Item 1.01 Entry into a Material Definitive Agreement
Non-Redemption Agreement
In order to help facilitate the closing of Greenrose's previously announced
Qualified Business Combinations (as defined in the Definitive Proxy Statement on
Schedule 14A filed with the U.S. Securities and Exchange Commission on October
5, 2021 (the "Proxy")), on October 20, 2021, Greenrose Acquisition Corp.
("Greenrose" or the "Company") and YA II PN, LTD. (the "Investor"), a Cayman
Islands exempt limited partnership and an affiliate of Yorkville Advisors
Global, LP, entered into a Non-Redemption Agreement (the "Non-Redemption
Agreement"), pursuant to which the Investor has agreed to commit to purchase
(collectively, the "Purchased Shares") up to 1,000,000 shares common stock of
the Company, $0.0001 par value per share, in open market transactions or in
private transactions from the certain selling shareholders who are not
affiliated with the Company, at a purchase price not to exceed $10.14 per share,
or a combination of the foregoing.
The Non-Redemption Agreement also provides that, simultaneously with the closing
of the previously announced Qualified Business Combinations, the Company will
issue and sell to the Investor 500,000 newly issued shares of common stock of
the Company (the "Newly Issued Shares") in a private transaction in reliance
upon Section 4(a)(2) under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act").
The Non-Redemption Agreement further provides that the Investor waives any
redemption rights it may otherwise have in connection with the Proxy, the
Qualified Business Combinations, and the purchase of the Purchased Shares and
the issuance of Newly Issued Shares.
The Investor also agreed, during the period commencing with the closing of the
previously announced Qualified Business Combinations and ending on the six (6)
month anniversary of such closing, to not directly or indirectly transfer any of
the Newly Issued Shares, except that the Investor may transfer such Newly Issued
Shares at the end of each one-month anniversary of such closing, in an amount
equal to 166,667 Shares multiplied by the difference between $11.50 and the
Monthly VWAP (defined below), and such result divided by the Monthly VWAP. The
term "Monthly VWAP" means the average of each of the daily volume weighted
average prices of the Common Stock on the primary market for the Common Stock as
displayed by Bloomberg L.P. on each trading day during each such one-month
period.
Also, pursuant to the Equity Purchase Agreement, the Investor has agreed to
limit its trading of both the Purchased Shares and the Newly Issues shares in
each lock-up month in the aggregate to the greater of 30% of the volume traded
during such lock-up month or 250,000 shares.
The Non-Redemption Agreement contains customary representations and warranties
by each of the Investor and the Company. Many of the representations and
warranties are qualified by materiality or Material Adverse Effect.
The foregoing description of the Non-Redemption Agreement is qualified in its
entirety by reference to the full text of the form of Non-Redemption Agreement,
a copy of which are attached as Exhibit 10.1 to this Current Report on Form 8-K
and incorporated herein by reference.
Standby Equity Purchase Agreement
On October 20, 2021, Greenrose and the Investor, entered into a Standby Equity
Purchase Agreement (the "Equity Purchase Agreement"), whereby the Investor
agreed to purchase from the Company up to $100 million of the Company's shares
of common stock, par value $0.0001 per share (the "Common Stock"), for a
purchase price per share of 96% multiplied by the lowest daily volume weighted
average price of shares during regular trading hours as reported by Bloomberg
L.P. of the Company's common stock during the three (3) consecutive trading days
commencing on the advance notice date.
Pursuant to the Equity Purchase Agreement, the Investor is committed to purchase
the Common Stock over the course of 36 months from the date of the consummation
of the Company's previously announced Qualified Business Combination (as defined
in the Proxy). The Company has the right, but not the obligation, to sell the
Common Stock to the Investor. Each right to see the Common Stock is called an
"Advance" and each Advance may be up to the greater of (a) such amount as is
equal to 20% of the aggregate dollar volume traded of the Common Stock during
the 5 trading days immediately prior to the date the Company requests each
Advance, or (b) $2,000,000. Each Advance may be increased upon mutual consent
immediately prior to the date the Company submits an Advance Notice, provided
however, in no event shall the number of shares sold to the Investor cause the
aggregate number of shares of Common Stock beneficially owned by the Investor
and its affiliates at any one time to exceed 4.99% of the Company at any one
time.
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The Equity Purchase Agreement contains customary representations and warranties
by each of the Investor and the Company. Many of the representations and
warranties are qualified by materiality or Material Adverse Effect.
The offer and sale of the Common Stock issuable pursuant to the Equity Purchase
Agreement will be made in reliance upon Section 4(a)(2) under the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act").
This summary description of the issuance and sale of the Common Stock does not
purport to be complete and is qualified in its entirety by reference to the full
text of the Standby Equity Purchase Agreement, a copy of which is included as
Exhibit A to the Non-Redemption Agreement attached as Exhibit 10.1 to this
Current Report on Form 8-K and incorporated herein by reference.
Registration Rights Agreement
In connection with the entry of the Non-Redemption Agreement, Greenrose entered
into a Registration Rights Agreement with the Investor (the "Yorkville
Registration Rights Agreement") pursuant to which Greenrose agrees that to file
a registration statement with the Securities and Exchange Commission (the "SEC")
covering the resale of the Common Stock requested to be included in such
registration statement (the "Resale Registration Statement"), and Greenrose
shall use its best efforts to have the Resale Registration Statement declared
effective as soon as practicable after the filing thereof, but in no event later
than the 45th calendar day following the filing of the Resale Registration
Statement (or, the fifth calendar day following the date on which the Company is
notified by the SEC that the Resale Registration Statement will not be or is no
longer subject to further review and comments.
This summary description of the Yorkville Registration Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to the full
text of the Yorkville Registration Rights Agreement, a copy of which is included
as Exhibit B to the Non-Redemption Agreement attached as Exhibit 10.1 to this
Current Report on Form 8-K and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
is incorporated by reference herein. The securities of Greenrose that may be
issued in connection with the Non-Redemption Agreement and the Equity Purchase
Agreement will not be registered under the Securities Act of 1933, as amended
(the "Securities Act") in reliance on the exemption from registration provided
by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated
thereunder.
Item 9.01. Financial Statement and Exhibits.
(d) Exhibits:
Exhibit Description
10.1 Non-Redemption Agreement, dated October 20, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Forward Looking Statements
This Current Report on Form 8-K includes certain statements that are not
historical facts but are forward-looking statements for purposes of the safe
harbor provisions under the United States Private Securities Litigation Reform
Act of 1995. Forward-looking statements generally are accompanied by words such
as "believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect," "should," "would," "plan," "predict," "potential," "seem," "seek,"
"future," "outlook," and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters. These
forward-looking statements include, but are not limited to, statements regarding
estimates and forecasts of revenue and other financial and performance metrics
and projections of market opportunity and expectations, Greenrose's ability to
enter into definitive agreements or consummate a transaction with any of Shango
Holdings Inc., or Shango, Futureworks LLC (d/b/a The Health Center), or
Futureworks, Theraplant, LLC, or Theraplant, or True Harvest, LLC, or True
Harvest to obtain the financing necessary consummate its previously announced
proposed transactions; and the expected timing of completion of the Proposed
Transactions. These statements are based on various assumptions and on the
current expectations of Greenrose's and any of Shango, Theraplant, True Harvest,
or Futureworks' management and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes only and are
not intended to serve as, and must not be relied on by any investor as, a
guarantee, an assurance, a prediction or a definitive statement of fact or
probability. Actual events and circumstances are difficult or impossible to
predict and will differ from assumptions. Many actual events and circumstances
are beyond the control of Greenrose and any of Shango, Theraplant, True Harvest,
or Futureworks. These forward-looking statements are subject to a number of
risks and uncertainties, including general economic, financial, legal, political
and business conditions and changes in domestic and foreign markets; the
inability of the parties to enter into definitive agreements or successfully or
timely consummate the Proposed Transactions or to satisfy the other conditions
to the closing of the Proposed Transactions, including the risk that any
required regulatory approvals are not obtained, are delayed or are subject to
unanticipated conditions that could adversely affect the combined company; the
risk that the approval of the Greenrose Stockholders for the Proposed
Transactions is not obtained; failure to realize the anticipated benefits of the
Proposed Transactions, including as a result of a delay in consummating any of
the Proposed Transactions or difficulty in, or costs associated with,
integrating the businesses of Greenrose and any of Shango, Theraplant, True
Harvest, or Futureworks; the amount of redemption requests made by the Greenrose
Stockholders; the occurrence of events that may give rise to a right of
Greenrose and any of Shango, Theraplant, True Harvest, or Futureworks to
terminate the respective Merger Agreements or Asset Purchase Agreements, as
applicable; risks related to the rollout of Greenrose' business and the timing
of expected business milestones; the effects of competition on Greenrose's
business; and those factors discussed in Greenrose's Annual Report on Form 10-K
for the fiscal year ended December 31, 2020 under the heading "Risk Factors,"
and other documents of Greenrose filed, or to be filed, with the SEC. If the
risks materialize or assumptions prove incorrect, actual results could differ
materially from the results implied by these forward-looking statements. There
may be additional risks that neither Greenrose nor any of Shango, Theraplant,
True Harvest, or Futureworks presently know or that Greenrose and any of Shango,
Theraplant, True Harvest, or Futureworks currently believe are immaterial that
could also cause actual results to differ from those contained in the
forward-looking statements. In addition, forward-looking statements reflect
Greenrose's and each of Shango, Theraplant, True Harvest, or Futureworks'
expectations, plans or forecasts of future events and views as of the date of
this Current Report on Form 8-K. Greenrose and each of Shango, Theraplant, True
Harvest, and Futureworks anticipate that subsequent events and developments will
cause their assessments to change. However, while Greenrose and any of Shango,
Theraplant, True Harvest, or Futureworks may elect to update these
forward-looking statements at some point in the future, Greenrose and each of
Shango, Theraplant, True Harvest, and Futureworks specifically disclaim any
obligation to do so. These forward-looking statements should not be relied upon
as representing Greenrose's or any of any of Shango, Theraplant, True Harvest,
or Futureworks' assessments as of any date subsequent to the date of this
Current Report on Form 8-K. Accordingly, undue reliance should not be placed
upon the forward-looking statements.
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