Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Resignations of Directors
As contemplated by the Arrangement Agreement, at the Effective Time, the size of
the board of directors of Tilray (the "Board") was increased to consist of nine
directors. Each of Michael Auerbach, Rebekah Dopp, Soren Schroder and Christine
St.Clare (the "Resigning Directors") resigned from the Board and from all
committees of the Board of which such individual was a member, effective as of
the Effective Time. The resignations are not a result of any disagreement
between Tilray and any of the Resigning Directors or any matter relating to
Tilray's operations, policies, or practices. In connection with the change of
control of Tilray, the Board accelerated the vesting of all unvested equity
awards granted to the Resigning Directors.
Appointment of Directors; Board Committees
The following persons are newly appointed directors following the closing. For
information concerning the directors, see the disclosures in the Joint
Circular/Proxy under the section titled "Governance and Management of the
Combined Company-Board of Directors of the Combined Company," and the
information set forth under Item 5.02 of Tilray's Current Report on Form 8-K
(File No. 001-38594) filed with the SEC on April 13, 2021, each of which is
incorporated herein by reference.
Name Age Position
Irwin D. Simon† 62 Chairperson of the Board of Directors
Jodi Butts±(3) 48 Director
David F. Clanachan†(1) 59 Director
John M. Herhalt*(4) 63 Director
David Hopkinson±(2)(3) 49 Director
Thomas (Tom) Looney± (1)(2) 57 Director
Renah Persofsky†(6)(7) 62 Director
Walter Robb*(1)(5) 66 Director
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* Class I, with a term expiring at Tilray 2022 annual meeting of stockholders and
until their successor has been duly elected and qualified, or until their
earlier death, resignation or removal
† Class II, with a term expiring at Tilray 2023 annual meeting of stockholders
and until their successor has been duly elected and qualified, or until their
earlier death, resignation or removal
± Class III, with a term expiring at Tilray 2021 annual meeting of stockholders
and until their successor has been duly elected and qualified, or until their
earlier death, resignation or removal
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(1) Member of the audit committee
(2) Member of the compensation committee
(3) Member of the nominating and corporate governance committee
(4) Chair of the audit committee
(5) Chair of the compensation committee
(6) Chair of the nominating and corporate governance committee
(7) Lead director
New Director Relationships
There are no family relationships between Irwin Simon, Jodi Butts, David
Clanachan, John Herhalt, David Hopkinson, Tom Looney, Renah Persofsky and Walter
Robb, and any director or executive officer of Tilray, and none has a direct or
indirect material interest in any transaction required to be disclosed pursuant
to Item 404(a) of Regulation S-K.
Resignation of Officers
As previously disclosed, on December 15, 2020, Brendan Kennedy, Tilray's former
chief executive officer and chairperson of the Board, submitted an irrevocable
letter of resignation and release (the "Letter of Resignation") whereby Mr.
Kennedy resigned from all positions held at Tilray (other than as a member of
the Board), with such resignations to be effective upon the Effective Time. The
Letter of Resignation also included a form of release agreement, which was
entered into between Mr. Kennedy and Tilray as of the Effective Time, that,
together with the Letter of Resignation, amends certain rights that Mr. Kennedy
had under his employment agreement in consideration for the benefits that Mr.
Kennedy received as a result of the completion of the Arrangement, including a
severance payment and full accelerated vesting of all equity awards.
The foregoing description of the Letter of Resignation does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Letter of Resignation, which is attached as Exhibit 10.1 to the Original Report
and incorporated herein by reference.
On April 29, 2021, Michael Kruteck notified Tilray of his intent to resign as
chief financial officer of Tilray effective April 30, 2021, and terminate
employment with Tilray effective May 6, 2021. Mr. Kruteck's resignation is not
the result of any disagreement with Tilray on any matter relating to the
Tilray's operations, policies, or procedures. In connection with Mr. Kruteck's
resignation, he was offered a severance benefits equal to twelve (12) months'
base salary and payment of COBRA premiums, target bonus, and acceleration of
equity awards, which was calculated based on the terms of Sections 7 and 8 of
his employment agreement, dated January 20, 2020, with Tilray, subject to his
executing and not rescinding a customary release in a form acceptable to the
Company (the "Kruteck Separation Agreement"). Other than what is provided for
in the Kruteck Separation Agreement (including a one-time payment equal to
$38,709.00 for Mr. Kruteck performing certain services), Mr. Kruteck will not be
entitled to any other compensation, payments or benefits from the Company or
affiliates in connection with his resignation. The foregoing description of the
Kruteck Separation Agreement does not purport to be complete and is qualified in
its entirety by reference to the full text of the Kruteck Separation Agreement
which is attached as Exhibit 10.2 to the Original Report and incorporated herein
by reference.
On April 28, 2021, Jon Levin resigned as chief operating officer of Tilray
effective April 30, 2021. Mr. Levin's resignation is not the result of any
disagreement with Tilray on any matter relating to the Tilray's operations,
policies, or procedures. In connection with Mr. Levin's resignation, he was
offered a severance benefits equal to twelve (12) months' base salary and
payment of COBRA premiums, target bonus, and acceleration of equity awards,
which was calculated based on the terms of Sections 7 and 8 of his employment
agreement, dated January 13, 2020 and as amended September 21, 2020, with
Tilray, subject to his executing and not rescinding a customary release in a
form acceptable to the Company (the "Levin Separation Agreement"). Other than
what is provided for in the Levin Separation Agreement, Mr. Levin will not be
entitled to any other compensation, payments or benefits from the Company or
affiliates in connection with his resignation. The foregoing description of the
Levin Separation Agreement does not purport to be complete and is qualified in
its entirety by reference to the full text of the Levin Separation Agreement
which is attached as Exhibit 10.3 to the Original Report and incorporated herein
by reference.
Appointment of Officers
Name Age Position
Irwin D. Simon* 62 President & Chief Executive Officer
Carl A. Merton† 51 Chief Financial Officer
Denise M. Faltischek 48 Chief Strategy Officer
James Meiers 63 Head of Canada
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* Principal executive officer
† Principal financial officer and principal accounting officer
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A brief biography for each of the foregoing newly appointed officers of the
Company is set forth in the section of Exhibit 99.5 to this Current Report on
Form 8-K/A entitled "Officers of Tilray," which is incorporated by reference
herein.
Employment Agreement with Mr. Simon
Overview; Base Salary. On July 27, 2021 (the "Effective Date"), the Company
entered into an employment agreement with Irwin D. Simon in connection with his
appointment as Chief Executive Officer and Chairman of the Board, at an annual
base salary of $1,700,000, effective as of May 1, 2021, which may be increased
but not decreased, as determined at an annual review of his performance and
compensation by the Compensation Committee of the Board (the "Compensation
Committee").
Annual Cash Bonus. Mr. Simon is eligible to earn an additional annual
performance-based cash bonus in amounts ranging from 200% of his base salary at
"target" (the "Target Bonus") to 350% of his base salary at "maximum," if
performance benchmarks, as determined in accordance with the employment
agreement, are met. For fiscal year 2021, the Compensation Committee has
determined that Mr. Simon's cash bonus will be at least $1,560,000, which the
Company has agreed to pay no later than August 15, 2021.
Long-Term Incentive Awards. Mr. Simon is also entitled to participate in
Tilray's Amended and Restated 2018 Equity Incentive Plan (the "LTIP"), or any
other equity compensation plan adopted and/or modified from time to time by the
Compensation Committee. Mr. Simon is eligible to earn annual long-term
incentive awards as a percentage of his base salary on the grant date of such
awards, 250% of his base salary at "target", with such percentage to be
determined by the Board. For fiscal year 2021, the Compensation Committee has
determined that Mr. Simon's annual RSU equity grant will be at least $2,600,000
in value as of the grant date, which the Company has agreed to grant no later
than August 15, 2021.
One-Time Cash Bonus. In exchange for Mr. Simon's agreement to remain in his
role as Chief Executive Officer or otherwise providing continued services
through mutual agreement with the Company until December 31, 2022, Mr. Simon is
entitled to receive a one-time cash bonus equal to $10,000,000 (less deductions
and withholdings required by law) (the "Transformation Bonus"), which is payable
within five days of the Effective Date. The Transformation Bonus is subject to
pro-rated clawback in the event Mr. Simon voluntarily resigns without "good
reason" (other than in the event of his death or disability) prior to December
31, 2022.
One-Time Equity Awards. In connection with the entry into his employment
agreement, on July 27, 2021, Mr. Simon received the following one-time equity
grants having an aggregate value as of the grant date equal to $15,000,000,
calculated using the closing price of the Company's Class 2 Common Stock on the
grant date of July 27, 2021: (i) 392,772 performance-based restricted stock
units ("PSUs"), subject to certain stock appreciation performance conditions and
vesting as set forth in the employment agreement; (ii) 392,772 time-based
restricted stock units ("RSUs"), which vest one-third on each of June 1, 2022,
June 1, 2023, and June 1, 2024; and (iii) 392,772 restricted stock units (the
"Synergy Equity Awards"), subject to performance-based vesting of 50% upon
achievement of savings equal to $50,000,000 and 100% vesting upon achievement of
savings of $80,000,000, and further subject to time-based vesting, with 50%
vesting on July 27, 2022, and 25% vesting on each of July 27, 2023, and July 27,
2024, provided that the performance-based vesting conditions are satisfied as
determined by the Compensation Committee.
Accelerated Vesting of Outstanding Equity Awards. Pursuant to the employment
agreement, the Company has agreed to accelerate all of the outstanding,
pre-Arrangement Tilray equity awards held by Mr. Simon by no later than August
15, 2021.
Term; Termination. The term of Mr. Simon's employment agreement became effective
as of the Effective Date and will continue until otherwise terminated in
accordance with its terms. The employment agreement may be terminated by Mr.
Simon at any time for any reason, provided that he gives the Company four weeks'
advance written notice of his resignation without "good reason" and subject to a
notice and cure period in the event that he resigns with "good reason" as
described below.
The employment agreement may also be terminated by Tilray for any reason,
including with or without "cause," subject to special notice rules in certain
instances as described below.
As defined in Mr. Simon's employment agreement, a termination for "cause"
includes termination by the Company due to conviction of a felony or entry of a
plea of guilty or nolo contender to any felony (other than relating to
cannabis); refusal to perform his reasonably assigned duties for the Company
(other than as a result of incapacity due to physical or mental illness);
engaging in any act of material dishonesty or fraud; willful misconduct or gross
negligence in the performance of his duties; material breach of his employment
agreement (other than violations of policies); or willfully and materially
violating material written policy applicable to Mr. Simon that directly results
in the Company incurring material liability. Any termination due to Mr. Simon's
refusal to perform his reasonably assigned duties, material breach of his
employment agreement or willful and material violation of material written
policies requires the Company to provide prior written notice and a 30-day cure
period to Mr. Simon.
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Mr. Simon's employment will be considered to be terminated with "good reason" if
he resigns because the Company (i) reduces his base salary or fails to pay any
amounts which he is due; (ii) materially reduces Mr. Simon's titles, duties,
authorities or reporting relationships; (iii) assigns duties to him that are
materially inconsistent with the positions of Chief Executive Officer and
Chairman of the Board; (iv) removes Mr. Simon from such positions, (v) requires
that his principal place of employment be outside of New York County, New York;
or (vi) materially breaches (or if any affiliate of the Company materially
breaches) the employment agreement or any other agreement to which Mr. Simon is
a party. In this event, Mr. Simon must notify the Company within 30 days and
must thereafter allow the Company 30 days to cure.
Other Benefits. Mr. Simon is also entitled to (1) receive individual disability
and life insurance coverage paid by the Company, (2) receive other executive
benefits, including a car allowance of $1,200 per month and a Company-expensed
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Exhibit Description
2.1 Arrangement Agreement by and between Tilray and Aphria dated December
15, 2020 (incorporated by reference to Exhibit 2.1 of Tilray's Current
Report on Form 8-K (File No. 001-38594), filed with the SEC on
December 21, 2020).
2.2 Amendment No. 1 to Arrangement Agreement and Plan of Arrangement by
and between Tilray and Aphria dated February 19, 2021(incorporated by
reference to Exhibit 2.1 of Tilray's Current Report on Form 8-K (File
No. 001-38594), filed with the SEC on February 22, 2021).
4.1 Indenture dated as of April 23, 2019, between Aphria Inc. and GLAS
Trust Company LLC, relating to Aphria Inc.'s 5.25% Convertible Senior
Notes due 2024 (incorporated by reference to Exhibit 4.1 of Tilray's
Current Report on Form 8-K (File No. 001-38594), filed with the SEC on
May 4, 2021).
4.2 First Supplemental Indenture dated as of April 30, 2021, among Aphria
Inc., Tilray, Inc. and GLAS Trust Company LLC (incorporated by
reference to Exhibit 4.2 of Tilray's Current Report on Form 8-K (File
No. 001-38594), filed with the SEC on May 4, 2021).
10.1 Resignation Letter and Release by and between Tilray and Brendan
Kennedy dated December 15, 2020 (incorporated by reference to Exhibit
10.1 of Tilray's Current Report on Form 8-K (File No. 001-38594),
filed with the SEC on May 4, 2021).
10.2± Separation Agreement and Complete Release dated as of April 30, 2021,
by and between Michael Kruteck and Tilray, Inc (incorporated by
reference to Exhibit 10.2 of Tilray's Current Report on Form 8-K (File
No. 001-38594), filed with the SEC on May 4, 2021).
10.3± Separation Agreement and Complete Release dated as of April 29, 2021,
by and between Jon Levin and Tilray, Inc. (incorporated by reference
to Exhibit 10.3 of Tilray's Current Report on Form 8-K (File No.
001-38594), filed with the SEC on May 4, 2021).
23.1 Consent of PricewaterhouseCoopers LLP (incorporated by reference to
Exhibit 23.1 of Tilray's Current Report on Form 8-K (File No.
001-38594), filed with the SEC on May 4, 2021).
99.1 Press release dated May 3, 2021 (incorporated by reference to Exhibit
99.1 of Tilray's Current Report on Form 8-K (File No. 001-38594),
filed with the SEC on May 4, 2021).
99.2 Audited consolidated statements of financial position of Aphria Inc.
and its subsidiaries as of May 31, 2020 and 2019, and the related
consolidated statements of loss and comprehensive loss, changes in
equity and cash flows for the years then ended, together with the
Report of Independent Registered Public Accounting Firm thereon and
the notes thereto (incorporated by reference to Exhibit 99.2 of
Tilray's Current Report on Form 8-K (File No. 001-38594) filed with
the SEC on February 25, 2021).
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99.3 Unaudited condensed interim consolidated financial statements of
Aphria for the three and nine months ended February 28, 2021 and
February 29, 2020, and the notes related thereto (incorporated by
reference to Exhibit 99.3 of Tilray's Current Report on Form 8-K (File
No. 001-38594), filed with the SEC on May 4, 2021).
99.4 Unaudited pro forma condensed consolidated financial statements of
Tilray (after giving effect to the Arrangement), as of February 28,
2021, for the nine months ended February 28, 2021 and for the year
ended May 31, 2020 (incorporated by reference to Exhibit 99.4 of
Tilray's Current Report on Form 8-K (File No. 001-38594), filed with
the SEC on May 6, 2021).
99.5* Certain disclosures regarding the officers of Tilray, Inc. following
completion of the Arrangement.
104* Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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* Filed herewith.
± Indicates a management or compensatory plan or description thereof.
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