Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 9, 2020,
Medicine Man Technologies, Inc. (the “Company”) appointed Nirup Krishnamurthy as Chief Operating Officer and appointed
Jeff Garwood as a member of the Company’s Board of Directors (the “Board”).
Appointment of Executive Officer
Since June 5, 2019,
Mr. Krishnamurthy has acted as the Company’s Chief Information and Integration Officer; Mr. Krishnamurthy provided such services
as a consultant until March 1, 2020, at which time he began formal employment with the Company. Mr. Krishnamurthy has over 25 years
of experience in innovation, technology, restructuring, and M&A for Fortune 500 companies. Since May 2018, Mr. Krishnamurthy
has been a partner with Dye Capital & Co. (“Dye”), a private equity firm investing in growth companies in disruptive
industries. In addition to his work with Dye, Mr. Krishnamurthy has acted as managing director of EBIT+ LLC (“EBIT+”),
a management consulting firm he founded in January 2016; EBIT+ works with executive management to improve revenues and margins
while reducing operating costs. From September 2011 through December 2015, Mr. Krishnamurthy was EVP and Chief Strategy Officer
& Chief Information Officer with The Great Atlantic and Pacific Tea Company (“A&P”), where he was responsible
for the information services, digital commerce, supply chain & logistics, strategic sourcing and retail space planning functions
for A&P. Mr. Krishnamurthy has also held senior management positions with companies including Northern Trust Corporation and
United Airlines, Inc. He obtained a Ph.D. in Industrial Engineering Operations Research and a M.S. in Industrial Engineering Operations/Production
Management from the State University of New York, and a B.S. in Mechanical Engineering from Anna University in Chennai, India.
Mr. Krishnamurthy was previously appointed
Chief Information and Integration Officer of the Company pursuant to, and upon the initial closing on June 5, 2019 of the securities
purchase agreement between the Company and Dye Capital Cann Holdings, LLC, an affiliate of Dye (“Dye Cann”), pursuant
to which the Company agreed to sell to Dye Cann, and Dye Cann agreed to purchase from the Company, up to 7,000,000 shares of common
stock at $2.00 per share and warrants to purchase 100% of the number of shares of common stock sold. At the initial closing on
June 5, 2019, the Company sold to Dye Cann 1,500,000 shares and 1,500,000 warrants for gross proceeds of $3,000,000, and has consummated
subsequent closings for an aggregate of 9,100,000 shares of common stock and warrants to purchase 9,100,000 shares of common stock
for aggregate gross proceeds of $18,200,000 to the Company. As a condition precedent to the closing of the arrangement with Dye
Cann, the Company entered into a consulting arrangement with Mr. Krishnamurthy.
Mr. Krishnamurthy and the Company entered
an Employment Agreement effective March 1, 2020 (the “CIO Agreement”). Mr. Krishnamurthy and the Company will not enter
into a separate agreement following his appointment to COO. The CIO Agreement provides that Mr. Krishnamurthy shall be paid a base
salary of $264,000 per annum, in accordance with the Company’s usual payroll practices (the “Salary”). In addition
to the Salary, on the effective date of the CIO Agreement, the Company issued an aggregate of 600,000 options to purchase shares
of Common Stock, at a purchase price equal to $1.71 per share (the “CIO Option”). The CIO Option shall vet one-fourth
on an annual basis beginning on the first anniversary of the date of grant, such that the CIO Option shall vest and shall be exercisable
in full on the fourth anniversary of the date of grant. Notwithstanding the foregoing, the CIO Option shall vest in full and become
exercisable upon the occurrence of a “Change in Control” as defined in the CIO Agreement. All shares of Common Stock
issuable upon exercise of the CIO Option are subject to a limitation whereby Mr. Krishnamurthy may sell no more than 5% of the
preceding give day average volume of the Common Stock on any given trading day.
Mr. Krishnamurthy shall be eligible to participate
in Company-establish stock option, 401(k), medical, health, dental, vision, and other plans as applicable. He is entitled to three
weeks of paid vacation time.
In addition to the foregoing, upon a termination
of employment without “Cause,” as such term is defined in the CIO Agreement, Mr. Krishnamurthy shall be entitled to
twelve months of Salary, any earned but unpaid bonus, additional twelve-month vesting of the CIO Option, and twelve-month reimbursement
for medical, dental, long-term disability, and life insurance.
The foregoing is merely a summary of the
material terms of the CIO Agreement, and is qualified in its entirety by reference to the CIO Agreement which is attached hereto
as Exhibit 10.1.
Appointment of Director
Mr. Garwood is the
founder and since 2010 has been managing member of Liberation Capital, LLC (“Liberation Capital”) a private equity
fund that is focused on providing modular, repeatable waste to value project finance. He is also the co-owner of, and since 2010
has actively managed, Zysense LLC, an entity providing high precision measurement instruments for research, where. Prior to founding
Liberation Capital, Garwood, held a variety of leadership positions with General Electric Company (“GE”) including
President and CEO of GE Water and Process Technologies, President and CEO of GE Fanuc, and President of Garrett Aviation. Prior
to joining Garret Aviation, Mr. Garwood worked for numerous years at the strategic consulting firm, McKinsey and Company. Garwood
received a B.S. of Chemical Engineering from North Carolina State University and an M.B.A. from the Kenan-Flagler Business School
at the University of North Carolina at Chapel Hill. Mr. Garwood is a recognized visionary business leader bringing 30 years of
extensive experience across finance and operations, and we believe his significant experience and qualifications across multiple
industries qualify him to serve as a member of the Board.
Mr. Garwood was appointed
to the Audit Committee and the Compensation Committee of the Board.
Mr. Garwood is not
a party to, nor has any direct or indirect material interest in, any transaction requiring disclosure under Item 404(a) of Regulation
S-K. There are no arrangements or understandings between Mr. Garwood and any other persons pursuant to which each was selected
as a director.
Additionally, Mr. Garwood and the Company
will enter into the Company’s standard form of indemnification agreement for directors and executive officers.
In connection with his appointment, Mr.
Garwood is expected to be granted an inaugural award of $50,000 value in shares of Common Stock within 90 days of board service.
A copy of the press
release announcing the foregoing matters is filed as Exhibit 99.1 with this report.