Sec Form 13D Filing - Volition Capital Advisors IV LLC filing for GROVE COLLABORATIVE HLDGS INC (GROV) - 2023-08-21

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.     )

Grove Collaborative Holdings, Inc.

(Name of Issuer)

Class A Common Stock, par value $0.0001 per share

(Title of Class of Securities)

39957D102

(CUSIP Number)

Mike Wilkens

Volition Capital LLC

177 Huntington Avenue, 16th Floor

Boston, MA 02115

617-830-2100

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

August 11, 2023

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

CUSIP No. 39957D102

CUSIP No. 39957D102

CUSIP No. 39957D102

This joint statement on Schedule 13D (this “Statement”) is being filed by the undersigned, pursuant to Rule 13d-1(a) under the Act, with respect to the Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), of Grove Collaborative Holdings, Inc. (the “Issuer”), whose principal executive offices are located at 1301 Sansome Street, San Francisco, California 94111. Information given in response to each item herein shall be deemed incorporated by reference in all other items, as applicable.

On August 11, 2023 (the “Closing Date”), the Issuer entered into a Subscription Agreement (the “Subscription Agreement”) with Volition Fund IV, pursuant to which the Issuer issued and sold to Volition Fund IV (i) 10,000 shares (the “Preferred Shares”) of the Issuer’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) at a purchase price equal to $1,000 per share, (ii) a warrant to purchase 1,579,778 shares of the Issuer’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) at a price per share equal to $6.33 (the “Warrant”), and (iii) a warrant to purchase 20,905 shares of Class A Common Stock at a price per share equal to $0.01 (the “Penny Warrant” and, together with the Warrant, the “Warrants” and (i)-(iii) collectively, the “Private Placement”).

Series A Preferred Stock

In connection with the closing of the Private Placement, the Issuer also filed the Certificate of Designation of Series A Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware on the Closing Date setting forth the terms, rights, obligations and preferences of the Series A Preferred Stock.

Ranking and Dividends

The Series A Preferred Stock shall rank prior and superior to all of the Class A Common Stock, Class B common stock, par value $0.0001 per share (the “Class B Common Stock” and collectively with the Class A Common Stock, the “Common Stock”), and any other capital stock of the Issuer. The rights of the shares of Class A Common Stock, Class B Common Stock and other capital stock of the Issuer shall be of junior rank to and subject to the preferences and relative rights of the Series A Preferred Stock.

The Series A Preferred Stock has a liquidation preference of $1,000.00 per share (the “Liquidation Preference”). The holders of then outstanding shares of Series A Preferred Stock shall be entitled to receive, only when, as and if declared by the Issuer’s Board, out of any funds and assets legally available therefor, dividends at the rate of 6% per annum of the Liquidation Preference for each share of Series A Preferred Stock, prior and in preference to any declaration or payment of any other dividend (other than dividends on shares of Class A Common Stock payable in shares of Class A Common Stock).

Conversion and Redemption

Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Class A Common Stock equal to the sum of (i) the amount determined by dividing (x) the Liquidation Price plus any declared but unpaid dividends to which such share of Series A Preferred Stock is then entitled by (y) the then-effective Conversion Preference in effect on the date the certificate is surrendered for conversion or notice is provided for non-certificated shares and (ii) the Subsequent Issuance Share Adjustment (collectively, the “Conversion Amount”). The “Conversion Price” for shares of Series A Preferred Stock shall initially be $2.11 (as adjusted for stock splits, combinations, stock dividends, recapitalizations and the like) per share (the “Conversion Rate”). The “Subsequent Issuance Share Adjustment” for shares of Series A Preferred Stock shall initially be equal to zero and shall be adjusted as set forth in Section 6(i) of the Certificate of Designation.

Cash will be paid in lieu of any fractional shares based on the closing market price of the Class A Common Stock on the conversion date. The Conversion Rate is subject to adjustment for customary anti-dilution protections, including for stock dividends, splits, and combinations, rights offerings, spin-offs, distributions of cash or other property (to the extent not participating on an as-converted basis) and above market self-tender or exchange offers. At any time from and after the seven-year anniversary of the Closing Date, the holders of at least a majority of the then-outstanding Preferred Shares may specify a date and time or the occurrence of an event by vote or written consent that all, and not less than all, outstanding Preferred Shares will automatically be, subject to certain exceptions and limitations, redeemed for an amount per share of Series A Preferred Stock equal to the Liquidation Preference plus all accrued or declared but unpaid dividends as of the redemption date and time.

Subject to certain exceptions, upon the occurrence of a fundamental change, voluntary or involuntary liquidation, dissolution or winding-up of the Issuer, the Issuer will be required to pay an amount per share of Series A Preferred Stock equal to the greater of (i) $1,000.00 per share or (ii) the consideration per share of Series A Preferred Stock as would have been payable had all Preferred Shares been converted to Class A Common Stock immediately prior to the liquidation event, plus, in each case, the aggregate amount of all declared but unpaid dividends thereon to the date of final distribution to the holders of Series A Preferred Stock.

Voting and Consent Rights

Holders of Preferred Shares are entitled to vote with the holders of shares of Class A Common Stock on an as-converted to common basis at any annual or special meeting of stockholders of the Issuer, and not as a separate class, except as required by Delaware law.

Additionally, for so long as 50% of the Preferred Shares remain outstanding, the Issuer will be prohibited, without the consent of the holders of at least a majority of the Preferred Shares, from taking various corporate actions, including:

Restrictions on Transfer

The holders of Series A Preferred Stock are permitted to transfer their Preferred Shares subject to any applicable legends or legal restrictions arising under applicable law, subject to completion of certain procedures.

Warrants

The Warrants have a three-year term. The Warrants also provide for an exercise on a cash or cashless net exercise basis at any time on or after the date that is six months following the Closing Date (the “Warrant Exercise Date”).

Registration Rights

The Issuer has agreed that within 30 days after the Closing Date, the Issuer will file a registration statement to register the resale of all the shares of Class A Common Stock issuable upon conversion or exercise of the Preferred Shares or Warrants.

Participation Rights

The Subscription Agreements provides Volition Fund IV, for so long as Volition Fund IV and its affiliates continues to hold or beneficially own at least 20% of the Preferred Shares, with a right to participate as investors in future financing transactions by the Issuer. The right is limited to financing transactions involving equity securities or securities exercisable or convertible for equity securities of the Issuer, subject to certain exemptions, and will provide Volition Fund IV the right to buy a number of new securities, on the same terms and conditions offered to other potential investors, necessary for Volition Fund IV to maintain its pro rata ownership percentage in the Issuer as set forth in the Subscription Agreement.

Beneficial Ownership and Voting Limitations

The Certificate of Designation and the Warrants include certain provisions that prevent Volition Fund IV from converting its Preferred Shares, voting its Preferred Shares on an as-converted-to-Class A Common Stock basis or exercising its Warrants, as applicable, to the extent such action would result in the Volition Fund IV beneficially owning or voting in excess of 19.99% of the Issuer’s outstanding Class A Common Stock (the “Ownership Limitation”).

The foregoing descriptions of the Certificate of Designation, Warrant, Penny Warrant, the Subscription Agreement and the transactions contemplated thereby are only summaries and do not purport to be complete, and are qualified in its entirety by reference to the full text of such instruments, copies of which are attached to the Issuer’s Current Report on Form 8-K filed with the Commission on August 14, 2023, as Exhibit 3.1, Exhibit 4.1, Exhibit 4.2 and Exhibit 10.1, respectively, which are filed as Exhibits 2 through 5, respectively, to this Statement and incorporated herein by reference.

All shares of the capital stock of the Issuer purchased by each Volition Fund IV have been purchased using investment funds provided to Volition Fund IV by its limited partner and general partner investors. Unless noted above, no part of the purchase price was borrowed by any Reporting Person for the purpose of acquiring any securities discussed in this Item 3.

The information set forth in Item 3 of this Statement is incorporated herein by reference. The Reporting Persons hold the securities of the Issuer for general investment purposes. The Reporting Persons may, from time to time, depending on prevailing market, economic and other conditions, acquire additional shares of Class A Common Stock or other securities of the Issuer, dispose of any such securities, or engage in discussions with the Issuer concerning such acquisitions or dispositions or further investments in the Issuer. The Reporting Persons intend to review their investment in the Issuer on a continuing basis and, depending upon the price and availability of shares of Class A Common Stock or other securities of the Issuer, subsequent developments affecting the Issuer, the Issuer’s business and prospects, other investment and business opportunities available to the Reporting Persons, general stock market and economic conditions, tax considerations and other factors considered relevant, may decide at any time to increase or to decrease the size of their investment in the Issuer in the open market, in privately negotiated transactions, pursuant to 10b5-1 trading plans or otherwise.

Cheng is a member of the Board. In addition, Cheng, in his capacity as a director, may be entitled to receive standard compensation payable to non-employee directors of the Issuer. Cheng has waived his right to receive standard compensation payable to non-employee directors.

Except as set forth above, the Reporting Persons have no present plans or intentions which would result in or relate to any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

(a) and (b) See Items 7-11 of the cover pages of this Statement and Item 2 above.

(c) Except as reported in this Statement, none of the Reporting Persons has effected any transactions in the Issuer’s securities within the past 60 days.

(d) Under certain circumstances set forth in the limited partnership agreement of Volition Fund IV, the general partner and limited partners of Volition Fund IV may be deemed to have the right to receive dividends from, or the proceeds from, the sale of shares of the Issuer owned by such entity of which they are a partner.

(e) Not applicable.

The information set forth in Items 3 and 4 of this Statement are incorporated herein by reference.

Indemnification Agreement

The Issuer has entered into an indemnification agreement with each of its directors and executive officers, including Cheng. The indemnification agreement requires the Issuer, among other things, to indemnify Cheng for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by Cheng in any action or proceeding arising out of his service as a director. The terms and provisions of the indemnification agreement are described more fully in the Issuer’s Registration Statement on Form S-4/A (as described in Item 7 below), and the above summary is qualified by reference to such description and the full text of the indemnification agreement, a form of which is filed as Exhibit 6 to this Statement and is incorporated herein by reference.

Cheng, in his capacity as a director, may be entitled to receive standard compensation payable to non-employee directors of the Issuer. Cheng has waived his right to receive standard compensation payable to non-employee directors.

SIGNATURES

After reasonable inquiry and to the best of its knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: August 21, 2023