Item 1.01 Entry into a Material Definitive Agreement.
Convertible Notes
On
In addition, the Company entered into a Securities Purchase Agreement (the "LGH
Purchase Agreement," together with the FirstFire Purchase Agreement, the
"Purchase Agreements") with
Unless the Notes are converted, the principal amounts of the Notes, and accrued interest at the rate of 8% per annum, are payable on the one-year anniversary of the issuance of the Notes (the "Maturity Date"). If the Company fails to satisfy its loan obligation by the Maturity Date, the default interest rate will be 16%.
The Lenders have the right to convert any or all of the principal and accrued
interest on the Notes into shares of common stock of the Company on the earlier
of (i) 180 calendar days after the issuance date of the Notes or (ii) the
closing of a listing for trading of the common stock of the Company on a
national securities exchange offering resulting in gross proceeds to the Company
of
Subject to customary exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price per share lower than the conversion price of the Notes, the conversion rate of the Notes shall be reduced to such lower price.
Until the Notes are either paid or converted in their entirety, the Company agreed with the Lenders not to sell any securities convertible into shares of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion price that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company or the market for the common stock. The Company also agreed to not issue securities at a future determined price.
The Lenders have the right to require the Company to repay the Notes if the Company receives cash proceeds, including proceeds from customers and the issuance of equity (including in the Uplist Offering). If the Company prepays the Notes prior to the Maturity Date, the Company shall pay a 10% prepayment penalty.
Warrants
The Warrants issued to the Lenders granted each of the Lenders the right to
purchase up to 200,000 shares of common stock of the Company at an exercise
price of
The Lenders have the right to exercise the Warrants on a cashless basis if the highest traded price of a share of common stock of the Company during the 150 trading days prior to exercise of the Warrants exceeds the exercise price, unless there is an effective registration statement of the Company which covers the resale of the Lenders.
If the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of the Warrants, the exercise price of the Warrants shall be reduced to such lower price, subject to customary exceptions.
The Lenders may not convert the Notes or exercise the Warrants if such conversion or exercise will result in each of the Lenders, together with any affiliates, beneficially owning in excess of 4.9% of the Company's outstanding common stock immediately after giving effect to such exercise unless the Lenders notify the Company at least 61 days prior to such exercise.
Registration Rights Agreements
Pursuant to the terms of the Registration Rights Agreement dated as of
The foregoing descriptions of the Purchase Agreements, the Notes, the Warrants and each of the Registration Rights Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, copies of which are attached hereto as Exhibits 4.8, 4.9, 4.10, 4.11, 10.18, 10.19, 10.20, and 10.21 and are 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 contained in Item 1.01 above is incorporated by reference in this Item 2.03.
Item 3.02 Unregistered Sales of
The information contained above in Item 1.01, regarding the issuance of the Note and the Warrant is incorporated herein by reference in this Item 3.02. The Note and Warrant described in Item 1.01 above were offered and sold in reliance upon exemptions from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended ("1933 Act"), and Rule 506(b) promulgated under the 1933 Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is included in this Current Report:
Exhibit No. Description 4.8 Promissory Note datedNovember 16, 2021 issued byWetouch Technology Inc. toFirstFire Global Opportunities Fund, LLC . 4.9 Common Stock Purchase Warrant datedNovember 16, 2021 issued byWetouch Technology Inc . 4.10 Promissory Note datedNovember 24, 2021 issued byWetouch Technology Inc. toLGH Investments, LLC . 4.11 Common Stock Purchase Warrant datedNovember 24, 2021 issued byWetouch Technology Inc . 10.18 Securities Purchase Agreement, dated as ofNovember 16, 2021 , betweenWetouch Technology Inc. andFirstFire Global Opportunities Fund, LLC . 10.19 Registration Rights Agreement dated as ofNovember 16, 2021 , betweenWetouch Technology Inc. andFirstFire Global Opportunities Fund, LLC . 10.20 Securities Purchase Agreement, dated as ofNovember 24, 2021 , betweenWetouch Technology Inc. andLGH Investments, LLC . 10.21 Registration Rights Agreement dated as ofNovember 24, 2021 , betweenWetouch Technology Inc. andLGH Investments, LLC . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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