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Item 1.01
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Entry
into a Material Definitive Agreement
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As
previously disclosed on Current Report to Form 8-K filed by Nxt-ID, Inc. (the “Company”) on July 27, 2016, on July
25, 2016, the Company, in connection with its acquisition of LogicMark, LLC (the “Seller”), issued to the LogicMark
Investment Partners, LLC, as the Seller’s representative (“LogicMark Investment”) a secured subordinated promissory
note in the amount of $2,500,000 (the “Original Note”), and the Seller and the Company entered into a security agreement
to secure the Original Note (the “Seller Security Agreement”).
Securities
Exchange Agreement
On
November 29, 2016, the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”) with certain
holders of a portion of the Original Notes (the “Holders”) pursuant to which the Company exchanged with the Holders
of $1,500,000 of Original Notes held by the Holders in exchange for: (i) an aggregate principal amount of $1,500,000 of new secured
subordinated promissory notes (the “Exchange Notes”) and (ii) warrants (the “Warrants”, and together with
the Exchange Notes, the “Exchange Securities”) convertible into 500,000 shares of common stock of the Company, par
value $0.0001 (the “Common Stock”). The Holders purchased the $1,500,000 of Original Notes from LogicMark Investment
prior to this transaction.
Exchange
Notes
The
Exchange Notes will mature on November 29, 2017 and accrue interest at a rate of 15.0% per annum. The Exchange Notes are convertible
at any time, in whole or in part, at the option of the Investors into shares of Common Stock at a conversion price of $3.00 per
share (the “Conversion Price”). The Conversion Price is subject to adjustment for stock dividends, stock splits, combinations
or similar events.
The
Company may prepay, in whole but not in part, without premium or penalty, the outstanding principal, together with accrued but
unpaid interest on the outstanding principal, if any.
Warrants
The
Warrants will be exercisable beginning on November 29, 2016, and will be exercisable for a period of five years. The exercise
price with respect to the Warrants is $3.00 per share (the “Exercise Price”). The Exercise Price and the amount of
shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment upon certain events, such as stock splits,
combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances.
The
foregoing descriptions of the terms of the Exchange Agreement, the Exchange Notes and the Warrants are qualified in their entirety
by reference to the provisions of the agreements filed as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on
Form 8-K (this “Report”), which are incorporated by reference herein.
Intercreditor
Agreement
On
November 29, 2016, in connection
with
the Exchange Agreement and the issuance of the Exchange Securities, the Company, LogicMark Investment Partners, LLC (“LogicMark
Investment”) and the Holders entered into an intercreditor agreement (the “Intercreditor Agreement”). The Intercreditor
Agreement governs the relative priorities (and other certain rights) of LogicMark Investment and the Holders with respect to the
remaining portion of the Original Notes, the Exchange Notes, and the Seller Security Agreement.
The
foregoing description of the terms of the Intercreditor Agreement is qualified in its entirety by reference to the provisions
of the agreement filed as Exhibit 10.2 to this Report, which is incorporated by reference herein.
First
Amendment to Forbearance Agreement
As
previously disclosed on Current Report to Form 8-K filed by the Company on September 23, 2016, on September 23, 2016, the Company
entered into a forbearance agreement with LogicMark Investment in connection with the Original Note (the “Forbearance Agreement”).
Under the terms of the Forbearance Agreement, LogicMark Investment agreed to extend the Original Note and the Company agreed to
satisfy several conditions.
On
November 29, 2016 (the “First Amendment Effective Date”), the Company and LogicMark Investment entered into a first
amendment to the Forbearance Agreement (the “First Amendment”). The First Amendment extends the Seller Note to April
15, 2017, or the earlier date of any Forbearance Default under the First Amendment. Pursuant to the First Amendment, the Company
agreed to satisfy several conditions, including: (i) delivering to LogicMark Investment the Intercreditor Agreement on the First
Amendment Effective Date; and (ii) not to amend or modify the terms of the Exchange Notes, other than for amendment and restatement
purposes pursuant to the Exchange Agreement (hereinafter defined). The Company agreed to make certain representations and warranties
in respect of LogicMark Investment’s continued forbearance. The Company also agreed to certain indemnification provisions
in connection with the First Amendment.
The
foregoing description of the terms of the First Amendment is qualified in its entirety by reference to the provisions of
the agreement filed as Exhibit 10.3 to this Report, which is incorporated by reference herein.