Item 1.01 Entry into a Material Definitive Agreement
Credit Line.
Maximum Credit Line; Interest; Advances; Payment. The 2023 Credit Agreement
provides for a maximum credit line of One Million Five Hundred Thousand Dollars
and No Cents (
Use of Proceeds. Advances may be used to fund general working capital needs of
the Company, which includes: expansion of existing business operations or
business lines to new geographical markets in
Unsecured Debt Obligation. Any Advance will be an unsecured general debt obligation of the Company. Further, there are no personal guarantees under the 2023 Credit Agreement.
Events of Default. The following shall constitute events of default under the
2023 Credit Agreement: (1) failure to make a payment of any Advance when due and
payable and Company fails to cure such default within ten (10) days after
receipt of a written notice from the Lender; (2) failure in the observance or
performance of any non-monetary material covenant or agreement and Company fails
to cure such default within thirty (30) days after written notice of default
from the Lender; (3) failure of Company to comply with the obligations, terms,
covenants or conditions of 2023 Credit Agreement, or breach by Company of any
obligations, covenant, representation or warranty that is not cured within
thirty (30) days from the receipt of a written notice from a Lender; (4) filing
of a petition in bankruptcy or the commencement of any proceedings under any
bankruptcy laws by or against Company, which filing or proceeding is not
dismissed within sixty (60) days after the filing or commencement thereof, or if
Company becomes insolvent; (5) petition is filed with a court to place the
Company in receivership or similar status for benefit of creditors and
appointment of a receiver is unvacated and unstayed for an aggregate of sixty
(60) days; (6) for debts or judgments in excess of One Hundred Thousand Dollars
and No Cents (
Conversion Right. The 2023 Credit Agreement grants the following conversion rights to each Lender. (1) Optional Conversion. Each Advance shall be convertible, in whole or in part, into shares of Company Common Stock at the option of the Lender who made that Advance (being referred to as a "Conversion"), at any time and from time to time, at a price per share equal the "Conversion Price" (as defined below).
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The Conversion Price for a Conversion shall be the average closing price of the Company Common Stock as quoted by the Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Lender effecting the Conversion if Bloomberg Financial Markets is not then reporting prices of the Company Common Stock) (collectively, "Bloomberg"), for the three (3) consecutive trading days prior to date of the Notice of Conversion.
The Conversion Price is not limited by a minimum price per share of Company Common Stock applicable to the Conversion. As such, if a Lender or Lenders loan a significant sum of money under the 2023 Credit Agreement and then elect to convert all or most of the loaned amount into shares of Company Common Stock, the resulting issuance of shares of Common Stock could significantly dilute existing Company shareholders.
Conversion upon a Change in Control Transaction. In the event that prior to the time of repayment of any Advance that has not previously been converted into shares of Company Common Stock, the Company shall consummate a "Change in Control Transaction" (as defined below), then the total amount of Advances outstanding shall convert into shares of Company Common Stock at the Conversion Price. "Change in Control Transaction" will be deemed to exist if (1) there occurs any consolidation, merger or other business combination of the Company with or into any a third party and the Company is not the surviving entity, or any other corporate reorganization or transaction or series of related transactions in which the voting stockholders of the Company prior to such event cease to own 50% or more of the voting power of the surviving entity after the transaction, or (2) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the operating assets of the Company or all of its wholly-owned subsidiaries, determined on a consolidated basis, to a third party.
Conversion upon Breach of this Agreement. In the event that the Company breaches any provision of the 2023 Credit Agreement and does not remedy that breach within thirty (30) days after receipt of a written demand from a Lender, then each of the Lenders may convert all or any portion of the unpaid amount of their respective Advance or Advances into shares of Company Common Stock at the Conversion Price.
Warrants. In the event that a Lender elects to convert any portion of an Advance into shares of Company Common Stock in lieu of cash payment in satisfaction of that Advance, then Company will issue to the Lender five (5) detachable warrants for each share of Company Common Stock issued in a Conversion ("Warrants"). Each Warrant will entitle the Lender to purchase one (1) share of Common Stock ("Warrant Shares") at a per-share exercise price equal to the Conversion Price. The exercise period of each Warrant will be five (5) years from date of issuance of the Warrant.
Board Approval. The disinterested directors of the Company, being Tan Wee Seng,
The following Company directors recused themselves from negotiations and
discussions for, and the vote on, the 2023 Credit Agreement and Warrant due to
affiliation with the Lenders or the Lender's or Lenders' controlling
shareholders or their management members and in order to avoid a potential
conflict of interest:
The disinterested directors of the Company approved the 2023 Credit Agreement
based on its terms being deemed more advantageous to the Company than the APB
Credit Line in that: (1) the 2023 Credit Agreement provides an unsecured credit
line while APB Credit Line imposes a lien on Company and its wholly-subsidiary
assets; (2) the maximum principal amount of the 2023 Credit Line is greater than
the maximum principal amount of the APB Credit Line -
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As a "penny stock" company lacking the tangible assets typically required for traditional bank financing, the Company has not received an offer of a firm commitment for working capital funding from other third-party funding sources in 2021 or 2202 and the few expressions of general interest in providing working capital funding from other third parties during that period were equity-based with the funding source seeking to sell shares of Company Common Stock into the public market to achieve a return on investment and without the prospect of ongoing funding.
Piggyback Registration Rights. The 2023 Credit Agreement grants piggyback registration rights for any shares of Company Common Stock, Warrants and shares of Company Common Stock issued upon exercise of Warrants.
Existing Loan Agreement. As previously reported, the Company has an existing
secured credit line with
Lenders. GWI is based in
GWI is the owner of record of 13,776,163 shares of Company Common Stock,
representing approximately 38.10% of the issued and outstanding shares of
Company Common Stock as of the date of this Form 8-K (based on 36,156,130 shares
issued and outstanding).
On
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A majority of the directors of the Company are affiliated with
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits Exhibit No. Exhibit Description 10.1 Convertible Credit Agreement by and amongValue Exchange International, Inc. ,GigWorld, Inc. andAmerican Wealth Mining Corp. , datedJanuary 27, 2023 10.2 Form of Warrant issuable byValue Exchange International, Inc.
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