Item 1.01 Entry into a Material Definitive Agreement.
On December 9, 2022, Orbital Infrastructure Group, Inc., a Texas corporation (“Company”, “we” or “us”) entered into a Forbearance and Investment Agreement (“New Agreement”) with Streeterville Capital, LLC, its successors and/or assigns, an institutional accredited investor (“Streeterville” or “Investor”) pursuant to which the Company issued to Streeterville a Secured Promissory Note in the face amount of $42,113,840.90 (the “New Note”). The New Note reflects the cancellation of $36,713,840.90 of obligations under certain prior promissory notes issued to Streeterville and $5,000,000 of additional funds made available to us.
The New Note carries an original issue discount of $350,000 and reimbursement of Investor’s transactional expenses of $50,000, which are included in the initial principal balance of the New Note. The New Note bears interests at nine percent (9%) per annum and has a maturity date of 18 months after its issuance date of December 9, 2022. We may prepay all or a portion of the outstanding obligations under the New Note at a price equal to 115% of the amount we elect to prepay. Beginning six (6) months after December 9, 2022, the Investor has the right to redeem up to $2,500,000 per month of amounts due under the New Note, as more fully described in the New Note.
The Company previously issued to Investor a promissory note dated December 21, 2021 in the original face amount of $16,065,000 (the “First Note”), which still remains outstanding and which was disclosed and filed as an exhibit to our Form 10-K as of December 31, 2021. Subject to certain conditions, as described in the New Agreement, the Investor agrees to fund an additional $5,000,000 to us on each of January 15, 2023 and February 15, 2023.
The New Agreement and New Note contain customary representations, warranties and events of defaults, including the occurrence of a Fundamental Transaction without the Investor’s prior written consent or the occurrence of Trigger Event, as defined in the New Note.
We have relied upon the exemption from registration offered by Section 4(a)(2) of the Securities Act of 1933, as amended, for the issuance of the New Note. The Investor has represented to us it is an “accredited investor”, as defined in Rule 501(a) of Regulation D.
The preceding description of the New Agreement, New Note and other related agreements does not purport to be complete and is qualified in its entirety by reference to such documents which are filed as Exhibits to this report, and incorporated herein by reference.