Section 1.01 Entering into a Material Definitive Agreement.
The Loan Agreement provides for a one-time senior secured term loan (the “Loan”) in an aggregate principal amount of
In accordance with the loan agreement, the maturity date of the loan is
The security guaranteeing the payment and performance of the obligations under the Loan consists of a first ranking security interest in the assets of each Borrower, including real estate located
The Loan Agreement includes representations and covenants customary for financing transactions of this nature, including, among others, restrictions on indebtedness, grant of encumbrances, fundamental changes and disclosure covenants. The Loan Agreement also contains a covenant to meet a debt service coverage ratio of 1.75:1.00 and failure to meet this triggers an obligation to sweep certain amounts into an escrow account, not a case of default.
An Event of Default under the Loan Agreement includes, but is not limited to, default in payment, breach of certain covenants, insolvency, failure to pay property taxes and maintain insurance, material adverse effect , change of control and cross default and judgments, in each case subject to customary exceptions and thresholds.
As part of its conclusion of the loan agreement, the
agrees to issue to minority members shares of its common stock in a value equal to the amount (if any) unpaid by TerrAscend NJ to minority members pursuant to the promissory note (the “Issue of TerrAscend Shares”), calculated in accordance with an average of the closing prices over the five trading days immediately following the triggering event. Assuming the formula was applied using the five trading days preceding the signing of the loan agreement, the maximum number of shares that could be issued under the TerrAscend share issue would be 16,425,540 shares.
The foregoing descriptions of the Loan Agreement and Promissory Note are qualified in their entirety by reference to the full text of the Loan Agreement and Promissory Note, copies of which will be filed as exhibits to the Annual Report of corporation on Form 10-K for the year ended
Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Section 1.01 under the subheading “Loan Agreement” above is incorporated by reference into this Section 2.03.
Item 3.02 Unrecorded Sales of
The information set out in 1.01 regarding the above promissory note is incorporated by reference into this 3.02.
All securities issued to minority members in connection with the issue of shares of TerrAscend will be issued on the basis of the exemption from registration requirements provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Rule 506 of Regulation D promulgated under the Securities Act. These securities may not be offered or sold in
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