Item
1.01.
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Entry into a Material
Definitive Agreement.
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On
October 30, 2017, Rennova Health, Inc. (the “Company”) closed an offering of $4,960,000 stated value of its newly-authorized
Series I-1 Convertible Preferred Stock (the “Preferred Stock”). The offering was pursuant to the terms of the Securities
Purchase Agreement, dated as of October 30, 2017 (the “Purchase Agreement”), between the Company and certain existing
institutional investors of the Company. The Company received proceeds of $4,000,000 from the offering.
The
Purchase Agreement gives the investors the right to participate in up to 50% of any offering of common stock or common stock
equivalents by the Company. In the event of any such offering, the investors may also exchange all or some of their Preferred
Stock for such new securities on an $0.80 stated value of Preferred Stock for $1.00 of new subscription amount
basis.
The
following is a summary of certain terms and provisions of the Preferred Stock.
General.
The Company’s board of directors has designated up to 4,960 shares of the 5,000,000 authorized shares of preferred
stock as the Preferred Stock. Each share of Preferred Stock has a stated value of $1,000.
Rank.
The Preferred Stock is senior in right of payment, including dividend rights and liquidation preference, to the Company’s
Series G Convertible Preferred Stock and Series H Convertible Preferred Stock.
Conversion.
Each share of Preferred Stock is convertible into shares of the Company’s common stock at any time at the option of
the holder at a conversion price equal to the lesser of (i) $1.00, subject to adjustment, and (ii) 85% of the lesser of the volume
weighted average market price of the common stock on the day prior to conversion or on the day of conversion. The conversion
price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the Certificate
of Designation of the Preferred Stock. Holders of the Preferred Stock are prohibited from converting Preferred Stock into
shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99%
(or, upon election of the holder, 9.99%) of the total number of shares of common stock then issued and outstanding.
However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any
increase in such percentage shall not be effective until 61 days after notice to the Company.
Liquidation
Preference.
Upon any liquidation, dissolution or winding-up of the Company, the holders of Preferred Stock shall be
entitled to receive an amount equal to the stated value of the Preferred Stock, plus any accrued and unpaid dividends thereon
and any other fees or liquidated damages then due and owing for each share of Preferred Stock, before any distribution or payment
shall be made on any junior securities.
Voting
Rights.
Shares of Preferred Stock generally have no voting rights, except as required by law and except that the affirmative
vote of the holders of a majority of the then outstanding shares of Preferred Stock is required to (a) alter or change adversely
the powers, preferences or rights given to the Preferred Stock or alter or amend the Certificate of Designation of the Preferred
Stock, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon liquidation
senior to, or otherwise pari passu with, the Preferred Stock, (c) amend the Company’s certificate of incorporation or other
charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares
of Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Dividends.
Holders of Preferred Stock shall be entitled to receive dividends on shares of Preferred Stock equal (on an as-converted to
common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if dividends are
paid on shares of common stock. No other dividends shall be paid on shares of Preferred Stock.
Redemption.
Upon the occurrence of certain Triggering Events (as defined in the Certificate of Designation of the Preferred Stock), the
holder shall, in addition to any other right it may have, have the right, at its option, to require the Company to either redeem
the Preferred Stock in cash or in certain circumstance in shares of common stock at the redemption prices set forth in the Certificate
of Designation.
Negative
Covenants.
As long as at least a specified number of shares of Preferred Stock are outstanding, unless the holders of
67% of the then outstanding shares of Preferred Stock shall have given prior written consent, the Company and its subsidiaries
are, with certain exceptions, limited from (a) incurring indebtedness, (b) creating liens, (c) amending its charter documents,
(d) repurchasing or acquiring shares of common stock or common stock equivalents, (e) paying cash dividends on junior securities,
(f) entering into transactions with affiliates, or (g) entering into any agreement with respect to the foregoing.
The
shares of Preferred Stock were issued in reliance on the exemption from registration contained in Section 4(a)(2)
of the Securities Act of 1933, as amended, and by Rule 506
of Regulation D promulgated thereunder as transactions
by an issuer not involving any public offering.
The
foregoing descriptions of the Purchase Agreement and the Preferred Stock do not purport to be complete and are qualified
by reference to the Purchase Agreement and the Certificate of Designation of the Preferred Stock, copies of which are filed
as exhibits to this Current Report on Form 8-K (this “Current Report”) and are incorporated herein by reference