Item 3.02. Unregistered Sales of Equity Securities.
Hexin Promissory Note
As previously reported in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, on December 28, 2022, Marizyme, Inc. (the "Company")
issued a Promissory Note to Hexin Global Ltd. ("Hexin") for the principal amount
of $750,000 bearing interest at the annual rate of 20% per annum, due June 28,
2023 (the "Hexin Promissory Note"). Under the Hexin Promissory Note, the Company
agreed to issue warrants to purchase the Company's common stock equal to
$1,500,000 with the same terms as any warrants issued in the Company's next
financing round and which will be immediately exercisable. Default in the
payment of principal or interest or other material covenant under the note
triggers a default penalty equal to 0.666% of $750,000 per month during the
period of default, and other lender rights, including the demand of immediate
payment of all amounts due including accrued but unpaid interest, and recovery
of all costs, fees including attorney's fees and disbursements, and expenses
relating to collection and enforcement of the promissory note.
Private Placement of OID Convertible Notes, Class E Warrants and Class F
Warrants
As previously reported in a Current Report on Form 8-K filed on May 18, 2023
(the "Previous Form 8-K"), on May 12, 2023, the Company conducted the initial
closing (the "Initial Closing") of a private placement (the "OID Units Private
Placement") of up to $10,000,000 for an aggregate of up to 100,000,000 units
(the "Units") under a Unit Purchase Agreement (the "Purchase Agreement"), with
accredited investors, in which each investor will receive (i) a 15% original
issue discount unsecured subordinated convertible promissory note (each, an "OID
Convertible Note" and collectively, the "OID Convertible Notes"), convertible
into shares of common stock plus additional shares based on accrued interest at
$0.10 per share, subject to adjustment, (ii) a warrant for the purchase of 125%
of the shares of common stock into which the related OID Convertible Notes may
be converted at $0.10 per share, subject to adjustment (the "Class E Warrant"),
and (iii) a warrant for the purchase of 125% of the shares of common stock into
which the related OID Convertible Note may be converted at $0.20 per share,
subject to adjustment (each, a "Class F Warrant," and each Class F Warrant
together with each Class E Warrant collectively, the "Class E and Class F
Warrants"). In addition to the rights set forth in the Purchase Agreement, the
OID Convertible Notes, and the Class E and Class F Warrants, each investor party
to the Purchase Agreement and each holder of one of the OID Convertible Notes or
the Class E and Class F Warrants will have rights under a registration rights
agreement (the "Registration Rights Agreement"), as described below.
As part of the Initial Closing, on May 12, 2023, Walleye Opportunities Master
Fund Ltd. entered into a Purchase Agreement dated as of such date, paid a
subscription amount of $1,000,000, and the Company issued 11,764,710 Units
consisting of (i) an OID Convertible Note in the principal amount of $1,176,471,
convertible into 11,764,710 shares of common stock plus additional shares based
on accrued interest at $0.10 per share, subject to adjustment, (ii) a Class E
Warrant for the purchase of 14,705,880 shares of common stock (the "Initial
Class E Warrant"), and (iii) a Class F Warrant for the purchase of 14,705,880
shares of common stock at $0.20 per share, subject to adjustment (the "Initial
Class F Warrant").
Class E Warrants and Class F Warrants
The Class E and Class F Warrants are generally exercisable for a period from the
date that the Company's articles of incorporation have been amended to increase
the number of authorized shares of common stock to a sufficient amount to permit
the full conversion of the OID Convertible Notes (the "Capital Amendment Date")
until five years from the date of issuance. The exercise right is subject to a
beneficial ownership limitation in which exercise is permitted only if it would
not cause the holder to beneficially own more than 4.99% of the Company's common
stock, or more than 9.99% if the holder beneficially owns more than 4.99% of
common stock based on ownership of equity securities of the Company other than
the OID Convertible Notes or the Class E and Class F Warrants. The Class E and
Class F Warrants provide for exercise on a cashless net exercise basis if there
is no effective registration statement registering or current prospectus
available for the resale of shares of common stock issuable under the Class E
and Class F Warrants (a "Registration Default") after 180 days following the
issue date (the "Registration Deadline"). In addition, for each 30 days
following the Registration Deadline, or portion of any 30-day period thereafter
in which a Registration Default exists, the amount of shares issuable under the
Class E and Class F Warrants shall be automatically increased by 5%, prorated
for a partial month, not to exceed in the aggregate an additional 25%. In the
event the Company sells, grants, issues, or otherwise disposes of common stock
or securities with rights to common stock, or announces an intention to do so,
at a lower price per share than either of the Class E and Class F Warrants'
exercise price, while such Warrants are outstanding, then the applicable
Warrants' exercise price will be reduced to the greater of such lower price or a
floor price as determined by any of NYSE American, The Nasdaq Stock Market LLC,
or the New York Stock Exchange, as applicable. The Class E and Class F Warrants
have the registration rights set forth in the Registration Rights Agreement. The
Class E and Class F Warrants also have customary antidilution provisions in the
event of stock splits, certain changes of control or similar transactions, and
rights offerings.
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Registration Rights Agreement
Under the Registration Rights Agreement, the Company is required to file a
registration statement with the Securities and Exchange Commission (the "SEC")
registering the resale of the shares of common stock issuable pursuant to
conversion of the OID Convertible Notes and exercise of the Class E and Class F
Warrants within 60 days of the date of the Initial Closing (i.e., by July 11,
2023) and to cause the registration statement to become effective within 120
days after such filing date. The Company must maintain the effectiveness of the
registration statement until the earlier of the first anniversary of its
effectiveness date and the date that the shares registered for resale may be
resold without volume or manner-of-sale restrictions pursuant to Rule 144 ("Rule
144") under the Securities Act of 1933, as amended (the "Securities Act") and
without the requirement for the Company to be in compliance with the current
public information requirement under Rule 144. If the Company fails to file the
registration statement by the filing deadline or cause it to become effective by
the effectiveness deadline, or the registration statement ceases to be effective
or the related prospectus becomes unavailable for resales for more than 10
consecutive calendar days or more than an aggregate of 15 calendar days during
any 12-month period, then on the date of such failure and every 30 calendar days
after such date until the failure is cured, the Company shall pay to each
investor partial liquidated damages equal to 1% of the aggregate purchase price
paid by such investor pursuant to the Purchase Agreement, up to a maximum of 10%
of the aggregate subscription amount paid by the investor. If the Company fails
to pay the partial liquidated damages within seven days of any such failure, the
Company will pay interest thereon at a rate of the lesser of 18% per annum or
the maximum amount permitted under applicable law to each investor, accruing
daily from the date such partial liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full. Additional liquidated damages
requirements will end when the applicable failure is cured or Rule 144 becomes
available for resale of all the shares of common stock otherwise required to be
registered for resale under the Registration Rights Agreement. Liquidated
damages will not apply to a failure that is due to limits imposed by the SEC's
interpretation of Rule 415 under the Securities Act. In addition, if there is
not an effective registration statement covering all shares of common stock
subject to the registration rights under the Registration Rights Agreement at
any time when required and the Company proposes to file a registration statement
to register certain other offerings, not including an underwritten public
offering of its securities for its own account or the account of others or
certain other types of registration statements, then the Company must provide
notice to investor parties and include the shares otherwise required to be
registered under the Registration Rights Agreement within 15 days of such
notice, unless they are eligible for resale pursuant to Rule 144 (without volume
restrictions or current public information requirements). The Registration
Rights Agreement contains related procedural and filing requirements and
investor notice and review rights as to certain events and filings relating to
the registration statement. The Company will be responsible for all fees and
expenses relating to compliance with the Registration Rights Agreement, as well
as up to $10,000 in reasonable attorney fees for the investors' review of the
registration statement. The Registration Rights Agreement contains mutual
indemnification provisions for claims relating to the registration statement.
Pursuant to the Hexin Promissory Note, the Company issued Hexin a Class E
Warrant that may be exercised to purchase 7,500,000 shares of common stock for
$0.10 per share, and a Class F Warrant that may be exercised to purchase
3,750,000 shares of common stock for $0.20 per share (collectively, the "Hexin
Warrants"). The Hexin Warrants will be exercisable in accordance with the
exercise terms and conditions of the other Class E and Class F Warrants
described above, which the Company determined controlled in order to fulfill its
obligations under the Hexin Promissory Note. For a description of the other
rights, terms and provisions applicable to the Hexin Warrants, see "Item 3.02.
Unregistered Sales of Equity Securities. - Private Placement of OID Convertible
Notes, Class E Warrants and Class F Warrants - Class E Warrants and Class F
Warrants" and "Item 3.02. Unregistered Sales of Equity Securities. - Private
Placement of OID Convertible Notes, Class E Warrants and Class F Warrants -
Registration Rights Agreement" of this Current Report on Form 8-K. For a
description of
other terms, provisions and agreements relating to the Initial Closing, the
Purchase Agreement and the OID Units Private Placement, see the Previous Form
8-K.
The issuance of the Hexin Warrants was conducted as a private placement pursuant
to and in reliance on the exemption from registration provided by Section
4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and/or
Regulation S promulgated thereunder.
The foregoing description of the Hexin Promissory Note and the Hexin Warrants is
qualified in its entirety by reference to the full text of such documents which
are filed as Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively, to this
Current Report on Form 8-K, and which are incorporated by reference herein.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description of Exhibit
4.1 Promissory Note issued by Marizyme, Inc. to Hexin Global Ltd.,
dated December 28, 2022 (incorporated by reference to Exhibit 4.16
to Form S-1/A filed on February 1, 2023)
4.2 Class E Common Stock Purchase Warrant issued by Marizyme, Inc.,
dated May 22, 2022
4.3 Class F Common Stock Purchase Warrant issued by Marizyme, Inc.,
dated May 22, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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