UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant x
Filed
by a Party other than the Registrant ¨
Check the appropriate box:
| ¨ | Preliminary
Proxy Statement |
| ¨ | Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive
Proxy Statement |
| ¨ | Definitive
Additional Materials |
| ¨ | Soliciting
Material under §240.14a-12 |
Ascend
Wellness Holdings, Inc.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| x | No
fee required. |
| ¨ | Fee
paid previously with preliminary materials. |
| ¨ | Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and
0-11. |
ASCEND WELLNESS HOLDINGS, INC.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON
FRIDAY, MAY 6, 2022
TO THE HOLDERS OF SHARES OF COMMON STOCK:
Notice
is hereby given that an annual meeting (the “Meeting”) of the holders of shares of common stock of Ascend Wellness
Holdings, Inc. (the “Company”) will be held in person and by way of a live audio webcast at https://web.lumiagm.com/218648002,
on Friday, May 6, 2022 at 10:00 a.m. (EDT) for the following purposes:
| 1. | to elect directors of the Company; |
| 2. | to ratify the appointment of Macias Gini &
O'Connell LLP as the independent registered public accounting firm of the Company; |
| 3. | to approve the adoption of the Company’s 2021 stock incentive
plan; |
| 4. | to approve the adoption of the Company’s 2021 employee stock
purchase plan; and |
| 5. | to transact such other business as may properly be brought before
the Meeting or any adjournment(s) or postponement(s) thereof. |
The accompanying proxy statement
(the “proxy statement”) provides additional information relating to the matters to be dealt with at the Meeting, including
detailed instructions for the Meeting, and forms a part of this Notice of Meeting.
The Board of Directors of
the Company has fixed March 15, 2022 as the record date for the Meeting. Stockholders of record at the close of business on this
date are entitled to notice of the Meeting and to vote thereat or at any adjournment or postponement thereof.
Meeting Format
The health and safety of
the Company’s employees, directors and stockholders are of the utmost importance and, in light of the growing risks emerging from
the COVID-19 pandemic, the Company will be hosting an entirely virtual annual meeting of stockholders in 2022. Stockholders
will not be able to attend the Meeting in person.
The
Meeting will be conducted as a virtual-only meeting of stockholders by way of a live audio webcast through the Lumi/AST Virtual AGM platform
(the “Virtual Platform”). Registered stockholders can attend the Meeting online at https://web.lumiagm.com/218648002
by clicking “I have a control number” and then enter your unique 13-digit control number located on your form of proxy
and the password “ascend2022” (case sensitive). You will have the ability to submit questions during the Meeting via the
Virtual Platform. Beneficial stockholders (being stockholders who hold their shares of common stock through a broker, investment dealer,
bank, trust company, custodian, nominee or other intermediary) who have not duly appointed themselves as proxyholder will be able to
attend as a guest and view the webcast but not be able to participate or vote at the Meeting.
If you are a registered stockholder
and choose to vote at the Meeting rather than through the use of the provided form of proxy and below instructions, or should you desire
to vote at the Meeting after completing and submitting the form of proxy, thereby overriding your selections contained therein, you are
able to do so through the Virtual Platform by voting on the left-hand side of the screen or as otherwise directed during the Meeting,
which will become available to you when the voting portion of the Meeting opens. Your results will be instantaneously tabulated and included
in the final Scrutineer’s Report, which will become available to the Company once the voting portion of the Meeting has closed.
See “Instructions for the Meeting” on page 5 of the proxy statement for detailed instructions on how to vote at the
Meeting.
If a stockholders receives
more than one form of proxy because such holder owns shares of common stock of different classes or registered in different names or
addresses, each form of proxy should be completed and returned. If you are a registered stockholder and receive these materials through
your broker or through another intermediary, please complete and return the form of proxy or voting instruction form in accordance with
the instructions provided to you by your broker or by the other intermediary.
Notice and Access
The Company has elected to
use the notice-and-access provisions under National Instrument 54-101 – Communication with Beneficial Owners of Securities of
a Reporting Issuer (the “Notice-and-Access Provisions”). The Notice-and-Access Provisions are a set of rules developed
by the Canadian Securities Administrators that reduce the volume of materials that must be physically mailed to stockholders by allowing
the Company to post the proxy statement and any additional materials online. The notice you received regarding the Internet availability
of our proxy materials (the “Notice”) provides instructions on how to access our proxy materials and cast your vote
via the Internet, by telephone or by mail.
Stockholders will still receive
the Notice and a form of proxy and may choose to receive a paper copy of (i) the proxy statement; (ii) the Company’s
Annual Report on Form 10-K, together with any document, or the pertinent pages of any document, incorporated therein by reference,
and/or (iii) the Company’s audited financial statements for the most recently completed financial year, together with the
report of the auditor thereon, and any interim financial statements of the Company subsequent to the financial statements for the Company’s
most recently completed financial year.
The Company will not use
the procedure known as “stratification” in relation to the use of Notice-and-Access Provisions. Stratification occurs when
a reporting issuer using the Notice-and-Access Provisions provides a paper copy of the proxy statement to some stockholders with this
notice package. In relation to the Meeting, all stockholders will receive the required documentation under the Notice-and-Access Provisions,
which will not include a paper copy of the proxy statement.
Please
review the proxy statement carefully and in full prior to voting, as the proxy statement has been prepared to help you make an informed
decision on the matters to be acted upon. The proxy statement and other meeting materials are available on the website of the Company’s
transfer agent, Odyssey Trust Company at https://odysseytrust.com/client/ascend-wellness-holdings-inc/, and under the Company’s
SEDAR profile at www.sedar.com and on EDGAR at www.sec.gov. Any stockholder who wishes to receive a paper copy of the proxy statement
should contact Odyssey Trust Company (Canada) at (888) 290-1175 (within North America) or (587) 885-0960 (outside of North America) or
ascendwellness@odysseytrust.com. Any requests for material received before the meeting date should be fulfilled within five business
days. Stockholders may also use the toll-free number noted above to obtain additional information about the Notice-and-Access Provisions.
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 10:00 a.m. (EDT) on May 4, 2022, or if the Meeting is adjourned, no later than 10:00 a.m. on the second
business day preceding the day to which the Meeting is adjourned.
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 Virtual Platform beginning
at 9:00 a.m. (EDT) on May 6, 2022. The Meeting will begin promptly at 10:00 a.m. (EDT) on May 6, 2022. If you encounter
any difficulties with the Virtual Platform on the day of the Meeting, please go to https://www.lumiglobal.com/faq for frequently asked
questions and click on the support button for assistance or please call Odyssey at (888) 290-1175 (within North America) or (587) 885-0960
(outside of North America). Support will be available starting at 7:00 a.m. (EDT) on May 6, 2022 and will remain available
until the Meeting has finished.
The proxy statement provides
additional detailed information relating to the matters to be dealt with at the Meeting and is supplemental to, and expressly made a
part of, this Notice of Meeting. Additional information about the Company and its financial statements are also available under the Company's
SEDAR profile at www.sedar.com and profile on the SEC’s website at www.sec.gov.
Dated at New York, New York, USA this 25th day
of March, 2022.
| |
BY ORDER OF THE BOARD |
| |
|
| |
/s/ Abner Kurtin |
| |
Chair and Chief Executive Officer |
PROXY STATEMENT OF ASCEND
WELLNESS HOLDINGS, INC.
(the “proxy statement”)
TABLE OF CONTENTS
PROXY STATEMENT
The
information contained in this proxy statement (“proxy statement”) is furnished in connection with the solicitation
of proxies to be used at the annual meeting of stockholders of Ascend Wellness Holdings, Inc. (the “Company”)
to be held by way of a live audio webcast through the Lumi/Odyssey Virtual AGM platform (the “Virtual Platform”) at
https://web.lumiagm.com/218648002, password “ascend2022” (case-sensitive), on Friday, May 6, 2022 at 10:00 a.m. (EDT)
(the “Meeting”), and at all adjournments thereof, for the purposes set forth in the accompanying Notice of Meeting.
The health and safety of
the Company’s employees, directors and stockholders are of the utmost importance and, in light of the growing risks emerging from
the novel coronavirus (“COVID-19”) pandemic, the Company will be hosting an entirely virtual annual meeting of stockholders
in 2022.
The
Meeting will be conducted solely as a virtual-only meeting of stockholders via a live audio webcast through the Virtual Platform. Registered
stockholders or duly appointed proxyholders can attend the Meeting online at https://web.lumiagm.com/218648002 by clicking “I
have a control number” and entering your unique 13-digit control number located on your form of proxy, followed by the password
“ascend2022” (case-sensitive). You will have the ability to submit questions during the Meeting via the Virtual Platform.
See “Instructions for the Meeting,” below. It is expected that the solicitation will be made primarily by mail on or about
March 25, 2022, but proxies may also be solicited personally by directors, officers or regular employees of the Company. The
solicitation of proxies by this proxy statement is being made by or on behalf of management of the Company. The total cost of the
solicitation will be borne by the Company.
Except as otherwise indicated,
information in this proxy statement is given as of March 14, 2022.
NOTICE-AND-ACCESS
The Company has elected to
use the notice-and-access provisions under National Instrument 54-101 – Communication with Beneficial Owners of Securities of
a Reporting Issuer (the “Notice-and-Access Provisions”). The Notice-and-Access Provisions are a set of rules developed
by the Canadian Securities Administrators that reduce the volume of materials that must be physically mailed to stockholders by allowing
the Company to post the proxy statement and any additional materials online. The notice you received regarding the Internet availability
of our proxy materials (the “Notice”) provides instructions on how to access our proxy materials and cast your vote
via the Internet, by telephone or by mail.
Stockholders’ access
to our proxy materials via the Internet is more environmentally friendly as it will help reduce paper use and will also reduce the cost
of printing and mailing the proxy materials to stockholders. Stockholders will still receive the Notice and a form of proxy and may choose
to receive a paper copy of (i) the proxy statement; (ii) the Company’s Annual Report on Form 10-K, together with
any document, or the pertinent pages of any document, incorporated therein by reference, and/or (iii) the Company’s audited
financial statements for the most recently completed financial year, together with the report of the auditor thereon, and any interim
financial statements of the Company subsequent to the financial statements for the Company’s most recently completed financial
year.
Please
review the proxy statement carefully and in full prior to voting, as the proxy statement has been prepared to help you make an informed
decision on the matters to be acted upon. The proxy statement and other meeting materials are available on the website of the Company’s
transfer agent, Odyssey Trust Company at https://odysseytrust.com/client/ascend-wellness-holdings-inc/, and under the Company’s
SEDAR profile at www.sedar.com and on EDGAR at www.sec.gov. Any stockholder who wishes to receive a paper copy of the proxy statement
should contact Odyssey Trust Company (Canada) at (888) 290-1175 (within North America) or (587) 885-0960 (outside of North America) or
ascendwellness@odysseytrust.com. Any requests for material received before the meeting date should be fulfilled within three business
days. Stockholders may also use the toll-free number noted above to obtain additional information about the Notice-and-Access Provisions.
The Company will not use
the procedure known as “stratification” in relation to the use of Notice-and-Access Provisions. Stratification occurs when
a reporting issuer using the Notice-and-Access Provisions provides a paper copy of the proxy statement to some stockholders with this
notice package. In relation to the Meeting, all stockholders will receive the required documentation under the Notice-and-Access Provisions,
which will not include a paper copy of the proxy statement.
The holders of a majority
of the voting power of the stock issued and outstanding shall constitute a quorum for the transaction of business at all meetings of
stockholders. In the event that a quorum is not present at the time fixed for holding the Meeting, the Meeting shall stand adjourned
to such date and to the same day in the next week at the same time and place.
APPOINTMENT AND REVOCATION
OF PROXIES
The persons named in the
form of proxy accompanying this proxy statement are officers and/or directors of the Company (the “Nominees”). A
stockholder of the Company has the right to appoint a person other than the persons specified in such form of proxy and who need not
be a stockholder of the Company to attend and act for the stockholder and on the stockholder’s behalf at the Meeting. Such
right may be exercised by striking out the names of the persons specified in the proxy, inserting the name of the person to be appointed
in the blank space provided in the proxy, signing the proxy and returning it in the reply envelope by mail, or submitting it through
the Internet, in the manner set forth in the accompanying Notice of Meeting.
Stockholders who wish to
appoint a person other than the Nominees identified in the form of proxy or voting instruction form (including a non-registered stockholder
who wishes to appoint themselves to attend the Meeting) must carefully follow the instructions in the attached proxy statement and on
their form of proxy or voting instruction form. These instructions include the additional step of registering such proxyholder with our
transfer agent, Odyssey Trust Company (“Odyssey”), after submitting the form of proxy or voting instruction form.
Failure to register the proxyholder with Odyssey will result in the proxyholder not receiving a control number to participate in the
Meeting and only being able to attend as a guest. Guests will be able to listen to the Meeting but will not be able to vote.
You must complete the additional
step of registering the proxyholder by emailing Odyssey at ascendwellness@odysseytrust.com by no later than 10:00 a.m. (EDT) on
May 4, 2022.
A stockholder of the Company
who has given a proxy may revoke it by an instrument in writing, including another completed form of proxy, executed by the stockholder
or the stockholder’s attorney authorized in writing, deposited at the registered office of the Company, or at the offices of Odyssey
by mail to 702 - 67 Yonge Street, Toronto, ON M5E 1J8 or by fax to (800) 517-4553 or by email to proxy@odysseytrust.com, or by internet
voting through https://login.odysseytrust.com/pxlogin, up to 12:00 p.m. (EDT) on the third business day preceding the date of the
Meeting, or any adjournment thereof.
VOTING OF SHARES REPRESENTED
BY MANAGEMENT PROXIES
The Nominees named in the
enclosed form of proxy will vote the shares of common stock in respect of which they are appointed by proxy on any ballot that may be
called for in accordance with the instructions thereon. If a stockholder of the Company specifies a choice with respect to any matter
to be acted upon, the shares will be voted accordingly. In the absence of such instructions, such shares will be voted in favor of
each of the matters referred to herein.
The enclosed form of proxy
confers discretionary authority upon the Nominees named therein with respect to amendments to or variations of matters identified in
the Notice of Meeting and with respect to other matters, if any, which may properly come before the Meeting. At the date of this proxy
statement, the management of the Company knows of no such amendments, variations, or other matters to come before the Meeting. However,
if any other matters which are not now known to management should properly come before the Meeting, the proxy will be voted on such matters
in accordance with the best judgement of the named proxy holder.
VOTING BY NON-REGISTERED
STOCKHOLDERS
Only registered stockholders
or the persons they appoint as their proxies are permitted to vote at the Meeting. However, in many cases, common shares owned by a person
(a “non-registered owner”) are registered either (a) in the name of an intermediary (an “Intermediary”)
that the non-registered owner deals with in respect of the common shares (Intermediaries include, among others, banks, trust companies,
securities dealers or brokers and trustees or administrators of self-administered registered savings plans, registered retirement income
funds, registered education savings plans and similar plans); or (b) in the name of a clearing agency (such as The Canadian Depository
for Securities Limited in Canada (“CDS”), or The Depository Trust Company in the United States) of which the Intermediary
is a participant.
In accordance with applicable
laws, non-registered owners who have advised their Intermediary that they do not object to the Intermediary providing their ownership
information to issuers whose securities they beneficially own (“Non-Objecting Beneficial Owners,” or “NOBOs”)
will receive by mail: (i) a voting information form which is not signed by the Intermediary and which, when properly completed and
signed by the non-registered holder and returned to the Intermediary or its service company, will constitute voting instructions (often
called a “Voting Instruction Form”); (ii) a letter from the Company with respect to the notice and access procedure;
and (iii) the request for financial statements form (collectively, the “Notice and Access Package”). The proxy
statement and the Notice of Meeting may be found at and downloaded from https://odysseytrust.com/client/ascend-wellness-holdings-inc/.
NOBOs who have standing instructions
with the Intermediary for physical copies of the proxy statement will receive by mail the Notice and Access Package, the proxy statement
and the Notice of Meeting.
Intermediaries are required
to forward the Notice and Access Package to non-registered owners who have advised their Intermediary that they object to the Intermediary
providing their ownership information (“Objecting Beneficial Owners,” or “OBOs”) unless an OBO
has waived the right to receive them. Often, Intermediaries will use service companies to forward proxy-related materials to OBOs.
Generally, OBOs who have not waived the right to receive proxy-related materials will either:
| (a) | be given a form of proxy which has already been signed by the Intermediary
(typically by a facsimile stamped signature), which is restricted as to the number and class of securities
beneficially owned by the OBO but which is not otherwise completed. Because the Intermediary has already
signed the form of proxy, this form of proxy is not required to be signed by the non-registered owner
when submitting the proxy. In this case, the OBO who wishes to vote by proxy should otherwise properly
complete the form of proxy and deliver it as specified; or |
| (b) | be given a Voting Instruction Form which the Intermediary must
follow. The OBO should properly complete and sign the Voting Instruction Form and submit it to
the Intermediary or its service company in accordance with the instructions of the Intermediary or its
service company. |
In either case, the purpose
of this procedure is to permit non-registered owners to direct the voting of the common shares they beneficially own. Should a non-registered
owner who receives either form of proxy wish to vote at the Meeting if a ballot is called, the non-registered owner should strike out
the persons named in the form of proxy and insert the non-registered owner’s name in the blank space provided. Non-registered owners
should carefully follow the instructions of their Intermediary including those regarding when and where the form of proxy or Voting Instruction
Form is to be delivered.
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.
BROKER NON-VOTES AND ABSTENTIONS
In the United States, brokers
and other intermediaries holding shares in street name for their customers are generally required to vote the shares in the manner directed
by their customers. If their customers do not give any direction, brokers may vote the securities at their discretion on routine matters,
but not on non-routine matters. Other than the proposal for the ratification of the appointment of Macias Gini and O’Connell LLP
as our auditors for the fiscal year ended December 31, 2022, all of the other matters to be voted on at the Meeting are non-routine
matters and brokers may not vote the securities held in street name for their customers in relation to these items of business without
direction from their customers.
The absence of a vote on
a non-routine matter is referred to as a broker non-vote. Any broker non-votes will have no impact in the election of directors or any
other matter to be voted on at the Meeting. For purposes of the Company’s majority voting requirements set forth in its bylaws
which apply to all matters to be voted on at the Meeting, except for the vote of directors, a broker non-vote is not considered to be
a vote withheld.
An “ABSTAIN” vote, which is available
for Proposals 2 through 4, will have the effect of a vote “AGAINST” those proposals.
DISTRIBUTION OF MEETING
MATERIALS TO NON-OBJECTING BENEFICIAL OWNERS
The
Notice and Access Package is being sent to both registered and non-registered owners of the securities using notice and access pursuant
to applicable laws. Electronic copies of the proxy statement and the Notice of Meeting may be found and downloaded from https://odysseytrust.com/client/ascend-wellness-holdings-inc/.
If you are a NOBO, and the Company or its agent has sent the Notice and Access Package directly to you, your name, address and information
about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the Intermediary
holding on your behalf.
The Company (and not the
Intermediary holding on your behalf) has assumed responsibility for (i) delivering the Notice and Access Package to you, and (ii) executing
your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.
VOTING SECURITIES AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
The authorized capital of
the Company consists of 750,000,000 shares of Class A common stock, $0.001 par value per share (“Class A Common Shares”),
100,000 shares of Class B common stock, $0.001 par value per share (“Class B Common Shares”), and 10,000,000
shares of preferred stock, $0.001 par value per share. As of March 14, 2022, the Company had issued and outstanding 173,305,018
Class A Common Shares, 65,000 Class B Common Shares, and no preferred shares.
The Company will make a list
of all persons who are registered holders of Class A Common Shares and Class B Common Shares as of the close of business on
March 15, 2022 (the “Record Date”) and the number of Common Shares registered in the name of each person on that
date. Each stockholder as of the Record Date is entitled to one vote for each Class A Common Share registered in his, her or its
name as it appears on the list on all matters which come before the Meeting. Each stockholder as of the Record Date is entitled to 1,000
votes for each Class B Common Share registered in his, her or its name as it appears on the list on all matters which come before
the Meeting. The Class B Common Shares are convertible into Class A Common Shares on a one-for-one basis at any time at the
option of the holders thereof and automatically in certain other circumstances. The Class A Common Shares may be considered “restricted
securities” within the meaning of such term under applicable Canadian securities laws, given the different voting rights attached
to the Class A Common Shares relative to the Class B Common Shares. As of the date hereof, the outstanding Class A Common
Shares represent 73% and the Class B Common Shares represent 27%, in each case, of the aggregate voting rights attached to the outstanding
shares of common stock of the Company. The Class A Common Shares and the Class B Common Shares are substantially identical
with the exception of the multiple voting and conversion rights attached to the Class B Common Shares.
To the knowledge of the directors
and Named Executive Officers (as defined herein) of the Company, as of March 14, 2022, except for AGP Partners, LLC and Abner Kurtin,
as set out forth in our beneficial ownership table below, no person beneficially owns or exercises control or direction over securities
carrying more than 10% of the voting rights attached to any class of outstanding voting securities of the Company entitled to be voted
at the Meeting. See “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,”
below
INSTRUCTIONS FOR THE MEETING
This year, the Meeting will
be in a completely virtual format. There will be no physical Meeting location. The Meeting will be conducted by way of a live audio webcast
through the Virtual Platform with integrated slides and real-time balloting.
Instructions on Voting at the Meeting
Registered stockholders and
duly appointed proxyholders will be able to attend the Meeting and vote in real time, provided they are connected to the internet and
follow the instructions in this proxy statement. Non-registered stockholders who have not duly appointed themselves as proxyholder will
be able to attend the Meeting as guests but will not be able to vote at the Meeting.
Stockholders who wish to
appoint a person other than the Nominees identified in the form of proxy or voting instruction form (including a non-registered stockholder
who wishes to appoint themselves to attend the Meeting) must carefully follow the instructions in this proxy statement and on their form
of proxy or voting instruction form. These instructions include the additional step of registering such proxyholder with our transfer
agent, Odyssey, after submitting the form of proxy or voting instruction form. Failure to register the proxyholder with Odyssey will
result in the proxyholder not receiving a control number to participate in the Meeting and only being able to attend as a guest. Guests
will be able to listen to the Meeting but will not be able to vote.
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 9:00 a.m. (EDT) on May 6, 2022. The Meeting will begin promptly at 10:00 a.m. (EDT) on May 6, 2022.
How to Vote
You have two ways to vote
your shares:
| • | by submitting your form of proxy
or other voting instruction form as per instructions indicated; or |
| • | during the Meeting by online ballot,
when called for, through the Virtual Platform. |
Registered stockholders and
duly appointed proxyholders (including non-registered stockholders who have duly appointed themselves as proxyholder) that attend the
Meeting online will be able to vote by completing a ballot online, when called for, during the Meeting through the Virtual Platform.
Guests (including non-registered
stockholders who have not duly appointed themselves as proxyholder) can log into the Meeting as set out below. Guests will be able to
listen to the Meeting but will not be able to vote during the Meeting.
To
Access and Vote at the Meeting:
| • | Step 1: Log into the Virtual Platform
online at https://web.lumiagm.com/218648002 |
| • | Step 2: Follow these instructions: |
Registered
stockholders: Click “I have a control number” and then enter your unique 13-digit control number and password
“ascend2022” (case-sensitive). The 13-digit number located on the form of proxy received from Odyssey is your control number.
If you use your control number to log into the Meeting, any vote you cast at the Meeting will revoke any proxy you previously submitted.
If you do not wish to revoke a previously submitted proxy, you should not vote during the Meeting.
Duly
appointed proxyholders: Click “I have a control number” and then enter your unique 13-digit control number and
the password “ascend2022” (case sensitive). Proxyholders who have been duly appointed and registered with Odyssey as described
in this proxy statement will receive a control number by email from Odyssey after the proxy voting deadline has passed.
Guests:
Click “Guest” and then complete the online form.
It is your responsibility
to ensure internet connectivity for the duration of the Meeting and you should allow ample time to log into the Virtual Platform before
the Meeting begins.
Non-Registered Stockholders/Appointees
Obtaining a Control Number to Vote During the Meeting
You must complete the additional
step of registering the proxyholder by calling Odyssey at (888) 290-1175 (within North America) or (587) 855-0960 (outside of North America)
by no later than 10:00 a.m. (EDT) on May 4, 2022. Failing to register your proxyholder online will result in the proxyholder
not receiving a control number, which is required to vote at the Meeting.
Non-registered stockholders
who have not duly appointed themselves as proxyholder will not be able to vote at the Meeting but will be able to participate as a guest.
Submission of Questions
You may submit questions during the Meeting if in receipt of a Control Number. Once logged into the Virtual Platform
at https://web.lumiagm.com/218648002, you may type and submit any questions you have where indicated.
Questions pertinent to Meeting
matters will be answered during the Meeting, subject to time constraints and at management’s discretion. Questions regarding personal
matters or questions that are not pertinent to Meeting matters will not be answered.
If you encounter any difficulties
with the Virtual Platform on the day of the Meeting, please go to https://www.lumiglobal.com/faq for frequently asked questions and click
on the support button for assistance or please call Odyssey at (888) 290-1175 (within North America) or (587) 885-0960 (outside of North
America). Support will be available starting at 7:00 a.m. (EDT) on May 6, 2022 and will remain available until the Meeting
has finished.
INTEREST OF CERTAIN PERSONS
OR COMPANIES IN MATTERS TO BE ACTED UPON
To the knowledge of the directors
and executive officers of the Company and except as set out herein, no director or executive officer of the Company, any proposed nominee
for election as director of the Company, or any associate or affiliate of any of the foregoing persons, has any material interest, direct
or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, other than the
election of directors.
OVERVIEW OF MATTERS TO
BE ACTED UPON AT THE MEETING
Our Board unanimously recommends
that you vote “FOR” each of the matters referred to herein.
Proposal 1 - Election
of Directors
The board of directors of
the Company (the “Board”) may consist of such number of members as the Board shall designate from time to time. Directors
are elected on an annual basis and serve until their successors are duly elected and qualified. The Board is currently composed of five
directors, and the Board is proposing that the following five directors be elected at the Meeting: Abner Kurtin, Joseph Hinrichs, Emily
Paxhia, Francis Perullo and Scott Swid.
The Company has adopted an
advance notice requirement in its bylaws for nominations of directors by stockholders. Among other things, the advance notice requirement
fixes a deadline by which stockholders must submit to the Company a notice of director nominations prior to any annual or special meeting
of stockholders at which directors are to be elected and sets forth the information that a stockholder must include in the notice for
it to be valid. As of the date hereof, the Company has not received notice of any director nominations in connection with the Meeting.
As the date to receive notice for a director nomination has passed, no director nominations may be made other than those set out in this
proxy statement.
Our stockholders do not have
the ability to cumulate votes for the election of directors. Director candidates must be approved by a plurality of the shares present
in person or by proxy at the Meeting and entitled to vote on the election of directors. A plurality means that if shareholders are electing
five directors, the five director nominees receiving the highest number of votes will be elected. Stockholders do not have the right
to cumulate their vote for directors. Except in respect of matters relating to the election of directors, or as otherwise provided in
our certificate of incorporation or required by law, all matters to be voted on by our stockholders must be approved by a majority of
the shares present in person or by proxy at the Meeting and entitled to vote on the subject matter.
The following table provides
the names of and information for the nominees for election as directors of the Company (the “Nominees”). The
persons named in the enclosed form of proxy intend to vote “FOR” the election of each of the Nominees. The Board
does not contemplate that any of the Nominees will be unable to serve as a director. All directors so elected will hold office until
the next annual meeting of stockholders or until their successors are elected or appointed, unless their office is vacated earlier in
accordance with the bylaws of the Company or the provisions of the Delaware General Corporation Law. Unless otherwise indicated,
the address of each director in the table set forth below is: care of Ascend Wellness Holdings, Inc., 1411 Broadway, 16th
Floor, New York, NY 10018.
The following table sets
out, as of March 14, 2022, the name of each current director, each proposed by the Board to be nominated for re-election as a director
of the Company at the Meeting, their respective positions and the period during which they have served as a director of the Company.
| 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 | |
Director Biographies
The biographies of the proposed
nominees for the Board are set out below:
Abner Kurtin
Mr. Kurtin is our Chief
Executive Officer and serves on our board, positions he has held since May 2018. He has served as Chief Executive Officer since
our founding in 2018 and as our President from May 2018 to February 2022. Prior to founding our company, Mr. Kurtin founded
K Capital Partners, a multibillion-dollar hedge fund, in 2000 and served with the company through April 2009, and was managing member
of Ca2 Group, a high-end real estate development firm in Massachusetts, from January 2010 to January 2018. He started his career
at The Baupost Group as a Managing Director. He previously served as a member of the President's Council of Massachusetts General Hospital
and Chairman of the Hill House. Mr. Kurtin holds an undergraduate degree from Tufts University and a M.B.A. from Harvard University.
Mr. Kurtin is qualified to serve as a director due to his in-depth knowledge of the cannabis industry and our Company.
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
Mr. Perullo is the co-founder
of our Company. He currently serves as President (since February 2022), our secretary, our Chief Strategy Officer (since May 2018),
and a member of our board since May 2018. In 2015, prior to co-founding our Company, Mr. Perullo founded the Novus Group, a
consulting firm that advises government and commercial clients, and he currently serves as principal. Prior to founding the Novus Group,
Mr. Perullo founded and served as president of Sage Systems, one of the leading providers of web-based campaign management software,
from 2002 to 2015. Mr. Perullo’s successful entrepreneurial career and deep knowledge of the cannabis industry and our Company
make him qualified to as a director.
Scott Swid
Mr. Swid is the General
Partner and managing owner of Venturi Grand Prix. He is the general partner and Managing Member of SLS Management (“SLS”).
Prior to starting SLS in 1999, Mr. Swid was a senior portfolio manager at Kingdon Capital Management Company and an analyst at Perry
Capital. Scott is a member of the Advisory Council for Stanford University’s Freeman Spogli Institute for International Studies
and Chairman of the Board of Directors at the Henry Street Settlement. Mr. Swid is also a member of the Council on Foreign Relations.
Mr. Swid received a MBA from Harvard Business School and a BA in History from Stanford University. Mr. Swid has served on our
board since September 2018. Mr. Swid is qualified to serve as a director due to his experience in the financial services industry
and his knowledge and experience in the cannabis industry.
Director
Independence
For purposes of this proxy
statement, the independence of our directors is determined under the corporate governance rules of the New York Stock Exchange (the
“NYSE”). While we are not listed on the NYSE, we believe NYSE rules represent corporate governance best practices
and we believe our Board should follow best practices. The independence rules of the NYSE include a series of objective tests, including
that an “independent” person will not be employed by us and will not be engaged in various types of business dealings with
us. In addition, the Board is required to make a subjective determination as to each person that no material relationship exists with
us either directly or as a partner, stockholder or officer of an organization that has a relationship with us. It has been determined
that three of our five directors are independent persons under the independence rules of the NYSE: Emily Paxhia, Joseph Hinrichs
and Scott Swid.
Cease Trade Orders, Bankruptcies, Penalties
or Sanctions
To the knowledge of the Company,
no director nominee set forth in this proxy statement:
(a) is, as of the date
hereof, or has been, within 10 years before the date of this proxy statement, chief executive officer or chief financial officer of any
company (including the Company) that, (i) was subject to an order that was issued while the proposed director was acting in the
capacity as director, chief executive officer or chief financial officer; or (ii) was subject to an order that was issued after
the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that
occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;
(b) is, as of the date
hereof, or has been, within 10 years before the date of this proxy statement, a director or executive officer of any company (including
the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became
bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
(c) has, within the
10 years before the date of this proxy statement, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency,
or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or
trustee appointed to hold the assets of the proposed director, state the fact.
Board
Leadership Structure
Our bylaws provide our Board
with flexibility to combine or separate the positions of Chair of the Board and Chief Executive Officer. Abner Kurtin serves as both
Chair of our Board and our Chief Executive Officer. We believe having a single person serve as both Chair of our Board and our Chief
Executive Officer is the most effective leadership structure for us at this time.
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.
Our Board does not currently
have a designated lead independent director. We are aware of the potential conflicts that may arise when an interested director is Chair
of the Board, but we will take steps to ensure that adequate structures and processes are in place to permit our Board to function independently
of management. The directors are able to request at any time a meeting restricted to independent directors for the purposes of discussing
matters independently of management and are encouraged to do so should they feel that such a meeting is required.
The Board held a total of
three meetings during the year ended December 31, 2021. 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 | |
During 2021, each director
attended 100% of the total number of meetings of the Board (held during the period for which he or she was a director) and more than
75% of the total number of meetings held by all committees of the Board on which he or she served (during the periods he or she served).
Board members are not required,
but are expected to make every effort, to attend the Annual Meeting of stockholders.
Contact with the Board of Directors
Stockholders may send communications
to the entire Board, to a particular committee, or to an individual director. The mailing address is Ascend Wellness Holdings, Inc.,
1411 Broadway, 16th Floor, New York, NY 10018, attention: Investor Relations. The letter should state that the sender is a
current stockholder.
Board Role in Risk Oversight
The Board is primarily responsible
for overseeing our risk management processes. The Board receives and reviews periodic reports from management, auditors, legal counsel,
and others, as considered appropriate regarding the Company’s assessment of risks. The Board focuses on the most significant risks
facing our Company and our Company’s general risk management strategy. While the Board oversees the Company, management is responsible
for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing
the risks facing our company and that our Board leadership structure supports this approach.
Board Committees
Our
Board has established (i) an audit committee and (ii) a compensation and corporate governance committee. The Board has adopted
written charters for each of these committees which can be found in the “Investors” section of the Company’s website
at https://awholdings.com. A brief description of each committee is set out below.
Audit Committee
The Audit Committee of the
Board assists our Board in fulfilling its responsibilities for oversight of financial, audit and accounting matters. The Audit Committee
reviews the financial reports and other financial information that we provide to regulatory authorities and our stockholders, as well
as reviews our system of internal controls regarding finance and accounting, including auditing, accounting and financial reporting processes.
The members of the Audit
Committee are:
| Name of Member |
Independent(1) |
Financially Literate(2) |
Audit
Committee Financial Expert |
| Scott
Swid |
Yes |
Yes |
Yes |
| Joseph
Hinrichs |
Yes |
Yes |
No |
| Abner
Kurtin |
No |
Yes |
No |
Notes:
| (1) | A member of the Audit Committee is independent
if he or she has no direct or indirect ‘material relationship’ with us. A material
relationship is a relationship which could, in the view of our Board, reasonably interfere
with the exercise of a member’s independent judgment. Any of our executive officers,
such as the President or Secretary, are deemed to have a material relationship with us. |
| (2) | A member of the Audit Committee is financially
literate if he or she has the ability to read and understand a set of financial statements
that present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and complexity of the issues that can reasonably be expected to be raised
by our financial statements. |
Each member of the Audit
Committee has experience relevant to his or her responsibilities as an Audit Committee member. See “Director and Executive Officer
Biographies” for a description of the education and experience of each Audit Committee member.
Our audit committee operates
under a written charter that satisfies applicable securities rules and regulations and the listing standards of the CSE. The Audit
Committee’s principal duties and responsibilities include assisting the Board in discharging the oversight of: (i) our internal
audit function; (ii) the integrity of our consolidated financial statements and accounting and financial processes and the audits
of our consolidated financial statements; (iii) compliance with legal and regulatory requirements; (iv) external auditors’
qualifications and independence; (v) the work and performance of financial management and external auditors; and (vi) system
of disclosure controls and procedures and system of internal controls regarding finance, accounting, legal compliance and risk management
established by management and the Board. The Audit Committee has access to all books, records, facilities and personnel and may request
any information about us as it may deem appropriate. It also has the authority to retain and compensate special legal, accounting, financial
and other consultants or advisors to advise the Audit Committee.
Change of Auditor
Marcum LLP (“Marcum”)
was the Company's auditor for the fiscal year ended December 31, 2020 and audited the Company's financial statements prepared in
connection with the Company's initial public offering. Marcum served as the Company's independent public through the interim period ended
September 28, 2021.
On September 28, 2021,
the Company notified 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 Audit Committee and approved by 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.
On September 28, 2021,
the Audit Committee, as authorized under the Audit Committee’s Charter, approved the appointment of Macias Gini & O'Connell
LLP (“MGO”) as the Company's new auditor, effective immediately. In order to effect the change of auditors discussed
above, the Company filed a Current Report on Form 8-K on EDGAR on October 1, 2021.
During the Company’s
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 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
Aggregate fees billed by
our independent auditors, MGO, for the year ended December 31, 2021 and former independent auditors, Marcum, for the year ended
December 31, 2020 are detailed in the table below.
| 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 | | |
$ | — | | |
$ | — | |
Notes:
| (1) | “Audit Fees” are the aggregate
fees billed by MGO LLP and Marcum in auditing the Company’s annual financial statements
for the years ended 2021 and 2020, respectively. |
| (2) | “Tax Fees” are fees for
professional services rendered by MGO LLP for tax compliance and planning. |
Policy on Pre-Approval
by our Audit Committee of Services Performed by Independent Auditors
Pursuant to the Audit Committee
Charter, the Audit Committee has the responsibility to review and approve the fees charged by the external auditors for audit services,
and to review and approve all services other than audit services to be provided by the external auditors, and associated fees. All engagements
and fees for the fiscal year ended December 31, 2021 were pre-approved by the Audit Committee.
Compensation and Corporate
Governance Committee
Our Compensation and Corporate
Governance committee consists of Emily Paxhia, Joseph Hinrichs and Abner Kurtin. Emily Paxhia serves as the chair of our compensation
and corporate governance committee. Emily Paxhia and Joseph Hinrichs meet the requirements of a “non-employee director” pursuant
to Rule 16b-3 under the Exchange Act.
Our Compensation and Corporate
Governance committee is, among other things, be responsible for:
| • | reviewing and approving the goals
and objectives relating to the compensation of our executive officers, including any long-term
incentive components of our compensation programs; |
| • | evaluating the performance of our
executive officers in light of the goals and objectives of our compensation programs and
determining each executive officer’s compensation based on such evaluation; |
| • | reviewing and approving, subject,
if applicable, to stockholder approval, our compensation programs; |
| • | reviewing the operation and efficacy
of our executive compensation programs in light of their goals and objectives; |
| • | reviewing and assessing risks arising
from our compensation programs; |
| • | reviewing and recommending to the
Board the appropriate structure and amount of compensation for our directors; |
| • | reviewing and approving, subject,
if applicable, to stockholder approval, material changes in our employee benefit plans; |
| • | establishing and periodically reviewing
policies for the administration of our equity compensation plans; |
| • | identifying, evaluating and recommending
qualified nominees to serve on our Board; |
| • | considering and making recommendations
to our Board regarding the composition and chairmanship of the committees of our Board; |
| • | developing and making recommendations
to our Board regarding corporate governance guidelines and matters and periodically reviewing
such guidelines and recommending any changes; and |
| • | overseeing annual evaluations of
our Board’s performance, including committees of our Board and management. |
Compensation Committee
Interlocks and Insider Participation
Abner Kurtin, our Chief Executive
Officer, served as a member of the Compensation and Corporate Governance Committee during the fiscal year ended December 31, 2021.
There were no compensation committee “interlocks” during the year ended December 31, 2021, nor during any time in 2020
or to date in 2022, 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.
Consideration of Director
Nominees
We seek directors with the
highest standards of ethics and integrity, sound business judgment, and the willingness to make a strong commitment to the Company and
its success. The Compensation and Corporate Governance Committee works with the Board on an annual basis to determine the appropriate
and desirable mix of characteristics, skills, expertise, and experience for the full Board and each Board committee, taking into account
both existing directors and all nominees for election as directors, as well as any diversity considerations and the membership criteria
applied by the Compensation and Corporate Governance Committee. The Compensation and Corporate Governance Committee and the Board, which
do not have a formal diversity policy, consider diversity in a broad sense when evaluating Board composition and nominations; and they
seek to include directors with a diversity of experience, professions, viewpoints, skills, and backgrounds that will enable them to make
significant contributions to the Board and the Company, both as individuals and as part of a group of directors. The Board evaluates
each individual in the context of the full Board, with the objective of recommending a group that can best contribute to the success
of the business and represent stockholder interests through the exercise of sound judgment. In determining whether to recommend a director
for re-election, the Compensation and Corporate Governance Committee also considers the director’s attendance at meetings and participation
in and contributions to the activities of the Board and its committees.
The Compensation and Corporate
Governance Committee does not have a formal policy that addresses director candidates recommended by stockholders because the Board believes
that its current director solicitation processes and stockholder engagement are sufficient to incorporate stockholder involvement without
a formal policy. Additionally, the Compensation and Corporate Governance Committee will consider director candidates recommended by stockholders,
and its process and criteria for considering such recommendations are no different than its process and criteria for screening and evaluating
candidates suggested by directors, management of the Company, or third parties.
Code of Business Conduct and Ethics
Our Board has adopted a code
of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, 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.
Trading Restrictions
All of our executives, directors
and certain other employees are subject to our insider trading policy, which prohibits trading in our securities while in possession
of material undisclosed information about us. Under this policy, such individuals are also prohibited from entering into hedging transactions
involving our securities, such as short sales, puts and calls.
Family and Certain Other Relationships
There are no family relationships
among the members of the Board or the members of senior management of the Company. There are no arrangements or understandings with major
stockholders, customers, suppliers or others, pursuant to which any member of the Board or member of senior management was selected.
Proposal 2 - Ratification
of Independent Registered Public Accounting Firm
The Audit Committee has appointed
MGO as the independent registered public accounting firm of the Company, with MGO to hold that position until the close of the next annual
meeting of the Company or until a successor is appointed. Stockholder ratification of the appointment of MGO as the Company’s independent
registered public accounting firm is not required by our bylaws or otherwise. However, the Board is submitting the appointment of MGO
to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the
Audit Committee will reconsider whether or not to retain that firm, but it retains sole responsibility for appointing and terminating
the independent registered public accounting firm.
The
persons named in the form of proxy accompanying this proxy statement intend to vote “FOR” the ratification of the appointment
of MGO as the independent registered public accounting firm of the Company for the ensuing year or until their successors are appointed,
unless the stockholder has specified in the form of proxy that the Common Shares represented by such proxy are to be withheld from voting
in respect thereof. The Company expects that a representative of MGO will be present at the Meeting to answer questions and make a statement
if they desire to do so.
Proposal 3 - Adoption
of the Company's 2021 Stock Incentive Plan
At the Meeting, Stockholders
will be asked to approve an ordinary resolution (the “2021 Incentive Plan Resolution”) ratifying, confirming and approving
the adoption of the Company’s 2021 stock incentive plan (the “2021 Incentive Plan”). A copy of the 2021 Incentive
Plan is attached hereto as Appendix A.
On June 29, 2021, the
Board unanimously approved and adopted the 2021 Incentive Plan. The purpose of the 2021 Incentive Plan is to promote the interests of
the Company and its Stockholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors, independent
contractors and non-employee directors capable of assuring the future success of the Company, to offer such persons incentives to put
forth maximum efforts for the success of the Company’s business and to compensate such persons through stock-based awards and provide
them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Stockholders.
The 2021 Incentive Plan authorizes
the Board or committee or subcommittee of the Board appointed from time to time by the Board to administer the 2021 Incentive Plan (the
“Administrator”) to provide equity-based compensation in the form of stock options, including tax-qualified Incentive
Stock Options (“ISOs”), stock appreciation rights (“SARs”), restricted stock, restricted stock
units (“RSUs”) or Dividend Equivalents (collectively, “Awards”).
2021 Incentive Plan Highlights and Certain
Important Provisions
| • | Overall Share Limit. The total
number of Shares reserved under the 2021 Incentive Plan shall be 10% of the number of Shares
issued and outstanding as of the date of Stockholder approval. |
| • | No Repricing of “Underwater”
Options or SARs. The Company will not reprice any previously granted Award for which
the fair market value (being the closing price of the Common Shares, as reported on the Canadian
Stock Exchange or the average of the closing “bid” and “asked” prices
quoted by the OTC Markets, the “Fair Market Value”) is less than the exercise
price without Stockholder approval other than as a result of certain customary capitalization
adjustments. |
| • | No Discount. All options must
have an exercise price equal to or greater than the Fair Market Value of the underlying Shares
on the date of grant, except that that the Compensation Committee may designate a purchase
price below Fair Market Value on the date of grant if the option is granted in substitution
for a stock option previously granted by an entity that is acquired by or merged with the
Company. |
| • | Change in Control. Customary
“Change in Control” provisions are triggered by the consummation of certain transactions,
and not their approvals by the Board or the Stockholders. |
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 2021 Incentive Plan or
the benefits that would have been received by such participants if the 2021 Incentive Plan had
been in effect in the year ended December 31, 2021.
| 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:
| (1) | Dollar value shown is of March 14,
2022, the most recent practicable date. The last sales price of the Class A Common Stock
as listed on the Canadian Securities Exchange on such date was $4.03 per share. |
Summary of the 2021 Incentive Plan
The following brief summary
of the 2021 Incentive Plan is not intended to be exhaustive and is qualified in its entirety by the terms of the 2021 Incentive Plan,
a copy of which is attached to this proxy statement as Appendix A.
Eligibility
Eligibility under the 2021
Incentive Plan is limited to employees, officers, non-employee directors, consultants, independent contractors or advisors providing
services to the Company or any entity controlled by the Company (an “Affiliate”), or any person to whom an offer of
employment or engagement with the Company or any Affiliate is extended.
As of March 14, 2022,
there were approximately 1,600 employees, five officers, three non-employee directors, and no consultants which would be eligible to
participate under the 2021 Incentive Plan. The Administrator, in its sole discretion, will determine which eligible persons will receive
Awards under the 2021 Incentive Plan.
Shares Available for Awards
Subject to customary capitalization
adjustments, the aggregate number of Shares that may be issued under all Awards under the 2021 Incentive Plan shall equal 10% of the
number of Shares issued and outstanding as of the date of Stockholder approval of the 2021 Incentive Plan. Any Shares subject to an Award
that is forfeited, cancelled, exchanged or surrendered or that otherwise terminates or expires without a distribution of Shares shall
again be available for grant under the 2021 Incentive Plan. Shares underlying Awards that can only be paid in cash do not count against
the overall 2021 Incentive Plan share limit.
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.
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 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 2021 Incentive Plan, then the Administrator shall, in accordance
with applicable law and 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, and (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 that, 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; 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 Administrator, whose determination in that respect
shall be final, binding and conclusive.
Types of Awards
Options
The 2021 Incentive Plan authorizes
awards of options. Subject to the limitations of the 2021 Incentive Plan, the Administrator may grant options for such number of Shares
and having such terms as the Administrator designates.
Options shall vest and be
exercisable in the timeframe determined by the Administrator, which shall be set forth in the applicable option award agreement. The
Administrator fixes the term of each option when granted, but such term may not be greater than 10 years from the date of grant (subject
to limited extensions for non-U.S. taxpayers whose options would otherwise expire during a blackout period). The exercise price of options
is established by the Administrator and shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except
in limited circumstances. Payment for the exercise price may be made in cash or its equivalent, payment in unrestricted Shares already
owned by the participant or, to the extent permitted under the relevant option award agreement, payment through (i) the sale by
a broker acceptable to the Company on behalf of the participant of a portion of the Shares subject to the option, or (ii) the withholding
of Shares that would otherwise be issuable in connection with the exercise of the options.
Incentive Stock Options
The 2021 Incentive Plan authorizes
awards of ISOs. In addition to the terms and conditions related to awards of options, awards of ISOs have the following conditions: (i) to
the extent that the aggregate Fair Market Value (determined at the time of grant) of the Shares with respect to which ISOs are exercisable
for the first time by a participant during any calendar year exceeds $100,000, the ISOs or portions thereof that exceed such limit (according
to the order in which they were granted) will be treated as a non-qualified stock option; (ii) ISOs must be granted before June 29,
2031; (iii) ISOs granted to a participant who, at the time such ISO is granted, owns (within the meaning of Section 422 of
the Internal Revenue Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or
of its Affiliates, shall expire and no longer be exercisable no later than 5 years from the date of grant; (iv) ISOs granted to
a participant who, at the time such ISO is granted, owns (within the meaning of Section 422 of the Internal Revenue Code) stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, shall have an
exercise price per share not less than 110% of the Fair Market Value of a Share on the date of grant of the ISO; (v) an ISO may
be exercised during a participant’s lifetime only by the participant; and (vi) an ISO may not be transferred, assigned, or
pledged by a participant except by will or the laws of descent and distribution.
Stock Appreciation Rights
The 2021 Incentive Plan authorizes
awards of SARs, which confer to the holder a right to receive the excess of (i) the Fair Market Value of one Share on the date of
exercise over (ii) the grant price of the SAR as specified in the relevant award agreement, which price shall not be less than 100%
of the Fair Market Value of one Share on the date of grant of the SAR. The terms and conditions of a SAR will be set forth in an applicable
award agreement, as determined by the Administrator. The Administrator fixes the term of each SAR when granted, but such term may not
be greater than 10 years from the date of grant.
Restricted Stock and Restricted Stock Unis
The 2021 Incentive Plan authorizes
awards of restricted stock and Restricted Stock Units, which will confer to the holder Shares or a right to receive Shares subject to
such restrictions as the Administrator may impose in an award agreement.
Restricted stock shall be
issued at the time such Awards are granted and will be held by the Company or a nominee until they are no longer subject to restrictions.
In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions
and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and
delivered to the holder of such Restricted Stock Units.
Except as otherwise determined
by the Administrator or as provided in an Award Agreement, upon a recipient’s termination of employment or service or resignation
or removal as a director during the applicable restriction period, all Shares of restricted stock and all Restricted Stock Units held
at such time shall be forfeited and reacquired by the Company for cancellation at no cost to the Company; provided, however, that the
Administrator may waive in whole or in part any or all remaining restrictions with respect to Shares of restricted stock or Restricted
Stock Units.
Dividend Equivalents
The 2021 Incentive Plan authorizes
the Administrator to grant Dividend Equivalents under which the participant shall be entitled to receive payments equivalent to and in
lieu of the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Administrator.
The Administrator may not, however, grant Dividend Equivalents to participants in connection with grants of options or SARs, and dividend
and Dividend equivalent amounts with respect to any Share underlying restricted stock or Restricted Stock Unit awards may be accrued
but not paid to a participant until all conditions or restrictions relating to such Share have been satisfied, waived or lapsed.
Limitations on Awards
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.
Transfer of Awards
No Award (other than fully
vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferrable other than by will
or by the laws of descent and distribution. In addition, no Award (other than fully vested and unrestricted Shares issued pursuant to
any Award) and no right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation,
attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.
Amendment and Termination
The Board may from time to
time amend, suspend or terminate the 2021 Incentive Plan or any Award agreement, and the Administrator may amend the terms of any previously
granted Award, provided that no amendment to the terms of any previously granted Award may (except as expressly provided in the 2021
Incentive Plan), materially and adversely alter or impair the terms or conditions of the Award previously granted without the participant’s
consent. Any amendment to the 2021 Incentive Plan, an Award agreement or to the terms of any Award previously granted is subject to compliance
with all applicable laws, rules, regulations and policies of any applicable laws, rules, regulations and policies of any applicable governmental
entity or stock exchange.
Prior approval of the Stockholders
shall be required to make any amendment to the 2021 Incentive Plan or an Award that would (i) require Stockholder approval under
the rules of the CSE, the rules or regulations of the SEC, or any other securities exchange that is applicable to the Company;
(ii) increase the number of Shares authorized under the 2021 Incentive Plan; (iii) permit repricing of Options or SARs, which
is currently prohibited; (iv) permit the award of Options or SARs at a price less than 100% of the Fair Market Value of a Share
on the date of grant; (v) increase the maximum term permitted for options and for SARs; or (vi) increase the maximum number
of Shares or dollar value of Awards which can be granted to a participant in a calendar year.
Change in Control
Effective upon the consummation
(or immediately prior to the consummation) 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 (each, a “Change in Control Event”), the Administrator may, in its sole discretion,
provide for (i) the termination of any Award, whether or not vested, in exchange for an amount of cash and/or other property; (ii) the
replacement of any Award with other rights or property selected by the Administrator in its sole discretion; (iii) the Award to
be assumed by, or substituted for a similar Award from, the successor or survivor of the Company, or a parent or subsidiary thereof,
with appropriate adjustments; (iv) the vesting or exercisability of Awards notwithstanding anything to the contrary in the applicable
Award Agreement; or (v) the determination of a future date after which Awards cannot vest, be exercised or become available, which
may be the effective date of the Change in Control Event.
Clawback Provisions
All awards under the 2021
Incentive Plan are subject to forfeiture or other penalties pursuant to any clawback policy that may be adopted by the Company.
U.S. Federal Income Tax Consequences
Grant
of Options and SARs. The grant of a stock option or SAR is not expected to result in any taxable income to the recipient.
Exercise
of Options and SARs. Upon exercising a non-qualified stock option, the optionee must recognize ordinary income equal
to the excess of the fair market value of the shares of the Company’s common stock acquired on the date of exercise over the exercise
price. The holder of an ISO generally will have no taxable income upon exercising the option (except that an alternative minimum tax
liability may arise). Upon exercising a SAR, the amount of any cash received and the fair market value on the exercise date of any of
our Shares received are taxable to the recipient as ordinary income.
Disposition
of Shares Acquired Upon Exercise of Options and SARs. The tax consequence upon a disposition of Shares acquired through
the exercise of an option or SAR will depend on how long the Shares have been held and whether the shares were acquired by exercising
an ISO or by exercising a non-qualified stock option or SAR. Generally, there will be no tax consequence to the Company in connection
with the disposition of Shares acquired under an option or SAR in the case of the disposition of Shares acquired under an ISO if the
disposition occurs before the applicable ISO holding periods set forth in the Internal Revenue Code have been satisfied.
Awards
Other Than Options and SARs. If an award is payable in Shares that are subject to substantial risk of forfeiture,
unless a special election is made by the holder of the award under the Internal Revenue Code, the holder must recognize ordinary income
equal to the excess of: (i) the fair market value of the Shares received (determined as of the first time the Shares become transferable
or not subject to substantial risk of forfeiture, whichever occurs earlier) over (ii) the amount (if any) paid for the Shares by
the holder of the award. As to other awards granted under the 2021 Incentive Plan that are payable either in cash or shares of our common
stock not subject to substantial risk of forfeiture, the holder of the award must recognize ordinary income equal to: (a) the amount
of cash received or, as applicable, (b) the excess of (i) the fair market value of the shares received (determined as of the
date such shares are received) over (ii) the amount (if any) paid for the shares by the holder of the award.
Special
Rules for Executive Officers Subject to Section 16 of the Exchange Act. Special rules may apply to
individuals subject to Section 16 of the Securities Exchange Act of 1934. In particular, unless a special election is made pursuant
to the Internal Revenue Code, shares received through the exercise or settlement of an award may be treated as restricted as to transferability
and subject to a substantial risk of forfeiture for a period of up to six months after the date of exercise. Accordingly, the amount
of any ordinary income recognized will be determined as of the end of that period.
Section 409A
of the Internal Revenue Code. The Administrator intends to administer and interpret the 2021 Incentive Plan and all
award agreements in a manner consistent to satisfy the requirements of Section 409A of the Internal Revenue Code to avoid any adverse
tax results thereunder to a holder of an award.
THE FOREGOING IS ONLY A SUMMARY
OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY UNDER THE 2021 INCENTIVE PLAN. 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 2021 Incentive Plan 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 2021 Incentive
Plan Resolution:
BE IT RESOLVED AS A RESOLUTION
OF THE STOCKHOLDERS THAT:
| 1. | the 2021 stock incentive plan (the “2021
Incentive Plan”) of Ascend Wellness Holdings, Inc. (the “Corporation”),
in substantially the form described in, and attached as Appendix A to the Company’s
proxy statement dated March 25, 2022 (the “Proxy Statement”) is hereby
ratified, confirmed and approved; |
| 2. | the maximum number of common shares in the
capital of the Company (the “Shares”) authorized and reserved for issuance
under the 2021 Incentive Plan shall be a fixed limit of up to 10% of the number of common
shares issued and outstanding as of the date hereof; |
| 3. | the form of the 2021 Incentive Plan may
be amended in order to satisfy the requirements or requests of any regulatory authority or
stock exchange without requiring further approval of the stockholders of the Company; |
| 4. | the stockholders of the Company hereby expressly
authorize the board of directors of the Company, in its discretion, to revoke this resolution
before it is acted upon without requiring further approval of the stockholders in that regard;
and |
| 5. | any director or officer of the Company is
authorized and directed to execute and deliver for and in the name of and on behalf of the
Company all such certificates, instruments, agreements, notices and other documents and to
do such other acts and things as, in the opinion of such persons, may be necessary or desirable
to give effect to the foregoing and facilitate the implementation of the foregoing resolutions. |
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 2021 Incentive
Plan 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 2021 Incentive Plan Resolution.
Board Recommendation
The Board believes the
passing of the 2021 Incentive Plan Resolution is in the best interest of the Company and unanimously recommends a vote FOR the passing
of the 2021 Incentive Plan 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:
| • | Reserves 4,000,000 Shares. As of March 14,
2022, the closing price of a share on the Canadian Securities Exchange was $4.03; |
| • | permits a participant to contribute
up to 20% of his or her eligible compensation each pay period through payroll deductions; |
| • | establishes offering periods (usually
two six-month offering periods); |
| • | permits participants to purchase Shares
at a purchase price equal to 85% of the lesser of (i) the Fair Market Value of the Shares
on the first trading day of an offering period (the “Offering Date”),
and (ii) the Fair Market Value of the Shares on the last trading day of any offering
period (or purchase period, if applicable) (the “Exercise Date”); and |
| • | limits the value of Shares that a
participant may purchase in a calendar year to $25,000 and limits the participant to a number
of Shares that does not cause the participant to own capital stock of the Company or any
Affiliate and/or outstanding options to purchase such stock equal to or exceeding 5% of the
total combined voting power or value of all classes of the capital stock of the Company or
an Affiliate or 10,000 Shares per offering period. |
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:
| 1. | the 2021 employee stock purchase plan (the
“ESPP”) of Ascend Wellness Holdings, Inc. (the “Corporation”),
in substantially the form described in, and attached as Appendix B to the Company’s
proxy statement dated March 6, 2022 (the “Proxy Statement”) is hereby
ratified, confirmed and approved; |
| 2. | the maximum number of common shares in the
capital of the Company (the “Shares”) authorized and reserved for issuance
from treasury under the ESPP shall be a fixed limit of up to an aggregate of 4,000,000 Shares; |
| 3. | the form of the ESPP be amended in order
to satisfy the requirements or requests of any regulatory authority or stock exchange without
requiring further approval of the stockholders of the Company; |
| 4. | the stockholders of the Company hereby expressly
authorize the board of directors of the Company, in its discretion, to revoke this resolution
before it is acted upon without requiring further approval of the stockholders in that regard;and |
| 5. | any director or officer of the Company is
authorized and directed to execute and deliver for and in the name of and on behalf of the
Company all such certificates, instruments, agreements, notices and other documents and to
do such other acts and things as, in the opinion of such persons, may be necessary or desirable
to give effect to the foregoing and facilitate the implementation of the foregoing resolutions. |
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.
EQUITY COMPENSATION PLAN
INFORMATION
The
following table presents information as of December 31, 2021, with respect to the Company's compensation plans under which equity
securities are authorized for issuance. As of December 31, 2021, there are no outstanding options, warrants or rights with respect
to these plans. Information with respect to the 2021 Incentive Plan and the ESPP is presented
under Proposals 3 and 4 and is not included in this table.
| 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 | |
| — | | |
| — | | |
| — | |
| Equity
compensation plans not approved by security holders | |
| — | | |
| — | | |
| 208,750 | (1) |
| Total | |
| — | | |
| — | | |
| 208,750 | |
Notes:
| (1) | Includes shares remaining available
for future issuance under the Ascend Wellness Holdings, LLC 2020 Equity Incentive Plan as
shares of restricted common stock or options, which would no longer be available on and after
stockholder approval of the 2021 Incentive Plan. |
EXECUTIVE OFFICERS
The following table identifies
our executive officers as of March 14, 2022:
| 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 | |
Notes:
| (1) | Biographical information with respect
to Messrs. Kurtin and Perullo is provided above. |
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.
Christopher
Melillo, Chief Revenue Officer. Christopher Melillo has served as our Chief Revenue Officer since September 2020. He
was formerly the Senior Vice President, Retail/Wholesale at Curaleaf Holdings, Inc. from September 2018 to September 2020.
Prior to that, Christopher was the Senior Director of Stores Nike North America from July 2013 to November 2016, and Vice President
of Stores at DTLR/Villa from January 2017 to August 2018. He has held significant leadership roles in Equinox, Pet Smart, Home
Depot. He has been instrumental in retail expansions, store design, construction, merchandising and omni-channel commerce in hundreds
of stores. In addition to developing and leading retail teams across the country.
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.
EXECUTIVE COMPENSATION
Overview of Executive Compensation
The Board is authorized to
review and approve annually all compensation decisions relating to our executive officers. In accordance with reduced disclosure rules applicable
to emerging growth companies as set forth in Item 402 of Regulation S-K, this section explains how our compensation program is structured
for our Chief Executive Officer and the other executive officers named in the Summary Compensation Table (the “named executive
officers” or “NEOs”).
Elements of our Executive Compensation Program
For the fiscal year 2021,
our named executive officers participated in several compensation programs, as outlined in the table below.
| 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 2021 base salaries were established as part of each named executive officers’
employment agreement entered into in March 2021. 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.
Base salaries for named executive
officers in 2021 was as follows:
| Name | |
Fiscal
2021 Base Salary | |
| Abner Kurtin | |
$ | 1,000,000 | |
| Frank Perullo | |
$ | 750,000 | |
| Daniel Neville | |
$ | 500,000 | |
Annual
Cash Incentive Program. Our NEOs are eligible to receive annual cash incentives. Prior to the Company's initial public offering
in May 2021 (the “IPO”), our cash incentives were entirely based on the Compensation Committee’s discretionary
assessment of each named executive officers’ individual performance. Subsequent to the IPO, the Compensation Committee desired
transitioning to a more structured and objective incentive program with financial and operational goals. Given the timing of the IPO,
an immediate transition to a structured incentive program with discrete goals was not feasible. As such, the Compensation Committee adopted
a “bridge” plan in the fourth quarter of 2021 that relies on a framework to consider financial, operational, and individual
goals. While the Compensation Committee will rely on this framework to determine payouts, the ultimate decision is at the discretion
of the Compensation Committee.
For the 2021 fiscal year,
the Compensation Committee relied on the following framework to determine payouts:
| | | |
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.
Based on the assessment of
performance as outlined above, the Compensation and Corporate Governance Committee determined a payout factor for each named executive
officer to apply to his or her target incentive opportunity. The payout factor may range from 0% to 200%. A payout at 100% represents
target performance.
In determining each named
executive officers’ payout factor for fiscal year 2021, the Compensation Committee recognized the extraordinary efforts required
to complete the IPO as well as achieve record financial performance for the year. In particular, the Committee noted the following highlights
from the year:
| • | FY2021 net revenue of $332.4 million, a year-over-year increase
of 132%. |
| • | FY2021
adjusted EBITDA of $79.4 million, a year-over-year increase of 158%. |
| • | Ozone,
our premium cannabis product, became a leading brand in Illinois. |
| • | Construction
completed of the Barry, IL greenhouse and in Lansing, MI. |
| • | Completed
construction and opened six dispensaries. |
| • | Rebranded
Michigan and Illinois dispensaries to Ascend, our retail locations. |
Each named executive officers’
potential payout was based on a percentage of his or her base salary. In early 2022, the Compensation and Corporate Governance Committee
met and determined that the payout of the annual cash incentive program was to be paid in the form of restricted stock units, with vesting
on March 15, 2022. The Compensation and Corporate Governance Committee determined the payout factor to be 100% for 2021. As such,
the actual payouts for 2021 performance for named executive officers is as follows:
| 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 | |
Changes
to the 2022 Annual Cash Incentive Program. In an effort to continue the transition to a more formulaic incentive program,
the Compensation Committee set revenue growth and adjusted EBITDA goals for fiscal year 2022. In addition, the Compensation Committee
created new operational and individual goals for the NEOs. The Compensation Committee will not base their decision strictly on these
goals. Rather, the Compensation Committee will again use the framework as set out above to inform its decision with respect to cash payouts.
However, the Compensation Committee believes that creating the financial, operational, and individual goals is an additional step on
the path towards a more quantitative incentive program.
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 | |
Long-term
Incentive Program. In connection with our IPO, our Board adopted the 2021 Equity Incentive Plan, pursuant to which we may
grant incentive stock options, non-qualified stock options, restricted stock, and other stock-based awards to our employees, including
the NEOs. Equity-based awards are intended to drive and reward performance over an extended period of time to promote creation of long-term
value for our stockholders, create strong alignment with the long-term interests of our stockholders, assist in retaining highly qualified
executives, and contribute to competitive total rewards.
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:
| Executive | |
Shares
granted in August 2021 | |
| Abner Kurtin | |
| 1,250,000 | |
| Frank Perullo | |
| 750,000 | |
| Daniel Neville | |
| 750,000 | |
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 stock options and restricted stock units. The Compensation and Corporate Governance Committee believes
that awarding a mix of stock options and restricted share units achieves a balance in linking NEO long-term compensation to Company performance.
Options do not provide any value unless our stock price appreciates and focus and reward our NEOs for increasing our stock price. The
value of restricted shares increases or decreases in the same way stockholders’ stock value increases or decreases and restricted
shares are generally less dilutive to our stockholders than options.
Options and restricted stock
units granted in 2022 vest in four equal annual installments on each of the first four anniversaries of the grant date, generally subject
to the grantee’s continued employment as of each applicable vesting date.
The grants to NEOs in 2022
was as follows:
| 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 | |
Summary Compensation
Table
The following table shows
the compensation earned by each of the Company’s NEOs over the last two financial years. The compensation of the NEOs is paid and
reported in U.S. dollars.
| 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 |
|
Notes:
| (1) | Messrs. Kurtin, Perullo and Neville
received special one-time initial public offering cash bonuses of $350,000 for Mr. Kurtin
and Mr. Perullo and $250,000 for Mr. Neville in 2021. Mr. Perullo also received
discretionary cash bonus of $20,000 in 2020. |
| (2) | The amounts reported in the Stock Awards
column reflect aggregate grant date fair value of restricted stock units computed in accordance
with ASC Topic 718, Compensation—Stock Compensation. These amounts reflect our calculation
of the value of these awards at the grant date and do not necessarily correspond to the actual
value that may ultimately be realized by the named executive officer. Assumptions used in
the calculation of these amounts are included in Note 13 to our consolidated financial statements
for the fiscal years ended December 31, 2021 and 2020. |
| (3) | On August 9, 2021, the Board of
Directors of the Company approved restricted stock unit grants (the "2021 RSU Grants")
to executive officers of the company, including Messrs. Kurtin, Perullo and Neville.
The 2021 RSU Grants vest in one-fourth increments on each of the first four anniversaries
of the date the Company entered into executive employment agreements with such NEO. The values
in the table above are calculated in accordance with ASC Topic 718, Compensation—Stock
Compensation, which requires the value to be shown at the closing price as of the date of
grant of $11.00 on August 9, 2021. |
| (4) | Each NEO received annual incentive plan
payouts for 2021. The Compensation and Corporate Governance Committee met and determined
that the annual incentive plan payout for 2021 was at the target level of 100%, to be paid
in the form of restricted stock units, with the number of units based on the volume-weighted
average price per share of the common stock for the 10 days prior to the March 15, 2022
vesting date. |
| (5) | In January 2021, the Company transitioned
to an unlimited paid time off program for the Company's corporate employees. In connection
with the transition, the Company made a one-time cash payment in satisfaction of outstanding
unused paid time off amounts to employees, including Messrs. Kurtin, Perullo and Neville. |
Outstanding Equity Awards at Fiscal Year
End
The following table summarizes
the total outstanding equity awards as of December 31, 2021 for the named executive officers.
| Name | |
Grant Date | |
Equity Incentive Plan
Awards: Number of Shares or Units of Shares that Have Not Vested (#) | |
Equity Incentive
Plan Awards: Market Value of Share-Based Awards that Have Not Vested (US$)(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 | |
Notes:
| (1) | Restricted stock award that vested 50%
upon the Company's IPO with the remaining 50% vesting in one-third tranches beginning on
March 15, 2021. |
| (2) | Restricted stock units that vest in
one-fourth increments on each of the first four anniversaries of the date the Company entered
into executive employment agreements with such NEO. |
| (3) | Calculated by multiplying the number
of shares in the preceding column by $6.61, the closing price per share of the Company’s
Class A Common Stock on the Canadian Securities Exchange prior to the close of business
on December 31, 2021, the last trading day of our last fiscal year. |
Employment Agreements
and Termination and Change of Control Benefits
Termination and Change
of Control Benefits
The Company has entered into
employment agreements with Abner Kurtin, Francis Perullo and Daniel Neville. A summary of each agreement is set forth below.
Abner Kurtin,
Chief Executive Officer
Effective as of March 22,
2021, the Company entered into an employment agreement with Abner Kurtin (the “CEO Employment Agreement”). Pursuant
to the CEO Employment Agreement, Mr. Kurtin will continue to serve the Company as its Chief Executive Officer and report to the
Company’s Board, for an initial term of three years, after which the term of employment will automatically renew for successive
one year terms unless either Mr. Kurtin or the Company provides notice of non-renewal to the other party at least 90 days prior
to the expiration of the then current term. So long as Mr. Kurtin is serving as the Chief Executive Officer, the Company will nominate
him for re-election to the Board.
Under the CEO 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
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. Kurtin 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. Kurtin’s employment by the Company for Cause (as defined in the CEO Employment Agreement). Additionally,
as noted above, the CEO Employment Agreement provides that, subject to the Board’s approval, Mr. Kurtin would be granted 1,250,000
restricted stock units under the Company’s 2021 Equity Incentive Plan. The Board approve the grant on August 9, 2021.
In the event that Mr. Kurtin’s
employment is terminated due to death or disability (as described in the CEO Employment Agreement), he will be entitled to: (x) any
annual bonus earned for the fiscal year in which such termination occurs, prorated for the number of days worked during such fiscal year
(the “Prorated Bonus”), and (y) 12 months of continued participation in the Company’s medical and dental
insurance plans (the “Benefit Continuation”). If the Company terminates Mr. Kurtin’s employment for any
reason other than for Cause, including as a result of the Company’s non-renewal notice to Mr. Kurtin (and in any event, not
due to his death or disability), or if Mr. Kurtin resigns from the Company for Good Reason (as defined in the CEO Employment Agreement),
then, in addition to the Prorated Bonus and the Benefit Continuation, Mr. Kurtin 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 CEO Employment Agreement), then such amount will be paid in a lump sum), and (ii) immediate
vesting in full and lapse of any repurchase right with respect to all of his outstanding equity awards (with any performance-based equity
awards deemed earned at target performance).
The severance benefits described
above are subject to Mr. Kurtin’s (or his estate’s or legal representative’s, as applicable) execution and non-revocation
of a general release of claims, as well as Mr. Kurtin’s compliance with the restrictive covenants set forth in the CEO Employment
Agreement, including certain non-competition and non-solicitation restrictions during employment and for 12 months thereafter and to
certain obligations relating to non-disparagement, confidentiality and intellectual property for an indefinite period (and the Company
has a mutual non-disparagement obligation with respect to Mr. Kurtin).
Frank Perullo,
President and Chief Strategy Officer
Effective as of February 11,
2022, the Company approved an amended and employment agreement with Mr. Perullo (the “President Employment Agreement”).
The Company and Mr. Perullo entered into an initial employment agreement on March 23, 2021 (the “Initial Perullo Agreement”).
Pursuant to the President Employment Agreement, Mr. Perullo will continue to serve the Company as its President and report to the
Board, for a term ending March 22, 2024, which coincides with the initial three-year term of the Initial Perullo Agreement, after
which the term of employment will automatically renew for successive one year terms unless either Mr. Perullo or the Company provides
notice of non-renewal to the other party at least 90 days prior to the expiration of the then current term. So long as Mr. Perullo
is serving as the President, the Company will nominate him for re-election to the Board.
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
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 units 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.
In the event that Mr. Perullo’s
employment is terminated due to death or disability (as described in the President Employment Agreement), he will be entitled to: (x) any
annual bonus earned for the fiscal year in which such termination occurs, prorated for the number of days worked during such fiscal year
(the “Prorated Bonus”), and (y) 12 months of continued participation in the Company’s medical and dental
insurance plans (the “Benefit Continuation”). If the Company terminates Mr. Perullo’s employment for any
reason other than for Cause, including as a result of the Company’s non-renewal notice to Mr. Perullo (and in any event, not
due to his death or disability), or if Mr. Perullo resigns from the Company for Good Reason (as defined in the President Employment
Agreement), then, in addition to the Prorated Bonus and the Benefit Continuation, Mr. Perullo 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 President Employment Agreement), then such amount will be paid in a lump
sum), and (ii) immediate vesting in full and lapse of any repurchase right with respect to all of his outstanding equity awards
(with any performance-based equity awards deemed earned at target performance).
The severance benefits described
above are subject to Mr. Perullo’s (or his estate’s or legal representative’s, as applicable) execution and non-revocation
of a general release of claims, as well as Mr. Perullo’s compliance with the restrictive covenants set forth in the President
Employment Agreement, including certain non-competition and non-solicitation restrictions during employment and for 12 months thereafter
and to certain obligations relating to non-disparagement, confidentiality and intellectual property for an indefinite period (and the
Company has a mutual non-disparagement obligation with respect to Mr. Perullo).
Daniel Neville, Chief
Financial Officer
Effective as of March 23,
2021, the Company entered into an employment agreement with Mr. Neville (the “CFO Employment Agreement”). Pursuant
to the CFO Employment Agreement, Mr. Neville will continue to serve the Company as its Chief Financial Officer and report to the
Company’s CEO, for an initial term of three years, after which the term of employment will automatically renew for successive one
year terms unless either Mr. Neville or the Company provides notice of non-renewal to the other party at least 90 days prior to
the expiration of the then current term.
Under the CFO Employment
Agreement, Mr. Neville is entitled to receive a base salary of $500,000 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
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 (as defined in the Company’s 2021 Equity Incentive Plan), Mr. Neville 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. Neville’s employment
by the Company for Cause (as defined in the CFO Employment Agreement). Additionally, subject to the Board’s approval, Mr. Neville
will be granted 750,000 restricted stock units under the Company’s 2021 Equity Incentive Plan.
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 paid in a lump sum), and (ii) immediate
vesting in full and lapse of any repurchase right with respect to all of his outstanding equity awards (with any performance-based equity
awards deemed earned at target performance).
The severance benefits described
above are subject to Mr. Neville’s (or his estate’s or legal representative’s, as applicable) execution and non-revocation
of a general release of claims, as well as Mr. Neville’s compliance with the restrictive covenants set forth in the CFO Employment
Agreement, including certain non-competition and non-solicitation restrictions during employment and for 12 months thereafter and to
certain obligations relating to non-disparagement, confidentiality and intellectual property for an indefinite period (and the Company
has a mutual non-disparagement obligation with respect to Mr. Neville).
DIRECTOR COMPENSATION
Director Compensation Table
The Company’s policy
with respect to directors’ compensation was developed by the Board, on recommendation of the Compensation and Corporate Governance
Committee. The following table sets forth the compensation awarded, paid to or earned by the directors of the Company during the most
recently completed fiscal year. Directors of the Company who are also officers or employees of the Company are not compensated for service
on the Board; therefore, no fees were payable to Abner Kurtin or Francis Perullo for their service as directors of the Company in 2021.
| 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:
| (1) | The amounts reported in the Stock Awards
column reflect aggregate grant date fair value of restricted stock units computed in accordance
with ASC Topic 718, Compensation—Stock Compensation. These amounts reflect our calculation
of the value of these awards at the grant date and do not necessarily correspond to the actual
value that may ultimately be realized by the named executive officer. Assumptions used in
the calculation of these amounts are included in Note 13 to our consolidated financial statements
for the fiscal years ended December 31, 2021 and 2020. |
| (2) | On August 9, 2021, the Board of
Directors of the Company approved one-time restricted stock unit grants (the "2021
Director RSU Grants") to our non-employee directors. Mr. Hinrichs received
125,000 RSUs which vest in one-half increments on each of the first two anniversaries of
his appointment to the Board. Ms. Paxhia and Mr. Swid received 50,000 RSUs which
vest in one-third increments on the first three anniversaries of our initial public offering.
The values in the table above are calculated in accordance with ASC Topic 718, Compensation—Stock
Compensation, which requires the value to be shown at the closing price as of the date of
grant of $11.00 on August 9, 2021. |
Non-Employee Director Compensation Policy
We have adopted a non-employee
director compensation policy that is applicable to each of our non-employee directors. Pursuant to this non-employee director compensation
policy, each non-employee director receives an annual retainer of $100,000. Each director will also receive an annual restricted stock
unit award equal to $150,000 (with prorated awards made to directors who join during a fiscal year). In addition, each director will
be reimbursed for out-of-pocket expenses in connection with his or her services.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tables set
forth information as of March 14, 2022 regarding the ownership of shares of our Class A Common Stock and Class B Common
Stock by each NEO, each director and all directors and executive officers as a group. Except as set out below, the Company is not aware
of any person who owns more than 5% of either outstanding shares of Class A Common Stock or Class B Common Shares.
The number of shares beneficially
owned and the percentage of shares beneficially owned are based on a total of 173,305,018 shares of Class A Common Stock and 65,000
shares of Class B Common Stock issued and outstanding as of March 14, 2022.
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, 2022 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 Shares shown as beneficially owned by them.
As of March 14, 2022,
there were 173,305,018 shares of Class A Common Stock issued and outstanding as fully paid and non-assessable and carrying a right
to one vote per share. As of March 14, 2022, there were 65,000 shares of Class B Common Stock issued and outstanding as fully
paid and non-assessable and carrying a right to one vote per share. The following table sets forth certain information regarding the
direct ownership of Common Shares as of March 14, 2022 by: (i) each of AWH's directors; (ii) each of AWH's executive officers;
(iii) all of AWH's executive officers and directors as a group; and (iv) each person known to us to own beneficially more than
5% of our common stock.
| | |
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 | % |
Notes:
| (1) | Includes shares of Class A Common
Stock underlying restricted stock units or shares of restricted common stock that are scheduled
to vest within 60 days of March 14, 2022 as follows: |
| Name | |
RSUs | |
| Abner Kurtin | |
| 470,833 | |
| Francis Perullo | |
| 395,833 | |
| Joseph Hinrichs | |
| 62,500 | |
| Emily Paxhia | |
| 37,499 | |
| Scott Swid | |
| 37,499 | |
| Daniel Neville | |
| 291,667 | |
| (2) | Includes 1,887,500 shares of Class A
Common Stock granted under the Company's 2020 Incentive Plan and 2021 Stock Incentive Plan.
Also includes 27,512,375 shares of Class A Common Stock held by AGP Partners, LLC, over
which Mr. Kurtin has sole voting power over 100% of the shares and sole investment power
over 77.9% of the shares. He shares investment power over 22.1% of the shares with Mr. Perullo.
Mr. Kurtin is the sole member of AGP’s managing member, Brook Farm LLC. |
| (3) | Includes 65,000 shares of Class B
Common Stock held by AGP Partners, LLC, over which Mr. Kurtin has sole voting power
over 100% of the shares and sole investment power over 77.9% of the shares. Mr. Kurtin
shares investment power over 22.1% of the shares with Mr. Perullo. Mr. Kurtin is
the sole member of AGP’s managing member, Brook Farm LLC. |
| (4) | Includes 1,862,500 shares of Class A
Common Stock granted under the Company's 2020 Incentive Plan and 2021 Stock Incentive Plan.
Also includes 6,080,235 shares of Class A Common Stock held by AGP Partners, LLC, over
which Mr. Perullo has shared investment power based on his 22.1% membership interest
in AGP. |
| (5) | Includes 14,365 shares of Class B
Common Stock held by AGP Partners, LLC, over which Mr. Perullo has shared investment
power based on his 22.1% membership interest in AGP. |
| (6) | AGP Partners, LLC, 1111 Lincoln Road,
Suite 515, Miami Beach, FL 33139, is owned 77.9% by Mr. Kurtin and 22.1% by Mr. Perullo.
With regard to both classes of common stock, Mr. Kurtin has sole voting power over 100%
of the shares and sole investment power over 77.9% of the shares. He shares investment power
over 22.1% of the shares with Mr. Perullo. |
INTEREST OF MANAGEMENT &
OTHERS IN MATERIAL TRANSACTIONS
Since May 15, 2018,
the date of formation of AWH, other than employment and executive compensation matters described under “Executive Compensation”
and the transactions described below, there have been no transactions or loans between us and:
| · | enterprises
that directly or indirectly through one or more intermediaries, control or are controlled
by, or are under common control with, us; |
| · | associates,
meaning unconsolidated enterprises in which we have a significant influence, or which have
significant influence over us; |
| · | individuals
owning, directly or indirectly, an interest in the voting power of us that gives them significant
influence over our us, and close members of any such individual’s family; |
| · | key
management personnel, that is, those persons having authority and responsibility for planning,
directing and controlling the activities of ours, including directors and senior management
of us and close members of such individuals’ families; and |
| · | enterprises
in which a substantial interest in the voting power is owned, directly or indirectly, by
any person described in the third or fourth bullets above or over which such a person is
able to exercise significant influence, including enterprises owned by directors or major
stockholders of us and enterprises that have a member of key management in common with us. |
Related Party Transaction Policy
Our Board has adopted a
Related Party Transactions Policy, which requires that employees, officers and directors report to the chief legal officer any activity
that would cause or appear to cause a conflict of interest on his or her part.
Under the Related Party
Transactions Policy, a related party transaction includes any transaction, arrangement or relationship, or any series of similar transactions,
arrangements or relationships, in which:
| · | we or any of our subsidiaries
are or will be a participant; |
| · | the aggregate amount
involved will be or may be expected to exceed $120,000 in any fiscal year; and |
| · | any related party
has or will have a direct or indirect material interest. |
Related parties include
any person who is or was (since the beginning of the last fiscal year, even if such person does not presently serve in that role) an
executive officer, director or nominee for director of the Company, any stockholder owning more than 5% of any class of our voting securities
or an immediate family member, as defined in the Related Party Transactions Policy, of any such person.
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.
Transactions with Related
Parties
Management Agreement
Effective April 1, 2018,
AWH entered into a management agreement (the “Management Agreement”) with AGP, the managing member of AWH, pursuant
to which AWH paid AGP $100,000 on a quarterly basis in exchange for AGP serving as managing member of AWH. AGP is entitled to receive
$2,000,000 upon the termination of the Management Agreement in the event of an initial public offering or change of control of AWH. The
payout is contingent upon the beneficial owners of AGP who serve as officers of the Company (i.e., Abner Kurtin and Frank Perullo) entering
into lock-up agreements that extend for 180 days beyond the lock-up agreements to be entered into in connection with the IPO. Pursuant
to the MSA, each such lock-up agreement shall contain a provision whereby AWH’s Board of Managers may waive, in whole or in part,
such extended lock-up thereto if AWH’s Board of Managers determines, in its sole discretion and in accordance with AWH’s
governing documents and applicable law, that such waiver will not have an adverse effect on AWH and its equity holders, business, financial
condition and prospects. AWH incurred management fees related to the Management Agreement of $200,000 during 2018, $400,000 during each
of 2019 and 2020, and $2,124,000 during 2021. The 2021 amount includes the $2,000,000 termination fee that was incurred when the Management
Agreement was terminated upon the IPO. The Management Agreement was approved by the disinterested members and the board of managers of
AWH.
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 144 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
No director, proposed director,
executive officer, nor any of their respective associates or affiliates, is or has been indebted to the Company or its subsidiaries since
the beginning of the Corporation’s most recently completed financial year.
AUDIT COMMITTEE REPORT
In the course of providing
its oversight responsibilities regarding the Company’s financial statements for the year ended December 31, 2021, the Audit
Committee reviewed and discussed the audited financial statements, which appear in our Annual Report on Form 10-K, with management
and Macias Gini & O’Connell LLP, our independent auditor. The Audit Committee reviewed accounting principles, practices
and judgments as well as the adequacy and clarity of the notes to the financial statements.
The Audit Committee has discussed
with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight
Board and the SEC. The Audit Committee has received the written disclosures and the letter from the independent auditors required by
applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the
Audit Committee concerning independence. The Audit Committee has discussed with the independent auditor that auditor’s independence.
In reliance on the reviews
and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial
statements be included in the Annual Report to Stockholders on Form 10-K for the year ended December 31, 2021. The Audit Committee
and the Board have also recommended the appointment of Macias Gini & O’Connell LLP as independent auditors for the Company
for the fiscal year ending December 31, 2022.
Submitted
by the Audit Committee Members:
Scott Swid, Chair
Abner Kurtin
Joseph Hinrichs
STOCKHOLDER PROPOSALS
To be included in the proxy
materials for our 2023 annual meeting of stockholders, proposals of stockholders must be received by us no later than November 25,
2022, which is 120 calendar days prior to the first anniversary of the expected mailing date of this proxy statement. To be included
in the proxy materials for our 2023 annual meeting of stockholders, in accordance with our bylaws, stockholder proposals, including director
nominations, must be received by us not less than 45 nor more than 75 days prior to the one-year anniversary of the date on which the
Company first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for our 2022 annual meeting
of stockholders. Proposals to be included in our proxy materials must comply with the requirements established by the United States Securities
and Exchange Commission for such proposals, which are set forth in Rule 14a-8 under the Exchange Act.
To comply with the universal
proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s
nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934 no
later than March 7, 2023.
OTHER MATTERS
We do not know of any business
other than that described in this proxy statement that will be presented for consideration or action by the stockholders at the Meeting.
If, however, any other business is properly brought before the meeting, shares represented by proxies will be voted in accordance with
the best judgment of the persons named in the proxies or their substitutes.
PRINCIPAL EXECUTIVE OFFICE
Our principal executive office
is located at 1411 Broadway, 16th Floor, New York, NY 10018.
ADDITIONAL INFORMATION
Additional information relating
to the Company is available under the Company's profile on the SEC’s website at www.sec.gov or under its SEDAR profile at www.sedar.com.
Financial information is provided in the Company’s Annual Report to Stockholders on Form 10-K for the year ended December 31,
2021, a copy of which may be obtained under the Corporation’s profile on the SEC’s website at www.sec.gov, under its SEDAR
profile at www.sedar.com or upon written request to the Corporate Secretary at 1411 Broadway, 16th Floor, New York, NY 10018.
Appendix A
ASCEND WELLNESS HOLDINGS, INC.
2021 STOCK INCENTIVE PLAN
Section 1. Purpose
The purpose of the Plan is
to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants,
advisors, independent contractors and non-employee Directors capable of assuring the future success of the Company, to offer such persons
incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through stock-based
awards and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the
Company’s shareholders.
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 mean Ascend Wellness Holdings, Inc., a corporation incorporated under the laws of Delaware and any successor corporation.
(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, as amended from time to time.
(r) “Prior
Equity Plan” shall mean current equity incentive plan of the Company, as amended from time to time.
(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 conditions
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
under all Awards under the Plan shall be 10% of the number of Shares issued and outstanding as of the date of shareholder approval of
this Plan. The aggregate number of Shares that may be issued under all Awards under the Plan shall be reduced by Shares subject to Awards
issued under the Plan and the Prior Equity Plan in accordance with the Share counting rules described in Section 4(b) below.
On and after shareholder approval of this Plan, no awards shall be granted under the Prior Equity Plan, but all outstanding awards previously
granted under the Prior Equity Plan shall remain outstanding and subject to the terms of the Prior Equity Plan. For avoidance of doubt,
the maximum number of Shares available for grants of Incentive Stock Options under the Plan is limited to 10% of issued and outstanding
Shares as of the date of shareholder approval of this Plan.
(b) Counting
Shares. For the purposes of this Section 4 if an Award entitles the holder thereof to receive or purchase Shares, the number
of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate
number of Shares available for granting Awards under the Plan.
| (i) | Shares Added Back to Reserve. If
any Shares covered by an Award or to which an Award relates are not purchased or are forfeited
or are reacquired by the Company, or if an Award otherwise terminates or is cancelled without
delivery of any Shares, then the number of Shares counted against the aggregate number of
Shares available under the Plan with respect to such Award, to the extent of any such forfeiture,
reacquisition by the Company, termination or cancellation, shall again be available for granting
Awards under the Plan. In addition, any Shares subject to any outstanding award under the
Prior Equity Plan that, on and after the date shareholders approve the Plan, are not purchased
or are forfeited, paid in cash or reacquired by the Company, or otherwise not delivered to
the Participant due to termination or cancellation of such award shall again be available
for granting Awards under the Plan. |
| (ii) | Cash-Only Awards. Awards that do
not entitle the holder thereof to receive or purchase Shares shall not be counted against
the aggregate number of Shares available for Awards under the Plan. |
| (iii) | Substitute Awards Relating to Acquired
Entities. 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 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:
| (i) | Exercise Price. The purchase price
per Share purchasable under an Option shall be determined by the Committee and shall not
be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of
grant of such Option; provided, however, that the Committee may designate a purchase
price below Fair Market Value on the date of grant if the Option is granted in substitution
for a stock option previously granted by an entity that is acquired by or merged with the
Company or an Affiliate. |
| (ii) | Option Term. The term of each Option
shall be fixed by the Committee at the date of grant but shall not be longer than 10 years
from the date of grant. Notwithstanding the foregoing, in the event that the expiry date
of an Option held by a non-U.S. Award Holder falls within a trading blackout period imposed
by the Company (a “Blackout Period”), and neither the Company nor the
individual in possession of the Options is subject to a cease trade order in respect of the
Company’s securities, then the expiry date of such Option shall be automatically extended
to the 10th business day following the end of the Blackout Period. |
| (iii) | Time and Method of Exercise. The
Committee shall determine the time or times at which an Option may be exercised within the
Option term either in whole or in part, and the method of exercise, except that any exercise
price tendered shall be in either cash, Shares having a Fair Market Value on the exercise
date equal to the applicable exercise price or a combination thereof, as determined by the
Committee. |
| (A) | Promissory Notes. Notwithstanding
the foregoing, the Committee may not permit payment of the exercise price, either in whole
or in part, with a promissory note. |
| (B) | Net Exercises. The terms of any
Option may be written to permit the Option to be exercised by delivering to the Participant
a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise)
equal to the excess, if any, of the Fair Market Value of the Shares underlying the Option
being exercised, on the date of exercise, over the exercise price of the Option for such
Shares. |
| (iv) | Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, the following additional provisions shall apply to
the grant of stock options which are intended to qualify as Incentive Stock Options: |
| (A) | To the extent that the aggregate Fair
Market Value (determined at the time of grant) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Participant during any calendar year
(under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit
established in the Code) or otherwise does not comply with the rules governing Incentive
Stock Options, the Options or portions thereof that exceed such limit (according to the order
in which they were granted) or otherwise do not comply with such rules will be treated
as Non-Qualified Stock Options, notwithstanding any contrary provision of the applicable
Award Agreement(s). |
| (B) | All Incentive Stock Options must be granted
within ten years from the earlier of the date on which this Plan was adopted by the Board
or the date this Plan was approved by the shareholders of the Company. |
| (C) | Unless sooner exercised, all Incentive
Stock Options shall expire and no longer be exercisable no later than ten (10) years
after the date of grant; provided, however, that in the case of a grant of
an Incentive Stock Option to a Participant who, at the time such Option is granted, owns
(within the meaning of Section 422 of the Code) stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or of its Affiliates,
such Incentive Stock Option shall expire and no longer be exercisable no later than five (5) years
from the date of grant. |
| (D) | The purchase price per Share for an Incentive
Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of
a Share on the date of grant of the Incentive Stock Option; provided, however,
that, in the case of the grant of an Incentive Stock Option to a Participant who, at the
time such Option is granted, owns (within the meaning of Section 422 of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or of its Affiliates, the purchase price per Share purchasable under
an Incentive Stock Option shall be not less than one hundred ten percent (110%) of the
Fair Market Value of a Share on the date of grant of the Incentive Stock Option. |
| (E) | Any Incentive Stock Option authorized
under the Plan shall contain such other provisions as the Committee shall deem advisable,
but shall in all events be consistent with and contain all provisions required in order to
qualify the Option as an Incentive Stock Option. |
| (F) | An Incentive Stock Option may be exercised
during the Participant’s lifetime only by the Participant. An Incentive Stock Option
may not be transferred, assigned, or pledged by the Participant except by will or the laws
of descent and distribution. |
(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:
| (i) | Restrictions. Shares of Restricted
Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or property with respect thereto),
which restrictions may lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may deem appropriate. For purposes of clarity
and without limiting the Committee’s general authority under Section 3(a), vesting
of such Awards may, at the Committee’s discretion, be conditioned upon the Participant’s
completion of a specified period of service with the Company or an Affiliate, or upon the
achievement of one or more performance goals established by the Committee, or upon any combination
of service-based and performance-based conditions. Notwithstanding the foregoing, rights
to dividend or Dividend Equivalent payments shall be subject to the limitations described
in Section 6(d). |
| (ii) | Issuance and Delivery of Shares.
Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted
and may be evidenced in such manner as the Committee may deem appropriate, including book-entry
registration or issuance of a stock certificate or certificates, which certificate or certificates
shall be held by the Company or held in nominee name by the stock transfer agent or brokerage
service selected by the Company to provide such services for the Plan. Such certificate or
certificates shall be registered in the name of the Participant and shall bear an appropriate
legend referring to the restrictions applicable to such Restricted Stock, which may include
lock-up restrictions. Shares representing Restricted Stock that are no longer subject to
restrictions shall be delivered (including by updating the book-entry registration) to the
Participant promptly after the applicable restrictions lapse or are waived. In the case of
Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon
the lapse or waiver of restrictions and the restricted period relating to Restricted Stock
Units evidencing the right to receive Shares, such Shares shall be issued and delivered to
the holder of the Restricted Stock Units. |
| (iii) | Forfeiture. Except as otherwise
determined by the Committee or as provided in an Award Agreement, upon a Participant’s
termination of employment or service or resignation or removal as a Director (in either case,
as determined under criteria established by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and all Restricted Stock Units held by such Participant
at such time shall be forfeited and reacquired by the Company for cancellation at no cost
to the Company; provided, however, that the Committee may waive in whole or in part any or
all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock
Units. |
(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.
| (i) | Consideration for Awards. Awards
may be granted for no cash consideration or for any cash or other consideration as may be
determined by the Committee or required by applicable law. |
| (ii) | Awards May Be Granted Separately
or Together. Awards may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with or in substitution for any other Award or any award granted
under any other plan of the Company or any Affiliate. Awards granted in addition to or in
tandem with other Awards or in addition to or in tandem with awards granted under any other
plan of the Company or any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards. |
| (iii) | Limits on Transfer of Awards. No
Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and
no right under any such Award shall be transferable by a Participant other than by will or
by the laws of descent and distribution, and no Award (other than fully vested and unrestricted
Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated,
attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any Affiliate. Notwithstanding
the foregoing, the Committee may permit the transfer of an Award to family members if such
transfer is for no value and in accordance with the rules of Form S-8. The Committee
may also establish procedures as it deems appropriate for a Participant to designate a person
or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and
receive any property distributable with respect to any Award in the event of the Participant’s
death. |
| (iv) | Restrictions; Securities Exchange Listing.
All Shares or other securities delivered under the Plan pursuant to any Award shall be subject
to such restrictions as the Committee may deem advisable under the Plan, applicable federal
or state securities laws and regulatory requirements, and the Committee may cause appropriate
entries to be made with respect to, or legends to be placed on the certificates for, such
Shares or other securities to reflect such restrictions. The Company shall not be required
to deliver any Shares or other securities covered by an Award unless and until the requirements
of any federal or state securities or other laws, rules or regulations (including the
rules of any securities exchange) as may be determined by the Company to be applicable
are satisfied. |
| (v) | Section 409A Provisions. Notwithstanding
anything in the Plan or any Award Agreement to the contrary, to the extent that any amount
or benefit that constitutes “deferred compensation” to a Participant under Section 409A
and applicable guidance thereunder is otherwise payable or distributable to a Participant
under the Plan or any Award Agreement solely by reason of the occurrence of a change in control
or due to the Participant’s disability or “separation from service” (as
such term is defined under Section 409A), such amount or benefit will not be payable
or distributable to the Participant by reason of such circumstance unless the Committee determines
in good faith that (i) the circumstances giving rise to such change in control event,
disability or separation from service meet the definition of a change in control event, disability,
or separation from service, as the case may be, in Section 409A(a)(2)(A) of the
Code and applicable proposed or final regulations, or (ii) the payment or distribution
of such amount or benefit would be exempt from the application of Section 409A by reason
of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise
would be made to a Participant who is a Specified Employee (as determined by the Committee
in good faith) on account of separation from service may not be made before the date which
is six months after the date of the Specified Employee’s separation from service (or
if earlier, upon the Specified Employee’s death) unless the payment or distribution
is exempt from the application of Section 409A by reason of the short-term deferral
exemption or otherwise. |
| (vi) | Prohibition on Option and Stock Appreciation
Right Repricing. Except as provided in Section 4(c) hereof, the Committee may
not, without prior approval of the Company’s shareholders, seek to effect any re-pricing
of any previously granted, “underwater” Option or Stock Appreciation Right by:
(i) amending or modifying the terms of the Option or Stock Appreciation Right to lower
the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right
and granting either (A) replacement Options or Stock Appreciation Rights having a lower
exercise price; or (B) Restricted Stock, Restricted Stock Units or Other Stock-Based
Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock
Appreciation Right for cash or other securities. An Option or Stock Appreciation Right will
be deemed to be “underwater” at any time when the Fair Market Value of the Shares
covered by such Option or Stock Appreciation Right is less than the exercise price. |
| (vii) | Undisclosed Information. The Committee
may not set Award exercise prices or other prices at which Shares may be issued on the basis
of market prices that do not reflect information known to management that has not been disclosed,
except where the Award or issuance relates directly to the undisclosed event and the grantee
or recipient of the Shares is not an employee or insider of the Company at the time of grant
or issue, in compliance with, and subject to any change in, CSE policies. |
| Section 7. | Amendment
and Termination; Corrections |
(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:
| (i) | correct any defect, supply any omission
or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner
and to the extent it shall deem desirable to implement or maintain the effectiveness of the
Plan; |
| (ii) | amend the eligibility for, and limitations
or conditions imposed upon, participation in the Plan; |
| (iii) | make changes that are necessary or desirable
to comply with applicable laws, rules, regulations and policies of any applicable governmental
entity or stock exchange (including amendments to Awards necessary or desirable to maximize
any available tax deduction or to avoid any adverse tax results, and no action taken to comply
with such laws, rules, regulations and policies shall be deemed to impair or otherwise adversely
alter or impair the rights of any holder of an Award or beneficiary thereof); |
| (iv) | amend any terms relating to the administration
of the Plan, including the terms of any administrative guidelines or other rules related
to the Plan; or |
| (v) | make any other amendment, whether fundamental
or otherwise, not requiring shareholders’ approval under CSE policies, applicable securities
laws, the rules or regulations of the Securities and Exchange Commission or any other
securities exchange that are applicable to the Company. |
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:
| (I) | require shareholder approval under CSE policies,
applicable securities laws, the rules or regulations of the Securities and Exchange
Commission or any other securities exchange that are applicable to the Company; |
| (II) | increase the number of shares authorized
under the Plan as specified in Section 4(a) of the Plan; |
| (III) | permit repricing of Options or Stock Appreciation
Rights, which is currently prohibited by Section 6 of the Plan; |
| (IV) | permit the award of Options or Stock Appreciation
Rights at a price less than one-hundred percent (100%) of the Fair Market Value of a
Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions
of Section 6(a)(i) and Section 6(b) of the Plan; |
| (V) | increase the maximum term permitted for
Options and Stock Appreciation Rights as specified in Section 6(a) and Section 6(b) or
extend the terms of any Options beyond their original expiry date; or |
| (VI) | amend this Section 7(a); |
(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:
| (i) | either (A) termination of any Award,
whether or not vested, in exchange for an amount of cash and/or other property, if any, equal
to the amount that would have been attained upon the exercise of the vested portion of the
Award or realization of the Participant’s vested rights (and, for the avoidance of
doubt, if, as of the date of the occurrence of the transaction or event described in this
Section 7(b)(i)(A), the Committee or the Board determines in good faith that no amount
would have been attained upon the exercise of the Award or realization of the Participant’s
rights, then the Award may be terminated by the Company without any payment) or (B) the
replacement of the Award with other rights or property selected by the Committee or the Board,
in its sole discretion; |
| (ii) | that the Award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or survivor corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices; |
| (iii) | that the Award shall be exercisable or
payable or fully vested with respect to all Shares covered thereby, notwithstanding anything
to the contrary in the applicable Award Agreement; or |
| (iv) | that the Award cannot vest, be exercised
or become payable after a date certain in the future, which may be the effective date of
the event. |
| Section 8. | Income
Tax Withholding |
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.
| Section 9. | U.S.
Securities Laws |
(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”).
| (i) | The following rules shall apply to
any Option in the event of termination of the Participant’s service to the Company
or an Affiliate: |
| (A) | 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, provided
that in no event shall the Option be exercisable after the expiration of the term as set
forth in the Award Agreement. |
| (B) | 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, provided that in no event shall the Option be exercisable
after the expiration of the term as set forth in the Award Agreement. |
“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.
| (ii) | 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. |
| (iii) | 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 Award Agreement shall terminate on or before the tenth anniversary
of the date of grant. |
| Section 10. | General
Provisions |
(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.
| Section 11. | Effective
Date of the Plan |
The Plan was adopted by the
Board on June 29, 2021.
| Section 12. | Term
of the Plan |
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
| ☐ |
Original
Application |
Offering
Date: |
|
| ☐ |
Change
in Payroll Deduction Rate |
|
|
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 of 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.
| Dated: |
|
| |
Signature
of Employee |
[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.
| |
Name: |
|
| |
Address: |
|
| |
|
|
| |
Signature: |
|
| |
Date: |
|
Appendix
C
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(D) of
the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): September 28, 2021
ASCEND WELLNESS HOLDINGS, INC.
(Exact name of registrant as specified in its
charter)
| Delaware |
|
333-254800 |
|
83-0602006 |
| (State
or other jurisdiction of incorporation or organization) |
|
(Commission
File Number) |
|
(I.R.S.
Employer Identification No.) |
1411 Broadway
16th Floor
New York, NY 10018
| |
|
(Address
of principal executive offices) |
|
|
(646) 661-7600
(Registrant’s telephone number, including
area code)
n/a
| |
|
(Former
name or former address, if changed since last report) |
|
|
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2
below).
| ¨ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
None
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 made by the Company in 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 has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
|
Ascend Wellness Holdings, Inc. |
| |
|
|
| October 1, 2021 |
|
/s/
Daniel Neville |
| |
|
Daniel Neville
Chief Financial Officer
(Principal Financial Officer) |
Exhibit 16.1
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
ASCEND WELLNESS HOLDINGS,
INC. Form of Proxy – Annual Meeting to be held on May 6, 2022 Sᵗᵒᶜᵏ Eˣᶜʰᵃⁿᵍᵉ
Tᵒʷᵉʳ Calgary, AB T2P 3C4Appointment of Proxyholder I/We being the undersigned holder(s) of Ascend Wellness Holdings,
Inc. (the “Company”) hereby appoint Abner Kurtin or failing this person, Francis Perullo ORPrint the name of the person you
are appointing if this person is someone other than the Board Nominees listed herein:as my/our proxyholder with full power of substitution
and to attend, act, and to vote for and on behalf of the holder in accordance with the following direction (or if no directions have
been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual Meeting of Ascend Wellness Holdings,
Inc. to be held virtually at https://web.lumiagm.com/218648002 at 10:00 a.m. (Eastern Time) or at any adjournment or postponement thereof.1.
Election of Directors. For Withhold For Withhold For Withhold a. Abner Kurtin b. Joseph Hinrichs c. Emily Paxhia d. Francis Perullo e.
Scott Swid2. Appointment of Auditor. To ratify the appointment of Macias Gini & O'Connell LLP as the independent registered public
accounting firm of the Company.3. Stock Incentive Plan. To approve the adoption of the Company’s 2021 stock incentive plan.4. Employee
Stock Purchase Plan. To approve the adoption of the Company’s 2021 employee stock purchase plan.For Against AbstainFor Against
AbstainFor Against AbstainAuthorized Signature(s) – This section must be completed for your instructions to be executed.I/we authorize
you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting.
If no voting instructions are indicated above, this Proxy will be voted as recommended by the Board.Signature(s): Date/ / MM / DD / YYQuarterly
Reports – Check the box to the right if you would like to RECEIVE our Quarterly Reports on Form 10-Q by mail. See reverse for instructions
to sign up for delivery by email.Annual Report – Check the box to the right if you would like to RECEIVE our Annual Report on Form
10-K by mail. See reverse for instructions to sign up for delivery by email.
This form of proxy is solicited
by and on behalf of Management. Proxies must be received by 12:00 p.m., Eastern Time, on May 3, 2022. Notes to Proxy 1. Each holder has
the right to appoint a person, who need not be a holder, to attend and represent him or her at the Annual Meeting. If you wish to appoint
a person other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided
on the reverse. 2. If the securities are registered in the name of more than one holder (for example, joint ownership, trustees, executors,
etc.) then all of the registered owners must sign this proxy in the space provided on the reverse. If you are voting on behalf of a corporation
or another individual, you may be required to provide documentation evidencing your power to sign this proxy with signing capacity stated.
3. This proxy should be signed in the exact manner as the name appears on the proxy. 4. If this proxy is not dated, it will be deemed
to bear the date on which it is mailed by Management to the holder. 5. The securities represented by this proxy will be voted as directed
by the holder; however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by the Board.
6. The securities represented by this proxy will be voted or withheld from voting, in accordance with the instructions of the holder,
on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities
will be voted accordingly. 7. This proxy confers discretionary authority in respect of amendments or variations to matters identified
in the Notice of Meeting or other matters that may properly come before the meeting. 8. This proxy should be read in conjunction with
the accompanying documentation provided by Management. INSTEAD OF MAILING THIS PROXY, YOU MAY SUBMIT YOUR PROXY USING SECURE ONLINE VOTING
AVAILABLE PRIOR TO 12:00 P.M. (EASTERN TIME) ON MAY 3, 2022:To Vote Your Proxy Online please visit: https://login.odysseytrust.com/pxlogin
and click on VOTE. You will require the CONTROL NUMBER printed with your address to the right. If you vote by Internet, do not mail this
proxy.Stockholder Address and Control Number HereTo Virtually Attend the Meeting:You can attend the meeting virtually by visiting https://web.lumiagm.com/218648002
and entering the meeting ID 218-648-002 (password ascend2022). For further information on the virtual AGM and how to attend it, please
view the management information circular of the company.To request the receipt of future documents via email and/or to sign up for Securityholder
Online services, you may contact Odyssey Trust Company at www.odysseycontact.comVoting by mail may be the only method for securities
held in the name of a corporation or securities being voted on behalf of another individual. A return envelope has been enclosed for
voting by mail.
Grafico Azioni Ascend Wellness (QX) (USOTC:AAWH)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Ascend Wellness (QX) (USOTC:AAWH)
Storico
Da Gen 2024 a Gen 2025
