CHUC 8-K
Charlie's Holdings, Inc. (CHUC)
8-K
2021-04-06
For: 2021-04-01
View Original
Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): April 1, 2021
Commission
File Number: 001-32420
Charlie's Holdings, Inc.
(Exact
name of registrant as specified in its charter.)
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Nevada
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84-1575085
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(State
or other jurisdiction of incorporation or
organization)
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(IRS
Employer Identification No.)
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1007 Brioso Drive, Costa Mesa, California 92627
(Address
of principal executive offices)
949-203-3500
(Registrant's
Telephone number)
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:
[ ]
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))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17
CFR 240.12b-2)
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. [ ]
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of exchange on which registered
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N/A
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CHUC
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N/A
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Item 1.01 Entry into a Material Definitive Agreement
See
Item 5.02.
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
On April 1, 2021,
the Board of Directors of Charlies Holdings, Inc. (the
"Company") entered into an
Employment Agreement (the "Agreement") with Henry Sicignano III,
MBA, pursuant to which the Company appointed Mr. Sicignano to serve
as President of the Company. A copy of the press release
announcing Mr. Sicignano’s appointment is attached to this
Current Report on Form 8-K as Exhibit 99.1.
Prior
to joining the Company, Mr. Sicignano, age 53, held multiple
positions, including Chief Executive Officer of 22nd Century Group,
Inc. (NYSE American: XXII), a plant-based biotechnology
company that is focused on tobacco harm reduction, very low
nicotine content tobacco, and hemp/cannabis research from March
2015 through July 2019. He also served as President and as a member
of the Board of Directors with 22nd Century from January 2011
through July 2019. In addition, from December 2014 to August 2018,
Mr. Sicignano served on the Board of Directors of Anandia
Laboratories, Inc., a cannabis-focused science company that was
sold to Aurora Cannabis (NYSE: ACB). Mr. Sicignano holds a B.A.
Degree in Government from Harvard College and an M.B.A. Degree from
Harvard University.
Pursuant to the
Agreement, Mr. Sicignano will serve as President for an initial
period of two years, renewable on an annual basis unless earlier
terminated by the Company or Mr. Sicignano. Mr. Sicignano's initial
base salary will be $200,000 (the "Base Salary"), until December 31, 2021,
at which such time the Base Salary will be increased on an annual
basis, in an amount to be determined by the Company. In addition,
Mr. Sicignano is also entitled to an annual cash bonus based upon
satisfactory achievement of personal performance objectives and
business performance objectives as may be determined by the
Company, and other customary benefits offered to similarly situated
employees of the Company.
In
addition, Mr. Sicignano will receive a one-time a restricted stock
award of 150.0 million restricted shares of the Company (the
"RSA"). The RSA will be no
longer subject to forfeiture as follows, subject to acceleration
upon certain events: (i) 75.0 million shares will no longer be
subject to forfeiture on April 1, 2022, and (ii) 75.0 million
shares will no longer be subject to forfeiture on April 1, 2023.
Further, the Agreement provides that the “unvested” RSA
will no longer be subject to forfeiture, as well as certain
severance payments, upon the occurrence of various events,
including, but not limited to termination of Mr. Sicignano’s
employment without Good Reason (as such term is defined in the
Agreement) and, in certain circumstances, upon a Change of Control
(as such term is defined in the Agreement).
The
preceding description of the Agreement does not purport to be
complete and, instead, is qualified in its entirety by reference to
the full text of the Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 10.1 and is incorporated by
reference herein.
Item 9.01 Financial Statements and
Exhibits.
See
Exhibit Index.
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 hereunto duly authorized.
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Charlie's Holdings, Inc.
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Date:
April 6, 2021
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By:
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/s/ David
Allen
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David
Allen
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Chief
Financial Officer
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Exhibit Index
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Exhibit No.
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Description
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Employment
Agreement, dated April 1, 2021, by and between Charlie's Holdings,
Inc. and Henry Sicignano
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Press
Release issued by Charlie’s Holdings, Inc., dated April 6,
2021
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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 1,
2021, between Charlie’s Holdings, Inc., a Nevada corporation
(the “Company”), and Henry Sicignano, III (the
“Executive”).
1. EMPLOYMENT
DUTIES AND RESPONSIBILITIES
1.1 Position
and Title. The Company hereby agrees to employ
the Executive in the position described on Addendum A attached
hereto and the Executive hereby accepts such position and agrees to
serve the Company in such capacity until this Agreement is
terminated by one of the parties in accordance with the terms set
forth in Section 4 below.
1.2 Company
Policies and Procedures. The Executive agrees to
abide by all applicable policies and procedures of the
Company.
1.3 Attention. During
the term of this Agreement, excluding any periods of vacation, sick
leave and disability to which Executive is entitled, Executive
agrees (i) to devote the primary portion of his productive time,
ability and attention to the business of the Company during normal
working hours (it is, however, understood that the Executive is
currently – and will continue to serve as – a paid
consultant to 22nd Century Group, Inc.), and (ii) not to acquire,
hold or retain, whether directly or indirectly, more than a five
percent (5%) interest in any business competing with or similar in
nature to the business of the Company or any of its Affiliates (as
such term is defined below). For purposes of this
Agreement, “Affiliates” shall mean any person or entity
that, directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under the common control of,
the Company.
2. TERM
OF EMPLOYMENT
2.1 Effective
Date. The Effective Date of this Agreement shall
be the date set forth on Addendum A attached hereto.
2.2. Term. The
initial term of this Agreement shall be set forth on Addendum A
hereto, and the Company agrees to employ the Executive and the
Executive hereby agrees to serve the Company until this Agreement
is terminated by one of the parties in accordance with the terms
set forth in Section 4 below.
3. COMPENSATION
3.1 Base
Salary. The Company shall pay to Executive, and
Executive shall accept from the Company, an annual base salary in
the amount set forth on Addendum A attached hereto (the “Base
Salary”), payable on the Company’s standard pay
schedule. Executive’s Base Salary may not be
decreased at any time during this Agreement without the express
written consent of the Executive. The Base Salary may be
increased as set forth in Addendum A hereto, as well as in such
other amounts as the Company may determine from time to
time.
3.2 Incentive
Compensation/Bonus. Executive shall be eligible
to receive an annual cash bonus (“Annual Bonus”) based
upon satisfactory achievement of personal performance objectives
and business performance objectives (collectively “Key
Performance Objectives”) as shall be determined by the
Company and the Executive. The Annual Bonus shall be payable to the
Executive on or before March 15th of the immediately
following calendar year. In order to be eligible for an Annual
Bonus, the Executive shall be actively employed on the last
business day of the applicable calendar year. (For the avoidance of
doubt, if the effective date of termination of the
Executive’s employment with the Company occurs after the last
business day of the applicable calendar year but before the payment
of the Annual Bonus, the Company shall continue to be obligated to
pay the Executive the full amount of the Annual Bonus which has
been earned by the Executive as of the end of such calendar
year.)
3.3
Restricted Stock
Grants/Stock Options. During the Term of this
Agreement as set forth in Addendum A hereto, Executive will be
eligible for restricted stock grants as may be awarded by the
Company, from time to time, subject to the terms of the
Company’s equity incentive plan or any similar plan or
agreement that shall be implemented.
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3.4. Expenses. Executive
shall be entitled to reimbursement of business expenses that are
incurred in the furtherance of Company business and are consistent
with the Company’s policies for such expense
reimbursement.
3.5
Benefits.
a. Executive shall
be eligible to receive health insurance (family coverage), dental
insurance (family coverage), personal
disability, life insurance, retirement, paid time-off and other
fringe benefits as are provided to similarly situated executives of
the Company. Such benefits may be amended, from time to
time, but they will always be at least commensurate with those
provided to other senior corporate officers of the Company. (Though
eligible for all such benefits, the Executive represents that he
does not anticipate requiring Company health or dental insurance
until January 2023.)
b. Executive shall
determine, at his sole discretion, his principal place of
employment with the Company and Executive will be free, at his sole
discretion, to change his principal place of employment. At this
date, the Executive’s principal place of employment will be
East Amherst, New York. Executive shall not be required to relocate
his personal residence at any time during his employment with the
Company, without his consent, which can be withheld by Executive in
his sole discretion. However, Executive will make trips to the
Company’s headquarters in California, and to other cities
across the country, to meet with investors, bankers, and analysts,
and to attend conferences and other events, all as often as
reasonably required to perform the duties of his job. The Company
will reimburse the Executive for all reasonable business travel
expenses including airfare, hotels, car rentals, meals, and other
related expenses.
c. Executive shall
also receive other benefits as may be set forth on Addendum A
hereto.
3.6 Equipment. If
deemed necessary by the Company, the Executive will be provided
with use of a laptop computer, printer and any other necessary
office equipment in order that the Executive may conduct business
and/or remain in contact with the office or with employees while
the Executive is stationed at his principal place of employment or
is otherwise travelling away from the office.
3.7 Parachute
Payments. For all payments made or required to be
made pursuant to the terms of this Agreement, including any
payments made with respect to the Executive’s termination of
employment for any reason, the Company shall determine and pay the
Executive an amount sufficient to cover the gross-up of any excise,
income and other taxes resulting from the imposition of the
parachute penalties of the Internal Revenue Code or applicable
state tax laws. Such determination and payment by the
Company shall be made six (6) months and one (1) day after the date
of the termination of Executive’s employment with the Company
for any reason or, if later, before the end of the calendar year
following the calendar year in which the Executive paid any such
excise tax.
4. TERMINATION
OF EMPLOYMENT
Executive’s
employment with the Company may be terminated, prior to the
expiration of any term of this Employment Agreement as set forth on
Addendum A hereto, in accordance with any of the following
provisions:
4.1 Termination
By Executive Without Good Reason.
a. The Executive
may terminate employment at any time during the course of this
Agreement by giving thirty (30)
days' notice in writing to the Chief Executive Officer of the
Company.
b. During the
notice period, Executive must fulfill all Executive’s duties
and responsibilities set forth above. Executive's salary and benefits will
remain unchanged during the 30-day notification
period. The Company, at its option, may relieve
Executive of all Executive’s duties and responsibilities at
any time during the notice period, but will, in such instance, be
required to continue to maintain Executive’s pay and benefits
through the remainder of the 30-day notice
period.
c.
In the event of a termination by Executive Without Good Reason,
Executive shall be entitled to receive
only that Base Salary earned on or before the Executive’s
last day of active service and other post-employment benefits
required by law or under Company policy. Under this
section, Executive shall not be entitled to receive any portion of
Executive’s Annual Bonus for the calendar year in which the
termination occurs but shall receive any accrued and unpaid Annual
Bonus for any calendar year fully completed prior to the date of
termination.
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4.2 Termination
By The Company Without Cause.
a. The Company may
terminate Executive’s employment without cause at any time
during the term of this Agreement
by giving the Executive
thirty (30) days’ notice of such termination, during
which period Executive will continue to receive the compensation
and benefits to which Executive would normally be entitled under
the terms of this Agreement.
b.
During the notice period, Executive must fulfill all of
Executive’s duties and responsibilities. Notwithstanding the foregoing, the Company, at its
option, may instruct Executive during such period not to undertake
any active duties on behalf of the Company, but will,
in such instance, be required to continue to maintain
Executive’s pay and benefits through the remainder of the
30-day notice period.
c. In
the event the Company terminates this Agreement under this Section
4.2, Executive shall be entitled to the severance benefits as
conditioned and described in Section 4.6.
4.3 Termination
By The Company For Cause.
a. The Company may,
at any time and without notice (except as required below),
terminate the Executive for
“cause.”
b. Termination by
the Company of the Executive for “cause” shall be
limited to termination based on any of the
following grounds: (a) fraud, misappropriation,
embezzlement or acts of similar dishonesty; (b) conviction of a
felony crime; (c) intentional and willful misconduct that subjects
the Company to criminal liability; (d) breach of the
Executive’s duty of loyalty to the Company or diversion or
usurpation of corporate opportunities properly belonging to the
Company; (e) material breach of this Agreement and/or any other
agreement entered into between the Company and the Executive;
and/or (f)
willful and/or continued failure to satisfactorily
perform the duties
of Executive’s position; provided, however, that Executive
shall not be terminated for cause under subsection (e) or
(f) above unless the Company first has provided Executive
with written notice that the Company considers the Executive to be
in violation of Executive’s obligations under those
subsections and Executive fails, within thirty (30) days of such
notice, to cure the conduct that has given rise to the
notice.
c.
In the event of a termination by the Company for Cause, Executive
shall be entitled to receive only that
Base Salary earned on or before the Executive’s last day of
active service and other post-employment benefits required by law
or under Company policy. Under this section, Executive
shall not be entitled to receive any portion of Executive’s
Annual Bonus for the calendar year in which the termination occurs
but shall receive any accrued and unpaid Annual Bonus for any
calendar year fully completed prior to the date of
termination.
4.4
Termination by the
Executive For Good Reason.
a. This
Agreement may be terminated by the Executive upon notice to the
Company of any event constituting "Good Reason" as defined
herein.
b. As
used herein, the term "Good Reason" means the occurrence of any of
the following, without the prior written consent of the Executive:
(i) failure of the Company to pay Executive’s compensation in
accordance with this Agreement; (ii) a change in the location of
the Executive's principal place of employment; (iii) a change in
job title, reporting, and/or duties of Executive; and/or (iv) a
material breach of any provision in this Agreement.
c. In
the event Executive terminates this Agreement under this Section
4.4, Executive shall be entitled to the severance benefits as
conditioned and described in Section 4.6.
4.5 Termination
By Death Or Disability.
a. The
Executive’s employment and rights to compensation under this
Employment Agreement shall terminate if the
Executive is unable to perform the duties of Executive’s
position due to death or disability; and the Executive, or the
Executive’s heirs, beneficiaries, successors, or assigns,
shall be entitled to receive any compensation fully earned prior to
the date of the Executive’s last day of active employment
prior to such death or incapacitation due to disability and shall
not be entitled to any other compensation or benefits, except: (a)
to the extent specifically provided in this Employment Agreement;
(b) to the extent required by law; or (c) to the extent that such
benefit plans or policies under which Executive is covered provide
a benefit to the Executive or to the Executive’s heirs,
beneficiaries, successors, or assigns.
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b.
For purpose of this agreement, “disability” shall be
defined as the Executive’s failure, due to a
mental
or physical condition, to perform the essential functions of
Executive’s position for more than 120 days in any 365 day
period.
c. In
the event Executive’s employment is terminated due to his
death or disability as provided for in this Section 4.5, Executive
(or, in the case of the Executive’s death, the
Executive’s beneficiary) shall be entitled to the severance
benefits as conditioned and described in Section
4.6(b).
4.6
Severance
Benefits.
a. Provided
that, the Executive executes and delivers to the Company a general
release of claims in the Company’s standard form (the
“Release”) within 60 days following the effective date
of termination (which Release will be delivered by the Company to
the Executive no later than 5 days following the effective date of
the termination of the Executive’s employment) and the
Executive does not revoke the Release within the period of time
permitted by the Release, six (6) months and one (1) day following
the effective date of the termination the Executive’s
employment, the Company shall pay to the Executive in one lump sum
payment, an amount equal to the amount of the
Executive’s Base Salary then in effect. If at the
time of Executive’s termination of employment, Executive is
receiving a health insurance benefit(s) from the Company, the
Company shall continue to provide the same or comparable health
insurance benefit(s) for one (1) year from the date of termination.
If the terms of the policies, contracts or plans under which such
coverage(s) is offered do not allow the Executive’s or his
family’s continued participation on a substantially similar
basis as was provided prior to the Executive’s termination of
employment, Executive shall receive from the Company the economic
equivalent of the value of the health insurance coverage(s), which
shall be paid six (6) months and one (1) day following the
effective date of termination under this section and if the
Executive executes a general release of claims within 60 days
following the effective date of termination and is not
revoked. Apart from any
severance benefit, executive shall
receive any accrued and unpaid Annual Bonus for the calendar year
fully completed prior to the date of Executive’s termination.
Under this section, Executive shall not be entitled to receive any
portion of Executive’s Annual Bonus for the calendar year in
which the termination occurs.
b. Notwithstanding
any provisions now or hereafter existing under the Company’s
Equity Incentive Plan or any other stock option plan or restricted
share plan of the Company or any entity which directly or
indirectly controls the Company, in the event of a Termination of
Executive’s employment with the Company by Death or
Disability, Termination by Executive of his employment with the
Company for Good Reason, or Termination of Executive’s
employment with the Company without Cause, all restricted shares
and/or stock options provided and/or to be provided to the
Executive pursuant to this Agreement, the Company’s Equity
Incentive Plan and/or any other agreement between the Company (or
any entity which directly or indirectly controls the Company) and
Executive shall be granted and shall immediately fully vest and no
longer be subject to forfeiture.
4.7 Change
in Control and Termination Provisions.
If, at
any time during the two (2) year period following any Change in
Control (as defined below):
a. The
Executive’s employment with the Company is terminated by the
Company without “cause” as “cause” is
defined in Section 4.3(b); or
b. (i)
One or more of the following changes in the terms and conditions of
the Executive’s employment by the Company occur:
(A) a
diminution of the Executive’s responsibilities, as compared
to the Executive’s responsibilities immediately prior to the
Change in Control, including but not limited to a change in the
title, job duties and/or person to whom the Executive reports
within the Company,
(B) a
reduction in the amount of the Executive’s Base Salary or any
other compensation as compared to such Base Salary or any other
compensation as of the date immediately prior to the Change in
Control,
(C) a
failure to provide the Executive with benefits at least as
favorable as those enjoyed by similarly-situated senior corporate
officers of the Company after the Change in Control or as granted
to the Executive by this Agreement,
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(D) any
relocation of the Executive’s principal site of employment,
without his consent, to a location more than twenty-five (25) miles
from the Executive’s principal place of employment as of the
date immediately prior to the Change in Control, or
(E) any
material breach of this Agreement by the Company; and
(ii) no
later than ninety (90) days following the occurrence of one any one
or more of the events described in Sections 4.7(b)(i)(A) through
(E), the Executive delivers to the Company written notice of his
intent to terminate his employment with the Company;
then
c. The
Company shall, six (6) months and one (1) day following the date
the Executive’s employment with the company is terminated,
pay to the Executive in one lump sum payment, an amount equal
to
the
greater of either (A) the Base Salary which remains unpaid for the
remainder of the initial term of this Agreement as set forth in
Addendum A hereto or (B) an amount equal to two (2) times the
Executive’s then current Base Salary. In addition,
the Company shall, for eighteen (18) months following such
termination, (i) reimburse the Executive for his reasonable costs
of medical and dental coverage (if any) as provided under COBRA,
(ii) reimburse the Executive for his reasonable costs incurred in
maintaining his life and disability coverage (if any), and (iii)
reimburse the Executive for all other benefits granted to the
Executive in this Agreement, each at levels substantially
equivalent to those provided by the Company to the Executive
immediately prior to the termination of his employment (including
such other benefits as shall be provided to senior corporate
officers of the Company in lieu of such benefits from time to time
during the eighteen (18) month payment period), on the same basis,
including the Company’s payment of premiums and
contributions, as such benefits are provided to other senior
corporate officers of the Company or were provided to the Executive
prior to the termination. Reimbursements of expenses
which provide for nonqualified deferred compensation under Internal
Revenue Code Section 409A, if any, shall not be paid before six (6)
months and one day after the Executive’s date of termination
of employment. The amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a taxable year
of the Executive may not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided in any other
taxable year. Reimbursements shall be paid on or before
the last day of the Executive’s taxable year following the
taxable year in which the expense was incurred. The
right to reimbursement hereunder is not subject to liquidation or
exchange for another benefit.
d. Notwithstanding
any provisions now or hereafter existing under the Company’s
Equity Incentive Plan or any other stock option plan or restricted
share plan of the Company or any entity which directly or
indirectly controls the Company, in the event of a Change in
Control, all restricted shares and/or stock options provided and/or
to be provided to the Executive pursuant to this Agreement, the
Company’s Equity Incentive Plan and/or any other agreement
between the Company (or any entity which directly or indirectly
controls the Company) and Executive shall be granted and shall
immediately fully vest and no longer be subject to forfeiture as of
the date of such Change in Control.
e. For
purposes of this Agreement, a “Change in Control” shall
be deemed to exist if any of the following occurs after the date
hereof:
(i) a
corporation, a partnership or a person, as defined in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, acquires
twenty five percent (25%) or more of the combined voting power of
the outstanding securities of the Company or any entity which
directly or indirectly controls the Company, which securities have
the right to vote in elections of directors of the Company or any
entity which directly or indirectly controls the Company;
or
(ii) Continuing
Directors shall for any reason cease to constitute a majority of
the Board of Directors; or
(iii) the
Company or any entity which directly or indirectly controls the
Company disposes, by sale of stock, assets or otherwise, of all or
substantially all of the business of the Company or the business of
any entity which directly or indirectly controls the Company to a
party or parties other than a subsidiary or other affiliate of the
Company or any entity which directly or indirectly controls the
Company pursuant to a partial or complete liquidation of the
Company or any entity which directly or indirectly controls the
Company; or
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(iv)
the Board of Directors of the Company or any entity
which directly or indirectly controls the Company approves the
consolidation or merger of the Company or any entity which directly
or indirectly controls the Company with or into any other person or
entity (other than a wholly-owned subsidiary of the Company or any
other entity which is directly or indirectly controlled by the
Company), or any other person’s consolidation or merger with
or into the Company or any entity which directly or indirectly
controls the Company, which results in all or part of the
outstanding shares of common stock of the Company or any entity
which directly or indirectly controls the Company being changed in
any way or converted into or exchanged for stock or other
securities or cash or any other property.
For
purposes of this Agreement, the term “Continuing
Director” shall mean a member of the Board of Directors of
the Company or any entity which directly or indirectly controls the
Company who was a member of such Board of Directors on the date
hereof, was appointed or elected to serve as a member of such Board
of Directors within six (6) months following the date hereof, or
who subsequently became a member of the Board of Directors of the
Company or any entity which directly or indirectly controls the
Company and whose election, or nomination for election, was
approved by a vote of at least two-thirds (2/3) of the Continuing
Directors then in office.
5. CONFIDENTIALITY
AND NONDISCLOSURE
5.1 Non-Disclosure
of Confidential Information. Executive recognizes
that Executive’s position with Company is one of the highest
trust and confidence and that Executive will have access to and
contact with the trade secrets and confidential and proprietary
business information of Company. Executive agrees that
Executive shall not, while employed by Company or thereafter,
directly or indirectly, use for Executive’s own benefit or
for the benefit of another, or disclose to another any trade secret
or Confidential Information (as defined below) of the Company,
except such use or disclosure is required in the discharge of
Executive’s duties and obligations on behalf of the
Company.
5.2 Definition
of “Confidential Information.” For purposes
of this Agreement, “Confidential Information” shall
include proprietary or sensitive information, materials, knowledge,
data or other information of the Company not generally known or
available to the public relating to (a) the services, products,
licensing information and contracts, customer lists, business
plans, marketing plans, pricing strategies, or similar confidential
information of the Company, including but not limited to the
Company’s trade secrets, intellectual property, systems,
procedures, manuals, cost and pricing information, solicitations,
proposals, bids, contracts, confidential reports and work product
prepared in connection with projects and contracts, supporting
information for any of the above items, the identities and records
of licensing agencies and offices and contacts, contractors and
contacts, with whom the Company has done business or is seeking to
do business, the identities and records of vendors and suppliers of
personnel, material and/or raw materials, all accounting and
financial information, business plans and budgets, and all other
information pertaining to the business activities and affairs of
the Company of every nature and type; (b) the business of any
Company customer, including without limitation, knowledge of the
customer’s current business or staffing needs; and (c) the
identities and records of current or former employees of the
Company or potential hires and their compensation arrangements with
the Company. Notwithstanding the foregoing, Confidential
Information shall not include any information that was lawfully in
the Executive’s possession prior to the Effective Date and
not obtained in the connection with the Executive’s
commencement of employment with the Company; or (y) constitutes
industry knowledge or is generally available, or is made generally
available, to the public other than as a result of a direct or
indirect disclosure by the Executive.
5.3 Return
of Materials and Equipment. Executive further
agrees that all memoranda, notes, computer files, records,
drawings, or other documents, in any format, made or compiled by
Executive or made available to Executive while employed by Company
concerning any Company activity shall be the property of Company
and shall be delivered to Company upon termination of Executive's
employment or at any other time upon request. Executive
also agrees to return to the Company and not retain any equipment,
including laptop computers, and other materials belonging to the
Company on or before Executive’s last day of active
employment with Company.
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6. RESTRICTIVE
COVENANTS
Executive
acknowledges that Executive’s services to be rendered
hereunder are of a special and unusual character, which have a
unique value to the Company and that the Company will be investing
time, effort, and expense in Executive. In view of the
unique value to the Company of the services of the Executive for
which the Company has contracted hereunder, the investments by the
Company in the Executive, and as a material inducement for the
Company to enter into this Agreement and to pay to the Executive
the compensation provided hereunder (including, if applicable, the
severance payments referred to in Section 4.6 above), Executive
covenants and agrees as follows:
6.1. Definitions. The
following definitions shall be applicable to each of the covenants
set forth in this section.
a. Definition
of “Same or Substantially Similar
Services.” As used herein, “Same or
Substantially Similar Services” means services, including
without limitation the provision of goods and/or services that are
identical or substantially similar, in whole or in part, to goods
and/or services (i) which were provided by Executive while
Executive was employed with the Company; (ii) which were
provided by employees or contractors whom Executive was directly or
indirectly managing while Executive was employed with the Company;
or (iii) which were the subject of proposals or contracts with
which Executive was involved while employed with the
Company.
b. Definition
of “Customer.” As used herein,
“Customer” is defined as any person or entity,
including without limitation a Government Agency, to whom
Executive, directly or indirectly (e.g., the end user of the
services if the Company is a subcontractor), provided services
while employed with the Company or with whom Executive interacted
on behalf of the Company at any time during Executive’s
employment with Company.
c. Definition
of “Prospective Customer.” As used herein,
“Prospective Customer” shall mean any person or entity,
including without limitation a Government Agency, whom the
Executive, at any time during the twelve (12) month period
preceding the termination of Executive’s employment, was
involved in soliciting or making a proposal to, on behalf of the
Company, for the provision of services.
d. Definition
of “Intellectual
Property.” As used herein,
“Intellectual Property” shall mean any and all
concepts, trademarks, improvements, designs, innovations, data,
processes, software, works of authorship, know-how, ideas,
inventions, developments, formulas, or discoveries, (whether
patentable or not) directly or indirectly related to the Company
(i) conceived or made by Executive, either alone or with others,
while employed by the Company, (ii) conceived or made by Executive,
either alone or with others, with the use of Confidential
Information, and/or (iii) conceived or made by Executive, either
alone or with others, within one (1) year after the
Executive’s last day of active service unless conclusively
proven by Executive to have been first conceived or made by
Executive after Executive’s last day of active service
without reference to any Confidential Information.
6.2 Covenants
a. Non-Competition
with Customers, Prospective Customers and
Competitors. During Executive's employment by the
Company and for a period of eighteen (18) months after Executive
ceases to be employed by the Company, then Executive will not
(except on behalf of the Company), directly or indirectly, as
either an employee, contractor, or consultant, whether personally
or through another entity, provide or offer to provide any goods or
services to any entity engaged in the United States in the making,
offering, marketing, distributing and/or selling of products that
are the Same or Substantially Similar to those offered by the
Company to any Customer or Prospective
Customer. Executive specifically recognizes and agrees
that the restrictions set forth in this subsection are
reasonable.
b. Non-Interference
With Customers or Prospective
Customers. Executive further agrees that, for the
term of Executive’s employment and for a period of eighteen
(18) months after Executive ceases to be employed by the Company,
the Executive shall not undertake to interfere with the
Company’s relationship with any Customer, Prospective
Customer, supplier, distributer, and/or
manufacturer. This means that Executive shall refrain:
(i) from making disparaging comments about the Company or its
management or employees to any Customer or Prospective Customer;
(ii) from attempting to persuade any Customer, Prospective
Customer, supplier, distributer, and/or manufacturer to cease or
reduce doing business with the Company; (iii) from soliciting any
Customer, Prospective Customer, supplier, distributer, and/or
manufacturer for the purpose of providing services competitive with
the Company Business; or (iv) from assisting any person or entity
in doing any of the foregoing.
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c. Non-Solicitation
and Non-Hiring of Employees. Executive agrees
that, for the term of Executive’s employment and for a period
of eighteen (18) months after Executive ceases to be employed by
the Company, the Executive shall not, directly or indirectly, as an
employee, consultant, contractor, principal, agent, or owner, on
Executive’s own behalf or the behalf of another person or
entity: (i) induce or attempt to induce any person employed by the
Company to leave their employment with the Company; (ii) hire or
employ, or attempt to hire or employ, any person employed by the
Company; or (iii) assist or facilitate in any way any other person
or entity in the hiring of any person employed by the
Company. The foregoing restriction also shall apply with
respect to any person who was an employee, consultant or
subcontractor of the Company at the time of, or during the six (6)
months preceding, the Executive’s termination from the
Company. This provision shall not limit the scope or the
enforceability of the confidentiality restriction prohibiting the
use or disclosure of any information pertaining to current or
former employees of the Company or potential hires that was
obtained in any manner during the period of Executive’s
employment with the Company.
6.3 Enforcement
and Remedies
a. Reasonableness
of Restrictions. Executive has carefully read and
considered the provisions of this Section 6 and, having done so,
agrees that the restrictions set forth in such provisions
(including, but not limited to, the time period of the
restrictions) are fair and reasonable and are reasonably required
for the protection of the interests of the Company, its
shareholders, directors, officers, and employees.
b. Severability
and Reformation. In the event that,
notwithstanding the foregoing, any portions of this Section 6
hereof shall be held to be invalid or unenforceable, the remaining
portions thereof shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable portions had not
been included therein. In the event that any provision
of this Section 6 shall be declared by a court of competent
jurisdiction to be invalid due to overly broad, the parties do
hereby authorize the court to reform the offending provision so as
to make it enforceable.
c. Successors. Executive
specifically acknowledges and agrees that these covenants contained
in this Section 6 shall be enforceable by any successor to the
Company.
7. GENERAL
PROVISIONS.
7.1 Notices. All
notices and other communications required or permitted by this
Agreement to be delivered by the Company or Executive to the other
party shall be delivered in writing, either personally or by
certified or express mail, return receipt requested, postage
prepaid, respectively, to the attention of the Chief Executive
Officer at the headquarters of the Company, or to the address of
record of the Executive on file at the Company. If
notice is sent by certified mail, it shall be deemed given and
effective on the fifth day after it was deposited in the
mail.
7.2 Amendments:
Entire Agreement. This Agreement may not be
amended or modified except by a writing executed by all of the
parties hereto. This Agreement, including any addenda
hereto, constitutes the entire agreement between Executive and the
Company relating in any way to the employment of Executive by the
Company, and supersedes all prior discussions, understandings and
employment agreements between them with respect
thereto.
7.3 Successors
and Assigns. This Agreement is personal to
Executive and shall not be assignable by Executive. The
Company will assign its rights hereunder to (a) any corporation
resulting from any merger, consolidation or other reorganization to
which the Company is a party or (b) any corporation, partnership,
association or other person to which the Company may transfer all
or substantially all of the assets and business of the Company
existing at such time. All of the terms and provisions
of this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
7.4 Severability:
Provisions Subject to Applicable Law. All
provisions of this Agreement shall be applicable only to the extent
that they do not violate any applicable law, and are intended to be
limited to the extent necessary so that they will not render this
Agreement invalid, illegal or unenforceable under any applicable
law. If any provision of this Agreement or any
application thereof shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of other
provisions of this Agreement or of any other application of such
provision shall in no way be affected thereby.
-8-
7.5 Waiver
of Rights. No waiver by the Company or Executive
of a right or remedy hereunder shall be deemed to be a waiver of
any other right or remedy or of any subsequent right or remedy of
the same kind.
7.6 Definitions,
Headings, and Number. A term defined in any part
of this Agreement shall have the defined meaning wherever such term
is used herein. The headings contained in this Agreement
are for reference purposes only and shall not affect in any manner
the meaning or interpretation of this Employment
Agreement. In construing this Agreement, feminine or
neuter pronouns shall be substituted for those masculine in form,
and vice versa, and plural terms shall
be substituted for singular and singular for plural, in any place
where the context so requires.
7.7 Governing
Law. This Agreement and the parties' performance
hereunder shall be governed by and interpreted under the laws of
the State of New York. Executive agrees to submit to the
jurisdiction of the courts of the State of New York, and that venue
for any action arising out of this Agreement or the parties'
performance hereunder shall be in a court of competent jurisdiction
located in or serving the State of New York.
7.8 409A
Savings Clause. Any payments under this Agreement that may
be excluded from Section 409A of the Internal Revenue Code of 1986,
as amended, (hereinafter “Section 409A”) either as
separation pay due to an involuntary separation from service or as
a short term deferral shall be excluded to the maximum extent
possible. For purposes of Section 409A, each installment payment
provided under this Agreement shall be treated as a separate
payment. Any payment to be made to the Executive upon a termination
of employment shall only be made if such termination of employment
constitutes a “separation from service” under Section
4.09A. All provisions of this Agreement shall, to the maximum
extent possible, be construed and interpreted in a manner which
will cause such provisions to be implemented in a manner which
complies with the applicable requirements of Section 409A and the
regulations promulgated thereunder so as to avoid subjecting the
Executive to tax under Section 409A.
7.9. Attorneys’
Fees. In the event of a dispute arising out of
the interpretation or enforcement of this Agreement, if the
Executive shall prevail, the Company shall pay his reasonable
attorneys' fees and costs.
7.10 Construction
and Interpretation. This Agreement has been
discussed and negotiated by, all parties hereto and their counsel
and shall be given a fair and reasonable interpretation in
accordance with the terms hereof, without consideration or weight
being given to its having been drafted by any party hereto or its
counsel.
IN
WITNESS WHEREOF, the Company and the Executive have executed and
delivered this Agreement as of the date first written
above.
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EXECUTIVE:
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CHARLIE’S
HOLDINGS, INC.
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/s/ Henry
Sicignano, III
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By:
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/s/
Brandon Stump
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Henry
Sicignano, III
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Brandon
Stump
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Chief
Executive Officer
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ADDENDUM A TO
EMPLOYMENT AGREEMENT OF HENRY SICIGNANO, III
This
Addendum A to the Employment Agreement of Henry Sicignano, III is
made and effective as of the date of April 1, 2021.
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A.
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Executive’s
title for purposes of the Agreement shall be President; Executive
shall report to the CEO.
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B.
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Unless
earlier terminated as provided in the Agreement, the Term of the
Agreement is for an initial period of two (2) years, and thereafter
the Agreement shall renew on an annual basis unless earlier
terminated by the Company or the Executive as provided in the
Agreement.
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C.
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Effective
as of the date of this Addendum, Executive’s Base Salary for
purposes of the Agreement shall be $200,000.00 for the period
immediately following the effective date of this Addendum and
continuing through December 31, 2021. Thereafter, the
Base Salary of the Executive will be increased, annually in
January, in an amount as determined by the Company.
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Effective
as of the date of this Addendum, the Company shall privately issue
restricted shares of the Company stock to the Executive (according
to the schedule described below) in a non-public, private
transaction in compliance with the United States securities laws,
rules and regulations. The Executive will be awarded one hundred
fifty million (150,000,000) restricted shares (subject to
forfeiture) of the Company. Executive will have all the rights of a
shareholder of the Company with respect to voting the 150,000,000
restricted shares awarded under this grant and share adjustments,
receipt of dividends (if any) and distributions (if any) on such
shares. Subject to Executive’s continued employment with the
Company, and regardless of the date on which the shares are
actually granted, the 150,000,000 restricted shares (Time-Vested
Shares) will no longer be subject to forfeiture in accordance with
the following schedule: Seventy-five million (75,000,000) shares
will no longer be subject to forfeiture on April 1, 2022; and
Seventy-five million (75,000,000) shares will no longer be subject
to forfeiture on April 1, 2023; Furthermore, unvested shares shall
cease to be subject to forfeiture on the first to occur (if any) of
the following: (i) the event of a change in control of the Company
(as defined in the Executive’s Employment Agreement), (ii)
termination of Executive’s employment with the Company by
Death or Disability (as defined in the Executive’s Employment
Agreement), (iii) termination by Executive of his employment with
the corporation for Good Reason (as defined in the
Executive’s Employment Agreement), or (iv) termination of
Executive’s employment with the Company Without Cause (as
defined in the Executive’s Employment Agreement). Under the
guidelines of Section 83(b) of the Internal Revenue Service code,
the Executive will pay – as a function of the fair market
value of the restricted shares at time of grant according to a
third party valuation expert – the federal and New York State
income taxes, as well as Medicare taxes, incurred on this equity
grant within 30 days from the time the grant is made.
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Pursuant
to the Agreement, Executive shall be eligible for additional
compensation and benefits as follows: (i) Executive will
be eligible for additional Restricted Stock and/or Stock Options as
may be awarded by the Company’s Board of Directors each year;
(ii) Executive will be eligible to receive an annual cash bonus
based upon satisfactory achievement of Key Performance Objectives
and business performance objectives as may be determined by the
Company.
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-10-
F.
After one year of
service, as of April 1, 2022, Executive may defer a percentage (up
to the maximum permitted by law; $19,500 in 2021 (plus $6,500
catch-up contribution)) of his pre-tax salary to the
Company’s 401(k) plan. As of this writing, The Company will
make a Matching Contribution on the Executive’s behalf if he
makes a "Matched Employee Contribution" during the Plan Year. If
the Executive makes a "Matched Employee Contribution," the Company
will contribute a Safe Harbor Matching Contribution to his Matching
Contribution Account in an amount equal to: (i) 100% of the Matched
Employee Contributions that are not in excess of 3% of the
Executive’s Compensation, plus (ii) 50% of the amount of the
Matched Employee Contributions that exceed 3% of the
Executive’s Compensation but that do not exceed 5% of the
Executive’s Compensation. In addition, the Company may make
Safe Harbor Matching Contributions. Further, the Company may, in
its sole discretion, make a Profit Sharing Contribution to the Plan
on the Executive’s behalf.
G.
Executive will be
immediately eligible for Company-paid, guaranteed issue Group Term
Life and AD&D insurance coverage.
H.
The Executive does
not anticipate requiring health insurance until January 2023. At
that time, if the Executive is still employed by the Company, he
will be immediately eligible for health and dental insurance
(family coverage) that is equivalent to the coverage enjoyed by the
Company’s other senior executives.
I.
In addition to the
Company’s eight paid “national holidays” (which
include, in 2021: New Year’s Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Eve, and
New Year’s Eve), Executive will be eligible for four weeks
(20 business days) paid vacation time in addition to three
sick/personal days per year.
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EXECUTIVE:
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CHARLIE’S
HOLDINGS, INC.
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/s/
Henry Sicignano, III
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By:
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/s/
Brandon Stump
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Henry
Sicignano, III
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Brandon
Stump
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Chief
Executive Officer
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-11-
Exhibit 99.1
Charlie’s Holdings Hires Former 22nd Century Group CEO as
President
Henry Sicignano will Spearhead the Company’s Business
Strategy
and Capital Markets Initiatives
Costa Mesa, CA – April 6, 2021 – Accesswire –
Charlie’s Holdings, Inc. (OTC Pink: CHUC)
(“Charlie’s” or the “Company”),
an industry leader in both the
premium, nicotine-based, e-cigarette space and the hemp-derived,
CBD wellness space, announced today the hiring of Henry
Sicignano, III, as President of the Company. Mr. Sicignano
previously served as President and CEO of 22nd Century Group, Inc.
(NYSE American: XXII)
(“22nd Century”), a leading plant-based, biotechnology
company focused on tobacco harm reduction and hemp/cannabis
research.
First as President, and later as CEO of 22nd Century Group,
Mr. Sicignano facilitated 22nd Century’s transformation from
a four-person private company to an OTC publicly traded microcap to
a NYSE American listed company. He spearheaded 22nd Century’s
in-licensing and commercialization initiatives, assembled a
best-in-class regulatory team, and raised more than $120 million in
the equity markets to facilitate submission to the U.S. Food and
Drug Administration (“FDA”) both 22nd Century’s
Pre-Market Tobacco Application (“PMTA”) and its
Modified Risk Tobacco Product Application (“MRTPA”) for
the world’s lowest nicotine tobacco cigarette. In December
2019, 22nd Century became
the third company in history to have a marketing order granted
under the FDA’s PMTA regulatory pathway. A marketing
order in response to 22nd Century’s MRTPA is expected in
2021. Previously, Mr. Sicignano held
executive positions with several other private companies. Most
notably, he served as Vice President and Marketing Director of
Santa Fe Natural Tobacco Company, parent to the Natural American Spirit cigarette
brand. Mr. Sicignano holds a B.A. Degree in Government from Harvard
College and an M.B.A. Degree from Harvard University.
As
President of Charlie’s, Mr. Sicignano will work closely with
Charlie’s Chief Executive Officer, Brandon Stump, to develop
and execute business strategy in the rapidly changing Electronic
Nicotine Delivery System (“ENDS”) marketplace; he will
lead and oversee the Company’s branding strategy and
marketing personnel; and he will serve as the Company officer with
primary responsibility for Charlie’s capital markets and
investor relations initiatives. Of particular importance to the
Company’s shareholders, Mr. Sicignano will ensure that
Charlie’s meets the targets required for the Company’s
applications to one or more senior stock exchanges.
“I
am thrilled with the opportunity to join the Charlie’s team
and I look forward to working with a company that is dedicated to
providing adult smokers with high quality, regulatory-compliant
alternatives to highly addictive combustible cigarettes,”
explained Mr. Sicignano. “It is clear that my work at 22nd
Century – developing Very Low Nicotine Content cigarettes
that are designed to be minimally or non-addictive –
complements perfectly Charlie’s leadership in the Electronic
Nicotine Delivery System marketplace for those adults who still
desire and enjoy nicotine. In this time of rapidly changing
regulatory requirements, I expect Charlie’s is on the verge
of unprecedented growth. Exciting times ahead!”
“Henry
Sicignano’s past successes – in both his initiatives to
provide adult smokers with alternatives to traditional combustible
cigarettes, and his experience growing and uplisting a public
company – are very impressive,” explained Brandon
Stump, CEO of Charlie’s. “I am confident that
Henry’s extensive industry contacts and experience, combined
with his leadership in the capital markets, will prove invaluable
to Charlie’s as we push forward with the PMTA review process,
accelerate domestic and international growth, and explore new stock
exchange opportunities for the Company.”
About Charlie’s Holdings, Inc.
Charlie’s Holdings, Inc. (OTC Pink: CHUC)
is an
industry leader in both the premium, nicotine-based, e-cigarette
space and the hemp-derived, CBD wellness space through its
subsidiary companies Charlie's Chalk Dust, LLC and Don Polly,
LLC. Charlie's Chalk Dust produces high quality vapor products
currently distributed in more than 90 countries around the world.
Charlie's Chalk Dust has developed an extensive portfolio of brand
styles, flavor profiles and innovative product formats. Launched in
June of 2019, Don Polly, LLC formulates innovative
hemp-derived CBD wellness products. Don Polly's high
quality CBD products derive from single-strain-sourced hemp extract
and high purity CBD isolate crystals.
For additional information, please visit our corporate website
at: CharliesHoldings.com
and our branded online
websites: CharliesChalkDust.com
and PachamamaCBD.com.
Safe Harbor Statement
This press release contains "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, including but not limited to
statements regarding the Company's overall business, existing and
anticipated markets and expectations regarding future sales and
expenses. Words such as "expect," "anticipate," "should,"
"believe," "target," "project," "goals," "estimate," "potential,"
"predict," "may," "will," "could," "intend," variations of these
terms or the negative of these terms and similar expressions are
intended to identify these forward-looking statements.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which involve factors or circumstances that
are beyond the Company's control. The Company's actual results
could differ materially from those stated or implied in
forward-looking statements due to a number of factors, including
but not limited to: the Company's ability to successful increase
sales and enter new markets; the FDA’s decision with respect
to the Company’s PMTAs; the Company's ability to manufacture
and produce product for its customers; the Company's ability to
formulate new products; the acceptance of existing and future
products; the complexity, expense and time associated with
compliance with government rules and regulations affecting nicotine
and products containing cannabidiol; litigation risks from the use
of the Company's products; risks of government regulations; the
impact of competitive products; and the Company's ability to
maintain and enhance its brand, as well as other risk factors
included in the Company's most recent quarterly report on Form
10-K, Form 10-Q and other SEC filings. These forward-looking
statements are made as of the date of this press release and were
based on current expectations, estimates, forecasts and projections
as well as the beliefs and assumptions of management. Except as
required by law, the Company undertakes no duty or obligation to
update any forward-looking statements contained in this release as
a result of new information, future events or changes in its
expectations.
Investors Contact:
Phone: 949-418-4020