Item 1.01 Entry into a Material Definitive Agreement.
On
The C5 Note has terms that are substantially similar to those secured promissory
notes previously issued by the Company as disclosed in a Current Report on Form
8-K filed on
The Company, C5 and the holders of the Prior Notes intend to, within five business days of the issuance of the C5 Note, amend and restate the Prior Notes and the C5 Note to be substantially in the form attached to this report as Exhibit 99.1 (the "Restated Notes") and all security agreements to be substantially in the form attached to this report as Exhibit 99.2 (the "Restated Security Agreements").
The Company will be permitted to prepay the Restated Notes at any time without premium or penalty. Each Restated Note will rank pari passu in right of payment with each of the other Restated Notes and any other note that may be issued by the Company on a substantially similar basis to C5 or its affiliates, and will rank senior in right of payment to all of the Company's other existing and future unsecured indebtedness to the extent of the value of the assets securing the Restated Notes.
The Restated Notes include customary Events of Default that include:
• the Company fails to timely pay any amounts due under the Restated Notes; • the Company breaches any covenant under the Restated Notes or the Restated Security Agreements, or any representation or warranty of the Company is violated or becomes untrue or misleading in any material respect; • the Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of or relating to debtors, applies for or consents to the appointment of a receiver, trustee, custodian or liquidator for itself or any part of its property if such appointment is not terminated or dismissed within 60 days, is adjudicated as bankrupt or insolvent or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; • the Company becomes subject to any proceedings under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors (unless such proceeding is dismissed or discharged within 60 days), or has an order of relief entered against it in any proceeding under the United States Bankruptcy Code; • the Company generally fails to pay, or admits in writing its inability to pay, any material debt as it becomes due, subject to applicable grace periods, if any; • any provision of the Restated Notes or the Restated Security Agreements shall for any reason cease to be valid and binding on or enforceable against the Company; or • the Company or any of its subsidiaries fails to pay any principal or interest due in respect of the Prior Notes or the Company's outstanding convertible promissory note issued to an institutional investor (as disclosed in the Company's Current Report on Form 8-K filed onSeptember 15, 2022 ) or the Company fails to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such indebtedness, subject to certain exceptions, exclusions and limitations.
Upon the occurrence of an Event of Default under the Restated Notes, all unpaid principal, accrued interest and other amounts owed shall, at the option of each holder upon written notice to the Company, and in certain cases automatically, be immediately due, payable and collectible.
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The foregoing description of the Restated Notes and the Restated Security Agreements does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the form of Restated Note and form of Restated Security Agreement filed hereto as Exhibits 99.1 and 99.2, respectively, and 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.
The information set forth in Item 1.01 of this Current Report is incorporated by reference into this Item 2.03.
Item 7.01 Regulation FD Disclosure.
On
The information provided in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.3 attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
On
The Company plans to use the proceeds of the Restated Notes to fund its ongoing
operations. However, management anticipates that, in the absence of additional
sources of liquidity (which may include additional Restated Notes to be issued
to C5 as described in the preceding paragraph), the Company's existing cash and
cash equivalents and anticipated cash flows from operations will not be
sufficient to meet the Company's operating and liquidity needs through the end
of
In the event the Company does not issue any additional Restated Notes to C5 and
determines that additional sources of liquidity will not be available to it or
will not allow it to meet its obligations as they become due, the Company may
need to file a voluntary petition for relief under the United States Bankruptcy
Code in order to implement a plan of reorganization, court-supervised sale
and/or liquidation. Furthermore, in the event the Company is unable to pursue
bankruptcy protection under Chapter 11 of the United States Bankruptcy Code, it
may be necessary to pursue bankruptcy protection under Chapter 7 of the United
States Bankruptcy Code, in which case a Chapter 7 trustee would be appointed or
elected to liquidate the Company's assets for distribution in accordance with
the priorities established by the United States Bankruptcy Code. The Company
expects that liquidation under Chapter 7 would result in significantly smaller
distributions being made to stakeholders than those it might obtain under
Chapter 11 primarily because of the likelihood that the Company's assets would
have to be sold or otherwise disposed of by a Chapter 7 trustee in a distressed
fashion over a short period of time rather than sold by existing management as a
going concern business. In the event that the Company pursues bankruptcy
protection under Chapter 7, the Company's material business activities will
cease, and the Company will no longer have the capability to prepare financial
statements and other disclosures required for periodic reports for filing with
the
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Forward-Looking Statements
Certain statements in this Current Report on Form 8-K may be considered
forward-looking statements, including statements with respect to the negotiation
of definitive agreements with C5 for the acquisition of the Company and the
Company's expectations with respect to the sufficiency of the Company's cash
resources and the ability to secure additional sources of liquidity, including
the issuance of additional Restated Notes to C5, the Company's ability to
continue as a going concern and the potential need to pursue bankruptcy
protection. Forward-looking statements generally relate to future events and can
be identified by terminology such as "may," "should," "could," "might," "plan,"
"possible," "strive," "budget," "expect," "intend," "will," "estimate,"
"believe," "predict," "potential," "pursue," "aim," "goal," "mission,"
"anticipate" or "continue," or the negatives of these terms or variations of
them or similar terminology. Such forward-looking statements are subject to
risks, uncertainties, and other factors which could cause actual results to
differ materially from those expressed or implied by such forward-looking
statements. These forward-looking statements are based upon estimates and
assumptions that, while considered reasonable by the Company and its management,
are inherently uncertain. Factors that may cause actual results to differ
materially from current expectations include, but are not limited to, risks and
uncertainties set forth in the section entitled "Risk Factors" in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Exhibit Description 99.1 Form of Amended and Restated Secured Promissory Note. 99.2 Form of Amended and Restated Security Agreement. 99.3 Press Release issued byIronNet, Inc. onJanuary 4, 2023 . 104 Cover Page Interactive Data File, formatted in Inline XBRL (embedded within the Inline XBRL document).
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