Item 1.01 Entry into a Material Definitive Agreement.
Offering of Secured Convertible Note
On November 5, 2018, Ascent Solar Technologies, Inc., a Delaware corporation (the “Company”) entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of a $1,220,000 Secured Convertible Promissory Note (“Company Note”).
On November 7, 2018, the Company received $200,000 of gross proceeds from the offering of the Note. In addition, the Company received additional consideration for the Company Note in the form of eight separate promissory notes of the Investor (the “Investor Notes”) having an aggregate principal amount of $800,000.
The Company may receive additional cash proceeds of up to an aggregate of $800,000 through cash payments made from time to time by the Investor of principal and interest under the eight Investor Notes.
The aggregate principal amount of the Company Note is divided into nine tranches, which tranches correspond to (i) the cash funding received on November 7, 2018 and (ii) the principal amounts of the eight Investor Notes.
Terms of the Secured Convertible Note
The $1,220,000 aggregate principal amount of the Company Note (together with accrued interest) will mature on November 5, 2019.
Beginning six months after the date of issue, Investor shall have the option to redeem all or a portion of the amounts outstanding under the Company Note. At Investor’s option, redemption amounts are payable by the Company in the form of (x) cash or (y) conversion of such amounts into shares of the Company's Common Stock. Conversions into Common Stock shall be calculated using a variable conversion price equal to 60% of the average of the two lowest closing bid price for the shares over the prior ten day trading period immediately preceding the conversion.
Shares of Common Stock may not be issued pursuant to the Company Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of the Company’s Common Stock.
The Company will be obligated to make payments (either in cash or stock) of any tranche of principal amount under the Company Note generally only to the extent that the Investor has made cash payments to the Company under the Investor Note that corresponds to a particular tranche of the Company Note. Under certain circumstances, both the Company and the Investor are entitled to offset amounts owed under the Company Note against the corresponding amounts owed under the Investor Notes.
The Company Note bears interest at a rate of 10% per annum. The interest rate increases to 22% in the event of a default under the Note.
The Company Note contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Note, and (ii) bankruptcy or insolvency of the Company.
There are no registration rights applicable to the Company Note or its underlying conversion shares.
The Company Note will be secured by a security interest on the Company’s headquarters building in Thornton, Colorado.
Terms of the Investor Notes
The principal amount of the eight Investor Notes is $1,000,000 in the aggregate. Each of the eight Investor Notes (together with accrued interest) will mature on November 5, 2019.
Under certain circumstances, both the Company and the Investor are entitled to offset amounts owed under the Company Note against the corresponding amounts owed under the Investor Notes.
Each of the Investor Notes bears interest at a rate of 10% per annum.
The Investor Notes contain standard and customary events of default including but not limited to failure to make payments when due under the Investor Notes.
The Investor Notes are unsecured.
The foregoing descriptions of each of the securities purchase agreement, the Company Note and the Investor Notes is a summary and is qualified in its entirety by reference to the documents attached hereto as Exhibits 10.1, 10.2 and 10.3, each of which documents is incorporated herein by reference.