Item 1.01 Entry into a Material Definitive Agreement.
Debt Conversion Agreement.
On September 26, 2016, Pernix Group, Inc. (the “Company”) entered into a Debt Conversion Agreement (the “Conversion Agreement”) with Bent Marketing Ltd. (“Bent”), a related party of the Company’s two largest beneficial shareholders, Ernil Continental Sa, BVI (“Ernil”) and Halbarad Group LTD, BVI (“Halbarad”). Pursuant to the terms of the Conversion Agreement, the Company and Bent agreed to convert all of the Company’s outstanding indebtedness payable to Bent (consisting of $14,000,000 in outstanding principal and $158,795 in accrued but unpaid interest) into 5,663,518 shares of the Company’s common stock based on a conversion rate of $2.50 per share.
Common Stock Purchase Agreements
. On September 26, 2016, the Company entered into a Common Stock Purchase Agreement (together, the “Common Stock Purchase Agreements”) with each of Ernil and Halbarad , pursuant to which the Company sold an aggregate of 2,000,000 shares of its common stock at $2.50 per share for a total purchase price of $5,000,000, of which Ernil purchased 1,100,000 shares for $2,750,000 and Halbarad purchased 900,000 shares for $2,250,000.
Preferred Shares Amendment Agreements
. On September 26, 2016, the Company entered into a Preferred Shares Amendment Agreement (together, the “Preferred Amendment Agreements”) with each of Ernil and Halbarad. Pursuant to the Preferred Amendment Agreements, Ernil and Halbarad agreed to waive the accrual and payment of dividends on the Company’s Series A, B and C Preferred Stock (collectively, the “Preferred Stock”) for the period beginning July 1, 2016 and ending July 1, 2018. In exchange for the waiver, the Company issued 550,000 and 450,000 shares of the Company’s common stock to Ernil and Halbarad, respectively. Other than with respect to the waived dividends described above, the Preferred Amendment Agreements did not modify the voting, liquidation and dividend rights of the holders of Preferred Stock.
The foregoing descriptions of the Conversion Agreement, the Common Stock Purchase Agreements and the Preferred Amendment Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of the agreements, copies of which are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively, and incorporated herein by reference.
The Preferred Stock Amended and Restated Certificate of Designations reflecting the modification pertaining to the waiver of dividend accrual and payment noted above is attached hereto as Exhibits 10.7, 10.8 and 10.9, respectively, and incorporated herein by reference.