Item 1.01 - Entry into a Material Definitive Agreement
Series G Convertible Preferred Stock Financing
On
The Warrants are exercisable for a period of five years from the date of
issuance at an exercise price of
The conversion price of the Series G Convertible Preferred Stock and the exercise price of the Warrants are subject to anti-dilution adjustment for subsequent lower price issuances by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.
The Series G Convertible Preferred Stock and the Warrant each contain a beneficial ownership limitation that restricts each of the Investor's ability to exercise the Warrants and convert the Series G Convertible Preferred Stock such that the number of shares of the Company common stock held by each of them and their affiliates after such conversion or exercise does not exceed 4.99% or 9.99% (at the election of the Investor) of the Company's then issued and outstanding shares of common stock.
The Purchase Agreement also provides that until the 18 month anniversary of the
date of the Purchase Agreement, in the event of a subsequent financing (except
for certain exempt issuances as provided in the Purchase Agreement) by the
Company, each Investor that invested over
From the date of the Purchase Agreement until the date that is the earlier of
(i) nine (9) months following the date of the Purchase Agreement and (ii) the
date that the VWAP for 10 consecutive Trading Days following
We also entered into separate Registration Rights Agreements with the Investors, pursuant to which the Company agreed to undertake to file a registration statement to register the resale of the shares underlying the Series G Convertible Preferred Stock and Warrants within ten (10) days following the date of written demand by the lead investor (the "Demand Date") , and to maintain the effectiveness of the registration statement until all of such shares of Common Stock have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any restrictions. If we fail to file the registration statement or have it declared effective by the dates set forth above, among other things, the Company is obligated to pay the investors liquidated damages in the amount of 1% of their subscription amount, per month, until such events are satisfied.
The net proceeds of the offering are expected to be used for working capital purposes and to further execute on our existing business, while also actively pursuing several additional "iconic" brands.
In conjunction with the Purchase Agreement, all officers and directors of the Company have entered into lock-up agreements pursuant to which they have agreed to not sell their shares of common stock or common stock equivalents in the Company until the twelve (12) month anniversary after the effective date of the registration statement described above.
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Item 3.02 Unregistered Sale of
The disclosure under item 1.01 above is incorporated herein by reference. The securities have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state, and were offered and issued in reliance on the exemption from registration under the Securities Act of 1933, as amended, afforded by Section 4(a)(2) and Rule 506 of Regulation D promulgated thereunder.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
Designation, Amount and Par Value. The number of shares of Series G Convertible
Preferred Stock designated shall be up to 1,500. Each share of Series G
Convertible Preferred Stock shall have a par value of
Dividends: Holders shall be entitled to receive, and the Company shall pay, dividends on shares of Series G Convertible Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of Series G Convertible Preferred Stock.
Liquidation: Upon any liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary (a "Liquidation"), the Holders shall be
entitled to receive out of the assets, whether capital or surplus, of the
Company an amount equal to the Stated Value, plus any accrued and unpaid
dividends thereon, if any, and any other fees or liquidated damages then due and
owing thereon under this Certificate of Designation, for each share of Preferred
Stock before any distribution or payment shall be made to the holders of any
Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Series G Convertible Preferred Stock shall have no voting rights. However, as long as any shares of Series G Convertible Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series G Convertible Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Series G Convertible Preferred Stock, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Series G Convertible Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Conversion Price. The conversion price for the Series G Convertible Preferred
Stock shall equal
Exercisability. A holder may not exercise any portion of the Series G Convertible Preferred Stock to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than 4.99% (or, upon election by a holder prior to issuance, 9.99%) of the outstanding common shares after exercise, except that upon notice from the holder to us, the holder may increase or decrease the amount of ownership of outstanding shares after exercising the holder's Series G Convertible Preferred Stock up to 9.99% of the number of our Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series G Convertible Preferred Stock, provided that any increase in such beneficial ownership limitation shall not be effective until 61 days following notice to us.
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Subsequent Equity Sales. If, at any time while the Series G Convertible Preferred Stock is outstanding, the Company, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the "Base Conversion Price" and such issuances, collectively, a "Dilutive Issuance") then simultaneously with the consummation of each Dilutive Issuance the Conversion Price shall be reduced to equal the Base Conversion Price (subject to certain exceptions set forth in the Certificate of Designations).
Fundamental Transaction. If we consummate any merger, consolidation, sale or other reorganization event in which our common stock is converted into or exchanged for securities, cash or other property, or if we consummate certain sales or other business combinations, then following such event, the holders of the Series G Convertible Preferred Stock will be entitled to receive upon exercise of the Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the warrants immediately prior to such event.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. 3.1 Certificate of Designation of Series G Convertible Preferred Stock. 10.1 Form of Securities Purchase Agreement, datedJanuary 12, 2020 betweenIconic Brands, Inc. and the signatories thereto. 10.2 Form of Warrant. 10.3 Form of Registration Rights Agreement, datedJanuary 12, 2020 , betweenIconic Brands, Inc. and the signatories thereto 10.4 Form of Lock-Up Agreement datedJanuary 12, 2020 . 99.1 Press Release ofIconic Brands, Inc. datedJanuary 13, 2020 . -4-
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