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Item 1.01.
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Entry into a Material Definitive Agreement.
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Stock Purchase Agreement
On July 9, 2019, the Company entered into
a common stock purchase agreement (the “Stock Purchase Agreement”) with Bison Entertainment and Media Group (“BEMG”),
an affiliate of Bison Capital Holding Company Limited, which, through an affiliate, is the majority holder of our Class A common
stock, par value $0.001 per share (the “Common Stock”), pursuant to which the Company agreed to sell to BEMG a total
of 2,000,000 shares of Common Stock (the “SPA Shares”), for an aggregate purchase price in cash of $3,000,000 priced
at $1.50 per share. The SPA Shares are subject to certain transfer restrictions. The sale of the SPA Shares was consummated on
July 9, 2019. The proceeds of the sale of the SPA Shares sold were used for working capital, including the repayment of debt. In
addition, the Company has agreed to enter into a registration rights agreement for the resale of the SPA Shares.
Conversion of Loan to Convertible Note
On July 12, 2019, the Company and Bison Global
Investment SPC for and on behalf of Global Investment SPC-Bison Global No. 1, another affiliate of Bison (“Bison Global”),
entered into a termination agreement (the “Termination Agreement”) with respect to the term loan agreement dated as
of July 20, 2018 between them, pursuant to which the Company had borrowed from Bison Global $10.0 million (the “2018 Loan”).
Pursuant to the Termination Agreement, an amount equal to the outstanding principal amount was converted into a convertible note,
and the accrued and unpaid interest on such outstanding principal amount was to be payable to Bison Global no later than September
30, 2019. As such, the 2018 Loan was paid in full, and the 2018 Loan Agreement was terminated. No early payment penalties were
incurred.
On July 12, 2019, the Company issued a subordinated
convertible note (the “Bison Convertible Note”) to Bison Global pursuant to which the Company borrowed from Bison Global
$10.0 million. The Bison Convertible Note has a term ending on March 4, 2020, and bears interest at 5% per annum. The principal
is payable upon maturity, in cash or in shares of Common Stock at the Company’s election. The Bison Convertible Note is unsecured
and may be prepaid without premium or penalty, and contains customary covenants, representations and warranties. The Bison Convertible
Note is convertible, in whole or in part from time to time, into shares of Common Stock at the holder’s election or at the
Company’s election. Upon conversion, the Company may elect to settle such conversion with shares of Common Stock or a combination
of cash and shares of Common Stock. At maturity, the Company may elect to pay in cash or shares of Common Stock. The proceeds of
the Convertible Note were used to repay the 2018 Loan.
The Bison Convertible Note, offset by the concurrent
payoff and termination of the 2018 Loan, did not result in any increase to the Company’s outstanding debt balance.
The foregoing descriptions of the Stock Purchase
Agreement, the Termination Agreement and the Bison Convertible Note are qualified in their entirety by reference to such documents,
which are filed as Exhibit 10.1, 10.2 and 4.1 hereto and incorporated herein by reference.