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): March 5, 2019
GROW SOLUTIONS
HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
| Nevada | 000-29301 | 87-0575118 | ||
|
(State or Other Jurisdiction
of Incorporation) |
(Commission
File Number) |
(I.R.S. Employer
Identification Number) |
PO Box 2869
Jackson, WY 83001
(Address of Principal Executive Offices) (Zip Code)
(360) 612-0180
(Registrant’s telephone number, including area code)
12410 SE 282 nd Avenue, Unit C
Boring, Oregon 97009
(Former Name or 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:
| ☐ | 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)) |
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 1.01 Entry into a Material Definitive Agreement.
Securities Exchange Agreement
On March 5, 2019, Grow Solutions Holdings, Inc. (the “ Company ”) entered into a securities exchange agreement (the “ Securities Exchange Agreement ”) with the shareholders of Pure Roots Holding, Ltd., representing 100% of the outstanding shares thereof (collectively the “ Seller ”), and Pure Roots Holding, Ltd., a Wyoming corporation (“ PRH ”), whereby the Company purchased from the Seller 100% of the issued and outstanding restricted common stock of PRH in exchange for 85,000 shares of the Company’s newly created Series B Preferred Stock (the “ Series B Preferred Stock ”).
The closing occurred following the satisfaction of customary closing conditions.
The above description of the Securities Exchange Agreement does not purport to be complete and is qualified in its entirety by the full text of the Securities Exchange Agreement, the form of which is attached hereto as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
On March 5, 2019, the Company issued to the shareholders of PRH, 85,000 restricted shares of the Company’s Series B Preferred Stock, par value $0.001 per share (the Series B Preferred Stock, the “ Securities ”) in exchange for 100% of the outstanding shares of PRH, as per the terms of that certain Securities Exchange Agreement dated March 5,2019.
Neither the Securities issued pursuant to the Securities Exchange Agreement nor the Securities issued to the shareholders of PRH have been registered under the Securities Act of 1933, as amended (the “Securities Act”) and are “restricted securities” as that term is defined by Rule 144 promulgated under the Securities Act.
The issuance of the shares set forth herein was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act for the offer and sale of securities not involving any public offering. The Company’s reliance upon Section 4(a)(2) of the Securities Act in issuing the shares was based upon the following factors: (a) the issuance of the shares were in isolated private transactions by us which did not involve a public offering; (b) the number of investors; (c) there were no subsequent or contemporaneous public offerings of the shares by the Company; (d) the shares were not broken down into smaller denominations; (e) the negotiations for the issuance of the shares took place directly between the individual investors and the Company; and (f) the number of non-accredited investors.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 1.01 and Item 3.02 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.
On March 5, 2019, the Secretary of State of the State of Nevada delivered confirmation of the effective filing of the Company’s Certificate of Amendment to its Certificate of Incorporation (the “ Amendment to Certificate ”), which established 100,000 shares of the Company’s Series B Preferred Stock, having such designations, rights and preferences as set forth therein, as determined by the Company’s Board of Directors in its sole discretion, in accordance with the Company’s Certificate of Incorporation and bylaws.
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The shares of Series B Preferred Stock have a stated value of $1,000 per share (the “ Series B Stated Value ”) and are convertible into 2,833 shares of Common Stock (the “ Conversion Ratio ”). The holders of shares of the Series B Preferred Stock shall be entitled to receive dividends out of any assets legally available, to the extent permitted by Nevada law, at an annual rate equal to 8% of the Series B Stated Value of such shares of Series B Preferred Stock, and shall accrue from the date of issuance of such shares of Series B Preferred Stock, payable quarterly in Common Stock valued at the closing trade price per share on the last trading day of the calendar quarter.
The holders of Series B Preferred Stock rank senior to the Company’s Common Stock and Series A preferred Stock and will vote together with the holders of the Company’s Common Stock on an as-converted basis on each matter submitted to a vote of holders of Common Stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a holder shall be equal to one (1) vote for each share of Common Stock into which such holder’s outstanding shares of Series B Preferred Stock may be converted. Each holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws.
The foregoing descriptions of the Amendment to Certificate does not purport to be complete and is subject to, and qualified in its entirety by the Amendment to Certificate, a copy of which is attached as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.01 Changes in Control of Registrant.
On March 11, 2019, the shareholders of PRH, acquired control of 85,000 shares of the Series B Preferred Stock of the Company, representing 85% of the Company’s total issued and outstanding Series B Preferred Stock, in exchange for 100% of the issued and outstanding shares of PRH, per the terms of a Securities Exchange Agreement by and between the Company and PRH.
There are no arrangements or understandings between the Company, and PRH, and/or their respective associates with respect to the election of directors or other matters.
On March 12, 2019, PRH, distributed the shares of Series B Preferred Stock to its shareholders.
On March 5, 2019, Chad Fischl, acquired control of 51 shares of the Series A Preferred Stock of the Company, representing 100% of the Company’s total issued and outstanding Series A Preferred Stock, from TCA Share Holdings, LLC a Limited Liability Company, in exchange for agreeing to become the President, Chief Executive Officer and Director of the Company.
The following table sets forth, as of March 5, 2019, the beneficial ownership of the outstanding common stock by: (i) any holder of more than five (5%) percent; (ii) each of our executive officers and directors; and (iii) our directors and executive officers as a group. Unless otherwise indicated, each of the stockholders named in the table below has sole voting and dispositive power with respect to such shares of common stock. As of the date of this Current Report, there are 91,697,617 shares of common stock 51 shares of Series A Preferred Stock and 85,000 shares of the Series B Preferred Stock issued and outstanding.
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| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percentage of Beneficial Ownership (2) | ||||
| Directors and Officers: | ||||||
|
Chad Fischl 628 6 th Street, East Saskatoon, SK S7H 1C2 |
51 Series A Preferred Shares 4,745 Series B Preferred Shares |
60 | % | |||
|
Bailey Fischl 628 6 th Street, East Saskatoon, SK S7H 1C2 |
4,746 Series B Preferred Shares | 9.9 | % | |||
|
Clara Fischl
49 Guy Drive, Prince Albert, SK S6X 0A3 |
9,421 Series B Preferred Shares | 9.9 | % | |||
|
Carla Blampin
Box 525, Big River, SK S0J 0E0 |
9,421 Series B Preferred Shares | 9.9 | % | |||
|
Sharon Branconnier
30736 Burgess Ave, Abbotsford, B.C. V4X 2A6 |
9,420 Series B Preferred Shares | 9.9 | % | |||
|
Jolene Branonnier
3044-240 St. Langley, B.C. V2Z 1N3 |
9,421 Series B Preferred Shares | 9.9 | % | |||
|
Norman James Payton
1561 Monte Creek Rd., Monte Creek B.C. V02 2MO |
9,421 Series B Preferred Shares | 9.9 | % | |||
|
Ismail Abdul Fattah Suite 1105 510 6 th Ave, S.E. Calgary AB T2G 1I7 |
7,084 Series B Preferred Shares | 9.9 | % | |||
|
Ahmad Abdel Latif Yassine
P.O. Box 41 Chatura Bekka Lebanon, Bekaa |
7,083 Series B Preferred Shares | 9.9 | % | |||
|
Adrian LaChance
6245 Cronquist Dr., T4N 1 E2 |
9,887 Series B Preferred Shares | 9.9 | % | |||
|
Emily LaChance
125 Caribou Crescent, T4P 0V6 |
2,175 Series B Preferred Shares | 9.9 | % | |||
| Carly LaChance | 2,175 Series B Preferred Shares | 9.9 | % | |||
| All executive officers and directors as a group (4 persons) |
51 Series A Preferred Shares 4,745 Series B Preferred Shares |
60 | % | |||
| (1) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding. |
| (2) | Based upon 91,697,617 shares issued and outstanding. |
Other than the shareholders listed above, we know of no other person who is the beneficial owner of more than five percent (5%) of our common stock.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in Item 1.01, 3.02, 3.03, and 5.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.02.
Resignation of Executive Director
In connection with the Securities Exchange Agreement, Mr. William Hayde submitted his resignation from his positions as Executive Director and member of the Company’s Board of Directors (the “ Board ”), effective March 5, 2019 (the “ Hayde Resignation ”). Mr. Hayde did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices..
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Appointment of Chief Executive Officer
On March 5, 2019, in connection with the CEO Resignation, the Board appointed Mr. Chad Fischl as Chief Executive Officer, effective March 5, 2019 (the “ CEO Appointment ”).
Chad Fischl, Age 36, Chief Executive Officer, Director. During his last year of University, in 2007, Chad started his first company, Shutout Solutions Inc., now called YXE Labs. YXE Labs was originally in the business of importing from South Korea, with exclusivity in North America, Nano Silver products used in the application of deodorizing sports gear. Mr. Fischl was the Co-CEO of YXE Labs and was an integral part of the growth of the business with retailers and professional sports teams across North America, earning endorsements from many of those teams. Mr. Fischl helped grow YXE Labs from having three products in 2007 through to, in 2017, having over 25 various products in four different markets and with internal intellectual property surrounding many of these products. In 2017, Chad resigned from his position with YXE Labs in order to pursue his new ventures through FarmBoys Design Corps. (“FarmBoys”) and, in 2017, Chad started a new venture with a group of partners from various backgrounds in engineering, oil & gas, biology and sales and marketing to form FarmBoys. As the CEO and President of FarmBoys Chad has worked tirelessly with his diverse team to design the world’s most productive modular aeroponic farming units that come fully equipped with proprietary monitoring and automation to make growing aeroponically simple and predictable with very little human intervention. Due to Mr. Fischl’s extensive experience with start-up companies, both in growing those companies and in working together with a diverse team to achieve a goal, we believe that Mr. Fischl, acting as our Chief Executive Officer and a Director of our Company, will be instrumental in helping the Company to execute on its plans for growth.
Family Relationships
Mr. Fischl does not have a family relationship with any of the current officers or directors of the Company.
Related Party Transactions
There are no related party transactions with regard to Mr. Fischl reportable under Item 404(a) of Regulation S-K.
Compensatory Arrangements
None.
Appointment of Chief Financial Officer
On March 5, 2019, in connection with the CFO Resignation, the Board appointed Mr. Wayne Hansen as Chief Financial Officer, effective March 5,2019 (the “ CFO Appointment ”).
Wayne Hansen, Age 72, Chief Financial Officer, Director: Mr. Hansen has an extensive history of corporate fiscal management, currently serving as the President of Caulfield Capital Management Inc., a position he has held since 2004. Before working with Caufield Capital Management, Inc., Mr. Hansen was a managing partner of Asia Liaison and a practice partner of BDO Dunwoody. While Wayne was a managing partner at Asia Liaison he was involved in the development of both short- and long-term strategic planning for the clients and company, he also was in charge of client development and retention. Mr. Hansen also has extensive experience in mergers and acquisitions and has been an officer and director of several publicly-traded companies and is currently the CFO for Four Twenty Property Management, Inc., a publicly-traded company currently quoted on the OTC Markets. Due to Mr. Hansen’s experience in financial oversight, public companies, mergers and acquisitions as well as his ability to manage both large and small projects, we believe that Mr. Hansen will be a valuable addition to our Company.
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Family Relationships
Mr. Hansen does not have a family relationship with any of the current officers or directors of the Company.
Related Party Transactions
There are no related party transactions with regard to Mr. Hansen reportable under Item 404(a) of Regulation S-K.
Compensatory Arrangements
None.
Resignation of Directors
In connection with the Securities Exchange Agreement, Ms. Jacquelyn Gogin and Ms. Alyce Schreiber submitted their resignations from their positions as Directors, effective March 5, 2019 (the “ Director Resignations ”). Neither Ms. Gogin nor Ms. Schreiber resigned as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information set forth in Item 1.01, Item 3.02, Item 3.03, and Item 5.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
* filed herewith
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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 thereunto duly authorized.
| GROW SOLUTIONS HOLDINGS, INC. | ||
| Date: March 13, 2019 | By: | /s/ Chad Fischl |
| Name: Chad Fischl | ||
| Title: Chief Executive Officer | ||
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Exhibit 2.1
SECURITIES EXCHANGE AGREEMENT
This Securities Exchange Agreement (this “Agreement”) is dated as of March 5, 2019, by and among the shareholders of Pure Roots Holding, Ltd., representing 100 percent of the outstanding shares, thereof (collectively the “Seller”), Pure Roots Holding, Ltd., a Wyoming corporation (the “Company”), and Grow Solutions Holdings, Inc. (the “Purchaser”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller certain restricted common stock shares of the Company, representing one hundred percent (100%) of the issued and outstanding restricted common stock shares of the Company (the “Shares”), as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Sellers and the Purchaser agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144.
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.1.
“Closing Date” means the Business Day when this Agreement has been executed and delivered by the applicable parties thereto, and all conditions precedent to the Parties obligations to perform have been satisfied or waived.
“Commission” means the Securities and Exchange Commission.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Losses” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred Stock” means a designated series of convertible preferred stock issued by Purchaser as consideration to Seller, designated as Series B Convertible Preferred Stock the form of certificate of designation of which is set forth as Exhibit attached hereto.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. At the Closing, Purchaser or certain of its securities holders shall deliver 85,000 shares of the Preferred Stock to Seller pursuant to Schedule A as consideration for the Shares, and the Seller shall deliver to Purchaser the Shares. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of the Company, or such other location as the parties shall mutually agree, on or before March 5, 2019.
2.2 Closing Conditions.
(a) At the Closing the Seller shall deliver to the Purchaser:
(i) this Agreement duly executed by the Company, and Seller; and
(ii) certificates evidencing the Shares, registered in the name of the Purchaser.
(b) At the Closing the Purchaser shall deliver or cause to be delivered to the Seller:
(i) this Agreement duly executed by the Purchaser; and
(ii) a copy of the certificate of designations for the Preferred Stock to be filed with the State of Nevada and an executed unanimous written consent of the Board of Directors of the Purchaser authorizing issuance of the Preferred Stock to the Seller, in accordance with the terms hereof.
(c) All representations and warranties of each party to the other party contained herein shall remain true and correct as of the Closing Date and all covenants of each party to the other party shall have been performed if due prior to such date.
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ARTICLE I 11
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties set forth below to the Purchaser:
(a) Subsidiaries. The Company has no direct or indirect subsidiaries.
(b) Organization and Qualification. The Company is duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation of any of the provisions of its certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, (i) could not, individually or in the aggregate adversely affect the legality, validity or enforceability of this Agreement, (ii) has had or could not reasonably be expected to result in a material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, or (iii) could not, individually or in the aggregate, adversely impair the Company’s ability to perform fully on a timely basis its obligations under this Agreement (any of (0, (ii) or (iii), a “Material Adverse Effect”).
(c) Authorization Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company other than Required Approvals. This Agreement has been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity. The Company is not in violation of any of the provisions of its certificate or articles of incorporation, by-laws or other organizational or charter documents.
(d) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) subject to obtaining the Required Approvals, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) result, in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as has not had or could not reasonably be expected to result in a Material Adverse Effect.
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(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement.
(f) Shares. The Shares are duly authorized and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in this Agreement.
(g) Capitalization. The capitalization of the Company as of the Closing Date is as described on Schedule 3.1(g) and will remain as of the Closing Date. The Company has not issued any capital stock since such date. Except as set forth on Schedule 3.1(g), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any restricted common stock shares or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional restricted common stock shares, or securities or rights convertible or exchangeable into restricted common stock shares. The sale of the Shares will not obligate the Company to issue additional restricted common stock shares or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.
(h) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which: (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Shares or (ii) could reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty that has had or could reasonably be expected to result in a Material Adverse Effect. The Company does not have pending before the Commission any request for confidential treatment of information. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company that has had or could reasonably be expected to result in a Material Adverse Effect.
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(i) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which has had or could reasonably be expected to result in a Material Adverse Effect. None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, and the Company is not a party to a collective bargaining agreement, and the Company believes that its relationships with their employees are good. No officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other Contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters. The Company is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours.
(j) Compliance. The Company is not: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived) that has had or could reasonably be expected to result in a Material Adverse Effect, (ii) is in violation of any order of any court, arbitrator or governmental body that has had or could reasonably be expected to result in a Material Adverse Effect, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority that has had or could reasonably be expected to result in a Material Adverse Effect.
(k) Regulatory Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their business, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.
(l) Title to Assets. The Company has good and marketable title in fee simple to all real property owned by it that is material to the business of the Company and good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases of which the Company is in compliance, except where the failure to be in compliance would not reasonably be expected to result in a Material Adverse Effect.
(m) Patents and Trademarks. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights necessary or material for use in connection with its businesses and which the failure to so have has had or could reasonably be expected to result in a Material Adverse Effect (collectively, the “Intellectual Property Rights”). The Company has not received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person that has had or could reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights that has had or could reasonably be expected to result in a Material Adverse Effect.
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(n) Insurance. The Company maintains no insurance.
(o) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement, and the Company has not taken any action that would cause the Purchaser to be liable for any such fees or commissions.
(p) Financial Statements. The financial statements of the Company as supplied to the Purchaser (“Financial Statements”) comply in all material respects with applicable accounting requirements with respect thereto as in effect at the time of filing. The Financial Statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(q) Material Changes. Since the date of the latest Financial Statement: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise), (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities. Except for the issuance of the Shares contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company or its business, properties, operations or financial condition that would be required to be disclosed by the Company.
(r) Tax Status. The Company has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statute or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.
(s) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
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(t) No Disagreements with Accountants and Lawyers. There are no disagreements of any kind, including but not limited to any disagreements regarding fees owed for services rendered, presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company, and the Company is current with respect to any fees owed to its accountants and lawyers.
(u) Minute Books. The minute books of the Company made available to the Purchaser contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.
(v) Employee Benefits. The Company has never had any plans which are subject to ERISA.
(w) Business Records and Due Diligence. Prior to the Closing, the Company has delivered (or will deliver) to the Purchaser all records and documents relating to the Company, which the Company and possesses, including, without limitation, books, records, government filings, Tax Returns, Charter Documents, corporate records, stock records, consent decrees, orders, and correspondence, director and stockholder minutes, resolutions and written consents, stock ownership records, financial information and records, and other documents used in or associated with the Company.
(x) Contracts. Except as set forth on Schedule 3.1(x), The Company is not a party to any Contracts.
(y) No Undisclosed Liabilities. Except as otherwise disclosed in the Company’s Financial Statements, the Company has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. The Company represents that at the date of Closing, except as set forth on Schedule 3.1 (y) the Company shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.
3.2 Representations and Warranties of the Purchaser. The Purchaser represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement, to which it is party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
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(b) Investment Intent. The Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other persons regarding the distribution of such Shares. The Purchaser is acquiring the Shares hereunder in the ordinary course of its business. The Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.
3.3 Representations and Warranties of the Seller. The Seller represents and warrants as of the date hereof and as of the Closing Date to the Purchaser as follows:
(a) Ownership. The Seller is the legal, beneficial and registered owner of the Shares, free and clear of any liens, security interests, charges or other encumbrances of any nature whatsoever. The Shares are validly issued, fully paid and non-assessable.
(b) No Conflict. The execution, delivery and performance by the Seller of this Agreement, and the consummation of the transactions contemplated hereby, will not (i) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligations or other agreements of the Seller, or (ii) violate any provision of law applicable to the Seller.
(c) Consents. No registration, filing with the consent or approval of, or other action by, any federal, state or other governmental authority, agency, regulatory body, third party or other Person is or will be required in connection with the execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Preferred Stock may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Preferred Stock other than pursuant to an effective registration statement or Rule 144, the Purchaser may require the transferor thereof to provide an opinion of counsel selected by the transferor and reasonably acceptable to Purchaser, the form and substance of which opinion shall be reasonably satisfactory to the Purchaser, to the effect that such transfer does not require registration of such transferred Preferred Stock under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Seller under this Agreement.
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(b) The Seller agrees to the imprinting, so long as is required by this Section 4.1(b), of the following legend on any certificate evidencing the Preferred Stock:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
4.2 [RESERVED]
4.3 Financial Statements: The Company shall provide to the Purchaser the necessary audited Company financials in order to satisfy the required regulatory disclosure associated with this Securities Exchange Agreement within 60 days of the Closing.
4.4 Intercompany Loan. Purchaser shall provide to Company monthly loans of up to $50,000 per month for a period of 6 months following the Closing. The terms of loans, including repayment, shall be finalized between the parties after the Closing.
RTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Shares.
5.2 Entire Agreement. This Agreement, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 6:00 p.m. (New York time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 6:00 p.m. (New York time) on any Business Day, (c) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
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5.4 Amendments / Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.
5.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
5.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser. The Purchaser may assign its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Shares.
5.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.5.
5.8 Governing Law / Venue; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Clark County, Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
5.9 Survival. The representations, warranties and covenants contained herein shall survive for a period of 12 months after the Closing Date and delivery and/or exercise of the Shares, as applicable.
5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof
5.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
[REMAINDER OF PAGE LEFT BLANK]
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IN WITNESS WHEREOF , each of the Parties has caused this Securities Exchange Agreement to be duly executed as of the date first above written.
| PURCHASER | ||
| GROW SOLUTIONS HOLDINGS, INC. | ||
| By: | /s/ William Hayde | |
| Title: | William Hayde, Executive Director | |
| COMPANY | ||
| PURE ROOTS HOLDING, LTD. | ||
| By: | /s/ Chad Fischl | |
| Title: | Chad Fischl – President, Director | |
| SELLER | ||
| Chad Fischl | ||
| By: | / s/ Chad Fischl | |
| SELLER | ||
| Bailey Fischl | ||
| By : | /s/ Bailey Fischl | |
| SELLER | ||
| Clara Fischl | ||
| By : | /s/ Clara Fischl | |
| SELLER | ||
| Carla Blampin | ||
| By: | / s/ Carla Blampin | |
| SELLER | ||
| Sharon Branconnier | ||
| By : | /s/ Sharon Branconnier | |
| SELLER | ||
| Jolene Branconnier | ||
| By: | /s/ Jolene Branconnier | |
| SELLER | ||
| Norman Payton Jones | ||
| By: | /s/ Norman Payton Jones | |
| SELLER | ||
| Ismail Abdul Fattah | ||
| By: | /s/ Ismail Abdul Fattah | |
| SELLER | ||
| Ahmad Abdel Latif Yassine | ||
| By: | /s/ Ahmad Abdel Latif Yassine | |
| SELLER | ||
| Adrian LaChance | ||
| By: | /s/ Adrian LaChance | |
| SELLER | ||
| Emily LaChance | ||
| By: | /s/ Emily La Chance | |
| SELLER | ||
| Carly LaChance | ||
| By : | /s/ Carly LaChance | |
Certificate of Designation of Series B Preferred Stock
SCHEDULE A
POST CLOSING SERIES B PREFERRED STOCK HOLDERS
|
Chad Fischl 628 6 th Street, East Saskatoon, SK S7H 1C2 |
4,745 | |||
|
Bailey Fischl 628 6 th Street, East Saskatoon, SK S7H 1C2 |
4,746 | |||
|
Clara Fischl
49 Guy Drive, Prince Albert, SK S6X 0A3 |
9,421 | |||
|
Carla Blampin
Box 525, Big River, SK S0J 0E0 |
9,421 | |||
|
Sharon Branconnier
30736 burgess Ave, Abbotsford, B.C. V4X 2A6 |
9,420 | |||
|
Jolene Branonnier
3044-240 St. Langley, B.C. V2Z 1N3 |
9,421 | |||
|
Norman James Payton
1561 Monte Creek Rd., Monte Creek B.C. V02 2MO |
9,421 | |||
|
Ismail Abdul Fattah Suite 1105 510 6 th Ave, S.E. Calgary AB T2G 1I7 |
7,084 | |||
|
Ahmad Abdel Latif Yassine
P.O. Box 41 Chatura Bekka Lebanon, Bekaa |
7,083 | |||
|
Adrian LaChance
6245 Cronquist Dr., T4N 1 E2 |
9,887 | |||
|
Emily LaChance
125 Caribou Crescent, T4P 0V6 |
2,175 | |||
| Carly LaChance | 2,175 | |||
| Total: | 85,000 |
SCHEDULE 3.1(g)
100,000 Shares of Restricted Common Stock; held as follows:
| Name and Address | Number of Shares | |||
|
Chad Fischl 628 6 th Street, East Saskatoon, SK S7H 1C2 |
5,556 | |||
|
Bailey Fischl 628 6 th Street, East Saskatoon, SK S7H 1C2 |
5,556 | |||
|
Clara Fischl
49 Guy Drive, Prince Albert, SK S6X 0A3 |
11,111 | |||
|
Carla Blampin
Box 525, Big River, SK S0J 0E0 |
11,111 | |||
|
Sharon Branconnier
30736 burgess Ave, Abbotsford, B.C. V4X 2A6 |
11,112 | |||
|
Jolene Branonnier
3044-240 St. Langley, B.C. V2Z 1N3 |
11,111 | |||
|
Norman James Payton
1561 Monte Creek Rd., Monte Creek B.C. V02 2MO |
11,111 | |||
|
Ismail Abdul Fattah Suite 1105 510 6 th Ave, S.E. Calgary AB T2G 1I7 |
8,333 | |||
|
Ahmad Abdel Latif Yassine
P.O. Box 41 Chatura Bekka Lebanon, Bekaa |
8,333 | |||
|
Adrian LaChance
6245 Cronquist Dr., T4N 1 E2 |
11,620 | |||
|
Emily LaChance
125 Caribou Crescent, T4P 0V6 |
2,523 | |||
| Carly LaChance | 2,523 | |||
| TOTAL: | 100,000 | |||
SCHEDULE 3.1(x)
Manufacturing and Distribution License by and between the Company and FarmBoys Design Corp.
Sales and Marketing Agreement by and between the Company and Ian & Nameer, Inc.
SCHEDULE 3.1(y)
N/A
Exhibit 3.1
| Certificate of Designation |
Certificate of Designation For
Nevada Profit Corporations
(Pursuant to NRS 78.1955)
1.
Name
of Corporation:
Grow Solutions Holdings, Inc.
2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations , restrictions and relative rights of the following class or series of stock.
SERIES B 8% CONVERTIBLE PREFERRED STOCK TERMS
Section 1. Designation, Amount and Par Value. The series of preferred stock shall be designated as the Series B 8% Convertible Preferred Stock (the “Series B Preferred Stock”), and the number of shares so designated and authorized shall be One Hundred Thousand (100,000). Each share of Series B_ Preferred Stock shall have a par value of $0.001 per share and a stated value of $1,000 per share (the “Stated Value”).
(Continued on attachment )
(must not be later than 90 days after the certificate is filed)
3. Signature: (required)
Filing Fee: $175.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
| This form must be accompanied by appropriate fees. |
Nevada Secretary of State Stock Designation Revised: 3-6-09 |
Signature of Officer
Section 2. Dividends.
(a) Holders of Series B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available therefor, and the Company shall accrue, quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing on the Issuance Date, cumulative dividends on the Series B Preferred Stock at the rate per share (as a percentage of the Stated Value per share) equal to eight percent (8%) per annum on the Stated Value, payable in common stock valued at the closing trade price per share on the last trading day of the calendar quarter. The party that holds the Series B Preferred Stock on an applicable record date for any dividend payment will be entitled to receive such dividend payment and any other accrued and unpaid dividends which accrued prior to such dividend payment date, without regard to any sale or disposition of such Series B Preferred Stock subsequent to the applicable record date but prior to the applicable dividend payment date.
(b) So long as any shares of Series B Preferred Stock remain outstanding, neither the Company nor any subsidiary thereof shall, without the consent of the Holders of eighty percent (80%) of the shares of Series B Preferred Stock then outstanding (the “Requisite Holders), redeem, repurchase or otherwise acquire directly or indirectly any Junior Securities (as defined in Section 7), nor shall the Company directly or indirectly pay or declare any dividend or make any distribution upon, nor shall any distribution be made in respect of, any Junior Securities, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Junior Securities.
Section 3. Voting Rights; Negative Covenants. The Series B Preferred Stock shall have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, either by written consent or by proxy on an as converted basis, subject to the conversion limits of Section 5(b) below. So long as any shares of Series B Preferred Stock are outstanding, the Company shall not and shall cause its subsidiaries not to, without the affirmative vote of the Requisite Holders, (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock, (b) alter or amend this Certificate of Designation, (c) amend its certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any Holders of the Series B Preferred Stock, (d) increase the authorized or designated number of shares of Series B Preferred Stock, (e) issue any additional shares of Series B Preferred Stock (including the reissuance of any shares of Series B Preferred Stock converted for Common Stock) or (f) enter into any agreement with respect to the foregoing.
Section 4. Liquidation. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary or a Sale (as defined below) (a “Liquidation”), the holders of the Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series B Preferred Stock an amount equal to the Stated Value plus all accrued but unpaid dividends per share, whether declared or not, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Company shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of Series B Preferred Stock shall be distributed among the holders of Series B Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record Holder of Series B Preferred Stock. A “Sale” shall mean a sale of the majority of assets, a merger (other than where the Company is the surviving entity) or consolidation by the Company with another corporation or other entity.
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Section 5. Conversion.
(a) Conversion at Option of Holder. Subject to the provisions of Section 5(b), below, each share of Series B Preferred Stock shall be convertible into 2,833 shares of Common Stock (“Conversion Ratio”), at the option of a Holder, at any time and from time to time, from and after the issuance of the Series B Preferred Stock; provided that, for a period of eighteen (18) months from the Issuance Date, if the Company issues shares of common stock (or securities, including any derivative securities, containing the right to purchase, exercise or convert into shares of common stock) (the “Dilution Shares”) such that the outstanding number of shares of common stock on a fully diluted basis shall be greater than (283,333,333) shares (inclusive of conversions of Series B Preferred Stock at the Conversion Ratio immediately above), then the Conversion Ratio for the Series B Preferred Stock then outstanding and unconverted as of the date the Dilution Shares are issued shall be adjusted to equal the Conversion Ratio multiplied by a fraction, the numerator of which shall be the number of shares outstanding on a fully diluted basis after the issuance of the Dilution Shares, and the denominator shall be (283,333,333). Example: Company issues securities representing 100,000,000 Dilution Shares, then the Conversion Ratio shall equal [2,833 x (383,333,333/283,333,333) (or 1.35) = 3,824.5]. A Holder shall effect a conversion by surrendering to the Company the original certificate or certificates representing the shares of Series B Preferred Stock to be converted to the Company, together with a completed form of conversion notice attached hereto as Exhibit B (the “Conversion Notice”). Each Conversion Notice shall specify the number of shares of Series B Preferred Stock to be converted, the date on which such conversion is to be effected, which date may not be prior to the date the Holder delivers such Conversion Notice (the “Conversion Date”), and the Conversion Price determined as specified in Section 5(c) hereof. If no Conversion Date is specified in a Conversion Notice, the Conversion Date shall be the date that the Conversion Notice is delivered pursuant to this Section 5(a). Subject to Section 5(b) hereof, each Conversion Notice, once given, shall be irrevocable.
(b) Beneficial Ownership Limitation. The Company shall not affect any conversion of the Series B Preferred Stock, and a Holder shall not have the right to convert any portion of the Series B Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined herein). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted shares of Series B Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Series B Preferred Stock or any other convertible securities of the Company) beneficially owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this subsection, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
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The “Beneficial Ownership Limitation” shall be 9.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Series B Preferred Stock held by the applicable Holder. A Holder, upon not less than sixty-five (65) days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this sub-section applicable to its Series B Preferred Stock and the provisions of this sub-section shall continue to apply. Any such increase will not be effective until the sixty-sixth (66th) day after such notice is delivered to the Company and shall only apply to such Holder and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this sub-section to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor Holder of Series B Preferred Stock.
(c) The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of Series B Preferred Stock, as herein provided, free from preemptive rights or any other actual or contingent purchase rights of persons other than the holders of Series B Preferred Stock, not less than 100% of such number of shares of Common Stock as shall be issuable (taking into account the adjustments and restrictions of sub-section (b) upon the conversion of all outstanding shares of Series B Preferred Stock hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and non-assessable.
(d) Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock but may if otherwise permitted and unless waived by the Holder of the Series B Preferred Stock, make a cash payment in respect of any final fraction of a share based on the Per Share Market Value at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder of a share of Series B Preferred Stock shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.
(e) The issuance of certificates for shares of Common Stock on conversion of Series B Preferred Stock shall be made without charge to the Holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such shares of Series B Preferred Stock so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
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(f) Shares of Series B Preferred Stock converted into Common Stock shall be canceled and shall have the status of authorized but unissued shares of undesignated preferred stock.
(g) Any and all notices or other communications or deliveries to be provided by the Holders of the Series B Preferred Stock hereunder, including, without limitation, any Conversion Notice, shall be in writing and delivered by facsimile, sent by a nationally recognized overnight courier service, or sent by certified or registered mail, postage prepaid, addressed to the attention of the President of the Company at the facsimile telephone number or address of the principal place of business of the Company. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered by facsimile, sent by a nationally recognized overnight courier service or sent by certified or registered mail, postage prepaid, addressed to each Holder of Series B Preferred Stock at the facsimile telephone number or address of such Holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:00 p.m. (New York time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:00 p.m. (New York time) on any date and earlier than 11:59 p.m. (New York time) on such date, (iii) four days after deposit in the United States mails, (iv) the Business Day (as defined in Section 7) following the date of mailing, if send by nationally recognized overnight courier service, or (v) upon actual receipt by the party to whom such notice is required to be given.
Section 6. Adjustments to Conversion Price.
(a) The Conversion Price shall be subject to adjustment from time to time as follows:
(i). Spin Off. If, for as long as any shares of Series B Preferred Stock remain outstanding the Company consummates a spin off or otherwise divests itself of a part of its business or operations or disposes of all or of a part of its assets in a transaction (the “Spin Off’) in which the Company, in addition to or in lieu of any other compensation received by the Company for such business, operations or assets, causes securities of another entity (the “Spin Off Securities”) to be issued to security holders of the Company, then the Company shall cause (a) to be reserved Spin Off Securities equal to the number thereof which would have been issued to all Holders had all shares of Series B Preferred Stock outstanding on the record date (the “Record Date”), for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (such outstanding shares of Series B Preferred Stock, the “Outstanding Preferred Stock”), if all Shares of Series B Preferred Stock had been converted as of the close of business on the Trading Day immediately before the Record Date (the “Reserved Spin Off Securities”), and (b) to be issued to each Holder upon the conversion of all or any of the Outstanding Preferred Stock, such amount of the Reserved Spin Off Securities equal to (1) the Reserved Spin Off Securities multiplied by (2) a fraction, of which (A) the numerator is the aggregate Stated Value of the Outstanding Preferred Stock then being converted by such Holder, and (B) the denominator is the aggregate Stated Value of the Outstanding Preferred Stock.
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(ii). Stock Splits, etc. If, at any time while any shares of Series B Preferred Stock remain outstanding, the Company effectuates a stock split or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares of Common Stock, the Conversion Price and any other amounts calculated as contemplated by this Certificate of Designations shall be equitably adjusted to reflect such action. By way of illustration, and not in limitation, of the foregoing (a) if the Company effectuates a 2:1 split of its Common Stock, thereafter, with respect to any conversion for which the Company issues shares after the record date of such split, the Conversion Price shall be adjusted to equal one-half of what it had been calculated to be immediately prior to such split; (b) if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter, with respect to any conversion for which the Company issues shares after the record date of such reverse split, the Conversion Price shall be adjusted to equal ten times what it had been calculated to be immediately prior to such split; and (c) if the Company declares a stock dividend of one share of Common Stock for every 10 shares outstanding, thereafter, with respect to any conversion for which the Company issues shares after the record date of such dividend, the Conversion Ratio shall be adjusted to equal such amount multiplied by a fraction, of which the numerator is the number of shares (10 in the example) for which a dividend share will be issued plus the dividend shares (11 in total), and the denominator is such number of shares for which a dividend will be issued thereon (i.e. 11/10 or 1.1).
(iii). Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 6, the Company, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to each Holder of Series B Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any Holder of Series B Preferred Stock, furnish to such Holder a like certificate setting forth (a) such adjustment or readjustment, (b) the Conversion Price in effect at the time and (c) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of a share of Series B Preferred Stock.
Section 7. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.
“Common Stock” means the common stock, $.001 par value per share, of the Company, and stock of any other class into which such shares may hereafter have been reclassified or changed.
“Conversion Ratio” means, initially, 2,833 shares of common stock for each share of Series B Preferred Stock, subject to adjustment set forth in Sections 5 and 6.
“Issuance Date” means the earliest date on which a Holder receives shares of the Series B Preferred Stock, regardless of the number of certificates which may be issued to evidence such Series E Preferred Stock.
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“Holder” means a registered holder of a share or shares of Series B Preferred Stock.
“Junior Securities” means the Common Stock and all other equity securities of the Company ranking junior to the Series B Preferred Stock in terms of payment of dividends or liquidation proceeds.
“Per Share Market Value” means on any particular date (a) the Closing Bid Price per share of the Common Stock on such date on the OTC Bulletin Board or other principal stock exchange or quotation system on which the Common Stock is then listed or quoted or if there is no such price on such date, then the Closing Bid Price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on the OTC Bulletin Board or any stock exchange or quotation system, the Closing Bid Price for a share of Common Stock in such other over-the-counter market, as reported by the Nasdaq Stock Market or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices at the close of business on such date, or (c) if the Common Stock is not then reported by the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices, then the average of the “Pink Sheet” quotes for the relevant conversion period, as determined in good faith by the Board of Directors, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined in good faith by the Board of Directors.
“Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.
“Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board or other stock exchange or market on which the Common Stock has been listed, or (b) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices).
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Exhibit 17.1
March 6, 2019
To the Members of the Board of Directors of
Grow Solutions Holdings, Inc.
This letter shall serve as formal notice confirming my resignation effective March 5, 2019, from my position as Executive Director of Grow Solutions Holdings Inc. (the “Company”) and as a member of the Board of Directors of the Company, and from all other positions with the Company to which I have been assigned, regardless of whether I served in such capacity. The resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Sincerely,
| /s/ Alyce Schreiber | |
| Alyce Schreiber |
Exhibit 17.2
March 6, 2019
To the Members of the Board of Directors of
Grow Solutions Holdings, Inc.
This letter shall serve as formal notice confirming my resignation effective March 5, 2019, from my position as Executive Director of Grow Solutions Holdings Inc. (the “Company”) and as a member of the Board of Directors of the Company, and from all other positions with the Company to which I have been assigned, regardless of whether I served in such capacity. The resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Sincerely,
| /s/ Jacquelyn Gogin | |
| Jacquelyn Gogin |
Exhibit 17.3
March 6, 2019
To the Members of the Board of Directors of
Grow Solutions Holdings, Inc.
This letter shall serve as formal notice confirming my resignation effective March 5, 2019, from my position as Executive Director of Grow Solutions Holdings Inc. (the “Company”) and as a member of the Board of Directors of the Company, and from all other positions with the Company to which I have been assigned, regardless of whether I served in such capacity. The resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Sincerely,
| /s/ William Hayde | |
| William Hayde |