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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 9, 2025
VIREO GROWTH INC.
(Exact name of registrant as specified in its
charter)
British Columbia
(State or other jurisdiction of Incorporation)
| 000-56225 |
|
82-3835655 |
| (Commission File Number) |
|
(IRS Employer Identification No.) |
| |
|
|
|
207 South 9th Street
Minneapolis, Minnesota |
|
55402 |
| (Address of principal executive offices) |
|
(Zip Code) |
(612) 999-1606
(Registrant’s telephone number, including
area code)
Not Applicable
(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:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
| N/A |
N/A |
N/A |
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 x
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 1.01. |
Entry into a Material Definitive Agreement |
On May 12, 2025, Vireo Growth Inc. (“Vireo”
or the “Company”) entered into the Second Amendment to Merger Agreement (the “Second Amendment” with Vireo WH
Merger Sub Inc. (“Merger Sub”) and WholesomeCo, Inc. (“Wholesome”), which amended the Agreement and Plan
of Merger, by and among the Company, Merger Sub, Wholesome, and Shareholder Representative Services LLC, a Colorado limited liability
company (solely in its capacity as representative, agent and attorney-in-fact of the Wholesome stockholders) (“Representative”),
dated December 18, 2024 (as amended by the First Amendment to Merger Agreement dated March 17, 2025 and the Second Amendment, the
“Merger Agreement”). Capitalized terms used herein without a definition have the meanings given to such terms in the Merger
Agreement.
The Second Amendment amended the definitions
of (i) “Closing Indebtedness” and “Closing Working Capital” in the Merger Agreement to provide that the calculations
of such amounts will be determined as of December 31, 2024 rather than the Closing Date (as defined below), (ii) “280E Tax Reserve
Shortfall and “Arches Cash Surplus” in the Merger Agreement to provide that such amounts will be $0.00, and (iii) “Post-Closing
Debt” in the Merger Agreement to clarify that such debt will (a) not take into account any post-Closing refinancing of Closing Indebtedness,
or any debt incurred by Wholesome or its subsidiaries in connection with a potential purchase after the Closing (the “Higley Road
Purchase”) of the real property leased pursuant to that certain Agreement of Lease dated as of February 1, 2023, as amended by the
First Amendment to Lease Agreement dated May 12, 2025, by and between Wholesome AG, LLC, a wholly-owned subsidiary of Wholesome, and 6800
N. Higley Road, LLC (the “Higley Road Lease”), and (b) be determined as of December 31, 2024 rather than the Closing Date.
The Second Amendment also amended the Merger
Agreement to clarify that certain increases in Wholesome’s EBITDA due to any elimination in rent payments to be made under the Higley
Road Lease in the event that the Higley Road Purchase is consummated after the Closing will not be taken into account for the purposes
of the EBITDA calculations used to determine the Total Merger Consideration under the Merger Agreement.
Certain additional amendments were also made
to the Merger Agreement to (i) clarify the amount of base and bonus compensation paid to a certain officer of Wholesome that will be deducted
from Wholesome’s EBITDA calculations for purposes of determining the Total Merger Consideration under the Merger Agreement, and
(ii) allow Wholesome to align the timing of the repayment by Wholesome of certain related party loans with Wholesome’s overall post-Closing
debt refinancing activities.
The foregoing description of the Second Amendment
is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Amendment,
which is filed as Exhibit 2.3 to this Current Report on Form 8-K and incorporated by reference herein.
| Item 2.01. | Completion of Acquisition or Disposition of Assets |
As previously announced, on December 18, 2024, Vireo, Merger Sub, Wholesome,
and Representative entered into the Merger Agreement. On May 12, 2025 (the “Closing Date”), Vireo completed its previously
announced acquisition of Wholesome pursuant to a merger whereby Merger Sub merged with and into Wholesome (the “Merger”).
Capitalized terms used herein without a definition have the meanings given to such terms in the Merger Agreement.
In connection with the Merger, Wholesome became a wholly owned subsidiary
of Vireo. Pursuant to the Merger Agreement, on the Closing Date, Vireo issued 120,806,952 (the “Closing Share Payment”) of
Vireo’s subordinate voting shares (the “Parent Shares”). The number of Parent Shares issued as the Closing Share Payment
was equal to the amount of the Estimated Closing Merger Consideration divided by US$0.52, less 13,423,034 Parent Shares (representing
10% of the aggregate number of Parent Shares issued as part of the Estimated Closing Merger Consideration), which were delivered to Odyssey
Trust Company in its capacity as escrow agent. The Parent Shares issued pursuant to the Merger Agreement are subject to a post-closing
purchase price adjustment with respect to certain of the estimated items included in the Estimated Closing Merger Consideration, and the
Wholesome stockholders are also eligible to receive additional Parent Shares pursuant to certain earn-out payments as described in the
Merger Agreement and summarized below.
Pursuant to rules adopted by the Securities and Exchange Commission
(the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a Schedule DEFM 14C information
statement was prepared by the Company and filed with the SEC and mailed to the shareholders of the Company on March 21, 2025 relating
to the Merger (the “Information Statement”).
The consideration
paid to acquire Wholesome was based in part on the product of an Acquisition Multiple of 4.175% multiplied by the Closing EBITDA of $16,000,000
and a US$0.52 share reference price for the Parent Shares. For more information on the calculation of the Closing Merger Consideration
and the Total Merger Consideration, please see the disclosures regarding the Merger in the Information Statement. The Company included
in the Closing Merger Consideration calculation an amount equal to US$11,860,800 (the “Arches Value Amount”), which Arches
Value Amount is intended to represent the value of the issued and outstanding equity interests in Arches IP, Inc. (“Arches”)
owned by Wholesome.
Subject to the terms and conditions of the Merger Agreement, former
Wholesome stockholders are entitled to earn-out payments based on the performance of Arches, based on the greater of US$37.5 million or
5x certain revenue percentages of Arches minus $4,000,000, with such revenue percentage amounts measured at the higher of trailing-twelve-month
or nine-month annualized amounts as of December 31, 2026, paid out using a share price for the Parent Shares at the higher of US$1.05
or 20-day volume weighted average price (“VWAP”) ending immediately prior to December 31, 2026, which as of the Closing Date represent approximately 84.72%
of the issued and outstanding equity securities of Arches.
Pursuant to the Merger Agreement, former stockholders of Wholesome
may also receive additional Parent Shares pursuant to earn-out payments based on Wholesome’s Adjusted EBITDA growth compared to
Wholesome’s Closing EBITDA (at a 4x multiple), adjusted for incremental debt and certain other matters, and paid out using a share
price for the Parent Shares of the higher of US$1.05 or the 20-day VWAP as of immediately prior to December 31, 2026. EBITDA growth is
defined as the increase between Closing EBITDA and the higher of 2026 Adjusted EBITDA or trailing nine-month annualized Adjusted EBITDA
as of December 31, 2026.
In no event shall the number of earn-out shares issued under the Merger
Agreement, in the aggregate, exceed the Closing Share Payment.
The Merger Agreement provides for the clawback of up to 50% of the
Parent Shares issued as Actual Closing Merger Consideration (excluding the Parent Shares issued as consideration for the Arches Value
Amount), if (a) 2026 Adjusted EBITDA is less than 96.5% of the Closing EBITDA (the amount of such shortfall, the “EBITDA Deficiency”),
and (b) retail revenue Market Share or EBITDA Margin for 2026 is less than the corresponding figures for 2024 and (c) the Company’s
20-day VWAP as of immediately prior to December 31, 2026 is greater than US$1.05 per share. The amount of shares subject to a clawback
would be equal to the Acquisition Multiple multiplied by the EBITDA Deficiency, adjusted for incremental debt and certain other matters,
divided by US$0.52 per share.
Pursuant to the Merger Agreement, the stockholders of Wholesome entered
into lock-up agreements with the Company providing that each such person, for a period of up to 33 months, may not, subject to customary
exceptions, offer, issue, sell, transfer or otherwise dispose of, or enter into certain arrangements that transfer any of the economic
consequences of the ownership of, the Parent Shares issued pursuant to the Merger without the prior written consent of the Company. The
lock-up agreements provide that the Parent Shares acquired by the stockholders of Wholesome pursuant to the Merger Agreement as Total
Merger Consideration shares are subject to a lock-up release schedule of 7.5% 12-months after the Closing Date, 10% at each of 18-months
and 21-months after the Closing Date, 17.5% 24-months after the Closing Date, 15% 27-months after the Closing Date and 20% at each of
30-months and 33-months after the Closing Date. In addition, all such Parent Shares held by such persons are subject to lock-up during
the 6-month period ending December 31, 2026. In addition, any Parent Shares issued in connection with the earn-out payments described
above will be subject to lock-up periods following the issuance of such earnout shares, with a 20% release per quarter ending at 15 months
post-issuance.
The Parent Shares issued and to be issued by the Company to the stockholders
of Wholesome pursuant to the Merger Agreement were and will be issued in reliance upon the exemptions from registration under the Securities
Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) thereunder, as a transaction not involving a public
offering and Rule 506 promulgated under the Securities Act.
The foregoing description of the Merger Agreement is only a summary,
does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed
as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. A copy of the Merger Agreement has
been included to provide shareholders with information regarding its terms and conditions, and is not intended to provide any factual
information about the Company or Wholesome. The representations, warranties and covenants contained in the Merger Agreement have been
made solely for the benefit of the parties to the Merger Agreement, and are not intended as statements of fact to be relied upon by the
Company’s shareholders, but rather as a way of allocating the risk between the parties to the Merger Agreement in the event the
statements therein prove to be inaccurate. Statements made in the Merger Agreement have been modified or qualified by certain confidential
disclosures that were made between the parties in connection with the negotiation of the Merger Agreement, which disclosures are not reflected
in the Merger Agreement attached hereto. Moreover, such statements may no longer be true as of a given date and may apply standards of
materiality in a way that is different from what may be viewed as material by shareholders. Accordingly, shareholders should not rely
on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition
of the Company or Wholesome. Moreover, information concerning the subject matter of the representations and warranties may change after
the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering
whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements
in this Current Report on Form 8-K not misleading.
| Item 3.01 | Unregistered Sales of Equity Securities |
The information set forth under Item 2.01 of this Current Report on
Form 8-K related to the Parent Shares issued and to be issued in connection with the Merger is incorporated herein by reference, to the
extent required herein. The securities were and will be issued in reliance upon the exemptions from registration under the Securities
Act provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering and Rule 506 promulgated under
the Securities Act.
As previously disclosed by the Company, each of John Mazarakis and
Tyson Macdonald, the Company’s Chief Executive Officer and Chief Financial Officer, respectfully, are entitled to certain restricted
stock unit (“RSU”) awards as detailed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 23, 2024 and in the Company’s Definitive Information Statement filed with the SEC on Schedule 14C on March
21, 2025. The Company granted such RSU awards on May 9, 2025 as discussed in Item 5.02 below. The RSUs were issued in reliance upon
the exemption from registration under the Securities Act provided by Section 4(a)(2) of the Securities Act as transactions not involving
a public offering.
Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
In connection with Mr. Mazarakis’
appointment as Co-Executive Chairman and Chief Executive Officer of the Company, the Company issued to Mr. Mazarakis 19,000,000 RSUs
settled in Parent Shares (the “Time-Vested RSUs”). The Time-Vested RSUs will become 30% vested upon the first anniversary
of December 17, 2024 (the “Mazarakis Effective Date”). An additional 35% shall become vested when the 30-day VWAP of
the Company shares exceeds $0.85 (adjusted for dividends and stock splits) at any time on or after the second anniversary of the Mazarakis
Effective Date and during the term of the agreement. Any unvested shares shall become vested when the VWAP exceeds $1.05 (adjusted for
dividends and stock splits) at any time on or after the third anniversary of the Mazarakis Effective Date and during the term of the agreement.
Vesting will accelerate and the Time-Vested RSUs will be 100% vested in the event that Mr. Mazarakis is terminated by the Company
for any reason other than for Cause (as defined in his employment agreement), upon a resignation by Mr. Mazarakis for Good Reason
(as defined in his employment agreement), upon Mr. Mazarakis’ death or Disability (as defined in his employment agreement)
or upon the consummation of a transaction constituting a Change in Control (as defined in his employment agreement). The foregoing description
of Mr. Mazarakis’ Time-Vested RSUs is only a summary, does not purport to be complete and is qualified in its entirety by reference
to the full text of the Time-Vested RSU award agreement for Mr. Mazarakis, which is filed as Exhibit 10.1 to this Current Report on Form
8-K and incorporated by reference herein.
The Company also issued
to Mr. Mazarakis 19,000,000 Restricted Stock Units settled in Parent Shares (the “Performance-Vested RSUs”). The Performance-Vested
RSUs shall become vested as follows: 1/3 of the Performance-Vested RSUs shall become vested when the 6 month trailing, annualized, adjusted
EBITDA (“AEBITDA”) exceeds $150,000,000 and the net leverage of the Company is below 2.2x, an additional 1/3 shall become
vested when AEBITDA exceeds $165,000,000 and the net leverage of the Company is below 2.2x, and the final 1/3 shall become vested when
AEBITDA exceeds $205,000,000 and the net leverage of the Company is below 2.2x. Vesting will accelerate and the Performance-Vested RSUs
will become 100% vested in the event that Mr. Mazarakis is terminated by the Company for any reason other than for Cause, upon a
resignation by Mr. Mazarakis for Good Reason, upon Mr. Mazarakis’ death or Disability or upon the consummation of a transaction
constituting a Change in Control. The foregoing description of Mr. Mazarakis’ Performance-Vested RSUs is only a summary, does not
purport to be complete and is qualified in its entirety by reference to the full text of the Performance-Vested RSU award agreement for
Mr. Mazarakis, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference herein.
In connection with Mr. Macdonald’s
appointment as Chief Financial Officer of the Company, the Company issued to Mr. Macdonald 9,500,000 Restricted Stock Units settled
in Parent Shares (the “Time-Vested RSUs”). The Time-Vested RSUs will become 30% vested upon the first anniversary of December 17,
2024 (the “Macdonald Effective Date”). An additional 35% shall become vested when the 30-day VWAP of the Company shares exceeds
$0.85 (adjusted for dividends and stock splits) at any time on or after the second anniversary of the Macdonald Effective Date and during
the term of the agreement. Any unvested shares shall become vested when the VWAP exceeds $1.05 (adjusted for dividends and stock splits)
at any time on or after the third anniversary of the Macdonald Effective Date and during the term of the Agreement. Vesting will accelerate
and the Time-Vested RSUs will be 100% vested in the event that the Mr. Macdonald is terminated by the Company for any reason other
than for Cause (as defined in his employment agreement), upon a resignation by Mr. Macdonald for Good Reason (as defined in this
employment agreement), upon Mr. Macdonald’s death or Disability (as defined in the his employment agreement) or upon the consummation
of a transaction constituting a Change in Control (as defined in his employment agreement). The foregoing description of Mr. Macdonald’s
Time-Vested RSUs is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of
the Time-Vested RSU award agreement for Mr. Macdonald, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated
by reference herein.
The Company also issued
to Mr. Macdonald 9,500,000 Restricted Stock Units settled in Parent Shares (the “Performance-Vested RSUs”). The Performance-Vested
RSUs shall become vested during the term of Mr. Macdonald’s employment with the Company as follows: 1/3 of the Performance-Vested
RSUs shall become vested when the 6 month trailing, annualized, AEBITDA exceeds $150,000,000 and the net leverage of the Company is below
2.2x, an additional 1/3 shall become vested when AEBITDA exceeds $165,000,000 and the net leverage of the Company is below 2.2x, and the
final 1/3 shall become vested when AEBITDA exceeds $205,000,000 and the net leverage of the Company is below 2.2x. Vesting will accelerate
and the Performance-Vested RSUs will become 100% vested in the event that Mr. Macdonald is terminated by the Company for any reason
other than for Cause, upon a resignation by Mr. Macdonald for Good Reason, upon Mr. Macdonald’s death or Disability or
upon the consummation of a transaction constituting a Change in Control. The foregoing description of Mr. Macdonald’s Performance-Vested
RSUs is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Performance-Vested
RSU award agreement for Mr. Macdonald, which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated by reference
herein.
Each RSU represents a
contingent right to receive one Parent Share.
| Item 7.01 | Regulation FD Disclosure |
On May 12, 2025, the Company issued a press release announcing the
matters disclosed in this Current Report on Form 8-K, which is attached as Exhibit 99.1 hereto and is incorporated herein solely for purposes
of this Item 7.01 disclosure.
Pursuant to the rules and regulations of the SEC, the information in
this Item 7.01 disclosure, including Exhibit 99.1 and information set forth therein, is deemed to have been furnished and shall not be
deemed to be “filed” under the Exchange Act.
| Item 9.01. | Financial Statements and Exhibits |
| (a) | Financial Statements of Business Acquired |
The information required by Item 9.01(a) of this report,
including the consolidated financial statements as of December 31, 2024 and 2023 and for the years then ended for WholesomeCo, Inc., is
incorporated by reference from the Company’s definitive information statement on Schedule DEFM 14C filed with the SEC on March
21, 2025, which audited consolidated financial statements were included in such filing beginning on page B-21 thereof.
| (b) | Pro Forma Financial Information |
The information required by Item
9.01(b) of this report, including the unaudited pro forma condensed combined financial statements of the Company and WholesomeCo,
Inc. adjusted to give effect to the Merger and related transactions is incorporated by reference from the Company’s definitive
information statement on Schedule DEFM 14C filed with the SEC on March 21, 2025, which pro forma financial statements and related
notes thereto were included in such filing under the heading “Unaudited Pro Forma Condensed Combined Financial Information.”
(d) Exhibits.
Exhibit
No. |
|
Description |
| 2.1 |
|
Agreement and Plan of Merger, dated as of December 18, 2024, by and among Vireo WH Merger Sub Inc., Vireo Growth Inc., WholesomeCo, Inc. and Shareholder Representative Services LLC (incorporated by reference to Exhibit 2.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024) |
| 2.2 |
|
First Amendment to Merger Agreement, dated as of March 17, 2025, by and among Vireo WH Merger Sub Inc., Vireo Growth Inc. and WholesomeCo, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on March 20, 2025) |
| 2.3 |
|
Second Amendment to Merger Agreement, dated as of May 12, 2025, by and among Vireo WH Merger Sub Inc., Vireo Growth Inc. and WholesomeCo, Inc. |
| 10.1 |
|
Restricted Stock Unit Agreement (Time Vesting) for John Mazarakis dated May 9, 2025 |
| 10.2 |
|
Restricted Stock Unit Agreement (Performance Vesting) for John Mazarakis dated May 9, 2025 |
| 10.3 |
|
Restricted Stock Unit Agreement (Time Vesting) for Tyson Macdonald dated May 9, 2025 |
| 10.4 |
|
Restricted Stock Unit Agreement (Performance Vesting) for Tyson Macdonald dated May 9, 2025 |
| 23.1 |
|
Consent of Tanner LLC, independent audit firm to WholesomeCo, Inc. |
| 99.1 |
|
Press Release, dated as of May 12, 2025* |
| 104 |
|
Cover Page Interactive Data File (embedded within Inline XBRL document) |
*Furnished herewith
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
VIREO GROWTH INC. |
| |
(Registrant) |
| |
|
| |
By: |
/s/
Tyson Macdonald |
| |
|
Tyson Macdonald |
| |
|
Chief Financial
Officer |
Date: May 12, 2025
Exhibit 2.3
SECOND AMENDMENT TO
MERGER AGREEMENT
This
SECOND AMENDMENT TO MERGER Agreement (this “Amendment”) is made and entered into effective as of May 12th,
2025, by and among Vireo WH Merger Sub Inc. (“Merger Sub”), Vireo Growth Inc., a British Columbia corporation (“Parent”),
and WholesomeCo, Inc., a Delaware corporation (the “Company”). Each of the Merger Sub, Parent, and the Company
are referred to herein as a “Party” and collectively as the “Parties”.
BACKGROUND
Reference is made to that
certain Agreement and Plan of Merger, by and among the Parties and Shareholder Representative Services LLC, a Colorado limited liability
company, solely in its capacity as the representative, agent and attorney-in-fact of the Stockholders, dated as of December 18, 2024,
as amended by that certain First Amendment to Merger Agreement, dated as of March 17, 2025 (the “Agreement”).
The Parties desire to further amend the Agreement as set forth herein. Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement.
AGREEMENT
For good and valuable consideration,
the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Amendments
to Article I.
i. The
definition of “280E Tax Reserve Shortfall” is hereby deleted in its entirety and replaced as follows:
““280E
Tax Reserve Shortfall” means an amount equal to $0.00.”
ii. The
definition of “Arches Cash Surplus” is hereby deleted in its entirety and replaced as follows:
““Arches
Cash Surplus” means an amount equal to $0.00.”
iii. The
definition of “Closing Indebtedness” is hereby deleted in its entirety and replaced as follows:
““Closing
Indebtedness” means, subject to the limitations set forth in the definition of “Indebtedness,” the aggregate amount
of any unpaid Indebtedness of the Company Entities remaining as of December 31, 2024 (other than, and without duplication of, the
amounts included in Current Liabilities that are taken into account in the calculation of the Closing Working Capital).”
iv. The
definition of “Closing Merger Consideration” is hereby deleted in its entirety and replaced as follows:
““Closing
Merger Consideration” means the sum of:
(a) the
EBITDA Consideration, plus
(b) the
Closing Cash, plus
(c) the
Arches Value Amount, plus
(d) provided
that the 280E Tax Reserve is not less than $2,000,000, an amount equal to the Adjusted 280E Reserve, less
(e) the
amount of Closing Indebtedness, less
(f) the
amount of the 280E Tax Reserve Shortfall, if any, less
(g) the
amount of any Pre-Closing Taxes, less
(h) the
amount of any unpaid Transaction Expenses, plus
(i) the
amount by which Closing Working Capital exceeds the Target Working Capital or minus the amount by which Closing Working Capital
is less than the Target Working Capital.”
v. The
definition of “Closing Working Capital” is hereby deleted in its entirety and replaced as follows:
““Closing
Working Capital” means: (a) the consolidated Current Assets of the Company Entities, less (b) the consolidated Current
Liabilities of the Company Entities, determined as of December 31, 2024.”
vi. The
definition of “Post Closing Debt” is hereby deleted in its entirety and replaced as follows:
““Post-Closing Debt”
means any principal, interest, other fee payments on, and (without duplication) any accrued amounts (including interest and fees) of,
indebtedness for borrowed money incurred (a) after December 31, 2024 by a Company Entity, whether as intercompany indebtedness
for amounts borrowed from Parent (or its subsidiaries) or from a third party lender, pursuant to a Company Entity’s request to the
Parent to incur such indebtedness for use in the business and operations of the Company Entities, and with Parent’s consent and
approval, which consent and approval may be withheld, delayed or conditioned in Parent’s sole and absolute discretion, or (b) after
December 31, 2024 by a Company Entity, without the prior consent and approval of Parent; provided, however, that, notwithstanding
the foregoing, “Post-Closing Debt” shall not include any indebtedness incurred by or on behalf of a Company Entity after December 31,
2024 in connection with satisfying or refinancing any amount of Closing Indebtedness, to the extent such Closing Indebtedness amount was
reflected in the calculation of Closing Merger Consideration, or purchasing the Property (as defined in that certain Agreement of Lease,
dated as of 2/1/23, by and between Wholesome Ag, LLC and 6800 N. Higley Road, LLC (as amended by the First Amendment to Lease Agreement
on May 12, 2025, the “Higley Road Lease”)).”
2. Amendments
to Exhibit B (Form of Adjusted EBITDA Worksheet). Exhibit B to the Agreement is hereby deleted in its entirety and
replaced with the Form of Adjusted EBITDA Worksheet attached hereto as Annex 1.
3. Waiver
of Closing Condition. Parent and Merger Sub hereby waive the condition to Closing set forth in Section 8.02(f) of the Agreement
with respect to the delivery by the Company of an instrument terminating (i) the Higley Road Lease, as amended on May 12, 2025,
(ii) the Founders LOC Agreement, (iii) the Series B2 Stock Purchase Agreement, dated as of
March 30, 2022, by and between the Company and GSSK LLC, and (iv) the REVOLVING CREDIT NOTE,
dated July 1, 2024, in favor of Jason Kwicien and promised by Wholesome AG, LLC, Wholesome Therapy, LLC, WC Staffing, LLC, Wholesome
Goods, LLC, and Wholesome Direct, LLC, in each case pursuant to Section 2.03(a)(xii) of the Agreement.
4. Miscellaneous.
Except as expressly modified by this Amendment, the Agreement shall remain unmodified and in full force and effect. The terms of Article 11
of the Agreement shall apply to this Amendment, as applicable, as if fully set forth herein.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, the Parties
have caused this Amendment to be executed effective as of the day and year first set forth above.
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MERGER SUB: |
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VIREO WH MERGER SUB INC. |
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|
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By: |
/s/ Amber Shimpa |
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Name: |
Amber Shimpa |
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Title: |
President |
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|
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PARENT: |
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|
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VIREO GROWTH INC. |
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|
| |
By: |
/s/ John Mazarakis |
| |
Name: |
John Mazarakis |
| |
Title: |
Chief Executive Officer |
| |
|
| |
THE COMPANY: |
| |
|
| |
WHOLESOMECO, INC. |
| |
|
| |
By: |
/s/ Christopher Jeffery |
| |
Name: |
Christopher Jeffery |
| |
Title: |
Chief Executive Officer |
[Signature Page to Second Amendment to Agreement and Plan of Merger]
ANNEX 1
Amended and Restated Form of Adjusted EBITDA
Worksheet
[See attached]
Exhibit B
Form of Adjusted EBITDA Worksheet
Adjusted EBITDA Worksheet
| Consolidated Net Income / (Loss)1 | |
$ | [●] | | |
(a) |
| (+) Interest Expense | |
$ | [●] | | |
(b)(i) |
| (+) Income Taxes (Excluding Property Taxes, Sales and Excise Taxes) | |
$ | [●] | | |
(b)(ii) |
| (+) Depreciation and Amortization | |
$ | [●] | | |
(b)(iii) |
| (+) Excess Intercompany / Corporate Costs2 | |
$ | [●] | | |
(b)(iv) |
| (+) Loss on Disposal of Assets | |
$ | [●] | | |
(b)(v) |
| (+) Non-cash Write-down of Assets | |
$ | [●] | | |
(b)(vi) |
| (+) Delivery Expenses and Fees3 | |
$ | [●] | | |
(b)(vii) |
| (+) Decrease in WIP inventory | |
$ | [●] | | |
(b)(viii) |
| (+) Decrease in Finished Goods Inventory (Non-Third-Party Products) | |
$ | [●] | | |
(b)(ix) |
| (-) Cash Payments Including Interest Expenses for Rent and/or Leases not Otherwise Expensed in Operating Expenses1 | |
$ | [●] | | |
(c) |
| (-) Interest Income | |
$ | [●] | | |
(d)(i) |
| (-) Gain on Disposal of Assets | |
$ | [●] | | |
(d)(ii) |
| (-) Non-cash Write-up of Assets | |
$ | [●] | | |
(d)(iii) |
| (-) Increase in WIP inventory | |
$ | [●] | | |
(d)(iv) |
| (-) Increase in Finished Goods Inventory (Non-Third-Party Products) | |
$ | [●] | | |
(d)(vii) |
1 For any period prior to the Closing
Date, Adjusted EBITDA will be calculated without including any revenues, costs and expenses relating to any discontinued or divested
operations prior to the Closing Date. Adjusted EBITDA shall also exclude any revenues, costs, expenses or related contribution from the
operation of Arches.
2 Intercompany costs and expenses,
corporate overhead allocations and similar items between the Company Entities and Parent and its Affiliates (other than the Company Entities)
(other than Arches Platform Fees and Delivery Fees and the amounts specified in the “Delivery Expenses and Fees line) up
to, in a particular fiscal year, the lower of (A) $1,000,000 and (B) 1% of the Company Entities’ net revenues. In addition, any
aggregate compensation (both base salary and bonus) paid by Parent, the Surviving Corporation, or their respective Affiliates to Christopher
Jeffery during the Earn-Out Period that exceeds $250,000 shall be added back as a corporate expense.
3 Any and all fees and expenses that
the Surviving Corporation incurs with respect to delivery vehicles and delivery drivers in connection with mobile deliveries related
to its use of the Arches Platform. In addition, capital expenditures for delivery vehicles will not be allocated to the Surviving Corporation
for purposes of computing Adjusted EBITDA for any period after the Closing Date.
1 From and after the date the
Surviving Corporation acquires the Property (as defined in that certain Agreement of Lease, dated as of 2/1/23, by and between Wholesome
Ag, LLC and 6800 N. Higley Road, LLC (as amended)), and for the remainder of the Earn-Out Period, the Surviving Corporation will be deemed
to be continuing to pay monthly rent on the Property in the amount of (i) $69,443.64 per month through February 28, 2026, and (ii) $71,526.94
per month from March 1, 2026 through the end of the Earn-Out Period.
Exhibit 10.1
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
ISSUABLE UPON SETTLEMENT HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT)”, OR ANY U.S. STATE SECURITIES LAWS. THE HOLDER HEREOF, BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY,
(B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE U.S. STATE
SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE U.S. STATE
SECURITIES LAWS, AFTER, IN THE CASE OF TRANSFERS UNDER CLAUSE (C) OR (D), THE HOLDER HAS FURNISHED TO THE COMPANY AND ITS TRANSFER
AGENT AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT TO
THE EFFECT THAT SUCH EXEMPTION(S) ARE AVAILABLE.
VIREO GROWTH INC.
RESTRICTED STOCK
UNIT AGREEMENT
| Name of Participant: |
John Mazarakis |
| |
|
| Number of Restricted Stock Units: |
19,000,000 |
| |
|
| Date of Grant: |
May 9, 2025 |
| Vesting Schedule: | Subject to the terms of this Agreement,
the Restricted Stock Units shall vest as follows: |
| · | with respect to 5,700,000 Restricted Stock Units, on March 6,
2026; |
| · | with respect to 6,650,000 Restricted Stock Units, at any time on or after March 6, 2027, on the
day immediately following the date on which the Shares have reached a 30-day volume- weighted average price (“VWAP”)
that exceeds US$0.85 on which Shares are then traded (the “Exchange”); and |
| · | with respect to 6,650,000 Restricted Stock Units, at any time on or after March 6, 2028, on the
day immediately following the date on which the Shares have reached a 30-day VWAP that exceeds US$1.05 on the Exchange, |
| | provided that in each such case, the Participant
is a Service Provider on the applicable vesting date (except as otherwise provided by Section 2 of this Agreement). |
This is a Restricted Stock Unit Agreement (the
“Agreement”), by and between Vireo Growth Inc., a British Columbia corporation (the “Company”),
and the participant identified above (“Participant”), entered into and effective as of the date of grant identified
above (the “Date of Grant”).
II. BACKGROUND
| 1. | The Company and Participant entered into an executive employment dated December 17, 2024 (the “Original Agreement”),
as approved by the board of directors of the Company (the “Board”) on December 17, 2024 and as amended by a First
Amendment to Employment Agreement dated March 6, 2026 (together with the Original Agreement, the “Employment Agreement”),
as approved by the Board on March 6, 2025. |
| 2. | In connection with the Employment Agreement the Company has agreed to issue to the Participant 19,000,000 Restricted Stock Units subject
to the terms and conditions set forth herein. |
| III. | AGREEMENT. The grant awarded under this
Agreement is made subject to the following terms and conditions. For the purposes of this Agreement, (a) “Restricted Stock
Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to this
Agreement, and each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company; (b) “Fair Market
Value” means the closing sales price of the Shares as quoted on the Canadian Securities Exchange on the day of determination;
and (c) “Share” means one subordinate voting share in the capital of the Company. |
| 1. | Grant of Award. The Company hereby grants to Participant, as of the Date of Grant and subject to
the terms and conditions of this Agreement, the number of Restricted Stock Units indicated above (the “Award”). Each
Restricted Stock Unit represents the right to receive one Share (or a cash payment equal to the Fair Market Value of one Share) upon settlement
of the Award. |
| 2. | Vesting and Forfeiture. The Award will vest as to the number of Restricted Stock Units and on
the dates specified in the Notice of Grant above, but only if Participant is an employee, director or consultant of the Company (a
“Service Provider”) on such dates. Except as otherwise expressly provided in this Agreement, if Participant ceases
to be a Service Provider, then all Restricted Stock Units subject to this Award that have not yet vested shall be forfeited. In the
event the Board determines it is within the best interests of the Company to accelerate the vesting of the Restricted Stock Units,
the Company may accelerate the vesting schedule set out above. In the event of Participant’s separation from service (as such
term is defined in Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and its related regulations
(“409A”)) by the Company for Cause, all Restricted Stock Units, whether vested but not yet settled or unvested,
shall be cancelled and forfeited as of the date of such separation from service for no consideration.
In the event of Participant’s separation from service by the Company for any reason other than Cause, the resignation of the Participant
for Good Reason or the death or Disability of the Participant, the vesting schedule of all outstanding Restricted Stock Units will
accelerate, and all vested Restricted Stock Units will remain outstanding and shall settle on the applicable Trigger Date. In the event
of the consummation of a transaction constituting a Change in Control (as defined in the Employment Agreement), the vesting schedule of
all outstanding Restricted Stock Units will accelerate, and all vested Restricted Stock Units will remain outstanding and shall settle
on the applicable Trigger Date. Notwithstanding the foregoing, the Board may, in its sole discretion, reduce or waive any vesting criteria
that must be met to receive a payout, provided that settlement shall comply with 409A. |
| | Notwithstanding the foregoing, for purposes
of this Agreement, the consummation of one or more of the transactions resulting in the business combination of the Company with (i) Deep
Roots Holdings, Inc., a Nevada corporation; (ii) Proper Holdings Management, Inc. and NGH Investments, Inc., both
Missouri corporations; or (iii) WholesomeCo, Inc., a Delaware corporation, shall be deemed not to constitute a
Change in Control. |
| 3. | Nature of Restricted Stock Units. The Restricted Stock Units granted pursuant to this Award are bookkeeping
entries only and do not provide Participant with any dividend, voting or other rights of a shareholder of the Company. The Restricted
Stock Units shall remain forfeitable at all times unless and to the extent the vesting conditions set forth in this Agreement are satisfied. |
| 4. | Settlement of Units. Subject to the provisions of this Agreement, the Company shall settle each vested
Restricted Stock Unit by delivering to Participant one Share to which such vested Restricted Stock Unit relates, a cash payment equal
to the Fair Market Value of one such Share, or a combination of both upon the earliest to occur of the following (such earliest date being
referred to herein as the “Trigger Date”): (a) on the dates identified under the Notice of Grant; (b) the
death or Disability of Participant; (c) a Change in Control of the Company; or (d) on the date of the Participant’s separation
from service (as such term is defined in 409A). For the avoidance of doubt, the portion of the Restricted Stock Units for which clauses
(b), (c), or (d) above apply (if applicable) is the portion of the Restricted Stock Units still outstanding as of the applicable
Trigger Date and not previously settled on an earlier Trigger Date. |
| | For purpose of this Agreement, the term
“Cause,” the term “Good Reason,” and the term “Disability” shall have the meaning ascribed to such
term in the Employment Agreement. |
| | | |
| | | Such
settlement shall occur as soon as practicable following the Trigger Date (but in no event later than sixty (60) days following the Trigger
Date, provided that the Company has the sole discretion to select the date of settlement within such sixty (60) day period and the Participant
has no right to select the year of payment if such sixty (60) day period crosses calendar years).
|
| 5. | Transferability. Until such time as the Restricted Stock Units are settled as provided by this Agreement,
the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by the Participant, except that the Restricted
Stock Units may be transferred by the Participant by will or, if the Participant dies intestate, by the laws of descent and distribution
of the state of domicile of the Participant at the time of death. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer
or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the
Restricted Stock Units will be forfeited by the Participant and all of the Participant’s rights to such Units shall immediately
terminate without any payment of consideration by the Company. The Restricted Stock Units, and any Shares issued upon settlement hereof,
have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or any applicable
U.S. state securities laws, and are or will when issued be “restricted securities” (as such term is defined in Rule 144(a)(3) under
the U.S. Securities Act). Any certificate or instrument representing such securities issued pursuant to an exemption from the registration
requirements of the U.S. Securities Act and any applicable U.S. state securities laws shall bear a legend restricting transfer under applicable
United States federal and state securities laws unless such securities are registered under the U.S. Securities Act and all applicable
U.S. state securities laws or unless issued in compliance with an exemption therefrom. |
| 6. | No Shareholder Rights. Neither Participant nor any permitted transferee of the Award will have any
of the rights of a stockholder of the Company with respect to any Shares subject to this Award unless and until a certificate evidencing
such Shares has been issued, electronic delivery of such Shares has been made to Participant’s designated brokerage account, or
an appropriate book entry in the Company’s stock register has been made. No adjustments shall be made for dividends or other rights if
the applicable record date occurs before a stock certificate has been issued, electronic delivery of the Shares has been made to Participant’s
designated brokerage account, or an appropriate book entry in the Company’s stock register has been made, except as otherwise described
in Section 7. |
| 7. | Adjustments; Dissolution or Liquidation; Change in Control or Other Transactions. |
| (a) | Adjustments. In the event that any 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 occurs, the Board, in order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made this Agreement, will adjust the number and class of shares of stock that may be delivered under this Agreement and/or
the number, class, and price of shares of stock covered by outstanding Awards. |
| (b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company,
the Board will notify Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has
not been previously exercised, an Award will terminate immediately prior to the consummation of such
proposed action. |
| (c) | Change in Control; Other Transactions. |
| | (i) In
the event of any reorganization, merger, statutory share exchange, consolidation, sale of Company’s assets, or the acquisition of
assets or stock of another entity by the Company, or other corporate transaction involving the Company or any of its subsidiaries, in
each case which is not a Change in Control (each, a “Corporate Transaction”), the Restricted Stock Units will be treated
as the Board determines (subject to the provisions of the following paragraph) without Participant’s consent, including, without
limitation, that (A) the Restricted Stock Units will be assumed, or substantially equivalent awards will be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; or (B) the
termination of the Restricted Stock Units in exchange for an amount of cash and/or property, if any, equal to the amount that would have
realized by the Participant as if the Restricted Stock Units had been issued and outstanding Shares, provided that in any such case, settlement
of the Restricted Stock Units shall occur at a time permitted by 409A. |
| | (ii) For
the purposes of Section 7(c)(i), the Restricted Stock Units will be considered assumed if, following the Corporate Transaction, the
Restricted Stock Units confer the right to receive, for each Share subject to the Restricted Stock Units immediately prior to the Corporate
Transaction, the consideration (whether stock, cash, or other securities or property) received in the Corporate Transaction by holders
of Subordinate Voting Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration
received in the Corporate Transaction is not solely common shares of the successor corporation or its parent, the Board may, with the
consent of the successor corporation, provide for the consideration to be received upon the payout of a Restricted Stock Unit, for each
Share subject to the award, to be solely common shares of the successor corporation or its parent equal in fair market value to the per
share consideration received by holders of Subordinate Voting Shares in the Corporate Transaction, all subject to compliance with 409A
as to timing of payments. |
| 8. | Securities Law and Other Restrictions. By signing this Agreement, Participant represents and warrants
that he is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the U.S. Securities
Act, and acknowledges that the Restricted Stock Units and any Shares issuable upon settlement hereof have not been registered under the
U.S. Securities Act or any U.S. state securities laws and are being issued in reliance upon an exemption from
such registration requirements. Notwithstanding any other provision of this Agreement, the Company shall not be required to issue, and
Participant may not sell, assign, transfer or otherwise dispose of, any Shares, unless and until: (a) there is in effect with respect
to the Shares a registration statement under the U.S. Securities Act, and any applicable U.S. state or foreign securities laws, or an
exemption from such registration; (b) there has been obtained the written consent resolution related to the grant of the Restricted
Stock Units and issuance of the underlying Shares signed by security holders of the Company of more than 50% of the securities of the
Company having voting rights; (c) the Company has furnished to
non-consenting security holders of the Company, and filed with the Securities and Exchange Commission, an information statement required
under Rule 14c-2 under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), in connection
with the grant of the Restricted Units and issuance of the underlying Shares, including the filing of any required preliminary information
statement and in compliance with any required timelines under the U.S. Exchange Act; and (d) there has been obtained any other consent,
approval or permit from any other regulatory body that the Board, in its sole discretion, deems necessary or advisable. Notwithstanding
the foregoing, Shares will not be issued pursuant to the exercise of this Award unless the exercise of this Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from
the parties involved, and the placement of any legends on certificates representing the Shares, as may be deemed necessary or advisable
by the Company in order to comply with such securities law or other restrictions. |
| 9. | Tax Withholding. THE COMPANY IS ENTITLED TO WITHHOLD AND DEDUCT FROM FUTURE FEES OR WAGES OF PARTICIPANT
(OR FROM OTHER AMOUNTS THAT MAY BE DUE AND OWING TO PARTICIPANT FROM THE COMPANY), OR MAKE OTHER ARRANGEMENTS FOR THE COLLECTION
OF, ALL LEGALLY REQUIRED AMOUNTS NECESSARY TO SATISFY ANY FEDERAL, STATE OR LOCAL WITHHOLDING AND EMPLOYMENT-RELATED TAX REQUIREMENTS
ATTRIBUTABLE TO THE AWARD, INCLUDING, WITHOUT LIMITATION, THE GRANT OR SETTLEMENT OF THE RESTRICTED STOCK UNITS. IF THE COMPANY IS
UNABLE TO WITHHOLD SUCH AMOUNTS, FOR WHATEVER REASON, PARTICIPANT AGREES TO PAY TO THE COMPANY AN AMOUNT EQUAL TO THE AMOUNT THE COMPANY
WOULD OTHERWISE BE REQUIRED TO WITHHOLD UNDER FEDERAL, STATE OR LOCAL LAW. |
| 10. | No Right to Employment or Engagement. This Award shall not be construed as giving Participant the
right to be retained as an employee, officer of consultant of the Company or any Affiliate, nor will it affect in any way the right of
the Company or an Affiliate to terminate Participant’s employment or engagement at any time, with or without cause, in accordance
with applicable law. In addition, the Company or an Affiliate may at any time dismiss Participant from employment or engagement free from
any liability or any claim under this Award, unless
otherwise expressly provided in this Agreement. Nothing in this Agreement 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 Participant be entitled to any compensation for any loss of any right or benefit under this Agreement
which Participant might otherwise have enjoyed but for termination of employment or engagement, whether such compensation is claimed by
way of damages for wrongful or unfair dismissal, breach of contract or otherwise. |
| 11. | Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority will not have been obtained. |
| 12. | Shareholder Agreements. Upon the settlement of the Award, Participant shall, at the request of the
Company, execute and deliver such voting, co-sale and other agreements as the Company requests generally of holders of amounts of stock
corresponding to that of such Participant; and if Participant fails to execute and deliver any such agreement, such Participant shall
nevertheless hold all stock subject to, and be bound by, such agreement. |
| 13. | Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators and successors
of the parties to this Agreement. |
| 14. | Governing Law. This Agreement and all rights and obligations under this Agreement shall be construed
in accordance with the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Agreement to the substantive laws of any other jurisdiction. |
| 15. | Entire Agreement. This Agreement and the Employment Agreement set forth the entire agreement and
understanding of the parties to this Agreement with respect to the administration, grant and settlement of this Award and supersede all
prior agreements, arrangements, plans and understandings relating to the administration, grant and settlement of this Award. |
| 16. | Amendment and Waiver. Subject to applicable law, this Agreement may be amended, waived, modified
or canceled only by a written instrument executed by the parties to this Agreement or, in the case of a waiver, by the party waiving compliance.
Notwithstanding the preceding, Participant agrees that the Board may amend this Agreement, to take effect retroactively or otherwise,
as deemed necessary or advisable for the purpose of conforming this Agreement to any present or future law relating to plans of this or
similar nature (including, but not limited to, Section 409A of the Code), and to the administrative regulations and rulings promulgated
thereunder. |
| 17. | Electronic Delivery and Acceptance. The Company may deliver any documents related to this Agreement
by electronic means and request Participant’s acceptance of this Agreement by electronic means. Participant
hereby consents to receive all applicable documentation by electronic delivery and to participate through an on-line (and/or voice activated)
system established and maintained by the Company or the Company’s third-party stock plan administrator. |
| 18. | Compliance with 409A. This Agreement is intended to comply with 409A to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted and administered to comply with 409A. Notwithstanding
the foregoing, the Company shall not have any obligation to take any action to prevent the assessment of any additional tax or penalty
on the Participant under 409A and the Company will not have any liability to the Participant for any such additional tax or penalty. Notwithstanding
any provision of this Agreement to the contrary, if on Participant’s separation from service, the Participant is deemed to be a
“specified employee” within the meaning of Code Section 409A, any payment or benefit under this Agreement for which the
commencement of payment is required to be delayed under Code Section 409A(a)(2)(B) shall not be paid or commence until the earliest
of (i) the first business day following
the expiration of six (6) months from the Participant’s separation from service or (ii) the date of the Employee’s
death. Notwithstanding any provision of this Agreement to the contrary, in no event will any payment under this Agreement that constitutes
“nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless
otherwise permitted by Code Section 409A. |
[Signature Page Follows]
The parties hereto have executed this Agreement effective
as of the Date of Grant.
| | VIREO GROWTH INC. |
| | | |
| | | |
| By: | /s/ Tyson Macdonald |
| | | Tyson Macdonald |
| | | |
| | Its: | Chief Financial
Officer |
| | | |
| | | |
| By
execution of this Agreement, Participant agrees to all of the terms and conditions described in this Agreement. |
PARTICIPANT |
| |
|
|
/s/ John Mazarakis |
|
Name: |
John Mazarakis |
Exhibit 10.2
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
ISSUABLE UPON SETTLEMENT HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT)”, OR ANY U.S. STATE SECURITIES LAWS. THE HOLDER HEREOF, BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY,
(B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE U.S. STATE
SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE U.S. STATE
SECURITIES LAWS, AFTER, IN THE CASE OF TRANSFERS UNDER CLAUSE (C) OR (D), THE HOLDER HAS FURNISHED TO THE COMPANY AND ITS TRANSFER
AGENT AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT TO
THE EFFECT THAT SUCH EXEMPTION(S) ARE AVAILABLE.
VIREO GROWTH INC.
RESTRICTED STOCK
UNIT AGREEMENT
| Name of Participant: |
John Mazarakis |
| |
|
| Number of Restricted Stock Units: |
19,000,000 |
| |
|
| Date of Grant: |
May 9, 2025 |
| Vesting Schedule: | Subject to the terms of this Agreement,
the Restricted Stock Units shall vest as follows: |
| · | with respect to one-third of the Restricted Stock Units, on the day immediately following the date on
which the 6-month trailing, annualized, adjusted EBITDA ("AEBITDA") exceeds US$150,000,000 and the net leverage of the
Company is below 2.2x; |
| · | with respect to one-third of the Restricted Stock Units, on the day immediately following the date on
which the AEBITDA exceeds US$165,000,000 and the net leverage of the Company is below 2.2x; and |
| · | with respect to the remainder of the Restricted Stock Units, on the day immediately following the date
on which the AEBITDA exceeds US$205,000,000 and the net leverage of the Company is below 2.2x, |
| | provided, however,
that (i) in each such case, the Participant is a Service Provider on the applicable
vesting date (except as otherwise provided by Section 2 of the Agreement), and (ii) such
milestone has been achieved by no later than the fifth (5th) anniversary of the
date of grant. |
This is a Restricted Stock Unit Agreement (the
“Agreement”), by and between Vireo Growth Inc., a British Columbia corporation (the “Company”),
and the participant identified above (“Participant”), entered into and effective as of the date of grant identified
above (the “Date of Grant”).
II. BACKGROUND
| 1. | The Company and Participant entered into an executive employment dated December 17, 2024 (the "Original Agreement"),
as approved by the board of directors of the Company (the "Board") on December 17, 2024, and as amended by a First
Amendment to Employment Agreement dated March 6, 2025 (together with the Original Agreement, the "Employment Agreement"),
as approved by the Board on March 6, 2025. |
| 2. | In connection with the Employment Agreement the Company has agreed to issue to the Participant 19,000,000 Restricted Stock Units subject
to the terms and conditions set forth herein. |
| III. | AGREEMENT. The grant awarded under this
Agreement is made subject to the following terms and conditions. For the purposes of this Agreement, (a) "Restricted Stock
Unit" means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to this
Agreement, and each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company; (b) "Fair Market
Value" means the closing sales price of the Shares as quoted on the Canadian Securities Exchange on the day of determination;
and (c) "Share" means one subordinate voting share in the capital of the Company. |
| 1. | Grant of Award. The Company hereby grants to Participant, as of the Date of Grant and subject to
the terms and conditions of this Agreement, the number of Restricted Stock Units indicated above (the “Award”). Each
Restricted Stock Unit represents the right to receive one Share (or a cash payment equal to the Fair Market Value of one Share) upon settlement
of the Award. |
| 2. | Vesting and Forfeiture. The Award will vest as to the number of Restricted Stock Units and on
the dates specified in the Notice of Grant above, but only if Participant is an employee, director or consultant of the Company (a
"Service Provider") on such dates. Except as otherwise expressly provided in this Agreement, if Participant ceases
to be a Service Provider, then all Restricted Stock Units subject to this Award that have not yet vested shall be forfeited. In the
event the Board determines it is within the best interests of the Company to accelerate the vesting of the Restricted Stock Units,
the Company may accelerate the vesting schedule set out above. In the event of Participant’s separation from service (as such
term is defined in Section 409A of the U.S. Internal Revenue Code of 1986, as
amended, and its related regulations (“409A”)) by the Company for Cause, all Restricted Stock Units, whether vested
but not yet settled or unvested, shall be cancelled and forfeited as of the date of such separation from service for no consideration. In
the event of Participant’s separation from service by the Company for any reason other than Cause, the resignation of the Participant
for Good Reason or the death or Disability of the Participant, the vesting schedule of all outstanding Restricted Stock Units will accelerate,
and all vested Restricted Stock Units will remain outstanding and shall settle on the applicable Trigger Date. In the event of the consummation
of a transaction constituting a Change in Control (as defined in the Employment Agreement), the vesting schedule of all outstanding Restricted
Stock Units will accelerate, and all vested Restricted Stock Units will remain outstanding and shall settle on the applicable Trigger
Date. Notwithstanding the foregoing, the Board may, in its sole discretion, reduce or waive any vesting criteria that must be met to receive
a payout, provided that settlement shall comply with 409A. |
| | Notwithstanding the foregoing, for purposes
of this Agreement, the consummation of one or more of the transactions resulting in the business combination of the Company with (i) Deep
Roots Holdings, Inc., a Nevada corporation; (ii) Proper Holdings Management, Inc. and NGH Investments, Inc., both
Missouri corporations; or (iii) WholesomeCo, Inc., a Delaware corporation, shall be deemed not to constitute a
Change in Control. |
| 3. | Nature of Restricted Stock Units. The Restricted Stock Units granted pursuant to this Award are bookkeeping
entries only and do not provide Participant with any dividend, voting or other rights of a shareholder of the Company. The Restricted
Stock Units shall remain forfeitable at all times unless and to the extent the vesting conditions set forth in this Agreement are satisfied. |
| 4. | Settlement of Units. Subject to the provisions of this Agreement, the Company shall settle each vested
Restricted Stock Unit by delivering to Participant one Share to which such vested Restricted Stock Unit relates, a cash payment equal
to the Fair Market Value of one such Share, or a combination of both upon the earliest to occur of the following (such earliest date being
referred to herein as the “Trigger Date”): (a) on the dates identified under the Notice of Grant, subject to attainment
of the applicable performance milestones set forth in the Notice of Grant; (b) the death or Disability of Participant; (c) a
Change in Control of the Company; or (d) on the date of the Participant’s separation from service (as such term is defined
in 409A). For avoidance of doubt, attainment of the performance milestones set forth in the Notice of Grant shall be waived, and any outstanding,
unvested portion of the Restricted Stock Units shall become immediately payable, if the events in clause (b) (c) or (d) above
occur before attainment of such performance milestones. |
| | For purpose of this Agreement, the term
“Cause”, the term “Good Reason,” and the term Disability shall have the meaning ascribed to such term in the Employment
Agreement. |
| | Such settlement shall occur as soon as
practicable following the Trigger Date (but in no event later than sixty (60) days following the Trigger Date, provided that the Company
has the sole discretion to select the date of settlement within sixty (60) day period and the Participant has no right to select the year
of payment if such sixty (60) day period crosses calendar years. |
| 5. | Transferability. Until such time as the Restricted Stock Units are settled as provided by this Agreement,
the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by the Participant, except that the Restricted Stock Units may be transferred by the Participant by will or, if the Participant
dies intestate, by the laws of descent and distribution of the state of domicile of the Participant at the time of death. Any attempt
to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto
shall be wholly ineffective and, if any such attempt is made, the Restricted Stock Units will be forfeited by the Participant and all
of the Participant’s rights to such Units shall immediately terminate without any payment of consideration by the Company. The Restricted
Stock Units, and any Shares issued upon settlement hereof, have not been registered under the U.S. Securities Act of 1933, as amended
(the “U.S. Securities Act”), or any applicable U.S. state securities laws, and are or will when issued be “restricted
securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act). Any certificate or instrument representing
such securities issued pursuant to an exemption from the registration requirements of the U.S. Securities Act and any applicable U.S.
state securities laws shall bear a legend restricting transfer under applicable United States federal and state securities laws unless
such securities are registered under the U.S. Securities Act and all applicable U.S. state securities laws or unless issued in compliance
with an exemption therefrom. |
| 6. | No Shareholder Rights. Neither Participant nor any permitted transferee of the Award will have any
of the rights of a stockholder of the Company with respect to any Shares subject to this Award unless and until a certificate evidencing
such Shares has been issued, electronic delivery of such Shares has been made to Participant’s designated brokerage account, or
an appropriate book entry in the Company's stock register has been made. No adjustments shall be made for dividends or other rights if
the applicable record date occurs before a stock certificate has been issued, electronic delivery of the Shares has been made to Participant’s
designated brokerage account, or an appropriate book entry in the Company's stock register has been made, except as otherwise described
in Section 7. |
| 7. | Adjustments; Dissolution or Liquidation; Merger or Change in Control. |
| (a) | Adjustments. In the event that any 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 occurs, the Board, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made this Agreement, will adjust the number and class of shares of
stock that may be delivered under this Agreement and/or the number, class, and price of shares
of stock covered by outstanding Awards. |
| (b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company,
the Board will notify Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has
not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. |
| (c) | Change in Control; Other Transactions. |
| | (i) In the event of any other reorganization, merger, statutory
share exchange, consolidation, sale of Company’s assets, or the acquisition of assets or stock of another entity by the Company,
or other corporate transaction involving the Company or any of its subsidiaries, in each case which is not a Change in Control (each,
a “Corporate Transaction”), the Restricted Stock Units will be treated as the Board determines (subject to the provisions
of the following paragraph) without Participant’s consent, including, without limitation, that (A) the Restricted Stock Units
will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof) with appropriate adjustments as to the number and kind of shares and prices; or (B) the termination of the Restricted Stock
Units in exchange for an amount of cash and/or property, if any, equal to the amount that would have realized by the Participant as if
the Restricted Stock Units had been issued and outstanding Shares, provided that in any such case, settlement of the Restricted Stock
Units shall occur at a time permitted by 409A. |
| | (ii) For the purposes of Section 7(c)(i), the Restricted Stock
Units will be considered assumed if, following the Corporate Transaction, the Restricted Stock Units confer the right to receive, for
each Share subject to the Restricted Stock Units immediately prior to the Corporate Transaction, the consideration (whether stock, cash,
or other securities or property) received in the Corporate Transaction by holders of Subordinate Voting Shares for each Share held on
the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Corporate Transaction
is not solely common shares of the successor corporation or its parent, the Board may, with the consent of the successor corporation,
provide for the consideration to be received upon the payout of a Restricted Stock Unit, for each Share subject to the award, to be solely
common shares of the successor corporation or its parent equal in fair market value to the per share consideration received by holders
of Subordinate Voting Shares in the Corporate Transaction, all subject to compliance with 409A as to timing of payments. |
| 8. | Securities Law and Other Restrictions. By signing this Agreement, Participant represents and
warrants that he is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the
U.S. Securities Act, and acknowledges that the Restricted Stock Units and any Shares issuable upon settlement hereof have not been
registered under the U.S. Securities Act or any U.S. state securities laws and are being issued in reliance upon an exemption from
such registration requirements. Notwithstanding any other provision of this Agreement, the Company shall not be required to issue,
and Participant may not sell, assign, transfer or otherwise dispose of, any Shares, unless and until: (a) there is in effect
with respect to the Shares a registration statement under the U.S. Securities Act, and any applicable U.S. state or foreign
securities laws, or an exemption from such registration is available; (b) there has been obtained the written consent
resolution related to the grant of the Restricted Stock Units and issuance of the underlying Shares signed by security holders of
the Company of more than 50% of the securities of the Company having voting rights; (c) the Company has furnished to
non-consenting security holders of the Company, and filed with the Securities and Exchange Commission, an information statement required
under Rule 14c-2 under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), in connection
with the grant of the Restricted Stock Units and issuance of the underlying Shares, including the filing of any required preliminary information
statement and in compliance with any required deadlines under the U.S. Exchange Act; and (d) there has been obtained any other consent,
approval or permit from any other regulatory body that the Board, in its sole discretion, deems necessary or advisable. Notwithstanding
the foregoing, Shares will not be issued pursuant to the exercise of this Award unless the exercise of this Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from
the parties involved, and the placement of any legends on certificates representing the Shares, as may be deemed necessary or advisable
by the Company in order to comply with such securities law or other restrictions. |
| 9. | Tax Withholding. THE COMPANY IS ENTITLED TO WITHHOLD AND DEDUCT FROM FUTURE FEES OR WAGES OF PARTICIPANT
(OR FROM OTHER AMOUNTS THAT MAY BE DUE AND OWING TO PARTICIPANT FROM THE COMPANY), OR MAKE OTHER ARRANGEMENTS FOR THE COLLECTION
OF, ALL LEGALLY REQUIRED AMOUNTS NECESSARY TO SATISFY ANY FEDERAL, STATE OR LOCAL WITHHOLDING AND EMPLOYMENT- RELATED TAX REQUIREMENTS
ATTRIBUTABLE TO THE AWARD, INCLUDING, WITHOUT LIMITATION, THE GRANT OR SETTLEMENT OF THE RESTRICTED STOCK UNITS. IF THE COMPANY IS
UNABLE TO WITHHOLD SUCH AMOUNTS, FOR WHATEVER REASON, PARTICIPANT AGREES TO PAY TO THE COMPANY AN AMOUNT EQUAL TO THE AMOUNT THE COMPANY
WOULD OTHERWISE BE REQUIRED TO WITHHOLD UNDER FEDERAL, STATE OR LOCAL LAW. |
| 10. | No Right to Employment or Engagement. This Award shall not be construed as giving Participant the
right to be retained as an employee, officer of consultant of the Company or any Affiliate, nor will it affect in any way the right of
the Company or an Affiliate to terminate Participant’s employment or engagement at any time, with or without cause, in accordance
with applicable law. In addition, the Company or an Affiliate may at any time dismiss Participant from employment or engagement free from
any liability or any claim under this Award, unless otherwise expressly provided in this Agreement. Nothing in this Agreement 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 Participant be entitled to any compensation
for any loss of any right or benefit under this Agreement which Participant might otherwise have enjoyed but for termination of employment
or engagement, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. |
| 11. | Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority will not have been obtained. |
| 12. | Shareholder Agreements. Upon the settlement of the Award, Participant shall, at the request of the
Company, execute and deliver such voting, co-sale and other agreements as the Company requests generally of holders of amounts of stock
corresponding to that of such Participant; and if Participant fails to execute and deliver any such agreement, such Participant shall
nevertheless hold all stock subject to, and be bound by, such agreement. |
| 13. | Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators and successors
of the parties to this Agreement. |
| 14. | Governing Law. This Agreement and all rights and obligations under this Agreement shall be construed
in accordance with the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Agreement to the substantive laws of any other jurisdiction. |
| 15. | Entire Agreement. This Agreement and the Employment Agreement set forth the entire agreement and
understanding of the parties to this Agreement with respect to the administration, grant and settlement of this Award and supersede all
prior agreements, arrangements, plans and understandings relating to the administration, grant and settlement of this Award. |
| 16. | Amendment and Waiver. Subject to applicable law, this Agreement may be amended, waived, modified
or canceled only by a written instrument executed by the parties to this Agreement or, in the case of a waiver, by the party waiving compliance.
Notwithstanding the preceding, Participant agrees that the Board may amend this Agreement, to take effect retroactively
or otherwise, as deemed necessary or advisable for the purpose of conforming this Agreement to any present or future law relating to plans
of this or similar nature (including, but not limited to, Section 409A of the Code), and to the administrative regulations and rulings
promulgated thereunder. |
| 17. | Electronic Delivery and Acceptance. The Company may deliver any documents related to this Agreement
by electronic means and request Participant’s acceptance of this Agreement by electronic means. Participant hereby consents to receive
all applicable documentation by electronic delivery and to participate through an on-line (and/or voice activated) system established
and maintained by the Company or the Company’s third-party stock plan administrator. |
| 18. | Compliance with 409A. This Agreement is intended to comply with 409A to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted and administered to comply with 409A. Notwithstanding
the foregoing, the Company shall not have any obligation to take any action to prevent the assessment of any additional tax or penalty
on the Participant under 409A and the Company will not have any liability to the Participant for any such additional tax or penalty. Notwithstanding
any provision of this Agreement to the contrary, if on Participant’s separation from service, the Participant is deemed to be a
“specified employee” within the meaning of Code Section 409A, any payment or benefit under this Agreement for which the
commencement of payment is required to be delayed under Code Section 409A(a)(2)(B) shall not be paid or commence until the earliest
of (i) the first business day following
the expiration of six (6) months from the Participant’s separation from service or (ii) the date of the Employee’s
death. Notwithstanding any provision of this Agreement to the contrary, in no event will any payment under this Agreement that constitutes
“nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless
otherwise permitted by Code Section 409A. |
[Signature Page Follows]
The parties hereto have executed this Agreement effective
as of the Date of Grant.
| | VIREO GROWTH INC. |
| | | |
| | | |
| By: | /s/ Tyson Macdonald |
| | | Tyson Macdonald |
| | | |
| | Its: | Chief Financial
Officer |
| | | |
| | | |
| By execution of this Agreement, Participant agrees to all of the terms and conditions described in this Agreement. |
PARTICIPANT |
| |
|
|
|
/s/ John Mazarakis |
| |
Name: |
John Mazarakis |
Exhibit 10.3
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
ISSUABLE UPON SETTLEMENT HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT)”, OR ANY U.S. STATE SECURITIES LAWS. THE HOLDER HEREOF, BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY,
(B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE U.S. STATE
SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE U.S. STATE
SECURITIES LAWS, AFTER, IN THE CASE OF TRANSFERS UNDER CLAUSE (C) OR (D), THE HOLDER HAS FURNISHED TO THE COMPANY AND ITS TRANSFER
AGENT AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT TO
THE EFFECT THAT SUCH EXEMPTION(S) ARE AVAILABLE.
VIREO GROWTH INC.
RESTRICTED STOCK
UNIT AGREEMENT
| Name of Participant: |
Tyson Macdonald |
| |
|
| Number of Restricted Stock Units: |
9,500,000 |
| |
|
| Date of Grant: |
May 9, 2025 |
| Vesting Schedule: | Subject to the terms of this Agreement, the Restricted Stock
Units shall vest as follows: |
| · | with respect to 2,850,000 Restricted Stock Units, on March 6, 2026; |
| · | with respect to 3,325,000 Restricted Stock Units, at any time on or after March 6, 2027, on the
day immediately following the date on which the Shares have reached a 30-day volume- weighted average price ("VWAP")
that exceeds US$0.85 on which Shares are then traded (the "Exchange"); and |
| · | with respect to 3,325,000Restricted Stock Units, at any time on or after March 6, 2028, on the day
immediately following the date on which the Shares have reached a 30-day VWAP that exceeds US$1.05 on the Exchange, |
| | provided that in each such case, the Participant is a Service
Provider on the applicable vesting date (except as otherwise provided by Section 2 of this Agreement). |
This is a Restricted Stock Unit Agreement (the “Agreement”), by and between Vireo Growth Inc., a British Columbia corporation
(the “Company”), and the participant identified above (“Participant”), entered into and effective as of the date
of grant identified above (the “Date of Grant”).
II. BACKGROUND
| 1. | The Company and Participant entered into an executive employment dated December 17, 2024 (the "Original Agreement"),
as approved by the board of directors of the Company (the "Board") on December 17, 2024, and as amended by a First
Amendment to Employment Agreement dated March 6, 2025 (together with the Original Agreement, the "Employment Agreement"),
as approved by the Board on March 6, 2025. |
| 2. | In connection with the Employment Agreement the Company has agreed to issue to the Participant 9,500,000 Restricted Stock Units subject
to the terms and conditions set forth herein. |
| III. | AGREEMENT. The grant awarded under this
Agreement is made subject to the following terms and conditions. For the purposes of this Agreement, (a) "Restricted Stock
Unit" means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to this
Agreement, and each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company; (b) "Fair Market
Value" means the closing sales price of the Shares as quoted on the Canadian Securities Exchange on the day of determination;
and (c) "Share" means one subordinate voting share in the capital of the Company. |
| 1. | Grant of Award. The Company hereby grants to Participant, as of the Date of Grant and subject to
the terms and conditions of this Agreement, the number of Restricted Stock Units indicated above (the “Award”). Each
Restricted Stock Unit represents the right to receive one Share (or a cash payment equal to the Fair Market Value of one Share) upon settlement
of the Award. |
| 2. | Vesting and Forfeiture. The Award will vest as to the number of Restricted Stock Units and on
the dates specified in the Notice of Grant above, but only if Participant is an employee, director or consultant of the Company (a
"Service Provider") on such dates. Except as otherwise expressly provided in this Agreement, if Participant ceases
to be a Service Provider, then all Restricted Stock Units subject to this Award that have not yet vested shall be forfeited. In the
event the Board determines it is within the best interests of the Company to accelerate the vesting of the Restricted Stock Units,
the Company may accelerate the vesting schedule set out above. In the event of Participant’s separation from service (as such
term is defined in Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and its related regulations
(“409A”)) by the Company for Cause, all Restricted Stock Units, whether vested but not yet settled or unvested,
shall be cancelled and forfeited as of the date of such separation from service for no consideration. In the event of
Participant’s separation from service by the Company for any reason other than Cause, the resignation of the Participant for
Good Reason or the death or Disability of the Participant, the vesting schedule of all outstanding Restricted Stock Units will
accelerate, and all vested Restricted Stock Units will remain outstanding and shall settle on the applicable Trigger Date. In the event
of the consummation of a transaction constituting a Change in Control (as defined in the Employment Agreement), the vesting schedule of
all outstanding Restricted Stock Units will accelerate, and all vested Restricted Stock Units will remain outstanding and shall settle
on the applicable Trigger Date. Notwithstanding the foregoing, the Board may, in its sole discretion, reduce or waive any vesting criteria
that must be met to receive a payout, provided that settlement shall comply with 409A. |
| | Notwithstanding the foregoing, for purposes
of this Agreement, the consummation of one or more of the transactions resulting in the business combination of the Company with (i) Deep
Roots Holdings, Inc., a Nevada corporation; (ii) Proper Holdings Management, Inc. and NGH Investments, Inc., both
Missouri corporations; or (iii) WholesomeCo, Inc., a Delaware corporation, shall be deemed not to constitute a
Change in Control. |
| 3. | Nature of Restricted Stock Units. The Restricted Stock Units granted pursuant to this Award are bookkeeping
entries only and do not provide Participant with any dividend, voting or other rights of a shareholder of the Company. The Restricted
Stock Units shall remain forfeitable at all times unless and to the extent the vesting conditions set forth in this Agreement are satisfied. |
| 4. | Settlement of Units. Subject to the provisions of this Agreement, the Company shall settle each vested
Restricted Stock Unit by delivering to Participant one Share to which such vested Restricted Stock Unit relates, a cash payment equal
to the Fair Market Value of one such Share, or a combination of both upon the earliest to occur of the following (such earliest date being
referred to herein as the “Trigger Date”): (a) on the dates identified under the Notice of Grant; (b) the
death or Disability of Participant; (c) a Change in Control of the Company; or (d) on the date of the Participant’s separation
from service (as such term is defined in 409A). For the avoidance of doubt, the portion of the Restricted Stock Units for which clauses
(b), (c), or (d) above apply (if applicable) is the portion of the Restricted Stock Units still outstanding as of the applicable
Trigger Date and not previously settled on an earlier Trigger Date. |
| | For purpose of this Agreement, the term
“Cause,” the term “Good Reason,” and the term “Disability” shall have the meaning ascribed to such
term in the Employment Agreement. |
| | Such settlement shall occur as soon as
practicable following the Trigger Date (but in no event later than sixty (60) days following the Trigger Date, provided that the Company
has the sole discretion to select the date of settlement within such sixty (60) day period and the Participant has no right to select
the year of payment if such sixty (60) day period crosses calendar years). |
| 5. | Transferability. Until such time as the Restricted Stock Units are settled as provided by this Agreement,
the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by |
| | the Participant, except that the Restricted
Stock Units may be transferred by the Participant by will or, if the Participant dies intestate, by the laws of descent and distribution
of the state of domicile of the Participant at the time of death. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer
or encumber the Restricted Stock Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the
Restricted Stock Units will be forfeited by the Participant and all of the Participant’s rights to such Units shall immediately
terminate without any payment of consideration by the Company. The Restricted Stock Units, and any Shares issued upon settlement hereof,
have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or any applicable
U.S. state securities laws, and are or will when issued be “restricted securities” (as such term is defined in Rule 144(a)(3) under
the U.S. Securities Act). Any certificate or instrument representing such securities issued pursuant to an exemption from the registration
requirements of the U.S. Securities Act and any applicable U.S. state securities laws shall bear a legend restricting transfer under applicable
United States federal and state securities laws unless such securities are registered under the U.S. Securities Act and all applicable
U.S. state securities laws or unless issued in compliance with an exemption therefrom. |
| 6. | No Shareholder Rights. Neither Participant nor any permitted transferee of the Award will have any
of the rights of a stockholder of the Company with respect to any Shares subject to this Award unless and until a certificate evidencing
such Shares has been issued, electronic delivery of such Shares has been made to Participant’s designated brokerage account, or
an appropriate book entry in the Company's stock register has been made. No adjustments shall be made for dividends or other rights if
the applicable record date occurs before a stock certificate has been issued, electronic delivery of the Shares has been made to Participant’s
designated brokerage account, or an appropriate book entry in the Company's stock register has been made, except as otherwise described
in Section 7. |
| 7. | Adjustments; Dissolution or Liquidation; Change in Control or Other Transactions. |
| (a) | Adjustments. In the event that any 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 occurs, the Board, in order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made this Agreement, will adjust the number and class of shares of stock that may be delivered under this Agreement and/or
the number, class, and price of shares of stock covered by outstanding Awards. |
| (b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company,
the Board will notify Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has
not been previously exercised, an Award will terminate immediately prior to the consummation of such
proposed action. |
| (c) | Change in Control; Other Transactions. |
| | (i) In the event of any reorganization, merger, statutory share
exchange, consolidation, sale of Company’s assets, or the acquisition of assets or stock of another entity by the Company, or other
corporate transaction involving the Company or any of its subsidiaries, in each case which is not a Change in Control (each, a “Corporate
Transaction”), the Restricted Stock Units will be treated as the Board determines (subject to the provisions of the following
paragraph) without Participant’s consent, including, without limitation, that (A) the Restricted Stock Units will be assumed,
or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate
adjustments as to the number and kind of shares and prices; or (B) the termination of the Restricted Stock Units in exchange for
an amount of cash and/or property, if any, equal to the amount that would have realized by the Participant as if the Restricted Stock
Units had been issued and outstanding Shares, provided that in any such case, settlement of the Restricted Stock Units shall occur at
a time permitted by 409A. |
| | (ii) For the purposes of Section 7(c)(i), the Restricted Stock
Units will be considered assumed if, following the Corporate Transaction, the Restricted Stock Units confer the right to receive, for
each Share subject to the Restricted Stock Units immediately prior to the Corporate Transaction, the consideration (whether stock, cash,
or other securities or property) received in the Corporate Transaction by holders of Subordinate Voting Shares for each Share held on
the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Corporate Transaction
is not solely common shares of the successor corporation or its parent, the Board may, with the consent of the successor corporation,
provide for the consideration to be received upon the payout of a Restricted Stock Unit, for each Share subject to the award, to be solely
common shares of the successor corporation or its parent equal in fair market value to the per share consideration received by holders
of Subordinate Voting Shares in the Corporate Transaction, all subject to compliance with 409A as to timing of payments. |
| 8. | Securities Law and Other Restrictions. By signing this Agreement, Participant represents and warrants
that he is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the U.S. Securities
Act, and acknowledges that the Restricted Stock Units and any Shares issuable upon settlement hereof have not been registered under the
U.S. Securities Act or any U.S. state securities laws and are being issued in reliance upon an exemption from
such registration requirements. Notwithstanding any other provision of this Agreement, the Company shall not be required to issue, and
Participant may not sell, assign, transfer or otherwise dispose of, any Shares, unless and until: (a) there is in effect with respect
to the Shares a registration statement under the U.S. Securities Act, and any applicable U.S. state or foreign securities laws, or an
exemption from such registration; (b) there has been obtained the written consent resolution related to the grant of the Restricted
Stock Units and issuance of the underlying Shares signed by security holders of the Company of more than 50% of the securities of the
Company having voting rights; (c) the Company has furnished to
non-consenting security holders of the Company, and filed with the Securities and Exchange Commission, an information statement required
under Rule 14c-2 under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), in connection
with the grant of the Restricted Units and issuance of the underlying Shares, including the filing of any required preliminary information
statement and in compliance with any required timelines under the U.S. Exchange Act; and (d) there has been obtained any other consent,
approval or permit from any other regulatory body that the Board, in its sole discretion, deems necessary or advisable. Notwithstanding
the foregoing, Shares will not be issued pursuant to the exercise of this Award unless the exercise of this Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from
the parties involved, and the placement of any legends on certificates representing the Shares, as may be deemed necessary or advisable
by the Company in order to comply with such securities law or other restrictions. |
| 9. | Tax Withholding. THE COMPANY IS ENTITLED TO WITHHOLD AND DEDUCT FROM FUTURE FEES OR WAGES OF PARTICIPANT
(OR FROM OTHER AMOUNTS THAT MAY BE DUE AND OWING TO PARTICIPANT FROM THE COMPANY), OR MAKE OTHER ARRANGEMENTS FOR THE COLLECTION
OF, ALL LEGALLY REQUIRED AMOUNTS NECESSARY TO SATISFY ANY FEDERAL, STATE OR LOCAL WITHHOLDING AND EMPLOYMENT- RELATED TAX REQUIREMENTS
ATTRIBUTABLE TO THE AWARD, INCLUDING, WITHOUT LIMITATION, THE GRANT OR SETTLEMENT OF THE RESTRICTED STOCK UNITS. IF THE COMPANY IS
UNABLE TO WITHHOLD SUCH AMOUNTS, FOR WHATEVER REASON, PARTICIPANT AGREES TO PAY TO THE COMPANY AN AMOUNT EQUAL TO THE AMOUNT THE COMPANY
WOULD OTHERWISE BE REQUIRED TO WITHHOLD UNDER FEDERAL, STATE OR LOCAL LAW. |
| 10. | No Right to Employment or Engagement. This Award shall not be construed as giving Participant the
right to be retained as an employee, officer of consultant of the Company or any Affiliate, nor will it affect in any way the right of
the Company or an Affiliate to terminate Participant’s employment or engagement at any time, with or without cause, in accordance
with applicable law. In addition, the Company or an Affiliate may at any time dismiss Participant from employment or engagement free from
any liability or any claim under this Award, unless
otherwise expressly provided in this Agreement. Nothing in this Agreement 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 Participant be entitled to any compensation for any loss of any right or benefit under this Agreement
which Participant might otherwise have enjoyed but for termination of employment or engagement, whether such compensation is claimed by
way of damages for wrongful or unfair dismissal, breach of contract or otherwise. |
| 11. | Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority will not have been obtained. |
| 12. | Shareholder Agreements. Upon the settlement of the Award, Participant shall, at the request of the
Company, execute and deliver such voting, co-sale and other agreements as the Company requests generally of holders of amounts of stock
corresponding to that of such Participant; and if Participant fails to execute and deliver any such agreement, such Participant shall
nevertheless hold all stock subject to, and be bound by, such agreement. |
| 13. | Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators and successors
of the parties to this Agreement. |
| 14. | Governing Law. This Agreement and all rights and obligations under this Agreement shall be construed
in accordance with the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Agreement to the substantive laws of any other jurisdiction. |
| 15. | Entire Agreement. This Agreement and the Employment Agreement set forth the entire agreement and
understanding of the parties to this Agreement with respect to the administration, grant and settlement of this Award and supersede all
prior agreements, arrangements, plans and understandings relating to the administration, grant and settlement of this Award. |
| 16. | Amendment and Waiver. Subject to applicable law, this Agreement may be amended, waived, modified
or canceled only by a written instrument executed by the parties to this Agreement or, in the case of a waiver, by the party waiving compliance.
Notwithstanding the preceding, Participant agrees that the Board may amend this Agreement, to take effect retroactively or otherwise,
as deemed necessary or advisable for the purpose of conforming this Agreement to any present or future law relating to plans of this or
similar nature (including, but not limited to, Section 409A of the Code), and to the administrative regulations and rulings promulgated
thereunder. |
| 17. | Electronic Delivery and Acceptance. The Company may deliver any documents related to this Agreement
by electronic means and request Participant’s acceptance of this Agreement by electronic means. Participant
hereby consents to receive all applicable documentation by electronic delivery and to participate through an on-line (and/or voice activated)
system established and maintained by the Company or the Company’s third-party stock plan administrator. |
| 18. | Compliance with 409A. This Agreement is intended to comply with 409A to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted and administered to comply with 409A. Notwithstanding
the foregoing, the Company shall not have any obligation to take any action to prevent the assessment of any additional tax or penalty
on the Participant under 409A and the Company will not have any liability to the Participant for any such additional tax or penalty. Notwithstanding
any provision of this Agreement to the contrary, if on Participant’s separation from service, the Participant is deemed to be a
“specified employee” within the meaning of Code Section 409A, any payment or benefit under this Agreement for which the
commencement of payment is required to be delayed under Code Section 409A(a)(2)(B) shall not be paid or commence until the earliest
of (i) the first business day following
the expiration of six (6) months from the Participant’s separation from service or (ii) the date of the Employee’s
death. Notwithstanding any provision of this Agreement to the contrary, in no event will any payment under this Agreement that constitutes
“nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless
otherwise permitted by Code Section 409A. |
[Signature Page Follows]
The parties hereto have executed this Agreement effective
as of the Date of Grant.
| | VIREO GROWTH INC. |
| | | |
| | | |
| By: | /s/ John Mazarakis |
| | | John Mazarakis |
| | | |
| | Its: | Chief Executive Officer |
| | | |
| | | |
| By execution of this Agreement, Participant agrees to all of the terms and conditions described in this Agreement. |
PARTICIPANT |
| |
|
|
|
/s /Tyson Macdonald |
|
Name: |
Tyson Macdonald |
Exhibit 10.4
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
ISSUABLE UPON SETTLEMENT HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES
ACT)”, OR ANY U.S. STATE SECURITIES LAWS. THE HOLDER HEREOF, BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY,
(B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE U.S. STATE
SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE U.S. STATE
SECURITIES LAWS, AFTER, IN THE CASE OF TRANSFERS UNDER CLAUSE (C) OR (D), THE HOLDER HAS FURNISHED TO THE COMPANY AND ITS TRANSFER
AGENT AN OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT TO
THE EFFECT THAT SUCH EXEMPTION(S) ARE AVAILABLE.
VIREO GROWTH INC.
RESTRICTED STOCK
UNIT AGREEMENT
| Name of Participant: |
Tyson Macdonald |
| |
|
| Number of Restricted Stock Units: |
9,500,000 |
| |
|
| Date of Grant: |
May 9, 2025 |
| Vesting Schedule: | Subject
to the terms of this Agreement, the Restricted Stock Units shall vest as follows: |
| · | with respect to one-third of the Restricted Stock Units,
on the day immediately following the date on which the 6-month trailing, annualized, adjusted EBITDA (“AEBITDA”) exceeds
US$150,000,000 and the net leverage of the Company is below 2.2x; |
| · | with respect to one-third of the Restricted Stock Units, on the day immediately following the date on
which the AEBITDA exceeds US$165,000,000 and the net leverage of the Company is below 2.2x; and |
| · | with respect to the remainder of the Restricted Stock Units, on the day immediately following the date
on which the AEBITDA exceeds US$205,000,000 and the net leverage of the Company is below 2.2x, |
| |
provided,
however, that (i) in each such case, the Participant is a Service Provider on the applicable vesting date (except
as otherwise provided by Section 2 of the Agreement), and (ii) such milestone has been achieved by no later than the fifth
(5th) anniversary of the date of grant. |
This is a Restricted Stock Unit Agreement (the
“Agreement”), by and between Vireo Growth Inc., a British Columbia corporation (the “Company”),
and the participant identified above (“Participant”), entered into and effective as of the date of grant identified
above (the “Date of Grant”).
II. BACKGROUND
| 1. | The Company and Participant entered into an executive employment dated December 17, 2024 (the “Original Agreement”),
as approved by the board of directors of the Company (the “Board”) on December 17, 2024, and as amended by a First
Amendment to Employment Agreement dated March 6, 2025 (together with the Original Agreement, the “Employment Agreement”),
as approved by the Board on March 6, 2025. |
| 2. | In connection with the Employment Agreement the Company has agreed to issue to the Participant 9,500,000 Restricted Stock Units subject
to the terms and conditions set forth herein. |
| III. | AGREEMENT.
The grant awarded under this Agreement is made subject to the following terms and conditions. For the purposes of this Agreement,
(a) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of
one Share, granted pursuant to this Agreement, and each Restricted Stock Unit represents an unfunded and unsecured obligation of the
Company; (b) “Fair Market Value” means the closing sales price of the Shares as quoted on the Canadian Securities
Exchange on the day of determination; and (c) “Share” means one subordinate voting share in the capital of the
Company. |
| 1. | Grant of Award. The Company hereby grants to Participant, as of the Date of Grant and subject to
the terms and conditions of this Agreement, the number of Restricted Stock Units indicated above (the “Award”). Each
Restricted Stock Unit represents the right to receive one Share (or a cash payment equal to the Fair Market Value of one Share) upon settlement
of the Award. |
| 2. | Vesting and Forfeiture. The Award will vest as to the number of Restricted Stock Units and on
the dates specified in the Notice of Grant above, but only if Participant is an employee, director or consultant of the Company (a
“Service Provider”) on such dates. Except as otherwise expressly provided in this Agreement, if Participant ceases
to be a Service Provider, then all Restricted Stock Units subject to this Award that have not yet vested shall be forfeited. In the
event the Board determines it is within the best interests of the Company to accelerate the vesting of the Restricted Stock Units,
the Company may accelerate the vesting schedule set out above. In the event of Participant’s separation from service (as such
term is defined in Section 409A of the U.S. Internal Revenue Code of 1986, as
amended, and its related regulations (“409A”)) by the Company for Cause, all Restricted Stock Units, whether vested
but not yet settled or unvested, shall be cancelled and forfeited as of the date of such separation from service for no consideration. In
the event of Participant’s separation from service by the Company for any reason other than Cause, the resignation of the Participant
for Good Reason or the death or Disability of the Participant, the vesting schedule of all outstanding Restricted Stock Units will accelerate,
and all vested Restricted Stock Units will remain outstanding and shall settle on the applicable Trigger Date. In the event of the consummation
of a transaction constituting a Change in Control (as defined in the Employment Agreement), the vesting schedule of all outstanding Restricted
Stock Units will accelerate, and all vested Restricted Stock Units will remain outstanding and shall settle on the applicable Trigger
Date. Notwithstanding the foregoing, the Board may, in its sole discretion, reduce or waive any vesting criteria that must be met to receive
a payout, provided that settlement shall comply with 409A. |
| | Notwithstanding the foregoing, for purposes
of this Agreement, the consummation of one or more of the transactions resulting in the business combination of the Company with (i) Deep
Roots Holdings, Inc., a Nevada corporation; (ii) Proper Holdings Management, Inc. and NGH Investments, Inc., both
Missouri corporations; or (iii) WholesomeCo, Inc., a Delaware corporation, shall be deemed not to constitute a
Change in Control. |
| 3. | Nature of Restricted Stock Units. The Restricted Stock Units granted pursuant to this Award are bookkeeping
entries only and do not provide Participant with any dividend, voting or other rights of a shareholder of the Company. The Restricted
Stock Units shall remain forfeitable at all times unless and to the extent the vesting conditions set forth in this Agreement are satisfied. |
| 4. | Settlement of Units. Subject to the provisions of this Agreement, the Company shall settle each vested
Restricted Stock Unit by delivering to Participant one Share to which such vested Restricted Stock Unit relates, a cash payment equal
to the Fair Market Value of one such Share, or a combination of both upon the earliest to occur of the following (such earliest date being
referred to herein as the “Trigger Date”): (a) on the dates identified under the Notice of Grant, subject to attainment
of the applicable performance milestones set forth in the Notice of Grant; (b) the death or Disability of Participant; (c) a
Change in Control of the Company; or (d) on the date of the Participant’s separation from service (as such term is defined
in 409A). For avoidance of doubt, attainment of the performance milestones set forth in the Notice of Grant shall be waived, and any outstanding,
unvested portion of the Restricted Stock Units shall become immediately payable, if the events in clause (b), (c), or (d) above occur
before attainment of such performance milestones. |
| | For purpose of this Agreement, the term
“Cause,” the term “Good Reason,” and the term “Disability” shall have the meaning ascribed to such
term in the Employment Agreement. |
| | Such settlement shall occur as soon as
practicable following the Trigger Date (but in no event later than sixty (60) days following the Trigger Date, provided that the Company
has the sole discretion to select the date of settlement within such sixty (60) day period and the Participant has no right to select
the year of payment if such sixty (60) day period crosses calendar years). |
| 5. | Transferability. Until such time as the Restricted Stock Units are settled as provided by this Agreement,
the Restricted Stock Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by the Participant, except that the Restricted Stock Units may be transferred by the Participant by will or, if the Participant
dies intestate, by the laws of descent and distribution of the state of domicile of the Participant at the time of death. Any attempt
to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Restricted Stock Units or the rights relating thereto
shall be wholly ineffective and, if any such attempt is made, the Restricted Stock Units will be forfeited by the Participant and all
of the Participant’s rights to such Units shall immediately terminate without any payment of consideration by the Company. The Restricted
Stock Units, and any Shares issued upon settlement hereof, have not been registered under the U.S. Securities Act of 1933, as amended
(the “U.S. Securities Act”), or any applicable U.S. state securities laws, and are or will when issued be “restricted
securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act). Any certificate or instrument representing
such securities issued pursuant to an exemption from the registration requirements of the U.S. Securities Act and any applicable U.S.
state securities laws shall bear a legend restricting transfer under applicable United States federal and state securities laws unless
such securities are registered under the U.S. Securities Act and all applicable U.S. state securities laws or unless issued in compliance
with an exemption therefrom. |
| 6. | No Shareholder Rights. Neither Participant nor any permitted transferee of the Award will have any
of the rights of a stockholder of the Company with respect to any Shares subject to this Award unless and until a certificate evidencing
such Shares has been issued, electronic delivery of such Shares has been made to Participant’s designated brokerage account, or
an appropriate book entry in the Company’s stock register has been made. No adjustments shall be made for dividends or other rights if
the applicable record date occurs before a stock certificate has been issued, electronic delivery of the Shares has been made to Participant’s
designated brokerage account, or an appropriate book entry in the Company’s stock register has been made, except as otherwise described
in Section 7. |
| 7. | Adjustments; Dissolution or Liquidation; Merger or Change in Control. |
| (a) | Adjustments. In the event that any 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 occurs, the Board, in order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made this Agreement, will adjust the number and class of shares of stock that may be delivered under this Agreement and/or
the number, class, and price of shares of stock covered by outstanding Awards. |
| (b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company,
the Board will notify Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has
not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. |
| (c) | Change in Control; Other Transactions. |
| | (i) In the event of any other reorganization, merger, statutory
share exchange, consolidation, sale of Company’s assets, or the acquisition of assets or stock of another entity by the Company,
or other corporate transaction involving the Company or any of its subsidiaries, in each case which is not a Change in Control (each,
a “Corporate Transaction”), the Restricted Stock Units will be treated as the Board determines (subject to the provisions
of the following paragraph) without Participant’s consent, including, without limitation, that (A) the Restricted Stock Units
will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof) with appropriate adjustments as to the number and kind of shares and prices; or (B) the termination of the Restricted Stock
Units in exchange for an amount of cash and/or property, if any, equal to the amount that would have realized by the Participant as if
the Restricted Stock Units had been issued and outstanding Shares, provided that in any such case, settlement of the Restricted Stock
Units shall occur at a time permitted by 409A. |
| | (ii) For the purposes of Section 7(c)(i), the Restricted Stock
Units will be considered assumed if, following the Corporate Transaction, the Restricted Stock Units confer the right to receive, for
each Share subject to the Restricted Stock Units immediately prior to the Corporate Transaction, the consideration (whether stock, cash,
or other securities or property) received in the Corporate Transaction by holders of Subordinate Voting Shares for each Share held on
the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Corporate Transaction
is not solely common shares of the successor corporation or its parent, the Board may, with the consent of the successor corporation,
provide for the consideration to be received upon the payout of a Restricted Stock Unit, for each Share subject to the award, to be solely
common shares of the successor corporation or its parent equal in fair market value to the per share consideration received by holders
of Subordinate Voting Shares in the Corporate Transaction, all subject to compliance with 409A as to timing of payments. |
| 8. | Securities Law and Other Restrictions. By signing this Agreement, Participant represents and
warrants that he is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the
U.S. Securities Act, and acknowledges that the Restricted Stock Units and any Shares issuable upon settlement hereof have not been
registered under the U.S. Securities Act or any U.S. state securities laws and are being issued in reliance upon an exemption from
such registration requirements. Notwithstanding any other provision of this Agreement, the Company shall not be required to issue,
and Participant may not sell, assign, transfer or otherwise dispose of, any Shares, unless and until: (a) there is in effect
with respect to the Shares a registration statement under the U.S. Securities Act, and any applicable U.S. state or foreign
securities laws, or an exemption from such registration is available; (b) there has been obtained the written consent
resolution related to the grant of the Restricted Stock Units and issuance of the underlying Shares signed by security holders of
the Company of more than 50% of the securities of the Company having voting rights; (c) the Company has furnished to
non-consenting security holders of the Company, and filed with the Securities and Exchange Commission, an information statement required
under Rule 14c-2 under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), in connection
with the grant of the Restricted Stock Units and issuance of the underlying Shares, including the filing of any required preliminary information
statement and in compliance with any required deadlines under the U.S. Exchange Act; and (d) there has been obtained any other consent,
approval or permit from any other regulatory body that the Board, in its sole discretion, deems necessary or advisable. Notwithstanding
the foregoing, Shares will not be issued pursuant to the exercise of this Award unless the exercise of this Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from
the parties involved, and the placement of any legends on certificates representing the Shares, as may be deemed necessary or advisable
by the Company in order to comply with such securities law or other restrictions. |
| 9. | Tax Withholding. THE COMPANY IS ENTITLED TO WITHHOLD AND DEDUCT FROM FUTURE FEES OR WAGES OF PARTICIPANT
(OR FROM OTHER AMOUNTS THAT MAY BE DUE AND OWING TO PARTICIPANT FROM THE COMPANY), OR MAKE OTHER ARRANGEMENTS FOR THE COLLECTION
OF, ALL LEGALLY REQUIRED AMOUNTS NECESSARY TO SATISFY ANY FEDERAL, STATE OR LOCAL WITHHOLDING AND EMPLOYMENT- RELATED TAX REQUIREMENTS
ATTRIBUTABLE TO THE AWARD, INCLUDING, WITHOUT LIMITATION, THE GRANT OR SETTLEMENT OF THE RESTRICTED STOCK UNITS. IF THE COMPANY IS
UNABLE TO WITHHOLD SUCH AMOUNTS, FOR WHATEVER REASON, PARTICIPANT AGREES TO PAY TO THE COMPANY AN AMOUNT EQUAL TO THE AMOUNT THE COMPANY
WOULD OTHERWISE BE REQUIRED TO WITHHOLD UNDER FEDERAL, STATE OR LOCAL LAW. |
| 10. | No Right to Employment or Engagement. This Award shall not be construed as giving Participant the right to be retained as
an employee, officer of consultant of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate
to terminate Participant’s employment or engagement at any time, with or without cause, in accordance with applicable law. In addition,
the Company or an Affiliate may at any time dismiss Participant from employment or engagement free from any liability or any claim under
this Award, unless otherwise expressly provided in this Agreement. Nothing in this Agreement 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 Participant be entitled to any compensation for any loss of any right or benefit
under this Agreement which Participant might otherwise have enjoyed but for termination of employment or engagement, whether such compensation
is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. |
| 11. | Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority will not have been obtained. |
| 12. | Shareholder Agreements. Upon the settlement of the Award, Participant shall, at the request of the
Company, execute and deliver such voting, co-sale and other agreements as the Company requests generally of holders of amounts of stock
corresponding to that of such Participant; and if Participant fails to execute and deliver any such agreement, such Participant shall
nevertheless hold all stock subject to, and be bound by, such agreement. |
| 13. | Binding Effect. This Agreement shall be binding upon the heirs, executors, administrators and successors
of the parties to this Agreement. |
| 14. | Governing Law. This Agreement and all rights and obligations under this Agreement shall be construed
in accordance with the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Agreement to the substantive laws of any other jurisdiction. |
| 15. | Entire Agreement. This Agreement and the Employment Agreement set forth the entire agreement and
understanding of the parties to this Agreement with respect to the administration, grant and settlement of this Award and supersede all
prior agreements, arrangements, plans and understandings relating to the administration, grant and settlement of this Award. |
| 16. | Amendment and Waiver. Subject to applicable law, this Agreement may be amended, waived,
modified or canceled only by a written instrument executed by the parties to this Agreement or, in the case of a waiver, by the
party waiving compliance. Notwithstanding the preceding, Participant agrees that the Board may amend this Agreement, to take effect
retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming this Agreement to any present or future
law relating to plans of this or similar nature (including, but not limited
to, Section 409A of the Code), and to the administrative regulations and rulings promulgated thereunder. |
| 17. | Electronic Delivery and Acceptance. The Company may deliver any documents related to this Agreement
by electronic means and request Participant’s acceptance of this Agreement by electronic means. Participant hereby consents to receive
all applicable documentation by electronic delivery and to participate through an on-line (and/or voice activated) system established
and maintained by the Company or the Company’s third-party stock plan administrator. |
| 18. | Compliance with 409A. This Agreement is intended to comply with 409A to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted and administered to comply with 409A. Notwithstanding
the foregoing, the Company shall not have any obligation to take any action to prevent the assessment of any additional tax or penalty
on the Participant under 409A and the Company will not have any liability to the Participant for any such additional tax or penalty. Notwithstanding
any provision of this Agreement to the contrary, if on Participant’s separation from service, the Participant is deemed to be a
“specified employee” within the meaning of Code Section 409A, any payment or benefit under this Agreement for which the
commencement of payment is required to be delayed under Code Section 409A(a)(2)(B) shall not be paid or commence until the earliest
of (i) the first business day following
the expiration of six (6) months from the Participant’s separation from service or (ii) the date of the Employee’s
death. Notwithstanding any provision of this Agreement to the contrary, in no event will any payment under this Agreement that constitutes
“nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless
otherwise permitted by Code Section 409A. |
[Signature Page Follows]
The parties hereto have executed this Agreement effective
as of the Date of Grant.
| | VIREO GROWTH INC. |
| | | |
| | | |
| By: | /s/ John Mazarakis |
| | | John Mazarakis |
| | | |
| | Its: | Chief Executive
Officer |
| | | |
| | | |
| By
execution of this Agreement, Participant agrees to all of the terms and conditions described in this Agreement. |
PARTICIPANT |
| |
|
|
|
/s/ Tyson Macdonald |
|
Name: |
Tyson Macdonald |
Exhibit 23.1
Consent of Independent Auditor
We consent to the incorporation by reference in the registration statements
on Form S-3 (No. 333-282311) and on Form S-8 (Nos. 333-252690, 333-278478 and 333-278479) of Vireo Growth Inc. and the inclusion in this
Current Report on Form 8-K of Vireo Growth Inc. of our report dated February 27, 2025, relating to the consolidated financial statements
of WholesomeCo, Inc. as of December 31, 2024 and 2023 and for the years then ended.
/s/ Tanner LLC
Lehi, Utah
May 12, 2025
Exhibit 99.1
Vireo Growth Inc. Announces Closing of WholesomeCo
Cannabis
& Arches Merger Transactions
– Acquisitions strengthen profitability
and competitive position with proprietary technology platform –
– Missouri and Nevada transactions remain
on track to close during the second quarter of 2025 –
MINNEAPOLIS – May 12, 2025 –
Vireo Growth Inc. ("Vireo" or the "Company") (CSE: VREO; OTCQX: VREOF), today announced that it has closed its
previously-announced transactions to acquire Utah-based WholesomeCo Cannabis (“Wholesome”) and the Arches proprietary technology
and analytics platform. Wholesome is a dominant player in the Utah medical market, fueled by a large delivery operation with one single
dispensary. The company initially developed the Arches proprietary technology stack in-house, which has developed sophisticated digital
marketing and consumer loyalty capabilities.
Total consideration for the transactions was $69.8
million, paid in the form of 134.2 million Subordinate Voting Shares of Vireo at a reference price per share of $0.52. The purchase price
of the Wholesome transaction represents a multiple of 4.175x 2024 “Reference EBITDA” of $16 million. The Wholesome transaction
is subject to clawback provisions if they don’t meet performance milestones as of December 31, 2026. The selling shareholders all
agreed to voluntary share lock-up provisions, with tranches of shares unlocking over a 33-month period.
The acquisitions of Wholesome and Arches are expected
to further strengthen the Company’s profitability profile and provide a unique opportunity to build competitive advantages in other
markets with a proprietary technology and analytics platform. Vireo management continues to expect that its other pending merger transactions
will close during the second quarter.
About
Vireo Growth Inc.
Vireo was
founded as a pioneer in medical cannabis in 2014 and we are fueled by an entrepreneurial drive that sustains our ongoing commitment to
serve and delight our key stakeholders, most notably our customers, our employees, our shareholders, our industry collaborators, and
the communities in which we live and operate. We work every day to get better and our team prioritizes 1) empowering and supporting strong
local market leaders and 2) strategic, prudent capital and human resource allocation. For more information, please visit www.vireogrowth.com.
Contact Information
Joe Duxbury
Chief Accounting Officer
investor@vireogrowth.com
(612) 314-8995
Forward-Looking Statement Disclosure
This press release contains “forward-looking
information” within the meaning of applicable United States and Canadian securities legislation. Forward-looking information contained
in this press release may be identified by the use of words such as “should,” “believe,” “estimate,”
“would,” “looking forward,” “may,” “continue,” “expect,” “expected,”
“will,” “likely,” “subject to,” “transformation,” and “pending,” variations
of such words and phrases, or any statements or clauses containing verbs in any future tense and includes, but may not be limited to,
statements regarding the Merger Transactions, including the timeline for the closing of the Merger Transactions; shareholder approval
of the Merger Transactions; and the regulatory approvals required for the Merger Transactions. These statements should not be read as
guarantees of future performance or results. Forward-looking information includes both known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance, or achievements of the Company or its subsidiaries to be materially different
from any future results, performance, or achievements expressed or implied by the forward-looking statements or information contained
in this press release. Forward-looking information is based upon a number of estimates and assumptions of management, believed but not
certain to be reasonable, in light of management’s experience and perception of trends, current conditions, and expected developments,
as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the
current and future regulatory
environment, and the availability of licenses,
approvals and permits.
Although the Company believes that the expectations
and assumptions on which such forward-looking information is based are reasonable, the reader should not place undue reliance on the forward-looking
information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially
from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could
cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties
include, but are not limited to: risks related to the shareholder approval of the Merger Transactions; risks related to regulatory approval
of the Merger Transactions; and risk factors set out in the Company’s Form 10-K for the year ended December 31, 2024 and the Company’s
information statement regarding the Merger Transactions, both of which are available on EDGAR with the U.S. Securities and Exchange Commission
and filed with the Canadian securities regulators and available under the Company’s profile on SEDAR+ at www.sedarplus.ca. The statements
in this press release are made as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking
statements or forward-looking information to reflect events or circumstances after the date of such statements.