Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant MastHill Loan
On
Also pursuant to the Purchase Agreement, in connection with the issuance of the MH Note, the First Warrants and the Second Warrants, the Company granted piggy-back registration rights to Mast Hill.
The Company paid to
The Company intends to use the net proceeds from the sale of the MH Note for required debt service and general corporate purposes.
The maturity date of the MH Note is the 12-month anniversary of the Effective Date, and is the date upon which the principal amount, the OID, as well as any accrued and unpaid interest and other fees, shall be due and payable.
Mast Hill has the right, at any time on or following the six month anniversary
of the Effective Date, to convert all or any portion of the then outstanding and
unpaid principal amount and interest (including any default interest) into
Common Stock, at a conversion price of
At any time prior to the date that an Event of Default (as defined in the MH
Note) occurs under the MH Note, the Company may prepay the outstanding principal
amount and interest then due under the MH Note. On any such event, the Company
shall make payment to Mast Hill of an amount in cash equal to the sum of (a)
100% multiplied by the principal amount then outstanding plus (b) accrued and
unpaid interest on the principal amount to the prepayment date plus (c)
In addition, if, at any time prior to the full repayment or full conversion of
all amounts owed under the MH Note, the Company receives cash proceeds of more
than
1
The MH Note contains customary Events of Default for transactions similar to the transactions contemplated by the Purchase Agreement and the MH Note, which entitle Mast Hill, among other things, to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the MH Note, in addition to triggering the conversion rights. Any principal amount or interest on the MH Note which is not paid when due shall bear interest at the rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by law from the due date until the same is paid. Upon the occurrence of any Event of Default, Mast Hill shall no longer be required to cancel and extinguish the Second Warrants, the MH Note shall become immediately due and payable, and the Company shall pay to Mast Hill an amount equal to the principal amount then outstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 150%, as well as all costs of collection.
The MH Note contains restrictions on the Company's ability to (a) incur additional indebtedness, (b) make distributions or pay dividends, (c) redeem, repurchase or otherwise acquire its securities, (d) sell its assets outside of the ordinary course, (e) enter into certain affiliate transactions, (f) enter into 3(a)(9) Transactions or 3(a)(10) Transactions (each as defined in the MH Note), or (g) change the nature of its business.
Commencing as of the Effective Date, and until such time as the MH Note is fully converted or repaid, the Company shall not effect or enter into an agreement to effect any Variable Rate Transaction (as defined in the Purchase Agreement).
The Purchase Agreement contains customary representations and warranties made by each of the Company and Mast Hill. It further grants to Mast Hill certain rights of participation and first refusal, and most-favored nation rights, all as set forth in the Purchase Agreement.
The Company is subject to customary indemnification terms in favor of Mast Hill and its affiliates and certain other parties.
The First Warrants have an initial exercise price of
The Second Warrants have an initial exercise price of
The foregoing is a brief description of the Purchase Agreement, the MH Note, the First Warrants and the Second Warrants, and is qualified in its entirety by reference to the full text of the Purchase Agreement, the MH Note, the First Warrants and the Second Warrants, which are included as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to this Current Report on Form 8-K, each of which are incorporated herein by reference.
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Item 3.02 Unregistered Sales of
The disclosure set forth above in Items 1.01 and 2.03 of this Current Report on Form 8-K relating to the MH Note, the First Warrants, and the Second Warrants is incorporated by reference herein.
The MH Note, the First Warrants and the Second Warrants each was, and, unless subsequently registered, the shares underlying the MH Note, the First Warrants and the Second Warrants will be, issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") and/or Regulation D promulgated thereunder, as no general solicitation was used in the offer and sale of such securities.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit Number Description 10.1 Securities Purchase Agreement withMast Hill Fund, L.P. 10.2 Promissory Note dated withMast Hill Fund, L.P. 10.3 First Common Stock Purchase Warrant withMast Hill Fund, L.P. 10.4 Second Common Stock Purchase Warrant withMast Hill Fund, L.P. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 3
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