Item 1.01
|
Entry into a Material Definitive Agreement.
|
Acquisition of AW Solutions
On April 25, 2017, Mantra
Venture Group Ltd. (the “
Company
”) entered into and closed on an Asset Purchase Agreement (the “
Asset
Purchase Agreement
”) with InterCloud Systems, Inc. (“
InterCloud
”), a Delaware corporation. Pursuant
to the terms the Asset Purchase Agreement, InterCloud agreed to sell, and the Company agreed to purchase (the “
Asset Sale
”),
80.1% of the assets associated with InterCloud’s “AW Solutions” business (the “
Business
”)
including, but not limited to, fixed assets, real property, intellectual property, and accounts receivables (collectively, the
“
Assets
”). The Business provides professional, multi-service line, telecommunications infrastructure and outsource
services to the wireless and wireline industry.
The purchase price paid
by the Company for the Assets includes the assumption of certain liabilities and contracts associated with the Business, the issuance
to InterCloud of a convertible promissory note in the aggregate principal amount of $2,000,000 (the “
Unsecured Note
”)
,
and a potential earn-out after six months in an amount equal to the lesser of (i) three times EBITDA (as defined in the Asset Purchase
Agreement) of the Business for the six-month period immediately following the closing and (ii) $1,500,000. In addition, the Asset
Purchase Agreement contains a working capital adjustment.
The interest on the outstanding
principal due under the Unsecured Note accrues at a rate of 8% per annum. All principal and accrued interest under the Unsecured
Note is due one year following the issue date of the Unsecured Note, and is convertible into shares of common stock, par value
$0.00001 (the “
Common Stock
”), at a conversion price equal to 75% of the lowest volume-weighted average price
during the 15 trading days immediately preceding the date of conversion. The Unsecured Note includes customary events of default,
including non-payment of the principal or accrued interest due on the Unsecured Note. Upon an event of default, all obligations
under the Unsecured Note will become immediately due and payable and the Company will be required to make certain payments to InterCloud.
Financing
On April 28, 2017, the
Company entered into and closed on a Securities Purchase Agreement (“
Purchase Agreement
”) with an institutional
investor (the “
Lender
”), pursuant to which the Company issued to the Lender a senior secured convertible promissory
note in the aggregate principal amount of $440,000 (the “
Secured Note
”) for an aggregate purchase price of $400,000,
and a warrant with a term of three years to purchase up to 27,500,000 shares of common stock of the Company at an exercise price
of $0.0255 per share (the “
Warrant
”).
The interest on the outstanding
principal due under the Secured Note accrues at a rate of 8% per annum. All principal and accrued interest under the Secured Note
is due on April 27, 2018 and is convertible into shares of the Company’s Common Stock at a conversion price equal to 75%
of the lowest volume-weighted average price during the 15 trading days immediately preceding the conversion, subject to adjustment
upon the occurrence of certain events. The Secured Note includes customary events of default, including non-payment of the principal
or accrued interest due on the Secured Note. Upon an event of default, all obligations under the Secured Note will become immediately
due and payable and the Company will be required to make certain payments to the Lender.
The Note and Warrant contain
customary anti-dilution provisions. The Lender was granted a right to participate in future financing transactions of the Company
while the Secured Note remains outstanding.
In connection with
the Purchase Agreement, the Company entered into a security agreement, dated as of April 27, 2017, with the Lender (the “
Security
Agreement
”) pursuant to which the Company granted a security interest in all of the assets of the Company to secure the
Company’s obligations under the Secured Note.
The foregoing summaries
of the terms of the Unsecured Note, the Secured Note, the Warrant, the Asset Purchase Agreement, the Securities Purchase Agreement
and the Security Agreement are subject to, and qualified in their entirety by, the agreements and instruments attached hereto as
Exhibits 4.1, 4.2, 4.3, 10.1, 10.2, and 10.3, respectively, which are incorporated by reference herein.