UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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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)) | |
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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 September 30, 2022, Charlotte’s Web Holdings, Inc. (the “Company”) and its subsidiary, Charlotte's Web, Inc., a Delaware corporation (“CWB”), entered into an Extension and Fourth 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 September 30, 2022 to December 31, 2022. Additionally, the Name and Likeness Agreement was also amended to provide the payment of a Company event fee of $1,500 per diem for each Stanley brother that, at the request of the Company’s chief executive officer, participates in any of the following events: (i) customer meetings; (ii) strategic partner meetings; (iii) speaking engagements; (iv) presentations; (v) social media postings; (vi) podcasts; (vi) public relations events; (vii) media interviews; (viii) trade show appearances; and (ix) events substantively similar to any of the foregoing.
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. |
The Company previously announced the departure of Wes Booysen as its Chief Financial & Operating Officer on April 25, 2022, which was reported on a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 28, 2022. Effective as of September 30, 2022, Mr. Booysen and CWB entered into a separation agreement (the “Separation Agreement”) pursuant to which Mr. Booysen will receive a lump sum payment of Two Hundred Fifty Thousand Dollars ($250,000) in exchange for a general release of all claims against the Company and its subsidiaries and affiliates, subject to Mr. Booysen not revoking the Separation Agreement within seven days. The Separation Agreement became effective on October 4th and the settlement payment to be paid thereunder will be due within 90 days from such effective date. The Company also agreed to release certain claims against Mr. Booysen in respect of the work performed by or on behalf of Mr. Booysen at the Company, but which release of claims excludes any claims that the Company may not waive or release under applicable law as well as claims based on any fraud, theft, embezzlement or similar misconduct chargeable as a criminal offense.
| Item 9.01. | Financial Statements and Exhibits. | |
| (d) | Exhibits: | |
| Exhibit No. |
Description |
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| 10.1 | Extension and Fourth Amending Agreement to Name and Likeness and License Agreement, effective as of September 30, 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. | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document | ||||
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: October 4, 2022 | By: | /s/ Stephen Rogers | |
| Stephen Rogers | |||
| Senior Vice President - General Counsel and Corporate Secretary | |||
Exhibit 10.1
EXTENSION AND FOURTH AMENDING AGREEMENT TO NAME AND LIKENESS AND LICENSE AGREEMENT
This Extension and Fourth Amending Agreement to Name and Likeness and License Agreement (this “Extension Agreement”) is made to effective as of September 30, 2022 (“Effective Date”), by and between Leeland & Sig LLC d/b/a Stanley Brothers Brand Company, a Colorado limited liability company (“Licensor”), Charlotte's Web, Inc., a Delaware corporation (“CWB” or the “Company”)), and Charlotte's Web Holdings, Inc., a British Columbia corporation (“Pubco” and together with CWB, the “Licensees”). Licensor and Licensees shall be referred to herein collectively as the “Parties” and each may be referred to individually as a “Party.”
RECITALS
WHEREAS the Licensor, CWB Holdings, Inc. and Pubco entered into a Name and Likeness and License Agreement dated August 1, 2018 (the “Original Agreement”); and
WHEREAS on August 30, 2018, CWB Holdings, Inc. merged into Stanley Brothers Inc. pursuant to a merger agreement, with the surviving entity changing its name to Charlotte's Web, Inc. and being a wholly-owned subsidiary of Pubco;
WHEREAS the Parties entered into an Amending Agreement to Name and Likeness Agreement effective April 16, 2021 (the “First Amending Agreement”) pursuant to which, among other amendments, the term of the Original Agreement was extended to July 31, 2022, an Extension and Second Amending Agreement to Name and Likeness and License Agreement (the ”Second Amending Agreement”) pursuant to which the term of the Original Agreement was extended to August 30, 2022, an Extension and Third Amending Agreement to Name and Likeness Agreement (the “Third Amending Agreement”), pursuant to which the term of the Original Agreement was extended to September 30, 2022 (the “Amended Term”) The First Amending Agreement, Second Amending Agreement and Third Amending Agreement are referred to collectively herein as the “Amending Agreements”; and
WHEREAS the Parties wish to amend the Original Agreement and the Amending Agreements to extend the Amended Term;
NOW, THEREFORE, in consideration of the mutual promises herein contained, it is hereby agreed:
article 1 - INTERPRETATION
1.1 Incorporation of Original Agreement and Amending Agreements. This Extension Agreement is supplemental to and shall be read in conjunction with the Original Agreement and the Amending Agreements, and the Original Agreement, the Amending Agreements, and this Extension Agreement shall have effect so far as practicable as if all the provisions thereof and hereof were contained in one document.
1.2 Effect on the Original Agreement and the Amending Agreements. Except as specifically amended in this Extension Agreement, the Parties hereby confirm that the Original Agreement and the Amending Agreements, and their terms and conditions, are and shall remain in full force and effect and are hereby ratified. To the extent there is any inconsistency between the Original Agreement, the Amending Agreements and this Extension Agreement, the terms of this Extension Agreement shall prevail and supersede the Original Agreement and the Amending Agreements.
1.3 Defined Terms. All terms used but not defined herein shall find their meaning in the Original Agreement.
ARTICLE 2 - EFFECTIVE DATE OF AMENDMENTS
2.1 The amendments contained in this Extension Agreement shall become effective as of the Effective Date of this Extension Agreement.
ARTICLE 3 - AMENDMENTS
3.1 Section 8(a) of the Original Agreement shall be deleted in its entirety and replaced with the following:
“(a) Term. Unless otherwise terminated in accordance with the provisions of this Section 8, this Agreement shall commence on the Effective Date and shall terminate on December 31, 2022 (the “Term”).”,
3.2 Section 3.14 of the First Amending Agreement shall be deemed superseded by Section 3.1 of this Extension Agreement.
3.3 Section 3.1 of the Second Amending Agreement shall be deemed superseded by Section 3.1 of this Extension Agreement.
3.4 Section 3.1 of the Third Amending Agreement shall be deemed superseded by Section 3.1 of this Extension Agreement
3.5 The following Section 2(f) shall be added to the Original Agreement:
“The Company shall pay a $1,500 per diem (“Event Participation Fee”) in respect of each Brother who, at the prior written request of the Chief Executive Officer of the Company, attends or participates in any of the following events and provided such events are conducted for the purpose of, and the applicable Brother’s participation is predominantly in support of, the furtherance of Company business: (i) customer meetings; (ii) strategic partner meetings; (iii) speaking engagements; (iv) presentations; (v) social media postings; (vi) podcasts; (vi) public relations events; (vii) media interviews; (viii) trade show appearances; and (ix) events substantively similar to any of the foregoing (collectively “Company Activities”). The Event Participation Fee will be payable within ten (10) calendar days of the end of the quarter in which the Company Activity occurred.”
ARTICLE 4 - MISCELLANEOUS
4.1 Further Assurances. The Parties hereto shall from time to time do all such further acts and things and execute and deliver all such documents as are required in order to effect the full intent of and fully perform and carry out the terms of this Extension Agreement.
4.2 Inurement. This Extension Agreement shall inure to the benefit of and shall be binding upon the Parties hereto and their respective successors and permitted assigns.
4.3 Counterparts. This Extension Agreement may be executed in any number of counterparts and delivered by facsimile or electronic mail and all such counterparts taken together shall be deemed to constitute one and the same instrument.
4.4 Whole Agreement; Only Written Amendments. The Original Agreement, the Amending Agreements, and this Extension Agreement constitute the whole and entire agreement between the Parties hereto regarding the subject matter hereof and thereof and cancel and supersede any prior agreements, undertakings, declarations, commitments, representations, written or oral, in respect thereof. Any provision of this Extension Agreement may only be amended if the Parties so agree in writing.
4.5 Time. Time is of the essence for all purposes of this Extension Agreement.
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IN WITNESS WHEREOF the Parties have executed this Extension Agreement as of the date first written above.
| Licensees: | Licensor: | |
| Charlotte’s Web, Inc. By: /s/ Jacques Tortoroli Name: Jacques Tortoroli Title: CEO, Director |
Leeland & Sig LLC d/b/a/ Stanley Brothers Brand Holding Co By: /s/ Jesse Stanley Name: Jesse Stanley Title: Board of Managers | |
| Charlotte’s Web Holdings, Inc. By: /s/ Jacques Tortoroli Name: Jacques Tortoroli Title: CEO, Director |
Cover |
Sep. 30, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Sep. 30, 2022 |
| Entity File Number | 000-56364 |
| Entity Registrant Name | Charlotte’s Web Holdings, Inc. |
| Entity Central Index Key | 0001750155 |
| Entity Tax Identification Number | 98-1508633 |
| Entity Incorporation, State or Country Code | A1 |
| Entity Address, Address Line One | 700 Tech Court |
| Entity Address, City or Town | Louisville |
| Entity Address, State or Province | CO |
| Entity Address, Postal Zip Code | 80027 |
| City Area Code | 720 |
| Local Phone Number | 617-7303 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |