Item 1.01 Entry into a Material Definitive Agreement
Common Stock Purchase Agreement and Registration Rights Agreement
On September 23, 2021, BioHiTech Global, Inc. (the "Company," "we," "us" or
"our") entered into a Common Stock Purchase Agreement (the "Purchase Agreement")
and a Registration Rights Agreement (the "Registration Rights Agreement") with
Keystone Capital Partners, LLC ("Keystone Capital Partners"). Pursuant to the
Purchase Agreement, the Company has the right to sell to Keystone Capital
Partners up to the lesser of (i) $20,000,000 of newly issued shares (the
"Shares") of the Company's common stock, par value $0.0001 per share (the
"Common Stock"), and (ii) the Exchange Cap (as defined below) (subject to
certain conditions and limitations), from time to time during the term of the
Purchase Agreement.
As an initial purchase under the Purchase Agreement, upon the execution and
delivery of the Purchase Agreement and the Registration Rights Agreement on
September 23, 2021, the Company issued and sold 625,000 shares of Common Stock
(the "Initial Purchase Shares") to Keystone Capital Partners for an aggregate
gross purchase price of $750,000 (the "Aggregate Initial Purchase Price"). We do
not have the right to sell any additional shares of Common Stock to Keystone
Capital Partners, until the conditions precedent thereto set forth in the
Purchase Agreement, including that a registration statement registering under
the Securities Act of 1933, as amended (the "Securities Act"), the resale by
Keystone Capital Partners of shares of Common Stock issued to it by the Company
under the Purchase Agreement (the "Initial Resale Registration Statement"),
which we agreed to file with the Securities and Exchange Commission (the "SEC")
pursuant to the Registration Rights Agreement, is declared effective by the SEC
and a final prospectus relating thereto is filed with the SEC, have been
initially satisfied as set forth in the Purchase Agreement (the time such
conditions are initially satisfied, the "Commencement," and the date on which
the Commencement occurs under the Purchase Agreement, the "Commencement Date").
From and after the Commencement Date, we will have the right, but not the
obligation, from time to time at our sole discretion, over a period of up to 24
months beginning on the effective date of the Initial Registration Statement
(the "Investment Period"), to direct Keystone Capital Partners to purchase up to
a specified maximum amount of shares of Common Stock as set forth in the
Purchase Agreement, by delivering written notice of such purchase to Keystone
Capital Partners prior to the commencement of regular trading hours on The
Nasdaq Capital Market on any trading day that we elect as the purchase date for
such purchase, so long as, (i) the closing sale price of the Common Stock on the
trading day immediately prior to such purchase date is not less than the
specified threshold price set forth in the Purchase Agreement and (ii) all
shares of Common Stock subject to all prior purchases by Keystone Capital
Partners under the Purchase Agreement have theretofore been received by Keystone
Capital Partners electronically as set forth in the Purchase Agreement. The
purchase price per share for the shares of Common Stock (excluding the Initial
Purchase Shares) that we elect to sell to Keystone Capital Partners in each
purchase that we direct Keystone Capital Partners to make from time to time
during the Investment Period, if any, will be determined by reference to the
volume weighted average price of the Common Stock ("VWAP") on the applicable
purchase date for such purchase, less a fixed 5% discount to such VWAP.
Other than the 625,000 Initial Purchase Shares that we sold to Keystone Capital
Partners as an initial purchase under the Purchase Agreement upon our execution
of the Purchase Agreement on September 23, 2021 for an aggregate gross purchase
price of $750,000, the Company is under no obligation to sell any additional
shares of Common Stock to Keystone Capital Partners under the Purchase
Agreement, either before or after Commencement. From and after the Commencement
Date, the Company will control the timing and amount of any sales of Common
Stock to Keystone Capital Partners. Actual sales of our Common Stock to Keystone
Capital Partners under the Purchase Agreement after the Commencement Date will
depend on a variety of factors to be determined by the Company, in its sole
discretion, from time to time during the Investment Period, including, among
other things, market conditions, the trading price of the Common Stock and
determinations by the Company as to the appropriate sources of funding for the
Company and its operations.
Under the applicable rules of The Nasdaq Stock Market LLC ("Nasdaq"), in no
event may we issue to Keystone Capital Partners under the Purchase Agreement
more than 5,689,663 shares of Common Stock, which number of shares is equal to
19.99% of the shares of the Common Stock outstanding immediately prior to the
execution of the Purchase Agreement (the "Exchange Cap"), unless (i) we obtain
stockholder approval to issue shares of Common Stock in excess of the Exchange
Cap in accordance with applicable Nasdaq rules, or (ii) the average purchase
price per share for all of the shares of Common Stock sold to Keystone Capital
Partners under the Purchase Agreement (including the Initial Purchase Shares)
equals or exceeds the lower of (i) the Nasdaq official closing price for the
Common Stock on the trading day immediately preceding the execution of the
Purchase Agreement and (ii) the arithmetic average of the five Nasdaq official
closing prices for the Common Stock during the 5-trading day period ending on
(and including) the trading day immediately preceding the execution of the
Purchase Agreement, as adjusted pursuant to applicable Nasdaq rules, such that
the Exchange Cap limitation shall not apply to issuances and sales of Common
Stock under the Purchase Agreement applicable Nasdaq rules. In any event, the
Purchase Agreement specifically provides that we may not issue or sell any
shares of our Common Stock under the Purchase Agreement if such issuance or sale
would breach any applicable Nasdaq rules.
Moreover, we may not issue or sell any shares of Common Stock to Keystone
Capital Partners under the Purchase Agreement which, when aggregated with all
other shares of Common Stock then beneficially owned by Keystone Capital
Partners and its affiliates (as calculated pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated
thereunder), would result in Keystone Capital Partners beneficially owning more
than 4.99% of the outstanding shares of Common Stock.
The net proceeds from sales, if any, under the Purchase Agreement, will depend
on the frequency and prices at which the Company sells shares of Common Stock to
Keystone Capital Partners. To the extent the Company sells shares under the
Purchase Agreement, the Company currently plans to use any proceeds therefrom
for working capital and other general corporate purposes.
There are no restrictions on future financings, rights of first refusal,
participation rights, penalties or liquidated damages in the Purchase Agreement
or Registration Rights Agreement other than a prohibition on entering (with
certain limited exceptions) into a "Variable Rate Transaction," as defined in
the Purchase Agreement. Keystone Capital Partners has agreed not to engage in or
effect, directly or indirectly, for is own principal account or for the
principal account of any of its affiliates, any short sales of the Common Stock
or hedging transaction that establishes a net short position in the Common Stock
during the term of the Purchase Agreement.
The Purchase Agreement and the Registration Rights Agreement contain customary
representations, warranties, conditions and indemnification obligations of the
parties. The representations, warranties and covenants contained in such
agreements were made only for purposes of such agreements and as of specific
dates, were solely for the benefit of the parties to such agreements and may be
subject to limitations agreed upon by the contracting parties.
The Purchase Agreement will automatically terminate on the earliest to occur of
(i) the first day of the month next following the 24-month anniversary after the
effective date of the Initial Registration Statement, (ii) the date on which
Keystone Capital Partners shall have purchased $20,000,000 of shares of Common
Stock from the Company under the Purchase Agreement, (iii) the date on which the
Common Stock shall have failed to be listed or quoted on The Nasdaq Capital
Market or another U.S. national securities exchange identified as an "eligible
market" in the Purchase Agreement, and (iv) the date on which the Company
commences a voluntary bankruptcy proceeding or any Person commences a proceeding
against the Company, a Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a general assignment for
the benefit of its creditors. The Company has the right to terminate the
Purchase Agreement at any time after Commencement, at no cost or penalty, upon
three trading days' prior written notice to Keystone Capital Partners. Neither
the Company nor Keystone Capital Partners may assign or transfer its rights and
obligations under the Purchase Agreement or the Registration Rights Agreement,
and no provision of the Purchase Agreement or the Registration Rights Agreement
may be modified or waived by the parties after the date that is one trading day
immediately prior to the date on which the Initial Resale Registration Statement
is filed by the Company with the SEC.
. . .
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference into this Item 3.02 in its entirety. The shares
of Common Stock that have been and may be issued under the Purchase Agreement
are being offered and sold in a transaction exempt from registration under the
Securities Act, in reliance on the exemptions afforded under Section 4(a)(2) of
the Securities Act and Rule 506(d) of Regulation D promulgated thereunder.
Keystone Capital Partners has represented to the Company in the Purchase
Agreement that it is an "accredited investor," as defined in Rule 501(a) of
Regulation D under the Securities Act, and is acquiring such shares under the
Purchase Agreement for investment purposes only and not with a view towards the
public sale or distribution thereof in violation of applicable U.S. federal
securities laws or applicable state securities or "Blue Sky" laws.
This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy any shares of our Common Stock nor shall there
be any sale of the shares in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or other jurisdiction.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 Common Stock Purchase Agreement by and between the Company and Keystone
dated September 23, 2021
10.2 Registration Rights Agreement by and between the Company and Keystone
dated September 23, 2021
104 The cover page from this Current Report on Form 8K, formatted in Inline
XBRL.
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