Item
1.01
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Entry
into a Material Definitive Agreement.
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Share
Purchase Agreement
On
July 9, 2019, Inpixon entered into a Share Purchase Agreement (the “Purchase Agreement”), with Inpixon Canada Inc.,
a wholly owned subsidiary of Inpixon (the “Purchaser”), Jibestream Inc., a British Columbia corporation (“Jibestream”),
each of the persons set forth on Exhibit A of the Purchase Agreement (each, a “Vendor” and collectively, the “Vendors”)
and Chris Weigand, as a Vendor and Vendors’ representative (the “Vendors’ Representative”), pursuant to
which the Purchaser will acquire all of the issued and outstanding shares of Jibestream (the “Shares”) on the terms
and subject to the satisfaction of the conditions set forth in the Purchase Agreement (the “Transaction”). As a result
of the Transaction, Jibestream will become an indirect, wholly owned subsidiary of Inpixon.
Subject
to the terms and conditions of the Purchase Agreement, the Purchaser will purchase the Shares in exchange for consideration
consisting of: (i) CAD $5,000,000 (the “Cash Consideration”), plus an amount equal to all cash and cash
equivalents held by Jibestream at the closing of the Transaction (the “Closing”), minus, if a negative number,
the absolute value of the Estimated Working Capital Adjustment (as defined in the Purchase Agreement), minus any amounts
loaned by the Purchaser to Jibestream to settle any Indebtedness (as defined in the Purchase Agreement) or other fees, minus
any cash payments to the holders of outstanding options to settle any in-the-money options (the “Option Payout”),
minus the deferred revenue costs of $150,000, and minus the costs associated with the audit and review of the financial
statements of Jibestream required by the Purchase Agreement (collectively, the “Estimated Cash Closing Amount”);
plus (ii) a number of shares of common stock of Inpixon, par value USD $0.001 (the “Inpixon Shares”), equal to
CAD $3,000,000 divided by the lesser of (a) the price per share at which shares of Inpixon’s common stock are
issued in the Financing (as defined below), and (b) the average closing price of Inpixon’s common stock as
reported or quoted by the Nasdaq Stock Market for the five trading days immediately preceding the Closing (the “Price
Per Share”). To the extent that the Estimated Cash Closing Amount is a negative number, the number of Inpixon Shares
will be reduced by the Estimated Cash Closing Amount divided by the Price Per Share. Collectively, the Inpixon Shares and the
Cash Consideration represent the “Purchase Price.”
To
the extent that approval by the stockholders of Inpixon for the issuance of the Inpixon Shares is required by applicable Nasdaq
listing rules and is not obtained prior to August 30, 2019, the Purchaser will pay the portion of the Purchase Price representing
the Inpixon Shares in cash, and the references to the Holdback Amount (as defined below) set forth in the Purchase Agreement will
refer to the corresponding cash amount paid pursuant to the foregoing.
Indemnification
The
Purchaser will retain an amount of Inpixon Shares representing fifteen percent (15%) of the value of the Purchase Price (the “Holdback
Amount”) to secure the indemnification and other obligations of the Vendors in favor of the Purchaser arising out of or
pursuant to Article VIII of the Purchase Agreement and, at the option of the Purchaser, to secure the obligation of the Vendors’
to pay any adjustment to the Purchase Price pursuant to Section 2.5 of the Purchase Agreement. The Holdback Amount is to be governed
by the terms and conditions set out in Section 2.6 of the Purchase Agreement, and is to be paid to the Vendors in whole or in
part, or retained by the Purchaser in whole or in part, subject to the terms and conditions set out therein.
Closing
Conditions
The
Closing will occur on (i) the date that is five (5) business days following the closing of an offering by Inpixon of equity or
equity-linked securities of Inpixon in which aggregate gross proceeds of at least $15 million, or such other amount mutually agreed
to by Jibestream and Inpixon, have been raised (the “Financing”), or (ii) such other date that is agreed to by the
parties to the Purchase Agreement (either date, the “Closing Date”).
The
Purchase Agreement contains standard conditions that must be fulfilled or be waived prior to the Closing. Among other
conditions, prior to the Closing: (i) Inpixon must have closed the Financing, (ii) the Inpixon Shares must have been approved
for listing on the Nasdaq Stock Market, and if required by applicable Nasdaq listing rules, must have been approved
by Inpixon’s stockholders, and (iii) receipt of adoption agreements relating to the Purchase Agreement from each Vendor
in a form acceptable to Inpixon and the Purchaser.
Registration
Statement
On
or before the thirtieth (30th) day from the Closing Date (the “Filing Date”), Inpixon will file an “evergreen”
shelf registration statement on Form S-1 or Form S-3 pursuant to Rule 415 under the Securities Act of 1933 (the “Securities
Act”), providing for an offering of the Inpixon Shares issued pursuant to the Purchase Agreement on a continuous basis (the
“Registration Statement”) and will use best efforts to cause the Registration Statement to become effective no later
than the date that is 30 days after the Filing Date, and in any event as soon as practicable after such filing.
Continued
Listing of Inpixon Common Stock
Following
the Closing, Inpixon will use commercially reasonable efforts to maintain the listing of its common stock on a national securities
exchange or, if Inpixon is no longer eligible to maintain such listing, Inpixon will take commercially reasonable efforts to make
its common stock available for quotation and trading on the over-the-counter markets.
Non-Competition
and Non-Solicitation
For
a period of two years commencing on the Closing Date, and subject to certain customary carve-outs, Chris Weigand will not, and
will not permit any of his Affiliates (as defined in the Purchase Agreement) to, directly or indirectly:
(A)
(i) engage in or assist others in engaging in a business that directly competes with the Business (as defined in the Purchase
Agreement) in Canada, the United States, the Middle East and Australia (collectively, the “Territory”); (ii) have
an interest in any Person that engages directly or indirectly in a business that directly competes with the Business in the Territory
in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally
interfere in any material respect with the business relationships between Jibestream and customers or suppliers of the Jibestream;
(B)
hire or solicit any individual employed by Jibestream as of the date of the Purchase Agreement (each, an
“Employee”) or encourage any Employee to leave his or her employment or hire any Employee who has left such
employment, except pursuant to general advertisements, posts or similar solicitations or activities that are not directed
specifically to any such Employees; and
(C)
solicit or entice, or attempt to solicit or entice, any clients or customers of Jibestream or potential clients or customers of
Jibestream for purposes of diverting their business or services from Jibestream.
Capital
Contribution
Inpixon
has agreed to make a capital contribution to the Purchaser in an amount equal to the Estimated Cash Closing Amount and the fair
market value of the Inpixon Shares at the time the Inpixon Shares are issued (the “Capital Contribution”) and Inpixon
will pay the Capital Contribution by issuing the Inpixon Shares to the applicable Vendors.
Other
Provisions
The
Purchase Agreement also includes representations, warranties, covenants and indemnifications made by the parties that are customary
for agreements of this type.
Inpixon
intends to issue the Inpixon Shares described herein (a) in reliance upon an exemption from registration under Section 4(a)(2)
of the Securities Act for private transactions and (b) in reliance on an exemption from registration provided by Regulation S
of the Securities Act inasmuch as the Vendors are persons other than “U.S. persons” (as defined in Rule 902 under
the Securities Act) and the requirements of Rule 903 under the Securities Act were otherwise met.
The
foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is
incorporated by reference herein.
Exchange
Agreement
On
July 11, 2019, Inpixon and the holder (the “Note Holder”) of that certain outstanding promissory note, issued on October
12, 2018 (as amended, supplemented or otherwise modified, the “Original Note”), with a remaining outstanding balance
of $214,806.81 as of July 11, 2019, entered into an exchange agreement, pursuant to which Inpixon and the Note Holder agreed to
(i) partition a new promissory note in the form of the Original Note in the original principal amount equal to $214,806.81 and
then cause the remaining outstanding balance to be reduced by $214,806.81; and (ii) exchange the partitioned note for the delivery
of 403,772 shares of Inpixon’s common stock at an effective price per share equal to $0.532. The shares of common stock
will be delivered to the Note Holder on or before July 12, 2019 and the exchange will occur with the Note Holder surrendering
the partitioned note to Inpixon on the date when the shares of common stock are approved and held by the Note Holder’s brokerage
firm for public resale. Following such partition of the Original Note, the Original Note will be deemed paid in full, will be
automatically deemed canceled, and will not be reissued.
The
offer and sale of the shares of common stock was not registered under the Securities Act in reliance on an exemption from registration
under Section 3(a)(9) of the Securities Act, in that (a) the shares of common stock are being issued in exchange for the partitioned
note which is another outstanding security of Inpixon; (b) there is no additional consideration of value being delivered by the
Note Holder in connection with the exchange; and (c) there are no commissions or other remuneration being paid by Inpixon in connection
with the exchange.
The
foregoing description of the exchange agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the exchange agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated by reference herein.