Item 2. Properties
Item 2. Properties
The following table sets forth the Company’s principal physical properties.
Material Properties
Type Location
Leased / Owned
Manufacturing, Production, Research and
Development
700 Tech Court, Louisville, Colorado
Leased
Office 1801 California Street, Denver, Colorado
Sublease
Office 1600 Pearl Street, Boulder, Colorado*
Sublease
*As of June 1, 2021, the Company executed a sublease agreement to cover its obligations concerning the 1600 Pearl Street property and moved its headquarters to the 1801 California Street property.
Facilities Overview
As at the date hereof, the Company operates several Colorado-based facilities to house administrative work, processing, R&D, distribution, horticulture, breeding and greenhouse space. In 2019, the Company leased a 136,610-square-foot industrial building located at 700 Tech Court in the Colorado Technology Center in Louisville, Colorado. This new cGMP facility, the LOFT, enables the Company for production, distribution, quality control and R&D expansion. This facility was used for supply chain activities commencing in the second quarter of 2020 and manufacturing and operations commencing in the third quarter of 2020.
Through its subsidiaries, the Company has entered into material lease agreements related to its operations. Those agreements are discussed below.
700 Tech Court
On May 7, 2019, EJ 700 Tech Court LLC entered into a lease agreement with Charlotte’s Web, Inc. for a period of 126 months commencing on September 1, 2019 for the premises located at the LOFT at 700 Tech Court, Louisville, Colorado (the “Tech Court Lease Agreement”), a cGMP facility. Following a lease abatement period for the first six months of no monthly rent payments, the monthly base rent for the remainder of the year of the term of the lease was $90,956.25 per month. The foregoing description is qualified in its entirety by reference to the Tech Court Lease Agreement
1801 California Street
On May 11, 2021, Molson Coors Beverage Company (“Molson Coors”), as tenant and sublandlord, and Charlotte’s Web, Inc., as subtenant, entered in a sublease agreement covering and describing the premises known as the entire 47th floor of a building located at 1801 California Street in Denver, Colorado comprising 22,389 rentable square feet (the “1801 California Sublease”), leased by Molson Coors from BOP 1801 California Street II LLC and BPREP 1801 California Street JV, LLC (collectively, as the landlord), in that certain Lease of Office Space agreement dated November 26, 2014, as amended from time-to-time. Pursuant to the terms of the 1801 California Sublease, the term of the sublease was to begin on July 1, 2021 and end on March 31, 2027. The 1801 California Sublease contained a lease abatement provision for the first seven months with no rent due, and a monthly base rent for the remainder of the first 12 months of the lease term of $37,315.00. The foregoing description is qualified in its entirety by reference to the 1801 California Sublease.
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On June 15, 2021, Molson Coors and the Company entered into that certain First Amendment to Sublease Agreement (the “First Amendment to the 1801 California Sublease”), whereby the Company agreed to sublease the 48th floor of 1801 California Street given that the 47th floor as contemplated in the 1801 California Sublease was unavailable to the Company. The First Amendment to the 1801 California Sublease contained same rent abatement term for the first seven months of the lease term, and thereafter included a monthly installment for the remainder of the first year of the lease of $36,811.67. The foregoing description is qualified in its entirety by reference to the First Amendment to the1801 California Sublease.
1600 Pearl Street
On May 31, 2019, Boulder Brands USA, Inc. (the “Sublandlord”), entered into a sublease agreement with Charlotte’s Web, Inc. for certain office space in the office building located at 1600 Pearl Street, Boulder, Colorado, which the Sublandlord had leased from 1600 Pearl Street, LLC, as landlord pursuant to that certain Office Lease dated May 7, 2014, as amended from time-to-time. Charlotte’s Web, Inc., as subtenant, agreed to sublease 42,191 of rentable square feet, beginning with 17,598 rentable square feet in a portion of the building known as Suite 300 commencing on June 1, 2019 and 24,593 rentable square feet commencing on January 1, 2020 (or the date that was 15 days following the date the Sublandlord vacated such space) consisting of 9,566 rentable square feet in a portion of the building known as Suite 100 and 15,027 rentable square feet in a portion of the building known as the Basement/Garden Level through August 31, 2025 (the “1600 Pearl Street Sublease Agreement”). The monthly base rent for the first 12 months of the term of the lease was $50,281.64 for Suite 300 (with a four-month lease abatement period with $0 monthly rent during months six through ten), with the monthly base rent rising to $84,002.41 upon commencement of the sublease for the additional 24,593 square feet. The foregoing description is qualified in its entirety by reference to the 1600 Pearl Street Sublease Agreement.
On August 30, 2019, Charlotte’s Web, Inc. and the Sublandlord entered into the First Amendment to the Sublease (the “1600 Pearl Street First Amendment”), whereby Charlotte’s Web, Inc. agreed to accept possession of the Basement/Garden Level portion of the building beginning September 1, 2019 and the Sublandlord confirmed that it would make Suite 100 available for possession by January 1, 2020. Under the terms of the 1600 Pearl Street First Amendment, commencing with possession of the Basement/Garden Level beginning September 1, 2019, the monthly base rent through December 31, 2019 increased to $69,390.98 per month. Thereafter, beginning on January 1, 2020, and assuming the availability of Suite 100, the monthly base rent was to increase to $84,002.41 through September 30, 2020. The foregoing description is qualified in its entirety by reference to the 1600 Pearl Street First Amendment.
On May 12, 2021, Charlotte’s Web, Inc. and Outside Interactive, Inc. (“Outside Interactive”) entered into a sublease agreement whereby Charlotte’s Web, Inc. agreed to sublease to Outside Interactive, as subtenant, the entirety of the 42,191 of rentable square feet (consisting of Suite 300, Suite 100, and the Basement/Garden Level) under the 1600 Pearl Street Sublease Agreement commencing on June 1, 2021 and expiring on August 31, 2025 (the “Outside Interactive Sublease Agreement”). The monthly base rent for the first ten months under the Outside Interactive Sublease Agreement was $84,311.68 with a rent abatement period during the first seven months of the lease providing for $0 monthly rent. Upon receiving the landlord’s consent to the sublease, Outside Interactive delivered to Charlotte’s Web, Inc. an unconditional, irrevocable, and transferrable letter of credit in the amount of $500,000 to secure Outside Interactive’s full performance of its obligations under the Outside Interactive Sublease Agreement, naming Charlotte’s Web, Inc. as beneficiary. The foregoing description is qualified in its entirety by reference to the Outside Interactive Sublease Agreement.
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