Item 8.01 Other Events. 31
Pursuant to the Exchange Agreement, 31 Group tendered
Principal and interest (at the rate of 12% per annum) is due and payable under the Debenture on
Principal and accrued but unpaid interest is convertible into shares of the Company's Common Stock at a price (the "Conversion Price") equal the lesser (i)
The Conversion Price is subject to downward adjustment upon the occurrence of a number of events as set forth in the Debenture, including the sale (or announcement of the sale) of shares of Common Stock or instruments exercisable or convertible into Common Stock other than "Exempt Issuances" (as defined in the Debenture) at an effective price per share that is lower than the then Conversion Price (a "Dilution Event"). Upon the occurrence of a Dilutive Event, the Conversion Price shall be reduced to equal the lowest price per share under the Dilution Event. The Company is subject to liquidated damages (as computed in the Debenture) if shares are not delivered in the manner and timeframe required by the Debenture.
Until such time as no Debentures are outstanding, absent the approval of Debenture holders, the Company is subject to certain negative covenants, including issuing debt senior to the Debenture, repaying debt other than pursuant to its terms or amending its Certificate of Incorporation.
Upon the occurrence of an "Event of Default" as defined in the Debenture, subject to a 10 day right to cure period, all unpaid principal and accrued interest shall become due and payable and the Company shall pay to 31 Group in full satisfaction of the Debenture an amount equal to 150% times the sum of (w) the then outstanding principal amount of the Debenture plus (x) accrued and unpaid interest on the unpaid principal amount of the Debenture to the date of payment, (y) Default Interest (as defined in the Debenture) and (z) any liquidated damages (the "Default Sum"). If the Company fails to pay the Default Sum within five business days of written notice that such amount is due and payable, then 31 Group shall have the right at any time, so long as the Company remains in default, to require the Company to immediately issue, in lieu of the Default Sum, the number of shares of Common Stock equal to the Default Sum divided by the Conversion Price then in effect.
The Debenture provides that 31 Group shall not have the right to convert any portion of the Debenture, to the extent that after giving effect to such conversion, it would beneficially own in excess of 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion. This provision may be waived by 31 Group upon not less than 61 days' prior notice to the Company.
Pursuant to the Exchange Agreement, the minimum Debenture Conversion Price on future exchanges will be the lesser of
The Exchanges was effected pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, and the issuance of the Debenture and the shares of Common Stock issuable upon conversion of the Debenture is exempt from registration pursuant to Rule 506(b) promulgated under the Securities Act of 1933 and Section 4(2) of such Act.
As a result of the transactions with 31 Group, the conversion rate of the Company's Series Preferred Stock increased from 250 shares of Common Stock per share of Series G Preferred to 625 shares of Common Stock per share of Series G Preferred, and the conversion price of the Company's Senior Secured Convertible Debt decreased from
Pursuant to the BM Documents, the Company received
Principal is due and payable under the BM Note on
At any time at the option of Black Mountain, principal is convertible into shares of the Company's Common Stock at a price (the "Conversion Price") equal the lesser of (i)
The BM Note provides that Black Mountain shall not have the right to convert any portion of the Note, to the extent that after giving effect to such conversion, it would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion. This provision may be waived by Black Mountain upon not less than 61 days' prior notice to the Company.
The above securities were issued pursuant to the exemption from registration provided by Rule 506(b) promulgated under the Securities Act of 1933 and Section 4(2) of such Act.
The foregoing descriptions of the Exchange Agreement, Debenture, BM Agreement and BM Note are qualified in their entirety by reference to the full text of these documents, copies of which are attached hereto as Exhibits and incorporated herein in their entirety by reference.
Item 9.01 Financial Statements and Exhibits
d) Exhibits Exhibit No. Exhibit Description 4.1
May 21, 2014Debenture issued to 31 Group, LLC. 4.2 May 6, 2014Convertible Note issued to Black Mountain 10.1 May 21, 2014Exchange Agreement with 31 Group, LLC10.2 May 6, 2014Purchase Agreement with Black Mountain. 4