Item 1.01 Entry into a Material Definitive Agreement.
On October 14, 2020, in connection with, and as an incentive to the entry into a
two-year exclusive manufacturing agreement to produce a patented Drone Delivery
Station for Valqari LLC ("Valqari"), AgEagle Aerial Systems, Inc. (the
"Company") entered into a Convertible Promissory Note pursuant to which the
Company has made a loan to Valqari, in the principal aggregate amount of
$500,000 (the "Note"), which amount accrues interest at a rate of three percent
per annum.
The loan matures on April 15, 2020 (the "Maturity Date"), at which time all
outstanding principal and interest that has accrued, but remains, unpaid shall
be due. The Note provides for an automatic six month extension of the Maturity
Date under the following circumstances (i) Valqari has received in writing, (x)
a good faith acquisition offer at a consideration value greater than
$15,000,000, (y) such offer, upon consummation, would result in a change in
control (as defined in the note) of Valqari, and (z) at such time Valqari, is
actively engaged in the negotiation or finalization of such acquisition
transaction; or (ii) Valqari has initiated, or is in the process of initiating,
a conversion to a "C-Corporation" under the Internal Revenue Code, whereas such
conversion will be completed no later than one day prior to the extended
Maturity Date. Valqari may not prepay the Note prior to the Maturity Date.
In the event of a change in control or conversion of Valqari to a
"C-Corporation" under the Internal Revenue Code on or before the Maturity Date,
the Company may convert the outstanding principal amount of the Note and any
unpaid accrued interest into (i) Class B Common Units of Valqari: immediately
prior to the closing of a Change in Control or (ii) upon Valqari's conversion to
a C-corporation, shares of Valqari common stock, in both cases at a conversion
price no higher than a pre-money valuation of $15,000,000.
The Note is subject to customary representations and warranties by Valqari, as
well as events of default, which may lead to acceleration of the payment of the
Note such as (i) failure to pay all of the outstanding principal, plus accrued
interest on the Maturity Date, (ii) Valqari filing a petition or action under
any bankruptcy, or other law, or (iii) an involuntary petition is filed again
Valqari under any bankruptcy statute (that is not dismissed or discharged within
60 days). The indebtedness evidenced by the Note is subordinated in right of
payment to the prior payment in full of any senior indebtedness (as defined in
the Note) in existence on the date of the Note or incurred thereafter.
Item 8.01 Other Information
On October 14, 2020, AgEagle entered into a manufacturing agreement with Valqari
for the manufacture and assembly of Valqari's patented Drone Delivery Station,
in accordance with the specification provided by, and the components designated
by Valqari, for sale and delivery to its customers. AgEagle has been appointed
as Valqari's exclusive manufacturer of its products in the United States of
America for a term of two-years, unless terminated earlier .
Valqari, based in Chicago, IL, is engaged in the development, manufacture and
sale of a patented Drone Delivery Station, including related software, which is
the only universal, standardized, safe and secure drone landing station that
protects people, property and packages
On October 15, 2020, the Company issued a press release today announcing
"AgEagle Aerial Systems Partners with Valqari to Manufacture Drone Delivery
Stations." A copy of the 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
10.1 Convertible Promissory Note, dated October 14, 2020.
99.1 Press Release dated October 15, 2020.
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