Exchange of Outstanding Promissory Notes for Unsecured Convertible Promissory Notes
On December 18, 2020, the Company entered into a securities exchange agreement (“BD1 Exchange Agreement”) with BD 1 Investment Holding LLC (“BD1”). BD1 had previously acquired all of the Company’s existing outstanding unsecured notes (other than notes held by GI) from the original note holders.
Pursuant to the terms of the BD1 Exchange Agreement, BD1 agreed to surrender and exchange all of its outstanding promissory notes with principal balances of approximately $10.4 million (including accrued interest and default penalties). In exchange and without the payment of any additional consideration, the Company issued to BD1 two unsecured convertible notes with an aggregate principal amount of $10,500,000 (“BD1 Exchange Notes”).
Terms of BD1 Exchange Notes
The BD1 Exchange Notes will mature on December 18, 2025.
The BD1 Exchange Notes will not bear any accrued interest but will bear a default interest rate of 10% in the event of a default under the BD1 Exchange Notes.
The BD1 Exchange Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the BD1 Exchange Notes, and (ii) bankruptcy or insolvency of the Company.
BD1 shall have the right, from and after the date of issuance and then at any time until the BD1 Exchange Notes are fully paid, to convert any outstanding and unpaid principal and interest into shares of Common Stock at a fixed conversion price equal to $0.0001 per share.
The BD1 Exchange Notes are not secured.
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