Item 1.01 Entry into a Material Definitive Agreement.
On
The Note bears interest at a rate of 12% per annum and matures on
The Note is convertible into common shares at the option of the Purchaser at any
time on or following the date that an event of default (as defined in the Note)
occurs under the Note at a conversion price equal the lower of (i)
The conversion price of the Note and the exercise price of the Warrants are subject to standard adjustments, including a price-based adjustment in the event that the Company issues any common shares or other securities convertible into or exercisable for common shares at an effective price per share that is lower than the conversion or exercise price, subject to certain exceptions. In addition, the Note and the Warrants contain an ownership limitation, such that the Company shall not effect any conversion or exercise, and the holders shall not have the right to convert or exercise, any portion of the Note or the Warrants to the extent that after giving effect to the issuance of common shares upon conversion or exercise, such holder, together with its affiliates and any other persons acting as a group together with such holder or any of its affiliates, would beneficially own in excess of 4.99% of the number of common shares outstanding immediately after giving effect to the issuance of common shares upon conversion or exercise.
1
Pursuant to the Purchase Agreement, the Company is required to hold a meeting of shareholders within ninety (90) calendar days for the purpose of obtaining shareholder approval of the issuance of all common shares underlying the Note and the Warrants. Prior to such shareholder approval, the maximum number of common shares that the Company may issue to the Purchaser in connection with the foregoing transactions is 930,661, equal to 19.99% of the Company's outstanding common shares prior to the transaction, including the common shares underlying Note and the Warrants.
The Purchase Agreement contains a participation right, which provides that, subject to certain exceptions, until the Note is extinguished in its entirety, if the Company directly or indirectly offers, sells, grants any option to purchase, or otherwise disposes of (or announces any offer, sale, grant or any option to purchase or other disposition of) any of its debt, equity, or equity equivalent securities, or enters into any definitive agreement with regard to the foregoing, it must offer to issue and sell to or exchange with the Purchaser the securities in such transaction. The Purchase Agreement also provides the Purchaser with customary piggy-back registration rights for the common shares underlying the Note and the Warrants, and contains other customary representations and warranties and covenants for a transaction of this type.
The foregoing description of the Purchase Agreement, the Note and the Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of those documents filed as exhibits to this report, which are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of
The information set forth under Item 1.01 regarding the issuance of the Note and the Warrants is incorporated by reference into this Item 3.02. The issuance of these securities is being made in reliance upon an exemption from the registration requirements of Section 5 of the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description of Exhibit 4.1 Common Share Purchase Warrant issued by1847 Holdings LLC to MastHill Fund, L.P. onFebruary 22, 2023 4.2 Common Share Purchase Warrant issued by1847 Holdings LLC to MastHill Fund, L.P. onFebruary 22, 2023 10.1 Securities Purchase Agreement, datedFebruary 22, 2023 , between1847 Holdings LLC andMast Hill Fund, L.P. 10.2 Promissory Note issued by1847 Holdings LLC toMast Hill Fund, L.P. onFebruary 22, 2023 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 2
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