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Item
1.01
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Entry
into a Material Definitive Agreement
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On April 14, 2020 (the “Effective
Date”), iMedia Brands, Inc. entered into a common stock and warrant purchase agreement with certain individuals and entities,
pursuant to which we will issue and sell an aggregate of 1,958,384 shares of our common stock and warrants to purchase an aggregate
of 979,190 shares of our common stock in a private placement, for an aggregate cash purchase price of $4,000,000.
In the initial closing under the purchase
agreement, which will occur on or before April 17, 2020, we will issue and sell an aggregate of 734,394 shares and warrants to
purchase an aggregate of 367,197 shares of our common stock for an aggregate cash purchase price of $1,500,000. Pursuant to the
purchase agreement, subsequent closings each with an aggregate cash purchase price of $500,000 are expected to occur on each of
May 23, 2020, June 1, 2020, and June 13, 2020, in which an aggregate of 244,798 shares and warrants to purchase an aggregate of
122,399 shares of our common stock will be issued and sold at each closing, and a closing with an aggregate cash purchase price
of $1,000,000 is scheduled to occur on July 11, 2020, in which an aggregate of 489,596 shares and warrants to purchase an aggregate
of 244,798 shares of our common stock will be issued and sold at this closing. The warrants will have an exercise price per share
of $2.66 and are exercisable at any time and from time to time from six months following their issuance date until April 14, 2025.
We have included a blocker provision in the purchase agreement whereby no purchaser may be issued shares of our common stock if
the purchaser would own over 19.999% of our outstanding common stock and, to the extent a purchaser in this offering would own
over 19.999% of our outstanding common stock, that purchaser will receive fully-paid warrants (in contrast to the coverage warrants
that will be issued in this transaction, as described above) in lieu of the shares that would place such holder’s ownership
over 19.999%. Further, we have included a similar blocker in the warrants (and amended the warrants purchased by the purchasers
on May 2, 2019, if any) whereby no purchaser of the warrants may exercise a warrant if the holder would own over 19.999% of our
outstanding common stock.
The purchasers consist of the following:
Invicta Media Investments, LLC, Michael and Leah Friedman and Hacienda Jackson LLC. Invicta Media Investments, LLC is owned by
Invicta Watch Company of America, Inc., which is the designer and manufacturer of Invicta-branded watches and watch accessories,
one of our largest and longest tenured brands. Michael and Leah Friedman are owners and officers of Sterling Time, LLC , which
is the exclusive distributor of Invicta Watch Company of America’s watches and watch accessories for television home shopping
and our long-time vendor. Invicta Watch Company of America is owned by our Vice Chair and director, Eyal Lalo, and Michael Friedman
also serves as a director of our company. Further, Invicta Media Investments, LLC and Michael and Leah Friedman comprise a “group”
of investors within the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended, that is our largest
stockholder.
Under the purchase agreement, the purchasers
agreed to customary standstill provisions related to our company for a period of two years through May 2, 2022, as well as to vote
their shares in favor of matters recommended by our board of directors for approval by our shareholders for the same time period.
Additionally, on April 14, 2020, we entered
into a registration rights agreement with the purchasers, pursuant to which we agreed to register the shares of common stock and
the shares issuable upon exercise of warrants held by the purchasers in accordance with the terms and conditions therein.
The foregoing descriptions are qualified
in their entirety by reference to the form of coverage warrants, form of fully-paid warrants, the purchase agreement and the registration
rights agreement, copies of which are included as Exhibit 4.1, Exhibit 4.2, Exhibit 10.1 and Exhibit 10.2, respectively, to this
Current Report on Form 8-K and are incorporated by reference herein.