Item 1.01 Entry into a Material Definitive Agreement
On January 13, 2022, Clever Leaves Holdings Inc. ("CLVR") and Catalina LP
("Catalina") entered into a First Amendment to Secured Convertible Note (the
"First Amendment Agreement"), amending certain terms of the Secured Convertible
Note issued by CLVR to Catalina on July 19, 2021 (the "Original Note").
Capitalized terms used herein have the meaning given to them under Original
Note, unless defined herein or otherwise indicated.
The amendments described below under "Temporary Amendments" expire at 11:59 p.m.
on July 19, 2022 (the "Expiration Time"), at which time the terms of the
Original Note apply with respect to such amendments.
As of the date of the First Amendment Agreement, $5,559,285.60 in redemptions of
Principal (with 720,085 Common Shares (defined below) being issued to the
Holder) have been made in accordance with Section 4 of the Original Note.
Accordingly, pursuant to Section 4(c)(i) of the Original Note, further
redemptions made in accordance with Section 4 of the Original Note from the date
of the First Amendment Agreement through and including July 19, 2022 cannot
exceed an additional $6,940,714.40 of Principal in the aggregate ("First Half
Principal Amount"). The terms of the Original Note will apply to redemptions or
repayments after July 19, 2022, unless further amended by the parties thereto.
Temporary Amendments
Redemption for Cash - The First Amendment Agreement allows Catalina to elect to
receive cash repayments on account of Principal if the closing price per Common
Share is below US$2.20 (compared to US$7.00 in the Original Note) on any 10 of
the previous 20 Trading Days (compared to 15 consecutive trading days in the
Original Note), provided that such repayments do not exceed US$3,500,000 (less
any conversions made pursuant to the optional redemption provisions described
below) in any calendar month or, in the aggregate and until the Expiration Date,
the First Half Principal Amount (less any conversions made pursuant to the
optional redemption provisions described below).
Optional Redemptions into Common Shares
The First Amendment Agreements eliminates the Company's right to elect to
convert pursuant to the Original Note.
With respect to redemptions into common shares of the Company, without par value
("Common Shares") by Catalina, the First Amendment Agreement modifies the
definition of Optional Redemption Price (which is the price at which Catalina
may elect to redeem the Principal into Common Shares), to be the greater of (i)
US$2.208 (which decreased from US$6.44 in the Original Note); and (ii) an 8%
discount to the 4-day VWAP, which is defined as the lowest volume weighted
average trading price of the Common Shares on the Nasdaq Stock Market on each of
the three days prior to and including the date of the Optional Redemption Notice
(the Original Note did not include the 4-day VWAP concept, and instead provided
for an 8% discount to the closing price of the Common Shares on the Original
Redemption Date). As such, until the Expiration Time, Catalina may redeem the
First Half Principal Amount for approximately 3.1 million Common Shares assuming
the minimum Optional Redemption Price of US$2.208 (compared to approximately 1.1
million Common Shares assuming the US$6.44 minimum optional redemption price
included in the Original Note).
The First Amendment Agreements also modifies the limitations on redemptions into
Common Shares by Catalina as follows: (1) from and after February 1, 2022,
Catalina may redeem up to an aggregate amount of US$2,000,000 (the "Base
Redemption Amount") during a calendar month at the Optional Redemption Price;
(2) from and after February 1, 2022, Catalina may redeem up to an additional
US$1,500,000 (the "Additional Redemption Amount") during a calendar month at a
redemption price that is the greater of (i) US$4.60 and (ii) an 8% discount to
the 4-day VWAP (as defined above); and (3) until January 31, 2022, Catalina may
redeem up to an aggregate amount of US$4,000,000 (the "Make-Up Base Redemption
Amount") at the Optional Redemption Price; and (4) until January 31, 2022,
Catalina may redeem up to an additional US$3,000,000 (the "Make-Up Additional
Redemption Amount") at a redemption price that is the greater of (i) US$4.60 and
(ii) an 8% discount to the 4-day VWAP (as defined above). If Catalina does not
redeem the full amount of the Base Redemption Amount, Additional Redemption
Amount, Make-Up Base Redemption Amount or Make-Up Additional Redemption Amount
in an applicable calendar month, Catalina may redeem any unused portion at any
time prior to the Expiration Date.
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Non-Temporary Amendments
In the event the number of Common Shares that are issued to Catalina pursuant to
the First Amendment Agreement or, following the Expiration Time, the Original
Note, exceed those registered under the existing resale registration statement
on Form S-1 (File No. 333-258855), CLVR may be required to amend such
registration statement or file a new registration statement with the Securities
and Exchange Commission to register such Common Shares.
The foregoing description of the First Amendment Agreement is not complete and
should be read in conjunction with the full text of the First Amendment
Agreement, a copy of which is filed herewith as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference, and the Original
Note.
Item 2.03 Creation of Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant
The disclosure set forth under Item 1.01 of this current report is incorporated
by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities
The disclosure set forth under Item 1.01 of this current report is incorporated
by reference into this Item 3.02.
Item 9.01. Financial Statements and Exhibits
Exhibit No. Description
10.1 First Amendment to Secured Convertible Note, dated as of January 13,
2022, by and among Clever Leaves Holdings Inc. and Catalina LP
104 Cover Page Interactive Data File (Formatted as Inline XBRL and included
as Exhibit 101)
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