Item 1.01. Entry into a Material Definitive Agreement.
On
The Company may prepay the Note at any time prior to the date that an Event of
Default (as defined in the Note) (each an "Event of Default") occurs at an
amount equal to the Principal Sum then outstanding plus accrued and unpaid
interest (no prepayment premium) plus
Upon the occurrence of any Event of Default, the Note shall become immediately due and payable and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Principal Sum then outstanding plus accrued interest multiplied by 150% (the "Default Amount"). Upon the occurrence of an Event of Default, additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 16% per annum or the highest rate permitted by law.
The Warrant is exercisable for five years from
The Company's obligations under the Note are secured by all of the assets of the Company and its subsidiaries, pursuant to the terms of the Security Agreement.
The SPA contains customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company to enter into variable rate transactions. Pursuant to the SPA, the Holder also has certain participation rights in certain future equity and debt offerings by the Company until the date that the Note is extinguished, as well as piggy-back registration rights with respect to the Common Stock into which the Note is convertible and Warrant is exercisable.
The foregoing descriptions of the Warrant, Note, SPA, and Security Agreement do not purport to be complete and are qualified in its entirety by reference to the full text of the Warrant, Note, SPA, and Security Agreement, copies of which are filed herewith as Exhibits 4.1, 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
To the extent required by Item 2.03 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered Sales of
To the extent required by Item 3.02 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 4.1 Common Stock Purchase Warrant, dated as ofFebruary 21, 2023 , by and betweenSugarmade, Inc. andMast Hill Fund, L.P. 10.1 Promissory Note, dated as ofFebruary 21, 2023 , by and betweenSugarmade, Inc. andMast Hill Fund, L.P. 10.2 Securities Purchase Agreement, dated as ofFebruary 21, 2023 , by and betweenSugarmade, Inc. andMast Hill Fund, L.P. 10.3 Security Agreement, dated as ofFebruary 21, 2023 , by and betweenSugarmade, Inc. , its subsidiaries, andMast Hill Fund, L.P. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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