Item 1.01 Entry into a Material Definitive Agreement
On June 9, 2021, iMedia Brands, Inc. (the "Company") entered into a Confidential
Vendor Exclusivity Agreement (the "IWCA Agreement") with Invicta Watch Company
of America, Inc. ("IWCA"), one of the Company's ten largest vendors, pursuant to
which IWCA granted the Company the exclusive right to market, promote and sell
watches and watch accessories using the Invicta brand names and any
substantially similar or directly competitive goods or services through the
Company's live or taped direct response video retail programming in North and
South America during the five-year exclusivity period of the IWCA Agreement,
unless earlier terminated pursuant to the terms of the IWCA Agreement. During
the final year of the term of the IWCA Agreement, the parties are required to
negotiate in good faith the terms of a five-year extension. This new agreement
permits the Company to extend its exclusive relationship with one of its largest
vendors, providing critical long-term stability to the Company's key vendor
ranks.
Pursuant to the IWCA Agreement, the Company agreed to issue to IWCA $4.5 million
of restricted stock units ("RSUs"), priced at the closing bid price of the
Company's common stock on the Nasdaq Capital Market on the trading date
immediately preceding the date of the IWCA Agreement - a total of 442,043 RSUs.
One-fifth of the RSUs will vest annually, beginning on June 9, 2021 and ending
on June 9, 2025. IWCA also agreed to provide the Company with a revolving line
of credit in the amount of $3.0 million during the first, second and third
quarters of each of the Company's fiscal years during the term of the IWCA
Agreement and $4.0 million during the fourth quarter of each of the Company's
fiscal years during the term of the IWCA Agreement. IWCA is an affiliate of Eyal
Lalo, the Company's Vice Chair.
The IWCA Agreement is terminable by either party within 60 days after a change
of control of the Company, with such termination being effective one year
following the notice date. The Company has the right to terminate the IWCA
Agreement (i) immediately upon IWCA's breach of the exclusivity provision in the
IWCA Agreement and (ii) upon 30 days' prior written notice if IWCA materially
breaches the IWCA Agreement and does not cure such default during the 30-day
notice period.
Additionally, on June 9, 2021, the Company entered into a Confidential Vendor
Exclusivity Agreement (the "Famjams Agreement") with Famjams Trading LLC
("Famjams"), one of the Company's ten largest vendors, pursuant to which Famjams
granted the Company the exclusive right to market, promote and sell products
using the Medic Therapeutics and Safety Vital brand names and any substantially
similar or directly competitive goods or services through the Company's
television networks, website and mobile applications, platforms on social media
and mobile host sites and brick and mortar retailing locations in North and
South America, Europe and Asia during the five-year exclusivity period, unless
earlier terminated pursuant to the terms of the Famjams Agreement. Until the
expiration of the exclusivity period, such license is exclusive to the IMBI
retailing channels. During the final year of the term of the Famjams Agreement,
the parties are required to negotiate in good faith the terms of a five-year
extension. This new agreement provides the Company with an exclusive
relationship with one of its largest and fastest growing new vendors.
Pursuant to the Famjams Agreement, the Company agreed to issue to Famjams $1.5
million of RSUs, priced at the closing bid price of the Company's common stock
on the Nasdaq Capital Market on the trading date immediately preceding the date
of the Famjams Agreement - a total of 147,347 RSUs. One-fifth of the RSUs will
vest annually, beginning on June 9, 2021 and ending on June 9, 2025. Famjams
also agreed to provide the Company with a revolving line of credit in the amount
of $2.0 million during the term of the Famjams Agreement.
The Company also agreed, pursuant to the Famjams Agreement, to deliver a cash
deposit of $6.0 million to Famjams to be used as working capital by Famjams.
This deposit will bear interest in the amount of 5% per annum and will become
due and payable in full at the end of the term of the Famjams Agreement, or if
the Famjams Agreement is extended for a five-year period, at the end of such
renewal period. In the event of a default, the Company agreed that the
intellectual property and trademarks associated with the Famjams products
subject to the Famjams Agreement pledged as collateral fully satisfies any due
and owing working capital amount owed by Famjams to the Company. Famjams is an
affiliate of Michael Friedman, a director of the Company.
The Famjams Agreement is terminable by either party within 60 days after a
change of control of the Company, with such termination being effective one year
following the notice date. The Company has the right to terminate the Famjams
Agreement (i) immediately upon Famjams' breach of the exclusivity provision in
the Famjams Agreement and (ii) upon 30 days' prior written notice if Famjams
materially breaches the Famjams Agreement and does not cure such default during
the 30-day notice period.
The foregoing descriptions are qualified in their entirety by reference to the
IWCA and Famjams confidential vendor exclusivity agreements and RSU award
agreements, copies of which are included as Exhibit 10.1, Exhibit 10.2,
Exhibit 4.1 and Exhibit 4.2, respectively, to this Current Report on Form 8-K
and are incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities
As described in Item 1.01 of this Current Report on Form 8-K, on June 9, 2021,
the Company entered into the IWCA Agreement pursuant to which it issued an
aggregate of 442,043RSUs. One-fifth of the RSUs will vest annually, beginning on
June 9, 2021 and ending on June 9, 2025. The description of the transaction and
the RSUs contained in Item 1.01 is incorporated by reference into this Item
3.02.
As described in Item 1.01 of this Current Report on Form 8-K, on June 9, 2021,
the Company entered into the Famjams Agreement pursuant to which it issued an
aggregate of 147,347RSUs. One-fifth of the RSUs will vest annually, beginning on
June 9, 2021 and ending on June 9, 2025. The description of the transaction and
the RSUs contained in Item 1.01 is incorporated by reference into this Item
3.02.
On June 9, 2021, the Company sold 147,347 shares of its common stock to ALCC for
$1.5 million, with the shares priced at the closing bid price of the Company's
common stock on the Nasdaq Capital Market on June 8, 2021.
The foregoing descriptions are qualified in their entirety by reference to the
RSU award agreements and ALCC stock purchase agreement, copies of which are
included as Exhibit 4.1, Exhibit 4.2 and Exhibit 10.3, respectively, to this
Current Report on Form 8-K and are incorporated by reference herein.
All of the securities described in this Current Report on Form 8-K were or will
be offered and sold in reliance upon exemptions from registration pursuant to
Section 4(a)(2) under the Securities Act of 1933, and Rule 506 of Regulation D
promulgated thereunder. The offerings were made to "accredited investors" (as
defined by Rule 501 under the Securities Act of 1933).
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibits are being filed with this Current Report on Form 8-K:
Exhibit No. Description
4.1 Restricted Stock Unit Award Agreement, dated June 9, 2021, by and
between the Company and Invicta Watch Company of America, Inc.
4.2 Restricted Stock Unit Award Agreement, dated June 9, 2021, by and
between the Company and Famjams Trading LLC
10.1 Confidential Vendor Exclusivity Agreement, dated June 9, 2021, by and
between the Company and Invicta Watch Company of America, Inc.
10.2 Confidential Vendor Exclusivity Agreement, dated June 9, 2021, by and
between the Company and Famjams Trading LLC
10.3 Stock Purchase Agreement, dated June 9, 2021, by and between the
Company and ALCC, LLC.
104 The cover page from this Current Report on Form 8-K, formatted in
Inline XBRL.
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