Item 1.01. Entry into a Material Definitive Agreement
Lender Agreement
Effective December 30, 2017, OrangeHook, Inc., a Florida corporation ("
OrangeHook
" or the "
Company
") entered into an Agreement for Assignment of Contract Proceeds (the "
Lender
Agreement
") with AIE Unlimited Corp., a Nevada corporation ("
AIE
"), with respect to future contractual payments from a business partner. In return for assignment of the rights to receive payment, AIE loaned $1,500,000 to OrangeHook in support of the Company's working capital needs.
Under the terms of the Lender Agreement, OrangeHook is to pay AIE periodic monthly amounts ("
Monthly Payment(s)
") representing twelve and one-half percent (12-1/2%) of payments due from OrangeHook's provision of technology and services to one of its business partners, beginning within fifteen (15) days after the end of the fourth month and continuing through the 60
th
month of the Lender Agreement. The Monthly Payments are further subject to a minimum amount of $35,692 per month ("
Minimum Monthly Payment
") and a maximum amount of $82,692 per month ("
Maximum Monthly Payment
"). In the event of a late payment, which is subject to a cure period of thirty (30) days, default interest will accrue at a rate of 15% per annum. The Agreement grants AIE a security interest in the applicable contract and the proceeds and products thereof and calls for AIE to rank on a pari passu basis with the Company's other senior indebtedness.
In addition, at any time during the term of the Agreement, AIE may, at its sole discretion, convert remaining future Minimum Monthly Payments to OrangeHook common stock at a conversion price of $10 per share. In the event of a conversion, the amount of remaining Maximum Monthly Payments cannot exceed $47,000.
SAFE Agreements
On December 29, 2017, the Company entered into Simple Agreements for Future Equity (the "
SAFE Agreements
") with Weintraub Capital Management, L.P., The Stadlin Trust dated 5/25/01 and Matthew Hayden, respectively (collectively, the "
Investors
"). The Company received aggregate proceeds of $950,000 under the SAFE Agreements. The terms of the SAFE Agreements provide that the Company will issue equity to the Investors in its next equity financing that meets certain conditions described in the SAFE Agreements. The Investors' price per share will equal the price per share of common stock sold in the equity financing, less a 20% discount for early placement; provided, further, that the maximum per share price from which the discount may be calculated is $5.00. In the event the SAFE Agreements extend beyond March 31, 2018, the Company will provide each Investor with penalty warrants equal to 2.0% for every month thereafter beginning on April 1, 2018, and exercisable at the Safe Price. The Company and the Investors made customary representations and warranties in the SAFE Agreements. The foregoing summary of the SAFE Agreements is qualified in its entirety by reference to the form of the SAFE Agreements, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Private Investment in Public Equity (PIPE) Offering
The Company intends to convert the SAFE Agreements into shares of the Company's previously announced common stock in a PIPE offering (the "
PIPE Offering
"), which the Company expects will close, possibly in multiple closings, during the first quarter of 2018. The Company anticipates that it will offer up to 2,000,000 shares of its common stock (collectively, the "
Shares
") at an anticipated offering price of $5.00 per share in the PIPE Offering for aggregate gross proceeds of up to $10 million. The Company reserves the right to increase the number of shares sold in the offering to 2,400,000 in its sole discretion. The Company expects that the purchase agreement for the PIPE Offering will contain customary representations and warranties and covenants for a transaction of this type, including an agreement to file a registration statement with the Securities and Exchange Commission (the "
Commission
") covering resale of the Shares.
The proceeds, if any, from the PIPE Offering will be used to fund the Company's continued implementation of its growth strategy, to repay and service current debt obligations, to satisfy outstanding accounts payable and for general working capital purposes going forward.
The Company cannot guarantee that the PIPE Offering will be completed on the terms described herein, or if the PIPE Offering will close at all.