ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 1, 2007, Gourmet Herb Growers, Inc., a Nevada
corporation (the "Company"), entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), with Halter Financial
Investments, L.P., a Texas limited partnership ("Purchaser"),
pursuant to which the Company agreed to sell Purchaser 11,200,000
unregistered shares of the Company's common stock for $400,000.
The Stock Purchase Agreement requires, as a condition to closing,
the election and appointment of the person or persons designated by
Purchaser as the new officers and director or directors of the
The Stock Purchase Agreement also requires the Company's Board of
Directors to declare and pay a special cash dividend of $0.245 per
share to the current shareholders of the Company and that the
Purchaser will not participate in such dividend. The proposed
dividend will be payable to shareholders of record at the close of
business on October 10, 2007, with a payment date on October 12,
2007, which is subsequent to the date the required payment from
Purchaser under the Stock Purchase Agreement has been received.
The dividend will be payable to the Company's current shareholders
who hold 1,600,000 shares of its common stock which will result in
a total dividend distribution of $392,000.
The Stock Purchase Agreement contains covenants that require
Purchaser, in its capacity as controlling shareholder of the
Company following closing, to agree that it will not approve any
additional reverse stock splits without the prior consent of a
majority of the members of the Company's current Board of
Directors as representatives of the Company's current
shareholders, that it will ensure that the Company does not
authorize the issuance of any additional shares of common stock
or securities convertible into shares of common stock except for
up to a 10 to 1 reverse split in connection with a combination
transaction with a corporation with current business operations
(a "Going Public Transaction"), and that it will not allow the
Company to enter into a Going Public Transaction unless the
Company, on a combined basis with the operating entity with which
it completes a Going Public Transaction, satisfies the financial
conditions for listing on the NASADAQ Stock Market immediately
following the closing of the Going Public Transaction. The Stock
Purchase Agreement also grants demand and "piggy back"
registration rights to Purchaser and, to the extent required, to
the current holders of the Company's restricted common stock.
After giving effect to the stock sale, the Purchaser would hold
11,200,000 shares or approximately 87.5% of the 12,800,000 shares
of the Company's common stock to be outstanding following the
completion of such action. As such, the Stock Purchase Agreement
will result in a change of control of the Company and, following
consummation of the transactions contemplated by the Stock Purchase
Agreement, the Purchaser will be able to elect directors and
control the policies and practices of the Company. The Stock
Purchase Agreement will not result in any change in the status of
the Company as a shell company and the Company will continue its
search for business opportunities for acquisition or participation
by the Company.
The foregoing summary of selected provisions of the Stock
Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the Stock Purchase
Agreement, a copy of which is filed as an exhibit to this report.