COOL TECHNOLOGIES, INC. (OTCMKTS:WARM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Note Purchase
On December 6, 2016, Cool Technologies, Inc. (the Company)
entered into a securities purchase agreement (the Note Purchase
Agreement) with Bellridge Capital, LP (Bellridge) which provides
for the purchase by Bellridge of up to an aggregate of $150,000
principal amount of convertible promissory notes (the Notes). The
Notes have a 5% original issue discount and bear interest at 5%
per annum (or the lesser of 22% per annum or the maximum amount
permitted by applicable law in the event of a default as
described in the Notes). On December 7, 2016, $85,000 was paid to
the initial Note (after the deduction of $10,000 for Bellridges
legal expenses); said note is due on December 5, 2017. Within two
trading days of notice from the Company that the registration
statement described below is filed with the SEC, the Company will
issue Bellridge another Note in the amount of $47,500. The Notes
may be prepaid in whole or in part by the Company at a 115%
premium if within 120 days of the issue date or 125% after 120
days of the issue date. The Notes are convertible into Common
Stock at a 30% discount to the lowest trading price for the ten
trading days immediately prior to the delivery of a conversion
notice, provided that the conversion price will not be less than
$0.06 per share. If the price per share of the Common Stock
closes at less than $0.06 for any five out of ten consecutive
trading days after the sooner to occur of the filing of the
Registration Statement (the Market Price Decline Period) or six
months from the date of the Note, the Company has the right to
pre-pay the Note at an amount equal to 125% of the then principal
and interest due on the Note. However, if the Company fails to
prepay the Note in its entirety during the thirty days following
a Market Price Decline Period, then the conversion price floor of
$0.06 per share will no longer be applicable.
If the Company fails to timely deliver shares to Bellridge upon
conversion of the Notes, Bellridge will be entitled to liquidated
damages of $10 per trading day for each $1,000 being converted
(and $20 per day after the tenth trading day). If the Company
fails to timely deliver share certificates and Bellridge is
required by its brokerage firm to purchase, or its brokerage firm
otherwise purchases, Common Stock to deliver in satisfaction of a
sale by Bellridge of the Conversion Shares which Bellridge was
entitled to receive, then the Company will (A) pay in cash the
amount by which (x) Bellridges total purchase price for the
Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that Bellridge was
entitled to receive from the conversion multiplied by (2) the
actual sale price at which the sell order giving rise to such
purchase obligation was executed and (B) at the option of
Bellridge, either reissue (if surrendered) the Note in a
principal amount equal to the principal amount of the attempted
conversion (in which case such conversion shall be deemed
rescinded) or deliver to Bellridge the number of shares of Common
Stock that would have been issued if the Company had timely
complied with its delivery requirements.
The Note may not be converted to the extent that after giving
effect to the conversion Bellridge and its affiliates would
beneficially own in excess of 4.99% of the number of shares of
the Common Stock outstanding, which percentage may be increased
to 9.99% upon not less than 61 days prior notice to the Company.
The Note includes anti-dilution protection in the event of
certain subsequent equity sales and dilutive issuances, purchase
rights in subsequent rights offerings and pro rata distributions
in the event of a dividend or other distribution by the Company.
If the Company engages in a fundamental corporate action (as
described in the Note), Bellridge will be entitled to receive
shares or other consideration that it would have received for
each share that would have been issuable upon conversion
immediately before such fundamental corporate action.
So long as the Note is outstanding, unless with the consent of
the holders of the majority in principal amount of the then
outstanding Notes, the Company will not create certain
indebtedness, amend its charter to adversely affect Bellridge, or
enter into transactions with affiliates, unless at arms length
and approved by the majority of disinterested directors.
The Note Purchase Agreement also provides that it is an event of
default if the Company does not obtain FINRAs approval to
effectuate a 1:15 reverse stock split no later than January 15,
2017. The Company also agreed to reserve the greater of (i)
1,000,000 shares of Common Stock or (ii) 300% of the maximum
aggregate number of shares issued or issuable to Bellridge
(without giving effect to any beneficial ownership restrictions).
So long as Bellridge owns the Notes and the shares issuable under
the Notes, if the Company fails to satisfy certain current public
information requirements under Rule 144 for more than 30
consecutive days, the Company will be required to pay liquidated
damages to Bellridge in cash equal to 5% of the aggregate
conversion price of the Note(s) on the day of a such failure and
on every 30th day thereafter. If the Company fails to make such
liquidated damages payments in a timely manner, such payments
will bear interest of 1.5% per month until paid in full.
Equity Line
On December 6, 2016, Cool and Bellridge entered into a securities
purchase agreement (the Equity Line Purchase Agreement), together
with a registration rights agreement (the Registration Rights
Agreement), to which the Company has the right to sell to
Bellridge up to $5,000,000 in shares of its common stock, par
value $0.001 per share (Common Stock).
Under the terms of the Equity Line Purchase Agreement, Bellridge
is obligated to purchase up to $5,000,000 in shares of Common
Stock (subject to certain limitations) from time to time over the
36-month period commencing on the date that a registration
statement (the Registration Statement) is declared effective by
the SEC. The Registration Statement will also register for resale
the shares of Common Stock issuable upon the conversion of the
Notes.The Company may direct Bellridge, at its sole discretion
and subject to certain conditions, to purchase a minimum of
$25,000 and a maximum of $500,000 of shares (each a Draw Down)
that is no more than 300% of the average trading volume of the
Common Stock during the 10-day period immediately prior to the
Draw Down; provided that this amount does not result in Bellridge
beneficially owning in excess of 4.99% of the issued and
outstanding Common Stock. However, the 4.99% limitation may be
increased by Bellridge up to 9.99% upon at least 61 days prior
notice to the Company.
In addition, the Company may direct Bellridge to purchase shares
only if during the fifteen consecutive days following a Draw Down
request by the Company, the Common Stock equals or exceeds $0.06
per share. The Company will control the timing
and amount of any sales of Common Stock to Bellridge but the
Company may not request a Draw Down less than ten business days
apart.
As consideration for its commitment to purchase shares of Common
Stock to the Equity Line Purchase Agreement, the Company agreed
to issue to Bellridge1,317,176 shares of Common Stock.
The Equity Purchase Agreement also provides for liquidated
damages of $100 per trading day ($200 after five trading days) if
the Company does not timely deliver the shares sold to Bellridge.
The Equity Purchase Agreement terminates if the Common Stock is
delisted, the Company files for creditor protection or the
Registration Statement is not declared effective by the SEC in
210 days from the execution of the Equity Purchase Agreement. The
Company may also terminate the Equity Purchase Agreement upon
five trading days notice if Bellridge fails to timely fund a Draw
Down.
Bellridge is not obligated to purchase more than $500,000of
Common Stock in any single purchase. There is no upper limit on
the price per share that Bellridge could be obligated to pay for
shares of Common Stock under the Equity Purchase Agreement.Actual
sales of shares of Common Stock to Bellridge under the Equity
Purchase Agreement will depend on a variety of factors to be
determined by the Company from time to time, including (among
others) market conditions, the trading price of the Common Stock
and determinations by the Company as to the appropriate sources
of funding for the Company and its operations.
The foregoing descriptions of the Note Purchase Agreement, the
Note, the Equity Line Purchase Agreement and the Registration
Rights Agreement and the transactions contemplated thereby are
qualified in their entirety by reference to the full text of such
Agreements, copies of which are attached hereto asExhibit 10.61,
10.62, 10.63 and 10.64, respectively, and each of which is
incorporated herein in its entirety by reference.
Section 2 – Financial Information
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The disclosure set forth above in Item 1.01 is hereby
incorporated by reference into this Item 2.03.
Section 3- Securities and Trading Markets
Item 3.02 Unregistered Sale of Equity Securities
The information contained above in Item 1.01 is hereby
incorporated by reference into this Item 3.02. The issuance and
sale of the securities by the Company to Bellridge was made
without registration under the Securities Act of 1933, as amended
(the Act), in reliance on the exemptions provided by Section 4(2)
of the Act and Regulation D promulgated thereunder, based on the
offering of such securities to one investor, the lack of any
general solicitation or advertising in connection with such
issuance, the representation of such investor to the Company that
it was an accredited investor (as that term is defined in Rule
501(a) of Regulation D), and the representation of such investor
that it was purchasing the shares for its own account and without
a view to distribute them.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
|
Exhibit No. |
Description |
|
|
Exhibit 10.61 |
Securities Purchase Agreement, dated December 6, 2016, |
|
|
Exhibit 10.62 |
5% Convertible Promissory Note |
|
|
Exhibit 10.63 |
Securities Purchase Agreement, dated December 6, 2016, |
|
|
Exhibit 10.64 |
Registration Rights Agreement, dated December 6, 2016, |
About COOL TECHNOLOGIES, INC. (OTCMKTS:WARM)
Cool Technologies, Inc., formerly HPEV, Inc., is engaged in developing and commercializing dispersion technologies in various product platforms. The Company is also engaged in developing and commercializing an electric load assist technology around which it has designed a vehicle retrofit system. Its application process is Totally Enclosed Heat Pipe Cooled technology (TEHPC). The markets for products utilizing its technology include consumer, industrial and military markets, both in the United States and across the world. Its initial target markets include those involved in moving materials and moving people, such as motors/generators, mobile auxiliary power, compressors, turbines, bearings, electric vehicles, brakes/rotors/calipers, pumps/fans, passenger vehicles, commercial vehicles, military and marine. The Company’s technologies are divided into categories, which include heat dispersion technology, mobile electric power and electric load assist. It has not generated any revenues. COOL TECHNOLOGIES, INC. (OTCMKTS:WARM) Recent Trading Information
COOL TECHNOLOGIES, INC. (OTCMKTS:WARM) closed its last trading session up +0.005 at 0.105 with 125,548 shares trading hands.