Washington, D.C.DC 20549
☒
☐
its charter)
ASCEND WELLNESS HOLDINGS, INC.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON
FRIDAY, MAY 6, 2022
5, 2023
We are excited to continue to provide expanded access, improved communication, and cost savings for our stockholders and the Company. We believe hosting a virtual meeting helps enable greater stockholder attendance at the annual meeting by allowing stockholders that might not otherwise be able to travel to a physical meeting to attend online and participate from any location around the world.
intermediary
Stockholders who cannot attend the Meeting may vote by proxy. Instructions on how to complete and return the proxy are provided with the form of proxy and are described in the proxy statement. To be valid, proxies must be received by Odyssey Trust Company by mail at 702 -— 67 Yonge Street, Toronto, ON M5E 1J8 or by fax to (800) 517-4553 (toll-free) or by email to proxy@odysseytrust.com, or by internet voting through https://login.odysseytrust.com/pxlogin, no later than 10:12:00 a.m.p.m. (EDT) on May 4, 2022,2, 2023, or if the Meeting is adjourned, no later than 10:11:00 a.m. on the second business day preceding the day to which the Meeting is adjourned.
| | | | | 1 | | | |
| | | | | 1 | | | |
| | | | | 2 | | | |
| | | | | | | ||
| | | | | 3 | | | |
| | | | | | | ||
| | | | | 4 | | ||
| | | | | | | ||
| | | | | 5 | | | |
| | | | | 6 | | ||
| | | | | 7 | | | |
| | | | | 7 | | | |
| | | | | | | ||
| | | | | | | ||
| | | | | | |||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| | | | | | | ||
| ||||||||
| A-1 | | |
2023. We are excited to continue to provide expanded access, improved communication, and cost savings for our stockholders and the Company. We believe hosting a virtual meeting helps enable greater stockholder attendance at the annual meeting by allowing stockholders that might not otherwise be able to travel to a physical meeting to attend online and participate from any location around the world.
2, 2023.
Management of the Company does not intend to pay for Intermediaries to forward the Notice and Access Package to OBOs. An OBO will not receive the Notice and Access Package unless the Intermediary assumes the cost of delivery.
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
Platform.
We encourage you to log into the Meeting at least 15 minutes prior to the commencement of the Meeting. You may begin to log into the Meeting Virtual Platform beginning at 9:10:00 a.m. (EDT) on May 6, 2022.5, 2023. The Meeting will begin promptly at 10:11:00 a.m. (EDT) on May 6, 2022.
5, 2023.
Submission of Questions
Josh Gold.
Name | Position(s) | Director Since | Age | ||||||
Abner Kurtin | Chair and Chief Executive Officer, Audit Committee and Compensation and Corporate Governance Committee member | 2021 | 55 | ||||||
Joseph Hinrichs | Director, Audit Committee and Compensation and Corporate Governance Committee member | 2021 | 55 | ||||||
Emily Paxhia | Director, Compensation and Corporate Governance Committee Chair | 2021 | 41 | ||||||
Francis Perullo | Director, President, Chief Strategy Officer and Secretary | 2021 | 45 | ||||||
Scott Swid | Director, Audit Committee Chair | 2021 | 54 |
Name | | | Position(s) | | | Director Since | | | Age | |
Abner Kurtin | | | Director, Executive Chair | | | 2021 | | | 56 | |
Francis Perullo | | | Director, President and Interim Co-Chief Executive Officer | | | 2021 | | | 46 | |
Daniel Neville | | | Director, Chief Financial Officer and Interim Co-Chief Executive Officer | | | 2022 | | | 36 | |
Scott Swid | | | Director, Corporate Governance and Compensation Committee Chair | | | 2021 | | | 55 | |
Josh Gold | | | Director, Audit Committee Chair | | | 2022 | | | 52 | |
Joseph Hinrichs
Joseph Hinrichs is currently Chairman of the Board of Exide Technologies, Senior Advisor at Boyden, Operating Advisor at Assembly Ventures, Strategic Advisor at MicroDrive, and a Member of the Board of Directors at WaveSense. From May 2019 to March 2020, Mr. Hinrichs served as President, Automotive, at Ford Motor Company. Prior to serving in this capacity, he served as President, Global Operations for two years. He also was President, The Americas, from late 2012 to May, 2017 and President, Asia Pacific and Africa, from December 2009 to December, 2012. Mr. Hinrichs served in various other leadership roles at Ford from December 2000 to December 2009, including the head of Global Manufacturing & Labor Affairs and President & CEO of Ford Canada. Prior to joining Ford, he was a partner and senior vice president of Ryan Enterprises Group, a manufacturing investment group in Chicago. Earlier in his career, he spent 10 years at General Motors in various positions in engineering and manufacturing, including plant manager. Mr. Hinrichs earned a bachelor’s degree in electrical engineering magna cum laude from the University of Dayton (Ohio) in 1989, and a master’s degree in business administration from the Harvard Business School in 1994 as a GM Fellow. Mr. Hinrichs is qualified to serve as a director due to his extensive operational expertise and experience as a leader of a major corporation.
Emily Paxhia
Ms. Paxhia is a co-founder and Managing Director of Poseidon Investment Management, which has three private funds and seven special purpose vehicles dedicated to cannabis and hemp related investments, and has served in such role since 2013. Poseidon has over 30 portfolio companies across several verticals in the industry in the United States and abroad. She is currently a director of Flowhub, LLC (from 2015 to present), a compliance technology solution, Headset, Inc. (from 2015 to present), a data analytics and insights platform and served on the board of the Marijuana Policy Project, a cannabis policy reform organization. Ms. Paxhia earned a B.A. in Psychology from Skidmore College. Ms. Paxhia has served on our board since September 2018. Ms. Paxhia is qualified to serve as a director due to her extensive experience in the cannabis industry, as well as her background in sourcing, negotiating and managing investments.
Francis Perullo
Josh Gold.
Our bylaws provide our Board with flexibility
As Chair of the Board, Mr. Kurtin’s key responsibilities include facilitating communication between our Board and management, assessing management’s performance, managing board members, preparation of the agenda for each board meeting, acting as Chair of board meetings and meetings of our Company’s stockholders and managing relations with stockholders, other stakeholders and the public.
matters.
The Board held a total of threethirteen meetings during the year ended December 31, 2021.2022. The following table shows the number of Board meetings each director attended during that period.
Name | Number of Board Meetings Held While a Director | Number of Board Meetings Attended | ||||
Abner Kurtin | 3 | 3 | ||||
Francis Perullo | 3 | 3 | ||||
Scott Swid | 3 | 3 | ||||
Emily Paxhia | 3 | 3 | ||||
Joseph Hinrichs | 3 | 3 |
Name | | | Number of Board Meetings Held While a Director in 2022 | | | Number of Board Meetings Attended in 2022 | |
Abner Kurtin | | | 13 | | | 10 | |
Francis Perullo | | | 13 | | | 12 | |
Daniel Neville | | | 0 | | | 5 (as observer) | |
Scott Swid | | | 4 | | | 13 | |
Josh Gold | | | 0 | | | 1 (as observer) | |
Each of the directors serving at the time virtually attended the 2022 Annual Meeting of stockholders.
The members of the Audit Committee are:
Name of Member | | Independent(1) | | | Financially Literate(2) | | | Audit Committee Financial Expert(3) | | |
Scott Swid | | Yes | ||||||||
Yes | ||||||||||
Yes | ||||||||||
Josh Gold (Chair) | | | Yes | | | Yes | | | Yes | |
Change of Auditor
Marcum LLP (“Marcum”) was the Company's auditor for the fiscal year ended December 31, 2020
Services
Marcum’s reports on the consolidated financial statements of Ascend Wellness Holdings, LLC as of and for the years ended December 31, 2020, and 2019 did not contain any adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the two fiscal years ended December 31, 2020, and the subsequent interim periodsperiod from January 1, 2021 through September 28, 2021, there were no (i) disagreements, within the meaning of Item 304(a)(1)(iv) of Regulation S-K (“Regulation S-K”) promulgated under the Securities Exchange Act of 1934, as amended (“Regulation S-K(the “Exchange Act”), and the related instructions thereto, with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject matter of the disagreements in connection with its reports; or (ii) “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto, except certain material weaknesses in the Company’s internal control over financial reporting, as discussed in the Form 10-Q for the quarterly periods ended March 31, 2021 and June 30, 2021.
During the Company’s fiscal years ended December 31, 2020, and 2019, and the subsequent interim periodsperiod from January 1, 2021 through September 28, 2021, neither the Company nor anyone acting on itsour behalf consulted with MGO with respect to: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’sour consolidated financial statements, and MGO did not provide either a written report or oral advice to the Companyus that MGO concluded was an important factor considered by the Companyus in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii) (a) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or (b) a “reportable event” as described in Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto or “reportable events as such term is defined in NI 51-102.
Attached to this proxy statement as Appendix C is a copy of the reporting package, as defined in NI 51-102, that was filed with the requisite securities regulatory authorities. The reporting package consists of (i) a letter from Marcum LLP; and (ii) a Current Report on Form 8-K.
Principal Accountant Fees and Services
S-K.
Year Ended | Audit Fees(1) | Audit-Related Fees | Tax Fees(2) | All Other Fees | ||||||||||||||
December 31, 2021 | $ | 375,000.00 | $ | — | $ | 160,300.00 | $ | — | ||||||||||
December 31, 2020 | $ | 325,068.00 | $ | 29,970.00 | $ | — | $ | — |
Year Ended | | | Audit Fees(1) | | | Audit-Related Fees | | | Tax Fees(2) | | | All Other Fees | | ||||||||||||
December 31, 2022 | | | | $ | 550,000 | | | | | $ | 5,000 | | | | | $ | 311,580 | | | | | $ | — | | |
December 31, 2021 | | | | $ | 375,000 | | | | | $ | — | | | | | $ | 160,300 | | | | | $ | — | | |
Compensation and Corporate Governance Committee
Consideration of Director NomineesChief Executive Officer,Chair, served as a member of the Compensation and Corporate Governance Committee during the fiscal year ended December 31, 2021.2022. There were no compensation committee “interlocks” during the year ended December 31, 2021, nor during any time in 20202022 or to date in 2022,2023, which generally means that no executive officer of the Company served as a director or member of the compensation committee of another entity, which had an executive officer serving as a director or member of the Company’s Compensation and Corporate Governance Committee.14ChiefCo-Chief Executive Officer,Officers, Chief Financial Officer and other executive and senior officers. The full text of our code of business conduct and ethics is posted on the investor relations page on our website. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website or in filings under the Exchange Act.
Proposal 2 -— Ratification of Independent Registered Public Accounting Firm
• Overall Share Limit. The total number of Shares reserved |
New Plan Benefits
As part of its regular annual process of granting equity awards to its officers and employees, in 2021, the Company opted to make grants under the 2021 Incentive Plan. Other than these previously granted awards, it is not possible to determine the benefits that will be received in the future by participants in the Amended 2021 Incentive Plan shall not exceed 10% of the total number of issued and outstanding Class A Common Shares, on a non-diluted basis, as constituted on the grant date of such Award.
| | | RSU Grants | | | Option Grants | | ||||||||||||||||||
Name and Position | | | Dollar Value ($)(1) | | | Number of RSUs (#) | | | Dollar Value ($)(1) | | | Number of Options (#) | | ||||||||||||
Abner Kurtin, Executive Officer Chairman | | | | | 625,000 | | | | | | 484,496 | | | | | | 625,000 | | | | | | 484,496 | | |
Francis Perullo, President, Chief Strategy Officer, and Interim Co-CEO | | | | | 375,000 | | | | | | 290,698 | | | | | | 375,000 | | | | | | 290,698 | | |
Daniel Neville, Chief Financial Officer and Treasurer and Interim Co-CEO | | | | | 250,000 | | | | | | 193,798 | | | | | | 250,000 | | | | | | 193,798 | | |
All executive officers as a group | | | | | 1,712,500 | | | | | | 1,489,131 | | | | | | 1,712,500 | | | | | | 1,489,131 | | |
Non-executive director group | | | | | 300,000 | | | | | | 232,558 | | | | | | 0 | | | | | | 0 | | |
Non-executive officer employee group | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Name and Position | Dollar Value ($)(1) | Grant of RSUs (#) | ||||||
Abner Kurtin Chief Executive Officer and Chairman | $ | 5,037,500 | 1,250,000 | |||||
Francis Perullo President, Chief Strategy Officer, Secretary and Director | $ | 3,022,500 | 750,000 | |||||
Daniel Neville Chief Financial Officer and Treasurer | $ | 3,022,500 | 750,000 | |||||
All current executive officers as a group | $ | 17,127,500 | 4,250,000 | |||||
All current directors who are not executive officers as a group | $ | 906,750 | 225,000 | |||||
All employees, including all current officers who are not executive officers, as a group | $ | 8,059,331 | 1,999,834 |
Notes:
VWAP”) of the Company’s Class A Common Share price quoted on the OTCQX as of January 28, 2023. The actual dollar value of the grants will be based on the 10-day VWAP based on the grant date following the stockholders’ approval of the Amendment.
as Proposed to be Amended
Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards under the 2021 Incentive Plan.
Award.
Incentive Stock Options
RSUs.
RSUs.
Limitations on Awards
U.S. Federal Income Tax Consequences
Approval
Resolution
”):Proposal 4 - Approval of the Company's 2021 Employee Stock Purchase Plan
At the Meeting, Stockholders will be asked to approve an ordinary resolution (the “ESPP Resolution”) ratifying, confirming and approving the adoption of the Company’s 2021 employee stock purchase plan (the “ESPP”). A copy of the ESPP is attached hereto as Appendix B. If approved, the ESPP will be effective on May 6, 2022.
On July 29, 2021, the Board unanimously approved and adopted, subject to the approval of the Stockholders, the ESPP. The Board of Directors believes that an employee stock purchase plan encourages employees to acquire Shares, thereby fostering broad alignment of employees’ interests with the interests of the Stockholders.
ESPP Highlights
The ESPP:
New Plan Benefits
Participation in the ESPP is voluntary and each eligible employee will have the discretion to determine whether and to what extent to participate in and contribute to the ESPP. Accordingly, the benefits and amounts that will be received or allocated to officers and other employees under the ESPP are not determinable at this time.
As of March 14, 2022, the last sales price of the Class A Common Stock listed on the Canadian Securities Exchange was $4.03 per share.
Summary of Material Provisions of the ESPP
The following brief summary of the ESPP is not intended to be exhaustive and is qualified in its entirety by the terms of the ESPP, a copy of which is attached to this proxy statement as Appendix B.
Plan Administration
The ESPP is expected to be administrated by the Compensation Committee, or by the Board acting in place of the Compensation Committee. Subject to the terms of the ESPP, the Compensation Committee will have the authority to, among other matters determine the terms and conditions of offerings under the ESPP, determine the eligibility of participants, and construe, interpret and apply the terms of the ESPP.
Shares Reserved for Issuance
Subject to customary capitalization adjustments, the maximum number of Shares reserved for issuance from treasury under the ESPP is 4,000,000.
Eligibility
Any individual who is a common law employee of the Company and any of its subsidiaries designated by the Compensation Committee for at least 20 hours per week on any given Offering Date will be eligible to participate in the ESPP.
The Compensation Committee may, in its discretion, exclude the following categories of employees from participation: (i) employees who have not completed at least two years of service since their last hire date (or such lesser period of time as may be determined by the Compensation Committee in its discretion); (ii) employees who customarily work not more than 20 hours per week or five months per calendar year (or such lesser period of time as may be determined by the Compensation Committee in its discretion); or (iii) certain highly-compensated employees.
As of March 14, 2022, there are approximately 1,600 employees which would be eligible to participate under the ESPP.
Offering Periods
The ESPP is currently expected to be administered through consecutive six-month periods referred to as “Offering Periods”. The Offering Periods will be determined by the Compensation Committee, provided that no Offering Period may extend for a period longer than 27 months.
On the Offering Date, each eligible employee who has properly enrolled in that Offering Period will be granted an option to purchase Shares to be funded by payroll deductions, based on the participant’s elected contribution rate. Unless a participant has properly withdrawn from the Offering Period, each option granted under the ESPP will automatically be exercised on the Exercise Date. The purchase price will be equal to 85% of the lesser of the Fair Market Value of the Shares on (i) the Offering Date; and (ii) the Exercise Date.
Contribution and Purchase Limitations
Unless otherwise determined by the Compensation Committee in accordance with the terms of the ESPP, no participant may (i) elect a contribution rate of more than 20% of his or her compensation for the purchase of Shares under the ESPP in any one payroll period; (ii) purchase more than 10,000 Shares under the ESPP on any one Exercise Date; or (iii) purchase Shares that have a Fair Market Value of more than $25,000, determined as of the Offering Date, in any calendar year.
Certain Corporate Transactions
If the number of outstanding Shares is changed by a dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occur, the Compensation Committee, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP will, in such manner as it may deem equitable, adjust the number and class of shares which may be delivered under the ESPP, the purchase price and the number of Shares covered by each option under the ESPP which has not yet been exercised, and the contribution and purchase limitations.
In the event that the successor corporation refuses to assume or substitute for the option, the Offering Period with respect to which such option relates will be shortened by setting a new Exercise Date and will end on the new Exercise Date. The new Exercise Date will occur before the date of the Company’s proposed corporate transaction. The Compensation Committee will notify each participant in writing prior to the new Exercise Date, that the Exercise Date for the participant’s option has been changed to the new Exercise Date and that the participant’s option will be exercised automatically on the new Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period.
Amendments and Termination
The Compensation Committee may generally amend, suspend, or terminate the ESPP at any time without Stockholder approval.
U.S. Federal Income Tax Consequences
The following brief summary of the effect of federal income taxation upon the participant and the Company with respect to the shares purchased under the ESPP does not purport to be complete, and does not discuss the tax consequences of a participant’s death or the income tax laws of any state or foreign country in which the participant may reside.
The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the Internal Revenue Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the ESPP are sold or otherwise disposed of. Upon sale or other disposition of the shares, the participant will generally be subject to tax in an amount that depends upon the holding period. If the shares are sold or otherwise disposed of more than two years from the first day of the applicable offering period and one year from the applicable date of purchase, the participant will recognize ordinary income measured as the lesser of (i) the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price, or (ii) an amount equal to 15% of the fair market value of the shares as of the first date of the applicable offering period. Any additional gain will be treated as long-term capital gain. If the shares are sold or otherwise disposed of before the expiration of these holding periods, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price. Any additional gain or loss on such sale or disposition will be long term or short-term capital gain or loss, depending on how long the shares have been held from the date of purchase.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY UNDER THE ESPP. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
Approval
The ESPP Resolution requires the approval of a majority of the shares present in person or by proxy at the Meeting and entitled to vote on the subject matter. Therefore, at the Meeting, Stockholders will be asked to consider, and if deemed advisable, to pass the following ESPP Resolution:
BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE STOCKHOLDERS THAT:
Unless you have specified in the enclosed form of proxy that the votes attaching to the Shares represented by the proxy are to be voted against the ESPP Resolution on any ballot that may be called for, the management representatives designated in the enclosed form of proxy intend to vote the Shares in respect of which they are appointed proxy FOR the ESPP Resolution.
Board Recommendation
The Board believes the passing of the ESPP Resolution is in the best interest of the Company and unanimously recommends a vote FOR the passing of the ESPP Resolution.
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights ($) | | | Number of securities remaining available for future issuance under equity compensation plans | | |||||||||
Equity compensation plans approved by security holders | | | | | 8,503,362 | | | | | $ | 3.29 | | | | | | 5,858,907 | | |
Equity compensation plans not approved by security holders | | | | | 616,666 | | | | | | — | | | | | | 208,750(1) | | |
Total | | | | | 9,120,028 | | | | | | — | | | | | | 6,067,657(1) | | |
Notes:
Name | Office Held | Officer Since | Age | |||||||
Abner Kurtin(1) | Chair and Chief Executive Officer | 2018 | 55 | |||||||
Robin Debiase | Chief People Officer | 2021 | 51 | |||||||
Chris Melillo | Chief Revenue Officer | 2020 | 48 | |||||||
Daniel Neville | Chief Financial Officer and Treasurer | 2020 | 35 | |||||||
Francis Perullo(1) | President, Chief Strategy Officer and Secretary | 2019 | 45 |
15, 2023:
Name | | | Office Held | | | Officer Since | | | Age | |
Abner Kurtin(1) | | | Executive Chairman | | | 2018 | | | 56 | |
Daniel Neville(1) | | | Chief Financial Officer and Interim Co-Chief Executive Officer | | | 2020 | | | 36 | |
Francis Perullo(1) | | | President and Interim Co-Chief Executive Officer | | | 2019 | | | 46 | |
(1) Biographical information with respect to Messrs. Kurtin, |
Robin Debiase, Chief People Officer. Robin Debiase has served as our Chief People Officer since March 2021. She was previously at WW (formerly known as Weight Watchers) as Vice-President Human Resources - North America and Emerging Markets from November 2019 to March 2021. Prior to WW, from May 2014 to August 2019, Ms. Debiase was Senior Vice President of HR at Delta Galil Industries, a global manufacturer and marketer of private label, licensed apparel products and owner of world-renowned brands such as 7 For All Mankind, PJ Salvage and Splendid. Earlier in her career, Ms. Debiase held executive leadership positions at various brands including Hanesbrands, Inc., Walgreens and Circuit City. She holds a Bachelor's degree in Human Relations from St. Joseph’s College as well as an MBA from Johns Hopkins Carey Business School.
Daniel Neville, Chief Financial Officer and Treasurer. Daniel Neville has served as our Chief Financial Officer since August 2020. Mr. Neville joined our Company as Senior Vice President of Finance in March 2019 and became Chief Financial Officer in August 2020. He was previously at SLS Capital, a special situations hedge fund based in New York, where he served as a Managing Director from January 2015 to March 2019 and an Analyst from April 2010 to January 2015. Previously, he worked as an investment banker at Credit Suisse in the Technology Group, where he worked on mergers & acquisitions and initial public offering transactions. Mr. Neville earned his Bachelor of Science in Economics from Duke University.
Incentive Type | | | Reward Element | | | Time Horizon | | | Rationale | |
Fixed compensation | | | Base salary | | | Annual | | | Base salary provides a fixed level of competitive pay that fairly compensates the executive based on individual levels of responsibilities. | |
Variable compensation | | | Annual incentive program | | | Annual | | | The annual incentive program provides cash awards for the attainment of short-term operating, strategic and financial goals. | |
| Stock options (50% of equity grant) | | | Four years | | | Stock options reward executives based on stock price growth over a multi-year timeframe and aligns their long-term interests with those of our stockholders. | | ||
| Restricted stock (50% of equity grant) | | | Four years | | | Time-based restricted stock both retains executives and aligns their long-term interests with those of stockholders. | |
Base Salary. Base salary is the fixed portion of each executive officer’s total compensation and is designed to fairly compensate the individual based on their level of responsibilities. The 20212022 base salaries were established as part of each named executive officers’ employment agreement entered into in March 2021.described below. In determining the appropriate base level of compensation for the executive officers, weight was 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.
Name | Fiscal 2021 Base Salary | |||
Abner Kurtin | $ | 1,000,000 | ||
Frank Perullo | $ | 750,000 | ||
Daniel Neville | $ | 500,000 |
Name | | | Fiscal 2022 Base Salary | | |||
Abner Kurtin | | | | $ | 1,000,000 | | |
Frank Perullo | | | | $ | 750,000 | | |
Daniel Neville | | | | $ | 500,000 | | |
Financial | Operational | Individual | |||||||||||
Metrics | a. Revenue growth b. Adjusted EBITDA | a. Customer experience b. Manufacturing and distribution efficiencies c. Supply chain management | a. IPO success b. Portfolio expansion c. Strategic licensing d. Sales channel optimization | ||||||||||
Weighting | 60 | % | 20 | % | 20 | % |
The 2021 bridge program did not rely on established financial or operational goals. Rather, the Compensation and Corporate Governance Committee reviewed performance of the metrics outlined above as the primary factors in determining cash payouts to executives. As the company continues its transition to a more mature public company, the Compensation Committee expects to set financial, operational, and individual goals against which payouts will be determined.
| | | Financial | | | Operational | | | Strategic | |
Metrics | | | a. Revenue growth b. Adjusted EBITDA | | | a. Customer experience b. Manufacturing and distribution efficiencies c. Supply chain management | | | a. Accretive M&A b. Portfolio expansion c. Strategic licensing | |
Weighting | | | 60% | | | 20% | | | 20% | |
Name | Target as % of Base Salary | $ Target Payout | Payout Factor | Actual Payout | ||||||||||||
Abner Kurtin | 100 | % | $ | 1,000,000 | 100 | % | $ | 1,000,000 | ||||||||
Frank Perullo | 100 | % | $ | 750,000 | 100 | % | $ | 750,000 | ||||||||
Daniel Neville | 100 | % | $ | 500,000 | 100 | % | $ | 500,000 |
Name | | | Target as % of Base Salary | | | Target Payout ($) | | | Payout Factor | | | Actual Payout ($) | | | RSUs Issued(1) | | |||||||||||||||
Abner Kurtin | | | | | 100% | | | | | $ | 1,000,000 | | | | | | 75% | | | | | | 500,000 | | | | | | 387,597 | | |
Frank Perullo | | | | | 100% | | | | | $ | 750,000 | | | | | | 75% | | | | | | 375,000 | | | | | | 290,698 | | |
Daniel Neville | | | | | 100% | | | | | $ | 500,000 | | | | | | 75% | | | | | | 250,000 | | | | | | 193,798 | | |
IPO Success Bonuses. In order to recognize the extraordinary efforts required to launch a successful IPO, the Committee awarded discretionary cash bonuses to all executive officers.
Name | IPO Success Bonus | |||
Abner Kurtin | $ | 350,000 | ||
Frank Perullo | $ | 350,000 | ||
Daniel Neville | $ | 250,000 |
As noted below, in March 2021, each NEO entered into an employment agreement providing for, among other items, a grant of restricted stock units, subject to the terms and conditions as established by the Board. As previously disclosed, the Board approved the restricted stock unit grants on August 9, 2021. The 2021 restricted stock unit grants vest in four equal annual installments. Vesting is subject to continued employment over the four-year period. The 2021 restricted stock unit grants were as follows:
We believe that regular equity-based long-term incentive awards align the interests of our NEOs with our stockholders and focus our NEOs on our long-term growth. In fiscal year 2022, we granted an equal mix of
Name | Target Grant Value (as % of base salary) | Target Grant Value | Dollar Value of Stock Options | Dollar Value of RSUs | ||||||||||||
Abner Kurtin | 125 | % | $ | 1,250,000 | $ | 625,000 | $ | 625,000 | ||||||||
Frank Perullo | 100 | % | $ | 750,000 | $ | 375,000 | $ | 375,000 | ||||||||
Daniel Neville | 100 | % | $ | 500,000 | $ | 250,000 | $ | 250,000 |
Name | | | Target Grant Value (as % of base salary) | | | Target Grant Value | | | Grant Date Fair Value of RSUs | | | Dollar Value of RSUs | | ||||||||||||
Abner Kurtin | | | | | 125% | | | | | $ | 1,250,000 | | | | | | 599,390 | | | | | | 1,976,198 | | |
Frank Perullo | | | | | 100% | | | | | $ | 750,000 | | | | | | 359,634 | | | | | | 1,930,152 | | |
Daniel Neville | | | | | 100% | | | | | $ | 500,000 | | | | | | 239,756 | | | | | | 704,269 | | |
Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards(2)(3) | Option Awards | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5) | Total Compensation | ||||||||||||||||||||||||
Abner Kurtin Chair and CEO | 2021 | $ | 851,827 | $ | 350,000 | $ | 13,750,000 | $ | — | $ | 1,000,000 | $ | 8,173 | $ | 15,960,000 | |||||||||||||||||
2020 | $ | 384,808 | $ | — | $ | 469,000 | $ | — | $ | — | $ | 6,779 | $ | 860,587 | ||||||||||||||||||
Frank Perullo President, Chief Strategy Officer and Secretary | 2021 | $ | 667,500 | $ | 350,000 | $ | 8,250,000 | $ | — | $ | 750,000 | $ | 8,173 | $ | 10,025,673 | |||||||||||||||||
2020 | $ | 384,808 | $ | 20,000 | $ | 469,000 | $ | — | $ | — | $ | 6,779 | $ | 880,587 | ||||||||||||||||||
Daniel Neville Chief Financial Officer | 2021 | $ | 449,231 | $ | 250,000 | $ | 8,250,000 | $ | — | $ | 500,000 | $ | 5,769 | $ | 9,455,000 | |||||||||||||||||
2020 | $ | 276,923 | $ | — | $ | 280,000 | $ | — | $ | — | $ | 4,808 | $ | 561,731 |
Name and Principal Position | | | Year | | | Salary | | | Bonus(1) | | | Stock Awards(2)(3) | | | Option Awards | | | Non-Equity Incentive Plan Compensation(4) | | | All Other Compensation(5) | | | Total Compensation | | ||||||||||||||||||||||||
Abner Kurtin Executive Chair | | | | | 2022 | | | | | $ | 293,632 | | | | | $ | — | | | | | $ | 1,976,198 | | | | | $ | 599,390 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,869,220 | | |
| | | 2021 | | | | | $ | 851,827 | | | | | $ | 350,000 | | | | | $ | 13,750,000 | | | | | $ | — | | | | | $ | 1,000,000 | | | | | $ | 8,173 | | | | | $ | 15,960,000 | | | ||
| | | 2020 | | | | | $ | 384,808 | | | | | $ | — | | | | | $ | 469,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 6,779 | | | | | $ | 860,587 | | | ||
Frank Perullo President and Interim Co-Chief Executive Officer | | | | | 2022 | | | | | $ | 750,000 | | | | | $ | — | | | | | $ | 1,930,152 | | | | | $ | 359,634 | | | | | $ | — | | | | | $ | — | | | | | $ | 3,039,786 | | |
| | | 2021 | | | | | $ | 667,500 | | | | | $ | 350,000 | | | | | $ | 8,250,000 | | | | | $ | — | | | | | $ | 750,000 | | | | | $ | 8,173 | | | | | $ | 10,025,673 | | | ||
| | | 2020 | | | | | $ | 384,808 | | | | | $ | 20,000 | | | | | $ | 469,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 6,779 | | | | | $ | 880,587 | | | ||
Daniel Neville Chief Financial Officer and Interim Co-Chief Executive Officer | | | | | 2022 | | | | | $ | 500,000 | | | | | $ | — | | | | | $ | 704,269 | | | | | $ | 239,756 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,444,025 | | |
| | | 2021 | | | | | $ | 449,231 | | | | | $ | 250,000 | | | | | $ | 8,250,000 | | | | | $ | — | | | | | $ | 500,000 | | | | | $ | 5,769 | | | | | $ | 9,455,000 | | | ||
| | | 2020 | | | | | $ | 276,923 | | | | | $ | — | | | | | $ | 280,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 4,808 | | | | | $ | 561,731 | | |
Name | Grant Date | Equity Incentive Plan Awards: Number of Shares or Units of Shares that Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Share-Based Awards that Have Not Vested (US$)(3) | |||||||
Abner Kurtin | 11/3/2020 | (1) | 316,666 | $ | 2,093,162 | |||||
8/9/2021 | (2) | 1,250,000 | $ | 8,262,500 | ||||||
Francis Perullo | 11/3/2020 | (1) | 416,666 | $ | 2,754,162 | |||||
8/9/2021 | (2) | 750,000 | $ | 4,957,500 | ||||||
Daniel Neville | 11/3/2020 | (1) | 208,334 | $ | 1,377,088 | |||||
8/9/2021 | (2) | 750,000 | $ | 4,957,500 |
| | | | | | | | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | |||||||||||||||||||||
Abner Kurtin | | | | | 11/3/2020(1) | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 11/3/2025 | | | | | | 158,333 | | | | | $ | 182,083 | | |
| | | 8/9/2021(2) | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 8/9/2026 | | | | | | 937,500 | | | | | $ | 1,078,125 | | | ||
| | | 3/15/2022 | | | | | | — | | | | | | 304,878 | | | | | $ | 4.10 | | | | | | 3/15/2027 | | | | | | 152,439 | | | | | $ | 175,305 | | | ||
Francis Perullo | | | | | 11/3/2020(1) | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 11/3/2025 | | | | | | 208,333 | | | | | $ | 239,583 | | |
| | | 8/9/2021(2) | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 8/9/2026 | | | | | | 562,500 | | | | | $ | 646,875 | | | ||
| | | 3/15/2022 | | | | | | — | | | | | | 182,927 | | | | | $ | 4.10 | | | | | | 3/15/2027 | | | | | | 91,463 | | | | | $ | 105,182 | | | ||
| | | 8/3/2022 | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 8/3/2027 | | | | | | 375,000 | | | | | $ | 431,250 | | | ||
Daniel Neville | | | | | 11/3/2020(1) | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 11/3/2025 | | | | | | 104,167 | | | | | $ | 119,792 | | |
| | | 8/9/2021(2) | | | | | | | | | | | | | | | | | $ | 4.10 | | | | | | 8/9/2026 | | | | | | 562,500 | | | | | $ | 646,875 | | | ||
| | | 3/15/2022 | | | | | | — | | | | | | 121,951 | | | | | $ | 4.10 | | | | | | 3/15/2027 | | | | | | 60,976 | | | | | $ | 70,122 | | |
Under the CEOKurtin Employment Agreement, Mr. Kurtin is entitled to receive a base salary of $1,000,000 per year (subject to any discretionary increase by the Board from time to time) and is eligible to earn an annual bonus based on the achievement of performance goals established by the Compensation and Corporate Governance Committee of the Board, with the target and maximum annual bonus opportunities equal to
and Interim Co-Chief Executive Officer
Under the President Employment Agreement, Mr. Perullo is entitled to receive a base salary of $750,000 per year (subject to any discretionary increase by the Board from time to time) and is eligible to earn an annual bonus based on the achievement of performance goals established by the Compensation and Corporate Governance Committee of the Board, with the target and maximum annual bonus opportunities equal to 100% and 200%, respectively, of the base salary. In the event of a change of control of the Company, Mr. Perullo will be deemed to have earned the maximum annual bonus for each fiscal year during the remainder of the term of employment; provided that the Company’s obligation to pay such bonus will terminate immediately upon a termination of Mr. Perullo’s employment by the Company for Cause (as defined in the President Employment Agreement). Additionally, as noted above, the Initial Perullo Agreement provides that, subject to the Board’s approval, Mr. Perullo would be granted 750,000 restricted stock unitsRSUs under the Company’s 2021 Equity Incentive Plan. The Board approve the grant on August 9, 2021. In connection with the execution of the President Employment Agreement, the Board granted Mr. Perullo an additional 375,000 restricted stock units.
RSUs.
and Interim Co-Chief Executive Officer
In the event that Mr. Neville’s employment is terminated due to death or disability (as described in the CFO Employment Agreement), he will be entitled to: (x) the Prorated Bonus, and (y) the Benefit Continuation. If the Company terminates Mr. Neville’s employment for any reason other than for Cause, including as a result of the Company’s non-renewal notice to Mr. Neville (and in any event, not due to his death or disability), or if Mr. Neville resigns from the Company for Good Reason (as defined in the CFO Employment Agreement), then, in addition to the Prorated Bonus and the Benefit Continuation, Mr. Neville will be entitled to: (i) an amount equal to two times the sum of the base salary and annual bonus earned by him for the full fiscal year preceding the termination date (or, if termination occurs before one full fiscal year of employment has lapsed, the current base salary and target bonus amount), with such amount payable in installments over the 12 month period after the termination date (provided that, if such termination occurs within 18 months after a Change of Control Event (as defined in the CFO Employment Agreement), then such amount will be
Name(1) | | | Fees Earned ($)(2) | | | Stock Awards ($)(3) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($) | | | Total ($) | | ||||||||||||||||||
Joseph Hinrichs | | | | | 50,000 | | | | | | 36,585 | | | | | | — | | | | | | — | | | | | | — | | | | | | 86,585 | | |
(former Director) | | | | | | | | ||||||||||||||||||||||||||||||
Emily Paxhia | | | | | 75,000 | | | | | | 36,585 | | | | | | — | | | | | | — | | | | | | — | | | | | | 111,585 | | |
(former Director) | | | | | | | | ||||||||||||||||||||||||||||||
Scott Swid | | | | | 100,000 | | | | | | 36,585 | | | | | | — | | | | | | — | | | | | | — | | | | | | 136,585 | | |
Josh Gold(4) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name(1) | Fees Earned ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Joseph Hinrichs | 100,000 | 1,375,000 | — | — | — | 1,475,000 | ||||||||||||||||||
Emily Paxhia | 100,000 | 550,000 | — | — | — | 650,000 | ||||||||||||||||||
Scott Swid | 100,000 | 550,000 | — | — | — | 650,000 |
Notes:
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Shares of stock subject to options that are exercisable within 60 days following March 14, 20221, 2023 are deemed to be outstanding and beneficially owned by the optionee or holder for the purpose of computing share and percentage ownership of that optionee or holder but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Except as indicated in the footnotes to this table, and as affected by applicable community property laws, all persons listed have sole or shared voting and investment power for all Common Sharesshares of common stock shown as beneficially owned by them.
Class A Common Stock | Class B Common Stock | |||||||||||||||||||
Beneficial Owner | Number Beneficially Owned(1) | Percent of Class A Common Stock | Number Beneficially Owned(3) | Percent of Class B Common Stock(3) | Percentage of Aggregate Voting Power | |||||||||||||||
Abner Kurtin(2) | 29,399,875 | 17.0 | % | 65,000 | 100.0 | % | 39.6 | % | ||||||||||||
Francis Perullo(4) | 7,945,486 | 4.6 | % | 14,371 | 22.1 | % | 9.4 | % | ||||||||||||
Joseph Hinrichs | 62,500 | — | % | — | — | — | % | |||||||||||||
Emily Paxhia | 266,666 | 0.2 | % | — | — | 0.1 | % | |||||||||||||
Scott Swid | 4,155,331 | 2.4 | % | — | — | 1.7 | % | |||||||||||||
Daniel Neville | 1,187,500 | 0.7 | % | — | — | 0.5 | % | |||||||||||||
Current directors and executive officers as a group (8 total) | 43,017,358 | 24.8 | % | 65,000 | 100.0 | % | 45.3 | % | ||||||||||||
AGP Partners, LLC(5) | 27,512,375 | 15.9 | % | 65,000 | 100.0 | % | 38.8 | % |
| | | Class A Common Shares | | | Class B Common Shares(8) | | | | | | | | ||||||||||||||||||
Beneficial Owner | | | Number Beneficially Owned(1) | | | Percent of Class A Common Shares | | | Number Beneficially Owned(3) | | | Percent of Class B Common Shares(3) | | | Percentage of Aggregate Voting Power | | |||||||||||||||
Abner Kurtin(2) | | | | | 19,626,167 | | | | | | 10.4% | | | | | | 40,021 | | | | | | 61.6% | | | | | | 23.5% | | |
Francis Perullo(4)(5) | | | | | 6,749,029 | | | | | | 3.6% | | | | | | 14,372 | | | | | | 22.1% | | | | | | 8.3% | | |
Scott Swid | | | | | 4,264,583 | | | | | | 2.3% | | | | | | — | | | | | | — | | | | | | 1.7% | | |
Daniel Neville | | | | | 1,252,939 | | | | | | 0.7% | | | | | | — | | | | | | — | | | | | | 0.5% | | |
Josh Gold(6) | | | | | 1,100,310 | | | | | | 0.6% | | | | | | — | | | | | | — | | | | | | 0.4% | | |
Current directors and executive officers as a group (5 total) | | | | | 32,993,028 | | | | | | 17.6% | | | | | | 54,393 | | | | | | 83.7% | | | | | | 34.4% | | |
AGP Partners, LLC(7) | | | | | 27,578,175 | | | | | | 14.6% | | | | | | 65,000 | | | | | | 100% | | | | | | 36.5% | | |
Name | | | RSAs | | | RSUs | | | Options | | |||||||||
Abner Kurtin | | | | | 158,333 | | | | | | 350,609 | | | | | | 76,219 | | |
Francis Perullo | | | | | 208,333 | | | | | | 210,365 | | | | | | 45,731 | | |
Daniel Neville | | | | | 104,167 | | | | | | 202,744 | | | | | | 30,487 | | |
Scott Swid | | | | | 20,833 | | | | | | 16,667 | | | | | | — | | |
Pursuant to the Related Party Transactions Policy, any potential related party transaction that requires approval will be reviewed by the Compensation and Corporate Governance Committee, and the Compensation and Corporate Governance Committee will consider such factors as it deems appropriate to determine whether to approve, ratify or disapprove the related party transaction. The Compensation and Corporate Governance Committee may approve the related party transaction only if it determines in good faith that, under all of the circumstances, the transaction is in the best interests of us and our stockholders.
Management Agreement
Effective April 1, 2018, AWH entered into
Registration Rights Agreement
In connection with our IPO, we entered into a registration rights agreement with AGP. AGP will be entitled to request that we register their shares of capital stock on a long-form or short-form registration statement on one or more occasions in the future, which registrations may be “shelf registrations.” AGP will be entitled to participate in certain of our registered offerings, subject to the restrictions in the registration rights agreement. We will pay expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (1) shares of our Class A common stock held by AGP and their affiliates, and (2) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Class A common stock described in clause (1) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions (“Registrable Securities”) and (3) Class A common stock issuable upon the conversion of Class B common stock. These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144Executive Chair of the Securities Act or repurchased by us or our subsidiaries. In addition, with the consent of the company and holders of a majority of Registrable Securities, certain Registrable Securities will cease to be Registrable Securities if they can be sold without limitation under Rule 144 of the Securities Act.
Exchange Agreement
On April 22, 2021, Ascend Wellness Holdings, LLC, converted into a Delaware corporation, changed its name to “Ascend Wellness Holdings, Inc.” and effected a 2:1 reverse stock split (the “Conversion”). On April 22, 2021, subsequent to the Conversion, we entered into an exchange agreement with AGP whereby AGP exchanged 65,000 shares of Class A Common Stock for the same number of shares of Class B Common Stock. Abner Kurtin and Francis Perullo are the beneficial owners of AGP.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
2023.
Section 1. Purpose
The purpose
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company.
(b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Dividend Equivalent granted under the Plan.
(c) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 10(b).
(d) “Board” shall mean the Board of Directors of the Company.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.
(f) “Committee” means a committee or subcommittee of the Board appointed from time to time by the Board. Notwithstanding the foregoing, if, and to the extent that no Committee exists which has the authority to administer this Plan, the functions of the Committee shall be exercised by the Board and all references herein to the Committee shall be deemed to be references to the Board.
(g) “Company” shall meanstockholders, Ascend Wellness Holdings, Inc., a Delaware corporation incorporated under(the “
(h) “CSE” means the Canadian Securities Exchange.
(i) “Director” shall mean a member of the Board.
(j) “Dividend Equivalent” shall mean any right granted under Section 6(b) of the Plan.
(k) “Eligible Person” shall mean any employee, officer, non-employee Director, consultant, independent contractor or advisor providing services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended. An Eligible Person must be a natural person and any consultants or advisors must not be engaged in connection with the offer or sale of securities in a capital-raising transaction, or to directly or indirectly promote or maintain a market for the Company’s securities.
(l) “Fair Market Value” with respect to one Share as of any date shall mean (a) if the Shares are listed on the CSE or any established stock exchange, the price of one Share at the close of the regular trading session of such market or exchange on the last trading day prior to such date, and if no sale of Shares shall have occurred on such date, on the next preceding date on which there was a sale of Shares. Notwithstanding the foregoing, in the event that the Shares are listed on the CSE, for the purposes of establishing the exercise price of any Options, the Fair Market Value shall not be lower than the greater of the closing market price of the Shares on the CSE on (i) the trading day prior to the date of grant of the Options, and (ii) the date of grant of the Options; (b) if the Shares are not so listed on the CSE or any established stock exchange, the average of the closing “bid” and “asked” prices quoted by the OTC Markets, the National Quotation Bureau, or any comparable reporting service on such date or, if there are no quoted “bid” and “asked” prices on such date, on the next preceding date for which there are such quotes for a Share; or (c) if the Shares are not publicly traded as of such date, the per share value of one Share, as determined by the Board, or any duly authorized Committee of the Board, in its sole discretion, by applying principles of valuation with respect thereto.
(m) “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision.
(n) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(o) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase Shares of the Company.
(p) “Participant” shall mean an Eligible Person designated to be granted an Award under the Plan.
(q) “Plan” shall mean the Ascend Wellness Holdings, Inc. 2021 Stock Incentive Plan (the “
(r) “Prior Equity Plan” shall mean current equity incentive planfollows:
(s) “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan.
(t) “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date, provided that in the case of Participants who are liable to taxation under the Tax Act in respect of amounts payable under this Plan, that such date shall not be later than December 31 of the third calendar year following the year services were performed in respect of the corresponding Restricted Stock Unit awarded.
(u) “Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder.
(v) “Securities Act” shall mean the Securities Act of 1933, as amended.
(w) “Share” or “Shares” shall mean shares or common shares in the capital of the Company (or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan), provided that such class is listed on a securities exchange.
(x) “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A.
(y) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.
(z) “Tax Act” means the Income Tax Act (Canada).
(aa) “U.S. Award Holder” shall mean any holder of an Award who is a “U.S. person” (as defined in Rule 902(k) of Regulation S under the Securities Act) or who is holding or exercising Awards in the United States.
Section 3. Administration
(a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditionsgrant of any Award, or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, subject to the limitations under Sections 6 and 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations of Sections 6 and 7; (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property (but excluding promissory notes), or canceled, forfeited or suspended; (viii) determine whether, to what extent and under what circumstances amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures and sub-plans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate.
(b) Delegation. The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall not delegate such authority (i) with regard to grants of Awards to be made to officers or directors of the Company or (ii) in such a manner as would contravene stock exchange rules, applicable law or applicable exchange rules.
(c) Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise all the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of applicable securities laws; and only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of any applicable securities exchange where the Shares are then listed) may grant Awards to Directors who are not also employees of the Company or an Affiliate.
(d) Indemnification. To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued undersubject to all Awards then outstanding under the Plan shall benot exceed 10% of the total number of Shares issued and outstanding Shares, on a non-diluted basis, as constituted on the grant date of such Award.
(b) Counting Shares. For the purposes of this Section 4 if an Award entitles the holder thereof to receive or purchase Shares, theMay 5, 2023. The number of Shares covered by such Award or to which such Award relatesan Incentive Stock Option shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting AwardsIncentive Stock Options under this Section 4(b). If any Shares covered by Incentive Stock Option are not purchased or are forfeited or are reacquired by the Plan.
(c) Adjustments. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any Award, and (iv) the limitation contained in Section 4(d) below; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive.
(d) Additional Award Limitations. If, and so long as, the Company is listed on the CSE, the aggregate number of Shares issued or issuable to persons providing Investor Relations Activities (as defined in CSE policies) as compensation within a one-year period, shall not exceed 1% of the total number of Shares then outstanding.
Section 5. Eligibility
Any Eligible Person shall be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision. Participation in the Plan shall be entirely voluntary and any decision not to participate shall not affect an Eligible Person's relationship or employment with the Company. Notwithstanding any express or implied term of this Plan to the contrary, the granting of an Award pursuant to the Plan shall in no way be construed as a guarantee of employment by the Company to the Participant.
Section 6. Awards
(a) Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than one hundred percent (100%) of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided, however, that, subject to applicable law and stock exchange rules, the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the term limitation in Section 6(a)(ii) applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:
(d) Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options and Stock Appreciation Rights and (ii) dividend and Dividend Equivalent amounts with respect to any Share underlying Restricted Stock or Restricted Stock Unit Award may be accrued but not paid to a Participant until all conditions or restrictions relating to such Share have been satisfied, waived or lapsed.
(e) General.
(a) Amendments to the Plan and Awards. The Board may from time to time amend, suspend or terminate this Plan, and the Committee may amend the terms of any previously granted Award, provided, however, that no amendment to the terms of any previously granted Award may, (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange, and any such amendment, alteration, suspension, discontinuation or termination of an Award is in compliance with CSE policies. For greater certainty and without limiting the foregoing, the Board may amend, suspend, terminate or discontinue the Plan, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders of the Company in order to:
For greater certainty, prior approval of the shareholders of the Company shall be required for any amendment to the Plan or an Award that would:
(b) Corporate Transactions. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Shares or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter the rights of any holder of an Award or beneficiary thereof:
In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, for avoidance of doubt, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (subject to any limitations required by ASC Topic 718 to avoid adverse accounting treatment); (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes or (c) by any other means set forth in the applicable Award Agreement.
(a) All Awards and securities which may be acquired pursuant to the exercise of the Awards to be issued pursuant to the Plan will be issued pursuant to the registration requirements of the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements.
(b) In addition to the other provisions of the Plan (and notwithstanding any other provision of the Plan to the contrary), the following limitations and requirements will apply to any Award granted to a Participant that receives an Award issued in reliance on Section 25102(o) of the California Corporations Code (each, a “California Participant”).
“Permanent Disability” for purposes of this Section 9 shall mean the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Company or any Affiliate because of the sickness or injury of the Participant.
(a) No Rights to Awards. No Eligible Person, Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.
(b) Award Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee.
(c) Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control.
(d) No Rights of Shareholders. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued.
(e) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases.
(f) No Right to Employment or Directorship. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, or the right to be retained as a Director, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, or remove a Director in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment, or remove a Director who is a Participant, free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee or Director of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee or Director might otherwise have enjoyed but for termination of employment or directorship, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.
(g) Governing Law. The internal law, and not the law of conflicts, of the State of Delaware shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award.
(h) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
(j) Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan.
(k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated.
(l) Clawback and Recoupment. All Awards under this Plan shall be subject to forfeiture or other penalties pursuant to any Company clawback policy, as may be adopted or amended from time to time, and such forfeiture and/or penalty conditions or provisions as determined by the Committee.
(m) Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
The Plan was adopted by the Board on June 29, 2021.
No Award shall be granted under the Plan, and the Plan shall terminate, on the tenth anniversary of the earlier of the date of adoption of the Plan by the Board or date of approval by the Company’s shareholders or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.
Appendix B
ASCEND WELLNESS HOLDINGS, INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
(As Adopted June 29, 2021)
1. Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Shares through accumulated payroll deductions. Subject to the Company obtaining shareholder approval of the Plan, it is the intention of the Company to have the Plan and the Offerings thereunder qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Offerings, accordingly, will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code. Notwithstanding the foregoing, and for greater certainty, the Plan may provide employees of the Company and its Designated Subsidiaries with the opportunity to purchase Common Shares through accumulated payroll deductions, which need not qualify as an “employee stock purchase plan” under Section 423 of the Code, pursuant to separate sub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities law compliance or other objectives for Eligible Employees, the Company and the Designated Subsidiaries in locations outside of the United States. Except as otherwise provided herein or determined by the Administrator, such Non-Section 423 opportunities will operate and be administered in the same manner as the Section 423 opportunities.
2. Definitions.
(a) “Administrator” means the Board or any Committee designated by the Board to administer the Plan pursuant to Section 14.
(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Shares are listed or quoted and the applicable laws of any foreign country or jurisdiction where awards are, or will be, granted under the Plan.
(c) “Black Out Period” means any period during which a policy of the Company prevents trading in the Common Shares.
(d) “Board” means the Board of Directors of the Company.
(e) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.
(f) “Committee” means a committee of the Board appointed in accordance with Section 14 hereof.
(g) “Common Shares” means the common shares of the Company.
(h) “Company” means Ascend Wellness Holdings, Inc., a Delaware corporation.
(i) ��� “Compensation” means an Employee’s base straight time gross earnings, exclusive of payments for overtime, shift premium, incentive compensation, incentive payments, bonuses and other compensation.
(j) “Designated Subsidiary” means any Subsidiary that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan or any Offering.
(k) “Director” means a member of the Board.
(l) “Eligible Employee” means any individual who is a common law employee of an Employer and is customarily employed for at least twenty (20) hours per week, provided that, the term “employee” shall not include any individual who performs services for the Company or any Designated Subsidiary pursuant to (i) an agreement (written or oral) that classifies such individual’s relationship with the Company or any Designated Subsidiary as other than an employee of the Company or any Designated Subsidiary, regardless of whether such individual is at any time determined to be an employee of the Company or any Designated Subsidiary, or (ii) a collective bargaining agreement that provides for the exclusion of such individual from participation in this Plan. For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence that the Employer approves. Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the ninety-first (91st) day of such leave. The Administrator, in its discretion, from time to time may, prior to the Offering Date of an Offering, determine (on a uniform and nondiscriminatory basis) that the definition of Eligible Employee will or will not include an individual if he or she: (ia) has not completed a period of time as may be determined by the Administrator in its discretion (but not to exceed two (2) years of service since his or her last hire date), (ii) customarily works not more than twenty (20) hours per week (or such lesser period of time as may be determined by the Administrator in its discretion), (iii) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Administrator in its discretion), or (iv) is a highly compensated employee under Section 414(q) of the Code with compensation above a certain level or who are Officers or subject to the disclosure requirements of Section 16(a) of the Exchange Act. Notwithstanding any provision of the Plan, the Administrator may in its sole discretion prior to the Offering Date of an Offering determine that citizens or residents of a foreign jurisdiction who are employed by the Company or a Designated Subsidiary shall not be Eligible Employees if, as of the Offering Date of the grant of an Option to citizens or residents of the foreign jurisdiction is prohibited under the laws of such jurisdiction; or compliance with the laws of the foreign jurisdiction would cause the Offering to violate the requirements of Code Section 423. For rules regarding participation of foreign Subsidiaries, Section 27 shall govern.
(m) “Employer” means any one or all of the Company and its Designated Subsidiaries.
(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
(o) “Exercise Date” means the last Trading Day of each Purchase Period. Notwithstanding the foregoing, the Administrator, in its discretion, from time to time may, prior to the Offering Date of an Offering, determine (on a uniform and nondiscriminatory basis) when the Exercise Dates will occur during a Purchase Period.
(p) “Fair Market Value” means, with respect to Common Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Administrator. Notwithstanding the foregoing, unless otherwise determined by the Administrator, the Fair Market Value of the Common Shares on a given date for purposes of the Plan shall be the volume weighted average price of the Common Shares on Canadian Stock Exchange (or such other exchange as applicable to the relevant Participant) for the five days on which Common Shares were traded immediately preceding the date in respect of which Fair Market Value is to be determined. In all other cases, Fair Market Value shall mean the amount which is determined by the Administrator, in good faith, to be the fair market value of one Common Share.
(q) “Fiscal Year” means the fiscal year of the Company.
(r) “New Exercise Date” means a new Exercise Date set by shortening any Offering Period then in progress.
(s) “Offering” means the grant of Options to purchase Common Shares under the Plan to Eligible Employees. The terms of each Offering need not be identical; provided, however, that the rights and privileges established with respect to an Offering will apply in an identical manner to all employees of the Company and each Designated Subsidiary that are granted Options under the Offering.
(t) “Offering Date” means the first Trading Day of each Offering Period.
(u) “Offering Period” means, subject to Section 4, the period of time the Administrator may determine prior to an Offering Date, for Options to be granted on such Offering Date, during which an Option granted under the Plan may be exercised, not to exceed twenty-seven (27) months.
(v) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(w) “Option” means an option to purchase Common Shares during an Offering Period granted pursuant to the Plan.
(x) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(y) “Participant” means an Eligible Employee who holds an outstanding Option granted pursuant to the Plan.
(z) “Plan” means this Ascend Wellness Holdings, Inc. 2021 Employee Stock Purchase Plan, as set forth herein and as may be amended from time to time.
(aa) “Purchase Period” means the period during an Offering Period during which Common Shares may be purchased on a Participant’s behalf in accordance with the terms of the Plan or Offering. The duration and timing of Purchase Periods may be established or changed by the Administrator at any time, in its sole discretion. Notwithstanding the foregoing, in no event may a Purchase Period exceed the duration of the Offering Period under which it is established. Unless and until the Administrator provides otherwise, the Purchase Period will have the same duration and coincide with the length of the Offering Period.
(bb) “Purchase Price” shall be determined by the Administrator (on a uniform and nondiscriminatory basis) prior to an Offering Date for all Options to be granted on such Offering Date, subject to compliance with Section 423 of the Code and Treasury regulations promulgated thereunder (or any successor rule or provision or any other Applicable Laws) or pursuant to Section 20. Unless and until the Administrator provides otherwise with respect to an Offering, the Purchase Price will be equal to eighty-five percent (85%) of the Fair Market Value of a Common Share on the Offering Date or the Exercise Date, whichever is lower. If such price contains a fraction of one tenth of one cent, the Purchase Price shall be increased to the next higher tenth of one cent.
(cc) “Securities Act” means the Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder.
(dd) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(ee) “Trading Day” means a day on which the national stock exchange upon which the Common Shares are listed is open for trading.
3. Eligibility.
(a) Offering Periods. Any individual who is an Eligible Employee on a given Offering Date of any Offering Period will be eligible to participate in the Plan, subject to the requirements of Section 5.
(b) Limitations. Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee will be granted an Option under the Plan (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the Fair Market Value of the Common Shares at the time such Option is granted) for each calendar year in which such Option is outstanding at any time.
4. Offering Periods. The Plan will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after January 15 and July 15 each year, or on such other date as the Administrator will determine, and continuing thereafter until terminated in accordance with Section 20 hereof. The first Offering Period under the Plan will be determined by the Administrator. The Administrator will have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future Offerings without shareholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter.
5. Participation. An Eligible Employee may participate in the Plan pursuant to Section 3 by (a) submitting to the Company’s payroll office (or its designee), on or before a date prescribed by the Administrator prior to an applicable Offering Date, a properly completed subscription agreement, substantially in the form of Exhibit A or such other form suggested by the Administrator, from time to time, authorizing payroll deductions in the form provided by the Administrator for such purpose, or (b) following an electronic or other enrollment procedure prescribed by the Administrator.
6. Payroll Deductions.
(a) At the time a Participant enrolls in the Plan pursuant to Section 5, he or she will elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding twenty percent (20%) of the Compensation which he or she receives on each pay day during the Offering Period; provided, however, that should a pay day occur on an Exercise Date, a Participant will have the payroll deductions made on such day applied to his or her account under the subsequent Purchase or Offering Period. A Participant’s subscription agreement will remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof. Except as may be expressly provided in the Plan, pursuant to separate sub-plan, appendix, rule or procedure as may be adopted by the Administrator, an Eligible Employee may participate in the Plan only by means of payroll deduction.
(b) Payroll deductions for a Participant will commence on the first pay day following the Offering Date and will end on the last pay day prior to the Exercise Date of such Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10 hereof.
(c) All payroll deductions made for a Participant will be credited to his or her account under the Plan and will be withheld in whole percentages only. A Participant may not make any additional payments into such account. No interest shall be paid to any Participant or credited under the Plan (except as may be required by applicable local laws).
(d) A Participant may discontinue his or her participation in the Plan as provided in Section 10 by (i) properly completing and submitting to the Company’s payroll office (or its designee), on or before a date prescribed by the Administrator, the form provided by the Administrator for such purpose, or (ii) following an electronic or other procedure prescribed by the Administrator. Unless the Administrator provides otherwise in applicable enrollment forms, a Participant’s payroll deductions will not continue for future Offering Periods unless the Participant makes an affirmative election to continue payroll deductions for such Offering Periods. Unless the Administrator determines otherwise prior to the beginning of an Offering Period, a Participant may not increase or decrease the rate of his or her payroll deductions during the Offering Period, other than a decrease due to a discontinuance of participation. To the extent the Administrator permits changes in payroll deductions, the Administrator may, in its sole discretion, limit the nature and/or number of payroll deduction rate changes that may be made by Participants during any Offering Period.
(e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b), or if the Administrator reasonably anticipates a Participant has contributed a sufficient amount to purchase a number of Common Shares equal to or in excess of the applicable limit for such Offering Period (as set forth in Section 7 or as established by the Administrator), a Participant’s payroll deductions may be decreased to zero percent (0%) at any time during an Offering Period. Subject to Section 423(b)(8) of the Code and Section 3(b) hereof, for Participants who have had their contributions reduced due to the applicable limits on the maximum number of Common Shares that may be purchased in any Offering Period, payroll deductions will recommence at the rate originally elected by the Participant effective as of the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 10.
(f) At the time the Option is exercised, in whole or in part, or at the time some or all of the Common Share issued under the Plan is disposed of, the Participant must make adequate provision for the Company’s or the Employer’s federal, state, or any other tax liability payable to any authority, national insurance, Social Security or other tax withholding obligations, if any, which arise upon the exercise of the Option or the disposition of the Common Shares. At any time, the Company or the Employer may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company or the Employer to meet applicable withholding obligations, including any withholding required to make available to the Company or the Employer any tax deductions or benefits attributable to sale or early disposition of Common Shares by the Eligible Employee.
(g) Notwithstanding any provision of the Plan, no payroll deductions may commence during an Offering Period unless the Common Shares to be issued upon exercise of the Options granted in the Offering are covered by an effective registration statement pursuant to the Securities Act and applicable state securities laws or may be issued pursuant to an applicable exemption from such registration requirements. If on an Offering Date the Common Shares are not so registered or no such exemption is available, no payroll deductions shall take effect on such Offering Date, and the Offering Date shall be delayed until the Common Shares are subject to such an effective registration statement or an applicable exemption is available.
(h) Notwithstanding any other provisions of this Plan, if a Blackout Period is in effect, an Eligible Employee subject to the Blackout Period (a) may not enroll (as set forth in Section 5) until after the end of the Blackout Period, and (b) may not voluntarily discontinue his or her participation in this Plan (as set forth in Section 6) until after the end of the Blackout Period.
7. Grant of Option. On the Offering Date of each Offering, each Eligible Employee participating in such Offering will be granted an Option to purchase on each Exercise Date during the applicable Offering Period (at the applicable Purchase Price) up to a number of Common Shares determined by dividing such Eligible Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the Eligible Employee’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event will an Eligible Employee be permitted to purchase during each Offering Period more than ten thousand (10,000) Common Shares (subject to any adjustment made by the Administrator and announced prior to the scheduled beginning of the first Offering Period to be affected thereafter or pursuant to Section 19), and provided further that such purchase will be subject to the limitations set forth in Sections 3(b) and 13. The Eligible Employee may accept the grant of such Option by electing to participate in the Plan in accordance with the requirements of Section 5. The Administrator may, for future Offerings, increase or decrease, in its absolute discretion, the maximum number of Common Shares that an Eligible Employee may purchase during each Purchase Period or Offering Period. Exercise of the Option will occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10. The Option will expire on the last day of the Offering Period. Without limiting he generality of the foregoing and for greater certainty, the Administrator may limit the number or value of Common Shares available during any 12-month period by Participants in specified countries or working for specified Designated Subsidiaries, if necessary to avoid securities law filings, achieve tax objectives or to meet other Company compliance objectives in particular non-U.S. jurisdictions.
8. Exercise of Option.
(a) Unless a Participant withdraws from the Plan as provided in Section 10, his or her Option will be exercised automatically on the Exercise Date, and the maximum number of full Common Shares subject to the Option will be purchased for such Participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional Common Shares will be purchased; any payroll deductions accumulated in a Participant’s account which are not sufficient to purchase a full Common Share will be retained in the Participant’s account for the subsequent Offering, subject to earlier withdrawal by the Participant as provided in Section 10. Any other funds left over in a Participant’s account after the Exercise Date will be returned to the Participant. During a Participant’s lifetime, a Participant’s Option to purchase Common Shares hereunder is exercisable only by him or her.
(b) Notwithstanding any contrary Plan provision, if the Administrator determines that, on a given Exercise Date, the number of Common Shares with respect to which Options are to be exercised may exceed (i) the number of Common Shares that were available for sale under the Plan on the Offering Date of the applicable Offering Period, or (ii) the number of Common Shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion provide that the Company will make a pro rata allocation of the Common Shares available for purchase on such Offering Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising Options to purchase Common Shares on such Exercise Date, and either (A) continue all Offering Periods then in effect or (B) terminate any or all Offering Periods then in effect pursuant to Section 20. The Company may make a pro rata allocation of the Common Shares available on the Offering Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Common Shares for issuance under the Plan by the Company’s shareholders subsequent to such Offering Date.
9. Delivery. As soon as reasonably practicable after each Exercise Date on which a purchase of Common Shares occurs, the Company will arrange the delivery to each Participant, as appropriate, of the Common Shares purchased upon exercise of his or her Option in a form determined by the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. The Company may permit or require that Common Shares be deposited directly with a broker designated by the Company or to a designated agent of the Company, and the Company may utilize electronic or automated methods of Common Share transfer. The Company may require that Common Shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such Common Shares. All certificates for Common Shares delivered pursuant to the Plan and all Common Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with U.S. and non-U.S. federal, state, provincial or local securities or other laws, rules and regulations and the rules of any securities exchange or automated quotation system on which the Common Shares are listed, quoted, or traded. No Participant will have any voting, dividend, or other stockholder rights with respect to Common Shares subject to any Option granted under the Plan until such Common Shares have been purchased and delivered to the Participant as provided in this Section 9. Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company may, in lieu of delivering to any Participant certificates evidencing Common Shares issued in connection with any Option, record the issuance of Common Shares in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).
10. Withdrawal.
(a) Pursuant to procedures established by the Administrator, a Participant may withdraw all but not less than all of the payroll deductions credited to his or her account and not yet used to exercise his or her Option under the Plan at any time by (i) submitting to the Company’s payroll office (or its designee) a written notice of withdrawal in the form prescribed by the Administrator for such purpose, or (ii) following an electronic or other withdrawal procedure prescribed by the Administrator. The Administrator may impose a deadline before an Exercise Date for withdrawing. All of the Participant’s payroll deductions credited to his or her account will be paid to such Participant as promptly as practicable after receipt of notice of withdrawal and such Participant’s Option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of Common Shares will be made for such Offering Period. If a Participant withdraws from an Offering, payroll deductions will not resume at the beginning of the succeeding Offering Period unless the Participant re-enrolls in the Plan in accordance with the provisions of Section 5 hereof.
(b) A Participant’s withdrawal from an Offering will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offerings which commence after the termination of the Offering from which the Participant withdraws.
11. Termination of Employment. Upon a Participant’s ceasing to be an Eligible Employee, for any reason, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such Participant’s account during the Offering Period but not yet used to purchase Common Shares under the Plan will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such Participant’s Option will be automatically terminated. For greater certainty and without limiting the generality of the foregoing, the date of termination of the Participant's employment for purposes of this Section 11 shall be the date such termination is stated effective in the notice of termination provided by the Company or a Designated Subsidiary to the Participant, and shall not be extended by and shall not include any period during which the Participant is in receipt of, or is eligible to receive, any statutory, contractual or common law notice or compensation in lieu thereof of severance payments following the actual date of termination.
12. Interest. No interest will accrue on the payroll deductions of a Participant in the Plan.
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of Common Shares which will be made available for sale under the Plan will be four (4) million Common Shares.
(b) Until the Common Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a Participant will only have the rights of an unsecured creditor with respect to such Common Shares, and no right to vote or receive dividends or any other rights as a shareholder will exist with respect to such Common Shares.
(c) Common Shares to be delivered to a Participant under the Plan will be registered in the name of the Participant.
14. Administration. The Plan will be administered by the Board or a Committee appointed by the Board, which Committee will be constituted to comply with Applicable Laws. As of the date hereof, the Compensation Committee of the Board is the Administrator of the Plan. The Administrator will have full and exclusive discretionary authority, subject to, and within the limitations of, the express provisions of the Plan:
(a) To determine how and when Options to purchase Common Shares shall be granted and the provisions of each Offering of such Options (which need not be identical);
(b) To designate from time to time which Subsidiaries of the Company shall be eligible to participate in the Plan as Designated Subsidiaries;
(c) To construe, interpret and apply the terms of the Plan and, in the exercise of this power, correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective;
(d) To determine eligibility and to adjudicate all disputed claims filed under the Plan;
(e) To adopt rules or procedures relating to the operation and administration of the Plan, including, without limitation, rules and procedures regarding eligibility to participate in the Plan or any Offering, the definition of Compensation, handling of payroll deductions, making of contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, withholding procedures and handling of stock certificates which vary with local requirements and such other procedures as are necessary to accommodate the specific requirements of local laws and procedures for jurisdictions outside of the United States;
(f) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside the United States; and
(g) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company and its Subsidiaries and to carry out the intent that the Plan be treated as a tax-qualified employee stock purchase plan.
Every finding, decision and determination made by the Administrator will, to the full extent permitted by law, be final and binding upon all parties. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revert to the Board some or all of the powers previously delegated. Further, to the extent not prohibited by Applicable Laws, the Board or Committee may, from time to time, delegate some or all of its authority under the Plan to one or more officers of the Company or other persons or groups of persons as it deems necessary, appropriate or advisable under conditions or limitations that it may set at or after the time of the delegation. Whether or not the Board has delegated administration of the Plan to a Committee, the Board shall have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.
15. Death of Participant. In the event of the death of a Participant, the Company shall, subject to local law, deliver any remaining cash balance to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such cash balance to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. All Common Shares held by a broker or designated agent of the Company shall be delivered, subject to local law, to such beneficiary named under the brokerage or agent account (or if there is no such beneficiary, as provided under the account).
16. Transferability. Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an Option or to receive Common Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition will be without effect, except that the Company may treat such act as an election to withdraw from an Offering in accordance with Section 10 hereof.
17. Use of Funds. Except as otherwise required by local law and/or Section 18 herein, the Company may use all payroll deductions received or held by it under the Plan for any corporate purpose, and the Company will not be obligated to segregate such payroll deductions. Until Common Shares are issued, Participants will only have the rights of an unsecured creditor with respect to such Common Shares.
18. Reports. Individual bookkeeping accounts will be maintained for each Participant in the Plan. Statements of account will be given to participating Eligible Employees at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number Common Shares purchased and the remaining cash balance, if any. Notwithstanding the foregoing, all payroll deductions received under the Plan shall be deposited with the general funds of the Company except where applicable law requires that contributions be deposited with an independent third party.
19. Adjustments, Dissolution, Liquidation, Merger or Change in Control.
(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Common Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Shares occurs, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Common Shares which may be delivered under the Plan, the Purchase Price per share and the number of Common Shares covered by each Option under the Plan which has not yet been exercised, and the numerical limits of Sections 7 and 13 hereof.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a New Exercise Date, and will terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date will be before the date of the Company’s proposed dissolution or liquidation. The Administrator will notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
(c) Corporate Transaction. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Common Shares or other securities of the Company or any other similar corporate transaction or event involving the Company, each outstanding Option will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Offering Period with respect to which such Option relates will be shortened by setting a New Exercise Date and will end on the New Exercise Date. The New Exercise Date will occur before the date of the Company’s proposed corporate transaction. The Administrator will notify each Participant in writing prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Administrator, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Administrator, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or upon completion of the purchase of Common Shares on the next Exercise Date (which may be sooner than originally scheduled, if determined by the Administrator in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to Section 19). If the Offering Periods are terminated prior to expiration, all amounts then credited to Participants’ accounts which have not been used to purchase Common Shares will be returned to the Participants (without interest thereon, except as otherwise required under local laws) as soon as administratively practicable.
(b) Without stockholder consent and without limiting Section 20(a), the Administrator will be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan.
(c) In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) amending the Plan to conform with the safe harbor definition under FASB ASC 718-50-25-1, including with respect to an Offering Period underway at the time;
(ii) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;
(iii) shortening any Offering Period by setting a New Exercise Date or terminating any outstanding Offering Period and returning contributions made through such date to Participant, including an Offering Period underway at the time of the Administrator action;
(iv) allocating Common Shares;
(v) reducing the maximum percentage of Compensation a Participant may elect to set aside as payroll deductions; and
(vi) reducing the maximum number of Common Shares a Participant may purchase during any Offering Period or Purchase Period.
Such modifications or amendments will not require stockholder approval or the consent of any Plan Participants.
21. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Common Shares. Common Shares will not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such Common Shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act, the Exchange Act and the requirements of any stock exchange upon which the Common Shares may then be listed, and will be further subject to the approval of counsel for the Company with respect to such compliance. Without limiting the generality of the foregoing, the Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Option, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.
As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Common Shares are being purchased only for investment and without any present intention to sell or distribute such Common Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
23. California Provisions. In addition to the other provisions of the Plan (and notwithstanding any other provision of the Plan to the contrary), the following limitations and requirements will apply to any award granted to a Participant in reliance on Section 25102(o) of the California Corporations Code.
(a) The following rules shall apply to any Option in the event of termination of the Participant’s service to the Company:
(i) If such termination was for reasons other than death, “Permanent Disability” (as defined below), or cause, the Participant shall have at least 30 days after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date.
(ii) If such termination was due to death or Permanent Disability, the Participant shall have at least six months after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date.
“Permanent Disability” for purposes of this Section 23 shall mean the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Company or any Affiliate because of the sickness or injury of the Participant.
(b) Notwithstanding anything to the contrary in the Plan, the Committee or the Board shall in any event make such adjustments as may be required by Section 25102(o) of the California Corporations Code.
(c) Notwithstanding anything stated herein to the contrary, no Option shall be exercisable on or after the tenth anniversary of the date of grant and any subscription agreement shall terminate on or before the tenth anniversary of the date of grant.
(d) Notwithstanding anything stated herein to the contrary, all Options must be granted within ten years from the date of adoption of the Plan or the date the Plan is approved by the shareholders of the Company, whichever is earlier.
(e) The Company shall furnish summary financial information (audited or unaudited) of the Company’s financial condition and results of operations, consistent with the requirements of applicable law, at least annually to each California Participant during the period such Participant has one or more awards outstanding, and in the case of an individual who acquired Common Shares pursuant to the Plan, during the period such Participant owns such Common Shares; provided, however, the Company shall not be required to provide such information if (i) the issuance is limited to key persons whose duties in connection with the Company assure their access to equivalent information or (ii) the Plan or any award agreement complies with all conditions of Rule 701 under the Securities Act; provided that for purposes of determining such compliance, any registered domestic partner shall be considered a “family member” as that term is defined in Rule 701 under the Securities Act.
24. Term of Plan. The Plan will become effective upon its adoption by the Board, but no Offerings will be treated as qualified under Section 423 of the Code unless the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after of its approval by the Board. The Plan will continue in effect until terminated under Section 20 or until no Options are available for grants hereunder.
25. Shareholder Approval. The Plan’s qualified status under Section 423 of the Code will be contingent upon approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
26. Covenants of the Company. The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell Common Shares upon exercise of the Options. If, after commercially reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Common Shares under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Shares upon exercise of such Options unless and until such authority is obtained.
27. Not a Contract of Employment. The Plan and Offerings do not constitute an employment contract. Nothing in the Plan or in any Offering shall in any way alter the at will nature of a Participant’s employment or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue in the employ of the Company or a Subsidiary, or on the part of the Company or a Subsidiary to continue the employment of a Participant.
28. International Participants. The Committee shall have the power and authority to allow any of the Company’s Subsidiaries other than Designated Subsidiaries to adopt and join in a portion of this Plan for employees of any such Subsidiary who are generally not subject to income taxation by the United States, and such portion is not intended to comply with Section 423 of the Code (the “Non-U.S. Portion”). If the Committee allows any Subsidiary other than a Designated Subsidiary to adopt the Non-U.S. Portion of the Plan, the Committee may allow certain employees of such Subsidiaries who work or reside outside of the United States an opportunity to acquire Common Shares in accordance with such special terms and conditions as the Committee may adopt from time to time, which terms and conditions may modify the terms and conditions set forth elsewhere in this Plan, with respect to such employees. Without limiting the authority of the Committee, the special terms and conditions that may be adopted with respect to any foreign country need not be the same for all foreign countries; and may include but are not limited to the right to participate, procedures for elections to participate, the payment of any interest with respect to amounts received from or credited to accounts held for the benefit of such employees who elect to participate, the purchase price of any Common Shares to be acquired, the length of any Offering Period, the maximum amount of contributions, credits or shares that may be acquired by any such participating employees, procedures regarding handling of payroll deductions, conversion of local currency, payroll tax withholding procedures, tax reporting and handling of share certificates which vary with local requirements and a participating employee’s rights in the event of his or her death, disability, withdrawal from participation in the purchase of shares under the Non-U.S. Portion of the Plan, or termination of employment. Any rights granted under the Non-U.S. Portion of the Plan to must be limited to non-resident alien individuals employed by Subsidiaries that are not Designated Subsidiaries and operate outside the United States, such that the grant is treated under section 1.409A-1(b)(8) of the Treasury Regulations as not providing deferred compensation for such individuals.
29. Tax Withholding. At the time of any taxable event that creates a withholding obligation for the Company, a Designated Subsidiary or a Subsidiary, the Participant will make adequate provision for any U.S. and non-U.S. federal, state, provincial and/or local taxes (including, without limitation, income tax, social insurance contributions, fringe benefit tax, employment tax, stamp tax and any employer tax liability which has been transferred to a Participant) for which a Participant is liable in connection with his or her participation in the Plan.. In their sole discretion, and except as otherwise determined by the Administrator, the Company or a Subsidiary that employs or employed the Participant may satisfy their obligations to withhold such tax-related items by (a) increased withholding from the Participant’s wages or other compensation, (b) withholding a sufficient whole number Common Shares otherwise issuable following exercise of the Option having an aggregate value sufficient to pay the aforementioned tax-related items required to be withheld with respect to the Option and/or shares, (c) withholding from proceeds from the sale of Common Shares issued upon exercise of the Option, either through a voluntary sale or a mandatory sale arranged by the Company, or (d) cash payments to the Company or a Designated Subsidiary or a Subsidiary, as applicable, by a Participant.
30. Governing Law. The internal law, and not the law of conflicts, of the State of Delaware shall govern all questions concerning the validity, construction and effect of the Plan or any Option, and any rules and regulations relating to the Plan or any Option.
EXHIBIT A to 2021 Employee Stock Purchase Plan
ASCEND WELLNESS HOLDINGS, INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
1. I, _________________________, hereby elect to participate in the Ascend Wellness Holdings, Inc. 2021 Employee Stock Purchase Plan (the “Plan”), and subscribe to purchase the Company’s Common Shares in accordance with this Subscription Agreement and the Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of ___% of my Compensation on each payday (from 0% to 20%) during the Offering Period in accordance with the Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions will be accumulated for the purchase of Common Shares at the applicable Purchase Price determined in accordance with the Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option and purchase Common Shares under the Plan.
4. I have received a copy of the complete Plan and its accompanying prospectus. I understand that my participation in the Plan is in all respects subject to the terms of the Plan.
5. Common Shares purchased for me under the Plan should be issued in my name.
6. I understand that if I dispose of any shares received by me pursuant to the Employee Stock Purchase Plan within two (2) years after the Offering Date (the first day of the Offering Period during which I purchased such shares) or one (1) year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the shares at the time such shares were purchased by me over the price which I paid for the shares. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Shares by me.
7. If I dispose of such shares at any time after the expiration of the two (2)-year and one (1)-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (a) the excess of the fair market value of the shares at the time ofany such disposition over the purchase price which I paid for the shares, or (b) 15% of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain.
8. I hereby agree to be bound by the terms of the Plan and the applicable Offering document. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan.
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT WILL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
EXHIBIT B to 2021 Employee Stock Purchase Plan
ASCEND WELLNESS HOLDINGS, INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned Participant in the Offering Period of the Ascend Wellness Holdings, Inc. 2021 Employee Stock Purchase Plan (the “Plan”) that began on _____________________ (the “Offering Date”), hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all of the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of Common Shares in the current Offering Period and the undersigned will be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement.
Appendix C
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): September 28, 2021
ASCEND WELLNESS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
1411 Broadway
16th Floor
New York, NY 10018
(646) 661-7600
(Registrant’s telephone number, including area code)
n/a
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).
Securities registered pursuant to Section 12(b) of the Act: None
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 þ
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 4.01 Changes in Registrant’s Certifying Accountant.
(a) Dismissal of Independent Registered Public Accounting Firm.
On September 28, 2021, Ascend Wellness Holdings, Inc. (the “Company”) notified Marcum LLP (“Marcum”) that it was being dismissed as the Company’s independent registered public accounting firm effective September 28, 2021. The decision to dismiss Marcum as the Company’s independent registered public accounting firm was recommended by the Company’s audit committee (the “Audit Committee”) and approved by the Company’s board of directors (the “Board”).
Marcum’s reports on the consolidated financial statements of Ascend Wellness Holdings, LLC as of and for the years ended December 31, 2020, and 2019 did not contain any adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the two fiscal years ended December 31, 2020, and the subsequent interim periods through September 28, 2021, there were no (i) disagreements, within the meaning of Item 304(a)(1)(iv) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (“Regulation S-K”), and the related instructions thereto, with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject matter of the disagreements in connection with its reports; or (ii) “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto, except certain material weaknesses in the Company’s internal control over financial reporting, as discussed in the Form 10-Q for the quarterly periods ended March 31, 2021 and June 30, 2021.
The Company provided Marcum with the disclosures under this Item 4.01 of Form 8-K and requested Marcum to furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements madeforfeiture, reacquisition by the Company, intermination or cancellation, shall again be available for granting Incentive Stock Options under this Item 4.01 of Form 8-K and, if not, stating the respects in which it does not agree. Marcum’s letter is filed as Exhibit 16.1 to this Current Report on Form 8-K.
(b) Appointment of New Independent Registered Public Accounting Firm.
On September 28, 2021, the Board approved, on the recommendation by the Audit Committee, the appointment of Macias Gini and O’Connell LLP (“MGO”) as the Company’s new independent registered public accounting firm for the fiscal year ending December 31, 2021, effective immediately. During the Company’s two most recent fiscal years ended December 31, 2020, and 2019, and the subsequent interim periods through September 28, 2021, neither the Company nor anyone acting on its behalf consulted with MGO with respect to: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and MGO did not provide either a written report or oral advice to the Company that MGO concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii) (a) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or (b) a “reportable event” as described in Item 304(a)(1)(v) of Regulation S-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
| Dated: March 9. 2023 | | | Ascend Wellness Holdings, Inc. |
| ||||
| | | By: /s/ Daniel Neville | |
Name: Daniel Neville Title: Chief Financial Officer | |
October 1, 2021
Office of the Chief Accountant
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Ladies and Gentlemen:
We have read the statements made by Ascend Wellness Holdings, Inc. included under Item 4.01 of its Form 8-K dated September 28, 2021. We agree with the statements concerning our Firm under Item 4.01 in such Form 8-K. We are not in a position to agree or disagree with other statements of Ascend Wellness Holdings, Inc. contained therein.
Very truly yours,
/s/ Marcum LLP
Marcum LLP
New York, NY
C-4