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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant
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Amendment No. 1 to Loan and Security Agreement
On July 30, 2018, The OLB
Group, Inc. (the “
Company
”) entered into Amendment No. 1 to Loan and Security Agreement (the “
Amendment
”)
amending that certain Loan and Security Agreement, dated as of April 9, 2018 (the “
Original Credit Agreement
,”
and as amended by the Amendment, the “
Credit Agreement
”), by and among GACP Finance Co., LLC, as administrative
agent and collateral agent, the lenders party thereto, Securus365, Inc., eVance, Inc., eVance Capital, Inc., OMNISOFT, Inc., and
Crowdpay.us, Inc., as borrowers, and the Company, as parent guarantor. Pursuant to the Amendment, among other things, the lenders
(i) waived the Company’s existing defaults under the Original Credit Agreement for its failure to make payment of $1,000,000
(the “
initial payment
”) under the Original Credit Agreement on or prior to July 15, 2018 and to deliver to the
lenders unaudited monthly financial statements and compliance certificates of the Company, (ii) extended the date on which the
initial payment was required to be made to July 30, 2018 and extended the date on which the Company is required to provide audited
financial statements for the fiscal years ended December 31, 2016 and 2017, (iii) permitted the Company to enter into a subordinated
loan arrangement for the Note (as defined below) concurrently with the Amendment such that the Company could make the initial payment
under the terms of the Credit Agreement, (iv) carved out from the collateral under the Credit Agreement the Note Collateral Shares
(as defined below) and (v) permitted the Note to be repaid either from the sale of the Note Collateral Shares or at any time after
the second payment under the Credit Agreement as long as there is then no event of default.
For more information related
to the Original Credit Agreement, see the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission
on April 13, 2018.
Subordinated Promissory Note
On July 30, 2018, pursuant
to the terms of the Amendment, the Company issued to John Herzog, a significant stockholder of the Company (the “
payee
”),
a subordinated promissory note in the principal amount of $1,000,000 (the “
Note
”) for cash proceeds of $1,000,000.
The Note matures on March 31, 2019 (though the Company has the right to prepay the Note, in whole or in part, at any time prior
to maturity) and bears interest at a rate of 12% per annum, compounding annually. The Note is secured by shares of common stock
of a publicly traded company held by the Company (the “
Note Collateral Shares
”). The Note is subordinated to
the Credit Agreement, other than the Note Collateral Shares.
The Company will use the
proceeds received by the Payee to make the initial payment under the Credit Agreement.
The foregoing descriptions
of the Amendment and the Note do not purport to be complete and are qualified in their entirety by reference to complete text of
the Amendment and the Note, copies of which are filed hereto as Exhibits 10.1 and 10.2.