Item 3.02Unregistered Sales of
On
The amount of available credit under the Loan is
The Loan bears interest at a rate of 12.75% per annum, with monthly installment payments of accrued interest only. The principal balance of the Loan may be prepaid at any time at the option of the Borrower, subject to certain prepayment charges.
The Borrower anticipates that the proceeds of the Loan will be used by the
Borrower to repay indebtedness owed to
In connection with the Agreement, the Borrower made certain customary representations and warranties, and agreed that while the Loan amount remains outstanding, it would not take certain actions, including that it will not incur certain debts (as defined in the Agreement); create, assume, or suffer to exist any lien on any property or asset of the Borrower, except those set forth in and allowed by the Agreement; consolidate or merge with any other entity; or sell, lease, or transfer all or substantially all of the assets of the Borrower. Also in connection with the Agreement, the Borrower made certain affirmative and negative covenants, and agreed to designate a representative of Digital Lending to attend Parent board of directors meetings in a non-voting, observer capacity.
In connection with the Agreement, the Borrower and Digital Lending also entered into a Security Agreement (the "Security Agreement"), and Parent executed a Guaranty (the "Guaranty") and issued a Common Stock Purchase Warrant ("Warrant") in favor of Digital Lending.
Security Agreement
Pursuant to the Security Agreement, the Borrower granted to Digital Lending a
second position security interest in and to the Borrower's collateral, as more
fully defined in the Security Agreement, and which includes receivables,
equipment, inventory, personal property, other intangibles, and proceeds from
any of these, to secure the Borrower's payment of its obligations under the
Loan. The security interest granted to Digital Lending is subordinate to a
security interest granted to
Guaranty
Pursuant to the Guaranty, Parent agreed to guaranty the Borrower's obligations under the Agreement and Note.
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Warrant
In connection with the Agreement and the Loan, Parent agreed to issue to Digital
Lending the Warrant. Pursuant to the Warrant, Digital Lending may purchase up
to 250,000 shares of Parent's common stock. The Warrant has a term of five (5)
years, has an exercise price of
The Warrant, together with the shares of common stock underlying the Warrant, were and will be issued to Digital Lending without registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, based in part upon the following factors: (a) the issuance of the securities was in connection with an isolated private transaction which did not involve any public offering; (b) there was a single offeree; (c) there were no subsequent or contemporaneous public offerings of the securities by Parent; and (d) the negotiations for the sale of the securities took place directly between the offeree and the issuer.
The foregoing summaries of the terms and conditions of the Agreement, the Note, the Security Agreement, and the Guaranty do not purport to be complete, and are qualified in their entirety by reference to the full text of the Agreement, the Note, the Security Agreement and the Guaranty, each of which is attached as an exhibit hereto.
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Item 9.01Financial Statements and Exhibits.
(d)Exhibits ExhibitDescription 10.1 Loan Agreement 10.2 Revolving Promissory Note 10.3 Security Agreement 10.4 Guaranty
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