Item 1.01. Entry into a Material Definitive Agreement.
Convertible Notes
On
Interest accrues at a rate of 8% per annum on the Notes, and is payable quarterly either in cash, shares of Common Stock, or a combination thereof at the Company's option, subject to certain equity conditions, on the 15th of April, July, October, and January of each year during the five (5) year term of the Note (each an "Interest Payment Date") commencing with the first Interest Payment Date following effective date of registration of the underlying shares.
The Notes provide for events of default that include (i) failure to pay principal or interest when due, (ii) any breach of any of the representations, warranties, covenants or agreements made by the Company in the Purchase Agreement, (iii) events of liquidation or bankruptcy, and (iii) a change in control. In the event of default, the interest rate increases to 12% per annum and the outstanding principal balance of the Notes plus all accrued interest due may be declared immediately payable by the holders of a majority of the outstanding principal balance of the Notes.
The Company also entered into a registration rights agreement (the "Convertible
Notes Registration Rights Agreement") with the Holders pursuant to which the
Company will register the shares of Common Stock underlying the Notes. The
Company has committed to file the registration statement by
The Notes were offered and sold solely to accredited investors on a private placement basis under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.
The foregoing summaries of the Purchase Agreement, the Notes, and the Convertible Notes Registration Rights Agreement are qualified in their entirety by reference to the full text of the agreements, which are attached as part of Exhibits 10.1 through 10.3 hereto and are incorporated herein by reference.
Item 3.02. Unregistered Sales of
The disclosures included in Item 1.01 regarding the shares underlying the Notes are incorporated herein by reference to the extent required.
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The Notes and the Common Stock issuable upon conversion of the Notes are being sold pursuant to the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits: Exhibit No. Description 10.1 Form of Securities Purchase Agreement 10.2 Form of Convertible Note 10.3 Form of Convertible Note Registration Rights Agreement 10.4 List of Convertible Note Holders 3
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