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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):
September 12, 2023
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.) |
|
700 Tech Court
Louisville, Colorado
|
80027 |
|
(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 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers. |
On
September 13, 2023, Charlotte’s Web Holdings, Inc. (the “Company”) announced the appointment of William Morachnick,
age 59, as the Company’s Chief Executive Officer effective immediately. Along with assuming the role of Chief Executive Officer,
Mr. Morachnick will be appointed as a non-independent director for the Board of Directors of the Company. Mr. Morachnick will replace
the Company’s Chief Executive Officer, Jacques Tortoroli, who will depart the Company effective September 13, 2023. Mr. Tortoroli’s
departure is not based on any disagreement with the Company’s accounting principles, practices or financial statement disclosures.
Mr.
Morachnick brings a track record of building differentiated products within the consumer goods and wellness space. Mr. Morchnick began
his career at Eastman Kodak Company where he rose to the position of Director of Consumer Products, Asia-Pacific. Following Eastman Kodak
Company, Mr. Morachnick was the founder and President of Tsunami International, Inc., and in 2006, assumed the position of Chief Executive
Officer of SFRTI, creating collaborative relationships with tobacco farmers to enable sustainable farming practices and living wages.
From 2016 through 2018, Mr. Morachnick was the CEO and Chairman of True Spirit Tobacco Company, where he built the international arm of
the RJ Reynolds owned Santa Fe tobacco brand from 4 employees in a single office to a 450-employee global premium brand, culminating in
an unsolicited $5B cash acquisition by market leader Japan Tobacco. Since 2018, he has leveraged his learnings from these experiences
to advise a variety of start-ups in the wellness industry, including cannabis growers and medical device makers. Mr. Morachnick received
his B.A from the University of Maryland and his MBA from the Thunderbird School of Global Management.
Pursuant
to the terms of his offer letter, Mr. Morachnick’s base salary will be $450,000 per annum
and will be subject to applicable withholding taxes. Mr. Morachnick is required to relocate to Colorado by March 13, 2023
and will receive relocation assistance of up to $25,000. Prior to his relocation, Mr. Morachnick will be eligible for reimbursement for
travel expenses in accordance with the Company’s guidelines.
Effective
on or before October 13, 2023, the Company will award Mr. Morachnick an equity grant of 4,500,000 restricted stock units (the “Time-vested
RSUs”) priced and issued in accordance with the terms of the Company’s Amended 2018 Long-Term Incentive Plan (the “2018
LTIP”), provided that vesting of the RSU’s will occur as to 8.3334 % on December 31, 2023 and as to 8.3333% every three
months (i.e., on March 31, June 30, September 30 and December 31) thereafter over a three (3) year period provided that the vesting of
all Time-vested RSUs shall accelerate upon a Change of Control. In addition to the Time-vested RSUs, and effective as of the Start Date,
Mr. Morachnick will be issued a one-time equity grant consisting of 500,000 restricted stock units of the Company (the “Initial
Equity Grant”) under the 2018 LTIP, which will be immediately and fully vested. The Initial Equity Grant (and not the Time-vested
RSUs) shall be subject to the terms of a lock-up agreement (the “Lock-up Agreement”), which will restrict any sale
or transfer of the shares representing the Initial Equity Grant prior to the earlier of (i) cessation of employment for any reason; and
(ii) September 13, 2026.
Mr.
Morachnick will be eligible for an annual discretionary bonus in accordance with the Company’s annual short-term incentive plan
and on the same terms and conditions as other similarly situated executives (the “Annual Discretionary Bonus”). The
target bonus opportunity will be 100% of the base salary, with a maximum payout opportunity of 150% of the base salary, provided that
the actual amount of any Annual Discretionary Bonus, if any, shall be determined by the Compensation Committee, in its sole and absolute
discretion, based on Company results and individual performance against applicable performance metrics to be jointly developed. For calendar
year 2023, Mr. Morachnick will be paid a guaranteed bonus of $150,000 (representing a 2023 bonus).
Mr.
Morachnick also is entitled to participate in the Company’s benefit programs applicable generally to employees and executive officers.
Such compensation and benefit plans and arrangements are described in the Company’s proxy statement on Schedule 14A filed with the
U.S. Securities and Exchange Commission on April 28, 2023, relating to its 2023 annual general meeting.
Effective
September 12, 2023, in connection with Mr. Tortoroli’s retirement, the Board of Directors approved the acceleration of the vesting
of Mr. Tortoroli’s unvested restricted stock units.
| Item 7.01 |
Regulation FD Disclosure. |
On September 13, 2023,
the Company issued a press release announcing the appointment of Mr. Morachnick as Chief Executive Officer, effective as September 13,
2023 and the departure of Mr. Tortoroli as the Company’s Chief Executive Officer, effective September 13, 2023. The Company also
announced the rejection of the offers to resign of John Held, Thomas Lardieri, Alicia Morga and Jacques Tortoroli that had been offered
pursuant to the Company’s Majority Voting Policy. A copy of the press release is filed as Exhibit 99.1 and incorporated into this
Item 7.01 by reference.
The information in this Item
7.01 of this Form 8-K 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.
†
Indicates a management contract or compensatory plan or arrangement.
*
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: September 13, 2023 |
|
By: |
/s/ Stephen Rogers |
| |
|
|
Stephen Rogers |
| |
|
|
Senior Vice President - General Counsel and Corporate Secretary |
| |
|
|
|
Exhibit 10.1
| CHARLOTTE’S
WEB, INC. |
| 700
TECH COURT, LOUISVILLE, CO 80002 |
September 12, 2023
Via
E-mail
William Morachnick
Re: Offer of
Employment with Charlotte’s Web Holdings, Inc.
Dear Bill,
We
are very pleased to extend to you this offer of employment for the position of Chief Executive Officer of Charlotte’s Web Holdings,
Inc. (the “Company”). This offer letter (the “Agreement”) sets forth the terms and conditions of
your employment with the Company, effective September 13, 2023 (the “Start Date”).
| (a) | In
your capacity as Chief Executive Officer, you will report to the Company’s Board of
Directors (the “Board”) and perform such duties and responsibilities that
are commensurate with your position, as well as such other duties and responsibilities as
may be assigned to you from time to time by the Board. |
| (b) | You
agree to devote your full business time, attention, and best efforts to the performance of
your duties hereunder and to the furtherance of the Company’s interest. During the
period of your employment with the Company, you shall not engage in any business activities
other than being employed by and performing the duties required of you by the Company. Notwithstanding
the foregoing, you will be permitted to participate in (i) charitable, professional and civic
activities and (ii) serve on the board of directors of third-party companies with the express
prior written approval of the Board, which approval the Board may grant or deny in its discretion,
and further provided that such outside activities do not, directly or indirectly, conflict
with the interests of, or create a perceived conflict of interest with, the Company or interfere
with the proper and efficient performance of your duties for the Company. The Company and
its Board of Directors have consented to your serving on the Board of Directors or Managers
of Euroflex USA, LLC and Omega Life Sciences and its subsidiaries. You confirm (i) neither
of these entities compete with the Company; and (ii) your directorship in either entity does
not create a conflict of interest for you in connection with your roles at the Company. |
| (c) | The
Company maintains, and from time to time modify and implement, various policies and procedures.
You will be expected to comply with all such policies and procedures that have been delivered
or made available to you and with any applicable laws or regulatory requirements which govern
your conduct in respect of the Company’s operations or its employees. |
2. Work
Location. Your principal place of employment shall be the Company’s headquarters in Louisville, Colorado, subject to business
travel as needed to properly fulfill your employment duties and responsibilities. The Company agrees that it shall reimburse you up to
$25,000 for expenses actually incurred in connection with your relocation to the Louisville, Colorado metropolitan area within six (6)
months following the Start Date (the “Relocation Reimbursement”). To receive the Relocation Reimbursement, you must
submit documentation satisfactory to the Company detailing expenses actually incurred. In the event that your employment with the Company
ceases prior to the second anniversary of the Start Date other than as the result of a termination without Cause, you agree to repay
to the Company the full amount of the Relocation Reimbursement actually paid to you by the Company within ten (10) business days of your
final day of employment. In addition to the forgoing, the Company will provide, at no cost to you and provided you are employed at the
Company during the relevant periods (i) an apartment located in Boulder, Colorado leased by the Company for a period commencing on the
Start Date and terminating December 31, 2023; and (ii) a vehicle for a period commencing on the Start Date and terminating February 2025.
The Company acknowledges that you will not be required to relocate to Louisville until the six-month anniversary of the date of this
Agreement.
| CHARLOTTE’S WEB, INC. |
| 700 TECH COURT, LOUISVILLE, CO 80002 |
3. Board
Seat. Effective as of the Start Date, you will be appointed as a non-independent director serving on the Board in your role of
Chief Executive Officer.
4. Base
Salary. In consideration of your services, you will be paid an initial base salary of Four Hundred Fifty Thousand Dollars ($450,000.00)
per year (“Base Salary”), subject to review by the Compensation Committee from time to time, payable in accordance
with standard payroll practices of the Company and subject to applicable withholdings and deductions. You will be entitled to four (4)
weeks of vacation per year.
5. Annual
Discretionary Bonus. You will be eligible for an annual discretionary bonus in accordance with the Company’s annual short-term
incentive plan and on the same terms and conditions as other similarly situated executives (the “Annual Discretionary Bonus”).
Your target bonus opportunity will be 100% of your base salary, with a maximum payout opportunity of 150% of your base salary, provided
that the actual amount of any Annual Discretionary Bonus, if any, shall be determined by the Compensation Committee, in its sole and
absolute discretion, based on Company results and individual performance against applicable performance metrics to be jointly developed
between you and the Company. For calendar year 2023, you shall be paid a guaranteed bonus of $150,000 (representing a 2023 bonus). Any
such Annual Discretionary Bonus payment, if any, will be subject to applicable taxes and withholdings and is generally paid within three
and a half (3.5) months following the end of the applicable calendar year. Subject to paragraph 11, notwithstanding the foregoing, to
be eligible to earn any such Annual Discretionary Bonus for a given calendar year, you must be actively employed, in good standing, and
not have given or received notice of termination of your employment as of the date such Annual Discretionary Bonus is paid. For the avoidance
of doubt, you will not be eligible to receive an Annual Discretionary Bonus if either you or the Company has given notice of termination
of your employment prior to the payment of such Annual Discretionary Bonus.
6. Initial
Equity Grant. Effective on or before October 13, 2023, the Company will award you an equity grant of 4,500,000 restricted stock
units (the “Time-vested RSUs”) priced per and issued in accordance with the terms of the Company’s Amended
2018 Long-Term Incentive Plan (the “2018 LTIP”), provided that vesting of the RSU’s will occur as to 8.3334
% on December 31, 2023 and as to 8.3333% every three months (i.e., on March 31, June 30, September 30 and December 31) thereafter over
a three (3) year period provided that the vesting of all Time-vested RSUs shall accelerate upon a Change of Control. In addition to the
Time-vested RSUs, and effective as of the Start Date, you will be issued a one-time equity grant consisting of 500,000 restricted
stock units of the Company (the “Initial Equity Grant”) under the 2018 LTIP, which will be immediately and fully vested.
The Initial Equity Grant (and not the Time-vested RSUs) shall be subject to the terms of a lock-up agreement (the “Lock-up Agreement”),
which will restrict you from any sale or transfer of the shares representing the Initial Equity Grant prior to the earlier of (i) your
cessation of employment for any reason; and (ii) September 13, 2026. You will be responsible for any and all tax liabilities incurred
by you in connection with the Initial Equity Grant but taxes may be withheld at your discretion from future equity grants upon vesting
in accordance with the 2018 LTIP.
| CHARLOTTE’S WEB, INC. |
| 700 TECH COURT, LOUISVILLE, CO 80002 |
7. Long
Term Incentive Program. You will be eligible to participate in the Company’s long-term incentive program on similar terms
and conditions as other similarly situated executives, as determined by the Compensation Committee, in its sole and absolute discretion.
Any and all equity awards shall in all respects be subject to the terms and conditions of the Company’s long-term incentive program,
the applicable grant and/or award document(s), and such other terms and conditions as the Board or Compensation Committee may impose
from time to time in its discretion. For certainty, the Initial Equity Grant is intended to serve as your long term incentive award package
for 2023, 2024 and 2025 and, subject to ongoing review, the Company does not currently intend to grant you additional long term incentive
awards during this period.
8. Benefits
and Perquisites. You will be eligible to participate in the employee benefit plans and programs that the Company may establish
and make generally available to the Company’s executives, subject to the terms and conditions of such plans and programs, which
are anticipated to include: (i) health, dental, and vision plans; (ii) disability and life insurance; (iii) 401(k) (with Company
match at 100% of first 3%); and (iv) access to free company products in accordance with Company plans and programs. The Company reserves
the right to amend, modify, suspend or terminate any of its benefit plans or programs at any time and for any reason, subject to applicable
law.
9. Withholdings.
All forms of compensation paid to you as an employee of the Company shall be subject to all applicable taxes and withholdings.
10. Restrictive
Covenant Agreement. Like all Company employees, you will be required, as a condition of your employment with the Company, to
sign and abide by the Company’s standard Employee Confidentiality, Non-Disclosure, Non-Compete and Conflict of Interest Agreement
(the “Restrictive Covenant Agreement”), the terms of which are incorporated herein by reference.
11. At-Will
Employment; Termination of Employment.
| (a) | Your
employment with the Company will be for no specified period of time. Rather, your employment
will be on an at-will basis, meaning that you or the Company may terminate the employment
relationship at any time, for any reason or no reason, with or without cause, and with or
without notice, provided, however, that you agree to provide the Company with not less than
ninety (90) days’ advance written notice of your intent to resign, during which period
you shall be expected to continue to perform your full duties and responsibilities with respect
to the Company, provided that the Company may, in its discretion, place you on garden leave
or terminate your employment early with no further payments owing, as determined in its discretion.
Although your job duties, compensation and benefits, as well as the Company’s personnel
policies and procedures, may change from time to time, the at-will nature of your employment
may only be changed by an express written agreement approved by the Board and signed by you
and a duly authorized representative of the Company (other than yourself). |
| CHARLOTTE’S WEB, INC. |
| 700 TECH COURT, LOUISVILLE, CO 80002 |
| (b) | (i)
If the Company terminates your employment without Cause or you terminate your employment
for Good Reason, the Company agrees to pay you, as severance (A) an amount equal to your
then-existing base salary for a period of twelve (12) months plus; (B) an amount equal to
the amount of the target bonus (as provided for in Section 5) for the year in which you are
terminated pro-rated to the date of termination, or (ii) if the Company (or
any successor thereof) terminates your employment without Cause within the ninety (90) day
period prior to the consummation of the Change of Control transaction or during the twelve
(12) month period immediately following a Change in Control, the Company agrees to pay you
as severance (A) an amount equal to your then-existing base salary for a period of twenty-four
(24) months plus; (B) an amount equal to the amount of the target bonus (provided for in
Section 5) for the year in which you are terminated pro-rated to the date of termination
(each such period under the preceding subparts (i) and (ii), as applicable, a “Severance
Period”), less applicable taxes and withholdings, to be paid in substantially equal
installments over the Severance Period pursuant to the Company’s normal payroll practices
(each such payment under the preceding subparts (i) and (ii), as applicable, a “Severance
Payment”). The Company’s obligation to provide you with the Severance Payment
is expressly conditioned upon your execution and delivery within forty-five (45) days after
presentation by the Company, and non-revocation within any time provided by the Company to
do so, of a release of all claims in favor of the Company in a form provided by to the Company,
and your strict compliance with the terms of your post-employment obligations, including
without limitation those set forth in the Restrictive Covenant Agreement. The Company shall
begin to make any Severance Payments required hereunder on the first administratively feasible
payroll date following the effective date of the Release. In the event that you do not timely
execute the Release as set forth above, or if you revoke such Release within any time provided
by the Company to do so, or in the event you violate the Restrictive Covenant Agreement,
you shall not be entitled to any Severance Payments, the Company shall have no further obligation
or liability under this Agreement, and you shall be required to immediately repay any Severance
Payments already paid, if any. |
| (c) | Immediately
upon the termination of your employment hereunder for any reason, you will be deemed to have
resigned from any and all directorships, committee memberships and any other offices or positions
you may hold with the Company and/or any affiliate thereof (if any), and, at the Company’s
request, you will provide the Company with a formal written resignation from any such directorships,
committee memberships and any other offices or positions, provided that receipt of such written
resignation will not be required for such deemed resignation to be effective. |
| (d) | “Cause”
means your (a) alcohol abuse or the use of controlled drugs (other than in accordance with
a physician’s orders); (b) repeated refusal, failure or inability to perform any of
your material duties hereunder (other than due to illness or Disability) and following notice
thereof; (c) your negligence or willful misconduct in the performance of your duties that
are damaging to the Company, its reputation, products, services, or customers; or material
failure to carry out the reasonable directives of the Board; (d) your breach of your obligations
under this Agreement or the Restrictive Covenant Agreement, or any act constituting a breach
of any common law or fiduciary obligation that you may owe to the Company; (e) conduct involving
dishonesty, fraud, embezzlement, corruption, theft or misuse of property; (f) commission
of any criminal offense constituting a felony, a misdemeanor or a crime involving moral turpitude,
whether or not in the course of your duties or resulting in a criminal indictment or conviction;
or (g) intentional, material violation of any policy of the Company. |
| CHARLOTTE’S WEB, INC. |
| 700 TECH COURT, LOUISVILLE, CO 80002 |
| (e) | “Change
in Control” means, for purposes of this Section 11, the occurrence of any of the
following events: (1) the acquisition by any person, entity or group (other than the Company
or any affiliate thereof) of ownership of more than 50% of the total fair market value or
total voting power of the equity interests of the Company (other than in connection with
a bona fide financing transaction); (2) a majority of members of the Board is replaced during
any 12-month period by directors whose appointment or election is not endorsed by a majority
of the members of the Board before the date of the appointment or election; or (3) the acquisition
by any person, entity or group (other than any affiliate of the Company) of all or substantially
all of the Company’s assets, provided in either case that the transaction is also a
“change in control event” as defined in Section 409A of the Code and the Treasury
Regulations thereunder. |
| (f) | For
purposes of this Agreement, “Good Reason” means any of the following events:
(i) a material reduction in the base salary or bonus opportunity or failure to pay any compensation
hereunder within thirty days of the due date therefor; (ii) a substantial reduction in your
responsibilities or duties; or (iii) a change in the geographic location of your principal
place of employment more than fifty (50) miles from the current principal place of employment |
12. Governing
Law. This offer letter shall be governed by the laws of the State of Colorado, without giving effect to any principles thereof
relating to conflicts of laws.
13. Representations.
By accepting this offer, you represent that you are able to accept this job and carry out the work that it would involve without breach
of any legal restrictions on your activities, such as non-competition, non-solicitation, or other work-related restrictions imposed by
a current or former employer. You also represent that you will inform the Company about any such restrictions and provide the Company
with as much information about them as possible, including any agreements between you and any current or former employer, or other entities
to whom you provided services, describing such restrictions to your activities. You further confirm that you will not remove or take
any documents or proprietary data or materials of any kind, electronic or otherwise, with you from your current or former employer to
the Company without written authorization from your current or former employer, nor will you use or disclose any such confidential information
during the course and scope of your employment with the Company. If you have any questions about the ownership of a particular document
or other information, you should discuss such questions with your former employer (or other applicable third-party) before removing or
copying the documents or information.
14. Entire
Agreement. This offer letter, together with the Restrictive Covenant Agreement, sets forth the entire terms of your employment
and supersedes any and all prior understandings, whether written or oral, relating to the terms of your employment; provided,
however, nothing in this offer letter or the Restrictive Covenant Agreement shall impair your obligations or the rights of the
Company under any confidentiality, non-disclosure, non-competition, non-solicitation, trade secret, and/or assignment of inventions and
other intellectual property provisions entered into between you and the Company. The parties hereto acknowledge that in entering into
this offer letter, neither party has relied on any representation or undertaking (whether oral or in writing) except as expressly set
forth in this offer letter and the Restrictive Covenant Agreement. This offer letter may only be amended by a written agreement, approved
by the Board and signed by both you and a duly authorized representative of the Company (other than yourself).
| CHARLOTTE’S WEB, INC. |
| 700 TECH COURT, LOUISVILLE, CO 80002 |
15. Successors
and Assigns. Your rights and obligations under this offer letter are personal and may not be assigned by you. The Company, however,
may assign its rights and obligations under this offer letter at any time, without your consent and without notice to you, to any successor
or affiliate of the Company. In addition, this offer letter shall be binding upon and inure to the benefit of the heirs, successors,
and permitted assigns of both you and the Company.
If
this offer letter correctly sets forth the terms under which you will be employed by the Company, please sign in the space provided below
and return a signed copy of this offer letter and the Restrictive Covenant to me.
We
are all extremely excited to have you join Charlotte’s Web in this new capacity and look forward to working with you as we build
Charlotte’s Web into one of the world’s premier companies. Please feel free to contact me if you have any questions about
this offer or the benefits described above.
Sincerely,
_/s/ John Held_
John Held, Chair
On behalf of Charlotte’s
Web Holdings, Inc.
Accepted and Agreed to as of the
date first above written:
_/s/ William Morachnick_
William Morachnick
Date: September 12, 2023
Exhibit 99.1
PRESS RELEASE
Charlotte's Web Announces Appointment of Bill Morachnick
as Chief Executive Officer
Provides Update on Majority Voting Policy Process
LOUISVILLE, CO. - September 13, 2023
- (TSX:CWEB) (OTCQX:CWBHF) Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company") is pleased
to announce the appointment of William (Bill) Morachnick who has joined the Company as its Chief Executive Officer. Mr. Morachnick has
also been appointed to the Company’s Board of Directors as a non-independent director. He replaces CEO Jacques Tortoroli who has
elected to resign from his roles at Charlotte’s Web.
Mr. Morachnick is a global business executive
with a track record of building premium, differentiated products and brands across multiple channels
throughout the world and across a broad range of product categories. He is a proven entrepreneurial professional skilled in taking companies
global and creating and managing strategies for consistent and sustained growth.
Mr. Morachnick was President at Santa
Fe Reynolds Tobacco International (SFRTI) GmbH in Zurich, Switzerland, an international business division of Reynolds American, Inc. from
2006 to 2016. He took SFRTI from a start-up to a highly profitable organization, managing several hundred employees and a network of importers/distributors
operating in Europe, Asia, and the Middle East. SFRTI was acquired by Japan Tobacco Group in 2016 for $5 billion. Mr. Morachnick led the
subsequent integration of the combined companies as Chief Executive Officer and Chairman based in Tokyo, Japan for two years before returning
to the U.S. in 2018.
Since returning to the U.S. he has served
as an executive advisor or board member for several companies seeking to launch and/or expand their businesses in the U.S. and overseas
markets.
Mr. Morachnick has a Masters of Business
Administration from the Thunderbird School of Global Management and is an Adjunct Professor of Global Business Strategy at the University
of Nevada Las Vegas.
“Bill
has an accomplished career building businesses in multiple categories,” said John Held, Chairman of Charlotte’s Web. “With
his proven operational expertise Bill is well-suited to take the reins to lead the
Charlotte’s Web team through the next phase of the Company’s growth opportunities.”
The
Company extends its gratitude to Mr. Tortoroli for his years of valued contributions.
“Jacques served on the Company’s Board since November of 2019, and as CEO since late 2021 in a difficult environment
devoid of regulatory oversight and clarity. Under his leadership as CEO, Jacques streamlined the organization, reduced the cash burn,
and recapitalized the Company through a strategic $57 million investment from BAT (LSE: BATS and NYSE: BTI) via
a convertible loan. He was instrumental in the successful launch of ReCreate™, the world’s first NSF
certified for Sport® broad spectrum CBD, which is the official CBD of Major League Baseball©. We are grateful to Jacques for
his valuable contributions,” said Mr. Held.
Board of Directors Majority Voting
Policy Decision
As disclosed in the Company’s press
release of June 16, 2023, each of John Held, Thomas Lardieri, Alicia Morga and Jacques Tortoroli did not receive the requisite majority
of votes at Company’s June 15, 2023 annual meeting of shareholders. In accordance with the Company’s Majority Voting Policy
(the “Policy”), these directors tendered offers to resign, which the Board referred to a committee of independent Board members
(the “Committee”) for consideration and to make a recommendation to the Board as to whether to accept the offers to resign.
The Committee carefully considered all
relevant factors and determined that there are exceptional circumstances that warrant the rejection of the offers to resign. The majority
voting objectives of the Toronto Stock Exchange and the Policy are the continuous improvement of corporate governance standards through
provision of a meaningful means for security holders to hold individual directors accountable. The withhold campaign launched by the activist
shareholders, however, was not aligned with those objectives. The withhold campaign was instead designed to circumvent the procedures
and processes in place to allow shareholders to vote based on full and complete disclosure with respect to director nominees and to make
an informed decision with respect to the election of directors to the Board. Based on these principles, the Committee recommended the
Board reject the offers to resign. The Board considered the Committee’s recommendation along with other relevant factors, including
the subject directors’ significant past contributions to the Board, expertise, and integral role in stewarding the Company, and
determined to reject the offers to resign.
The Board is focused on effective corporate
governance and on maximizing value for all Company stakeholders and believes that the current Board composition aligns with this objective.
In accordance with its mandate, the Company’s Corporate Governance and Nominating Committee regularly considers potential candidates
to be considered for the Board.
About Charlotte’s Web Holdings, Inc.
Charlotte's
Web Holdings, Inc., a Certified B Corporation headquartered in Louisville, Colorado, is the market leader in innovative hemp extract
wellness products under a family of brands that includes Charlotte's Web™, ReCreate™, CBD Medic™, and CBD Clinic™.
Charlotte’s Web whole-plant CBD extracts come in full-spectrum and broad-spectrum options, including ReCreate™
by Charlotte’s Web, broad-spectrum CBD certified NSF for Sport®. ReCreate is the official
CBD of Major League Baseball©, Angel City Football Club and the Premier Lacrosse League. Charlotte's Web branded premium quality
products start with proprietary hemp genetics that are North American farm-grown using organic and regenerative cultivation practices.
The Company's hemp extracts have naturally occurring botanical compounds including cannabidiol ("CBD"), CBC, CBG, terpenes,
flavonoids, and other beneficial compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products) CBD
gummies (sleep, calming, exercise recovery, immunity), CBD capsules, CBD topical creams and lotions, as well as CBD pet products for
dogs. Through its substantially vertically integrated business model, Charlotte’s Web maintains stringent control over product
quality and consistency with analytic testing from soil to shelf for quality assurance. Charlotte’s Web products are distributed
to retailers and health care practitioners throughout the U.S.A, and online through the Company's website at www.charlottesweb.com.
Shares of Charlotte's Web trade on the Toronto Stock Exchange
(TSX) under the symbol “CWEB” and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol “CWBHF”.
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to Charlotte's Web investor news.
© Major League Baseball trademarks
and copyrights are used with permission of Major League Baseball. Visit MLB.com.
Forward-Looking Information
Certain information in this news release
constitutes forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively,
"forward-looking information"). In some cases, but not necessarily in all cases, forward looking information can be identified
by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect",
"is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes",
"anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might", "will" or "will
be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances contain forward-looking information.
Statements containing forward-looking
information are not historical facts, but instead represent management's current expectations, estimates and projections regarding the
future of our business, future plans, strategies, projections, anticipated events and trends, the economy and other future conditions.
Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable
by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors
that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied
by such statements containing forward-looking information. Although these statements containing forward-looking information are based
on assumptions the Company considers to be reasonable based on the information available on the date such statements are made, such statements
are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking information.
The material factors and assumptions used
to develop the forward-looking information herein include, but are not limited to, international and political considerations; regulatory
changes; and the factors discussed throughout the "Risk Factors" section of the Company's most recently filed annual information
form available on www.SEDAR.com and in the Company's most recently filed Annual Report on Form 10-K
and quarterly report on Form 10-Q as amended, and other filings with the Securities and Exchange Commission available on www.SEC.gov.
Except as required by applicable securities laws, the Company undertakes no obligation to publicly update any forward-looking information,
whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
For more information:
Shareholder Contact:
Cory Pala | Director of Investor Relations
(720) 484-8930
Cory.Pala@CharlottesWeb.com
Charlotte’s Web Holdings,
Inc.
THE WORLD’S MOST TRUSTED
HEMP EXTRACT
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