Item 1.01 Entry into a Material Definitive Agreement.
On August 4, 2020, AgEagle Aerial Systems Inc. (the "Company"), and an
institutional investor and existing Company shareholder (the "Investor") entered
into a securities purchase agreement (the "Purchase Agreement") pursuant to
which the Company agreed to sell to the Investor in a registered direct offering
3,335,705 shares of common stock, par value $0.001 ("Common Stock"), and
warrants to purchase up to 2,516,778 shares of Common Stock at an exercise price
of $3.30 per share (the "Warrants"), for gross proceeds of approximately $10
million. Upon exercise of the Warrants in full by the Investor, the Company
would receive additional gross proceeds of approximately $8,305,367. The shares
of Common Stock underlying the Warrants are referred to as "Warrant Shares."
The purchase price for each share of Common Stock is $2.98. Net proceeds from
the sale will be used for working capital, capital expenditures and general
corporate purposes. The Shares, the Warrants and the Warrant Shares are being
offered by the Company pursuant to an effective shelf registration statement on
Form S-3 (File No. 333-239157), which was declared effective on June 19, 2020.
Pursuant to the terms of the Purchase Agreement, the Company has agreed to
certain restrictions on future stock offerings, including that during the 75-day
period following the closing, the Company will not issue (or enter into any
agreement to issue) any shares of Common Stock or Common Stock equivalents,
subject to certain exceptions, including if the consolidated closing price on
the trading market on which the Company's Common Stock is traded at the time is
greater than $5.00 (adjusted for any subsequent stock splits or similar capital
adjustments) for ten consecutive trading days, the Company may issue such
securities at not less than $5.00 per Common Stock Equivalent. In addition, the
Company's executive officers and directors agreed that they shall not sell (or
hedge in any manner) any of their shares of the Common Stock for a period ending
September 7, 2020. The Investor has a right from the date of the Purchase
Agreement until December 31, 2020, to participate in a subsequent financing by
the Company or any of its Subsidiaries of Common Stock or Common Stock
Equivalents for cash consideration, indebtedness or a combination of units
thereof (a "Subsequent Financing"), in an amount equal to 50% of the Subsequent
Financing on the same terms, conditions and price provided for in the Subsequent
Financing.
The exercise price of the Warrants and the number of Warrant Shares issuable
upon the exercise thereof will be subject to adjustment in the event of any
stock dividends and splits, reverse stock split, recapitalization,
reorganization or similar transaction, as described in the Warrants. The
Warrants will be exercisable on a "cashless" basis only in the event there is no
effective registration statement registering, or the prospectus contained
therein is not available for the sale of the shares underlying the Warrants. The
Warrants contain a beneficial ownership limitation, such that none of such
Warrants may be exercised, if, at the time of such exercise, the holder would
become the beneficial owner of more than 9.99% of our outstanding shares of
Common Stock following the exercise of such Warrant. The Warrant is for a ten
month term and is not exercisable for the first six months.
A copy of the form of the Purchase Agreement and the form of Warrant are
attached hereto as Exhibits 10.1 and 4.1, respectively, and are incorporated
herein by reference. The foregoing summaries of the terms of the Purchase
Agreement and the Warrants are subject to, and qualified in their entirety by,
such documents.
On August 5, 2020, the Company issued a press release announcing the
transaction. A copy of such press release is attached hereto as Exhibit 99.1 and
is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
4.1 Form of Stock Purchase Warrant
5.1 Legal Opinion of Loeb & Loeb LLP
10.1 Form of Securities Purchase Agreement between the Registrant and
the Investor
99.1 Press Release dated August 5, 2020
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