VAPOR HUB INTERNATIONAL INC. (OTCMKTS:VHUB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On December 23, 2016, we entered into a Senior Secured Credit
Facility Agreement (the Loan Agreement)
with PLY Technology (PLY). At the
initial closing on December 23, 2016, we received gross proceeds
of $543,110.30, which includes $60,000 previously advanced to us
by PLY and issued to PLY a Senior Secured Convertible Promissory
Note in the principal amount of $543,100.30 (the
Note). The Note is scheduled to mature
on February 15, 2017 (the Maturity
Date). At any time prior to the Maturity Date or
the earlier termination of the Loan Agreement, we can request up
to $331,899.70 of additional loans, which additional loans may be
made in the sole discretion of PLY. We may prepay borrowings at
any time, in whole or in part, without penalty.
The Loan Agreement provides that, until our obligations under the
Loan Agreement are satisfied in full, (i) PLY has the sole and
exclusive right to negotiate an Acquisition Proposal (as defined
below) with us and (ii) neither we nor our representatives are
permitted to solicit, initiate negotiations with, or enter into
any agreement with a third party in relation to an Acquisition
Proposal, in each case subject to certain exceptions relating to
unsolicited Acquisition Proposals from third parties. Acquisition
Proposal means any proposal, offer or indication of interest
relating to, or that would reasonably be expected to lead to,
(i)any acquisition or purchase of (A)assets or businesses that
constitute all or substantially all of our assets, or
(B)beneficial ownership of twenty percent (20%) or more of any
class of our equity securities; (ii)any purchase or sale of, or
tender offer or exchange offer for, our equity securities that,
if consummated, would result in any person or group beneficially
owning twenty percent (20%) or more of any class of our equity
securities; or (iii)any merger, consolidation, business
combination, recapitalization, reorganization, dual listed
structure, joint venture, share exchange or similar transaction
involving us, as a result of which the owners of our equity
securities immediately prior to such event own less than 80% of
our equity securities immediately following such event; or
(iv)our liquidation or dissolution.
Prior to the Maturity Date, we intend to enter into an asset
purchase agreement with PLY to which PLY will acquire
substantially all of our assets. The terms of the asset purchase
agreement have not been finalized.
The loan will accrue interest on the unpaid principal balance at
an annual rate of 18% and the principal amount and all accrued
but unpaid interest thereon is due and payable on the Maturity
Date. In the event we are in default under the Loan Agreement or
any related transaction document, including as a result of a
default in our payment obligations, any amount due to PLY under
the facility will, at PLYs option, bear interest from the date
due until such past due amount is paid in full at an annual
default rate of 22%. In addition, upon the occurrence and during
the continuance of an event of default under the transaction
documents, PLY may terminate its commitments to us and declare
all of our obligations to PLY to be immediately due and payable.
While the Note is outstanding, but only upon the occurrence of
(i) an event of default under the Loan Agreement or any related
transaction document or (ii) our mutual agreement with PLY, PLY
may convert, subject to certain beneficial ownership limitations,
all or any portion of the outstanding principal, accrued and
unpaid interest and any other sums due and payable under the Note
or any other transaction document (such total amount, the
Conversion Amount) into a number of
shares of our common stock equal to: (i) the Conversion Amount
divided by (ii) eighty-five percent (85%) of the lowest
of the daily volume weighted average price of our common stock
during the five business days immediately prior to the conversion
date (the Conversion Shares). Upon sale
by PLY of Conversion Shares, if PLY realizes a net amount from
such sale equal to less than the Conversion Amount, we are
obligated to issue to PLY additional shares of our common stock
equal to: (a) the Conversion Amount minus the net
realized amount, divided by (b) the average volume
weighted average price of our common stock during the five
business days immediately prior to the date upon which PLY
requests additional shares.
The payment and performance of all our indebtedness and other
obligations to PLY, including all borrowings under the Loan
Agreement and related agreements, are secured by first priority
liens on substantially all of our assets to a Security
Agreement. Upon the occurrence and during the continuance of an
event of default under the transaction documents, PLY may, at
its option, exercise a number of remedies as a secured lender
including selling, leasing or disposing all or a portion of our
assets or retaining all or a portion of our assets in
satisfaction of our obligations to PLY.
Of the proceeds received at the initial closing, $483,110.30
was used to pay in full all indebtedness outstanding under our
Senior Secured Credit Facility Agreement with TCA Global Credit
Master Fund, LP (TCA), entered into
on December 24, 2015 and the other loan documents entered into
in connection with such agreement (collectively, the
TCA Transaction Documents). Upon
repayment of our indebtedness to TCA, TCA released its liens on
our assets and the TCA Transaction Documents, subject to
certain surviving provisions, were terminated.
In connection with the Credit Agreement, on December 23, 2016,
we entered into a consulting agreement with PLY (the
Consulting Agreement), to which we
will assist PLY in connection with the operation of its
business, which includes the sale of e-cigarette products and
services, and granted to PLY a non-exclusive license to use our
intellectual property rights in connection with the marketing,
sale and distribution of products developed as a result of our
services to PLY. Unless earlier terminated, the Consulting
Agreement is scheduled to expire on June 30, 2017. For our
services under the Consulting Agreement, we received a fee of
$25,000 on December 23, 2016.
The foregoing summaries of the Loan Agreement, the Security
Agreement, the Note and the Consulting Agreement do not purport
to be complete and are qualified in their entirety by reference
to the full text of such agreements, which are attached as
Exhibits 10.1, 10.2, 10.3 and 10.4 hereto.
Item 1.02 Termination of a Material
Definitive Agreement.
The information set forth under Item 1.01, Entry into a
Material Definitive Agreement, regarding the termination of the
facility with TCA is incorporated herein by reference.
Item 2.03 Creation of a Direct
Financial Obligation or an Obligation Under an Off-Balance
Sheet Arrangement of a Registrant.
The information set forth under Item 1.01, Entry into a
Material Definitive Agreement, regarding the Loan Agreement and
related transaction documents is incorporated herein by
reference.
Item 3.02 Unregistered Sales of Equity
Securities.
to the Loan Agreement, we may be required to issue an unknown
number of Conversion Shares in accordance with the terms of the
transaction documents. The Note was issued to PLY in reliance
upon the exemption from registration set forth in Section
4(a)(2) of the Securities Act of 1933, as amended, for
transactions not involving a public offering.
Item 9.01 Financial Statements and
Exhibits
(d)
Exhibits.
The following exhibits are filed herewith:
|
Exhibit Number |
Description of Exhibit |
|
|
10.1 |
Senior Secured Credit Facility Agreement dated December |
|
|
10.2 |
Security Agreement dated December 23, 2016 by and between |
|
|
10.3 |
Senior Secured Convertible Promissory Note dated December |
|
|
10.4 |
Consulting Agreement dated December 23, 2016 by and |
|
About VAPOR HUB INTERNATIONAL INC. (OTCMKTS:VHUB)
Vapor Hub International Inc. is engaged in designing, sourcing, marketing and selling of smokeless electronic cigarettes. The Company provides a selection of vaping devices and related accessories, which it designs and sources, including its Limitless Mods and Limitless Atomizers. It also purchases vaping devices and related accessories from third parties for resale. It distributes products nationally and internationally to wholesale customers and retail customers, including through its Website www.vapor-hub.com. It also markets and sells products through a retail location. Its Limitless Mechanical Mod is available in aluminum, brass, copper, black rhodium plated aluminum and gold plated brass finishes. Its Binary Premium e-liquid is available in over five flavors. It offers Binary Premium e-liquid with 0 milligrams (mg), 2.5mg, 5.0mg, 7.5mg or 10mg of nicotine per bottle. It also offers a range of accessories, including apparel, tanks and atomizers, batteries, chargers and drip tips. VAPOR HUB INTERNATIONAL INC. (OTCMKTS:VHUB) Recent Trading Information
VAPOR HUB INTERNATIONAL INC. (OTCMKTS:VHUB) closed its last trading session down -0.0001 at 0.0114 with 767,697 shares trading hands.
