8-K

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

EX-10.1

Exhibit 10.1

EXTENSION AND SECOND AMENDING AGREEMENT TO NAME AND LIKENESS AND LICENSE AGREEMENT

This Extension and Second Amending Agreement to Name and Likeness and License Agreement (this “Extension ‎Agreement”) is made to effective as of July 31, 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”), 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 “Amending Agreement”) pursuant to which, among other amendments, the term of the Original Agreement was extended to July 31, 2022 (the “Amended Term”); and

WHEREAS the Parties wish to amend the Original Agreement and Amending Agreement 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 Agreement. This Extension Agreement is supplemental to and ‎shall be read in conjunction with the Original Agreement and the Amending Agreement, and the Original Agreement, the Amending Agreement 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 Agreement. Except as specifically amended in this Extension Agreement,‎ the Parties hereby confirm that the Original Agreement and the Amending Agreement, 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 Agreement and this Extension Agreement, the terms of this Extension ‎Agreement shall prevail and supersede the Original Agreement and the Amending Agreement.‎

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 August 31, 2022 (the “Term”).”

‎

3.2       ‎Section 3.14 of the Amending Agreement shall be deemed superseded by Section 3.1 of this Extension Agreement.

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 and the Amending Agreement (as amended ‎hereby) 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.‎

‎[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK‎]

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

EX-10.2

Exhibit 10.2

 

August 2, 2022

Via E-Mail

Jacques Tortoroli

[***]

Re: Amendment to Offer of Employment with Charlotte’s Web Holdings, Inc.

Dear Jacques,

This letter serves as an amendment (“Amendment”) to your offer of employment from Charlotte’s Web Holdings, Inc. (the “Company”), dated December 16, 2021 (the “Offer Letter”). Provided that you timely sign and return a copy of this Amendment to me, this Amendment shall be effective as of August 2, 2022 (the “Effective Date”). Except as expressly set forth in this Amendment, all other terms and conditions of your Offer Letter remain in full force and effect, as if expressly stated herein.

1. Base Salary. Section 4 of your Offer Letter shall be amended such that your Base Salary shall be: (a) commencing on the Effective Date and ending on December 31, 2023, Three Hundred Fifty Thousand Dollars ($350,0000) per year; and (b) commencing on January 1, 2024, Four Hundred Twenty-Five Thousand Dollars ($425,0000) per year. For the avoidance of doubt, your Base Salary shall be pro-rated for any partial years worked and continue to be payable in accordance with the Company’s standard payroll practices and procedures, less applicable withholdings and deductions.

2. Restricted Stock Award. Subject to the approval of the Company’s Board of Directors, the Company will award you a one-time equity grant (the “Restricted Stock Award”) consisting of Eight Hundred Fifty Thousand (850,000) restricted stock units (“RSUs”). The Restricted Stock Award shall be issued under and subject in all respects to the terms and conditions of the Company’s 2018 Long-Term Incentive Plan (the “Plan”) and restricted stock award agreement (“Award Agreement”), which you will be required to execute as a condition of your receipt of the Restricted Stock Award. The Restricted Stock Award shall vest as follows: (a) 50% of the RSUs shall vest on December 31, 2022; and (b) 50% of RSUs shall vest on December 31, 2023. Such vesting shall be subject to your continuous service on each applicable vesting date, as described in the Plan and Award Agreement.

Nothing contained herein is intended to or shall in any way alter the nature of your employment status as an at-will employee. Please confirm your understanding and acceptance of this Amendment by signing and returning one copy of this Amendment to me by August 2, 2022.

We look forward to a mutual collaboration and to your continued contribution in developing the Company’s business. Please feel free to contact me if you have any questions.

Sincerely,

/s/ Stephen Rogers

Stephen Rogers

Senior Vice President, General Counsel/Corporate Counsel

On behalf of Charlotte’s Web Holdings, Inc.

[***] Indicates material that has been excluded from this Exhibit 10.2 because it is not material.

Accepted and Agreed:

/s/ Jacques Tortoroli               

Jacques Tortoroli                                                                                                  Date August 2, 2022