Item 1.01 Entry into a Material Definitive Agreement.
On
The Notes are secured by the assets of the Company pursuant to a Security
Agreement entered into for such purpose, and are senior to the indebtedness
payable to
The Notes mature on the earlier of (i) nine months from the issuance date, or
The Notes provide for certain events of default which include failure of the Uplist Transaction to occur by the maturity date, failure to maintain effectiveness of the registration statement under the Registration Rights Agreement (as described below), suspension of trading of the Company's common stock for five consecutive trading days, failure to timely deliver shares issuable upon conversion of the Notes or exercise of the Warrants, failure to timely make payments under the Notes, default under other indebtedness, and certain other customary events of default, subject to certain exceptions and limitations.
Upon an event of default, the holders will have the right to require the Company
to prepay the Notes at a 125% premium. Further, upon a bankruptcy event of
default or a change of control event, the Company will be required to prepay the
Notes at a premium. If the conversion price falls below
Pursuant to the Notes, upon an event of default one of the investors is entitled
to cause
The Notes are convertible upon the earlier of the Uplist Transaction and an
event of default at a conversion price equal to the greater of (a) 90% of the
lowest volume weighted average price ("VWAP") for the 10 trading days prior to
the conversion date and (b)
The Notes contain customary restrictive covenants including covenants against incurring new indebtedness or liens, changing the nature of its business, transfers of assets, transactions with affiliates, and issuances of securities, subject to certain exceptions and limitations.
The Company repaid its existing line of credit with
The Warrants entitle the holders to purchase a total of 1,666,666 shares of
common stock for a five-year period from issuance, at an exercise price
determined as follows: (i) beginning on the issuance date and for a period of 90
days thereafter,
Each holder's exercise is subject to a 4.99% beneficial ownership limitation which may be increased to 9.99% on 61 days' notice from the holder. The Warrants may be exercised cashlessly if the registration statement covering the resale of the shares of common stock issuable upon exercise is not effective as required under the Registration Rights Agreement.
The SPA, Warrants and Notes require a reserve of authorized but unissued shares of common stock initially equal to approximately 15,000,000 shares of common stock, subject to reduction as the Notes and Warrants are converted and exercised, respectively.
--------------------------------------------------------------------------------
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information contained above in Item 1.01 is hereby incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of
The information contained above in Item 1.01 and Item 2.03 is incorporated by reference into this Item 3.02.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
For the avoidance of doubt, while Mr.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibits
Exhibit No. Description of Exhibit Form Date Number Filed 4.1 Form of Note* Filed 4.2 Form of Warrant* Filed 10.1 Form of Securities Purchase Agreement* Filed 10.2 Form of Security Agreement* Filed 10.3 Form of Subordination Agreement* Filed 10.4 Form of Registration Rights Agreement 104 Cover Page Interactive Data File (embedded within the Inline XBRL Document)
* Certain schedules and other attachments have been omitted. The Company
undertakes to furnish the omitted schedules and attachments to the
--------------------------------------------------------------------------------
© Edgar Online, source