Item 1.01. Entry into a Material Definitive
Agreement.
Securities Purchase Agreement and Convertible
Promissory Note
On April 18, 2022, iMedia
Brands, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”), by and between the Company
and Growth Capital Partners, LLC (“GCP”), for the purchase and sale of an unsecured convertible promissory note (the “Note”)
in the original aggregate principal amount of $10,600,000, convertible into shares of the Company’s common stock, $0.01 par value
(“Common Stock”), in a private placement upon the terms and subject to the limitations and conditions set forth in the Note.
The aggregate purchase price of the Note is $10,000,000, which reflects an original issue discount to GCP of $600,000.
The terms of the Note issued
and sold at the closing (the “Closing”) of the transactions contemplated by the SPA are set forth in the form of Note attached
as Exhibit 4.1 to this Current Report on Form 8-K. The original principal balance of the Note accrues interest at 7%, unless an Event
of Default (as defined in the Note) has occurred and is continuing, at which time at the election of the GCP, interest would accrue at
a rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. The maturity date of the Note is thirteen
months after the date of the issuance of the Note.
GCP may redeem all or
any portion (the “Redemption Amount”) of the Note at its election any time beginning six months from the Closing.
Payments of each Redemption Amount may be made (a) in cash, (b) at the Company’s option by converting such Redemption Amount
into Common Stock using the following formula: the number of Conversion Shares equals the portion of the applicable Redemption
Amount being converted (the “Conversion Shares”) divided by the Redemption Conversion Price (as defined below), or (c)
at the Company’s option by any combination of the foregoing, subject to certain other terms and conditions in the Note. The
“Redemption Conversion Price” means 90% multiplied by the lowest daily volume weighted average price of the Common Stock
(VWAP) during the five (5) trading days immediately preceding the date the applicable redemption notice is delivered. The Redemption
Conversion Price is subject to customary adjustments for stock dividends, stock splits, stock combination, reclassifications, or
other similar transactions. The maximum number of shares of Common Stock that may be issued in connection with a redemption of the
Note may not exceed 19.99% of the Company’s then-current outstanding shares (as of January 29, 2021, this limit would be a
maximum of 4,314,277 shares).
The Company may prepay all
or any portion of the outstanding balance under the Note, subject to the terms and conditions therein. If the Company exercises its right
to prepay the Note prior to June 1, 2022, the Company shall make payment to GCP of an amount in cash equal to 105% multiplied by the portion
of the outstanding balance that the Company elects to prepay. If the Company exercises its right to prepay the Note on or after June 1,
2022, the Company shall make payment to GCP of an amount in cash equal to 107.5% multiplied by the portion of the outstanding balance
that the Company elects to prepay.
The Company will be
required to prepay an amount equal to 25% of the gross proceeds that the Company receives from the sale of any of its equity
securities up to a maximum of $5,000,000 (not including any prepayment premium) within ten days of receiving such amount.
The foregoing summaries
of the terms of the SPA and the Note are subject to, and qualified in their entirety by, such documents, which are
included as exhibits hereto and incorporated by reference herein.
The Note and underlying shares of Common Stock
have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered
or sold in the United States absent registration or an applicable exemption from registration requirements. The Company is relying on
the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation
D promulgated under the Securities Act, and in reliance on similar exemptions under applicable state laws. No form of general
solicitation or general advertising was conducted in connection with the issuance. The Note (and, if and to the extent issued, the underlying
shares of Common Stock), contain (or will contain, where applicable) restrictive legends preventing the sale, transfer, or other disposition
of such securities, unless registered under the Securities Act, or pursuant to an exemption therefrom. The disclosure contained in
this Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company,
and is made only as required under applicable rules for filing current reports with the Securities and Exchange Commission.