Common use of Unit Exchange Clause in Contracts

Unit Exchange. Subject to the terms and conditions set forth herein, at the Closing, Transferors shall transfer to ParentCo all of the Units and any other equity instruments or instruments exchangeable into equity of the Company, free and clear of all Encumbrances, and in exchange therefor ParentCo shall issue and deliver to Transferors, pro rata, such number of its Class B Subordinate Voting Shares as shall be specified for each Transferor on Schedule I hereto (the “Exchange Shares”). (a) The aggregate number of Exchange Shares that shall be issued to the Transferors shall be an amount equal to 1/3 multiplied by the sum of: (i) the fully diluted issued and outstanding equity and options, warrants or other instruments redeemable for equity of ParentCo (calculated on the treasury stock method) immediately prior to the Closing as evidenced by the Closing Share Schedule, plus (ii) the amount of the outsanding LTIP Units (as defined in the amended and restated limited liability company agreement of MM Enterprises USA, LLC dated May 28, 2018) issued to the General Counsel, Chief Strategy Officer and former CFO on May 28, 2018, at the time of the Closing, to the extent not already included in the calculation set forth in subsection 2.01(a)(i) above (the “Total Consideration”). For the avoidance of doubt, the Parties agree that the Total Consideration shall be calculated in the same manner as the Parties calculated the implied share consideration to be 454,500,000 existing fully-diluted shares outstanding as of October 9, 2018 for purposes of the Binding LOI. If the LTIP Units (as defined in the amended and restated limited liability company agreement of MM Enterprises USA, LLC dated May 28, 2018) issued to MedMen’s former CFO which may be subject to litigation are forfeited prior to the Closing, the Total Consideration shall be reduced by 1/3 of the number of such forfeited LTIP Units. If such forfeiture occurs after the Closing, the reduction in the Total Consideration shall occur through release of the Escrow Shares to MedMen. If a final resolution regarding such LTIP Units is not reached prior to the release of the Escrow Shares, the Total Consideration shall be reduced by 986,323 Exchange Shares through release of the Escrow Shares. (b) As of the Closing, the Class B Subordinate Voting Shares of ParentCo shall have been conditionally approved by the CSE for listing thereon. (c) At least two (2) Business Days prior to the Closing, the Company shall deliver to ParentCo an allocation statement (“Payment Allocation Schedule”) consistent with Schedule I setting forth: (i) the pro-rata allocation of the Exchange Shares to be issued at the Closing to the Transferors, less the pro-rata allocation of Broker Shares; (ii) the pro-rata allocation of the Escrow Shares to be delivered to the Escrow Agent in accordance with the Escrow Agreement to be held on behalf of the Transferors; (iii) the pro-rata allocation of Non-Key License Holdback Shares (as defined in Section 8.20(c)) to be held back at the Closing; and (iv) the names and addresses of each of the Transferors. The Payment Allocation Schedule shall not contain any fractional shares, and ParentCo and MedMen shall be entitled to rely on the accuracy and completeness of the Payment Allocation Schedule such that neither ParentCo nor MedMen shall have any Liability in the event any Person makes a claim regarding the inaccuracy thereon. (d) The Unit Exchange shall occur at Closing, provided, however, that the Non-Key License Holdback Shares may be withheld from delivery to Transferors at Closing, as contemplated by and further described in Section 8.20 in the event that the requisite Governmental Approvals for the transfer of the Cannabis Permits to ParentCo has not been received for all of the Companies on or prior to the Closing.

Unit Exchange. Subject to the terms and conditions set forth herein, at the Closing, Transferors shall transfer to ParentCo all of the Units and any other equity instruments or instruments exchangeable into equity of the Company, free and clear of all Encumbrances, and in exchange therefor ParentCo shall issue and deliver to Transferors, pro rata, such number of its Class B Subordinate Voting Shares as shall be specified for each Transferor on Schedule I hereto (the “Exchange Shares”). (a) The aggregate number of Exchange Shares that shall be issued to the Transferors shall be an amount equal to 1/3 multiplied by the sum of: (i) the fully diluted issued and outstanding equity and options, warrants or other instruments redeemable for equity of ParentCo (calculated on the treasury stock method) immediately prior to the Closing as evidenced by the Closing Share Schedule, plus (ii) the amount of the outsanding LTIP Units (as defined in the amended and restated limited liability company agreement of MM Enterprises USA, LLC dated May 28, 2018) issued to the General Counsel, Chief Strategy Officer and former CFO on May 28, 2018, at the time of the Closing, to the extent not already included in the calculation set forth in subsection 2.01(a)(i) above (the “Total Consideration”). For the avoidance of doubt, the Parties agree that the Total Consideration shall be calculated in the same manner as the Parties calculated the implied share consideration to be 454,500,000 existing fully-diluted shares outstanding as of October 9, 2018 for purposes of the Binding LOI. If the LTIP Units (as defined in the amended and restated limited liability company agreement of MM Enterprises USA, LLC dated May 28, 2018) issued to MedMen’s former CFO which may be subject to litigation {Price reduction event REDACTED – Confidential} are forfeited prior to the Closing, the Total Consideration shall be reduced by 1/3 of the number of such forfeited LTIP Units. If such forfeiture occurs after the Closing, the reduction in the Total Consideration shall occur through release of the Escrow Shares to MedMen. If a final resolution regarding such LTIP Units is not reached prior to the release of the Escrow Shares, the Total Consideration shall be reduced by 986,323 Exchange Shares through release of the Escrow Shares. (b) As of the Closing, the Class B Subordinate Voting Shares of ParentCo shall have been conditionally approved by the CSE for listing thereon. (c) At least two (2) Business Days prior to the Closing, the Company shall deliver to ParentCo an allocation statement (“Payment Allocation Schedule”) consistent with Schedule I setting forth: (i) the pro-rata allocation of the Exchange Shares to be issued at the Closing to the Transferors, less the pro-rata allocation of Broker Shares; (ii) the pro-rata allocation of the Escrow Shares to be delivered to the Escrow Agent in accordance with the Escrow Agreement to be held on behalf of the Transferors; (iii) the pro-rata allocation of Non-Key License Holdback Shares (as defined in Section 8.20(c)) to be held back at the Closing; and (iv) the names and addresses of each of the Transferors. The Payment Allocation Schedule shall not contain any fractional shares, and ParentCo and MedMen shall be entitled to rely on the accuracy and completeness of the Payment Allocation Schedule such that neither ParentCo nor MedMen shall have any Liability in the event any Person makes a claim regarding the inaccuracy thereon. (d) The Unit Exchange shall occur at Closing, provided, however, that the Non-Key License Holdback Shares may be withheld from delivery to Transferors at Closing, as contemplated by and further described in Section 8.20 in the event that the requisite Governmental Approvals for the transfer of the Cannabis Permits to ParentCo has not been received for all of the Companies on or prior to the Closing.