for the benefit of the Holders) or other restrictions, claims, rights, encumbrances or burdens (other than customary restrictions in connection with commercially licensed software), the intellectual property identified on Schedule 5.17 and all other processes, designs, formulas, computer programs, computer software packages, trade secrets, inventions, product manufacturing instructions, technology, research and development, know-how and all other intellectual property that are necessary and material for the operation of each Credit Party’s and each Subsidiary’s businesses as being operated on the Third Restatement Closing Date. Each patent, trademark, service mark, trade name, copyright and license listed on Schedule 5.17 is in full force and effect. Except as set forth in Schedule 5.17, to the knowledge of each Credit Party (i) none of the present or contemplated products or operations of any Credit Party or any Subsidiary infringes upon any patent, trademark, service mark, trade name, copyright, license of intellectual property or other right owned by any other Person, and (ii) there is no pending or, to the knowledge of each Credit Party, threatened claim or litigation against or affecting any Credit Party or any Subsidiary contesting the right of any of them to manufacture, process, sell or use any such product or to engage in any such operation.

5.18 Subsidiaries. None of the Credit Parties owns any direct or indirect Subsidiaries or Equity Interests in any other Person other than those set forth on Schedule 5.18.

5.19 Brokers’ Fees; Transaction Fees. Neither any Credit Party nor any Subsidiary has any obligation to any Person in respect of any finder’s fee, broker’s commission or investment banker’s fee or other similar fee in connection with the transactions contemplated hereby, other than fees payable under any Operative Document or those set forth on Schedule 5.19.

5.20 Insurance. Each Credit Party and each Subsidiary and their respective Properties are insured with financially sound and reputable insurance companies which are not Affiliates of any Credit Party or any Subsidiary, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar Properties in localities where any Credit Party or any Subsidiary operates. A true and complete listing of such insurance, including issuers, coverages and deductibles, has been provided to the Purchasers.

5.21 Material Facts Disclosed. None of the representations or warranties made by any Credit Party in the Operative Documents as of the date such representations and warranties were made or deemed made, and none of the statements contained in each exhibit, report, statement or certificate furnished by or on behalf of any Credit Party in connection with the Operative Documents (including offering and disclosure materials, if any, delivered by or on behalf of any Credit Party to the Purchasers prior to the Closing Date) contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading as of the time when made or delivered in light of the circumstances at the time made; provided, that with respect to any forecasts or projections delivered to the Purchasers, each Credit Party represents only that such information was prepared in good faith based upon assumptions believed to be fair and reasonable at the time in light of current market conditions and that such forecasts or projections are

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document not to be viewed as facts, and that the actual results during such period or periods covered by any such forecasts or projections may differ significantly from projected results.

5.22 Anti-Terrorism Laws. No Credit Party, nor to each Credit Party’s knowledge, any Affiliate of any Credit Party, or brokers or other agents of any such Person acting or benefiting in any capacity in connection with the Notes or other Obligations: (a) is in violation of any applicable Laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, signed into law October 26, 2001 (the “USA Patriot Act”); (b) is a Person: (i) that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) that is owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) with which the Purchasers are prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order or has done so or plans to do so; or (v) that is named as a “specially designated national and blocked person” on the most current list published by the USA Treasury Department Office of Foreign Assets Control (“OFAC”) at its official website or any replacement website or other replacement official publication of such list; (c) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in clause (b) above; (d) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (e) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

5.23 Solvency; Separate Entities. The Credit Parties, taken as a whole and after giving effect to the transactions occurring on or about the Third Restatement Closing Date, including the Evanston Sale, are able to pay their debts and obligations as they become due. Each Credit Party which currently has any operations maintains a separate bank account to the extent possible based on the circumstances applicable to each Credit Party. Each Credit Party that currently does not have operations and does not have a separate bank account hereby covenants and agrees that prior to beginning any operations, such Credit Party shall use its best efforts open a separate bank account for itself. The Credit Parties use their best efforts not to comingle their assets and maintain separate ownership of such assets. Each Credit Party separately maintains sufficient capital and liquid resources to operate its business.

5.24 Security Documents.

(a) The Security Agreement and Company Security Agreements will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent for the benefit of Holders, legal, valid and enforceable first priority Liens (other than with respect to Liens on the property, assets or Equity Interests of the Hankey Subsidiaries and Installment Sale Subsidiaries) on, and security interests in, the collateral described therein to the extent intended to be created thereby, and (i) when financing statements and other filings in appropriate form are filed in each applicable filing office for each applicable jurisdiction and (ii) upon the taking of possession or control by the Collateral Agent for the benefit of the Holders of such collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent for the benefit of the Holders to the extent possession or control by the Collateral Agent is required by the Security Agreement), the Liens created by the Security Agreement and Company Security Agreements shall constitute fully perfected first- priority Liens (other than with respect to Liens on the property, assets or Equity Interests of the Hankey Subsidiaries and Installment Sale Subsidiaries) on, and security interests in (to the extent intended to be created thereby), all right, title and interest of the grantors in such collateral to the extent perfection can be obtained by filing financing statements or the taking of possession or control, in each case subject to no Liens other than Permitted Liens and Excluded Laws.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Upon recording thereof in the appropriate recording office, each Mortgage is effective to create, in favor of the Collateral Agent for the benefit of the Holders, legal, valid and enforceable perfected Liens on, and security interest in, all of the Credit Parties’ right, title and interest in and to the Mortgaged Properties and the proceeds thereof, subject only to Permitted Liens, and when the Mortgages are filed in the appropriate recording office, the Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Credit Parties in the Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other Person, other than Permitted Liens.

5.25 Material Agreements.

(a) The Company has provided to the Purchasers a copy of each Material Agreement. None of the Credit Parties has received any notification from any party that it intends to terminate any such agreement, and there is no default or event of default by a Credit Party under any such agreement which could reasonably be expected to have a Material Adverse Effect.

(b) Each of the Material Agreements and other documents and instruments pursuant to which any Credit Party holds its Investments, property or assets and conducts its business is a valid and subsisting agreement, document and instrument in full force and effect, enforceable in accordance with the terms thereof, none of the Credit Parties or any other party thereto is in default of any of the provisions of any such agreements, instruments or documents nor has any such default been alleged, and such Investments and assets are in good standing under applicable Laws, except for any of the foregoing which could not reasonably be expected to have a Material Adverse Effect.

5.26 Survival. All representations and warranties contained in this Agreement or any of the other Operative Documents shall survive the execution and delivery of this Agreement.

5.27 Private Offering. Assuming the accuracy and validity of representations of the Purchasers in ARTICLE VI, no registration of the Notes or Warrants pursuant to the provisions of any Securities Law will be required in connection with the offer, sale or issuance of the Notes or Warrants pursuant to this Agreement. The Credit Parties have not, directly or indirectly, offered, sold or solicited any offer to buy, and the Company will not, directly or indirectly, offer, sell or solicit any offer to buy, any security of a type or in a manner which would be integrated with the sale of the Notes or Warrants and require the Notes or Warrants to be registered under any Securities Laws. None of the Credit Parties, their Affiliates or any Person acting on its or any of their behalf (other than the Purchasers and the Collateral Agent, as to whom the Credit Parties make no representation or warranty) has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the offering of the Notes. Each Credit Party covenants and agrees that neither it, nor anyone acting on its behalf, will offer or sell the Notes or any other security so as to require the registration of the Notes pursuant to the provisions of the Securities Act or any state securities or “blue sky” laws, unless such Notes are so registered. The Notes shall be issuable only in registered form without coupons and in any denomination a Holder may request.

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser, for itself only and not on behalf of any other subsequent Holder of the Notes, represents and warrants on behalf of itself, to the Company as follows:

6.1 Purchase for Investment. Such Purchaser acquired the Notes for investment for its own account and not with a view to the resale of all or any part thereof in any transaction that would constitute a “distribution” within the meaning of Canadian Securities Laws; provided, however, the disposition of such Purchaser’s property shall at all times be and remain in its control, subject to applicable Laws, including those related to insider trading.

6.2 Investor Qualifications. Such Purchaser (a) is an “accredited investor” (as defined in Regulation D promulgated by the Commission and as defined in NI 45-106), (b) is able to bear the economic risk of its investment in the Notes, (c) acknowledges that neither the Notes nor the Warrants have been or will be registered under the U.S.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Securities Act and therefor are or will be subject to certain restrictions on transfer unless registered for resale or subject to an exempt transaction under the U.S. Securities Act and any applicable state securities law and the Company is not under any obligation to file a registration statements with the Commission with respect to the Notes, the Warrants or any of the underlying Shares, and (d) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the Company and the Notes. Such Purchaser is not an entity formed solely to make this investment. Each Purchaser is an U.S. Accredited Investor and is acquiring the Notes and Warrants for its own account, and for investment and not with a view to any resale, distribution or other disposition of the Notes, Warrants, or Shares in violation of United States federal or state securities Laws, and each Purchaser has so indicated by checking the appropriate category on the U.S. Accredited Investor certificate delivered to the Borrowers which so describes it and acknowledges that by signing this Agreement it is certifying that the statements made by checking the appropriate U.S. Accredited Investor category are true.

6.3 Fees and Commissions. Such Purchaser has not retained any finder, broker, agent, financial advisor or other intermediary in connection with the transactions contemplated by this Agreement.

6.4 Power, Authority and Authorization.

(a) Such Purchaser is a corporation, limited partnership or limited liability company, as the case may be, validly exiting under the laws of the jurisdiction of its incorporation or formation, as the case may be. Such Purchaser has full power, capacity and authority to enter into and perform its obligations under this Agreement and each of the Operative Documents in accordance with its terms.

(b) This Agreement and each other Operative Document to be executed and delivered by a Purchaser has been duly authorized, executed and delivered by such Purchaser and constitutes a valid and binding obligation of such Purchaser enforceable against it in accordance with its terms subject, however, to the customary limitations with respect to Debtor Relief Laws and with respect to the availability of equitable remedies.

(c) The execution, delivery and performance by each Purchaser of this Agreement and each other Operative Document to which such Person is a party, have been duly authorized by all necessary corporate, partnership or limited liability company action, as applicable, and do not: (i) contravene the terms of any of such Person’s Organization Documents; (ii) conflict with or result in any breach or contravention of any document evidencing any Contractual Obligation to which such Person is a party, except where such conflict, breach or contravention would not reasonably be expected to result in a Material Adverse Effect; (iii) conflict with or result in any breach or contravention of any order, injunction, writ or decree of any Governmental Authority to which such Person or its Property is subject; or (iv) violate any Law applicable to such Purchaser.

6.5 Acknowledgements Regarding Notes. Each Purchaser acknowledges and agrees that:

(a) no securities commission or similar regulatory authority has reviewed or passed on the merits of the Notes, Warrants, Shares or Warrant Shares;

(b) there are risks associated with the purchase of the Notes and Warrants, and each Purchaser has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and it is able to bear the economic risk of loss of its investment;

(c) the Notes and Warrants are being offered for sale only on a “private placement” basis and that the sale and delivery of the Notes and Warrants are conditional upon such sale being exempt from the requirements as to the filing of a prospectus or delivery of an offering memorandum (and no such document has been provided to, or requested by, the Purchaser) or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or delivering an offering memorandum and, as a consequence (i) it is restricted from using most of the civil remedies available under applicable Canadian Securities Laws; (ii) it may not receive information that would otherwise be required to be provided to it under applicable Canadian Securities Laws; and (iii) the Company is relieved from certain obligations that would otherwise apply under applicable Canadian Securities Laws;

(d) the Company has advised each Purchaser, that the Company is relying on an exemption from the requirements to provide each Purchaser with a prospectus under the Securities Act (Ontario) and other applicable Canadian Securities Laws;and, as a consequence of acquiring the Notes and Warrants pursuant to this exemption, certain protections, rights and remedies provided by the Securities Act (Ontario) and applicable Canadian Securities Laws, including statutory rights of rescission or damages, will not be available to them; and

(e) each Purchaser acknowledges that the Operative Documents require it to provide certain Personal Information to the Company. Such information is being collected and will be used by the Company for the purposes of completing the proposed issuance and sale of the Notes and Warrants, which includes, without limitation, determining the Purchasers’ eligibility to purchase such securities under applicable Laws and preparing and registering certificates representing the Notes and Warrants, and the underlying securities issuable upon exercise or conversion thereof. Each Purchaser agrees that its Personal Information may be disclosed by the Company to: (a) applicable securities regulatory authorities and the CSE, (b) the Company’s registrar and transfer agent, if any, and (c) any of the other parties involved in the proposed transaction, including legal counsel, and may be included in record books in connection with the transaction. In addition, each Purchaser acknowledges, agrees and consents to the collection, use and disclosure of Personal Information by the Company for corporate finance and shareholder communication purposes or such other purposes as are necessary to the Company’s business.

ARTICLE VII AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees that, from and after the date hereof until the Notes and all other amounts under the Operative Documents have been finally paid in full in accordance with their terms (other than contingent indemnification or reimbursement obligations to the extent no claim giving rise thereto has been asserted), each Credit Party shall, and shall cause each of its Subsidiaries to, perform and comply with all covenants in this ARTICLE VII.

7.1 Financial Statements.

(a) Each Credit Party shall, and shall cause each Subsidiary to, maintain a system of accounting established and administered in accordance with sound business practices to permit the preparation of financial statements in conformity with IFRS or GAAP, as applicable; provided that monthly financial statements shall not be required to have note disclosure and are subject to normal year-end adjustments.

(b) The Company shall deliver to the Holders in form and detail reasonably satisfactory to the Holders:

(i) as soon as available, but not later than one hundred twenty (120) days after the end of each Fiscal Year, commencing with the Fiscal Year ending June 29, 2019, a copy of the audited consolidated statement of financial position of the Company and its Subsidiaries as at the end of such Fiscal Year and the related audited consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year (if any), certified on behalf of the Company by an appropriate Responsible Officer as fairly presenting, in all material respects, in accordance with IFRS or GAAP, as applicable, the financial position and the results of operations of the Company and its Subsidiaries on a consolidated basis, accompanied by the opinion of a nationally recognized independent public accounting firm reasonably acceptable to the Holders (MNP LLP being deemed acceptable) which report shall state that such consolidated financial statements present fairly, in all material respects, the financial position as at and for the periods indicated in accordance with IFRS or GAAP, as applicable, applied on a basis consistent with prior years. Such opinion shall not be qualified or limited because of a restricted or limited examination by such accountant, beyond an accountant’s standard limitation for an audit conducted in accordance with IFRS or GAAP, as applicable;

(ii) as soon as available, but not later than sixty (60) days after the end of each of the first three Fiscal Quarters of each Fiscal Year, commencing with the Fiscal Quarter ending on or about September 30, 2019, a copy of the unaudited consolidated statement of financial position of the Company and its Subsidiaries as of the end of such Fiscal Quarter, and the related unaudited consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for such Fiscal Quarter and for the portion of the Fiscal Year then ended, and setting forth in each case comparisons to the corresponding periods in the preceding Fiscal Year all certified on behalf of the Company by an appropriate Responsible Officer as fairly presenting, in all material respects, in accordance with IFRS or GAAP, as applicable, the financial position and the results of operations of the Company and its Subsidiaries on a consolidated basis, subject to normal year-end adjustments and absence of footnote disclosure; and

(iii) as soon as available, but not later than commencement of each Fiscal Year, the Company’s’ consolidated annual operating plans, operating and capital expenditure budgets, and financial forecasts, including cash flow projections (prepared on a month by month basis) covering proposed fundings, repayments, additional advances, investments and other cash receipts and disbursements, together with a statement of underlying assumptions, each for the following Fiscal Year presented on a monthly basis for such next Fiscal Year, all of which shall be in a format reasonably consistent with projections, budgets and forecasts theretofore provided to the Holders, and promptly following the preparation thereof, updates to any of the foregoing from time to time prepared by management of the Company (such report, as amended, supplemented or otherwise modified, in each case as approved by the board of directors of the Company, the “Annual Budget”).

(c) Each Credit Party authorizes the Holders to discuss the financial condition of each Credit Party and each Subsidiary with such Credit Party’s independent certified public accountants and agrees that such discussion or communication shall be without liability to either the Holders or such accountants.

7.2 Certificates; Other Information. Company shall furnish to the Holders:

(a) concurrently with the delivery of the annual financial statements referred to in Section 7.1(b)(i), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Event of Default, except as specified in such certificate;

(b) concurrently with the delivery of the financial statements referred to in clauses (i) and (ii) of Section 7.1(b), a compliance certificate in a form reasonably satisfactory to the Holders (each, a “Compliance Certificate”), under which a Responsible Officer certifies on behalf of the Credit Parties that no Default or Event of Default has occurred or is continuing, except as specified in such certificate;

(c) promptly after the same are sent, copies of all financial statements and reports which any Credit Party sends to holders of its Equity Interests; and to the extent not publicly filed and available as part of the Company Public Disclosure Record, promptly after the same are filed, copies of all financial statements and regular, periodic or special reports which any Credit Party may make to, or file with, the Commission or any successor or similar Governmental Authority;

(d) no later than thirty (30) days after the Restatement Closing Date, the CRO presented to the representatives of the Purchasers the proposed turnaround plan, as prepared and approved by the CRO in accordance with Section 7.21. The CRO shall update the Turnaround Plan in his or her reasonable discretion, but no less frequently than every four (4) weeks, with the oversight of the board of directors of the Company, provided that such updated Turnaround Plan must be delivered to the Purchasers no later than five (5) days (or such later date agreed upon by the Holders) prior to the implementation thereof and shall be subject to the Gotham Purchasers’ approval in accordance

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document with Section 7.21, and the CRO shall present each such update to the Turnaround Plan in person or by telephonic conference to representatives of the Holders prior to the implementation thereof;

(e) together with each delivery of financial statements pursuant to Section 7.1(b), a management report, in reasonable detail, signed by a Responsible Officer of the Credit Parties, describing the operations and financial condition of Credit Parties and the Subsidiaries for the Fiscal Quarter then ended (or for the Fiscal Year then ended in the case of annual financial statements), and together with each delivery of financial statements pursuant to Section 7.1(b), a report discussing the reasons for any significant variations from projections for the period covered thereby or the same period in the prior Fiscal Year;

(f) promptly upon receipt thereof, copies of any written reports submitted by the Company’s certified public accountants in connection with each annual, interim or special audit or review of any type of the financial statements or internal control systems of the Credit Parties and the Subsidiaries made by such accountants, including any comment letters submitted by such accountants to management of such Person in connection with their services;

(g) prompt notice of any material actual or (if reasonably certain) proposed working capital adjustment to be paid by a Credit Party or other material purchase price adjustment, escrow, indemnification or other similar determinations or claims against, or material payments in respect of such matters by, any Credit Party; and

(h) such additional business, financial, corporate (or other organizational) and other information as the Holders may from time to time reasonably request, within a reasonable period after such request, taking into account the nature of the request.

7.3 Notices. The Company shall promptly notify the Holders of any of the following (and in no event later than three (3) Business Days after a Responsible Officer becoming aware thereof):

(a) the occurrence or existence of any Event of Default;

(b) any breach or non-performance of, or any default under, any Contractual Obligation (other than a Material Agreement) of any Credit Party or any Subsidiary, or any violation of, or non-compliance with, any Law (other than Cannabis Laws), which, in any such case, could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, including a description of such breach, non-performance, default, violation or non- compliance and the steps, if any, such Credit Party or such Subsidiary has taken, is taking or proposes to take in respect thereof;

(c) any material breach or material non-performance of, or any material default under, any Material Agreement of any Credit Party or any Subsidiary, or any material violation of, or material non-compliance with, any Cannabis Law, including a description of such breach, non- performance, default, violation or non-compliance and the steps, if any, such Credit Party or such Subsidiary has taken, is taking or proposes to take in respect thereof;

(d) any dispute, litigation, investigation, audit, proceeding or suspension which may exist at any time between any Credit Party or any Subsidiary and any Governmental Authority (other than any Governmental Authority with jurisdiction over any Cannabis Laws) which could reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect;

(e) any dispute, litigation, investigation, audit, proceeding or suspension which may exist at any time between any Credit Party or any Subsidiary and any Governmental Authority with jurisdiction over any Cannabis Laws other than investigations and audits in the Ordinary Course of Business or that otherwise could not reasonably be expected to, either individually or in the aggregate, materially and adversely affect any Credit Party;

(f) any notice from a Governmental Authority which could reasonably be expected to lead to the suspension or revocation of any material Cannabis License held by a Cannabis License Holder, or any material fine or penalty levied against any Cannabis License Holder which could reasonably be expected to materially and adversely affect a Cannabis License;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (g) the commencement, or any material adverse development in, of any litigation or proceeding affecting any Credit Party or any Subsidiary (i) in which the amount of damages claimed is $1,000,000, (ii) in which injunctive or similar relief is sought and which could reasonably be expected to have a Material Adverse Effect, (iii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any other Operative Document or (iv) in which the amount of damages claimed is in excess of $50,000 and the Company has determined not to contest the underlying claims consistent with its legal budget and the Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect;

(h) any of the following if the same could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, together with a copy of any notice with respect to such event that may be required to be filed with a Governmental Authority and any notice delivered by a Governmental Authority to any ERISA Affiliate with respect to such event:

(i) an ERISA Event; (ii) the adoption of any new, or the commencement of contributions to, any Title IV Plan or Multiemployer Plan by any Credit Party, any Subsidiary or any ERISA Affiliate; or (iii) the adoption of any amendment to a Title IV Plan, if such amendment results in a material increase in benefits or unfunded liabilities;

(i) any Material Adverse Effect subsequent to the date of the most recent consolidated audited financial statements of the Company delivered to the Holders pursuant to this Agreement;

(j) any material change in accounting policies or financial reporting practices by any Credit Party or any Subsidiary;

(k) the creation, establishment or acquisition of any Subsidiary;

(l) upon the reasonable request of the Holders, an updated Perfection Certificate (or, to the extent such request relates to specified information contained in the Perfection Certificate, such information) reflecting all changes since the date of the information most recently received pursuant to this paragraph (l) or Section 4.2(j);

(m) the acquisition of, completion of improvements on or the election of Treehouse REIT not to purchase, any Material Real Property;

(n) any other development specific to the Company or any of the Subsidiaries that is not a matter of general public knowledge and that has had, or could reasonably be expected to have, a Material Adverse Effect; and

(o) (i) on each Thursday following the Restatement Closing Date, the Borrowers shall deliver to the Collateral Agent for distribution to the Holders a 13-week cash forecast in the form attached to Appendix I to this Agreement, with such form subject to adjustment by the Borrowers with the approval of the Collateral Agent (not to be unreasonably withheld); and

(ii) no later than five (5) Business Days after the end of each fiscal month, the Borrowers shall deliver to the Collateral Agent for distribution to the Holders a written report showing the monthly financial performance for the prior fiscal month indicating any variances to the Company’s budget as previously delivered to the Collateral Agent and approved by the Board, in the form attached to Appendix II to this Agreement, with such form subject to adjustment by the Borrowers with the approval of the Collateral Agent (not to be unreasonably withheld).

Each notice pursuant to this Section shall be accompanied by a written statement by a Responsible Officer on behalf of Credit Parties setting forth details of the occurrence referred to therein, and stating what action Credit Parties propose to take with respect thereto and at what time. Each notice of a Default or of an Event of Default shall describe with particularity any and all clauses or provisions of this Agreement or other Operative Document that have been breached or violated.

7.4 Preservation of Existence, Etc. Each Credit Party shall: (a) preserve and maintain in full force and effect its corporate, partnership, limited liability company or other existence and good standing under the laws of its state or jurisdiction of incorporation or formation; (b) use commercially reasonable efforts, in the Ordinary Course of Business, to preserve and maintain in full force and effect all rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business where failure to do so could reasonably be expected to result in a Material Adverse Effect; (c) use commercially reasonable efforts, in the Ordinary Course of Business, to preserve its business organization and preserve the goodwill and business of the customers, suppliers and others having material business relations with it; and (d) preserve or renew all of its registered trademarks, trade names and service marks materially necessary or materially useful to the operation of its business.

7.5 Maintenance of Property. Except to the extent that failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Credit Party shall, in the Ordinary Course of Business, maintain and preserve all of its Property which is used or materially useful in its business in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs thereto and renewals and replacements thereof.

7.6 Property Insurance and Business Interruption Insurance. Each Credit Party shall, and shall cause each Subsidiary to, maintain, at its expense, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as the Credit Parties) as are customarily carried under similar circumstances by such other Persons as is reasonably acceptable to the Majority Holders. All such policies of insurance shall be in form and substance reasonably satisfactory to the Majority Holders and no Credit Party shall or shall permit any Subsidiary to, amend or otherwise change any such policies in any way which may adversely affect the Holders without the prior written consent of the Majority Holders. Credit Parties shall deliver to the Holders a certificate of insurance for each policy of liability insurance, which shall be accompanied by an additional insured endorsement in favor of the Collateral Agent. The policy of liability insurance shall provide for the insurer to provide at least thirty (30) days prior written cancellation notice to the Holders. The Company shall provide the Holders with prompt written notice of any change, amendment or modification to such insurance policy.

7.7 Payment of Liabilities. Each Credit Party shall, and shall cause each Subsidiary to, pay, discharge and perform as the same shall become due and payable or required to be performed, all of their respective obligations and liabilities (but subject to any restrictions contained in this Agreement), including: (a) all income and other material Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently prosecuted which stay the enforcement of any Lien and for which adequate reserves in accordance with IFRS or GAAP, as applicable, are being maintained by such Credit Party or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its Property unless the same are being contested in good faith by appropriate proceedings diligently prosecuted which stay the imposition or enforcement of the Lien and for which adequate reserves in accordance with IFRS or GAAP, as applicable, are being maintained by such Credit Party or such Subsidiary; (c) any Indebtedness, as and when due and payable, but subject to any restrictions contained in this Agreement, provisions in any applicable subordination agreement or provisions in any instrument or agreement evidencing such Indebtedness; and (d) all material obligations under any Contractual Obligation to which such Credit Party or such Subsidiary is bound, or to which it or any of its Properties is subject.

7.8 Compliance with Laws. Each Credit Party shall, and shall cause each Subsidiary to, comply, in all material respects, with all Laws of any Governmental Authority having jurisdiction over it or its business (including all Cannabis Laws and Environmental Laws), except (a) such as may be contested in good faith by appropriate proceedings diligently prosecuted without risk of loss of any material portion of the assets of the Credit Parties, (b)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document as to which a bona fide dispute exists, and (c) for which appropriate reserves have been established on such Person’s financial statements.

7.9 Inspection of Property and Books and Records. Each Credit Party shall maintain proper books of record and account, in which full, true and correct entries in conformity with IFRS or GAAP, as applicable to such Credit Party, consistently applied shall be made of all financial transactions and matters involving the assets and business of each Credit Party and each Subsidiary. Each Credit Party shall, and shall cause each Subsidiary to, permit representatives and independent contractors of the Holders to visit and inspect any of their respective Properties, to examine their respective organizational, corporate, limited liability company or partnership, as applicable, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and, so long as (unless an Event of Default has occurred and is continuing) a senior member of Company’s management is given a reasonable opportunity to be present, independent public accountants, at such reasonable times, upon reasonable prior written notice, during normal business hours, in a manner that would not reasonably be expected to disrupt the conduct of such Credit Party’s or Subsidiary’s business in the ordinary course and as the Holders may reasonably desire; provided that, unless an Event of Default has occurred and is continuing, no more than two (2) such visits or inspections shall occur per calendar year at the expense of the Credit Parties.

7.10 Use of Proceeds. The Company and the Borrowers shall use the proceeds of all Notes solely as follows: (a) to fund capital expenditures and marketing expenses, (b) to pay fees and expenses incurred in connection with the transactions contemplated by this Agreement, (c) for general working capital purposes and (d) to repay outstanding debt and associated obligations under the Hankey Loan Documents to the extent required to maintain compliance with the license value to debt ratio set forth in the Hankey Loan Documents, provided that the Company notifies the Holders in writing promptly after using any proceeds of the Notes to prepay any obligations under the Hankey Loan Documents, provided that, so long as the Interim Budget or Turnaround Plan is in effect, the Company and the Borrowers shall use the proceeds of the Tranche 4 Advance and the proceeds of the Incremental Advances solely in accordance with the Interim Budget or Turnaround Plan, as applicable; and provided further, that proceeds of the Third Restatement Advance shall be used for no other purpose than as described in clauses (a) through (c) of this Section 7.10.

7.11 Further Assurances. Each Credit Party shall, and shall cause each Subsidiary to ensure that all written information, exhibits, schedules and reports furnished to the Holders, when read together with the Company Public Disclosure Record, do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and will promptly disclose to the Holders and correct any material defect or error that may be discovered in any written information, exhibits, schedules and reports furnished to the Holders or in any Operative Document or in the execution, acknowledgment or recordation thereof (it being acknowledged and understood that forecasts and projections are not to be viewed as facts and actual results may differ significantly from projected results contained in such forecasts and projections). Promptly upon request by the Holders, each Credit Party shall, and shall cause each Subsidiary to, take such additional actions as the Holders may reasonably require from time to time in order to carry out more effectively the purposes of this Agreement or any other Operative Document.

7.12 Additional Collateral.

(a) In the event (1) any Credit Party forms or acquires any Subsidiary which is not an Excluded Subsidiary after the Closing Date, or (2) any Excluded Subsidiary shall no longer be deemed an Excluded Subsidiary, such Credit Party or the Credit Party which controls such former Excluded Subsidiary shall promptly upon (but no later than thirty (30) days after) such formation, acquisition or change in status cause (i) such newly formed or acquired Subsidiary or former Excluded Subsidiary (each is a “New Subsidiary”) to execute and deliver to the Holders such documents as the Holders may then reasonably require (including, without limitation, a Guaranty and a joinder agreement causing such New Subsidiary to become party to the Security Agreement as a “Grantor” thereunder), (ii) provide updates to existing schedules and exhibits or new schedules or other disclosures as appropriate to modify representations, warranties, covenants, conditions and other provisions applicable to such New Subsidiary), (iii) a certificate attaching (x) the Organization Documents of such New Subsidiary, (y) resolutions of the board of

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document directors (or similar governing body) of such New Subsidiary approving and authorizing the execution, delivery and performance of the documents described in this Section 7.11 and the other Operative Documents and the transactions contemplated thereby, and (z) signature and incumbency schedule of such New Subsidiary, all certified as of the date of delivery of such certificate by a Responsible Officer of such New Subsidiary as being true and complete and in full force and effect without modification and (iv) such other instruments, documents, and certificates reasonably required by the Holders in connection therewith.

(b) If any asset (other than real property, which is covered by paragraph (c) below) that has an individual fair market value (as determined in good faith by the Borrowers) in an amount greater than $1,000,000 is acquired by any Credit Party or any Subsidiary after the Closing Date or owned by an entity at the time it becomes a Credit Party (in each case other than (x) assets constituting Collateral under the Security Agreement that become subject to the Lien of the Security Agreement upon acquisition thereof, (y) assets that are not required to become subject to Liens in favor of the Holders pursuant to any Operative Document, or (z) assets of an Excluded Subsidiary), the applicable Credit Party will (i) as promptly as practicable notify the Holders thereof and (ii) take or cause the Credit Parties to take such actions as shall be reasonably requested by the Holders to grant and perfect such Liens, all at the expense of the Credit Parties.

(c) The Company shall promptly notify the Holders of the acquisition of, or completion of improvements on, and grant and cause each of the Credit Parties to grant to the Holders security interests and Mortgages in such Material Real Property of the Company or any such Credit Parties as are not covered by the Mortgages previously delivered and recorded pursuant to documentation substantially in the form of the Mortgages or in such other form as is reasonably satisfactory to the Holders (each, an “Additional Mortgage”) and constituting valid and enforceable Liens subject to no other Liens except Permitted Liens at the time of perfection thereof, record or file, and cause each such Credit Party to record or file, the Additional Mortgage or instruments related thereto in such manner and in such places as is required by law to establish, perfect, preserve and protect the Liens in favor of the Holders required to be granted pursuant to the Additional Mortgages and pay, and cause each such Credit Party to pay, in full, all Taxes, fees and other charges payable in connection therewith. Unless otherwise waived by the Holders, with respect to each such Additional Mortgage, the Company shall deliver to the Holders contemporaneously therewith a title insurance policy in an amount and with such endorsements as shall be required by Holders and in form and substance reasonably acceptable to Holders, flood determination and evidence of flood insurance, if required by law, legal opinion (in form and substance customary for the particular transaction and permitting reasonable assumptions and qualifications which are typically required in connection with opinions rendered in the cannabis industry), FIRREA appraisal (if required by law), a phase I environmental assessment, evidence of zoning compliance and no non-compliance with any other applicable laws, rules and regulations, an ALTA survey in form and substance acceptable to Holders, a phase I environmental assessment disclosing no recognized environmental conditions and otherwise in form and substance acceptable to Holders, and otherwise comply with the requirements of the Operative Documents applicable to Mortgages and Mortgaged Property. Any survey, environmental assessment, title insurance commitment or policy and evidence of zoning/compliance with applicable laws, ordinances, rules and regulations shall be at the sole cost and expense of Company.

(d) The Company shall furnish to the Holders promptly (and in any event within thirty (30) days after such change) written notice of any change (i) in any Credit Party’s corporate or organization name, (ii) in any Credit Party’s identity or organizational structure, (iii) in any Credit Party’s organizational identification number, or (iv) in any Credit Party’s jurisdiction of organization; provided that the Credit Parties shall not effect or permit any such change unless all filings have been made, or will have been made within any statutory period, under the Uniform Commercial Code or otherwise that are required in order for the Holders to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral with the same priority as prior to such change (it being understood that, subject to the foregoing, any Credit Party may change the name under which it conducts its business or its corporate name, trade name, trademarks, brand name or other public identifiers).

(e) Not later than thirty (30) days after any new deposit account or securities account is opened by any Credit Party (excluding any accounts used solely to fund payroll or employee benefits), deliver to the Collateral Agent for the benefit of the Holders a Control Agreement with respect to each such account.

7.13 Anti-Terrorism Laws. Each Credit Party shall, and shall cause each Subsidiary to, (a) ensure that no Person that directly or indirectly owns a controlling interest in or otherwise controls such Person is or shall be listed in any of the listings described in Section 5.22, (b) not use or permit the use of the proceeds of the Notes to violate any of the foreign asset control regulations of OFAC or any enabling statute or order relating thereto or the Executive Order and (c) comply in all material respects with all applicable Bank Secrecy Act laws and regulations.

7.14 Fees and Expenses.

(a) Each Credit Party shall bear all of its own expenses in connection with this Agreement and the other Operative Documents, and the transactions contemplated hereby and thereby. The Credit Parties will reimburse the Holders for their Attorney Fees in connection with the drafting, negotiation and execution of this Agreement up to a maximum of $50,000.

(b) Any action taken by any Credit Party under or with respect to any Operative Document, even if required under any Operative Document or at the request of the Holders, shall be at the expense of the Credit Parties, and the Holders shall not be required under any Operative Document to reimburse any Credit Party or any Subsidiary of any Credit Party therefor except as expressly provided therein. In addition, the Credit Parties agree to pay or reimburse upon demand (with respect to subparagraphs (i) and (ii) collectively for all costs and expenses incurred after the Closing Date, up to an amount not to exceed half of one percent (0.50%) of the outstanding principal balance under the notes): (i) the Holders for all reasonable and invoiced out-of-pocket costs and expenses incurred by it or any of its Related Persons in connection with the investigation, development, preparation, negotiation, execution, interpretation or administration of, any modification of any term of or termination of, any Operative Document, any commitment or proposal letter therefor, any other document prepared in connection therewith or the consummation and administration of any transaction contemplated therein, in each case including Attorney Costs of the Holders, the reasonable and invoiced out-of-pocket cost of environmental audits, background checks and similar expenses, to the extent permitted hereunder, (ii) the Holders for all reasonable and invoiced out-of-pocket costs and expenses incurred by it or any of its Related Persons in connection with internal audit reviews, audits by Governmental Authorities, field examinations and inspections, and (iii) each of the Holders, and its Related Persons for all invoiced out-of- pocket costs and expenses incurred in connection with (A) any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out”, (B) the enforcement or preservation of any right or remedy under any Operative Document, any Obligation, or any other related right or remedy or (C) the commencement, defense, conduct of, intervention in, or the taking of any other action (including preparation for and/or response to any subpoena or request for document production relating thereto) with respect to, any proceeding (including any bankruptcy or insolvency proceeding) related to any Credit Party, any Subsidiary of any Credit Party, Operative Document, Obligation or Related Transaction, including Attorney Costs.

7.15 Taxes. Each Credit Party and each Subsidiary shall file all Tax returns and reports required to be filed, and will pay or cause to be paid Taxes, assessments, fees and other governmental charges levied or imposed upon it or its Properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently prosecuted and for which adequate reserves have been provided in accordance with IFRS or GAAP, as applicable.

7.16 Right of First Refusal. From and after the consummation of the Tranche 3 Advance and until the repayment in full or conversion of the Obligations then outstanding under all Notes, the Company shall notify the Holders of each proposed offering of debt securities (“Debt Offering”) by the Company or (unless it is to another Subsidiary or the Company) any of its Subsidiaries within a commercially reasonable time prior to the initial closing of such offering, and each Holder shall have the right to participate in such Debt Offering, subject to negotiations in good faith by the Company and the Holders of the terms of such Debt Offering and of definitive documentation therefor, by providing notice to the Company within two (2) Business Days of receipt of such notice from the Company.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7.17 Regulatory Disclosures. In the event that any Credit Party receives a subpoena, notice of requirement to disclose or any request to disclose any information about any Purchaser from any Governmental Authority, or any applicable Law or Order (other than Excluded Laws) requires any Credit Party to disclose any information about any Purchaser (each is a “Regulatory Disclosure Requirement”), such Credit Party shall, to the extent permissible, prior to disclosing such information, promptly notify the Holders of such Regulatory Disclosure Requirement and permit the Holders and their counsel to seek a protective order or otherwise restrict the disclosure of such information. Further, each Credit Party shall cooperate in good faith with the Holders in their efforts to obtain a protective order or take such other action as the Holders deem necessary, and if a protective order or other remedy is not obtained despite the Holders’ efforts, the Credit Parties shall disclose only that portion of the information that the Credit Parties are legally required to disclose and will make reasonable efforts to obtain reliable assurance that confidential treatment will be afforded that information. Notwithstanding the foregoing, the Company may make disclosures in accordance with its obligations to report the transactions contemplated hereby under the policies of the CSE and under applicable Canadian Securities Laws, including disclosure of the names of the Holders, the amount purchased, and certain other required information.

7.18 Board Observer. At the Closing, the Purchasers shall be irrevocably and unconditionally (subject to the express terms hereof) granted the right to appoint one non-voting observer to the Company’s board of directors (the “Observer”) pursuant to the Observer Agreement, which agreement and appointment will become effective as of the Closing.

7.19 Financial Covenants.

(a) Minimum Liquidity. The Company and the Borrowers and their respective Subsidiaries on a consolidated basis shall at all times maintain Unencumbered Liquid Assets with a value greater than or equal to the applicable Minimum Liquidity Amount; provided, however, that, on any date of determination when interest is payable in cash under the Notes, the foregoing covenant shall not apply if and only if the Borrowers pay and have paid the cash portion of interest accrued under each such Note as and when such cash interest becomes due and payable; provided further, that in the event the Borrowers fail to pay any cash portion of interest accrued under the Notes prior to the end of the applicable cure period in Section 9.1(b), the foregoing covenant shall continue to apply or be reinstated, as applicable (and for the avoidance of doubt, in such event an Event of Default shall have occurred under Section 9.1(b) (and Section 9.1(c) to the extent the value of Unencumbered Liquid Assets does not meet or exceed the Minimum Liquidity Amount at such time)), until such Event of Default has been cured or waived.

(b) Annual Budget. The Annual Budget shall not be amended, supplemented or otherwise modified without the approval of the Board (the term “Annual Budget” shall refer to such modified budget). The Annual Budget for fiscal year 2021 (as in effect as of the Third Restatement Closing Date) is attached to the Disclosure Letter as Schedule 7.19.

(c) Corporate Expenditures. The Credit Parties shall, and shall cause their subsidiaries to, incur corporate expenditures during any period set forth in the Annual Budget only in accordance with the Annual Budget, subject to unlimited downward variances and an upward variance in any Fiscal Quarter of not greater than twenty percent (20%) (with respect to any line item or in the aggregate).

7.20 Post Closing Matters. The Credit Parties shall perform the actions and deliver all agreements, instruments and documents set forth on Schedule 7.20.

7.21 Chief Restructuring Officer; Turnaround Plan; Executive Personnel.

(a) The Credit Parties shall not terminate the CRO without the Gotham Purchasers’ prior written consent, with such consent not to be unreasonably withheld, conditioned or delayed. In the event that the CRO’s employment by the Company is terminated, the Credit Parties shall, as soon as practicable, hire a new CRO who is reasonably acceptable to the Gotham Purchasers (as evidenced by their prior written consent). It shall be an immediate Event of Default if the Company does not engage a replacement CRO within forty five (45) days after the date of the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document prior CRO’s termination. The Credit Parties shall cause and permit the CRO to share financial and other information with the Purchasers promptly upon any Purchaser’s reasonable request. The Purchasers acknowledge that as a result of such information being provided to them, that trading in securities of the Company may be restricted under applicable securities laws.

(b) The Credit Parties shall fully cooperate with the CRO and provide all assistance and resources reasonably necessary or desirable for the CRO to develop, present to the board of directors of the Company and the Purchasers, and implement a turnaround plan and budget which covers budgets, forecasts and financial projections of the Company and its Subsidiaries, for a minimum of the thirteen (13)-week period following the Restatement Closing Date (or a longer period in the CRO’s reasonable discretion), which shall set forth for such period the forecasted budget and projections for cash flow statements. Such proposed turnaround plan and budget must be delivered and presented to the Purchasers in accordance with Section 7.2(d). The Credit Parties shall instruct the CRO to provide the proposed turnaround plan and budget and all updates thereto to the Gotham Purchasers for their consideration and approval, with such other background information and analyses as the Gotham Purchasers reasonably request to be able to evaluate the proposed turnaround plan and all updates thereto. The turnaround plan and budget as approved by the board of directors of the Company and by the Gotham Purchasers shall replace the Interim Budget and is referred to herein as the “Turnaround Plan”. Neither the Interim Budget nor the Turnaround Plan may be amended, supplemented or otherwise modified without the Gotham Purchasers’ prior written consent, not to be unreasonably withheld (and if such consent is given, the term “Turnaround Plan” shall refer to such modified plan). The Turnaround Plan in effect as of the Third Restatement Closing Date is attached to Schedule 7.21. The requirement to produce 13-week forecasted budget and projections for cash flow statements under this Section 7.21 in connection with the Turnaround Plan shall expire when both (i) the Credit Parties’ consolidated after-tax cash flow is positive for at least one Fiscal Quarter, and (ii) the Debt Service Coverage Ratio is greater than 1.20 to 1.00 for at least one Fiscal Quarter (on a trailing four Fiscal Quarters basis), in each case with respect to the foregoing clauses (i) and (ii), as evidenced by financial statements delivered to the Holders under Section 7.1(b) and as certified to in a Compliance Certificate delivered under Section 7.2(b).

(c) As long as the Interim Budget or Turnaround Plan is in effect, the Credit Parties shall comply with and implement the Interim Budget or Turnaround Plan, respectively, in a timely manner. The requirement to maintain and comply with the Turnaround Plan shall expire when the Board approves the Annual Budget for the Company’s 2021 Fiscal Year.

(d) The Credit Parties shall not hire, engage or terminate, or agree to hire, engage or terminate, any “C-Level” employee of any Credit Party without the Gotham Purchasers’ prior written consent, not to be unreasonably withheld.

ARTICLE VIII NEGATIVE COVENANTS

Each Credit Party covenants and agrees that, from and after the date hereof until the Notes and all other amounts under the Operative Documents have been finally paid in full in accordance with their terms (other than contingent indemnification or reimbursement obligations to the extent no claim giving rise thereto has been asserted), such Credit Party shall not, and shall not cause, suffer or permit any Subsidiary to, directly or indirectly:

8.1 Liens. Create, incur, assume or suffer to exist any Lien on any of its assets, other than the following (collectively, “Permitted Liens”): (a) liens securing the payment of Taxes either not yet delinquent or the validity of which is being contested in good faith by appropriate proceedings, and as to which such Credit Party or such Subsidiary shall, under IFRS or GAAP, as applicable, have set aside on its books and records adequate reserves; (b) pledges, deposits or Liens made or arising under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations or surety, stay, appeal or custom bonds, or to secure indemnity, performance or other similar bonds in the Ordinary Course of Business; (c) Liens in favor of the Collateral Agent for the benefit of the Holders; (d) Liens which arise by operation of law,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document other than Liens which arise by operation of Environmental Laws, incurred in the Ordinary Course of Business (for sums not constituting borrowed money) that are not overdue for a period of more than thirty (30) days or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with IFRS or GAAP, as applicable (if so required); (e) zoning restrictions, building codes, easements, rights of way, licenses, covenants and other similar restrictions affecting the use of real property that do not secure monetary obligations and do not materially impair the use of such real property for its intended purposes or the value thereof; (f) Liens described on Schedule 8.1, provided that such Liens shall secure only those obligations which they secure on the Closing Date or, in the case of Liens securing the Indebtedness outstanding under the Hankey Loan Documents, Liens securing any refinancing, renewal, replacement or extension of such Indebtedness to the extent permitted under Section 8.2(d); (g) purchase money security interests on equipment of any Credit Party or any Subsidiary securing Capital Leases or purchase money Indebtedness in each case permitted by Section 8.2(b); (h) Liens arising from the filing of precautionary UCC or Personal Property Security Act financing statements solely as a precautionary measure in connection with operating leases, licenses or consignment of goods; (i) rights of offset or statutory banker’s Liens arising in the Ordinary Course of Business in favor of commercial banks; provided that any such Lien shall only extend to deposits and Property in possession of such commercial bank; (j) any interest or title of a licensor, sublicensor, lessor or sublessor with respect to any assets under any license or lease agreement expressly permitted under this Agreement and entered into in the Ordinary Course of Business which do not (i) interfere in any material respect with the business of any Credit Party or (ii) secure any Indebtedness; (k) judgment Liens (i) with respect to judgments which do not constitute an Event of Default, provided that the enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings, or (ii) imposed in connection with judgments and disputes which do not constitute an Event of Default and which are not being contested due to legal budgetary constraints (such constraints being consistent with the Turnaround Plan), provided that the Company notified the Collateral Agent in writing promptly upon determining not to contest such judgment, dispute or related Lien; (l) non-exclusive outbound licenses or sublicenses of patents, copyrights, trademarks and other intellectual property rights granted by any Credit Party in the Ordinary Course of Business and not interfering in any respect with the ordinary conduct of or materially detracting from the value of the business of such Credit Party; (m) [reserved]; (n) liens described on Schedule 8.1(n); (o) [reserved]; and (p) any other Liens on Property not otherwise permitted by this Section 8.1 so long as neither (i) the aggregate principal amount of the Indebtedness and other obligations secured thereby nor (ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the Property subject thereto exceeds $1,000,000 at any time outstanding. No Credit Party shall permit the filing of any financing statement naming such Person as debtor, except for financing statements filed with respect to Permitted Liens.

8.2 Indebtedness. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness of any Credit Party or any Subsidiary, except for any of the following: (a) the Obligations; (b) Capital Leases and purchase money Indebtedness (including Capital Leases and purchase money Indebtedness listed on Schedule 8.2), incurred to finance the purchase of equipment, not to exceed $5,000,000 in the aggregate at any time outstanding, and in each case is subject to terms arms’ length terms and conditions and may be prepaid at any time in accordance with its terms; (c) trade obligations and normal accruals made in accordance with IFRS or GAAP, as applicable, in the Ordinary Course of Business not yet due and payable, or with respect to which such Credit Party or such Subsidiary is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that such Credit Party or such Subsidiary has set aside on its books adequate reserves therefor, if appropriate under IFRS or GAAP, as applicable; (d) Indebtedness described on Schedule 8.2 and any refinancing, renewal, replacement or extension of such Indebtedness in a principal amount not in excess of that which is outstanding on the Closing Date; (e) unsecured intercompany Indebtedness arising from loans made by any Credit Party to any other Credit Party, provided, however, that upon the request of the Holders at any time, such Indebtedness shall be evidenced by promissory notes having terms reasonably satisfactory to the Majority Holders; (f) Indebtedness arising from endorsing negotiable instruments for collection in the Ordinary Course of Business; (g) obligations (contingent or otherwise) of the Credit Parties and their respective Subsidiaries existing or arising in connection with endorsement of instruments for deposit in the Ordinary Course of Business; (h) Indebtedness to the extent (and without duplication) constituting Investments made by the Credit Parties as expressly permitted under Section 8.5, but subject to clause (n) of this Section 8.2 (below); (i) Indebtedness arising from the honoring by a bank or other financing institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the Ordinary Course of Business; provided, however, that such Indebtedness is extinguished

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document within ten (10) days of incurrence; (j) to the extent constituting Indebtedness, Indebtedness incurred in the Ordinary Course of Business in connection with the financing of unpaid insurance premiums (not in excess of one year’s premiums); (k) Contingent Obligations (i) arising from indemnification obligations, purchase price adjustments or similar obligations in favor of Holders in connection with Dispositions expressly permitted hereunder, (ii) arising from indemnification obligations in favor of directors, managers, employees and officers incurred in the Ordinary Course of Business and expressly permitted hereunder, (iii) constituting guaranties, endorsement or other liabilities incurred in the Ordinary Course of Business in respect of obligations of (or to) suppliers, customers, lessors and licensees, (iv) arising under indemnity agreements to title insurers to cause such title insurer to issue title insurance policies, or (v) of the Credit Parties or any Subsidiary in respect of guarantees of Indebtedness otherwise permitted under this Agreement of another Credit Party; (l) Indebtedness representing any Tax payment obligations to the extent such Taxes are being contested by a Credit Party in good faith by appropriate proceedings and adequate reserves are being maintained in accordance with IFRS or GAAP, as applicable; (m) Indebtedness subject to a Subordination Agreement; (n) Indebtedness of any Person that becomes a Subsidiary after the date hereof, provided that such Indebtedness exists at the time such Person becomes a Subsidiary, is not created in contemplation of, or in connection with, such Person becoming a Subsidiary, and provided further, that the incurrence of such Indebtedness by an existing Credit Party or Subsidiary would have been permitted before such new Subsidiary became a Subsidiary; (o) unsecured Indebtedness which is subject to a Subordination Agreement in an aggregate principal amount not to exceed $650,000,000; and (p) trade payables or accrued expenses incurred in the Ordinary Course of Business which payables or expenses are (i) past due less than (x) one hundred twenty (120) days if such 120-day period would end on or prior to September 30, 2021, and (y) ninety (90) days if such 90-day period would end after September 30, 2021or (ii) the payment of which is included in the Interim Budget, Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect (including details regarding delays of payment past ninety (90) days) or otherwise is subject to a payment plan with the vendor (provided that the applicable Credit Parties and Subsidiaries remain compliant in all material respects with each such vendor payment plan).

8.3 Disposition of Assets. Sell, assign, license, lease, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any Property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing (including any agreement to statutorily divide) (each is a “Disposition”), except: (a) Dispositions of Inventory in the Ordinary Course of Business; (b) Dispositions from a Credit Party to another Credit Party; (c) to the extent expressly permitted by Section 8.4 or Section 8.5; (d) non-exclusive licenses or sublicenses of intellectual property rights in the Ordinary Course of Business not interfering, individually or in the aggregate, in any material respect with the business of any Credit Party; (e) any Disposition of real Property required by a Governmental Authority to a Governmental Authority as a result of eminent domain proceedings; (f) to the extent constituting a sale, lease, conveyance or disposition, the granting of Permitted Liens; (g) Dispositions of machinery, equipment or other fixed assets to the extent such machinery, equipment or other fixed assets are exchanged for credit against the purchase price of similar replacement machinery, equipment or other fixed assets, or the proceeds of such Dispositions are reasonably promptly applied to the purchase price of similar replacement machinery, equipment or other fixed assets, all in the Ordinary Course of Business; (h) sales of real property in connection with Treehouse REIT Transactions; (i) Dispositions of immaterial, obsolete or worn-out Property in the Ordinary Course of Business; (j) Dispositions of cultivation facilities or the management thereof, subject to the prior written consent of the Gotham Purchasers, not to be unreasonably withheld or delayed and provided the Gotham Purchasers are aware of the terms upon which the Company is currently contemplating disposing of its cultivation facilities and acknowledge the Company will not be receiving cash consideration for such disposition; (k) a Disposition of all or substantially all of the Equity Interests or assets of MME Evanston Retail, LLC (the “Evanston Sale”) provided that: (i) the Credit Parties use their best efforts to obtain regulatory approvals and close the Evanston Sale as promptly as practicable; (ii) the gross proceeds of the Evanston Sale payable to Credit Parties are at least $20,000,000; (iii) the initial $10,000,000 of gross proceeds shall be paid to the Company or another Credit Party without regard to the immediately following clause (iv); and (iv) a portion of the gross proceeds of the Evanston Sale equal to $10,000,000, plus or minus fifty percent (50%) of any positive or negative, respectively, working capital adjustments estimated at such closing (provided, however, that any such reduction shall not exceed $500,000), minus fifty percent (50%) of cash broker fees paid at such closing (the “Evanston Prepayment”) shall be used to pay down the Obligations on the date the Evanston Sale closes and any Credit Party receives any proceeds of such sale, to be applied to the Obligations under the Notes to which the Holders choose to apply such prepayment, which application shall be in each Holder’s sole discretion; and (l) Dispositions of other Property provided that for purposes of this clause (l):

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (A) no Default or Event of Default exists or would result from such disposition;

(B) such Disposition is

(i) of the Arizona Subsidiaries or Virginia Subsidiaries, or Property owned or contemplated to be owned by such Subsidiaries as of the Second Amendment Effective Date (collectively, the “Subsidiary Sales”), in each case, on terms no less favorable to such Subsidiary or any Credit Party than would be obtained in a comparable arm’s length transaction under similar market and economic conditions, and without the prior written consent of the Purchasers (which consent shall not be unreasonably withheld, conditioned or delayed), in no event for cash consideration less than $11,000,000 for the entities or assets comprising the operations of EBA Holdings, Inc. or in such amounts as reflected in non-binding letters of intent existing as of the Third Restatement Closing date as described on Schedule 8.3(k)), or $7,500,000 in the case of the Virginia Subsidiaries, or

(ii) of Property no longer material to the continued operation of the business of the Credit Parties and which has been identified for Disposition in the Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect; or

(iii) of other Property with respect to which (y) the consideration received by the Credit Parties or Subsidiaries for each such disposition shall be at least 75% cash, Cash Equivalents or free trading securities that are converted to cash within 30 days, and (z) the total consideration received by such Credit Parties or Subsidiaries for such Property shall have a fair market value not exceeding, in the aggregate, (1) $12,500,000 during the period beginning January 1, 2021 and ending June 30, 2021, and (2) $25,000,000 during any Fiscal Year thereafter; and

(C) the Company has provided copies of the definitive documentation for such Disposition (which may be subject to any immaterial changes prior to closing, so long as such changes are not adverse to any Holder) to the Collateral Agent at least five (5) days prior to the closing thereof or any Credit Party’s or Subsidiary’s receipt of consideration therefor; and

(D) except with respect to the Evanston Sale and Evanston Prepayment, the Company has notified the Holders in writing of its intended use of cash consideration received with respect to such Disposition, which shall include either funding an Investment permitted hereunder within twelve (12) months after receipt thereof (the “Reinvestment Period”) (provided that such Investment is set forth in the Interim Budget, Turnaround Plan or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect, and the Company notifies the Collateral Agent in writing of its intent to make such Investment promptly after deciding upon such use of the applicable sale proceeds), using such cash to satisfy Section 7.19(a), or a prepayment of Obligations, which prepayment shall be subject to all prepayment premiums or fees set forth in the Notes (and provided further, that if the Credit Parties fail to fund an Investment within the Reinvestment Period, make a prepayment or notify the Holders of its intended use to satisfy Section 7.19(a), and such cash is not required to satisfy Section 7.19(a), then, immediately upon expiration of the Reinvestment Period, the Credit Parties shall offer to the Holders to make a prepayment under the Notes in an amount equal to such cash consideration, which prepayment each Holder may forego in its sole discretion).

The restrictions contained in this Section 8.3 shall not apply with respect to any Excluded JV Subsidiary or any Immaterial Subsidiary to the extent the applicable disposition is set forth in the Interim Budget, Turnaround Plan, or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect, as applicable.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document With respect to the Evanston Sale: (i) the Collateral Agent will cooperate in good faith with Borrowers and the Credit Parties to release its Liens on any assets sold in connection with the Evanston Sale effective concurrently with the applicable Credit Party’s receipt of payment of the full or remaining amount of the cash purchase price set forth in the Evanston Sale Documents as in effect on the Third Restatement Closing Date, the Holders’ receipt of the applicable portion of such cash proceeds as the Evanston Prepayment), and the issuance of all notes by the buyer(s) to the applicable Credit Party with respect to the Evanston Sale (the “Evanston Seller Notes”), (ii) the Holders hereby waive the ninety (90) day notice period and Applicable Premium that would otherwise be due under Section 5.2(b) of each Note, but in each case only with respect to the Evanston Prepayment, (iii) Schedule 1.1(d) shall be updated by the parties promptly after the Evanston Prepayment is made, and (iv) concurrent with the issuance of any Evanston Seller Notes, the Borrowers and the Credit Parties will grant the Collateral Agent a Lien on such Evanston Seller Notes to the extent not already granted under existing Operative Documents, and promptly deliver all agreements, instruments and documents requested by Collateral Agent under Section 5.3 of the Security Agreement in connection with such Lien.

With respect to Dispositions permitted under clauses (g), (h), (i), (j) or (l) above, the Collateral Agent will cooperate in good faith with Borrowers and the Credit Parties to release its Liens on any assets sold in connection with such Disposition on or prior to the final closing of such Disposition and transfer of such assets to the buyer thereof.

8.4 Consolidations, Conversions and Mergers. Do any of the following: (a) convert its status as a type of Person (e.g., corporation, limited liability company, partnership) or the jurisdiction in which it is organized, formed or created, unless it shall have provided thirty (30) days prior written notice to the Holders, (b) consummate a statutory division, merge or consolidate with or into, any Person, except in connection with a Permitted Acquisition, (c) convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of the assets (whether now owned or hereafter acquired) of any Credit Party (taken as a whole) to or in favor of any Person other than another Credit Party unless such conveyance, transfer, lease or other disposition is consummated in accordance with Section 8.3(k), (d) liquidate, wind-up or dissolve any Credit Party or Subsidiary that is not an Excluded Subsidiary, or (e) or agree to do any of the foregoing, except that upon ten (10) Business Days’ prior written notice to the Holders, any Credit Party may merge, amalgamate or consolidate with or acquire some or all the Equity Interests issued by, an interest in, or the assets of, another Credit Party (and, in the case of such merger, amalgamation or consolidation or, in the case of the conveyance or distribution of all such assets, the non-surviving or selling entity, as the case may be, may be liquidated, wound up or dissolved); provided that if the Company is a party to such transaction, the Company must be the surviving entity.

8.5 Loans and Investments. Do any of the following: (a) purchase or acquire, or make any commitment for, any Equity Interest or any evidence of Indebtedness or obligations or other securities of, or any interest in, any Person, including the establishment or creation of or statutory division into a Subsidiary or joint venture, (b) make or commit to make any Acquisitions, or any other acquisition of all or substantially all of the assets of another Person, or of any business or division of any Person, including by way of merger, consolidation or other combination, or (c) make or commit to make any advance, loan, extension of credit or capital contribution to, or assume the debt of, purchase or acquire any other debt or interest in, or make any other investment in, any Person including any Affiliate of any Credit Party or any Subsidiary (the items described in clauses (a), (b) and (c) are referred to as “Investments”), except for: (i) Investments in cash and Cash Equivalents and checking and demand deposit accounts maintained in the Ordinary Course of Business; (ii) each Credit Party’s ownership of the Equity Interests of its Subsidiaries; (iii) the Investments listed on Schedule 8.5; (iv) each Credit Party’s ownership of the Equity Interests of its Subsidiaries including Subsidiaries established or created after the Closing Date in compliance with all applicable terms of the Operative Documents; (v) prepaid expenses and deposits for lease obligations or in connection with the provision of goods or services, in each case incurred in the Ordinary Course of Business; (vi) accounts created and trade debt extended in the Ordinary Course of Business; (vii) Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary to prevent or limit loss; (viii) [reserved]; or (ix) Permitted Acquisitions and joint venture Investments, provided that the aggregate amount of cash and Cash Equivalents used as consideration therefor shall not exceed ten percent (10%) of the Market Capitalization, both as of the last day of the Fiscal Quarter most recently ended and after giving effect to the applicable Permitted Acquisition or joint venture Investment.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 8.6 Transactions with Affiliates. Enter into any transaction or series of transactions with, or pay any compensation or other amounts to, any Affiliate of any Credit Party or any Affiliate of any Subsidiary, except (a) as specifically described on Schedule 8.6, (b) the Treehouse REIT Transactions, (c) pursuant to terms no less favorable to such Credit Party or such Subsidiary than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of such Credit Party or such Subsidiary, provided that the Company notifies the Holders of each such transaction, (d) for transactions and payments expressly permitted by Sections 8.3, 8.4, 8.5 and 8.10, (e) customary fees to, and indemnifications of, any independent director of a Credit Party’s limited partnership advisory committee, board of directors or similar governing body or any observer thereto, and (f) payments of salary, bonus, equity-linked compensation and other expenses and perquisites for executive officers of the Credit Parties. Without limiting the foregoing, none of the Credit Parties shall permit or cause to be permitted any increase to the compensation of any employee, consultant or contractor of any Credit Party who is a director or officer of any Credit Party, unless such increase (i) reflects an increase to such person’s compensation of less than ten percent (10%) as compared to the compensation such Person received from the Credit Parties on a consolidated basis during the twelve (12) months prior thereto, or (ii) is approved by the Company’s board of directors.

8.7 Use of Proceeds. Use any portion of the proceeds of the Notes, directly or indirectly, (a) to purchase or carry Margin Stock or repay or otherwise refinance Indebtedness of any Credit Party or any Subsidiary or others incurred to purchase or carry Margin Stock, (b) to pay dividends or make any distributions to any holders of Equity Interests issued by the Company or any Credit Party, except with respect to any tax distributions required by any Contractual Obligation of a Credit Party and distributions from one Credit Party to another Credit Party, or (c) otherwise in any manner which is in contravention of any Law or in violation of this Agreement.

8.8 Contingent Obligations. Create, incur, assume or suffer to exist any Contingent Obligations except in respect of the Obligations and except: (a) endorsements for collection or deposit in the Ordinary Course of Business; (b) Contingent Obligations incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar obligations; (c) guaranties in favor of the Holders; (d) endorsements for collection or deposit in the Ordinary Course of Business; (e) Contingent Obligations in respect of, or constituting, Indebtedness permitted under Section 8.2; (f) guaranties of the Obligations by any Credit Party other than the Company, (g) Contingent Obligations set forth in Schedule 8.8; (h) guaranties of any operating lease or Capital Lease of the Credit Party or any Subsidiary; or (i) guaranties with respect to Permitted Acquisitions to secure payments of purchase price in connection therewith, including, without limitation, earnout payments, seller notes and other deferred purchase price payments which are otherwise permitted under this Agreement.

8.9 Compliance with ERISA. Except as would not reasonably be expected to have a Material Adverse Effect, either individually or in the aggregate, cause or permit (a) to exist any ERISA Event; or (b) any Title IV Plan to have vested Unfunded Benefit Liabilities determined as of the most recent valuation date for each such Title IV Plan.

8.10 Restricted Payments. Do any of the following (clauses (a), (b), (c) and (d) are referred to herein, collectively, as “Restricted Payments”): (a) pay any “earnouts” or similar payment obligations under merger, acquisition, purchase or similar or related agreements, unless in each case no Event of Default shall have occurred or be continuing or would result from such payment, (b) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any Equity Interests which are not tax distributions specifically permitted under Section 8.7, (c) consummate a statutory division or (d) purchase, redeem, retire or otherwise acquire (in each case for cash) any Equity Interests now or hereafter outstanding (other than redemptions or exchanges of common shares of Holdings or units of MM Opco which are redeemable or exchangeable in accordance with the Organization Documents of Holdings or MM Opco, as applicable, for Equity Interests of the Company), or set apart assets for a sinking or other analogous fund therefor, in each case, other than Restricted Payments by any Subsidiary of the Company to the Company or by the Company to any Subsidiary or between Subsidiaries of the Company.

8.11 Change in Business. Engage in any material line of business substantially different from those lines of business carried on by it on the date hereof, other than ancillary or related businesses or reasonable extensions thereof.

8.12 Change in Structure. Amend, modify or restate any of its Organization Documents in any manner.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 8.13 Accounting Changes; Fiscal Year. Make any material change in accounting treatment or reporting practices (except as required by IFRS or GAAP, as applicable), or change its Fiscal Year.

8.14 Subsidiaries. Form, acquire or permit to exist any Subsidiaries, other than those in existence on the Closing Date and listed on Schedule 1.1(c) and other than those established or created after the Closing Date in compliance with Section 7.12.

8.15 Environmental. Fail to conduct its business so as to comply in all respects with all Environmental Laws and Environmental Permits in all jurisdictions in which it is or may at any time be doing business, except for such failures to comply that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; provided, however, that nothing contained in this Section 8.15 shall prevent any Credit Party or any Subsidiary from contesting, in good faith by appropriate legal proceedings, any such law, regulation, interpretation thereof or application thereof, provided, further, that such Credit Party or such Subsidiary shall not fail to comply with the order of any court or other Governmental Authority of applicable jurisdiction relating to such laws unless such Credit Party or such Subsidiary shall currently be prosecuting an appeal or proceedings for review and shall have secured a stay of enforcement or execution or other arrangement postponing enforcement or execution pending such appeal or proceedings for review.

8.16 Limits on Restrictive Agreements. Create, enter into or otherwise cause or suffer to exist or become effective any contractual or other restriction on the ability of (a) any Credit Party or any Subsidiary to perform and comply with their respective obligations under the Operative Documents, or (b) any Credit Party or any Subsidiary to (i) make Restricted Payments in respect of any Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to, any Credit Party, (ii) make loans or advances to, or other Investments in, any Credit Party, or (iii) transfer any of its assets to any Credit Party, except for such encumbrances or restrictions existing under or by reason of this Agreement, the other Operative Documents and under the arrangements described in clauses (b) through (e) of Section 8.18 to the extent they contain provisions restricting the transfer of assets.

8.17 Sale-Leaseback Transactions. Except in connection with Treehouse REIT Transactions (which shall not be prohibited) or with the prior written consent of the Majority Holders (such consent not to be unreasonably withheld), become or remain liable as lessee or as guarantor or other surety with respect to any lease, whether an operating lease or a Capital Lease, (a) of any Material Real Property that any Credit Party or any Subsidiary has sold or transferred (or is to sell or transfer) to a Person that is not a Credit Party or (b) that any Credit Party or any Subsidiary intends to use for substantially the same purpose as any other Material Real Property that, in connection with such lease, has been sold or transferred by any Credit Party or any Subsidiary to another Person.

8.18 No Other Negative Pledges. Enter into or suffer to exist any agreement or restriction, or permit any Subsidiary to enter into any agreement or restriction, that, directly or indirectly, prohibits or conditions the creation, incurrence or assumption of any Lien upon or with respect to any part of its property or assets, whether now owned or hereafter acquired, or agree to do any of the foregoing, except for such agreements or restrictions existing under or by reason of (a) this Agreement and the other Operative Documents, (b) applicable Laws, (c) any agreement or instrument creating a Permitted Lien (but only to the extent such agreement or restriction applies to the assets subject to such Permitted Lien), (d) customary provisions in leases and licenses of real or personal property entered into by any Credit Party or any Subsidiary as lessee or licensee in the Ordinary Course of Business, restricting the granting of Liens therein or in Property that is the subject thereof, and (e) customary restrictions and conditions contained in any agreement relating to the sale of assets pending such sale, provided that such restrictions and conditions apply only to the assets being sold and such sale is permitted under this Agreement.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 8.19 Press Release. Issue any press releases or other public disclosure, nor cause or permit any Affiliate of a Credit Party to do so, including any prospectus, proxy statement or other materials filed with any governmental authority or body relating to a public offering of the securities of any Credit Party, using the name of any Purchaser or its affiliates or referring to this Agreement or the other Operative Documents without at least ten (10) Business Days’ prior notice to the Purchasers and without the prior written consent of the Purchasers, which consent shall not be unreasonably withheld, unless (and only to the extent that) such Credit Party or Affiliate is required to do so under Law and then, in any event, such Credit Party or Affiliate shall use commercially reasonable efforts to consult with the Purchasers before issuing such press release or other public disclosure. Each Credit Party consents to the publication by the Purchasers of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement; provided, that, if requested by the Company, the Purchasers shall provide a draft of any such tombstone or similar advertising material to the Company for review and comment prior to the publication thereof. The Purchasers reserve the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

8.20 Changes to Certain Documents; New Material Agreements. (a) Amend, modify or change materially the terms of any Material Agreement without the Majority Holders’ prior written consent, which shall not be unreasonably withheld or delayed; (b) amend, modify or change the terms of the Organization Documents of any Credit Party or any of its Subsidiaries or any agreement, instrument or other document evidencing, entered into in connection with or relating to the Organization Documents of any Credit Party or any of its Subsidiaries; or (c) amend, modify or change the terms of any agreement, instrument or other document evidencing, entered into in connection with or relating to Material Indebtedness which is subordinated to the Obligations (whether by contract or otherwise), in a manner that could reasonably be materially adverse to the interests of the Purchasers, and provided, that the Company shall use commercially reasonable efforts to notify the Purchases of any amendment, modification or change, of the terms of any agreement, instrument or other document evidencing, entered into in connection with or relating to Material Indebtedness (whether by contract or otherwise) or of any Material Agreement (even if the Purchasers’ consent thereto is not required pursuant to this Section 8.20), and provided further, that the failure to provide such notice shall not be an Event of Default under this Agreement. Promptly upon the execution of any Material Agreement not in existence on the Closing Date, the Company shall notify the Holders thereof and provide a copy of such Material Agreement to the Holders.

8.21 Limitations on Activities of Certain Credit Parties. No Holding Company will engage at any time in any business or business activity other than (i) ownership of the Equity Interests or debt in the other Credit Parties, together with activities related thereto, (ii) performance of its obligations under and in connection with the Operative Documents and the incurrence and performance of Obligations permitted to be incurred by it hereunder, (iii) issuance of Equity Interests and activities in connection therewith and related thereto, (iv) capital markets activities, (v) activities expressly permitted or required hereunder, and (vi) as otherwise required by Law (other than Excluded Laws).

8.22 Issuance of Securities.

(a) Notwithstanding anything to the contrary herein or in any other Operative Document, issue any Equity Interest, including, without limitation and for the avoidance of doubt, any security evidencing Indebtedness which is convertible or exchangeable for, or represents an option, right or obligation to acquire, any Equity Interest, including, without limitation, any Indebtedness which would otherwise be permitted under Section 8.2 (collectively, “Dilutive Interests”), the price of which (on a per Share equivalent basis) is lower than the highest Conversion Price set forth in Schedule 1.1(d) (such an issuance is a “Down Round”). Notwithstanding the foregoing restriction, the Company may issue a Down Round if there is no Event of Default at the time of each such issuance and such issuance would not be reasonably likely to result in an Event of Default occurring, provided, however, that at the time of such issuance, the Adjusted Conversion/Exercise Price (as indicated on Schedule 1.1(d), as applicable) shall be automatically deemed amended to be the per unit price (on a per Share equivalent basis as agreed upon by the Majority Holders and the Company, in each case, acting reasonably) of the Dilutive Interests being issued in such Down Round (in each case, such prices remaining subject to further adjustments in accordance with the Notes and Warrants and this Section 8.22) (the foregoing clause is referred to as the “Down-Round Price Reset”). The Down-Round Price Reset shall not be required for any Down-Round involving (x) the exercise, conversion, exchange or redemption of

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any securities of any Credit Party existing as of the Restatement Closing Date to the extent set forth on Schedule 8.22 and in accordance with the terms of such securities; (y) the issuance of any Equity Interests pursuant to obligations in effect or contemplated as of the Restatement Closing Date, in each case to the extent set forth on Schedule 8.22 and in accordance with the terms of such Equity Interests; and (z) Equity Interests issued to employees, consultants, directors, advisors or other third parties, in exchange for the provision of goods or services to any Credit Party, or as part of their compensation, to the extent not otherwise prohibited by the Operative Documents, in each case with respect to the foregoing clauses (x), (y) and (z), only if such issuance was approved or otherwise authorized by the board of directors of the Company, there is no Event of Default at the time of each such issuance and such issuance would not be reasonably likely to result in an Event of Default occurring (collectively, “Excluded Issuances”). The Notes and Warrants, if and to the extent identified on Schedule 1.1(d) as being subject to the Down-Round Price Reset, are, and will continue to be, the only Notes and Warrants subject to the Down-Round Price Reset under this Section 8.22(a). No Credit Party shall close an issuance of Dilutive Interests without first (A) giving notice as contemplated in Section 8.22(b) below and (B) executing such documentation as the Majority Holders may require to document the Down-Round Price Reset, including an updated Schedule 1.1(d). For the avoidance of doubt, this Section 8.22(a) shall not apply in connection with the issuance or amendment of any securities pursuant to an Incremental Advance.

(b) Notwithstanding anything to the contrary herein or in any other Operative Document, issue any Dilutive Interests (excluding Excluded Issuances and issuances in connection with an Incremental Advance) if, upon closing such issuance, the Note Holder Ownership Percentage would reasonably be expected to be below fifty one percent (51%) (any such issuance of Dilutive Interests being a “Dilutive Issuance”), provided that Dilutive Issuances shall be permitted if there is no Event of Default at the time of each such issuance and such issuance would not be reasonably likely to result in an Event of Default occurring, at least twenty one (21) days prior to issuing any Dilutive Interests (the “Pre-Emptive Right Offer”): the Holders shall be offered, and shall have a period of ten (10) days from receipt of the Pre-Emptive Right Offer to accept such offer, the right to purchase a number of such Dilutive Interests being offered at the same price and subject to the same terms as offered to all other purchasers thereof (provided that the issuance to the Holders may be completed as a concurrent private placement if such Dilutive Issuance is a public offering) that would result in the Note Holder Ownership Percentage being at least fifty one percent (51%) following completion of the Dilutive Issuance and the acquisition in full of the Dilutive Interests offered under this Section 8.22(b), such purchase to be closed concurrently with completion of the Dilutive Issuance. In connection with the Pre-Emptive Right Offer, the Company shall provide to the Holders all information, documents and materials they reasonably request and that the Company can reasonably, practically and legally provide in connection with each such Dilutive Issuance, including, without limitation, the names of the other purchasers acquiring such Dilutive Interests (where known to the Company) and the number of Dilutive Interests each such purchaser has disclosed it intends to purchase (whether or not binding, and updated upon request by the Gotham Purchasers).

(c) No Credit Party other than the Company may issue any Equity Interests other than new Equity Interests that are expressly authorized in such Credit Party’s Organizational Documents as of the Restatement Closing Date.

(d) The Credit Parties shall not proceed with any Down Round or Dilutive Issuance if compliance with applicable Laws or the policies of the CSE would prevent a required Down-Round Price Reset or Pre-Emptive Right Offer to occur in accordance with the terms of this Section 8.22. For the avoidance of doubt, the Company could be required to both complete a Down-Round Price Reset and the Pre-Emptive Right Offer.

ARTICLE IX EVENTS OF DEFAULT

9.1 Events of Default Defined; Acceleration of Maturity. If any one or more of the following events (each herein called an “Event of Default”) shall have occurred:

(a) all or any part of the principal of any of the Notes is not paid on the date such principal shall become due and payable, whether at the maturity thereof, by acceleration, by conversion, by notice of prepayment, or all or any part of the interest of any of the Notes is not paid within five (5) Business Days after the date such

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document interest shall become due and payable, whether at the maturity thereof, by acceleration, by conversion, by notice of prepayment, or otherwise;

(b) all or any part of any other amount owing by any Credit Party or any Subsidiary to the Holders pursuant to the terms of this Agreement, the Notes or any other Operative Document (including, without limitation, amounts owed or reimbursable under Section 7.14) is not paid when such other amount becomes due and payable and such non-payment is not remedied within five (5) Business Days after written demand therefor was made (if required by the Operative Documents or, otherwise, after written notice thereof to such Credit Party by the Holders);

(c) any Credit Party fails or neglects to perform, keep or observe any of its covenants, conditions or agreements contained in:

(i) Section 7.1 , 7.2(a), 7.2(b) or 7.2(d), in each case only if such failure shall continue for ten (10) days after the Collateral Agent notifies the Borrowers of such failure;

(ii) Section 7.3, 7.4, 7.6, 7.10, 7.12, 7.20, or 7.21 or ARTICLE VIII;

(iii) [reserved];

(iv) any other covenant, condition or agreement contained in this Agreement or other Operative Document, including any Warrant (and, if any grace or cure period is expressly applicable thereto as set forth therein, the same shall continue past such grace period) and such failure shall continue for thirty (30) days after the earlier of (i) delivery by the Collateral Agent to any Credit Party of notice of such non-compliance or (ii) a Responsible Officer of any Credit Party becoming aware of such failure;

(d) any warranty or representation now or hereafter made by any Credit Party herein, in any other Operative Document, or other certificate, report or other delivery required to be made by any Credit Party to the Holders hereunder, is untrue or incorrect in any material respect (or, in the case of any such representation or warranty that is qualified as to materiality or Material Adverse Effect, untrue or incorrect in any respect) when made or deemed made;

(e) a judgment or order shall be rendered against any Credit Party (except for judgments which are not a Lien on personal property and which are being contested by such Person in good faith) and such judgment or order shall remain unsatisfied or undischarged and in effect for forty five (45) consecutive days without a stay of enforcement or execution, provided that this Section 9.1(e) shall not apply (i) to any judgment for which such Credit Party is fully insured (except for normal deductibles in connection therewith) and with respect to which the insurer has not denied its responsibility to assume the defense and with respect to which such Credit Party reasonably believes the insurer will pay the full amount thereof (except for normal deductibles in connection therewith), (ii) to any judgment which a Credit Party has elected not to contest consistent with its legal budget allocated to the specific case, such legal budget being consistent with the Turnaround Plan, or, after the Turnaround Plan is no longer in effect, the approved Annual Budget then in effect, and the Company has notified the Collateral Agent thereof under Section 7.3(g), or (iii) to the extent that the aggregate amount of all such judgments and orders in addition to (i) and (ii) above does not exceed $2,000,000;

(f) a notice of Lien, levy or assessment is filed or recorded with respect to all or a substantial part of the assets of any Credit Party by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipality or other governmental agency, or any Taxes or debts owing at any time or times hereafter to any one or more of them become a Lien upon all or a substantial part of the assets of any Credit Party or the Credit Parties taken as a whole, or any securities pledged to the Holders, and (i) such Lien, levy or assessment is not discharged or released or the enforcement thereof is not stayed within forty five (45) days of the notice or attachment thereof, or (ii) if the enforcement thereof is stayed, such stay shall cease to be in effect, provided that this Section 9.1(f) shall not apply to any Liens, levies or assessments which relate to current Taxes not yet due and payable;

(g) all or any part of assets of any Credit Party is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and on or before sixty (60) days thereafter such assets are not returned to and/or such writ, distress warrant or levy is not dismissed, stayed or lifted and if the amount of such assets or collateral, together with any other assets and collateral that is so attached, seized, subjected to writ or distress warrant or levied upon, exceeds $2,000,000 at any time;

(h) a proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed (i) against any Credit Party and an adjudication or appointment is made or order for relief is entered, or such proceeding remains undismissed for a period in excess of sixty (60) days, or (ii) by any Credit Party; any Credit Party makes an assignment for the benefit of creditors; any Credit Party voluntarily or involuntarily dissolves or is dissolved, or terminates or is terminated; any Credit Party takes any corporate, limited liability company or partnership, as applicable, action to authorize any of the foregoing; or any Credit Party becomes insolvent or fails generally to pay its debts as they become due;

(i) any Credit Party or any Subsidiary involuntarily dissolves or is involuntarily dissolved, or involuntarily terminates its existence or involuntarily has its existence terminated, that has a Material Adverse Effect;

(j) any Credit Party or any Cannabis License Holder is enjoined, restrained, or in any way prevented by the order of any Governmental Authority that prohibits the Credit Parties, taken as a whole, from conducting all or any material part of their collective business affairs, and such order is not dismissed, stayed or discharged within thirty (30) days;

(k) as to any Material Indebtedness of any Credit Party or any other Subsidiary,

(i) any Credit Party or any other Subsidiary shall fail to make any payment due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) on any such Material Indebtedness and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Material Indebtedness; (ii) any other default or event of default under any agreement or instrument relating to any such Material Indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument if the effect of such default, event of default or event is to accelerate, or to permit the acceleration of, the maturity of such Material Indebtedness; or (iii) any such Material Indebtedness shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled required payment) prior to the stated maturity thereof;

(l) default (after giving effect to any notice and cure periods) in the payment when due, or in the performance or observance of, any material obligation of, or condition agreed to by, any Credit Party with respect to any Material Agreement which could have a Material Adverse Effect (except only to the extent that Company is contesting the existence of any such default in good faith and by appropriate proceedings);

(m) any Guarantor shall, or shall attempt to, terminate or revoke any of its obligations under the applicable guarantee agreement in favor of the Holders in connection with the Obligations or breach any of the terms of such guarantee agreement, or any Person executing a fidelity guaranty in favor of the Holders in connection with the Obligations shall, or shall attempt to, terminate or revoke such guaranty;

(n) a Change of Control shall occur;

(o) any material adverse change in the Business of any Credit Party or any Subsidiary, from time to time, taken as a whole or the occurrence of any event that is continuing that has a Material Adverse Effect;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (p) any Credit Party shall, or shall attempt to, terminate, discontinue or revoke any of its obligations under any Operative Document;

(q) the occurrence of an ERISA Event results in, or would reasonably be expected to result in, a Material Adverse Effect or a Lien in excess of $2,000,000 on the assets of any Credit Party’s Property;

(r) if (i) the Company or any of its Subsidiaries is enjoined, restrained, or in any way prevented by the order of any court or any administrative or regulatory agency from conducting all or any material part of its business affairs or has its license revoked, or (ii) the Shares cease to be traded on the CSE or another national stock exchange, or (iii) the Company de- lists or is de-listed from the CSE or any other national stock exchange; provided, however, that it shall not be an Event of Default pursuant to this Section 9.1(r) if the foregoing results from a change in Law or applicable stock exchange rules and policies;

(s) subject to Section 9(c), any Cannabis License expires, terminates or fails to be renewed for any reason which, individually or in the aggregate with the expiration, termination or non-renewal of any other Cannabis License during the immediately preceding twelve (12) month period that is not re-issued or replaced within ninety (90) days of such expiration, termination or failure to be renewed and that results in a Material Adverse Effect; or

(t) any Operative Document to which any Credit Party is now or hereafter a party shall for any reason cease to be in full force and effect, or any Credit Party shall assert any of the foregoing. then, when any Event of Default (other than an Event of Default described in clause (g), (h) or (i) above) has occurred and shall be continuing, the principal of the Notes and the interest accrued thereon and all other amounts due under any Operative Document (collectively, the “Other Payments”), shall, upon written notice from the Holders, forthwith become and be due and payable, if not already due and payable, without presentment, further demand or other notice of any kind. If any Event of Default described in clause (g), (h) or (i) above occurs, the principal of all of the Notes, the interest accrued thereon and the Other Payments shall immediately become due and payable, upon the occurrence thereof, without presentment, demand, or notice of any kind. If any principal, installment of interest or Other Payment is not paid in full on the due date thereof (whether by maturity, prepayment or acceleration) or any Event of Default has occurred and is continuing, then the outstanding principal balance of the Notes, any overdue installment of interest (to the extent permitted by applicable law), including interest accruing after the commencement of any proceeding under any bankruptcy or insolvency law and all Other Payments will bear additional interest from the due date of such payment, or from and after an Event of Default, at a rate equal to the lesser of (i) the highest rate allowed by applicable law or (ii) an amount equal to the then applicable interest rate on the Notes, plus three percent (3%) per annum (such rate being referred to as the “Default Rate”), compounded quarterly, until the payment is received or the Event of Default is cured, if permitted, or waived in writing in accordance with the terms hereof. If payment of the Notes is accelerated, then the outstanding principal balance thereof shall bear interest at the Default Rate from and after the Event of Default. The Credit Parties shall pay to the Holders all invoiced out-of-pocket costs, fees and expenses incurred by the Holders in any effort to collect the Notes, and the other payments, including reasonable attorneys’ fees and expenses for services rendered in connection therewith, and pay interest on such costs and expenses to the extent not paid when demanded at the Default Rate.

Notwithstanding anything contained herein or in any other Operative Document to the contrary, to the extent any default by the tenant under any lease or similar agreement between any direct or indirect subsidiary of Treehouse REIT and any direct or indirect subsidiary of any Borrower would result in a breach of any representation, warranty or covenant of such Borrower set forth herein or in any of the other Operative Documents, such default under such lease shall not constitute an Event of Default except in the case of a default under such lease beyond any applicable notice and cure periods set forth in such lease, in each case of such default and cure, if the landlord under such lease has notified any Credit Party or any of their Subsidiaries of such default in writing.

9.2 Remedies.

(a) Without limiting the generality of the final paragraph of Section 9.1, and in addition thereto, if an Event of Default under Section 9.1(a) has occurred and is continuing, then the Holders may declare all or any portion

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of the outstanding principal amount of the Notes (together with all accrued interest thereon and all other amounts due and payable with respect thereto) to be immediately due and payable and may demand immediate payment of all or any portion of the outstanding principal amount of the Notes (together with all such other amounts then due and payable to it). The Credit Parties shall give prompt written notice of any such demand to any other Holders, each of which may demand immediate payment of all or any portion of such Holder’s Note(s). If any Holder demands immediate payment of all or any portion of the Notes, the Credit Parties shall immediately pay to such Holder or Holders all amounts due and payable with respect to the Note(s).

(b) In addition to any rights and remedies of the Holders provided by Law, upon the occurrence and during the continuance of any Event of Default, Holders and their Affiliates (and the Collateral Agent, in respect of any unpaid fees, costs and expenses payable under the Operative Documents) are authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company (on its own behalf and on behalf of each Credit Party) to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Obligations at any time owing by, any Purchaser, any of its Affiliates or the Collateral Agent to or for the credit or the account of the respective Credit Parties against any and all Obligations owing to Holders or the Collateral Agent hereunder or under any other Operative Document, now or hereafter existing, irrespective of whether or not the Collateral Agent or such Purchaser or Affiliate shall have made demand under this Agreement or any other Operative Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness. Each Purchaser agrees promptly to notify the Company and the Collateral Agent after any such set off and application made by a Purchaser; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Collateral Agent and each Purchaser under this section are in addition to other rights and remedies (including other rights of setoff) that the Collateral Agent and the Holders may have.

(c) If an Event of Default occurs as a result of any failure to renew or suspension, termination, revocation of a Cannabis License held by a Cannabis License Holder (which in and of itself if not considered an Event of Default), and such Event of Default has materially restricted or would reasonably be expected to materially restrict the Credit Parties’ ability to generate revenue for thirty (30) days or more, the Credit Parties shall in good faith use their best efforts to cooperate with all actions taken by the Holders or Collateral Agent on behalf of any Credit Party to maintain the business of the Credit Parties (or any Credit Party) as a going concern, including, without limitation, in connection with (i) renewing, reinstating or obtaining a new Cannabis License for such Cannabis License Holder and (ii) engaging with a new Cannabis License Holder to conduct business with any Credit Party with respect to the locations or operations affected by such Event of Default. In connection with any new business engagement described in clause (ii) above, none of the Credit Parties shall, and no Credit Party shall permit its Subsidiaries to, withhold any consent or approval required for such engagement if found by the Holders; provided such engagement is not with an Affiliate of a Purchaser in which case such Credit Party’s consent shall be obtained prior to such engagement (which consent shall not be unreasonably withheld, conditioned or delayed); and if such engagement is found by a Credit Party, the Holders shall have the right to accept or deny such engagement in their reasonable discretion.

(d) If any Event of Default has occurred and is continuing, the Holders may proceed to protect and enforce their rights either by suit in equity or by action at law, or both, whether for the specific performance of any covenant or agreement contained in this Agreement, or in aid of the exercise of any power granted in this Agreement, or to enforce any other legal or equitable right or remedy of the Holders.

9.3 Delays or Omissions. No failure to exercise or delay in the exercise of any right, power or remedy accruing to any Purchaser upon any breach or default of any Credit Party under this Agreement or any other Operative Document shall impair any such right, power or remedy of such Purchaser nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.

9.4 Remedies Cumulative. All remedies under this Agreement and the other Operative Documents, by law or otherwise, afforded to the Holders shall be cumulative and not alternative.

9.5 Set-off. If an Event of Default shall have occurred and be continuing, each Purchaser and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held, and other obligations (in whatever currency) at any time owing, by such Purchaser or any such Affiliate, to or for the credit or the account of any Credit Party against any and all of the obligations of such Credit Party now or hereafter existing under this Agreement or any other Operative Document to such Purchaser or any of its Affiliates, irrespective of whether or not such Purchaser or Affiliate shall have made any demand under this Agreement or any other Operative Document and although such obligations of such Credit Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Purchaser different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness. The rights of the Holders and their Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Holders and their Affiliates may have. The Holders agree to notify the Company and the Holders promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

ARTICLE X COLLATERAL AGENT

10.1 Appointment and Authorization.

(a) Each Purchaser hereby irrevocably appoints Gotham Green Admin 1, LLC to act on its behalf as the Collateral Agent hereunder and under the other Operative Documents, designates and authorizes the Collateral Agent to take such action on its behalf under the provisions of this Agreement and each other Operative Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Operative Document, together with such powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, each Purchaser hereby expressly authorizes the Collateral Agent to execute any and all documents (including releases) with respect to the Collateral and the rights of the Holders with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Operative Documents and acknowledge and agree that any such action by the Collateral Agent shall bind such Purchaser. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Operative Document, the Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Collateral Agent have or be deemed to have any fiduciary relationship with a Purchaser, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Operative Document or otherwise exist against the Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Operative Documents with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

(b) Each Purchaser (by acceptance of the benefits of the Operative Documents) hereby irrevocably appoints and authorizes the Collateral Agent to act as the agent of (and to hold any security interest created by the Operative Documents for and on behalf of or on trust for) such Purchaser for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by the Credit Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent shall be entitled to the benefits of all provisions of this Section 10.1 as if set forth in full herein with respect thereto.

(c) Each Purchaser (by acceptance of the benefits of the Operative Documents) hereby (i) acknowledges that it has received a copy of the Intercreditor Agreement, (ii) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement to the extent then in effect, and (iii) authorizes

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and instructs the Collateral Agent to enter into the Intercreditor Agreement as Collateral Agent and on behalf of such Purchaser.

(d) Except as provided in this ARTICLE X, the provisions of this ARTICLE X are solely for the benefit of the Holders, and neither the Company nor any other Credit Party shall have rights as a third-party beneficiary of any of such provisions; provided, however that each Credit Party shall have the right to rely on the appointment and authority granted to the Collateral Agent under this ARTICLE X to operate as the sole and exclusive agent of each Purchaser and each Credit Party shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation by a Collateral Agent as the consent or direction of any Purchaser.

10.2 Delegation of Duties.

The Collateral Agent may execute any of its duties under this Agreement or any other Operative Document (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Operative Documents or of exercising any rights and remedies thereunder) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Collateral Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates, and the officers, directors, employees, partners, agents, advisors, attorneys-in-fact and other representatives of such Persons and Affiliates (collectively, “Agent- Related Persons”). The exculpatory provisions of this Article shall apply to any such sub-agent and to the Agent- Related Persons of the Collateral Agent and any such sub-agent, and shall apply to their activities as Collateral Agent. The Collateral Agent shall not be responsible for the negligence or misconduct of any agent or sub-agent or attorney-in- fact that it selects in the absence of gross negligence or willful misconduct (as determined in the final non-appealable judgment of a court of competent jurisdiction).

10.3 Liability of Agents.

No Agent-Related Person shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Operative Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct, as determined by the final non-appealable judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein), (ii) except as expressly set forth herein and in the other Operative Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Affiliates that is communicated to or obtained by the Person serving as the Collateral Agent or any of its Affiliates in any capacity, (iii) be responsible for or have any duty to ascertain or inquire into the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent or (d) be responsible in any manner to the Purchasers for any recital, statement, representation or warranty made by any Credit Party or any officer thereof, contained herein or in any other Operative Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, this Agreement or any other Operative Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Operative Document, the existence, value or collectability of the Collateral, any failure to monitor or maintain any part of the Collateral, or the perfection or priority of any Lien or security interest created or purported to be created under the Operative Documents, or for any failure of any Credit Party or any other party to any Operative Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to the Purchasers or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Operative Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof. Notwithstanding the foregoing, the Collateral Agent shall have no duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Operative Documents that the Collateral Agent is required to exercise as directed in writing by the Purchasers; provided that the Collateral Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Collateral Agent to liability or that

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document is contrary to any Operative Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law.

10.4 Reliance by Collateral Agent.

The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Credit Party), independent accountants and other experts selected by the Collateral Agent. The Collateral Agent shall be fully justified in failing or refusing to take any action under any Operative Document unless it shall first receive such advice or concurrence of the Purchasers as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Purchasers against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Operative Document in accordance with a request or consent of the Purchasers and such request and any action taken or failure to act pursuant thereto shall be binding upon the Purchasers.

10.5 Notice of Default.

The Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Collateral Agent for the account of the Holders, unless the Collateral Agent shall have received written notice from the Holders or the Company referring to this Agreement, describing such Event of Default and stating that such notice is a “notice of default.” The Collateral Agent will notify the Holders of its receipt of any such notice. The Collateral Agent shall take such action with respect to any Event of Default as may be directed by the Holders; provided that unless and until the Collateral Agent has received any such direction, the Collateral Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable or in the best interest of the Holders.

10.6 Credit Decision; Disclosure of Information by Collateral Agent.

Each Purchaser acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Collateral Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Credit Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to such Purchaser as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Purchaser represents to the Collateral Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Credit Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Purchaser also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Operative Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Credit Parties. Except for notices, reports and other documents expressly required to be furnished to the Holders by the Collateral Agent herein, the Collateral Agent shall not have any duty or responsibility to provide the Holders with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Credit Parties or any of their Affiliates which may come into the possession of any Agent-Related Person.

10.7 Indemnification.

Whether or not the transactions contemplated hereby are consummated, the Holders shall indemnify upon demand by each Agent-Related Person (to the extent not reimbursed by or on behalf of any Credit Party and without limiting the obligation of any Credit Party to do so) acting as the Collateral Agent, and hold harmless each Agent- Related Person, on a pro rata basis in respect of the principal amount of the Note(s) held by such Holder, from and against any and all actions, causes of action, suits, losses, liabilities, damages, Taxes, penalties, judgments, and reasonable and documented out-of-pocket expenses, including reasonable attorneys’ fees arising out of or relating to any Operative Document or any action taken or omitted by each Agent-Related Person under any Operative Document (including, the costs of any such Agent-Related Person defending itself against a claim brought by a party hereto and the costs of enforcing a Holder’s indemnity obligations hereunder) (the “Indemnified Liabilities”) incurred by it; provided that no Purchaser shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Agent-Related Person’s own gross negligence or willful misconduct, as determined by the final non-appealable judgment of a court of competent jurisdiction; provided that no action taken in accordance with the directions of the Holders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section 10.7. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Liabilities, this Section 10.7 applies whether any such investigation, litigation or proceeding is brought by any Purchaser or any other Person. Without limitation of the foregoing, each Purchaser shall reimburse the Collateral Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including attorney fees and costs) incurred by the Collateral Agent, as the case may be, in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Operative Document, or any document contemplated by or referred to herein, to the extent that the Collateral Agent, as the case may be, is not reimbursed for such expenses by or on behalf of the Credit Parties and without limiting their obligation to do so. The undertaking in this Section 10.7 shall survive payment in full of the Obligations and the resignation of the Collateral Agent, as the case may be.

10.8 Successor Agents.

The Collateral Agent may resign as the Collateral Agent upon thirty (30) days’ notice to the Holders and the Company. If the Collateral Agent resigns under this Agreement, the Holders shall appoint a successor agent, which successor agent shall be consented to by the Company at all times other than during the existence of an Event of Default (which consent of the Company shall not be unreasonably withheld or delayed). If no successor agent is appointed prior to the effective date of the resignation or removal of the Collateral Agent, the Collateral Agent may appoint, after consulting with the Holders, a successor agent from among the Holders. Upon the acceptance of its appointment as successor agent hereunder, the Person acting as such successor agent shall succeed to all the rights, powers and duties of the retiring Collateral Agent and the term “Collateral Agent” shall mean such successor collateral agent, and the retiring Collateral Agent’s appointment, powers and duties as the Collateral Agent shall be terminated. After the retiring Collateral Agent’s resignation or removal hereunder as the Collateral Agent, the provisions of this ARTICLE X and the provisions of Sections 7.14 and 11.18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement. If no successor agent has accepted appointment as the Collateral Agent by the date which is thirty(30) days following the retiring Collateral Agent’s notice of resignation, the retiring Collateral Agent’s resignation shall nevertheless thereupon become effective and the Holders shall perform all of the duties of the Collateral Agent hereunder until such time, if any, as the Holders appoints a successor agent as provided for above. Upon the acceptance of any appointment as the Collateral Agent hereunder by a successor and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Holders may request, in order to (a) continue the perfection of the Liens granted or purported to be granted by the Operative Documents or (b) otherwise ensure that Section 7.11 is satisfied, the Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges, and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations under the Operative Documents. After the retiring Collateral Agent’s resignation hereunder as the Collateral Agent, the provisions of this ARTICLE X and the provisions of Sections 7.14 and 11.18 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Collateral Agent.

10.9 Collateral Agent May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Credit Party, the Collateral Agent (irrespective of whether any principal amount of the Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Collateral Agent shall have made any demand on the Company) shall be (to the fullest extent permitted by mandatory provisions of applicable Law) entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Holders and the Collateral Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Holders and the Collateral Agent and their respective agents and counsel and all other amounts due to the Holders and the Collateral Agent under Sections 7.14 and 11.18) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, curator, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by Holders to make such payments to the Collateral Agent and, in the event that the Collateral Agent shall consent to the making of such payments directly to the Holders, to pay to the Collateral Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Collateral Agent and its respective agents and counsel, and any other amounts due the Collateral Agent under Sections 7.14 and 11.18.

Nothing contained herein shall be deemed to authorize the Collateral Agent to authorize or consent to or accept or adopt on behalf of the Holders any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of the Holders or to authorize the Collateral Agent to vote in respect of the claim of the Holders in any such proceeding.

10.10 Collateral and Guaranty Matters.

The Purchaser irrevocably agrees:

(a) That upon the request of the Company, the Collateral Agent may release or subordinate any Lien on any property granted to or held by the Collateral Agent under any Operative Document to the holder of any Lien on such property that is permitted hereunder pursuant to documents reasonably acceptable to the Collateral Agent; and

(b) The Collateral Agent may, without any further consent of the Holders, enter into any intercreditor or subordination agreement with the collateral agent or other representatives of holders of any Indebtedness that is intended to be secured on a junior or pari passu basis with the Liens securing the Obligations, in each case, where such Indebtedness is secured by Liens permitted hereunder. The Collateral Agent may rely exclusively on a certificate of the chief executive officer or chief financial officer the Company as to whether any such other Liens are permitted. Any such intercreditor or subordination agreement entered into by the Collateral Agent in accordance with the terms of this Agreement shall be binding on the Holders.

Upon request by the Collateral Agent at any time, the Holders will confirm in writing the Collateral Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Subsidiary from its obligations under the relevant Operative Documents pursuant to this Section 10.10. In each case as specified in this

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 10.10, the Collateral Agent will promptly upon the request of the Company (and each Purchaser irrevocably authorizes the Collateral Agent to), at the Company’s expense, execute and deliver to the applicable Credit Party such documents as the Company may reasonably request to evidence the release or subordination of such item of Collateral from the assignment and security interest granted under the Operative Documents, or to evidence the release of such Guarantor from its obligations under the applicable Guaranty, in each case in accordance with the terms of the Operative Documents and this Section 10.10 (and the Collateral Agent may rely conclusively on a certificate of the chief executive officer or chief financial officer of the Company to that effect provided to it by any Credit Party upon its reasonable request without further inquiry). Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Collateral Agent.

10.11 Withholding Tax Indemnity.

To the extent required by any applicable Law, the Collateral Agent may deduct or withhold from any payment to the Holders an amount equivalent to any applicable withholding Tax and any such withholding or deduction shall be subject to Section 11.12(a). If the Internal Revenue Service, the Canada Revenue Agency or any other authority of the United States or Canada or other jurisdiction asserts a claim that the Collateral Agent did not properly deduct withhold Tax from amounts paid to or for the account of any Holder for any reason (including, without limitation, because the appropriate form was not delivered or not properly executed, or because any Holder failed to notify the Collateral Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Holder shall, within ten (10) days after written demand therefor, indemnify and hold harmless the Collateral Agent for all amounts paid, directly or indirectly, by the Collateral Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to a Holder by the Collateral Agent shall be conclusive absent manifest error. Each Holder hereby authorizes the Collateral Agent to set off and apply any and all amounts at any time owing to the Holder under this Agreement or any other Operative Document against any amount due the Collateral Agent under this Section 10.11. The agreements in this Section 10.11 shall survive the resignation and/or replacement of the Collateral Agent, any assignment of rights by, or the replacement of, any Holder and the repayment, satisfaction or discharge of all other Obligations.

ARTICLE XI MISCELLANEOUS

11.1 Consent to Amendments; Waivers. Except as otherwise expressly provided herein, the provisions of this Agreement or the other Operative Documents may be amended, modified, supplemented, waived or consented to at any time only by the written agreement of the Credit Parties party thereto and the Majority Holders. Any waiver, permit, consent or approval of any kind or character on the part of the Holders of any provisions or conditions of this Agreement or any other Operative Document may be given or provided by the Majority Holders and must be made in writing and shall be effective only to the extent specifically set forth in such writing.

11.2 Survival of Terms. All representations, warranties and covenants contained herein or made in writing by any party in connection herewith will be made only as of the Closing Date (unless expressly made thereafter in writing), and, as so made, will survive the execution and delivery of this Agreement and any investigation made at any time by or on behalf of the Holders.

11.3 Successors and Assigns.

(a) Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement and the other Operative Documents by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors of the parties hereto, whether so expressed or not and by the permitted registered assigns of the parties hereto including, without limitation, any subsequent holders of the Notes. This Agreement and the rights and obligations of the Purchasers hereunder and under the Notes may be assigned by the Purchasers; provided, however, that if no Default or Event of Default has occurred and is continuing, the Company must consent to any such assignment, which consent of the Company shall not be unreasonably conditioned, withheld or delayed

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and which consent of the Company shall not be required in connection with an assignment to a partner, member, Related Fund or Affiliate of the Purchasers; provided further, in any case, that no assignment shall be effective unless and until such assignment is recorded in the register pursuant to Section 11.3(b). This Agreement and the rights and obligations of the Credit Parties shall not be assigned without the prior written consent of the Holders. Each Purchaser shall maintain at one of its offices in the United States a copy of each assignment delivered to it and a register for the recordation of the names and addresses of each Holder and the principal amount of, and interest on, the Obligations owing to such Holder pursuant to the terms hereof. Such register shall include sub-registers that separately record the principal amount of, and interest with respect to, all Obligations arising from the Closing Date, the Restatement Closing Date, the Second Restatement Closing Date and the Third Restatement Closing Date. The entries in such register shall be conclusive, and the Credit Parties, the Purchasers and the Holders may treat each Person whose name is recorded therein pursuant to the terms hereof as a Holder hereunder for all purposes of this Agreement, notwithstanding any notice to the contrary. Such register shall be available for inspection by the Credit Parties and any Holder at any reasonable time upon reasonable prior notice to the Purchasers. Any Holder may, with the prior written consent of the Purchasers, at any time sell to one or more commercial banks, funds or other Persons (a “Participant”) participating interests in the Notes and the other interests of that Holder (the “Originating Holder”) hereunder and under the other Operative Documents; provided, however, that, unless otherwise consented to by the Purchasers and the Company, which consent shall not be unreasonably conditioned, withheld or delayed (it being agreed that the Company’s consent shall not be required with respect to any sale to any Participant that is a partner, member, Affiliate or Related Fund of any Holder or required if an Event of Default shall have occurred and be continuing):

(i) the Originating Holder’s obligations under this Agreement shall remain unchanged;

(ii) the Originating Holder shall remain solely responsible for the performance of such obligations;

(iii) the Credit Parties and the Purchasers shall continue to deal solely and directly with the Originating Holder in connection with the Originating Holder’s rights and obligations under this Agreement and the other Operative Documents; and

(iv) no Holder shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Operative Document.

In the case of any such participation, the Participant shall not have any rights under this Agreement, or any of the other Operative Documents, and all amounts payable by the Company hereunder shall be determined as if such Holder had not sold such participation.

(b) Notwithstanding any other provision contained in this Agreement or any other Operative Document to the contrary, any Holder may (i) assign all or any portion of the Notes held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Federal Reserve Board and any Operating Circular issued by such Federal Reserve Bank, or (ii) pledge all or any portion of the Notes held by it to its unaffiliated lenders for collateral security purposes, provided that any payment in respect of such assignment made by the Company to or for the account of the assigning or pledging Holder in accordance with the terms of this Agreement shall satisfy the Company’s obligations hereunder in respect to such assigned or pledged Notes to the extent of such payment. No such assignment or pledge shall release the assigning Holder from its obligations hereunder. Each Participant shall be entitled to the benefits of Section 11.12 hereof as if it were a Holder, and such Participant shall be obligated to comply with the requirements of Section 11.12 hereof.

Each Originating Holder that sells a participation shall, acting solely for this purpose as an agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts of, and stated interest on, each Participant’s interest in the Obligations owing to such Participant (the “Participant Register”); provided that no Holder shall have any obligation to disclose all or any portion of the Participant Register to any Person other than the Purchasers except to the extent that such disclosure is necessary to establish that the Notes are in “registered form” under the Code. The entries in the Participant Register shall be conclusive absent manifest

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document error, and such Originating Holder shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Purchasers shall have no responsibility for maintaining a Participant Register. This Section 11.3(b) shall be construed so that the Notes are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.

11.4 Severability. Whenever possible, each provision of this Agreement and the other Operative Documents shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or any other Operative Documents is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement or such other Operative Documents, as applicable, unless the consummation of the transaction contemplated hereby is materially adversely affected thereby.

11.5 Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement.

11.6 Notices. Any notices required or permitted to be sent hereunder or under any other Operative Documents shall be delivered personally or mailed, certified mail, return receipt requested and postage prepaid, delivered by commercial overnight courier service, with charges prepaid, or emailed, to the following addresses, or such other address as any party hereto designates by written notice to the Collateral Agent, Credit Parties, and the Purchasers and the Holders, and shall be deemed to have been given upon delivery, if delivered personally, three (3) days after mailing, if mailed, one Business Day after delivery to the courier, if delivered by overnight courier service, or if e- mailed prior to 5:00 PM New York time on a Business Day, the same Business Day such email was delivered, and if e-mailed after 5:00 PM New York time on a Business Day or on a non-Business Day, the Business Day following the day such e-mail was delivered:

If to any Credit Party, to:

MedMen Enterprises USA, LLC 10115 Jefferson Blvd. Culver City, California 90232 Attention: Dan Edwards Electronic Mail: [email protected]

With a copy to:

Raines Feldman LLP 1800 Avenue of the Stars, 12th Floor Los Angeles, California 90067 Attention: Jonathan D. Littrell, Esq. Electronic Mail: [email protected]

If to any Purchaser or the Collateral Agent, to:

c/o Gotham Green Partners, LLC 1437 4th St. Suite 200 Santa Monica, California 90401 Attention: David Rosenthal Electronic Mail: [email protected]

Honigman LLP 660 Woodward Ave. 2290 First National Building Detroit, Michigan 48226 Attention: Michael D. DuBay and Clara L. Seymour Electronic Mail: [email protected] and [email protected]

Any party may change the address to which notices to it are to be sent by written notice given to the other parties hereto.

11.7 Governing Law. All questions concerning the construction, validity, application and interpretation of this Agreement including without limitation each provision of this Article XI, the other Operative Documents and the exhibits and schedules hereto and thereto shall be governed by the internal law, and not the law of conflicts, of the State of New York, applicable to contracts made and wholly to be performed in that state, notwithstanding anything to the contrary including, without limitation, Borrower and the Credit Parties operation in other states.

11.8 Exhibits and Schedules. All exhibits and schedules hereto are an integral part of this Agreement.

11.9 Exchange, Transfer, or Replacement of Notes.

(a) Subject to any restrictions on transfer contained in this Agreement or under applicable Law, upon surrender by any holder of Notes or Warrants (collectively, the “Securities”) to the Company of any certificate or instrument evidencing Securities o, together in each case with a duly executed assignment, the Company at its own expense will issue (or cause to be issued) in exchange therefor and deliver to such holder, a new certificate(s) or instrument(s) evidencing such Securities that are being exchanged, in such denominations as may be requested by the holder. Upon surrender for transfer of any of the Notes, the Company at its own expense will execute and deliver, in the name of the transferee designated by the then Holder of the Notes, one or more notes of the same type and of a like aggregate principal amount. All Notes issued upon any exchange or transfer, upon issuance, will be the legal and valid obligations of the Company, evidencing the same debt, and entitled to the same benefits as the Note surrendered for transfer or exchange.

(b) Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing Securities and of an indemnity in form and substance reasonably satisfactory to the Company, at its expense, the Company will issue and deliver to the holder a new certificate of like tenor, in lieu of such lost, stolen, destroyed or mutilated Security certificate.

(c) Any new certificate issued in exchange for, or upon the loss, theft or destruction of the Security certificate, all as provided herein, shall be in substantially the form of the Security certificate so exchanged, lost, stolen or destroyed.

11.10 Final Agreement; Release. This Agreement, together with the Notes, the other Operative Documents and all the documents, certificates and charter documents delivered herewith or therewith, constitute the final agreement of the parties concerning the matters referred to herein, and supersedes all prior agreements and understandings. Execution of this Agreement by the Credit Parties constitutes a full, complete and irrevocable release of any and all claims which any Credit Party may have at law or in equity in respect of all prior discussions and understandings, oral or written, relating to the subject matter of this Agreement or the other Operative Documents. Neither the Purchasers nor any Holder shall be liable to any Credit Party or any other Person on any theory of liability for any special, indirect, consequential or punitive damages.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 11.11 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

11.12 Taxes; Etc.

(a) Payments Free of Taxes. Any payment or distribution by the Credit Parties to any Holder under the Notes for principal or interest shall not be subject to any deduction or withholding for Taxes, except to the extent required by Law. Notwithstanding any term or provision of any Operative Document to the contrary, if it shall be determined that any payment (other than a payment dealt with under Section 11.18) by a Credit Party to or for the benefit of a Holder pursuant to the terms of any Operative Document, whether for principal, interest or otherwise and whether paid or payable or distributed or distributable, actual or deemed is subject to any deduction or withholding of Taxes (other than Excluded Taxes), then the sum payable by the Credit Parties shall be increased as necessary so that after such required deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 11.12) the Holder receives an amount equal to the sum it would have received had no such deductions or withholding been made. The Credit Parties shall timely remit the full amount so deducted or withheld to the applicable Governmental Authority and shall provide evidence of such payment to such Holder within thirty (30) days of making such payment.

(b) Payment of Other Taxes by the Credit Parties. The Credit Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Holders timely reimburse it for the payment of, any present or future stamp, court or documentary, excise, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Operative Document except any such Taxes imposed with respect to an assignment or participation (other than an assignment made at the request of a Credit Party or following an Event of Default).

(c) Indemnification by the Credit Parties. The Credit Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Taxes other than Excluded Taxes (including Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable and invoiced expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate prepared in good faith, setting forth in reasonable detail the basis for calculating the amount of such payment or liability and delivered to the Company by a Recipient (with a copy to the Purchasers), or by a Purchaser on behalf of a Recipient, shall be conclusive absent manifest error.

(d) Indemnification by the Holders. Each Holder shall severally indemnify the Purchasers, within ten (10) days after demand therefor, for (i) any Taxes attributable to such Holder (but only to the extent that any Credit Party has not already indemnified the Purchasers for such Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Holder’s failure to comply with the provisions of Section 11.3 relating to the maintenance of a Participant Register and (iii) any Taxes attributable to such Holder, in each case, that are payable or paid by the Purchaser in connection with any Operative Document, and any reasonable and invoiced expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate prepared in good faith setting forth in reasonable detail the basis for calculating the amount of such payment or liability and delivered to any Holder by the Purchasers shall be conclusive absent manifest error. Each Holder hereby authorizes the Purchasers to set off and apply any and all amounts at any time owing to such Holder under any Operative Document or otherwise payable by the Purchasers to such Holder from any other source against any amount due to the Purchasers under this paragraph (d).

(e) Evidence of Payments. As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority pursuant to this Section, such Credit Party shall deliver to the Holders the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Holders. Any amounts paid

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document by Holdings under the Operative Documents shall be on its own behalf as debtor thereunder and, for greater certainty, not on behalf of the Company or in respect of any amount owing by the Company under the Operative Documents.

(f) Status of Holders.

(i) Any Holder that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Operative Document shall deliver to the Company, at the time or times reasonably requested by the Company, such properly completed and executed documentation reasonably requested by the Company as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Holder, if reasonably requested by the Company, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company as will enable the Company to determine whether or not such Holder is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in such Holder’s reasonable judgment such completion, execution or submission would subject such Holder to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Holder.

(ii) Without limiting the generality of the foregoing, in the event that a Borrower is a U.S. Person,

(A) any Holder that is a U.S. Person shall deliver to such Borrower on or about the date on which such Holder becomes a Holder under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower), executed copies of IRS Form W-9 certifying that such Holder is exempt from U.S. federal backup withholding tax;

(B) any Holder that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to such Borrower (in such number of copies as shall be requested by the recipient) on or about the date on which such Holder becomes a Holder under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower), whichever of the following is applicable:

(1) in the case of a Holder claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Operative Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Operative Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2) executed copies of IRS Form W-8ECI;

(3) in the case of a Holder claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit C-1 to the effect that such Holder is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to such Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or

(4) to the extent a Holder is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit C- 2 or Exhibit C-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Holder is a partnership and one or more direct or indirect partners of such Holder are claiming the portfolio interest exemption, such Holder may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit C-4 on behalf of each such direct and indirect partner;

(C) any Holder that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to such Borrower (in such number of copies as shall be requested by the recipient) on or about the date on which such Holder becomes a Holder under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower), executed copies of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit such Borrower to determine the withholding or deduction required to be made; and

(D) if a payment made to a Holder under any Operative Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Holder were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Holder shall deliver to such Borrower at the time or times prescribed by law and at such time or times reasonably requested by such Borrower such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by such Borrower as may be necessary for such Borrower to comply with their obligations under FATCA and to determine that such Holder has complied with such Holder’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Holder agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the relevant Borrower in writing of its legal inability to do so.

(g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all invoiced out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h) Survival. Each party’s obligations under this Section shall survive the resignation or replacement of each Holder or any assignment of rights by, or the replacement of, a Holder and the repayment, satisfaction or discharge of all obligations under any Operative Document.

11.13 Intentionally Omitted.

11.14 Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement and the other

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Operative Documents shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement and the other Operative Documents. The parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect or any Event of Default shall occur, the fact that there exists another representation, warranty or covenant or Event of Default relating to the same subject matter (regardless of the relative levels of specificity) which such party has not breached shall not detract from or mitigate the fact that such party is in breach of the first representation, warranty or covenant or that the first Event of Default shall have occurred.

11.15 Further Cooperation. At any time and from time to time, and at its own expense, the Credit Parties shall promptly execute and deliver all such agreements, documents and instruments, and do all such acts and things, as any Purchaser or any Holder reasonably may request in order to further effect the purposes of this Agreement.

11.16 WAIVERS BY THE CREDIT PARTIES. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT OR AS REQUIRED BY APPLICABLE LAW, (A) EACH OF THE CREDIT PARTIES WAIVES PRESENTMENT, DEMAND AND PROTEST, AND NOTICE OF PRESENTMENT WITH RESPECT TO THIS AGREEMENT OR THE NOTES AND (B) EACH PARTY HERETO WAIVES ITS RIGHT TO A JURY TRIAL IN THE EVENT OF ANY LITIGATION INSTITUTED IN RESPECT OF THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER OPERATIVE DOCUMENTS. EACH PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO EACH OTHER PARTY’S ENTERING INTO THIS AGREEMENT AND THAT SUCH OTHER PARTY IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH THE OTHER PARTIES. EACH PARTY HERETO WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

11.17 CONSENT TO FORUM. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF THE CREDIT PARTIES OR THE HOLDERS, EACH OF THE PARTIES HEREBY CONSENTS AND AGREES THAT THE UNITED STATES DISTRICT COURT OR ANY OTHER COURT HAVING SITUS WITHIN THE SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES AND THE PURCHASERS AND ANY OF THE HOLDERS PERTAINING TO, ARISING OUT OF, OR RELATING TO THIS AGREEMENT, THE NOTES AND THE OTHER OPERATIVE DOCUMENTS. EACH OF THE CREDIT PARTIES WAIVES ANY OBJECTION BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE CREDIT PARTIES HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY COMPLYING WITH THE PROVISIONS FOR GIVING NOTICE AS SET FORTH IN THIS AGREEMENT. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF THE PURCHASERS OR THE HOLDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY THE PURCHASERS OR ANY OF THE HOLDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

11.18 Indemnification. The Company shall indemnify the Purchasers, each Holder, and each Related Person of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and invoiced fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonably invoiced out-of-pocket fees and time charges and disbursements for attorneys, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Credit Party) other than such Indemnitee and its Related Persons arising out of, in connection with, or as a result of (a) the execution or delivery of this Agreement, any other Operative Document, or any agreement or instrument contemplated hereby or thereby,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (b) any loan or other credit extension or investment or the use or proposed use of the proceeds therefrom, (c) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Credit Party or any of its Subsidiaries, or any environmental liability related in any way to any Credit Party or any of its Subsidiaries, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party, and regardless of whether any Indemnitee is a party thereto; provided, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a breach of such Indemnitee’s obligations hereunder or under any other Operative Document, if the Company shall have obtained a final and nonappealable judgment in its favor or to such effect on such claim as determined by a court of competent jurisdiction.

11.19 Patriot Act Notification. Each Holder that is subject to the Patriot Act hereby notifies the Credit Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Holder to identify each Credit Party in accordance with the Patriot Act.

11.20 Confidential Information. Each Purchaser agrees to maintain as confidential all information provided to them by any Credit Party, except that such Purchaser may disclose such information (a) to Persons employed or engaged by such Purchaser or any of their Affiliates in evaluating, approving, structuring or administering the Notes and to its and its Affiliates’ partners (or prospective partners), managers, members (or prospective managers), advisors, counsel and consultants who need to know such information (it being understood that the Persons to whom such disclosure is made will first be informed of the confidential nature of such information and instructed to keep such information confidential); (b) to any assignee or potential assignee that has agreed to comply with the covenant contained in this Section 11.20 (and any such assignee or potential assignee may disclose such information to Persons employed or engaged by them or as otherwise as described in clause (a) above); (c) as required or requested by any federal, provincial or state regulatory authority or examiner (including the U.S. Small Business Administration), or any insurance industry association, or as reasonably believed by such Purchaser to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of such Purchaser’s counsel, is required by law; (e) in connection with the exercise of any right or remedy under the Operative Documents or in connection with any litigation to which such Purchaser is a party; (f) to any nationally recognized rating agency or investor of such Purchaser that requires access to information about such Purchaser’s investment portfolio in connection with ratings issued or investment decisions with respect to such Purchaser; (g) that ceases to be confidential through no fault of such Purchaser; or (h) with the written consent of a Credit Party but only to the extent and in the manner so approved by the Credit Party in writing. Notwithstanding the foregoing, the Credit Parties consent to the publication by the Purchasers of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement, and the Purchasers reserve the right to provide to industry trade organizations non-confidential information necessary and customary for inclusion in league table measurements. The Purchasers each acknowledge that it is aware, and that it will advise its directors and officers and persons to whom Notes are transferred and any other Person permitted to be provided confidential information that securities laws in Canada prohibit each of them, while in possession of non-public material information from purchasing or selling securities of the Company or from communicating such information to any third party except in certain limited circumstances. The Purchasers each acknowledge that a breach or threatened breach of these confidentiality provisions would not be susceptible to adequate relief by way of monetary damages only. Accordingly, the Company may, in that case, apply to court for any applicable equitable remedies (including injunctive relief).

11.21 Amendment and Restatement. This Agreement amends, restates, supersedes and replaces the Existing Agreement; provided, however, that the execution and delivery by the undersigned of this Agreement shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished, waived or discharged any of the undersigned’s obligations evidenced by the Existing Agreement, all of which obligations shall continue under and shall hereinafter be evidenced and governed by this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and Restated Securities Purchase Agreement on the date first set forth above.

HOLDERS / PURCHASERS:

GOTHAM GREEN FUND 1, L.P. GOTHAM GREEN FUND 1 (Q), L.P. PURA VIDA MASTER FUND, LTD. By: Gotham Green GP1, LLC, By: Pura Vida Investments, LLC, its general partner its Investment Manager

By: /s/ Jason Adler By: /s/ Efrem Kamen Name:Jason Adler Name:Efrem Kamen Title: Managing Member Title: Managing Member

GOTHAM GREEN FUND II, L.P. PURA VIDA PRO SPECIAL GOTHAM GREEN FUND II (Q), L.P. OPPORTUNITY MASTER FUND, LTD. By: Gotham Green GP II, LLC, By: Pura Vida Pro, LLC, its general partner its Investment Manager

By: /s/ Jason Adler By: /s/ Efrem Kamen Name:Jason Adler Name:Efrem Kamen Title: Managing Member Title: Managing Member

GOTHAM GREEN PARTNERS SPV IV, GOTHAM GREEN PARTNERS SPV VI, L.P. L.P. By: Gotham Green Partners SPV IV GP, By: Gotham Green Partners SPV VI LLC, its general partner GP, LLC, its general partner

By: /s/ Jason Adler By: /s/ Jason Adler Name:Jason Adler Name:Jason Adler Title: Managing Member Title: Managing Member

PARALLAX MASTER FUND, L.P. Acknowledged and Agreed to by: By: Parallax Volatility Advisers, L.P., COLLATERAL AGENT: its attorney in fact/investment adviser GOTHAM GREEN ADMIN 1, LLC

By: /s/ William Bartlett By: /s/ Jason Adler Name:William Bartlett Name:Jason Adler Title: CEO Title: Managing Member

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and Restated Securities Purchase Agreement on the date first set forth above.

HOLDERS / PURCHASERS:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document GOTHAM GREEN FUND 1, L.P. GOTHAM GREEN FUND 1 (Q), L.P. PURA VIDA MASTER FUND, LTD. By: Gotham Green GP1, LLC, By: Pura Vida Investments, LLC, its general partner its Investment Manager

By: /s/ Jason Adler By: /s/ Efrem Kamen Name:Jason Adler Name:Efrem Kamen Title: Managing Member Title: Managing Member

GOTHAM GREEN PARTNERS SPV IV, GOTHAM GREEN PARTNERS SPV VI, L.P. L.P. By: Gotham Green Partners SPV IV GP, By: Gotham Green Partners SPV VI LLC, its general partner GP, LLC, its general partner

By: /s/ Jason Adler By: /s/ Jason Adler Name:Jason Adler Name:Jason Adler Title: Managing Member Title: Managing Member

PARALLAX MASTER FUND, L.P. Acknowledged and Agreed to by: By: Parallax Volatility Advisers, L.P., COLLATERAL AGENT: its attorney in fact/investment adviser GOTHAM GREEN ADMIN 1, LLC

By: /s/ William Bartlett By: /s/ Jason Adler Name:William Bartlett Name:Jason Adler Title: CEO Title: Managing Member

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and Restated Securities Purchase Agreement on the date first set forth above.

HOLDERS / PURCHASERS:

GOTHAM GREEN FUND 1, L.P. GOTHAM GREEN FUND 1 (Q), L.P. PURA VIDA MASTER FUND, LTD. By: Gotham Green GP1, LLC, By: Pura Vida Investments, LLC, its general partner its Investment Manager

By: /s/ Jason Adler By: /s/ Efrem Kamen Name:Jason Adler Name:Efrem Kamen Title: Managing Member Title: Managing Member

GOTHAM GREEN FUND II, L.P. PURA VIDA PRO SPECIAL

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document GOTHAM GREEN FUND II (Q), L.P. OPPORTUNITY MASTER FUND, LTD. By: Gotham Green GP II, LLC, By: Pura Vida Pro, LLC, its general partner its Investment Manager

By: /s/ Jason Adler By: /s/ Efrem Kamen Name:Jason Adler Name:Efrem Kamen Title: Managing Member Title: Managing Member

GOTHAM GREEN PARTNERS SPV IV, GOTHAM GREEN PARTNERS SPV VI, L.P. L.P. By: Gotham Green Partners SPV IV GP, By: Gotham Green Partners SPV VI LLC, its general partner GP, LLC, its general partner

By: /s/ Jason Adler By: /s/ Jason Adler Name:Jason Adler Name:Jason Adler Title: Managing Member Title: Managing Member

PARALLAX MASTER FUND, L.P. Acknowledged and Agreed to by: By: Parallax Volatility Advisers, L.P., COLLATERAL AGENT: its attorney in fact/investment adviser GOTHAM GREEN ADMIN 1, LLC

By: /s/ William Bartlett By: /s/ Jason Adler Name:William Bartlett Name:Jason Adler Title: CEO Title: Managing Member

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

COMPANY:

MEDMEN ENTERPRISES INC.

By: /s/ Reece Fulgham Name:Reece Fulgham Title: Chief Financial Officer

OTHER CREDIT PARTIES:

MM CAN USA, INC.

By: /s/ Reece Fulgham Name:Reece Fulgham Title: Chief Financial Officer

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

MM Enterprises USA, LLC MMOF Vegas, LLC a Delaware limited liability company a Nevada limited liability company

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document By: MM CAN USA, Inc., By: MM Enterprises USA, LLC, A California CorporationIts Manager Its Sole Member

By: /s/ Reece Fulgham By: MM CAN USA, Inc., Name:Reece Fulgham A California Corporation Its: Chief Financial Officer Its Manager

MMOF Vegas Retail, Inc. By: /s/ Reece Fulgham a Nevada corporation Name:Reece Fulgham Its: Chief Financial Officer By: /s/ Reece Fulgham Name:Reece Fulgham MMOF Fremont Retail, Inc. Its: Chief Financial Officer a Nevada corporation

By: /s/ Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer

MMOF Fremont, LLC a Nevada limited liability company

MM Enterprises USA, LLC, Its Sole By: Member

By: MM CAN USA, Inc., A California Corporation Its Manager

By: /s/ Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer

[signatures continue on following pages]

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

MMNV2 Holdings I, LLC Desert Hot Springs Green Horizons, Inc. a Nevada limited liability company a California corporation

By: MM Enterprises USA, LLC, By: /s/ Reece Fulgham Its Sole Member Name:Reece Fulgham Its: Chief Financial Officer By: MM CAN USA, Inc., A California Corporation NVGN RE Holdings, LLC its Manager a Nevada limited liability company

By: /s/ Reece Fulgham By: MM Enterprises USA, LLC, Name:Reece Fulgham Its Sole Member Its: Chief Financial Officer

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Manlin DHS Development, LLC. By: MM CAN USA, Inc., a Nevada limited liability company A California Corporation its Manager By: MM Enterprises USA, LLC, Its Sole Member By: /s/ Reece Fulgham Name:Reece Fulgham By: MM CAN USA, Inc., Its: Chief Financial Officer A California Corporation its Manager MME Florida, LLC a Florida limited liability company By: /s/ Reece Fulgham Name:Reece Fulgham By: MM Enterprises USA, LLC, Its: Chief Financial Officer Its Sole Member

By: MM CAN USA, Inc., A California Corporation its Manager

By: /s/ Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer

MME Culver Retail, Inc. a California corporation

By: /s/ Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer

[signatures continue on following pages]

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

100

MME MFDST, Inc. MME Pasadena Retail, Inc. a California corporation a California corporation

By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer Its: Chief Financial Officer

MME GNTX, LLC Sure Felt LLC a California limited liability company a California limited liability company

By: MM Enterprises USA, LLC, By: MM Enterprises USA, LLC, Its Sole Member Its Sole Member

By: MM CAN USA, Inc., By: MM CAN USA, Inc., A California Corporation A California Corporation its Manager its Manager

By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham

ICH California Holdings Ltd. The Source Santa Ana a California corporation a California corporation

By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer Its: Chief Financial Officer

Rochambeau, Inc. MILKMAN, LLC a California corporation By: MM Enterprises USA, LLC, By: /s/ Reece Fulgham Its Sole Member Name:Reece Fulgham Its: Chief Financial Officer By: MM CAN USA, Inc., A California Corporation MMOF Santa Monica, Inc. its Manager a California corporation By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer Its: Chief Financial Officer

[signatures continue on following pages]

SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

101

OMAHA MANAGEMENT SERVICES, MMOF SM, LLC LLC a limited liability company By: MM Enterprises USA, LLC, By: MM Enterprises USA, LLC, Its Sole Member

By: MM CAN USA, Inc., By: MM CAN USA, Inc., A California Corporation A California Corporation its Manager its Manager By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer Its: Chief Financial Officer EBA HOLDINGS, INC. MATTnJEREMY, INC. By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer Its: Chief Financial Officer FUTURE TRANSACTIONS HOLDINGS LLC PHARMACANN VIRGINIA, LLC By: MM Enterprises USA, LLC, By: MM Enterprises USA, LLC, Its Sole Member

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Its Sole Member By: MM CAN USA, Inc., By: MM CAN USA, Inc., A California Corporation

A California Corporation its Manager its Manager

By: /s/ Reece Fulgham By: /s/ Reece Fulgham Name:Reece Fulgham Name:Reece Fulgham Its: Chief Financial Officer Its: Chief Financial Officer

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SIGNATURE PAGE TO THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

102

EXHIBIT A

Form of Amended and Restated Note

See attached.

103

Execution Version

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MAY 12, 2021.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) 144A THEREUNDER, IF AVAILABLE, AND, IN EACH CASE, IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT, IN THE CASE OF (C)(1) AND (D) ABOVE, AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY IS PROVIDED TO THE EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE US. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.

MEDMEN ENTERPRISES INC. MM CAN USA, INC.

SENIOR SECURED CONVERTIBLE NOTE

Date: January 11, 2021

RECITALS:

WHEREAS, MEDMEN ENTERPRISES INC., a corporation incorporated under the laws of the Province of British Columbia (the “Company”), and MM CAN USA, INC., a California corporation (the “US Borrower” and, with the Company, collectively, the “Borrowers”, and each a “Borrower”), issued senior secured convertible notes which as of the date hereof evidence an aggregate principal amount equal to the aggregate principal amounts set forth in Appendix B hereto, as increased pursuant to the terms of the Operative Documents, to [●], a [●], and its successors and permitted assigns (the “Holder” or “Purchaser”);

AND WHEREAS, in connection with Third Amended and Restated Securities Purchase Agreement, dated January 11, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Securities Purchase Agreement”) among the Holders, the Borrowers, the other Credit Parties party thereto and the Collateral Agent, the Borrowers and Holder desire to amend, restate, supersede and replace the Notes issued prior to the date hereof in their entirety pursuant to the terms and conditions set forth in this amended and restated senior secured convertible note (as amended, restated, supplemented or otherwise modified from time to time, this “Note”);

AND WHEREAS, the Borrowers have agreed to pay a portion of the Restatement Fee in accordance with the Fee Letter by including the amount thereof in the principal amount of this Note (whether on the date hereof or in connection with a prior Advance);

104

AND WHEREAS, therefore, this Note evidences the principal amount of the Obligations of the Borrowers to the Holder and all interest accrued thereon, among other Obligations set forth herein;

NOW, THEREFORE, the parties hereby amend, restate, supersede and replace the Note(s) issued to Holder prior to the date hereof as follows:

ARTICLE 1 PRINCIPAL AND INTEREST

1.1 Promise to Pay

FOR VALUE RECEIVED, the Borrowers, jointly and severally, each hereby acknowledges itself indebted to and promises to pay to the order of the Holder on the earlier of (the “Maturity Date”) (a) the later of (i) the three (3) year anniversary of the Closing Date (the “Initial Maturity Date”), and (ii) the date that is twelve (12) months after the three (3) year anniversary of the Closing Date, if extended by the Borrowers in accordance with Section 3.2(a) hereof (the “Extended Maturity Date”), and (b) such earlier date as the Principal Amount (as hereinafter defined) may become payable in accordance with the provisions of this Note, the principal amount of $[●]1 in lawful money of the United States (together with all Interest accrued and paid in kind under Section 3.3(a), collectively, the “Principal Amount”) and to accrue interest (“Interest”) on the Principal Amount outstanding from time to time at the Applicable Interest Rate (as hereinafter defined) until the Principal Amount of the Note is repaid in full in accordance with its terms.

The Borrowers shall pay Interest in accordance with Section 3.3. Any Obligations (as defined in the Securities Purchase Agreement) arising out of this Note, including without limitation the Principal Amount and the Interest, shall be referred to herein as the “Obligations”. The Holder acknowledges that this Note is one of a series of notes of substantially similar terms and conditions (collectively, the “Notes”) issued by the Borrowers to the Holder and other holders (such holders with the Holder, collectively, the “Holders”) under the terms of the Securities Purchase Agreement.

2.1 Interpretation

Capitalized terms used herein without definition shall have the meaning ascribed thereto in the Securities Purchase Agreement providing for, inter alia, the purchase of this Note by the Holder.

2.2 Plurality and Gender

Words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine and neuter genders and vice versa and words importing Persons shall include firms and corporations and vice versa.

2.3 Headings, etc. ______1 NTD: Fully Accreted Principal Amount with respect to the relevant Purchaser, plus any Restatement Fee to be paid in connection with the Third Restatement Advance. The division of this Note into Articles, Sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Note.

105

2.4 Day Not a Business Day

In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken at or before the requisite time on the next succeeding day that is a Business Day.

2.5 Currency

Any reference in this Note to “Dollars”, “dollars” or the sign “$” shall be deemed to be a reference to lawful money of the United States.

ARTICLE 3 PAYMENT OF PRINCIPAL AND INTEREST

3.1 The Obligations shall be due and payable without deduction or withholding for taxes of any kind or nature, except to the extent required by applicable law, immediately on the earlier of:

(a) the Maturity Date; and

(b) the occurrence and continuance of an Event of Default (as hereinafter defined).

3.2 Maturity Extensions.

The Borrowers have the right to extend the Initial Maturity Date by twelve (12) months at their sole option, (a) provided that:

(i) the Initial Maturity Date is extended with respect to all Notes then outstanding;

(ii) the Borrowers notify the Holders in writing at least sixty (60) days prior to the Initial Maturity Date; and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) on or prior to the Initial Maturity Date the Borrowers pay to the Holders a fee equal to one percent (1.0%) of the Fully Accreted Principal Amount outstanding under all Notes then outstanding by wire transfer of immediately available funds to the account(s) designated by the Holders.

3.3 Interest shall accrue at the Applicable Interest Rate and shall be calculated on the basis of the actual days elapsed in the period for which such Interest is to accrue and on the basis of a year of 360 days. The Borrowers shall pay Interest on each Interest Payment Date as follows:

(a) Interest due on any Interest Payment Date prior to July 2, 2021 shall accrue and may, at Borrower’s option upon written notice to Holder, either (i) be added to the Principal Amount, with such amount accruing Interest as part of the Principal Amount of the Obligations, and such interest paid in kind shall be payable on the date that the remaining Principal Amount is due and payable pursuant thereto, or (ii) be paid in cash in arrears to the Holder, by wire transfer of immediately available funds to the account designated by Holder from time to time; and

106

(b) Interest due on any Interest Payment Date on or after July 2, 2021 shall be paid as follows: (i) fifty percent (50%) of the Interest then due shall be paid in cash in arrears to the Holder, by wire transfer of immediately available funds to the account designated by Holder from time to time; and (ii) fifty percent (50%) of the Interest then due shall be added to the Principal Amount, with such amount accruing Interest as part of the Principal Amount of the Obligations, and such interest paid in kind shall be payable on the date that the remaining Principal Amount is due and payable pursuant thereto.

(c) Notwithstanding Sections 3.3(a)-(b), if Code Section 280E reform is enacted with respect to the cannabis industry in a manner that would eliminate the additional tax burden placed on the Company and its Affiliates, then, effective immediately on the date any such reform goes into effect, (x) the Borrower shall not be permitted to pay Interest in kind by adding such Interest to the Principal Amount, and (y) Borrower shall pay all Interest accruing on and after such date in cash, as it becomes due hereunder.

3.4 For purposes of this Note, the following terms shall have the definitions set forth in this Section 3.4:

(a) “Applicable Interest Rate” means, as of any date, LIBOR plus six percent (6.0%) per annum.

(b) “Interest Payment Date” means the last Business Day of each month, with the first Interest Payment Date after the Third Restatement Closing Date occurring on January 31, 2021.

(c) “Interest Period” means, with respect to periods in which clause (ii) of the definition of LIBOR applies, the period beginning on the day after the applicable Interest Payment Date and ending on the next Interest Payment Date.

(d) “LIBOR” means the greater of (i) 2.5% and (ii) for any Interest Period, the rate equal to the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other Person that takes over the administration of such rate), as published by Reuters (or any other commercially available source providing quotations of such rate as designated by the Holder from time to time) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided, that in no event shall such rate be less than zero or exceed four percent (4.0%); and provided further, that if a rate determined under clause (ii) is not available at such time for such Interest Period, the parties will work in good faith to agree upon an alternative floating rate.

107

4.1 Optional Conversion Right

The Holder has the right (the “Optional Conversion Right”), from time to time, subject to Section 4.7 (if applicable), and at any time on or prior to 5:00 p.m. (Toronto time) on the earlier of the Business Day immediately preceding (i) the Maturity Date and (ii) the date fixed for redemption of this Note in accordance with terms hereof, to convert all or any portion of the outstanding Principal Amount plus, at the Holder’s option, all accrued and unpaid Interest with respect to such Principal Amount and any unpaid fees, into Class B Subordinate Voting Shares of the Company (the “Shares”), at a price equal to the price per Share set forth on Appendix B corresponding to the portion of the Principal Amount being converted (the “Converted Portion”) (or if such price per Share for the Converted Portion is amended under Section 4.5(n) of this Note or Section 8.22 of the Securities Purchase Agreement, such price per Share shall be as set forth on Schedule 1.1(d) to the Securities Purchase Agreement) (each such price per Share, being a “Conversion Price”).

4.2 Exercise of Optional Conversion Right

Subject to Section 4.7, the Optional Conversion Right may be exercised by the Purchaser by completing and signing a notice of conversion in a form reasonably acceptable to the Company and the Purchaser (the “Optional Conversion Notice”) and delivering the Optional Conversion Notice and this Note to the Borrowers. The Optional Conversion Notice shall provide that the Optional Conversion Right is being exercised, shall specify the amount and the Converted Portion(s) being converted, the applicable Conversion Price(s) with respect to such Converted Portion(s), and the date (the “Optional Conversion Issue Date”) on which Shares are to be issued upon the exercise of the Optional Conversion Right (such date to be no earlier than five (5) Business Days and no later than ten (10) Business Days after the day on which the Optional Conversion Notice is delivered to the Borrowers). The conversion shall be deemed to have been effected immediately prior to the close of business on the Optional Conversion Issue Date and the Shares issuable upon conversion shall be deemed to be issued as fully paid and non-assessable at such time. Within ten (10) Business Days after the Optional Conversion Issue Date, a certificate or other evidence of ownership for the required number of Shares shall be issued to the Purchaser. If less than all of the Principal Amount of this Note is the subject of the Optional Conversion Right, then within ten (10) Business Days after the Optional Conversion Issue Date, the Borrowers shall deliver to the Purchaser a replacement Note in the form hereof in the principal amount of the unconverted principal balance hereof and any unconverted portion of any accrued and unpaid Interest and fees (and with Appendix B having been updated for all changes (including prior updates made in Schedule 1.1(d) that were not included in Appendix B prior to such replacement Note being issued), and this Note shall be cancelled. If the Optional Conversion Right is being exercised in respect of the entire Principal Amount of this Note (and, if applicable, all accrued and unpaid Interest and fees), this Note shall be cancelled.

4.3 [Reserved.]

4.4 [Reserved.]

4.5 Other Adjustments of Conversion Price

Each Conversion Price in effect at any date shall be subject to adjustment from time to time as follows:

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(a) If and whenever at any time prior to the Maturity Date, the Company shall:

(i) subdivide or redivide the outstanding Shares into a greater number of Shares;

(ii) reduce, combine or consolidate the outstanding Shares into a smaller number of Shares;

(iii) issue Shares (or securities convertible into or exchangeable for Shares) to the holders of all or substantially all of the outstanding Shares by way of stock dividend; or

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iv) make a distribution on its outstanding Shares payable in Shares or securities exchangeable for or convertible into Shares,

each Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issue of Shares (or securities convertible into or exchangeable for Shares) by way of a stock dividend or other distribution, as the case may be, shall, in the case of the events referred to in Sections 4.5(a)(i), (iii) and (iv) above, be decreased in proportion to the increase in the number of outstanding Shares resulting from such subdivision, redivision or dividend (including, in the case where securities convertible into or exchangeable for Shares are issued, the number of Shares that would have been outstanding had such securities been converted into or exchanged for Shares on such effective or record date) or shall, in the case of the events referred to in Section 4.5(a)(ii) above, be increased in proportion to the decrease in the number of outstanding Shares resulting from such reduction, combination or consolidation on such effective or record date. Such adjustment shall be made successively whenever any event referred to in this Section 4.5(a) shall occur. Any such issue of Shares (or securities convertible into or exchangeable for Shares) by way of a stock dividend or other distribution shall be deemed to have been made on the record date for the stock dividend or other distribution for the purpose of calculating the number of outstanding Shares under Sections 4.5(b) and (g); to the extent that any such securities are not converted into or exchanged for Shares prior to the expiration of the conversion or exchange right, each Conversion Price shall be readjusted effective as at the date of such expiration to the respective Conversion Price which would then be in effect based upon the number of Shares actually issued on the exercise of such conversion or exchange right.

(b) as the “Rights Period”), to subscribe for or purchase Shares (or securities convertible into or exchangeable for Shares) (such subscription price per Share (inclusive of any cost of acquisition of securities exchangeable for or convertible into Shares in addition to any direct cost of Shares) being referred to in this Section 4.5(b) as the “Per Share Cost”), the Borrowers shall give written notice to the Purchaser with respect thereto (any of such events herein referred to as a “Rights Offering”), and the Purchaser shall have fifteen (15) days after receipt of such notice (but prior to the Maturity Date or the date fixed for redemption of this Note) to elect to convert any or all of the Principal Amount of this Note into Shares at the applicable Conversion Prices and otherwise on terms and conditions set out in this Note. If the Purchaser validly elects to convert any or all of the Principal Amount of this Note, such conversion shall occur immediately prior to the record date for the issuance of such rights, options or warrants. If the Purchaser elects not to convert any of the Principal Amount of this Note, there shall continue to be an adjustment to each Conversion Price as a result of the issuance of such rights, options or warrants, in the manner hereinafter provided. Each Conversion Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying such Conversion Price in effect immediately prior to the end of the Rights Period by a fraction:

109

(i) the numerator of which is the aggregate of:

(A) the number of Shares outstanding as of the record date for the Rights Offering; and

(B) the number determined by dividing the product of the Per Share Cost and:

1. where the event giving rise to the application of this Section 4.5(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase additional Shares, the number of Shares so subscribed for or purchased during the Rights Period, or

2. where the event giving rise to the application of this Section 4.5(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase securities exchangeable for or convertible into Shares, the number of Shares for which those securities so subscribed for or purchased during the Rights Period

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document could have been exchanged or into which they could have been converted during the Rights Period,

by the trading price of the Shares on the Canadian Securities Exchange (or such other recognized stock exchange or quotation on which the Shares are listed for trading) (the “Current Market Price”) as of the record date for the Rights Offering; and

(ii) the denominator of which is:

(A) in the case described in subparagraph 4.5(b)(i)(B)(1), the number of Shares outstanding, or

in the case described in subparagraph 4.5(b)(i)(B)(2), the number of Shares that would be (B) outstanding if all the Shares described in subparagraph 4.5(b)(i)(B)(2) had been issued, as at the end of the Rights Period.

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Any Shares owned by or held for the account of the Company or any subsidiary (as defined in the (c) Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

(d) If by the terms of the rights, options or warrants referred to in Section 4.5(b), there is more than one purchase, conversion or exchange price per Share, the aggregate price of the total number of additional Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:

(1) the lowest purchase, conversion or exchange price per Share, as the case may be, if such price is applicable to all Shares which are subject to the rights, options or warrants, and

(2) the average purchase, conversion or exchange price per Share, as the case may be, if the applicable price is determined by reference to the number of Shares acquired.

(e) To the extent that any adjustment in any Conversion Price occurs pursuant to Section 4.5(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in Section 4.5(b), such Conversion Price will be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the Conversion Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

(f) [Intentionally Omitted].

(g) If and whenever at any time prior to the Maturity Date, the Company shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Shares of (i) shares of any class other than Shares (or other than securities convertible into or exchangeable for Shares), or (ii) rights, options or warrants (other than rights, options or warrants referred to in Section 4.5(b)), or (iii) evidences of its indebtedness, or (iv) assets (in each case, other than dividends paid in the ordinary course) then, in each such case, the Borrowers shall give written notice to the Purchaser with respect thereto, and the Purchaser shall have fifteen (15) days after receipt of such notice to elect to convert any or all of the Principal Amount of this Note into Shares at the then applicable Conversion Prices and otherwise on terms and conditions set out in this Note. If the Purchaser elects to convert any or all of the Principal Amount of this Note, such conversion shall occur immediately prior to the record date for the making of such distribution. If the Purchaser elects not to convert any of the Principal Amount of this Note, there shall continue to be an adjustment to each Conversion Price as a result of the making of such distribution (herein referred to as a “Special Distribution”), determined in the manner hereafter set out in Section 4.5(h). In this Section 4.5(g) the term “dividends paid in the ordinary course” shall include the value of any securities or other property or assets distributed in lieu of cash dividends paid in the ordinary course at the option of shareholders.

(h) In circumstances described in Section 4.5(g), each Conversion Price will be adjusted effective immediately after such record date to a price determined by multiplying such Conversion Price in effect on such record date by a fraction:

(1) the numerator of which is:

(A) the product of the number of Shares outstanding on such record date and the Current Market Price of the Shares on such record date; less

(B) the aggregate fair market value (as determined by action by the directors of the Company, acting reasonably) to the holders of the Shares of such securities or property or other assets so issued or distributed in the Special Distribution; and

(2) the denominator of which is the number of Shares outstanding on such record date multiplied by the Current Market Price of the Shares on such record date.

Any Shares owned by or held for the account of the Company or any subsidiary (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

(i) [Intentionally Omitted]

(j) In the case of any reclassification of, or other change in, the outstanding Shares (other than a change referred to in Section 4.5(a), Section 4.5(b), or Section 4.5(g) or hereof), each Conversion Price shall be adjusted in such manner, if any, and at such time, as the Board of Directors of the Company determines to be appropriate on a basis consistent with the intent of this Section 4.5; provided that if at any time a dispute arises with respect to adjustments provided for in this Section 4.5(j), such dispute will be conclusively determined by the auditors of the Borrowers or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the directors of the Company, acting reasonably, and any such determination will be binding on the Borrowers and the Purchaser.

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(k) The Borrowers will provide such auditors or accountants with access to all necessary records of the Borrowers. If and whenever at any time after the date hereof there is a reclassification or redesignation of the Shares outstanding at any time or change of the Shares into other shares or into other securities (other than as set out in Section 4.5(a), (b), (g) or (i)), or a consolidation, amalgamation or merger of the Company with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification or redesignation of the outstanding Shares or a change of the Shares into other shares and other than as set forth in Section 4.5(a) or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity (any of such events being called a “Capital Reorganization”), the Purchaser, upon the exercising of the Optional Conversion Right, after the effective date of such Capital Reorganization, will be entitled to receive in lieu of the number of Shares to which the Purchaser was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property, if any, which the Purchaser would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Purchaser had been the registered holder of the number of Shares to which such Purchaser was theretofore entitled upon exercise of the Optional Conversion Right. If determined appropriate by action of the directors of the Company, appropriate adjustments will be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 4.5 with respect to the rights and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document interests thereafter of the Purchaser to the end that the provisions set forth in this Section 4.5 will thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any shares, other securities or other property thereafter deliverable upon the exercise of the Optional Conversion Right. Any such adjustment must be made by and set forth in an amendment to this Note approved by action by the directors of the Company, acting reasonably, and will for all purposes be conclusively deemed to be an appropriate adjustment.

(l) In any case in which this Section 4.5 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event, issuing to the Purchaser before the occurrence of such event, the additional Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Borrowers shall deliver to the Purchaser an appropriate instrument evidencing the Purchaser’s right to receive such additional Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Shares declared in favour of holders of record of Shares on and after the Issue Date or such later date as the Purchaser would, but for the provisions of this Section 4.5(l), have become the holder of such additional Shares pursuant to this Section 4.5.

(m) The adjustments provided for in this Section 4.5 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other event resulting in any adjustment under the provisions of this Section, provided that, notwithstanding any other provision of this Section, no adjustment of any Conversion Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in such Conversion Price then in effect; provided, however, that any adjustments which by reason of this Section 4.5(m) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(n) The Conversion Price for (i) the Amended Portion of the Existing Notes Principal, (ii) the portion of this Note representing the Tranche 4 Advance and each Incremental Advance (for the avoidance of doubt, including (without duplication) any interest paid in kind with respect to such principal under Section 3.3(a) above), (iii) the portion of this Note representing the Restatement Fee (for the avoidance of doubt, including (without duplication) any interest paid in kind with respect to such principal under Section 3.3(a) above), and (iv) the portion of this Note representing the Third Restatement Advance and each other Advance evidenced by this Note, in each case, is subject to further adjustment in accordance with Section 8.22 of the Securities Purchase Agreement. To the extent there is any conflict between the terms of this Section 4.5 and the Securities Purchase Agreement (including changes to Schedule 1.1(d) to the Securities Purchase Agreement), the Securities Purchase Agreement (and such Schedule 1.1(d)) shall control.

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No Conversion Price adjustment will be made to the extent that the Company makes an equivalent distribution to holders of Notes in respect of such Notes. No adjustment to any Conversion Price will be made for distributions or dividends on Shares issuable upon conversion of Notes that have been surrendered for conversion, provided that holders converting their Notes shall be entitled to receive, in addition to the applicable number of Shares, accrued and unpaid interest payable in cash from, and including, the most recent interest payment date to, but excluding, the date of conversion.

4.6 Legend; Transfer Restrictions

(a) Any certificates or other evidence of ownership representing Shares issued upon conversion of this Note prior to the date that is four months and one day after the date of issue of this Note, and all certificates or other evidence of ownership issued in exchange or in substitution thereof shall bear the following legend:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MAY 12, 2021.”

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document provided that at any time subsequent to the date which is four months after the date of issue of this Note, any certificate or other evidence of ownership representing any such Shares may be respectively exchanged for a certificate or other evidence bearing no such legend.

(b) The Note and the Shares to be issued upon conversion of this Note have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States. “United States” and “U.S. person” are as defined in Regulation S under the U.S. Securities Act.

(c) Any Shares issued upon conversion of Note in the United States, or to or for the account or benefit of a U.S. person or a person in the United States, will be “restricted securities”, as defined in Rule 144(a)(3) under the U.S. Securities Act. The certificates or DRS statements representing such Shares, as well as all certificates or DRS statements issued in exchange or in substitution therefor, until such time as is no longer required under the applicable requirements of the U.S. Securities Act, or applicable state securities laws, will bear, on the face of such certificate or DRS statement, the following legends:

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF PARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO SUCH EFFECT.

THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.”

provided, that if the Shares are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S under the U.S. Securities Act (“Regulation S”) and such Shares were acquired at a time when the Company is a “foreign issuer” as defined in Regulation S, the legends set forth above in this Section 4.6(c) may be removed by providing a declaration to the registrar and transfer agent of the Company, as set forth in Appendix A attached hereto (or in such other form as the Company may prescribe from time to time); and provided, further, that, if the Shares are being sold otherwise than in accordance with Rule 904 of Regulation S and other than to the Company, the legends may be removed by delivery to the registrar and transfer agent and the Company of an opinion of counsel of recognized standing in form

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and substance reasonably satisfactory to the Company that such legends are no longer required under applicable requirements of the U.S. Securities Act or state securities laws.

(d) Notwithstanding any provision to the contrary contained herein, no Shares will be issued pursuant to the conversion of any Note if the issuance of such securities would constitute a violation of the securities laws of any applicable jurisdiction, and the certificates or DRS statements evidencing the Shares thereby issued may bear such legend as may, in the opinion of legal counsel to the Company, be necessary in order to avoid a violation of any securities laws of any applicable jurisdiction or to comply with the requirements of any stock exchange on which the Shares of the Company are listed, provided that, at any time, in the opinion of legal counsel to the Company, such legends are no longer necessary in order to avoid a violation of any such laws, or the holder of any such legended certificate or DRS statement, at that holder’s expense, provides the Company with evidence reasonably satisfactory in form and substance to the Company (which may include an opinion of legal counsel of recognized standing in form and substance reasonably satisfactory to the Company) to the effect that such holder is entitled to sell or otherwise transfer such Shares in a transaction in which such legends are not required, such legended certificate or DRS statement may thereafter be surrendered to the Company in exchange for a certificate or DRS statement which does not bear such legend.

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4.7 Restriction on Conversion

Notwithstanding anything to the contrary herein or in any other Operative Document, the conversion of certain portions of the Principal Amount (for the avoidance of doubt, excluding any interest paid in kind with respect to such principal under Section 3.3(a) above) into Shares is not permitted until the date set forth with respect to such Principal Amount in Appendix B (if any).

ARTICLE 5 PREPAYMENT

5.1 No Early Redemption or Prepayment

Except pursuant to Sections 5.2 and 5.3, the Borrowers shall not be permitted to redeem or repay the Note prior to the Maturity Date without the prior written consent of the Holders holding more than fifty percent (50%) of the aggregate unpaid principal amount outstanding under the Notes.

5.2 Voluntary Prepayment

(a) The Borrowers shall not repay, in whole or in part, any portion of the Principal Amount prior to September 27, 2021 (such period is the “No-Call Period”).

(b) Subject to the rest of this Section 5.2, after the No-Call Period, from time to time the Borrowers may repay, in whole or in part, the then outstanding Principal Amount of this Note together with accrued and unpaid Interest and fees, provided that (i) the Company has notified the Purchasers in writing at least ninety (90) days prior to the proposed prepayment date (such ninety (90) day notice may be provided prior the expiration of the No-Call Period to enable a prepayment to occur at any time on or after September 27, 2021), (ii) no Event of Default exists on the date of such notice of prepayment or for the entire ninety (90) day period prior to the proposed prepayment date and (iii) the Borrowers pay the Applicable Premium at the time of such prepayment. For purposes of this Note, “Applicable Premium” means, with respect to any prepayment occurring before April 23, 2021 (if the Holder has consented in writing to such prepayment), five percent (5%) of the Principal Amount being repaid, and thereafter (if the Holder has consented in writing to any prepayment before September 27, 2021), three percent (3%) of the Principal Amount being repaid. Each notice of prepayment shall include the proposed prepayment date and the Principal Amount, interest, fees and Applicable Premium to be paid on such prepayment date. Such prepayment will be paid by wire transfer of immediately available funds to the account designated by the Holder.

5.3 Change of Control

(a) The Borrowers shall give written notice to the Purchaser of any Change of Control at least thirty (30) days or, if the Borrowers become aware that a Change of Control may occur in less than thirty (30) days, as soon as reasonably possible prior to the effective date of any such Change of Control (the “Change of Control Notice”) and another written notice on or as soon as reasonably practicable after the effective date of such Change of Control (the “Change of Control Closing Notice”).

(b) After receipt of a Change of Control Notice, the Holder shall, in its sole discretion, have the right to require the Borrowers to prepay all Obligations then outstanding under this Note, plus five percent (5%) of the Principal Amount being repaid. The Holder may require such prepayment to be completed concurrently with the closing of the Change of Control. Alternatively, the Holder may, in its sole discretion, elect to convert all or any portion of the Obligations hereunder in accordance with Section 4.1, in which case any such portion converted will, for certainty, not be subject to repayment or any premium thereon.

ARTICLE 6 SECURITY

6.1 As security for the Obligations under this Note, each Borrower shall grant to the Collateral Agent, for the benefit of the Holder, a first priority security interest over all of such Borrower’s present and after acquired assets and property in which such Borrower has rights, of whatsoever nature or kind and wherever situated, save and except property specifically excluded in the Securities Purchase Agreement or any security or pledge agreement granted by such Borrower to the Collateral Agent, for the benefit of the Holder, which shall rank pari passu between and among the Holders (the “Security Interest”). The Security Interest shall be evidenced by one or more security or pledge agreements entered into between each Borrower and the Holder.

6.2 This Note is entitled to and shall have the benefit of a cross guarantee by each Borrower and a guaranty by each Subsidiary (collectively, the “Guarantors”), of all of the Obligations of the Borrowers to the Purchaser under or in connection with this Note in favour of the Purchaser dated as of the date of this Note (the “Guarantees”). As security for such Obligations under the Guarantees, each Guarantor shall grant in favour of the Collateral Agent, for the benefit of the Holder, a first priority security interest over all of such Guarantor’s present and after acquired assets and property in which such Guarantor has rights, of whatsoever nature or kind and wherever situated, save and except property specifically excluded in the Securities Purchase Agreement or any security or pledge agreement granted by such Guarantor to the Collateral Agent, for the benefit of the Holder, which shall rank pari passu between and among the Holders. The security granted to the Collateral Agent, for the benefit of the Holder, by each of the Guarantors shall be evidenced by one or more security agreements entered into between the Guarantors and the Holder.

ARTICLE 7 EVENTS OF DEFAULT

7.1 The occurrence of an “Event of Default” under the Securities Purchase Agreement shall constitute an event of default (“Event of Default”) hereunder.

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7.2 Upon and during the continuation of an Event of Default, the Interest Rate shall increase by three percent (3%) per annum, and the Holder shall be entitled to all of the rights and remedies set forth in the Securities Purchase Agreement and available to it under applicable law.

ARTICLE 8 COVENANTS

So long as any Obligations remain unpaid, the Company shall perform the covenants and actions as set forth in, and in accordance with, the Securities Purchase Agreement.

8.2 Tax Treatment

For United States federal income tax purposes, the parties agree to treat the Notes as convertible debt instruments that are excepted from the contingent payment debt instrument rules of Treas. Reg. § 1.1275-4. The parties shall file all federal income tax returns and reports in a consistent manner unless otherwise required pursuant to a final “determination” within the meaning of Section 1313 of the Internal Revenue Code of 1986, as amended.

ARTICLE 9 GENERAL MATTERS

9.1 Amalgamation

The Borrowers acknowledge that if, to the extent permitted under the Securities Purchase Agreement, either Borrower amalgamates or merges with any other Person (a) the term “Company” or “U.S. Borrower”, where used herein shall extend to and include the applicable amalgamated or surviving Person, and (b) the term, “Obligations”, where used herein shall extend to and include the Obligations of the Borrowers and the amalgamated Person.

9.2 No Modification or Waiver

No modification, variation or amendment of any provision of this Note shall be made without the prior written consent of Holders holding more than fifty percent (50%) of the aggregate unpaid principal amount outstanding under the Notes. The Holder shall not, by any act, delay, omission or otherwise, be deemed to have expressly or impliedly waived any of its rights, powers and/or remedies unless such waiver shall be in writing and executed by an authorized officer of the Holder. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by the Holder of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which the Holder would otherwise have on any future occasion, whether similar in kind or otherwise.

9.3 Entire Agreement

This Note together with the Securities Purchase Agreement and the other Operative Documents constitute the entire agreement between the parties and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties with respect to the subject matter hereof. There are no other agreements between the parties in connection with the subject matter hereof except as specifically set forth or referred to herein or therein.

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9.4 Notice to the Company and the Holder

Any notice to be given to the Borrowers or the Holder shall be in writing and shall be deemed to be validly given if such notice is delivered in accordance with Section 11.6 of the Securities Purchase Agreement.

9.5 Replacement of Note

If this Note shall become mutilated or be lost, stolen or destroyed and in the absence of notice that the Note has been acquired by a bona fide purchaser, the Borrowers shall issue a new Note upon surrender and cancellation of the mutilated Note, or, in the event that a Note is lost, stolen or destroyed, in lieu of and in substitution for the same, and the substituted Note shall be in the form hereof and the Holder shall be entitled to benefits hereof. In case of loss, theft or destruction, the Holder shall furnish to the Borrowers such evidence of such loss, theft or destruction as shall be satisfactory to the Borrowers in their discretion acting reasonably together with an indemnity in form and substance

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document mutually acceptable to the Borrowers and the Holder, each acting reasonably. The applicant shall pay reasonable expenses incidental to the issuance of any such new Note.

9.6 Successors and Assigns

This Note shall inure to the benefit of the Holder and its successors and its permitted assigns and shall be binding upon the Borrowers and each of their successors and permitted assigns.

9.7 Assignment

No Party may assign its rights or benefits under this Note except that the Holder may assign all or any portion of its rights and benefits under this Note to any Person or Persons who may purchase all or part of this Note, subject to compliance with applicable securities laws and the Securities Purchase Agreement.

9.8 Registered Obligations

The Borrowers shall keep a “register” in which the Borrowers shall provide for the recordation of the name and address of, and the amount of outstanding principal and interest owing to, the Holder or its permitted assignees. The entries in the register shall be conclusive evidence of the amounts due and owing to the Holder or its permitted assignees in the absence of manifest error. The Borrowers, the Holder, and its successors and assigns shall treat each Person whose name is recorded in the register pursuant to the terms hereof as the Holder for all purposes. Notwithstanding anything to the contrary contained in this Note, the Note is a registered obligation and the right, title and interest of the Holder and its assignees in and to this Note shall be transferable only upon notation of such transfer in the register. This Section 9.88 shall be construed so that the Note is at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code, and any related regulations (and any other relevant or successor provisions of the Code or such regulations). The register shall be available for inspection by the Holder and its successors and permitted assignees at from time to time upon reasonable prior notice to the Borrowers.

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9.9 Invalidity of Provisions

Each of the provisions contained in this Note is distinct and severable and a declaration of invalidity or unenforceability of any such provision by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof or thereof.

9.10 Governing Law

THIS NOTE AND EACH OTHER TRANSACTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

9.11 Maximum Rate of Interest

Notwithstanding any other provisions of this Note, if the amount of any interest, premium, fees or other monies or any rate of interest required to be paid under this Note or any other document entered into in connection with this Note would, but for this provision, contravene any applicable Law, then such amount or rate of interest shall be reduced to such maximum amount as would not contravene such provisions; and to the extent that any excess has been charged or received the Holder shall apply such excess against the outstanding Obligations and refund to the Borrowers any further excess amount.

9.12 Time of Essence

Time shall be of the essence of this Note and a forbearance by the Holder of the strict application of this provision shall not operate as a continuing or subsequent forbearance.

Each Borrower hereby waives presentment, notice of dishonor, protest and notice of protest. No failure or delay by the Holder in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right exclude other further exercise thereof or the exercise of any other right.

9.14 Waiver of Trial by Jury

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS NOTE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING HEREUNDER OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY TRANSACTION AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY TO THIS NOTE HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.14 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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9.15 Obligations Joint and Several

All obligations of the Borrowers under this Note are joint and several.

9.16 Amendment and Restatement

This Note amends, restates, supersedes and replaces all Notes previously issued to the Holder by the Borrowers under the Securities Purchase Agreement or the Existing Agreement (as defined in the Securities Purchase Agreement) (the “Previously Issued Notes”); provided, however, that the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s obligations evidenced by the Previously Issued Notes, all of which obligations shall continue under and shall hereinafter be evidenced and governed by this Note.

[Signature Page Follows]

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IN WITNESS WHEREOF, each Borrower has caused this Note to be executed by its duly authorized officer as of the date first written above.

MEDMEN ENTERPRISES INC.

Per: Name: Title:

MM CAN USA, INC.

Per: Name:

122

ACCEPTED AND AGREED as of the date first written above by:

[●] By: [●] Its: [●]

By: Name: Its:

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APPENDIX A

FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO: Registrar and transfer agent for the shares of MedMen Enterprises Inc. (the “Issuer”)

The undersigned (A) acknowledges that the sale of the ______Class B Subordinate Voting Share in the capital of the Issuer represented by certificate number_____ , to which this declaration relates, is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and (B) certifies that (1) the undersigned is not an “affiliate” (as defined in Rule 405 under the U.S. Securities Act) of the Issuer (except solely by virtue of being an officer or director of the Issuer) or a “distributor”, as defined in Regulation S, or an affiliate of a “distributor”; (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States, or (b) the transaction was executed on or through the facilities of a designated offshore securities market within the meaning of Rule 902(b) of Regulation S under the U.S. Securities Act, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States; (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged in any directed selling efforts in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S under the U.S. Securities Act with fungible unrestricted securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or a scheme to evade the registration provisions of the U.S. Securities Act. Unless otherwise specified, terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

Dated: ______

Signature of Individual (if Seller is an individual)

Authorized signatory signature (if Seller is not an indivi

Name of authorized signatory (please print)

Official capacity of authorized signatory (print print)

124

Affirmation by Seller’s Broker-Dealer (Required for sales pursuant to Section (B)(2)(b) above)

We have read the representations of our customer______(the “Seller”) contained in the foregoing Declaration for Removal of Legend, dated _____ , 20 , with regard to the sale, for such Seller’s account, of ______Class B Subordinate Voting Shares (the “Securities”) of the Issuer represented by certificate number ______. We have executed sales of the Securities pursuant to Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), on behalf of the Seller. In that connection, we hereby represent to you as follows:

(1) (no offer to sell Securities was made to a person in the United States;

(2) the sale of the Securities was executed in, on or through the facilities of the Canadian Securities Exchange or another designated offshore securities market (as defined in Rule 902(b) of Regulation S under the U.S. Securities Act), and, to the best of our knowledge, the sale was not pre-arranged with a buyer in the United States;

(3) no “directed selling efforts” were made in the United States by the undersigned, any affiliate of the undersigned, or any person acting on behalf of the undersigned; and

(4) we have done no more than execute the order or orders to sell the Securities as agent for the Seller and will receive no more than the usual and customary broker’s commission that would be received by a person executing such transaction as agent.

For purposes of these representations: “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the undersigned; “directed selling efforts” means any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the Securities (including, but not be limited to, the solicitation of offers to purchase the Securities from persons in the United States); and “United States” means the United States of America, its territories or possessions, any State of the United States, and the District of Columbia.

Legal counsel to the Issuer shall be entitled to rely upon the representations, warranties and covenants contained herein to the same extent as if this affirmation had been addressed to them. ______Name of Firm

Per: Authorized Signatory

[End of Appendix A]

Execution Version

APPENDIX B

PRINCIPAL AMOUNTS; CONVERSION PRICES; RESTRICTIONS ON CONVERSION

Advances Made and Fees Paid on or prior to November 27, 2019 (“Existing Notes”):

Fully Conversion Conversion Conversion Conversion Conversion Accreted Price for Price for Price for Price for to Shares Initial Principal 28% of 15% of 52% of 5% of FullyRestricted Tranche Date of Principal Amount as Fully Fully Fully Accreted until: Issuance Amount of Third Accreted Accreted Accreted Principal RestatementPrincipal Principal Principal Amount1 Closing Amount1 Amount1 Amount2 Date 1-A 4/23/19 07/02/21 1-B 5/22/19 07/02/21 2 7/12/19 07/02/21 Amendment 10/29/19 07/02/21 Fee 3 11/27/19 07/02/21 Total principal amounts for Existing Notes:

The aggregate “July 2, 2020 Existing Notes Principal” evidenced by this Note is $ .

1 As of the Third Restatement Closing Date, and subject to change under Section 4.5 of this Note and Section 8.22 of the Securities Purchase Agreement.

2 As of the Third Restatement Closing Date, and subject to change under Section 4.5 of this Note.

[Remainder of page intentionally left blank]

126

Advances Made and Fees Paid After November 27, 2019:

Fully Accreted Initial Principal Principal Amount as Amount Restatement of Conversion Fee Total Third to Allocated to Initial Restatement Shares Date of Conversion Principal Principal Closing Restricted Tranche Issuance Price3 Amount Amount Date until: 4 3/27/20 07/ 02/ 21

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Incremental 4/24/20 07/02/21 Advance 1 2020 Amendment 7/2/20 07/02/21 Fee Incremental 9/14/20 N/A Advance 2 Third 1/11/ 21 N/A Restatement Advance Total principal amount for the foregoing, as of the Third Restatement Closing Date:

Fully Accreted Principal Amount as of Third Restatement Closing Date: $[●]

3 Conversion Prices are subject to change under Section 4.5 of this Note and Section 8.22 of the Securities Purchase Agreement.

*Due to a scrivener’s error, the Incremental Advance 2 notes previously reflected a one-year conversion restriction ending on September 14, 2021. To reform this error and as indicated on this Appendix B, there is no conversion restriction on the Incremental Advance 2 notes. Due to a scrivener’s error, the notes that were amended on September 14, 2020 previously reflected a one-year conversion restriction ending on September 14, 2021. To reform this error and as indicated on this Appendix B, the conversion restriction applicable to these notes ends on July 2, 2021.

**The conversion restriction applies to interest paid in kind on the “Amended and Restated Notes” (as defined in the Second Amended and Restated Securities Purchase Agreement) with respect to the “July 2, 2020 Existing Notes Principal” or the “Restatement Fee” on or before the “Second Restatement Closing Date” (each as defined in the Second Amended and Restated Securities Purchase Agreement) as provided in Section 3.4(c) of the Second Amended and Restated Securities Purchase Agreement as of July 2, 2020; the conversion restriction does not apply to interest paid in kind on the “Amended and Restated Notes” (as defined in the Second Amended and Restated Securities Purchase Agreement) with respect to the “July 2, 2020 Existing Notes Principal” or the “Restatement Fee” after the “Second Restatement Closing Date” (each as defined in the Second Amended and Restated Securities Purchase Agreement) as provided in Section 3.4(c) of the Second Amended and Restated Securities Purchase Agreement as of July 2, 2020.

In the event that there are further amendments to the Notes, the conversion date restrictions may need to be updated.

To the extent there is any conflict between this Appendix B and Schedule 1.1(d) to the Securities Purchase Agreement, Schedule 1.1(d) shall control.

127

EXHIBIT B

Form of Third Restatement Warrant

See attached.

128

Execution Version

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF CLAUSE (C) OR (D), THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH EFFECT.

THESE WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THE SHARES ISSUABLE UPON EXERCISE OF THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [●], 2021.

THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE AFTER 5:00 P.M. (TORONTO TIME) ON THE EXPIRY DATE(S) SET FORTH ON APPENDIX “A” HERETO, SUBJECT TO THE TERMS AND CONDITIONS HEREIN, UNLESS THE HOLDER (AS DEFINED HEREIN) HAS EXERCISED ITS RIGHTS PRIOR THERETO.

MEDMEN ENTERPRISES INC.

(Organized under the laws of British Columbia)

Certificate Number: 2021-3AR-[●] Warrant to Purchase Issuance Date: January [●], 2021 [●] Shares

SHARE PURCHASE WARRANTS

THIS IS TO CERTIFY THAT, for value received, [●], [●], a [●], or its lawful assignee (the “Holder”) is entitled to subscribe for and purchase up to [●] non-assessable Class B Subordinate Voting Shares (collectively, the “Shares”, and individually, a “Share”) in the capital of MEDMEN ENTERPRISES INC., a company organized under the laws of the Province of British Columbia (the “Company”) at the price per Share set forth on APPENDIX “A” at any time on or before the Expiry Time. This Warrant Certificate (as defined herein) is subject to the provisions of the Terms and Conditions attached hereto as SCHEDULE “A” and forming part hereof.

The rights represented by this Warrant Certificate may be exercised by the Holder, in whole or in part (but not as to a fraction of a Share) by surrender of this Warrant Certificate (properly endorsed as required), together with the Warrant Exercise Form (as defined herein) in the form attached hereto as APPENDIX “C”, duly completed and executed, to the Company at 10115 Jefferson Blvd., Culver City, California 90232, Attention: General Counsel, or such other address as the Company may from time to time in writing direct, together with a certified cheque, bank draft or wire transfer payable to or to the order of the Company in payment of the purchase price of the number of Shares subscribed for. The Holder is advised to read “Instructions to Holders” attached hereto as APPENDIX “B” for details on how to complete the Warrant Exercise Form.

IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be executed by its duly authorized officer, as of the Issuance Date set forth above.

MEDMEN ENTERPRISES INC.

By: Name: Title:

130

SCHEDULE “A”

TERMS AND CONDITIONS ATTACHED TO CLASS B SUBORDINATE VOTING SHARE PURCHASE WARRANTS ISSUED BY MEDMEN ENTERPRISES INC. (the “Company”)

Each Warrant (as defined herein), whether single or part of a series hereunder, is subject to these Terms and Conditions as they were at the date of issue of the Warrant.

PART 1 DEFINITIONS AND INTERPRETATION

Definitions

Section 1.1 In these Terms and Conditions, except as otherwise expressly provided herein, the following words and phrases will have the following meanings:

(a) “Company” means MedMen Enterprises Inc., a corporation organized under the laws of the Province of British Columbia and includes any successor corporations and assigns;

(b) “Company’s auditor” means the accountant duly appointed as auditor of the Company;

(c) “Exercise Price” means the price(s) per Share set forth on APPENDIX “A” or as may be adjusted pursuant to Part 5 or Section 8.22 of the Purchase Agreement;

(d) “Expiry Date” means the date(s) set forth on APPENDIX “A”.

(e) “Expiry Time” means 5:00 p.m. (Toronto time) on the Expiry Date;

(f) “Holder” means the registered holder of the Warrants;

(g) “person” means an individual, corporation, limited liability company, partnership, trust, trustee or any unincorporated organization, and words importing persons have a similar meaning;

(h) “Purchase Agreement” means the Third Amended and Restated Securities Purchase Agreement dated January [●], 2021 among the Company, the other Credit Parties party thereto, the Holder, the other Purchasers party thereto and the Collateral Agent party thereto, pursuant to which the Holder has purchased, among other securities, the Warrants, as amended, restated, supplemented or otherwise modified from time to time;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) “Shares” or, as appropriate in the context, “shares” means the Class B Subordinate Voting Shares in the capital of the Company as constituted at the date of issue of the Warrants and any shares resulting from any event referred to in Part 5;

(j) “Warrant” means a warrant of the Company as evidenced by the Warrant Certificate, and one (1) Warrant entitles the Holder to purchase one (1) Share at any time on or prior to the Expiry Time at the Exercise Price;

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(k) “Warrant Certificate” means this Amended and Restated Warrant Certificate evidencing the Warrants; and

(l) “Warrant Exercise Form” means APPENDIX “C” hereof.

Interpretation

Section 1.2 In these Terms and Conditions, except as otherwise expressly provided herein:

(a) the words “herein”, “hereof”, and “hereunder” and other words of similar import refer to this Warrant Certificate as a whole and not to any particular Part, Section, subsection, clause, subclause or other subdivision;

(b) a reference to a Part, Section, subsection, clause, subclause or other subdivision means a Part, Section, subsection, clause, subclause or other subdivision, as applicable, of these Terms and Conditions;

(c) the headings are for convenience only, do not form a part of these Terms and Conditions and are not intended to interpret, define or limit the scope, extent or intent of these Terms and Conditions or any of its provisions;

(d) all dollar amounts referred to herein are expressed in United States dollars;

(e) time will be of the essence hereof; and

(f) words importing the singular number include the plural and vice versa, and words importing the masculine gender include feminine and neuter genders.

Applicable Law

Section 1.3 This Warrant Certificate will be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and will be treated in all respects as a legal contract under the laws of the Province of British Columbia.

Protection of Certain Individuals

Section 1.4 Subject to as herein provided, all or any of the rights conferred upon the Holder may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement herein contained or in any of the Warrants represented hereby shall be taken against any shareholder, employee, consultant, officer or director of the Company or of any of its affiliates, either directly or through the Company or any of its affiliates, it being expressly agreed and declared that the obligations under the Warrants evidenced hereby, are solely corporate obligations of the Company and that no personal liability whatever shall attach to or be incurred by the shareholders, employees, consultants, officers or directors of the Company or of any of its affiliates or any of them in respect thereof, any and all rights and claims against every such shareholder, employee, consultant, officer or director being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants evidenced hereby.

PART 2 ISSUE OF WARRANTS

Additional Warrants

Section 2.1 Subject to the other Operative Documents, the Company may at any time and from time to time issue Warrants or grant or issue options or other rights to purchase or otherwise acquire shares of the Company.

Issue in Substitution for Lost Warrants

Section 2.2 In case this Warrant Certificate will become mutilated, lost, destroyed or stolen, the Company in its discretion may issue and deliver a new Warrant Certificate(s) of like date and tenor as the one mutilated, lost, destroyed or stolen in exchange for, and in place of, and upon cancellation of, such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the Warrants represented by such substituted Warrant Certificate(s) will be entitled to the benefit hereof and rank equally in accordance with its terms with all other Warrants of the same issue. The Company may charge a reasonable fee for the issuance and delivery of a new Warrant Certificate(s).

Section 2.3 The applicant for the issue of a new Warrant Certificate(s) pursuant hereto will bear the cost of the issue thereof and in the case of loss, destruction or theft furnish to the Company such evidence of ownership, and of loss, destruction or theft of this Warrant Certificate so lost, destroyed or stolen as will be satisfactory to the Company in its reasonable discretion; and such applicant may also be required to furnish indemnity in amount and form satisfactory to the Company in its discretion and will pay the reasonable charges of the Company in connection therewith.

Holder Not a Shareholder

Section 2.4 The holding of a Warrant alone will not constitute the Holder a shareholder of the Company with respect to the Shares issuable upon exercise of such Warrant, nor entitle the Holder to any right or interest in respect thereof, except as expressly provided in this Warrant Certificate.

Securities Law Exemption

Section 2.5 The Holder acknowledges and agrees that the Warrants and any Shares issuable pursuant to the exercise of any Warrants have been or will be issued only on a “private placement” basis and that the Company has no obligation to, and does not intend to, file any prospectus or registration statement in any jurisdiction in order to qualify any such Warrants and/or Shares for resale to the public.

PART 3 OWNERSHIP

Exchange and Transfer of Warrants

Section 3.1 A Warrant Certificate in any authorized denomination, upon compliance with the reasonable requirements of the Company, may be exchanged for a Warrant Certificate(s) in any other authorized denomination of the same issue entitling the Holder to purchase an equal aggregate number of Shares at the same Exercise Price and on the same terms as the Warrant Certificate so exchanged.

Section 3.2 Warrants may be exchanged only with the Company.

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 3.3 The Warrants are transferable by the Holder completing and submitting to the Company a completed and duly executed Warrant Transfer Form in the form attached hereto as APPENDIX “D”, along with this Warrant Certificate and such other documentation as may be requested by the Company, including an opinion of appropriate legal counsel of recognized standing in form and substance satisfactory to the Company, evidencing that the Warrants have been transferred in accordance with all applicable laws, and after payment by the Holder of any transfer taxes or governmental or other charges arising in connection with the transfer. The Holder shall comply and cause compliance with all applicable laws in connection with any transfer of the Warrants.

Charges for Exchange or Transfer

Section 3.4 In connection with any exchange or transfer of Warrants, except as otherwise herein provided, payment of any transfer taxes or governmental or other charges will be made by the Holder.

Ownership of Warrants

Section 3.5 The Company may deem and treat the registered holder of this Warrant Certificate as the absolute owner of the Warrants for all purposes and will not be affected by any notice or knowledge to the contrary.

Notice to Holder

Section 3.6 Any notices required or permitted to be sent hereunder shall be delivered personally or mailed, certified mail, return receipt requested and postage prepaid, delivered by commercial overnight courier service, with charges prepaid, or emailed, to the address set forth on this Warrant Certificate or the applicable Warrant Transfer Form, and shall be deemed to have been given upon delivery, if delivered personally, three (3) days after mailing, if mailed, or one Business Day (as defined in the Purchase Agreement) after delivery to the courier, if delivered by overnight courier service, if e-mailed prior to 5:00 PM New York time on a Business Day, the same Business Day such email was delivered, and if e- mailed after 5:00 PM New York time on a Business Day or on a non-Business Day, the Business Day following the day such e-mail was delivered.

PART 4 EXERCISE OF WARRANTS

Method of Exercise of Warrants

Section 4.1 The right to purchase Shares conferred by a Warrant may be exercised by the Holder surrendering this Warrant Certificate, together with a duly completed and executed Warrant Exercise Form. The Holder shall either (a) deliver with the Warrant Exercise Form a certified cheque, bank draft or wire transfer for the aggregate Exercise Price payable to, or to the order of, the Company, at the address as set out on this Warrant Certificate or such other address as the Company may from time to time in writing direct, or (b) elect, by instructing the Company on the Warrant Exercise Form, to receive Shares then issuable upon exercise of all or any part of this Warrant on a net basis such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender Warrants in exchange for the number of Shares as computed using the following formula:

X = [Y (A-B)] / A

Where: X = the number of Shares to be issued to the Holder

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Y = the number of Shares issuable to the Holder upon a cash exercise of the applicable number of Warrants duly surrendered for exercise (the “Exercised Amount”)

A = the Current Market Price (as defined in Section 5.1(1)(b)) of one Share on the effective date that this Warrant Certificate, along with all associated documentation required pursuant to this Warrant Certificate, are duly surrendered to the Company for exercise

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document B = the per Share Exercise Price (as adjusted in accordance with this Warrant Certificate as of the date of such calculation)

Any reference to the payment of the Exercise Price herein is deemed to include delivery of Warrants for cashless exercise as set forth in this Section 4.1.

Effect of Exercise of Warrants

Section 4.2 Upon surrender and payment as aforesaid, the Shares so subscribed for will be deemed to have been issued, and the Holder will be deemed to have become the holder of such Shares on the date of such surrender and payment, and such Shares will be issued in exchange for the aggregate Exercise Price, as such Exercise Price may be adjusted in the events and in the manner described herein. Any Warrants surrendered to the Company for exercise shall be deemed to be cancelled upon such surrender.

Section 4.3 Within seven days after surrender and payment as aforesaid, the Company or its transfer agent will forthwith cause to be mailed to the person in whose name the Shares are directed to be registered as specified in such Warrant Exercise Form, or if no such direction is given, to the Holder at the last address of the Holder appearing on the register maintained for the Warrants, one or more certificates or DRS statements for the appropriate number of Shares not exceeding those which the Holder is entitled to purchase pursuant to this Warrant Certificate.

Subscription for Less than Entitlement

Section 4.4 The Holder may purchase or exercise Warrants for a number of Shares less than the aggregate number which the Holder is entitled to purchase pursuant to this Warrant Certificate. In the event of any purchase of or exercise of Warrants for a number of Shares less than the number which can be purchased pursuant to this Warrant Certificate, the Holder, upon exercise thereof, will, in addition to certificates or DRS statements representing Shares issued on such exercise, be entitled to receive a new Warrant Certificate (with or without legends, as may be appropriate) in respect of the balance of the Shares which the Holder was entitled to purchase pursuant to the surrendered Warrant Certificate but which were not then purchased.

Warrants for Fractions of Shares

Section 4.5 To the extent that the Holder is entitled to receive on the exercise of a Warrant a fraction of a Share, such right may be exercised in respect of such fraction only in combination with another Warrant(s) which in the aggregate will entitle the Holder to receive a whole number of Shares. In all cases, the number of Shares issuable upon the exercise of any Warrants shall be rounded down to the nearest whole number, without payment or compensation in lieu thereof.

Expiration of Warrants

Section 4.6 After the Expiry Time, all rights under the Warrants will wholly cease and terminate, and the Warrants will thereupon be void and of no effect.

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Exercise Price

Section 4.7 The price per Share which must be paid to exercise a Warrant is the Exercise Price, as may be adjusted in the events and in the manner described herein.

No Obligation to Purchase

Section 4.8 Nothing herein contained or done pursuant hereto shall obligate the Holder to purchase or pay for or the Company to issue any Shares except those Shares in respect of which the Holder shall have exercised its right to purchase hereunder in the manner provided herein.

Section 4.9 The Company shall not be required to deliver certificates for or other evidence of Shares while the share transfer books of the Company are closed (in accordance with the Company’s corporate governance documents and applicable law) for any lawful purpose, and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment for the Shares called for thereby during any such period, mailing of certificates for or other evidence of Shares may be postponed for a period not exceeding seven days after the date of the re-opening of said share transfer books.

PART 5 ADJUSTMENTS

Section 5.1 Adjustments

(1) Definitions: For the purposes of this Part 5, unless there is something in the subject matter or context inconsistent therewith, the words and terms defined below shall have the respective meanings specified therefor in this subsection:

(a) “Adjustment Period” means the period commencing on the date of issue of this Warrant Certificate and ending at the Expiry Time;

(b) “Current Market Price” at any date means the price per share equal to the volume weighted average price at which the Shares have traded, during the twenty (20) consecutive trading day period ending on the day that is three (3) trading days before such date, on the Canadian Securities Exchange or another stock exchange on which the Shares principally trade or, if the Shares are not then listed on such an exchange, in the over-the-counter market, and if no over- the-counter market exists for the Shares then the Current Market Price shall be as determined by the directors of the Company, acting reasonably and in good faith relying upon the advice of independent financial advisors, which determination shall be conclusive. The volume weighted average price per share shall be determined by dividing the aggregate sale price of all such shares sold on the said exchange or market during the said twenty (20) consecutive trading days by the total number of such shares so sold;

(c) “director” means a director of the Company at the relevant time and, unless otherwise specified herein, a reference to action “by the directors” means action by the directors of the Company as a board or, whenever empowered, action by any committee of the directors of the Company; and

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(d) “trading day” with respect to a stock exchange or over-the-counter market means a day on which such stock exchange or market is open for business.

Adjustments: The Exercise Price and the number of Shares issuable to the Holder pursuant to this Warrant (2) Certificate shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(a) If at any time during the Adjustment Period the Company shall:

(i) fix a record date for the issue of, or issue, Shares to the holders of all or substantially all of the outstanding Shares by way of a stock dividend;

(ii) fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the Shares payable in Shares or securities exchangeable or exercisable for or convertible into Shares;

(iii) subdivide the outstanding Shares into a greater number of Shares; or

(any of such events in subclauses 5.1(2)(a)(i), 5.1(2)(a)(ii), 5.1(2)(a)(iii) and 5.1(2)(a)(iv) above being herein called a “Share Reorganization”), the Exercise Price shall be adjusted on the earlier of the record date on which holders of Shares are determined for the purposes of the Share Reorganization and the effective date of the Share Reorganization to the amount determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date, as the case may be, by a fraction:

(A) the numerator of which shall be the number of Shares outstanding on such record date or effective date, as the case may be, before giving effect to such Share Reorganization; and

(B) the denominator of which shall be the number of Shares which will be outstanding immediately after giving effect to such Share Reorganization (including in the case of a distribution of securities exchangeable or exercisable for or convertible into Shares, the number of Shares that would be outstanding had such securities all been exchanged or exercised for or converted into Shares on such date).

To the extent that any adjustment in the Exercise Price occurs pursuant to this Subsection 5.1(2)(a) as a result of the fixing by the Company of a record date for the distribution of, or the distribution of, securities exchangeable or exercisable for or convertible into Shares, the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the Exercise Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

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(b) If at any time during the Adjustment Period the Company shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Shares of rights, options or warrants pursuant to which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue (such period being the “Rights Period”), to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares at a price per share to the holder (or in the case of securities exchangeable for or convertible into Shares, at an exchange or conversion price per share, which price shall be deemed to include any cost of acquisition of such securities exchangeable for or convertible into Shares, in addition to any direct costs of acquisition of the Shares (the “Per Share Cost”)) of less than 95% of the Current Market Price on such record date (any of such events being called a “Rights Offering”), the Exercise Price shall be adjusted effective immediately after the record date for such Rights Offering to the amount determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i) the numerator of which shall be the aggregate of:

(A) the number of Shares outstanding on the record date for the Rights Offering; and

(B) the quotient determined by dividing:

either: (a) the product of the number of Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Shares are offered; or (b) the product of the Per Share Cost of the securities so offered during the Rights Period pursuant to the Rights Offering and the number of Shares for or into which the securities offered may be exchanged, exercised or converted, as the case may be; by

the Current Market Price as of the record date for the Rights Offering; and

the denominator of which shall be the aggregate of the number of Shares outstanding on such record (ii) date and the number of Shares offered pursuant to the Rights Offering (including in the case of the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document issue or distribution of securities exchangeable or exercisable for or convertible into Shares, the number of Shares into which such securities may be exchanged, exercised or converted).

Any Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this Subsection 5.1(2)(b) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants referred to in this Subsection 5.1(2)(b), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, conversion or exercise right to the Exercise Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right.

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(c) If at any time during the Adjustment Period the Company shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding Shares of:

(i) shares of the Company of any class other than Shares;

(ii) rights, options or warrants to acquire Shares or securities exchangeable or exercisable for or convertible into Shares (other than rights, options or warrants pursuant to which holders of Shares are entitled, during a period expiring not more than 45 days after the record date for such issue, to subscribe for or purchase Shares or securities exchangeable or exercisable for or convertible into Shares at a price per share (or in the case of securities exchangeable or exercisable for or convertible into Shares at a Per Share Cost on the record date for the issue of such securities) of at least 95% of the Current Market Price on such record date);

(iii) evidences of indebtedness of the Company; or

(iv) any property or other assets of the Company;

and if such issue or distribution does not constitute a Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Exercise Price shall be adjusted effective immediately after the record date for the Special Distribution to the amount determined by multiplying the Exercise Price in effect on the record date for the Special Distribution by a fraction:

(A) the numerator of which shall be the difference between:

the product of the number of Shares outstanding on such record date and the Current Market Price on such record date, and

the aggregate fair value, as determined by the directors of the Company, to the holders of Shares of the shares, rights, options, warrants, evidences of indebtedness, property or other assets to be issued or distributed in the Special Distribution, and

the denominator of which shall be the product obtained by multiplying the number of Shares (B) outstanding on such record date by the Current Market Price on such record date.

Any Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of such calculation. To the extent that any adjustment in the Exercise Price occurs pursuant to this Subsection 5.1(2)(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Shares or securities exchangeable or exercisable for or convertible into Shares referred to in this Subsection 5.1(2)(c), the Exercise Price shall be readjusted immediately after the expiry of any relevant exchange, exercise or conversion right to the Exercise Price which would then be in effect if the fair market value had been determined on the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document basis of the number of Shares issued and remaining issuable immediately after such expiry, and shall be further readjusted in such manner upon the expiry of any further such right.

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(d) If at any time during the Adjustment Period there shall occur:

(i) a reclassification or redesignation of the Shares, any change or exchange of the Shares into other shares or securities or any other capital reorganization involving the Shares other than a Share Reorganization;

(ii) a consolidation, amalgamation, arrangement, merger or other form of business combination of the Company with or into any other body corporate or entity which results in a reclassification or redesignation of the Shares or a change or exchange of the Shares into or for other shares or securities; or

(iii) the transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or entity;

(any of such events being herein called a “Capital Reorganization”), after the effective date of the Capital Reorganization, the Holder shall be entitled to receive, and shall accept, for the same aggregate consideration, upon exercise of the Warrants, in lieu of the number of Shares which the Holder was theretofore entitled to purchase or receive upon the exercise of the Warrants, the kind and aggregate number of shares and other securities or property resulting from the Capital Reorganization which the Holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which the Holder was theretofore entitled to purchase or receive upon the exercise of the Warrants. If necessary, as a result of any Capital Reorganization, appropriate adjustments shall be made in the application of the provisions of this Warrant Certificate with respect to the rights and interest thereafter of the Holder to the end that the provisions of this Warrant Certificate shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares or other securities or property thereafter deliverable upon the exercise of the Warrants.

(e) If at any time during the Adjustment Period any adjustment or readjustment in the Exercise Price shall occur pursuant to the provisions of Subsections 5.1(2)(a), 5.1(2)(b), or 5.1(2)(c) hereof, then the number of Shares purchasable upon the subsequent exercise of the Warrants shall be simultaneously adjusted or readjusted, as the case may be, by multiplying the number of Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment or readjustment by a fraction which shall be the reciprocal of the fraction used in the adjustment or readjustment of the Exercise Price.

(3) Rules: The following rules and procedures shall be applicable to adjustments made pursuant to Subsection 5.1(2) hereof.

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(a) Subject to the following provisions of this Subsection 5.1(3), any adjustment made pursuant to Subsection 5.1(2) hereof shall be made successively whenever an event referred to therein shall occur.

(b) would otherwise have been required to be made shall be carried forward and taken into account in any subsequent adjustment. Notwithstanding any other provision of Subsection 5.1(2) hereof, no adjustment of the Exercise Price shall be made which would result in an increase in the Exercise Price or a decrease in the number of Shares issuable upon the exercise of the Warrants (except in respect of

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Share Reorganization described in Subsection 5.1(2)(a)(iv) hereof or a Capital Reorganization described in Subsection 5.1(2)(d) hereof).

(c) No adjustment in the Exercise Price or in the number or kind of securities or other property purchasable upon the exercise of the Warrants shall be made in respect of any event described in Section 5.1 hereof if the Holder is entitled to participate in such event on the same terms mutatis mutandis as if the Holder had exercised the Warrants prior to or on the record date or effective date, as the case may be, of such event.

(d) No adjustment in the Exercise Price or in the number of Shares purchasable upon the exercise of this Warrant Certificate shall be made pursuant to Subsection 5.1(2) hereof in respect of the issue from time to time of Shares and Shares pursuant to this Warrant Certificate, pursuant to any stock option, stock purchase, stock bonus or other incentive plan in effect from time to time for directors, officers or employees of the Company and/or any affiliate of the Company, or pursuant to any redemption or exchange of securities of any subsidiaries of the Company in accordance with the terms of the Company’s and such subsidiaries’ Organization Documents, whether in (i) cash, (ii) shares of the Company, (iii) warrants or similar rights to purchase any shares of the Company or property or other assets of the Company, and any such issue, and any grant of options in connection therewith, shall be deemed not to be a Share Reorganization, a Rights Offering nor any other event described in Subsection 5.1(2) hereof.

(e) If at any time during the Adjustment Period the Company shall take any action affecting the Shares, other than an action described in Subsection 5.1(2) hereof, which in the opinion of the directors would have a material adverse effect upon the rights of the Holder, either or both the Exercise Price and the number of Shares purchasable upon exercise of the Warrants shall be adjusted in such manner, if any, and at such time, by action of the directors, in their sole discretion, as may be equitable in the circumstances; provided, however, that any such adjustment shall be subject to the approval of the applicable recognized stock exchange (if the Shares are then listed on such stock exchange) and any other required regulatory approvals. Failure of the taking of action by the directors so as to provide for an adjustment on or prior to the effective date of any action by the Company affecting the Shares will be conclusive evidence that the directors have determined that it is equitable to make no adjustment under the circumstances; provided that any such failure shall be subject to Section 5.2 below.

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(f) If the Company shall set a record date to determine holders of Shares for the purpose of entitling such holders to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such holders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Shares purchasable upon exercise of the Warrants shall be required by reason of the setting of such record date.

(g) In any case in which this Warrant Certificate shall require that an adjustment shall become effective immediately after a record date for an event referred to in Subsection 5.1(2) hereof, the Company may defer, until the occurrence of such event:

(i) issuing to the Holder, to the extent that the Warrants are exercised after such record date and before the occurrence of such event, the additional Shares issuable upon such exercise by reason of the adjustment required by such event; and

(ii) delivering to the Holder any distribution declared with respect to such additional Shares after such record date and before such event;

provided, however, that the Company shall deliver to the Holder an appropriate instrument evidencing the right of the Holder, upon the occurrence of the event requiring the adjustment, to an adjustment in

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Exercise Price and the number of Shares purchasable upon the exercise of the Warrants and to such distribution declared with respect to any such additional Shares issuable on this exercise of the Warrants.

(h) In the absence of a resolution of the directors fixing a record date for any event which would require any adjustment pursuant to Subsection 5.1(2) hereof, the Company will be deemed to have fixed as the record date therefor the date on which the event is effected.

(i) As a condition precedent to the taking of any action which would require an adjustment pursuant to Subsection 5.1(2) hereof, including the Exercise Price and the number or class of shares or other securities which are to be received upon the exercise of the Warrants, the Company shall take any action which may, in the opinion of counsel to the Company, be necessary in order that the Company may validly and legally issue as fully paid and non-assessable shares all of the Shares or other securities which the Holder is entitled to receive in accordance with the provisions of this Warrant Certificate.

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(4) Notice: At least seven (7) days prior to any record date or effective date, as the case may be, for any event which requires or might require an adjustment in any of the rights of the Holder under this Warrant Certificate, including the Exercise Price and the number of Shares which are purchasable under this Warrant Certificate, the Company shall deliver to the Holder a certificate of the Company specifying the particulars of such event and, if determinable, the required adjustment and the calculation of such adjustment. In case any adjustment for which a notice in this Subsection 5.1(4) has been given is not then determinable, the Company shall promptly after such adjustment is determinable deliver to the Holder a certificate providing the calculation of such adjustment. The Company hereby covenants and agrees that the register of transfers and transfer books for the Shares will be open, and that the Company will not take any action which might deprive the Holder of the opportunity of exercising the rights of subscription contained in this Warrant Certificate, during such seven (7) day period.

Determination of Adjustments

Section 5.2 If any question or dispute will at any time arise with respect to any adjustments to be made under Part 5, such question or dispute will be determined by a mutually acceptable firm of independent chartered or certified public accountants other than the Company’s auditor, and such firm will have access to all appropriate records, and such determination, absent manifest error, will be binding upon the Company and the Holder.

PART 6 COVENANTS BY THE COMPANY

Reservation of Shares

Section 6.1 The Company will reserve, and there will remain unissued out of its authorized capital, a sufficient number of Shares to satisfy the rights of purchase provided for in this Warrant Certificate from time to time.

PART 7 RESTRICTION ON EXERCISE

Section 7.1 Any certificates or DRS statements representing Shares issued upon exercise of the Warrants prior to the date that is four months and one day after the date of issue of the Warrants, and any Shares issued in exchange for such Shares, will bear the following legend:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [●].”

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document provided that at any time subsequent to the date which is four months after the date hereof, any certificate or DRS statement representing any such Shares may be respectively exchanged for a certificate or DRS statement bearing no such legend.

Section 7.2 The Warrants and the Shares to be issued upon their exercise have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States. The Warrants may not be exercised in the United States, or by or for the account or benefit of a U.S. person or a person in the United States, unless (i) the Shares are registered under the U.S. Securities Act and the applicable laws of any such state or (ii) an exemption from such registration requirements is available and, in either case, the Holder has complied with the requirements set forth in the Warrant Exercise Form attached hereto as APPENDIX “C”. “United States” and “U.S. person” are as defined in Regulation S under the U.S. Securities Act.

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Section 7.3 Any Shares issued upon exercise of Warrants in the United States, or to or for the account or benefit of a U.S. person or a person in the United States, will be “restricted securities”, as defined in Rule 144(a)(3) under the U.S. Securities Act. The certificates or DRS statements representing such Shares, as well as all certificates or DRS statements issued in exchange or in substitution therefor, until such time as is no longer required under the applicable requirements of the U.S. Securities Act, or applicable state securities laws, will bear, on the face of such certificate or DRS statement, the following legends:

THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER HEREOF TO EFFECT “GOOD DELIVERY” OF THE SECURITIES REPRESENTED HEREBY ON A CANADIAN STOCK EXCHANGE.” provided, that if the Shares are being sold outside the United States in compliance with the requirements of Rule 904 of Regulation S under the U.S. Securities Act (“Regulation S”) and such Shares were acquired at a time when the Company is a “foreign issuer” as defined in Regulation S, the legends set forth above in this Section 7.3 may be removed by providing a declaration to the registrar and transfer agent of the Company, as set forth in APPENDIX “E” attached hereto (or in such other form as the Company may prescribe from time to time); and provided, further, that, if the Shares are being sold otherwise than in accordance with Rule 904 of Regulation S and other than to the Company, the legends may be removed by delivery to the registrar and transfer agent and the Company of an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company that such legends are no longer required under applicable requirements of the U.S. Securities Act or state securities laws.

Section 7.4 Notwithstanding any provision to the contrary contained herein, no Shares will be issued pursuant to the exercise of any Warrant if the issuance of such securities would constitute a violation of the securities laws of any applicable jurisdiction, and the certificates or DRS statements evidencing the Shares thereby issued may bear such legend as may, in the opinion of legal counsel to the Company, be necessary in order to avoid a violation of any securities laws of any applicable jurisdiction or to comply with the requirements of any stock exchange on which

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Shares of the Company are listed, provided that, at any time, in the opinion of legal counsel to the Company, such legends are no longer necessary in order to avoid a violation of any such laws, or the holder of any such legended certificate or DRS statement, at that holder’s expense, provides the Company with evidence reasonably satisfactory in form and substance to the Company (which may include an opinion of legal counsel of recognized standing in form and substance reasonably satisfactory to the Company) to the effect that such holder is entitled to sell or otherwise transfer such Shares in a transaction in which such legends are not required, such legended certificate or DRS statement may thereafter be surrendered to the Company in exchange for a certificate or DRS statement which does not bear such legend.

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PART 8 MODIFICATION OF TERMS, SUCCESSORS

Modification of Terms and Conditions for Certain Purposes

Section 8.1 From time to time the Company may, subject to the provisions of this Warrant Certificate, with the consent of the Holder, modify the terms and conditions hereof, for any one or more or all of the following purposes:

(a) adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of counsel for the Company, are reasonably necessary or advisable in the circumstances;

(b) making such provisions not inconsistent herewith as may be reasonably necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining a listing or quotation of Warrants on any stock exchange (for the avoidance of doubt, the Company is not under any obligation to obtain or attempt to obtain any listing or quotation of the Warrants);

(c) adding to or altering the provisions hereof in respect of the registration of Warrants and adding to or altering the provisions hereof for the exchange of Warrant Certificates of different denominations;

(d) making any modification in the form of Warrant Certificates which does not affect the substance thereof;

(e) for any other purpose not inconsistent with the terms hereof, including the correction or rectification of any ambiguities, defective provisions, errors or omissions herein; and

(f) to evidence any succession of any corporation and the assumption by any successor of the covenants of the Company herein and in the Warrants contained as provided hereafter in this Part 8.

The Company may Amalgamate on Certain Terms

Section 8.2 Nothing herein contained will prevent any amalgamation or merger of the Company with or into any other company, or the sale of the property or assets of the Company to any company, to the knowledge of the Company, lawfully entitled to acquire the same; provided however that such amalgamation or merger is permitted under the Purchase Agreement.

Additional Financings

Section 8.3 Nothing herein contained will prevent the Company from issuing any other securities or rights with respect thereto during the period within which a Warrant is exercisable, upon such terms as the Company may deem appropriate.

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Section 8.4 This Warrant Certificate amends, restates, supersedes and replaces Warrant Certificates previously issued to the Holder by the Company under the Existing Agreement (as defined in the Purchase Agreement) as described in APPENDIX “A” with respect to all issuances described in such appendix other than the issuance with respect to the Third Restatement Advance (the “Previously Issued Warrants”); provided, however, that the execution and delivery by the undersigned of this Warrant Certificate shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s obligations evidenced by the Previously Issued Warrants, all of which obligations shall continue under and shall hereinafter be evidenced and governed by this Warrant Certificate.

[End of Schedule “A”]

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APPENDIX “A”

EXERCISE PRICES AND EXPIRY DATES

Number of Date of Warrant Exercise Expiry Tranche Issuance Shares Price Date 1-A 4/23/19 [●] $[●] [●] 1-B 5/22/19 [●] $[●] [●] 2 7/12/19 [●] $[●] [●] 3 11/27/19 [●] $[●] [●] 4 3/27/20 [●] $[●] [●] Incremental Advance 4/24/20 [●] $[●] [●] 1 Incremental Advance 9/14/20 [●] $[●] [●] 2 Third Restatement 1/[●]/ 21 [●] $[●] [●] Advance

Exercise Prices set forth herein are subject to the Down-Round Price Reset set forth in Schedule 8.22 of the Purchase Agreement, to the extent Schedule 1.1(d) to the Purchase Agreement indicates the applicable securities are subject to the Down-Round Price Reset.

To the extent there is any conflict between this Appendix “A” and Schedule 1.1(d) to the Purchase Agreement, Schedule 1.1(d) shall control.

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APPENDIX “B”

INSTRUCTIONS TO HOLDERS

TO EXERCISE:

To exercise Warrants, the Holder must deliver to the Company (i) a completed and signed Warrant Exercise Form, attached as Appendix “C”, indicating the number shares to be acquired or indicating the Exercised Amount in the event of a net exercise under Section 4.1(b) of the Warrant Certificate, (ii) the corresponding Warrant Certificate, and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) either (x) a certified cheque, bank draft or wire transfer payable to or to the order of the Company in payment of the purchase price of the number of shares subscribed for or (y) an indication on the Warrant Exercise Form that the Holder is electing net exercise under Section 4.1(b) of the Warrant Certificate.

TO TRANSFER:

To transfer Warrants, the Holder must complete, sign and deliver the Warrant Transfer Form, attached as Appendix “D” and deliver the corresponding Warrant Certificate to the Company. As a condition precedent to any such transfer of Warrants, the Holder must pay any transfer taxes or governmental or other charges arising in connection with the transfer and the Company may in its discretion require additional certificates, opinions and other documentation that evidences that the transfer is being completed in compliance with applicable laws.

To transfer Warrants, the Holder’s signature on the Warrant Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange.

GENERAL:

If forwarding any documents by mail, registered mail must be employed.

If the Warrant Exercise Form or Warrant Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must also be accompanied by evidence of authority to sign satisfactory to the Company.

The address of the Company is:

MedMen Enterprises Inc. 10115 Jefferson Blvd. Culver City, California 90232 Attention: Chief Financial Officer and General Counsel

[End of Appendix “B”]

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APPENDIX “C”

WARRANT EXERCISE FORM

TO: MedMen Enterprises Inc. 10115 Jefferson Blvd. Culver City, California 90232

Attention: Chief Financial Officer and General Counsel

The undersigned Holder of the within Warrants hereby subscribes for Class B Subordinate Voting Shares (the “Shares”) of MedMen Enterprises Inc. (the “Company”) pursuant to the within Warrants on the terms and price specified in the Warrants; provided that in the case of a net exercise of the Warrants for Shares under Section 4.1(b) of the Warrant Certificate, this specified amount is hereby deemed to represent the Exercised Amount (as defined in the Warrant Certificate).

The Holder elects the following consideration for the exercise of the Warrants to purchase the Shares (check one):

☐ This subscription is accompanied by a certified cheque, bank draft, or wire transfer payable to or to the order of the Company for the whole amount of the purchase price of the Shares.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ☐ The Holder is electing to net exercise the Warrants for Shares under Section 4.1(b) of the Warrant Certificate pursuant to which the Holder is exercising the Warrants.

The undersigned hereby directs that the Shares be registered as follows:

NAME(S) IN FULL ADDRESS(ES) NUMBER OF SHARES

As at the time of exercise hereunder, the undersigned Holder represents, warrants and certifies as follows (check one):

☐ (A) the undersigned holder at the time of exercise of the Warrant is not in the United States, is not a “U.S. person” as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and is not exercising the Warrant for the account or benefit of a U.S. person or a person in the United States (as defined in Regulation S), and did not execute or deliver this exercise form in the United States; OR

☐ (B) the undersigned holder is resident in the United States, is a U.S. person, or is exercising the Warrant for the account or benefit of a U.S. person or a person in the United States (a “U.S. Holder”), and is an “accredited investor”, as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (a “U.S. Accredited Investor”), and has completed the U.S. Accredited Investor Status Certificate in the form attached to this exercise form; OR

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☐ (C) if the undersigned holder is a U.S. Holder, the undersigned holder has delivered to the Company and the Company’s transfer agent an opinion of counsel of recognized standing (which will not be sufficient unless it is in form and substance reasonably satisfactory to the Company) or such other evidence reasonably satisfactory to the Company to the effect that with respect to the Shares to be delivered upon exercise of the Warrant, the issuance of such securities has been registered under the U.S. Securities Act and applicable state securities laws, or an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available.

Note: Certificates or DRS statements representing Shares will not be registered or delivered to an address in the United States unless box (B) or (C) immediately above is checked.

If the undersigned Holder has indicated that the undersigned Holder is a U.S. Accredited Investor by marking box (B) above, the undersigned Holder additionally represents and warrants to the Company that:

(1) the undersigned Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares, and the undersigned is able to bear the economic risk of loss of his or her entire investment;

(2) the undersigned is: (i) purchasing the Shares for his or her own account or for the account of one or more U.S. Accredited Investors with respect to which the undersigned is exercising sole investment discretion, and not on behalf of any other person; (ii) is purchasing the Shares for investment purposes only and not with a view to resale, distribution or other disposition in violation of United States federal or state securities laws; and (iii) in the case of the purchase by the undersigned of the Shares as agent or trustee for any other person or persons (each a “Beneficial Owner”), the undersigned holder has due and proper authority to act as agent or trustee for and on behalf of each such Beneficial Owner in connection with the transactions contemplated hereby; provided that: (x) if the undersigned holder, or any Beneficial Owner, is a corporation or a partnership, syndicate, trust or other form of unincorporated organization, the undersigned holder or each such Beneficial Owner was not incorporated or created solely, nor is it being used primarily to permit purchases without a prospectus or registration statement under applicable law; and (y) each Beneficial Owner, if any, is a U.S. Accredited Investor; and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (3) the undersigned has not exercised the Warrants as a result of any form of general solicitation or general advertising (as such terms are used in Rule 502 of Regulation D under the U.S. Securities Act), including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio, television, the Internet or other form of telecommunications, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

If the undersigned has indicated that the undersigned is a U.S. Accredited Investor by marking box (B) above, the undersigned also acknowledges and agrees that:

(4) the Company has provided to the undersigned the opportunity to ask questions and receive answers concerning the terms and conditions of the offering consummated under the Purchase Agreement, and the undersigned has had access to such information concerning the Company as the undersigned has considered necessary or appropriate in connection with the undersigned’s investment decision to acquire the Shares;

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(5) if the undersigned decides to offer, sell or otherwise transfer any of the Shares, the undersigned must not, and will not, offer, sell or otherwise transfer any of such Shares directly or indirectly, unless:

(a) the sale is to the Company;

(b) the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations;

(c) the sale is made pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in accordance with any applicable state securities or “blue sky” laws; or

(d) the Shares are sold in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities, and it has prior to such sale furnished to the Company an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company;

(6) if the undersigned decides to offer, sell or otherwise transfer any of the Shares, the undersigned shall comply in connection therewith with all applicable laws and any applicable terms and conditions of the constating documents of the Company;

(7) the Shares are “restricted securities” under applicable federal securities laws and that the U.S. Securities Act and the rules of the United States Securities and Exchange Commission provide in substance that the undersigned may dispose of the Shares only pursuant to an effective registration statement under the U.S. Securities Act or an exemption therefrom;

(8) the Company has no obligation to register any of the Shares or to take action so as to permit sales pursuant to the U.S. Securities Act (including Rule 144 thereunder);

(9) the certificates representing or other evidence of the Shares (and any certificates or other evidence issued in exchange or substitution for the Shares) will bear a legend stating that such securities have not been registered under the U.S. Securities Act or the securities laws of any state of the United States, and may not be offered for sale or sold unless registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, or unless an exemption from such registration requirements is available;

(10) delivery of certificates bearing such a legend may not constitute “good delivery” in settlement of transactions on Canadian stock exchanges or over-the-counter markets, but a new certificate without such a legend will be made available to the undersigned upon provision by the undersigned of a declaration to the registrar and transfer agent (the “Transfer Agent”) of the Shares in the form attached as Appendix “E” to the Warrant Certificate (or in such other form as the Company may prescribe from time to time) and, if requested by the Company or the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Transfer Agent, an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company and the Transfer Agent, to the effect that such sale is being made in compliance with Rule 904 of Regulation S in circumstances where Rule 905 of Regulation S does not apply; and provided, further, that, if any Shares are being sold otherwise than in accordance with Rule 904 of Regulation S and other than to the Company, the legend may be removed by delivery to the Transfer Agent and the Company of an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Company that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;

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(11) the financial statements of MedMen Enterprises Inc. have been prepared in accordance with Canadian generally accepted accounting principles or International Financial Reporting Standards, which differ in some respects from United States generally accepted accounting principles, and thus may not be comparable to financial statements of United States companies;

(12) there may be material tax consequences to the undersigned of an acquisition or disposition of the Shares;

(13) MedMen Enterprises Inc. is treated as a U.S. domestic corporation under Section 7874 of the Internal Revenue Code of 1986, as amended;

(14) funds representing the subscription price for the Shares which will be advanced by the undersigned to the Company upon exercise of the Warrants will not represent proceeds of crime for the purposes of the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”), and the undersigned acknowledges that the Company may in the future be required by law to disclose the undersigned’s name and other information relating to this exercise form and the undersigned’s subscription hereunder, on a confidential basis, pursuant to the PATRIOT Act. No portion of the subscription price to be provided by the undersigned (i) has been or will be derived from or related to any activity that is deemed criminal under the laws of the United States of America, or any other jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been identified to or by the undersigned, and it shall promptly notify the Company if the undersigned discovers that any of such representations ceases to be true and provide the Company with appropriate information in connection therewith;

(15) the Company is not obligated to remain a “foreign issuer”; and

(16) the undersigned consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company in order to implement the restrictions on transfer set forth and described in this Warrant Exercise Form.

In the absence of instructions to the contrary, the securities or other property will be issued in the name of the undersigned Holder and will be sent to the last address of the undersigned Holder appearing on the register maintained for the Warrants.

DATED this______day of______, 20______.

In the presence of:

Name of Holder

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Signature of Witness Signature of Holder

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INSTRUCTIONS FOR SUBSCRIPTION

The name for the subscription must correspond in every particular with the name written upon the face of this Warrant Certificate without alteration. If the registration in respect of the certificates or DRS statements representing the Shares to be issued upon exercise of the Warrants differs from the registration of this Warrant Certificate the signature of the registered holder must be guaranteed by an authorized officer of a Canadian chartered bank, or of a major Canadian trust company, or by a medallion signature guarantee from a member recognized under the Signature Medallion Guarantee Program, or from a similar entity in the United States, if this subscription is executed in the United States, or in accordance with industry standards.

In the case of persons signing by agent or attorney or by personal representative(s), the authority of such agent, attorney or representative(s) to sign must be proven to the satisfaction of the Company.

If the Warrant Certificate and the form of subscription are being forwarded by mail, registered mail must be employed.

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U.S. ACCREDITED INVESTOR STATUS CERTIFICATE

In connection with the exercise of certain outstanding warrants of MEDMEN ENTERPRISES INC. (the “Company”) by the holder, the holder hereby represents and warrants to the Company that the holder, and each beneficial owner (each a “Beneficial Owner”), if any, on whose behalf the holder is exercising such warrants, satisfies one or more of the following categories of Accredited Investor (please write “W/H” for the undersigned holder, and “B/O” for each beneficial owner, if any, on each line that applies):

______(1) Any bank as defined in Section 3(a)(2) of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the U.S. Securities Exchange Act of 1934; any insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; any investment company registered under the U.S. Investment Corporation Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Corporation licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the U.S. Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of US$5,000,000; any employee benefit plan within the meaning of the U.S. Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors” (as such term is defined in Rule 501 of Regulation D of the U.S. Securities Act);

______(2) Any private business development company as defined in Section 202(a)(22) of the U.S. Investment Advisers Act of 1940;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ______(3) Any organization described in Section 501(c)(3) of the U.S. Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000;

______(4) Any trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person (being defined as a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment);

______(5) A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase, exceeds US$1,000,000 (for the purposes of calculating net worth, (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of this certification, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of this certification exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability);

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______(6) A natural person who had annual gross income during each of the last two full calendar years in excess of US$200,000 (or together with his or her spouse in excess of US$300,000) and reasonably expects to have annual gross income in excess of US$200,000 (or together with his or her spouse in excess of US$300,000) during the current calendar year, and no reason to believe that his or her annual gross income will not remain in excess of US$200,000 (or that together with his or her spouse will not remain in excess of US$300,000) for the foreseeable future;

______(7) Any director or executive officer of the Company; or

______(8) Any entity in which all of the equity owners meet the requirements of at least one of the above categories – if this alternative is selected you must identify each equity owner and provide statements from each demonstrating how they qualify as an accredited investor.

[End of Appendix “C”]

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APPENDIX “D”

WARRANT TRANSFER FORM

TO: MedMen Enterprises Inc. 10115 Jefferson Blvd. Culver City, California 90232

Attention: Chief Financial Officer and General Counsel

FOR VALUE RECEIVED, the undersigned holder (the “Transferor”) of the within Warrants hereby sells, assigns and transfers to______(the “Transferee”),______Warrants of MedMen Enterprises Inc. (the “Company”) registered in the name of the undersigned on the records of the Company and irrevocably appoints______the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The undersigned hereby directs that the Warrants hereby transferred be re-issued and delivered as follows:

NAME IN FULL ADDRESS NUMBER OF WARRANTS

The Transferor hereby certifies that (check either A or B):

(A) the transfer of the Warrants is being completed pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), in which case the Transferor has delivered or caused to be delivered by the Transferee a written opinion of U.S. legal counsel of recognized standing in form and substance reasonably satisfactory to the Company to the effect that the transfer of the Warrants is exempt from the registration requirements of the U.S. Securities Act; or

(B) the transfer of the Warrants is being made in reliance on Rule 904 of Regulation S under the U.S. Securities Act, and certifies that:

(1) the undersigned is not an “affiliate” (as defined in Rule 405 under the U.S. Securities Act) of the Company (except solely by virtue of being an officer or director of the Company) or a “distributor”, as defined in Regulation S, or an affiliate of a “distributor”;

(2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States or (b) the transaction was executed on or through the facilities of a designated offshore securities market within the meaning of Rule 902(b) of Regulation S under the U.S. Securities Act, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States;

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(3) neither the seller nor any affiliate of the seller nor any person acting on their behalf engaged in any directed selling efforts in connection with the offer and sale of the Warrants;

(4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the Warrants are “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act);

(5) the Transferor does not intend to replace the securities sold in reliance on Rule 904 of the U.S. Securities Act with fungible unrestricted securities; and

(6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or a scheme to evade the registration provisions of the U.S. Securities Act.

Unless otherwise specified, terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

DATED this______day of______, 20______.

Signature of Warrant Holder Signature Guaranteed

Name of Warrant Holder

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INSTRUCTIONS FOR TRANSFER

The name of the Warrant Holder must correspond in every particular with the name of the person appearing on the face of this Warrant Certificate without alteration.

If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, this Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Company.

The signature on the Transfer Form must be guaranteed by a chartered bank or trust company, or a member firm of an approved signature guarantee medallion program. The guarantor must affix a stamp bearing the actual words: “SIGNATURE GUARANTEED”.

The Warrants will only be transferable in accordance with applicable laws. The Warrants and the shares issuable upon exercise thereof have not been and will not be registered under the U.S. Securities Act or under the securities laws of any state of the United States, and may not be transferred to or for the account or benefit of a U.S. person or any person in the United States without registration under the U.S. Securities Act and applicable state securities laws, or compliance with the requirements of an exemption from registration. “United States” and “U.S. person” are as defined in Regulation S under the U.S. Securities Act.

[End of Appendix “D”]

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APPENDIX “E”

FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO: Registrar and transfer agent for the shares of MedMen Enterprises Inc. (the “Issuer”)

The undersigned (A) acknowledges that the sale of the Class B Subordinate Voting Share in the capital of the Issuer represented by certificate number , to which this declaration relates, is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and (B) certifies that (1) the undersigned is not an “affiliate” (as defined in Rule 405 under the U.S. Securities Act) of the Issuer (except solely by virtue of being an officer or director of the Issuer) or a “distributor”, as defined in Regulation S, or an affiliate of a “distributor”; (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States, or (b) the transaction was executed on or through the facilities of a designated offshore securities market within the meaning of Rule 902(b) of Regulation S under the U.S. Securities Act, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States; (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged in any directed selling efforts in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S under the U.S. Securities Act with fungible unrestricted securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or a scheme to

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document evade the registration provisions of the U.S. Securities Act. Unless otherwise specified, terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

Dated: ______

Signature of Individual (if Seller is an individual)

Authorized signatory signature (if Seller is not an individual)

Name of Seller (please print)

Name of authorized signatory (please print)

Official capacity of authorized signatory (print print)

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Affirmation by Seller’s Broker-Dealer (Required for sales pursuant to Section (B)(2)(b) above)

We have read the representations of our customer (the “Seller”) contained in the foregoing Declaration for Removal of Legend, dated , 20 , with regard to the sale, for such Seller’s account, of Class B Subordinate Voting Shares (the “Securities”) of the Issuer represented by certificate number _. We have executed sales of the Securities pursuant to Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), on behalf of the Seller. In that connection, we hereby represent to you as follows:

(1) no offer to sell Securities was made to a person in the United States;

(3) no “directed selling efforts” were made in the United States by the undersigned, any affiliate of the undersigned, or any person acting on behalf of the undersigned; and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Legal counsel to the Issuer shall be entitled to rely upon the representations, warranties and covenants contained herein to the same extent as if this affirmation had been addressed to them.

Name of Firm

Per: Authorized Signatory

[End of Appendix “E”]

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EXHIBIT C-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Holders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Securities Purchase Agreement dated as of April 23, 2019 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Agreement”), by and between MEDMEN ENTERPRISES INC., a company incorporated under the laws of the Province of British Columbia, MM CAN USA, INC., a California corporation, each other Credit Party thereto, [ ], [ ], [ ], [ ], and [ ].

Pursuant to the provisions of Section 11.12 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Note(s) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder” of the relevant Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the relevant Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the relevant Borrower with a certificate of its non- U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform the relevant Borrower, and (2) the undersigned shall have at all times furnished the relevant Borrower with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

[NAME OF HOLDER]

By: Name: Title:

Date:______, 20[__]

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EXHIBIT C-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 11.12 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder” of the relevant Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the relevant Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Holder with a certificate of its non- U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Holder in writing, and (2) the undersigned shall have at all times furnished such Holder with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

[NAME OF HOLDER]

By: Name: Title:

Date:______, 20[__]

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EXHIBIT C-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 11.12 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten percent shareholder” of relevant Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the relevant Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Holder with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Holder and (2) the undersigned shall have at all times furnished such Holder with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement.

[NAME OF HOLDER]

By: Name: Title:

Date:______, 20[__]

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EXHIBIT C-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Holders That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 11.12 of the Agreement, Note(s) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Note(s), (iii) with respect to the extension of credit pursuant to this Agreement or any other Operative Document, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten percent shareholder” of the relevant Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the relevant Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the relevant Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform the relevant Borrower, and (2) the undersigned shall have at all times furnished the relevant Borrower with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

[NAME OF HOLDER]

By: Name: Title:

Date:______, 20[__]

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document EXHIBIT 10.26

SUBSCRIPTION FOR SUBORDINATE VOTING SHARES AND WARRANTS

TO:Med Men Enterprises Inc. (the “Corporation”)

The undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase the number of units of the Corporation (“Units”) set forth below for the aggregate subscription price set forth below (the “Aggregate Subscription Amount”), representing a subscription price of US$0.37 per Unit (the “Issue Price”). Each Unit shall consist of one (I) Class B subordinate voting share (“Class B Share”) of the Corporation and one (1) Class B Share purchase warrant (each a “Warrant”). Each Warrant will be exercisable to purchase one additional Class B Share (a “Warrant Share”) at an exercise price of US$0.464 per share for a period of five (5) years from the date of issuance of the Warrants (the Warrants and together with the Class B Shares. the “Purchased Securities”), upon and subject to the terms and conditions set fo1th in the “Terms and Conditions of Subscription forSubordinate Voting Shares and Warrants of MedMen Enterprises Inc.” attached hereto (collectively with this face page, the “Subscription Agreement”).

Full Legal Name of Subscriber (please Aggregate Subscription Amount: print) US$______

By: Signature of Subscriber or its Authorized Representative Number of Units: ______

Official Title or Capacity (please print) Details of Securities Currently Held

Name of Signatory (please print name of Class B Subordinate Voting Shares individual whose signature appears above if different than name of Subscriber) Number:

Convertible Debentures Subscriber’s Address (including postal Principal: US$ code) Conversion Price: US$

Telephone Number (including area code) Warrants Number: Exercise Price: US$ e-mail Address

By executing this Subscription Agreement, you are consenting to the collection, use and disclosure of personal information in the manner described i11 the privacy notice 011 page 13 of this Subscription Agreement.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Register the Purchased Securities (if Deliver the Purchased Securities (if different from address given above) as different from address given above) follows: as follows:

Name Name

Account reference, if applicable Account reference, if applicable

Address (including postal code) Contact Name

Address (including postal code)

Telephone Number (including area e-mail Address code)

ACCEPTANCE: The Corporation, by countersigning this Subscription Agreement below, hereby accepts this subscription as set forth above upon and subject to the terms and conditions contained in this Subscription Agreement.

MEDMEN ENTERPRISES INC. February , 2021

Per: ______No.:

This is the first page of an agreement comprised of 13 pages.

Offshore

PLEASE MAKE SURE THAT YOUR SUBSCRIPTION INCLUDES:

1. a signed copy of this Subscription Agreement;

2. a wire transfer or direct deposit to:

PLEASE NOTE THAT THE FAILURE TO PROVIDE ALL OF THE ABOVE INFORMATION IN RESPECT OF WIRE TRANSFERS MAY RESULT IN THE COMPLETION OF YOUR SUBSCRIPTION FOR SECURITIES HEREUNDER BEING REJECTED OR DELAYED,

MedMen Enterprises Inc.

Attn: Reece Fulgham Email: [email protected]

And To:

Manatt, Phelps & Phillips, LLP

Attn: Katherine Blair Email: [email protected]

And To:

Cassels Brock & Blackwell LLP

Attn: Greg Hogan Email: Email: [email protected]

TERMS AND CONDITIONS OF SUBSCRIPTION FOR SUBORDINATE VOTING SHARES AND WARRANTS OF MEDMEN ENTERPRISES INC.

1. Definitions. In this Subscription Agreement:

(a) “Aggregate Subscription Amount” has the meaning set forth on the face page hereof;

(b) “Allowed Delay” shall have the meaning ascribed thereto in paragraph 10 hereof;

(d) Closing Date” means such date(s) as the Corporation may determine;

(e) Corporation” means MedMen Enterprises Inc., a corporation incorporated under the Business Corporations Act (British Columbia);

(f) “Investment Agreement” shall have the meaning ascribed thereto in paragraph 10 hereof;

(g) “Issue Price” has the meaning set forth on the face page hereof;

(h) “OFAC” shall have the meaning ascribed thereto in paragraph 3(cc) hereof;

(i) “Offering” shall have the meaning ascribed thereto in paragraph 2(b) hereof;

(j) “Purchased Securities” has the meaning set forth on the face page hereof;

(k) “PCMLTFA” shall have the meaning ascribed thereto in paragraph 3(bb) hereof;

(l) “Registrable Securities” shall have the meaning ascribed thereto in paragraph 10 hereof;

(m) “Registration Statement” shall have the meaning ascribed thereto in paragraph 10 hereof;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (n) “Shares” means the Class B subordinate voting shares in the capital of the Corporation;

(o) “Subscriber” has the meaning set forth on the face page hereof;

(p) “Subscription Agreement” has the meaning set forth on the face page hereof;

(q) “Underlying Securities” means the Warrant Shares, if and when issued by the Corporation;

(r) “U.S. Securities Act” shall have the meaning ascribed thereto in paragraph 3(g) hereof;

(s) “Warrants” has the meaning set forth on the face page hereof; and

(t) “Warrant Shares” means the Shares issuable upon exercise of the Warrants.

2. Acknowledgements of the Subscriber. The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that:

(a) this subscription is subject to rejection or acceptance by the Corporation in whole or in part;

(b) the Purchased Securities subscribed for by the Subscriber hereunder form part of a larger issue and sale by the Corporation of up to 15,600,000 of Purchased Securities, or such other amount as agreed to by the subscribers herein (collectively, the “Offering”);

(c) the Subscriber is responsible for obtaining such legal advice as it considers appropriate in connection with the execution, delivery and performance by it of this Subscription Agreement;

(d) there is no government or other insurance scheme covering the Purchased Securities; and

(e) there are risks associated with an investment in the Purchased Securities and, as a result, the Subscriber may lose its entire investment.

3. Representations, Warranties and Covenants of the Subscriber. By executing this Subscription Agreement, the Subscriber (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) represents, warrants and covenants to the Corporation and its counsel (and acknowledges that the Corporation and its counsel are relying thereon) that:

(a) the Subscriber has the requisite power, authority, legal capacity and competence to execute and deliver and be bound by this Subscription Agreement, to perform all of its obligations hereunder, and to undertake all actions required of the Subscriber hereunder, and all necessary approvals of its directors, partners, shareholders, trustees or otherwise with respect to such matters have been given or obtained;

(b) the Subscriber has been duly incorporated or created and is validly subsisting under the laws of its jurisdiction of incorporation or creation;

(c) this Subscription Agreement has been duly and validly authorized, executed and delivered by, and constitutes a legal, valid, binding and enforceable obligation of, the Subscriber;

(d) the execution, delivery and performance by the Subscriber of this Subscription Agreement and the completion of the transactions contemplated hereby do not and will not result in a violation of any law, regulation, order or ruling applicable to the Subscriber, and do not and will not constitute a breach of or default under any of the Subscriber’s constating documents or any agreement or covenant to which the Subscriber is a party or by which it is bound;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) the Subscriber, either alone or together with its representatives, confirms that the Subscriber (and, if the Subscriber is not purchasing as principal, each beneficial purchaser for whom the Subscriber is acting):

(i) has such knowledge, sophistication and experience in financial and business affairs as to be capable of evaluating the merits and risks of its investment in the Purchased Securities;

(ii) is capable of assessing the proposed investment in the Purchased Securities as a result of the Subscriber’s own experience or as a result of advice received from a person registered under applicable securities legislation;

(iii) is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of companies in private placements in the past, and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable Subscriber to utilize the information made available by the Corporation to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment;

(iv) is aware of the characteristics of the Purchased Securities and Underlying Securities and the risks relating to an investment therein on its own and without reliance on the Corporation or any of its affiliates or representatives; and

(v) is able to bear the economic risk of loss of its investment in the Purchased Securities and is able to afford a complete loss of such investment;

(f) the Subscriber understands that no securities commission, stock exchange, governmental agency, regulatory body or similar authority has made any finding or determination or expressed any opinion with respect to the merits of investing in the Purchased Securities;

(g) the Subscriber understands and acknowledges that no prospectus or registration statement has been filed by the Corporation with any securities commission or similar regulatory authority in any jurisdiction in connection with the issuance of the Purchased Securities and the Underlying Securities, the Purchased Securities and the Underlying Securities are being offered in a transaction not involving any public offering within the meaning of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and the Purchased Securities are being offered for sale only on a “private placement” basis and that the sale of the Purchased Securities is conditional upon such sale being exempt from the registration requirements under applicable United States federal and state securities laws and that the Corporation is relying in part upon the truth and accuracy of, and Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of Subscriber to subscribe for the Purchased Shares;

the Subscriber confirms that neither the Corporation, nor any of its representative directors, employees, (h) officers, agents, representatives or affiliates, have made any representations (written or oral) to the Subscriber:

(i) regarding the future value of the Purchased Securities or Underlying Securities;

(ii) that any person will resell or repurchase the Purchased Securities or Underlying Securities;

(iii) that any of the Purchased Securities or Underlying Securities will be listed on any stock exchange or traded on any market; or

(iv) that any person will refund the purchase price or exercise price, as applicable, of the Purchased Securities or Underlying Securities other than as provided in this Subscription Agreement;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) the Subscriber confirms that it has been advised to consult its own legal and financial advisors with respect to the suitability of the Purchased Securities as an investment for the Subscriber, the tax consequences of purchasing and dealing with the Purchased Securities and Underlying Securities, and the resale restrictions and “hold periods” to which the Purchased Securities and Underlying Securities are or may be subject under applicable securities legislation or stock exchange rules, and has not relied upon any statements made by or purporting to have been made on behalf of the Corporation with respect to such suitability, tax consequences, and resale restrictions;

(j) except for the Subscriber’s knowledge regarding its subscription for Purchased Securities hereunder, the Subscriber has no knowledge of a “material fact” or a “material change” (as those terms are defined in the Securities Act (Ontario)) in the affairs of the Corporation that has not been generally disclosed;

(k) the Subscriber is resident in the jurisdiction indicated on the face page of this Subscription Agreement as the “Subscriber’s Address” and the purchase by and sale to the Subscriber of the Purchased Securities, and any act, solicitation, conduct or negotiation directly or indirectly in furtherance of such purchase and sale (whether with or with respect to the Subscriber or any beneficial purchaser) has occurred only in such jurisdiction;

(l) the Subscriber acknowledges that it and/or the Corporation may be required to provide applicable securities regulatory authorities or stock exchanges with information concerning the identities of the beneficial purchasers of the Purchased Securities;

(m) at the time the Subscriber was offered the Purchased Securities, it was, and as of the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a) under the U.S. Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the U.S. Securities Act. The Subscriber is not a “bad actor” as such term is defined in Rule 506 of the U.S. Securities Act. The Subscriber is acquiring the Purchased Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the resale, distribution or other disposition of such Purchased Securities (this representation and warranty not limiting such Subscriber’s right to sell the Purchased Securities pursuant to a registration statement or otherwise in compliance with applicable U.S. federal and state securities laws). The Subscriber is acquiring the Purchased Securities hereunder in the ordinary course of its business;

(n) the Subscriber understands that it may not be able to resell the Purchased Securities or Underlying Securities except in accordance with limited exemptions available under applicable securities legislation, regulatory policy and stock exchange rules, and that the Subscriber is solely responsible for (and the Corporation is not in any way responsible for) the Subscriber’s compliance with applicable resale restrictions;

(o) the Subscriber understands that the sale of the Purchased Securities is conditional upon such sale being exempt from the requirements to file and obtain a receipt for a prospectus or to deliver an offering memorandum, and the requirement to sell securities through a registered dealer, or upon the issuance of such orders, consents or approvals as may be required to enable such sale to be made without complying with such requirements, and that as a consequence of acquiring the Purchased Securities pursuant to such exemptions, certain protections, rights and remedies provided by applicable securities legislation, including statutory rights of rescission or damages in the event of a misrepresentation will not be available to the Subscriber in connection with the purchase and sale of the Purchased Securities;

(p) except as provided for herein, the Subscriber understands and acknowledges that the Purchased Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and that the offer and sale of the Purchased Securities to it are being made in reliance upon the exemption from registration provided by the U.S. Securities Act and similar exemptions under applicable state securities laws. The Subscriber understands and acknowledges that the Purchased Securities will be “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Upon the original issuance of the Purchased Securities and until such time as is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, all certificates representing the Purchased Securities and Underlying Securities, and all certificates issued in exchange therefor or in substitution thereof, shall bear a legend substantially in the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR U.S. STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN COMPLIANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED THAT THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE CORPORATION.”

The Subscriber consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Purchased Securities or Underlying Securities in order to implement the restrictions on transfer set forth and described herein;

(q) the Subscriber has not received or been provided with, nor has it requested, nor does it have any need to receive, any offering memorandum, or any other document (other than the annual financial statements, interim financial statements or any other document (excluding offering memoranda, prospectuses or other offering documents) the content of which is prescribed by statute or regulation) describing the business and affairs of the Corporation, which has been prepared for delivery to and review by prospective purchasers in order to assist them in making an investment decision in respect of the purchase of Purchased Securities pursuant to the Offering;

(r) the Subscriber is not purchasing the Purchased Securities as a result of any “general solicitation” or “general advertising” (as defined in Regulation D under the U.S. Securities Act), including any advertisement, article, notice or other communication regarding the Purchased Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar and has not become aware of any advertisement in printed media of general and regular paid circulation or on radio, television or other form of telecommunication or any other form of advertisement (including electronic display or the Internet) or sales literature with respect to the distribution of the Purchased Securities;

(s) the Subscriber is aware that the Purchased Securities and Underlying Securities have not been and may not be registered under the U.S. Securities Act, or the securities laws of any state and that the Purchased Securities and the Underlying Securities may not be offered or sold, directly or indirectly, in the United States without registration under the U.S. Securities Act or compliance with requirements of an exemption from registration;

(t) the Subscriber did not receive an offer of the Purchased Securities while in the United States and was not in the United States at the time the Subscriber’s buy order was originated or this Subscription Agreement was executed or delivered;

(u) the Subscriber undertakes and agrees that it will not offer or sell any of the Purchased Securities or Underlying Securities in the United States unless such securities are registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, or an exemption from such registration requirements is available;

(v) if required by applicable securities legislation, regulations, rules, policies or orders or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing, such reports, undertakings and other documents with respect to the issue of the Purchased Securities;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (w) except as disclosed in writing to the Corporation, the Subscriber does not act jointly or in concert with any other person or company for the purposes of acquiring securities of the Corporation;

(x) the Subscriber is not a “control person” of the Corporation, as that term is defined in the Securities Act (Ontario), will not become a “control person” of the Corporation by purchasing the Purchased Securities subscribed for under this Subscription Agreement and does not intend to act jointly or in concert with any other person to form a control group in respect of the Corporation;

(y) except for this Subscription Agreement, the Subscriber has relied solely upon publicly available information relating to the Corporation and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Corporation, and acknowledges that the Corporation’s counsel is acting as counsel to the Corporation and not as counsel to the Subscriber;

(z) the Subscriber has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Corporation concerning the terms and conditions of the offering of the Purchased Securities and the merits and risks of investing in the Purchased Securities; (ii) access to information about the Corporation and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Corporation possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment;

(aa) the Subscriber has reviewed the “Privacy Notice” attached to this Subscription Agreement, and agrees to and accepts all covenants, representations and consents as set out therein;

(bb) the funds representing the Aggregate Subscription Amount which will be advanced by the Subscriber to the Corporation hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”) and the Subscriber acknowledges that the Corporation may in the future be required by law to disclose the Subscriber’s name and other information relating to this Subscription Agreement and the Subscriber’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA. To the best of its knowledge: (i) none of the subscription funds to be provided by the Subscriber: (A) have been or will be derived from or related to any activity that is deemed criminal under the law of Canada, the United States of America, or any other jurisdiction; or (B) are being tendered on behalf of a person or entity who has not been identified to the Subscriber; and (ii) it shall promptly notify the Corporation if the Subscriber discovers that any of such representations ceases to be true, and to provide the Corporation with appropriate information in connection therewith;

(cc) the Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The undersigned agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the undersigned is permitted to do so under applicable law. To the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by the undersigned and used to purchase the Shares were legally derived.

(dd) the Subscriber acknowledges that the Corporation may complete additional financings in the future in order to develop the business of the Corporation and to fund ongoing development. There is no assurance that such financing will be available and if available, on reasonable terms. Any such financings may have a dilutive effect on current shareholders, including the Subscriber;

(ee) if the Subscriber is contracting under this Subscription Agreement on behalf of another person or persons, the representations, warranties, covenants, acknowledgements, confirmations and statements made by the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subscriber in this Subscription Agreement are true and correct with respect to such person or persons on whose behalf the Subscriber is so contracting, as if such representations, warranties, covenants, acknowledgements, confirmations and statements were made directly by such person or persons; and

(ff) the Subscriber acknowledges that an investment in the Purchased Securities is subject to a number of risk factors. The Subscriber covenants and agrees to comply with applicable securities legislation, orders or policies concerning the purchase, holding of, and resale of the Purchased Securities and Underlying Securities.

4. Timeliness of Representations, etc. The Subscriber agrees (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that the representations, warranties and covenants of the Subscriber herein will be true and correct both as of the execution of this Subscription Agreement and as of the Closing Time (as defined herein), and will survive the completion of the distribution of the Purchased Securities and any subsequent disposition by the Subscriber of any of the Purchased Securities or Underlying Securities.

5. Indemnity. The Subscriber acknowledges that the Corporation and its counsel are relying upon the representations, warranties and covenants of the Subscriber set forth herein in determining the eligibility (from a securities law perspective) of the Subscriber (or, if applicable, the eligibility of another on whose behalf the Subscriber is contracting hereunder to subscribe for Purchased Securities) to purchase Purchased Securities under the Offering, and hereby agrees to indemnify the Corporation and its directors, officers, employees, advisers, affiliates, shareholders and agents (including their respective legal counsel) against all losses, claims, costs, expenses, damages or liabilities that they may suffer or incur as a result of or in connection with their reliance on such representations, warranties and covenants. The Subscriber undertakes to immediately notify the Corporation’s counsel at Cassels Brock & Blackwell LLP, Attention: Greg Hogan (email: [email protected]), of any change in any statement or other information relating to the Subscriber set forth herein that occurs prior to the Closing Time.

6. Deliveries by Subscriber prior to Closing. The Subscriber agrees to deliver to the Corporation, or as the Corporation may direct, not later than 5:00 p.m. (Toronto time) on such date of which the Subscriber receives notice:

(a) this duly completed and executed Subscription Agreement;

(b) a wire transfer in accordance with the instructions set forth above; and

7. Time and Place of Closing. The sale of the Purchased Securities will be completed virtually via the exchange of the necessary documents, instructions and funds at such time as the Corporation may determine (the “Closing Time”) on the Closing Date. The Corporation reserves the right to close the Offering in multiple tranches, so that one or more closings may occur after the initial closing.

8. Subject to Regulatory Approval. The obligations of the parties hereunder are subject to all required regulatory approvals being obtained.

9. Representations, Warranties and Covenants of the Corporation. The Corporation hereby represents, warrants and covenants to the Subscriber (and acknowledges that the Subscriber is relying thereon) that:

(a) the Corporation has the full corporate right, power and authority to execute and deliver this Subscription Agreement and to issue the Purchased Securities and the Underlying Securities to the Subscriber;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) upon acceptance by the Corporation, this Subscription Agreement shall constitute a binding obligation of the Corporation enforceable in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization and other laws of general application limiting the enforcement of creditors’ rights generally and to the general principles of equity including the fact that specific performance is available only in the discretion of the court;

10. Registration Rights. The Corporation shall, as soon as reasonably practicable, and in any event within fifteen (15) days after the date of this Subscription Agreement, file with the U.S. Securities and Exchange Commission a registration statement on Form S-1 (the “Registration Statement”) under the U.S. Securities Act covering the resale of (a) the Shares and the Warrant Shares subscribed for hereunder, (b) the Shares and Shares underlying Warrants that may be subscribed for, and only to the extent issued, pursuant to the right granted under subsection 11 hereof, and (c) the Shares underlying convertible debentures and warrants that have been issued pursuant to the Investment Agreement dated September 16, 2020 (the “Investment Agreement”) among the Corporation, and BPY Limited, Nomis Bay Ltd, Anson Investments Master Fund LP and Anson East Master Fund LP (collectively, the “Registrable Securities”). A security shall cease to be a Registrable Security upon sale pursuant to the Registration Statement, Rule 144 under the U.S. Securities Act, or otherwise in a transaction in which the transferee received unlegended securities. Subscriber agrees to cooperate as reasonably requested by the Corporation in connection with the preparation and filing of the Registration Statement hereunder.

For not more than thirty (30) consecutive days or for a total of not more than ninety (90) days in any twelve (12) month period, the Corporation may suspend the use of the prospectus included in the Registration Statement contemplated by this Section in the event that the Corporation determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Corporation, the disclosure of which at the time is not, in the good faith opinion of the Corporation, in the best interests of the Corporation or (B) amend or supplement the affected Registration Statement or the related prospectus so that such Registration Statement or prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify the Subscriber in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of Subscriber) disclose to such Subscriber any material non-public information giving rise to an Allowed Delay, (b) advise the Subscriber in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable. Subscriber agrees that, upon receipt of any notice from the Corporation of either (i) the commencement of an Allowed Delay or (ii) the discovery that, or upon the happening of any event as a result of which, the prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, Subscriber will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until the Subscriber is advised by the Company that such dispositions may again be made.

11. Second Tranche. The Corporation hereby grants the Subscriber (together with the other Subscribers under this Offering) the right to purchase up to 7,800,000 Units at the Issue Price for a period of forty- five (45) days following the Closing Date of the Offering herein.

12. Participation Right.

(a) For a period of one year from the Closing Date, the Subscriber shall have twenty-four (24) hours from first notice, if an overnight raise is executed or a commercially reasonable time in all other circumstances, to commit to participate up to 25% on any broadly syndicated (i) equity raises, (ii) convertible note offerings, or (iii) unit deals offered via bank or brokerage firm; provided, however, that Subscriber shall not have any participation right on (i) any capital found through a strategic capital raise process conducted by Moelis & Company, (ii) straight debt instruments, (iii) capital transactions that involve a change of control, (iv) any funding by Gotham Green Partners or (v) capital transactions with a strategic on non-strategic counterparty that take place in conjunction with any restructuring or conversion of debt to equity (even if they involve

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document equity). The total amount of any such individual participation shall not exceed $20,000,000. Subscriber shall be invited to participate in the process conducted by Moelis & Company.

(b) The Subscriber and the Corporation agree that as between the Subscriber and the Corporation the Pre- Emptive Right set out under the heading “Participation Rights – Equity” of the Investment Agreement are superseded in their entirety by this section 12 and such Pre-Emptive Right is terminated.

13. No Partnership. Nothing herein shall constitute or be construed to constitute a partnership of any kind whatsoever between the Subscriber and the Corporation.

14. Governing Law. In all respects, including all matters of construction, validity and performance, this agreement and all disputes, claims and proceedings in connection herewith shall be governed by, and construed and enforced in accordance with, the internal laws of the state of California applicable to contracts made and performed in that state (without regard to the choice of law or conflicts of law provisions thereof) and any applicable laws of the United States of America. Each of the parties hereto hereby consents and agrees that the Superior Court of Los Angeles County, California, or, at any party’s option, the United States District Court for the Central District of California, shall have exclusive jurisdiction to hear and determine any claims or disputes among the parties hereto pertaining to this Agreement or to any matter arising out of or related to this Agreement. Each party hereby expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and such persons hereby waive any objection which they may have based upon lack of personal jurisdiction, improper venue or forum non conveniens and hereby consent to the granting of such legal or equitable relief as is deemed appropriate by such court.

15. Time of Essence. Time shall be of the essence of this Subscription Agreement.

16. Entire Agreement. This Subscription Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof, and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein.

17. Electronic Copies. The Corporation shall be entitled to rely on delivery of a facsimile or other electronic copy of executed subscriptions, and acceptance by the Corporation of such facsimile or electronic copies shall be legally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms hereof.

18. Counterpart. This Subscription Agreement may be executed in one or more counterparts each of which so executed shall constitute an original and all of which together shall constitute one and the same agreement.

19. Severability. The invalidity, illegality or unenforceability of any provision of this Subscription Agreement shall not affect the validity, legality or enforceability of any other provision hereof.

20. Survival. The covenants, representations and warranties contained in this Subscription Agreement shall survive the closing of the transactions contemplated hereby, and shall be binding upon and enure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.

21. Interpretation. The headings used in this Subscription Agreement have been inserted for convenience of reference only and shall not affect the meaning or interpretation of this Subscription Agreement or any provision hereof. In this Subscription Agreement, all references to money amounts are to [Canadian] dollars.

22. Amendment. Except as otherwise provided herein, this Subscription Agreement may only be amended by the parties hereto in writing.

23. Costs. The Subscriber acknowledges and agrees that all costs incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the sale of the Purchased Securities to the Subscriber shall be borne by the Subscriber.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 24. Withdrawal. The Subscriber, on its own behalf and, if applicable, on behalf of others for whom it is contracting hereunder, agrees that this subscription is made for valuable consideration and may not be withdrawn, cancelled, terminated or revoked by the Subscriber, on its own behalf and, if applicable, on behalf of others for whom it is contracting hereunder.

25. Assignment. Neither party may assign all or part of its interest in or to this Subscription Agreement without the consent of the other party in writing.

26. Language. The Subscriber acknowledges that it has consented to and requested that all documents evidencing or relating in any way to the sale of the Purchased Securities be drawn up in the English language only.

PRIVACY NOTICE

The Subscriber acknowledges that this Subscription Agreement and the Exhibits hereto require the Subscriber to provide certain personal information to the Corporation. Such information is being collected by the Corporation for the purposes of completing the Offering, which may include, without limitation, determining the Subscriber’s eligibility to purchase the Purchased Securities under applicable securities laws, preparing and registering certificates representing the Purchased Securities to be issued to the Subscriber and completing filings required by any stock exchange or securities regulatory authority. In addition, such personal information may be used or disclosed by the Corporation for the purpose of administering the Corporation’s relationship with the Subscriber or, if applicable, the beneficial purchaser for whom the Subscriber is contracting. For example, such personal information may be used by the Corporation to communicate with the Subscriber or, if applicable, the beneficial purchaser for whom the Subscriber is contracting (such as by providing annual or quarterly reports), to prepare tax filings and forms or to comply with its obligations under taxation, securities and other laws (such as maintaining a list of holders of shares). The Subscriber’s personal information may also be disclosed by the Corporation to (a) stock exchanges or securities regulatory authorities (including the Unites States Securities and Exchange Commission (the “SEC”))), (b) the Corporation’s registrar and transfer agent, (c) Canadian or United States tax authorities, and (d) any of the other parties involved in the Offering, including legal counsel, and may be included in closing books in connection with the Offering.

By executing this Subscription Agreement, the Subscriber consents to the foregoing collection, use and disclosure of the Subscriber’s personal information. The Subscriber also consents to the filing of copies or originals of any of the Subscriber’s documents delivered in connection with this Subscription Agreement as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby and expressly consents to the collection, use and disclosure of the Subscriber’s personal information by the Canadian Securities Exchange for the purposes identified by such exchange, from time to time.

ACKNOWLEDGEMENT – PERSONAL INFORMATION

The Subscriber acknowledges as follows:

The Canadian Securities Exchange and its affiliates, authorized agents, subsidiaries and divisions (collectively referred to as “the Exchange”) may collect Personal Information in certain Forms that are submitted by the individual and/or by an Issuer or applicant and use it for the following purposes:

· to conduct background checks,

· to verify the Personal Information that has been provided about each individual,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · to consider the suitability of the individual to act as an officer, director, insider, promoter, investor relations provider or, as applicable, an employee or consultant, of the Issuer or applicant,

· to consider the eligibility of the Issuer or applicant to list on the Exchange,

· to provide disclosure to market participants as to the security holdings of directors, officers, other insiders and promoters of the Issuer, or its associates or affiliates,

· to conduct enforcement proceedings, and

· to perform other investigations as required by and to ensure compliance with all applicable rules, policies, rulings and regulations of the Exchange, securities legislation and other legal and regulatory requirements governing the conduct and protection of the public markets in Canada.

As part of this process, the Exchange also collects additional Personal Information from other sources, including but not limited to, securities regulatory authorities in Canada or elsewhere, investigative, law enforcement or self- regulatory organizations, regulations services providers and each of their subsidiaries, affiliates, regulators and authorized agents, to ensure that the purposes set out above can be accomplished.

The Personal Information the Exchange collects may also be disclosed:

(a) to the agencies and organizations in the preceding paragraph, or as otherwise permitted or required by law, and they may use it in their own investigations for the purposes described above; and

(b) on the Exchange’s website or through printed materials published by or pursuant to the directions of the Exchange.

The Exchange may from time to time use third parties to process information and/or provide other administrative services. In this regard, the Exchange may share the information with such third party service providers.

The Subscriber hereby provides the Corporation with written consent to the disclosure of its Personal Information to the Exchange pursuant to the Exchange’s Form 9 and otherwise consents to the Form 9 filing, and to the collection, use and disclosure of its information by the Exchange in the manner and for the purposes described in Appendix A to the Exchange’s Form 9 or as otherwise identified by the Exchange, from time to time.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR U.S. STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN COMPLIANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED THAT THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY.

THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS EXERCISED BY 5:00 P.M. (PACIFIC TIME), ON FEBRUARY 16, 2026, OR SUCH EARLIER DATE AS PROVIDED HEREIN, AFTER WHICH TIME THE WARRANTS EVIDENCED HEREBY SHALL BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT.

WARRANT CERTIFICATE

MEDMEN ENTERPRISES INC.

WARRANT CERTIFICATE l WARRANTS (each a "Warrant") entitling the holder to acquire, subject to adjustment, one Class NO. l B subordinate voting share of MedMen Enterprises Inc. at a price of US$0.464 (a "Share") for each Warrant represented hereby.

THIS CERTIFIES THAT, for value received, l, l (hereinafter referred to as the "Holder"), is entitled, at any time prior to the Expiry Time, to purchase, at the Exercise Price, one Share in the capital stock of MedMen Enterprises Inc. (the "Company") for each Warrant evidenced hereby, by surrendering to the Company at its office at 10115 Jefferson Boulevard, Culver City, CA 90232, this Warrant Certificate, together with a Subscription Form, duly completed and executed, and cash or a certified cheque, money order, bank draft or wire of immediately available funds in lawful money of the United States payable to or to the order of the Company for the amount equal to the Exercise Price per Share multiplied by the number of Shares subscribed for, on and subject to the terms and conditions set forth below.

Nothing contained herein shall confer any right upon the Holder to subscribe for or purchase any shares of the Company at any time after the Expiry Time, and from and after the Expiry Time this Warrant Certificate and the Warrants represented hereby, and all rights hereunder shall be void and of no value.

1. Definitions

(a) "Affiliate" has the meaning ascribed to such term under the Securities Act (Ontario);

(b) "Business Day" means a day which is not a Saturday, Sunday, or a civic or statutory holiday in the City of Los Angeles, California;

(c) "Shares" means Class B subordinate voting shares of the Company as such shares were constituted on the date hereof, as the same may be reorganized, reclassified or redesignated pursuant to any of the events set out in Section 13 hereof;

(d) "Company" means MedMen Enterprises Inc., a corporation formed under the laws of the Province of British Columbia and its successors and assigns;

(e) "Current Market Price" at any date, means the weighted average of the sale prices per Share at which the Shares have traded on the Canadian Securities Exchange, or, if the Shares in respect of which a determination of Current Market Price is being made are not listed thereon, on such stock exchange on which such shares are listed as may be selected for such purpose by the directors, or, if the Shares are not listed on any stock exchange, then on the over-the-counter market, for any 30 consecutive trading days selected by the Company commencing not later than 45 trading days and ending no later than 5 trading days before such date; provided, however, if such Shares are not traded during such 45 day period for at least 30 consecutive trading days, the simple average of the following prices established for each of 30 consecutive trading days selected by the Company commencing not later than 45 trading days before such date:

(i) the average of the bid and ask prices for each day on which there was no trading, and

(ii) the closing price of the Shares for each day that there was trading,

or in the event that at any date the Shares are not listed on any exchange or on the over-the-counter market, the Current Market Price shall be as determined by the directors or such firm of independent chartered accountants as may be selected by the directors acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average price for any period shall be determined by dividing the aggregate sale prices during such period by the total number of Shares sold during such period;

(f) "Equity Shares" means the Shares and any shares of any other class or series of the Company which may from time to time be authorized for issue if by their terms such shares confer on the holders hereof the right to participate in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company beyond a fixed sum or a fixed sum plus accrued dividends;

(g) "Exercise Price" means $0.464 in United States funds per Share;

(h) "Expiry Time" means 5:00 pm (Los Angeles time) on February 16, 2026;

(i) "Holder" means the registered holder of this Warrant Certificate;

(j) "person" means an individual, corporation, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof;

(k) "Subscription Form" means the form of subscription annexed hereto as Schedule "A";

(l) "this Warrant Certificate", "herein", "hereby", "hereof", "hereto", "hereunder" and similar expressions mean or refer to this Warrant Certificate and any deed or instrument supplemental or ancillary thereto and any schedules hereto or thereto and not to any particular article, section, subsection, clause, subclause or other portion hereof; and

(m) "Warrant" or "Warrants" means the right to acquire Shares evidenced hereby.

2. Expiry Time

After the Expiry Time, all rights under any Warrants evidenced hereby, in respect of which the right of subscription and purchase herein provided for shall not theretofore have been exercised, shall wholly cease and terminate and such Warrants and this Warrant Certificate shall be void and of no value or effect.

3. Exercise Procedure

The Holder may exercise the right of purchase herein provided for by surrendering or delivering to the Company prior to the Expiry Time at its registered office as set out above:

(a) this Warrant Certificate, with the Subscription Form duly completed and executed by the Holder or its legal representative or attorney, duly appointed by an instrument in writing in form and manner satisfactory to the Company, and

(b) certified cheque, money order, bank draft or wire transfer payable to or to the order of the Company in lawful money of the United States (or such other currency as agreed to by the Company) in an amount equal to the Exercise Price multiplied by the number of Shares for which subscription is being made.

Any Warrant Certificate and cash, certified cheque, money order or bank draft referred to in the foregoing clauses (a) and (b) shall be deemed to be surrendered only upon delivery thereof to the Company at its principal office in the manner provided in Section 28 hereof.

This Warrant Certificate is exchangeable, upon the surrender hereof by the Holder, for new warrant certificates of like tenor, and bearing the same legends representing, in the aggregate, the right to subscribe for the number of Shares which may be subscribed for hereunder.

4. Right to Distributions

Subject to applicable laws and the rights of any shares of the Company ranking in preference to the Shares, the Holder hereof shall be entitled to receive ratably with the holders of Shares, any dividends declared on the Shares or any other distributions made to the holders of Shares (the “Share Distribution”), on the basis as if the Warrants had been exercised for Shares at the Exercise Price in effect for the Warrants as of the record date for the determination of the holders of Shares entitled to receive the Share Distribution.

5. Entitlement to Certificate

Upon such delivery and payment as aforesaid, the Company shall cause to be issued to the Holder hereof the Shares subscribed for not exceeding those which such Holder is entitled to purchase pursuant to this Warrant Certificate and the Holder hereof shall become a shareholder of the Company in respect of such Shares with effect from the date of such delivery and payment and shall be entitled to delivery of confirmation of the registration of such Shares and the Company shall cause such confirmation to be mailed to the Holder hereof at the address or addresses specified in such subscription within five (5) Business Days of such delivery and payment.

6. Register of Warrantholders and Transfer of Warrants

The Company shall cause a register to be kept in which shall be entered the names and addresses of all holders of the Warrants and the number of Warrants held by them.

The Company may treat the registered holder of any Warrant Certificate as the absolute owner of the Warrants represented thereby for all purposes, and the Company shall not be affected by any notice or knowledge to the contrary except where the Company is required to take notice by statute or by order of a court of competent jurisdiction.

Subject to the terms hereof and the terms set forth in the Transfer Form attached as Schedule “B” hereto, this Warrant may be transferred to: (i) an Affiliate of the Holder; or (ii) any other person; provided that no proposed transfer to a person that is not an Affiliate of the Holder will be permitted (A) without the prior written consent of the Company, which consent will not be unreasonably withheld, conditioned or delayed unless the Company determines, in its sole discretion, that the proposed transferee is, or is reasonably expected to become, a competitor of the Company. In addition to the foregoing, no transfer of this Warrant shall be effective unless this Warrant Certificate is accompanied by a duly executed Transfer Form or other instrument of transfer in such form as the Company may from time to time prescribe, together with such evidence of the genuineness of each endorsement, execution and authorization and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of other matters as may reasonably be required by the Company. Notwithstanding anything else contained herein, no transfer of this Warrant shall be made if in the opinion of counsel to the Company such transfer would result in the violation of any applicable securities laws.

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7. Partial Exercise

The Holder may subscribe for and purchase a number of Shares less than the number the Holder is entitled to purchase pursuant to this Warrant Certificate. In the event of any such subscription and purchase prior to the Expiry Time, the Holder shall in addition be entitled to receive, without charge, a new Warrant Certificate in respect of the balance of the Shares of which he was entitled to purchase pursuant to this Warrant Certificate and which were then not purchased.

8. No Fractional Shares

Notwithstanding any adjustments provided for in Section 13 hereof or otherwise, the Company shall not be required upon the exercise of any Warrants, to issue fractional Shares in satisfaction of its obligations hereunder. Where a fractional Share would, but for this Section 8, have been issued upon exercise of a Warrant, in lieu thereof, there shall be paid to the Holder an amount equal (rounded to the nearest $0.01) to the product obtained by multiplying such fractional share interest by the Current Market Price at the date of due exercise of this Warrant, accompanied by a subscription form and the Exercise Price in the manner provided in Section 3, which payment shall be made within five (5) Business Days of such delivery and payment.

9. Not a Shareholder

Except as provided for herein, nothing in this Warrant Certificate or in the holding of the Warrants evidenced hereby shall be construed as conferring upon the Holder any right or interest whatsoever as a shareholder of the Company.

10. No Obligation to Purchase

Nothing herein contained or done pursuant hereto shall obligate the Holder to purchase or pay for or the Company to issue any shares except those shares in respect of which the Holder shall have exercised its right to purchase hereunder in the manner provided herein.

11. Ranking of Warrants

All warrants issued concurrent herewith shall rank pari passu, notwithstanding the actual date of the issue thereof.

12. Covenants

(a) The Company covenants and agrees that:

(i) so long as any Warrants evidenced hereby remain outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Shares to satisfy the right of purchase herein provided for should the Holder determine to exercise its rights in respect of all the Shares for the time being called for by such outstanding Warrants; and

(ii) all Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment therefor of the amount at which such Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable Shares and the holders thereof shall not be liable to the Company or to its creditors in respect thereof.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) The Company shall make all requisite filings under the Securities Act (Ontario) and the regulations made thereunder including those necessary to remain a reporting issuer not in default of any requirement of such act and regulations.

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13. Adjustment to Exercise Price

The Exercise Price in effect at any time is subject to adjustment from time to time in the events and in the manner provided as follows:

(a) If and whenever at any time after the date hereof the Company:

(i) issues Shares or securities exchangeable for or convertible into Shares to all or substantially all the holders of the Shares as a stock dividend; or

(ii) makes a distribution on its outstanding Shares payable in Shares or securities exchangeable for or convertible into Shares; or

(iii) subdivides its outstanding Shares into a greater number of shares; or

(iv) consolidates its outstanding Shares into a smaller number of shares;

(any of such events being called a "Share Reorganization"), then the Exercise Price will be adjusted effective immediately after the effective date or record date for the happening of a Share Reorganization, as the case may be, at which the holders of Shares are determined for the purpose of the Share Reorganization by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which is the number of Shares outstanding on such effective date or record date before giving effect to such Share Reorganization and the denominator of which is the number of Shares outstanding immediately after giving effect to such Share Reorganization (including, in the case where securities exchangeable for or convertible into Shares are distributed, the number of Shares that would have been outstanding had all such securities been exchanged for or converted into Shares on such effective date or record date).

(b) If and whenever at any time after the date hereof the Company fixes a record date for the issue of rights (excluding rights issued pursuant to a shareholder rights plan), options or warrants to the holders of all or substantially all of its outstanding Shares under which such holders are entitled to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares, where:

(i) the right to subscribe for or purchase Shares, or the right to exchange securities for or convert securities into Shares, expires not more than 45 days after the date of such issue (the period from the record date to the date of expiry being herein in this Section 13 called the "Rights Period"), and

(ii) the cost per Share during the Rights Period (inclusive of any cost of acquisition of securities exchangeable for or convertible into Shares in addition to any direct cost of Shares) (herein in this Section 13 called the "Per Share Cost") is less than 95% of the Current Market Price of the Shares on the record date,

(any of such events being called a "Rights Offering"), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(A) the numerator of which is the aggregate of:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) the number of Shares outstanding as of the record date for the Rights Offering; and

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(2) a number determined by dividing the product of the Per Share Cost and:

(I) where the event giving rise to the application of this subsection 13(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase additional Shares, the number of Shares so subscribed for or purchased during the Rights Period, or

(II) where the event giving rise to the application of this subsection 13(b) was the issue of rights, options or warrants to the holders of Shares under which such holders are entitled to subscribe for or purchase securities exchangeable for or convertible into Shares, the number of Shares for which those securities so subscribed for or purchased during the Rights Period could have been exchanged or into which they could have been converted during the Rights Period,

by the Current Market Price of the Shares as of the record date for the Rights Offering; and

(B) the denominator of which is:

(1) in the case described in subparagraph 13(b)(A)(2)(I), the number of Shares outstanding, or

(2) in the case described in subparagraph 13(b)(A)(2)(II), the number of Shares that would be outstanding if all the Shares described in subparagraph 13(b)(A)(2)(II) had been issued,

as at the end of the Rights Period.

Any Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (Ontario)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

If by the terms of the rights, options or warrants referred to in this Section 13, there is more than one purchase, conversion or exchange price per Share, the aggregate price of the total number of additional Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:

(I) the lowest purchase, conversion or exchange price per Share, as the case may be, if such price is applicable to all Shares which are subject to the rights, options or warrants, and

(II) the average purchase, conversion or exchange price per Share, as the case may be, if the applicable price is determined by reference to the number of Shares acquired.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 13 as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this Section 13, the Exercise Price will be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the Exercise Price which would then be in effect based upon the number of Shares actually issued and remaining issuable after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

If the Holder has exercised this Warrant Certificate in accordance herewith during the period beginning immediately after the record date for a Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Shares equal to the result obtained when the Exercise Price in effect immediately prior to the end of such Rights Offering pursuant to this subsection is multiplied by the number of Shares received upon the exercise of this Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Rights Offering pursuant to this subsection; provided that the provisions of Section 7 will be applicable to any fractional interest in a Share to which such Holder might otherwise be entitled. Such additional Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period and a certificate for such additional Shares will be delivered to such Holder within ten (10) Business Days following the end of the Rights Period.

(c) If and whenever at any time after the date hereof the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding Shares of:

(i) shares of the Company of any class other than Shares;

(ii) rights, options or warrants to acquire shares or securities exchangeable for or convertible into Shares or property or other assets of the Company;

(iii) evidence of indebtedness of the Company; or

(iv) any property or other assets of the Company,

and if such issuance or distribution does not constitute (A) a Share Reorganization, (B) a Rights Offering or (C) the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Shares under which such holders are entitled to subscribe for or purchase Shares or securities exchangeable for or convertible into Shares, where:

(x) the right to subscribe for or purchase Shares, or the right to exchange securities for or convert securities into Shares, expires not more than 45 days after the date of such issue, and

(y) the cost per Share during the Rights Period, inclusive of the Per Share Cost, is 95% or more than the Current Market Price of the Shares on the record date

(any of such non-excluded events being called a "Special Distribution"), the Exercise Price will be adjusted effective immediately after such record date to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(A) the numerator of which is:

(1) the product of the number of Shares outstanding on such record date and the Current Market Price of the Shares on such record date; less

(2) the aggregate fair market value (as determined by action by the directors of the Company, subject, however, to the prior written consent of the TSX Venture Exchange, where required) to the holders of the Shares of such securities or property or other assets so issued or distributed in the Special Distribution; and

(B) the denominator of which is the number of Shares outstanding on such record date multiplied by the Current Market Price of the Shares on such record date.

(d) If and whenever at any time after the date hereof there is a Share Reorganization, a Rights Offering, a Special Distribution, a reclassification or redesignation of the Shares outstanding at any time or change of the Shares into other shares or into other securities (other than a Share Reorganization), or a consolidation, amalgamation or merger of the Company with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification or redesignation of the outstanding Shares or a change of the Shares into other shares), or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity (any of such events being called a "Capital Reorganization"), the Holder, upon exercising this Warrant Certificate after the effective date of such Capital Reorganization, will be entitled to receive in lieu of the number of Shares to which such Holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which such Holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the number of Shares to which such Holder was theretofore entitled upon exercise of this Warrant Certificate. If determined appropriate by action of the directors of the Company, appropriate adjustments will be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Section 13 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 13 will thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any shares, other securities or other property thereafter deliverable upon the exercise hereof. Any such adjustment must be made by and set forth in an amendment to this Warrant Certificate approved by action by the directors of the Company and will for all purposes be conclusively deemed to be an appropriate adjustment.

(e) If at any time after the date hereof and prior to the Expiry Time any adjustment in the Exercise Price shall occur as a result of:

(i) an event referred to in subsection 13(a);

(ii) the fixing by the Company of a record date for an event referred to in subsection 13(b); or

(iii) the fixing by the Company of a record date for an event referred to in subsection 13(c) if such event constitutes the issue or distribution to the holders of all or substantially all of its outstanding Shares of (A) Equity Shares, or (B) securities exchangeable for or convertible into Equity Shares at an exchange or conversion price per Equity Share less than the Current Market Price on such record date or (C) rights, options or warrants to acquire Equity Shares at an exercise, exchange or conversion price per Equity Share less than the Current Market Price on such record date,

then, where required, the number of Shares purchasable upon the subsequent exercise of this Warrant Certificate shall be simultaneously adjusted by multiplying the number of Shares purchasable upon the exercise of this Warrant Certificate immediately prior to such adjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment of the Exercise Price. To the extent any adjustment in subscription rights occurs pursuant to this subsection 13(e) as a result of a distribution of exchangeable or convertible securities other than Equity Shares referred to in subsection 13(a) or as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in subsection 13(b), the number of Shares purchasable upon exercise of this Warrant Certificate shall be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the number of Shares which would be purchasable based upon the number of Shares actually issued and remaining issuable immediately after such expiration, and shall be further readjusted in such manner upon expiration of any further such right. To the extent that any adjustment in subscription rights occurs pursuant to this subsection 13(e) as a result of the fixing by the Company of a record date for the distribution of exchangeable or convertible securities other than Equity Shares or rights, options or warrants referred to in subsection 13(c), the number of Shares purchasable upon exercise of this Warrant Certificate shall be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the number which would be purchasable pursuant to this subsection 13(e) if the fair market value of such securities or such rights, options or warrants had been

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document determined for purposes of the adjustment pursuant to this subsection 13(e) on the basis of the number of Equity Shares issued and remaining issuable immediately after such expiration, and shall be further readjusted in such manner upon expiration of any further such right.

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14. Rules Regarding Calculation of Adjustment of Exercise Price

(a) The adjustments provided for in Section 13 are cumulative and will, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent and will be made successively whenever an event referred to therein occurs, subject to the following subsections of this Section 14.

(b) No adjustment in the Exercise Price is required to be made unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price; provided, however, that any adjustments which, except for the provisions of this subsection, would otherwise have been required to be made, will be carried forward and taken into account in any subsequent adjustments.

(c) No adjustment in the Exercise Price will be made in respect of any event described in Section 13, other than the events referred to in clauses 13(a)(iii) and (iv), if the Holder is entitled to participate in such event on the same terms, mutatis mutandis, as if the Holder had exercised this Warrant Certificate prior to or on the effective date or record date of such event.

(d) No adjustment in the Exercise Price will be made under Section 13 in respect of the issue from time to time of Shares issuable from time to time as dividends paid in the ordinary course to holders of Shares who exercise an option or election to receive substantially equivalent dividends in Shares in lieu of receiving a cash dividend, and any such issue will be deemed not to be a Share Reorganization.

(e) If at any time a dispute arises with respect to adjustments provided for in Section 13, such dispute will be conclusively determined by the auditors of the Company or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the directors of the Company and any such determination, where required, will be binding upon the Company, the Holder and shareholders of the Company. The Company will provide such auditors or accountants with access to all necessary records of the Company.

(f) In case the Company after the date of issuance of this Warrant Certificate takes any action affecting the Shares, other than action described in Section 13, which in the opinion of the board of directors of the Company would materially affect the rights of the Holder, the Exercise Price will be adjusted in such manner, if any, and at such time, by action by the directors of the Company but subject in all cases to the prior written consent of the Canadian Securities Exchange, where required, and any necessary regulatory approval. Failure of the taking of action by the directors of the Company so as to provide for an adjustment on or prior to the effective date of any action by the Company affecting the Shares will be conclusive evidence that the board of directors of the Company has determined that it is equitable to make no adjustment in the circumstances.

(g) If the Company sets a record date to determine the holders of the Shares for the purpose of entitling them to receive any dividend or distribution or sets a record date to take any other action and, thereafter and before the distribution to such shareholders of any such dividend or distribution or the taking of any other action, decides not to implement its plan to pay or deliver such dividend or distribution or take such other action, then no adjustment in the Exercise Price will be required by reason of the setting of such record date.

(h) In the absence of a resolution of the directors of the Company fixing a record date for a Special Distribution or Rights Offering, the Company will be deemed to have fixed as the record date therefor the date on which the Special Distribution or Rights Offering is effected.

(i) As a condition precedent to the taking of any action which would require any adjustment to this Warrant Certificate, including the Exercise Price, the Company must take any corporate action which may be necessary in order that the Company have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which the Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof.

(j) The Company will from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Section 13, forthwith give notice to the Holder specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Exercise Price.

(k) The Company covenants to and in favour of the Holder that so long as the Warrants represented by this Warrant Certificate remain outstanding, it will give notice to the Holder of its intention to fix a record date for any event referred to in subsections 13(a), (b) or (c) (other than the subdivision or consolidation of the Shares) which may give rise to an adjustment in the Exercise Price, and, in each case, such notice must specify the particulars of such event and the record date and the effective date for such event; provided that the Company is only required to specify in such notice such particulars of such event as have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 14 days prior to each such applicable record date or effective date.

15. Consolidation and Amalgamation

(a) The Company shall not enter into any transaction whereby all or substantially all of its undertaking, property and assets would become the property of any other corporation (herein called a "successor corporation") whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction the Company and the successor corporation shall have executed such instruments and done such things as, in the opinion of counsel to the Holder, are necessary or advisable to establish that upon the consummation of such transaction:

(i) the successor corporation will have assumed all the covenants and obligations of the Company under this Warrant Certificate, and

(ii) the Warrant will be a valid and binding obligation of the successor corporation entitling the Holder, as against the successor corporation, to all the rights of the Holder under this Warrant Certificate.

(b) Whenever the conditions of subsection 15(a) shall have been duly observed and performed the successor corporation shall possess, and from time to time may exercise, each and every right and power of the Company under this Warrant Certificate in the name of the Company or otherwise and any act or proceeding by any provision hereof required to be done or performed by any director or officer of the Company may be done and performed with like force and effect by the like directors or officers of the successor corporation.

16. Representation and Warranty

The Company hereby represents and warrants with and to the Holder that the Company is duly authorized and has the corporate and lawful power and authority to create and issue the Warrants represented by this Warrant Certificate and the Shares issuable upon the exercise hereof and perform its obligations hereunder and that this Warrant Certificate represents a valid, legal and binding obligation of the Company enforceable in accordance with its terms.

17. If Share Transfer Books Closed

The Company shall not be required to deliver confirmation of registration for Shares while the share transfer books of the Company are properly closed, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment for the Shares called for thereby during any such period delivery of confirmation of registration for Shares may be postponed for not exceeding five (5) Business Days after the date of the re-opening of said share transfer books. Provided, however, that any such postponement of delivery of confirmation of registration shall be without prejudice to the right of the Holder, if the Holder has surrendered the same and made payment during such period, to receive such confirmation of registration for the Shares called for after the share transfer books have been re-opened.

18. Protection of Shareholders, Officers and Directors

Subject as herein provided, all or any of the rights conferred upon the Holder may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement herein contained or in any of the Warrants represented hereby shall be taken against any shareholder, officer or director of the Company, either directly or through the Company, it being expressly agreed and declared that the obligations under the Warrants evidenced hereby, are solely corporate obligations of the Company and that no personal liability whatever shall attach to or be incurred by the shareholders, officers, or directors of the Company or any of them in respect thereof, any and all rights and claims against every such shareholder, officer or director being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants evidenced hereby.

19. Lost Certificate

If this Warrant Certificate evidencing the Warrants issued hereby becomes stolen, lost, mutilated or destroyed the Company may, on such terms, as it may in its discretion reasonably impose, respectively issue and countersign a new warrant of like denomination, tenor and date, and bearing the same legends, as the certificate so stolen, lost mutilated or destroyed.

20. Governing Law

In all respects, including all matters of construction, validity and performance, this agreement and all disputes, claims and proceedings in connection herewith shall be governed by, and construed and enforced in accordance with, the internal laws of the state of California applicable to contracts made and performed in that state (without regard to the choice of law or conflicts of law provisions thereof) and any applicable laws of the United States of America. Each of the parties hereto hereby consents and agrees that the Superior Court of Los Angeles County, California, or, at any party’s option, the United States District Court for the Central District of California, shall have exclusive jurisdiction to hear and determine any claims or disputes among the parties hereto pertaining to this Agreement or to any matter arising out of or related to this Agreement. Each party hereby expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and such persons hereby waive any objection which they may have based upon lack of personal jurisdiction, improper venue or forum non conveniens and hereby consent to the granting of such legal or equitable relief as is deemed appropriate by such court.

21. Severability

If any one or more of the provisions or parts thereof contained in this Warrant Certificate should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom and:

(i) the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and

(ii) the invalidity, illegality or unenforceability of any provision or part thereof contained in this Warrant in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Warrant Certificate in any other jurisdiction.

22. Headings

The headings of the articles, sections, subsections and clauses of this Warrant Certificate have been inserted for convenience and reference only and do not define, limit, alter or enlarge the meaning of any provision of this Warrant Certificate.

23. Numbering of Articles, etc.

Unless otherwise stated, a reference herein to a numbered or lettered article, section, subsection, clause, subclause or schedule refers to the article, section, subsection, clause, subclause or schedule bearing that number or letter in this Warrant Certificate.

24. Gender

Whenever used in this Warrant, words importing the singular number only shall include the plural, and vice versa, and words importing the masculine gender shall include the feminine gender.

25. Day not a Business Day

In the event that any day on or before which any action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a Business Day. If the payment of any amount is deferred for any period, then such period shall be included for purposes of the computation of any interest payable hereunder.

26. Computation of Time Period

Except to the extent otherwise provided herein, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding".

27. Binding Effect

This Warrant Certificate and all of its provisions shall enure to the benefit of the Holder and his heirs, executors, administrators, legal personal representatives, permitted assigns and successors and shall be binding upon the Company and its successors and permitted assigns.

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28. Notice

Any notice, document or communication required or permitted by this Warrant Certificate to be given by a party hereto shall be in writing and is sufficiently given if delivered personally, or if sent by prepaid registered mail, or if transmitted by any form of recorded telecommunication tested prior to transmission, to such party addressed as follows:

(i) to the Holder, in the register to be maintained pursuant to Section 6 hereof; and

MedMen Enterprises Inc. 10115 Jefferson Boulevard Culver City, CA 90232

Attention: Reece Fulgham Email: [email protected]

Notice so mailed shall be deemed to have been given on the tenth (10th) Business Day after deposit in a post office or public letter box. Neither party shall mail any notice, request or other communication hereunder during any period in which applicable postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notice transmitted by a form of recorded telecommunication or delivered personally shall be deemed given on the day of transmission or personal delivery, as the case may be. Any party may from time to time notify the other in the manner provided herein of any change of address which thereafter, until change by like notice, shall be the address of such party for all purposes hereof.

29. Time of Essence

Time shall be of the essence hereof.

[The remainder of this page is intentionally left blank.]

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This Warrant Certificate shall not be valid for any purpose whatever unless and until it has been executed by the Company.

IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be signed by its duly authorized officer February 16, 2021.

This certificate has been electronically signed and is the only copy that will be issued by the Company. This certificate is deemed to be an original.

MEDMEN ENTERPRISES INC.

Per: Reece Fulgham, Chief Financial Officer

SCHEDULE "A" SUBSCRIPTION FORM

TO:MEDMEN ENTERPRISES INC. 10115 Jefferson Boulevard Culver City, CA 90232

The undersigned holder of the within Warrant Certificate hereby irrevocably subscribes for Class B subordinate voting shares ("Shares") of MEDMEN ENTERPRISES INC. (the "Company") pursuant to the within

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Warrant Certificate at the Exercise Price per share specified in the said Warrant Certificate and encloses herewith cash or a certified cheque, money order or bank draft payable to the order of the Company, or has arranged for wire transfer, in payment of the subscription price therefor. Capitalized terms used herein have the meanings set forth in the within Warrant Certificate.

The undersigned hereby acknowledges that the following legends will be placed on the confirmation of registration/ certificates representing the Shares being acquired upon exercise of the Warrants:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR U.S. STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN COMPLIANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED THAT THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY.”

In connection with the exercise of the Warrant and issuance of the Shares, the undersigned represents and warrants as follows:

(a) Purchase for Own Account. The undersigned is acquiring the Shares as principal for his, her or its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the U.S. Securities Act or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the U.S. Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares in violation of the U.S. Securities Act or any applicable state securities law (this representation and warranty not limiting Holder’s right to sell such Warrant Shares pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws).

(b) Status. The undersigned is, either: (i) an “accredited investor” as defined in Rule 501(a) under the U.S. Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the U.S. Securities Act.

(c) Experience. The undersigned, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. The undersigned is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment

(d) Access to Information. The undersigned has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

(e) Restricted Securities. The undersigned understands and acknowledges that the Shares have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and that the offer and sale of the Shares to it are being made in reliance upon the exemption from registration provided by Section 4(a)(2) of the U.S. Securities Act and similar exemptions under applicable state securities laws. Holder understands and acknowledges that the Shares will be “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, and agrees that if it decides to offer, sell, pledge or otherwise

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document transfer any of the Securities, it will not offer, sell, pledge or otherwise transfer any of such securities, directly or indirectly, unless the transfer is unless pursuant to an effective registration statement under the U.S. Securities Act or pursuant to an available exemption from, or in compliance with an exemption from the registration requirements under the U.S. Securities Act provided that the undersigned has, prior to such transfer, furnished to the Company an opinion of counsel in a form satisfactory to the Company.

Except as provided in the Subscription Agreement between the Company and the Holder dated as of the date of the Warrant Certificate, the undersigned understands that the Company is not obligated to file and has no present intention of filing with the U.S. Securities and Exchange Commission or with any state securities administrator any registration statement in respect of resales of the Shares in the United States, and acknowledges that there are substantial restrictions on the transferability of the Shares and that it may not be possible for the undersigned to readily liquidate his, her or its investment in the case of an emergency at any time.

(f) Consent. The undersigned consents to the Company making a notation on its records or giving instructions to any transfer agent of the Shares in order to implement the restrictions on transfer set forth and described herein.

(g) General Solicitation. The undersigned is not purchasing the Shares as a result of any "directed selling efforts" (as defined in Regulation S) or any "general solicitation" or "general advertising" (as defined in Regulation D under the U.S. Securities Act), including any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of the undersigned, any other general solicitation or general advertisement.

DATED this ____ day of ______, 20____.

NAME: Signature: Address:

☐ Please check box if these share certificates are to be delivered at the office where this Warrant Certificate is surrendered, failing which the confirmation of registration for the Shares will be mailed to the subscriber at the address set out above.

If any Warrants represented by the within Warrant Certificate are not being exercised, a new Warrant Certificate bearing the same legends as the within Warrant Certificate will be issued and delivered with the confirmation of registration for the Shares.

SCHEDULE “B”

TRANSFER FORM

For value received, the undersigned hereby sells, transfers and assigns unto ______

(please print name of transferee) of ______

______

(please print address of transferee)

______Warrants represented

(please insert number of Warrants to be transferred) by the within certificate.

DATED this ___ day of ______, 20___.

NOTICE: THE SIGNATURE TO THIS TRANSFER MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER

Signature guaranteed by:

NOTICE: THE SIGNATURE OF THE TRANSFEROR SHOULD BE GUARANTEED BY A BANK, FINANCIAL INSTITUTION OR STOCK BROKER WHOSE SIGNATURE IS ACCEPTABLE TO THE COMPANY.

Warrants shall only be transferable in accordance with applicable laws and the resale of Warrants and Shares issuable upon exercise of Warrants may be subject to restrictions under such laws.

INVESTMENT AGREEMENT

among

MedMen NY, Inc.

and

MM ENTERPRISES USA, LLC

and

AWH New York, LLC

and

Ascend Wellness Holdings, LLC

dated as of February 25, 2021

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS 1

ARTICLE II. PURCHASE AND SALE OF SHARES 14

Section Purchase and Sale 14 2.1. Section Closings 14 2.2. Section Purchase Price 15 2.3. Section Closing Cash Payment Adjustment 16 2.4. Section Transactions to be Effected at the Initial Closing. 17 2.5.

ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY 18

Section Organization; Good Standing; Power 19 3.1. Section Capitalization; Subsidiaries. 19 3.2. Section Authorization; Execution & Enforceability; No Breach 20 3.3. Section Financial Statements 21 3.4. Section Absence of Undisclosed Liabilities 21 3.5.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section Absence of Changes. 21 3.6. Section Assets 22 3.7. Section Tax Matters 23 3.8. Section Contracts 25 3.9. Section Intellectual Property Rights. 28 3.10. Section Litigation 29 3.11. Section Labor Matters 29 3.12. Section Employee Benefits. 30 3.13. Section Compliance with Laws; Permits 33 3.14. Section Real Property 34 3.15.

Section Environmental Matters 39 3.16. Section Affiliate Transactions 38 3.17. Section Insurance 38 3.18. Section Brokers 38 3.19. Section Accounts Receivable 38 3.20. Section Vendors 38 3.21. Section Bank Accounts 39 3.22. Section Inventory 39 3.23. Section Compliance with Privacy and Security Laws 39 3.24. Section No Other Representations and Warranties 40 3.25.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF INVESTOR 41

Section Organization and Authority of Investor 41 4.1. Section No Conflicts; Consents 41 4.2. Section Investment Purpose; Sufficiency of Funds 42 4.3. Section Brokers; No General Solicitation 42 4.4. Section Legal Proceedings 42 4.5.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section Disclosure of Information; Investment Experience 42 4.6. Section No Bad Actors 42 4.7.

ARTICLE V. COVENANTS 43

Section Conduct of Business Prior to the Closing 43 5.1. Section Access to Information 45 5.2. Section No Solicitation of Other Bids. 45 5.3. Section Notice of Certain Events. 46 5.4. Section Resignations 47 5.5. Section Confidentiality; Seller Intellectual Property 47 5.6. Section Non-solicitation 48 5.7. Section Governmental Approvals and Consents. 49 5.8.

Section Books and Records. 51 5.9. Section Operating Costs 51 5.10. Section Closing Conditions 51 5.11. Section Public Announcements 52 5.12. Section Further Assurances 52 5.13.

ARTICLE VI. TAX MATTERS 52

Section Tax Covenants. 52 6.1. Section Termination of Existing Tax Sharing Agreements 53 6.2. Section Tax Indemnification 53 6.3. Section Straddle Period 54 6.4. Section Contests 54 6.5. Section Cooperation and Exchange of Information 55 6.6. Section Tax Treatment of Indemnification Payments 55 6.7. Section Survival 55 6.8.

ARTICLE VII. CONDITIONS TO CLOSING 56

Section Conditions to Obligations of All Parties 56 7.1. Section Conditions to Obligations of Investor 56 7.2. Section Conditions to Obligations of the Company Parties 58 7.3.

ARTICLE VIII. INDEMNIFICATION 59

Section Survival 59 8.1. Section Indemnification by Company Parent 60 8.2. Section Indemnification by Investor 60 8.3. Section Certain Limitations 61 8.4. Section Indemnification Procedures 62 8.5. Section Payments 64 8.6. Section Tax Treatment of Indemnification Payments 64 8.7. Section Effect of Investigation 64 8.8. Section Exclusive Remedies 64 8.9.

iii

ARTICLE IX. TERMINATION 65

Section Termination 65 9.1. Section Effect of Termination 66 9.2.

ARTICLE X. RELEASE 67

ARTICLE XI. MISCELLANEOUS 67

Section Expenses 67 11.1. Section Notices 67 11.2. Section Interpretation 68 11.3. Section Headings 68 11.4. Section Severability 69 11.5.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section Entire Agreement 69 11.6. Section Successors and Assigns 69 11.7. Section No Third-party Beneficiaries 69 11.8. Section Amendment and Modification; Waiver 69 11.9. Section Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 70 11.10. Section Specific Performance 71 11.11. Section Counterparts 71 11.12.

INVESTMENT AGREEMENT

This Investment Agreement (this “Agreement”), dated as of February 25, 2021 (the “Agreement Date”), is entered into by and among MedMen NY, Inc., a New York corporation, (the “Company”), MM Enterprises USA, LLC, a Delaware limited liability company (“Company Parent”), AWH New York, LLC, a New York limited liability company (“Investor”) and Ascend Wellness Holdings, LLC, a Delaware limited liability company (“Investor Parent”).

WHEREAS, the Company requires additional capital to satisfy outstanding indebtedness and for working capital and other general corporate purposes;

WHEREAS, Investor is willing to provide such capital to the Company through the purchase of certain shares of capital stock of the Company, as further described herein; and

WHEREAS, the board of directors or managers, as applicable, of each of the Company, Company Parent and Investor has adopted and approved this Agreement and the transactions contemplated herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I. DEFINITIONS

The following terms have the meanings specified or referred to in this Article I:

“Accounts Receivable” means all receivables (including notes, book debts and other amounts due or accrued, whether billed or unbilled), arising from or related to or in respect of the Business, whether or not in the Ordinary Course of Business, together with any unpaid financing charges accrued thereon and the benefit of all security for such accounts receivable, notes and debts, including all receivables reflected or which will be reflected in the Recent Balance Sheet.

“Acquisition Proposal” has the meaning set forth in Section 5.3(a).

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity that is commenced, brought, tried or heard by or before, or otherwise involving a Governmental Authority.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Adjusted Cash Purchase Price” means (A) the Base Cash Purchase Price, minus (B) the aggregate amount of all Change in Control Payments not otherwise paid as of immediately prior to the Initial Closing, minus (C) the aggregate amount of all Transaction Expenses not otherwise paid as of immediately prior to the Initial Closing, minus (D) the aggregate amount of the Excess Operating Costs, if any, minus (E) the Company Debt Payoff Amount, minus (F) the Net Working Capital Deficiency, if any, plus (G) the Net Working Capital Surplus, if any.

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Agreement Date” has the meaning set forth in the preamble.

“Allocation Certificate” has the meaning set forth in Section 2.4(b).

“Base Cash Purchase Price” means $35,000,000.

“Break Fee” means a cash payment equal to $6,000,000.

“Business” means the business conducted by the Company and/or its Subsidiaries on the Agreement Date, including the sale of cannabis.

“Business Assets” has the meaning set forth in Section 3.7(a).

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by Law to be closed for business.

“Business IP” shall mean the Owned IP and all other Intellectual Property used by the Company and its Subsidiaries, including Licensed Intellectual Property.

“Cap” has the meaning set forth in Section 8.4(a).

“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).

“Change in Control Payment” means any new or increased commission, severance, bonus, increased vesting or benefit accruals, or other similar payment payable by the Company or any of the Subsidiaries to management or other Employees that is triggered (in whole or in part) solely as a result of the consummation of the transaction contemplated hereunder, in each case plus the employer’s portion of any applicable employment or payroll Taxes with respect to such amount and regardless of whether such commission, obligation, severance, bonus or other payment is due, paid or payable prior to, on or after the Initial Closing; provided that, in each case, a Change in Control Payment shall not include any commission, severance, bonus, increased vesting, benefit accrual or other similar payment triggered as a result of the voluntary termination of an Employee by the Company or Investor at any time prior to, on or after the Initial Closing.

“Change Notice” has the meaning set forth in Section 2.4(a)(ii).

“Closing” has the meaning set forth in Section 2.2(b).

“Closing Note” has the meaning set forth in Section 2.3(b)(iii).

“COBRA” has the meaning set forth in Section 3.13(c).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preamble.

“Company Debt” means with respect to the Company and the Subsidiaries, at the time of determination and without duplication (i) all obligations for borrowed money or extensions of credit outstanding as of the Agreement Date (including all sums due on early termination and repayment or redemption calculated to the Initial Closing and any advances), (ii) all obligations evidenced by bonds, debentures, notes or other similar instruments as of the Agreement Date (including all sums due on early termination and repayment or redemption calculated to the Initial Closing), (iii) all obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the Ordinary Course of Business, (iv) all obligations as lessee capitalized in accordance with GAAP, (v) all obligations, contingent or otherwise, directly or indirectly guaranteeing any obligations of any other Person, (vi) all obligations to reimburse the issuer in respect of letters of credit or under performance of surety bonds, or other similar obligations, (vii) all obligations in respect of bankers’ acceptances and under reverse purchase agreements, (viii) all obligations in respect of futures contracts, swaps and other derivative financial instruments (determined on a net basis as if such contract or obligation was being terminated early on such date), (ix) all direct or indirect guarantee obligations in respect of obligations of the kind referred to in clauses (i) through (viii) above, and (x) all obligations of the kind referred to in clauses (i) through (ix) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and Contract rights) owned by the Company or any of the Subsidiaries, whether or not the Company or such Subsidiary has assumed or become liable for the payment of such obligation. Notwithstanding the foregoing, “Company Debt” shall not include any obligations incurred by or at the direction of Investor (or its Affiliates) on behalf of the Company pursuant to the Management Agreement or otherwise, but shall include any Company Debt obligations incurred by the Company Parent on behalf of the Company in violation of this Agreement or the Management Agreement (as applicable) during the period between the Agreement Date and the Initial Closing.

“Company Debt Payoff Amount” has the meaning set forth in Section 2.4(b)(ii).

“Company Disclosure Schedules” has the meaning set forth in ARTICLE III.

“Company Owner” means Project Compassion NY, LLC, a Delaware limited liability company.

“Company Parent” has the meaning set forth in the recitals.

“Company Parent Indemnitees” has the meaning set forth in Section 8.3.

“Company Parent Intellectual Property” means any right, title or interest in, including any license for the use of, any Intellectual Property of Company Parent, which for clarity, shall include without limitation any right title and interest in and to the names “MM Enterprises USA, LLC,” “MedMen,” “Luxlyte,” “Statemade,” “MMRed” and any derivative thereof.

“Company Party” has the meaning set forth in ARTICLE III.

“Company Permits” has the meaning set forth in Section 3.14(b).

“Contingent Workers” has the meaning set forth in Section 3.12(a).

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Contracts” means all legally binding contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements.

“Current Assets” means the total assets of the Company, as determined in accordance with GAAP.

“Current Liabilities” means the total liabilities of the Company, as determined in accordance with GAAP.

“Deductible” has the meaning set forth in Section 8.4(a).

“Deposit” means the cash payment of $4,000,000 paid by Investor to the Company in accordance with the Non-Binding Proposal between Investor and MM Enterprises USA, LLC dated December 2, 2020.

“Direct Claim” has the meaning set forth in Section 8.5(c).

“Disclosure Schedules” means the Company Disclosure Schedules and the Investor Disclosure Schedules, each delivered concurrently with the execution and delivery of this Agreement.

“Disqualification Event” means a “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) promulgated under the Securities Act.

“Dollars or $” means the lawful currency of the United States.

“Employee” means any current, former, or retired employee, officer, manager, or director of the Company or any of its Subsidiaries.

“Employee Benefit Plan” has the meaning set forth in Section 3.13(a).

“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

“Environmental Liabilities” means all Liabilities arising from environmental, health or safety conditions or a Release or threat of Release resulting from the Company, or any Release for which the Company is otherwise responsible under any Environmental Law.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

“Equity Equivalents” means with respect to any Person, (i) any capital stock, membership interests or other share capital, equity or ownership interest or voting security, (ii) any securities (including debt securities) directly or indirectly convertible into or exchangeable or exercisable for any capital stock, membership interests or other share capital, equity or ownership interest or voting security, or containing any profit participation features, (iii) any rights, warrants or options directly or indirectly to subscribe for or to purchase any capital stock, membership interests, other share capital, equity or ownership interest or voting security, or securities containing any profit participation features, or to subscribe for or to purchase any securities (including debt securities) convertible into or exchangeable or exercisable for any capital stock, membership interests, other share capital, equity or ownership interest or voting security or securities containing any profit participation features, (iv) any share appreciation rights, phantom share rights, other rights the value of which is linked to the value of any securities or interests referred to in clauses (i) through (iii) above or other similar rights or (v) any securities (including debt securities) issued or issuable with respect to the securities or interests referred to in clauses (i) through (iv) above in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ERISA Affiliate” has the meaning set forth in Section 3.13(c).

“Excess Operating Costs” means the amount by which the Net Interim Period Operating Costs exceeds the Maximum Interim Period Operating Costs. For the avoidance of doubt, if the Net Interim Period Operating Costs are less than or equal to the Maximum Interim Period Operating Costs, the Excess Operating Costs shall equal zero (0).

“Existing Shares” means 400 shares of Common Stock of the Company owned by Company Owner, which represents all of the issued and outstanding equity of the Company immediately prior to the Initial Closing.

“Federal Cannabis Laws” means United States federal Laws relating to the manufacture, use, possession, cultivation, and distribution of cannabis, its cannabinoids, and cannabimimetic agents (including, without limitation, the Controlled Substances Act).

“Financial Statements” has the meaning set forth in Section 3.4(a).

“Fundamental Representations” has the meaning set forth in Section 8.1.

“GAAP” means generally accepted accounting principles in the United States in effect from time to time.

“Government Contract” means any Contract between the Company and (a) any Governmental Authority, (b) any prime contractor to a Governmental Authority (in its capacity as such), or (c) any subcontractor (of any tier) in connection with or with respect to any Contract described in clause (a) or (b), and any modification of any of the foregoing.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

“Indemnified Party” has the meaning set forth in Section 8.5.

“Indemnifying Party” has the meaning set forth in Section 8.5.

“Independent Accountant” shall mean a nationally recognized accounting firm mutually appointed by Investor and Company Parent, that has no prior business relationship with Investor, Company Parent or their respective Affiliates, provided, if Investor and Company Parent are unable to agree upon an Independent Accountant within ten (10) days of such need for appointment, each of Investor and Company Parent shall select a nationally recognized accounting firm that shall mutually appoint a third nationally recognized accounting firm to serve as the Independent Accountant, which accounting firm shall have no prior business relationship with Investor, Company Parent or their respective Affiliates.

“Initial Shares Purchase Price” has the meaning set forth in Section 2.3(a).

“Insurance Policy” has the meaning set forth in Section 3.18.

“Intellectual Property” means all intellectual property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, anyof the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models); and (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation.

“Interim Period” means the period beginning on the Agreement Date and ending on the MSA Effective Date.

“Investor” has the meaning set forth in the preamble.

“Investor Disclosure Schedules” has the meaning set forth in ARTICLE IV.

“Investor Indemnitees” has the meaning set forth in Section 8.2.

“Investor Parent” has the meaning set forth in the preamble.

“IP Licenses” has the meaning set forth in Section 3.9(a)(ix).

“IT Assets” shall mean all websites, software and applications (on premises or cloud- based), databases, systems (telecommunications and otherwise), servers, computers, hardware, firmware, middleware, networks, data communications lines, routers, hubs, switches and all other information technology equipment, and all associated documentation.

“Knowledge of the Company” or any other similar knowledge qualification, means the actual knowledge of Tom Lynch, Tim Bossidy, Reece Fulgham and Dan Edwards after reasonable investigation.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leased Real Property” has the meaning set forth in Section 3.15(d).

“Liabilities” means any liabilities of any nature, whether accrued, absolute, contingent or otherwise (including, liabilities as guarantor or otherwise with respect to obligations of others, liabilities for Taxes due or then accrued or to become due, and contingent liabilities relating to activities of the Company or any of the Subsidiaries or the conduct of the Business, regardless of whether claims in respect thereof have been asserted).

“Licensed Intellectual Property” means all Intellectual Property that any third party owns and that the Company or its Subsidiaries use or have the right to use pursuant to a license or sublicense.

“Licensed Providers” has the meaning set forth in Section 3.14(d).

“Lien” means any lien, charge, security interest, condition, restriction, mortgage, pledge, community property interest, right of first refusal, option, easement, reservation, tenancy, assignment, right of pre-emption or any other encumbrance whatsoever.

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include consequential, incidental or punitive damages, except in the case when actually awarded as the result of intentional misconduct, gross negligence, fraud of an Indemnifying Party or to the extent actually awarded to a Governmental Authority.

“Management Agreement” means the Management and Administrative Services Agreement to be entered into between Investor and the Company substantially in the form attached hereto as Exhibit A.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), prospects or assets of the Company, taken as a whole or (b) the ability of the parties to consummate the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic, health or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial or securities markets in general; (iv) pandemics, acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any changes in applicable Laws or accounting rules, including GAAP; or (vi) the public announcement, pendency or completion of the transactions contemplated by this Agreement, except in the case of clause (i), (ii) or (iii), to the extent that such

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document change, event or effect disproportionately affects the Company and/or Business relative to other businesses in the same industry. For the avoidance of doubt, any change in State and Local Cannabis Laws that may have an adverse effect on the Business (such as an expansion of the New York cannabis program) but that does not prohibit the operation of the Business entirely, shall not, in and of itself, be deemed a Material Adverse Effect hereunder.

“Material Contracts” has the meaning set forth in Section 3.9(b).

“Material Vendor” has the meaning set forth in Section 3.21.

“Maximum Interim Period Operating Costs” means (i) $12,500 multiplied by (ii) the number of days of the Interim Period.

“Milestone Closing” has the meaning set forth in Section 2.2(b).

“Milestone Event” means the first sale by the Company of adult use marijuana products at one or more of its retail store locations.

“Milestone Shares Purchase Price” has the meaning set forth in Section 2.1(c).

“MSA Effective Date” means the effective date of the Management Agreement.

“Net Interim Period Operating Costs” means the amount by which the aggregate Operating Costs of the Business during the Interim Period exceed the aggregate revenue of the Company during the Interim Period (calculated in accordance with GAAP). For the avoidance of doubt, if the aggregate Operating Costs of the Company are less than or equal to the aggregate revenue of the Company during the Interim Period, the Net Interim Period Operating Costs shall equal zero (0).

“Net Working Capital” means the Current Assets of the Company less the Current Liabilities of the Company, determined as of the close of business on the Agreement Date.

“Net Working Capital Deficiency” means the amount by which the Net Working Capital is less than the Net Working Capital Target.

“Net Working Capital Surplus” means the amount by which the Net Working Capital is greater than the Net Working Capital Target.

“Net Working Capital Target” means $0.00.

“Off-the-Shelf Software Licenses” has the meaning set forth in Section 3.9(a)(ix).

“Operating Costs” means (i) cost of goods sold (COGS) plus (ii) selling, general and administrative expense (SG&A) plus(iii) Taxes owed with respect to Real Property minus (iv) depreciation and amortization (D&A), in each case calculated in accordance with GAAP.

“Opt-Out Notifications” has the meaning set forth in Section 3.24(g).

“Order” means any consent, decree, injunction, judgment, order, ruling, assessment or writ of any Governmental Authority or arbitration tribunal (in each case, whether final or preliminary).

“Ordinary Course of Business” means the ordinary course of the Company’s and its Subsidiaries’ business taken as a whole and consistent with past practice.

“Owned IP” means the Intellectual Property owned or purported to be owned by the Company or its Subsidiaries, which expressly excludes all Company Parent Intellectual Property.

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Permitted Liens” means (a) all purchase money Liens on equipment or inventory; (b) statutory Liens of landlords and Liens of carriers, warehousemen, bailees, mechanics, materialmen and other like liens imposed by Law, created in the Ordinary Course of Business and securing amounts not yet due or paid in the Ordinary Course of Business (or which are being contested in good faith, by appropriate proceedings or other appropriate actions which are sufficient to prevent imminent foreclosure of such Liens); (c) deposits made (and the Liens thereon) in the Ordinary Course of Business of the Company (including security deposits for leases, indemnity bonds, surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, contracts (other than for the repayment or guarantee of borrowed money or purchase money obligations), statutory obligations and other similar obligations arising as a result of progress payments under government contracts; (d) easements (including reciprocal easement agreements and utility agreements), encroachments, rights of way or minor defects or irregularities in title (whether or not recorded), if applicable, and which, individually or in the aggregate, do not materially interfere with the operation by the Company or the Business or with the occupation and enjoyment of the Real Property so encumbered; (e) Liens for Taxes not yet due and payable and liens for Taxes that the Company or Company Parent are contesting, in good faith, by appropriate proceedings which are sufficient to prevent imminent foreclosure of such Liens, and with respect to which adequate reserves are being maintained by the Company Parent or the Company, as applicable; (f) Liens created by the Company Debt to Senior Lender; and (g) Liens created by the Closing Note.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“Personal Information” means all data that (i) identifies an individual or, in combination with any other information or data available to the Company or any of its Subsidiaries, is capable of identifying an individual or (ii) the collection, retention, disclosure, processing, storage, or transfer of which is regulated by any applicable Law.

“Post-Agreement Tax Period” means any taxable period beginning after the Agreement Date and, with respect to any taxable period beginning before and ending after the Agreement Date, the portion of such taxable period beginning after the Agreement Date.

“PPACA” has the meaning set forth in Section 3.13(c).

“Pre-Agreement Tax Period” means any taxable period ending on or before the Agreement Date and, with respect to any taxable period beginning before and ending after the Agreement Date, the portion of such taxable period ending on and including the Agreement Date.

“Pre-Agreement Taxes” means Taxes of the Company for any Pre-Agreement Tax Period.

“Pre-Closing Tax Period” means any taxable period ending on or before the Initial Closing Date and, with respect to any taxable period beginning before and ending after the Initial Closing Date, the portion of such taxable period ending on and including the Initial Closing Date.

“Privacy and Security Laws” has the meaning set forth in Section 3.24(a).

“Real Property Leases” has the meaning set forth in Section 3.15(d).

“Recent Balance Sheet” has the meaning set forth in Section 3.4(a).

“Recent Balance Sheet Date” has the meaning set forth in Section 3.4(a).

“Registered Owned IP” has the meaning set forth in Section 3.10(a).

“Release” means any release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“Remedial Action” means any action or proceeding to (i) contain, clean-up, remove, treat or remediate any Hazardous Materials, (ii) correct or prevent an environmental Action resulting from the prior treatment, storage or disposal of Hazardous Materials or to recover the cost of either by a Governmental Authority or third party, (iii) remove any fill or implement any remediation, restoration or mitigation that may be required in connection with any dredging, filling or disturbance activities in any wetland or wetlands, as those terms are defined under applicable Law, (iv) perform post-remedial monitoring and care, and (v) respond to any request by any Governmental Authority for information relating to containment, clean-up, removal, treatment or remediation of Hazardous Materials.

“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“Restricted Period” has the meaning set forth in Section 5.7(a).

“Review Period” has the meaning set forth in Section 2.4(a)(ii).

“Rule 506(d) Related Parties” means, with respect to any Person, any other Person that is a beneficial owner of such first Person’s securities for purposes of Rule 506(d) under the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Senior Lender” has the meaning set forth in Section 2.3(b)(i).

“Shares” has the meaning set forth in Section 2.1(c).

“Signing Balance Sheet” means an unaudited balance sheet of the Company as of the close of business on the Agreement Date and prepared in accordance with GAAP consistent with past practices (except for the absence of footnotes).

“Signing Working Capital Statement” has the meaning set forth in Section 2.4(a)(i).

“State and Local Cannabis Laws” means Laws regarding the cultivation, manufacture, possession, use, sale or distribution of cannabis or cannabis products promulgated by state and local Governmental Authorities in the states and municipalities in which the Company or any of its Subsidiaries operate or any of its Subsidiaries is organized or domiciled, including without limitation, the State of New York.

“Straddle Period” has the meaning set forth in Section 6.4.

“Subsidiaries” has the meaning set forth in Section 3.2(b).

“Tax Representations” has the meaning set forth in Section 8.1.

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“Taxing Authority” means any Governmental Authority responsible for the administration, imposition or collection of any Tax.

“Third Party Claim” has the meaning set forth in Section 8.5(a).

“Transaction Documents” means this Agreement, the Closing Note, the Management Agreement and each of the agreements and instruments delivered in connection with the foregoing agreements.

“Transaction Expenses” means, without duplication, all costs, fees and expenses incurred or owed to a third party by any Company Party in connection with the transactions contemplated hereby, including all fees, costs and expenses incurred in connection with the negotiation, preparation and review of this Agreement (including any investment banking fees, fees of accountants, attorneys and other advisors). For the avoidance of doubt, any fees and expenses that are contingent upon the consummation of the Initial Closing shall be deemed to have been accrued immediately prior to the Initial Closing for purposes of this definition.

“Treasury Regulations” means regulations issued by the U.S. Department of the Treasury under the Code.

“Union” has the meaning set forth in Section 3.12(c).

“Working Capital Advance” has the meaning set forth in Section 5.10.

ARTICLE II. PURCHASE AND SALE OF SHARES

Section 2.1. Purchase and Sale.

(a) On or before the Initial Closing (as defined below), the Company shall have adopted and filed with the Secretary of State of the State of New York the Certificate of Amendment to the Company’s Certificate of Incorporation in the form of Exhibit B attached to this Agreement (the “Charter Amendment”).

(b) Subject to the terms and conditions set forth herein, at the Initial Closing (as defined below), the Company shall issue and sell to Investor, and Investor shall purchase from the Company, free and clear of all Encumbrances, 2,608 shares (the “Initial Shares”) of common stock of the Company, no par value per share (the “Common Stock”), for the consideration specified in Section 2.3, as finally determined in accordance with Section 2.4.

(c) Subject to the achievement of the Milestone Event and the other terms and conditions set forth herein, the Company shall issue and sell to Investor, and Investor shall purchase from the Company, free and clear of all Encumbrances, a number of shares of Common Stock equal to $10,000,000 (the “Milestone Shares Purchase

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Price”) divided by the Per Share Purchase Price (the “Milestone Shares”). The shares of Common Stock issued to Investor pursuant to this Agreement (including the Initial Shares and the Milestone Shares) shall be referred to in this Agreement as the “Shares.”

(d) The “Per Share Purchase Price” shall equal the Initial Shares Purchase Price, as finally determined in accordance with Section 2.4, divided by the number of Initial Shares.

Section 2.2. Closings.

(a) The purchase and sale of the Initial Shares shall take place at a closing (the “Initial Closing”) to be held at 10:00 a.m., Eastern time, no later than five (5) Business Days after the last of the Conditions to Closing set forth in ARTICLE VII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Initial Closing Date), remotely via the exchange of documents and signatures, or at such other time or on such other date or at such other place or in such other manner as the Company and Investor may mutually agree upon in writing (the day on which the Initial Closing takes place being the “Initial Closing Date”).

(b) The purchase and sale of the Milestone Shares shall take place at a closing (the “Milestone Closing”) to be held at 10:00 a.m., Eastern time, no later than five (5) Business Days following the achievement of the Milestone Event, remotely via the exchange of documents and signatures, or at such other time or on such other date or at such other place or in such other manner as the Company and Investor may mutually agree upon in writing. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, if the Milestone Event occurs prior to the Initial Closing, Investor shall purchase the Milestone Shares at the Initial Closing. In the event there is more than one closing, the term “Closing” shall apply to each such closing unless otherwise specified.

Section 2.3. Purchase Price.

(a) The aggregate purchase price for the Initial Shares shall be equal to (i) the Adjusted Cash Purchase Price, as finally determined in accordance with Section 2.4 below, plus (ii) the Closing Note Principal Balance (as defined below), plus (iii) the balance of the Working Capital Advance as of the Initial Closing (the “Initial Shares Purchase Price”).

(b) The Initial Shares Purchase Price shall be payable as follows:

(i) Prior to the date hereof, Investor or Investor Parent has paid to the Company the Deposit. If not paid previously, at the Initial Closing, the Company shall pay the Deposit to Hankey Capital, LLC (the “Senior Lender”) in partial satisfaction of the Company Debt owed to the Senior Lender.

(ii) At the Initial Closing, Investor or Investor Parent shall pay to the Senior Lender, on behalf of the Company in partial satisfaction of the Company Debt owed to the Senior Lender, by wire transfer of immediately available funds, a cash payment (the “Closing Cash Payment”) equal to the Adjusted Cash Purchase Price minus the Deposit pursuant to instructions provided by the Senior Lender.

(iii) At the Initial Closing, Investor shall issue a Senior Secured Promissory Note (the “Closing Note”), with a principal amount of $28,000,000 (the “Closing Note Principal Balance”) and guaranteed by Investor Parent, to the Company, which Closing Note shall be assigned by the Company to the Senior Lender in partial satisfaction of the Company Debt owed to the Senior Lender.

(iv) At the Initial Closing, the Working Capital Advance shall be converted into shares of Common Stock and all obligations of the Company thereunder shall be deemed extinguished and satisfied in full.

(c) The aggregate purchase price for the Milestone Shares shall be equal to the Milestone Share Purchase Price. At the Milestone Closing, Investor or Investor Parent shall pay the Milestone Share Purchase Price to the Senior Lender, on behalf of the Company in partial satisfaction of the Company Debt owed to the Senior Lender,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document by wire transfer of immediately available funds, a cash payment equal to the Milestone Share Purchase Price pursuant to instructions provided by the Senior Lender.

Section 2.4. Closing Cash Payment Adjustment.

(a) Calculation of Net Working Capital Adjustment.

(i) Calculation. Within thirty (30) days after the Agreement Date, the Company shall deliver to Investor the Signing Balance Sheet, together with a statement (the “Signing Working Capital Statement”) of the Net Working Capital of the Company and the Net Working Capital Deficiency (if any) or the Net Working Capital Surplus (if any), which Signing Working Capital Statement shall be prepared in accordance with the definition of Net Working Capital, without giving effect to the consummation of the transaction contemplated hereunder and subject to the adjustments specified in the definition of Net Working Capital.

(ii) Examination and Review. After receipt of the Signing Working Capital Statement, Investor shall have sixty (60) days (the “Review Period”) to review the Signing Working Capital Statement. During the Review Period, the Company Parties will make available at Investor’s reasonable request all records and work papers of the Company Parties used in preparing the Signing Working Capital Statement. If Investor disagrees with any of the amounts set forth in the Signing Working Capital Statement, Investor may provide a written notice of proposed changes to any such calculation specifying in reasonable detail all disputed items and the basis therefor (a “Change Notice”) to Company Parent prior to the end of the Review Period (and in the event no Change Notice is provided during such period, Investor will be deemed to have agreed to and accepted the Signing Working Capital Statement). The Company Parties shall reasonably promptly cooperate with Investor in providing such information as Investor reasonably requests in connection with the review of the Signing Working Capital Statement. If Investor provides a Change Notice to Company Parent within the Review Period, the Signing Working Capital Statement and the components thereof included in the Change Notice shall be finally determined in accordance with the resolution of dispute procedures set forth in Section 2.4(a)(iii). If no Change Notice is provided by Investor prior to the expiration of the Review Period, the Signing Working Capital Statement shall be binding on the parties in all respects.

(iii) Resolution of Disputes. Investor and Company Parent will attempt in good faith promptly to resolve any differences with respect to the Signing Working Capital Statement that are raised within the Review Period and set forth in the Change Notice. If Investor and Company Parent resolve their disagreement, they shall set forth the agreement in a written document executed by Investor and Company Parent and such written document shall be deemed final and binding for all purposes of this Agreement. If they are unable to resolve any differences within thirty (30) days after timely delivery of an applicable Change Notice, such remaining differences will be submitted to an Independent Accountant for prompt determination. The Independent Accountant will determine those matters in dispute and will render a written report as to the disputed matters within sixty (60) days of submission, which report shall be conclusive and binding upon the parties. The fees and expenses of the Independent Accountant shall initially be borne fifty percent (50%) by Company Parent and fifty percent (50%) by Investor; provided that upon resolution of the dispute by the Independent Accountant, the prevailing party, if any, shall be entitled to be reimbursed in proportion to the amount by which the other party’s determinations of the items in dispute differed from the amount determined by the Independent Accountant. Such amount shall be determined by the Independent Accountant.

(b) Allocation Certificate. At least three (3) Business Days prior to the Initial Closing Date, the Company shall deliver to Investor a certificate (the “Allocation Certificate”) signed by the Chief Financial Officer of the Company, setting forth and certifying on behalf of the Company the following:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) the Net Working Capital Surplus or the Net Working Capital Deficiency, as finally determined in accordance with Section 2.4(a);

(ii) other than the Company Debt owed to the Senior Lender, all other Company Debt not paid as of immediately prior to the Initial Closing, including a description and amount for each element thereof, together with payoff letters, in form and substance satisfactory to Investor, indicating the amount necessary to discharge in full such Company Debt at the Initial Closing (the “Company Debt Payoff Amount”) and, if such Company Debt is secured, an undertaking by such holder to discharge at the Initial Closing any Liens securing such Company Debt;

(iii) the aggregate amount of all Change in Control Payments, if any, together with a description and the amount of each element thereof;

(iv) the aggregate amount of all Transaction Expenses, together with a description and the amount of each element thereof;

(v) the aggregate amount of the Excess Operating Costs, if any;

(vi) the Adjusted Cash Purchase Price; and

(vii) the resulting Closing Cash Payment.

The Company shall give Investor timely access to all supporting records and work papers used in preparation of the Allocation Certificate, which, when in form and substance satisfactory to and approved by Investor, shall be used for purposes of the payments to be made at the Initial Closing.

(viii) The Company, Investor, and Company Parent agree to treat any adjustment to the Adjusted Cash Purchase Price pursuant to this Section 2.4, if any, as an adjustment to the Initial Shares Purchase Price for all Tax purposes and shall take no position contrary thereto unless required to do so by applicable Tax Law pursuant to a determination as defined in Section 1313(a) of the Code.

Section 2.5. Transactions to be Effected at the Initial Closing.

(a) At the Initial Closing, Investor or Investor Parent shall deliver:

(i) the Closing Cash Payment and the Closing Note to the Senior Lender in accordance with the provisions of Section 2.3 of this Agreement; and

(ii) the Transaction Documents to which it is a party and all other agreements, documents, instruments or certificates required to be delivered by Investor at or prior to the Initial Closing pursuant to Section 7.3 of this Agreement.

(b) At the Initial Closing, the Company shall:

(i) Issue a stock certificate evidencing the Initial Shares in the name of Investor and deliver such stock certificate to Senior Lender to be held as collateral to secure the Closing Note; and

(ii) If not previously paid, the Deposit to the Senior Lender;

(iii) the Transaction Documents to Investor and all other agreements, documents, instruments or certificates required to be delivered by the Company or Company Parent at or prior to the Initial Closing pursuant to Section 7.2 of this Agreement.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (i) Investor or Investor Parent shall deliver the Milestone Shares Purchase Price to Senior Lender; and

(ii) the Company shall issue a stock certificate evidencing the Milestone Shares in the name of Investor and deliver such stock certificate to Senior Lender to be held as collateral to secure the Closing Note.

ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

Company Parent and the Company (each, a “Company Party” and collectively, the “Company Parties”) hereby makes to Investor the representations and warranties regarding the Company and each of the Company’s Subsidiaries contained in this ARTICLE III as of the Agreement Date and as of the MSA Effective Date, and, with respect to the representations and warranties contained Section 3.1, Section 3.2, Section 3.3 and Section 3.19 only, as of the Initial Closing Date, subject to the exceptions and qualifications disclosed by the Company in the written schedules provided to Investor, dated as of the Agreement Date (the “Company Disclosure Schedules”). The term “Company” as used throughout this ARTICLE III shall be deemed to refer to each of the Company and each of its Subsidiaries, except the term “Company” in Section 3.2, shall mean the Company and not its Subsidiaries. The Company Disclosure Schedules shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this ARTICLE III. Notwithstanding the foregoing, any event or condition specifically disclosed in reasonable detail in any section or subsection of the Company Disclosure Schedules shall be deemed disclosed and incorporated into any other section or subsection of the Company Disclosure Schedules with the same degree of specification for purposes of this ARTICLE III if the applicability of such disclosure to any other applicable representation, warranty or covenant would be reasonably apparent to a Person reviewing the Company Disclosure Schedules, regardless of whether an explicit reference to such other representation, warranty or covenant is made.

Section 3.1. Organization; Good Standing; Power.

(a) The Company is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation or organization and is licensed or qualified to conduct its business and is in good standing in each jurisdiction where such licensing or qualification is material to the business it is conducting or the operation, ownership or leasing of its properties (which such jurisdictions are set forth on Section 3.1(a) of the Disclosure Schedules). The Company possesses full power and authority necessary to own and operate its properties and assets and to carry on its businesses as presently conducted and as contemplated to be conducted immediately after the Closing.

(b) The Company has made available true, complete and correct copies of the certificate of incorporation and bylaws (and any other comparable organizational documents) of the Company, each as amended and in effect as of the Agreement Date.

Section 3.2. Capitalization; Subsidiaries.

(a) As of the Agreement Date and immediately prior to the Initial Closing, Company Owner, is a wholly-owned subsidiary of Company Parent, and owns 100% of the outstanding equity interests of the Company. At the Initial Closing, the Shares (i) shall be duly authorized, validly issued and fully-paid and nonassessable, and (ii) shall be issued in compliance with applicable Law.

(b) Section 3.2(b) of the Disclosure Schedules sets forth each subsidiary of the Company (the “Subsidiaries”), and, with respect to each Subsidiary: (i) corporate form, (ii) jurisdiction of formation, (iii) list of officers, directors and/or managers and (iv) authorized ownership interests and the number of issued and outstanding voting securities of such Subsidiary or other ownership interests therein. Except as set forth in Section 3.2(b) of the Disclosure Schedules, the Company and its Subsidiaries do not have any Subsidiaries or own or hold any equity or other security interest in any other Person. Except as set forth in Section 3.2(b) of the Disclosure Schedules, all issued

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and outstanding shares of voting securities of, or ownership interests in, the Company’s Subsidiaries are directly or indirectly owned beneficially and of record by the Company, free and clear of all Liens.

(c) Other than the Existing Shares, the Company does not have any outstanding Equity Equivalents. There are no (x) outstanding obligations of the Company (contingent or otherwise) to repurchase or otherwise acquire or retire any of Equity Equivalents of the Company, or (y) voting trusts, proxies or other agreements between or among the Company or any of the Company’s members with respect to the voting or transfer of any Equity Equivalents of the Company (other than this Agreement). No Shares are subject to vesting or forfeiture rights or repurchase by the Company.

(d) Neither the Company nor any of its Subsidiaries are a participant in any joint venture, partnership or similar arrangement. Except as set forth in Section 3.2(d) of the Disclosure Schedules, the Company has not made any investment and does not hold or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association or other business entity. Except as set forth in Section 3.2(d) of the Disclosure Schedules, each Subsidiary of the Company is owned, directly or indirectly, 100% by the Company and there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance or sale of, or outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of any such Subsidiary. Each Subsidiary of the Company is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, with full corporate power and authority to conduct its business as is now being conducted and to own or use the properties and assets that it purports to own or use. Each Subsidiary of the Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it or the nature of the activities conducted by it makes such qualification or licensing necessary.

Section 3.3. Authorization; Execution & Enforceability; No Breach.

(a) The execution, delivery and performance of the Transaction Documents by the Company Parties and the consummation of the transactions contemplated hereby and thereby are within its power and have been duly and validly authorized by all necessary corporate action on the part of the Company Parties and no further corporate action is required on the part of the Company Parties to authorize the Transaction Documents to which it is a party and the transactions contemplated hereby and thereby. The Transaction Documents have been duly executed and delivered by the Company Parties, and (assuming due authorization, execution and delivery by the other parties hereto) constitutes the valid and binding obligation of the Company Parties, enforceable against the Company Parties, in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in an Action at law or in equity).

(b) Except for the filings, applications, submissions, notices and approvals required under State and Local Cannabis Laws as set forth in Section 3.3(b) of the Disclosure Schedules, no filing with or notice to, and no permit, authorization, registration, consent or approval of, any Governmental Authority is required on the part of the Company Parties for the execution, delivery and performance by the Company Parties of the Transaction Documents to which it is or will be a party nor the consummation of the transactions contemplated hereby or thereby.

(c) Except as set forth in Section 3.3(c) of the Disclosure Schedules, neither the execution, delivery nor performance by the Company Parties of the Transaction Documents to which it is or will be a party, nor the consummation of the transactions contemplated hereby or thereby, will (i) result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien (except for a Permitted Lien), (iv) give any third party the right to modify, cancel, terminate, suspend, revoke or accelerate or increase any obligation or benefit under, (v) result in a violation of, (vi) require the consent, notice or other action by any third party under or (vii) create in any third party the right to terminate, modify, accelerate, cancel or change any right or obligation or deny any benefit arising under (A) the organizational documents of the Company or the Subsidiaries, (B) any Law to which the Company or the Subsidiaries is subject or (C) any Material Contract.

Section 3.4. Financial Statements.

(a) Section 3.4(a) of the Disclosure Schedules sets forth true, complete and correct copies of (i) the audited consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2018, December 31, 2019 and December 31, 2020 and the related statements of income, cash flows and stockholders’ equity for the respective years then ended, and (ii) the unaudited consolidated balance sheet (the “Recent Balance Sheet”) of the Company and its Subsidiaries as of September 30, 2020 (the “Recent Balance Sheet Date”) and the unaudited statements of income, stockholders’ equity and cash flows of the Company and its Subsidiaries for the nine (9) month period then ended. Collectively, the financial statements referred to in the immediately preceding sentence are sometimes referred to herein as the “Financial Statements.” The Financial Statements (including the notes thereto, if any) have been prepared from, and are consistent with, the books and records of the Company and its Subsidiaries, and fairly present in all material respects the financial condition of the Company and its Subsidiaries taken as a whole as of the dates thereof, and the results of operations and cash flows for the periods then ended, and have been prepared in accordance with GAAP (except that the interim Financial Statements are subject to normal and recurring year- end adjustments, none of which are, individually or in the aggregate, material in amount or effect and do not include footnotes). Since January 1, 2020, there has been no change in any of the accounting (and Tax accounting) policies, practices or procedures of the Company.

(b) The Company has established and adhered to a system of internal accounting controls that are designed to provide reasonable assurance regarding the reliability of financial reporting. Except as set forth in Section 3.4(b) of the Disclosure Schedules, there has never been any claim or allegation regarding any fraud or other wrongdoing that involves any of the management or other Employees of the Company who have a role in the preparation of financial statements or the internal accounting controls used by the Company.

(c) Section 3.4(c) of the Disclosure Schedules sets forth a list of all Company Debt as of the Agreement Date and identifies for each item of such Company Debt the outstanding principal and accrued but unpaid interest as of the Agreement Date.

Section 3.5. Absence of Undisclosed Liabilities. The Company has no Liabilities, except for (a) Liabilities set forth on the Recent Balance Sheet (or notes thereto), or (b) Liabilities that have arisen after the Recent Balance Sheet Date in the Ordinary Course of Business, and are not, individually or in the aggregate, material in amount.

Section 3.6. Absence of Changes.

(a) Since September 30, 2020 through the MSA Effective Date, there has not been any result, occurrence, fact, change, event or effect which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

(b) Except as set forth on Section 3.6(b) of the Disclosure Schedules, since September 30, 2020 through the MSA Effective Date, the Company has operated in the Ordinary Course of Business and without any material change of policy or procedure, and the Company has not:

(i) incurred or suffered any material loss, damage, destruction or other casualty to any of the assets, properties or rights used or held by the Company (whether or not covered by insurance);

(ii) mortgaged, pledged or subjected to any Lien any of the assets of the Company, except for Permitted Liens and the Liens listed on Section 3.7(a) of the Disclosure Schedules;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) entered into, terminated (other than at its stated expiration date), amended in any material respect, suspended or canceled any Material Contract or Permit;

(iv) sold, transferred or otherwise disposed of any assets or rights of the Company, other than sales, transfers or other dispositions made in the Ordinary Course of Business;

(v) (A) cancelled or waived any claim or right or (B) settled or compromised any claim under material Actions;

(vi) incurred any material capital expenditures;

(vii) entered into any employment, retention, severance, consulting, or similar Contract with any Employee, or authorized or granted any increase in the compensation or benefits of any of the Employees (other than offer letters or similar agreements for Employees that are terminable by the Company at will or changes to the Employee Benefit Plans in the Ordinary Course of Business); or

(viii) made any change in any method of accounting or accounting practice, including, without limitation, its practices in connection with the treatment of expenses, accounts receivable, accounts payable or valuations of inventory.

Section 3.7. Assets.

(a) Except as set forth on Section 3.7(a) of the Disclosure Schedules, the Company has good and valid title to, a valid leasehold interest in, or a valid license or other contractual right to use the properties and assets, tangible or intangible, shown on the Recent Balance Sheet or acquired thereafter (the “Business Assets”), free and clear of all Liens, other than any Permitted Liens. Each Business Asset, as applicable, is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to reasonable wear and tear) and is suitable for the purposes for which it is presently used. The Business Assets constitute all of the assets, rights and properties reasonably necessary, and are sufficient, for the conduct of the Business of the Company as currently conducted. Except as set forth on Section 3.7(a) of the Disclosure Schedules, all properties used in the operations of the Company are reflected in the Recent Balance Sheet to the extent required by GAAP.

(b) Section 3.7(b) of the Disclosure Schedules lists all machinery, equipment, tools, furniture, fixtures, leasehold improvements, office equipment, motor vehicles, mobile equipment, rolling stock and other items of depreciable (or fully depreciated) tangible personal property owned by the Company with a net book value in excess of $50,000 and identifies such assets as leased or subleased to the Company.

Section 3.8. Tax Matters.

(a) The Company has duly and timely filed all Tax Returns required to be filed by or with respect to it under applicable Laws, and all such Tax Returns are true, complete and correct in all material respects and have been prepared in compliance in all material respects with all applicable Laws.

(b) The Company has paid all Taxes due and owing by it (whether or not such Taxes are related to, shown on or required to be shown on any Tax Return), and has properly and timely withheld or deducted and paid over to the appropriate Taxing Authority all Taxes which it has been required to withhold or deduct from amounts paid or owing or deemed paid or owing or benefits given to any employee, equityholder, member, creditor or other third party.

(c) The Company is not currently the beneficiary of any extension of time within which to file any Tax Return or pay any Taxes, which extension is still in effect (other than valid automatic extensions received in the Ordinary Course of Business).

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (d) The Company has not (i) waived any statute of limitations with respect to any Taxes or Tax Returns of the Company or (ii) consented in writing to any extension of time with respect to any Tax assessment or deficiency of the Company, which waiver or extension of time is currently in effect. The Company has not granted any powers of attorney concerning any Taxes or Tax Returns, which powers of attorney are still in effect.

(e) No Tax audits, investigations, actions, or assessments or administrative or judicial Actions are pending or are threatened in writing with respect to the Company, and there are no matters under discussion, audit or appeal with any Taxing Authority with respect to Taxes or Tax Returns of the Company.

(f) There are no Liens for Taxes on any of the assets of the Company, other than Liens for Taxes not yet due and payable and for which appropriate reserves have been established according to GAAP on the Financial Statements.

(g) No claim has ever been made by a Taxing Authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction, which claim has not been resolved.

(h) The Company (i) has never been a member of any affiliated group (other than any such group the common parent of which is the Company) filing or required to file a consolidated, combined, unitary, or other similar Tax Return, (ii) has no Liability for the Taxes of any Person other than itself under Section 1.1502-6 of the Treasury Regulations (or any similar provision of U.S. state or local or non-U.S. Law), as a transferee or successor, by Contract or otherwise, and (iii) is not party to or bound by and does not have any obligations under any Tax allocation, Tax sharing, Tax indemnification or other similar Contract.

(i) Since December 31, 2019, the Company has not made any material change (or filed for or requested any change) in financial or Tax accounting methods or practices or made, changed, revoked or modified any material Tax election, filed any amended Tax Return, settled or compromised any Tax liability, voluntarily approached any Taxing Authority in respect of any Taxes or Tax Returns relating to a prior Tax period (including through any voluntary disclosure process), consented to any claim or assessment related to any Taxes, entered into any closing or other agreement (including any extension or waiver of any statute of limitations) with any Taxing Authority with respect to any Taxes or Tax Returns, or changed its fiscal or Tax year.

(j) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the MSA Effective Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the MSA Effective Date, (ii) use of an improper method of accounting for a taxable period ending on or prior to the MSA Effective Date, (iii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local, or non-U.S. income Tax Law) executed prior to the MSA Effective Date, (iv) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law), (v) installment sale or open transaction disposition made prior to the MSA Effective Date, (vi) prepaid amount or advance payment received on or prior to the MSA Effective Date, or (vii) election under Section 108(i) of the Code (or any corresponding provision of state, local, or non-U.S. Law).

(k) The Company has neither been a resident for Tax purposes in any jurisdiction, nor is or has had any branch, agency, permanent establishment or other taxable presence in any jurisdiction, other than the jurisdiction of its formation.

(l) The Company has not engaged in any “listed transaction” within the meaning of Sections 6111 and 6112 of the Code or any similar provisions of U.S. state or local or non-U.S. Law.

(m) Except as set forth on Section 3.8(m) of the Disclosure Schedules, the Company has not requested or received a written ruling from any Taxing Authority or signed any binding agreement with any Taxing Authority or made or filed any election, designation or similar filing with respect to Taxes of the Company.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (n) The unpaid Taxes of the Company (including, for the avoidance of doubt, any employment, payroll or similar Taxes deferred under the CARES Act) (i) did not, as of the Recent Balance Sheet Date, exceed the reserve for Tax liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Recent Balance Sheet (rather than in any notes thereto) and (ii) will not exceed that reserve as adjusted for operations and transactions through the Initial Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns.

(o) The Company has duly and timely collected all amounts on account of any transfer taxes, including goods and services, harmonized sales and state, provincial or territorial sales taxes, required by applicable Laws to be collected by it and has duly and timely remitted to the appropriate Taxing Authority any such amounts required by Law to be remitted by it.

(p) Section 3.8(p) of the Disclosure Schedules lists all Tax Returns filed with respect to the Company for taxable periods ended on or after December 31, 2017, identifies those Tax Returns that have been audited, and identifies those Tax Returns that currently are the subject of audit. The Company has delivered to Investor correct and complete copies of all income and other material Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by the Company for taxable periods ended on or after December 31, 2017.

(q) No property owned by the Company (i) is “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code; (ii) directly or indirectly secures any debt the interest of which is tax-exempt under Section 103(a) of the Code; (iii) is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code; (iv) is “limited use property” within the meaning of Rev. Proc. 76-30 or Rev. Proc. 2001-28; or (v) is subject to Section 168(g)(1)(A) of the Code. No property owned by the Company is (A) required to be treated as being owned by another person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended; (B) subject to a lease under Section 7701(h) of the Code or under any predecessor section; or (C) subject to a disqualified leaseback or long-term agreement as defined in Section 467 of the Code.

(r) The Company (i) has not applied for, and has not received, any loan or other financial assistance under the CARES Act or the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139), or (ii) has so applied for, or received, any such loan or other financial assistance and was eligible to make such application or receive such loan or other financial assistance, undertook its analysis to determine its eligibility and to make certifications regarding necessity in good faith, and has complied with all applicable conditions (including to maintain eligibility for any available loan forgiveness).

Section 3.9. Contracts.

(a) Section 3.9(a) of the Disclosure Schedules sets forth an accurate and complete list (by each applicable subsection referenced below in this Section 3.9(a)) of each of the following Contracts to which the Company is a party or by which the Company is otherwise bound:

(i) any Contract providing for (A) payment by any Person to the Company in excess of $50,000 annually, (B) requires a single capital expenditure greater than $50,000, (C) involves a non-cancellable commitment to make capital expenditures in excess of $50,000 annually, or (D) the purchase of products or services by the Company from any Person in excess of $50,000 annually, in each case that cannot be cancelled by the Company without penalty or without more than thirty (30) days’ notice;

(ii) any Contract establishing any joint ventures, strategic alliance, partnership, sharing of profit arrangement, and minority equity investments;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iii) (A) any Contract for the employment or service of any officer, individual Employee or individual service provider or providing for the payment of any severance, retention, or Change in Control Payment or (B) any other Person providing for (x) fixed and/or variable compensation in the aggregate in excess of $50,000 annually or (y) commission based arrangements;

(iv) any Government Contract;

(v) other than with the Senior Lender, any Contract or indenture relating to borrowed money or other Company Debt or the mortgaging, pledging or otherwise placing a Lien on any asset (tangible or intangible) or any letter of credit arrangements, or any guarantee therefor;

(vi) other than with the Senior Lender, any Contract or indenture under which the Company has (A) created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) Company Debt, (B) granted a Lien (other than a Permitted Lien) on its properties or assets, whether tangible or intangible, to secure such Company Debt or (C) extended credit to any Person (including any loan or advance);

(vii) any Contract under which the Company is a (A) lessee of or holds or operates any personal property, owned by any other Person or (B) lessor of or permits any other Person (other than the Company) to hold or operate any personal property owned or controlled by it, in each case with annual payments in excess of $50,000;

(viii) any collective bargaining agreement, labor peace agreement or any other Contract with any labor union, works council, trade association or other agreement or Contract with any employee organization;

(ix) any (A) license, royalty, indemnification, covenant not to sue, escrow, co-existence, concurrent use, consent to use or other Contract relating to any Owned IP or Licensed IP (including any Contracts relating to the licensing of Intellectual Property by the Company to a third party or by a third party to the Company) and (B) other Contracts affecting the Company’s ability to own, enforce, use, license, or disclose any Owned IP or Licensed IP (clauses (A) and (B), collectively, “IP Licenses”), provided that commercial “shrink-wrap” software and “shrink-wrap” software licenses (“Off-the-Shelf Software Licenses”) shall not be required to be set forth on Section 3.9(a) of the Disclosure Schedules;

(x) any agent, sales representative, referral, marketing or distribution agreement;

(xi) any Contract that limits the ability of the Company to engage in any line of business or that contains a covenant not to compete applicable to the Company;

(xii) any Contract that contains “most favored nations” pricing terms or grants to any customer, supplier or vendor any right of first offer or right of first refusal or exclusivity or any similar requirement;

(xiii) any Contract that contains any “non-solicitation,” “no hire” or similar provisions which restrict the Company from soliciting, hiring, engaging, retaining or employing any other Person’s current or former employees;

(xiv) any settlement, conciliation or similar agreement entered into in the past three (3) years under which there are continuing obligations or Liabilities on the part of the Company;

(xv) any Contract for the disposition of any portion of the assets or Business of the Company (other than sales of products in the Ordinary Course of Business) or for the acquisition by the Company of the assets or business of any other Person (other than purchases of inventory or components in the Ordinary Course of Business);

(xvi) any Contract between or among the Company, on the one hand, and Company Parent, on the other hand;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (xvii) any Contract between or among the Company, on the one hand, and any current officer, director, manager, Employee or service provider of the Company (other than employment and employment-related contracts made in the Ordinary Course of Business), on the other hand;

(xviii) any powers of attorney; and

(xix) any commitment or arrangement to enter into any of the foregoing.

(b) (i) Each of the Contracts set forth or required to be set forth on Section 3.9(a) of the Disclosure Schedules and each of the Real Property Leases (collectively, the “Material Contracts”) is in full force and effect and constitutes a valid, binding and enforceable obligation of the Company and the other parties thereto, (ii) the Company is not in breach of or default in any material respect under any Material Contract, and (iii) to the Knowledge of the Company, no counterparty is in breach of or default in any material respect under any Material Contract. To the Knowledge of the Company, the Company has not received notice of an intention by a counterparty to a Material Contract to terminate such Contract or amend the terms of such Contract, other than in the Ordinary Course of Business or as otherwise disclosed in Section 3.9(a) of the Disclosure Schedules. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. The Company has provided, furnished or made available to Investor (x) a true, complete and correct copy of each written Material Contract, together with all amendments, waivers or other changes thereto and (y) a true, complete and correct description of the terms and conditions of each oral Material Contract.

Section 3.10. Intellectual Property Rights.

(a) Section 3.10(a) of the Disclosure Schedules sets forth (with the application number/date, registration number/date, next deadline, title or mark, country or other jurisdiction and owner(s), as applicable) a complete and accurate list of all Owned IP that is registered, patented, or the subject of a pending application (“Registered Owned IP”). All Owned IP, including the Registered Owned IP, is valid, subsisting and enforceable. The Owned IP and Licensed Intellectual Property constitute all Intellectual Property used in or necessary to conduct the Business as currently conducted. Except as otherwise provided in this Agreement, the Intellectual Property owned and, except for Off-the-Shelf Software Licenses, the Intellectual Property used by the Company immediately prior to the Closing will continue to be owned or available for use by the Company on identical terms and conditions immediately after the Closing.

(b) Except as set forth in Section 3.10(b) of the Disclosure Schedules, (i) no Action is or has been pending or threatened in writing that challenges the legality, validity, enforceability, use or ownership of any item of Owned IP or that alleges that the operation of the Business infringes, violates or misappropriates the Intellectual Property of any Person, (ii) no operations of the Company or any product, ingredient or process that is used, manufactured, sold or distributed by or for the Company, as such operations are conducted or as such product, ingredient or process is used, manufactured, sold or distributed has infringed, violated or misappropriated the Intellectual Property of any Person, (iii) to the Knowledge of the Company, no Person is infringing, violating or misappropriating any Owned IP, and (iv) the Company is not subject to any Order that limits the Company’s right to use or enforce the Owned IP, other than any limitations set forth in any registration or application for Owned IP.

(c) The Company (i) exclusively owns and possesses, free and clear of all Liens, other than Permitted Liens and the Liens listed on Section 3.7(a) of the Disclosure Schedules, all right, title and interest in and to the Owned IP; and (ii) has the right to use all other Business IP pursuant to a license that is valid and enforceable.

(d) Each Employee and contractor of the Company that has made a contribution to the development of any Owned IP either (i) has entered into a contract pursuant to which such Person has assigned to the Company all Intellectual Property and inventions (whether patentable or unpatentable) such Person has conceived, created, authored, developed, or invented in connection with such contribution and which such contract is valid and binding, or (ii) developed such development as a “work made for hire” for the Company or in other circumstances under which, by operation of Law, the Intellectual Property in such development are owned by the Company.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (e) To the Knowledge of the Company, in the past twelve (12) months, there have been no material failures, crashes, security breaches or other adverse events affecting the IT Assets used by the Company, which have caused material disruption to the Business of the Company. The Company has implemented security, backup, and disaster recovery measures and technology consistent with industry practices and there has been no unauthorized or improper access of the IT Assets.

Section 3.11. Litigation. Except as set forth in Section 3.11 of the Disclosure Schedules, (a) there have been no Actions (i) pending or, to the Company’s Knowledge, threatened against or affecting the any Company Party or its assets, properties or rights or against any of its directors, managers, officers or employees (in each case, in their capacity as such) or (ii) initiated or threated by or on behalf of any Company Party, and (b) there have been no outstanding Orders to which any Company Party or any of its Affiliates is a party or to which any Company Party or any of its Affiliates or its or their assets or properties is or are bound. To the Company’s Knowledge no event has occurred or circumstances exist that would reasonably likely give rise to, or serves as a basis for, any such Action or Order.

Section 3.12. Labor Matters.

(a) Section 3.12(a) of the Disclosure Schedules sets forth a list of, as of the Agreement Date, (i) the first and last names of all current Employees with the office location where the Employee normally works, (ii) the division, job title, date of hire, union status, full- or part- time status, overtime status, accrued vacation, current annual rate of compensation (or with respect to Employees compensated on an hourly or per diem basis, the hourly or per diem rate of compensation), including any bonus, contingent or deferred compensation, and estimated or target annual incentive cash compensation of each such person, and (iii) the total annual compensation for such person during the calendar years ending December 31, 2019 and December 31, 2020 as reported on the current employee’s W2 from the corresponding year. Section 3.12(a) of the Disclosure Schedules also contains a complete and accurate list of all of the independent contractors, consultants, temporary employees or leased employees of the Company (“Contingent Workers”) as of the Agreement Date, showing for each Contingent Worker such individual’s job title and fee or compensation arrangements. The Company has properly classified and treated any such Contingent Worker in accordance with applicable Laws and for purposes of all wage, hour, classification and Tax Laws and employee benefit plans and prerequisites.

(b) The Company currently classifies and has properly classified each of its employees as exempt or non-exempt according to the Fair Labor Standards Act and other applicable state and local wage and hour Laws, and is and has been otherwise in compliance in all material respects with such applicable Laws.

(c) Except as set forth on Section 3.12(c) of the Disclosure Schedules, the Company is not a party to or otherwise bound by any collective bargaining agreement, labor peace agreement or relationship with any labor union, works council, trade association or other employee organization (collectively, “Union”). Except as set forth on Section 3.12(c) there has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, picket, unfair labor practice charges or other similar labor dispute affecting the Company or any of its employees. Except as set forth on Section 3.12(c) of the Disclosure Schedules, the Company: (i) has not experienced any strikes, work stoppages, walkouts or other material labor disputes and no such dispute is pending or, to the Knowledge of the Company threatened, (ii) has not committed any material unfair labor practice, (iii) has not experienced any union organizational or decertification activities and to the Knowledge of the Company no such activities are currently underway or threatened by, on behalf of or against any labor union, works council, trade association or other employee organization with respect to Employees of the Company; (iv) has not implemented any plant closing or layoff of employees that would trigger the obligations under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar applicable foreign, state, provincial or local plant closing or mass layoff Law or (v) has not been subject to any pending or threatened, material employment-related Action in any forum, relating to an alleged violation or breach by the Company, or any of its officers or directors of any Law, regulation or Contract, and, to the Company’s Knowledge neither the Company nor its employees, officers, directors or agents have committed any act or omission giving rise to material Liability for any violation or breach identified in this Section 3.12(c).

(d) The Company has paid all wages, salaries, wage premiums, bonuses, vacation pay, commissions, fees, and other compensation due and payable to its current and former Employees and Contingent Workers pursuant to applicable Law, Contract or policy.

(e) Except as set forth on Section 3.12(e) of the Disclosure Schedules, as of the Agreement Date, no officer of the Company has informed the Company in writing of any plan to terminate employment with or services for the Company.

(f) (i) except as set forth in Section 3.12(f) of the Disclosure Schedules, no investigation by any Governmental Authority of the employment policies or practices of the Company is pending or, to the Company’s Knowledge, threatened, (iii) except as set forth on Section 3.12(f) of the Disclosure Schedules, no litigation, arbitration or administrative proceeding is pending or, to the Company’s Knowledge, threatened against the Company relating to its employment policies or practices, and (iv) except as set forth on Section 3.12(f) of the Disclosure Schedules during the past five (5) years, the Company has not been a party to a settlement agreement with a current or former employee that relates primarily to allegations of sexual harassment or sexual misconduct and no allegations of sexual harassment or sexual misconduct have been made against any officer, director or employee of the Company in his or her capacity as an officer, director or employee of the Company.

Section 3.13. Employee Benefits.

(a) Section 3.13(a) of the Disclosure Schedules sets forth a true, complete and correct list of each (i) “employee benefit plan” (as such term is defined in Section 3(3) of ERISA, whether or not subject to ERISA), medical, dental, life insurance, equity or equity-based compensation, stock option, stock purchase, employee stock ownership, bonus or other incentive compensation, employment, consulting, profit sharing, disability, salary continuation, severance, change in control, retention, retirement, pension, deferred compensation, vacation, sick pay or paid time off plan, program, arrangement or policy in excess of applicable legal requirements, and each other benefit or compensation plan, policy, agreement (including employment and consulting agreements), program or arrangement, whether funded or unfunded, that the Company maintains, sponsors, contributes to or is required to contribute to, or under or with respect to which the Company has any current or potential Liability, including on account of an ERISA Affiliate, (each, an “Employee Benefit Plan” and collectively, the “Employee Benefit Plans”).

(b) With respect to each Employee Benefit Plan, the Company has provided, furnished or made available to Investor true, complete and correct copies of, as applicable: (i) the current plan documents, or, if terminated, the plan document as of the plan termination date, with all amendments thereto (or for each Employee Benefit Plan that is not written, a description thereof); (ii) the most recent summary plan description and all related summaries of material modifications; (iii) the most recent determination or opinion letter received from the IRS; (iv) the three (3) most recent annual reports (Form 5500-series, with all applicable schedules and attachments); (v) all current related insurance Contracts, other funding arrangements and administrative services agreements; (vi) all material notices or correspondence to the Company from or with any Governmental Authority since December 31, 2015; and (vii) all other material documents pursuant to which such Employee Benefit Plan is maintained, funded and administered.

(c) To the Company’s Knowledge, each Employee Benefit Plan (and each related trust, insurance Contract or fund) has been established, maintained, funded and administered in accordance with its terms (and the terms of any applicable collective bargaining agreement, if applicable) and in compliance in all material respects with all applicable requirements of ERISA, the Code and other applicable Laws, including the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended, and any guidance issued thereunder (“PPACA”). The Company and each Person that at any relevant time would be, is or has been treated as a single employer with the Company under Section 414 of the Code (each, an “ERISA Affiliate”) have

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document complied and are in compliance in all material respects with the requirements of Part 54 of Subtitle B of Title I of ERISA, Section 4980B of the Code, and any similar state Laws (“COBRA”) and PPACA. The Company has not incurred, or is reasonably expected to incur or to be subject to, any Tax, penalty or other liability that may be imposed under PPACA.

(d) Each Employee Benefit Plan that is intended to be “qualified” under Section 401(a) of the Code either has received a current favorable determination from the IRS or may rely upon a current favorable opinion letter from the IRS that such Employee Benefit Plan is so qualified, and nothing has occurred that would adversely affect the qualification of such Employee Benefit Plan.

(e) With respect to each Employee Benefit Plan, all contributions, distributions, reimbursements and payments (including all employer contributions, employee salary reduction contributions, and premium payments) that are due have been made within the time periods prescribed by the terms of each Employee Benefit Plan, ERISA, the Code and other applicable Laws, and all contributions, distributions, reimbursements or payments for any period ending on or before the Initial Closing Date that are not yet due have been made or properly accrued. No Employee Benefit Plan has any unfunded Liability not accurately reflected on the Financial Statements.

(f) None of the Company or any ERISA Affiliate maintains, sponsors, contributes to, has any obligation to contribute to, or has any current or potential Liability under or with respect to (i) any “defined benefit plan” as defined in Section 3(35) of ERISA or any other plan that is or was subject to the funding requirements of Section 412 of the Code or Section 302 or Title IV of ERISA, (ii) any “multiemployer plan” as defined in Section 3(37) or 4001(a)(3) of ERISA, (iii) any multiple employer welfare arrangement (within the meaning of Section 3(40) of ERISA), (iv) any multiple employer plan (as described in Section 413(c) of the Code) or (v) any plan, program or arrangement that provides for post-retirement or post-employment medical, life insurance or other similar benefits (other than health continuation coverage required by COBRA for which the covered Person pays the full cost of coverage). None of the Company or any ERISA Affiliate has any current or potential Liability to the Pension Benefit Guaranty Corporation or otherwise under Title IV of ERISA. The Company has no Liability (whether current or contingent) as a result of at any time being treated as a single employer under Section 414 of the Code with any other Person.

(g) All required reports and descriptions (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been timely filed and distributed in accordance with the applicable requirements of ERISA and the Code with respect to each Employee Benefit Plan.

(h) With respect to each Employee Benefit Plan, (i) there have been no non- exempt “prohibited transactions” (as defined in Section 406 of ERISA or Section 4975 of the Code), (ii) no “fiduciary” (as defined under ERISA) has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of such Employee Benefit Plan, and (iii) no Action (other than routine claims for benefits) is pending or to the Company’s Knowledge, is threatened, and to the Company’s Knowledge there are no facts that would give rise to or would reasonably be expected to give rise to any such Action. No act, omission or transaction has occurred which would result in the imposition on the Company of (A) breach of fiduciary duty liability damages under Section 409 of ERISA, (B) a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or (C) a Tax, penalty or assessment imposed pursuant to Chapter 43 of Subtitle D of the Code.

(i) The consummation of the transaction contemplated hereunder, alone, or in combination with any other event, shall not (i) entitle any current or former director, officer, employee, independent contractor or consultant or other individual service provider of the Company (or the beneficiaries of such individuals) to any severance, change in control, retention, or other payment or benefit under any Employee Benefit Plan or otherwise or (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation or benefits due to any such employee or other individual service provider (or their beneficiaries), or otherwise give rise to any obligation to fund or any Liability under any Employee Benefit Plan or otherwise. No amount that would be received (whether in cash, property or the vesting of property, or any form of benefit) as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby (either alone or upon the occurrence of any subsequent termination of employment) would result ,separately or in the aggregate ,in the payment of an “excess parachute

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document payment” within the meaning of Section280G of the Code or an amount that would be subject to an excise tax under Section 4999 of the Code.

(j) The Company has correctly classified those individuals performing services for the Company as common law employees, leased employees, exempt or non-exempt employees, independent contractors or agents of the Company, as the case may be, and to the Knowledge of the Company, the Company has no Liability for improper classification of any such individual, including for unpaid overtime or by reason of an individual who performs or performed services for the Company in any capacity being improperly excluded from participating in an Employee Benefit Plan.

(k) Each Employee Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has been operated and administered in compliance in all material respects with, and is in documentary compliance in all material respects with, Section 409A of the Code and the Treasury Regulations and other official guidance promulgated thereunder. The Company has no indemnity or gross-up obligation on or after the Closing for any Taxes imposed under Section 409A of the Code (or any corresponding provisions of state, local, or foreign Tax Law).

Section 3.14. Compliance with Laws; Permits.

(a) Except with respect to Federal Cannabis Laws, the Company is and has been in compliance in all material respects with all Laws of any Governmental Authority applicable to the Company. The Company has not received any written notice from a Governmental Authority that alleges that it is not in compliance with any Law, and the Company has not been subject to any adverse inspection, finding, investigation, penalty assessment, audit or other compliance or enforcement action.

(b) The Company holds and is, and has been, in compliance in all material respects with all Permits required for the conduct of the Business and the ownership of its assets and properties. Section 3.14(b) of the Disclosure Schedules sets forth an accurate and complete list of all of such Permits (collectively, the “Company Permits”), including with respect to each Company Permit: (i) the operations, activities, locations and/or facilities authorized, covered by, or subject to such Company Permit; (ii) the issuer of such Company Permit; (iii) the expiration or renewal date for such Company Permit and (iv) any conditions provided in such Company Permit. All conditions of or restrictions on such Company Permits that may materially affect the ability to perform any cannabis related activity authorized by the Laws of the states and municipalities in which the Company operates, whether or not embodied in the Company Permit, are disclosed in Section 3.14(b) of the Disclosure Schedules. Each Company Permit is in full force and effect, and except as set forth on Section 3.14(b) of the Disclosure Schedules is not subject to any pending or, to the Knowledge of the Company, threatened administrative or judicial proceeding to revoke, cancel, suspend or declare such Permit invalid. The Company Permits are the only licenses, permits, franchises, authorizations and approvals required for the conduct of the Business. The Company has not violated a material term of any Company Permit or a material condition under which any Company Permit was granted. All renewals for the Company Permits have been timely applied for and, to the Company’s Knowledge no event or circumstance has occurred or exists that would prohibit or prevent the re-issuance to Investor or the Company of any of the Company Permits. All fees and charges with respect to such Company Permits as of the Agreement Date have been paid in full and will be paid through the MSA Effective Date.

(c) Except as set forth on Section 3.14(c) of the Disclosure Schedules, (i) the Company has not received any notice from any Governmental Authority having jurisdiction over its operations, activities, locations, or facilities, of (A) any deficiencies or violations of, or (B) any remedial or corrective actions required in connection with, any Company Permits or their renewal, (ii) to the Company’s Knowledge no action is being or has been threatened or contemplated with which (1) would reasonably be expected to result in the issuance of any such notice or (2) would prevent or impair the operations and activities engaged in pursuant to such Company Permits, and (iii) no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Company Permits. Without limiting the foregoing, neither the Company nor to the Company’s Knowledge any Affiliate of the Company has made any bribe, rebate, payoff, influence payment, kickback or other payment unlawful under any applicable Law.

(d) Reserved.

(e) To the Company’s Knowledge, any Person who is required to have a Permit under applicable law or regulation to provide any cannabis or cannabis-related services for which the Company has hired or engaged with such Person (the “Licensed Providers”) has all Permits necessary for the conduct of their business activities involving the Company. Except as set forth on Section 3.14(e) of the Disclosure Schedules, (i) the Company has not received any written notice from any Governmental Authority having jurisdiction over the Licensed Providers’ operations, activities, locations, or facilities, of (A) any deficiencies or violations of, or (B) any remedial or corrective actions required in connection with any Permit held by a Licensed Provider or their renewal, and (ii) to the Company’s Knowledge no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit held by a Licensed Provider necessary for its cannabis or cannabis-related activities and operations involving the Company.

(f) Company Parent, the Company and their respective Affiliates have complied with all restrictions on ownership, control and participation in the Company and its Business under all applicable State and Local Cannabis Laws and to the Knowledge of the Company have made no false statement, representation or omission to any Governmental Authority in connection with the Company, its Business, or its Permits.

Section 3.15. Real Property.

(a) Section 3.15(a) of the Disclosure Schedules sets forth the address of each parcel of real property that is owned by the Company (the “Owned Real Property”), and a true and complete list of all real property deeds evidencing ownership of such Owned Real Property. The Owned Real Property is maintained in a manner consistent with standards generally followed with respect to similar properties, and is otherwise suitable for the conduct of the Business of the Company as presently conducted in all material respects. The Closing will not affect the continued use and possession of the Owned Real Property by the Company for the conduct of the Business as presently conducted. Neither the operation of the Company on the Owned Real Property nor such Owned Real Property, including the improvements thereon, violate in any material respect any applicable building code, zoning requirement or statute relating to such property or operations thereon, and any such non-violation is not dependent on so-called non- conforming use exceptions. The Company has good, clear, record and marketable title to all Owned Real Property, free and clear of all Liens, liabilities, encumbrances and title exceptions or claims other than (i) Liens for taxes not yet due and payable, (ii) zoning Laws, and (iii) utility easements and other of record easements that will not impair or prohibit the use of the Owned Real Property for the cultivation, processing and handling of cannabis and cannabis- related products.

(b) Except as set forth on Section 3.15(b) of the Disclosure Schedules, (i) the Company is not a party to or bound by any agreement providing another Person with the right to purchase, lease, or sublease from the Company any Owned Real Property or any portion thereof and there are no options, right of first offer, or rights of first refusal related thereto; (ii) the Company has not leased, subleased, or otherwise granted to any Person the right to use or occupy any Owned Real Property or any portion thereof; and (iii) the Company is not a party to or bound by any agreement providing the Company with the right or obligation to purchase from another Person any real property or any interest in real property.

(c) Except as set forth on Section 3.15(c) of the Disclosure Schedules, there is no debt associated with the Owned Real Property.

(d) Section 3.15(d) of the Disclosure Schedules sets forth a true, correct and complete list of all real property leased or licensed by the Company, whether as lessee or lessor (the “Leased Real Property”), each Contract

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document relating to the use and/or occupancy of such Leased Real Property, including all leases, subleases, agreements to lease or other occupancy agreements (written or oral) entered into by the Company, lease guarantees, tenant estoppels, subordinations, non-disturbance and attornment agreements, including all amendments thereto, and all condominium documents and service agreements relating thereto (the “Real Property Leases”). Section 3.15(d) of the Disclosure Schedules also lists (i) the street address of each Real Property Lease parcel; (ii) the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease for each leased or subleased property; and (iii) the current use of such property. The Company has a valid and enforceable leasehold interest in all its Leased Real Property reflected in the Financial Statements or acquired after the Recent Balance Sheet Date. Except as set forth on Section 3.15(d) of the Disclosure Schedules, all such properties (including leasehold interests) are free and clear of all Liens, other than Permitted Liens and the Liens listed on Section 3.7(a) of the Disclosure Schedules.

(e) The Company has delivered or made available to Investor true, complete and correct copies of all Real Property Leases. Each Real Property Lease is in full force and effect. Except as set forth on Section 3.15(e) of the Disclosure Schedules, (i) all rents and additional rents due to date on each Real Property Lease have been paid and neither the Company nor any other party to any such Real Property Lease has received notice of any breach or default or has repudiated any provision thereof, (ii) the Company has not received written notice of cancellation or termination with respect to any Real Property Lease, (iii) there exists no event that, with notice or lapse of time, or both, would constitute a breach or default by the Company or any other party thereto, under any of the Real Property Leases, and (iv) the Company is not a sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased or subleased Real Property.

(f) The Leased Real Property and the Owned Real Property (together, the “Real Property”) comprise all of the real property used or intended to be used in, or otherwise related to, the Business. The use and operation of the Real Property in the conduct of the Business does not violate in any material respect any Law, covenant, condition, restriction, easement, license, Permit or Contract. Except as set forth on Section 3.15(f) of the Disclosure Schedules, no material improvements constituting a part of the Owned Real Property encroach on real property owned or leased by a Person other than the Company. There are no Actions pending nor threatened against or affecting the Owned Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings. Neither the whole nor any material portion of any building or material improvement constituting a part of the Real Property that is used by the Company has been damaged or destroyed by fire or other casualty. Except as set forth on Section 3.15(f) of the Disclosure Schedules, no material construction, alteration or other leasehold improvement work with respect to any of the Company’s facilities remains to be paid for or to be performed by the Company.

(g) Except as set forth on Section 3.15(g) of the Disclosure Schedules, no consent of any landlord or any other party is required under any Real Property Lease as the result of the transactions contemplated hereby or to keep such Real Property Lease in full force and effect after the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(h) The Company has not received notice from any Governmental Authority of any violation of any Law with respect to any of the Real Property that has not been corrected heretofore, and no such violation currently exists. Except as set forth in Section 3.15(f) of the Disclosure Schedules, all improvements necessary for the Business of the Company as currently conducted and constituting part of the Real Property have been completed and are now in compliance in all respects with all applicable Laws and there are presently in effect all Permits required by Law. To the Knowledge of the Company (with no duty to investigate), (i) there is at least the minimum access required by applicable subdivision or similar Law to the Real Property (ii) there are no structural, latent or hidden, defects in the buildings and other material improvements that are part of the Real Property that would materially affect the ability to operate any of the Real Property as currently operated for the continued conduct of the Company’s Business, and (iii) the Real Property is sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitutes all of the real property necessary to conduct the Business of the Company as currently conducted. The Company has not received notice of any pending or threatened real estate Tax deficiency or reassessment or condemnation of all or any portion of any of the Real Property.

Section 3.16. Environmental Matters.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) The operations of the Business, and all products manufactured and services provided by the Business, have been in compliance in all material respects with all applicable Environmental Laws and Environmental Permits issued thereunder.

(b) The Company has obtained all Environmental Permits required for the Business to operate within the Real Property and all such Environmental Permits are valid, in good standing and in full force and effect, and the Company is in compliance in all material respects with all terms and conditions of such Environmental Permits. The Company has not received any written notice regarding any actual or alleged violation of or material liability under Environmental Laws. Except as set forth on Section 3.16(b) of the Disclosure Schedules, the Company has not assumed or provided an indemnity with respect to any liabilities of any other Person arising under Environmental Laws.

(c) The Company has not generated, transported, treated, stored, or disposed of any Hazardous Materials at or on the Real Property or any part thereof or in any area surrounding or adjacent thereto, or on, under or at any real property previously owned, leased or licensed by the Company, in each case, except in compliance in all material respects with applicable Environmental Laws, and there has been no Release of any Hazardous Materials by the Company at or on the Real Property that requires reporting or remediation by the Company pursuant to any applicable Environmental Law. To the Knowledge of the Company, all containers for or containing Hazardous Materials used, generated or disposed of by the Company in the conduct of the Business, have been identified, dated, logged, manifested and disposed of in compliance in all material respects with all applicable Environmental Laws, whether or not on property owned by the Company, and such containers are disposed of by a Hazardous Materials handler (or handlers) who or which have all certificates, licenses, other forms of authorization and other Permits that are required to be obtained by such handler (or handlers) under applicable Laws (currently in effect, or in effect at the time of such disposal) and such handler (or handlers) has disposed of such containers in compliance in all material respects therewith. No Hazardous Materials, handler, treatment, storage or disposal facility is used by the Company in connection with the conduct of the Company’s business or the operation of the Business Assets, including the Real Property. To the Company’s Knowledge, none of the Real Property is located in an active or inactive hazardous waste disposal site. There are no pending or, to the Knowledge of the Company, threatened investigations of the Business, or currently or previously owned, operated or leased property of the Company regarding violations of or liabilities under Environmental Laws.

(d) The Company has not: (i) received written notice under the citizen suit provisions of any Environmental Law; (ii) received any written request for information, notice, demand letter, administrative inquiry or written complaint or written claim from any Governmental Authority under any Environmental Law; (iii) been subject to or, to the Knowledge of the Company, threatened with any governmental or citizen enforcement action with respect to any Environmental Law; or (iv) received written notice of any unsatisfied liability under any Environmental Law. The Company is not subject to any outstanding Order pursuant to Environmental Laws. The Company has not, and to the Company’s Knowledge none of its currently or previously owned, leased, or licensed property (including the Real Property) or operations has been named as a potentially responsible party or is subject to any outstanding written order from or agreement with any Governmental Authority or other Person or is subject to any judicial or docketed administrative proceeding respecting (x) Environmental Laws, (y) Remedial Action or (z) any Environmental Liabilities. Neither the Company nor any of its Affiliates have received any notice or claim to the effect that it is or is reasonably expected to be liable to any Person as a result of a Release or threatened Release or any notice letter or request for information under the Comprehensive Environmental Response, Compensation, and Liability Act.

(e) No Environmental Lien, including any unrecorded Environmental Lien of which the Company has written notice, has attached to any currently or previously owned or leased property of the Company or Business Asset.

(f) The Company has provided, furnished or made available to Investor true and correct copies of all material written environmental studies, audits, reviews, reports and assessments, if any, conducted by or on behalf of or in possession, custody or control of the Company bearing on Environmental Liabilities relating to the past or current operations or facilities of the Company.

Section 3.17. Affiliate Transactions. Except as set forth on Section 3.17 of the Disclosure Schedules and with the Senior Lender, (a) the Company is not a party to any Contract or arrangement with, or indebted, either directly or indirectly, to any of its officers, directors, managers, equityholders or, to the Knowledge of the Company, any of their respective relatives or Affiliates, other than (i) the compensation disclosed with respect to employees on Section 3.12(a) of the Disclosure Schedules and (ii) at-will employee offer letters; (b) none of such Persons is indebted to the Company, or, to the Knowledge of the Company, has any direct or indirect ownership interest in, or any contractual or business relationship with, any Person with which the Company is or was affiliated or with which the Company has a business relationship, or any Person which, directly or indirectly, competes with the Company; and (c) none of the Company’s officers, directors, managers, or equityholders has any interest in any property, real or personal, tangible or intangible, including inventions, copyrights, trademarks, or trade names, used in or pertaining to the Business, or to the Knowledge of the Company, any supplier, distributor or customer of the Company.

Section 3.18. Insurance. Section 3.18 of the Disclosure Schedules sets forth, as of the Agreement Date, a description of each insurance policy (each, an “Insurance Policy”) carried by, or maintained on behalf of, the Company which Insurance Policies are in full force and effect as of the Agreement Date. The Company has not received notice of any default under any Insurance Policy. There are no claims under the Insurance Policies which are reasonably likely to exhaust the applicable limit of liability and the Company has reported in a timely manner all reportable events to its insurers. All premiums due and payable under the Insurance Policies have been timely paid, and the Company is in material compliance with the terms of the Insurance Policies.

Section 3.19. Brokers. Except as set forth on Section 3.19 of the Disclosure Schedules, no broker, finder or investment banker is entitled to any brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement to which any Company Party is a party or to which such Company Party is subject for which Investor or its Affiliates (including the Company) could become obligated after the Closing.

Section 3.20. Accounts Receivable. The Company has no aged Accounts Receivable.

Section 3.21. Vendors. Section 3.21 of the Disclosure Schedules sets forth a list as of the Agreement Date of the top ten (10) suppliers and vendors to the Company (based on total amount purchased from such supplier or vendor) for the twelve-month period ended December 31, 2020 (each a “Material Vendor”), showing the approximate total spend by the Company from each such supplier or vendor during such fiscal year and the percentage of total spend of the Company represented by such spend. Since December 31, 2020, (a) no Material Vendor has canceled or otherwise terminated, or, to the Company’s Knowledge, threatened to cancel, or intends to cancel or terminate, its relationship with the Company, and (b) no Material Vendor has decreased or, to the Company’s Knowledge, threatened to decrease or limit its business with the Company intends to modify its relationship with the Company (except in the Ordinary Course of Business).

Section 3.22. Bank Accounts. Section 3.22 of the Disclosure Schedules contains a true, complete and correct list of (a) all banks or other financial institutions with which the Company has an account or maintains a lock box or safe deposit box, showing the type of each such account, lock box and safe deposit box and (b) the names of the Persons authorized as signatories thereon or to act or deal in connection therewith.

Section 3.23. Inventory. All of the Company’s inventories, materials, and supplies consist of items of quality and quantity, in good condition and usable or salable in the Ordinary Course of Business. The values of the inventories stated in the Financial Statements reflect the Company’s normal inventory valuation policies and were determined in accordance with GAAP.

(a) The Company has established and implemented such policies, programs, procedures, contracts and systems, as are necessary to comply with (i) applicable state and federal laws governing the privacy and security of health information pertaining to individuals, including regulations promulgated pursuant thereto, and (ii) applicable state and federal laws governing the privacy and security of Personal Information (collectively, the “Privacy and Security Laws”).

(b) All Personal Information that has been collected, acquired, stored, disposed, processed, maintained, treated or otherwise used by the Company has been collected, acquired, stored, disposed, processed, maintained, treated and otherwise used in compliance in all material respects with all applicable industry standards and requirements, in each case to the extent applicable to the Company, and the Company’s own applicable policies and procedures related to rights of publicity, privacy, data protection, information security, or the collection, use, storage or disposal of Personal Information collection, used or held for use by the Company in the conduct of their businesses. To the Knowledge of the Company there has been no loss of, or unauthorized access, use, disclosure or modification of any Personal Information or of any confidential information that would trigger a mandatory breach notification as required by applicable Law.

(c) The Company has established, and is in compliance in all material respects with, its currently posted privacy policy and terms of use available on its website(s), and its current internal information security and human resources policies and procedures (and has been in compliance in all material respects with all historically posted privacy policies, terms of use and all historic information security and human resources policies and procedures) pertaining to the collection, access, storage, transfer, receipt and use of Personal Information, and to the Company’s Knowledge has never collected, accessed, stored, transferred, received, or used any Personal Information in a manner violative of such privacy policies, terms of use, information security policies and human resource policies and procedures.

(d) Each privacy policy or other privacy notice, as applicable, used in the conduct of the Company’s business contains, and has since the date that is three (3) years prior to the Agreement Date contained, express authorization for the Company to transfer Personal Information to a partner, successor, or transferee in a merger, or an acquirer of its business, equity or assets.

(e) The Company has not received notice of noncompliance with any Privacy and Security Law, guidelines or industry standards, and no claim or proceeding has been asserted in writing or threatened in writing against the Company alleging a violation of any Person’s rights of publicity or privacy or Personal Information or data rights. The consummation of the transaction contemplated hereunder will not breach or otherwise cause any violation in any material respect of any of the Company’s own applicable policies and procedures related to rights of publicity, privacy, data protection, information security, or the collection, use, storage or disposal of Personal Information collection, used or held for use by the Company in the conduct of their businesses.

(f) The Company has not, and currently does not, market its products and services to any Persons under the age of 13, and the Company does not knowingly collect Personal Information from any Persons under the age of 13.

(g) The Company has complete and correct records of all Persons who have notified the Company of such Person’s election not to receive any electronic communications or solicitations (“Opt-Out Notifications”) from the Company. The Company has complied in all material respects with all such Opt-Out Notifications.

(h) The Company has in place, maintains, and complies with adequate anti- virus and malware protection, and security measures and safeguards to protect business data and Personal Information against illegal or unauthorized access or use by its personnel or third parties, or access or use of such information by its personnel or third parties in a manner violative of any Privacy and Security Law, applicable industry standards or guidelines, or the privacy rights of third parties, as applicable, in each case consistent with industry practices. To the Knowledge of

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Company, no Person has gained unauthorized access to or made any unauthorized use of any trade secrets of the Company or Personal Information collected or received by the Company in a manner that would trigger a mandatory breach notification as required by applicable Law.

(i) Except as set forth on Section 3.24(i) of the Disclosure Schedules, the Company is in compliance in all material respects with the Privacy and Security Laws and the Company has not received notice of any incident reports or allegations that it has breached the Privacy and Security Laws. Attached to Section 3.24(i) of the Disclosure Schedules are all written consultant reports, corrective actions and plans of action for implementation of any requirements with respect to the Business of the Company under the Privacy and Security Laws.

Section 3.25. No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), neither the Company, Company Parent nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Business and the Company furnished or made available to Investor and its Representatives (including any information, documents or material delivered or made available to Investor or its Representatives, management presentations or in any other form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Business, or any representation or warranty arising from statute or otherwise in law.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor represents and warrants to the Company Parties that the statements contained in this Article IV are true and correct as of the date hereof, subject to the exceptions and qualifications disclosed by Investor in the written schedules provided to the Company Parties, dated as of the Agreement Date (the “Investor Disclosure Schedules”). The Investor Disclosure Schedules shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this ARTICLE IV. Notwithstanding the foregoing, any event or condition specifically disclosed in reasonable detail in any section or subsection of the Investor Disclosure Schedules shall be deemed disclosed and incorporated into any other section or subsection of the Investor Disclosure Schedules with the same degree of specification for purposes of this ARTICLE III.

Section 4.1. Organization and Authority of Investor. Investor is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of New York. Investor has full company power and authority to enter into this Agreement and the other Transaction Documents to which Investor is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Investor of this Agreement and any other Transaction Document to which Investor is a party, the performance by Investor of its obligations hereunder and thereunder and the consummation by Investor of the transactions contemplated hereby and thereby have been duly authorized by all requisite company action on the part of Investor. This Agreement has been duly executed and delivered by Investor, and (assuming due authorization, execution and delivery by the Company) this Agreement constitutes a legal, valid and binding obligation of Investor enforceable against Investor in accordance with its terms. When each other Transaction Document to which Investor is or will be a party has been duly executed and delivered by Investor (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Investor enforceable against it in accordance with its terms.

Section 4.2. No Conflicts; Consents. The execution, delivery and performance by Investor of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the articles of organization, operating agreement or other organizational documents of Investor; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Investor; or (c) require the consent, notice or other action by any Person under any Contract to which Investor is a party. Except as set forth in Section 4.2 of the Investor Disclosure Schedules, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document respect to Investor in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

Section 4.3. Investment Purpose; Sufficiency of Funds. Investor is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Investor is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Investor acknowledges that the Shares are not registered under the Securities Act or any state securities laws, and that the Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Investor understands that the Shares and any securities issued in respect of or in exchange for the Shares may be noted with a legend required by the Securities Act or any other federal or state securities Laws to the extent such Laws are applicable to the Shares represented by the certificate, instrument, or book entry so legended. Investor has sufficient cash on hand or other sources of immediately available funds to enable it to make the cash payments required hereunder to consummate the transactions contemplated in the Transaction Documents including, without limitation, the Initial Shares Purchase Price and the Milestone Shares Purchase Price.

Section 4.4. Brokers; No General Solicitation. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Investor. Neither the Investor, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including, through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Shares.

Section 4.5. Legal Proceedings. There are no Actions pending or, to Investor’s knowledge, threatened against or by Investor or any Affiliate of Investor that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

Section 4.6. Disclosure of Information; Investment Experience. Investor has had an opportunity to discuss the Company’s business, management, financial affairs and the terms and conditions of the offering of the Shares with the Company’s management and has had an opportunity to review the Company’s facilities. The foregoing, however, does not limit or modify the representations and warranties of the Company in Article III of this Agreement or the right of Investor to rely thereon. Investor has substantial experience in evaluating and investing in companies in the Company’s industry, and has such knowledge and experience in financial or business matters so that it is capable of evaluating the merits and risks of its investment in the Company and protecting its own interests. Investor understands and acknowledges that its investment in the Company is highly speculative and involves substantial risks and Investor can bear the economic risk of its investment hereunder and is able, without impairing its financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of its investment.

Section 4.7. No Bad Actors. (i) Investor has exercised reasonable care to determine whether any Disqualification Event is applicable to Investor or Investor’s Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable and (ii) no Disqualification Event is applicable to the Investor, or any of Investor’s Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable.

ARTICLE V. COVENANTS

Section 5.1. Conduct of Business Prior to the Closing.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) From the date hereof until the Initial Closing, except as otherwise provided in this Agreement, in the Management Agreement or consented to in writing by Investor (which consent shall not be unreasonably withheld, delayed or conditioned), the Company Parties shall,

(i) conduct the Business of the Company in the Ordinary Course of Business; and (2) use commercially reasonable efforts to maintain and preserve intact the current organization, Business and franchise of the Company and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having business relationships with the Company. Without limiting the foregoing, from the date hereof until the MSA Effective Date, the Company Parties shall, and subsequent to the MSA Effective Date until the Initial Closing the Company Parties shall, in accordance with the Management Agreement, use commercially reasonable efforts to assist Investor or Investor’s Affiliate to:

(i) cause the Company to preserve, maintain and perform in compliance with all of its Permits;

(ii) cause the Company to pay its debts, Taxes and other obligations when due;

(iii) cause the Company to maintain the properties and assets owned, operated or used by the Company in substantially the same condition as they were on the Agreement Date, subject to reasonable wear and tear;

(iv) cause the Company to continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;

(v) cause the Company to defend and protect its properties and assets from infringement or usurpation;

(vi) cause the Company to perform all of its obligations under all Material Contracts;

(vii) cause the Company to maintain its books and records in accordance with past practice;

(viii) cause the Company to comply in all material respects with all applicable Laws;

(ix) except as required by any applicable Law, cause the Company to continue to operate all retail locations currently open and to use commercially reasonable efforts to timely open any additional retail locations scheduled to be opened within the next 12 months; and

(x) except as required by any applicable Law, cause the Company to continue all growing, processing and manufacturing activities currently being undertaken by the Company.

(b) From the Agreement Date until the Closing, the Company Parties shall cause the Company not to take or permit any of the following actions without Investor’s prior written consent, unless such actions are otherwise permitted and in accordance with the Management Agreement:

(i) declare, set aside, or pay any dividend or make any distribution with respect to the equity of the Company or redeem, purchase, or otherwise acquire any of the equity of the Company;

(ii) authorize for issuance, issue, sell, pledge, grant, encumber or deliver or agree or commit to issue, sell, pledge, grant, encumber or deliver any Equity Equivalents of the Company;

(iii) amend or change any of the Company’s organizational documents;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (iv) incur any material obligation or liability (individually or in the aggregate) other than for Transaction Expenses or incur any indebtedness for borrowed money, make any loans or advances, or assume, guarantee or endorse or otherwise become responsible for the obligations of any other Person;

(v) (i) enter into any significant new line of business, or incur or commit to incur any capital expenditures or Liabilities in connection therewith or (ii) abandon or discontinue any significant existing lines of business;

(vi) except as required by any applicable Law, apply for any new Permits pursuant to State and Local Cannabis Laws or abandon any pending applications for Permits applied for under State and Local Cannabis Laws;

(vii) acquire any business whether by merger or consolidation, purchase of assets or equity securities or any other manner;

(viii) any action that would cause any of the changes, events or conditions described in Section 3.6 to occur; or

(ix) commit to do any of the foregoing referred to in clauses (i)–(viii).

Section 5.2. Access to Information. From the date hereof until the MSA Effective Date, the Company Parties shall (a) afford Investor and its Representatives access to and the right to inspect all of the Real Property, properties, assets, premises, books and records, Contracts and other documents and data related to the Company at mutually acceptable times and without undue disruption to the Ordinary Course of Business of the Company or interference with the Company’s contractual relationships; (b) furnish Investor and its Representatives with such legal, financial, operating and other data and information related to the Company as Investor or any of its Representatives may reasonably request; and (c) cooperate with Investor in its investigation of the Company; provided, however that any such investigation shall be conducted during normal business hours upon reasonable advance notice to Company Parent, under the supervision of Company Parent’s designated Representatives and in such a manner as not to interfere with the conduct of the Business or any other businesses of the Company or Company Parent. All requests by Investor for access pursuant to this Section 5.2 shall be submitted or directed exclusively to Tim Bossidy or such other individuals as Company Parent may designate in writing from time to time. Notwithstanding anything to the contrary in this Agreement, no Company Party shall be required to disclose any information to Investor if such disclosure would, in Company Parent’s reasonable discretion: (w) cause significant competitive harm to a Company Party and its businesses, including the Business, if the transactions contemplated by this Agreement are not consummated; (x) jeopardize any attorney-client privilege; (y) contravene any applicable Law, fiduciary duty or material binding agreement entered into prior to the date of this Agreement; or (z) reveal bids received from third parties in connection with transactions similar to those contemplated by this Agreement and any written analysis (including financial analysis) relating to such bids. Prior to the MSA Effective Date, without the prior written consent of a Company Party and unless in the presence of a designated Representative of Company Parent, Investor shall not contact or otherwise communicate with any employee of a Company Party or any third party contracting with the Company and Investor shall have no right to perform invasive or subsurface investigations of the Real Property. Investor shall, and shall cause its Representatives to, abide by the terms of the Confidentiality Agreement with respect to any access or information provided pursuant to this Section 5.2. For avoidance of doubt, on and after the MSA Effective Date, the Investor shall have full access to and shall manage the Company in accordance with the terms of the Management Agreement.

Section 5.3. No Solicitation of Other Bids.

(a) From the Agreement Date until the termination of this Agreement, Company Parent shall not, and shall not authorize or permit any of its Affiliates (including the Company) or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal (as defined below); (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Company Parent shall immediately cease and cause to be terminated,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and shall cause its Affiliates (including the Company) and all of their respective Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any proposal or offer from any Person (other than Investor or any of its Affiliates) concerning (A) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company; (B) the issuance or acquisition of shares of capital stock or other equity securities of the Company; or (C) the sale, lease, exchange or other disposition of any significant portion of the Company’s properties or assets.

(b) In addition to the other obligations under this Section 5.3, the Company and/or Company Parent shall promptly (and in any event within three Business Days after receipt thereof by the Company, Company Parent or their Representatives) advise Investor orally and in writing of any Acquisition Proposal or any request for information with respect to any Acquisition Proposal received subsequent to the Agreement Date, the material terms and conditions of such request or Acquisition Proposal, and the identity of the Person making the same.

(c) Company Parent agrees that the rights and remedies for noncompliance with this Section 5.3 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Investor and that money damages would not provide an adequate remedy to Investor.

Section 5.4. Notice of Certain Events.

(a) From the date hereof until the final Closing, the Company Parties shall promptly notify Investor in writing of:

(i) any fact, circumstance, event or action occurring on or prior to the Initial Closing that becomes the Knowledge of the Company Parties, the existence, occurrence or taking of which (A) has had, or would reasonably be expected to have, a Material Adverse Effect, (B) has resulted in, or would reasonably be expected to result in, any representation or warranty made by the Company or Company Parent hereunder not being true and correct as of the MSA Effective Date (or, with respect to the Fundamental Representations, as of the Initial Closing), (C) has resulted in, or would reasonably be expected to result in, a breach by the Company or Company Parent of any covenant set forth in this Agreement, or (D) has resulted in, or would reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.2 to be satisfied;

(ii) any notice or other communication received by a Company Party from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(iii) any notice or other communication, written or oral, to or from a Company Party or any of its Representatives and any Governmental Authority in connection with the transactions contemplated by this Agreement; and

(iv) any Actions commenced or, to Company’s Knowledge, threatened against, relating to or involving or otherwise affecting the Company or Company Parent that, if pending on the Agreement Date, would have been required to have been disclosed pursuant to Section 3.11 of the Disclosure Schedules, or that relates to the consummation of the transactions contemplated by this Agreement.

(b) Other than any supplements to the Company Disclosure Schedules provided by a Company Party in accordance with Section 5.4(c) below, Investor’s receipt of information pursuant to this Section 5.4 shall not modify the date upon which the representations in this Agreement are made, nor operate as a waiver or otherwise affect

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any representation, warranty or agreement given or made by the Company or Company Parent in this Agreement (including Section 8.2 and Section 9.1(b)) and shall not be deemed to amend or supplement the Disclosure Schedules.

(c) Notwithstanding the foregoing, from the Agreement Date until the Initial Closing, the Company may provide to Investor supplements to the Company Disclosure Schedules solely to reflect events or circumstances occurring after the Agreement Date. Any such supplement shall not cure any prior breach and shall not limit the rights of the parties under ARTICLE VIII and ARTICLE IX.

Section 5.5. Resignations. The Company shall deliver to Investor written resignations and releases, in form and substance reasonably satisfactory to Investor and effective as of the Initial Closing Date (or at such later date as mutually agreed upon by the parties), of the officers and directors of the Company set forth on Section 5.5 of the Disclosure Schedules.

Section 5.6. Confidentiality; Seller Intellectual Property.

(a) From and after the Closing, the Company Parties shall, and shall cause their Affiliates to, hold, and shall use commercially reasonable efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Company, except to the extent that the Company Parties can show that such information (i) is generally available to and known by the public through no fault of any Company Party or any of their respective Affiliates or Representatives; or (ii) is lawfully acquired by the Company Parties or any of their respective Affiliates or Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Company Parties or any of their respective Affiliates or Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, to the extent permitted, the Company Parties shall promptly notify Investor in writing and shall disclose only that portion of such information which the Company Parties are advised by counsel to be disclosed, provided that the Company Parties shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Prior to the Closing, the parties’ respective rights and obligations related to all non- public information of the other party shall be governed by and subject to the Mutual Non- Disclosure Agreement between Investor and an Affiliate of Company Parent dated August 27, 2020 (the “NDA”).

(b) From and after the later of (i) the Initial Closing and (ii) the date upon which the parties receive approval of a change of name or “doing business as” registration of the Company from the State of New York’s Department of Health (the “Name Change Approval”), but in no event later than 180 days after the Initial Closing (such date, the “Name Change Approval Date”), any and all licenses or grant of rights previously made by Company Parent or its Affiliates in and to the Company Parent Intellectual Property in favor of the Company, shall be terminated in their entirety. From and after the Name Change Approval Date, the Company, Investor and its Affiliates shall not, and shall not permit the Company to, use any Company Parent Intellectual Property unless Company Parent expressly grants a license, in writing, to the Company, Investor or its Affiliates to use any such Company Parent Intellectual Property. Company Parent reserves all rights in and to the Company Parent Intellectual Property and nothing in this Agreement shall be construed as a license or grant of right of any kind by Company Parent with respect to the Company Parent Intellectual Property. On the Name Change Approval Date, Investor shall cause the Company to immediately remove all references to “MedMen” or other Company Parent Intellectual Property in the signage used by the Company at any locations where the Company conducts its business, including, without limitation, any references to “MedMen” or other Company Parent Intellectual Property on the websites of the Company, and shall not otherwise in any way indicate any affiliation with Company Parent or its Affiliates unless pursuant to a written agreement between Company Parent, on the one hand, or Investor, the Company and their respective Affiliates, on the other hand. To the extent that there is no such license granted in writing, from the Agreement Date through the Name Change Approval Date, the Company Parent hereby grants a limited license to the Company to use the name “MedMen” in connection with the operation of the Business in the ordinary course. If the parties do not receive the Name Change Approval on or prior to the date that is 180 days after the Initial Closing, the parties agree to negotiate in good faith a license agreement for the Company’s continued use of the name “MedMen.”

Section 5.7. Non-solicitation.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) For a period of two (2) years commencing on the Initial Closing Date (the “Restricted Period”), Company Parent shall not, and shall not permit any of its Affiliates to, directly or indirectly, solicit any employee of the Company or encourage any such employee to leave such employment except pursuant to a general solicitation which is not directed specifically to any such employees; for clarity, nothing in this Section 5.7(a) shall prevent Company Parent or any of its Affiliates from hiring any employee whose employment has been terminated by the Company or Investor.

(b) From the Agreement Date and continuing during the Restricted Period, Investor and Investor Parent shall not, and shall not permit any of their Affiliates to, directly or indirectly, solicit any employee of Company Parent or its Affiliates (other than the Company) or encourage any such employee to leave such employment except pursuant to a general solicitation which is not directed specifically to any such employee employees; for clarity, nothing in this Section 5.7(b) shall prevent Investor or Investor Parent or any of their Affiliates from hiring any employee whose employment has been terminated by the Company Parent.

(c) Company Parent acknowledges that a breach or threatened breach of Section 5.3, Section 5.6 or this Section 5.7 may give rise to irreparable harm to Investor, for which monetary damages may not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Company Parent of any such obligations, Investor shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

(d) Company Parent acknowledges that the restrictions contained in this Section 5.7 are reasonable and necessary to protect the legitimate interests of Investor and constitute a material inducement to Investor to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 5.7 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 5.7 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

Section 5.8. Governmental Approvals and Consents.

(a) The parties shall, no later than the close of business on March 8, 2021, submit a request to the DOH for approval of the transactions contemplated in this Agreement. Without limiting the foregoing, each party hereto shall, as promptly as possible (i) make, or cause or be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates; and (ii) use commercially reasonable efforts to obtain, or cause to be obtained, all Permits, consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the other Transaction Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required Permits, consents, authorizations, orders and approvals, and shall provide complete and accurate information to all Governmental Authorities upon request. Investor shall not request any change or modification to any Permit or Governmental Order applicable to the Company without the written consent of the Company. The Company shall not be obligated to consent to any such requested change or modification to any Permit or authorization from any Governmental Authority that would be applicable to the Company if a Closing does not occur.

(b) The Company, Company Parent and Investor shall use commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 3.3 of the Disclosure Schedules.

(c) Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use all commercially reasonable efforts to:

(i) respond to any inquiries by any Governmental Authority regarding any matters with respect to the transactions contemplated by this Agreement or any Transaction Document;

(ii) avoid the imposition of any Order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any Transaction Document; and

(iii) in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any Transaction Document has been issued, to use commercially reasonable efforts to have such Governmental Order vacated or lifted.

(d) If any consent, approval or authorization necessary to preserve any right or benefit under any Contract to which the Company is a party is not obtained prior to the Closing, Company Parent shall, subsequent to the Closing, cooperate with Investor and the Company in attempting to obtain such consent, approval or authorization as promptly thereafter as reasonably practicable and at the expense of Investor. If such consent, approval or authorization cannot be obtained, Company Parent shall use commercially reasonable efforts to provide the Company with the rights and benefits of the affected Contract for the term thereof at Investor’s cost and expense, and, if Company Parent provides such rights and benefits, the Company shall assume all obligations and burdens thereunder.

(e) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, proposals and other communications made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, proposals or other communications. Each party shall give prior notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

Section 5.9. Books and Records.

(a) In order to facilitate the resolution of any claims made against or incurred by the Company prior to the Closing, or for any other reasonable purpose, for a period of six years after the Closing or such later period as may be mandated by applicable Law, Investor shall:

(i) retain the books and records (including personnel files) of the Company relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of the Company; and

(ii) upon reasonable notice, afford Company Parent reasonable access (including the right to make, at Company Parent’s expense, photocopies), during normal business hours, to such books and records; provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in Article VI.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) In order to facilitate the resolution of any claims made by or against or incurred by Investor or the Company after the Closing, or for any other reasonable purpose, for a period of six years following the Closing or such later period as may be mandated by applicable Law, Company Parent shall:

(i) retain the books and records (including personnel files) of the Company which relate to the Company and its operations for periods prior to the Closing; and

(ii) upon reasonable notice, afford the Representatives of Investor or the Company reasonable access (including the right to make, at Investor’s expense, photocopies), during normal business hours, to such books and records; provided, however, that any books and records related to Tax matters shall be retained pursuant to the periods set forth in Article VI.

(c) Neither Investor nor any Company Party shall be obligated to provide the other party with access to any books or records (including personnel files) pursuant to this Section 5.9 where such access would violate any Law or any applicable attorney-client privilege.

Section 5.10. Operating Costs. For the avoidance of doubt, the Company shall be responsible for all Operating Costs arising on or prior to the Agreement Date, whether or not such obligations are satisfied as of the Agreement Date. To the extent any such obligations are not satisfied as of the Agreement Date such obligations shall be included as a Current Liability in the calculation of Net Working Capital as of the Agreement Date. From time to time following the Agreement Date, Investor shall advance (the “Working Capital Advance”) to the Company sufficient funds to fund all Operating Costs arising after the Agreement Date, pursuant to the terms of an advance agreement substantially in the form attached hereto as Exhibit C (the “Advance Agreement”). At the Initial Closing, the Working Capital Advance shall convert into shares of Common Stock in full satisfaction of all obligations owing thereunder.

Section 5.11. Closing Conditions. From the date hereof until the Closing, each party hereto shall use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.

Section 5.12. Public Announcements. Unless otherwise contemplated in Section 5.8 hereof, or required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel and upon reasonable notice and collaboration with the other party), no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld, delayed or conditioned), and the parties shall cooperate as to the timing and contents of any such announcement.

Section 5.13. Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

ARTICLE VI. TAX MATTERS

Section 6.1. Tax Covenants.

(a) Without the prior written consent of Investor, Company Parent (and, prior to the MSA Effective Date, the Company, its Affiliates and their respective Representatives) shall not, to the extent it may affect, or relate to, the Company, make, change or rescind any Tax election, deduct any expenses in violation of Section 280E of the Code, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would reasonably be considered to have the effect of increasing the Tax liability or reducing any Tax asset of Investor or the Company in respect of any Pre-Closing Tax Period. Company Parent and the Company agree that Investor is to have no liability for any Tax resulting from any pre-Agreement Date action of the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company, its Affiliates or any of their respective Representatives, and agree to indemnify and hold harmless Investor (and, after the Initial Closing Date, the Company) against any such Tax or reduction of any Tax asset. It is understood and agreed that no officers and Employees of the Company prior to the Initial Closing shall be “Responsible Persons” for purposes of New York Tax Law Section 1133 for any Pre- Closing Tax Periods.

(b) All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with the Investor’s purchase of Shares pursuant to this Agreement (including any real property transfer Tax and any other similar Tax) shall be borne and paid by Investor when due. Investor shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (subject to prior review and approval of Investor if such filing is prior to the Initial Closing).

(c) Investor shall prepare, or cause to be prepared, all Tax Returns required to be filed by the Company after the Initial Closing Date with respect to a Pre-Agreement Tax Period. Any such Tax Return shall be prepared in a manner consistent with the memorandum provided in Section 6.1(c) of the Disclosure Schedules and otherwise consistent with past practice (unless otherwise required by Law) and without a change of any election or any accounting method and shall be submitted by Investor to Company Parent (together with schedules, statements and, to the extent requested by Company Parent, supporting documentation) for Company Parent’s approval at least 45 days prior to the due date (including extensions) of such Tax Return or, if the due date is sooner than 45 days, as soon as practical prior to such due date. If Company Parent objects to any item on any such Tax Return, Company Parent shall, within ten days after delivery of such Tax Return, notify Investor in writing of such objection, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Investor and Company Parent shall negotiate in good faith and use their commercially reasonable efforts to resolve such items. If Investor and Company Parent are unable to reach such agreement within ten days after receipt by Investor of such notice, the disputed items shall be resolved by the Independent Accountant, and any determination by the Independent Accountant shall be final. The Independent Accountant shall resolve any disputed items within twenty days of having the item referred to it pursuant to such procedures as it may require. If the Independent Accountant is unable to resolve any disputed items before the due date for such Tax Return, the Tax Return shall be filed as prepared by Investor and then amended to reflect the Independent Accountant’s resolution. The costs, fees and expenses of the Independent Accountant shall be borne equally by Investor and Company Parent. Subsequent to the Initial Closing, the preparation and filing of any Tax Return of the Company with respect to the Post-Agreement Tax Period shall be exclusively within the control and responsibility of Investor.

Section 6.2. Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon the Company shall be terminated as of the Initial Closing Date. After such date none of the Company, Company Parent or any of their respective Affiliates or Representatives shall have any further rights or liabilities thereunder.

Section 6.3. Tax Indemnification. Company Parent shall indemnify Investor, and each Investor Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 3.8; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Article VI; (c) all Taxes of the Company or relating to the Business of the Company for all Pre-Agreement Tax Periods; (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company (or any predecessor of the Company) is or was a member on or prior to the Initial Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and all Taxes of any person imposed on the Company arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Agreement Date. In each of the above cases, together with any documented out-of- pocket fees and expenses (including reasonable third-party attorneys’ and accountants’ fees) incurred in connection therewith. Investor shall indemnify Company Parent, and each Company Parent Indemnitee and hold them harmless from and against (i) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in this Article VI; (ii) all Taxes of the Company or relating to the Business of the Company for all Post-Agreement Tax Periods; (iii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Investor (or any predecessor of the Investor) is or was a member on or prior to the Initial Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of foreign, state or local Law; and (iv) any and all Taxes of any person imposed on the Company arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring after the Agreement Date. In each of the above cases, together with any documented out-of-pocket fees and expenses (including reasonable third-party attorneys’ and accountants’ fees) incurred in connection therewith.

Section 6.4. Straddle Period. In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Agreement Date (each such period, a “Straddle Period”), the portion of any such Taxes that are treated as Pre-Agreement Taxes for purposes of this Agreement shall be:

(a) in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property, or (iii) required to be withheld, deemed equal to the amount which would be payable if the taxable year ended with the Agreement Date; and

(b) in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on the Agreement Date and the denominator of which is the number of days in the entire period.

Section 6.5. Contests. Investor agrees to give written notice to Company Parent of the receipt of any written notice by the Company, Investor or any of Investor’s Affiliates which involves the assertion of any claim, or the commencement of any Action, in respect of which an indemnity may be sought by Investor pursuant to this Article VI (a “Tax Claim”); provided, that failure to comply with this provision shall not affect Investor’s right to indemnification hereunder, except to the extent Company Parent is prejudiced by Investor’s failure to provide the requisite notice. Company Parent shall have the right, at its own expense, to elect in writing, within twenty days of receiving notice of any Tax Claim with respect to any material Pre-Agreement Taxes to control the contest or resolution of any such Tax Claim; provided, however, that for any such Tax Claim that could result in any Loss to Investor or the Company for any Post-Agreement Tax Period: (a) Company Parent shall keep Investor fully and timely informed of the progress of such Tax Claim; (b) Company Parent shall permit Investor to review and comment on all written submissions made to any administrative or judicial body in connection with such Tax Claim and attend all administrative and judicial proceedings relating to each such Tax Claim; and (c) Company Parent shall not be permitted to settle or compromise such Tax Claim without the prior written consent of Investor (which consent shall not be unreasonably withheld or delayed). If Company Parent fails within the twenty day period described in this Section 6.5 to respond to any notice of a Tax Claim, or fails to participate in any contest of a Tax Claim, in either case which Company Parent has the right to control pursuant to this Section 6.5, then Investor shall control the contest or resolution of any Tax Claim; provided, however, that Investor shall obtain the prior written consent of Company Parent (which consent shall not be unreasonably withheld or delayed) before entering into any settlement of any such Tax Claim or ceasing to defend such Tax Claim; and, provided further, that Company Parent shall have the continuing right to participate in the contest of such Tax Claim and Investor shall take in good faith all comments reasonably made by Company Parent into consideration. In any contest of a Tax Claim, each party shall bear its own costs and expenses related to such contest; provided, that Company Parent shall bear all such costs and expenses that are indemnifiable by Company Parent pursuant to Section 6.3 hereof.

Section 6.6. Cooperation and Exchange of Information. Company Parent and Investor shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this Article VI or in connection with any audit or other proceeding in respect of Taxes of the Company. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers and documents relating to rulings or other determinations by tax authorities. Each of Company Parent and Investor shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Company for any taxable period beginning before the Initial Closing Date until the expiration of the statute of limitations of the taxable periods

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Company for any taxable period beginning before the Initial Closing Date, Company Parent or Investor (as the case may be) shall provide the other party with reasonable written notice and offer the other party the opportunity to take custody of such materials.

Section 6.7. Tax Treatment of Indemnification Payments. Any indemnification payments pursuant to this ARTICLE VI shall be treated as an adjustment to the Base Cash Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

Section 6.8. Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.8 and this ARTICLE VI shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days.

Section 6.9. Overlap. To the extent that any obligation or responsibility pursuant to ARTICLE VIII may overlap with an obligation or responsibility pursuant to this ARTICLE VI, the provisions of this ARTICLE VI shall govern.

ARTICLE VII. CONDITIONS TO CLOSING

Section 7.1. Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(a) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise limiting, restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

(b) The Company shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 3.3 and Investor shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 4.2, in each case, in form and substance reasonably satisfactory to Investor and the Company, and no such consent, authorization, order and approval shall have been revoked. Without limitation of the foregoing, Investor and the Company shall have received all necessary consents, authorizations, orders, approvals and Permits from the Governmental Authorities approving Investor’s purchase of the Shares as contemplated hereunder, including, without limitation those referred to in Section 5.8.

Section 7.2. Conditions to Obligations of Investor. The obligations of Investor to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Investor’s waiver, at or prior to the Initial Closing, of each of the following conditions:

(a) Other than the representations and warranties of the Company and Company Parent contained in Section 3.1, Section 3.2, Section 3.3, Section 3.4 and Section 3.19, the representations and warranties of the Company and Company Parent contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the Agreement Date and on and as of the MSA Effective Date. The representations and warranties of the Company and Company Parent contained in Section 3.1, Section 3.2, Section 3.3, Section 3.4 and Section 3.19 shall be true and correct in all respects on and as of the Agreement Date and the Initial Closing Date.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) The Company and Company Parent shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by the Company or Company Parent prior to or on the Initial Closing Date.

(c) No Action shall have been commenced against Investor, Company Parent or the Company, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.

(d) All approvals, consents and waivers that are listed on Section 3.3 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Investor at or prior to the Closing.

(e) From the Agreement Date through the Initial Closing Date, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, with or without the lapse of time, would reasonably be expected to result in a Material Adverse Effect (in either case, other than any Material Adverse Effect or event, as the case may be, occurring between the Agreement Date and the Initial Closing that is caused by or authorized by the Investor (or its Affiliate) in connection with Investor’s performance under the Management Agreement).

(f) The Transaction Documents (other than this Agreement) shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to Investor.

(g) Investor shall have received a certificate, dated the Initial Closing Date and signed by a duly authorized officer of the Company, that each of the conditions set forth in (a), (b) and (e) has been satisfied.

(h) Investor shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Company certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of the Company authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

(i) Investor shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of the Company certifying the names and signatures of the officers of the Company authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(j) Investor shall have received resignations and releases from the directors and officers of the Company pursuant to Section 5.5.

(k) The Company shall have delivered to Investor a good standing certificate (or its equivalent) for the Company from the secretary of state or similar Governmental Authority of the jurisdiction under the Laws in which the Company is organized.

(l) The Company shall have delivered to Investor a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that the Company is not a foreign person within the meaning of Section 1445 of the Code.

(m) The Company shall have delivered to Investor a payoff letter, in form and substance satisfactory to Investor, indicating the amount necessary to discharge in full all obligations of the Company owed to all creditors

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document other than the Senior Lender and an undertaking each such creditor to discharge at the Initial Closing any Liens securing such indebtedness.

(n) Investor shall have an irrevocable option to purchase the Existing Shares, pursuant to an option agreement between Investor and Company Owner substantially in the form attached hereto as Exhibit D.

(o) Company Parent shall have delivered to Investor audited financial statements for the fiscal years ending December 31, 2018 and December 31, 2019 and auditor- reviewed interim carve-out consolidated financial statements for the Company.

(p) The Company shall have delivered to Investor such other documents or instruments as Investor reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

Section 7.3. Conditions to Obligations of the Company Parties. The obligations of the Company Parties to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Company’s waiver, at or prior to the Closing, of each of the following conditions:

(a) Other than the representations and warranties of Investor contained in Section 4.1 and Section 4.4, the representations and warranties of Investor contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Initial Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Investor contained in Section 4.1 and Section 4.4 shall be true and correct in all respects on and as of the date hereof and on and as of the Initial Closing Date with the same effect as though made at and as of such date.

(b) Investor shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Initial Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Investor shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

(c) No Action shall have been commenced against the Company, Company Parent or Investor, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.

(d) All approvals, consents and waivers that are listed on Section 4.2 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to the Company at or prior to the Closing.

(e) The Transaction Documents (other than this Agreement) shall have been executed and delivered by the parties thereto and true and complete copies thereof shall have been delivered to the Company and Company Parent, and the Closing Note shall have been executed and delivered by Investor to the Senior Lender.

(f) Payment of the Closing Cash Payment shall have been made to Senior Lender in accordance with Section 2.3.

(g) Investor shall have delivered to the Company such other documents or instruments as the Company reasonably request and are reasonably necessary to consummate the transactions contemplated by this Agreement.

ARTICLE VIII.

Section 8.1. Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein (other than any representations or warranties contained in Section 3.8 which are subject to ARTICLE VI, and referred to herein as the “Tax Representations”) shall survive the Closing and shall remain in full force and effect until the date that is twelve months from the Agreement Date (unless the Initial Closing does not occur on or prior to the date that is nine (9) months following the Agreement Date, in which case the representations and warranties contained herein shall survive until the date that is three (3) months following the Initial Closing); provided, that the representations and warranties in Section 3.1, Section 3.2, Section 3.3, Section 3.19, with respect to the Company Section 4.1, Section 4.2, Section 4.3, Section 4.4 and Section 4.7 with respect to Investor (the “Fundamental Representations”) shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and agreements of the parties contained herein (other than any covenants or agreements contained in ARTICLE VI which are subject to ARTICLE VI) shall survive the Closing until fulfilled or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non- breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

Section 8.2. Indemnification by Company Parent. Subject to the other terms and conditions of this ARTICLE VIII, Company Parent, subject to the limitations set forth herein, shall indemnify and defend each of Investor and its Affiliates (including the Company) and their respective Representatives (collectively, the “Investor Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Investor Indemnitees based upon, arising out of, with respect to or by reason of:

(a) any inaccuracy in or breach of any of the representations or warranties of the Company Parties contained in this Agreement or in any certificate or instrument delivered by or on behalf of any Company Party pursuant to this Agreement (other than in respect of Section 3.8, it being understood that the sole remedy for any such inaccuracy in or breach thereof shall be pursuant to Article VI), as of the date such representation or warranty was made (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by a Company Party pursuant to this Agreement (other than any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in Article VI, it being understood that the sole remedy for any such breach, violation or failure shall be pursuant to Article VI);

(c) any Company Debt Payoff Amounts, Transaction Expenses, Change in Control Payments, Excess Operating Costs or Operating Costs arising out of the operation of the Business prior to the Agreement Date, in each case to the extent not included in the Adjusted Cash Purchase Price as finally determined in accordance with Section 2.4;

(d) any fraud or intentional breach of this Agreement by any Company Party;

(e) any claims brought against the Company for failure to properly classify, on or prior to the Agreement Date, any employee or Contingent Worker in accordance with applicable Laws; and

(f) the matters set forth on Schedule 8.2(f).

Section 8.3. Indemnification by Investor. Subject to the other terms and conditions of this Article VIII, Investor shall indemnify and defend Company Parent and its Affiliates and Representatives (collectively, the “Company Parent Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Company Parent Indemnitees based upon, arising out of, with respect to or by reason of:

(a) any material inaccuracy in or breach of any of the representations or warranties of Investor contained in this Agreement or in any certificate or instrument delivered by or on behalf of Investor pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Initial Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

(b) any breach or non-fulfillment of any covenant, agreement or obligation expressly required to be performed by Investor pursuant to this Agreement (other than ARTICLE VI, it being understood that the sole remedy for any such breach thereof shall be pursuant to ARTICLE VI);

(d) any fraud or intentional breach of this Agreement by Investor.

Section 8.4. Certain Limitations. The indemnification provided for in Section 8.2 and Section 8.3 shall be subject to the following limitations:

(a) Company Parent shall not be liable to the Investor Indemnitees for indemnification under Section 8.2(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.2(a) exceeds $100,000 (the “Deductible”), in which event Company Parent shall be required to pay or be liable for all such Losses that exceed the Deductible. The aggregate amount of all Losses for which Company Parent shall be liable pursuant to Section 8.2(a) or Section 8.2(e) shall not exceed $3,650,000 (the “Cap”).

(b) Investor shall not be liable to the Company Parent Indemnitees for indemnification under Section 8.3(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.3(a) exceeds the Deductible, in which event Investor shall be required to pay or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which Investor shall be liable pursuant to Section 8.3(a) shall not exceed the Cap.

(c) Notwithstanding the foregoing, the limitations set forth in Section 8.4(a) and Section 8.4(b) shall not apply to Losses based upon, arising out of, or resulting from (i) a party’s breach of the Fundamental Representations or Tax Representations, or (ii) a party’s criminal activity (except with respect to Federal Cannabis Laws), intentional misconduct or fraud.

(d) The obligation to provide indemnity by an Indemnifying Party pursuant to Section 8.2(a) and Section 8.3(a) in respect of any Losses shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment actually received by the Indemnified Party (including the Company) in respect of such claim.

(e) Notwithstanding any provision to the contrary herein or in the Certificate of Incorporation or bylaws of the Company, Company Parent shall not be entitled to indemnification from the Company for any Losses for which Company Parent shall be liable pursuant to this ARTICLE VIII.

Section 8.5. Indemnification Procedures. The party making a claim under this ARTICLE VIII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this ARTICLE VIII is referred to as the “Indemnifying Party”.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses or is otherwise prejudiced by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s sole cost and expense and by the Indemnifying Party’s own counsel (subject to approval by the Indemnified Party which such approval shall not be unreasonably withheld, conditioned or delayed), and the Indemnified Party shall cooperate in good faith in such defense. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.5(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the sole cost and expense of the Indemnified Party. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 8.5(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Company Parent and Investor shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 5.6) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out- of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b) Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.5(b), which consent shall not be unreasonably withheld, delayed or conditioned. If a firm offer is made to settle a Third Party Claim without leading to liability, admission of guilt or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.5(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses or is otherwise prejudiced by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Company’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

(d) Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event or proceeding in respect of Taxes of the Company (including, but not limited to, any such claim in respect of a breach of the representations and warranties in Section 3.8 hereof or any breach or violation of or failure to fully perform any covenant, agreement, undertaking or obligation in Article VI) shall be governed exclusively by Article VI hereof.

Section 8.6. Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VIII, the Indemnifying Party shall satisfy its obligations as follows:

(a) In the event that the Indemnifying Party is Company Parent, Company Parent shall pay the amount of such Loss by wire transfer of immediately available funds within 20 Business Days of the agreement or final adjudication of the applicable Loss.

(b) In the event that the Indemnifying Party is Investor, Investor shall pay the amount of such Loss to Company Parent by wire transfer of immediately available funds within 20 Business Days of the agreement or final adjudication of the applicable Loss.

Section 8.7. Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the purchase price for Tax purposes, unless otherwise required by Law.

Section 8.8. Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) subsequent to the Agreement Date or by reason of the fact that, subsequent to the Agreement Date the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of any condition set forth in Section 7.2 or Section 7.3, as the case may be.

Section 8.9. Exclusive Remedies. Subject to Section 5.7 and Section 11.11, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud or criminal activity (except with respect to Federal Cannabis Laws), on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VIII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to theindemnification provisions set forth in ARTICLE VI and this ARTICLE VIII. Nothing in this Section 8.9 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s fraudulent, criminal or intentional misconduct.

ARTICLE IX. TERMINATION

Section 9.1. Termination. This Agreement may be terminated at any time prior to the Closing:

(a) by the mutual written consent of the Company Parties and Investor;

(b) by Investor by written notice to the Company Parties if the conditions set forth in Section 7.1 have been satisfied and:

(i) Investor is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any Fundamental Representation, covenant or agreement made by a Company Party pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by such Company Party within ten days of such Company Party’s receipt of written notice of such breach from Investor, provided, if such breach, inaccuracy or failure is not capable of being cured within such ten day period, then the Company Party shall have an additional twenty days to cure such breach, inaccuracy or failure; or

(ii) Investor is not then in material breach of any provision of this Agreement and any of the conditions set forth in Section 7.2 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by December 31, 2021 (or such later date as Investor and the Company may mutually agree to in writing, the “Outside Date”), unless such failure shall be due to an Action against Investor or the failure of Investor to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;

(c) by the Company Parties by written notice to Investor if the conditions set forth in Section 7.1 have been satisfied and:

(i) No Company Party is then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any Fundamental Representation, covenant or agreement made by Investor pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Investor within ten days of Investor’s receipt of written notice of such breach from the Company, provided, if such breach, inaccuracy or failure is not capable of being cured within such ten day period, then the Investor shall have an additional twenty days to cure such breach, inaccuracy or failure; or

(ii) No Company Party is then in material breach of any provision of this Agreement and any of the conditions set forth in Section 7.3 shall not have been fulfilled by the Outside Date, unless such failure shall be due to an Action against any Company Party or the failure of any Company Party to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;

(d) by Investor or the Company Parties in the event that (i) the conditions set forth in Section 7.1 shall not have been fulfilled by the Outside Date (unless such failure shall be due to an Action against such party or the failure of such party to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Outside Date), (ii) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (iii) any Governmental Authority shall have issued a Governmental Order prohibiting, restraining, limiting or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 9.2. Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement and the Management Agreement shall forthwith become void and there shall be no liability herein or therein on the part of any party hereto or thereto except:

(a) as set forth in this ARTICLE IX and Section 5.6 and ARTICLE XI hereof, or in any provisions expressly surviving the termination of the Management Agreement as set forth therein;

(b) if this Agreement is terminated by Investor in accordance with Section 9.1(b), the Company shall be liable, and shall within three Business Days following such termination reimburse Investor, for the Deposit and the Working Capital Advance; provided that such payment shall be the sole and exclusive remedy of Investor for any such termination and breach;

(c) if this Agreement is terminated by the Company Parties in accordance with Section 9.1(c), the Company shall retain the Deposit and the Working Capital Advance (which shall be deemed forgiven and the Advance Agreement terminated) and Investor shall, within three (3) Business Days following the Outside Date or such termination, pay to the Company the Break Fee by wire transfer of readily available funds; provided, that in the event that Investor fails to timely pay the Break Fee to the Company, the Company shall be entitled to collect from Investor the Break Fee, plus any costs of collection (including attorneys’ fees) incurred by the Company as a result of such failure to pay the Break Fee together with interest accrued thereon at 8% per annum compounded monthly; and provided further that such payments and forgiveness shall be the sole and exclusive remedy of the Company Parties for any such termination and breach;

(d) if this Agreement is terminated by either party in accordance with Section 9.1(d), and the Investor has not failed to perform or comply in any material respect with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing, the Company shall be liable for the Working Capital Advance in accordance with the terms of the Advance Agreement, and shall within ten Business Days following such termination reimburse Investor for the Deposit; and

(e) that nothing in this Section 9.2 shall relieve any party hereto from liability for any willful or intentional breach of any provision hereof.

ARTICLE X. RELEASE

As a material inducement to Investor to enter into this Agreement, effective as of the Initial Closing, Company Parent, on its own behalf and on behalf of its Affiliates, agrees not to sue and fully releases and forever discharges the Company and each of its directors, officers, employees, members, managers, shareholders, agents, assigns and successors as of the Initial Closing, with respect to and from any and all Actions, demands, rights, liens, Contracts, covenants, Liabilities, debts, expenses (including reasonable attorneys’ fees) and Losses of whatever kind or nature in law, equity or otherwise, whether now known or unknown, and whether or not concealed or hidden, to the extent arising out of facts or circumstances in existence prior to the Initial Closing; provided, however that such release shall exclude those claims, liabilities, obligations and duties of the Company under this Agreement. The terms and conditions of this ARTICLE X constitute essential terms and conditions of this Agreement, and the execution of this Agreement by the Company Parent shall constitute the Company Parent’s express agreement to be bound by such terms and provisions.

ARTICLE XI. MISCELLANEOUS

Section 11.1. Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 11.2. Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.2):

If to Investor or the Company (following the Closing): Ascend Wellness Holdings, LLC 1411 Broadway, 16th Floor New York, NY 10018 Attn: Daniel Neville

with a copy to: Foley Hoag LLP 155 Seaport Boulevard Boston, MA 02210 Attention: Erica Rice [email protected]

If to Company Parent or MedMen NY, Inc. the Company (prior to the Closing): c/o MM Enterprises USA, LLC 10115 Jefferson Blvd. Culver City, CA 90232 Attention: Dan Edwards [email protected]

Raines Feldman LLP 1800 Avenue of the Stars, 12th Floor Los Angeles, CA 90067 with a copy to: Attention: Jonathan Littrell [email protected]

Section 11.3. Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole; (d) the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders; and (e) references to “dollars” and “$” mean dollars in lawful currency of the United States of America. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules, Exhibits and Schedules mean the Articles and Sections of, and Disclosure Schedules, Exhibits and Schedules attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits and Schedules referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 11.4. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 11.5. Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 5.7(e), upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 11.6. Entire Agreement. This Agreement, the other Transaction Documents and the NDA constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits, Schedules, and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 11.7. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign its rights or obligations hereunder without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed; provided, however, Investor may, without the prior written consent of the Company Parties, assign all or any portion of its rights under this Agreement to (i) an Affiliate of Investor or (ii) to any lender (or any agent or collateral trustee for any such Person) of Investor, the Company or their respective Affiliates as collateral security in connection with any new financings or refinancings, and such collateral assignments shall be deemed to include any further assignment or transfer that may occur due to a foreclosure or other remedy under such financing documents. No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 11.8. No Third-party Beneficiaries. Except as provided in Section 6.3, Section 9.2, ARTICLE VIII and ARTICLE X and payments made to Senior Lender in accordance with ARTICLE II, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 11.9. Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 11.10. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEW YORK, IN EACH CASE LOCATED IN THE CITY OF NEW YORK AND COUNTY OF NEW YORK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10(C).

Section 11.11. Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

Section 11.12. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Remainder of page intentionally left blank. Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

COMPANY:

MEDMEN NY, INC.

COMPANY PARENT:

MM ENTERPRISES USA, LLC

By: /s/ Tom Lynch Name:Tom Lynch Title: CEO

INVESTOR:

AWH NEW YORK, LLC

By: Name: Title:

INVESTOR PARENT:

ASCEND WELLNESS HOLDINGS, LLC

By: Name: Title:

[Signature page to Investment Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

COMPANY:

MEDMEN NY, INC.

By: Name: Title:

COMPANY PARENT:

MM ENTERPRISES USA, LLC

By: Name: Title:

INVESTOR:

AWH NEW YORK, LLC

INVESTOR PARENT:

ASCEND WELLNESS HOLDINGS, LLC

By: /s/ Abner Kurtin Name:Abner Kurtin Title: Chief Executive Officer

Signature page to Investment Agreement

Exhibit A

Management Agreement

MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT

BETWEEN

[ ]

AND

MEDMEN NY INC.

MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT

THIS MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENT is entered into as of this day of , 2021 (the “Effective Date”) by and between MedMen NY Inc., a New York corporation having its principal place of business at (together with its affiliates and assigns, the “Licensee”) and a limited liability company, having a place of business at (“Management Firm”), each a “Party” and collectively the “Parties.”,

WHEREAS, Management Firm has significant expertise and is engaged in the business of, inter alia, providing management and advisory services to licensed marijuana dispensaries, production and/or cultivation facilities in multiple states;

WHEREAS, Licensee is engaged in the business of operating a medical marijuana business in the State of New York, including the ownership and operation of four (4) dispensaries and one (1) cultivation and manufacturing facility; and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document WHEREAS, Licensee desires to retain Management Firm to provide management and administrative services to Licensee in connection with Licensee’s operation of its business, and Management Firm desires to provide such services.

NOW, THEREFORE, in consideration of their mutual promises, the Parties do hereby agree as follows:

1. Definitions. As they are used in this Agreement, the following terms shall have the meaning assigned to them in this Section 1. Capitalized terms that are defined in the Applicable Laws and not otherwise defined herein shall have the meanings prescribed by the Applicable Law. To the extent terms used in this Agreement are not so defined in this Section 1, such terms shall be interpreted according to their usual, plain meaning.

1.1. “Affiliate” means, as to any person or entity, any corporation, partnership, limited liability company, joint venture, trust, department or agency, or individual controlled by, under common control with, or which controls, directly or indirectly, such person or entity.

1.2. “Agreement” means this Management and Administrative Services Agreement, as it may be amended from time to time.

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1.3. “Applicable Law(s)” means any and all present and future state, local, and/or federal (to the extent not inconsistent with state and local), statutes, ordinances, rules, regulations, permits, licenses, certificates, and judicial and/or administrative rulings, decisions and/or orders in any way applicable to this Agreement, Licensee, Management Firm, the Facilities, the Enterprise, the Personnel, and/or the Services, including, without limitation Public Health Law and 10 NYCRR §1004 et. seq.

1.4. “Books of Account” means all business and accounting records and documents associated with the Enterprise, including back-up.

1.5. “Construction Budget” refers to the budget for the design and construction of one or more of the Facilities.

1.6. “Depository Account” means the bank account in the name of Licensee, if any, for the purpose of depositing all cash, checks, and/or other payments paid to the Enterprise, as described in Section 8.3, below.

1.7. “Disbursement Account” means the bank account in the name of Licensee, if any, from which payments for Operating Expenses, debt service, consulting fees, and disbursements to Licensee shall be made, as described in Section 8.4, below.

1.8. “Effective Date” means the date stated in the introductory paragraph of this Agreement.

1.9. “Enterprise Bank Accounts” means any and all bank accounts in the name of Licensee, if any, for the purpose of managing or operating the Enterprise, including but not limited to the Depository Account and the Disbursement Account.

1.10.“Enterprise” means the Licensee’s entire present and future business operations, including the Facilities, involving or related to the growth, production and/or distribution of marijuana (and recreational cannabis if authorized) in the State in accordance with Applicable Law. The Enterprise encompasses Licensee’s entire operations in the State, including operations pursuant to more than one license to grow, produce, and/or distribute marijuana in the State in accordance with Applicable Law.

1.11.“Enterprise Employees” means employees of Licensee, Management or an outsourced professional employer organization (“PEO”) that are involved in the operation of the Enterprise. All Enterprise Employees shall at all times be deemed exclusively employees of Licensee, the Management Firm or the PEO, as the case may be, and shall be paid directly by Licensee, the Management Firm or the PEO from the applicable payroll. For clarity, employees of Licensee’s parent entity, MM Enterprises USA, LLC and its parent and Affiliates shall not be deemed Enterprise Employees for purposes of this Agreement.

1.12.“Facilities” means the physical locations of the Enterprise, including, but not limited to, the structures, buildings, and fixtures located thereon.

1.13.“Fiscal Year” means the period commencing on January 1 of each year and ending on December 31 of that year unless otherwise agreed by both Parties in writing.

1.14.“Force Majeure” means any cause beyond the reasonable control of a party, including, but not limited to, acts of God, acts or omissions of civil or military authorities of a state or nation, fire, strike, flood, riot, war, delay of transportation, or inability due to the aforementioned causes to obtain necessary labor, materials, or facilities.

1.15.“Furnishings and Equipment” means all furniture, furnishings, equipment, and personal property used or reasonably required or desirable for the operation or management of the Enterprise.

1.16.“Gross Revenue” means all cash, checks, proceeds, and other payments of any kind collected by or paid to the Enterprise arising out of the operation of the Enterprise and/or the sale of all products, services, and all other activities of the Enterprise.

1.17.“Initial Term” is defined in Section 19.1 of this Agreement.

1.18.“Licensee” is defined in the introductory paragraph of this Agreement.

1.19.“Licensee Representatives” means one or more persons designated by Licensee and approved by Management Firm who shall have authority to act as a designated agent and responsible party for Licensee as set forth in Section 7.4.

1.20.“Management Executives” means employees of Management Firm who provide executive-level Services to the Licensee in connection with the Enterprise.

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1.21.“Management Fee Statement” means the written statement Management Firm shall provide to Licensee each month on a date specified in this Agreement, stating the amount of the Management Fee that is due to Management Firm from Licensee for the previous month.

1.22.“Management Firm” is defined in the introductory paragraph of this Agreement.

1.23.“Management Firm Marks” means any trade names, trademarks and/or service marks owned by or licensed to Management Firm that are used in the operation of the Enterprise.

1.24.“Operating Budget” refers to the budget for the operation and management of the Enterprise.

1.25.“Operating Expenses” means all actual expenses for the items included or addressed in the Operating Budget plus any actual expenses that were not included or addressed in the Operating Budget but which were incurred pursuant to Section 4 herein.

1.26.“Operating Statement” means the monthly, quarterly, and annual statements created and developed by Licensee in accordance with Section 20.1.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1.27.“Patron” means an individual(s) legally qualified under Applicable Law to purchase marijuana and related products from the Enterprise.

1.28.“Personnel” means the Management Executives and Enterprise Employees acting under the direction and control of Management Firm, Licensee or PEO, as applicable, in providing Services hereunder.

1.29.“Renewal Term” means a defined length Term of this Agreement following the Initial Term or the Renewal Term as further set forth in Section 19.

1.30.“Services” means all management, administrative and related responsibilities and/or obligations undertaken by Management Firm, subcontractors or other third parties reasonably acceptable to Management Firm pursuant to this Agreement, to be performed in a commercially reasonable manner under the circumstances.

1.31.“State” means the State of New York.

“Term” means the entire term for which this Agreement is effective, including the Initial Term plus the 1.32. Renewal Term, if any.

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2. Covenants. In consideration of the mutual covenants and promises contained in this Agreement, the sufficiency of which is hereby acknowledged by both Parties, the Parties agree and covenant as follows:

2.1. Engagement of Management Firm. Licensee hereby retains and engages Management Firm to provide the Services exclusively pursuant to the terms and conditions of this Agreement, and Management Firm hereby accepts such retention and engagement subject to receipt of any approvals required by Applicable Law. Licensee hereby authorizes Management Firm to exercise such powers and to take such actions with respect to the Enterprise as are expressly set forth herein and as may be necessary for the performance of Management Firm’s obligations under this Agreement. Management Firm hereby accepts such appointment on the terms and conditions hereinafter set forth and agrees to manage, operate and maintain the Enterprise in an efficient and satisfactory manner consistent with the Operating Budget and Construction Budget.

2.2. Term. The Term of this Agreement shall commence on the Effective Date and shall continue until terminated solely in accordance with Section 19.

2.3. Compliance With Applicable Law. Licensee hereby covenants to Management Firm that Licensee’s ownership and operation of the Enterprise shall, at all times, be in compliance with Applicable Law. Subject to the other provisions of this Agreement, Management Firm shall, subsequent to the Effective Date, cause the Enterprise to continue to comply with state and municipal laws, ordinances, regulations and orders relative to the management and operation of the Enterprise. Except as otherwise provided in this Agreement, Management Firm shall immediately notify Licensee of, and use its reasonable best efforts to remedy any violation of any such law, ordinance, rule, regulation or order which comes to its attention subsequent to the Effective Date.

2.4. Covenants of Licensee. During the Term, Licensee shall not take any of the following actions without the prior written consent of Management Firm:

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2.4.1.declare, set aside, or pay any dividend or make any distribution with respect to the equity of the Enterprise or redeem, purchase, or otherwise acquire any of the equity of the Enterprise;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2.4.2.cause the Enterprise to sell or otherwise transfer any material asset of the Enterprise outside of the ordinary course of business;

2.4.3.cause the Enterprise to enter into or negotiate the settlement of any claims other than those claims set forth on Schedule 2.4.3 attached hereto, which claims may be settled or negotiated without the written consent of Management Firm, provided, such settlement or negotiation does not result in any liability for payment or admission of wrongdoing by Management Firm or Licensee;

2.4.4.change the business or business plan or adopt or amend any budget of the Enterprise;

2.4.5.approve any sale of the Enterprise (or similar transaction with respect to any subsidiaries of the Enterprise);

2.4.6.make any investments or sales not in the ordinary course of business, or capital expenditures for the Enterprise or cause the Enterprise to incur obligations not set forth in the Operating Budget, Construction Budget, or organizational documents of the Enterprise;

2.4.7.hire or terminate any Enterprise Employee; or

2.4.8.enter into any agreement, contract, commitment or arrangement to take any of the actions set forth above.

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3. Management and Administrative Services.

3.1. Management Firm’s Authority and Responsibility. Beginning on the Effective Date and continuing during the Term, the Parties agree that Management Firm shall provide Licensee with the Services reasonably necessary or convenient for the day-to-day operation, management, administration, and maintenance of the Enterprise on behalf of Licensee, substantially in accordance with the Operating Budget and the Construction Budget. Management Firm’s duties include, but are not limited to, the following activities:

3.1.1. Recommending to Licensee the Enterprise’s operating days and hours in accordance with Applicable Laws, and ensuring that the Enterprise is adequately staffed during all hours of operation established by Licensee;

3.1.2. Developing the Operating Budget and the Construction Budget for the Enterprise;

3.1.3. Developing for Licensee’s approval marketing plans, including but not limited to promotional activities and advertising, and long-term business plans for the Enterprise, and implementing the approved plans;

3.1.4. Selecting and purchasing or leasing on behalf of Licensee, subject to the Operating Budget or otherwise with the approval of Licensee, all Furnishings and Equipment that Management Firm determines are necessary or desirable to operate the Enterprise;

3.1.5. Recommending to Licensee administrative policies and procedures for the operation of the Enterprise, and implementing the approved policies and procedures;

3.1.6. Staffing, training and monitoring the performance of all Personnel, and directing all Personnel in accordance with Licensee’s policies and procedures;

3.1.7. Subject to the Operating Budget or otherwise with the approval of Licensee, establishing, purchasing, and managing appropriate inventory and supply levels for the Enterprise, including, but not limited to, supplies necessary for the growing, production, and distribution of marijuana as permitted under Applicable Law, office supplies, and technology supplies;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3.1.8. Maintaining an ongoing quality management program that includes continuous quality improvement, safety, and risk management;

3.1.9. Monitoring the scheduling of Patrons and developing resolutions for delays in booking Patrons for services at the Enterprise;

3.1.10.Providing the Licensee, upon written request from Licensee, with all information that is in Management Firm’s possession and necessary for Licensee to obtain or maintain its license(s) and/or its required certification(s) and/or accreditation(s) in compliance with Applicable Law;

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3.1.11.Making or causing to be made any expenditure that is accounted for in the Operating Budget and/or the Construction Budget;

3.1.12.Negotiating any new or modification to any existing lease, license or purchase agreement for real property of Licensee;

3.1.13.Negotiating and facilitating contracts, on behalf of Licensee, for the sale and distribution of Licensee’s cultivated cannabis product to marijuana production facilities and dispensaries or Patrons as applicable, in compliance with Applicable Law; provided, that Management Firm shall use commercially reasonable efforts to contract first with such production facilities and dispensaries that are owned by Licensee or its Affiliates; and

3.1.14.Performing or causing to be performed all other activities that Management Firm determines are reasonably necessary or desirable for the operation or management of the Enterprise.

Notwithstanding anything to the contrary herein, nothing in this Agreement: (i) grants or is intended to grant Management Firm any right, title or interest in the Facilities housing the Enterprise or to the Enterprise itself, or (ii) divests or is intended to divest Licensee of any authority or responsibility for the Enterprise that is otherwise required by Applicable Law.

3.2. Physical Duties. Subject to the Operating Budget and Construction Budget, or as otherwise approved in writing by Licensee, Management Firm shall use commercially reasonable measures for the orderly physical administration, management, and operation of the Enterprise, including without limitation cleaning, painting, decorating, plumbing, carpeting, grounds-keeping, landscaping, and such other maintenance and repair work that Management Firm determines is reasonably necessary or desirable for the operation of the Enterprise.

3.3. Support Services. Subject to the Operating Budget and Construction Budget, or as otherwise approved in writing by Licensee, Management Firm will select, provide, procure, and/or otherwise arrange for various support services through the Personnel or third-party contractors as Management Firm may reasonably determine are necessary or desirable for the management or operation of the Enterprise. Such third party services may include, but are not limited to: billing services; payroll, human resources, or PEO services; legal and accounting services; housekeeping services; grounds-keeping services; landscaping services; utilities services; technical, computer, and/or telecommunications services; waste disposal services; delivery services; transportation services; and security services.

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3.4. Training. Management Firm shall use commercially reasonable efforts to ensure that all Personnel who provide Services on behalf of the Enterprise hereunder shall: (a) receive training on all policies and requirements as may be reasonably required by Management Firm or Licensee for the Enterprise from time to time; and (b) adhere to such policies and requirements, including but not limited to: dress code;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document confidentiality policies; nondiscrimination policies; safety policies and incident/accident reporting requirements; medical and business record documentation and completion requirements; and cardio- pulmonary resuscitation and other emergency response.

3.5. Software. During the Term, Licensee shall grant Management Firm access to Licensee’s [Bio Track] software (including support and any subsequent modifications and improvements developed thereto and accessible to Licensee) during the Term in connection with the Enterprise. Licensee shall be the exclusive owner of all intellectual property and other rights in such software and any of Licensee’s proprietary software, including any and all personal or business data that Patrons supply the Enterprise to the fullest extent permitted under Applicable law. For the sake of clarity, neither Licensee nor its Affiliates shall receive any royalties for the license of such software during the Term.

3.6. Doing Business As. Licensee and Management Firm shall cooperate to submit an application to the New York Department of Health (“DOH”) to allow the Enterprise to operate under the name “[Management Firm],” subject to the limited license to the Management Firm Marks granted to Licensee in Section 16.2.

4. Operating Budget. Management Firm shall establish the Operating Budget for each Fiscal Year using the procedure outlined below.

4.1. Operating Budget. On or before the Effective Date for the first Fiscal Year during the Term, and thereafter not later than thirty (30) days prior to the commencement of each subsequent Fiscal Year, Management Firm will develop and submit to Licensee for approval (with such approval not to be unreasonably withheld, conditioned or delayed), an Operating Budget for the upcoming Fiscal Year. The Operating Budget shall include an annual operating budget, an annual cash capital expenditures budget (if appropriate), and annual cash flow projections. The Operating Budget shall, at a minimum, cover or otherwise account for the following expenditures, costs, and/or investments:

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4.1.1. The payment of salaries, wages, benefit programs, and other costs for the Enterprise Employees;

4.1.2. Utilities;

4.1.3. Repairs and maintenance;

4.1.4. Grounds-keeping, maintenance, and/or housekeeping services;

4.1.5. Interest on installment contract purchases or other interest charges on debt included in the previous Construction Budget or Operating Budget;

4.1.6. Lease payments;

4.1.7. Insurance and bonding;

4.1.8. Advertising, branding, and marketing;

4.1.9. Transportation and travel expenses for Personnel or any Affiliate(s) Management Firm to inspect and oversee the Enterprise; of

4.1.10.Accounting, legal, and/or other professional services and fees;

4.1.11.Security;

4.1.12.Purchase or lease payments for Furnishings and Equipment;

4.1.13.Waste removal;

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4.1.15.Other expenses designated as Operating Expenses by Management Firm, or specifically designated as Operating Expenses in this Agreement;

4.1.16.Depreciation and amortization of the Enterprise assets and/or Facilities based on applicable depreciation or amortization methods available for financial accounting and tax reporting purposes (including, without limitation, straight- line, ACRS and MACRS);

4.1.17.Recruiting and training;

4.1.18.Fees or other payments due to any applicable accrediting or licensing agency having jurisdiction over Management Firm, Licensee, the Enterprise and/or the Facilities;

4.1.19.Required payments to State or local governments made by or on behalf of the Enterprise and/or the Licensee; and

4.1.20.All materials and Personnel used in connection with the operation and/or management of the Enterprise, including but not limited to soil, fertilizer, chemicals, packaging, and any other materials Management Firm determines are necessary or desirable to operate or manage the Enterprise.

4.2. Approved Operating Budget. Within ten (10) days of receiving the proposed Operating Budget, Licensee and any secured lender to Licensee shall approve the Operating Budget, which approval shall not be unreasonably withheld, conditioned or delayed, or, after consultation with and agreement from Management Firm, approve the Operating Budget with changes (either being the approved Operating Budget). Notwithstanding the foregoing, if for any reason the Parties do not approve an Operating Budget before the first day of the Fiscal Year, the Parties shall use the approved Operating Budget for the previous Fiscal Year until a new Operating Budget is approved. The approved Operating Budget shall constitute authorization for Management Firm to incur obligations and make expenditures to operate and manage the Enterprise pursuant to such Operating Budget.

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4.3. Modifications to Operating Budget. If Management Firm determines, in its reasonable discretion, that it is necessary or desirable for the Enterprise to incur obligations or make expenditures that are not included or otherwise addressed in the Operating Budget in order to manage or operate the Enterprise or comply with Applicable Law, Management Firm may cause the Enterprise to incur such obligations and/or make such expenditures up to fifty thousand dollars ($50,000.00) per occurrence upon written notice to Licensee. Management Firm shall not cause the Enterprise to incur any unaccounted-for obligation or expenditure in excess of fifty thousand dollars ($50,000.00) without the prior written approval of Licensee and any secured lender to Licensee, which approval shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, no notice to or approval of the Enterprise shall be required for costs of goods sold incurred in the Enterprises normal course of business.

5. Contracts in Licensee’s Name Doing Business as the Enterprise and at Arm’s Length. Management Firm agrees that it will not enter into any lease, contract or obligation binding upon the Enterprise, or terminate any existing lease, contract or obligation of the Enterprise, in any manner or respect or otherwise incur any debt, obligation or liability for or on behalf of the Enterprise or Licensee unless Management Firm receives prior written approval from the Licensee; provided, however, that Management Firm may, without the prior approval of Licensee, enter into such contracts for the furnishing of utilities to the Facilities, enter into tax appeals with

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document respect to the Enterprise, or enter into contracts for goods or services or any other item set forth in an Operating Budget or Construction Budget except to the extent provided in Section 4.2. Without limitation on, but subject to, the foregoing, the Management Firm acknowledges and agrees to not, and that it does not have any authority to, without the express prior written authority of the Licensee or as otherwise authorized by this Agreement, (i) enter into or incur any debt or obligation on behalf of or in the name of Licensee; (ii) expend Enterprise funds in excess of the Operating Budget or Construction Budget except to the extent provided in Section 4.2; (iii) pledge, assign for security or grant any security interest in the Facilities; (iv) compromise or release any of the claims of the Licensee; (v) give any bond, indemnity or guaranty on behalf of the Licensee; or (vi) commit or agree on behalf of the Licensee to do any of the foregoing. Licensee may, from time to time, establish in writing limited authority for Management Firm to enter into a specific contract or agreement, and in such event, Management Firm’s authority shall be limited solely to entering into the specific agreement specified in the written approval from Licensee. Except where Management Firm is expressly authorized by this Agreement or in a written instrument executed by Licensee to enter into a contract or agreement pursuant to the immediately foregoing sentence, all leases, contracts, agreements or other obligations relating to the Enterprise shall be executed and entered into solely by an authorized representative of the Licensee on behalf of the Licensee.

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6. Enterprise Operating Standards. Management Firm shall use commercially reasonable efforts to advise Licensee so as to enable Licensee to operate the Enterprise in a proper, efficient, and competitive manner, in accordance with operating standards which are consistent with those of the Enterprise’s industry generally and compliant with all Applicable Laws.

7. Personnel. All Personnel shall be subject to the Licensee’s and/or Enterprise’s general policies and procedures.

7.1. Management Executives. Management Firm shall exercise its authority and fulfill its responsibilities under this Agreement by and through the Management Executives. The Management Executives shall be employees of Management Firm (unless otherwise outsourced through the PEO and determined by the Management Firm in its sole discretion), and the cost of the Management Executives, including but not limited to their salaries, benefits and associated payroll costs shall be borne by Management Firm.

7.2. Reserved.

7.3. Enterprise Employees. Enterprise Employees shall work on-site at the Enterprise in the operations of the Enterprise.

7.3.1.Enterprise Employees shall be employees of Licensee, Management Firm or the PEO, as the case may be, and shall be paid by Licensee, Management Firm or the PEO on the applicable payroll. All costs and expenses associated with the Enterprise Employees shall be accounted for in the Operating Budget. Except as expressly set forth in this Agreement, all matters pertaining to the employment, supervision, compensation, promotion and discharge of Enterprise Employees and others engaged by Licensee or the PEO for the operation and maintenance of the Enterprise are the responsibility of Licensee or the PEO, applicable, provided, in each case, Licensee or the PEO obtain the prior written consent of Management Firm. Except as expressly set forth in this Agreement, all matters pertaining to the employment, supervision, compensation, promotion and discharge of Enterprise Employees and others engaged by Management Firm for the operation and maintenance of the Enterprise are the responsibility of Management Firm. The Licensee, Management Firm or the PEO, as applicable, shall comply with all Applicable Laws and regulations having to do with workmen’s compensation, social security, unemployment insurance, hours of labor, wages, working conditions, and other employer- employee related subjects in connection with all employees of the Enterprise.

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7.3.2.Management Firm shall recommend and Licensee shall adopt personnel policies and procedures that are mutually agreeable and which shall be applicable to the Enterprise Employees. These policies and procedures shall, at a minimum, establish fair and uniform standards for Enterprise Employees, and provide procedures for resolving disputes between supervisors and the Enterprise Employees.

7.4. Licensee Representative.

7.4.1.Licensee shall designate one or more Licensee Representatives who shall liaise with Management Firm, have full agency authority to approve those matters designated in this Agreement which require the approval or consent of Licensee (which approval shall not be unreasonably withheld, conditioned or delayed and shall conclusively be determined as the approval of Licensee), and have access to the Enterprise during normal operating hours and upon reasonable notice (but not less than twenty-four (24) hours). Notwithstanding the foregoing, the Licensee Representative shall not have any authority to direct or control the Services or any other management, administration, and/or operational activities of Management Firm or the Management Executives, and the Licensee Representative shall not interfere with Management Firm’s fulfillment of its management and operational responsibilities under this Agreement.

Licensee Representative’s responsibilities shall include, without limitation, the following:

7.4.1.1.To approve any activity, obligation, expenditure, or investment that is in excess of or not previously included as part of the Operating Budget for each Fiscal Year;

7.4.1.2.To inspect, on behalf of Licensee, all aspects of the Enterprise, including daily operations;

7.4.1.3.To verify all Enterprise revenues and income, in conjunction with the Management Firm;

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7.4.1.4.To obtain information from Management Firm reasonably requested by Licensee respecting Enterprise operations, and reporting the same to Licensee; and

7.4.1.5.To investigate any problems relating to the operation of the Enterprise of which Licensee has been made aware, and to report the same to Licensee.

7.4.2.Management Firm shall not direct or oversee the Licensee Representative(s) with respect to the performance and fulfillment of its duties as set forth in this Agreement.

7.4.3.If Licensee designates one or more Licensee Representatives pursuant to this Section 7.4, Licensee shall provide the name or names of such persons to Management Firm in writing. The initial Licensee Representatives shall be Tim Bossidy, or if Tim Bossidy is no longer employed or engaged by Licensee, Tom Lynch.

8. Banking and Bank Accounts.

8.1. Enterprise Bank Accounts. Management Firm shall recommend, and Licensee shall approve (with such approval not to be unreasonably withheld, conditioned or delayed), a bank or banks for the deposit and maintenance of funds from the operation of the Enterprise, and Licensee shall use reasonable efforts to establish Enterprise Bank Accounts in such bank(s), for the benefit of Licensee and in the Enterprise’s name, for the management and operation of the Enterprise in the course of business and as consistent with this Agreement. The Enterprise Bank Accounts shall include, but are not limited to, a Depository Account and a Disbursement Account, as described below.

8.2. Authorization for Enterprise Bank Accounts. Licensee shall execute any and all documents necessary to authorize Management Firm and its Management Executives to deposit funds into, withdraw funds from, and write checks from the Enterprise Bank Accounts for the purpose of operating, managing, and maintaining

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Enterprise, including, but not limited to, the payment of expenses and/or financial obligations incurred or undertaken by or on behalf of the Enterprise, consistent with the Operating Budget and Construction Budget or as otherwise authorized by this Agreement.

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8.3. Depository Account. All gross revenues and other proceeds connected with or arising from the operation of the Enterprise, and/or the sale of all products, services, and all other activities of the Enterprise shall be deposited in the Depository Account. Management Firm shall count all cash, checks, and/or other payments paid to the Enterprise at the close of business on the day that such cash, checks, and/or other payments are received and shall deposit the same into the Depository Account within twenty-four (24) hours after receipt.

8.4. Disbursement Account.

8.4.1.Management Firm shall, consistent with and pursuant to the Operating Budget or Construction Budget, have responsibility and authority for making all payments for Operating Expenses and other expenses permitted under this Agreement, Management Fees, debt service, consulting fees, and disbursements to Licensee all of which shall be made from the Disbursement Account as permitted under Applicable Laws.

8.4.2.Upon approval of the Operating Budget or Construction Budget, the Parties shall also agree on the minimum sum of money that shall be maintained by Licensee for each month of the Fiscal Year in the Disbursement Account to serve as the working capital for the Enterprise operations. Management Firm shall have the sole and exclusive responsibility for depositing that sum of money into the Disbursement Account on or before the first day of every month, and further ensuring that the Disbursement Account is at all times sufficiently funded.

8.4.3.If either Party believes the Disbursement Account should be funded with a larger or smaller amount of money than previously agreed upon by the Parties, that Party shall notify the other Party of this belief in writing, and the Parties shall work in good faith to agree on a new minimum balance for the Disbursement Account. Notwithstanding the foregoing, until and unless the Parties reach agreement on a new minimum balance, Management Firm shall not be relieved of its obligation to fund the Disbursement Account with the previously agreed upon amount on or before the first day of every month, or to ensure that the Disbursement Account is sufficiently funded at all times.

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8.5. Transfers Between Accounts. Management Firm shall have the authority to transfer funds between or among any Enterprise Bank Accounts as Management Firm determines in its sole discretion is necessary or desirable for the management or operation of the Enterprise.

8.6. Cash Disbursements. In the event Licensee is unable to establish a Depository Account, Disbursement Account or other Enterprise Bank Account in the manner contemplated by this Section 8 for any reason, Management Firm shall have exclusive responsibility for managing, maintaining and disbursing all cash receipts from the Enterprise on behalf of Licensee (including, without limitation, such cash receipts derived from all gross revenues and other proceeds connected with or arising from the Enterprise and/or the sale of all products, services, and other activities of the Enterprise) as if Licensee were able to establish such Enterprise Bank Accounts.

9. Design, Renovation, and/or Construction of the Facilities. Management Firm shall from time to time as agreed by Management Firm and Licensee, arrange for and manage the design, renovation, and/or construction of the Facilities housing the Enterprise, which design, renovation, and construction shall be in accordance with the following terms:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 9.1. Design Services. Management Firm shall, consistent with Applicable Laws and in accordance with the Construction Budget, use commercially reasonable efforts to supervise the necessary design services for the Facilities, including, but not limited to, architectural, engineering, and other professional design services, and the preparation of required drawings, specifications and other design submittals.

9.2. Construction Services. Management Firm shall, consistent with Applicable Laws and in accordance with the Construction Budget, provide, through itself or third-party general contractors or subcontractors selected by Management Firm and approved by Licensee (with such consent not to be unreasonably withheld, conditioned or delayed) the necessary supervision, labor, inspection, testing, start-up, material, equipment, machinery, temporary utilities, and other goods and services necessary to construct the Facilities and Management Firm shall coordinate all activities of any general contractor(s) or subcontractor(s) on behalf of Licensee.

9.3. Construction Budget. On or before a date mutually agreed upon by the Parties but not later than thirty (30) days prior to the commencement of any construction or renovation at the Facilities (or any design thereof, whichever is earlier), Management Firm will develop and submit to Licensee and any secured lender to Licensee for approval, a proposed a Construction Budget for such design, construction and renovation work.

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9.4. Approved Construction Budget. Within thirty (30) days of receiving the proposed Construction Budget, Licensee and any secured lender to Licensee shall approve the proposed Construction Budget, which approval shall not be unreasonably withheld, conditioned or delayed, or, after consultation with and agreement from Management Firm, approve the proposed Construction Budget with changes (either being the approved Construction Budget). The approved Construction Budget shall constitute authorization for Management Firm to incur obligations and make expenditures to design, construct and renovate the Facilities pursuant to such approved Construction Budget.

9.5. Modifications to Approved Construction Budget. If Management Firm determines, in its reasonable discretion, that it is necessary or desirable to exceed the approved Construction Budget in order to complete the construction or renovation project, or to otherwise comply with Applicable Law, Management Firm may cause the Enterprise to exceed the approved Construction Budget by up to ten percent (10%) in the aggregate by providing written notice to Licensee. Management Firm shall not cause the Enterprise to exceed the approved Construction Budget by more than ten percent (10%) in the aggregate without the prior written approval of Licensee and any secured lender to Licensee, which approval shall not be unreasonably withheld, conditioned or delayed. If Management Firm determines, in its reasonable discretion, that it is necessary or desirable for the Enterprise to incur obligations or make expenditures that are not included or otherwise addressed in the approved Construction Budget in order to complete the construction or renovation of the Facilities, or to comply with Applicable Law, Management Firm may cause the Enterprise to incur such obligations and/or make such expenditures up to twenty five thousand dollars ($25,000.00) per line item upon written notice to Licensee. Management Firm shall not cause the Enterprise to incur any unaccounted- for obligation or expenditure in excess of twenty five thousand dollars ($25,000.00) without the prior written approval of Licensee and any secured lender to Licensee, which approval shall not be unreasonably withheld, conditioned or delayed.

10. Fire and Safety. Subject to the Operating Budget and Construction Budget and to the extent of funds thereof, Management Firm shall cause the Facilities to be maintained and any renovations or repairs made in compliance with Applicable Laws regarding fire and safety.

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 11. Security. Subject to the Operating Budget and Construction Budget and to the extent of funds thereof, Management Firm shall supervise the design and implementation of commercially reasonable security for the operation of the Enterprise.

12. Interruption of the Business of the Enterprise.

12.1.Casualty or Condemnation. If, during the Term of this Agreement, the Facilities (or any substantial part thereof) is damaged or destroyed or is taken under the power (or threat of the power) of eminent domain, Management Firm and Licensee shall obtain the prior written approval of any secured lender of Licensee prior to restoring the Facilities to be substantially its condition prior to the casualty or taking, or to be reconstructed at a new location, in accordance with the provisions of Section 9 of this Agreement.

12.2.Suspension of Operations. If the Enterprise is prohibited or substantially prohibited from operating as a result of a decision of a court of competent jurisdiction, administrative hearing or proceeding, law enforcement action or otherwise by operation of Applicable Law that is not the result of Management Firm’s actions or failure to act, Licensee shall use its best efforts to restore Licensee’s legal authority to operate the Enterprise as promptly as possible and Management Firm shall be under no obligation to provide Services during any period when Licensee is legally prevented from operating the Enterprise. If, after good faith efforts, Licensee is unable to obtain restoration of Licensee’s legal authority to operate the Enterprise within one hundred eighty (180) days after the suspension of the operations of the Enterprise, and such suspension was not the result of Management Firm’s actions or failure to act, either Party may terminate this Agreement upon written notice to the other Party.

12.3.Tolling of the Term. If the operation of the Enterprise is suspended under the circumstances described in Section 12.1 or 12.2 above, the Initial Term or Renewal Term during which such suspension shall have occurred shall be extended by the same number of days of such suspension.

12.4.Modifications. If it is determined that the terms of this Agreement will prohibit or otherwise forestall Licensee from continuing its operations, then the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible; provided, that nothing herein shall relieve a Party from its obligations hereunder without the express written consent of the other Party.

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13. Licensee Obligations, Representations and Warranties. During the Term of this Agreement, the Licensee shall fulfill the following obligations relative to the operation of the Enterprise, in addition to the other obligations set forth elsewhere in this Agreement, and be ultimately responsible for the operations of the Enterprise as required by Applicable Law:

13.1.Compliance with Applicable Law. Licensee shall at all times comply with all Applicable Laws and of the rules and regulations of all applicable governmental authorities relating to the licensing and operation of the Enterprise.

13.2.Licensing and Accreditation. Licensee shall maintain all licenses, permits, authorizations, certifications, and accreditations, including but not limited to those applicable to controlled substances, that are necessary or appropriate to operate or manage the Enterprise pursuant to Applicable Law for the entire Term of this Agreement.

13.3.Authority. Licensee is duly incorporated or organized, validly existing and (to the extent applicable) in good standing under the laws of the jurisdiction of its incorporation or organization and has all necessary power and authority to enter into this Agreement, to carry out its obligations hereunder and to perform the actions contemplated hereby. The execution and delivery of this Agreement by Licensee and the performance by Licensee of its obligations hereunder have been duly authorized by all requisite action on the part of Licensee. This Agreement has been duly executed and delivered by Licensee and (assuming

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document due authorization, execution and delivery by the other parties signatory hereto) constitutes a legal, valid and binding obligation of Licensee enforceable against it in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (iii) to the extent the indemnification provisions contained in this Agreement may be limited by applicable federal or state laws.

13.4.No Conflict. Assuming that all consents, approvals, authorizations have been obtained, the execution, delivery and performance of this Agreement by Licensee does not and will not (a) violate, conflict with or result in the breach of any provision of its charter or bylaws (or similar organizational documents), (b) conflict with or violate any state or local law, ordinance, governmental regulation or governmental order applicable to Licensee or any of its assets, properties or businesses or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights pursuant to, any contract, agreement or arrangement by which Licensee is bound, except to the extent that any such conflict or other event under (b) or (c) above would not prevent or materially hinder the consummation of the transactions contemplated by this Agreement.

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13.5.Insurance. Licensee has in full force and effect insurance policies concerning such casualties as set forth on Schedule 13.5 attached hereto.

14. Insurance. For the entire Term of this Agreement, Management Firm shall maintain, or cause its agents to maintain, with responsible insurance carriers admitted and licensed to do business in applicable jurisdiction, commercial general liability, property and casualty, professional liability and other insurance coverage that is reasonably available and customary for Licensee’s business, in amounts that are adequate under Applicable Law and consistent with industry standards, for the entire Term of the Agreement. Each such insurance policy shall name Licensee as the primary insured and Management Firm and Licensee’s secured lender as additional insured and loss payees. In addition to the foregoing, all Personnel who in any way handle funds for the Enterprise shall be covered under a crime and theft insurance policy arranged by Management Firm. Such insurance shall name the Licensee, the Enterprise, the Facilities, Management Firm, Management Executives and Management Firm’s Affiliates as insured parties. Management Firm, shall also arrange for workers’ compensation insurance for all Enterprise employees in accordance with Applicable Law and consistent industry standards for the entire Term of the Agreement. Management Firm shall from time to time consult with risk managers, insurance brokers and/ or other independent insurance specialists to periodically review the sufficiency of insurance coverage for the Enterprise.

15. Compensation. Licensee shall compensate Management Firm for the Services as follows:

15.1.Management Fee. So long as Licensee is not in default of any of its loan agreements, Licensee shall pay Management Firm a reasonable monthly “Management Fee” for the Services provided as set forth in this Section 15 and calculated as provided in Exhibit A attached hereto. In the event that Licensee is in default under any of its loan agreements, the Management Fee shall continue to accrue, but shall be subject to any lender’s senior right to collect payments under such loan agreement in connection with such default, and Licensee shall pay such Management Fee as soon as permissible in accordance with the terms of such loan agreements. The Management Fee is in addition to the other compensation payable to Management Firm under other provisions of this Agreement.

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Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 15.2.Management Firm’s Statement of Management Fee and Payment. On or before the fifteenth (15th) day of each calendar month during a Fiscal Year, Management Firm shall provide Licensee with a Management Fee Statement showing the amount of the Management Fee that is due from Licensee to Management Firm for the previous month during the Term, as well as any additional fees or other costs specified in this Agreement that have not previously been billed. The Management Fee shall be solely payable out of the Enterprise Bank Accounts and Management Firm may withdraw any undisputed Management Fee from the Enterprise Bank Accounts on or before the last day of each calendar month of each Fiscal Year during the Term. In the event there are insufficient funds to pay the Management Fee out of the Enterprise Bank Accounts (after taking into consideration all operational expenses of the Enterprise), the unpaid amount shall be added to the Management Fee payable with respect to the following month during the Term.

16. Use of Marks.

16.1.MedMen Intellectual Property.

16.1.1.Management Firm acknowledges that nothing contained in this Agreement shall grant Management Firm any right, title or interest in, including any license for the use of, any of Licensee’s or any parent of Licensee’s intellectual property or proprietary information, which shall include but not be limited to (i) any trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing, including but not limited to “MedMen NY,” “MM Enterprises” and “MedMen”; (ii) internet domain names, whether or not trademarks, registered in any top- level domain by any authorized private registrar or governmental authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook, Instagram, Tik Tok and other social media companies and the content found thereon and related thereto, and URLs; (iii) works of authorship, expressions, designs and design registrations, whether or not copyrightable,including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (iv) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other governmental authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models) (collectively, the “MedMen Intellectual Property”).

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16.1.2.Subject to receipt of prior approvable from the DOH, Management Firm shall remove all references to “MedMen” or other MedMen Intellectual Property in the signage used by the Licensee, including, without limitation, any references to “MedMen” or other MedMen Intellectual Property on the websites of Management Firm or the Licensee, and shall not otherwise in any way indicate any affiliation with MedMen or its Affiliates unless pursuant to a written agreement between Licensee and Management Firm.

16.1.3.In the event of termination, cancellation, or expiration of this Agreement, for whatever reason, Management Firm shall not hold itself out as, or continue operations of Management Firm by using any of the MedMen Intellectual Property, nor will Management Firm use any of the MedMen Intellectual Property without the prior written consent of Licensee and any license to use such MedMen Intellectual Property granted hereunder shall terminate immediately and automatically without any further action of either Party. Management Firm shall, within thirty (30) days after the effective date of termination, cancellation or expiration of this Agreement, furnish Licensee with reasonably acceptable evidence of Management Firm’s compliance with the foregoing obligations.

16.2.Management Firm License. Management Firm hereby grants to Licensee a limited, non- exclusive, royalty free and revocable right and non-assignable license to use the Management Firm Marks during the Term

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document for use solely in connection with the Enterprise. Management Firm shall not receive any royalties for such license above the compensation payable to Management Firm under this Agreement.

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16.2.1.Licensee acknowledges and recognizes Management Firm’s exclusive right of ownership in the Management Firm Marks (including all modifications, improvements and derivative works thereof), and any other similar rights or registrations now held, or held in the future, or applied for, by Management Firm. Licensee shall not jeopardize or otherwise interfere with the rights in the Management Firm Marks through action or through failure to take action.

16.2.2.Licensee acknowledges and recognizes that if Licensee makes any improvements or other contributions to the Management Firm Marks which are authorized or unauthorized by Management Firm during the Term of this Agreement, Licensee will immediately disclose all such improvements, contributions and other derivative works to Management Firm. Licensee hereby assigns to Management Firm, for no consideration, any and all rights Licensee may have or acquire in or to any improvements, contributions or other derivative works pertaining to the Management Firm Marks. Licensee agrees to promptly execute any and all documents and to do all other things reasonably requested by Management Firm in order to vest more fully in Management Firm any and all legal and equitable rights in and to, and secure intellectual property protection of the Management Firm Marks, including improvements, contributions and derivative works related thereto. If Management Firm is unable, after reasonable efforts, to secure Licensee’s signature as required under this Agreement, Licensee hereby irrevocably designates and appoints Management Firm and its duly authorized agents as Licensee’s agent and attorney-in-fact, to act for and in Licensee’s behalf to execute and file any and all such documents and to do all other lawfully permitted acts with the same legal force and effect as if executed by Licensee. Licensee will not take any action or fail to take any action, or permit or aid any other person or entity in taking any action or failing to take any action, that is inconsistent or conflicts with Management Firm’s ownership of the Management Firm Marks.

16.2.3.Licensee hereby disclaims any legal or equitable rights or interests in any of the Management Firm Marks, regardless of any legal protection afforded thereto, except as specifically provided in this Agreement.

16.2.4.Licensee shall not use any of the Management Firm Marks without the prior written consent of Management Firm.

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16.2.5.In the event of termination, cancellation, or expiration of this Agreement, for whatever reason, Licensee shall not hold itself out as, or continue operation of the Enterprise by using any of the Management Firm Marks, nor will Licensee use any of the Management Firm Marks without the prior written consent of Management Firm and the license to use such Management Firm Marks granted hereunder shall terminate immediately and automatically without any further action of either Party. Licensee shall, within thirty (30) days after the effective date of termination, cancellation or expiration of this Agreement, furnish Management Firm with reasonably acceptable evidence of Licensee’s compliance with the foregoing obligations.

16.3.Signs. Subject to Section 16.1 above, Management Firm may, upon written consent of Licensee and in accordance with Applicable Law, erect, install, and any and all signs that the Parties mutually determine are necessary or desirable in, on, or about the Facilities, or at any other location, including but not limited to signs bearing one or more of the Management Firm Marks.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 16.4.Litigation Involving MedMen Intellectual Property and the Management Firm Marks. In the event either Party is the subject of any litigation action brought by any party seeking to restrain the use of MedMen Intellectual Property, Licensee shall indemnify Management Firm for all losses arising thereunder, and such litigation or action shall be defended and controlled entirely by Licensee or its Affiliate, at Licensee or such Affiliate’s sole cost and expense. In the event either Party is the subject of any litigation action brought by any party seeking to restrain the use of the Management Firm Marks, Management Firm shall indemnify Licensee for all losses arising thereunder, and such litigation or action shall be defended and controlled entirely by Management Firm or its Affiliate, at Management Firm or such Affiliate’s sole cost and expense.

16.5.Material Term. Each Party acknowledge that its agreement to utilize the MedMen Intellectual Property and Management Firm Marks as limited pursuant to this Agreement is a material term of this Agreement, and its breach of that term may the other Party irreparable harm for which damages at law may not be an adequate remedy and the Parties agree that the other Party shall have, in addition to any other rights or remedies available to it at law or in equity, the right to seek injunctive relief or specific enforcement of the provision of this Section 16 by a court of competent jurisdiction.

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17. Confidential and Proprietary Information. The Parties acknowledge and agree to be bound by that certain Mutual Non-Disclosure Agreement dated as of August 27, 2020 (the “NDA”) entered into by the Affiliates of the Parties which, NDA shall survive the Term of this Agreement.

18. Reserved.

19. Term and Termination

19.1.Term. The initial term of this Agreement shall commence on the Effective Date and remain in effect until December 31, 2021 (the “Initial Term”). This Agreement will automatically renew for an additional six (6) month Renewal Term unless terminated by the Parties in accordance with the provisions set forth herein.

19.2.Termination. This Agreement may only be terminated by a Party as follows:

19.2.1.By written agreement between the Parties.

19.2.2.[Reserved.]

19.2.3.Either Party may terminate this Agreement by providing written notice to the other Party at least thirty (30) days prior to the end of the Initial Term or the Renewal Term, if any.

19.2.4.If one Party materially breaches this Agreement, which breach cannot reasonably be cured or remains uncured for thirty (30) days after the non-breaching Party provides written notice of the breach to the breaching Party, the non-breaching Party may terminate this Agreement within ten (10) days of the expiration of such cure period by providing written notice of such termination to the breaching Party;

19.2.5.Management Firm may terminate this Agreement immediately if it determines in its reasonable discretion that the rendition of the Services pursuant to this Agreement does or reasonably could be determined to violate any Applicable Laws applicable to the Parties, their Affiliates and/or the Enterprise, and enforcement for violation of such Applicable Laws is likely to result in substantial civil or criminal liability or otherwise have a material and detrimental effect on the Parties, the Enterprise and/or the continued rendition of the Services; or

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19.3.No Waiver of Legal Remedies; Survival of Obligations. The expiration or termination of this Agreement shall not act as a waiver of any claims, suits, or causes of action of any kind that either Party may have against the other arising out of this Agreement or the operation or management of the Enterprise. The terms of Sections 16, 17, 18, 19, 20.2, 22 and 25 shall survive any expiration or termination of this Agreement.

19.4.Obligations Upon Termination. Upon termination of this Agreement, Management Firm shall forthwith:

19.4.1.Surrender and deliver to Licensee possession of the Facilities and all income of the Facilities and other monies, property or assets of Licensee (after deduction for any unpaid Management Fees) under Management Firm’s actual or constructive control, including but not limited to all rights in and to the Enterprise Bank Accounts; and

19.4.2.Deliver to Licensee all materials, equipment, tools and supplies, keys, leases, contracts, and documents and such other accountings, data, reports, papers, and records pertaining to this Agreement and the operation of the Enterprise that are the property of Licensee and which are in Management Firm’s actual or constructive control.

20. Accounting and Books of Account.

20.1.Operating Statements. Management Firm shall, on a quarterly and annual basis, prepare and provide Operating Statements to the Licensee for review by Licensee. The Operating Statements shall provide summary and detailed back-up information, in a format mutually agreeable to the Parties. Such Operating Statements shall include, at a minimum, the Operating Budget and Construction Budget projections as comparative statements, and which will include comparative statements from the comparable period for the prior year of all revenues, and all other amounts collected and received, and all deductions and disbursements made therefrom in connection with the Enterprise, including a quarterly cash flow statement and balance sheet.

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20.2.Books of Account. Management Firm shall maintain full and accurate Books of Account and other records reflecting the daily operations of the Enterprise, in a format mutually agreeable to the Parties. Licensee shall have access to the Books of Account and other records reflecting the daily operations of the Enterprise during normal business hours and upon reasonable notice (at least twenty-four (24) hours) to Management Firm, and both Licensee and Management Firm shall have the unlimited right to inspect, examine, and copy all such Books of Account and associated records, including any records maintained at other locations.

20.3.Annual Audit. A reputable independent certified public accounting firm (other than a firm which currently audits Management Firm) shall perform one or more annual audits of the Books of Account of the Enterprise, and of all contracts for supplies and/or services reflecting Operating Expenses if the Parties determine it is necessary and appropriate or otherwise required by Applicable Law. Such certified public accounting firm shall be mutually selected by the Parties. The Parties, in consultation with the certified public accounting firm, shall determine the scope of the audit, which, at a minimum, will meet all Applicable Laws. Management Firm shall meaningfully consult Licensee during the audit and provide comment on the scope thereof, and work in good faith to incorporate and/or accommodate the substance of Licensee’s comments. Once completed, the audit shall be immediately provided to Licensee and Management Firm, and shall, if necessary, be provided to any applicable governmental agency as may be required by Applicable Law. The certified public accounting firm shall not be working on a contingency fee basis, and the audit shall be conducted during normal business hours at offices and hours designated by Management Firm. The result of any such audit shall be kept confidential and Management Firm shall not supply any information obtained as a result of such audit to any other client of Management Firm or representatives and affiliates of any other client of Management Firm or to any third party except on a confidential basis to Licensee’s legal counsel, accountants or as otherwise required by Applicable Law. In the course of any audit, Management Firm may request from Licensee from time to time, and Licensee

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shall promptly provide to Management Firm, copies of all calculations and related work papers prepared by the accountant in the course of the applicable audit and relating to any disputed items. Licensee acknowledges, each time prior to the Management Firm granting the certified public accounting firm the right to audit, that the Licensee will promptly supply all correspondence and results of the audit, including but not limited to engagement agreements, relating to the audit, the accountant and the Licensee.

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21. Independent Contractor Status. Nothing in this Agreement shall create or shall be deemed to create any joint venture or partnership between the Parties, nor shall anything in this Agreement render or be construed to render any of employees or agents of Management Firm to be employees or agents of Licensee or any employee or agent of Licensee to be considered an employee or agent of Management Firm. This Agreement does not provide any of Management Firm’s employees or agents with any rights or benefits to which an employee or agent of Licensee may be entitled or provide any of Licensee’s employees or agents with any rights or benefits to which an employee or agent of Management Firm may be entitled. Each Party acknowledges exclusive responsibility for and indemnifies the other Party against withholding and payment of any and all taxes, including but not limited to FICA taxes, worker’s compensation insurance premiums, unemployment, state and federal income taxes, and any such withholding payments required under state or federal law, as well as vacation pay, paid sick leave, retirement benefits, and employee benefits of any kind whatsoever for all Personnel on their payroll, and neither Party shall be liable for any of the foregoing with regard to Personnel on the other Party’s payroll.

22. Dispute Resolution. The Parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of the State of New York and to the jurisdiction of the United States District Court for the Southern District of New York for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of State of New York or the United States District Court for the Southern District of New York, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.1 ______1 RF – Arbitration TBD

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22.1.Attorney’s Fees. In the event of a dispute of the Parties with respect to this Agreement resulting in litigation, the prevailing Party shall be entitled to recover from the other Party all reasonable costs, including, but not limited to attorneys’ fees reasonably incurred by such Party.

22.2.Performance During Dispute. In the event of any claim, controversy, disagreement, or dispute between the Parties, including but not limited to a dispute as to the validity of this Agreement, the Parties shall continue their performance of this Agreement.

22.3.Notice and Right to Cure. The Parties agree that prior to utilizing the dispute resolution mechanism provided for in this Agreement, the Party claiming the breach of damage shall give written notice of the alleged breach or damage to the other Party, and the Parties shall meet in good faith to cure any breach and resolve any differences, provided, however, that such right of notice and opportunity to cure shall not extend any timetables set forth elsewhere in this Agreement or in Applicable Law or for a period of thirty (30) days without the written consent of the Parties to continue such opportunity to cure.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 23. Notices. All notices, demands, consents and reports provided for in this Agreement which are required to be in writing shall be given to the parties at the addresses set forth below or at such other address as they individually may specify thereafter in writing:

FOR MedMen NY Inc. LICENSEE: c/o: MM Enterprises USA, LLC 10115 Jefferson Blvd., Culver City, CA 90232 Attention: Dan Edwards Email: [email protected]

FOR MANAGEMENT FIRM: [ ] 1411 Broadway, 16th Floor New York, NY 10018 Attention: [Name] Email: [Name]

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Such notice or other communication may be mailed by United States registered or certified mail, return receipt requested, postage prepaid and may be deposited in a United States Post Office or a depository for the receipt of mail regularly maintained by the post office. Such notices, demands, consents and reports may also be delivered by hand, overnight delivery, email or similar electronic communication or by any other method or means permitted by Applicable Law. Notice given in accordance with the foregoing shall be deemed received when personally received or forty-eight (48) hours after placed in the mail in accordance with the foregoing requirements.

24. Taxes. In accordance with Section 21 Management Firm shall be solely responsible for the payment of any and all taxes imposed on Management Firm in connection with the performance of the Services, including but not limited to, FICA taxes, worker’s compensation insurance premiums, unemployment, state and federal income taxes, and any such withholding payments required under state or federal law, as well as vacation pay, paid sick leave, retirement benefits, and employee benefits of any kind whatsoever for all Personnel on Management Firm’s payroll (but expressly not for any Personnel that are employees of Licensee). Upon Licensee’s written request, Management Firm shall provide evidence, reasonably satisfactory to Licensee, of compliance with this Section 24, including, but not limited to, evidence of workers’ compensation coverage and payment of employment-related taxes. Licensee shall be responsible for any and all taxes imposed on Licensee in connection with its ownership of the Enterprise, including but not limited to, FICA taxes, worker’s compensation insurance premiums, unemployment, state and federal income taxes, and any such withholding payments required under state or federal law, as well as vacation pay, paid sick leave, retirement benefits, and employee benefits of any kind whatsoever for all Personnel that are employees of Licensee. Upon Management Firm’s written request, Licensee shall provide evidence, reasonably satisfactory to Management Firm, of compliance with this Section 24, including, but not limited to, evidence of workers’ compensation coverage and payment of employment-related taxes. Payments of Licensee’s taxes under this Section 24 shall be made out of the Enterprise Bank Accounts prior to any withdraw for Management Fees.

25. General Provisions

25.1.Governing Law. The validity and interpretation of this Agreement and all disputes arising under or in connection with this Agreement shall be governed by the laws of the State without regard to any conflicts of law. Nothing in this Section 25.1 is intended to subject this Agreement to any franchise or similar law, rule or regulation of the State or any jurisdiction to which it otherwise would not be subject.

25.2.Authority to Execute and Perform Agreement. Licensee and Management Firm represent and warrant to each other that they each have the full power and authority to execute this Agreement and to be bound by and perform the terms herein.

25.3.Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

25.4.Entire Understanding. The Parties agree that this Agreement contains the entire understanding between the Parties regarding the subject matter herein, and there are no other understandings, representations, or agreements, written or oral, other than as set forth in this Agreement.

25.5.Amendment. The Parties agree that this Agreement may be amended from time to time by the Parties, provided that no modification, amendment, or waiver of any of term or condition of this Agreement shall be effective unless it is agreed upon by both Parties in writing, and signed by both Parties.

25.6.Assignment. This Agreement, or any part hereof, shall not be subject to assignment or transfer by either Party without the express written consent of the other Party and subject to any approvals required by Applicable Law. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assignees subject to Applicable Law.

25.7.No Payment for Referrals. Nothing in this Agreement or in any other written or oral agreement between the Parties, or any consideration offered or paid in connection with this Agreement, contemplates or requires the admission or referral of any Patron to Licensee, the Enterprise, or Management Firm. Any consideration specified in this Agreement is consistent with what the Parties reasonably believe, after good faith and arms-length negotiation, to be fair market value for the Services provided hereunder and shall not be conditioned on or vary based upon the volume or value of any referrals or business otherwise generated directly or indirectly to any other party, or upon any requirement that any party make or influence referrals or otherwise generate business for the other. No consideration paid or provided hereunder is intended to be, nor shall it be construed to be, an inducement or payment for the referral of Patrons by any party to another party. In addition, the amounts charged hereunder do not include any discount, rebate, kickback or reduction in charge and are not intended to be, nor shall they be construed to be, an inducement or payment for referral of Patrons to any party to this Agreement.

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25.8. Waiver. No delay or omission by either Party to exercise any right or remedy under this Agreement shall be construed to be either acquiescence or waiver of the ability to exercise any right or remedy in the future. Any waiver of any terms and conditions hereof must be in writing and signed by the Parties hereto. A waiver of any term or condition hereof shall not be construed as a future waiver of the same or any other term or condition hereof.

25.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute one and the same instrument. This Agreement may also be executed by facsimile or electronic (including .pdf) signatures, which shall be as effective as original signatures.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 25.10.Cumulative of Remedies. The various rights, options, elections, powers, and remedies of the respective parties hereto contained in, granted, or reserved by this Agreement, are in addition to any others that said parties may be entitled to by law; shall be construed as cumulative; and no one of them is exclusive of any of the others or of any right or priority allowed by law.

25.11.Force Majeure. If either Party is delayed or prevented from fulfilling any of its obligations (other than any payment obligations) under this Agreement by Force Majeure, the Party shall not be liable under this Agreement for the delay or failure.

25.12.Headings. The headings for each section and subsection in this Agreement are intended for convenience only.

25.13.Patron Records. At all times during the Term, and notwithstanding anything to the contrary contained in this Agreement, the Parties shall strictly enforce each Patron’s right to confidentiality and security of his or her health and patient information in accordance with the Health Insurance Portability and Accountability Act of 1996 and similar Applicable Laws.

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25.14.No Public Statement or Information Disclosures. The Parties will not make, permit to be made, or aid others in making any public announcement or statement relating to the subject matter of this Agreement, the existence of this Agreement, the action or inaction of the Parties pursuant to this Agreement, or otherwise regarding the Parties, their agents, Affiliates, or businesses; provided, however, the Parties may make any public disclosure they believe in good faith is required by Applicable Law, provided that each Party will use its best efforts to advise the other Party prior to making the disclosure and will seek confidential treatment of any information disclosed. For purposes of the foregoing, a “public announcement or statement” includes a statement to any person or entity that is not a party to this Agreement whether or not that person or entity will or may disseminate the information.

25.15.Periods of Time. Whenever any determination is to be made or action is to be taken on a date specified in or calculated under this Agreement, if such date shall fall on a Saturday, Sunday or legal holiday under the laws of the United States of America, then in such event said date shall be extended to the next day which is not a Saturday, Sunday or legal holiday.

25.16.Time of the Essence. Time is of the essence in the performance of this Agreement.

25.17.Indemnification. Management Firm shall, to the fullest extent allowable by Applicable Law, indemnify, defend (using counsel acceptable to Licensee) and hold harmless Licensee and its Affiliates and each of their respective officers, directors, employees, stockholders, partners, agents, lenders, representatives, and contractors, and each of their respective successors and assigns, from and against any and all liabilities, obligations, claims, losses, causes of action, suits, proceedings, awards, judgments, settlements, demands, damages, costs, expenses, fines, penalties, deficiencies, taxes and fees, (including without limitation the fees, expenses, disbursements and investigation costs of attorneys and consultants) arising directly or indirectly out of or resulting in any way from or in connection with the management of the Enterprise by Management Firm, the use of any forms of agreement, software, intellectual property or document for the Enterprise, or the performance or exercise by Management Firm of the duties, obligations, powers, the violation of Applicable Law by the Management Firm (including without limitation any violation that results in the revocation or loss of any license and any employment related or wage and hour claims arising after the Effective Date) or authorities herein, or hereafter granted to Management Firm, unless such claims, losses, causes of action, suits, proceedings, awards, judgments, settlements, demands, damages, costs, expenses, fines, penalties, deficiencies, taxes and fees, (including without limitation the fees, expenses, disbursements and investigation costs of attorneys and consultants) arise as a result of Licensee’s gross negligence, intentional misconduct, breach of this Agreement or violation of Applicable Law. Furthermore, Licensee shall, to the fullest extent allowable by Applicable Law, indemnify, defend (using counsel acceptable to Management Firm) and hold harmless Management Firm and its Affiliates and each of their respective officers, directors, employees, stockholders, partners, agents, lenders, representatives, and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document contractors, and each of their respective successors and assigns, from and against any and all liabilities, obligations, claims, losses, causes of action, suits, proceedings, awards, judgments, settlements, demands, damages, costs, expenses, fines, penalties, deficiencies, taxes and fees, (including without limitation the fees, expenses, disbursements and investigation costs of attorneys and consultants) arising directly or indirectly out of any act or omission of Licensee or its Affiliate constituting gross negligence, intentional misconduct, breach of this Agreement or violation of Applicable Law. The indemnities in this Section 27.15 shall survive the expiration or termination of this Agreement.

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25.18.Defense. Each Party shall have the right to bring and/or defend and/or settle any claim or legal action brought against such Party (and/or its Affiliates) in connection with the Enterprise, provided that such Party shall promptly notify the other party of any such action arising in connection with the Enterprise.

25.19.Exclusion of Certain Damages. EACH PARTY AGREES THAT EXCEPT FOR THE INDEMNITY OBLIGATIONS ARISING UNDER THIS AGREEMENT INCLUDING THIS SECTION 25, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, EXEMPLARY, SPECIAL, TREBLE, PUNITIVE, INCIDENTAL, OR RELIANCE DAMAGES, INCLUDING ANY LOST PROFITS, ARISING FROM OR RELATING TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, EVEN IF SUCH PARTY KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF, OR COULD REASONABLY HAVE PREVENTED, SUCH DAMAGES.

25.20.Preparation of Agreement. This Agreement was drafted and entered into after careful review and upon the advice of competent counsel. It shall not be construed more strongly for or against either Party.

26. Legal Compliance and Condition of Performance.

26.1.The Parties represent and agree that they will use all reasonable and appropriate efforts to assure that those activities required or undertaken by them, their respective employees, and/or their respective agents pursuant to the terms of this Agreement are in compliance with Applicable Law, including, but not limited to, statutes and regulations that specifically apply to licensed marijuana dispensaries, statutes and regulations that specifically apply to the production, distribution, and/or use of controlled substances or narcotics and all applicable standards and rules of licensing and accrediting agencies with jurisdiction over either Party.

26.2.The Parties further agree that the validity, enforceability, and performance of this Agreement is expressly conditioned upon the lawfulness of owning and/or operating a business engaged in the growing, production, and/or distribution of marijuana, including the Enterprise, under Applicable Law.

26.3.Upon promulgation of any new Applicable Laws or amendments to Applicable Laws which pose or may pose a significant regulatory or other legal risk to either Party, or if it is determined by an authority having jurisdiction over the Enterprise that a term or provision contained herein is noncompliant with an existing Applicable Law, the Parties shall negotiate in good faith and shall amend this Agreement to the least extent possible while still satisfying Applicable Law.

26.4.The Parties acknowledge their respective understandings that the owning, operating, and/or conducting of the Enterprise, Facilities, and Services as described in this Agreement including, but not limited to, the use of marijuana, may be lawful pursuant to State and local laws, but unlawful pursuant to federal law. The Parties acknowledge and agree that they shall proceed with this Agreement only upon obtaining all required licenses and permits under Applicable Law and acceptable assurance from appropriate government and/or law enforcement officials that such officials do not intend to prosecute any of the foregoing activities as unlawful under federal law. If at any time the Parties learn from government or law enforcement officials that such activities required or undertaken by either Party pursuant to this Agreement will be prosecuted as unlawful under federal law, this Agreement may be terminated by either Party in accordance with Section 12.2 after the applicable periods set forth therein.

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IN WITNESS WHEREOF, the parties by their duly authorized representatives have entered into this Agreement effective as of the Effective Date first above written.

“Licensee”

MedMen NY Inc., a New York corporation

By: Name: Title:

“Management Firm”

By: Name: Title:

[Signature Page to Management Agreement]

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EXHIBIT A

MANAGEMENT FEES

The Management Fee shall be calculated and payable on a monthly basis in accordance with Section 15 hereof as follows:

Thirty-five percent (35%) of the Enterprise’s Earnings Before Interest, Taxes, Depreciation, & Amortization (“EBITDA”) and Management Fee.

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Exhibit B

Charter Amendment

CERTIFICATE OF INCORPORATION

MEDMEN NY, INC.

(Under Section 805 of the Business Corporation Law)

1. The name of the corporation is MedMen NY, Inc. (the “Corporation”). The Corporation originally was formed under the name “Bloomfield Industries Inc.”

2. The Corporation’s Certificate of Incorporation was filed in the office of the New York Department of State on March 12, 2015 and its Restated Certificate of Incorporation was filed in the office of the New York Department of State on June 23, 2015 (collectively, the “Certificate of Incorporation”).

3. The Certificate of Incorporation of the Corporation is hereby amended to provide for an increase in the aggregate number of shares of Common Stock the Corporation is authorized to issue from 400 shares of Common Stock without par value to 10,000 shares of Common Stock without par value. The Corporation’s Certificate of Incorporation is hereby amended to reflect the foregoing by deleting Article IV of the Certificate of Incorporation of the Corporation in its entirety and substituting the following in lieu thereof:

“ARTICLE IV

The Company is authorized to issue one class of shares to be designated Common Stock. The total number of shares of Common Stock the Company has authority to issue is 10,000, with no par value per share.”

4. The amendments to the Certificate of Incorporation effected hereby have been duly adopted by the affirmative vote of the Board of Directors of the Corporation by written consent in accordance with the provisions of Section 708(b) of the Business Corporation Law, followed by the unanimous written consent of the holders of all outstanding shares in accordance with the provisions of Section 615 of the Business Corporation Law.

IN WITNESS WHEREOF, the undersigned has signed this Certificate of Amendment this ____ day of ______, 20 ____ .

MEDMEN NY, INC.

By: Name: Title:

Exhibit C

Advance Agreement

Between

MedMen NY, Inc., as Borrower,

and

AWH New York, LLC, as Lender

February 25, 2021

WORKING CAPITAL ADVANCE AGREEMENT

This Working Capital Advance Agreement (this “Agreement”) dated February 25, 2021 is made between MedMen NY, Inc., a New York corporation (“Borrower”), and AWH New York, LLC, a New York limited liability company (“Lender”).

WHEREAS, Lender and Borrower are party to the Investment Agreement (the “Investment Agreement”), dated as of the date hereof, pursuant to which the Borrower has agreed, subject to the terms thereof, to issue and Lender has agreed to purchase, subject to the terms thereof, shares of capital stock of the Borrower (the “Shares”).

WHEREAS, pursuant to Section 5.10 of the Investment Agreement, Lender is obligated to extend advances to or for the benefit of Borrower for Operating Costs (as defined in the Investment Agreement) upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the above, and the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1 DEFINITIONS

1.1 General. The definition of each agreement, document, and instrument set forth in this Agreement shall be deemed to mean such agreement, document, or instrument as amended, restated, or modified from time to time. Words used in this Agreement, regardless of the number or gender specifically used, shall be deemed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. The word “including” shall be deemed to mean “including, without limitation.” The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. An Event of Default shall be deemed to be continuing and to exist until it is waived in writing by Lender. Any accounting term used, but not specifically defined in this Agreement, shall be construed in accordance with GAAP. All other capitalized words and phrases used herein and not otherwise specifically defined herein shall have the respective meanings assigned to such terms in the Uniform Commercial Code in effect in the State of New York from time to time.

1.2 Defined Terms. In addition to the definitions set forth elsewhere in this Agreement, as used in this Agreement, the following terms have the following meanings:

(a) “Advances” means term loans made by Lender to Borrower on or after the date hereof from time to time as part of the Loan.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) “Applicable Laws” means, collectively, all federal, state and local laws, statutes, codes, ordinances, rules and regulations applicable to the Loan, Borrower or Lender, other than the federal Controlled Substances Act as it relates to the distribution, possession and sale of cannabis products.

(d) “Business Day” means any day (other than a Saturday, Sunday, or legal holiday) on which commercial banks are authorized or required to be closed in New York, New York.

(e) “Event of Default” is defined in Article 8.

(f) “GAAP” means U.S. generally accepted accounting principles, consistently applied.

(g) “Indebtedness” means (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures, notes or other similar instruments or debt securities, (iii) all obligations under swaps, hedges or similar instruments, (iv) all obligations for the deferred purchase price of any property or services (other than trade accounts payable and accrued expenses incurred in the ordinary course of business), including earn-outs, payments under non-compete agreements and seller notes, (v) all obligations created or arising under any conditional sale or other title retention agreement, (vi) all obligations secured by a Lien, (vii) all obligations under leases which shall have been or should be, in accordance with GAAP, recorded as capital or finance leases, (viii) all obligations in respect of bankers’ acceptances or letters of credit, (ix) all obligations of any Person which are directly or indirectly guaranteed by Borrower, and (x) all interest, principal, prepayment penalties, premiums, fees or expenses due or owing in respect of any item listed in clauses (i) through (ix) above,

(h) “Investment Agreement” is defined in the recitals to this Agreement.

(i) “Lender” is defined in the recitals to this Agreement.

(j) “Liability” means any liability, indebtedness or other obligation of any nature whatsoever (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due).

(k) “Lien” means security interests, mortgages, liens, pledges, deeds of trust, charges, easements, reservations, restrictions, servitudes, rights of way, options, rights of first offer or refusal, community property interests, equitable interests, conditional sale or other title retention agreements, and other encumbrances of any nature, and any agreement to provide any of the foregoing, whether or not relating to the extension of credit or the borrowing of money, whether imposed by contract, law, equity or otherwise.

(l) “Line Amount” means initially $10,000,000, which amount may be increased up to $17,500,000 at the election of Lender and must be increased to the extent Lender is obligated to increase the amount of Advances to pay Operating Costs in accordance with Section 5.10 of the Investment Agreement.

(m) “Loan” means the aggregate outstanding Advances made by Lender to Borrower in accordance with this Agreement.

(n) “Loan Documents” means this Agreement, the Note, any guarantee by a subsidiary of Borrower and any other document evidencing, governing, guaranteeing or securing the Loan, including the security agreement, mortgage and intercreditor agreement referred to in Section 3.2(d) below, as each may be amended or supplemented from time to time.

(o) “Loan Obligations” means all principal, interest, indemnities, fees, expenses and other items from time to time owing by Borrower to Lender under the Loan Documents, in all cases whether accruing before or after any bankruptcy proceeding and whether or not allowed as a claim in any such proceeding.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (p) “Licenses” means all permits, approvals, or other business licenses to conduct cannabis activities, including without limitation for cultivation, production, transporting, testing, distributing, retail sale or medical dispensing in the State of New York.

(q) “Management Agreement” means the Management and Administrative Services Agreement substantially in the form attached as Exhibit A to the Investment Agreement.

(r) “Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business, properties, prospects, condition (financial or otherwise) or results of operations of Borrower, (b) a material impairment of the ability of Borrower to perform any of its obligations under any of the Loan Documents, or (c) a material adverse effect on (i) any substantial portion of the property or assets of Borrower, (ii) the legality, validity, binding effect or enforceability against Borrower of any of the Loan Documents, (iii) the perfection or priority of any Lien granted to Lender under any Loan Document, or (iv) the rights or remedies of Lender under any Loan Document.

(s) “Maturity Date” means the earlier of (1) the Initial Closing (as defined in the Investment Agreement) and (2) if the Investment Agreement is terminated:

(i) by Lender or its corporate parent under Section 9.1(b) of the Investment Agreement, the “Maturity Date” shall be three business days after the date of such termination, and

(ii) by any party under Section 9.1(d) of the Investment Agreement, the “Maturity Date” shall be the second anniversary of the date of such termination.

(t) “Note” means a Promissory Note in the principal face amount of the Line Amount, in form substantively identical to the attached Exhibit A, to be signed by Borrower and delivered to Lender concurrently upon executing this Agreement to evidence the Loan.

(u) “Operating Costs” is defined in the Investment Agreement.

(v) “Senior Lender” means Hankey Capital, LLC, a California limited liability company, as lender under the Senior Loan Agreement.

(w) “Senior Loan Agreement” means the Senior Secured Commercial Loan Agreement between MM CAN USA, Inc. and Senior Lender, dated October 1, 2018, as in effect on the date hereof.

(x) “Shares” is defined in the recitals to this Agreement.

(y) “Unmatured Event of Default” shall mean any event which, with the giving of notice, the passage of time or both, would constitute an Event of Default.

(z) “Utica Assets” is defined in Section 2.5.

ARTICLE 2 THE ADVANCES

2.1 Loan. Subject to the terms, conditions, representations, warranties and covenants contained in this Agreement, Lender shall make Advances to, or for the account of, Borrower in immediately available funds. Borrower shall provide to Lender at least five (5) Business Days’ prior written notice for an Advance in the form of Exhibit B. Borrower may not request an Advance more frequently than once every 30 days, except with Lender’s consent.

2.2 Note. Borrower’s obligation to repay the Loan shall be evidenced by the Note, which shall be duly executed and delivered by Borrower to Lender concurrently upon the parties executing this Agreement. The Advances will be evidenced by the Note.

2.3 Interest; Financing Fee. The Loan shall not bear interest. Upon repayment of the Loan, a financing fee will be due and payable to the extent provided in the Note.

2.4 Repayment. The entire outstanding principal balance of the Note, including any financing fee, shall be paid in full on the Maturity Date; provided, however, that:

(a) in the event that the Maturity Date is on account of the Initial Closing (as defined in the Investment Agreement), all principal of the Note shall be converted into Shares under the Investment Agreement at the Per Share Purchase Price (as defined in the Investment Agreement) and no financing fee shall be payable; and

(b) in the event the Investment Agreement is terminated by Borrower or its corporate parent under Section 9.1(c) of the Investment Agreement, the entire outstanding amount of the Advances shall be forgiven as provided in the Investment Agreement and no financing fee shall be payable.

The Borrower may voluntarily prepay all or any portion of the outstanding principal (in minimum amounts of $250,000) of the Note, without penalty or premium, by delivering five (5) Business Days’ advance written notice to Lender. All prepayments of principal shall be accompanied by payment of the financing fee on the principal prepaid. Amounts repaid may be not be reborrowed hereunder.

2.5 Use of Proceeds. Borrower shall use the proceeds from the Advances solely to fund (a) Operating Costs in accordance with a budget mutually agreed by Borrower and Lender from time to time and (b) in the event Borrower exercises its option to purchase real property currently leased by it as part of its Utica, New York facilities, up to $10,000,000 of Advance proceeds may be applied to the option exercise price, as well as the cost of subsequently acquired improvements and equipment on the Utica, New York real property (such real property, improvements and equipment, the “Utica Assets”).

ARTICLE 3 CONDITIONS PRECEDENT

3.1 Conditions to Effectiveness. This Agreement shall become effective on the date that each of the following conditions has been satisfied or waived in writing by Lender:

(a) Lender shall have received the Note duly executed by Borrower;

(b) Gotham Green Admin 1, LLC, as collateral agent, on behalf of the purchasers under the Third Amended and Restated Securities Purchase Agreement, dated as of January 11, 2021 (as amended, restated, supplemented or otherwise modified from time to time), with MedMen Enterprises Inc. and MM CAN USA, Inc., shall have consented to permit the financing contemplated hereby and any collateral in the Utica Assets;

(c) The Senior Lender shall have consented to this Agreement under the Senior Loan Agreement to permit the financing contemplated hereby and any collateral in the Utica Assets and agreed to enter into an intercreditor agreement on the terms described in Section 3.2(d) below;

(d) The Investment Agreement shall remain in full force and effect; and

(e) All legal matters and corporate proceedings incident to the transactions contemplated hereby shall be satisfactory, in form and substance, to Lender, who shall have received such certificates and evidence of authorization as it shall reasonably request.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3.2 Advance Conditions. On the date of any request by Borrower for an Advance (including the request for the initial Advance), the following shall be satisfied:

(a) The aggregate principal amount of all Advances made by Lender pursuant to this Agreement, other than Advances previously repaid, must be less than or equal to the Line Amount as then in effect, and if as a result of the requested Advance the Loan exceeds $10,000,000, Borrower shall execute and deliver to Lender a replacement Note evidencing the increased Line Amount;

(b) The representations and warranties contained in this Agreement and in every other Loan Document delivered to Lender by Borrower shall be true and correct as of the date Lender makes an Advance as if made as of such date; no Event of Default or Unmatured Event of Default shall exist; and Borrower shall have delivered to Lender a certificate executed by an executive officer to such effect;

(d) Only if the Advance is to finance the purchase or construction of any Utica Assets, (i) Borrower shall have executed and delivered such security agreements, mortgages and other collateral documents reasonably requested by Lender to provide a security interest in and, if requested by Lender, mortgage on, the Utica Assets and (ii) the Senior Lender shall have executed and delivered to Lender an intercreditor agreement in customary form reasonably satisfactory to the Senior Lender and Lender pursuant to which Lender shall have a first priority security interest and, if applicable, mortgage upon 50% of the book value of the Utica Assets and the Senior Lender and Lender shall have a 50/50 pari passu security interest and, if applicable, mortgage upon the remainder of the Utica Assets, which intercreditor agreement shall also provide that Lender will bear the cost of any mortgage tax and documentation expense if it elects to file a mortgage; and

ARTICLE 4 BORROWER’S REPRESENTATIONS AND WARRANTIES

As an inducement to Lender to enter into this Agreement, Borrower hereby represents and warrants as follows:

4.1 Borrower Organization and Name. Borrower is a corporation duly organized, existing and in good standing under the laws of the State of New York, with full and adequate power to carry on and conduct its business as presently conducted. Borrower is duly licensed or qualified in all foreign jurisdictions wherein the nature of its activities require such qualification or licensing, except for such jurisdictions where the failure to so qualify would not have a Material Adverse Effect. The exact legal name of Borrower is as set forth in the first paragraph of this Agreement, and Borrower currently does not conduct, nor has it during the last five years conducted, business under any other name or trade name other than Bloomfield Industries, Inc.

4.2 No Conflicts. The execution and delivery by Borrower of this Agreement and the other Loan Documents to which Borrower is a party, the performance by Borrower of all of Borrower’s obligations under the Loan Documents, and the incurrence of the Loan contemplated by this Agreement do not and will not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, any agreement or other instrument to which Borrower is a party or by which Borrower is bound or affected.

4.3 Valid Obligations. Borrower has duly authorized, executed and delivered each of the Loan Documents to which Borrower is a party and each such Loan Document will be in full force and effect. This Agreement and the other Loan Documents executed and delivered by Borrower to Lender represent the legal, valid, and binding obligations of Borrower enforceable according to their respective terms, except as limited by equity or laws relating to the general enforcement of creditors’ rights.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 4.4 Subsidiaries. Borrower has no subsidiaries or ownership or equity interests in any other entity except for MMOF NY Retail, LLC, a New York limited liability company wholly owned by Borrower.

4.5 Litigation and Contingent Liabilities. There is no litigation, arbitration proceeding, demand, charge, claim, petition or governmental investigation or proceeding pending, or to the knowledge of Borrower, threatened, against Borrower, which challenges the validity of this Agreement or the financing contemplated hereby. Other than any Liability incident to such litigation or proceedings, Borrower has no material guarantee obligations, contingent liabilities, liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not disclosed in the Investment Agreement or fully-reflected or fully reserved for in the most recent financial statements delivered to Lender. Except for the (a) Loan, (b) amounts outstanding under the Senior Loan Agreement, (c) obligations that are to be paid with the proceeds of the initial Advance (d) amounts disclosed in the Investment Agreement, and (d) amounts incurred to finance the acquisition of fixed or capital assets in the ordinary course of business, Borrower has no Indebtedness.

4.6 Adverse Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened litigation or proceeding or basis therefor) exists which would constitute an Event of Default or an Unmatured Event of Default.

4.7 Legal Counsel. Borrower has had the benefit of, or the opportunity to obtain, legal counsel throughout Borrower’s dealings with Lender in connection with the negotiation, preparation, execution, and delivery of this Agreement.

ARTICLE 5 LENDER’S REPRESENTATIONS AND WARRANTIES

As an inducement to Borrower to enter into this Agreement, Lender hereby represents and warrants as follows:

5.1 No Conflicts. The execution and delivery by Lender of this Agreement and the other Loan Documents to which Lender is a party, the performance by Lender of all of Lender’s agreements and obligations under the Loan Documents, and the making of the acceptance of the Loan contemplated by this Agreement do not and will not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under any agreement or other instrument to which Lender is a party or by which Lender is bound or affected.

5.2 Valid Obligations. Lender has duly authorized, executed and delivered each of the Loan Documents to which Lender is a party and each such Loan Document is in full force and effect. This Agreement and the other Loan Documents executed and delivered by Lender to Borrower represent the legal, valid, and binding obligations of Lender enforceable according to their respective terms, except as limited by equity or laws relating to the general enforcement of creditors’ rights.

5.3 Legal Counsel. Lender has had the benefit of, or the opportunity to obtain, legal counsel throughout Lender’s dealings with Borrower in connection with the negotiation, preparation, execution, and delivery of this Agreement.

ARTICLE 6 AFFIRMATIVE COVENANTS

Borrower covenants to Lender that until the Loan is paid or forgiven, Borrower shall comply with, observe, perform and fulfill all of the covenants set forth in this Article 6.

6.1 Compliance with Applicable Laws. Borrower shall comply with all Applicable Laws and will promptly notify Lender in the event that Borrower receives any notice, claim or demand from any governmental authority asserting the violation of any Applicable Laws.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6.2 Conduct of Business. Borrower shall (a) conduct its business in the ordinary course in a manner consistent with past practice, (b) maintain its other properties and assets in good working condition (normal wear and tear excepted), and (c) use its best efforts to maintain the Licenses and any other licenses and permits necessary or advisable for the operation of its business and ownership or use of its properties in compliance with all Applicable Laws.

6.3 Notice of Litigation. Borrower shall furnish, or cause to be furnished, to Lender within ten (10) Business Days after Borrower becomes aware of the same, a written notice identifying and describing the commencement or institution of any legal or administration action, suit, proceeding or investigation by or against Borrower, or involving the Borrower’s operations, in or before any court, governmental or regulatory body, agency, commission or official board of arbitration or arbitrator and Borrower’s proposed response thereto.

6.4 Notice of Events of Default. Promptly upon becoming aware of the existence of any Event of Default or Unmatured Event of Default, Borrower shall furnish Lender with a written notice specifying the nature of such Event of Default or Unmatured Event of Default and describing Borrower’s proposed response thereto.

6.5 Payment of Taxes and Other Claims. Borrower shall pay and discharge promptly all taxes, assessments, and other governmental charges or levies at any time imposed upon Borrower or upon Borrower’s income, revenues, or properties.

6.6 Further Assurances. Borrower will execute, acknowledge, and deliver, or cause to be executed, acknowledge, and delivered, any and all further assurances reasonably requested by Lender from time to time in order to give full effect to any of the Loan Documents. Upon written request by Lender, Borrower shall cause its subsidiary to guarantee, and create a security interest in substantially all its assets to secure, the Loan Obligations.

ARTICLE 7 NEGATIVE COVENANTS

Borrower covenants to Lender that until the Loan is paid or forgiven, Borrower shall not perform the following without the express written consent of Lender.

7.1 Debt. Borrower shall not, either directly or indirectly, create, assume, incur or have outstanding any Indebtedness other than (a) the Loan, (b) amounts incurred to finance the acquisition of fixed or capital assets outstanding on the date hereof or (c) other Indebtedness consented to by Lender in writing, including any Indebtedness set forth in an operating budget approved by Borrower and Lender.

7.2 Encumbrances. Borrower shall not, either directly or indirectly, create, assume, incur or suffer or permit to exist any Lien or charge of any kind or character upon any asset of Borrower, whether owned at the date hereof or hereafter acquired, except for Liens (a) created by the Security Agreement, (b) securing Indebtedness permitted under, and attaching to fixed or capital assets described in, Section 7.1(b), or (c) consented to by Lender in writing.

7.3 Transfer; Merger; Sales. Borrower shall not, whether in one transaction or a series of related transactions, without the written consent of the Lender, (a) be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any capital securities of any class of, or any partnership or joint venture interest in, any other entity, (b) sell, transfer, convey or lease all or any substantial part of its assets, the Licenses or any other governmental authorizations, or (c) sell or assign, with or without recourse, any receivables.

7.4 Dividends and Distributions. Borrower shall not declare or pay any dividend on any equity interests of Borrower or make any distributions to equity holders or repurchase any equity interests or rights to acquire such interests.

7.5 Transactions with Affiliates. Borrower shall not, directly or indirectly, enter into or permit to exist any transaction with any of its Affiliates or with any director, officer or employee of Borrower other than transactions in the ordinary course of, and pursuant to the reasonable requirements of, the business of Borrower and upon fair and reasonable terms which are fully disclosed to Lender and are no less favorable to Borrower than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate of Borrower.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7.6 Fundamental Changes. Borrower shall not, and shall cause its subsidiaries not to, issue any new equity interests or rights to acquire such interests, change its capital structure (except as contemplated by the Investment Agreement) or otherwise adversely affect the rights of Lender.

ARTICLE 8 DEFAULT

“Event of Default” shall mean the occurrence of one or more of any of the following events:

8.1 Failure to Pay Loan Obligations. Borrower fails to pay any amount owing under the Loan Documents on the Maturity Date or, within five (5) days after Lender gives written notice of such default, otherwise when due hereunder.

8.2 Failure to Perform Covenants. Borrower fails to perform or observe any covenant or agreement contained in this Agreement or the other Loan Documents and such failure (a) is not caused by actions taken or failed to be taken by Lender under the Management Agreement, and (b) remains unremedied for thirty (30) days after written notice thereof is given by Lender to Borrower, unless such failure cannot be reasonably cured within thirty (30) days, but can be cured within sixty (60) days, in which event, Borrower shall not be in default as long as Borrower commences to cure such default within the thirty (30) day period, diligently prosecutes the cure and cures such failure within sixty (60) days.

8.3 Misstatement. Any statement, representation, or warranty heretofore, now or hereafter made by Borrower in connection with any Loan Document shall prove to have been false or misleading in any material respect when made.

8.4 Insolvency. The institution by or against Borrower of any proceedings under the United States Bankruptcy Code. 11 U.S.C. § 101 et seq. or any or law in which Borrower is alleged to be insolvent or unable to pay its debts as they mature, or the making by Borrower of any assignment for the benefit of creditors or the granting by Borrower of a trust mortgage for the benefit of creditors, or the liquidation, dissolution or winding up of the Borrower.

ARTICLE 9 LENDER’S REMEDIES

Upon the occurrence and during the continuance of any Event of Default, Lender, in the exercise of its sole and absolute discretion, may exercise all or any combination of its remedies afforded by Applicable Law or described in the Loan Documents, including, without limitation, those remedies set forth below:

9.1 Accelerate Note. Lender may accelerate the Note and declare all Loan Obligations immediately due and payable, which Loan Obligations shall become automatically due and payable upon the occurrence of an Event of Default under Section 8.4.

9.2 Setoff. Lender may setoff any obligation Lender may owe to Borrower as payment of all or any portion of the Loan Obligations.

9.3 Lender Remedies. Lender shall have all remedies of a secured creditor with respect to the Utica Assets under the New York Uniform Commercial Code and other applicable law, and may exercise any and all other remedies provided in the Loan Documents. Lender’s failure at any time to exercise any remedy does not constitute a waiver of the right to exercise that remedy at any other time or with respect to subsequent Events of Default. Lender’s acceptance of one or more partial payments after the occurrence of an Event of Default shall not constitute a course of dealing or course of performance, nor shall it constitute a waiver of any Event of Default, nor a relinquishment of Lender’s option to exercise its available rights and remedies. Lender’s exercise of any right or remedy will not constitute a cure or waiver of any Event of Default, nor prejudice Lender in exercising any other right or remedy, until Lender realizes all Loan Obligations owed to it.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 9.4 Nonexclusive Remedies. All of Lender’s rights and remedies not only under the provisions of this Agreement, but also under any other Loan Document or any other agreement or transaction, shall be cumulative and not alternative or exclusive, and may be exercised by Lender at such time or times and in such order of preference as Lender in its sole discretion may determine.

ARTICLE 10 MISCELLANEOUS

10.1 Severability. If any provision of this Agreement or portion of such provision or the application thereof to any person or circumstance shall to any extent be held invalid or unenforceable, the remainder of this Agreement (or the remainder of such provision) and the application thereof to other persons or circumstances shall not be affected thereby.

10.2 Complete Agreement. This Agreement, the Investment Agreement and the other Loan Documents constitute the entire agreement and understanding between and among the parties relating to the subject matter hereof, and supersede all prior proposals, negotiations, agreements and understandings among the parties with respect to such subject matter.

10.3 Binding Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties. Neither party may assign or transfer any of its rights or obligations under this Agreement or the other Loan Documents (except that Lender may assign its rights to an affiliate) without the other party’s prior written consent.

10.4 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

10.5 Jury Waiver. Borrower and Lender each hereby knowingly, voluntarily and intentionally, and after an opportunity to consult with legal counsel: (a) waive any and all rights to a trial by jury in any action or proceeding in connection with this Agreement, the Loan Documents, all matters contemplated hereby, and documents executed in connection herewith; and (b) agree not to seek to consolidate any such action with any other action in which a jury trial cannot be, or has not been, waived.

10.6 Notices. Except for any notice required under Applicable Law to be given in another manner, any notice, demand, request or other communication to be given by either party to the other shall be in writing and shall be deemed to have been properly given: (a) if hand delivered or if sent by telecopy, effective upon receipt; (b) if delivered by overnight courier service, effective on the Business Day following delivery to such courier service; or (c) if mailed by United States registered or certified mail, postage prepaid, return receipt requested, effective two (2) Business Days after deposit in the United States mails, addressed in each case to the parties at their addresses set forth herein, or at such other address or to such other addressee as a party may have so furnished to the other:

If to Borrower:

MedMen NY, Inc. c/o MM Enterprises USA, LLC 10115 Jefferson Blvd. Culver City, CA 90232 Attention: Dan Edwards Email: [email protected] with a copy to:

Raines Feldman LLP 1800 Avenue of the Stars, 12th Floor Los Angeles, CA 90067 Attention: Jonathan Littrell

If to Lender:

AWH New York, LLC 1411 Broadway, 16th Floor New York, NY 10018

Attention: Corey Sheahan Email: [email protected] with a copy to:

Foley Hoag LLP 155 Seaport Boulevard Boston, MA 02210 Attention: Erica Rice Email: [email protected]

10.7 Jurisdiction and Venue. Borrower and Lender irrevocably submit to the exclusive jurisdiction of any state court sitting in New York or the district court for the Southern District of New York with respect to any suit, action, or proceeding arising out of or relating to this Agreement or the Loan Documents, and Borrower waives any objection Borrower may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum.

10.8 Relationship of Parties. The relationship of Borrower and Lender established by this Agreement and the other Loan Documents is, and shall at all times remain, solely that of borrower and lender, respectively, and neither of the parties is, nor shall it hold itself out to be, the agent, employee, joint venturer or partner of the other party. Lender shall not by reason of this Agreement be deemed responsible for, or a participant in, any acts, omissions or decisions of Borrower.

10.9 Electronic Execution. For purposes of executing this Agreement, a document signed and transmitted by facsimile machine or other form of electronic transmission shall be treated as an original document. The signature of any party thereon shall be considered an original signature and the document transmitted shall be considered to have the binding legal effect as if it were originally signed. At the request of any party, any facsimile or other electronic document shall be re-executed by all of the parties in original form. No party hereto may raise the use of a facsimile machine or other means of electronic transmission or the fact that any signature was transmitted through the use of a facsimile machine or other electronic means as a defense to the enforcement of this Agreement or any amendment executed in compliance with this Section 10.9.

10.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute but one agreement.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, Borrower and Lender have each caused this Agreement to be executed under seal by its duly authorized officer as of the date first set forth above.

LENDER: BORROWER:

By: By: Print Name: Print Name: ______Title: Title:

[SIGNATURE PAGE TO WORKING CAPITAL ADVANCE AGREEMENT]

EXHIBIT A

THIS NON-NEGOTIABLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.

WORKING CAPITAL PROMISSORY NOTE

New York, New York $10,000,000 Dated as of February 25, 2021

THIS PROMISSORY NOTE (as amended, supplemented or otherwise modified from time to time, this “Note”) is issued as of the date written above by MedMen NY, Inc., a New York corporation having an address at 10115 Jefferson Blvd., Culver City, CA 90232 (“Borrower”), in favor of AWH New York, LLC, a New York limited liability company having an address at 1411 Broadway, 16th Floor, New York, NY 10018 (“Lender”). This Note is being issued in connection with the Working Capital Advance Agreement, dated February 25, 2021, entered into between Borrower and Lender (the “Advance Agreement”). All capitalized terms used but not defined herein will have the same meaning as set forth in the Advance Agreement.

FOR VALUE RECEIVED, Borrower hereby promises to pay to Lender, in the amounts and on the dates set forth herein, at its address set forth in the Advance Agreement or such other address as Lender may designate from time to time, the principal amount of $10,000,000 or, if less, such amount as may be the aggregate unpaid principal amount of all Advances made by Lender to Borrower pursuant to the Advance Agreement. All payments of principal are payable in lawful money of the United States of America in immediately available funds in accordance with the following terms. This Note shall not bear interest.

1. Payment. The entire Loan, including the Financing Fee described below, shall be due and payable in full on the Maturity Date to the extent provided in the Advance Agreement.

2. Advance Agreement; Advances. The terms of this Note shall be as provided in the Advance Agreement as from time to time in effect. Lender shall keep a written record of all Advances and any repayments of the Loan, which record shall be definitive absent manifest error.

3. Financing Fee. In the event all or any portion of the Loan is paid in cash on the Maturity Date, on any accelerated maturity of this Note or otherwise, Borrower shall pay to Lender at the time of such repayment to the extent required by the Advance Agreement a financing fee (the “Financing Fee”) equal to the product of (i) 0.833 percent (0.833%) of the portion of the Loan then paid multiplied by (ii) (a) in the event the Maturity Date results from the termination of the Investment Agreement pursuant to Section 9.1(d) thereof, the number of months (or portion thereof) that the applicable portion of the Loan has been outstanding since the termination of the Investment Agreement and (b) in the event the Maturity Date results from the termination of the Investment Agreement pursuant to Section 9.1(b) thereof or any other cash repayment of the Loan, the number of months

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (or portion thereof) that the applicable portion of the Loan has been outstanding since the respective Advance dates. No Financing Fee shall apply in the event that the Loan is converted into Shares upon consummation of the Initial Closing contemplated by the Investment Agreement.

4. Miscellaneous.

a. Amendments. This Note may not be amended orally, but only by an amendment in writing signed by Lender and Borrower.

b. Governing Law. This Note is governed by and construed in accordance with New York law.

c. Jurisdiction. Borrower and each endorser of this Note each irrevocably submits to the exclusive jurisdiction of any federal or state court sitting in New York, over any suit, action, or proceeding arising out of or relating to this Note. Borrower, for itself and for all endorsers or sureties of this Note, irrevocably waives, to the fullest extent it may effectively do so under applicable law, any objection it may now or hereafter have to the laying of the venue of any such suit, action, or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum.

d. Further Assurances. Borrower will from time to time execute and deliver to Lender such documents, and take or cause to be taken, all such other further action, as Lender may request in order to effect and confirm or vest more securely in Lender all rights contemplated by this Note or any other Loan Documents (including, without limitation, to correct clerical errors) or to vest more fully in or assure to lender the security interest in any collateral securing this Note or to comply with applicable statute or law.

e. Loss of Note. Upon notice from Lender to Borrower of the loss, theft, destruction or mutilation of this Note and upon receipt of indemnity reasonably satisfactory to Borrower from Lender or, in the case of mutilation, upon surrender of the mutilated Note, Borrower shall make and deliver a new note of like tenor in lieu of this Note.

f. Captions and References. The captions of the sections of this Note are for convenience only and do not modify, explain, enlarge, or restrict any of its provisions. All “Section” references are to the sections of this Note, unless otherwise indicated. Words used in this Note, regardless of the number or gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

g. Successors and Assigns. This Note binds and benefits Borrower, Lender and their respective legal successors and assigns.

h. Severable Provisions. Every provision of this Note is severable. If any term is declared by a court of competent jurisdiction to be invalid, the balance of the terms remain binding and enforceable.

i. Assignment. Borrower may not assign or transfer its obligations under this Note without the prior written consent of Lender.

BORROWER:

MEDMEN NY, INC.

By: Print Name: Title:

FORM OF ADVANCE REQUEST

REQUEST FOR ADVANCE

[Date]

AWH New York, LLC 1411 Broadway, 16th Floor New York, NY 10018 Attention: Corey Sheahan Email: [email protected] Ladies and Gentlemen:

You are hereby requested, pursuant to Section 2.1 of the Working Capital Advance Agreement, dated as of February 25, 2021 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Advance Agreement”), between MedMen NY, Inc. (“Borrower”) and you, as Lender, to make an Advance under the Advance Agreement to Borrower in the amount set forth below. Terms defined in the Advance Agreement are used herein with the same meanings.

(A) Aggregate principal amount of advance: $ ______

(B) Date of the requested advance: ______

The undersigned hereby certifies that as of the date hereof (i) Borrower is in compliance with all of the terms and conditions of the Advance Agreement and each of the other Loan Documents, (ii) before and after giving effect to the Advance requested hereby, no Event of Default or Unmatured Default has occurred and is continuing, (iii) each of the representations and warranties in Article 4 of the Advance Agreement (and any other statements and assertions set forth therein) are true and correct in all material respects, (iv) the amount of such requested Advance does not cause the Loan to exceed the Line Amount and (v) any other conditions required for such Advance under Section 3.2 of the Advance Agreement, for example if the Loan would exceed $10,000,000 or the Advance proceeds are used to acquire Utica Assets.

BORROWER:

MEDMEN NY, INC.

By: Print Name: Title:

Exhibit D

Option Agreement

This CALL OPTION AGREEMENT (“Agreement”) is entered into this day of 20 , by and between AWH NEW YORK, LLC, a New York limited liability company (“Investor”) and PROJECT COMPASSION NY, LLC, a Delaware limited liability company (“Company Owner”). Each of the foregoing is referred to herein individually as a “party” and collectively as the “parties”. Capitalized terms used herein and not otherwise defined have the meanings set forth in the Investment Agreement (as hereinafter defined).

BACKGROUND

A. Investor, MedMen NY, Inc., a New York corporation (“Company”), MM Enterprises USA, LLC, a Delaware limited liability company (“Company Parent”) and Ascend Wellness Holdings, LLC, a Delaware limited liability company, are parties to an Investment Agreement dated as of February 25, 2021 (the “Investment Agreement”) pursuant to which Investor is acquiring from the Company 2,608 newly authorized shares (the “Investor Shares”) of common stock, without par value, of the Company (the “Common Stock”);

B. Company Owner, a wholly owned subsidiary of Company Parent, owns 400 shares of Common Stock (collectively, the “Option Shares”), which represent all of the issued and outstanding shares of capital stock of the Company other than the Investor Shares; and

C. It is a condition to consummation of the transactions contemplated by the Investment Agreement that the parties enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Grant of Option; Expiration.

1.1 Company Owner hereby grants exclusively to Investor an irrevocable option (the “Call Option”), exercisable at any time following the date on which Investor first receives confirmation that the exercise of the Call Option is allowed under applicable Law (the “Transaction Approval Date”), under which Investor shall have the exclusive right, but not the obligation, to acquire, and Company Owner shall be obligated to sell, all (but not less than all) of the Option Shares to Investor for $1.00 per share (the “Call Price”).

1.2 The term of this Agreement and the Call Option shall expire on the earlier to occur of (x) the ten (10) year anniversary of the date of this Agreement and (y) the one (1) year anniversary of the Transaction Approval Date.

2. Exercise of Call Option; Closing.

2.1 At any time following the Transaction Approval Date and prior to the expiration or termination hereof, Investor shall have the right, but not the obligation, to exercise the Call Option, by delivering to Company Owner a notice of exercise (the “Call Notice”) of Investor’s right to purchase all (but not less than all) of the Option Shares.

2.2 Upon delivery of a Call Notice to Company Owner in accordance with the terms of this Agreement, Investor shall be obligated to purchase from Company Owner, and Company Owner shall be obligated to sell, assign and deliver to Investor, the Option Shares for the Call Price on the Closing Date (as defined below).

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2.3 The closing, if any, for the purchase and sale of the Option Shares following the exercise of the Call Option (the “Closing”) shall be held on the tenth (10th) day following the delivery of the Call Notice (or if such day is not a Business Day, the first Business Day following such day), at the Company’s registered offices, or at such other place, time and date as Investor and Company Owner may agree in writing. The date on which the closing shall take place is referred to as the “Closing Date”.

2.4 At the Closing, Company Owner shall deliver to Investor the Option Shares (registered in the name of Investor or with stock powers duly endorsed in blank) against payment of the Call Price therefor by check or transfer of immediately available funds to such bank as Company Owner may direct in writing for credit to Company Owner’s account.

2.5 Investor may designate a third party in the Call Notice as the purchaser of the Option Shares.

3. Representations and Warranties. Company Owner hereby represents and warrants to Investor that as of the date hereof and as of the Closing Date: (i) except with respect to the pledge of the Option Shares to Senior Lender (which pledge shall be released concurrently with the Closing), Company Owner has full right, title and interest in and to the Option Shares and that such Option Shares constitute 100% of the issued and outstanding capital stock of the Company (other than the Investor Shares), (ii) Company Owner has all the necessary power and authority and has taken all necessary action to enter into this Agreement and to sell the Option Shares as contemplated by this Agreement, (iii) except with respect to the pledge of the Option Shares to Senior Lender (which pledge shall be released concurrently with the Closing), the Option Shares are free and clear of any and all mortgages, pledges, security interests, options, rights of first offer, encumbrances or other restrictions or limitations of any nature whatsoever other than those arising as a result of this Agreement; and (iv) Company Owner has not entered into any other agreement to sell, pledge, transfer, option, hypothecate or otherwise encumber the Option Shares.

4. Covenants of Company Owner. During the term of this Agreement, and except with respect to the pledge of the Option Shares to Senior Lender, Company Owner shall not sell, transfer, assign, pledge or otherwise dispose of or further encumber the Option Shares. Company Owner shall take all actions as may be reasonably necessary to consummate the sale of Option Shares contemplated by this Agreement, including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be necessary or appropriate. Company Owner hereby agrees to cooperate fully in such sale of the Option Shares and not to take any action prejudicial to or inconsistent with such sale of the Option Shares. In furtherance of the foregoing, Company Owner appoints Investor (or its designee) as Company Owner’s exclusive and irrevocable agent, proxy and attorney-in-fact (and such proxy shall be deemed to be coupled with an interest based on this Agreement),with full power and authority to act on Company Owner’s behalf for the purposes of carrying out the terms of this Agreement, including to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Agreement in connection with Investor’s exercise of the Call Option right pursuant to this Agreement.

5. General Terms.

5.1 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given as provided in Section 11.2 of the Investment Agreement.

5.2 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

5.3 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5.4 Entire Agreement. This Agreement together with the Investment Agreement and the agreements contemplated thereby, constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.

5.5 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

5.6 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

5.7 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).

5.8 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

5.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

AWH NEW YORK, LLC

By: Name: Title:

PROJECT COMPASSION NY, LLC

By: Name: Title:

[Signature Page to Call Option Agreement]

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent, to the use in the Prospectus constituting a part of this Registration Statement, our auditor’s report dated October 15, 2020, except for Note 28 as to which the date is December 4, 2020, with respect to the consolidated financial statements of MedMen Enterprises Inc. and its subsidiaries as at June 27, 2020 and June 29, 2019 and for each of the years then ended, which is contained in that Prospectus.

We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ MNP LLP Chartered Professional Accountants March 5, 2021 Calgary, Canada

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended Cover Dec. 26, 2020 Cover [Abstract] Entity Registrant Name MedMen Enterprises, Inc. Entity Central Index Key 0001776932 Document Type S-1 Amendment Flag false Entity Small Business true Entity Emerging Growth Companytrue Entity Filer Category Non-accelerated Filer Entity Ex Transition Period true

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unaudited Interim Condensed Consolidated Dec. 26, 2020 Jun. 27, 2020 Jun. 29, 2019 Balance Sheets - USD ($) Current Assets: Cash and Cash Equivalents $ 7,549,841 $ 10,093,925 $ 33,226,370 Restricted Cash 6,010 9,873 55,618 Accounts Receivable and Prepaid Expenses 5,927,363 Accounts Receivable 963,997 621,945 Current Portion of Prepaid Rent - Related Party 0 1,580,205 Prepaid Expenses 4,662,764 13,897,904 Inventory 25,495,872 22,638,120 25,481,122 Current Assets Held for Sale 20,499,209 33,459,879 7,395,018 Other Current Assets 5,733,682 9,105,457 18,913,039 Due from Related Party 3,109,717 3,109,717 4,921,455 Total Current Assets 68,321,694 84,043,732 106,092,676 Prepaid Rent - Related Party, Net of Current Portion 0 4,327,077 Operating Lease Right-of-Use Assets 98,236,694 116,354,828 0 Property and Equipment, Net 152,427,173 174,547,867 232,895,281 Intangible Assets, Net 133,580,466 148,081,030 201,101,415 Non- Current Assets Held for Sale 56,970,526 Goodwill 33,861,150 33,861,150 53,786,872 Other Assets 17,137,917 17,374,997 32,302,547 TOTAL ASSETS 503,565,094 574,263,604 687,476,394 Current Liabilities: Accounts Payable and Accrued Liabilities 80,635,429 79,530,930 47,610,197 Income Taxes Payable 86,342,631 38,599,349 13,658,111 Other Current Liabilities 13,462,163 19,732,305 3,646,380 Derivative Liabilities 546,076 9,343,485 Current Portion of Operating Lease Liabilities 5,882,032 9,757,669 0 Current Portion of Finance Lease Liabilities 617,592 1,644,044 4,153,935 Current Portion of Notes Payable 16,761,052 16,188,668 21,998,522 Current Liabilities Held for Sale 12,367,699 18,659,038 3,641,620 Due to Related Party 4,374,727 4,556,814 5,640,817 Total Current Liabilities 220,443,325 189,214,893 109,693,067 Operating Lease Liabilities, Net of Current Portion 116,211,645 131,045,238 0 Finance Lease Liabilities, Net of Current Portion 27,630,404 58,569,498 12,230,848 Other Non-Current Liabilities 3,932,218 4,215,533 24,929,028 Non-Current Liabilities Held for Sale 7,185,447 Deferred Tax Liabilities 44,910,274 48,928,492 84,562,776 Senior Secured Convertible Credit Facility 159,592,165 166,368,463 86,855,415 Notes Payable, Net of Current Portion 177,752,061 152,809,937 150,749,037 TOTAL LIABILITIES 750,472,092 751,152,054 476,205,618 SHAREHOLDERS' EQUITY:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Preferred Shares (no par value, unlimited shares authorized and no 0 0 0 shares issued and outstanding) Subordinate Voting Shares (no par value, unlimited shares authorized, 512,315,834 and 403,907,218 shares issued and 0 0 0 outstanding as of December 26, 2020 and June 27, 2020, respectively) Additional Paid-In Capital 840,119,302 791,172,612 613,356,006 Accumulated Deficit (674,420,245)(631,365,865)(370,382,824) Total Equity Attributable to Shareholders of MedMen Enterprises 165,699,057 159,889,247 243,138,181 Inc. Non-Controlling Interest (412,606,055)(336,777,697)(31,867,405) TOTAL MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY (246,906,998)(176,888,450)211,270,776 TOTAL LIABILITIES, MEZZANINE EQUITY AND 503,565,094 574,263,604 687,476,394 SHAREHOLDERS' EQUITY Super Voting [Member] SHAREHOLDERS' EQUITY: TOTAL MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY 0 82,500 164,999 Super Voting Shares (no par value, unlimited shares authorized, nil and 815,295 shares issued and outstanding as of December 26, 2020 $ 0 $ 82,500 $ 164,999 and June 27, 2020, respectively)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unaudited Interim Condensed Consolidated Dec. 26, 2020Jun. 27, 2020Jun. 29, 2019 Balance Sheets (Parenthetical) - shares Subordinate Voting Shares [Member] Stockholders' deficit Preferred stock, shares issued 512,315,834 403,907,218 173,010,922 Preferred stock, shares outstanding 512,315,834 403,907,218 173,010,922 Super Voting Shares [Member] Stockholders' deficit Preferred stock, shares issued 0 815,295 1,630,590 Preferred stock, shares outstanding 0 815,295 1,630,590

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unaudited Interim 3 Months Ended 6 Months Ended 12 Months Ended Condensed Consolidated Dec. 26, Dec. 28, Statements of Operations - Dec. 26, 2020 Dec. 28, 2019 Jun. 27, 2020 Jun. 29, 2019 2020 2019 USD ($) Unaudited Interim Condensed Consolidated Statements of Operations Revenue $ $ $ $ $ 69,401,630 $ 83,735,878 33,775,662 44,065,882 157,112,281 119,919,169 Cost of Goods Sold 15,832,057 31,238,909 34,633,967 51,516,729 98,991,307 64,468,357 Gross Profit 17,943,605 12,826,973 34,767,663 32,219,149 58,120,974 55,450,812 Expenses: General and Administrative 33,568,436 60,318,947 65,252,040 114,413,896 200,273,872 239,344,688 Sales and Marketing 217,254 3,609,997 410,639 9,392,777 10,641,912 27,548,784 Depreciation and Amortization 9,705,254 6,643,252 18,330,962 16,127,433 39,953,805 22,055,590 Realized and Unrealized Loss on Changes in Fair Value of 87,893 5,215,271 390,727 7,499,325 8,951,801 0 Contingent Consideration Impairment Expense 0 0 789,709 0 239,509,415 0 Loss on Disposals of assets, restructuring fees and other 6,233,034 16,542,840 expense Other Operating Expense 775,896 5,705,408 (15,921,965) 5,007,446 (Income) Total Expenses 44,354,733 81,492,875 69,252,112 152,440,877 505,563,839 305,491,902 Loss from Operations (26,411,128) (68,665,902)(34,484,449) (120,221,728)(447,442,865)(250,041,090) Other Expense (Income): Interest Expense 10,237,737 8,095,033 21,380,601 16,258,650 40,425,315 12,381,121 Interest Income (539,855) (265,378) (541,065) (634,720) (766,035) (701,790) Amortization of Debt Discount 6,900,770 1,831,425 10,103,664 4,898,960 9,061,967 8,308,751 and Loan Origination Fees Change in Fair Value of 177,879 (2,901,284) (127,500) (8,029,704) (8,797,409) (3,908,722) Derivatives Realized and Unrealized Loss (Gain) on Investments and 1,960,871 (5,034,158) (10,454,608) (16,514,480) (16,373,788) (4,259,000) Assets Held for Sale Loss on Extinguishment of 943,706 660,119 11,073,361 32,230,235 44,355,401 1,164,054 Debt Total Other Expense 19,681,108 2,385,757 31,434,453 28,208,941 67,905,451 12,984,414 Loss from Continuing Operations Before Provision (46,092,236)(71,051,659)(65,918,902) (148,430,669)(515,348,316)(263,025,504) for Income Taxes Provision for Income Tax (23,970,469)14,649,487 (34,309,031) 32,310,218 39,598,946 6,369,046 (Expense) Benefit Net Loss from Continuing (70,062,705)(56,402,172)(100,227,933)(116,120,451) (475,749,370)(256,656,458) Operations

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net Loss from Discontinued 1,201,766 (36,845,653)(1,480,409) (39,926,048) (50,781,039) (1,264,196) Operations, Net of Taxes Net Loss (68,860,939)(93,247,825)(101,708,342)(156,046,499)(526,530,409)(257,920,654) Net Loss Attributable to Non- (19,165,455)(51,997,293)(30,092,996) (90,573,223) (279,266,058)(188,840,766) Controlling Interest Net Loss Attributable to $ $ $ $ $ $ Shareholders of MedMen (49,695,484)(41,250,532)(71,615,346) (65,473,276) (247,264,351)(69,079,888) Enterprises Inc. Loss Per Share - Basic and Diluted: From Continuing Operations Attributable to Shareholders of $ (0.11) $ (0.02) $ (0.17) $ (0.13) $ (0.73) $ (0.64) MedMen Enterprises Inc. From Discontinued Operations Attributable to Shareholders of $ 0.00 $ (0.17) $ (0.00) $ (0.20) $ (0.19) $ (0.01) MedMen Enterprises Inc. Weighted-Average Shares Outstanding - Basic and 482,903,106 220,467,070 452,806,117 196,211,921 270,418,842 105,915,105 Diluted

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document TOTAL EQUITY Unaudited Interim Additional ATTRIBUTABLE Condensed Consolidated Subordinate Accumulated Super Paid-in TO Noncontrolling Statements of Changes in Total Voting Deficit Voting Capital SHAREHOLDERS Interest Shareholders Equity - USD [Member] [Member] [Member] [Member] OF MEDMEN ($) [Member] Balance, shares at Jul. 01, 45,215,976 1,630,590 2018 Balance, amount at Jul. 01, $ $ $ $ 0 $ 108,848,702 $ 85,728,414 $ 164,999 2018 194,577,116 172,441,570 (63,757,867) Net Loss (257,920,654)$ 0 $ 0 (69,079,888) (69,079,888) (188,840,766) $ 0 Bought Deal Equity Financing, 29,321,818 net, shares Bought Deal Equity Financing, $ 115,289,679 $ 0 0 115,289,679 0 $ 0 net, amount 115,289,679 Derivative Liability Incurred $ (13,252,207) $ 0 0 (13,252,207) 0 $ 0 on Issuance of Equity (13,252,207) At-the-Market Equity 5,168,500 Financing Program, net, shares At-the-Market Equity $ Financing Program, net, $ 13,306,096 $ 0 $ 0 $ 13,306,096 $ 0 $ 0 13,306,096 amount Shares Issued to Settle Debt, 632,130 shares Shares Issued to Settle Debt, $ 2,170,163 $ 0 $ 2,170,163 $ 0 $ 2,170,163 $ 0 $ 0 amount Shares Issued for Debt 2,691,141 Issuance Costs, Shares Shares Issued for Debt 5,836,550 $ 0 5,836,550 0 5,836,550 0 $ 0 Issuance Costs, Amount Equity component of debt 7,548,720 $ 0 7,548,720 0 7,548,720 0 $ 0 Redemption of MedMen Corp 58,095,821 Redeemable Shares, shares Redemption of MedMen Corp $ 0 $ 0 (212,084,052)(7,683,232) 7,683,232 $ 0 Redeemable Shares, amount 204,400,820 Redemption of LLC 5,566,993 Redeemable Units, shares Redemption of LLC $ 0 $ 0 7,671,349 24,439,469 (24,439,469) $ 0 Redeemable Units, amount 16,768,120 Other Assets, shares 919,711 Other Assets, amount 2,986,501 $ 0 $ 2,986,501 0 2,986,501 0 $ 0 Acquisition Costs, shares 159,435 Acquisition Costs, amount 515,500 $ 0 $ 515,500 0 515,500 0 $ 0 Acquisition of Non- 9,736,870 Controlling Interest, shares Acquisition of Non- $ 0 $ 0 (33,132,366) (96,549) 96,549 $ 0 Controlling Interest, amount 33,035,817 Business Acquisitions, shares 10,875,929 Business Acquisitions, amount $ 34,402,179 $ 0 0 34,402,179 0 $ 0 34,402,179 Asset Acquisitions, shares 1,658,884 Asset Acquisitions, amount 5,097,436 $ 0 $ 5,097,436 0 5,097,436 0 $ 0 Vested Restricted Stock Units, 333,479 shares

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Vested Restricted Stock Units, 0 $ 0 $ 0 0 0 0 $ 0 amount Stock Grants for 2,634,235 Compensation, shares Stock Grants for 5,712,872 $ 0 $ 5,712,872 0 5,712,872 0 $ 0 Compensation, amount Share-Based Compensation, 13,935,569 0 13,935,569 0 13,935,569 0 0 amount Options Issued - Other Assets 633,837 0 633,837 0 633,837 0 0 Deferred Tax Impact on (7,473,216) 0 (7,473,216) 0 (7,473,216) 0 0 Conversion Feature Non-Controlling Interest 0 0 0 0 0 0 0 Equity Transactions Cash Contributions 290,000 0 0 0 0 290,000 0 Conversion of Convertible 3,802,381 0 0 0 0 3,802,381 0 Debentures Asset Acquisitions 41,154,986 0 0 0 0 41,154,986 0 Share Issued to Settle Debt 6,759,125 0 0 0 0 6,759,125 0 Other Assets 343,678 343,678 Equity Component of Debt 13,590,104 0 0 0 0 13,590,104 0 Exercise of Warrants 8,521,268 0 0 0 0 8,521,268 0 Acquisition Costs 597,320 0 0 0 0 597,320 0 Share-Based Compensation 12,845,773 $ 0 0 0 0 12,845,773 $ 0 Balance, shares at Jun. 29, 173,010,922 1,630,590 2019 Balance, amount at Jun. 29, 211,270,776 $ 0 613,356,006 (370,382,824)243,138,181 (31,867,406) $ 164,999 2019 Net Loss (156,046,499)$ 0 0 (65,473,276) (65,473,276) (90,573,223) $ 0 At-the-Market Equity 9,789,300 Financing Program, net, shares At-the-Market Equity Financing Program, net, 12,399,249 $ 0 12,399,249 0 12,399,249 0 $ 0 amount Shares Issued to Settle Debt, 1,231,280 shares Shares Issued to Settle Debt, 2,441,912 $ 0 2,441,912 0 2,441,912 0 $ 0 amount Redemption of MedMen Corp 6,225,620 Redeemable Shares, shares Redemption of MedMen Corp 0 $ 0 23,362,740 (24,037,868) (675,128) 675,128 $ 0 Redeemable Shares, amount Asset Acquisitions, shares 7,373,034 Asset Acquisitions, amount 4,904,381 $ 0 4,904,381 0 4,904,381 0 $ 0 Stock Grants for 1,889,646 Compensation, shares Stock Grants for 2,734,119 $ 0 2,698,902 0 2,698,902 35,217 $ 0 Compensation, amount Share-Based Compensation, 5,465,147 0 5,465,147 0 5,465,147 0 0 amount Deferred Tax Impact on (260) 0 0 (260) (260) 0 0 Conversion Feature Share-Based Compensation 1,313,059 $ 0 0 0 0 1,313,059 $ 0 Shares Issued for Cash, shares 38,355,076 Shares Issued for Cash, 40,200,000 $ 0 40,200,000 0 40,200,000 0 $ 0 amount

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Shares Issued to Settle Contingent Consideration, 10,691,455 shares Shares Issued to Settle Contingent Consideration, 10,811,219 $ 0 10,811,219 0 10,811,219 0 $ 0 amount Equity Component of Debt - 2,517,014 $ 0 2,517,014 0 2,517,014 0 $ 0 New and Amended Shares Issued for Vested 67,038 Restricted Stock Units, shares Shares Issued for Vested 0 $ 0 0 0 0 0 $ 0 Restricted Stock Units, amount Shares Issued for Other 3,107,315 Assets, shares Shares Issued for Other 2,397,659 $ 0 2,397,659 0 2,397,659 0 $ 0 Assets, amount Shares Issued for Acquisition 214,716 Costs, shares Shares Issued for Acquisition 421,497 $ 0 421,497 0 421,497 0 $ 0 Costs, amount Shares Issued for Business 5,112,263 Acquisition, shares Shares Issued for Business 9,833,000 $ 0 9,833,000 0 9,833,000 0 $ 0 Acquisition, amount Distributions (310,633) 0 0 0 0 (310,633) 0 Equity Component of Debt - (1,444,676) $ 0 $ 0 0 0 (1,444,676) $ 0 New and Amended Amount Balance, shares at Dec. 28, 257,067,665 1,630,590 2019 Balance, amount at Dec. 28, $ 148,906,963 $ 0 (459,894,228)271,079,497 (122,172,534) $ 164,999 2019 730,808,726 Balance, shares at Jun. 29, 173,010,922 1,630,590 2019 Balance, amount at Jun. 29, 211,270,776 $ 0 613,356,006 (370,382,824)243,138,181 (31,867,406) $ 164,999 2019 Net Loss (526,530,409)$ 0 $ 0 (247,264,351)(247,264,351) (279,266,058) $ 0 At-the-Market Equity 9,789,300 Financing Program, net, shares At-the-Market Equity $ Financing Program, net, 12,399,252 $ 0 0 12,399,252 0 $ 0 12,399,252 amount Redemption of MedMen Corp 83,119,182 Redeemable Shares, shares Redemption of MedMen Corp $ 0 $ 0 (12,685,751) 32,192,800 (32,192,800) $ 0 Redeemable Shares, amount 44,878,551 Asset Acquisitions, shares 7,373,034 Asset Acquisitions, amount 4,904,381 $ 0 $ 4,904,381 0 4,904,381 0 $ 0 Stock Grants for 4,675,017 Compensation, shares Stock Grants for 3,656,926 $ 0 $ 3,621,769 0 3,621,769 35,157 $ 0 Compensation, amount Share-Based Compensation, 5,916,125 0 5,916,125 0 5,916,125 0 0 amount Deferred Tax Impact on (11,009,989) 0 (10,452,700)(557,289) (11,009,989) 0 0 Conversion Feature

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 1,492,073 $ 0 $ 0 0 0 1,492,073 $ 0 Shares Issued for Cash, shares 61,596,792 Shares Issued for Cash, $ 50,193,938 $ 0 0 50,193,938 0 $ 0 amount 50,193,938 Shares Issued to Settle Contingent Consideration, 13,737,444 shares Shares Issued to Settle $ Contingent Consideration, 11,559,875 $ 0 0 11,559,875 0 $ 0 11,559,875 amount Equity Component of Debt - 23,781,053 $ 0 23,781,053 0 23,781,053 0 $ 0 New and Amended Shares Issued for Vested 329,548 Restricted Stock Units, shares Shares Issued for Vested 0 $ 0 0 0 0 0 $ 0 Restricted Stock Units, amount Shares Issued for Other 13,479,589 Assets, shares Shares Issued for Other 7,802,182 $ 0 $ 7,802,182 0 7,802,182 0 $ 0 Assets, amount Shares Issued for Acquisition 765,876 Costs, shares Shares Issued for Acquisition 564,464 $ 0 $ 564,464 0 564,464 0 $ 0 Costs, amount Shares Issued for Business 5,112,263 Acquisition, shares Shares Issued for Business 9,833,000 $ 0 $ 9,833,000 0 9,833,000 0 $ 0 Acquisition, amount Distributions (310,633) 0 0 0 0 (310,633) 0 Equity Component on Debt 5,331,969 $ 0 $ 0 0 0 5,331,969 $ 0 and Debt Modification Shares Issued to Settle Debt 6,801,790 and Accrued Interest, shares Shares Issued to Settle Debt 5,255,172 $ 0 $ 5,255,172 0 5,255,172 0 $ 0 and Accrued Interest, amount Shares Issued to Settle Accounts Payable and 24,116,461 Liabilities, shares Shares Issued to Settle Accounts Payable and $ 7,477,045 $ 0 $ 7,477,045 $ 0 $ 7,477,045 $ 0 $ 0 Liabilities, amount Repurchase and Cancellation (815,295) of Super Voting Shares, shares Repurchase and Cancellation of Super Voting Shares, $ (475,650) $ 0 $ 82,500 $ (475,650) $ (475,650) $ 0 $ (82,500) amount Balance, shares at Jun. 27, 403,907,218 815,295 2020 Balance, amount at Jun. 27, (176,888,450)$ 0 791,172,613 (631,365,866)159,889,247 (336,777,697) $ 82,500 2020 Net Loss (101,708,342)$ 0 0 (71,615,346) (71,615,346) (30,092,996) 0 Redemption of MedMen Corp 88,945,434 Redeemable Shares, shares Redemption of MedMen Corp 0 $ 0 13,655,293 34,925,150 48,580,443 (48,580,443) 0 Redeemable Shares, amount

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock Grants for 3,001,282 Compensation, shares Stock Grants for 817,252 $ 0 817,252 0 817,252 0 0 Compensation, amount Share-Based Compensation, 2,546,220 0 2,546,220 0 2,546,220 0 0 amount Deferred Tax Impact on (11,233,284) 0 (10,023,232)0 (10,023,232) (1,210,052) 0 Conversion Feature Equity Component of Debt - 33,589,921 $ 0 33,589,921 0 33,589,921 0 0 New and Amended Shares Issued for Vested 7,173,256 Restricted Stock Units, shares Shares Issued for Vested 437,386 $ 0 437,386 0 437,386 0 0 Restricted Stock Units, amount Shares Issued for Acquisition 2,082,890 Costs, shares Shares Issued for Acquisition 318,095 $ 0 318,095 0 318,095 0 0 Costs, amount Equity Component on Debt 4,055,133 $ 0 0 0 0 4,055,133 $ 0 and Debt Modification Shares Issued to Settle Accounts Payable and 7,205,754 Liabilities, shares Shares Issued to Settle Accounts Payable and $ 1,159,071 $ 0 $ 1,159,071 $ 0 $ 1,159,071 $ 0 Liabilities, amount Repurchase and Cancellation 82,500 (815,295) of Super Voting Shares, shares Deemed Dividend - Down $ 0 $ 0 $ 6,364,183 $ (6,364,183) $ 0 $ 0 $ 0 Round Feature of Warrants Cancellation of Super Voting (82,500) Shares, amount Non-Controlling Interest 0 $ 0 0 0 0 0 $ 0 Equity Transactions Balance, shares at Dec. 26, 512,315,834 2020 Balance, amount at Dec. 26, $ $ $ $ 0 $ 165,699,057 $ (412,606,055) $ 0 2020 (246,906,998) 840,119,302 (674,420,245)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unaudited Interim 6 Months Ended 12 Months Ended Condensed Consolidated Statements of Cash Flows - Dec. 26, 2020 Dec. 28, 2019 Jun. 27, 2020 Jun. 29, 2019 USD ($) CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss from Continuing Operations $ $ $ $ (100,227,933)(116,120,451)(475,749,370)(256,656,458) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Deferred Tax (Recovery) Expense (13,457,855) (44,914,110) (58,422,755) (26,144,449) Depreciation and Amortization 18,889,212 17,476,078 42,943,366 23,679,315 Non-Cash Operating Lease Costs 15,692,972 14,964,892 30,661,411 0 Accretion of Debt Discount and Loan Origination Fees 10,103,664 4,898,960 9,061,967 8,308,751 Loss on Disposal of Asset 669,601 0 0 9,315,073 Gain on Lease Modifications (17,908,817) 0 Accretion of Deferred Gain on Sale of Property (283,315) (283,313) (566,625) (368,309) Impairment of Assets 789,709 0 239,509,415 0 Realized and Unrealized Gain on Investments, Assets (10,454,608) (16,514,480) (16,373,788) (4,259,000) Held for Sale and Other Assets Unrealized Gain on Changes in Fair Value of 390,727 7,499,325 8,951,801 0 Contingent Consideration Change in Fair Value of Derivative Liabilities (127,500) (8,029,704) (8,797,409) (3,908,722) Loss on Extinguishment of Debt and Settlement of 10,429,797 32,182,825 44,355,401 1,164,054 Accounts Payables and Accrued Liabilities Share-Based Compensation 3,800,858 9,512,324 11,065,124 32,494,214 Shares Issued for Acquisition Costs 318,095 421,497 564,464 1,112,820 Changes in Operating Assets and Liabilities: Accounts Receivable and Income Taxes Receivable (300,602) (1,100,239) (342,052) (303,786) Prepaid Rent - Related Party 0 2,712,237 2,712,237 (1,356,270) Prepaid Expenses (172) 7,245,054 9,227,342 (4,511,307) Inventory (2,857,752) (9,441,420) 3,265,309 (18,394,457) Other Current Assets 5,498,567 1,330,104 6,846,673 923,471 Due from Related Party 0 994,170 1,524,738 (1,412,420) Other Assets 237,080 (9,317,551) (10,833,928) (19,896,170) Accounts Payable and Accrued Liabilities 4,997,688 39,897,922 49,815,754 30,555,656 Income Taxes Payable 47,743,296 11,506,388 20,015,975 9,705,252 Other Current Liabilities 16,953,294 7,482,398 16,308,233 (17,507,245) Interest Payments on Finance Leases (1,984,118) (2,982,699) (6,262,019) 0 Cash Payments - Operating Lease Liabilities (16,077,196) (17,329,775) (27,304,389) 0 Due to Related Party (182,087) (717,848) (1,084,003) (6,752,861) Other Non-Current Liabilities 0 (11,984) 787,492 (774,000) NET CASH USED IN CONTINUED OPERATING (27,347,395) (68,639,400) (108,119,636) (243,000,588) ACTIVITIES

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net Cash Used in Discontinued Operating Activities (2,347,948) (1,041,277) (2,007,113) 1,986,260 NET CASH USED IN OPERATING ACTIVITIES (29,695,343) (69,680,677) (110,126,749) (242,000,588) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of Property and Equipment (1,490,447) (48,295,906) (56,687,761) (116,897,412) Additions to Intangible Assets (1,891,526) (2,359,664) (4,140,786) (3,084,097) Sale of Investments 0 12,500,000 12,500,000 0 Purchase of Investments 0 (8,759,791) Proceeds from Sale of Assets Held for Sale and Other 18,752,185 4,952,822 21,947,797 0 Assets Proceeds from Sale of Property 0 9,300,000 9,300,000 24,073,319 Cash Payments for Asset Acquisitions 0 (19,780,494) Acquisition of Businesses, Net of Cash Acquired 0 (1,000,001) (1,000,000) (26,661,541) Restricted Cash 3,863 (60,256) 45,745 6,107,981 NET CASH PROVIDED BY (USED IN) 15,374,075 (24,963,005) (18,035,005) (145,002,035) CONTINUED INVESTING ACTIVITIES Net Cash Used in Discontinued Investing Activities 0 (1,491,328) (1,356,211) (1,458,866) NET CASH PROVIDED BY (USED IN) 15,374,075 (26,454,333) (19,391,216) (146,460,901) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Subordinate Voting Shares for Cash 0 52,599,249 62,593,190 128,595,775 Exercise of Warrants for MedMen Corp Redeemable 8,521,268 Shares Payment of Loan Amendment Fee (500,000) 0 Cash Received in Advance for Issuance of Equity 0 2,000,000 Proceeds from Issuance of Senior Secured Convertible 5,468,565 35,000,000 50,000,000 100,000,000 Credit Facility Proceeds from Issuance of Notes Payable 14,830,279 13,850,000 13,850,000 166,243,539 Principal Repayments of Senior Secured Convertible (8,000,000) 0 Credit Facility Principal Repayments of Notes Payable (481,780) (12,745,839) (14,779,090) (55,007,057) Principal Repayments of Finance Lease Liability (39,880) (297,588) (1,785,282) (492,030) Debt and Equity Issuance Costs 0 (1,186,187) (1,939,394) (4,096,229) Distributions - Non-Controlling Interest 0 (310,633) (310,633) 290,000 NET CASH PROVIDED BY FINANCING 11,777,184 88,909,002 107,128,791 344,055,266 ACTIVITIES NET DECREASE IN CASH AND CASH (2,544,084) (7,226,008) (22,389,174) (45,406,223) EQUIVALENTS Cash Included in Assets Held for Sale (743,271) (527,377) Cash and Cash Equivalents, Beginning of Period 10,093,925 33,226,370 33,226,370 79,159,970 CASH AND CASH EQUIVALENTS, END OF 7,549,841 26,000,362 10,093,925 33,226,370 PERIOD SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash Paid for Interest 4,542,208 4,204,613 38,608,975 13,471,532 Non-Cash Investing and Financing Activities: Net Assets Transferred to Held for Sale 6,614,987 11,823,655 23,890,069 49,785,079 Receivable Recorded on Asset Held for Sale 2,876,792 0 Adoption of ASC 842 - Leases 0 162,551,190 152,141,639 0 Lease Termination and Amendments 36,767,595 0 Recognition of Right-of-Use Assets for Finance Leases 350,249 45,614,041 45,614,041 0 Paid-in-Kind Interest Capitalized to Debt 24,032,739 0 Settlement of Contingent Consideration with Shares 0 10,811,219 11,559,875 0 Derivative Liability Incurred on Issuance of Equity 13,252,207 Increase in Fair Value of Contingent Consideration 0 9,374,487 9,374,487 8,438,690 Related to Asset Acquisition Issuance of Subordinate Voting Shares for Intangible 0 7,302,040 12,706,563 2,986,501 Assets and Other Assets Other Assets 0 343,678 Redemption of MedMen Corp Redeemable Shares 48,580,443 675,128 32,192,800 7,683,232 Redemption of MedMen LLC Redeemable Shares 0 24,439,469 Acquisition of Non-Controlling Interests 0 96,549 Options Issued for Other Assets 0 633,837 Equity Component of Debt Modification - Non- 5,331,969 21,138,824 Controlling Interest Shares Issued for Debt Issuance Costs 0 5,836,550 Conversion of Convertible Debentures 0 3,802,381 Release of Investments for Liabilities 750,000 0 Shares Issued to Settle Debt and Accrued Interest 6,908,194 0 Shares Issued to Settle Accounts Payable and 1,159,071 2,028,342 4,798,343 8,929,288 Liabilities Equity Component of Debt - New and Amended 5,310,375 0 23,781,053 0 Accrued Interest Added to Senior Secured Convertible 10,247,255 0 Debt Finance Lease Assets Acquired Under Sale and 0 16,876,813 Leaseback Transactions Net Effect of Equity on Debt, amount 0 2,517,014 Deferred Tax Impact on Property Purchases 15,948,592 26,230,572 Deferred Tax Impact on Intangible Purchases (362,125) 36,154,740 Deferred Tax Impact on Conversion Feature $ 11,233,284 $ 260 11,009,989 7,473,216 Deferred Tax Impact on Intangible Asset Acquisitions 0 0 Accrual for the Repurchase of Class A Super Voting 475,650 0 Shares Deferred Gain on Sale and Leaseback Transactions $ 0 $ 5,666,274

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document NATURE OF 6 Months Ended 12 Months Ended OPERATIONS Dec. 26, 2020 Jun. 27, 2020 NATURE OF OPERATIONS Note 1. NATURE OF MedMen Enterprises Inc. (“MedMen MedMen Enterprises Inc. (“MedMen OPERATIONS Enterprises” or the “Company”), formerly Enterprises” or the “Company”), formerly known as Ladera Ventures Corp., was known as Ladera Ventures Corp., was incorporated under the Business Corporations incorporated under the Business Corporations Act (British Columbia) on May 21, 1987. The Act (British Columbia) on May 21, 1987. The Company’s Class B Subordinate Voting Shares Company’s Class B Subordinate Voting Shares are listed on the Canadian Securities Exchange are listed on the Canadian Securities Exchange under the symbol “MMEN”, on the OTCQX under the symbol “MMEN”, on the OTCQX under the symbol “MMNFF”, on the Frankfurt under the symbol “MMNFF”, on the Frankfurt Stock Exchange under the symbol “OJS.F”, on Stock Exchange under the symbol “OJS.F”, on the Stuttgart Stock Exchange under the symbol the Stuttgart Stock Exchange under the symbol “OJS.SG”, on the Munich Stock Exchange under “OJS.SG”, on the Munich Stock Exchange under the symbol “OJS.MU”, on the Berlin Stock the symbol “OJS.MU”, on the Berlin Stock Exchange under the symbol “OJS.BE” and on Exchange under the symbol “OJS.BE” and on the Dusseldorf Stock Exchange under the symbol the Dusseldorf Stock Exchange under the symbol “OJS.DU”. The head office and principal address “OJS.DU”. The head office and principal address of the Company is 10115 Jefferson Boulevard, of the Company is 10115 Jefferson Boulevard, Culver City, California 90232. The Company’s Culver City, California 90232. The Company’s registered and records office address is 885 West registered and records office address is 885 West Georgia Street, Suite 2200, Vancouver, British Georgia Street, Suite 2200, Vancouver, British Columbia Canada V6C 3E8. The Company Columbia Canada V6C 3E8. The Company operates through its principal wholly-owned operates through its principal whole-owned subsidiaries, MM CAN USA, Inc., a California subsidiaries, MM CAN USA, Inc., a California corporation (“MM CAN” or “MedMen Corp”), corporation (“MM CAN” or “MedMen Corp”), and MM Enterprises USA, LLC, a Delaware and MM Enterprises USA, LLC, a Delaware limited liability company (“MM Enterprises limited liability company (“MM Enterprises USA”). USA”).

MM CAN was converted into a California MM CAN was converted into a California corporation (from a Delaware corporation) on corporation (from a Delaware corporation) on May 16, 2018 and is based in Culver City, May 16, 2018 and is based in Culver City, California. The head office and principal address California. The head office and principal address of MM CAN is 10115 Jefferson Boulevard, of MM CAN is 10115 Jefferson Boulevard, Culver City, California 90232. Culver City, California 90232.

MM Enterprises USA was formed on January MM Enterprises USA was formed on January 9, 2018 and is based in Culver City, California. 9, 2018 and is based in Culver City, California. The head office and principal address of MM The head office and principal address of MM Enterprises USA is 10115 Jefferson Boulevard, Enterprises USA is 10115 Jefferson Boulevard, Culver City, California 90232. MM Enterprises Culver City, California 90232. MM Enterprises USA was formed as a joint venture whose USA was formed as a joint venture whose contributors were MMMG, LLC (“MMMG”); contributors were MMMG, LLC (“MMMG”); MedMen Opportunity Fund, LP (“Fund I”); MedMen Opportunity Fund, LP (“Fund I”); MedMen Opportunity Fund II, LP (“Fund II”), MedMen Opportunity Fund II, LP (“Fund II”), The MedMen of Nevada 2, LLC (“MMNV2”); The MedMen of Nevada 2, LLC (“MMNV2”); DHSM Investors, LLC (“DHS Owner”); and DHSM Investors, LLC (“DHS Owner”); and Bloomfield Partners Utica, LLC (“Utica Bloomfield Partners Utica, LLC (“Utica Owner”) (collectively, the “MedMen Group of Owner”) (collectively, the “MedMen Group of Companies”). Companies”).

On January 24, 2018, pursuant to a Formation On January 24, 2018, pursuant to a Formation and Contribution Agreement (the “Agreement”), and Contribution Agreement (the “Agreement”),

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document a roll-up transaction was consummated whereby a roll-up transaction was consummated whereby the assets and liabilities of the MedMen Group the assets and liabilities of The MedMen Group of Companies were transferred into MM of Companies were transferred into MM Enterprises USA. In return, the MedMen Group Enterprises USA. In return, the MedMen Group of Companies received 217,184,382 MM of Companies received 217,184,382 MM Enterprises USA Class B Units. The Agreement Enterprises USA Class B Units. The Agreement was entered into by and among MM Enterprises was entered into by and among MM Enterprises Manager, LLC, the sole manager of MM Manager, LLC, the sole manager of MM Enterprises USA; MMMG; Fund I; Fund II; Enterprises USA; MMMG; Fund I; Fund II; MMNV2; DHS Owner; and Utica Owner. MMNV2; DHS Owner; and Utica Owner.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SUMMARY OF 6 Months Ended 12 Months Ended SIGNIFICANT Dec. 26, 2020 Jun. 27, 2020 ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Note 2. SUMMARY OF Basis of Preparation Basis of Preparation SIGNIFICANT The accompanying unaudited The accompanying consolidated financial statements have been ACCOUNTING POLICIES interim Condensed prepared on a going concern basis in accordance with accounting Consolidated Financial principles generally accepted in the United States of America Statements have been prepared (“GAAP”) and reflect the accounts and operations of the on a going concern basis in Company and those of the Company’s subsidiaries in which the accordance with accounting Company has a controlling financial interest. principles generally accepted in the United States of America All intercompany transactions and balances have been eliminated (“GAAP”) for interim financial in consolidation. In the opinion of management, all adjustments information and in accordance (consisting only of normal recurring adjustments) considered with the rules and regulations necessary for a fair presentation of the consolidated financial of the Securities and Exchange position of the Company as of June 27, 2020 and June 29, 2019, Commission (“SEC”). The the consolidated results of operations and cash flows for the years unaudited interim Condensed ended June 27, 2020 and June 29, 2019 have been included. In Consolidated Financial accordance with the provisions of FASB ASC 810, Statements include the “Consolidation” (“ASC 810”), the Company consolidates any accounts of MedMen variable interest entity (“VIE”), of which the Company is the Enterprises, its subsidiaries and primary beneficiary. variable interest entities (“VIEs”) where the Company Fiscal Year-End is considered the primary beneficiary, if any, after The Company’s fiscal year is a 52/53 week year ending on the last elimination of intercompany Saturday in June. In a 52-week fiscal year, each of the Company’s accounts and transactions. quarterly periods will comprise 13 weeks. The additional week in Investments in entities in a 53-week fiscal year is added to the fourth quarter, making such which the Company has quarter consist of 14 weeks. The Company’s first 53-week fiscal significant influence, but less year will occur in fiscal year 2024. The Company’s fiscal years than a controlling financial ended June 27, 2020 and June 29, 2019 included 52 weeks. interest, are accounted for using the equity method. Going Concern

In the opinion of management, As reflected in the consolidated financial statements, the all adjustments (consisting Company had an accumulated deficit and a negative net working only of normal recurring capital (current liabilities greater than current assets) as of June adjustments) considered 27, 2020, as well as a net loss and negative cash flow from necessary for a fair operating activities for the reporting period then ended. These presentation of the factors raise substantial doubt about the Company’s ability to consolidated financial position continue as a going concern for at least one year from the of the Company as of issuance of these financial statements. December 26, 2020 and June 27, 2020, the consolidated Management believes that substantial doubt of our ability to meet results of operations for the our obligations for the next twelve months from the date these three and six months ended financial statements were first made available has been alleviated December 26, 2020 and due to, but not limited to, (i) capital raised between July 2020 and December 28, 2019, and the July 2021, (ii) restructuring plans that have already been put in consolidated statements of cash place to reduce corporate-level expenses, (iii) debt amendments flows for the six months ended that have been agreed to with lenders and landlords to defer cash December 26, 2020 and interest and rent payments, (iv) reduction in capital expenditures

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document December 28, 2019 have been through a slow-down in new store buildouts, (v) plans to divest included. non-core assets to raise non-dilutive capital, (vi) enhancements to its digital offering, including direct-to-consumer delivery and The accompanying unaudited curbside pick-up in light of COVID-19 and (vii) a change in retail interim Condensed strategy to pass certain local taxes and payment processing fees to Consolidated Financial customers. Statements do not include all of the information required for However, management cannot provide any assurances that we full annual financial will be successful in accomplishing any of our plans. statements. Accordingly, Management also cannot provide any assurance as to unforeseen certain information, footnotes circumstances that could occur at any time within the next twelve and disclosures normally months or thereafter which could increase our need to raise included in the annual financial additional capital on an immediate basis. statements, prepared in accordance with GAAP, have The Company will continually monitor its capital requirements been condensed or omitted in based on its capital and operational needs and the economic accordance with SEC rules and environment and may raise new capital as necessary. The regulations within the Company’s ability to continue as a going concern will depend on instruction to Form 10-Q and its ability to raise additional equity or debt in the private or public Article 10 of Regulation S-X. markets, reducing operating expenses, divesting of certain non- The financial data presented core assets, achieving cash flow profitability. While the Company herein should be read in has been successful in raising equity and debt to date, there can be conjunction with the audited no assurances that the Company will be successful in completing Consolidated Financial a financing in the future. If the Company is unable to raise Statements and accompanying additional capital whenever necessary, it may be forced to divest notes included in this additional assets to raise capital and/or pay down its debt, amend prospectus. its debt agreements which could potentially have a dilutive effect on the Company’s shareholders, further reduce operating Going Concern expenses and temporarily pause the opening of new store locations. Furthermore, COVID-19 and the impact the global As reflected in the Condensed pandemic has had and will continue to have on the broader retail Consolidated Financial environment could also have a significant impact on the Statements, the Company had Company’s financial operations. an accumulated deficit and a negative net working capital Emerging Growth Company (current liabilities greater than current assets) as of December The Company is an emerging growth company as defined in the 26, 2020, as well as a net loss Jumpstart Our Business Startups Act (the “JOBS Act”) under and negative cash flow from which emerging growth companies can delay adopting new or operating activities for the revised accounting standards until such time as those standards reporting period then ended. apply to private companies. These factors raise substantial doubt about the Company’s Functional Currency ability to continue as a going concern for at least one year The Company and its subsidiaries’ functional currency, as from the issuance of these determined by management, is the United States (“U.S.”) dollar. unaudited interim Condensed These consolidated financial statements are presented in U.S. Consolidated Financial dollars as this is the primary economic environment of the group. Statements. All references to “C$” refer to Canadian dollars.

Management believes that Consolidation of Variable Interest Entities (“VIE”) substantial doubt of our ability to meet our obligations for the ASC 810 requires a variable interest holder to consolidate a VIE next twelve months from the if that party has the power to direct the activities of the VIE that date these financial statements most significantly impact the VIE’s economic performance and were first made available has the obligation to absorb losses of the VIE that could potentially be been alleviated due to, but not significant to the VIE or the right to receive benefits from the VIE limited to, (i) capital raised that could potentially be significant to the VIE. To determine between February 2021 and whether or not a variable interest the Company holds could

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document February 2022, (ii) potentially be significant to the VIE, the Company considers both restructuring plans that have qualitative and quantitative factors regarding the nature, size and already been put in place to form of the Company’s involvement with the VIE. The equity reduce corporate-level method of accounting is applied to entities in which the Company expenses, (iii) debt is not the primary beneficiary or the entity is not a VIE and the amendments that have been Company does not have effective control, but can exercise agreed to with lenders and influence over the entity with respect to its operations and major landlords to defer cash interest decisions. The Company does not consolidate a VIE in which it is and rent payments, (iv) not considered the primary beneficiary. The Company evaluates reduction in capital its relationships with all the VIE’s on an ongoing basis to reassess expenditures through a slow- if it continues to be the primary beneficiary. down in new store buildouts, (v) plans to divest non-core The following are the Company’s VIE that are included in these assets to raise non-dilutive consolidated financial statements as of and for the fiscal years capital, (vi) enhancements to ended June 27, 2020 and June 29, 2019: its digital offering, including direct-to-consumer delivery Retail Entities and curbside pick-up in light of COVID-19 and (vii) a change Ownership in retail strategy to pass certain Entity Location Purpose 2020 2019 local taxes and payment processing fees to customers. Nature’s Cure, Los Inc. Angeles - Dispensary However, management cannot LAX provide any assurances that we (1)(3) Airport 0% 0% will be successful in LAX Fund II accomplishing any of our Group, LLC (1)(4) 0% 0% plans. Management also cannot Venice Venice provide any assurance as to Caregiver Beach - Dispensary unforeseen circumstances that Foundation, Inc. Abbot could occur at any time within (2)(3) Kinney 0% 0% the next twelve months or thereafter which could increase (1) Nature’s Cure, Inc. is wholly-owned by MedMen Opportunity our need to raise additional Fund II, LP, a related party, and under control of the Company capital on an immediate basis. through a management agreement. The Company does not hold any ownership interests in the entity. The Company will continually (2) Venice Caregivers Foundation, Inc. is wholly-owned by monitor its capital MedMen Opportunity Fund II, LP, a related party, and under requirements based on its control of the Company through a management agreement. The capital and operational needs Company does not hold any ownership interests in the entity. and the economic environment (3) and may raise new capital as California Corporation necessary. The Company’s (4) California Limited Liability Company ability to continue as a going concern will depend on its Basis of Consolidation ability to raise additional equity or debt in the private or These consolidated financial statements as of and for the year public markets, reducing ended June 27, 2020 and June 29, 2019 include the accounts of operating expenses, divesting the Company, its wholly-owned subsidiaries and entities over of certain non-core assets, which the Company has control as defined in ASC 810. achieving cash flow Subsidiaries over which the Company has control are fully profitability. While the consolidated from the date control commences until the date Company has been successful control ceases. Control exists when the Company has ownership in raising equity and debt to of a majority voting interest, and, therefore, as a general rule date, there can be no ownership by one reporting entity, directly or indirectly, of more assurances that the Company than 50 percent of the outstanding voting shares of another entity. will be successful in In assessing control, potential voting rights that are currently completing a financing in the exercisable are taken into account. future. If the Company is

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document unable to raise additional The following are the Company’s principal whole-owned capital whenever necessary, it subsidiaries that are included in these consolidated financial may be forced to divest statements as of and for the fiscal years ended June 27, 2020 and additional assets to raise capital June 29, 2019: and/or pay down its debt, amend its debt agreements Corporate Entities which could potentially have a dilutive effect on the Ownership Company’s shareholders, Entity Location Purpose 2020 2019 further reduce operating expenses and temporarily MM CAN USA, Manager pause the opening of new store Inc. of MM locations. Furthermore, California Enterprises COVID-19 and the impact the (5) USA, LLC 100% 100% global pandemic has had and MM Enterprises Operating will continue to have on the Delaware USA, LLC (8) Entity 100% 100% broader retail environment Convergence Public could also have a significant Management Canada Relations impact on the Company’s Services, Ltd. (17) Entity 100% 0% financial operations. Management Entities COVID-19 Ownership The COVID-19 pandemic Subsidiaries Location Purpose 2020 2019 promoted unparalleled procedures from governments LCR SLP, LLC Holding and businesses such as Delaware (8) Company 100% 100% restrictions on travel and LCR Manager, Delaware Manager business operations, temporary LLC of the closures of businesses, and Real Estate quarantine and shelter-in-place Investment orders. During the current (16) Trust 0% 70% reporting period, aspects of the Company’s business continue The following are MM Enterprises USA’s wholly-owned to be affected by the subsidiaries and entities over which the Company has control that COVID-19 pandemic, with the are included in these consolidated financial statements as of and Company’s offices and retail for the fiscal years ended June 27, 2020 and June 29, 2019: stores operating within local rules and regulations. While Real Estate Entities the ultimate severity of the Ownership outbreak and its impact on the economic environment is Subsidiaries Location Purpose 2020 2019 uncertain, the Company is monitoring this closely. In the MMOF Venice Venice event that the Company were Parking, LLC Beach - Parking to experience widespread Lincoln Lot transmission of the virus at one (6) Blvd. 100% 100% or more of the Company’s store MME RE AK, LLC Venice Beach - or other facilities, the Company Building could suffer reputational harm Abbot or other potential liability. (6) Kinney 100% 100% Further, the Company’s MMOF RE SD, LLC San Diego business operations may be - Kearny Building materially and adversely (6) Mesa 100% 100% MMOF RE Vegas 2, Las Vegas affected if a significant number Building of the Company’s employees LLC (10) - The Strip 100% 100% are impacted by the virus. MMOF RE Fremont, Las Vegas LLC - Building Emerging Growth Company (10) Downtown 100% 100%

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company is an emerging Arts growth company as defined in District the Jumpstart Our Business MME RE BH, LLC Los Startups Act (the “JOBS Act”) Angeles - Building under which emerging growth Beverly companies can delay adopting (6) Hills 100% 100% new or revised accounting NVGN RE Holdings, Genetics standards until such time as LLC Nevada R&D those standards apply to private (10) Facility 100% 100% companies.

Functional Currency Retail Entities

The Company and its Ownership subsidiaries’ functional Subsidiaries Location Purpose 2020 2019 currency, as determined by management, is the United Manlin I, Los States (“U.S.”) dollar. These LLC Angeles - Dispensary unaudited interim Condensed West Consolidated Financial (1)(2)(6) Hollywood 100% 100% Statements are presented in Farmacy Los U.S. dollars as this is the Collective Angeles - Dispensary primary economic environment West of the group. All references to (1)(3)(7) Hollywood 100% 100% “C$” refer to Canadian dollars. The Source Orange Santa Ana County - Dispensary Significant Accounting (1(4)(6) Santa Ana 100% 100% Policies SA Fund Group RT, The significant accounting LLC 100% 100% policies and critical estimates CYON Los applied by the Company in Corporation, Angeles - Dispensary these unaudited interim Inc. Beverly Condensed Consolidated (5) Hills 100% 100% Financial Statements are the BH Fund II same as those applied in the Group, LLC (6) 100% 100% Company’s audited MMOF Los Consolidated Financial Downtown Angeles - Dispensary Statements and accompanying Collective, Downtown notes included in this LLC (6) 100% 100% prospectus, unless otherwise Advanced disclosed in these Patients’ accompanying notes to the Collective (5) 100% 100% Condensed Consolidated DT Fund II Financial Statements for the six Group, LLC (5) 100% 100% months ended December 26, MMOF San San Diego 2020. Diego Retail, - Kearny Dispensary Inc. (6) Mesa 100% 100% Restricted Cash San Diego Retail Group Restricted cash balances are II, LLC (5) 100% 100% those which meet the definition MMOF Venice of cash and cash equivalents Venice, LLC Beach - Dispensary but are not available for use by Lincoln the Company. As of December (6) Blvd. 100% 100% 26, 2020 and June 27, 2020, The restricted cash was $6,010 and Compassion (5) 100% 100% $9,873, respectively, which is

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document used to pay for lease costs and Network, costs incurred related to LLC building construction in Reno, MMOF PD, Palm Nevada. This account is Dispensary LLC (6) Desert 100% 100% managed by a contractor and MMOF Palm the Company is required to Desert, Inc. (5) 100% 100% maintain a certain minimum MMOF SM, Santa balance. Dispensary LLC (6) Monica 100% 100% MMOF Down-Round Provisions Santa Monica, Inc. (5) 100% 100% The Company calculates MMOF Las Vegas - down-round features under Fremont, Downtown Accounting Standards Update Dispensary LLC Arts (“ASU”) No. 2017-11, (10) District 100% 100% “Earnings Per Share (Topic MMOF 260); Distinguishing Liabilities Fremont from Equity (Topic 480); Retail, Inc. (9) 100% 100% Derivatives and Hedging MME SF San (Topic 815): (Part I) Dispensary Retail, Inc. (5) Francisco 100% 100% Accounting for Certain MMOF Las Vegas - Financial Instruments with Vegas, LLC North Las Dispensary Down Round Features” (“ASU (10) Vegas 100% 100% 2017-11”), in which down MMOF round features do not meet the Vegas Retail, criteria for derivative Inc. (9) 100% 100% accounting and no liability is MMOF to be recorded until an actual Las Vegas - Vegas 2, Dispensary issuance of securities triggers Cannacopia LLC (10) 100% 100% the down-round feature. MMOF Vegas Retail Loss per Share 2, Inc. (9) 100% 100% MME VMS, The Company calculates basic San Jose Dispensary LLC (7) 100% 100% loss per share by dividing net Viktoriya’s loss by the weighted-average Medical number of common shares Supplies, outstanding during the period. LLC (7) 100% 100% Diluted loss per share is Project determined by adjusting profit Compassion or loss attributable to common Venture, shareholders and the weighted- LLC (9) 100% 100% average number of common Project shares outstanding, for the Compassion effects of all dilutive potential Capital, LLC (9) 100% 100% common shares, which Project comprise convertible Compassion debentures, DSU, RSU, NY, LLC (9) 100% 100% warrants and stock options MedMen New York issued. NY, Inc. (Manhattan / Syracuse / Recently Adopted Accounting Dispensaries Lake Standards Success / (11) Buffalo) 100% 100% In June 2016, the Financial MME IL Oak Park, Accounting Standards Board Dispensary Group LLC (15) Illinois 100% 100% (“FASB”) issued ASU No. Future 2016-13, “Financial Transactions (15) 100% 100% Instruments - Credit Losses

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (Topic 326) Measurement of Credit Losses on Financial Holdings, Instruments” (“ASU LLC 2016-13”), which replaces the MME Seaside, Dispensary incurred loss model with a Seaside, LLC (6) California 100% 100% current expected credit loss PHSL, LLC (6) 100% 100% (“CECL”) model and requires MME San Diego consideration of a broader Sorrento - Sorrento Dispensary range of reasonable and Valley, LLC (6) Valley 100% 100% supportable information to Sure Felt, explain credit loss estimates. LLC (6) 100% 100% Under the new standard, the Rochambeau, Emeryville, Dispensary Company recognizes a loss Inc. (5) California 100% 100% allowance based on lifetime Kannaboost Scottsdale expected credit losses at each Technology, and Tempe, Dispensaries reporting date from the date of Inc. (14) Arizona 100% 100% the trade receivable. The CSI Company is not required to Solutions, track the changes in credit risk. LLC (13) 100% 100% The guidance must be adopted MME AZ Mesa, Dispensary using a modified retrospective Group, LLC (13) Arizona 100% 100% transition method through a EBA cumulative-effect adjustment Holdings, to retained earnings in the Inc. (14) 100% 100% period of adoption. The MattnJeremy, Long Company adopted ASU Inc. Beach, Dispensary 2016-13 on June 28, 2020. The (5) California 100% 0% adoption of the standard did Milkman, Grover not have a material impact on LLC Beach, Dispensary the Company’s unaudited (6) California 100% 0% interim condensed MME 1001 Chicago, consolidated financial North Retail, Dispensary Illinois statements. LLC (15) 100% 0% MME Evanston, In January 2017, the FASB Evanston Dispensary Illinois issued ASU No. 2017-04 Retail, LLC (15) 100% 0% “Intangibles— Goodwill and Other (Topic 350): Simplifying Cultivation Entities the Test for Goodwill Impairment” (“ASU Ownership 2017-04”), which provides a Subsidiaries Location Purpose 2020 2019 simplified assessment method whether goodwill is impaired Project Mustang Cultivation by removing the requirement to Development, Northern and determine the fair value of LLC Nevada Production individual assets and liabilities (10) Facility 100% 100% in order to calculate a reporting The MedMen of unit’s implied goodwill. Per Nevada 2, LLC (10) 100% 100% ASU 2017-04, the Company MMNV2 performed its goodwill Holdings I, LLC (10) 100% 100% impairment test by comparing MMNV2 the fair value of a reporting unit Holdings II, LLC (10) 100% 100% with its carrying amount. The MMNV2 Company should recognize a Holdings III, goodwill impairment charge LLC (10) 100% 100% for the amount by which the MMNV2 reporting unit’s carrying Holdings IV, amount exceeds its fair value. LLC (10) 100% 100% If fair value exceeds the

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document carrying amount, no MMNV2 impairment should be Holdings V, LLC (10) 100% 100% recorded. Any loss recognized Manlin DHS Cultivation should not exceed the total Desert Hot Development, and amount of goodwill allocated Springs, LLC Production to that reporting unit. California (10) Facility 100% 100% Impairment losses on goodwill Desert Hot cannot be reversed once Springs Green recognized. ASU 2017-04 Horizon, Inc. (7) 100% 100% must be applied prospectively Project Cultivation and is effective in fiscal years Compassion Utica, New and beginning after December 15, Venture, LLC York Production 2019. The Company adopted (8) Facility 100% 100% the new standard on June 28, EBA Holdings, Cultivation 2020. The adoption of the Inc. Mesa, and standard did not have a Arizona Production material impact on the (14) Facility 100% 100% Company’s unaudited interim Kannaboost Cultivation condensed consolidated Technology, Inc. Mesa, and financial statements. Arizona Production (14) Facility 100% 100% In August 2018, the FASB CSI Solutions, issued ASU 2018-13, “Fair LLC (13) 100% 100% Value Measurement (Topic MME Florida, Cultivation 820): Disclosure LLC Eustis, and Framework—Changes to the Florida Production Disclosure Requirements for (12) Facility 100% 100% Fair Value Measurement” (“ASU 2018-13”), which (1) Subsidiary over which the Company previously controlled removes, modifies and adds under a management agreement. See “Note 2 - certain disclosure requirements Consolidation of Variable Interest Entities” for further in Topic 820 “Fair Value information. All intercompany balances and transactions are Measurement”. Per ASU eliminated on consolidation. 2018-13 certain disclosures are (2) Manlin I, LLC contains the operations of the MedMen West eliminated which relate to Hollywood dispensary (“WeHo”). The Company had a transfers and the valuations management agreement with i5 Holdings Ltd. (“i5”) to process, modifies disclosures manage WeHo, which was wholly-owned by i5, an entity for investments that are valued controlled or owned by Captor Capital. Prior to January 25, based on net asset value, 2019, the Company consolidated the entity as a VIE. On clarifies the measurement January 25, 2019, the Company acquired all non-controlling uncertainty disclosure, and interest from i5. See “Note 19 - Shareholders’ Equity” for requires additional disclosures further information. for Level 3 fair value (3) Farmacy Collective contains the operations of WeHo. The measurements. ASU 2018-13 Company had a management agreement with i5 to manage must be applied prospectively WeHo, which was wholly-owned by i5, an entity controlled or and is effective in fiscal years owned by Captor Capital. Prior to January 25, 2019, the beginning after December 15, Company consolidated the entity as a VIE. On January 25, 2019. The Company adopted 2019, the Company acquired all non-controlling interest from the new standard on June 28, i5. See “Note 19 - Shareholders’ Equity” for further 2020. The adoption of the information. standard did not have a (4) The Source Santa Ana contains the operations of the MedMen material impact on the Santa Ana dispensary (“Santa Ana”). The Company had a Company’s unaudited interim management agreement with i5 to manage Santa Ana, which condensed consolidated was wholly-owned by i5, an entity controlled or owned by financial statements. Captor Capital. Prior to January 25, 2019, the Company consolidated the entity as a VIE. On January 25, 2019, the Recently Issued Accounting Company acquired all non-controlling interest from i5. See Standards “Note 19 - Shareholders’ Equity” for further information.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In December 2019, the FASB issued ASU 2019-12, (5) California Corporation “Simplifying the Accounting (6) California Limited Liability Company for Income Taxes (Topic 740)”, (7) California Non-Profit Corporation which eliminates certain exceptions related to the (8) Delaware Limited Liability Company approach for intraperiod tax (9) Nevada Corporation allocation, the methodology for (10)Nevada Limited Liability Company calculating income taxes in an (11)New York Corporation interim period and the recognition of deferred tax (12)Florida Limited Liability Company liabilities for outside basis (13)Arizona Limited Liability Company differences. It also clarifies and (14)Arizona Corporation simplifies other aspects of the (15)Illinois Liability Company accounting for income taxes. ASU 2019-12 is effective for (16)Delaware Limited Liability Company fiscal years beginning after December 15, 2020, and Non-Controlling Interest interim periods within those fiscal years. The Company is Non-controlling interest represents equity interests owned by evaluating the adoption date parties that are not shareholders of the ultimate parent. The share and impact, if any, adoption of net assets attributable to non-controlling interests is presented will have on its financial as a component of equity. Their share of net income or loss is position and results of recognized directly in equity. Changes in the parent company’s operations. ownership interest that do not result in a loss of control are accounted for as equity transactions. In January 2020, the FASB issued ASU 2020-01, Use of Estimates “Investments – Equity Securities (Topic 321)”, The preparation of the consolidated financial statements in “Investments – Equity Method accordance with GAAP requires management to make estimates and Joint Ventures (Topic and assumptions that affect the reported amounts of assets and 323)”, and “Derivatives and liabilities at the dates of the consolidated financial statements and Hedging (Topic 815)”, which is the reported amounts of total net revenue and expenses during the intended to clarify the reporting period. The Company regularly evaluates significant interaction of the accounting estimates and assumptions related to the consolidation or non- for equity securities under consolidation of variable interest entities, estimated useful lives, Topic 321 and investments depreciation of property and equipment, amortization of accounted for under the equity intangible assets, inventory valuation, stock-based compensation, method of accounting in Topic business combinations, goodwill impairment, long-lived asset 323 and the accounting for impairment, purchased asset valuations, fair value of financial certain forward contracts and instruments, compound financial instruments, derivative purchased options accounted liabilities, deferred income tax asset valuation allowances, for under Topic 815. The incremental borrowing rates, lease terms applicable to lease standard is effective for the contracts and going concern. These estimates and assumptions are Company beginning January 1, based on current facts, historical experience and various other 2021. The Company is factors that the Company believes to be reasonable under the currently evaluating the effect circumstances, the results of which form the basis for making of adopting this ASU on the judgments about the carrying values of assets and liabilities and Company’s financial the recording of revenue, costs and expenses that are not readily statements. apparent from other sources. The actual results the Company experiences may differ materially and adversely from these In August 2020, the FASB estimates. To the extent there are material differences between the issued ASU 2020-06, “Debt – estimates and actual results, the Company’s future results of Debt with Conversion and operations. Other Options (Subtopic 470-20)” and “Derivatives and Cash and Cash Equivalents Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Restricted Cash

Inventory Accounting for Convertible Inventory is comprised of raw materials, finished goods and instruments and contracts in an work-in-process such as pre-harvested cannabis plants and by- Entity’s Own Equity”, which products to be extracted. The costs of growing cannabis, simplifies the accounting for including but not limited to labor, utilities, nutrition and supplies, certain financial instruments are capitalized into inventory until the time of harvest. All direct with characteristics of and indirect costs related to inventory are capitalized when liabilities and equity, including incurred, and subsequently classified to cost of goods sold in the convertible instruments and Consolidated Statement of Operations. Raw materials and work- contracts on an entity’s own in-process is stated at the lower of cost or net realizable value, equity. ASU 2020-06 is determined using the weighted average cost. Finished goods effective for the Company for inventory is stated at the lower of cost or net realizable value, fiscal years beginning after with cost being determined on the first-in, first-out (“FIFO”) December 15, 2021, and method of accounting. Net realizable value is determined as the interim periods within those estimated selling price in the ordinary course of business less fiscal years. Early adoption is estimated costs to sell. The Company periodically reviews permitted for fiscal years physical inventory for excess, obsolete, and potentially impaired beginning after December 15, items and reserves. The Company reviews inventory for obsolete, 2020, and interim periods redundant and slow-moving goods and any such inventory is within those fiscal years. written down to net realizable value. Packaging and supplies are Adoption is applied on a initially valued at cost. The reserve estimate for excess and modified or full retrospective obsolete inventory is based on expected future use. The reserve transition approach. The estimates have historically been consistent with actual experience Company is currently as evidenced by actual sale or disposal of the goods. As of June evaluating the adoption date 27, 2020 and June 29, 2019, the Company determined that no and impact, if any, adoption reserve was necessary. will have on its financial position and results of Investments operations. Investments in unconsolidated affiliates are accounted as follows:

Equity Method and Joint Venture Investments

Investments at Fair Value

Investments in Equity without Readily Determinable Fair Value

Property and Equipment

Intangible Assets

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document indefinite life or not yet available for use are not subject to amortization. Amortization is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods

Dispensary Licenses 15 Years Customer 5 Years Relationships Management 30 Years Agreement Intellectual Property 10 Years Capitalized Software 3 Years

Goodwill

Impairment of Long-Lived Assets

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document recoverability test (Step 1) compares the carrying amount of the asset to the sum of its future undiscounted cash flows using entity-specific assumptions generated through the asset’s use and eventual disposition. If the carrying amount of the asset is less than the cash flows, the asset is recoverable and an impairment is not recorded. If the carrying amount of the asset is greater than the cash flows, the asset is not recoverable and an impairment loss calculation (Step 2) is required. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. The reversal of impairment losses is prohibited.

Leased Assets

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document interrelated with another right of-use asset. Lessees are required to record a right of use asset and a lease liability for all leases with a term greater than twelve months. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The incremental borrowing rate is determined using estimates which are based on the information available at commencement date and determines the present value of lease payments if the implicit rate is unavailable.

Income Taxes

Tax expense recognized in profit or loss comprises the sum of current and deferred taxes not recognized in other comprehensive income or directly in equity.

Current Tax

Deferred Tax

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Deferred tax assets are recognized to the extent that the Company believe that these assets are more likely than not to be realized. In making such a determination, all available positive and negative evidence are considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If it is determined that the Company would be able to realize deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax asset valuation allowance is recorded, which would reduce the provision for income taxes.

Change in Tax Policy

Increase (Decrease) Consolidated Balance Sheet Property and Equipment, Net $(6,105,588) Deferred Tax Liabilities $(9,540,007) Accumulated Deficit $ 3,434,419

Consolidated Statement of Cash Flows Deferred Tax (Recovery) Expense $(3,355,935) Depreciation and Amortization $ (78,484) Non - Cash Deferred Tax Impact on Property Purchases $(6,184,072)

Convertible Instruments

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”.

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance ASC 470, “Accounting for Convertible Securities with Beneficial Conversion Features”, as those professional standards pertain to “Certain Convertible Instruments”. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Derivative Liabilities

Assets Held for Sale

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document been initiated, iv) the sale of the asset is probable, the transfer of the asset is expected to qualify for recognition as a completed sale, within one year, subject to certain exceptions, v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current value, and vi) actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or withdrawn. Assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell (“FVLCTS”). FVLCTS is the amount obtainable from the sale of the asset in an arm’s length transaction, less the costs of disposal. Once classified as held for sale, any depreciation and amortization cease to be recorded. For long-lived assets or disposals groups that are classified as held for sale but do not meet the criteria for discontinued operations, the assets and liabilities are presented separately on the balance sheet of the initial period in which it is classified as held for sale. The major classes of assets and liabilities classified as held for sale are disclosed in the notes to the consolidated financial statements. See “Note 7 - Assets Held for Sale” and “Note 26 - Discontinued Operations”.

Discontinued Operations

Revenue Recognition

In order to recognize revenue under ASU 2014-09, the Company applies the following five (5) steps:

· Identify a customer along with a corresponding contract; · Identify the performance obligation(s) in the contract to transfer goods or provide distinct services to a customer; · Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods or services to a customer; · Allocate the transaction price to the performance obligation(s) in the contract;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document · Recognize revenue when or as the Company satisfies the performance obligation(s).

Dispensary Revenue

The Company recognizes revenue from the sale of cannabis for a fixed price upon delivery of goods to customers at the point of sale since at this time performance obligations are satisfied.

Cultivation and Wholesale

Delivery Revenue

The Company recognizes revenue from the sale of cannabis delivered to its customer for a fixed price at the point of delivery since at this time performance obligations are satisfied.

Stock-Based Compensation

The Company has a stock-based compensation plan comprised of stock options, stock grants, deferred share units (“DSU”), restricted stock units (“RSU”) and three classes of member units: 1) Common Units; 2) Appreciation Only Long-Term Incentive Performance Units (“AO LTIP Units”); and 3) Fair Value Long- Term Incentive Performance Units (“FV LTIP Units”). AO LTIP Units and FV LTIP Units are convertible into Long-Term Incentive Performance Units (“LTIP Units”). LTIP Units are convertible into Common Units on a one-for-one basis.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document including restricted stock awards. For stock options, the Company estimates the fair value using a closed option valuation (Black- Scholes) model. When there are market-related vesting conditions to the vesting term of the share-based compensation, the Company uses a valuation model to estimate the probability of the market-related vesting conditions being met and will record the expense. The fair value of restricted stock awards is based upon the quoted market price of the common shares on the date of grant. The fair value is then expensed over the requisite service periods of the awards, net of estimated forfeitures, which is generally the performance period and the related amount is recognized in the Consolidated Statements of Operations.

Loss per Share

Financial Instruments

Classification

The Company classifies its financial assets and financial liabilities in the following measurement categories: (i) those to be measured subsequently at fair value through profit or loss (“FVTPL”); (ii) those to be measured subsequently at fair value through other comprehensive income (“FVOCI”); and (iii) those to be measured subsequently at amortized cost. The classification of financial assets depends on the business model for managing the financial assets and whether the contractual cash flows represent solely payments of principal and interest (“SPPI”). Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at FVTPL (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains or losses are either recorded in profit or loss or other comprehensive income. The Company reclassifies financial assets when and only when its

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document business model for managing those assets changes. Financial liabilities are not reclassified.

Measurement

Fair Value

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The following table summarizes the Company’s financial instruments as of June 27, 2020:

Amortized Cost FVTPL TOTAL

Financial Assets:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash and Cash Equivalents $ - $ 10,093,925 $ 10,093,925 Restricted Cash $ - $ 9,873 $ 9,873 Accounts Receivable $ 963,997 $ - $ 963,997 Due from Related Party $ 3,109,717 $ - $ 3,109,717 Investments $ - $ 3,786,791 $ 3,786,791

Financial Liabilities: Accounts Payable and Accrued Liabilities $ 79,530,930 $ - $ 79,530,930 Other Liabilities $ 10,780,504 $ - $ 10,780,504 Acquisition Consideration $ - $ 8,951,801 $ 8,951,801 Related Liabilities Notes Payable $ 168,998,605 $ - $168,998,605 Due to Related Party $ 4,556,814 $ - $ 4,556,814 Derivative Liabilities $ - $ 546,076 $ 546,076 Senior Secured Convertible Credit Facility $ 166,368,463 $ - $166,368,463

The following table summarizes the Company’s financial instruments as of June 29, 2019:

Amortized Cost FVTPL TOTAL

Impairment

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document credit risk, the Company compares the risk of a default occurring on the asset at the reporting date with the risk of default at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information. For accounts receivable only, the Company applies the simplified approach as permitted by ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The simplified approach to the recognition of expected losses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses at each reporting date from the date of the trade receivable.

Recently Issued Accounting Standards

In January 2020, the FASB issued ASU 2020-01, “Investments- Equity Securities (Topic 321)”, “Investments-Equity Method and Joint Ventures (Topic 323)”, and “Derivatives and Hedging (Topic 815)”, which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU 2020-01 is effective for the Company beginning January 1, 2021. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Adoption is applied on a modified or full retrospective transition approach. The Company is currently evaluating the adoption date and impact, if any, adoption will have on its financial position and results of operations.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document CONCENTRATIONS OF 12 Months Ended BUSINESS AND CREDIT Jun. 27, 2020 RISK CONCENTRATIONS OF BUSINESS AND CREDIT RISK Note 3. CONCENTRATIONS The Company maintains cash with various U.S. banks and credit unions with balances in excess of OF BUSINESS AND the Federal Deposit Insurance Corporation and National Credit Union Share Insurance Fund limits, respectively. The failure of a bank or credit union where the Company has significant deposits CREDIT RISK could result in a loss of a portion of such cash balances in excess of the insured limit, which could materially and adversely affect the Company’s business, financial condition and results of operations.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended PREPAID EXPENSES Jun. 27, 2020 PREPAID EXPENSES Note 4. PREPAID EXPENSES As of June 27, 2020 and June 29, 2019, prepaid expenses consist of the following:

2020 2019

Prepaid Expenses $3,962,686 $ 9,471,692 Prepaid Rent - 2,077,771 Prepaid Insurance 700,078 2,348,441

Total Prepaid Expenses $4,662,764 $13,897,904

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended 12 Months Ended INVENTORIES Dec. 26, 2020 Jun. 27, 2020 PREPAID EXPENSES As of December 26, 2020 and June 27, 2020, Note 5. INVENTORIES As of June 27, 2020 and June 29, 2019, inventory consists of the following: inventory consists of the following: December 26, June 27, 2020 2019 2020 2020 Raw Materials $ 2,055,500 $ 3,696,177 Raw Materials $ 3,326,636 $ 2,055,500 Work-in-Process 8,807,137 6,527,407 Work-in-Process 9,173,021 8,807,137 Finished Goods 11,775,483 15,257,538 Finished Goods 12,996,215 11,775,483 Total Inventory $22,638,120 $25,481,122 Total Inventory $ 25,495,872 $22,638,120

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document OTHER CURRENT 6 Months Ended 12 Months Ended ASSETS Dec. 26, 2020 Jun. 27, 2020 OTHER CURRENT ASSETS Note 6. OTHER CURRENT As of December 26, 2020 and June 27, 2020, other current assets consist of the As of June 27, 2020 and June 29, 2019, other current assets consist of the ASSETS following: following:

December 2020 2019 26, June 27, 2020 2020 Investments $3,786,791 $13,018,791 Excise Tax Receivable 5,254,595 5,721,945 Investments $3,036,791 $3,786,791 Other Current Assets 64,071 172,303 Excise Tax Receivable - 5,254,595 Total Other Current Assets $9,105,457 $18,913,039 Note Receivable (1) 2,549,302 - Other Current Assets 147,589 64,071 As of June 27, 2020 and June 29, 2019, investments included in other current Total Other Current Assets $5,733,682 $9,105,457 assets consist of the following: ______The (1) See “Note 5 – Assets Held for Sale” for further information. Hacienda ToroVerde Company, Other As of December 26, 2020 and June 27, 2020, investments included in other Inc. LLC Old Pal Investments TOTAL current assets consist of the following: (1) (2) (3)

The Fair Value Hacienda as of July ToroVerde Company, Old Other 1, 2018 $ - $ - $ - $ - $ - Inc. (1) LLC (2) Pal(3) Investments TOTAL Additions 5,000,000 1,500,000 2,000,000 259,791 8,759,791 Fair Value Unrealized as of June Gain on 27, 2020 $ - $ 750,000 $1,970,000 $ 1,066,791 $3,786,791 Changes in Fair Value Settlement of of Investments 600,000 709,000 2,430,000 520,000 4,259,000 Liabilities - (750,000) - - (750,000) Fair Value Fair Value as of June as of 29, 2019 5,600,000 2,209,000 4,430,000 779,791 13,018,791 December 26, 2020 $ - $ - $1,970,000 $ 1,066,791 $3,036,791 Non-Cash ______Additions - - - 287,000 287,000 (1) In July 2018, the Company purchased 9,000,000 common shares of Unrealized ToroVerde Inc., an investment company focused on emerging international Gain on cannabis markets, for an aggregate purchase price of $5,000,000, or $0.56 per Changes in common share, amounting to 14.3% of the outstanding common shares. As the Fair Company was not deemed to exert any significant influence, the investment Value of was recorded at FVTPL as of December 26, 2020 and June 27, 2020. As of Investments - 1,294,843 2,492,822 - 3,787,665 December 26, 2020 and June 27, 2020, the Company holds 14.3% of the equity Unrealized ownership and voting interests in this investment. Loss on Changes in (2) In July 2018, the Company purchased units of The Hacienda Company, Fair LLC, a California limited liability company, which owns Lowell Herb Co., a Value of California-based cannabis brand known for its pack of pre-rolls called Lowell Investments (5,600,000) (2,753,843) - - (8,353,843) Smokes, for an aggregate purchase price of $1,500,000, amounting to 3.2% of Transfer to the outstanding units. Pursuant to SEC guidance under ASC 323, “Investments Assets Held - Equity Method and Joint Ventures” the application of equity method to For Sale - (3,503,843) (4,952,822) - (8,456,665) investments applies to limited liability companies and are required unless the Transferred investor holds less than 3-5%. Accordingly, the Company was deemed to have Back from significant influence resulting in equity method accounting. The Company has Assets Held elected the fair value option under ASC 825, “Financial Instruments” and the for Sale - 3,503,843 - - 3,503,843 investment was recorded at FVTPL. As of December 26, 2020 and June 27, 2020, the Company holds 0% and 3.2%, respectively, of the equity ownership Fair Value and voting interests in this investment. (3) as of June In October 2018 and March 2019, the Company purchased an aggregate 27, 2020 $ - $ 750,000 $ 1,970,000 $ 1,066,791 $ 3,786,791 of 125.3 units of Old Pal, a California-based brand that provides high-quality ______cannabis flower for its customers, for an aggregate purchase price of (1) In July 2018, the Company purchased 9,000,000 common shares of $2,000,000, amounting to approximately 10.0% of the outstanding units with ToroVerde Inc., an investment company focused on emerging international 8.7% voting interests. Pursuant to SEC guidance under ASC 323, the cannabis markets, for an aggregate purchase price of $5,000,000, or $0.56 application of equity method to investments applies to limited liability per common share, amounting to 14.3% of the outstanding common shares. companies and are required unless the investor holds less than 3-5%. As the Company was not deemed to exert any significant influence, the Accordingly, the Company was deemed to have significant influence resulting investment was recorded at FVTPL as of June 27, 2020 and June 29, 2019. in equity method accounting. During the year ended June 27, 2020, the As of June 27, 2020, the Company holds 14.3% of the equity ownership and Company decreased their level of ownership in which Old Pal no longer voting interests in this investment. qualified under equity method accounting. The Company has elected the fair (2) In July 2018, the Company purchased units of The Hacienda Company, value option under ASC 825 and the investment was recorded at FVTPL as LLC, a California limited liability company, which owns Lowell Herb Co., a of June 27, 2020 and continues to measure Old Pal at the previously elected California-based cannabis brand known for its pack of pre-rolls called FVTPL under ASC 323 as of December 26, 2020. As of December 26, 2020, the Lowell Smokes, for an aggregate purchase price of $1,500,000, amounting Company holds 2.6% of the equity ownership and 1.4% of the voting interests to 3.2% of the outstanding units. Pursuant to SEC guidance under ASC 323, in this investment. the application of equity method to investments applies to limited liability companies and are required unless the investor holds less than 3-5%. As of December 26, 2020, the Company’s investment balance in ToroVerde Accordingly, the Company was deemed to have significant influence Inc. and The Hacienda Company, LLC was nil and nil, respectively. In August resulting in equity method accounting. The Company has elected the fair

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document value option under ASC 825 and the investment was recorded at FVTPL as of June 27, 2020 and June 29, 2019. As of June 27, 2020, the Company holds 3.2% of the equity ownership and voting interests in this investment. (3) In October 2018 and March 2019, the Company purchased an aggregate of 125.3 units of Old Pal, a California-based brand that provides high-quality cannabis flower for its customers, for an aggregate purchase price of $2,000,000, amounting to approximately 10.0% of the outstanding units with 8.7% voting interests. Pursuant to SEC guidance under ASC 323, the application of equity method to investments applies to limited liability companies and are required unless the investor holds less than 3-5%. Accordingly, the Company was deemed to have significant influence 2020, the Company entered into an agreement to exchange all of its investment resulting in equity method accounting. During the year ended June 27, in The Hacienda Company, LLC to settle outstanding balances totaling 2020, the Company decreased their level of ownership in which Old Pal no approximately $750,000. The Company determined that the fair value of its longer qualified under equity method accounting. The Company has elected investment in Old Pal LLC was $1,970,000 as of December 26, 2020. the fair value option under ASC 825 and the investment was recorded at FVTPL as of June 29, 2019 and continues to measure Old Pal at the The fair value of investments included in other current assets is considered a previously elected FVTPL under ASC 323 as of June 27, 2020. As of June Level 3 categorization in the fair value hierarchy. Investments are measured at 27, 2020, the Company holds 2.6% of the equity ownership and 1.4% of the fair value using a market approach that is based on unobservable inputs. voting interests in this investment.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended 12 Months Ended ASSETS HELD FOR SALE Dec. 26, 2020 Jun. 27, 2020 ASSETS HELD FOR SALE Note 7. ASSETS HELD FOR A reconciliation of the beginning and ending balances of assets held for sale A reconciliation of the beginning and ending balances of assets held for sale for the year SALE for the six months ended December 26, 2020 is as follows: ended June 27, 2020 is as follows:

Available Available for for Sale Discontinued PharmaCann Sale Discontinued PharmaCann Subsidiaries Operations Assets(1) Subsidiaries(2) Operations (3) Investments TOTAL Assets (1) (2) (3) TOTAL Balance at Balance at Beginning of Beginning of Period $ - $ - $ 64,365,544 $ - $ 64,365,544 Period $ 212,400 $ 12,066,428 $ 21,181,051 $ 33,459,879 Transferred Transferred In 6,870,833 12,066,428 - 8,456,665 27,393,926 In - 6,614,987 - 6,614,987 Transferred Gain on the Out - - - (3,503,843) (3,503,843) Sale of Changes in Assets Held Fair Value of for Sale - 10,454,608 - 10,454,608 Assets Held Proceeds for Sale (1,050,833) - - - (1,050,833) from Sale - (20,907,879) - (20,907,879) Proceeds Ongoing from Sale - - - (4,952,822) (4,952,822) Activity Ongoing from Activity Discontinued from Operations - (1,621,372) (7,501,013) (9,122,385) Discontinued Operations - - (43,184,493) - (43,184,493) Balance at Impairment End of Period $ 212,400 $ 6,606,772 $ 13,680,038 $ 20,499,209 of Assets (5,607,600) - - - (5,607,600) ______Total Assets (1) During the year ended June 27, 2020, PharmaCann LLC, Held for (“PharmaCann”) transferred 100% of the membership interests for MME Sale at End Evanston Retail, LLC (“Evanston”), PharmaCann Virginia, LLC of Period $ 212,400 $ 12,066,428 $ 21,181,051 $ - $ 33,459,879 (“Staunton”), and PC 16280 East Twombly LLC (“Hillcrest”). As of ______December 27, 2020, the Company has 100% of membership interests in (1) See “Note 10 - Termination of Previously Announced Acquisition” for further Staunton which holds land and a license for a vertically-integrated facility in information. Staunton, Virginia. The Staunton land and license were classified as assets (2) Long-lived assets classified as held for sale that do not qualify as discontinued held for sale in accordance with ASC 360, “Long-Lived Assets Classified as operation and classified as held for sale. Significant classes of assets and liabilities Held for Sale” and are measured at the lower of its carrying amount or fair are presented in the notes to the consolidated financial in accordance with ASC value less costs to sell (“FVLCTS”) which was determined as $212,400 and 360-10. $0, respectively, as of December 26, 2020. (3) See “Note 26 - Discontinued Operations” for further information. (2) Long-lived assets classified as held for sale that do not qualify as discontinued operation and classified as held for sale. Significant classes On October 17, 2019, the Company entered into an agreement to sell a portion of its of assets and liabilities are presented in the notes to the Condensed interest in Old Pal LLC to Gotham Green Partners, a related party, and a third party. As a Consolidated Financial Statements in accordance with ASC 360-10. (3) result, the Company classified the portion available for sale as an asset held for sale and See “Note 24 - Discontinued Operations” for further information. recorded a gain on fair value of $2,492,822 during the year ended June 27, 2020. The interests sold consist of 86.80 Class B Units, or 6.9% of the outstanding units, resulting in During the six months ended December 26, 2020, the Company agreed to an aggregate sale price of $4,952,822. As of June 27, 2020, the Company holds 38.50 transfer all outstanding membership interests in MME Evanston Retail, LLC Class B Units, or 2.6% of the outstanding units, in Old Pal LLC as an investment. (“Evanston”), for a dispensary operation located in Evanston, Illinois, to an See “Note 6 - Other Current Assets” for further information. unaffiliated third party (“Purchaser”). The Company received an aggregate consideration of $20,000,000, of which, $10,000,000 cash was received at On November 13, 2019, the Company entered into an agreement to sell its investment in closing on July 1, 2020 (“Closing Date”), an additional $8,000,000 cash was The Hacienda Company, LLC for an aggregate sale price of $3,503,843. As a result, the received on November 17, 2020 and an additional $2,000,000 in the form Company classified the investment as an asset held for sale and recorded a net loss on fair of a secured promissory note will be payable three months following the value of $1,459,000 during the fiscal year ended June 27, 2020. The parties subsequently Closing Date in exchange for all of the Company’s membership interests withdrew from the agreement and management retracted its commitment to sell the in Evanston. On August 10, 2020 (“Effective Date”), all operational control investment in the current or near future. Accordingly, the Company reclassified the asset as and risk of loss was transferred to the Purchaser and the Company had an investment as of June 27, 2020. See “Note 6 - Other Current Assets” for discussion on no further obligation to fund operations of Evanston through a Consulting the change in fair value of the Company’s investment. See “Note 27 - Subsequent Agreement. Management performed an assessment and determined that the Events” for further discussion. Company no longer has a controlling financial interest as of the Effective Date. The transfer of the cannabis license is pending regulatory approval as of During the year ended June 27, 2020, the Company decided to divest two cannabis licenses the issuance of these Condensed Consolidated Financial Statements and the and entered into separate agreements to sell 100% of its membership interests in these two Company will take all commercially reasonable steps to maintain all permits locations, located in California and Illinois, for an aggregate sale price of $21,500,000 of for Evanston to operate its business. The Company recognized a gain upon which $10,000,000 was paid upon the signing of the definitive agreement subsequent to sale of membership interests equal to the difference between the aggregate June 27, 2020, and an additional $10,000,000 due within six months following the signing consideration and the book value of the assets as of the disposition date, of the definitive agreement. See “Note 27 - Subsequent Events” for further discussion. A less direct costs to sell, which is recognized on the Condensed Consolidated non-binding term sheet was entered on June 26, 2020 in which $750,000 is to be paid upon Statements of Operations during the six months ended December 26, 2020. the date of close and $750,000 paid in equal monthly installments over twelve months through a promissory note. The contemplated sale of these locations are pending customary During the six months ended December 26, 2020, the Company decided closing conditions and are expected to be completed within a one year period. The assets to divest two cannabis licenses and entered into separate agreements to and liabilities related to these subsidiaries were classified as held for sale in accordance sell 100% of its membership interests in these two locations, located in with ASC 360-10 and are measured at the lower of its carrying amount or FVLCTS. The California. On June 26, 2020, the Company entered into a non-binding term California assets and Illinois assets received from PharmaCann do not qualify as sheet for the retail location located in Seaside, California for an aggregate discontinued operations under ASC 205, “Discontinued Operations”. sales price of $1,500,000 wherein $750,000 is to be paid upon the date of close in addition to $750,000 paid in equal monthly installments over twelve In accordance of ASC 360-10, the company performed an analysis of any impairments months through a promissory note. The transaction closed in October 2020 prior to reclassifying certain assets as held for sale and recorded an impairment charge of and the Company transferred all outstanding membership interests in PHSL, $53,389,260 of which $46,702,660 is included as a component of loss from discontinued LLC. Upon deconsolidation, the Company will not have any continuing operations,$1,050,833 which is included as a component of realized and unrealized gain on involvement with the former subsidiary. The Company recognized a loss investments and assets held for sale in the Consolidated Statements of Operations and upon sale of membership interests of $332,747 for the difference between the $5,635,767 is included as a component of impairment expense in the accompanying aggregate consideration and the book value of the assets as of the disposition Consolidated Statements of Operations. date, less direct costs to sell, which is recognized on the Condensed

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements of Operations during the six months ended December 26, 2020.

In December 2020, the Company entered into a purchase agreement for the sale of its membership interests in a retail location in California for a total consideration of $3,750,000 in which $3,500,000 cash is to be paid within thirty days following the date of close and equity consideration equal to $250,000. As of December 26, 2020, the contemplated sale is pending customary closing conditions and are expected to be completed within a one year period. The assets and liabilities related to these subsidiaries were classified as held for sale in accordance with ASC 360-10 and are measured at the lower of its carrying amount or FVLCTS. Subsidiaries classified as assets held for sale that do not qualify as discontinued operations as of June 27, 2020 consists of the following: Subsidiaries classified as assets held for sale that do not qualify as discontinued operations as of December 26, 2020 and June 27, 2020 consists 2020 of the following: Carrying Amounts of the Assets Included in Assets Held for Sale: December 26, June 27, Cash and Cash Equivalents $ 743,271 2020 2020 Prepaid Expenses 7,798 Inventory 520,464 Carrying Amounts of the Assets Included in Other Current Assets 81,427 Assets Held for Sale: TOTAL CURRENT ASSETS (1) Cash and Cash Equivalents $ - $ 743,271 Prepaid Expenses 103 7,798 Property and Equipment, Net 717,952 Inventory - 520,464 Operating Lease Right-of-Use Assets 190,986 Other Current Assets - 81,427 Intangible Assets, Net 5,227,288 Goodwill 4,577,242 TOTAL CURRENT ASSETS (1) TOTAL NON-CURRENT ASSETS (1) Property and Equipment, Net 166,657 717,952 Operating Lease Right-of-Use Assets 965,558 190,986 TOTAL ASSETS OF SUBSIDIARIES CLASSIFIED AS HELD FOR Intangible Assets, Net 5,474,454 5,227,288 SALE $12,066,428 Goodwill - 4,577,242 Carrying Amounts of the Liabilities Included in Assets Held for Sale: TOTAL NON-CURRENT ASSETS (1) Accounts Payable and Accrued Liabilities $ 963,255 Income Taxes Payable 159,053 TOTAL ASSETS OF SUBSIDIARIES Other Current Liabilities 27,854 CLASSIFIED AS HELD FOR SALE $6,606,772 $12,066,428 TOTAL CURRENT LIABILITIES (1) Carrying Amounts of the Liabilities Included in Assets Held for Sale: Operating Lease Liabilities, Net of Current Portion 296,694 Deferred Tax Liabilities 2,151,879 Accounts Payable and Accrued Liabilities $ 10,698 $ 963,255 Income Taxes Payable - 159,053 TOTAL NON-CURRENT LIABILITIES (1) Other Current Liabilities - 27,854 Current Portion of Operating Lease Liabilities 272,119 - TOTAL LIABILITIES OF SUBSIDIARIES CLASSIFIED AS HELD FOR SALE $ 3,598,735 TOTAL CURRENT LIABILITIES (1) (1) The assets and liabilities of subsidiaries classified as held for sale are classified as Operating Lease Liabilities, Net of Current current on the Consolidated Balance Sheets as of June 27, 2020 because it is probable that Portion 965,592 296,694 the sale will occur and proceeds will be collected within one year. Deferred Tax Liabilities 1,793,659 2,151,879

TOTAL NON-CURRENT LIABILITIES (1)

TOTAL LIABILITIES OF SUBSIDIARIES CLASSIFIED AS HELD FOR SALE $3,042,068 $ 3,598,735 ______(1) The assets and liabilities of subsidiaries classified as held for sale are classified as current on the Condensed Consolidated Balance Sheets as of December 26, 2020 and June 27, 2020 because it is probable that the sale will occur and proceeds will be collected within one year.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document PROPERTY AND 6 Months Ended 12 Months Ended EQUIPMENT Dec. 26, 2020 Jun. 27, 2020 PROPERTY AND EQUIPMENT As of June 27, 2020 and June 29, 2019, Note 8. PROPERTY AND As of December 26, 2020 and June 27, 2020, property and equipment consists of the EQUIPMENT property and equipment consists of the following: following: 2020 2019 December 26, June 27, Land and 2020 2020 $ 37,400,378 Buildings $ 68,005,575 Finance Lease Land and Buildings $ 37,421,326 $ 37,400,378 Right-of-Use Finance Lease Right- Assets 26,194,566 17,081,955 of-Use Assets 12,650,946 26,194,566 Furniture and Furniture and Fixtures 13,970,449 14,273,678 Fixtures 14,042,105 13,970,449 Leasehold Leasehold Improvements 63,976,372 36,186,686 Improvements 67,534,535 63,976,372 Equipment and Equipment and Software 29,277,120 36,175,978 Software 29,700,665 29,277,120 Construction Construction in in Progress 38,470,016 75,997,268 Progress 36,404,721 38,470,016 Total Total Property and Property and Equipment 197,754,298 209,288,901 Equipment 209,288,901 247,721,140 Less Accumulated Less Depreciation (45,327,125) (34,741,034) Accumulated Depreciation (34,741,034) (14,825,859) Property and Equipment, Net $152,427,173 $174,547,867 Property and Equipment, Depreciation expense related to continuing Net $174,547,867 $232,895,281 operations of $3,960,243 and $9,512,628 was recorded for the three and six months ended Depreciation expense related to continuing December 26, 2020, respectively, of which operations of $23,621,713 and $11,040,843 $278,719 and $558,250, respectively, is included in was recorded for the year ended June 27, cost of goods sold. Depreciation expense related 2020 and June 29, 2019, respectively, of to continuing operations of $3,344,124 and which $22,989,561 and $1,424,358, $10,410,880 was recorded for the three and six respectively, is included in cost of goods months ended December 28, 2019, respectively, of sold. The amount of depreciation recognized which $406,103 and $1,348,645, respectively, is for the right of use assets for capital leases included in cost of goods sold. The amount of during the years ended June 27, 2020 and depreciation recognized for the right of use assets June 29, 2019 was $2,752,022 and $896,176, for capital leases during the three and six months respectively, see “Note 16 - Leases” for ended December 26, 2020 was $83,427 and further information. $397,569, respectively, see “Note 11 – Leases” for further information. During the year ended June 27, 2020 and June 29, 2019, borrowing costs totaling During the three and six months ended December $1,749,467 and $2,724,118, respectively, 28, 2019, borrowing costs totaling $1,432,632 and were capitalized using an average $2,308,728, respectively, were capitalized using an capitalization rate of 10.2% and 10.5%, average capitalization rate of 15% and 15%, respectively. In addition, during the year respectively. Borrowing costs were not capitalized ended June 27, 2020 and June 29, 2019, total as there were no active construction projects in labor related costs of $448,086 and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document $2,183,419, respectively, were capitalized to Construction in Progress, of which $207,664 and $320,917, respectively, was share-based compensation. progress during the three and six months ended December 26, 2020. During the year ended June 27, 2020, management noted indicators of impairment In addition, during the three and six months ended of its long-lived assets of certain cultivation December 26, 2020, total labor related costs of assets in California and Nevada as well as $71,000 and $507,164, respectively, were certain long-lived assets relating to capitalized to Construction in Progress, of which operations in Florida which was due to the $12,000 and $148,386, respectively, was share- change in use of these asset groups and the based compensation. During the three and six impacts of COVID-19. Accordingly, the months ended December 28, 2019, total labor Company recorded an impairment of related costs of $339,905 and $776,069, $143,005,028 of its property which are respectively, were capitalized to Construction in included as a component of impairment Progress, of which $36,269 and $172,655, expense in the accompanying Consolidated respectively, was share-based compensation. Statement of Operations. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended BUSINESS ACQUISITIONS Jun. 27, 2020 BUSINESS ACQUISITIONS Note 9. BUSINESS A summary of business acquisitions completed during the years ended June 27, 2020 and June 29, 2019 is as follows: ACQUISITIONS 2019 Acquisitions 2020 Acquisitions

Kannaboost Technology Viktoriya’s Future Inc. and MME Medical Transactions CSI Evanston LVMC, Supplies Holdings Solutions PHSL, 2019 MattnJeremy, Retail, 2020 LLC Monarch LLC LLC LLC LLC TOTAL Inc. LLC TOTAL

February December October 9, December 3, January 15, February 4, 13, March 29, September 3, 2, Closing Date: 2018 2018 2019 2019 2019 2019 2019 2019

Total Consideration

Total Consideration $10,075,000 $ 21,098,012 $ 10,300,000 $ 12,945,270 $ 31,169,438 $3,000,000 $ 88,587,720 $ 12,708,000 $ 6,930,557 $ 19,638,577

Number of Shares Issued: Subordinate Voting Shares - 4,019,065 - 2,117,238 4,739,626 - 10,875,929 5,112,263 - 5,112,263

Preliminary Accounting Estimate of Net Assets Acquired

Total Intangible Assets 5,659,000 4,230,000 5,160,000 4,080,000 17,290,000 1,589,000 38,008,000 5,930,000 4,800,000 10,730,000

Total Identifiable Net Assets 4,630,693 4,185,061 3,823,584 3,135,220 16,308,730 1,161,498 33,244,786 4,490,535 4,184,647 8,675,182

Goodwill (1) 5,444,307 16,912,951 6,476,416 9,810,050 14,860,708 1,838,502 55,342,934 8,217,465 2,745,910 10,963,375

Total Preliminary Accounting Estimate of Net Assets Acquired $10,075,000 $ 21,098,012 $ 10,300,000 $ 12,945,270 $ 31,169,438 $3,000,000 $ 88,587,720 $ 12,708,000 $ 6,930,557 $ 19,638,577

Acquisition Costs Expensed (3) $ 650,000 $ 1,147,320 $ 528,888 $ 252,492 $ - $ - $ 2,578,700 $ 421,497 $ - $ 421,497

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net Income (Loss) $ (2,108,596) $ (1,369,842) $ (1,462,801) $ (455,441) $ (1,143,117) $ 91,646 $ (6,448,151) $ (11,293,305) $ 870,289 $(10,423,016) Revenues $ 1,914,479 $ 3,905,002 $ 2,960,376 $ 1,665,602 $ 6,139,233 $ 331,535 $ 16,916,227 $ 3,199,684 $ 6,283,249 $ 9,482,933 Pro Forma Net Income (Loss) (2) $ (140,000) $ (219,000) $ (755,000) $ (250,000) $ 2,511,000 $ (235,000) $ 912,000 $ 10,000 $ (132,726) $ (122,726) Pro Forma Revenues (2) $ - $ 5,770,000 $ 5,334,000 $ 1,664,000 $ 11,044,000 $1,232,000 $ 25,044,000 $ 50,000 $ 4,488,035 $ 4,538,035

______(1) Goodwill arising from acquisitions represent expected synergies, future income and growth, and other intangibles that do not qualify for separate recognition. Generally speaking, goodwill related to dispensaries acquired within a state adds to the footprint of the MedMen dispensaries within the state, giving the Company’s customers more access to the Company’s branded stores. Goodwill related to cultivation and wholesale acquisitions provide for lower costs and synergies of the Company’s growing and wholesale distribution methods which allow for overall lower costs.

Business acquisitions completed during the year ended June 27, 2020 is as follows:

MattnJeremy, Inc., d/b/a One Love Beach Club

On September 3, 2019, the Company completed the acquisition of MattnJeremy, Inc., d/b/a One Love Beach Club (“One Love”), a licensed medical and recreational cannabis dispensary located in Long Beach, California. The Company acquired all of the issued and outstanding shares of One Love for aggregate consideration of $12,708,000 which is comprised of $1,000,000 in cash at closing, $1,000,000 deferred payment to be paid six months after closing, $1,000,000 deferred payment to be paid one year after closing and the issuance of 5,112,263 Subordinate Voting Shares with an aggregate value of $9,833,000 at closing. Pursuant to a Lock-Up Agreement with the sellers, the shares cannot be sold or transferred for a period of one year from the closing date. As consideration for the lock up of the shares, the Company agreed to issue additional shares if the value of the shares decline prior to the expiration of the lock up period. The shares were valued at the present value of the $10,000,000 over a one year period. The deferred payments were present valued at $1,875,000, of which $958,500 remain as of June 27, 2020 and were included in other current liabilities in the Consolidated Balance Sheets. During the fiscal year ended June 27, 2020, the Company settled the first deferred payment of $1,000,000 by cash payment and by the issuance of 3,045,989 Subordinate Voting Shares valued at $748,658 based on the closing trading price on the issuance date. The Company recorded a loss on extinguishment of debt of $248,656. The loss was recorded as a component of other expense in the Consolidated Statement of Operations for the fiscal year ended June 27, 2020. In no case will the Company be required to pay additional consideration. However, if the working capital adjustment is negative, the Company will not be required to pay some deferred payments. There was no working capital adjustment based upon the closing inventory.

MME Evanston Retail, LLC

Business acquisitions completed during the year ended June 29, 2019 is as follows:

LVMC, LLC, d/b/a Cannacopia

Monarch

Viktoriya’s Medical Supplies LLC, d/b/a Buddy’s Cannabis

Future Transactions Holdings LLC d/b/a Seven Point

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On February 4, 2019, the Company completed the acquisition of Future Transactions Holdings LLC (“Future Transactions”), d/b/a Seven Point, a licensed medical cannabis dispensary located in Oak Park, Illinois. The Company acquired all of the issued and outstanding shares of Future Transactions for aggregate consideration of $12,945,270, which is comprised of $3,050,000 in cash, $3,000,000 in note payable, and 2,117,238 Subordinate Voting Shares at the trading price of $3.26 per share on the acquisition date.

Kannaboost Technology Inc. and CSI Solutions LLC

PHSL, LLC, d/b/a SugarLeaf Trading Co.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document TERMINATION OF 12 Months Ended PREVIOUSLY ANNOUNCED Jun. 27, 2020 ACQUISITION TERMINATION OF PREVIOUSLY ANNOUNCED ACQUISITION Note 10. TERMINATION OF On October 11, 2018, the Company entered into a binding letter of intent with PharmaCann, LLC PREVIOUSLY (“PharmaCann”) to acquire all outstanding equity interests in PharmaCann in an all-stock transaction (the “PharmaCann Acquisition”), valued at $682,000,000 based on the closing price ANNOUNCED of the Subordinate Voting Shares on October 9, 2018 (such value being subject to change based ACQUISITION on the daily closing price of the Subordinate Voting Shares). In connection with the letter of intent, the Company provided PharmaCann with a $20,000,000 line of credit which bears interest at a rate of 7.5% per annum paid-in-kind. In the event the PharmaCann Acquisition does not close, any outstanding principal and interest shall become due and payable within twelve months of termination.

MME Evanston Retail, LLC (“Evanston”), which holds a retail location in Evanston, • Illinois and related licenses, and a retail license for Greater Chicago, Illinois; PharmaCann Virginia, LLC (“Staunton”), which holds land and a license for a • vertically-integrated facility in Staunton, Virginia; and PC 16280 East Twombly LLC (“Hillcrest”), which holds an operational cultivation • and production facility in Hillcrest, Illinois and related licenses.

Each delivery of the Transfer of Interest, after successful regulatory approval, if any, will relieve one-third of the line of credit and any accrued interest due from PharmaCann. Concurrent with the termination agreement, the Company and PharmaCann entered into a membership interest purchase agreement which detailed the assets to be delivered to the Company. The Company entered into plans to sell the Staunton and Hillcrest assets while the Evanston assets will be owned and operated by the Company. As of June 27, 2020, the Company successfully received the membership interests in Evanston and Staunton, and transferred the rights to receive the equity interest in Hillcrest to a third party, and relieved the full amount due from PharmaCann.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document excluding the land value of approximately $212,000 was unrecoverable and wrote off the remaining balance of $5,607,600 which is included as a component of impairment expense in the accompanying Consolidated Statement of Operations. See “Note 7 - Assets Held for Sale” for further information.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended 12 Months Ended INTANGIBLE ASSETS Dec. 26, 2020 Jun. 27, 2020 INTANGIBLE ASSETS Note 11. INTANGIBLE As of June 27, 2020 and June 29, 2019, ASSETS intangible assets consist of the following: 2020 2019 As of December 26, 2020 and June 27, 2020, intangible assets consist of the following: Dispensary Licenses $139,736,881 $179,628,706 December Customer 26, June 27, Relationships 18,586,200 18,415,200 2020 2020 Management Agreement 7,594,937 7,594,937 Dispensary Licenses $133,053,216 $139,736,881 Capitalized Customer Software 9,255,026 4,010,454 Relationships 18,586,200 18,586,200 Intellectual Management Property 8,520,121 8,212,764 Agreement 7,594,937 7,594,937 Capitalized Software 9,343,352 9,255,026 Total Intellectual Property 7,850,517 8,520,121 Intangible Assets 183,693,165 217,862,061 Total Intangible Assets 176,428,222 183,693,165 Less Accumulated Dispensary Licenses (23,064,894) (19,162,587) Amortization (35,612,135) (16,760,646) Customer Relationships (13,407,729) (8,113,913) Intangible Management Assets, Net $148,081,030 $201,101,415 Agreement (665,276) (565,972) Capitalized Software (3,462,896) (2,273,432) As of June 27, 2020, accumulated Intellectual Property (2,246,961) (5,496,231) amortization for dispensary licenses, customer relationships, management Less Accumulated agreement, capitalized software and Amortization (42,847,756) (35,612,135) intellectual property is $19,162,587, $8,113,913, $565,972, $2,273,432 and Intangible Assets, Net $133,580,466 $148,081,030 $5,496,231 respectively. As of June 29, 2019, accumulated amortization for The Company recorded amortization expense related dispensary licenses, customer relationships, to continuing operations of $6,023,730 and management agreement, capitalized $9,376,584 for the three and six months ended software and intellectual property is December 26, 2020, respectively. The Company $9,330,150, $6,484,668, $366,667, recorded amortization expense related to continuing $579,161 and nil, respectively. operations of $3,705,231 and $7,065,198 for the three and six months ended December 28, 2019, The Company recorded amortization respectively. During the three and six months ended expense related to continuing operations of December 26, 2020, $13,300 and $38,119, $16,880,094 and $12,439,105 for the year respectively, of share-based compensation was ended June 27, 2020 and June 29, 2019, capitalized to capitalized software. During the three respectively. During the year ended June and six months ended December 28, 2019, $70,988 27, 2020 and June 29, 2019, $346,180 and and $272,242, respectively, of share-based $276,847, respectively, of share-based compensation was capitalized to capitalized software. compensation was capitalized to capitalized software.

During the year ended June 27, 2020, management noted indicators of

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document impairment of its long-lived assets of certain asset groups in California, Nevada and Florida. The Company used various Level 3 inputs and a discounted cash flow model to determine the fair value of these asset groups. Accordingly, the Company recorded an impairment of $38,959,000 which is included as a component of impairment expense in the accompanying Consolidated Statement of Operations.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended GOODWILL Jun. 27, 2020 ASSETS HELD FOR SALE Note 12. GOODWILL As of June 27, 2020 and June 29, 2019, goodwill was $33,861,150 and $53,786,872, respectively. See “Note 9 - Business Acquisitions” and Note 26 - Discontinued Operations” for further information. As of June 27, 2020 and June 29, 2019, the carrying amounts of goodwill were allocated to each group of reporting units as follows:

California Illinois Nevada Arizona New York TOTAL

Balance as of July 1, 2018 $ 8,427,925 $ - $ 11,111,980 $ - $10,677,692 $ 30,217,597

Acquired Goodwill 8,314,918 9,810,050 5,444,307 31,773,659 - 55,342,934 Transferred to Assets Held for Sale - - - (31,773,659) - (31,773,659)

Balance as of June 29, 2019 $16,742,843 $ 9,810,050 $ 16,556,287 $ - $10,677,692 $ 53,786,872

Acquired Goodwill 8,217,465 2,745,910 - - - 10,963,375 Transferred to Assets Held for Sale (1,869,900) (2,745,910) - - - (4,615,810) Impairment Losses - - (16,556,287) - (9,717,000) (26,273,287)

Balance as of June 27, 2020 $23,090,408 $ 9,810,050 $ - $ - $ 960,692 $ 33,861,150

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2020, the Company recorded a goodwill impairment loss in the amount of $26,273,287 as a result of its assessment which is included as a component of impairment expense in the Consolidated Statement of Operations.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended 12 Months Ended OTHER ASSETS Dec. 26, 2020 Jun. 27, 2020 OTHER ASSETS Note 13. OTHER ASSETS As of December 26, 2020 and June 27, 2020, other assets consist of the following:

December 26, June 27, As of June 27, 2020 and June 29, 2019, other assets consist 2020 2020 of the following:

Long- 2020 2019 Term Security Long Term Security Deposits Deposits for Leases $ 9,752,611 $10,451,381 for Loans and other Long-Term Leases $ 9,271,565 $ 9,752,611 Deposits 7,568,738 20,501,166 Loans Other Assets 53,648 1,350,000 and Total Other Assets $17,374,997 $32,302,547 Other Long- During the year ended June 27, 2020, management noted Term indicators of realizability for certain loans and assets. Deposits 7,769,757 7,568,738 Accordingly, the Company recorded an impairment of Other $5,944,143 which is included as a component of Assets 96,595 53,648 impairment expense in the Consolidated Statements of Operations. Total Other Assets $ 17,137,917 $17,374,997

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ACCOUNTS PAYABLE 6 Months Ended AND ACCRUED Dec. 26, 2020 LIABILITIES ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Note 14. ACCOUNTS PAYABLE AND As of December 26, 2020 and June 27, 2020, accounts payable and accrued ACCRUED LIABILITIES liabilities consist of the following: December 26, June 27, 2020 2020

Accounts Payable $ 57,692,382 $58,614,619 Accrued Liabilities 13,234,560 10,532,715 Other Accrued Liabilities 9,708,487 10,383,596

Total Accounts Payable and Accrued Liabilities $ 80,635,429 $79,530,930

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document OTHER CURRENT 6 Months Ended 12 Months Ended LIABILITIES AND OTHER NON-CURRENT Dec. 26, 2020 Jun. 27, 2020 LIABILITIES ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Note 15. OTHER CURRENT As of December 26, 2020 and June 27, As of June 27, 2020 and June 29, 2019, other current LIABILITIES AND OTHER 2020, other current liabilities consist of liabilities consist of the following: the following: NON-CURRENT 2020 2019 LIABILITIES December 26, June 27, Accrued Interest Payable $ 9,051,650 $2,819,594 2020 2020 Contingent Consideration 8,951,801 774,000 Other Current Liabilities 1,728,854 52,786 Accrued Interest Total Other Current Payable $ 1,857,304 $ 9,051,650 Liabilities $19,732,305 $3,646,380 Contingent Consideration 87,893 8,951,801 As of June 27, 2020 and June 29, 2019, other non- Derivatives 418,576 546,076 current liabilities, net of current portion, consist of the Other Current following: Liabilities 11,098,390 1,728,854 2020 2019 Total Other Current Deferred Gain on Sale of Liabilities $13,462,163 $20,278,381 Assets (1)(2) $4,164,713 $ 4,731,338 Contingent Consideration - 20,197,690 Contingent Consideration Other Long Term Liabilities 50,820 - Contingent consideration recorded relates Total Other Non-Current to a business acquisition during the year $4,215,533 $24,929,028 ended June 27, 2020. The contingent Liabilities consideration related to the acquisition of ______(1) One Love Beach Club is based upon fair See “Note 16 - Leases” for further information. value of the additional shares required to (2) The current portion of Deferred Gain on Sale of be paid upon the expiration of the lock-up Assets of $566,627 is recorded in Accounts Payable and is based upon the fair market value and Accrued Liabilities. of the Company’s trading stock and is considered a Level 1 categorization in the Contingent Consideration fair value hierarchy. Contingent consideration classified as a liability and Contingent consideration recorded relates to a business measured at fair value in accordance with acquisition (see “Note 9 - Business Acquisitions”). The ASC 480, “Distinguishing Liabilities contingent consideration related to the acquisition of from Equity”. The contingent One Love Beach Club is based upon fair value of the consideration is remeasured at fair value additional shares required to be paid upon the at each reporting period with changes expiration of the lock-up and is based upon the fair recorded in profit and loss in the market value of the Company’s trading stock and is Condensed Consolidated Statements of considered a Level 1 categorization in the fair value Operations. During the six months ended hierarchy. Contingent consideration classified as a December 26, 2020, the lock-up period liability and measured at fair value in accordance with expired and the contingent consideration ASC 480, “Distinguishing Liabilities from was reclassified as other current liabilities Equity”. The contingent consideration is remeasured at on the Condensed Consolidated Balance fair value at each reporting period with changes Sheets as of December 26, 2020. recorded in profit and loss in the Consolidated Statement of Operations.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivative Liabilities As of June 29, 2019, the Company evaluated the A reconciliation of the beginning and contingent consideration related to an asset acquisition ending balance of derivative liabilities and remeasured the liability at fair value of and change in fair value of derivative $20,197,689. The increase in the contingent liabilities for the six months ended consideration of $8,438,690 was capitalized to the December 26, 2020 is as follows: assets acquired, which was a dispensary license. Refer to “Note 11 - Intangible Assets”. On November 12, December 2019, the Company entered into an agreement to amend 26, the cash earn out due in December 2020 to $10,000,000 2020 in Class B Subordinate Voting Shares due in December 2019. In conjunction with the amendment to settle the Balance at Beginning of contingent consideration, the Company issued Period $ 546,076 10,691,455 Subordinate Voting Shares in full settlement valued at $10,811,219. The value of the acquired assets Change in Fair Value of was adjusted for the change in fair value of the liability Derivative Liabilities (127,500) upon settlement of $9,386,471. As of June 27, 2020, there is no contingent consideration resulting from asset Balance at End of Period $ 418,576 acquisitions on the Consolidated Balance Sheet. Remeasurement of the contingent liability after the date Fair value was measured based on Level of acquisition is capitalized as part of the cost of the 1 inputs on the fair value hierarchy since assets acquired and is allocated to increase the eligible there are quoted prices in active markets assets on a relative fair value basis. The value of for these warrants. The Company used amortizable or depreciable identifiable assets are the closing price of the publicly-traded adjusted when contingent consideration is recognized at warrants to estimate fair value of the a later date in accordance with ASC 450 wherein the derivative liability as of December 26, change in amortization or depreciation expense is 2020. recognized on a prospective basis.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document DERIVATIVE 12 Months Ended LIABILITIES Jun. 27, 2020 DERIVATIVE LIABILITIES Note 17. DERIVATIVE During the year ended June 29, 2019, the Company issued the following warrants related to LIABILITIES bought deals. The exercise price of the warrants is denominated in Canadian dollars. Upon the analysis of the warrants issued under ASC 815, the Company determined that the warrants are to be accounted as derivative liabilities. The warrants are traded on the Canadian stock exchange. The following are the warrants issued related to the bought deals that were accounted for as derivative liabilities:

Number of Warrants

September Bought Deal Equity Financing 7,840,909 (1)(2)(3) December Bought Deal Equity Financing 13,640,000 (1)(2)(4) 21,480,909 ______(1) The exercise price of the warrants was denominated in a price other than the Company’s functional currency. In accordance with ASC 815-40, a share warrant denominated in a price other than the functional currency of the Company fails to meet the definition of equity. Accordingly, such a contract or instrument would be accounted for as a derivative liability and measured at fair value with changes in fair value recognized in the Consolidated Statement of Operations at each period-end. (2) Measured based on Level 1 inputs on the fair value hierarchy since there are quoted prices in active markets for these warrants. The Company used the closing price of the publicly- traded warrants to estimate fair value of the derivative liability at issuance and at each reporting date. (3) See “Note 19 - Shareholders’ Equity - September Bought Deal Equity Financing” for further information. (4) See “Note 19 - Shareholders’ Equity - December Bought Deal Equity Financing” for further information.

A reconciliation of the beginning and ending balance of derivative liabilities and change in fair value of derivative liabilities for the years ended June 27, 2020 and June 29, 2019 is as follows:

2020 2019

Balance as of Beginning of Year $ 9,343,485 $ -

Initial Recognition of Derivative Liabilities - 13,252,207 Change in Fair Value of Derivative Liabilities (8,797,409) (3,908,722)

Balance as of End of Year $ 546,076 $ 9,343,485

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended 12 Months Ended LEASES Dec. 26, 2020 Jun. 27, 2020 LEASES Note 18. LEASES In accordance with ASU 2016-02, the Company determines if an As a result of the adoption of ASC arrangement is a lease at inception. Operating leases are included in 842 on June 30, 2019, the Company operating lease right‐of‐use (“ROU”) assets and accrued obligations has changed its accounting policy for under operating lease (current and non-current) liabilities in the leases. The Company determines if an Condensed Consolidated Balance Sheets. Finance lease ROU assets arrangement is a lease at inception. are included in property and equipment, net and accrued obligations Operating leases are included in under finance lease (current and noncurrent) liabilities in the Condensed operating lease right‐of‐use (“ROU”) Consolidated Balance Sheets. assets and accrued obligations under operating lease (current and non- ROU assets represent the Company’s right to use an underlying asset current) liabilities in the Consolidated for the lease term and lease liabilities represent the Company’s Balance Sheets. Finance lease ROU obligation to make lease payments arising from the lease. ROU assets assets are included in property and are classified as a finance lease or an operating lease. The Company equipment, net and accrued classifies a lease as an operating lease when it does not meet any of the obligations under finance lease criteria of a finance lease as set forth by ASU 2016-02. (current and noncurrent) liabilities in the Consolidated Balance Sheets. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Most ROU assets represent the Company’s operating leases contain renewal options that provide for rent increases right to use an underlying asset for the based on prevailing market conditions. The Company has lease lease term and lease liabilities extension terms at its properties that have either been extended or are represent the Company’s obligation to likely to be extended. The terms used to calculate the ROU assets make lease payments arising from the for these properties include the renewal options that the Company is lease. ROU assets are classified as a reasonably certain to exercise. finance lease or an operating lease. A finance lease is a lease in which 1) The below are the details of the lease cost and other disclosures ownership of the property transfers to regarding the Company’s leases for the three and six months ended the lessee by the end of the lease term; December 26, 2020 and December 28, 2019: 2) the lease grants the lessee an option to purchase the underlying asset that Three Months Ended Six Months Ended the lessee is reasonably certain to December December December December exercise; 3) the lease is for a major 26, 28, 26, 28, part of the remaining economic life of 2020 2019 2020 2019 the underlying asset; 4) The present value of the sum of the lease Finance Lease payments and any residual value Cost: guaranteed by the lessee that is not Amortization already included in the lease payments of Finance equals or exceeds substantially all of Lease Right- the fair value; or 5) the underlying of-Use asset is of such a specialized nature Assets $ 83,426 $ 546,157 $ 397,569 $ 2,616,924 that it is expected to have no Interest on alternative use to the lessor at the end Lease of the lease term. The Company Liabilities 460,297 1,549,769 1,984,118 2,982,699 classifies a lease as an operating lease Operating when it does not meet any one of Lease Cost 8,034,052 7,978,593 15,692,972 14,964,892 these criteria.

Total Lease ROU assets and liabilities are Expenses $8,577,775 $10,074,519 $18,074,659 $ 20,564,515 recognized at commencement date based on the present value of lease 2020 2019 2020 2019 payments over the lease term. Most operating leases contain renewal Gain on Sale options that provide for rent increases and Leaseback based on prevailing market Transactions, conditions. The Company has lease Net $ - $ - $ - $ (704,207) extension terms at its properties that Cash Paid for have either been extended or are likely Amounts to be extended. The terms used to Included in the calculate the ROU assets for these

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Measurement of Lease properties include the renewal options Liabilities: that the Company is reasonably Financing certain to exercise. Cash Flows from As of the adoption date, the Company Finance capitalized operating and finance Leases $ - $ 297,588 $ 39,880 $ 297,588 right-of-use assets totaling Operating $153,851,114 and $24,852,891, Cash Flows respectively. The Company leases from land, buildings, equipment and other Operating capital assets which it plans to use for Leases $6,918,798 $10,157,732 $16,077,196 $ 17,329,775 corporate purposes and the production Non-Cash and sale of cannabis products. Leases Additions to with an initial term of 12 months or Right-of-Use less are not recorded on the Assets and Consolidated Balance Sheets and are Lease expensed in the Consolidated Liabilities: Statements of Operations on the Recognition straight-line basis over the lease term. of Right-of- Use Assets During the year ended June 27, 2020, for Finance management noted indicators of Leases $ - $ 2,937,513 $ 350,249 $ 45,614,041 impairment of its long-lived assets of Recognition certain asset groups in California, of Right-of- Nevada and Florida which included Use Assets right-of-use assets related to operating for leases. The Company used various Operating Level 3 inputs and a discounted cash Leases $ - $20,993,959 $ - $162,551,190 flow model to determine the fair value of these asset groups. Accordingly, the The weighted-average remaining lease term and discount rate related to Company recorded an impairment of the Company’s finance lease liabilities as of December 26, 2020 were $19,785,621 on its right-of-use assets 42 years and 15.93%, respectively. The weighted-average remaining related to operating leases, which is lease term and discount rate related to the Company’s operating lease included as a component of liabilities as of December 26, 2020 were 8 years and 13.38%, impairment expense in the respectively. The Company’s lease discount rates are generally based accompanying Consolidated on estimates of its incremental borrowing rate, as the discount rates Statement of Operations. implicit in the Company’s leases cannot be readily determined. The below are the details of the lease Future lease payments under non-cancelable operating leases and cost and other disclosures regarding finance leases as of December 26, 2020 are as follows: the Company’s leases as of June 27, 2020: Operating Fiscal Year Ending Leases Finance Leases 2020

June 26, 2021 $ 14,166,912 $ 2,388,782 Finance Lease Cost: June 25, 2022 28,762,223 5,344,591 Amortization of June 24, 2023 28,896,785 5,504,327 Finance Lease Right- June 29, 2024 33,130,642 9,880,306 of-Use Assets $ 2,752,022 June 28, 2025 40,475,748 6,542,077 Interest on Lease December 27, 2026 and Thereafter 109,374,556 1,076,344,422 Liabilities 6,262,019 Operating Lease Cost 30,661,411 Total Lease Payments 254,806,866 1,106,004,505 Less Interest (132,713,189) (1,077,756,509) Total Lease Expenses $ 39,675,453 Present Value of Lease Liability $ 122,093,677 $ 28,247,996 2020 Finance leases noted above contain required security deposits, refer to “Note 8 – Other Assets”. (Gain) and Loss on Sale and Leaseback Lease Deferral Arrangements Transactions, Net $ (704,207) Cash Paid for During the six months ended December 26, 2020, the Company Amounts Included in modified its existing lease arrangements with the Treehouse Real Estate

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Measurement of Lease Liabilities: Financing Cash Flows from Finance Leases $ 1,785,282 Operating Cash Flows from Operating Leases $ 27,304,389 Non-Cash Additions to Right-of-Use Assets and Lease Liabilities: Recognition of Right- of-Use Assets for Finance Leases $ 45,614,041 Recognition of Right- of-Use Assets for Operating Leases $152,141,639

2020

Weighted-Average Investment Trust (the “REIT”) in which the REIT agreed to defer a Remaining Lease portion of total current monthly base rent on certain cultivation facilities Term (Years) - and ground leases for the 36-month period between July 1, 2020 and Finance Leases 48 July 1, 2023 for a total of fourteen properties. Amendments for eight of Weighted-Average the properties were accounted for as lease modifications in accordance Remaining Lease with ASC 842 “Leases”, whereas six leases related to failed leaseback Term (Years) - transactions in which the related finance obligation was modified and Operating Leases 9 accounted for in accordance with ASC 470, “Debt”, see “Note 12 – Weighted-Average Notes Payable”, for further discussion. The total amount of all deferred Discount Rate - rent accrues interest at 8.6% per annum during the deferral period. Finance Leases 10.68% As consideration for the rent deferral, the Company issued 3,500,000 Weighted-Average warrants to the REIT, each exercisable at $0.34 per share for a period of Discount Rate - five years. Upon the analysis of the warrants issued under ASC 815, the Operating Leases 12.15% Company determined that the warrants are accounted for as a direct cost in relation to the lease and to be measured at fair value and accounted The discount rate used to determine for as an equity instrument. As a result of the modification to the leases the commencement date present value discussed above, a gain on lease modification was recognized in the of lease payments is the interest rate amount of $16,274,615 and is included in gain on disposals of assets, implicit in the lease, or when that is restructuring fees and other expenses in the accompanying Condensed not readily determinable, the Consolidated Statements of Operations during the six months ended Company utilizes its secured December 26, 2020. borrowing rate. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Finance Leases

Certain lease monthly payments may escalate up to 3.0% each year, other lease monthly payments will increase to the greater of 3.0% or the consumer

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document price index from the United States Department of Labor in which variability is included within the current and noncurrent finance lease liabilities.

Future minimum principal payments under finance leases are as follows:

Finance Fiscal Year Ending Leases

June 26, 2021 $ 1,439,200 June 25, 2022 1,579,608 June 24, 2023 1,790,448 June 29, 2024 2,021,743 June 28, 2025 2,279,010 June 27, 2026 and Thereafter 51,479,265

Total Future Minimum Lease Payments $60,589,274

Finance leases noted above contain required security deposits, refer to “Note 11 - Other Assets”.

Sale and Leaseback Transactions

During the years ended June 27, 2020 and June 29, 2019, the Company sold and subsequently leased back several of its properties in transactions with the Treehouse Real Estate Investment Trust (the “REIT”) and other third parties for total proceeds of $20,400,000 and $96,373,000, respectively. The Company determined that certain transactions of these sales did not qualify for sale- leaseback treatment under ASC 840 due to prohibited forms of continuing involvement in the assets sold by the Company. Following the adoption of ASC 842 on June 30, 2019, the previously unqualified transactions under ASC 840 were reassessed under criteria provided in the adopted guidance, resulting in no changes in classification of previously unqualified transactions because the lease classification would be a finance lease under ASC 842. Accordingly, the “sold” assets remain within land, building and leasehold improvements, as appropriate, for the duration of the lease and a finance liability equal to the amount of proceeds received was recorded within notes payable. Refer to “Note 17 - Notes Payable”. Upon lease termination, the sale will be recognized by removing the remaining carrying values of the assets and

As of June 27, 2020 and June 29, 2019, the total deferred gain recorded for the sale and leaseback transactions was as follows:

2020 2019

Balance at Beginning of Year $5,297,965 $ -

Additions - 5,666,274 Amortization (566,625) (368,309)

Balance at End of Year 4,731,340 5,297,965

Less Current Portion of Deferred Gain (566,627) (566,627)

Deferred Gain on Sale of Assets, Net $4,164,713 $4,731,338

The current portion and non-current portion of deferred gains are included as a component of accounts payable and other non-current liabilities in the Consolidated Balance sheet.

Operating Lease Liabilities

The Company leases certain business facilities from third parties under operating lease agreements that specify minimum rentals. The leases expire through 2038 and contain certain renewal provisions with implied interest rates ranging from 19.2% through 11.7%. The operating leases require monthly payments ranging from $446 to $195,780. Certain lease monthly payments may escalate up to 3.0% each year, other lease monthly payments will increase to the greater of 3.0% or the consumer price index from the United States Department of Labor in which variability is included within the current and noncurrent operating lease liabilities.

Operating Lease Liabilities (Continued)

Future minimum operating lease payments under non-cancelable operating leases is as follows:

Operating Fiscal Year Ending Leases

June 26, 2021 $ 34,049,336 June 25, 2022 34,040,450 June 24, 2023 34,224,191 June 29, 2024 31,289,161 June 28, 2025 30,837,827 June 27, 2026 and Thereafter 134,553,668

Total Future Minimum Lease Payments $298,994,663

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6 Months Ended 12 Months Ended NOTES PAYABLE Dec. 26, 2020 Jun. 27, 2020 NOTES PAYABLE Note 19. NOTES PAYABLE As of December 26, 2020 and June 27, 2020, notes As of June 27, 2020 and June 29, 2019, notes payable consist of the following: payable consist of the following:

December 2020 2019 26, June 27, 2020 2020 Promissory notes dated Financing liability between incurred on various January 15, dates between 2019 through January 2019 March 29, through September 2019, issued 2019 with implied for deferred interest rates ranging payments on from 0.7% to 17.0% acquisitions, per annum. $ 83,400,000 $ 83,576,661 which mature on varying Non-revolving, dates from senior secured term August 3, 2019 notes dated between to June 30, October 1, 2018 and 2020 and bear October 30, 2020, interest at rates issued to accredited ranging from investors, which 8.0% to 9.0% mature on January per annum. $ 16,173,250 $ 26,750,000 31, 2022, and bear interest at a rate of Secured 15.5% and 18.0% promissory per annum. 100,712,185 77,675,000 note dated November 27, Convertible 2019, issued to debentures dated refinance between September property 16, 2020 and acquisition December 17, 2020, loans, which issued to accredited matures on investors and May 31, 2020 qualified and bears institutional buyers, interest at a which mature two rate of 9.5% years from issuance, per annum. - 6,050,000 and bear interest at a rate of 7.5% per Finance annum. 4,000,000 - liabilities incurred on Promissory notes various dates dated between between January 15, 2019 January 2019 through March 29, through 2019, issued for September deferred payments 2019 with on acquisitions, implied interest which mature on 15,992,000 16,173,250 rates ranging 83,576,661 71,538,352

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document from 0.7% to varying dates from 17.0% per August 3, 2019 to annum. June 30, 2020 and bear interest at rates Non-revolving, ranging from 8.0% senior secured to 9.0% per annum. term note dated October 1, Promissory notes 2018, issued to dated November 7, accredited 2018, issued to investors, Lessor for tenant which matures improvements as on January 31, part of sales and 2022, and bears leaseback interest at a transactions, which fixed rate of mature on 15.5% per November 7, 2028, annum and bear interest at a rate requires of 10.0% per annum monthly and require interest minimum monthly payments of payments of $15,660 12.0% and and $18,471. 2,221,112 2,339,564 3.5% will accrue monthly Other 15,417 15,418 as payment-in- kind. 77,675,000 77,675,000 Total Notes Payable 206,340,714 179,779,893 Promissory Less Unamortized notes dated Debt Issuance Costs November 7, and Loan 2018, issued to Origination Fees (11,827,601) (10,781,288) Lessor for tenant Net Amount $194,513,113 $168,998,605 improvements Less Current Portion as part of sales of Notes Payable (16,761,052) (16,188,668) and leaseback transactions, Notes Payable, Net which mature of Current Portion $177,752,061 $152,809,937 on November 7, 2028, bear A reconciliation of the beginning and ending interest at a balances of notes payable for the six months ended rate of 10.0% December 26, 2020 is as follows: per annum and require Balance at Beginning of Period $168,998,605 minimum monthly Cash Additions 14,830,279 payments of Non-Cash Addition - Debt $15,660 and Modification 877,439 $18,471. 2,339,564 2,484,357 Debt Discount Recognized on Modification (947,918) Other 15,418 21,120 Paid-In-Kind Interest Capitalized 11,454,467 Cash Payments (481,780) Total Notes Equity Component of Debt (5,310,375) Payable 179,779,893 184,518,829 Cash Paid for Debt Issuance Less Costs 70,479 Unamortized Accretion of Debt Discount 5,021,917 Debt Issuance Costs and Loan (10,781,288) (11,771,270)

Less Current Portion of Notes Net Amount $168,998,605 $172,747,559 (16,761,052 Payable ) Less Current Portion of Notes Payable, Net of Current Notes Payable (16,188,668) (21,998,522) Portion $177,752,061 Notes Payable, Amendments to Senior Secured Term Loan Net of Current Facility Portion $152,809,937 $150,749,037

On July 2, 2020, the Company completed the A reconciliation of the beginning and ending amendment of its existing term loan facility (the balances of notes payable for the years ended “Facility”) in the principal amount of $77,675,000 June 27, 2020 and June 29, 2019 is as with funds managed by Hankey Capital and with follows: an affiliate of Stable Road Capital (the “Lenders”) wherein the entirety of the interest at a rate of 2020 2019 15.5% per annum shall accrue monthly to the outstanding principal as payment-in-kind effective Balance at March 1, 2020 through July 2, 2021. Thereafter Beginning of until maturity on January 31, 2022, one-half of the Period $172,747,559 $ 55,946,959 interest (7.75% per annum) shall be payable monthly in cash and one-half of the interest (7.75% Cash Additions 13,850,000 166,243,539 per annum) shall be paid-in-kind. In addition, the Non-Cash Company may request an increase to the Facility Additions - through December 31, 2020 to be funded through Business incremental term loans. Certain reporting and Acquisition - 26,750,000 financial covenants were added, and the minimum Non-Cash liquidity covenant was waived until September 30, Addition - Debt 2020 wherein the amount of required cash balance Modification 1,000,000 - thereafter was amended. The amendment to the Debt Discount Facility was not deemed to be a substantial Recognized on modification under ASC 470-50, “Modifications Modification (1,000,000) - and Extinguishments”. Payment of Amendment The Company incurred an amendment fee of Fee (500,000) - $834,000 that was added to the outstanding Cash Payments (14,779,091) (55,007,057) principal balance. As consideration for the Equity amendment, the Company issued approximately Component of 20,227,863 warrants exercisable at $0.34 per share Debt (5,331,969) (13,590,104) until July 2, 2025. The Company also cancelled Shares Issued 20,227,863 existing warrants held by the lenders for Debt exercisable at $0.60 per share until December 31, Issuance Costs - (1,857,431) 2022. The warrants may be exercised at the election Conversion of of their holders on a cashless basis. The warrants Convertible issued in connection with the term loan facility met Debentures - (3,802,381) the scope exception under ASC 815, “Derivatives Shares Issued and Hedging” and are classified as equity to Settle Debt (4,393,342) (8,929,288) instruments. The change in fair value of the Cash Paid for warrants was recorded as a debt discount in Debt Issuance connection with the Facility. As a result of the Costs (61,500) (2,019,472) modification, the Company recorded an additional Accretion of debt discount of $906,436 related to the change in Debt Discount 6,895,051 7,848,740 terms of the warrants. See “Note 15 – Share-Based Non-Cash Loss Compensation” for further information regarding on the valuation method and assumptions used in Extinguishment determining the fair value of these equity of Debt 571,897 1,164,054 instruments.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Balance at On September 16, 2020, the Company entered into End of Period $168,998,605 $172,747,559 further amendments wherein the amount of funds available under the Facility was increased by Less Current $12,000,000, of which $5,700,000 was fully Portion of committed by the lenders through October 31, Notes Payable (16,188,668) (21,998,522) 2020. The additional amounts are funded through incremental term loans at an interest rate of 18.0% Notes Payable, per annum wherein 12.0% shall be paid in cash Net of Current monthly in arrears and 6.0% shall accrue monthly Portion $152,809,937 $150,749,037 as payment-in-kind. In connection with each incremental draw under the amended Facility, the Scheduled maturities of debt are as follows: Company shall issue warrants equal to 200% of the incremental term loan amount, divided by the Scheduled greater of (a) $0.20 per share and (b) 115% Fiscal Year Ending Maturity multiplied by the volume-weighted average trading price (“VWAP”) of the shares for the five June 26, 2021 $ 16,188,668 consecutive trading days ending on the trading day June 25, 2022 77,675,000 immediately prior to the applicable funding date June 24, 2023 - of the second tranche, which shall be the exercise June 29, 2024 - price of the issued warrant. Such warrants are June 28, 2025 - subject to a down round feature wherein the June 27, 2026 and Thereafter 85,916,225 exercise price would be decreased in the event of the exercise of a down-round price reset of select Total Notes Payable $179,779,893 warrants under the senior secured convertible credit facility with Gotham Green Partners (“GGP”). Refer to “Note 13 – Senior Secured Convertible Senior Secured Term Loan Facility Credit Facility” for further information. In addition, certain covenants and terms were added or On October 1, 2018, the Company closed a amended, and the minimum liquidity covenant was $73,275,000 senior secured term loan facility waived until December 31, 2020. The amendment (the “Facility”) with funds managed by to the Facility was not deemed to be a substantial Hankey Capital and with an affiliate of Stable modification under ASC 470-50, “Modifications Road Capital (the “Lenders”). On October 3, and Extinguishments”. As consideration for the 2018, the Company closed an additional amendment, the Company issued approximately tranche of the Facility, which increased the 20,227,863 warrants exercisable at $0.34 per share principal amount of the loan to $77,675,000. until September 16, 2025. The Company also The principal amount under the Facility will cancelled 20,227,863 existing warrants held by the accrue interest at a rate of 7.5% per annum, lenders exercisable at $0.60 per share until paid monthly, with a maturity date of 24 December 31, 2022. The change in fair value of months following the date of closing on the warrants was recorded as a debt discount in October 1, 2018. The Company may repay connection with the Facility. Accordingly, the the balance of the Facility at any time and Company recorded an additional debt discount of from time to time, in whole or in part, with a $542,986 related to the change in terms of the prepayment penalty of 1% of the outstanding warrants. principal amount repaid if repaid before December 31, 2019. In connection with the On September 16, 2020, the Company closed on Facility, the Company’s equity interests in an incremental term loan of $3,000,000 under the MMOF SD LLC, MMOF VENICE LLC, amended Facility and issued 30,000,000 warrants MMOF DOWNTOWN COLLECTIVE LLC, with an exercise price of $0.20 per share until MMOF BH LLC, and MMOF VEGAS 2 September 16, 2025. On October 30, 2020, the LLC were pledged as security. Company closed on an incremental term loan of $7,705,279 under the amended Facility and issued Additionally, MM CAN issued to the Lenders 77,052,790 warrants with an exercise price of $0.20 8,105,642 warrants, each being exercisable per share until September 14, 2025. The warrants for one Class B Common Share of such may be exercised at the election of their holders company at a purchase price per share of on a cashless basis and are classified as equity $4.97 for 30 months. Such Class B Common instruments. See “Note 15 – Share-Based Shares are redeemable in accordance with Compensation” for further information. their terms for Class B Subordinate Voting

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Shares of the Company. The Facility will be On September 16, 2020 and September 28, 2020, used for acquisitions, capital expenditures and the down round feature on the warrants issued in general corporate purposes. connection with the incremental term loan of $3,000,000 on September 16, 2020 was triggered In connection with the increased principal wherein the exercise price was adjusted to $0.17 under the Facility, MM CAN issued to the and $0.15 per share, respectively. The value of the Lenders an additional 511,628 warrants, each effect of the down round feature was determined being exercisable for one Class B Common to be $405,480 and recognized as an increase in Share of such affiliate at a purchase price per additional paid-in capital. share of $4.73 for a period of 30 months. Such Class B Common Shares are Unsecured Convertible Facility redeemable in accordance with their terms for Class B Subordinate Voting Shares of the On September 16, 2020, the Company entered into Company. an unsecured convertible debenture facility for total available proceeds of $10,000,000 wherein the In addition to providing a portion of the convertible debentures shall have a conversion Facility, Stable Road Capital provided price equal to the closing price on the trading day advisory services to the Company. Advisory immediately prior to the closing date, a maturity services included introducing the Company to date of 24 months from the date of issuance and will brands and various service providers, advice bear interest at a rate of 7.5% per annum payable on the Facility and providing advice with semi-annually in cash. The unsecured facility is respect to the Company’s planned structured callable in additional tranches in the amount of sale of real estate assets. For its advisory $1,000,000 each, up to a maximum of $10,000,000 services, MM CAN issued to Stable Road under all tranches. The timing of additional Capital 8,105,642 warrants at a purchase tranches can be accelerated based on certain price per share of $4.97 and 511,628 warrants conditions. The Company has the right to prepay, in at a purchase price per share of $4.73, each whole or in part, the outstanding principal amount being exercisable for one Class B Common and accrued interest prior to maturity, upon Share of such company for a period of 30 payment of 7.5% of the principal amount being months. Such Class B Common Shares are repaid, less the amount of interest paid during the redeemable in accordance with their terms for year of prepayment. The debentures provide for Class B Subordinate Voting Shares of the the automatic conversion into Subordinate Voting Company. Shares in the event that the VWAP is greater than $0.25 on the CSE for 45 consecutive trading days, Amendment to Senior Secured Term Loan at a conversion price per Subordinate Voting Share Facility equal to $0.17. On January 13, 2020, the Company On September 16, 2020, the Company closed on an completed the amendment of its existing term initial $1,000,000 of the facility with a conversion loan facility in the principal amount of price of $0.17 per Subordinate Voting Share. In $77,675,000 with Hankey Capital wherein the connection with the initial tranche, the Company maturity date was extended from October 1, issued 3,293,413 warrants with an exercise price 2020 to January 31, 2022 and the interest rate of $0.21 per share. On September 28, 2020, the was increased from a fixed rate of 7.5% per Company closed on a second tranche of $1,000,000 annum to 15.5% per annum. In addition, the under its existing unsecured convertible facility Company may prepay the amounts with a conversion price of $0.15 per Subordinate outstanding, on a non-revolving basis, at any Voting Share. In connection with the second time and from time to time, in whole or in tranche, the Company issued 3,777,475 warrants part, without penalty. The amendment with an exercise price of $0.17 per Subordinate secured the Facility by a pledge of 100% of Voting Share. On November 20, 2020, the the equity interest in Project Compassion NY, Company closed on a third tranche of $1,000,000 LLC, which includes MedMen NY, Inc. and under the facility with a conversion price of $0.15 MMOF NY Retail, LLC. The amendment to per Subordinate Voting Share. In connection with the term loan facility was not deemed to be a the third tranche, the Company issued 3,592,425 substantial modification under ASC warrants with an exercise price of $0.17 per share. 470-50, “Modifications and On December 17, 2020, the Company closed on Extinguishments”. a fourth tranche of $1,000,000 under the facility with a conversion price of $0.15 per Subordinate

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Further, the Company cancelled the existing 16,211,284 and 1,023,256 warrants issued to the lenders exercisable at $4.97 and $4.73 per share, respectively, representing 100% of the loan amount. The Company issued new warrants to the lenders totaling 40,455,729 warrants exercisable at $0.60 per share until December 31, 2022. The new warrants may be exercised at the election of their holders on a cashless basis. The warrants issued in connection with the term loan facility met the scope exception under ASC 815, “Derivatives and Hedging” and are classified as equity instruments. The warrants are measured at fair value and recorded as a debt discount in connection with the term loan facility. See “Note 20 - Share-Based Compensation” for further information Voting Share. In connection with the fourth tranche, regarding the valuation method and the Company issued 3,597,100 warrants with an assumptions used in determining the fair exercise price of $0.18 per share. Under ASC 815, value of these equity instruments. As a result the conversion option and warrants were recorded of the modification, the Company recorded an as an equity instrument. As of December 26, 2020, additional debt discount of $5,331,969 related the relative fair value of the warrants with a value to the change in terms of the warrants. of $650,933 has been recorded to equity. The existing loan facility is subject to certain Financing Liability covenant clauses whereby the Company is required to meet certain key financial ratios. In connection with the Company’s failed sale and As of June 27, 2020, the lenders waived leaseback transactions described in “Note 11 – certain covenant clauses. Refer to “Note 27 - Leases”, a financing liability was recognized equal Subsequent Events” for amendments to the to the cash proceeds received upon inception. The existing loan facility subsequent to June 27, cash payments made on the lease less the portion 2020. considered to be interest expense, will decrease the financing liability. The financing liability was Amendment to Secured Promissory Note modified due to an amended lease agreement during the six months ended December 26, 2020 in On January 30, 2020, the Company amended which the new terms of the amended agreement do the secured promissory note issued in not qualify as a substantial modification under connection with the acquisition of ASC 470-50, “Modifications and Kannaboost Technology Inc. and CSI Extinguishments”. Solutions LLC (collectively referred to as “Level Up”) wherein the principal amount was amended from $12,000,000 to $13,000,000 and the maturity date was extended to April 8, 2020. On February 10, 2020, the secured promissory note was amended in which the Company was required to pay a $500,000 extension fee wherein the amendment was deemed to be a substantial modifications under ASC 470-50, “Modifications and Extinguishment”. Accordingly, the Company recorded a loss on extinguishment of debt of $571,897. The loss was recorded as a component of other expense in the Consolidated Statements of Operations for the fiscal year ended June 27, 2020.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On April 8, 2020, the Company entered into a third amendment of the Level Up secured promissory note wherein the maturity date was extended to the earlier of December 31, 2020 or in the event of default. No payments shall be due prior to the maturity date unless certain events occur. The balance of the secured promissory note will bear interest at a rate of 9.0% per annum until paid in full. The effectiveness of the amendment on April 8, 2020 is currently in dispute with the counterparty. The Company disputes the claims filed by the counterparty. The Company also disputes any default of the promissory note, has entered into a counterclaim and continues to seek resolution of the undisputed portion of the promissory note.

Settlement of Debt

Financing Liability

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SENIOR SECURED 6 Months Ended 12 Months Ended CONVERTIBLE CREDIT Dec. 26, 2020 Jun. 27, 2020 FACILITY CONCENTRATIONS OF BUSINESS AND CREDIT RISK Note 20. SENIOR SECURED As of June 27, 2020 and June 29, 2019, senior secured convertible credit facility consists of the following: CONVERTIBLE CREDIT Tranche 2020 2019 FACILITY Senior secured convertible notes dated April 23, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 1A $ 21,660,583 $ 20,000,000

Senior secured convertible notes dated May 22, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 1B 86,053,316 80,000,000

Senior secured convertible notes dated July 12, 2019, issued to accredited investors, which mature on April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 2 26,570,948 - As of December 26, 2020 and June 27, 2020, senior secured convertible credit facility consists of the following: Senior secured convertible notes dated November 27, 2019, December 26, June 27, issued to accredited investors, which mature on April 23, 2022 Tranche 2020 2020 and bear interest at LIBOR plus 6.0% per annum. 3 10,288,815 - Senior secured convertible notes dated April 23, 2019, issued to accredited investors, which mature on April 23, Senior secured convertible notes dated March 27, 2020, issued to 2022 and bear interest at LIBOR plus 6.0% per annum. 1A $ 16,092,152 $ 21,660,583 accredited investors, which mature on April 23, 2022 and bear Senior secured convertible notes dated May 22, 2019, issued to accredited investors, which mature on April 23, interest at LIBOR plus 6.0% per annum. 4 12,500,000 - 2022 and bear interest at LIBOR plus 6.0% per annum. 1B 90,698,233 86,053,316 Senior secured convertible notes dated July 12, 2019, issued to accredited investors, which mature on April 23, Amendment fee converted to senior secured convertible notes 2022 and bear interest at LIBOR plus 6.0% per annum. 2 28,340,475 26,570,948 dated October 29, 2019, which mature on April 23, 2022 and Senior secured convertible notes dated November 27, 2019, issued to accredited investors, which mature on April bear interest at LIBOR plus 6.0% per annum. - 19,423,593 - 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 3 10,974,012 10,288,815 Senior secured convertible notes dated March 27, 2020, issued to accredited investors, which mature on April 23, Senior secured convertible notes dated April 24, 2020, issued to 2022 and bear interest at LIBOR plus 6.0% per annum. 4 13,327,075 12,500,000 accredited investors, which mature on April 23, 2022 and bear IA-1 Amendment fee converted to senior secured convertible notes dated October 29, 2019, which mature on April 23, interest at LIBOR plus 6.0% per annum. 2,734,282 - 2022 and bear interest at LIBOR plus 6.0% per annum. - 20,717,133 19,423,593 Senior secured convertible notes dated April 24, 2020, issued to accredited investors, which mature on April 23, IA-1 Restatement fee issued in senior secured convertible notes dated 2022 and bear interest at LIBOR plus 6.0% per annum. 2,894,053 2,734,282 March 27, 2020, which mature on April 23, 2022 and bear Senior secured convertible notes dated September 14, 2020, issued to accredited investors, which mature on IA-2 interest at LIBOR plus 6.0% per annum. - 8,199,863 - April 23, 2022 and bear interest at LIBOR plus 6.0% per annum. 5,596,564 - Restatement fee issued in senior secured convertible notes dated March 27, 2020, which mature on April 23, Total Drawn on Senior Secured Convertible Credit Facility 187,431,400 100,000,000 2022 and bear interest at LIBOR plus 6.0% per annum. - 8,745,997 8,199,863 Second restatement fee issued in senior secured convertible notes dated July 2, 2020, which mature on April 23, Less Unamortized Debt Discount (21,062,937) (13,144,585) 2022 and bear interest at LIBOR plus 6.0% per annum. - 2,092,538 - Senior Secured Convertible Credit Facility, Net $ 166,368,463 $ 86,855,415 Total Drawn on Senior Secured Convertible Credit Facility 199,478,232 187,431,400

Less Unamortized Debt Discount (39,886,067) (21,062,937) A reconciliation of the beginning and ending balances of senior secured convertible credit facility for the years ended June 27, 2020 and June 29, 2019 is as follows: Senior Secured Convertible Credit Facility, Net $ 159,592,165 $ 166,368,463 Amendment Restatement Tranche 1 Tranche 2 Tranche 3 Tranche 4 Fee Notes Fee Notes TOTAL A reconciliation of the beginning and ending balances of senior secured convertible credit facility for the six months ended December 26, 2020 is as follows: Balance as 2nd of July 1, Incremental Incremental Amendment Restatement Restatement 2018 $ - $ - $ - $ - $ - $ - $ - Tranche 1 Tranche 2 Tranche 3 Tranche 4 Advance - 1 Advance - 2 Fee Notes Fee Notes Fee Notes TOTAL Cash Balance as of Additions 100,000,000 - - - - - 100,000,000 June 27, 2020 $ 102,833,447 $ 25,352,687 $ 9,680,433 $ 286,691 $ 2,168,540 $ - $ 18,964,600 $ 7,082,065 $ - $ 166,368,463 Net Effect on Equity Cash Additions - - - - - 5,468,565 - - - 5,468,565 Component Repayments (8,000,000) ------(8,000,000) of New Fees Capitalized and to Debt Related to Amended Debt Debt (7,548,720) - - - - - (7,548,720) Modifications - - - - - (468,564) - - 2,000,000 1,531,436 Shares Issued Paid-In-Kind for Debt Interest Issuance Capitalized 7,076,486 1,769,530 685,198 827,075 159,771 128,000 1,293,540 546,134 92,538 12,578,272 Costs (3,979,119) - - - - - (3,979,119) Net Effect on Cash Paid for Debt from Debt Extinguishment 4,812,996 962,750 497,175 2,167,870 (453,979) - 455,792 630,758 - 9,073,362 Issuance Net Effect on Costs (2,076,757) - - - - - (2,076,757) Equity Amortization Component of of Debt New and Discounts 460,011 - - - - - 460,011 Amended Debt (13,190,673) (3,412,171) (1,454,451) (2,839,602) (1,296,844) (3,239,508) (2,349,451) (4,551,980) - (32,334,680) Cash Paid for Balance as Debt Issuance of June 29, Costs - - - - - (175,000) - - - (175,000) 2019 $ 86,855,415 $ - $ - $ - $ - $ - $ 86,855,415 Amortization of Debt Discounts 2,185,753 566,800 241,271 676,309 215,283 329,917 351,577 514,837 - 5,081,747 Cash Additions - 25,000,000 10,000,000 15,000,000 - - 50,000,000 Balance as of Fees December 26, Capitalized to 2020 $ 95,718,009 $ 25,239,596 $ 9,649,626 $ 1,118,343 $ 792,771 $ 2,043,410 $ 18,716,058 $ 4,221,814 $ 2,092,538 $ 159,592,165 Debt Related to On July 2, 2020, the Company amended and restated the securities purchase agreement with Gotham Green Partners (“GGP”) under the senior secured convertible Debt credit facility (the “Convertible Facility”) (the “Fourth Amendment”) wherein the minimum liquidity covenant was waived until September 30, 2020 and resetting Modifications - - - 234,282 18,750,000 8,199,863 27,184,145 at $5,000,000 thereafter with incremental increases on March 31, 2021 and December 31, 2021. The payment-in-kind feature on the Convertible Facility was also Paid-In-Kind extended, such that 100% of the cash interest due prior to June 2021 will be paid-in-kind and 50% of the cash interest due thereafter will be paid-in-kind. The Fourth Interest Amendment released certain assets from its collateral to allow greater flexibility to generate proceeds through the sale of non-core assets. The Fourth Amendment allows Capitalized 7,713,899 1,570,948 288,815 - 673,593 - 10,247,255 for immediate prepayment of amounts under the Convertible Facility with a 5% prepayment penalty until 2nd anniversary of the Fourth Amendment and 3% prepayment Net Effect on penalty thereafter. As part of the Fourth Amendment, holders of notes under the Convertible Facility were provided down-round protection where issuances of equity Equity interests (including securities that are convertible or exchangeable for equity interests) by the Company at less than the higher of (i) lowest conversion price under the Component amended and restated notes of the Convertible Facility amendment dated March 27, 2020 and (ii) the highest conversion price determined for any incremental advances, of New will automatically adjust the conversion/exercise price of the previous tranches and incremental tranche 4 warrants and the related replacement warrants to the price of and the newly issued equity interests. Certain issuances of equity interests are exempted such as issuances to existing lenders, equity interests in contemplation at the time of Amended Fourth Amendment and equity interests issued to employees, consultants, directors, advisors or other third parties, in exchange for goods and services or compensation. Debt 6,942,719 (1,137,637) (172,786) (12,161,866) (511,900) (1,245,676) (8,287,146) Pursuant to ASU 2017-11, the down-round protection was not considered a derivative and will be recognized when the down-round protection adjustments are triggered. Cash Paid for Debt As consideration for the amendment, the conversion price for 52% of the tranches 1 through 3 and the first amendment fee notes outstanding under the Convertible - - Issuance Facility were amended to $0.34 per share. An amendment fee of $2,000,000 was also paid through the issuance of additional notes at a conversion price of $0.28 per Costs - (482,998) (641,689) (673,435) (1,798,122) share. The Fourth Amendment to the Convertible Facility was deemed to be a substantial modification under ASC 470-50, “Modifications and Extinguishments,” and Amortization a loss on extinguishment of $10,129,655 was recorded in the Condensed Consolidated Statements of Operations for the six months ended December 26, 2020. of Debt Discounts 1,321,414 402,374 206,093 56,250 52,907 127,878 2,166,916 On September 14, 2020, the Company closed on an incremental advance in the amount of $5,000,000 under its existing Convertible Facility with GGP at a conversion price of $0.20 per share. In connection with the incremental advance, the Company issued 25,000,000 warrants with an exercise price of $0.20 per share. In addition, Balance as 1,080,255 Existing warrants were cancelled and replaced with 16,875,001 warrants with an exercise price of $0.20 per share. Pursuant to the terms of the GGP Facility, of June 27, the conversion price for 5.0% of the existing Notes outstanding prior to Tranche 4 and Incremental Advance (including paid-in-kind interest accrued on such Notes), 2020 $ 102,833,447 $ 25,352,687 $ 9,680,433 $ 2,455,231 $ 18,964,600 $ 7,082,065 $ 166,368,463 being 5.0% of an aggregate principal amount of $170,729,923, was amended to $0.20 per share. As consideration for the additional advance, the Company issued convertible notes as consideration for a $468,564 fee with a conversion price of $0.20 per share. On March 22, 2019, the Company signed a binding term sheet for a senior secured convertible credit facility (the “Convertible Facility”) of up to $250,000,000 from funds managed by Gotham Green Partners (“GGP”), an investor in On September 16, 2020 and September 28, 2020, the down round feature on the convertible notes and warrants issued in connection with Tranche 4, Incremental the global cannabis industry. The Company subsequently entered into definitive documentation on April 23, 2019 and Advances and certain amendment fees was triggered wherein the exercise price was adjusted to $0.17 and $0.15 per share, respectively. The value of the effect of closed on a portion of the initial funding tranche. the down round feature on convertible notes and warrants was determined to be $32,744,770 and $6,723,954, respectively, for the six months ended December 26, 2020. The effect related to convertible notes was recognized as additional debt discount and an increase in additional paid-in-capital. The effect related to warrants was The Convertible Facility will be accessed through issuances to the lenders of convertible senior secured notes recognized as a deemed distribution and an increase in additional paid-in capital. (“Notes”) co-issued by the Company and MM CAN, in an aggregate amount of up to $250,000,000. Under the definitive terms, Notes will be issuable in up to five tranches, with each tranche being issuable at the option of the On November 1, 2020, the Company repaid $8,000,000 of borrowings under the Convertible Facility and recorded a loss $943,706 on the partial extinguishment of Company, subject to certain conditions and, in certain cases, price thresholds for the Class B Subordinate Voting debt and is included in the net effect on equity component of new and amended debt in the reconciliation of the beginning and ending balances of senior secured Shares of the Company. The initial tranche, which the Company and MM CAN have drawn down on April 23, 2019 convertible credit facility for the six months ended December 26, 2020. and May 22, 2019, was for gross proceeds of $100,000,000 (“Tranche 1”). The balance of the Convertible Facility will be funded through additional tranches.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company may force the conversion of up to 75% of the then outstanding Notes if the VWAP of the Subordinate Voting Shares (converted to U.S. dollars) is at least $8.00 for any 20 consecutive trading day period, at a conversion price per Subordinate Voting Share equal to $8.00. If 75% of the then outstanding Notes are converted by the Company, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months (if such extended period is longer than the maturity date of such Notes), subject to an outside date of 48 months from the Closing Date.

In connection with Tranche 1, the Company issued to the lenders 10,086,066 Warrants with an exercise price per share equal to $3.72 and 42,913,752 Warrants with an exercise price per share equal to $4.29. Under ASC 815, the conversion option and warrants were recorded as an equity instrument. As of June 29, 2019, the relative fair value of the warrants with a value of $7,548,720 has been recorded to equity. In addition, the Company paid cash financing fees of $2,276,757 and issued 1,748,251 Subordinate Voting Shares valued at an aggregate price of $3,979,119 using the trading share price of the Company at the issuance date. The cash consideration and Subordinate Voting Shares issued were allocated between debt and equity.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Tranche 3 in the amount of $10,000,000 on November 27, 2019, the Company issued 3,708,772 and 1,071,421 warrants to the lenders at an exercise price of $1.01 and $1.17 per share, respectively.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SHAREHOLDERS 6 Months Ended 12 Months Ended EQUITY Dec. 26, 2020 Jun. 27, 2020 MEZZANINE EQUITY: Note 21. SHAREHOLDERS' Issued and Outstanding Authorized EQUITY A reconciliation of the beginning and ending issued and outstanding shares is as follows: The authorized share capital of the Company is comprised of the following:

MM CAN MM Unlimited Number of Class B Subordinate Voting Shares USA Enterprises Subordinate Super Class B USA Holders of Subordinate Voting Shares are entitled to notice of and to attend at any meeting of the Voting Voting Redeemable Common shareholders of the Company, except a meeting of which only holders of another particular class Shares Shares Units Units or series of shares of the Company will have the right to vote. At each such meeting, holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share Balance as of June 27, 2020 403,907,218 815,295 236,123,851 725,016 held. As long as any Subordinate Voting Shares remain outstanding, the Company will not, without the consent of the holders of the Subordinate Voting Shares by separate special resolution, Cancellation of Super Voting prejudice or interfere with any right attached to the Subordinate Voting Shares. Holders of Shares - (815,295) - - Subordinate Voting Shares are entitled to receive as and when declared by the directors of the Shares Issued to Settle Company, dividends in cash or property of the Company. In the event of the liquidation, Accounts Payable and dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of Liabilities 7,205,754 - - - any other distribution of assets of the Company among its shareholders, the holders of Class B Redemption of MedMen Corp Subordinate Voting Shares shall, subject to the prior rights of the holders of any shares of the Redeemable Shares 88,945,434 - (88,945,434) - Company ranking in priority rights of the holders of any shares of the Company ranking in priority Shares Issued for Vested to the Class B Shares (including without restriction the Class A Super Voting Shares) be entitled to Restricted Stock Units 7,173,256 - - - participate ratably along with all other holders of Class B Shares. Shares Issued for Acquisition Costs 2,082,890 - - - Authorized (Continued) Stock Grants for Compensation 3,001,282 - - - Unlimited Number of Class A Super Voting Shares

Balance as of December 26, Holders of Super Voting Shares are not entitled to receive dividends. They are entitled to notice of 2020 512,315,834 - 147,178,417 725,016 and to attend at any meeting of the shareholders of the Company, except a meeting of which only holders of another particular class or series of shares of the Company have the right to vote. At Cancellation of Super Voting Shares each such meeting, holders of Super Voting Shares are entitled to 1,000 votes in respect of each Super Voting Share held. Provided that the founders hold more than 50% of the issued and Effective as of December 10, 2020, the Company cancelled the remaining 815,295 outstanding non-voting common shares of MM Corp and Common Units of LLC, otherwise each Class A Super Voting Shares that were granted via proxy to Benjamin Rose wherein holders of Super Voting Shares are entitled to 50 votes in respect of each Super Voting Share held. no consideration was paid. The effect of the cancellation was recognized as a reduction As long as any Super Voting Shares remain outstanding, the Company will not, without the in the mezzanine equity for the book value of $82,500 and the difference over the consent of the holders of the Super Voting Shares by separate special resolution, prejudice or repurchase price of nil was recorded to additional paid-in capital. There was no effect on interfere with any right or special right attached to the Super Voting Shares. The Super Voting total shareholders’ equity as a result of this cancellation. As of December 26, 2020, there Shares are redeemable by the Company at a fixed rate of $0.10119 per share at the option of the are no outstanding Class A Super Voting Shares. current holder (the founders) in certain circumstances. In all other circumstances, the Company has the option to redeem the Super Voting Shares at the aforementioned fixed rate. The total Non-Controlling Interests amount due if redeemed, is approximately $82,500. The Company determined that the Super Voting are temporary equity in accordance with ASC 480, “Distinguishing Liabilities from Equity” Non-controlling interest represents the net assets of the subsidiaries that the holders of and has reflected the amount as mezzanine equity in the Consolidated Balance Sheets. the Subordinate Voting Shares do not directly own. The net assets of the non-controlling interest are represented by the holders of MM CAN USA Redeemable Shares and the In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or holders of MM Enterprises USA Common Units. Non-controlling interest also represents involuntary, or in the event of any other distribution of assets of the Company among its the net assets of the entities the Company does not directly own but controls through shareholders, the Company will distribute its assets firstly and in priority to the rights of holders of a management agreement. As of December 26, 2020 and June 27, 2020, the holders of any other class of shares of the Company (including the holders of preferred shares of any series the MM CAN USA Redeemable Shares represent approximately 22.32% and 36.89%, and Class B Subordinate Voting Shares) to return the issue price of the Class A Super Voting respectively, of the Company and holders of the MM Enterprises USA Common Units Shares. If there are insufficient assets to fully return the issue price, such holders will receive an represent approximately 0.11% and 0.11%, respectively, of the Company. amount equal to the holders of the Class A Super Voting Shares such holders will receive an amount equal to their pro rata share in proportion to the issue price of their Class A Super Voting Variable Interest Entities Shares along with all other holders of Class A Super Voting Shares.

The below information are entities the Company has concluded to be variable interest On January 31, 2020, the Company announced that Adam Bierman and Andrew Modlin agreed to entities (“VIEs”) as the Company possesses the power to direct activities through surrender all of their Class A Super Voting Shares to the Company. The value of the Super Voting management services agreements (“MSAs”). Through these MSAs, the Company can Shares will be determined by a special committee of the Board (the “Special Committee”) through significantly impact the VIEs and thus holds a controlling financial interest. a process that includes hiring a third-party supervised by the Special Committee. As of June 27, 2020, the third-party valuation has not been completed. Accordingly, 815,295 Super Voting Shares The following table represents the summarized financial information about the previously held by Mr. Bierman were cancelled during the fiscal year ended June 27, 2020. On Company’s consolidated VIEs. VIEs include the balances of LAX Fund II Group, LLC, July 12, 2020, the valuation of the Super Voting Shares was completed. As of June 27, 2020, Natures Cure, Inc. and Venice Caregiver Foundation, Inc. This information represents $475,650 was accrued in current liabilities for the amount owed to Adam Bierman related to the amounts before intercompany eliminations. Super Voting Shares cancelled. This liability is to be settled in Class B Subordinate Voting Shares and RSUs. Mr. Modlin’s surrender will occur in December 2020 upon the expiration of the As of and for the six months ended December 26, 2020, the balances of the VIEs before limited proxy granted to Benjamin Rose, Executive Chairman of the Board. As a result, the any intercompany eliminations consists of the following: Company expects to have no outstanding Class A Super Voting Shares by the end of calendar year 2020. Venice LAX Caregivers Fund II Unlimited Number of Preferred Shares Foundation, Group, Natures Inc. LLC Cure, Inc. TOTAL The Preferred Shares may be issued at any time or from time to time in one or more series. The board of directors of the Company may, by resolution, alter its Notice of Articles of the Company Current Assets $ 772,010 $(8,795,281) $10,407,949 $ 2,384,678 to create any series of Preferred Shares and to fix before issuance, the designation, rights, Non-Current Assets 13,461,338 3,129,112 5,002,478 21,592,928 privileges, restrictions and conditions to attach to the Preferred Shares of each series, including the rate, form, entitlement and payment of preferential dividends, the dates and place for payment thereof, the redemption price, terms, procedures and conditions of redemption, if any, voting rights Total Assets $ 14,233,348 $(5,666,169) $15,410,427 $23,977,606 and conversion rights, if any, and any sinking fund, purchase fund or other provisions attaching to the Preferred Shares of such series; provided, however, that no Preferred Shares of any series shall Current Liabilities $ 12,147,006 $ (566,336) $ 5,070,565 $16,651,235 be issued until the Company has filed an alteration to its Notice of Articles with the British Non-Current Liabilities 9,214,775 2,558,486 1,146,329 12,919,590 Columbia Registrar of Companies. Preferred shares shall be entitled to preference over other classes of shares, dividends when declared and any distribution of assets in event of liquidation, Total Liabilities $ 21,361,781 $ 1,992,150 $ 6,216,894 $29,570,825 dissolution or winding up the Company, whether voluntary or involuntary. Non-Controlling Interest $ (7,128,433) $(7,658,319) $ 9,193,533 $ (5,593,219) Authorized (Continued)

Revenues $ 4,398,883 $ (823) $ 6,549,799 $10,947,859 2,000,000,000 Units of MM CAN USA Redeemable Shares Net Income (Loss) Attributable to Non- The Company’s subsidiary, MM CAN USA, Inc. has two authorized classes of units, Class A and Controlling Interest $ (1,203,248) $(1,587,992) $ 2,413,906 $ (377,334) Class B Redeemable Stock with a $0.001 USD par value, having an authorized limit of 1,000,000,000 units each. Class A Units are not redeemable, while Class B Redeemable Units are As of and for the year ended June 27, 2020, the balances of the VIEs consists of the redeemable into shares of the Company’s Class B Subordinate Voting Shares. Holders of Class B following: Redeemable Units can redeem at their election. There are no mandatory redemption features. Class A Units are entitled to vote per unit held while Class B Redeemable Units are non-voting.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Each Class share on a pro-rata basis dividends when declared. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Class B Redeemable Units, together with holders of Class A Units on a pro-rata basis, will be entitled to receive all assets of the Corporation available for distribution to its stockholders.

Unlimited Number of MM Enterprises USA Common Units

The Company’s subsidiary, MM Enterprises USA, LLC has one authorized class of units being Common Units. Common Units contain no voting rights and are redeemable into Class B Redeemable Units of MedMen Corp or of the Company’s Class B Subordinate Voting Shares. Distributions to members, upon the dissolution or liquidation of the Company, whether voluntary or involuntary may be declared by out of distributable cash or other funds or property legally available therefor in such amounts and on such terms as the Company shall determine using such record date as the Company may designate on a pro-rata basis in accordance with each members Venice percentage interest in the Company. Caregivers LAX Fund Foundation, II Group, Natures Issued and Outstanding Inc. LLC Cure, Inc. TOTAL A reconciliation of the beginning and ending issued and outstanding shares is as follows: Current Assets $ 1,233,188 $ 811,025 $ 6,639,231 $ 8,683,444 Non-Current Assets 16,867,824 3,259,563 5,032,428 25,159,815 MM CAN MM USA Enterprises Total Assets $ 18,101,012 $ 4,070,588 $11,671,659 $33,843,259 Subordinate Super Class B USA Voting Voting Redeemable Common Current Liabilities $ 12,831,161 $ 7,481,953 $ 3,745,710 $24,058,824 Shares Shares Units Units Non-Current Liabilities 11,196,585 2,662,078 1,146,322 15,004,985 Balance as of July 1, 2018 45,215,976 1,630,590 365,961,334 1,570,064 Total Liabilities $ 24,027,746 $10,144,031 $ 4,892,032 $39,063,809 Bought Deal Equity Financing 29,321,818 - - - Non-Controlling Interest $ (5,926,734) $ (6,073,443) $ 6,779,627 $ (5,220,550) At-the-Market Equity Financing Program 5,168,500 - - - Revenues $ 10,949,458 $ - $13,976,810 $24,926,268 Shares Issued to Settle Debt 632,130 - 3,932,415 - Net Income (Loss) Debt Issuance Costs 2,691,141 - - - Attributable to Non- Redemption of MedMen Corp Controlling Interest $ (6,132,528) $ (3,777,079) $ 3,143,437 $ (6,766,170) Redeemable Shares 58,095,821 - (58,095,821) - Redemption of LLC Redeemable Units 5,566,993 - 4,274,566 (9,841,559) The net change in the consolidated VIEs and other non-controlling interest are as Other Assets 919,711 - 72,464 - follows for the six months ended December 26, 2020: Acquisition Costs 159,435 - 169,487 - Acquisition of Non-Controlling Venice LAX Interest 9,736,870 - - - Caregivers Fund II Other Non- Business Acquisitions 10,875,929 - - - Foundation, Group, Natures Controlling Asset Acquisitions 1,658,884 - - 8,996,511 Inc. LLC Cure, Inc. Interests TOTAL Vested Restricted Stock Units 333,479 - - - Exercise of Warrants - - 2,878,770 - Balance as of Stock Grants for Compensation 2,634,235 - - - June 27, 2020 $ (5,925,185) $(6,070,327) $6,779,627 $(331,561,812) $(336,777,697) Balance as of June 29, 2019 173,010,922 1,630,590 319,193,215 725,016 Net Income (Loss) (1,203,248) (1,587,992) 2,413,906 (29,715,662) (30,092,996) Cancellation of Super Voting Shares - (815,295) - - At-the-Market Equity Financing Equity Program, Net 9,789,300 - - - Component Shares Issued for Cash 61,596,792 - - - on Debt and Shares Issued to Settle Debt and Debt Accrued Interest 6,801,790 - - - Modification - - - 4,055,133 4,055,133 Shares Issued to Settle Accounts Deferred Payable and Liabilities 24,116,461 - - - Tax Impact Shares Issued to Settle Contingent on Consideration 13,737,444 - - - Conversion Asset Acquisitions 7,373,034 - - - Feature - - - (1,210,052) (1,210,052) Redemption of MedMen Corp Redemption Redeemable Shares 83,119,182 - (83,119,182) - of MedMen Shares Issued for Vested Restricted Corp Stock Units 329,548 - - - Redeemable Shares Issued for Other Assets 13,479,589 - - - Shares - - - (48,580,443) (48,580,443) Shares Issued for Acquisition Costs 765,876 - - - Shares Issued for Business Acquisition 5,112,263 - - - Balance as of Stock Grants for Compensation 4,675,017 - 49,818 - December 26, $ (7,128,433) $(7,658,319) $9,193,533 $(407,012,836) $(412,606,055) 2020 Balance as of June 27, 2020 403,907,218 815,295 236,123,851 725,016

Le Cirque Rouge, LP (the Operating Partnership,” or the “OP”) is a Delaware limited September Bought Deal Equity Financing partnership that holds substantially all of the real estate assets owned by the REIT, conducts the REIT’s operations, and is financed by the REIT. Under ASC 810, On September 27, 2018, MedMen Corp completed a bought deal financing (the “September “Consolidation”, the OP was determined to be a variable interest entity in which the Offering”) of 15,681,818 units (the “September Units”) at a price of C$5.50 per September Unit Company has a variable interest. The Company was determined to have an implicit (the “September Issue Price”), which included the exercise in full by the Underwriters of their variable interest in the OP based on the leasing relationship and arrangement with the over-allotment option, for aggregate gross proceeds of approximately C$86,250,000 (or REIT. The Company was not determined to be the primary beneficiary of the VIE as the $65,935,325 U.S. dollars). Company does not have the power to direct the activities of the VIE that most significantly affect its economic performance. As of December 26, 2020, the Company Each September Unit consisted of one Subordinate Voting Share and one-half of one share continues to have a variable interest in the OP. During the six months ended December purchase warrant of the Company (each whole share purchase warrant, a “September Warrant”). 26, 2020, the Company did not provide any financial or other support to the REIT other Each September Warrant entitles the holder thereof to acquire, subject to adjustment in certain than the REIT being a lessor on various leases as described in “Note 11 – Leases”. circumstances, one Subordinate Voting Share at an exercise price of C$6.87 for a period of 36 Accordingly, Le Cirque Rouge, LP is not consolidated as a variable interest entity months following the closing of the September Offering. On September 27, 2018, the September within the unaudited interim Condensed Consolidated Financial Statements. Warrants commenced trading under the ticker symbol “MMEN.WT”. See “Note 15 - Derivative Liabilities” for further information.

December Bought Deal Equity Financing

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document under the ticker symbol “MMEN.WT” with the September Warrants. See “Note 15 - Derivative Liabilities” for further information.

At-the-Market Equity Financing Program

Non-Controlling Interests

Non-controlling interest represents the net assets of the subsidiaries the holders of the Subordinate Voting Shares do not directly own. The net assets of the non-controlling interest are represented by the holders of the MM CAN USA Redeemable Shares. and the holders of MM Enterprises USA Common Units. Non-controlling interest also represents the net assets of the entities the Company does not directly own but controls through a management agreement. As of June 27, 2020 and June 29, 2019, the holders of the MM CAN USA Redeemable Shares represent approximately 36.89% and 64.85%, respectively, of the Company and holders of the MM Enterprises USA Common Units represent approximately 0.11% and 0.15%, respectively, of the Company.

Variable Interest Entities

Acquisition of Previously Consolidated VIE

Prior to January 25, 2019, the Company VIE’s also included The Source Santa Ana and The Farmacy Collective. On January 25, 2019, the Company completed the acquisition of the Source Santa Ana and The Farmacy Collective from Captor Capital Corp. (“Captor”), a related party for $33,035,817 pursuant to a stock purchase agreement entered into on January 9, 2019 (the “SPA”). Under the terms of the SPA, the Company acquired all of the shares of ICH California Holdings, Ltd., a wholly-owned subsidiary of Captor that held assets including the ownership interests in its MedMen branded retail cannabis dispensaries located in Santa Ana and West Hollywood. The purchase price was paid with 9,736,870 Subordinate Voting Shares at an aggregate value of $33,035,817. Additionally, 1,051,902 Subordinate Voting Shares issued as part of the purchase price are contractually restricted from trading for six months from the closing date. Accordingly, The Source Santa Ana is now consolidated as a wholly owned subsidiary of the Company.

As of and for the year ended June 27, 2020, the balances of the VIEs consist of the following:

Venice LAX Fund Caregivers II Natures Foundation, Group, Cure, Inc. LLC Inc. TOTAL

Current Assets $ 1,233,188 $ 811,025 $ 6,639,231 $ 8,683,444 Non-Current Assets 16,867,824 3,259,563 5,032,428 25,159,815

Total Assets 18,101,012 4,070,588 11,671,659 33,843,259

Current Liabilities $ 12,831,161 $ 7,481,953 $ 3,745,710 $24,058,824 Non-Current Liabilities 11,196,585 2,662,078 1,146,322 15,004,985

Total Liabilities 24,027,746 10,144,031 4,892,032 39,063,809

Non-Controlling Interest $ (5,926,734) $ (6,073,443) $ 6,779,627 $ (5,220,550)

Revenues $ 10,949,458 $ - $13,976,810 $24,926,268 Net (Loss) Income Attributable to Non- Controlling Interest $ (6,132,528) $ (3,777,079) $ 3,143,437 $ (6,766,170)

As of and for the year ended June 29, 2019, the balances of the VIEs consist of the following:

Venice LAX Fund Caregivers II Foundation, Group, Natures Inc. LLC Cure, Inc. TOTAL

Current Assets $ 1,793,174 $ 1,156,113 $ 1,437,604 $ 4,386,891 Non-Current Assets 6,133,804 1,753,897 4,000,000 11,887,701

Total Assets 7,926,978 2,910,010 5,437,604 16,274,592

Current Liabilities $ 6,375,156 $ 5,203,258 $ 1,801,414 $13,379,828 Non-Current Liabilities 1,344,479 - - 1,344,479

Total Liabilities 7,719,635 5,203,258 1,801,414 14,724,307

Non-Controlling Interest $ 207,343 $(2,293,248) $ 3,636,190 $ 1,550,285

Revenues $ 9,767,302 $ - $11,630,475 $21,397,777

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net (Loss) Income Attributable to Non- Controlling Interest $ (5,563,148) $(5,264,296) $ 3,345,828 $ (7,481,616)

The net change in the consolidated VIEs and other non-controlling interest are as follows for the year ended June 27, 2020:

Venice LAX Caregivers Fund II Natures Other Non- Foundation, Group, Cure, Controlling Inc. LLC Inc. Interests TOTAL

Balance as of June 29, 2019 $ 207,343 $(2,293,248) $3,636,190 $ (33,417,690) $ (31,867,405)

Net Income (Loss) (6,132,528) (3,777,079) 3,143,437 (272,499,888) (279,266,058)

Balance as of June 27, 2020 $ (5,925,185) $(6,070,327) $6,779,627 $(331,561,812) $(336,777,697)

The net change in the consolidated VIEs and other non-controlling interest are as follows for the year ended June 29, 2019:

Farmacy Collective Venice and The Caregivers LAX Fund Source Other Non- Foundation, II Group, Natures Santa Controlling Inc. LLC Cure, Inc. Ana Interests TOTAL

Balance as of June 30, 2018 $ 5,770,491 $ 2,971,048 $ 290,362 $ (692,837) $ 77,389,350 $ 85,728,414

Net Income (Loss) (5,563,148) (5,264,296) 3,345,828 596,288 (181,955,438) (188,840,766)

Cash Contributions from Non- Controlling Members - - - - 290,000 290,000 Conversion of Convertible Debentures - - - - 3,802,381 3,802,381 Asset Acquisitions - - - - 41,154,986 41,154,986 Fair Value of Warrants Issued for Debt - - - - 13,590,104 13,590,104 Issuance of Equity for the Repayment of Notes Payable - - - - 6,759,125 6,759,125 Exercise of Warrants - - - - 8,521,268 8,521,268 Other Assets - - - - 343,678 343,678 Acquisition Costs - - - - 597,320 597,320 Share-Based Compensation - - - - 12,845,773 12,845,773 Acquisition of Non- Controlling Interest - - - 96,549 - 96,549 Redemption of MedMen Corp Redeemable Shares - - - - 7,683,232 7,683,232 Redemption of LLC Redeemable Units - - - - (24,439,469) (24,439,469)

Balance as of June 29, 2019 $ 207,343 $(2,293,248) $3,636,190 $ - $ (33,417,690) $ (31,867,405)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company are also members of management to the REIT (see below). The amount of initial investment in the OP was nominal, and thus the equity interests in the OP, and accordingly, the amount of investment, was determined to be insignificant and therefore has not been recorded in these financial statements. Accordingly, the Company’s maximum exposure to loss as a result of its involvement with the OP is not significant. During the fiscal year ended June 27, 2020, the Company sold its interests in LCR Manager, LLC for gross proceeds of $12,500,000.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document SHARE-BASED 6 Months Ended 12 Months Ended COMPENSATION Dec. 26, 2020 Jun. 27, 2020 SHARE-BASED COMPENSATION Note 22. SHARE-BASED The Company has a stock and equity incentive plan (the “Incentive The Company has a stock and equity incentive plan (the “Incentive COMPENSATION Plan”) under which the Company may issue various types of equity Plan”) under which the Company may issue various types of equity instruments to any employee, officer, consultant, advisor or director. instruments to any employee, officer, consultant, advisor or The types of equity instruments issuable under the Incentive Plan director. The types of equity instruments issuable under the encompass, among other things, stock options, stock grants, deferred Incentive Plan encompass, among other things, stock options, stock stock units, restricted stock grants, LTIP, P units and warrants (together, grants, deferred stock units, restricted stock grants, LTIP, P units “Awards”). Stock based compensation expenses are recorded as a and warrants (together, “Awards”). Stock based compensation component of general and administrative to the extent that the expenses are recorded as a component of general and Company has not appointed a Compensation Committee, all rights and administrative expenses. To the extent that the Company has not obligations under the Incentive Plan shall be those of the full Board appointed a Compensation Committee, all rights and obligations of Directors. The maximum number of Awards that may be issued under the Incentive Plan shall be those of the full Board of under the Incentive Plan shall be determined by the Compensation Directors. The maximum number of Awards that may be issued Committee or the Board of Directors in the absence of a Compensation under the Incentive Plan shall be determined by the Compensation Committee. Any shares subject to an Award under the Incentive Plan Committee or the Board of Directors in the absence of a that are forfeited, canceled, expire unexercised, are settled in cash, Compensation Committee. Any shares subject to an Award under or are used or withheld to satisfy tax withholding obligations, shall the Incentive Plan that are forfeited, canceled, expire unexercised, again be available for Awards under the Incentive Plan. Vesting of are settled in cash, or are used or withheld to satisfy tax Awards will be determined by the Compensation Committee or Board withholding obligations, shall again be available for Awards under of Directors in absence of one. The exercise price for Awards (if the Incentive Plan. Vesting of Awards will be determined by the applicable) will generally not be less than the fair market value of the Compensation Committee or Board of Directors in absence of one. Award at the time of grant and will generally expire after 10 years. The exercise price for Awards (if applicable) will generally not be less than the fair market value of the Award at the time of grant and A summary of share-based compensation expense for the three and will generally expire after 10 years. six months ended December 26, 2020 and December 28, 2019 is as follows: A summary of share-based compensation expense for the years ended June 27, 2020 and June 29, 2019 is as follows: Three Months Ended Six Months Ended December December December December 2020 2019 26, 28, 26, 28, 2020 2019 2020 2019 Stock Options $ 1,876,225 $11,699,796 Deferred Stock Units 484,932 - Stock Options $1,537,682 $ 967,231 $2,546,220 $2,654,504 LTIP Units 1,492,073 12,845,773 LTIP Units - 479,528 - 1,313,059 Stock Grants for Services 3,656,926 5,712,872 Stock Grants for Restricted Stock Grants 3,554,968 2,235,773 Services (60,357) 1,524,698 121,232 1,889,646 Warrants - 227,244 Restricted Stock Grants 279,909 1,130,018 437,386 2,810,643 Total Share-Based Compensation $11,065,124 $32,721,458

Total Share-Based On February 1, 2020, Adam Bierman resigned as Chief Executive Compensation $1,757,234 $4,101,475 $3,104,838 $8,667,852 Officer of the Company and surrendered all Class A Super Voting Shares to the Company. See “Note 19 - Shareholders’ Equity” for For the six months ended December 26, 2020 and December 28, 2019, further information on Mr. Bierman’s Super Voting Shares. As the fair value of stock options granted with a fixed exercise price payment of severance to Mr. Bierman, the Company will was determined using the Block-Scholes option-pricing model with the compensate Mr. Bierman in the form of securities of which the following assumptions at the time of grant: number of issued securities and the aggregate amount is approximately 3,700,000 of which half are in Class B Subordinate Six Months Ended Voting Shares and half are in RSUs. The RSUs have a term of 10 December December years and vest when the Company’s Class B Subordinate Voting 26, 28, Shares have a daily VWAP of at least $2.05 for 25 consecutive 2020 2019 days. As of June 27, 2020, $475,650 was accrued in current liabilities for the amount owed to Adam Bierman related to the Weighted-Average Risk-Free Annual Super Voting Shares cancelled. This liability is to be settled in Interest Rate 1.05% 1.70% Class B Subordinate Voting Shares and RSUs. In addition, the Weighted-Average Expected Annual Company amended the terms of the 9,661,939 LTIP Units held by Dividend Yield 0.0% 0.0% Mr. Bierman wherein the vesting period was extended to ten years Weighted-Average Expected Stock Price from February 1, 2020. The Company analyzed the impact of the Volatility 116.5% 85.1% modification on its consolidated financial statements and Weighted-Average Expected Life in Years 7.50 7.50 determined the modification did not have a significant impact on its Weighted-Average Estimated Forfeiture Consolidated Statements of Operations and its Consolidated Rate 40.0% 40.0% Balance Sheets as of and for the year ended June 27, 2020.

Stock Options Stock Options

A reconciliation of the beginning and ending balance of stock options A reconciliation of the beginning and ending balance of stock outstanding is as follows: options outstanding is as follows:

Weighted- Number of Weighted- Weighted- Number Average Stock Average Number of Average of Stock Exercise Options Exercise Stock Exercise Options Price Exercisable Price Options Price

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Balance as of July 1, 2018 5,793,374 $ 4.14 Balance as of June 27, 2020 8,618,204 $ 2.78 4,248,393 $ 2.78 Granted 10,374,075 $ 3.45 Granted 7,318,669 $ 0.17 8,257,087 $ 0.36 Forfeited (2,629,347) $ (4.32) Forfeited (1,051,917) $ (3.00) - $ - Balance as of June 29, 2019 13,538,102 $ 4.31 Balance as of December 26, Granted 6,812,552 $ 1.34 2020 14,884,956 $ 1.48 12,505,480 $ 1.42 Forfeited (11,732,450) $ (2.79) The aggregate intrinsic value of options outstanding was nil at both Balance as of June 27, 2020 8,618,204 $ 2.79 December 26, 2020 and June 27, 2020. The following table summarizes the stock options that remain LTIP Units and LLC Redeemable Units outstanding as of June 27, 2020: A reconciliation of the beginning and ending balances of the LTIP Units Stock Stock and LLC Redeemable Units issued for compensation outstanding is as Exercise Security Expiration Options Options follows: Price Issuable Date Outstanding Exercisable Weighted Subordinate February LTIP Units LLC Average Voting Shares $ 3.26 2029 316,085(3) 316,085 Grant Subordinate August Issued and Redeemable Date Voting Shares $ 3.41 2021 32,974(4) 32,974 Fair Subordinate Outstanding Units Value July 2023 Voting Shares $ 3.84 200,000(6) 200,000 Subordinate Balance as of June 27, 2020 May 2028 Voting Shares $ 4.03 1,916,739(5) 1,426,900 and December 26, 2020 19,323,878 725,016 $ 0.52 Subordinate August Voting Shares $ 4.05 2028 61,950(7) 61,950 Deferred Stock Units Subordinate August Voting Shares $ 4.05 2028 376,746(7) - Effective December 10, 2019, the Company’s board of directors Subordinate October approved a Deferred Share Unit (“DSU”) award under the Company’s Voting Shares $ 4.03 2028 35,000(5) 16,041 Incentive Plan. The DSU award was for units to the Company’s non- Subordinate October management directors. Each director will be provided the Company’s Voting Shares $ 5.71 2028 466,075(5) 251,968 Subordinate Voting Shares based on the duration of their term as a Subordinate January director up to $250,000 for a year of service ending August 2020. As Voting Shares $ 3.42 2029 394,980(5) 298,046 of December 26, 2020, and June 27, 2020, there was nil and 1,283,567 Subordinate units issued and outstanding, respectively. For the three and six months None Voting Shares $ 2.64 -(1) - ended December 26, 2020, compensation expense related to the DSU Subordinate February award was nil and nil, respectively, was included in accounts payable Voting Shares $ 3.36 2029 207,842(2) 207,842 and stock-based compensation expense on the Company’s Condensed Subordinate Consolidated Balance Sheets. As of December 26, 2020, the April 2029 Voting Shares $ 3.06 238,064(5) 132,262 corresponding Subordinate Voting Share had been issued to the Subordinate directors. A reconciliation of the beginning and ending balance of April 2029 Voting Shares $ 2.79 225,106(5) 71,847 DSUs outstanding is as follows: Subordinate May 2029 Voting Shares $ 2.36 35,895(5) 14,014 Weighted- Subordinate Issued and Average June 2029 Voting Shares $ 2.66 63,250(5) 16,291 Outstanding Fair Value Subordinate June 2029 Voting Shares $ 2.17 724,645(8) 724,645 Balance as of June 27, 2020 1,283,567 $ 0.38 Subordinate July 2029 Voting Shares $ 2.02 578,623(5) - Settled (1,283,567) $ (0.38) Subordinate August Voting Shares $ 1.99 2029 467,660(5) - Balance as of December 26, 2020 - $ - Subordinate September Voting Shares $ 1.55 2029 269,655(5) - Restricted Stock Grants Subordinate $ 2.02 None 645,705(5) - Voting Shares During the six months ended December 26, 2020, the Company granted Subordinate October an entitlement to 27,508,063 of restricted Subordinate Voting Shares Voting Shares $ 1.38 2029 144,260(5) - to certain officers, directors and employees. A reconciliation of the Subordinate December beginning and ending balance of restricted stock grants outstanding is Voting Shares $ 0.44 2029 249,908(5) - as follows: Subordinate January Voting Shares $ 0.53 2030 161,395(5) - Weighted- Subordinate January Issued and Average Voting Shares $ 0.53 2030 231,630(5) 231,630 Outstanding Vested Fair Value Subordinate January Voting Shares $ 0.47 2030 289,119(5) - Balance as of June 27, 2020 7,159,164 192,459 $ 0.68 Subordinate February Voting Shares $ 0.27 2030 32,000(5) - Granted (1) 27,508,063 - $ 0.16 Subordinate March Forfeiture of Restricted Voting Shares $ 0.11 2030 46,608(5) 46,608 Stock (2) (2,156,155) - $ (0.15) Subordinate March Voting Shares $ 0.38 2030 7,000(5) -

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subordinate Redemption of Vested May 2030 Voting Shares $ 0.18 199,290(5) 199,290 Stock (7,173,258) (7,173,258) $ (0.18) 8,618,204 4,248,393 Vesting of Restricted Stock - 7,584,358 $ 0.18 ______(1) Balance as of December 26, Issued to certain officers of the Company under the Company’s 2020 25,337,814 603,559 $ 0.30 stock and incentive plan. Such options will vest contingent ______upon achievement of certain price targets in respect of the (1) Issued on December 11, 2020 to certain officers and employees of Subordinate Voting Shares, whereby 1,585,288 of such options, the Company and vest 37.5%, 12.5%, 37.5%, 12.5% on the 1st, 2nd, one third will vest when the price of the Subordinate Voting 3rd and 4th anniversary, respectively. Shares reaches US$10 in the open market, another third will (2) 2,156,155 of the restricted stock grants were forfeited upon the vest when such share price reaches US$15 in the open market resignation of certain employees prior to their vesting. and another third will vest when such share price reaches US$20 in the open market, and 1,714,699 of such options, one Certain restricted stock granted has vesting which is based on market third will vest when the price of the Subordinate Voting Shares conditions. For restricted stock that have no market condition vesting, reaches US$15 in the open market, another third will vest when the fair value was determined using the trading value of the such share price reaches US$30 in the open market and Subordinate Voting Shares on the date of grant. For the restricted stock another third will vest when such share price reaches US$60 in that have market condition vesting, these shares were valued using a the open market. These options have no expiration date. Such Monte Carlo simulation model taking into account the trading value of share price will be determined as a 5-day volume weighted- the Company’s Subordinate Voting Shares on the date of grant and into average trading price on any exchange on which the the future encompassing a wide range of possible future market Subordinate Voting Shares are traded. (2) conditions. During the six months ended December 26, 2020, there Issued to a certain officer of the Company under the were no restricted stock grants with a market vesting condition. Company’s stock and incentive plan. Such options expire in ten years from the date of grant and 1/36th of the options will vest Warrants upon each successive month after the grant date. (3) Issued to a consultant in connection with services rendered A reconciliation of the beginning and ending balance of warrants under the Company’s stock and incentive plan. Such options outstanding is as follows: expire in one year from the date of grant and 1/12th of the options will vest upon each successive month after March 1, Number of Warrants Outstanding 2019. (4) MedMen Weighted- Issued to certain directors of the Company under the Subordinate Corp Average Company’s stock and incentive plan. Such options expire in Voting Redeemable Exercise August 2021 and 1/8th of the options will vest upon each Shares Shares Total Price successive month after the grant date. (5) Issued to employees of certain subsidiaries of the Company under the Company’s stock and incentive plan. Such options Balance as expire in ten years from the date of grant and have the of June 27, following vesting conditions: Such option will vest over a 2020 114,998,915 40,455,731 155,454,646 $ 0.71 period of four years from the employees hire date as 1/4th of the options vest on the first anniversary of the hire date and, Issued 114,305,552 147,508,516 261,814,068 $ 0.18 1/48th of the options will vest upon each successive month after Cancelled (1,080,226) (40,455,731) (41,535,957) $ (0.50) the first anniversary of the employee’s hire date for a period of three years. Balance as (6) Issued to a consultant in connection with services rendered of under the Company’s stock and incentive plan. Such options December fully vest on the grant date. Such options expire in five years 26, 2020 228,224,241 147,508,516 375,732,757 $ 0.36 from the grant date. (7) Issued to certain directors of the Company under the During the six months ended December 26, 2020, 40,455,726, Company’s stock and incentive plan. 61,950 of such options 30,000,000 and 77,052,790 warrants were issued for MedMen Corp vest at the end of the first year of service and 376,746 of such Redeemable Shares with an exercise price of $0.34, $0.20 and $0.20, options vest at the end of three years of service. All options respectively, and expire through October 30, 2025. Additionally, expire in ten years from the date of grant. 41,875,000, 3,293,413, 3,500,000, 3,777,475, 3,592,326, 3,597,000 and (8) Issued to a certain officer of the Company under the 54,670,338 warrants were issued for Subordinate Voting Shares with an Company’s stock and incentive plan. Such options expire in ten exercise price of $0.20, $0.21, $0.34, $0.17, $0.17, $0.18 and $0.15, years from the date of grant and were vested immediately upon respectively, and expire through July 2, 2025. the grant date. The fair value of warrants exercisable for MedMen Corp Redeemable For the years ended June 27, 2020 and June 29, 2019, the fair value Shares was determined using the Black-Scholes option-pricing model of stock options granted with a fixed exercise price was determined with the following assumptions on the date of issuance: using the Block-Scholes option-pricing model with the following assumptions at the time of grant: December June 26, 27 2020 2019 2020 2020 Weighted-Average Risk-Free Annual Interest Rate 1.60% 1.95% Weighted-Average Risk-Free Annual Weighted-Average Expected Annual Dividend Interest Rate 0.13% 2.20% Yield 0.0% 0.0% Weighted-Average Expected Annual Weighted-Average Expected Stock Price Volatility 91.0% 87.8% Dividend Yield 0% 0% Weighted-Average Expected Life in Years 7.50 6.15 Weighted-Average Expected Stock Weighted-Average Estimated Forfeiture Rate 40.0% 33.0% Price Volatility 92.06% 88.19% Weighted-Average Expected Life of 1 year 1 year Stock price volatility was estimated by using the average historical Warrants volatility of comparable companies from a representative peer group of publicly-traded cannabis companies. The expected life The fair value of warrants exercisable for the Company’s Subordinate represents the period of time that stock options granted are Voting Shares was determined using the Black-Scholes option-pricing expected to be outstanding. The risk-free rate was based on Bank

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document of Canada zero coupon bond with a remaining term equal to the expected life of the options. For the year ended June 27, 2020, the fair value of stock options granted with vesting contingent upon achievement of certain price targets was determined using a Monte Carlo simulation model taking into account the fair value of the Company’s Subordinate Voting Shares on the date of grant and into the future encompassing a wide range of possible future market conditions. The following assumptions were used at the time of grant:

2020 2019

Weighted-Average Stock Price C$2.65 C$4.10 Weighted-Average Probability 6.0% 6.0% Weighted-Average Term in Years 3.0 3.0 Weighted-Average Volatility 83.3% 72.0%

In the fourth quarter of the year ended June 29, 2019, the Company modified the Company’s stock option plan for all outstanding employee options, allowing the vesting period to begin on the date model with the following assumptions on the latest modification of of hire. Previously, the vesting period commenced on the grant December 17, 2020: date. The Company analyzed the impact of the modification on its financials and determined the modification accelerated the vesting Weighted-Average Risk-Free Annual Interest Rate 0.09% and expense recognition. The Company determined the amount of Weighted-Average Expected Annual Dividend additional expense recognized for this modification did not have a Yield 0% significant impact on its Consolidated Statement of Operations for Weighted-Average Expected Stock Price Volatility 91.82% the years ended June 27, 2020 and June 29, 2019. Weighted-Average Expected Life of Warrants 1 year LTIP Units and LLC Redeemable Units Stock price volatility was estimated by using the historical volatility of the Company’s Subordinate Voting Shares and the average historical A reconciliation of the beginning and ending balances of the LTIP volatility of comparable companies from a representative peer group Units and LLC Redeemable Units issued for compensation of publicly-traded cannabis companies. The expected life in years outstanding is as follows: represents the period of time that warrants issued are expected to be outstanding. The risk-free rate was based on U.S. Treasury bills with a Weighted remaining term equal to the expected life of the warrants. 55,817,248 of LTIP Units LLC Average warrants are cancelable if the Company meets certain cash flow metrics Grant for six consecutive months. The effects of contingent cancellation Issued and Redeemable Date feature were included in determining the fair value of the related Fair warrants. Outstanding Units Value

As of December 26, 2020 and June 27, 2020, warrants outstanding Balance as of July 1, have a weighted-average remaining contractual life of 4 and 4 years, 2018 30,314,333 1,570,064 $ 1.56 respectively. Redemptions - (845,048) $ (3.38) Forfeiture of LTIP Units (2) (3,962,422) - $ (3.38) Cancellation of LTIP Units (2) (724,645) - $ (3.38) Vesting and Converted (1)(3) (4,744,911) - $ (3.38)

Balance as of June 29, 2019 20,882,355 725,016 $ 0.74

Vesting and Converted (1)(3) (1,558,477) - $ (3.38)

Balance as of June 27, 2020 19,323,878 725,016 $ 0.74 ______(1) LTIP Units and LLC Redeemable Units will vest as follows:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document reaches C$15 in the open market and the final third will vest when such share price reaches C$20 in the open market. Such share price will be determined as a 5-day volume weighted-average trading price on any exchange on which the Subordinate Voting Shares are traded. 9,661,939 of the LTIPs were modified to extend the vesting periods to 10 years from the modification date of February 1, 2020.

• 724,645 of the LTIP Units will vest ratably, on a monthly basis, beginning on May 17, 2018 and concluding with all LTIP Units being fully vested on March 15, 2021.

(2) 3,237,778 of the LTIP Units were forfeited upon the resignation of an employee. In addition, 724,645 of the LTIP Units and the vested amounts were cancelled/forfeited by the employee. (3) For the year ended June 27, 2020 and June 29, 2019, 1,558,477 and 4,744,991, respectively, of the LTIP Units were vested and converted to zero LLC Redeemable Units pursuant to the formula determined by the Third Amended and Restated LLC Agreement of MM Enterprises USA, LLC.

Deferred Stock Units

Effective December 10, 2019, the Company’s board of directors approved a Deferred Share Unit (“DSU”) award under the Company’s Incentive Plan. The DSU award was for units to the Company’s non-management directors. Each director will be provided the Company’s Subordinate Voting Shares based on the duration of their term as a director up to $250,000 for a year of service ending August 2020. At June 27, 2020 and June 29, 2019, there was 1,276,169 units and nil units, respectively, issued and outstanding. For the years ended June 27, 2020 and June 29, 2019, compensation expense related to the DSU award was $484,932 and nil, respectively, was included in accounts payable and stock based compensation expense on the Company’s Consolidated Balance Sheets. As of June 27, 2020, the corresponding Subordinate Voting Share have not yet been issued to the directors. A reconciliation of the beginning and ending balance of DSUs outstanding is as follows:

Weighted- Issued and Average Outstanding Fair Value

Balance as of July 1, 2018 - $ -

Balance as of June 29, 2019 - $ -

Granted 1,283,567 $ 0.38

Balance as of June 27, 2020 1,283,567 $ 0.38

Restricted Stock Grants

A reconciliation of the beginning and ending balance of restricted stock grants outstanding is as follows:

Balance as of July 1, 2018 - - $ -

Granted 4,352,340 336,441 $ 3.89 Forfeiture of Restricted Stock (2) (3,000,000) - $ (4.25) Redemption of Vested Shares (333,479) (333,479) $ (3.07)

Balance as of June 29, 2019 1,018,861 2,962 $ 3.89

Granted 7,443,954 - $ 0.73 Forfeiture of Restricted Stock (2) (974,103) - $ 2.69 Redemption of Vested Stock (329,548) (329,548) $ 3.14 Vesting of Restricted Stock - 519,045 $ 2.28

Balance as of June 27, 2020 7,159,164 192,459 $ 0.68

(1) Restricted stock grants will vest as follows: • 3,000,000 of the restricted stock grants will vest as follows: one-fourth upon the 12-month employment anniversary, with the remaining three-fourths vesting in amounts of one third each when the trading price of the Subordinate Voting Shares on the then current stock exchange at any time during the term of employment reaches a minimum of C$10, C$15 and C$20, respectively. • 46,331 of the restricted stock grants on July 11, 2018 will vest in four (4) equal quarterly installments on each three- month anniversary of the Date of Grant. • 131,859 of the restricted stock grants on August 29, 2018 will vest in four (4) equal quarterly installments on each three-month anniversary of the Date of Grant. • 918,785 of the restricted stock grants will vest ratably as follows: one-fourth within 30-days of the grant date, with the remaining three-fourths in three equal installments on every anniversary of the grant date, beginning on December 18, 2018 and concluding with all restricted stock grants being fully vested on December 18, 2021. • 23,082 of the restricted stock grants will vest on a straight- line basis, beginning on January 3, 2019, and concluding with all restricted stock grants being fully vested on August 28, 2019. • 162,455 of the restricted stock units will vest as follows: one-fourth of the total number of restricted stock shall vest on March 26, 2019. Thereafter, 1/36 of the remainder shall vest on the first day of each month over a period of three years until all restricted stock shall have vested. • 72,202 of the restricted stock units will vest as follows: one-fourth of the total number of restricted stock shall vest on May 7, 2019. Thereafter, 1/36 of the remainder shall vest on the first day of each month over a period of three years until all restricted stock shall have vested. 5,458,749 of the restricted stock units will vest as follows • on the first anniversary of the grant date, December 10, 2020. 1,885,408 of the restricted stock units will vest as follows: • on the second anniversary of the grant date, July 30, 2021. 50,181 of the restricted stock units will vest as follows: on • the first anniversary of the grant date, August 26, 2020. 49,616 of the restricted stock units will vest as follows: on • August 1, 2021. (2) 3,000,000 and 974,103 of the restricted stock grants were forfeited upon resignation of an employee prior to their vesting for the fiscal years ended June 29, 2019 and June 27, 2020, respectively.

Certain restricted stock granted has vesting which is based on market conditions. For restricted stock that have no market condition vesting, the fair value was determined using the trading

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document value of the Subordinate Voting Shares on the date of grant. For the restricted stock that have market condition vesting, these shares were valued using a Monte Carlo simulation model taking into account the trading value of the Company’s Subordinate Voting Shares on the date of grant and into the future encompassing a wide range of possible future market conditions.