Item 1.01
Entry into a Material Definitive Agreement
Exchange
Transaction
On
July 31, 2018, The Greater Cannabis Company, Inc., a Florida corporation (the “Company”) entered into
and consummated a voluntary share exchange transaction with Green C Corporation, a company incorporated under the laws of
the Province of Ontario (“Green C”) and the shareholders of Green C (the “Selling Shareholders”)
pursuant to a Share Exchange Agreement by and among the Company, Green C and the Selling Shareholders (the
“Exchange Agreement”).
In
accordance with the terms of the Exchange Agreement, the Company issued 9,411,998 shares of its preferred stock, par value
$0.001 (the “Shares”) to the Selling Shareholders and certain individuals named below (collectively, the
“Shareholder Group”) in exchange for 100% of the issued and outstanding capital stock of Green C (the
“Exchange Transaction”). As a result of the Exchange Transaction, the Selling Shareholders acquired 29.67% of the
Company’s issued and outstanding shares of preferred stock, Green C became the Company’s wholly-owned subsidiary
and the Company acquired 100% of the business and operations of Green C. The preferred shares have been designated as the
Series A Convertible Preferred Stock and have the following rights, features, privileges and limitations (in pertinent
part):
1.
Fractional Shares.
Series A Convertible Preferred Stock may be issued in fractional shares.
2.
Dividends.
Series A Convertible Preferred Stock shall be treated pari passu with the Company’s shares of common stock
(“Common Stock”) except that the dividend on each share of Series A Convertible Preferred Stock shall be equal to
the amount of the dividend declared and paid on each share of Common Stock multiplied by the Conversion Rate.
3.
Liquidation, Dissolution, or Winding Up.
(a)
Payments to Holders of Series A Convertible Preferred Stock.
Series A Convertible Preferred Stock shall be treated pari
passu with Common Stock except that the payment on each share of Series A Convertible Preferred Stock shall be equal to the amount
of the payment on each share of Common Stock multiplied by the Conversion Rate.
4.
Voting.
(a) The shares of Series A Convertible Preferred Stock shall vote on all matters as a class with the holders of Common
Stock and each share of Series A Convertible Preferred Stock shall be entitled to the number of votes per share equal to the Conversion
Rate.
5.
Conversion Rate and Adjustments.
(a)
Conversion Rate.
The Conversion Rate shall be 50 shares of Common Stock (as adjusted pursuant to this Section 5) for each
share of Series A Convertible Preferred Stock.
(b)
Adjustment for Stock Splits and Combinations.
If the Corporation shall at any time or from time to time after the issuance
of the Series A Convertible Preferred Stock effect a subdivision of the outstanding Common Stock, the Conversion Rate then in
effect immediately before that subdivision shall be proportionately increased. If the Corporation shall at any time or from time
to time after the issuance of the Series A Convertible Preferred Stock combine the outstanding shares of Common Stock, the Conversion
Rate then in effect immediately before the combination shall be proportionately decreased. Any adjustment under this paragraph
shall become effective at the close of business on the date the subdivision or combination becomes effective.
(c)
Adjustment for Merger or Reorganization, etc.
If there shall occur any reorganization, recapitalization, reclassification,
consolidation, or merger involving the Corporation in which the Common Stock (but not the Series A Convertible Preferred Stock)
is converted into or exchanged for securities, cash, or other property, then, following any such reorganization, recapitalization,
reclassification, consolidation, or merger, each share of Series A Convertible Preferred Stock shall thereafter be convertible
in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or
other property that a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share
of Series A Convertible Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation,
or merger would have been entitled to receive pursuant to such transaction.
6.
Conversion.
(a)
Shares of Series A Convertible Preferred Stock are convertible at the option of their holder in whole or in part at any time except
that they shall not be convertible at any time that there are not a sufficient number of authorized shares of Common Stock not
reserved for other purposes so that all outstanding shares of Series A Convertible Preferred Stock can be converted.
(b).
If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument
or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her, or
its attorney duly authorized in writing. As soon as practicable after a conversion and the surrender of the certificate or certificates
for Series A Convertible Preferred Stock, the Corporation shall cause to be issued and delivered to such holder, or on his, her,
or its written order, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion
in accordance with the provisions hereof and cash as provided in Section 6(b) in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion.
(c)
All certificates or other form of ownership evidencing shares of Series A Convertible Preferred Stock (if any) that are required
to be surrendered for conversion in accordance with the provisions hereof shall, from and after the date on which such preferred
shares were converted, be deemed to have been retired and cancelled and the shares of Series A Convertible Preferred Stock represented
thereby converted into Common Stock for all purposes, notwithstanding the failure of the holder or holders thereof to surrender
such certificates or other form of ownership on or prior to such date. Such converted Series A Convertible Preferred Stock may
not be reissued as shares of such Series, and the Corporation may thereafter take such appropriate action (without the need for
stockholder action) as may be necessary to reduce the authorized number of shares of Series A Convertible Preferred Stock accordingly.
The Shareholder Group
consists of:
|
1.
|
Aitan
Zacharin
|
|
2.
|
Joe
Kalfa
|
|
3.
|
Elisha
Kalfa
|
|
4.
|
Fernando
Bisker
|
|
5.
|
Sigalush
LLC
|
|
6.
|
Mark
Radom
|
|
7.
|
David
Tavor
|
|
8.
|
Rakefet
LLC
|
Green
C is the owner of a license for an orally dissolved film containing CBD, as an active material, for medical treatment as further
described in the exclusive license agreement dated June 21, 2018 with Pharmedica Ltd. Attached hereto as an exhibit (the
“License Agreement”).
The
Exchange Agreement includes customary representations, warranties and covenants of the Company, Green C, and the Selling
Shareholders, made to each other as of specific dates.
The
foregoing description of the Exchange Agreement is qualified in its entirety by reference to the full text of the Exchange Agreement,
which is included as an exhibit to this Current Report on Form 8-K and is incorporated by reference herein.