In the event of a fundamental change, holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes at a price equal to 100% of the capitalized principal amount of Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date.
The Indenture includes customary terms and covenants, including certain events of default after which the maturity of the Notes is accelerated and the Notes become due and payable immediately. Such events of default include: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time, in certain cases if such failure is not cured within five business days; (iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another Person (as defined in the Indenture); (iv) the Company’s failure in its obligation to convert a Note, if such default is not cured within five business days; (v) a default by the Company in its other agreements under the Indenture or the Notes if such default is not cured within 60 days after notice is given in accordance with the Indenture; (vi) certain defaults by the Company or any “significant subsidiary” of the Company (within the meaning of Regulation S-X) with respect to indebtedness for borrowed money of at least $15,000,000; (vii) certain failures by the Company or any significant subsidiary of the Company with respect to the payment of final judgments of at least $15,000,000; and (viii) certain events of bankruptcy, insolvency and reorganization involving the Company or any significant subsidiary of the Company.
The foregoing descriptions of the Indenture, the Notes and the Investment Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions of the Indenture, a copy of which is attached hereto as Exhibit 4.1, and the Investment Agreement, a copy of which is attached hereto as Exhibit 10.1, each of which is incorporated herein by reference.
Strategic Agreement & Warrant Agreements
On October 25, 2022, the Company and RXR FP Services LLC (“RXR FP”) entered into an Agreement for Strategic Planning and Consulting Services (the “Strategic Agreement”). Pursuant to the Strategic Agreement, RXR FP was appointed to render strategic planning and consulting services to the Company.
In consideration of RXR FP’s performance of its obligations under the Strategic Agreement, the Company agreed to issue to RXR FP warrants (the “Warrants”) to purchase, in the aggregate, 9,511,128 shares of Common Stock. On October 25, 2022, the Company issued the Warrants to RXR FP pursuant to certain Common Stock Purchase Warrant Agreements (the “Warrant Agreements”). The shares underlying the Warrants vest in equal tranches over the three-year period following the initial issuance date of the Warrants, with one-third of such shares vesting each year on the anniversary thereof, provided that all such shares shall vest immediately upon the occurrence of certain specified events (each, an “Early Exercise Event”). The Warrants are exercisable, to the extent vested and unexercised, (1) in the case of certain of the Warrants, upon the earlier of the applicable vesting date or an Early Exercise Event, and prior to 11:59 p.m., New York City time, on October 25, 2032 (the “Warrant Termination Time”), at an exercise price of $0.01 per share of Common Stock, subject to certain adjustments (the “Exercise Price”), (2) in the case of certain of the Warrants, upon the earlier of the applicable vesting date or any later date, provided that the closing price of the Common Stock has exceeded $1.32 (as may be adjusted) for 20 of 30 consecutive trading days prior to such applicable vesting date or such later date, or an Early Exercise Event, and prior to the Warrant Termination Time, at the Exercise Price, and (3) in the case of certain of the Warrants, upon the earlier of the applicable vesting date or any later date, provided that the closing price of the Common Stock has exceeded $1.58 (as may be adjusted) for 20 of 30 consecutive trading days prior to such applicable vesting date or such later date, or an Early Exercise Event, and prior to the Warrant Termination Time, at the Exercise Price. The Warrants may also be exercised, in whole or in part, by means of a “cashless exercise” for a number of shares as determined in the Warrant Agreements. The Warrants are subject to certain restrictions on transfer prior to their applicable exercise dates.
The Strategic Agreement provides RXR FP with a right of first offer, should the Company undertake a debt financing or equity capital raise, subject to certain exceptions, to participate in such financing or capital raise. The Strategic Agreement also gives RXR FP the right to designate one member of the Company’s board of directors (the “RXR Designee”), which designee shall be the Vice-Chairperson of the Company’s board of directors, until the earlier of (i) the fifth annual meeting of stockholders of the Company following the date of the Strategic Agreement and (ii) the end of the term of the Strategic Agreement, and provides that the Company shall enter into a customary indemnification and other agreements with the RXR Designee in connection with the RXR Designee’s role on the Company’s board of directors.