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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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).
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| Item 1.01. | Entry Into a Material Definitive Agreement. |
Effective as of February 17, 2023, Charlotte’s Web Holdings, Inc. (the “Company”) and its subsidiary, Charlotte's Web, Inc., a Delaware corporation (“CWB”), entered into an Extension and Fifth 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 to June 30, 2023.
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 9.01. | Financial Statements and Exhibits. | |
| (d) | Exhibits: | |
| Exhibit No. |
Description |
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| 10.1 | Extension and Fifth Amending Agreement to Name and Likeness and License Agreement, effective as of February 17, 2023, 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: February 22, 2023 | By: | /s/ Stephen Rogers | |
| Stephen Rogers | |||
| Senior Vice President - General Counsel and Corporate Secretary | |||
Exhibit 99.1
EXTENSION AND Fifth AMENDING AGREEMENT TO NAME AND LIKENESS AND LICENSE AGREEMENT
This Extension and Fifth Amending Agreement to Name and Likeness and License Agreement (this “Extension Agreement”) is made to effective as of February 17, 2023 (“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, an Extension and Fourth Amending Agreement to Name and Likeness Agreement (the “Fourth Amending Agreement”), pursuant to which the term of the Original Agreement was extended to December 31, 2022, (the “Amended Term”). The First Amending Agreement, Second Amending Agreement, Third Amending Agreement and Fourth 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.
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.
CAN: 36822787.1
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1.2 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 June 30, 2023 (the “Term”).”
3.2 Section 3.1 of the Fourth Amending Agreement shall be deemed superseded by Section 3.2 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 affect the full intent of and fully perform and carry out the terms of this Extension Agreement.
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.
4.2 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.
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.
4.3 Time. Time is of the essence for all purposes of this Extension Agreement.
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CAN: 36822787.1
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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 |
CAN: 36822787.1