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Entry into a Material Definitive Agreement.
Short Term Loan
On September 27, 2018, Cool Holdings, Inc., a Maryland corporation (the “
Company
”), entered into an unsecured promissory note (the “
Short Term Note
”) with Rein Voigt, as the lender. Pursuant to the terms of the Short Term Note, the Company borrowed $400,000.00 from Mr. Voigt. The Short Term Note matures, and becomes due and payable in full, on October 1, 2018 together with a one-time fee of $4,000.00 in lieu of interest (the “
Loan Fee
”). Unless an event of default occurs under the Short Term Note, no interest, fees or other charges shall accrue under the Short Term Note other than the Loan Fee. In the event of certain events of default under the Short Term Note, in addition to the Loan Fee, interest shall accrue on the unpaid principal amount outstanding under the Short Term Note at the rate of 8.0% simple interest per year, compounded annually, until the Short Term Note is repaid in full. Mr. Voigt is the Company’s Chief Operating Officer.
The foregoing description of the Short Term Note does not purport to be complete and is qualified in its entirety by reference to the complete text of such agreement, which is filed as Exhibit 10.1 hereto, which is incorporated herein by reference.
Subsidiary Debt Consolidation
On September 30, 2018, the Company entered into a Promissory Note Consolidation Agreement (the “
Consolidation Agreement
”) with one of its stockholders, Delavaco Holdings, Inc., as lender (“
Delavaco
”). Pursuant to the terms of the Consolidation Agreement, the Company assumed an aggregate of $2,107,003.51 of outstanding debt obligations (the “
Outstanding Debt
”), which included principal and interest, owed to Delavaco by three of its subsidiaries, OneClick International, LLC, ICON Networks, LLC and Cooltech Holding Corp.
Upon the assumption by the Company of the Outstanding Debt, the Company and Delavaco entered into an unsecured promissory note (the “
Consolidated Note
”), which such Consolidated Note restated the repayment terms and conditions of the Outstanding Debt in full. Pursuant to the terms and conditions of the Consolidated Note, the Outstanding Debt accrues simple interest at 8.0% per year, compounded annually, and the Consolidated Note has a maturity date of March 31, 2021. No regularly scheduled periodic payments of principal or interest are due under the Consolidated Note, and, unless there is an earlier event of default, all outstanding and unpaid principal and interest under the Consolidated Note is due and payable in a single lump sum payment at maturity. The Company may prepay the Consolidated Note at any time prior to maturity without penalty.
Furthermore, in connection with the assumption of the Outstanding Debt and pursuant to the terms and conditions of the Consolidation Agreement, Delavaco terminated, effective September 30, 2018, any and all security interests that were granted to it by OneClick International, LLC, ICON Networks, LLC and Cooltech Holding Corp. relating to any Outstanding Debt assumed by the Company.
The foregoing descriptions of the Consolidation Agreement and Consolidated Note do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements, which are filed as Exhibits 10.2 and 10.3 hereto, respectively, each of which are incorporated herein by reference.