Item 1.01 Entry Into a Material Definitive Agreement
On
At the closing of the Merger, each outstanding share of common stock, Series A Preferred Stock and Series B Preferred Stock of Splash, shall be converted into such amount of fully paid and non-assessable shares of common stock of the Company that. upon completion of the merger, shareholders of Splash as a group will own on a fully diluted basis approximately 85% of the Company and the current shareholders of the Company as a group will own approximately 15% of the Company.
Completion of the Merger is subject to customary closing terms and conditions including among others:
? the adoption of the Merger Agreement by Splash's stockholders; ? the representations and warranties of the respective parties being true and correct in all material respects as of the closing day of the Merger; ? sinceJune 1, 2019 through the closing of the Merger, Splash shall have raised from the aggregate sale of its equity securities not less than$1,500,000 which shall be available or was utilized for inventory purchases, reductions to accounts payable and for other general working capital purposes; ? on the closing of the Merger liabilities of Splash debt shall not exceed$500,000 ; ? Splash shall have entered into note conversion agreements with substantially all holders of its debt pursuant to which such debt is converted into shares Splash's common stock at a conversion price of$1.00 per share; ? Designated shareholders of Splash shall have entered into lock-up/leak out agreements by which they will agree to restrict post-Merger sales of Canfield securities for a period of up to one year following the Merger, as more particularly described within the Merger Agreement; ? The Company andMichael West , the Company's former Chief Executive Officer, and a current director, shall have entered into a Business Transfer and Indemnity Agreement pursuant to which all operations, assets and liabilities of the Company's home health services business shall be transferred and conveyed toMr. West or an entity designated byMr. West in exchange for his indemnifying the Company for certain liabilities and claims; ? the Company shall not have any liabilities exceeding$50,000 in the aggregate; ? The Company's directors and officers shall have tendered their resignations; -2- ?Robert Nistico , Chief Executive Officer of Splash, shall be appointed as chief executive officer of the Company; and ? the composition of the Company's board of directors shall be as set forth in the Merger Agreement.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached hereto as Exhibit 2.1, and is incorporated herein by reference.
The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Splash, Merger Sub or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by the Company and Merger Sub, on the one hand, and by Splash, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules delivered by each party in connection with the signing of the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the Company and Merger Sub, on the one hand, and Splash, on the other hand. Accordingly, the representations and warranties in the Merger Agreement should not be relied on by any persons as characterizations of the actual state of facts about the Company at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits Exhibit Description No. 2.1 Agreement and Plan of Merger among Registrant, Merger Sub and Splash datedDecember 31, 2019 -3-
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