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Item 1.01.
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Entry into a Material Definitive Agreement.
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On December 17, 2020,
XpresSpa Group, Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the
“Purchase Agreement”) with certain purchasers named therein (the “Purchasers”), pursuant to which the
Company agreed to issue and sell, in a registered direct offering (the “Offering”), (i) 24,509,806 shares
(the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”)
and (ii) warrants exercisable for an aggregate of 24,509,806 shares of Common Stock (the “Warrants” and, together with the Shares, the “Securities”) at a
combined offering price of $1.70 per share. The Warrants have an exercise price of $1.70 per share. Each Warrant is
immediately exercisable and will expire 24 months from the issuance date.
A holder (together with its affiliates) may
not exercise any portion of the Warrant to the extent that the holder would own more than 4.99% (or, at the holder’s option
upon issuance, 9.99%) of the Company’s outstanding Common Stock immediately after exercise. However, upon at least 61 days’
prior notice from the holder to the Company, a holder with a 4.99% ownership blocker may increase the amount of ownership of outstanding
Common Stock after exercising the holder’s Warrant up to 9.99% of the number of the Company’s Common Stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the
Warrant.
The Purchase Agreement contains customary representations
and warranties and agreements of the Company and the Purchasers and customary indemnification rights and obligations of the parties.
The closing of the Offering occurred on December 21, 2020. The Company received gross proceeds of approximately $41.7 million in
connection with the Offering, before deducting placement agent fees and related offering expenses.
Pursuant to a letter agreement,
dated March 25, 2020, as amended on June 16, 2020
and December 17, 2020 (the “Engagement Letter”), the Company engaged H.C. Wainwright & Co., LLC (the “Placement
Agent”) as placement agent in connection with the Offering. The Placement Agent agreed to use its reasonable best efforts
to arrange for the sale of the Securities. The Company agreed to pay to the Placement Agent a cash fee of 7.5% of the aggregate
gross proceeds raised in the Offering, plus a management fee equal to 1.0%
of the gross proceeds raised in the Offering and reimbursement of certain expenses and legal fees. Pursuant to the Engagement
Letter, the Company also issued to designees of the Placement Agent warrants to purchase up to 8.0% of the aggregate number of
shares of Common Stock sold in the transactions, or warrants to purchase up to 1,960,784 shares of Common Stock (the “Placement
Agent Warrants”). The Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement
Agent Warrants have an exercise price equal to 125% of the offering price per share (or $2.125 per share). The Company also agreed
to pay the Placement Agent $25,000 for non-accountable expenses, to reimburse the Placement Agent’s legal fees in an amount
up to $40,000 and to pay $12,900 for the Placement Agent’s clearing fees. Pursuant
to the terms of the Engagement Letter, the Placement Agent has the right, for a period of twelve months following the closing of
the Offerings, to act (i) as financial advisor in connection with any merger, consolidation or similar business combination by
the Company and (ii) as sole book-running manager, sole underwriter or sole placement agent in connection with certain debt and
equity financing transactions by the Company.
The foregoing summaries of the Purchase
Agreement, the Warrants and the Placement Agent Warrants do not purport to be complete and are subject to, and qualified in their
entirety by, the forms of such documents attached as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on Form 8-K,
which are incorporated herein by reference.
The Company is also issuing warrants
to purchase up to an aggregate of 754,902 shares of Common Stock (“Palladium Warrants”) to Palladium Capital Advisors,
LLC (“Palladium”), pursuant to a letter agreement with Palladium dated March 19, 2020 (the “Palladium Engagement
Letter”) with Palladium Capital Advisors, LLC (“Palladium”), pursuant to the terms of the Palladium Engagement
Letter which provides that fees are payable to Palladium for any sale of the Company’s securities that occurs during the
term or within 18 months thereafter to specified investors. The Palladium Warrants have substantially the same terms as
the Warrants.
The shares of Common Stock
and Warrants in the Offering and the Placement Agent Warrants and Palladium Warrants are being offered by the Company
pursuant to a registration statement on Form S-3 (File No. 333-240084), which was filed with the Securities and Exchange
Commission (the “Commission”) on July 24, 2020 and was declared effective by the Commission on August 5, 2020
(the “Registration Statement”). A copy of the opinion of Bryan
Cave Leighton Paisner LLP relating to the legality of the issuance and sale of the Securities in the Offering is attached as
Exhibit 5.1 hereto. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to
buy securities, nor shall there be any sale of securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any such state.