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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): |
January
23, 2024 |
MEDMEN
ENTERPRISES INC.
(Exact
name of registrant as specified in its charter)
British
Columbia |
|
000-56199 |
|
98-1431779 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
6501
Congress Ave., Boca Raton, Florida 33487
(Address,
including zip code, of principal executive offices)
Registrant’s
telephone number, including area code |
(424)
330-2082 |
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act: None.
Title
of Each Class |
|
Trading
Symbol |
|
Name
of Each Exchange on Which Registered |
|
|
|
|
|
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.
Item
5.02. |
Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
As
previously reported in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on
January 24, 2024, the board of directors of MedMen Enterprises Inc. (the “Company”) appointed Richard P. Ormond as its
Chief Restructuring Officer on January 23, 2024. Mr. Ormond will provide restructuring services to the Company pursuant to a
consulting agreement (the “Consulting Agreement”), dated January 23, 2024, between the Company and Stone Blossom
Capital, LLC (“SBC”), of which Mr. Ormond is the principal. The Company agreed to pay SBC a non-refundable initial
payment of $180,000 for the first four months of services and $45,000 per month thereafter until the termination of the Consulting
Agreement, as well as reimbursement of reasonable out-of-pocket expenses. The Consulting Agreement has a minimum initial term of six
months and can be renewed on a monthly basis or terminated upon ten days written notice thereafter. The Company has also engaged
Buchalter, APC, of which Mr. Ormond is a shareholder, for legal services.
Richard
P. Ormond, 51, has been a lawyer at Buchalter, APC since March 2003 and a shareholder at that firm since 2007. Mr. Ormond is the
co-founder and chairman of Ejudicate, Inc., d/b/a Brief.com, an online dispute resolution company, and the principal of Stone
Blossom Capital LLC, a receivership, ABC and restructuring business focused on the cannabis industry, since January 2020. From
January 2020 to May 2021, Mr. Ormond was a professor at Loyola Law School, where he taught a cannabis business law course focusing
on finance, regulatory compliance and corporate governance. Mr. Ormond holds a Bachelor’s Degree in Political Science from the
University of California, Los Angeles and a Juris Doctor degree from the University of San Diego School of Law.
Other
than as described herein, there are no arrangements or understandings between Mr. Ormond and any other person pursuant to which he was
appointed to serve as Chief Restructuring Officer and Mr. Ormond does not have a direct or indirect material interest in any “related
party” transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. There are no family relationships between
Mr. Ormond and any director or executive officer of the Company.
Item
9.01 |
Financial
Statements and Exhibits. |
(d)
Exhibits
† |
The
Company has omitted portions of the referenced exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K because it (a) is not material
and (b) is the type of information that the Company both customarily and actually treats as private and confidential. The Company
hereby agrees to furnish supplementally the omitted information to the SEC upon request. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated:
January 30, 2024 |
MEDMEN
ENTERPRISES INC. |
|
|
|
|
/s/
Amit Pandey |
|
By: |
Amit
Pandey |
|
Its: |
Chief
Financial Officer |
Exhibit
10.1
CERTAIN
IDENTIFIED INFORMATION MARKED BY [*] HAS BEEN EXCLUDED FROM THIS
EXHIBIT
BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE
REGISTRANT
CUSTOMARILY AND ACTUALLY TREATS AS PRIVATE AND CONFIDENTIAL.
Stone
Blossom Capital LLC
Consulting Agreement
THIS
AGREEMENT (the “Agreement”) is made as of January 23, 2024, by and between Stone Blossom Capital, LLC (“Consultant”)
and Medmen Enterprises Inc. and its affiliates and subsidiaries (collectively the “Company”).
Company
desires to retain Consultant to render business advice as further set forth in Appendix A (the “Services”). With the
consideration of the covenants herein as well as other valuable consideration receipt whereof is hereby acknowledged, Consultant and
Company agree as follows:
1. Incorporation
of Recitals and Attachments. All the foregoing Recitals are hereby incorporated herein and made a part hereof by this reference. Further,
any terms, conditions and provisions of all attachments, exhibits and appendices to this Agreement are incorporated and made a part hereof
by this reference.
2. Consulting
Duties and Obligations. Consultant agrees to provide the Services to Company and such other tasks and duties, as the Company may deem
necessary to complete the Services. The Consultant and Company agree that Consultant will not provide any legal advice or legal
services in connection with the Services.
3. Non-exclusive.
The Services provided by Consultant are non-exclusive and Consultant is free to provide similar services to other non-related clients.
4. Legal
Representations. Consultant possesses the academic background and professional experience necessary to perform the Services. Company
acknowledges that a principal of Consultant is affiliated with Buchalter APC and cannot provide any legal advice to Company. Any legal
advice for the Company must be obtained from other attorneys (not Richard P. Ormond) as Company may require. Consultant is permitted
to engage Buchalter APC for and on behalf of itself or on behalf of the Company, if necessary, as set forth in Appendix A.
5. Compensation.
See Appendix A.
6. Term
and Termination. This Agreement is for a minimum six-month term (“Initial Term”) and can be renewed on a month-to-month basis
thereafter. This Agreement may be terminated upon ten (10) days written notice, subject to the compensation terms set forth in Appendix
A.
7. Independent
Contractor
|
(1) |
The
Company and Consultant acknowledge and agree that Consultant has no power or authority to act for, or on behalf of, the Company or
to bind the Company to any matter without the prior, written approval of the Company. Consultant is authorized by Company to provide
similar services and advice to other clients. |
|
|
|
|
(2) |
Both
Consultant and the Company acknowledge and agree that the relationship created by this Agreement is that of independent contractor
and not that of employee and employer. Consultant is responsible for the payment of any taxes, including but not limited to all federal,
state, and local personal and business income taxes, sales and use taxes, other business taxes and license fees arising out of the
activities of Consultant. Consistent with the full performance of the terms of this Agreement, Consultant shall have sole control
of the manner and means of performing under this Agreement. |
|
|
|
|
(3) |
Consultant
is responsible for all office and other expenses incurred by Consultant in connection with the performance of services hereunder.
As further set forth in Appendix |
Stone
Blossom Capital LLC
Consulting Agreement
A, travel related expenses incurred by the Consultant while fulfilling this Agreement will be reimbursed by the Company, subject to
Company’s prior review and approval.
Expense
reports must be provided to the Company for reimbursement.
8.
Projections; Reliance; Limitation of Duties. You understand that the services to be rendered by the CONSULTANT may include the
preparation of projections and other forward-looking statements, and that numerous factors can affect the actual results of the
Company’s operations, which may materially and adversely differ from those projections and other forward-looking statements.
In addition, the CONSULTANT will be relying on information provided by other members of the Company’s management in the
preparation of those projections and other forward-looking statements. CONSULTANT makes no representation or guarantee that an
appropriate restructuring proposal or strategic alternative can be formulated for the Company, that any restructuring proposal or
strategic alternative selected by CONSULTANT will be more successful than all other possible restructuring proposals or strategic
alternatives, that restructuring or liquidation is the best course of action for the Company or, if formulated, that any proposed
restructuring plan, liquidation plan or strategic alternative will be accepted by any of the Company’s creditors, shareholders
and other constituents.
9. No
Third-party Beneficiary. The Company acknowledges that all advice (written or oral) given by Consultant to the Company in connection
with this engagement is intended solely for the benefit and use of the Company (limited to its Board of Directors and management) in
considering the matters to which this engagement relates. The Company agrees that no such advice shall be used for any other purpose
or reproduced, disseminated, quoted or referred to at any time in any manner or for any purpose other than accomplishing the tasks referred
to herein without Consultant’s prior approval (which shall not be unreasonably withheld), except as required by law.
10. No
Guaranty of Results. The Company agrees that Consultant cannot, and is not, guarantying any results. Because the information needed to
provide our services, prepare and review financial analyses and reports, business analysis, various financial reports and documents and
a Company wind down plan, will be based on assumptions and information provided by the Company, and their advisors, appraisers, accountants,
and lawyers, the Company will assume full and complete responsibility for the information prepared. The Company understands and acknowledges
that Consultant’s work effort, analysis and advice are inherently subjective and that reasonable professionals/individuals reviewing
the same information may reach entirely different conclusions. The Company releases Consultant from all responsibility as to the reliability
and accuracy of the information provided to Consultant. While we will use our reasonable efforts in assisting the Company to achieve
its goals, Consultant cannot guaranty any results or assume any responsibility for the Company’s ultimate financial position or
survival.
11. Conflicts.
Consultant is not currently aware of any relationship that would create a conflict of interest with the Company or those parties-in-interest
of which you have made us aware. Because Consultant provides business fiduciary services and serves clients in numerous cases, both in
and out of court, it is possible that Consultant may have rendered services to or have business associations with other entities or people
which had or have or may have relationships with the Company, including creditors of the Company. Consultant will not represent, and
Consultant has not represented, the interests of any such entities or people in connection with this matter.
12.
Confidentiality / Non-Solicitation. Consultant shall keep as confidential all non-public information received from the Company in
conjunction with this engagement, except (I) as requested by the Company or its legal counsel; (ii) as required by legal proceedings
or (iii) as reasonably required in the performance of this engagement. All obligations as to non-disclosure shall cease as to any
part of such information to the extent that such information is or becomes public other than because of a breach of this
provision.
Stone
Blossom Capital LLC
Consulting Agreement
13. Hold
Harmless. The Company shall hold harmless Consultant to the same extent as the most favorable indemnification it extends to its officers
or directors, whether under the Company’s charter, bylaws, or other organizational documents or policies (collectively, “Corporate
Documentation”), applicable law, or otherwise, and no reduction or termination in any of the benefits provided under any such indemnities
shall affect the benefits provided to Consultant. Absent actual fraud or willful misconduct on the part of Consultant, no action may
be brought against the Consultant by or on behalf of any Director or member of the Company or any shareholder or their assigns or successors
in interest, for and on account of or with reference to actions, acts or conduct of Consultant (or Richard Ormond), or in connection
with any of the duties or functions undertaken or performed Consultant. In the event of any such action against Consultant, Consultant
shall be entitled to have advanced, from time to time, by the Company, funds for costs reasonably necessary in connection with the defense
of such action or actions. The Consultant shall be covered as an officer under the Company’s director and officer liability insurance
policies. Consultant shall, in addition, be entitled to obtain a director and officer liability insurance policy, of its choosing, covering
Consultant only for all insurable risks, at the sole cost of the Company, for a minimum of USD$5,000,000. The Company shall also maintain
any such insurance coverage for Consultant for a period of not less than six (6) years following the date of the termination of Consultant’s
services hereunder. The provisions of this section are contractual obligations and no change in applicable law or the Company’s
Corporate Documentation shall affect Consultant’s rights hereunder.
14. Insurance
and Indemnity.
|
(1) |
Company
will add Consultant as an additional insured on its Errors & Omissions policy and its Director and Officer policy. This is a
mandatory condition of this Agreement. |
|
|
|
|
(2) |
COMPANY
WILL DEFEND, INDEMNIFY AND HOLD CONSULTANT HARMLESS FROM ALL CLAIMS ASSERTED AGAINST CONSULTANT RELATED TO OR IN CONNECTION WITH
COMPANY AND ITS AFFILIATES. SEE APPENDIX B FOR ADDITIONAL INDEMNITY TERMS. |
15.
Amendments. All amendments, modifications or additions to this Agreement shall be in writing and signed by both parties.
16. Invalidity
or Unenforceability. If any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement
shall be construed thereafter as if such invalid, illegal or unenforceable provision had never been contained herein.
17. Headings.
The paragraph headings of this Agreement and its Appendices are for convenience or reference only and shall not define or limit any of
the terms or provisions hereof.
18. Notices.
Any notices or other communications contemplated or required under this Agreement, to be effective, shall be in writing and shall be
given via personal delivery or via U.S. Certified mail, return receipt requested, at the following addresses.
If
to Consultant:
|
|
If
to Company: |
|
With
a copy to: |
Richard
Ormond |
|
|
|
|
[*] |
|
|
|
|
Stone
Blossom Capital LLC
Consulting Agreement
19. Governing
Law. This Agreement shall be governed by the laws of the State of California.
20.
Arbitration. ANY DISPUTE OR CONTROVERSY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY A SINGLE
ARBITRATOR AT ADR, SUBJECT TO ADR RULES THEN IN PLACE, LOCATED IN THE COUNTY OF LOS ANGELES, CALIFORNIA.
21. Attorney’s
Fees. In the event that any dispute between Consultant and Company should result in litigation or arbitration, the prevailing party in
such dispute shall be entitled to recover from the other party all reasonable and documented out-of-pocket fees, costs and expenses of
enforcing any right of the prevailing party, including without limitation, reasonable attorneys’ fees and expenses, all of which
shall be deemed to have accrued upon the commencement of such action and shall be paid whether or not such action is prosecuted to judgment.
IN
WITNESS WHEREOF, the Parties agree to and execute this Agreement effective as of 12/1/23.
MEDMEN
ENTERPRISES INC. by and on behalf of itself and all of its affiliates.
By:
|
/s/
Amit Pandey |
|
Its:
|
Chief
Financial Officer |
|
Name: |
Amit
Pandey |
|
Stone Blossom
Capital LLC
/s/
Richard Ormond |
|
Richard
Ormond, Principal |
|
Stone
Blossom Capital LLC
Consulting Agreement
APPENDIX
A
SERVICES
AND COMPENSATION
SERVICES
General
Duties: Consultant will be engaged as Company’s Chief Restructuring Officer to work with Company to develop and implement a restructuring
or insolvency plan. This may include recommending an insolvency proceeding for the Company (and its subsidiaries and affiliates).
Additional
Services. The CONSULTANT will provide, among others, the following services to the Company.
|
(i) |
Management
of the affairs of the Company. |
|
|
|
|
(ii) |
Surveying
Company assets wherever located, and assessing all Company assets, including gathering appraisals of value of assets where necessary. |
|
|
|
|
(iii) |
Assess
the best method to monetize Company assets to optimize cash proceeds. |
|
|
|
|
(iv) |
Develop
and execute a plan for the orderly winddown of Company operations and affairs. |
|
|
|
|
(v) |
Consultant
is authorized to employ agents, accountants, forensic accountants, security, computer forensics, IT services, specialist attorneys,
professionals, locksmiths and management Consultants to protect, preserve and maintain the Company’s assets and books and records,
and assist in the orderly winddown of the Company’s affairs. The costs for these professionals will be paid for by Company. |
|
|
|
|
(vi) |
Hire
and terminate employees as necessary in the best interests of the Company. |
|
|
|
|
(vii) |
Coordination
with the Company’s counsel, with respect to the preparation of pleadings, court-filings, administrative filings, for any proceedings
on behalf of the Company, and in the negotiation and resolution of any claims against the Company. |
|
|
|
|
(viii) |
Review
and evaluation of claims asserted against the Company and the resolution of disputed claims asserted against the Company. |
|
|
|
|
(ix) |
Appearance
at any proceedings or hearings in any Court, as appropriate and necessary. |
|
|
|
|
(x) |
Communicating
with creditors and with other parties-in-interest of the Company. |
|
|
|
|
(xi) |
Performance
of the services typical of CRO and such other services as may be mutually agreed upon by the Company and Consultant in furtherance
of a resolution of the Company’s affairs and its assets. |
Consultant’s
Professionals. In the ordinary course of its business, to address and efficiently handle business responsibilities, Consultant may retain
other professionals to provide administrative support and services. Fees and expenses for services provided and expenses incurred by
Consultant are the sole responsibility of the Company.
Reporting.
CONSULTANT shall report to the Board of Directors of the Company.
While
unlikely, if Consultant requires independent legal counsel for any reason related to this Agreement or the Services, Company agrees that
Consultant can engage Buchalter, APC as its counsel, and agrees to waive any potential conflicts. Legal fees are exclusive of the compensation
set forth below.
Stone
Blossom Capital LLC
Consulting Agreement
COMPENSATION
Consultant
will be paid forty-five thousand dollars per month until the termination of this Agreement. If this engagement lasts longer than the
Initial Term, Consultant will be paid forty-five thousand dollars per month until such engagement is terminated.
In
addition, Consultant will be reimbursed by the Company for the reasonable out-of-pocket expenses incurred in connection with this assignment,
such as reasonable out-of-town travel, reasonable out-of-town lodging, duplications, computer research, messenger and technology charges.
All fees and expenses due to Consultant will be billed monthly at cost, with no markup.
Upon
execution of this Agreement a non-refundable initial payment of $180,000 shall be wired to Consultant (reflecting the first four months
of the Initial Term). This payment is exclusive of any additional legal retainers needed for the Company or Consultant.
Consultant
Wire Instructions:
[*]
Stone
Blossom Capital LLC
Consulting
Agreement
APPENDIX
B
GUARANTY
AND INDEMNITY BY SECURED LENDER (“Guarantor”)
By
signing here, for good consideration, which is acknowledged herein Guarantor agrees, unconditionally, to be jointly and severally responsible
to pay all the fees due to Consultant in the event Company (as defined in the Agreement) does not meet its payment obligations set forth
herein. This includes any legal fees or other fees incurred by Consultant as well as any indemnities that remain unpaid.
GUARANTOR
AGREES TO DEFEND, INDEMNIFY AND HOLD CONSULTANT HARMLESS FROM ALL CLAIMS ASSERTED AGAINST CONSULTANT RELATED TO OR IN CONNECTION WITH
COMPANY AND ITS AFFILIATES, AND THIS AGREEMENT INCLUDING ANY AND ALL LEGAL FEES INCURRED BY CONSULTANT. CONSULTANT IS ENTITLED TO SEEK
ITS OWN INDEPENDENT COUNSEL TO DEFEND ANY AND ALL CLAIMS AT GUARANTOR’S EXPENSE, TO BE PAID AT THE TIME THAT SUCH LEGAL FEES AND
COSTS ARE INCURRED, INCLUDING BUT NOT LIMITED TO ARBITRATION FEES AND COSTS.
Governing
Law. This Guaranty shall be governed by the laws of the State of California.
Arbitration.
ANY DISPUTE OR CONTROVERSY ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY SHALL BE SETTLED EXCLUSIVELY BY A SINGLE ARBITRATOR AT
ADR, SUBJECT TO ADR RULES THEN IN PLACE, LOCATED IN THE COUNTY OF LOS ANGELES, CALIFORNIA.
If
any dispute between Consultant and Guarantor. should result in litigation or arbitration, prevailing party is entitled to recover all
reasonable fees, costs and expenses of enforcing any right including without limitation reasonable attorneys’ fees and expenses,
all of which shall be deemed to have accrued upon the commencement of such action and shall be paid whether such action is prosecuted
to judgment.
Stone
Blossom Capital LLC |
|
|
|
|
|
Richard
Ormond, Principal |
|
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Medmen Enterprises (CE) (USOTC:MMNFF)
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