The obligations under the Minosa Note may be accelerated upon the occurrence of specified
events of default including (a) our failure to pay any amount payable under the Minosa Note on the date due and payable; (b) our failure to perform or observe any term, covenant, or agreement in the Minosa Note or the related documents,
subject to a five-day cure period; (c) the occurrence and expiration of all applicable grace periods, if any, of an event of default or material breach by us under any of the other loan documents;
(d) the termination of the SPA; (e) commencement of certain specified dissolution, liquidation, insolvency, bankruptcy, reorganization, or similar cases or actions by or against us, in specified circumstances unless dismissed or stayed
within 60 days; (f) the entry of a judgment or award against us in excess of $100,000; and (g) the occurrence of a change in control (as defined in the Minosa Note).
Pursuant to second amended and restated pledge agreements (the Second AR Pledge Agreements) entered into by us in favor of MINOSA,
we pledged and granted security interests to MINOSA in (a) the 54 million cuotas (a unit of ownership under Panamanian law) of Oceanica held by us, (b) all notes and other receivables from Oceanica and its subsidiary owed to us, and
(c) all of the outstanding equity in our wholly owned subsidiary, Odyssey Marine Enterprises, Ltd.
In connection with the execution
and delivery of the Minosa Purchase Agreement, Odyssey and MINOSA entered into a second amended and restated registration rights agreement (the Second AR Registration Rights Agreement) pursuant to which Odyssey agreed to register the
offer and sale of the shares (the Conversion Shares) of our common stock issuable upon the conversion of the indebtedness evidenced by the Minosa Note. Subject to specified limitations set forth in the Second AR Registration Rights
Agreement, including that we are eligible to use Form S-3, the holder of the Minosa Note can require us to register the offer and sale of the Conversion Shares if the aggregate offering price thereof (before
any underwriting discounts and commissions) is not less than $3.0 million. In addition, we agreed to file a registration statement relating to the offer and sale of the Conversion Shares on a continuous basis promptly (but in no event later
than 60 days after) after the conversion of the Minosa Note into the Conversion Shares and to thereafter use its reasonable best efforts to have such registration statement declared effective by the Securities and Exchange Commission.
Note 7 Monaco 2018
During the
period ended March 31, 2018, Monaco advanced us $1.0 million that was included in a loan agreement that was executed on April 20, 2018. Monaco also agreed to treat $99,366 of back rent owed by us to Monaco as part of this loan
resulting in an aggregate principal amount of $1,099,366 at September 30, 2019 and December 31, 2018. The indebtedness bears interest at 10.0% percent per year. All principal and any unpaid interest are payable on the first anniversary of
this agreement, April 20, 2019. This debt is secured by cash proceeds, if any, from our future shipwreck projects we have contracted with Magellan. As additional consideration, their share purchase option expiration date, as discussed in Note 1
Monaco 2014 and Note 2 Monaco 2016 above, has been extended from 30 days to seven months after the note becomes paid in full. For the three months ended September 30, 2019 and 2018, interest expense in the amount of $31,483 and
$28,498, respectively, was recorded.
Note 8 Promissory note
On July 12, 2018, we entered into a Note and Warrant Purchase Agreement (the Purchase Agreement) with two individuals (the
Lenders), one of whom holds in excess of 5.0% of our outstanding common stock. Pursuant to the Purchase Agreement, the Lenders agreed to lend an aggregate of $1,050,000 to us, which was advanced in three tranches on July 12, 2018,
$500,000, August 17, 2018, $300,000 and October 4, 2018, $250,000. The indebtedness is evidenced by secured convertible promissory notes (the Notes) and bears interest at a rate equal to 8.0% per annum. Unless otherwise
converted as described below, the entire outstanding principal balance under the Notes and all accrued interest and fees are due and payable on July 12, 2019. See Term Extension (July 8, 2019) below.
At any time after to the first to occur of (a) a sale by us of additional Notes or (b) September 12, 2018, the Lenders have the
right to convert all amounts outstanding under the Notes into either (x) shares of our common stock at the conversion rate of $8.00 per share, (y) $500,000 of the indebtedness owed by Exploraciones Oceanicas S. de R. L. de C.V.
(ExO) to Oceanica Marine Operations, S.R.L. (OMO), or (z) a 7.5% interest in Aldama Mining Company, S. de R. L. de C.V. (Aldama). We indirectly hold a controlling interest in ExO; OMO and Aldama are indirect,
wholly owned subsidiaries of ours.
In connection with the issuance and sale of the Notes, we issued warrants to purchase common stock
(the Warrants) to the Lenders. The Lenders may exercise the Warrants to purchase an aggregate of 65,625 shares of our common stock at an exercise price of $12.00 per share. The Warrants are exercisable during the period commencing on the
date on which the Notes are converted into shares of our common stock and ending on July 12, 2021.
Pursuant to a Pledge Agreement,
dated as of July 12, 2018 (the Pledge Agreement), our obligations under the Notes are secured by a pledge of a portion of Odysseys ownership interest in Aldama and another entity.
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