Appgate : New Financial Obligation - Form 8-K

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As previously disclosed by Appgate, Inc., a Delaware corporation ("Appgate" or the "Company"), on the Form 8-K (the "Prior 8-K") filed by the Company on July 25, 2023 with the Securities and Exchange Commission, on July 20, 2023, Appgate Cybersecurity, Inc., a Delaware corporation ("Legacy Appgate") and a wholly owned subsidiary of the Company, entered into a Note Purchase Agreement (the "Note Purchase Agreement") with Appgate Funding, LLC (the "Purchaser") and the Company and a Note Issuance Agreement (the "Note Issuance Agreement") with the Company, Legacy Appgate's wholly owned domestic subsidiaries (the "Domestic Subsidiary Guarantors" and, together with the Company, the "Note Guarantors") and the Purchaser (the Note Purchase Agreement and the Note Issuance Agreement, collectively, the "Note Agreements").

Pursuant to the Note Agreements, Legacy Appgate issued and sold to the Purchaser $2.5 million aggregate principal amount of convertible notes due 2026 (the "Initial Convertible Notes"). In addition, pursuant to the terms of the Note Purchase Agreement, Purchaser or its affiliates has the right to purchase up to an additional $27.5 million in Convertible Notes on or prior to July 20, 2025 (any such notes, "Additional Convertible Notes", and together with the Initial Convertible Notes, the "Convertible Notes"). On August 21, 2023, Legacy Appgate issued and sold to the Purchaser $2.0 million aggregate principal amount of Additional Convertible Notes.

On September 18, 2023, Legacy Appgate issued and sold to the Purchaser an additional $1.0 million aggregate principal amount of Additional Convertible Notes. As of the date hereof, Legacy Appgate has issued an aggregate of $5.5 million of Convertible Notes to the Purchaser. The Convertible Notes mature on May 9, 2026, subject to extension to May 9, 2028 at the election of either Purchaser or the representative under the Company's previously reported amended and restated note issuance agreement, dated June 9, 2023.

Interest on the Convertible Notes is payable at the Company's election in cash, in kind ("PIK Interest"), or in a combination of cash and PIK Interest; provided, that the Company may not pay cash interest prior to July 20, 2024. The Convertible Notes bear interest at the annual rate of 9.50%, regardless of whether interest is paid in cash or in PIK Interest. At any time prior to maturity, the Convertible Notes are convertible, at the option of the Purchaser, into shares of common stock of the Company at a rate of 585.74960 shares for each $1,000 principal amount of Convertible Notes. In addition, Legacy Appgate's obligations under the Convertible Notes and other related agreements are secured by a second priority security interest in favor of the Purchaser in substantially all assets of Legacy Appgate and the Note Guarantors.

The information contained in Item 1.01 of the Prior 8-K with respect to the Note Issuance Agreement, the Note Purchase Agreement and the Convertible Notes is incorporated by reference in this Item 2.03.