Item 1.01 Entry into a Material Definitive Agreement.
On
Pursuant to the terms and subject to the conditions of the Asset Purchase
Agreement, the purchase price is
The Asset Purchase Agreement remains subject to higher or better offers, as
well as approval of the
The closing of the Sale is scheduled to be held on the second business day following satisfaction of the conditions set forth in the Asset Purchase Agreement. The foregoing description of the Asset Purchase Agreement and the transactions contemplated thereby, including the Sale, does not purport to be complete and is qualified in its entirety by reference to the text of the Asset Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. Also, see Item 1.03 for a discussion of the DIP Loan Agreement. Item 1.03 Bankruptcy or Receivership.
Chapter 11 Filing
On
--------------------------------------------------------------------------------
Senior "Debtor-in-Possession" Financing
In connection with the Chapter 11 Case, the Company will be filing a motion (the
"DIP Motion") seeking, among other things, interim and final approval of
postpetition, debtor-in-possession financing (the "DIP Financing") on the terms
and conditions set forth in the DIP Loan and Security Agreement (the "DIP Loan
Agreement"), dated as of
The proceeds from the DIP Financing will be used, subject to the order of
the
The maturity date of the DIP Financing will be the earliest to occur of
(a)
Interest on the outstanding principal amount of the loans under the DIP Loan Agreement will be payable quarterly in arrears and on the maturity date at the rate of 8% per annum, except that the Company will have the option to add to the principal amount of the DIP Facility up to 4% of such interest instead of paying it in cash. Upon the occurrence and during the continuance of an event of default, all obligations under the DIP Loan Agreement will bear interest at a rate equal to the then current rate plus an additional 2% per annum.
The foregoing description of the DIP Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the DIP Loan Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. --------------------------------------------------------------------------------
Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. The commencement of the Chapter 11 Case described in Item 1.03 above may constitute an event of default that may accelerate the Company's obligations under outstanding promissory notes in the aggregate approximate principal amount of up to$7,669,020 (collectively, the "Notes"). Any efforts to enforce the payment obligations under the Notes are automatically stayed as a result of the filing of the Chapter 11 Case, and the creditors' rights of enforcement in respect of the Notes are subject to the applicable provisions of the Bankruptcy Code. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. (e) OnMarch 16, 2020 , the Company andMark Weinreb , its Chief Executive Officer, entered into an agreement (the "Weinreb Agreement") pursuant to which, among other matters, the term of his employment agreement with the Company was extended to the earlier of (i)September 30, 2020 or (ii) the effective date of a plan of liquidation of the Company. The foregoing description of the Weinreb Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Weinreb Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference. Item 7.01 Regulation FD Disclosure.
Cautionary Information Regarding Trading in the Company's Securities
The Company cautions that trading in the Company's securities during the
pendency of the Chapter 11 Case is highly speculative and poses substantial
risks. Trading prices for the Company's securities may bear little or no
relationship to the actual recovery, if any, by the holders of the Company's
securities in the Chapter 11 Case. Based on the values for the Company's
business contemplated by the Asset Purchase Agreement referred to herein, the
Company expects that existing Company stockholders will receive no recovery at
the end of the Chapter 11 Case, consistent with legal priorities.
Coventry Action
On
This Current Report on Form 8-K contains certain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on our current expectations, estimates and projections about our operations, financial condition, results of operations, and liquidity. Statements containing words such as "may," "believe," "anticipate," "expect," "intend," "plan," "project," "estimate," or similar expressions constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding expectations about the timing and execution of the Company's strategic transactions (including the contemplated sale of substantially all of the Debtor's assets), and the operating expectations during the pendency of the Chapter 11 Case. Potential factors that could affect such forward-looking statements include, among others, risks and uncertainties relating to the Chapter 11 Case, including, but not limited to, the Company's ability to obtainBankruptcy Court approval of motions filed in the Chapter 11 Case (including, but not limited to, the DIP Motion and the Bidding Procedures Motion), the effects of the Chapter 11 Case on the Company and on the interests of various constituents,Bankruptcy Court rulings in the Chapter 11 Case and the outcome of the Chapter 11 Case in general, the length of time the Company will operate under the Chapter 11 Case, risks associated with third-party motions in the Chapter 11 Case, the conditions to which the Company's DIP Financing is subject and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of the Company's control; uncertainty associated with evaluating and completing any strategic or financial alternative as well as the Company's ability to implement and realize any anticipated benefits associated with any alternative that may be pursued; the consequences of the acceleration of the Company's debt obligations; the trading price and volatility of the Company's common stock and the risks related to trading on the OTC Pink Market and the other factors disclosed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors that May Affect Future Results and Financial Condition" in the Company's most recent Annual Report on Form 10-K filed with theSEC , as updated from time to time in our subsequent filings with theSEC . Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted. Reported results should not be considered an indication of future performance. Except as required by law, the Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. -------------------------------------------------------------------------------- The information in this Item 7.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. The filing of this Item 7.01 of this report shall not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation FD. Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
2.1 Asset Purchase Agreement, dated as of
10.1 DIP Loan and Security Agreement, dated as of
10.2 Letter agreement, dated
Inc. andMark Weinreb ___________________
* Certain schedules and exhibits omitted pursuant to Item 601(b)(2) of
Regulation S-K promulgated by the
--------------------------------------------------------------------------------
© Edgar Online, source