AGREEMENT AND PLAN OF MERGER BY AND AMONG DRIVEN DELIVERIES, INC., GR ACQUISITION, INC., AND GANJARUNNER, INC., INC.
Exhibit
2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GR ACQUISITION, INC.,
AND
GANJARUNNER, INC., INC.
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is
dated as of June 21, 2019, among:
Driven Deliveries,
Inc., a Delaware corporation
(“Parent”);
GR Acquisition,
Inc., a Nevada corporation and a wholly-owned subsidiary of Parent
(“GRA”); and
Ganjarunner,
Inc., a California corporation
(“GR”) and Global Wellness,
LLC, a California limited
liability company (“GW”) (collectively, Ganjarunner,
Inc. and Global Wellness are hereinafter collectively referred to
as “GR/GW”).
RECITALS
A.
Upon
the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law
(“DGCL”) and California Corporations Code
(“CCC”), Parent, GRA, and GR intend to enter into a
business combination transaction (the
“Merger”).
B.
The
Board of Directors of Parent took the following
actions:
determined
the Merger is consistent with the long-term business strategy of
Parent, and in the best interests of Parent and its
stockholders;
approved
this Agreement (and all other transactions contemplated by it);
and
adopted
a resolution declaring the Merger advisable.
C.
The
Board of Directors of GRA took the following actions:
determined
the Merger is consistent with and in furtherance of the long-term
business strategy of GRA and fair to, and in the best interests of,
GRA and its stockholders;
approved
this Agreement (and all other transactions contemplated by
it);
adopted
a resolution declaring the Merger advisable; and
determined
to recommend that the stockholders of GRA adopt this
Agreement.
D.
The
Board of Directors of GR took the following actions:
determined
the Merger is consistent with and in furtherance of the long-term
business strategy of GR and fair to, and in the best interests of,
GR and its stockholders;
approved
this Agreement (and all other transactions contemplated by
it);
adopted
a resolution declaring the Merger advisable; and
determined
to recommend the stockholders of GR adopt this
Agreement.
The
Managing Members of GW took the following actions:
determined
the Merger is consistent with and in furtherance of the long-term
business strategy of GW and fair to, and in the best interests of,
GW and its member;
approved
this Agreement (and all other transactions contemplated by
it);
adopted
a resolution declaring the Merger advisable; and
determined
to recommend the members of GR adopt this Agreement.
NOW,
THEREFORE, in consideration of the covenants, promises, and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1
I.
THE MERGER
1. The
Merger. At the Effective Date (as defined in
Section 1.2 ) and pursuant to the terms and conditions of this
Agreement and the applicable provisions of the DGCL and CCC, GR/GW
shall merge with GRA (the “Merger”), the separate
existence of GR/GW shall cease and GRA shall continue as the
surviving entity as a wholly-owned subsidiary of Parent. The
surviving company after the Merger is sometimes referred to
hereinafter as the “Surviving Company”, which shall be
a wholly-owned subsidiary of Parent.
2. Effective
Date.
This Agreement shall be binding from
the date first written above. Unless this Agreement is earlier
terminated pursuant to Article VII hereof, the closing of the
Merger and the other transactions contemplated by this Agreement
(the “Closing”) will take place at Parent’s
offices on June 29, 2019, or such other time and date to be
specified by the parties. The date upon which the Closing actually
occurs is herein referred to as the “Effective Date.”
On the Effective Date, the parties hereto shall cause the Merger to
be consummated by filing a Certificate of Merger in the form
attached as Exhibit A hereto or like instrument (a “Delaware
Certificate of Merger”) with the Secretary of State of the
State of Delaware, in accordance with the relevant provisions of
the DGCL and filing a Certificate of Merger in the form attached as
Exhibit B hereto or like instrument (a “California
Certificate of Merger”) with the California Secretary of
State, in accordance with the relevant provisions of the CCC (the
time at which the Merger has become fully effective (or such later
time as may be agreed in writing by the parties and specified in
the Certificate of Merger) is referred to herein as the
“Effective Date”).
3. Effect of the
Merger.
(a)
At
the Effective Date, the effect of the Merger shall be as provided
in the applicable provisions of the DGCL and CCC. Without limiting
the generality of the foregoing, and subject thereto, at the
Effective Date, except as provided herein, all the property,
rights, privileges, powers and franchises of GR and GW shall vest
in the Surviving Company, and all debts and liabilities of GR and
GW shall become the debts, liabilities and duties of the Surviving
Company, including but not limited to any liability for taxes due
any agency or regulatory authority, any liability resulting from
any litigation or dispute, and any obligation to defend any
litigation or dispute, arising from past or prospective operations
of GR and/or GW.
(b)
Prior
to or at the Effective Date, the properties and assets of GR and GW
will be free and clear of any and all encumbrances, charges,
claims, equitable interests, liens, options, pledges, security
interests, mortgages, rights of first refusal or restrictions of
any kind and nature (collectively, the “Encumbrances”),
except for GR/GW’s material liabilities, accounts payable,
debts, adverse claims, duties, responsibilities and obligations of
every kind or nature, whether accrued or unaccrued, known or
unknown, direct or indirect, absolute, contingent, liquidated or
unliquidated and whether arising under, pursuant to or in
connection with any contract, tort, strict liability or otherwise
(collectively the “Liabilities”).
4. Certificate
of Formation; Operating Agreement. From and after the Effective Date and until
further amended in accordance with applicable law, the Articles of
Incorporation of GRA as in effect immediately prior to the
Effective Date shall be the Articles of Incorporation of the
Surviving Company.
5. GRA Board of Directors
and Management.
(a)
Unless
otherwise determined by Parent and GRA prior to the Effective Date,
the Board of Directors of GRA immediately prior to the Effective
Date shall be the Board of Directors of the Surviving Company at
and after the Effective Date, each to hold the office of a Director
of the Surviving Company in accordance with the provisions of the
NRS and the Articles of Incorporation of the Surviving Company
until their successors are duly elected and qualified.
(b)
Unless
otherwise determined by Parent and GRA prior to the Effective Date,
the officers of GRA immediately prior to the Effective Date shall
be the officers of the Surviving Company at and after the Effective
Date, each to hold office in accordance with the provisions of the
Articles of Incorporation of the Surviving Company.
2
6. Merger
Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Date, by virtue of the merger (and
without any further action by Parent, GRA, GR and GW, or the
holders of any of the securities of such entities), the following
consideration shall be exchanged:
(a)
Deliverable by Parent to GR/GW
Founders (i.e. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇).
(i)
Parent
will make a cash payments to the GR/GW Founders (in the manner such
GW Founders shall designate in writing) as follows:
(a)
Cash
payment in the aggregate amount of $150,000 on the Effective
Date;
(b)
Cash
payment in the amount of $150,000 on or before June 28, 2019
contingent on (i) the achievement of a signature compliance rate of
at least 75% of deliveries during the period between the Effective
Date and June 28, 2019;. For each 1% percent below 75%, there will
be a purchase price holdback of $2,000, which amount will be paid
once compliance for 75% of deliveries is accomplished. The
holdbacks will be reviewed at the 15th and end of the following
month through Onfleet software to evaluate whether the 75%
compliance rate has been achieved.
(c)
Cash
payment in the amount of $150,000 on or before July 31, 2019
contingent on (i) the achievement of a signature compliance rate of
at least 85% of deliveries during the month of July 2019. For each
1% percent below 85%, there will be a purchase price holdback of
$2,000. The holdbacks will be reviewed at the 15th and end of the
following month through Onfleet software to evaluate whether the
85% compliance rate has been achieved.
(d)
Cash payment in the aggregate amount of $350,000
at the earlier to occur of (i) the end of the 6th
month following the Effective Date or
(ii) Parent closing on a raise of at least $2,000,000 in a new
round of equity investment following the Effective
Date;
(e)
Cash payment in the aggregate amount of $300,000
at the end of the 24th
month following the Effective
Date;
(f)
The
foregoing amounts shall accelerate and become immediately payable
upon a “change of control” of Parent or GRA. For these
purposes, a “change of control” shall be defined as the
acquisition by an unrelated third-party of an equity interest in
excess of 51% in Parent.
(ii)
Parent
shall deliver shares of Parent common stock to the GR/GW Founders
(in the manner such Founders shall designate in writing) as
follows:
(a)
1,000,000
shares at the Effective Date;
(b)
An additional 2,000,000 shares at the end of the
12th
month following the Effective
Date;
(c)
An additional 2,000,000 shares at the end of the
24th
month following the Effective
Date;
(d)
Delivery
of shares pursuant to Paragraph (b), above shall be subject to
Surviving Company recognizing actual gross revenues of $4,500,000
during the first 12 months following the Effective Date. In the
event gross revenues are less than or greater than that $4,500,000
for such period, the number of shares to be delivered will be
reduced or increased proportionately;
(e)
Delivery
of shares pursuant to Paragraph (c), above shall be subject to the
Surviving Company recognizing actual gross revenues of $6,000,000
during the second 12 months following the Effective Date. In the
event gross revenues are less than or greater than $6,000,000 for
such period, the number of shares to be delivered will be reduced
or increased proportionately;
(f)
For
the purposes of subparagraph (d) and (e), above, gross revenues
shall be defined as all revenue attributable to Driven Deliveries,
Inc. including revenues from future acquisitions
3
(g)
Notwithstanding
the foregoing, in the event Parent does not provide to the
Surviving Company within 60 days of the Effective Date a non-retail
storefront delivery license or permit located in a municipality
within Los Angeles County from which the Surviving Company can
legally and actually operate, which license or permit the Surviving
Company is able to utilize to engage in compliant delivery sales in
and around the City of Los Angeles, then the trigger dates for the
issuance of shares pursuant to paragraphs (b) and (c), above, may
at the option of the GR Founders be deferred for the period beyond
60 days from the Effective Date it takes for Driven to provide the
Surviving Company with a non-storefront delivery license and
location within Los Angeles County from which the Surviving Company
can legally and actually operate to engage in compliant delivery
sales in and around the City of Los Angeles. In the event that
Parent does not satisfy this condition within six (6) months of the
Effective Date, meaning that Parent has not provided to the
Surviving Company within 6 months of the Effective Date a license
and location in Los Angeles County from which the Surviving Company
can make deliveries in and around the City of Los Angeles, then the
Founders will each have the option to either receive the full
blocks of 2 million shares contemplated by sections 1.6(a)(ii)(b)
and 1.6(a)(ii)(c) to which they are entitled, on the respective
time frames set forth therein, at the end of months 12 and 24,
without regard to the revenue target numbers set forth in Sections
1.6(a)(ii)(d) or (e), or to continue to defer the date for share
issuance for up to one year, provided the respective
Founder’s contract of employment is extended for another
two-year term.
(b)
Deliverable by GR/GW to Parent and GRA.
(i) At
the Effective Date, subject to the terms and conditions of this
Agreement, by virtue of the Merger and without any action on the
part of Parent, GRA, GR and GW or the holders of any of the
following securities, the following shall
occur:
(a)
Ownership
of GR Stock. At the Effective
Date, GR shall simultaneously cancel all of its issued and
outstanding shares and 1,000 shares of GR common stock shall be
issued to Parent which shall comprise 100% of the then issued and
outstanding stock of GR.
(b)
Ownership of GW Membership Interests. At the Effective Date, GW shall take action to
vest 100% of its membership interests in GRA, which shall comprise
100% ownership of GW.
(c)
Cancellation
of Current GR/GW Securities. At the Effective Date, all shares of GR stock and
GW membership interest outstanding prior to the Effective Date
shall be cancelled.
(d)
Inventory.
Notwithstanding the foregoing, all current on hand inventory shall
remain with GRA.
(c)
Net
Working Capital. At the
Effective Date, $35,000 of the funds maintained in GWA’s bank
account with ▇▇▇▇▇ Fargo will be payable immediately to GR Founders
in the aggregate, to be divided between ▇▇▇▇▇▇, ▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇▇. Parent will provide all necessary operating capital to
GRA immediately upon the Effective Date and thereafter. Parent will
pay in full within 60 days of Effective Date, GR/GWA credit card
ending in 2305.
7. Rights of GR/GW
Security Holders.
(a)
On
the Effective Date, all rights of GR/GW security holders shall
terminate and any GR/GW securities which were outstanding prior to
the Effective Date shall be cancelled without any further action on
the part of any party. In any matters relating to such GR/GW
security ownership, GRA and Parent may rely conclusively upon the
records maintained by GR/GW containing the names and addresses of
the holders of record of GR/GW securities on the Effective
Date.
8. No
Further Ownership Rights in GR/GW. The delivery of the Merger Consideration by Parent
and GRA in accordance with the terms hereof shall be deemed to be
in full satisfaction of all rights pertaining to the holders of
securities of GR/GW. After the Effective Date, there shall be no
further registration of transfers on the records of GR/GW
securities which were outstanding immediately prior to the
Effective Date. If, after the Effective Date, any evidence of
ownership of GR/GW securities are presented to Surviving Company
for any reason, they shall be cancelled as provided in this
ARTICLE
I.
9. Tax
Treatment. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “Code”). Each of the parties hereto adopts this
Agreement as a “plan of reorganization” within the
meaning of Section 1.368-2(g) of the United States Treasury
Regulations (the “Regulations”). Both prior to and
after the Closing, each party's books and records shall be
maintained, and all federal, state and local income tax returns and
schedules thereto shall be filed in a manner consistent with the
Merger being qualified as a reverse triangular merger under Section
368(a)(2)(E) of the Code (and comparable provisions of any
applicable state or local laws), except to the extent the Merger is
determined in a final administrative or judicial decision not to
qualify as a reorganization within the meaning of Code Section
368(a).
10.
Reserved.
11.
Taking
of Necessary Action; Further Action. If,
at any time after the Effective Date, any further action is
necessary or desirable to carry out the purposes of this Agreement
and to vest the Surviving Company (and/or its successor in
interest) with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of GR and GW,
the officers and directors of Parent and the Surviving Company
shall be fully authorized (in the name of GR, GW and otherwise) to
take all such necessary action.
4
II.
REPRESENTATIONS AND WARRANTIES OF GR AND GW
Except as set forth in the schedules attached
hereto, each of GR and GW, jointly and severally hereby represent
and warrant to GRA and Parent that the statements contained in
this ARTICLE II
are true and
correct.
1.
Organization,
Qualification and Subsidiaries. GR is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation. GW is a limited liability company duly organized,
validly existing and in good standing under the laws of its state
of formation. Neither GR nor GW has any subsidiaries and does not
have an equity interest in any other firm, partnership, association
or other entity. As of the Effective Date, GR/GW is duly qualified
to transact business in the State of California and is in good
standing under the applicable laws thereof.
2.
Authorization,
Enforcement. GR/GW has the requisite power and authority to
conduct its business as presently conducted and to enter into and
to consummate the Merger. The execution and delivery of this
Agreement by GR/GW and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of GR/GW and no further consent or action is
required by GR/GW, other than the Required Approvals (as defined in
Section 3.2 below) and the approval of GR’s
stockholders, GW’s members and the approval of the
stockholders of GRA of the Merger and the amendments to their
respective certificates/articles of incorporation and/or
Certificate of Formation (the “Approvals”). This
Agreement, when executed and delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of GR/GW
enforceable against GR/GW in accordance with its terms, subject to
the Approvals, applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar applicable laws
affecting creditors’ rights and remedies generally and
general principles of equity.
3.
No
Conflicts. The execution, delivery and performance of this
Agreement by GR/GW and the consummation by GR/GW of the Merger do
not and will not: (i) conflict with or violate any provision of
GR’s Certificate of Incorporation or By-Laws or GW’s
Certificate of Formation or Operating Agreement, or (ii) subject to
obtaining the Approvals and the filing with the Secretary of State
of its state of incorporation/formation of a Certificate of Merger
(collectively, 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 or lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing GR/GW debt or otherwise) or other understanding to
which GR/GW is a party or by which any material property or asset
of GR/GW is bound or affected, or (iii) result in a violation of
any known applicable law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or
governmental authority as currently in effect to which GR/GW is
subject (including state securities laws and regulations), or by
which any material property or asset of GR/GW is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could
not, individually or in the aggregate (a) materially and adversely
affect the legality, validity or enforceability of the Merger, (b)
have or result in a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise)
of GR/GW, taken as a whole, or (c) materially and adversely impair
GR/GW’s ability to perform fully on a timely basis its
obligations under this Agreement (any of (a), (b) or (c), a
“GR/GW Material Adverse Effect”).
4.
Filings,
Consents and Approvals. Other than as detailed in Schedule 2.4 hereto,
GR/GW is not aware that it is 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 GR/GW of this
Agreement, other than the Required Approvals.
Notwithstanding the foregoing, Parent and GRA acknowledge that
they must receive permission from the Bureau of Cannabis Control
and City of Sacramento to be added as owners and/or financial
interest holders on the delivery license held by GR, and this is
neither a condition of closing or a duty of GR/GW, but will be the
responsibility of GRA and Parent post-Effective Date, with the
cooperation of Founders.
5.
Capitalization.
As of the date of this Agreement and
as of immediately before the Effective Date, GR/GW’s
outstanding capital is as set forth on Schedule 2.5. Except as
described in Schedule 2.6, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or exchangeable for, or giving
any Person any right to subscribe for or acquire, any interest in
GR/GW, or contracts, commitments, understandings or arrangements by
which GR/GW is or may become bound to issue additional interest in
GR/GW or rights convertible or exchangeable into any interest in
GR/GW.
5
6.
Contracts and Commitments.
a)
Schedule
2.6 hereto lists the following agreements, whether oral or written,
to which GR/GW is a party, which are currently in effect, and which
relate to the operation of GR/GW’s business:
b)
collective
bargaining agreement or contract with any labor union;
c)
contract,
agreement or understanding relating to the voting of GR stock or GW
membership interests or the election of the Board of Directors or
Managing Members, as the case may be;
d)
lease
or agreement under which GR/GW is lessee of, or holds or operates
any property, real or personal, owned by any other party, for which
the annual rental exceeds $50,000;
e)
other
agreement which is either material to GR/GW’s business or was
not entered into in the ordinary course of business.
To
GR/GW’s knowledge:
a)
GR/GW
has performed all obligations required to be performed by it in
connection with the contracts or commitments required to be
disclosed in Schedule 2.6 hereto and is not in receipt of any claim
of default under any contract or commitment required to be
disclosed under such caption;
b)
GR/GW
has no present expectation or intention of not fully performing any
material obligation pursuant to any contract or commitment required
to be disclosed under such caption; and
c)
GR/GW
has no knowledge of any breach or anticipated breach by any other
party to any contract or commitment required to be disclosed under
such caption.
7.
Affiliate
Transactions. Except as set forth in Schedule 2.7 hereto, and
other than pursuant to this Agreement, no officer, Director, or
Managing Member of GR/GW, or any member of the immediate family of
any such officer, Director, or Managing Member ,or any entity in
which any of such persons owns any beneficial interest (other than
any publicly-held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than
five percent (5%) of the stock of which is beneficially owned by
any of such persons) (collectively “GR/GW Insiders”),
has any agreement with GR/GW (other than normal employment
arrangements) or any interest in any property, real, personal or
mixed, tangible or intangible, used in or pertaining to the
business of GR/GW (other than ownership of securities of GR/GW).
Except as set forth on Schedule 2.7, GR/GW is not indebted to any
GR/GW Insider (except for amounts due as normal salaries and
bonuses and in reimbursement of ordinary business expenses) and no
GR/GW Insider is indebted to GR/GW (except for cash advances for
ordinary business expenses). None of the GR/GW Insiders has any
direct or indirect interest in any competitor, supplier or customer
of GR/GW or in any person, firm or entity from whom or to whom
GR/GW leases any property, or in any other person, firm or entity
with whom GR/GW transacts business of any nature. For purposes of
this Section 2.7 the stockholders of the immediate family of an
officer, director or employee shall consist of the spouse, parents,
children and siblings of such officer, director or
employee.
8.
Financial
Statements. Each of GR and GW have provided Parent and GRA
with financial statements for the period ending March 31, 2019. The
financial statements of GR/GW, together with the related notes
thereto, present fairly, in all material respects, the financial
position of GR/GW as of the dates specified and the results of its
operations and changes in financial position for the periods
covered thereby. Such audited financial statements and related
notes were prepared in accordance with United States Generally
Accepted Accounting Principles (“GAAP”) throughout the
period indicated except as may be disclosed in the notes thereto.
Except as required to be set forth in such financial statements, or
on Schedule 2.8, GR/GW has no material liabilities of any kind,
whether accrued, absolute, contingent or otherwise or entered into
any material transactions or commitments.
9.
Taxes. GR/GW has filed, on a timely basis, each Federal,
state and local Tax Returns which are required to be filed by it,
or has requested an extension therefore, and has paid all Taxes and
all related assessments, penalties and interest shown on such tax
returns to the extent that the same have become due and are not
being contested in good faith.
10.
Litigation.
Other than as set forth on Schedule
2.10, there is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of GR/GW,
threatened against or affecting GR/GW or its 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) materially
adversely affects or challenges the legality, validity or
enforceability of this Agreement or (ii) would, if there were an
unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in an GR/GW Material Adverse
Effect. GR/GW is not nor has it ever been the subject of any Action
involving a claim of violation of or liability under federal or
state securities laws. There has not been, and to the knowledge of GR/GW,
there is not pending or contemplated, any investigation by the SEC
or any other governmental authority involving
GR/GW.
6
11.
Compliance.
GR/GW is not:
a)
in
violation of its Articles of Incorporation or by-laws or Articles
of Formation or Operating Agreement;
b)
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 GR/GW under), nor has GR/GW received
notice of a claim that it is in default under or that it is in
violation of, any material indenture, loan or credit agreement or
any other material 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), which default or
violation would have or result in an GR/GW Material Adverse Effect;
or
c)
in
violation of any order of any court, arbitrator or governmental
body.
12.
Regulatory
Permits. GR/GW has not received any notice of proceedings
relating to the revocation or modification of any Permit. Following
the Merger, Parent will be ultimately responsible for compliance
with State and local regulations with respect to all licenses and
permits held by GR/GW.
13.
Properties.
GR/GW does not own any real property in fee simple. GR/GW has good
and marketable title to all other property (personal, tangible and
intangible) owned by it, free and clear of all security interests,
liens and encumbrances, except those that:
a)
do
not materially interfere with the use made of such property by
GR/GW;
b)
for
such imperfections of title and encumbrances that would not have an
GR/GW Material Adverse Effect; or
c)
for
liens that are not yet due and payable.
14.
Intellectual
Property. To the extent it has filed applications for
intellectual property protection, GR/GW owns all right, title and
interest in, or possesses adequate and enforceable rights to use,
all patents, patent applications, trademarks, trade names, service
marks, copyrights, rights, licenses, franchises, trade secrets,
confidential information, processes, formulations, software and
source and object codes necessary for the conduct of GR/GW business
(collectively, the “Intangibles”), except to the extent
that the failure to own or possess adequate rights to such
Intangibles would not have an GR/GW Material Adverse Effect. To its
the knowledge, GR/GW has not infringed upon the rights of others
with respect to the Intangibles and GR/GW has not received written
notice that it has or may have infringed or is infringing upon the
rights of others with respect to the Intangibles, or any written
notice of conflict with the asserted rights of others with respect
to the Intangibles, which infringement or conflict, if the subject
of an unfavorable decision, would have an GR/GW Material Adverse
Effect.
15.
Insurance.
The insurance policies owned and maintained by GR/GW that are
material to GR/GW are in full force and effect, all premiums due
and payable thereon have been paid (other than retroactive or
retrospective premium adjustments that GR/GW is not currently
required, but may in the future be required, to pay with respect to
any period ending prior to the date of this Agreement), and GR/GW
has received no notice of cancellation or termination with respect
to any such policy that has not been replaced on substantially
similar terms prior to the date of such
cancellation.
16.
No
Undisclosed Liabilities. Except as reflected in the balance sheet(s) of
March 31, 2019 (the “GR/GW Balance Sheets”) contained
in the audited and reviewed financial statements referenced in
Section 2.9, or as otherwise disclosed on Schedule 2.16, GR/GW has
no material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise except liabilities which have arisen
after the date of the GR/GW Balance Sheets in the ordinary course
of business (none of which is a material uninsured liability for
breach of contract, breach of warranty, tort, infringement, claim
or lawsuit).
17.
Environmental
Matters. None of the operations of GR/GW involves the
generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any
state, local or foreign equivalent.
7
18.
Material
Changes. Except for this Merger Transaction and such other
transactions as are set forth on Schedule 2.18, since the date of
the GR/GW Balance Sheet:
a)
there
has been no event, occurrence or development that has had an GR/GW
Material Adverse Effect;
b)
GR/GW
has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice, and (B)
liabilities not required to be reflected in GR/GW financial
statements pursuant to GAAP;
c)
GR/GW
has not altered its method of accounting or the identity of its
auditors;
d)
Other
than as disclosed in Schedule 2.18(d) hereto, GR/GW has not
declared or made any dividend or distribution of cash or other
property to its security holders except nominal payments in the
ordinary course of business consistent with prior practice, or
purchased, redeemed or made any agreements to purchase or redeem
any stock except consistent with prior practice; and
e)
GR/GW
has not issued any securities to any officer, director, member or
affiliate, except pursuant the conversion or exercise of
outstanding GR/GW securities.
19.
Full
Disclosure. The representations and warranties of GR/GW
contained in this Agreement (and in any schedule, exhibit,
certificate or other instrument to be delivered under this
Agreement) are believed in good faith to be true and correct in all
material respects, and such representations and warranties do not
omit any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading. There is no fact of which GR/GW has knowledge that
has not been disclosed to Parent pursuant to this Agreement,
including the schedules hereto, all taken together as a whole,
which has had or could reasonably be expected to have a GR/GW
Material Adverse Effect or materially adversely affect the ability
of GR/GW to consummate in a timely manner the transactions
contemplated hereby.
8
III.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND GRA
Each of Parent and GRA, jointly and severally,
hereby represents and warrants to GR and GW that the statements
contained in this ARTICLE
III are true and
correct.
1.
Organization of Parent and GRA.
a)
Each
of Parent and GRA is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
has the power and authority to own, lease and operate its assets
and property and to carry on its business as now being conducted;
and is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the failure to be
so qualified would have a Parent Material Adverse Effect. As used
in this Agreement, the term “Parent Material Adverse
Effect” means a material adverse effect on the condition
(financial or otherwise), business, assets or results of operations
of Parent and GRA as a whole or on the ability of Parent to
consummate the transactions contemplated by this Agreement;
provided, however, that any adverse change, event or effect that is
demonstrated to be caused primarily by the conditions generally
affecting the United States economy shall be deemed not to be a
Parent Material Adverse Effect.
b)
Parent
has delivered or made available to GR/GW a true and correct copy of
the Articles of Incorporation and Bylaws of each of Parent and GRA,
each as amended to date, and each such instrument is in full force
and effect. Neither Parent nor GRA is in violation of any of the
provisions of any of its governing instruments.
2.
Capital
Structure. As of the date of this Agreement, the authorized
capital stock of Parent consists of 200,000,000 shares of Parent
Common Stock of which there were 40,875,014 shares issued and
outstanding as of April 11, 2019 and 15,000,000 shares of preferred
stock, none of which were shares issued and outstanding as of April
11, 2019. All outstanding shares of Parent and GRA are duly
authorized, validly issued, fully paid and nonassessable, were
issued in compliance with applicable securities laws and are not
subject to preemptive rights created by statute, the
Certificate/Articles of Incorporation or Bylaws of Parent and GRA,
respectively or any agreement or document to which Parent or GRA is
a party or by which it is bound.
3.
Obligations
With Respect to Capital Stock. Other than as set forth on Schedule 3.3, there are
no equity securities, partnership interests or similar ownership
interests of any class of Parent, or any securities exchangeable or
convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests issued,
reserved for issuance or outstanding. There are no equity
securities, partnership interests or similar ownership interests of
any class of Parent, or any security exchangeable or convertible
into or exercisable for such equity securities, partnership
interests or similar ownership interests issued, reserved for
issuance or outstanding.
4.
Authority.
a)
Each
of Parent and GRA has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, have been
duly authorized by all necessary company action on the part of each
of Parent and GRA, subject only to the adoption of this Agreement
by GRA’s Board of Directors and the filing and recordation of
the Certificate of Merger pursuant to the DGCL or CCC, as the case
may be. This Agreement has been duly executed and delivered by each
of Parent and GRA and, assuming the due authorization, execution
and delivery by GR/GW, constitutes the valid and binding obligation
of each of Parent and GRA, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws and general principles of equity.
b)
The
execution and delivery of this Agreement by each of Parent and GRA,
do not, and the performance of this Agreement by each of Parent and
GRA, will not:
1.
conflict
with or violate the Articles of Incorporation or Bylaws of Parent,
or the Certificate of Incorporation or Bylaws of GRA, respectively,
(collectively, the “Parent Charter
Documents”);
2.
subject
to compliance with the requirements set forth in Section 3.4(d)
below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or GRA, respectively, or by
which its or any of their respective properties is bound or
affected; or
3.
result
in any breach of, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or
impair any of, Parent's or GRA' rights or alter the rights or
obligations of any third party under, or to Parent's knowledge,
give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Parent or GRA,
respectively, pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which any of Parent or GRA is a party
or by which Parent or GRA, or any of their respective properties
are bound or affected.
9
c)
Other
than as listed in Schedule 3.4(c), no consent, approval, order or
authorization of, or registration, declaration or filing with any
Governmental Entity is required by or with respect to any of Parent
or GRA in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby, except for:
1.
the
filing of the Certificate of Merger with the Secretaries of State
of Delaware and California, respectively;
2.
such
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable
federal and state securities laws and;
3.
such
other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, individually or in
the aggregate, would not be reasonably likely to have a Parent
Material Adverse Effect.
5.
Parent SEC Filings; Parent Financial Statements.
(a)
The
Parent has filed all forms, reports and documents required to be
filed with the SEC. All such required forms, reports and documents
(including the financial statements, exhibits and schedules thereto
and those documents that the Parent may file subsequent to the date
hereof) are collectively referred to herein as the “Parent
SEC Reports”. As of their respective dates, the Parent SEC
Reports (i) were prepared in accordance with the requirements of
the Securities Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as the case may be, and
the rules and regulations of the SEC thereunder applicable to such
Parent SEC Reports, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(b)
Each
of the financial statements (including, in each case, any related
notes thereto) contained in the Parent SEC Reports (the
“Parent Financials”), including any Parent SEC Reports
filed after the date hereof until the Closing, as of their
respective dates:
(i)
complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto;
(ii)
was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act); and
(iii)
fairly presented the financial position of the Parent at the
respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not, or are
not expected to be, material in amount.
The balance sheet of the Parent
as of December 31, 2018 is hereinafter referred to as the
“Parent Balance Sheet.” Except as disclosed in the
Parent Financials, the Parent does not have any liabilities
(absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP
which are, individually or in the aggregate, material to the
business, results of operations or financial condition of the
Parent, except liabilities (i) provided for in the Parent Balance
Sheet, or (ii) incurred since the date of the Parent Balance Sheet
in the ordinary course of business consistent with past
practices. No person who has
been suspended or barred from being associated with a registered
public accounting firm, or who has failed to comply with any
sanction pursuant to Rule 5300 promulgated by the Public Company
Accounting Oversight Board, has participated in or otherwise aided
the preparation of, or audited, any financial statements,
supporting schedules or other financial data filed by the Parent
with the SEC.
6.
Absence
of Certain Changes or Events.
Except as disclosed in the Parent SEC
Reports filed prior to the date hereof or as contemplated by this
Agreement, since the date of the Parent Balance Sheet, Parent has
conducted business only in, and has not engaged in any material
transaction other than according to, the ordinary and usual course
of such businesses and there has not been:
a)
any
change that individually or in the aggregate, has had or is
reasonably likely to have a Parent Material Adverse
Effect;
b)
any
material damage, destruction or other casualty loss with respect to
any material asset or property owned, leased or otherwise used by
Parent or GRA, whether or not covered by insurance;
c)
any
declaration, setting aside or payment of any dividend or other
distribution in cash, stock or property in respect of the capital
stock of Parent, except for dividends or other distributions on its
capital stock publicly announced prior to the date hereof and
except as expressly permitted hereby;
d)
any
event that would constitute a violation of Section 4.1 or Section
4.2 hereof, if such event occurred after the date of this Agreement
and prior to the Effective Date; or
e)
any
change by Parent in accounting principles, practices or
methods.
10
7.
No
Undisclosed Liabilities. Except as reflected in the Parent Financials or as
otherwise disclosed on Schedule 3.7, Parent has no liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise)
except liabilities which have arisen after the date of the Parent
Financials in the ordinary course of business (none of which is a
material uninsured liability for breach of contract, breach of
warranty, tort, infringement, claim, or
lawsuit).
8.
Tax
Matters. The Parent timely filed all required Tax Returns
with the appropriate Taxing Authorities before the Effective Date.
These Tax Returns were true, correct, and complete in all material
respects. No extension is in effect for Parent with respect to the
filing of any Tax Return, the payment of any Taxes, or any
limitation period regarding the assessment or collection of any
Taxes. Parent has paid in full all Taxes which have become due and
payable on or before the Effective Date (whether or not shown on
any Tax Return). Adequate reserves and accruals have been
established to provide for the payment of all Taxes which are not
yet due and payable with respect to the Parent through the
Effective Date. There are no liens for Taxes upon Parent or GRA or
any of their properties or assets except for Taxes not yet due and
payable. Neither Parent nor GRA has any liability for the Taxes of
any other person under Treasury Regulation Section 1.502-6 (or
similar provisions of state, local or foreign tax law), as a
transferee or successor, by contract, or otherwise. Parent does not
have pending any ruling requests filed by it or on its behalf with
any Taxing Authority and is not a party to any closing agreement
described in Internal Revenue Code Section 7121 (or similar
provisions of state, local or foreign law). No deficiency or
proposed adjustment for any amount of Tax has been proposed,
asserted, assessed or reassessed (as may be applicable) by any
Taxing Authority against Parent that has not been paid, settled or
otherwise resolved. There is no action, suit, claim, examination,
investigation, proceeding or audit now pending, proposed or
threatened against Parent with respect to any Taxes. Parent has not
been notified by any Taxing Authority that any issues have been
raised with respect to any Tax Return. No claim has been made
within the past five (5) calendar years by any Taxing Authority in
a jurisdiction where Parent did not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. Neither Parent nor
GRA is an “investment company” within the meaning of
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue
Code.
As
used in this Agreement, “Tax” means any federal, state,
province, local or foreign income taxes (including any tax on or
based upon net income, or gross income, or income as specially
defined, or earnings, or profits, or selected items of income,
earnings or profits) and all gross receipts, estimated, sales, use,
ad valorem, transfer, franchise, license, withholding, payroll,
employment, excise, capital stock, social security (or similar),
unemployment, disability, severance, stamp, gains, registration,
value added, occupation, premium, real property, personal property,
profits, windfall profits, environmental, alternative or add-on
minimum taxes, custom duties or other taxes, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any
Taxing Authority whether disputed or not.
As
used in this Agreement, “Tax Return” is defined as any
return, declaration, report, claim for refund, information return,
statement or other document (including any related or supporting
information, schedule, attachment and any amendment thereof) filed
or required to be filed with any federal, state, province, local or
foreign governmental entity or other authority (a “Taxing
Authority”) in connection with the determination, assessment
or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any
Tax.
9.
Contracts and Commitments.
a)
Other
than as disclosed in the Parent’s filings with the U. S.
Securities and Exchange Commission, Schedule 3.9 hereto lists the
following agreements, whether oral or written, to which Parent or
GRA is a party, which are currently in effect, and which relate to
the operation of Parent’s business, or where applicable, the
business of GRA:
1.
collective
bargaining agreement or contract with any labor union;
2.
bonus,
pension, profit sharing, retirement or other form of deferred
compensation plan;
3.
hospitalization
insurance or other welfare benefit plan or practice, whether formal
or informal;
4.
stock
purchase or stock option plan;
5.
contract
for the employment of any officer, individual employee or other
person on a full-time or consulting basis or relating to severance
pay for any such person;
6.
confidentiality
agreement;
7.
contract,
agreement or understanding relating to the voting of Parent Common
Stock or the election of directors of Parent;
11
8.
agreement
or indenture relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a lien on any of the assets of Parent
or GRA;
9.
guaranty
of any obligation for borrowed money or otherwise;
10.
lease
or agreement under which Parent or GRA is lessee of, or holds or
operates any property, real or personal, owned by any other party,
for which the annual rental exceeds $25,000;
11.
lease
or agreement under which Parent or GRA is lessor of, or permits any
third party to hold or operate, any property, real or personal, for
which the annual rental exceeds $25,000;
12.
contract
which prohibits Parent or GRA from freely engaging in business
anywhere in the world;
13.
license
agreement or agreement providing for the payment or receipt of
royalties or other compensation by Parent or GRA in connection with
any intellectual property rights;
14.
contract
or commitment for capital expenditures in excess of
$50,000;
15.
agreement
for the sale of any capital asset;
16.
contract
with GRA any affiliate thereof which in any way relates to Parent
(other than for employment on customary terms); or
17.
other
agreement which is either material to Parent’s business or
was not entered into in the ordinary course of
business.
b)
To
Parent’s knowledge, Parent and GRA has performed all
obligations required to be performed by them in connection with the
contracts or commitments required to be disclosed in Schedule 3.9
hereto and is not in receipt of any claim of default under any
contract or commitment required to be disclosed under such caption,
Parent and GRA, where applicable, have no present expectation or
intention of not fully performing any material obligation pursuant
to any contract or commitment required to be disclosed under such
caption, and Parent has no knowledge of any breach or anticipated
breach by any other party to any contract or commitment required to
be disclosed under such caption.
10.
Ongoing
Parent Support. Additionally, Parent will provide adequate
financial support for marketing and other operating costs needed to
support GRA’s growth such that the revenue targets set forth
herein and in mutually-agreed budgets to be developed by the
parties are reasonably attainable. Parent agrees that it will take
no actions, either before or after the Effective Date, that might
frustrate GR’s ability to meet the revenue targets set forth
herein. The scope and quantification of the Parent’s
financial support commitment shall be as detailed in the business
plan.
11.
Compliance; Permits; Restrictions.
a)
Neither
Parent nor GRA is in conflict with, or in default or violation
of:
(i)
any
law, rule, regulation, order, judgment or decree applicable to
Parent or GRA or by which it or any of its properties are bound or
affected; or
(ii)
any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which Parent or GRA is a party or by which Parent or GRA or its or
any of their respective properties is bound or affected except for
those conflicts, defaults or violations which would not be
reasonably expected to have a Parent Material Adverse
Effect.
(b)
To
the knowledge of Parent, no investigation or review by any
Governmental Entity is pending or threatened against Parent or GRA,
nor has any Governmental Entity indicated in writing an intention
to conduct the same. There is no agreement, judgment, injunction,
order or decree binding upon Parent or GRA which has or would
reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Parent or GRA, any
acquisition of material property by Parent or GRA or the conduct of
business by Parent as currently conducted.
(c)
Parent
and GRA hold all permits, licenses, variances, exemptions, orders
and approvals from Governmental Entities which are necessary to the
conduct of the business of Parent except those the absence of which
would not, individually or in the aggregate, be reasonably likely
to have a Parent Material Adverse Effect, (collectively, the
“Parent Permits”). Parent and GRA are in compliance in
all material respects with the terms of the Parent
Permits.
12
12.
Litigation.
There is no action, suit, proceeding,
claim, arbitration or investigation pending, including derivative
suits brought by or on behalf of Parent, or as to which Parent or
GRA has received any written notice of assertion nor, to Parent's
knowledge, is there a threatened action, suit, proceeding, claim,
arbitration or investigation against Parent or GRA seeking to
delay, limit or enjoin the transactions contemplated by this
Agreement or which might reasonably be expected to have a Parent
Material Adverse Effect.
13.
Brokers'
and Finders' Fees. Neither
Parent nor GRA has incurred, nor will they incur, directly or
indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this
Agreement or any transaction contemplated
hereby.
14.
Employees.
(a)
GRA
does not now have, nor has it ever had at any time, any
employees.
(b)
Except
as otherwise set forth in Schedule 3.14, or as contemplated by this
Agreement, to the knowledge of Parent, neither any executive
employee of Parent nor any group of Parent’s employees has
any plans to terminate his, her or its employment.
(c)
Parent
has no material labor relations problem pending and its labor
relations are satisfactory.
(d)
There
are no workers’ compensation claims pending against Parent
nor is Parent aware of any facts that would give rise to such a
claim.
(e)
To
the knowledge of Parent, no employee of Parent is subject to any
secrecy or non-competition agreement or any other agreement or
restriction of any kind that would impede in any way the ability of
such employee to carry out fully all activities of such employee in
furtherance of the business of Parent.
(f)
No
employee or former employee of Parent has any claim with respect to
any intellectual property rights of Parent.
15.
Affiliate
Transactions. Except as set
forth in the Parent’s filings with the U.S. Securities and
Exchange Commission or in Schedule 3.15 hereto, and other than
pursuant to this Agreement, no officer, director or employee of
Parent, GRA or any member of the immediate family of any such
officer, director or employee, or any entity in which any of such
persons owns any beneficial interest (other than any publicly-held
corporation whose stock is traded on a national securities exchange
or in the over-the-counter market and less than one percent of the
stock of which is beneficially owned by any of such persons)
(collectively “Parent
Insiders”), has any
agreement with Parent (other than normal employment arrangements)
or any interest in any property, real, personal or mixed, tangible
or intangible, used in or pertaining to the business of Parent
(other than ownership of capital stock of Parent). Parent is not
indebted to any Parent Insider (except for amounts due as normal
salaries and bonuses and in reimbursement of ordinary business
expenses) and no Parent Insider is indebted to Parent) except for
cash advances for ordinary business expenses, in each case in an
amount less than $1,000). None of the insiders has any direct or
indirect interest in any competitor, supplier or customer of Parent
or in any person, firm or entity from whom or to whom Parent leases
any property, or in any other person, firm or entity with whom
Parent transacts business of any nature. For purposes of this
Section 3.15, the members of the immediate family of an officer,
director or employee shall consist of the spouse, parents and
children of such officer, director or employee.
16.
Books
and Records. The books of
account, minute books, stock record books, and other records of
Parent and GRA have been properly kept and contain no inaccuracies
except for inaccuracies that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on Parent. At the Closing, all of Parent’s records will be in
the possession of Parent.
17.
Real
Property. Neither Parent nor
GRA owns any real property. Schedule 3.17 contains
an accurate list of all leaseholds and other interests of Parent
and GRA in any real property. Parent and GRA have good and valid
title to those leaseholds and other interests free and clear of all
liens and encumbrances, and the real property to which those
leasehold and other interests pertain constitutes the only real
property used in Parent’s business.
18.
Insurance.
The insurance policies owned and
maintained by Parent that are material to Parent are in full force
and effect, all premiums due and payable thereon have been paid
(other than retroactive or retrospective premium adjustments that
Parent is not currently required, but may in the future be
required, to pay with respect to any period ending prior to the
date of this Agreement), and Parent has received no notice of
cancellation or termination with respect to any such policy that
has not been replaced on substantially similar terms prior to the
date of such cancellation.
13
19.
Environmental
Matters. None of the operations
of Parent or GRA involves the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under
40 C.F.R. Parts 260-270 or any state, local or foreign
equivalent.
20.
Absence
of Liens and Encumbrances. Each of Parent and GRA has good and valid title
to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its tangible properties and assets,
real, personal and mixed, used in its business, free and clear of
any liens and encumbrances except:
(a)
as
reflected in the Parent Financial Statements;
(b)
for liens for taxes not yet due and payable; and
(c)
for such imperfections of title and encumbrances, if any, which
would not be reasonably expected to have a Parent Material Adverse
Effect.
21.
Board
Approval. The Board of Directors of Parent and
GRA:
(a)
determined
that the Merger is fair to, advisable and in the best interests of
it and its stockholders or members;
(b)
approved
the Merger Consideration; and
(c)
duly
approved the Merger, this Agreement and the transactions
contemplated hereby.
22.
Reserved.
23.
Disclosed
Information. None of the
information supplied or to be supplied by Parent or GRA, or any
amendments or supplements thereto, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading.
24.
Investigations
and Inquiries. Nether Parent,
GRA nor any of its respective directors, officers or managing
members is the subject of any investigation, inquiry or proceeding
before the Securities Exchange Commission or any state securities
commission or administrative agency.
25.
Foreign
Corrupt Practices. Neither the Parent nor GRA, nor to the
Parent’s knowledge, any director, officer, managing member,
agent, employee or other Person acting on behalf of the Parent has,
in the course of its actions for, or on behalf of, the Parent or
GRA:
(a)
used
any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity;
(b)
made
any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds;
(c)
violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or
(d)
made
any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government
official or employee.
26.
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
Other than as set forth on Schedule
3.26, the Parent is either in compliance with any and all
applicable requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are
effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the SEC thereunder that are
effective as of the date hereof or any elements of
non-compliance.
14
27.
Patriot
Act.
To the extent applicable, both the
Parent and GRA are in compliance, in all material respects, with
the following federal laws:
(a)
Trading
with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto; and
(b)
Uniting
and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism (USA Patriot Act of
2001).
28.
Off
Balance Sheet Arrangements.
There is no transaction, arrangement, or other relationship between
the Parent and an unconsolidated or other off balance sheet entity
that is required to be disclosed by the Parent in its 1934 Act
filings and is not so disclosed or that otherwise would be
reasonably likely to have a Parent Material Adverse
Effect.
29.
Investment
Company Status. Neither Parent
nor the GRA is, nor upon consummation of the sale of the Securities
will not be, an “investment company,” a company
controlled by an “investment company” or an
“affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company
Act of 1940, as amended.
30.
Full
Disclosure. The representations
and warranties of Parent and GRA contained in this Agreement (and
in any schedule, exhibit, certificate or other instrument to be
delivered under this Agreement) are true and correct in all
material respects, and such representations and warranties do not
omit any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading. There is no fact of which Parent has knowledge that
has not been disclosed to GR/GW pursuant to this Agreement,
including the schedules hereto, all taken together as a whole,
which has had or could reasonably be expected to have a Material
Adverse Effect on Parent or GRA or materially adversely affect the
ability of Parent or GRA to consummate in a timely manner the
transactions contemplated hereby.
15
IV.
CONDUCT PRIOR TO THE EFFECTIVE DATE
1.
Conduct
of Business by the Parties. During the period from the date of execution of
this Agreement (“Execution
Date”) and continuing
until the earlier of the termination of this Agreement pursuant to
ARTICLE VII or the Effective Date, except as contemplated by this
Agreement or the transactions contemplated hereby and thereby, each
of GR, GW, GRA and Parent shall conduct their respective businesses
in the ordinary course and in substantial compliance (except as
stated elsewhere in this Agreement) with all applicable laws and
regulations, pay their respective debts and Taxes when due subject
to good faith disputes over such debts or Taxes, pay or perform
other material obligations when due subject to good faith disputes
over such obligations, and use their commercially reasonable
efforts consistent with past practices and policies
to:
(a)
preserve
intact their present business organization;
(b)
keep
available the services of each of their present officers and key
employees, respectively; and
(c)
preserve
to the best of their ability their relationships with customers,
suppliers, distributors, licensors, licensees and others with which
each party has business dealings material to their respective
business.
2.
Covenants
of GR and GW. Except as
disclosed in Schedule 4.2
hereto, permitted by the terms of this
Agreement or the transactions contemplated hereby and thereby,
during the period from the Execution Date and continuing until the
earlier of the termination of this Agreement pursuant to its terms
or the Effective Date, GR and GW shall not:
(a)
amend
the GR or GW Articles of Incorporation or Articles of Formation, as
the case may be (other than as provided herein);
(b)
split,
combine or reclassify its outstanding stock;
(c)
declare,
set aside or pay any dividend payable in cash, stock or property in
respect of any stock;
(d)
conduct
its business, other than in the ordinary course consistent with
past practices;
(e)
issue
any stock or any options, warrants or other rights to subscribe for
or purchase any stock or any securities convertible into or
exchangeable or exercisable for, or rights to purchase or otherwise
acquire, any securities of GR or GW; or
(f)
directly
or indirectly redeem, purchase, sell or otherwise acquire any
securities of GR or GW.
16
V.
ADDITIONAL AGREEMENTS
1.
Due Diligence and Access.
(a) From
and after the date of this Letter, each Party will authorize its
management to allow the other Party and such other Party's advisors
access to its personnel, facilities, contracts, books, and records,
in each case to the extent relating to its participation in the
transaction, for the purpose of conducting such other Party's due
diligence with respect to the transaction, subject to the
Confidentiality Agreement between the Parties.
(b) The
Parties will have until June 27, 2019 (the “Due Diligence
Completion Date”) to complete their respective due diligence
regarding the transaction.
(c) In
carrying out its due diligence pursuant to hereto, (i) Parent
agrees that it will direct all requests for any information
concerning GGA/GW and/or their affiliates to ▇▇▇▇▇ ▇▇▇▇, (ii) GR/GW
agrees that it will direct all requests for any information
concerning Parent and/or its affiliates to ▇▇▇▇▇ ▇▇▇▇▇; and (iii)
neither Party will make any inquiries of any other parties and/or
their affiliates' customers, suppliers, lenders, employees or other
service providers with respect to the other Party or the
transaction without the prior written consent of the other Party's
Diligence Contact (which consent may be withheld for any reason or
no reason at all in the sole discretion of the other
Party).
2. Public
Disclosure; Securities Law Filings. Parent and GR/GW will consult with each other, and
to the extent practicable, agree, before issuing any press release
or otherwise making any public statement with respect to the Merger
or this Agreement and will not issue any such press release or make
any such public statement prior to such consultation, except as may
be required by law, in which case reasonable efforts to consult
with the other party will be made prior to such release or public
statement. In addition, Parent and GR/GW agree to cooperate in the
preparation and filing of all filings required by applicable
securities laws, including, without limitation, the Merger Form 8-K
(as defined in Section 6.1 below), periodic and other reports
required by Section 13 of the Exchange Act, and information
required by Section 14(f) of the Exchange Act, including Rule 14f-1
promulgated thereunder.
3. Expenses.
Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
4. Commercially
Reasonable Efforts; Notification.
(a)
Upon
the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by
this Agreement, including to accomplish the following:
(i)
causing
the conditions precedent set forth in ARTICLE IV to be
satisfied;
(ii)
obtaining all necessary actions or non-actions,
waivers, consents, approvals, orders and authorizations from any
federal, state, local or foreign governmental authority
(collectively, “Governmental
Entities” and each a
“Governmental
Entity”);
(iii)
making
all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities,
if any);
(iv)
avoiding
any suit, claim, action, investigation or proceeding by any
Governmental Entity challenging the Merger or any other transaction
contemplated by this Agreement;
(v)
obtaining
all consents, approvals or waivers from third parties required as a
result of the transactions contemplated in this
Agreement;
(vi)
defending
any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed;
and
(vii)
executing
or delivering any additional instruments reasonably necessary to
consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement.
17
(b)
Parent
shall give prompt notice to GR/GW upon becoming aware that any
representation or warranty made by it or GRA contained in this
Agreement has become untrue or inaccurate, or of any failure of
Parent or GRA to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied
by it under this Agreement, in each case, where the conditions set
forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as
a result thereof; provided, however, that no such notification
shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c)
GR/GW
shall give prompt notice to Parent upon becoming aware that any
representation or warranty made by it contained in this Agreement
has become untrue or inaccurate, or of any failure of GR/GW to
comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under
this Agreement, in each case, where the conditions set forth in
Section 6.3(a) or Section 6.3(b) would not be satisfied as a result
thereof; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under
this Agreement.
5. Third
Party Consents. On or before
the Effective Date, Parent, GRA and GR/GW will each use
commercially reasonable efforts to obtain any consents, waivers and
approvals under any of its respective agreements, contracts,
licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated
hereby.
6. GR
Stockholders’ Written Consent; GW Members Written Consent;
Materials to Stockholders and Members.
(a)
GR/GW
shall use commercially reasonable efforts to obtain, in lieu of
holding a stockholders or members meeting, the written consent of
the number of GR/GW stockholders or members necessary under its
Certificate of Incorporation, By-Laws, Certificate of Formation,
Operating Agreement and the CCC to approve this agreement and the
Merger.
7. Indemnification.
GRA and Parent shall advance defense
costs (or provide a defense), and indemnify each of the Founders
for all claims, losses, expenses, liabilities, attorneys fees,
fees, investigation and judgments, arising from (a) any lawsuit,
investigation or other challenge made to the enforceability of this
Agreement or the Merger by Driven’s shareholder’s or
federal regulators, as well as for (b) any services provided by the
Founders to GRA and Parent following the Merger pursuant to any
employment agreement.
8. Limitation
of Liability. Notwithstanding
anything to the contrary contained in this Agreement, except as a
result of a fraud, or a material misstatement or omission
hereunder, perpetrated by any party to this agreement, or their
respective successors or affiliates, no party shall have any
liability to any other party hereunder from and after the Effective
Date except pursuant to this Agreement or any other agreement which
specifically provides that it will survive or be effective after
the Effective Date.
9. Failure
to Fulfill Conditions. In the
event that any of the parties hereto determines that a condition to
its respective obligations to consummate the transactions
contemplated hereby cannot be fulfilled on or prior to the
termination of this Agreement, it will promptly notify the other
party.
10.
Notification
of Certain Matters. On or prior
to the Effective Date, each party shall give prompt notice to the
other party of the following:
(a)
the
occurrence or failure to occur of any event or the discovery of any
information, which occurrence, failure or discovery would be likely
to cause any representation or warranty on its part contained in
this Agreement to be untrue, inaccurate or incomplete after the
date hereof in any material respect or, in the case of any
representation or warranty given as of a specific date, would be
likely to cause any such representation or warranty on its part
contained in this Agreement to be untrue, inaccurate or incomplete
in any material respect as of such specific date; and
(b)
any material failure of such party to comply with
or satisfy any covenant or agreement to be complied with or
satisfied by it hereunder.
11.
Access
to Information. Each of GR, GW,
Parent and GRA shall afford to the other and the other's
accountants, counsel, financial advisors and other representatives
reasonable access during normal business hours throughout the
period prior to the Effective Date to all properties, books,
contracts, commitments and records (including, but not limited to,
tax returns) of it and, during such period, shall furnish
promptly:
(a)
a
copy of each report, schedule and other document filed or received
by it during such period pursuant to the requirements of federal or
state securities laws or filed by it during such period with the
SEC in connection with the transactions contemplated by this
Agreement or which may have a Parent Material Adverse Effect or
GR/GW Material Adverse Effect on it; and
(b)
such
other information concerning its business, properties and personnel
as the other shall reasonably request; provided, however, that no
investigation pursuant to this Section shall affect any
representation or warranty made herein or the conditions to the
obligations of the respective parties to consummate the
Merger.
All
non-public documents and information furnished to any of GR, GW,
Parent or GRA, as the case may be, in connection with the
transactions contemplated by this Agreement shall be deemed to have
been received, and shall be held by the recipient, in
confidence.
18
VI.
CONDITIONS TO THE MERGER
1.
Conditions
to Obligations of Each Party to Effect the Merger.
The respective obligations of each
party to this Agreement to effect the Merger, and the Closing
taking place, shall be subject to the satisfaction at or prior to
the Effective Date of the following conditions, any of which may be
waived if waived in writing by both Parent and
GR/GW:
(a)
Due
Diligence. No party shall have
advised any other party prior to the Due Diligence Completion Date
that it is unsatisfied with any due diligence
matter.
(b)
Business
Plan. The parties shall have
agreed on a written Business Plan, including but not limited to (a)
the hiring of GR’s current employees and incorporation of
their benefits packages, including employment agreements for ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Cisco Rico with the combined
businesses, (b) agreement as to GR Founder’s management role
with respect to GR’s ongoing business, (c) the budget for GRA
and financial contributions and support to be provided by Parent,
and (d) overall business growth strategy.
(c) Employment
Agreements. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ shall have each entered into
mutually-acceptable employment agreements with
Parent.
(d)
Strategy.
The parties shall develop a written and mutually agreeable strategy
and timeline for Parent securing by acquisition or otherwise, a
license or permit within Los Angeles County that would provide a
suitable location for GR to complete compliant deliveries in and
around the City of Los Angeles.
(e)
Bonus
Structure. The parties develop
a framework with milestones and triggers for bonuses and additional
compensation for management based upon agreed metrics, including
but not limited to GR’s performance and the generation of new
affiliate agreements for Driven, as well as a change of control of
Driven or GRA.
(f)
Parent
Default. The parties develop an
agreed framework for GR to remit back to its Founders certain
assets, including its non-storefront retail license and technology
platform, should Parent undergo a catastrophic failure or default
in any of its required payments of stock or cash payable to such
Founders pursuant to this Agreement.
(g)
Burbank
License. The parties develop an
agreed framework for additional compensation in the form of Parent
shares and/or cash if the Burbank City Council votes to allow GR to
operate from within the City of Burbank.
(g)
GR
Legal Fees. Parent shall have
reimbursed GR for its legal fees incurred following the execution
of a Letter of Intent in an amount not to exceed $25,000 (or have
paid ▇▇▇▇▇▇▇ Law Group P.C. directly for those fees
incurred).
(h)
No
Prohibitive Change of Law.
Other than Federal legislation relating to the sale of cannabis,
there shall have been no law, statute, rule or regulation, domestic
or foreign, enacted or promulgated which would prohibit or make
illegal the consummation of the transactions contemplated
hereby.
(i)
Reserved.
(j)
Order.
No Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the
Merger.
19
(k)
Schedules.
Each of the parties hereto shall have delivered to each other
complete and accurate Schedules to this Agreement and such
Schedules shall have been approved by the
recipient.
(l)
Exhibits.
The parties shall mutually agree upon the form and substance of all
the Exhibits to this Agreement and the appropriate signatories
thereto shall have executed and delivered each such
document.
(m)
Officers’
Certificate. Each party shall
have furnished to the other a certificate of its Chief Executive
Officer dated as of the Effective Date, in which such officers
shall certify that, to their best knowledge, the conditions set
forth in Section 6.2(a) and 6.2(b) or 6.3(a) and 6.3(b) (as
applicable) have been fulfilled and are true and
correct.
(n)
Readiness
of the Form 8-K. The Form 8-K
announcing the Closing, together with, or incorporating by
reference, the financial statements prepared by GR/GW, and such
other information (including financial statements) that may be
required to be disclosed with respect to the Merger in any report
or form to be filed with the SEC (“Merger Form
8-K”) shall be, in the
opinion of the parties, in a form reasonably acceptable for filing
with the SEC immediately following the Closing. The Merger Form 8-K
will be prepared by counsel for Parent, subject to review by the
Parent’s counsel. Notwithstanding the foregoing, GR/GW and
its counsel are not making any representations concerning
compliance of the Merger Form 8-K with securities laws and assume
no liability or responsibility therefor.
2. Additional
Conditions to Obligations of GR/GW. The obligation of GR/GW to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Date of
each of the following conditions, any of which may be waived, in
writing, exclusively by GR/GW:
(a)
Representations
and Warranties. The
representations and warranties of Parent and GRA set forth in this
Agreement shall be true and correct as of the date of this
Agreement and as of the Effective Date as if made on and as of the
Effective Date (except to the extent any such representation and
warranty expressly speaks only as of an earlier date) and GR/GW
shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer of Parent to such
effect.
(b)
Agreements
and Covenants. Each of Parent
and GRA shall have performed or complied with, in all material
respects, all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the
Effective Date, and GR/GW shall have received a certificate to such
effect signed on behalf of each of Parent and GRA by an authorized
officer of GR/GW.
(c) Consents
and Approvals. Parent and GRA
shall have obtained all consents and approvals necessary to
consummate the transactions contemplated by this Agreement in order
that the transactions contemplated herein not constitute a breach
or violation of, or result in a right of termination or
acceleration of, or creation of any encumbrance on any of
Parent’s or GRA’s assets pursuant to the provisions of,
any agreement, arrangement or undertaking of or affecting Parent or
any license, franchise or permit of or affecting Parent or GRA.
Notwithstanding the foregoing, this condition does not apply to
Parent or GRA receiving permission from the Bureau of Cannabis
Control and City of Sacramento to be added as owners and/or
financial interest holders on the delivery license held by
GR.
(d)
No
Closing Material Adverse Effect. Since the date hereof, there has not occurred a
Parent Material Adverse Effect. For purposes of the preceding
sentence and Section the occurrence of any of the following events
or circumstances, in and of themselves and in combination with any
of the others, shall not constitute a Parent Material Adverse
Effect:
(i)
any
litigation or threat of litigation filed or made after the date
hereof challenging any of the transactions contemplated herein or
any stockholder litigation or threat of stockholder litigation
filed or made after the date hereof resulting from this Agreement
or the transactions contemplated herein unless GR/GW shall conclude
that it has or could have a Parent Material Adverse Effect on the
Parent and the Surviving Corporation, taken as a whole;
and
(ii)
any adverse change, event or effect that is demonstrated to be
caused primarily by conditions generally affecting the United
States economy.
(e)
Other
Agreements and Resignations.
Each of the officers and directors of GR/GW immediately prior to
the Effective Date shall deliver duly executed resignations from
their positions with each such applicable corporation immediately
upon the Effective Date.
(f)
Compliance
with Securities Law Requirements. Parent shall be in compliance in all material
respects with all requirements of applicable securities laws,
including, without limitation, the filing of reports required by
Section 13 of the Exchange Act, and shall have taken all actions
with respect thereto as shall be required or reasonably requested
by GR/GW in connection therewith.
20
3.
Additional
Conditions to the Obligations of Parent and GRA.
The obligations of Parent and GRA to
effect the Merger shall be subject to the satisfaction at or prior
to the Effective Date of each of the following conditions, any of
which may be waived, in writing, exclusively by
Parent:
(a)
Representations
and Warranties. The
representations and warranties of GR and GW set forth in this
Agreement shall be true and correct as of the date of this
Agreement and as of the Effective Date as if made on and as of the
Effective Date (except to the extent any such representation and
warranty expressly speaks only as of an earlier date or to the
extent such representation and warranty is no longer true on
account of transactions contemplated by this Agreement) and Parent
shall have received a certificate signed on behalf of GR and GW by
their respective Presidents of GR and GW to such effect; provided,
however, that notwithstanding anything herein to the contrary, this
Section 6.3(a) shall be deemed to have been satisfied even if such
representations or warranties are not so true and correct unless
the failure of such representations or warranties to be so true and
correct, individually or in the aggregate, has had, or is
reasonably likely to have, an GR/GW Material Adverse
Effect.
(c)
Agreements
and Covenants. GR and GW shall
have performed or complied with, in all material respects, all
agreements and covenants required by this Agreement to be performed
or complied with by it at or prior to the Effective Date, and
Parent shall have received certificates to such effect signed on
behalf of each of GR and GW by authorized officers of each
respective company.
(d)
Receipt
and Approval of GR and GW Audited Financial Statements.
Parent and GRA shall have received and
approved financial statements of GR and GW for the period ended
December 31, 2018 and 2017 and unaudited financial statements for
the period ended March 31, 2019 (June 30, 2019 if the transaction
closes after August 15, 2019, audited (with respect to any annual
statements) and reviewed (with respect to any interim financial
statements) by a PCAOB-registered auditor within 60 days of the
Effective Date.
(e)
Reserved.
(e)
Resignation
of GR and GW Officers and Directors. The Officers and Directors of each of GR and GW
shall have tendered their resignations from their respective
offices to be effective at the Closing.
(f)
No
Closing Material Adverse Effect. Since the date hereof, there shall not have
occurred an GR/GW Material Adverse Effect. For purposes of the
preceding sentence and Section 6.3(a), the occurrence of any of the
following events or circumstances, in and of themselves and in
combination with any of the others, shall not constitute an GR/GW
Material Adverse Effect:
(i)
any
litigation or threat of litigation filed or made after the date
hereof challenging any of the transactions contemplated herein or
any stockholder litigation or threat of stockholder litigation
filed or made after the date hereof resulting from this Agreement
or the transactions contemplated herein unless GR/GW shall conclude
that it has or could have an GR/GW Material Adverse Effect on GR/GW
and the Surviving Company, taken as a whole; and
(ii)
any
adverse change, event or effect that is demonstrated to be caused
primarily by conditions generally affecting the United States
economy, or by conditions generally affecting the biotechnology or
pharmaceutical industries.
21
ARTICLE VII
TERMINATION, AMENDMENT, DEFAULT AND WAIVER
1.
Termination.
This Agreement may be terminated at
any time prior to the Effective Date, whether before or after the
requisite approval of the stockholders and members of
GR/GW:
(a)
by
mutual written consent duly authorized by the Boards of Director of
Parent and GR/GW; or
(b)
by either Parent or GR/GW if the Merger shall not
have been consummated by June 30, 2019 (such date, being the
“Outside
Date”) for any reason;
provided, however, that the right to terminate this Agreement under
this Section 7.1(b) shall not be available to any party whose
action or failure to act has been a principal cause of, or resulted
in the failure of, the Merger to occur on or before such date if
such action or failure to act constitutes a breach of this
Agreement;
or
(c)
by
either Parent or GR/GW if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger, which order, decree, ruling or
other action shall have become final and non-appealable or any law,
order, rule or regulation is in effect or is adopted or issued,
which has the effect of prohibiting the Merger; or
(d)
by Parent, on the one hand, or GR/GW, on the
other, if any condition to the obligation of any such party to
consummate the Merger set forth in Sections 6.1 and
6.2 (in the case of GR/GW) or 6.3 (in the case of
Parent) becomes incapable of satisfaction prior to the Outside
Date; provided, however, that the failure of such condition is not
the result of a breach of this Agreement by the party seeking to
terminate this Agreement.
(e)
by
GR/GW if any representation and warranty of Parent and GRA set
forth in Article III is determined to be false or
inaccurate.
2. Damages
on Default. In the event (subject to any adjustments detailed
in this Agreement), Parent fails to deliver any element of the
Merger Consideration within ten (10) business days of the
applicable due date, (a) interest at a rate of ten percent (10%)
per annum shall be applied to the amount of any past due cash
payment and (b) interest at a rate of ten percent (10%) per annum
based upon the value of any share consideration (calculated at the
market closing price of the shares as of the due date for such
delivery), until fully paid. In the event (a) Parent fails to make
a required payment of Merger Consideration which goes uncured for a
period of six (6) months from the date it is due, or (b) Parent
materially fails to provide adequate financial support to GRA as
provided for in section III.10 during the period of time when any
portion of the Merger Consideration is still outstanding, then the
Founders shall have the right, but not the obligation to
re-purchase any cannabis-related licenses and permits held by GR
prior to the Effective Date for their then fair market value. If
the parties are unable to negotiate a mutually-agreed re-purchase
price in good faith or through mediation, then they will appoint a
mutually-agreed third-party valuation expert to determine such fair
market value.
3. Fees
and Expenses. Except as
otherwise set forth in this Agreement, all Expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such Expenses whether
or not the Merger is consummated. As used in this Agreement,
“Expenses”
shall include all reasonable out-of-pocket expenses (including,
without limitation, all fees and expenses of counsel, accountants,
experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and
performance of this Agreement and all other matters relating to the
closing of the Merger and the other transactions contemplated
hereby.
4. Amendment.
This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective
Boards of Directors at any time prior to the Effective Date;
provided, however, that, after the approval and adoption of this
Agreement by the stockholders/members of GR/GW, there shall not be
any amendment that by applicable law requires further approval by
the stockholders/members of GR/GW without the further approval of
such stockholders/members. This Agreement may not be amended by the
parties hereto except by execution of an instrument in writing
signed on behalf of each of Parent, GR/GW and
GRA.
5. Extension;
Waiver. At any time prior to
the Effective Date, any party hereto may, to the extent legally
allowed:
(a)
extend
the time for the performance of any of the obligations or other
acts of the other parties hereto;
(b)
waive
any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant
hereto; and
(c)
waive compliance with any of the agreements or conditions for the
benefit of such party contained herein.
Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such
right.
22
VIII
GENERAL PROVISIONS
1.
Notices.
All notices and other communications
hereunder shall be in writing and shall be deemed given on the day
of delivery if delivered personally or sent via telecopy (receipt
confirmed) or on the second business day after being sent if
delivered by commercial delivery service, to the parties at the
following addresses or telecopy numbers (or at such other address
or telecopy numbers for a party as shall be specified by like
notice):
(a)
if
to Parent or GRA (prior to Closing):
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇ ▇▇▇▇▇, President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
With
a copy to:
▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇
▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
(b)
if
to GR/GW or GR/GW (prior to Closing):
▇▇▇▇▇
▇▇▇▇, CEO
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
With
a copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇
Law Group, P.C.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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2. Interpretation.
(a)
When
a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to a Section,
such reference shall be to a Section of this Agreement. Unless
otherwise indicated the words “include,”
“includes” and “including” when used herein
shall be deemed in each case to be followed by the words
“without limitation.” The table of contents and
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. When reference is made herein to “the
business of” an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of
such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such
entity.
(b)
For
purposes of this Agreement, the term “knowledge” means
with respect to a party hereto, with respect to any matter in
question, that any of the officers of such party has actual
knowledge of such matter.
(c)
For
purposes of this Agreement, the term “person” shall
mean any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, company
(including any limited liability company or joint stock company),
firm or other enterprise, association, organization, entity or
Governmental Entity.
(d)
For
purposes of this Agreement, an “agreement,”
“arrangement,” “contract,”
“commitment” or “plan” shall mean a legally
binding, written agreement, arrangement, contract, commitment or
plan, as the case may be.
3.
Counterparts;
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 or by e-mail
delivery of a “.pdf” format or other electronic data
file, 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 or
“.pdf” signature page were an original
thereof.
4.
Entire
Agreement; Third Party Beneficiaries. This Agreement and the documents and instruments
and other agreements among the parties hereto as contemplated by or
referred to herein constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ are third party
beneficiaries of this Agreement. Nothing in this Agreement is
intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
5.
Severability.
In the event that any provision of
this Agreement, or the application thereof, becomes or is declared
by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to
other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
6.
Other
Remedies; Specific Performance. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other
remedy. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other
remedy to which t they are entitled at law or in equity. In any
action at law or suit in equity to enforce this Agreement or the
rights of any of the parties hereunder, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum
for its attorneys' fees and all other reasonable costs and expenses
incurred in such action or suit.
7.
Governing
Law; Jurisdiction. This
Agreement shall be governed by and construed in accordance with the
laws of the State of California, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law
thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in San Diego,
California, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, 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 brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. 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 to such party at the address
for such 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.
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8.
Rules
of Construction. The parties
hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such
agreement or document.
9.
Assignment.
No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
10.
Waiver
of Jury Trial. EACH OF PARENT,
GRA, GR AND GW HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE ACTIONS OF PARENT, GRA, GR AND GW IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
11.
Survival
of Representations and Warranties. The respective representations, warranties,
obligations, agreements and promises of the parties contained in
this Agreement and in any exhibit, schedule, certificate or other
document delivered pursuant to this Agreement, shall survive for a
period of one year following the Effective
Date.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be executed by their duly authorized respective
officers as of the date first written above.
By:
Name: ___________________
Title: ___________________
GR ACQUISITION, INC.
By:
Name: ___________________
Title: ___________________
GLOBAL WELLNESS ALLIANCE, LLC
By:
Name: ___________________
Title: ___________________
GANJARUNNER, INC.
By:
Name: ___________________
Title: ___________________
25