Item 1.01. Entry Into a Material Definitive Agreement.
On February 16, 2023, the Company received correspondence from JGB Collateral,
LLC, a Delaware limited liability company (the "Agent") constituting its
assertion of a notice of events of default and reservation of rights (the
"Notice of Default") under that certain Loan and Security Agreement, dated as of
October 21, 2022 (the "Loan Agreement"), by and among the Company, its
subsidiaries, the Agent and certain lenders party thereto (collectively, the
"Lender"). The Loan Agreement is described in a current report on Form 8-K filed
by the Company on October 26, 2022 and initially provided for a $5.5 million
term loan. The Notice of Default purports that certain events of default under
the Loan Agreement have occurred and are continuing, due to the Company's
current liquidity situation as previously disclosed in the Company's Current
Reports on Form 8-K filed on February 7, 2023 and February 8, 2023.
On February 22, 2023, after due discussions between the Company and the Agent,
the Company entered into an amendment to the Loan Agreement (the "Amendment")
with the Agent pursuant to which, among other things, (i) the Company agreed to
repay the principal amount of the term loan to the Agent in the following
installments: (A) $2 million on February 23, 2023, (B) $1 million on August 22,
2023 and (C) the entire remaining principal balance and all accrued but unpaid
interest (including the Original Issue Discount, as defined in the Amendment) on
August 22, 2024; (ii) the Agent agreed to withdraw the Notice of Default and not
exercise its purported rights and remedies thereunder; (iii) the Lender may
elect, at any time and from time to time, to convert any outstanding portion of
the outstanding term loan into shares of the Company's common stock at a
conversion price of $0.50 per share; (iv) removed the "Cash Minimum" covenant of
which the Company had to maintain unrestricted, unencumbered Cash (as defined in
the Loan Agreement) of at least $2,000,000; (v) removed the EBITDA (as defined
in the Loan Agreement) covenant of which the Company had to maintain at least
the applicable EBITDA Target (as defined in the Loan Agreement) for each
calendar quarter; (vi) removed the revenue covenant in which the Company had to
maintain consolidated quarterly net revenue of at least $75 million each
calendar quarter and (vii) provide a lien to JGB in the Company's claims for
trademark infringement against Volkswagen Group of America, Inc. pursuant to the
lawsuit currently pending in the (X) United States District Court for the
District of New Jersey and captioned as Onyx Enterprises Int'l, Corp v.
Volkswagen Group of America, Inc., Civil Action Number 3:20-cv-09976-BRM-ZNQand
all proceeds and products thereof and (Y) United States District Court for the
District of Massachusetts and captioned as Onyx Enterprises International Corp.
v. ID Parts LLC, Case No. 1:20cv-11253 and all proceeds and products thereof
(collectively, the "Volkswagen Trademark Claims"), provided that the Company can
secure the Permitted Litigation Indebtedness (as defined in the Amendment) on
the terms described in the Amendment.
In connection with the Amendment, the Company and the Agent entered into an
Amended and Restated Intellectual Property and Security Agreement (the "A&R
Security Agreement") which amended and restated that certain Intellectual
Property and Security Agreement, dated as of October 21, 2022. The A&R Security
Agreement removed the exclusion of the Volkswagen Trademark Claims from the
Agent's security interest in the Company's intellectual property.
The foregoing descriptions of the Amendment and A&R Security Agreement thereby
are not complete and are subject to, and qualified in their entirety by
reference to, the full text of the Amendment and the A&R Security Agreement, the
forms of which are included as Exhibits 10.1 and 10.2 to this Current Report on
Form 8-K, respectively, and are incorporated herein by this reference.
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Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 2.04.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02.
Item 8.01 Other Events.
On February 21, 2023, the Company held a virtual town hall with certain of its
key vendors to provide updates on recent events at the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed as part of this report:
Exhibit No. Description
10.1 Amendment to Loan and Security Agreement, by and among PARTS iD,
Inc., the Lenders party thereto and JGB Collateral, LLC, in its
capacity as collateral agent for the Lenders, dated as of February 22,
2023.
10.2 Amended and Restated Intellectual Property Security Agreement, by and
among PARTS iD, Inc., PARTS iD, LLC, the Lenders party thereto and JGB
Collateral, LLC, in its capacity as collateral agent for the Lenders,
dated as of February 22, 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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