Item 1.01 Entry into a Material Definitive Agreement.
Membership Interest Purchase Agreement
On September 4, 2020, Verb Acquisition Co., LLC (“Verb Acquisition”), a subsidiary of Verb Technology Company, Inc. (the “Company”), entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Ascend Certification, LLC, dba SoloFire (“SoloFire”), the sellers party thereto (collectively, the “Sellers”), and Steve Deverall, solely in his capacity as the seller representative, under which Sellers agreed to sell their entire interest in SoloFire, representing all of the outstanding limited liability company membership interests of SoloFire, to Verb Acquisition for a base purchase price of $5,700,000 less an aggregate of $517,750 in certain adjustments, subject to certain potential post-closing working capital adjustments, payable in a $1,982,250 Promissory Note (as defined below) and an aggregate $3,200,000 of Verb Acquisition’s class B units (the “Class B Units”).
The transactions contemplated by the Purchase Agreement (the “Transactions”) closed on September 4, 2020 (the “Closing”). At the Closing, Verb Acquisition issued an aggregate 2,642,159 Class B Units to Sellers, which amount is equal to $3,200,000 divided by the quotient of (i) the sum of the volume weighted average prices of the Company’s common stock during the ten (10) consecutive trading day period ending on the trading day immediately preceding the Closing, divided by (ii) ten (10).
The Purchase Agreement also contains customary representations, warranties and covenants, and other terms and conditions.
The Company has determined that the Transactions do not constitute the acquisition of a significant amount of assets, and thus do not trigger a disclosure under Item 2.01 of this Current Report on Form 8-K.
The description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by this reference.
Promissory Note and Guaranty
On September 4, 2020, Verb Acquisition issued a promissory note (the “Promissory Note”) in favor of Steve Deverall, solely in his capacity as the seller representative under the Purchase Agreement, in the principal amount of $1,982,250. The Promissory Note accrues interest at a rate of 0.14% per annum and matures on October 1, 2020. The Promissory Note may be prepaid, at the option of Verb Acquisition, without premium or penalty, at any time. The Promissory Note contains a variety of events of default which are typical for transactions of this type and contains other customary terms and conditions.
On September 4, 2020, the Company entered into a Guaranty of Payment Agreement (the “Guaranty”) for the benefit of Steve Deverall, as seller representative. The Guaranty provides for the unconditional guarantee by the Company, and the Company agreed to be liable for, the payment and performance when due of the principal amount of the Promissory Note and the interest thereon. The Guaranty also contains customary representations, warranties and covenants, and other terms and conditions.
The descriptions of the Promissory Note and Guaranty do not purport to be complete and are qualified in their entirety by reference to the Promissory Note and Guaranty, which are filed as Exhibits 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by this reference.
Exchange Agreement
On September 4, 2020, Verb Acquisition, the Company and the holders of Class B Units entered into an Exchange Agreement (the “Exchange Agreement”) under which the parties agreed, from and after the six (6)-month anniversary of the Closing, that each holder of Class B Units shall be entitled to surrender its Class B Units to Verb Acquisition in exchange for shares of the Company’s common stock at an exchange rate of one (1) share of the Company’s common stock for one (1) Class B Unit.
The Exchange Agreement also contains customary representations, warranties and covenants, and other terms and conditions.
The description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement, which is filed as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by this reference.
Form of Contribution and Exchange Agreement
On September 4, 2020, Verb Acquisition and each Seller entered into a Contribution and Exchange Agreement (the “Contribution and Exchange Agreement”) under which, immediately prior to the Closing, each Seller agreed to contribute, transfer and assign to Verb Acquisition all of such Seller’s limited liability company membership interests in SoloFire solely in exchange for its share of Class B Units.
The Contribution and Exchange Agreement also contains customary representations, warranties and covenants, and other terms and conditions.
The description of the Contribution and Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement, which is filed as Exhibit 10.5 to this Current Report on Form 8-K and is incorporated herein by this reference.
On September 4, 2020, Verb Acquisition entered into an Amended and Restated Operating Agreement (the “Amended and Restated Operating Agreement”) with Sellers. The Amended and Restated Operating Agreement authorizes class A units and Class B Units and contains customary representations, warranties and covenants, and other terms and conditions.
The description of the Amended and Restated Operating Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Operating Agreement, which is filed as Exhibit 10.6 to this Current Report on Form 8-K and is incorporated herein by this reference.
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