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): July 31, 2022
Charlotte’s Web Holdings, Inc.
(Exact name of Registrant as Specified in Its Charter)
| British Columbia | 000-56364 | 98-1508633 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1801 California Street, Suite 4800 Denver, Colorado | 80202 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (720) 617-7303
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 Instructions 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 | Name of 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 ☒
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. |
Effective as of July 31, 2022, Charlotte’s Web Holdings, Inc. (the “Company”) and its subsidiary, Charlotte's Web, Inc., a Delaware corporation (“CWB”), entered into an Extension and Second Amending Agreement to Name and Likeness and License Agreement (the “Extension Agreement”) with Leeland & Sig LLC d/b/a Stanley Brothers Brand Company, a Colorado limited liability company (“Licensor”). Pursuant to the Extension Agreement, the term of the Name and Likeness and License Agreement dated August 1, 2018 between the Company, CWB and Licensor, as amended by the Amending Agreement to Name and Likeness Agreement effective April 16, 2021 (as amended, the “Name and Likeness Agreement”), was extended from July 31, 2022 to August 31, 2022.
In addition to the Name and Likeness Agreement, as amended by the Extension Agreement, affiliates of the Licensor are parties to certain agreements with the Company. Jesse Stanley, one of the Company’s founders, and Master and A Hound Irrevocable Trust, are borrowers under that certain secured promissory note, dated November 30, 2020, for $1,000,000 that, as amended as of March 22, 2022, matures as of November 13, 2023. Stanley Brothers USA Holdings, Inc. (“Stanley Brothers USA”), a Delaware corporation whose majority shareholders are certain founders of the Company or entities controlled by such founders or their affiliates, is party to the option purchase agreement (the “SBH Purchase Option”), dated March 2, 2021, with the Company, which provides the Company with the option to acquire all or substantially all of Stanley Brothers USA on the earlier of February 26, 2024, and federal legalization of Cannabis in the United States, or such earlier time as Stanley Brothers USA and Charlotte’s Web may agree, at a purchase price to be determined at the time of exercise of the SBH Purchase Option. The SBH Purchase Option has a five-year term (extendable for an additional two years upon payment of additional consideration).
Mr. Jared Stanley, Chief Operating Officer of the Company, is a Co-Founder of Stanley Brothers USA and, following execution of the SBH Purchase Option, assumed a seat on the board of directors of Stanley Brothers USA. Mr. Joel Stanley, a Co-Founder of Stanley Brothers USA, is the former Chairman of the Company’s board of director. Mr. Jared Stanley and Mr. Joel Stanley each resigned as a member of the Company’s board of directors effective March 2, 2021.
The foregoing description of the Extension Amendment is qualified in its entirety by reference to the agreement, which is included as Exhibit 10.1 to this Current Report on Form 8-K.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Effective August 2, 2022 (the “Effective Date”), the Company entered into an amendment (the “Amendment”) to the offer of employment, dated December 16, 2021 (the “Offer Letter”), with Jacques Tortoroli, President and Chief Executive Officer of the Company. Pursuant to the Amendment, Mr. Tortoroli’s annual base salary under the Offer Letter was: (a) reduced commencing on the Effective Date and ending on December 31, 2023, to Three Hundred Fifty Thousand Dollars ($350,0000) per year; and (b) commencing on January 1, 2024, to Four Hundred Twenty-Five Thousand Dollars ($425,0000) per year, in each case, less applicable withholdings and deductions and payable in accordance with the Company’s standard payroll practices and procedures. To further align Mr. Tortoroli’s compensation with that of the shareholders of the Company, Mr. Tortoroli will also receive under the Company’s 2018 Long-Term Incentive Plan and a restricted stock award agreement, a one-time equity grant consisting of Eight Hundred Fifty Thousand (850,000) restricted stock units that will vest 50% on December 31, 2022 and the balance on December 31, 2023.
The foregoing description of Ms. Tortoroli’s Amendment is qualified in its entirety by reference to the agreement, which is included as Exhibit 10.2 to this Current Report on Form 8-K.
| Item 9.01. | Financial Statements and Exhibits. |
| | (d) | Exhibits: |
Exhibit
No. | | Description | |
| | |
| 10.1 | | Extension and Second Amending Agreement to Name and Likeness and License Agreement, effective as of July 31, 2022, by and between Leeland & Sig LLC d/b/a Stanley Brothers Brand Company, a Colorado limited liability company, Charlotte's Web, Inc., and Charlotte's Web Holdings, Inc. | |
| | | | |
| 10.2†∔ | | Letter dated as of August 2, 2022 to Jacques Tortoroli re: Amendment to Offer of Employment with Charlotte’s Web Holdings, Inc. | |
| | | | | | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document | | | |
| | | | | | |
† Indicates a management contract or compensatory plan or arrangement.
∔ Certain identified information has been excluded from the exhibit pursuant to Item 601(a)(6) and/or Item 601(b)(10)(iv) of Regulation S-K.
* This Exhibit 99.1 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
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 thereunto duly authorized.
| | | CHARLOTTE’S WEB HOLDINGS, INC. |
| | | | |
| Date: August 3, 2022 | | By: | /s/ Stephen Rogers |
| | | | Stephen Rogers |
| | | | Senior Vice President - General Counsel and Corporate Secretary |
| | | | |
