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 LogicMark Investment
Partners, LLC, as the Seller’s representative (“LogicMark Partners”) 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”).
Subsequent to certain payments made to
LogicMark
Partners under the Original Note, the Company issued to LogicMark Partners on November 29, 2016, an Amended and Rested Secured
Promissory Note, with a principal amount of $1,000,000 (the “Amended and Restated Note”).
On
July 19, 2017, certain investors (the “Holders”) purchased from LogicMark Partners the $594,403 outstanding balance
on Amended and Restated Note, inclusive of accrued and unpaid interest. In connection therewith, the Company, LogicMark Partners,
and the Holders entered into an Assignment and Assumption Agreement, dated July 19, 2017 (the “Assignment Agreement”),
whereby LogicMark Partners assigned the Amended and Restated Note to the Holders.
Additionally,
on July 19, 2017, the Company and the Holders entered into a Securities Exchange Agreement (the “Exchange Agreement”)
pursuant to which the Company exchanged with the Holders the Amended and Restated Note held by them in exchange for: (i) an aggregate
principal amount of $594,403 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 297,202
shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”).
Exchange
Notes
The
Exchange Notes will mature on July 19, 2018, 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 Holders into shares of Common Stock at a conversion price of $2.00 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 July 19, 2017, and will be exercisable for a period of five (5) years. The exercise price with
respect to the Warrants is $2.00 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 Assignment 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, 10.2, 4.1 and 4.2, respectively,
to this Current Report on Form 8-K (this “Report”), which are incorporated by reference herein.