Item
1.01
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Entry
Into a Material Definitive Agreement.
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Agreement and Plan of Share Exchange
On May 20, 2020 (the “Effective Date”),
Edison Nation, Inc. (the “Company”) entered into an Agreement and Plan of Share Exchange (the “Share
Exchange Agreement”) with PPE Brickell Supplies, LLC, a Florida limited liability company (“PPE”),
and Graphene Holdings, LLC, a Wyoming limited liability company (“Graphene”, and together with PPE, the
“Sellers”), whereby the Company purchased 25 membership units of Global Clean Supplies, LLC, a Nevada limited liability
company (“Global”) from each of PPE and Graphene, for a total of fifty (50) units, representing fifty percent
(50%) of the issued and outstanding units of Global (the “Purchase Units”). The Company issued 250,000 shares of its
restricted common stock, $0.001 par value per share (the “Common Stock”) to PPE, and 50,000 shares of Common Stock
to Graphene, in consideration for the Purchase Units.
Pursuant to the terms of the Share Exchange
Agreement, the Sellers may earn additional shares of Common Stock upon Global realizing the following revenue
targets: (i) In the event that Global’s total orders equal or exceed $1,000,000, Graphene shall receive 200,000
shares of Common Stock; (ii) In the event that Global’s total orders equal or exceed $10,000,000, PPE shall receive
100,000 shares of restricted Common Stock; and (iii) In the event that Global’s total orders equal or exceed $25,000,000,
Graphene shall receive 125,000 shares of restricted Common Stock. Additionally, the Company shall be entitled to appoint
two managers to the Board of Managers of Global.
Amended
Limited Liability Company Agreement
On the Effective Date, the Company entered
into an Amended Limited Liability Company Agreement of Global (the “Amended LLC Agreement”). The Amended LLC Agreement
amends the original Limited Liability Company Agreement of Global, dated May 13, 2020. The Amended LLC defines the operating rules
of Global and the ownership percentage of each member: Edison Nation, Inc. 50%, PPE 25% and Graphene 25%.
Secured Line of Credit Agreement
On the Effective Date, the Company
(as “Guarantor”) entered into a Secured Line of Credit Agreement (the “Credit Agreement”) with Global
and PPE. Under the terms of the Credit Agreement, PPE is to make available to Global a revolving credit loan in
a principal aggregate amount at any one time not to exceed $2,500,000. Upon each drawdown of funds against the credit line,
Global shall issue a Promissory Note (the “Note”) to PPE. The Note shall accrue interest at 3% per annum
and have a maturity date of six (6) months. In the event of a default, any and all amounts due to PPE by Global, including
principal and accrued but unpaid interest, shall increase by forty (40%) percent and the interest shall increase to five (5%)
percent (the “Default Interest”).
Security Agreement
On the Effective Date, the Company
(as “Guarantor”) entered into a Security Agreement (the “Security Agreement”) with Global (as “Borrower”)
and PPE (as “Secured Party”), whereby the Company placed 1,800,000 shares of Common Stock (the “Reserve
Shares”) in reserve with its transfer agent in the event of default under the Credit Agreement. In the event of a default
that is not cured by the defined cure period, the PPE may liquidate the Reserve Shares until the Global’s
principal, interest and associated expenses are recovered. The number of Reserve Shares may be increased through the issuance
of True-Up shares in the event the original number of Reserve Shares is insufficient.
Item
1.01 of this Current Report on Form 8-K contains only a brief description of the material
terms of the Credit Agreement, the Security Agreement, the Share Exchange Agreement,
and the Amended LLC Agreement, and does not purport to be a complete description of the
rights and obligations of the parties thereunder, and such descriptions are qualified
in their entirety by reference to the full text of the Credit Agreement, the Security
Agreement, the Share Exchange Agreement, and the Amended LLC Agreement, attached as Exhibits
10.1, 10.2, 10.3 and 10.4, respectively, to this Current Report on Form 8-K, and are
incorporated herein by reference.