Item 1.01 Entry into a Material Definitive Agreement.
On October 5, 2020, Driven Deliveries, Inc. (the "Company") entered into an
Agreement and Plan of Reorganization (the "Merger Agreement") among Stem
Holdings, Inc., a Nevada corporation ("Parent") Stem Driven Acquisition, Inc., a
Nevada corporation ("Acquisition Sub") and the Company.
Pursuant to the Merger Agreement, on the Effective Date (as defined in the
Merger Agreement), Acquisition Sub shall be merged (the "Merger") with and into
the Company and shall become a wholly-owned subsidiary of Parent. As of the
closing of the Merger, all of the Company's outstanding shares shall be
cancelled and converted into the shares of the Parent on a pro-rata basis at a
ratio of one share of the Parent for every one share of the Company. Immediately
prior to the closing of the Merger the Parent will issue to each holder of
warrants, options or convertible debentures to purchase the Company's shares,
warrants, options and convertible debentures that are equal in value and on the
same terms as the respective holder's Company warrants, options and debentures.
Additionally, certain outstanding debt of the Company will be converted into
shares of the Company's common stock in accordance with the Merger Agreement.
Adam Berk, is the Parent's Chief Executive Officer and President as well as a
member of its board of directors. Mr. Berk is a member of the Company's board of
directors. Mr. Berk abstained from voting on the approval of the Merger during
the Company's board meeting at which the Merger was voted on.
The Closing of the Merger is subject to customary closing conditions including
(but not limited to):
(i) The Merger being approved by the Company's shareholders, the shareholders of
Acquisition Sub, and the board of directors by the Parent;
(ii) The listing of the Consideration Shares shall have been approved by the
Canadian Securities Exchange;
(iii) Any required third party consents shall have been received; and
(iv) The Company shall have obtained executed waivers from Salvador Villanueva,
III, Jeanette Villanueva and Lisa Chow pursuant to which such parties waive
their respective rights to re- purchase all of the assets of Budee, Inc. under
the Agreement and Plan of Merger among the Company, Budee Acquisition, Inc. and
Budee Inc., dated February 27, 2020.
Either the Company or the Parent may terminate the Merger Agreement if the
Merger has not been consummated by December 31, 2020.
The foregoing description of the Merger Agreement does not purport to be
complete, and is qualified in its entirety by reference to the full text of the
Merger Agreement, a copy of which is filed as Exhibit 2.1 to this filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 4, 2020 Christian Schenk resigned as the Company's Chief Executive
Officer and as the Chairman and as a member of the Company's board of Directors.
On October 4, 2020, Salvador Villanueva, who is currently serving as the
Company's president, was appointed the Company's Interim Chief Executive
Officer. Mr. Villanueva will continue to serve as the Company's president.
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Mr. Villanueva was appointed as President of the Company effective February 28,
2020. Mr. Villanueva is an accomplished entrepreneur with a proven track record
of successfully creating and building sustainable businesses. The sale of Budee
Inc. to the Company is Mr. Villanueva's fourth successful and largest exit, with
a transaction value of over $10.9M. Mr. Villanueva started Budee Inc., in 2015.
Under his leadership, the enterprise grew to an $8M+ sales run rate with over
150 employees and multiple delivery hubs throughout the state. In an effort to
differentiate himself and his enterprises, Mr. Villanueva has always heavily
focused on developing and customizing proprietary technology. He oversaw the
development of the infrastructure that powers the Company's 200,000+ annual
deliveries. Mr. Villanueva's experience spans multiple industries to include the
heavy equipment, transportation, and gold industries. Mr. Villanueva holds a
B.S. in Economics from the University of California Santa Barbara and currently
serves as President of Driven Deliveries, Inc.
Mr. Villanueva is serving as president of the Company pursuant to the terms of
an employment agreement. The terms of the employment agreement between the
Company and Villanueva have been reported in the Company's 10-K for the year
ended December 31, 2019 which was filed with the Securities and Exchange
Commission on May 22, 2020.
As previously reported in the Company's reports with the Securities and Exchange
Commission, in September 2019 the Company entered into a Joint Venture with
Budee, Inc. and in February 2020 the Company completed an acquisition of Budee,
Inc. Mr. Villanueva was the Chief Executive Officer of Budee, Inc.
As previously reported in the Company's reports with in the Company's 10-K for
year ended December 31, 2019 which was filed with the Securities and Exchange
Commission on May 22, 2020 on February 28, 2020, in connection with the Merger
Agreement with Budee Inc., the Company entered into a consulting agreement (the
"Consulting Agreement") with IP Tech Holding, Inc. Mr. Villanueva is the CEO of
IP Tech Holding, Inc.
There are no family relationships between Mr. Villanueva and any director or
executive officer of the Company.
Item 7.01 Regulation FD Disclosure. The officers of the Company are using the
presentation attached hereto as Exhibit 99.1 in one or more meetings with
investors and analysts. A copy of the investor presentation is attached hereto
as Exhibit 99.1. On October 6, 2020, the Company issued a press release
announcing the Merger. A copy of the Press Release is furnished hereto as
Exhibit 99.2 and is incorporated by reference herein.
The Company does not intend for this Item 7.01 or Exhibit 99.1 or 992 to be
treated as "filed" for purposes of the Securities Exchange Act of 1934, as
amended, or incorporated into its filings under the Securities Act of 1933, as
amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Presentation
99.2 Press Release dated October 5, 2020
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