Item 1.01 Entry into a Material Definitive Agreement.
On February 24, 2021, a subsidiary of Acreage Holdings, Inc. (the "Company"),
High Street Capital Partners, LLC ("HSCP") entered into a Stock Purchase
Agreement (the "Agreement") with RWB Florida LLC (the "Buyer") and Red, White &
Bloom Brands Inc. (the "Parent") (CSE: RWB) (OTCQX: RWBYF), to sell all of the
issued and outstanding shares of common stock of Acreage Florida, Inc. ("Acreage
Florida") for an aggregate purchase price of $60.0 million. Acreage Florida is
licensed to operate medical marijuana dispensaries, a processing facility, and a
cultivation facility in the state of Florida. The deal also includes the sale of
property in Sanderson, Florida (the "Transaction").
As consideration for the Transaction, the Buyer will (i) pay to HSCP an initial
$5.0 million upon execution of the Agreement; (ii) pay to HSCP an additional
$20.0 million upon closing of the transaction; (iii) issue to HSCP $7.0 million
worth of common shares of the Parent, which shares shall be subject to a
twelve-month lock-up period during which shares shall be released from lock-up
in equal increments starting on the sixth month of the lock-up period; (iv)
issue to HSCP a promissory note in the principal amount of $10.0 million due
approximately seven months from the closing date; and (v) issue to HSCP an
additional promissory note in the principal amount of $18.0 million due
approximately thirteen months from the closing date.
The closing of the Transaction is expected to occur during the second quarter of
2021 and is subject to customary closing conditions including the procurement of
all necessary approvals for the transfer to the Buyer of the Florida license for
the operation of the medical marijuana businesses.
On February 25, 2021, the Company issued a news release announcing the
Transaction, a copy of which is furnished with this Current Report on Form 8-K
as Exhibit 99.1.
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Appointment of New Chief Financial Officer
On February 23, 2021, the Company announced that Glen Leibowitz, Acreage's Chief
Financial Officer, will be leaving the Company and that Steve Goertz will be
appointed as the Chief Financial Officer, with the transition effective April 2,
2021.
Mr. Goertz previously served as Chief Financial Officer of sgsco, a private
equity owned global marketing services organization, from 2018 to 2020, where he
led the restructuring of the finance function and participated in the
rationalization of an organization built through acquisitions. Prior to that,
Mr. Goertz was the Chief Financial Officer of goeasy Ltd., a Toronto Stock
Exchange listed consumer finance company, from 2009 to 2018, where he co-led the
transformation of the business from a hard goods retailer to a leading non-bank
financial services organization. In this role, he was also responsible for the
development of systems and the establishment of a risk management discipline and
successfully transformed the capital structure through a series of equity and
debt offering. Mr. Goertz also served in various finance and accounting roles at
Sobeys, Maple Leaf Foods, and Deloitte.
Prior to joining Acreage, Mr. Goertz gained considerable cannabis capital
markets experience having spent the past 14 months working with Bespoke Capital
Acquisition Corp, a special purpose acquisition corporation, focused on the
cannabis industry in the U.S. and globally.
On February 15, 2021, the Company entered into an offer letter (the "Offer
Letter") with Mr. Goertz with respect to his employment as Vice President of
Finance. The Company expects this Offer Letter to form the basis of Mr. Goertz's
compensation in the role of Chief Financial Officer as well, and does not
currently expect any changes to the compensation package discussed herein upon
the effective date of the transition to the Chief Financial Officer role. The
Offer Letter provides for Mr. Goertz to receive: (a) an annual base salary of
$350,000; (b) an initial long-term equity award (the "Equity Award") under the
Acreage Holdings, Inc. Annual Omnibus Equity Incentive Plan consisting of (i)
15,901 restricted share units ("New RSUs") that will be settled in accordance
with the terms of the Equity Award for class E subordinate voting shares of the
Company (the "Fixed Shares"), (ii) 50,962 restricted share units ("Floating
RSUs") that will be settled in accordance with the terms of the Equity Award for
class D subordinate voting shares of the Company (the "Floating Shares"), (iii)
23,665 options ("Fixed Options") to acquire Fixed Shares, and (iv) 107,456
options ("Floating Options") to acquire Floating Shares, with each of the New
RSUs, Floating RSUs, Fixed Options and Floating Options to vest in one-third
increments on the first, second and third anniversary of the date of the grant;
(c) a one-time equity grant of (i) 51,111 New RSUs and (ii) 172,698 Floating
Options (the "Initial Award"), with the Initial Award subject to
performance-based vesting under which 33 1/3% of each of the class of securities
issued pursuant to Initial Award will vest if the Board determines that the
Company achieved at least 90% of the Consolidated Adjusted EBITDA Target in
respect of each of the fiscal years 2021-2023; and (d) eligibility for an annual
cash bonus award in an amount to be determined by the Board, which can be equal
to up to 150% of the annual base salary. The Offer Letter also provides
severance benefits equal to twelve months of Mr. Goertz's base salary following
his termination by the Company without cause.
There are no arrangements or understandings with any other person pursuant to
which Mr. Goertz will be appointed as the Company's Chief Financial Officer, and
there are no family relationships between Mr. Goertz and any director or
executive officer of the Company. Additionally, there are no transactions
between Mr. Goertz and the Company that would be required to be reported under
Item 404(a) of Regulation S-K.
On February 23, 2021, the Company issued a news release announcing Mr.
Leibowitz's impending departure and Mr. Goertz's appointment, a copy of which is
furnished with this Current Report on Form 8-K as Exhibit 99.2. In addition, a
copy of the Offer Letter is filed with this report as Exhibit 10.1. The
foregoing description of the terms of the Offer Letter is a summary of select
terms, is not complete, and is qualified in its entirety by reference to the
full text thereof, which is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is filed as part of this Current
Report on Form 8-K.
Exhibit No. Description of Exhibit
10.1 Offer of Employment Letter, dated February 15, 2021, by and
between Acreage Holdings, Inc. and Steve Goertz.
99.1 Press release of Acreage Holdings, Inc., related to the Sale of
Acreage Florida, dated February 25, 2021 .
99.2 Press release of Acreage Holdings, Inc. related to the appointment
of Steve Goertz, dated February 23, 2021.
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