EDGEMODE, INC. Item 1.01 Entry into a Material Definitive Agreement.
Effective
The terms of the Series B Preferred Stock, including the terms of conversion, pursuant to a Certificate of Designation, Preference and Rights of Series B Preferred Stock of the Company (the "Certificate of Designation"), are provided below under Item 5.03.
Pursuant to the Purchase Agreement, the Investor may convert all or a portion of the outstanding Series B Preferred Stock into shares of the Company's Common Stock beginning on the date which is 180 days after the issuance date of the Series B Preferred Stock into Common Stock; provided, however, that the Investor may not convert the Series B Preferred Stock to the extent that such conversion would result in beneficial ownership by the Investor and its affiliates of more than 4.99% of the Company's issued and outstanding Common Stock.
The Company will have the right, at the Company's sole option, provided that an
event of default has not occurred, to redeem all or any portion of the shares of
Series B Preferred Stock, exercisable on not more than 3 Trading Days prior
written notice to the holders of the Series B Preferred Stock, in full. If the
Company redeems the shares of Series B Preferred Stock within 90 days of its
issuance, the Company must pay all of the principal at a cash redemption premium
of 120%; if such prepayment is made between the 91st day and the 180th day after
the issuance of the Series B Preferred Stock, then such redemption premium is
125%. After the 180th day following the issuance date, there shall be no further
right of optional redemption. On the date which is the earlier of: (i) twelve
(12) months following the issuance date; or (ii) at the option of the Investor,
upon the occurrence of an Event of Default as defined under the Certificate of
Designation (the "Mandatory Redemption Date"), the Company shall redeem all of
the shares of Series B Preferred Stock of the Investor (which have not been
previously redeemed or converted). With five (5) days of the Mandatory
Redemption Date, the Company shall make payment to the Investor of an amount in
cash equal to the total number of shares of Series B Preferred Stock held by
such Investor multiplied by the then current Stated Value as adjusted pursuant
to the terms hereof (including but not limited to the addition of any accrued
unpaid dividends and any default adjustments. An Event of Default includes the
Company's failure to pay a mandatory redemption amount, comply with its
In connection with the Certificate of Designation, the Company agreed to cause its transfer agent to reserve six times the number of shares of Common Stock that would be issuable upon full conversion of the Series B Preferred Stock (assuming that the 4.99% limitation set forth in herein is not in effect) (based on the respective Conversion Price of the Series B Preferred Stock as defined below in effect from time to time).
The proceeds from the sale of the Series B Preferred Stock shall be used for
working capital. In addition, the Company paid
The foregoing summaries of the terms of the Certificate of Designation and the Purchase Agreement are subject to, and qualified in their entirety by, the agreements and instruments attached hereto as Exhibits 3.1 and 10.1, respectively, which are incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above with respect to the Purchase Agreement and the related agreements are incorporated herein by reference.
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Item 3.02 Unregistered Sales of
The information set forth under Item 1.01 above with respect to the issuance of the shares of Series B Preferred Stock is incorporated herein by reference. The issuance of the shares of Series B Preferred Stock was made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Act"), pursuant to Section 4(a)(2) of the Act. No commissions or fees were paid in connection with the sale of the Series B Preferred Stock.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Effective
Pursuant to the Certificate of Designation, the Company authorized 1,000,000
shares of the Series B Preferred Stock, which may be convertible into shares of
common stock, par value
The Series B Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends and right of liquidation with the Company's Common Stock and (b) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company and existing and outstanding preferred stock of the Company.
The Series B Preferred Stock shall have no right to vote on any matters requiring shareholder approval or any matters on which the shareholders are permitted to vote. So long as any shares of Series B Preferred Stock are outstanding, the Company will not, without the affirmative approval of the Investor (i) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend this Certificate of Designations, (ii) authorize or create any class of stock ranking as to distribution of dividends or a liquidation preference senior to the Series B Preferred Stock, (iii) amend its Articles of Incorporation, as amended in breach of any of the provisions the Certificate of Designation, (iv) increase the authorized number of shares of Series B Preferred Stock, (v) liquidate, dissolve or wind-up the business and affairs of the Company, or effect any Deemed Liquidation Event (as defined below), (vi) breach any of the provisions set forth herein; or (vii) enter into any binding agreement with respect to any of the foregoing. A "Deemed Liquidation Event" means: (a) a merger or consolidation in which the Company is a constituent party or a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of the surviving or resulting corporation or, if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.
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Each share of Series B Preferred Stock will carry an annual dividend in the
amount of eight percent (8%) of the price per share of Series B Preferred Stock
of
Item 9.01 Exhibits, Financial Statement Schedules
(d) Exhibits
Exhibit No. Exhibit Description
Certificate of Designation of Series B Preferred Stock filed
3.1 July 20, 2022
10.1 Series B Preferred Stock Purchase Agreement, dated as of July
18, 2022 , by and between Edgemode, Inc. and 1800 Diagonal Lending
LLC
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