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)
September 15,
2020
cbdMD, INC.
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(Exact name of registrant as specified in its charter)
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North Carolina
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001-38299
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47-3414576
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(State or other jurisdiction of incorporation or
organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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8845 Red Oak Blvd, Charlotte, NC 28217
(Address of principal executive offices)(Zip Code)
Registrant's
telephone number, including area code: (704) 445-3060
_______________________________________
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(Former name or former address, if changed since last
report)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction 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
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Trading Symbol(s)
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Name of each exchange on which registered
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common
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YCBD
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NYSE
American
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8%
Series A Cumulative Convertible Preferred Stock
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YCBD PR
A
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NYSE
American
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Indicate by check mark whether the registrant is an emerging growth
company as defined in 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 ☑
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If an
emerging growth company, indicate by checkmark 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 15, 2020, with an effective date of October 1, 2020, the
Company entered into an Executive Employment Agreement with T.
Ronan Kennedy pursuant to which Mr. Kennedy was hired to serve as
the Company’s Chief Financial Officer. Biographical
information for Mr. Kennedy is as follows:
Mr.
Kennedy, 41, has served as Chief Financial Officer of AMV Holdings,
LLC, a Mooresville, NC-based vaping and e-cigarette retailer,
manufacturer and wholesaler since 2015. During his tenure, AMV grew
from a 9-store regional chain to a platform of over 100 U.S.
locations and a growing European footprint. Since the passing of
the Farm Bill in late 2018, Mr. Kennedy assisted AMV expand into
the manufacturing and retailing of CBD products. Prior to his role
at AMV, Mr. Kennedy spent 9 years at Meriturn Partners, LLC, a
Raleigh, NC-based middle-market private equity firm focused on
acquiring and advising middle-market companies, where he was a
Principal. In his role with Meriturn Partners, LLC, Mr. Kennedy has
led all facets of transactions, including due diligence, financial
analysis and capital raising and in 2014 helped lead
Meriturn’s original acquisition of AMV’s predecessor.
Since 2014 Mr. Kennedy has also provided independent advisory and
consulting services with select organizations and his engagements
have included leading the financial analysis on sale-side
engagements, assistance in negotiating a $40 million sale to a
strategic buyer, advising secured creditors through restructuring
of a restaurant group, and serving as a co-trustee for a specialty
pharmaceutical company. From 2001 to 2004 Mr. Kennedy held
engineering and manufacturing roles with Visteon Corporation, a $16
billion Tier 1 automotive supplier. Mr. Kennedy received a B.S. in
Mechanical Engineering from Virginia Polytechnic Institute &
State University and a M.B.A. from the Fuqua School of Business,
Duke University. Since 2019 Mr. Kennedy has served on the Board of
Directors of Nexus Capital Real Estate Inc., a Rochester, NY-based
real estate investment firm.
The
term of Mr. Kennedy’s Executive Employment Agreement is one
year, and may be renewed by us for additional one year terms upon
60 days prior notice to Mr. Kennedy. As compensation for his
services, we agreed to pay him an annual base salary of $250,000,
and he is entitled to received a performance bonus, payable in a
combination of cash and awards of common stock, and the performance
bonus will be based upon his relative achievement of annual
performance goals established by our board of directors upon
recommendation of the compensation committee, with input from
senior executive management. Mr. Kennedy is also entitled to a
discretion bonus and he is entitled to participate in all benefit
programs we offer our employees, reimbursement for business
expenses and four weeks of annual paid vacation.
As additional compensation on the effective date
of the agreement we will grant him (i) a restricted stock
award of an aggregate of 50,000 shares of our common stock, and
(ii) 10 year stock options to purchase 350,000 shares of our common
stock, vesting subject to continued employment as follows:
(A) 100,000 shares at an
exercise price of $3.50 per share shall vest in equal amounts over
a three year period on October 1, 2021, October 1, 2022 and October
1, 2023, respectively; (B) an additional 125,000 shares at an
exercise price of $5.00 per share shall vest in equal amounts over
a three year period on October 1, 2021, October 1, 2022 and October
1, 2023, respectively; and (B) an additional 125,000 shares at an
exercise price of $6.50 per share shall vest in equal amounts over
a three year period on October 1, 2021, October 1, 2022 and October
1, 2023, respectively.
The agreement may terminated for cause, upon his
death or disability, or by us without cause. If we terminate the
agreement for cause, or if it terminates upon Mr. Kennedy’s
death, or if he voluntarily terminates the agreement, neither Mr.
Kennedy nor his estate (as the case may be) is entitled to any
severance or other benefits following the date of termination. If
we should terminate the agreement without cause, we are obligated
to continue to pay to Mr. Kennedy his base salary for the
balance of the term of this agreement; provided that, in no event
shall the remaining base salary to which he would be entitled to be
for less than six months regardless of when the term ends. If at
any time during the term, Mr. Kennedy’s employment with us is
terminated by us not for cause within the lesser of the remaining
term or one year after the Change of Control (as defined in the
agreement) or in the 90 days prior to the Change of Control upon
the request of the acquiror, we are obligated to him an amount
equal to the greater of (i) 1.5 multiplied by his then base salary
or (ii) all of his base salary remaining to be paid during the
initial term, payable in a lump-sum payment on the termination date
of his employment hereunder but not earlier than the closing of the
Change of Control. The agreement also contains customary
confidentiality, non-disclosure and indemnification
provisions.
On September 16,
2020 Mark Elliott entered into a Separation and General Release
(the “Separation Agreement”) with the cbdMD, Inc. (the
“Company”) and its subsidiaries resigning as Chief
Financial Officer and Chief Operating Officer and all other
capacities, effective October 1, 2020. His resignation was pursuant
to Section 6(d) of his Employment Agreement dated September 6, 2018
(the “Elliott Employment Agreement”). Under the
Separation Agreement the Company has agreed to provide Mr. Elliott
with the following benefits: (i) in exchange for transition
services to be provided by Mr. Elliott from October 1, 2020 through
February 28, 2021, Mr. Elliott will be paid through December 31,
2021 in accordance with the Company's regular bi-weekly payroll
practices, his current salary, along with benefits;
(ii) to the extent not
already vested, all options and restricted stock previously issued
to Mr. Elliott shall fully vest and the Company will extend the
option exercise period and provide for a cashless exercise of such
options; and (iii) upon the effectiveness of the Separation
Agreement, in exchange for the transition services being offered by
Employee from October 1, 2020 through February 28, 2021, Mr.
Elliott shall receive options to purchase 300,000 shares of the
Company’s common stock, exercisable at $2.60 per share for a
period of 3 years on a cashless basis. Mr. Elliott has agreed to
release Company from the provisions contained in the Elliott
Employment Agreement, provided that Mr. Elliott and the Company
agree that provisions relating to confidential information shall
remain full force and effect. The Company has also agreed to
release Mr. Elliott from his non-competition obligations under the
Elliott Employment Agreement. In consideration for the compensation
payable under the Separation Agreement Mr. Elliott has also agreed
to release the Company, its shareholders, directors, officers,
employees and agents from all claims, whether known or unknown,
related to his employment. The agreement also contains customary
non-disclosure and non-disparagement
provisions.
The
description of the terms and conditions of each of the Executive
Employment Agreement with Mr. Kennedy and the Separation Agreement
with Mr. Elliott is qualified in its entirety by reference to the
agreement which is filed as Exhibit 10.1 and Exhibit 10.2,
respectively, to this report.
Item
9.01
Financial
Statements and Exhibits.
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Incorporated by Reference
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Filed or
Furnished
Herewith
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No.
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Exhibit Description
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Form
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Date Filed
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Number
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Executive
Employment dated September 15, 2020
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Filed
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Separation
Agreement dated September 16, 2020
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Filed
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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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cbdMD,
Inc.
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Date:
September 18, 2020
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By:
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/s/
Marty Sumichrast
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Marty
Sumichrast, co-Chief Executive Officer
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