MedMen Announces Increased Commitment From Gotham Green Partners

MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF) (“MedMen” or the “Company”) is pleased to announce that it has signed a binding term sheet in respect of certain amendments to the definitive agreements for the up to US$250,000,000 senior secured convertible credit facility (the “Facility”) led by Gotham Green Partners, an investor in the global cannabis industry. Concurrent to the amendments, Gotham Green Partners, with participation from Wicklow Capital, has agreed to an additional US$30,000,000 equity commitment, bringing the total financing commitment to US$280,000,000. To date, Gotham Green Partners has funded US$100,000,000 of the total commitment.

“Both Gotham Green and Wicklow have shown continued confidence in our strategy and recognize the potential ahead,” said Adam Bierman, MedMen co-founder and CEO.

In addition to funding general working capital, the increased financing commitment will primarily be used to:

• operationalize the balance of the Company's retail licenses; the Company is licensed for up to 86 retail stores across the U.S., of which 37 are operational today (including the footprint to be acquired through pending acquisitions, subject to customary regulatory approvals);
• focus on strategic markets, such as Illinois, where the Company anticipates 10 stores after the state transitions from a medical to adult use market in 2020 and pending regulatory approvals associated with the PharmaCann acquisition;
• continue expanding the retail presence in Florida, where the Company expects to open 11 additional stores in 2019;
• remain opportunistic with respect to selective growth initiatives such as expanding the Company’s retail footprint and investing in its delivery and loyalty platforms and
• strengthen the Company’s balance sheet

“MedMen’s strategy, brand and performance makes them the clear leader of cannabis retail in the U.S. and we are supportive of management’s vision and plan for growth and profitability,” said Jason Adler, managing member of Gotham Green Partners. “As their primary capital partner, we will continue to support the Company as they bring their iconic brand to new markets.”

Among other amendments, it is contemplated that the terms and conditions of the Facility will be amended such that:

• the trading price thresholds in respect of the Class B subordinate voting shares of the Company (the “Subordinate Voting Shares”) in order to access Tranche 2 and Tranche 3 of the Facility will be eliminated, giving the Company full access to the US$250,000,000 Facility.
• the conversion price per share of the senior secured convertible notes (“Notes”) in the aggregate principal amount of US$100,000,000 co-issued by the Company and MM CAN USA, Inc., a subsidiary of the Company, pursuant to Tranche 1 of the Facility will be changed from US$3.29 to US$2.55, which represents a 12% premium over the Company’s 20 trading day VWAP as of July 8, 2019.
• the method for calculating the conversion price per share of the Notes issuable pursuant to Tranches 2 and 3 of the Facility (which are each in the principal amount of US$75,000,000 and which have not yet been issued), will be changed from being equal to:
  • the lesser of (i) 115% of the 20 trading day volume weighted average trading price (“VWAP”) of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of the applicable Tranche, and (ii) US$7.00.
    
    to being equal to:
    
    
  • the lesser of (i) the 20 trading day VWAP of the Subordinate Voting Shares as of the trading day immediately preceding the date the applicable Tranche is called by the Company, (ii) the 20 trading day VWAP of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of the applicable Tranche, and (iii) US$2.55.
• the Company will be able to force the conversion of up to 75% of the then outstanding Notes under the Facility if the VWAP of the Subordinate Voting Shares is at least US$6.20 for any 20 consecutive trading day period, at a conversion price per share equal to US$6.20, with both the forced conversion share price threshold and the conversion price per share being reduced from US$8.00.

It is expected that receipt of the initial portion of Tranche 2, in the aggregate principal amount of US$25,000,000, will be completed in the coming days. Notes in connection with this portion of Tranche 2 will have a conversion price per share determined in accordance with the amended method noted above.

As a Facility amendment fee, 15% of the outstanding principal amount of the Facility will be added to the balance of the Facility on the effective date of the Facility amendments (such outstanding principal amount is anticipated to be US$125,000,000, given the anticipated completion of the initial portion of Tranche 2 noted above). This amendment fee will be cancelled in the event that either (i) the Facility balance excluding the amendment fee is paid in full (inclusive of any other required fees or premiums), or (ii) a lender under the Facility elects to convert any portion of the Facility and the trading price of the Subordinate Voting Shares at the time of conversion is above US$2.95.

In addition, Gotham Green Partners and Wicklow Capital have committed to a US$30,000,000 non-brokered financing of Subordinate Voting Shares (the “Equity Placement”) at a price equal to US$2.37 per share. The Equity Placement is conditional upon the satisfaction of customary conditions, including but not limited to the receipt of all necessary approvals.

Please refer to the Company’s news releases dated April 23, 2019 and May 23, 2019 and to other documents available on the Company’s profile at www.sedar.com for additional details as to the Facility.

The terms of the Facility amendments and of the Equity Placement described in this new release are set out in a binding term sheet and not within definitive documentation. As a result, completion of any such amendments and of the Equity Placement are subject to further terms and conditions, including representations, warranties, covenants and conditions, and other agreements being entered into by the applicable parties. The terms of the Facility amendments and of the Equity Placement are subject to change as the parties negotiate such definitive documentation. The completion of the Facility amendments and of the Equity Placement will be subject to certain conditions being satisfied including but not limited to the receipt of all necessary approvals. The parties are currently anticipating amending the Facility and completing the Equity Placement in July or August. There can be no assurance that the parties will enter into definitive documentation such that the Facility will be amended or the Equity Placement will be completed as described herein, or if definitive documentation is entered into, that the terms of the Facility amendments and the Equity Placement will be as stated above.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws.

About MedMen:

MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New York. MedMen’s mission is to provide an unparalleled experience that invites the world to discover the remarkable benefits of cannabis because a world where cannabis is legal and regulated is a safer, healthier and happier world. Learn more at www.medmen.com.

About Gotham Green Partners:

Gotham Green Partners, LLC is a New York and California-based private equity firm focused on deploying capital into cannabis and cannabis-related enterprises on a global scale. The firm manages a diversified portfolio of investments and is actively investing across the cannabis value chain.

Cautionary Note Regarding Forward-Looking Information and Statements:

This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only MedMen’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of MedMen’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but is not limited to, expectations that definitive documentation for the Facility amendments and the Equity Placement will be entered into, information concerning the terms of the proposed Facility amendments and the Equity Placement, timing for completion of the Facility amendments and the Equity Placement, the use of proceeds of the Facility and the Equity Placement, the impact of such use of proceeds of the Facility and the Equity Placement on the business, assets, liabilities, financial condition, performance and prospects of MedMen, sufficiency of the proceeds of the Facility and Equity Placement for MedMen to realize its objectives, the effects of the Facility (once fully drawn) and the Equity Placement on the financial condition of MedMen, the ability of MedMen to satisfy the remaining conditions (and any future additional conditions) to drawdown on Tranches 2 and 3 of the Facility after the Facility is amended, the anticipated completion of the initial portion of Tranche 2 of the Facility in the principal amount of US$25,000,000 in the coming days, and the completion by MedMen of its currently pending acquisitions.

By identifying such information and statements in this manner, MedMen is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of MedMen to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this news release, MedMen has made certain assumptions. Although MedMen believes that the assumptions used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Key assumptions used herein are that the parties will negotiate mutually acceptable definitive documentation for the Facility amendments and the Equity Placement and complete the Equity Placement, that the current terms and anticipated timing will not change and that MedMen will be able to satisfy the conditions to drawdown on Tranche 2 and Tranche 3 of the Facility that remain after the Facility has been amended. The forward-looking information and forward-looking statements contained in this news release are made as of the date of this news release, and MedMen does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to MedMen or persons acting on its behalf is expressly qualified in its entirety by this notice.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

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