ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On
entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the
Company sold and issued 14,722.075 shares of its Series E Redeemable Convertible
Preferred Stock (the “HCMC Preferred Stock”) to five institutional investors
(the “Purchasers”) for an aggregate subscription price of
“Offering”). The HCMC Preferred Stock is currently convertible into
147,220,750,000 shares of the Company’s Common Stock at a conversion price of
below and as set forth in the Certificate of Designation (as defined below).
The transactions contemplated by the SPA were consummated on
The proceeds the Company received in the Offering will be held in segregated
accounts pursuant to a deposit account control and will be released either (1)
to the Company, upon conversion of the HCMC Preferred Stock or (2) to the
Purchaser, upon redemption of the HCMC Preferred Stock.
Pursuant to the SPA, Purchasers will also be required to purchase Series A
Convertible Preferred Stock (“NewCo Series A Stock”) of a newly created public
company (“NewCo”) resulting from spin off of HCMC’s grocery and wellness
businesses in the same subscription amounts that the Purchasers paid for the
HCMC Preferred Stock (the “Spinoff”). The closing of the sale of the NewCo
Series A Stock is expected to be contemporaneous with the completion of the
common stock. The purchase price will be
Stock.
The initial conversion price for the NewCo Series A Stock is
On the 40th calendar day (“Reset Date”) after the effectiveness of the
the conversion price will be reset in the event the closing price of the Common
Stock on such date is less than
will equal a 10% discount to the 5-day volume weighted average price measured
using the 5 trading days preceding the Reset Date; provided, however, in no
instance will the conversion price be reset below
of the NewCo Series A Stock shall have voting rights on as converted basis.
NewCo will register for resale the NewCo common stock issuable upon exercise of
the NewCo Series A Stock. The proceeds of the
the NewCo Series A Stock will be used for general corporate purposes and
potential acquisitions.
The foregoing description of the Securities Purchase Agreement is a summary and
is qualified in its entirety by reference to the provisions thereof, a copy of
which is attached to this Current Report as Exhibit 10.1, which is incorporated
by reference herein.
The issuances of the shares of HCMC Preferred Stock and the shares of HCMC
common stock issuable upon conversion thereof were exempt from registration
pursuant to the provisions Section 4(a)(2) of the Securities Act of 1933, as
amended, and Rule 506(b) of Regulation D, as promulgated by the Commission. The
shares of HCMC Preferred Stock and the shares of common stock into which they
may be converted constitute restricted securities that may not be offered or
sold absent their registration for resale or the availability of an exemption
therefrom.
The foregoing description of the Securities Purchase Agreement is a summary and
is qualified in its entirety by reference to the provisions thereof, a copy of
which is attached to this Current Report as Exhibit 10.1, which is incorporated
by reference herein.
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
On
Preferences, Rights and Limitations of the Series E Redeemable Convertible
Preferred Stock (“Certificate of Designation”) with the Secretary of State of
the
is 14,722.075 and each share of HCMC Preferred Stock has a stated value equal to
Voting Rights
The HCMC Preferred Stock shall have voting rights on as converted basis at the
Company’s next stockholders’ meeting. However, as long as any shares of HCMC
Preferred Stock are outstanding, the Company shall not, without the affirmative
vote of the holders of a majority of the then outstanding shares of the HCMC
Preferred Stock, (a) alter or change adversely the powers, preferences or rights
given to the HCMC Preferred Stock or alter or amend the Certificate of
Designation, (b) increase the number of authorized shares of HCMC Preferred
Stock, or (c) enter into any agreement with respect to any of the foregoing.
Liquidation.
Upon any liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary that is not a Fundamental Transaction (as defined in
the Certificate of Designation), the holders of HCMC Preferred Stock shall be
entitled to receive out of the assets, whether capital or surplus, of the
Company an amount equal to
Redemption
Unless earlier converted or extended as set forth below, a Purchaser may require
the redemption of all or a portion of the Stated Value of the HCMC Preferred
Stock either (1) six months after closing or (2) the time at which the balance
is due and payable upon an event of default (the “Redemption Date”). The
Redemption Date will be extended for up to an additional six months as follows:
• The Redemption Date may be extended by 30 days by a Purchaser for up to an
additional six months.
• During each extension period, the Purchaser may elect to either (1) convert all
or a portion of its HCMC Preferred Stock or (2) request redemption of the all
or a portion of the HCMC Preferred Stock.
• Beginning in the second 30-day extension period, the Stated Value will be
decreased by 1% during each extension period solely for redemption purposes.
Conversion Price
The conversion price for the HCMC Preferred Stock shall equal
rights of the HCMC Preferred Stock include certain protections in the event of
dilutive equity issuances.
The foregoing description of the HCMC Preferred Stock is not complete and is
qualified in its entirety by reference to the full text of the Company’s
Certificate of Designations of Preferences, Rights and Limitations of Series E
Convertible Preferred Stock, which is filed herewith as Exhibit 2.1 to this
Current Report on Form 8-K and is incorporated by reference herein.
ITEM 7.01 REGULATION FD
On
of Directors has approved (1) a Common Stock share repurchase program, the
details of which are set forth in Item 8.01 below, and (2) the spin-off of the
Company’s grocery and wellness business which is expected to be completed in in
the fourth quarter of 2022. A copy of the press release is furnished as Exhibit
99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information
presented herein under Item 7.01 and set forth in the attached Exhibit 99.1 is
deemed to be “furnished” solely pursuant to Item 7.01 of this Current Report on
Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of that section, nor shall such information or the
exhibit be deemed incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Exchange Act.
ITEM 8.01 OTHER EVENTS
On
authorizing the Company to purchase up to an aggregate of
Company’s common stock. The share repurchase program will be administered in
accordance with Rule 10b-18 of the Exchange Act. Subject to applicable rules
and regulations, the shares may be purchased from time to time in the open
market or in privately negotiated transactions. Such purchases will be at times
and in amounts as the Company deems appropriate, based on factors such as market
conditions, legal requirements and other business considerations.
1
——————————————————————————–
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits. Exhibit Number Description 2.1Healthier Choices Management Corp. Certificate of Designation of Preferences, Rights And Limitations of Series E Redeemable Convertible Preferred Stock 10.1 Securities Purchase Agreement, dated as ofAugust 18, 2022 , by and betweenHealthier Choices Management Corp. and the purchasers named therein 99.1 Press release of the Company datedAugust 22, 2022 2
——————————————————————————–
© Edgar Online, source
