Item 1.01
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Entry into a Material Definitive Agreement
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Purchase
Agreement
On
June 23, 2020, the Company and Michael Blisko entered into a Purchase Agreement pursuant to which Mr. Blisko agreed to purchase
in a private placement 100 shares of the Company’s newly-authorized Series B Preferred Stock for a cash purchase price of
$2,500,000. The transaction was closed on June 23, 2020.
Each
of the parties made customary representations and warranties in the Purchase Agreement, including representations and warranties
by the Company as to formation and good standing, authorization, compliance with laws and other instruments and the offer
of shares.
The
shares of the Company’s Series B Preferred Stock are not deposits or savings accounts, are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency, and are not obligations of, or guaranteed by, a bank.
Mr.
Blisko was not an affiliate of the Company.
The
foregoing summary of the Purchase Agreement is qualified in its entirety by the full text thereof, which is filed as Exhibit 10.1
hereto and incorporated herein by reference.
Series
B Certificate of Designations
In
connection with the issuance of Series B Preferred Stock pursuant to the Purchase Agreement, on June 23, 2020, the Company filed
a Certificate of Designation for the Series B Preferred Stock, no par value, of the Company (the “Series B Certificate of
Designation”) with the Secretary of State of the State of Florida.
Under
the Series B Certificate of Designation, the Company is authorized to issue 100 shares of Series B Preferred. As of June 30, 2020,
the Company issued 100 shares of Series B Preferred Stock to Mr. Blisko under the Purchase Agreement.
Rank.
Except as otherwise expressly set forth in the Certificate of Designation for the Series B Preferred Stock, all Shares of the
Series B Preferred Stock rank senior to all Junior Securities, with respect to payment or distribution of assets upon liquidation,
dissolution, or winding up of the Company, whether voluntary or involuntary. “Junior Securities” means, collectively,
the Common Stock and any other class of securities that is specifically designated as junior to the Series B Preferred Stock.
Participating
Dividends. Except in the case of liquidation, if the Company declares or pays a dividend or distribution on the Common Stock,
the Company shall simultaneously declare and pay a dividend on the Series B Preferred Stock on a pro rata basis with the Common
Stock determined on an as-converted basis assuming all Shares of Series B Preferred Stock had been converted immediately prior
to the record date of the applicable dividend.
Liquidation.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (a “Liquidation”),
the holders of Shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, before any payment shall be made to the holders of Junior Securities by reason
of their ownership thereof, an amount per Share equal to the greater of (i) the Series B Original Issue Price of $25,0000, or
(ii) such amount per Share as would have been payable had all shares of Series B Preferred Stock been converted into Common Stock
immediately prior to such Liquidation (the amount payable pursuant to this sentence is hereinafter referred to as the “Series
B Liquidation Amount”).
Voting.
Except as provided below and otherwise provided by law, the holders of the Series B Preferred Stock will have no voting rights.
Supermajority
Voting Rights—Amendments. The affirmative vote or consent of the holders of at least 66-2/3% of all of the Shares of
the Series B Preferred Stock at the time outstanding, voting separately as a class (a “Supermajority Interest”), shall
be required to amend the provisions of the Articles of Incorporation so as to materially and adversely affect the rights, preferences
or privileges of the Series B Preferred Stock, taken as a whole.
Supermajority
Voting Rights—Priority. The affirmative vote or consent of a Supermajority Interest of the Series B Preferred Stock
shall be required to issue, authorize or increase the authorized amount of, or to issue or authorize any obligation or security
convertible into or evidencing the right to purchase, any class or series of stock ranking senior to the shares of the Series
B Preferred Stock with respect to payment of dividends or the distribution of assets upon any Liquidation of the Company.
Right
to Convert. Subject to the provisions of described below, at any time and from time to time on or after issuance, the Company
shall have the right to convert all or any portion of the outstanding Shares of Series B Preferred Stock into an aggregate number
of shares of Common Stock as is determined by (i) multiplying the number of Shares (including any fraction of a Share) to be converted
by the Series B Original Issue Price of $25,000 thereof, and then (ii) dividing the result by the Conversion Price in effect immediately
prior to such conversion. The initial conversion price per Share (the “Conversion Price”) shall be $2.50 per Share,
subject to certain adjustments. No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to such
fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors
of the Company.
Subject
to the limitations described below, and assuming there are no adjustments to the Conversion Price, the Company would have the
right to convert the outstanding shares of Series B preferred Stock into 1,000,000 shares of Common Stock.
Limitations
on Conversion. The right of the Company to convert any of the shares of the Series B Preferred Stock shall be subject to the
prior fulfillment of the following conditions:
(a)
Such conversion shall have been by approved by the holders of a majority of the outstanding Common Stock of the Company;
and
(b)
Such conversion shall not result in any holder of the Series B Preferred Stock and any Persons with whom the holder may be
acting in concert, becoming Beneficial Owners of more than 9.9% of the outstanding shares of the Common Stock. For purposes
of this subsection, the term “Beneficial Owner” shall have the meaning given to such term in SEC Rule
13d-3.
Reservation
of Stock. The Company shall at all times when any shares of Series B Preferred Stock is outstanding reserve and keep available
out of its authorized but unissued shares of capital stock, solely for the purpose of issuance upon the conversion of the Series
B Preferred Stock, such number of shares of Common Stock issuable upon the conversion of all outstanding Series B Preferred Stock.
Adjustment
to Conversion Price and Number of Conversion Shares. The Conversion Price and the number of Conversion Shares issuable on
conversion of the shares of Series B Preferred Stock shall be subject to customary adjustments upon dividend, subdivision, or
combination of Common Stock, and upon any reorganization, reclassification, consolidation or merger.
Preemptive
Rights. The holders of shares of Series B Preferred Stock shall have no preemptive rights with respect to any shares of the
Company’s capital stock or any of its other securities convertible into or carrying rights or options to purchase any such
capital stock.
The
foregoing summary of the Series B Certificate of Designations is qualified in its entirety by the full text thereof, which is
filed as Exhibit 3.1 hereto and incorporated herein by reference.