WETOUCH TECHNOLOGY INC. Item 1.01 Entry into a Material Definitive Agreement.
Convertible Note
On
Unless the Note is converted, the principal amount of the Note, and accrued interest at the rate of 8% per annum, are payable on the one-year anniversary of the issuance of the Note (the "Maturity Date"). If the Company fails to satisfy its loan obligation by the Maturity Date, the default interest rate will be 16%.
The Lender has the right to convert any or all of the principal and accrued
interest on the Note into shares of common stock of the Company on the earlier
of (i) 180 calendar days after
Subject to customary exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price per share lower than the conversion price of the Note, the conversion rate of the Note shall be reduced to such lower price.
Until the Note is either paid or converted in its entirety, the Company agreed with the Lender not to sell any securities convertible into shares of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion price that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company or the market for the common stock. The Company also agreed to not issue securities at a future determined price.
The Lender has the right to require the Company to repay the Note if the Company receives cash proceeds, including proceeds from customers and the issuance of equity (including in the Uplist Offering). If the Company wants to prepay the Note prior to the Maturity Date, the Company shall pay a 10% prepayment penalty.
Warrant
The Warrant issued to the Lender granted the Lender the right to purchase up to
600,000 shares of common stock of the Company at an exercise price of
The Lender has the right to exercise the Warrant on a cashless basis if the highest traded price of a share of common stock of the Company during the 150 trading days prior to exercise of the Warrant exceeds the exercise price, unless there is an effective registration statement of the Company which covers the resale of the Lender.
If the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of the Warrant, the exercise price of the Warrant shall be reduced to such lower price, subject to customary exceptions.
The Lender may not convert the Note or exercise the Warrant if such conversion or exercise will result in the Lender, together with any affiliates, beneficially owning in excess of 4.9% of the Company's outstanding common stock immediately after giving effect to such exercise unless the Lender notifies the Company at least 61 days prior to such exercise.
Registration Rights Agreement
Pursuant to the terms of the Registration Rights Agreement dated
The foregoing descriptions of the Purchase Agreement, the Note, the Warrant and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, copies of which are attached hereto as Exhibits 4.6, 4.7, 10.16, and 10.17 and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 above is incorporated by reference in this Item 2.03.
Item 3.02 Unregistered Sales of
The information contained above in Item 1.01, regarding the issuance of the Note and the Warrant is incorporated herein by reference in this Item 3.02. The Note and Warrant described in Item 1.01 above were offered and sold in reliance upon exemptions from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
On
Pursuant to the Director Service Agreements, each director (each, a "Director" and, collectively, the "Directors") agreed to serve as a member of the Board and perform his or her duties in a faithful and competent manner, in compliance with all laws, rules, and regulations applicable to the Company and its business. Each Director also agreed to serve on any committees if and when established by the Board.
In consideration for their services as members of the Board, upon an uplist
offering that results in the immediate listing for trading of the Company's
common stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market, the
The term of each Director Service Agreement is for one year, which term will automatically renew for additional one-year periods unless the parties agree otherwise. Each Director Service Agreement may be terminated either, (a) at any time upon 30 days' prior written notice by the Director, (b) if the Director is not re-elected to the Board at any meeting of the Company's shareholders in which directors are elected, (c) automatically if, at any time, the Director becomes disqualified under the terms of the Company's charter documents, or (d) if a majority of the Board (not including the Director) determines that the Director is unfit or unable to serve as a Director (as further described in the agreement).
The Director Service Agreement also includes standard and customary provisions regarding the Director's fiduciary duties and obligations as a member of the Company's Board.
The foregoing summary of the Director Service Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Director Service Agreement, a copy of which is filed as Exhibit 10.18 to this Current Report on Form 8-K (the "Report") and incorporated herein by reference.
Except as otherwise disclosed in this Report, there are no arrangements or
understandings between any of
A description of each Director's background and experience is as follows:
The Board believes
Wei Wang, 36, has served as Vice Director of the
The Board believes
The Board believes
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is included in this Current Report:
Exhibit No. Description 4.6 Promissory Note datedNovember 5, 2021 issued byWetouch Technology Inc. toMast Hill Fund, L.P. 4.7 Common Stock Purchase Warrant datedNovember 5, 2021 issued byWetouch Technology Inc. 10.16 Securities Purchase Agreement, dated as ofNovember 5, 2021 , betweenWetouch Technology Inc. andMast Hill Fund, L.P. 10.17 Registration Rights Agreement dated as ofNovember 5, 2021 , betweenWetouch Technology Inc. andMast Hill Fund, L.P. 10.18 Form of Director Services Agreement. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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