UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 5, 2022
MITESCO, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-53601 | 87-0496850 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 1600 Highway 100 South, Suite 432 St. Louis Park, MN 55416 |
| (Address of principal executive offices) (Zip Code) |
(844) 383-8689
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 1.01. |
Entry into a Material Definitive Agreement. |
Cavalry Exchange Agreement
On October 5, 2022, Mitesco, Inc. (the “Company”) entered into an exchange agreement (the “Cavalry Exchange Agreement”) with Cavalry Fund I LP (“Cavalry”). In connection with the Cavalry Exchange Agreement, on October 5, 2022, the Company issued a 10% promissory note to Cavalry (the “Cavalry Note”), of which the Company received gross proceeds of $500,000 (the “Cavalry Principal Amount”)
Pursuant to the Calvary Exchange Agreement, Cavalry shall exchange (the “Cavalry Exchange”) (a) 1,000,000 shares of the Company’s Series C Convertible Preferred Stock (the “Series C Shares”), (b) 750,000 shares of the Company’s Series D Convertible Preferred Stock (the “Series D Shares”), and (c) amounts owing under the Cavalry Note, for a number of Series E Convertible Preferred Stock (the “Series E Shares”) equal to 150% of the principal amount of the Cavalry Note, plus 150% of the stated value of the Series C Shares and Series D Shares (the "Series E Exchange Value").
The Cavalry Exchange shall occur on the date of the Company’s listing of its common stock on a national securities exchange. Cavalry shall surrender to the Company the Series C Shares and Series D Shares owned by it and as well as the Cavalry Note. Upon such surrender, the Company shall issue to Cavalry a number of Series E Shares equal to the Series E Exchange Value.
Cavalry Promissory Note
The maturity date of the Cavalry Note is December 31, 2022. If the Company successfully lists its shares of common stock on any of The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market on or before December 10, 2022, the Cavalry Principal Amount shall convert into Series E Shares pursuant to the Cavalry Exchange Agreement.
If and only if the Cavalry Principal Amount is not converted into Series E Shares pursuant to the term of the Cavalry Note, the unpaid Cavalry Principal Amount shall bear interest at 10% per annum, which interest shall be accrued on a monthly basis and which shall have been deemed to have been accruing from the issue date of the Cavalry Note. Following an event of default, as defined in the Cavalry Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%.
The Cavalry Note contains a “most favored nations” clause that provides that, so long as the Cavalry Note is outstanding, if the Company issues any new security, which Cavalry reasonably believes contains a term that is more favorable than those in the Cavalry Note, the Company shall notify Cavalry of such term, and such term, at the option of Cavalry, shall become a part of the Cavalry Note.
Mercer Exchange Agreement
On October 7, 2022, the Company entered into an exchange agreement (the “Mercer Exchange Agreement”) with Mercer Street Global Opportunity Fund, LLC (“Mercer”). In connection with the Mercer Exchange Agreement, on October 7, 2022, the Company issued a 10% promissory note to Mercer (the “Mercer Note”), of which the Company received gross proceeds of $300,000 (the “Mercer Principal Amount”).
Pursuant to the Mercer Exchange Agreement, Mercer shall exchange (the “Mercer Exchange”) (a) 47,619 shares of the Company’s Series C Convertible Preferred Stock (the “Series C Shares”), (b) 750,000 shares of the Company’s Series D Convertible Preferred Stock (the “Series D Shares”), and (c) amounts owing under the Mercer Note, for a number of Series E Convertible Preferred Stock (the “Series E Shares”) equal to 150% of the principal amount of the Mercer Note, plus 150% of the stated value of the Series C Shares and Series D Shares (the "Series E Exchange Value").
The Mercer Exchange shall occur on the date of the Company’s listing of its common stock on a national securities exchange. Mercer shall surrender to the Company the Series C Shares and Series D Shares owned by it and as well as the Mercer Note. Upon such surrender, the Company shall issue to Mercer a number of Series E Shares equal to the Series E Exchange Value.
Mercer Promissory Note
The maturity date of the Mercer Note is December 31, 2022. If the Company successfully lists its shares of common stock on any of The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market on or before December 10, 2022, the Mercer Principal Amount shall convert into Series E Shares pursuant to the Mercer Exchange Agreement.
If and only if the Mercer Principal Amount is not converted into Series E Shares pursuant to the term of the Mercer Note, the unpaid Mercer Principal Amount shall bear interest at 10% per annum, which interest shall be accrued on a monthly basis and which shall have been deemed to have been accruing from the issue date of the Mercer Note. Following an event of default, as defined in the Mercer Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%.
The Mercer Note contains a “most favored nations” clause that provides that, so long as the Mercer Note is outstanding, if the Company issues any new security, which Mercer reasonably believes contains a term that is more favorable than those in the Mercer Note, the Company shall notify Mercer of such term, and such term, at the option of Mercer, shall become a part of the Mercer Note.
Pinz Exchange Agreement
On October 10, 2022, the Company entered into an exchange agreement (the “Pinz Exchange Agreement”) with Pinz Capital Special Opportunities Fund LP (“Pinz”). In connection with the Pinz Exchange Agreement, on October 10, 2022, the Company issued a 10% promissory note to Pinz (the “Pinz Note”), of which the Company received gross proceeds of $30,000 (the “Pinz Principal Amount”).
Pursuant to the Pinz Exchange Agreement, Pinz shall exchange (the “Pinz Exchange”) (a) 100,000 shares of the Company’s Series D Convertible Preferred Stock (the “Series D Shares”), and (b) amounts owing under the Pinz Note, for a number of Series E Convertible Preferred Stock (the “Series E Shares”) equal to 150% of the principal amount of the Pinz Note, plus 150% of the stated value of the Series D Shares (the "Series E Exchange Value").
The Pinz Exchange shall occur on the date of the Company’s listing of its common stock on a national securities exchange. Pinz shall surrender to the Company the Series D Shares owned by it and as well as the Pinz Note. Upon such surrender, the Company shall issue to Pinz a number of Series E Shares equal to the Series E Exchange Value.
Pinz Promissory Note
The maturity date of the Pinz Note is December 31, 2022. If the Company successfully lists its shares of common stock on any of The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market on or before December 10, 2022, the Pinz Principal Amount shall convert into Series E Shares pursuant to the Pinz Exchange Agreement.
If and only if the Pinz Principal Amount is not converted into Series E Shares pursuant to the term of the Pinz Note, the unpaid Pinz Principal Amount shall bear interest at 10% per annum, which interest shall be accrued on a monthly basis and which shall have been deemed to have been accruing from the issue date of the Pinz Note. Following an event of default, as defined in the Pinz Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%.
The Pinz Note contains a “most favored nations” clause that provides that, so long as the Pinz Note is outstanding, if the Company issues any new security, which Pinz reasonably believes contains a term that is more favorable than those in the Pinz Note, the Company shall notify Pinz of such term, and such term, at the option of Pinz, shall become a part of the Pinz Note.
This summary is not a complete description of all of the terms of the Cavalry Note, the Cavalry Exchange Agreement, the Mercer Note, the Mercer Exchange Agreement, the Pinz Note and the Pinz Exchange Agreement and is qualified in its entirety by reference to the full text of the Cavalry Note, the Cavalry Exchange Agreement, the Mercer Note, the Mercer Exchange Agreement, the Pinz Note and the Pinz Exchange Agreement, forms of which are filed as Exhibit 4.1 and 10.1, respectively hereto, which is incorporated by reference into this Item 1.01.
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Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. |
To the extent required by this Item 2.03, the information contained in Item 1.01 is incorporated herein by reference.
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Item 3.02. |
Unregistered Sales of Equity Securities. |
To the extent required by this Item 3.02, the information contained in Item 1.01 is incorporated herein by reference.
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Item 3.03. |
Material Modification to Rights of Security Holders. |
To the extent required by this Item 3.03, the information contained in Item 1.01 is incorporated herein by reference.
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Item 5.03. |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On October 4, 2022, the Company filed a Certificate of Correction with the Delaware Secretary of State (the "Certificate of Correction") to correct a typographical error contained in the Certificate of Designation of Powers, Preferences and Rights of Series D Convertible Preferred Stock (the “Series D”) filed with the Delaware Secretary of State on October 15, 2021, which inadvertently referred to the conversion of Series D to shares of Common Stock at a request of the underwriters in Section 5(c)(i)(2) of the Certificate of Designations, to clarify and correct that the Series D shall automatically convert into shares of Common Stock at the Conversion Price without any further action on the part of the Company or the holder of such Series D (the “Holder”) upon (i) the closing of an underwritten offering of at least $10 million of the Company’s securities or (ii) a listing of the Company’s Common Stock on a national securities exchange, and the Holders shall have no further rights as a Holder.
The foregoing description of the Certificate of Correction does not purport to be complete and is qualified in its entirety by reference to the Certificate of Correction, a copy which is filed as Exhibit 3.1, to this Current Report on Form 8-K and is incorporated herein by reference.
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Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit No. |
Description |
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3.1* |
State of Delaware Certificate of Correction dated October 4, 2022 | |
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4.1* |
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10.1* |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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* |
Filed herewith. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: October 12, 2022 |
MITESCO, INC. |
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By: |
/s/ Lawrence Diamond |
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Lawrence Diamond |
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Chief Executive Officer |
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EXHIBIT 3.1
STATE OF DELAWARE
CERTIFICATE OF CORRECTION
MITESCO, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware
DOES HERBY CERTIFY:
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1. |
The name of this corporation is Mitesco, Inc. (the “Company”). |
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2. |
That a Certificate of Designation of Powers, Preferences and Rights of Series D Convertible Preferred Stock was filed by the Secretary of State of Delaware on October 15, 2021 and that said Certificate requires correction as permitted by Section 103 of the General Corporation Law of the State of Delaware. |
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3. |
The inaccuracy or defect of said Certificate is: |
a typographical error that refers to a request of the Corporation’s underwriters that the Series D convert to shares of Common Stock and a request of the underwriters in Section 5(c)(i)(2) of the Certificate of Designations
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4. |
Section 5(c)(i)(2) of the Corporation’s Certificate shall be amended by replacing Section 5(c)(i)(2) in its entirety as follows: |
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Upon (i) the closing of an underwritten offering of at least $10 million of the Company’s securities or (ii) a listing of the Corporation’s Common Stock on a national securities exchange, the Series D shall automatically convert into shares of Common Stock at the Conversion Price without any further action on the part of the Corporation or the Holder and the Holders shall have no further rights as a Holder. The effective date of the conversion shall be the date of the closing of the underwritten offering or first trading date of the shares of Common Stock on a national securities exchange, as applicable. |
IN WITNESS WHEREOF, PROGRESSIVE CARE INC. has caused this Certificate of Correction to be signed by its Chief Executive Officer this 4th day of October 2022.
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MITESCO, INC. |
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By: |
/s/ Lawrence Diamond |
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Lawrence Diamond |
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Chief Executive Officer |
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EXHIBIT 4.1
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Principal Amount of US$300,000.00 |
Issue Date: October 7, 2022 |
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, MITESCO, INC., a corporation incorporated under the laws of the State of Delaware (the “Borrower”), hereby promises to pay to the order of MERCER STREET GLOBAL OPPORTUNITY FUND, LLC (the “Lender” and collectively with the Borrower, the “Parties”) on the Termination Date (as defined below), the principal amount of three hundred thousand dollars and zero/100 United States Dollars (US$300,000.00) (the “Principal Amount”). The purchase price for this promissory note (this “Note”) shall be three hundred thousand United States Dollars (US$300,000.00) (the “Purchase Price”) and shall be payable by the Lender to the Borrower on the Issue Date.
VERY SPECULATIVE AND HIGHLY RISKY INVESTMENT. Investing in this convertible Promissory Note is highly speculative and is suitable only for those who (a) understand and are willing to assume the economic, legal and other risks involved, and (b) are financially able to assume significant losses. Lender represents, warrants and agrees that Lender understands these risks; that Lender is willing and able, financially and otherwise, to assume the risks of this Note and that loss of Lender’s entire Principal Amount will not change your lifestyle. Before deciding to invest in this Note Lender should carefully consider Lender’s investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your Principal Amount and therefore you should not invest money that you cannot afford to lose.
Section 1. Certain Terms Defined. The following terms for all purposes of this Promissory Note shall have the respective meanings specified below.
“Business Day” means any day except a Saturday, Sunday, or other day on which commercial banks in New York, New York are authorized by law to close.
“Default” means any event which, with the giving of notice, lapse of time, determination of materiality or fulfillment of any other applicable condition (or any combination of the foregoing), would constitute an Event of Default.
“Event of Default” has the meaning given to it in Section 12.
"Exchange Agreement” means that certain Exchange Agreement, dated as of October 7, 2022, between the Borrower and the Lender.
“GAAP” means generally accepted accounting principles in the United States, in effect from time to time, consistently applied.
“Material Adverse Effect” means a material adverse effect on (a) the business, operations, prospects, condition (financial or otherwise) or property of the Borrower, (b) the validity or enforceability of any provision of any Transaction Document, (c) the ability of any party to any Transaction Document to timely perform its obligations thereunder, or (d) the rights and remedies of the Lender under any Transaction Document.
“Termination Date” means the maturity date as defined in Section 2.
“Transaction Documents” means this Promissory Note.
Section 2. Purchase Price. The Lender shall pay the Purchase Price to the Borrower on the Issue Date.
Section 3. Maturity of this Promissory Note. This Principal Amount of this Note will be due and payable on December 31, 2022 (“Maturity Date”), unless the Parties have mutually agreed upon terms upon which the Maturity Date may be extended or the Principal Amount shall otherwise be converted.
Section 4. Conversion of the Principal Amount. The Principal Amount shall convert into Series E Convertible Preferred Stock (the “Series E Shares”) in accordance with the terms of the Exchange Agreement, if the Borrower successfully lists its shares of common stock on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market on or before December 10, 2022.
Section 5 Interest Payments. If and only if the Principal Amount is not converted into Series E Shares pursuant to Section 4 above, the unpaid Principal Amount shall bear interest at ten percent (10%) per annum (the “Interest Rate”), which interest shall be accrued on a monthly basis and which shall have been deemed to have been accruing from the Issue Date.
Notwithstanding the foregoing, following an Event of Default, the Principal Amount shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law and (ii) eighteen percent (18%) (the “Default Rate”).
Interest shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).
Section 6 Optional Prepayments. The Borrower may prepay the amounts owing under this Promissory Note in whole or in part at any time after December 10, 2022, without penalty by paying the Principal Amount together with interest accrued thereon and any other amount which may be outstanding to the date of prepayment.
Section 7. General Provisions As To Payments. All payments owing under this Promissory Note by the Borrower hereunder shall be made not later than 12:00 Noon (New
York City time) on the date when due by cashier’s check or by wire transfer of immediately available funds to the Lender’s account at a bank specified by the Lender in writing to the Borrower without reduction by reason of any set-off or counterclaim. In the event that any required payment date is not a Business Day, then said payment date shall be the next succeeding Business Day.
Section 8. Representations and Warranties of the Borrower. The Borrower represents and warrants to the Lender that:
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a. |
it is duly organized, validly existing and in good standing under the laws of the state of its incorporation; |
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b. |
it is duly authorized to do business in all jurisdictions material to the conduct of its business; |
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c. |
it has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its obligations under this Promissory Note and to conduct its business substantially as currently conducted by it; |
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d. |
the execution, delivery and performance of this Promissory Note are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate action; |
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e. |
this Promissory Note has been duly executed by an authorized officer of the Borrower and constitutes a legal, valid and binding obligation enforceable against the Borrower; |
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f. |
this Promissory Note does not violate any of the Borrower’s organizational documents, any law, court order or material agreement by which the Borrower is bound; and |
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g. |
the Borrower’s performance under this Promissory Note is not threatened by any pending or threatened litigation. |
Section 9. Affirmative Covenants. Unless the Lender shall otherwise agree, the Borrower shall:
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a. |
(i) maintain its corporate existence and qualify and remain qualified to conduct business as currently conducted; (ii) maintain all approvals necessary for this Promissory Note and the Transaction Documents; and (iii) operate its business with due diligence, efficiency and in conformity with sound business practices; |
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b. |
keep its properties and business insured with financially sound and reputable insurers against loss or damage in such manner and to the same extent as shall be no less than that generally accepted as customary in regard to property and business of like character; |
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c. |
comply in all material respects with all applicable laws, rules, regulations and orders of any government authority; |
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d. |
maintain records, books, management information systems and financial control procedures which together are adequate to: (i) support the accounting practices and tax elections of the Borrower; and (ii) accurately, adequately and fairly reflect the financial condition of the Borrower and the results of its operations in conformity with GAAP; |
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e. |
pay and discharge all taxes, assessments and governmental charges upon it, its income and its properties prior to the date on which penalties are attached thereto, unless and only to the extent that (i) such taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings by the Borrower, (ii) reserves which are adequate under GAAP are maintained by the Borrower with respect thereto, and (iii) any failure to pay and discharge such taxes, assessments and governmental charges would not have and could not reasonably be expected to have a Material Adverse Effect; |
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f. |
promptly inform the Lender, in writing, of any proposed material change in the nature or scope of the business or operations of the Borrower, or any event or condition which has or could reasonably be expected to have a Material Adverse Effect; |
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g. |
comply with the requirements of all applicable laws, rules, regulations, and orders of any government authority, a breach of which would or would reasonably be expected to result in a Material Adverse Effect; |
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h. |
obtain, make and keep in full force and effect all licenses, contracts, consents, approvals and authorizations from and registrations with government authorities that may be required to conduct its business, to maintain compliance with all applicable laws and regulations, and remit monies payable pursuant to this Promissory Note; |
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i. |
promptly notify the Lender of the occurrence of (i) any Default or Event of Default; (ii) any event, development or circumstance whereby the Borrower’s financial statements fail in any material respect to present fairly and accurately, in accordance with GAAP, the financial condition and operating results of the Borrower as of the date of such financial statements; (iii) any material litigation or proceedings that are instituted or, to the knowledge of the Borrower, threatened against the Borrower or any of their respective assets; (iv) each and every event which, at the giving of notice, lapse of time, determination of materiality or fulfillment of any other applicable condition (or any combination of the foregoing), would constitute an event of default (however described) under either of the Transaction Documents; and (v) any other development in the business or affairs of the Borrower if the effect thereof might have a Material Adverse Effect; |
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j. |
comply with the Transaction Documents or any other document executed in connection with the transactions contemplated hereby; |
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k. |
inform the Lender, as soon as they are made, of any judicial or non-judicial claims against the Borrower of more than $25,000 or the equivalent thereof in any other currency for each claim; and |
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l. |
execute such other and further documents and instruments as the Lender may reasonably request to implement the provisions of this Promissory Note. |
Section 10. Negative Covenants. Unless the Lender shall otherwise agree, the Borrower shall not:
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a. |
make any change to the scope or nature of its respective business activities as carried on at the date hereof or undertake any operations not permitted by the Transaction Documents; |
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b. |
(i) violate any laws, ordinances, government rules or regulations to which it is subject or (ii) fail to obtain or maintain any patents, trademarks, service marks, trade names, copyrights, design patents, licenses, permits, franchises, or other governmental authorizations necessary to ownership of its property or the conduct of its respective business, in either case where such failure would have or could reasonably be expected to have a Material Adverse Effect; and |
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c. |
assign or otherwise transfer, terminate, waive, or amend either of the Transaction Documents without the prior consent of the Lender, except for amendment in the ordinary course of business. |
Section 11. Events Of Default. Each of the following events shall constitute an “Event of Default”:
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a. |
the amounts owing under this Promissory Note shall not be paid within five (5) Business Days of the date that such amount was due; |
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b. |
any warranty, representation or statement by the Borrower is or becomes false, misleading or incorrect in a material respect when made or regarded as made by the Borrower under this Promissory Note or the Transaction Documents; |
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c. |
the Borrower fails to perform or observe any material undertaking, obligation or agreement expressed or implied in this Promissory Note or the Transaction Documents and such default is not cured within ten (10) days, or such longer period as is determined by the Lender, after receipt by the Borrower of a notice from the Lender specifying the failure; |
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d. |
a receiver, receiver and manager, official manager, trustee, administrator or similar official is appointed, or steps are taken for such appointment, over any of the assets or undertaking of the Borrower; |
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e. |
the Borrower is, or becomes, unable to pay its debts when they are due or is, or becomes, unable to pay its debts within the meaning of the US Bankruptcy Code or is presumed to be insolvent under the US Bankruptcy Code; |
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f. |
an application or order is made for the winding up or dissolution of the Borrower, which application or order is not dismissed or withdrawn within twenty on (21) days, or a resolution is passed or any steps are taken to pass a resolution for the winding up or dissolution of the Borrower otherwise than for the purpose of an amalgamation or reconstruction which has the prior written consent of the Lender; or |
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g. |
the Borrower suspends payment of its debts generally. |
If an Event of Default described above shall occur, the amounts owing under this Promissory Note shall become due and payable within ten (10) days of the Lender’s issuance of a formal demand notice to the Borrower. Immediately upon the occurrence of any Event of Default described above, or upon failure to pay this Promissory Note on the Termination Date, the Lender, without any notice to the Borrower, which notice is expressly waived by the Borrower, may proceed to protect, enforce, exercise and pursue any and all rights and remedies available to the Lender under this Promissory Note and any other agreement or instrument, and any and all rights and remedies available to the Lender at law or in equity.
All sums paid or advanced by the Lender in connection with the foregoing and all out-of-pocket costs and reasonable expenses (including, with limitation, reasonable attorneys’ fees, and expenses) incurred in connection therewith, together with interest thereon at the Default Rate from the date of payment until repaid in full, shall be paid by the Borrower to the Lender on demand and shall constitute and become a part of the obligations of the Borrower secured hereby.
Section 12. Further Assurances. The Borrower hereby agrees that, from time to time upon the written request of the Lender, the Borrower will execute and deliver such further documents and do such other acts and things as the Lender may reasonably request in order to fully effect the purposes of this Promissory Note and to protect and preserve the priority and validity of the security interests granted hereunder.
Section 13. Powers And Remedies Cumulative; Delay Or Omission Not Waiver Of Event Of Default. No right or remedy herein conferred upon or reserved to the Lender is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission of the Lender to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any Event of Default or an acquiescence therein; and every power and remedy given by this Promissory Note or by law may be exercised from time to time, and as often as shall be deemed expedient, by the Lender.
Section 14. Transfers. The Parties may not transfer or assign this Promissory Note nor any right or obligation hereunder to any person or entity without the prior written consent of the other Party.
Section 15. Modification. This Promissory Note may be modified only with the written consent of both the Borrower and the Lender.
Section 16 Notices. Each notice authorized or required to be given to a party shall be in writing and may be delivered personally or sent by properly addressed prepaid mail in each case addressed to the party at its address set out in below:
In the case of the Lender:
Mercer Street Global Opportunity Fund, LLC
Email: jjuchno@mercerstcap.com
In the case of the Borrower:
Mitesco, Inc.
1660 Highway 100 South
Suite 432
St. Louis Park, MN 55416
Attention: Jenny Lindstrom, Chief Legal Officer
Section 17 Most Favored Nations. So long as this Promissory Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any new security, with any term that the Lender, reasonably believe is more favorable to the holder of such security or with a term in favor of the holder of such security which Lender reasonably believes was not similarly provided to the Lender in the Warrants, (i) the Company shall notify the Lender of such additional or more favorable term within one (1) business day of the issuance or amendment (as applicable) of the respective security, and (ii) such term, at the option of the Lender, shall become a part of the Transaction Documents (regardless of whether the Company complied with the notification provision of this Section).
Section 18 Miscellaneous. This Promissory Note shall be deemed to be a contract under the laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of said state. The parties hereto hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, and enforcement of or any default under this Promissory Note, except as specifically provided herein, and assent to extensions of the time of payment, or forbearance or other indulgence without notice. The Section headings herein are for convenience only and shall not affect the construction hereof. Any provision of this Promissory Note which is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity, prohibition or unenforceability without invalidating or impairing the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. This Promissory Note shall bind the Borrower and his or her heirs, administrators, executors, personal representatives and permitted assigns. The rights under and benefits of this Promissory Note shall inure to the Lender and its permitted successors and assigns. This Promissory Note may be executed in any number of counterparts, each of which when executed and delivered to the other parties shall constitute an original, but all counterparts together shall constitute one and the same Promissory Note.
[Signature Page Follows]
IN WITNESS WHEREOF, the Borrower has caused this instrument to be duly executed on the date indicated below.
Date: October 7, 2022
MITESCO, INC.
By:
Name: Lawrence Diamond
Title: Chief Executive Officer
EXHIBIT 10.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT, is dated as of October 7, 2022 (this “Agreement”), by and among Mitesco, Inc., a Delaware corporation (the “Company”), and Mercer Street Global Opportunity Fund, LLC, a limited liability corporation formed under the laws of Delaware (the “Fund”).
WHEREAS, the Fund owns an aggregate of: (a) 47,619 shares of the Company’s Series C Convertible Preferred Stock (the “Series C Shares”), (b) 750,000 shares of the Company’s Series D Convertible Preferred Stock (the “Series D Shares”); and (c) a Promissory Note dated October 6, 2022 for the Principal Amount of $300,000 (“October 7 Promissory Note”);
WHEREAS, the Company expects to list the Common Stock on a national securities exchange (the “Uplisting”) shortly following the date hereof and in connection therewith to conduct an offering of Common Stock and/or units consisting of Common Stock and warrants to purchase Common Stock (the “Uplisting Offering”); and
WHEREAS, pursuant to the terms of a Securities Purchase Agreement, dated on or about the date of the Uplisting (the “Series E SPA”), the Company is conducting an offering of shares of its Series E Convertible Preferred Stock (the “Series E Shares”) having the terms and provisions set forth in the form of Certificate of Designations, Preferences and Rights of the Series E Convertible Perpetual Preferred Stock of the Company, attached hereto as Exhibit A;
WHEREAS¸ the Fund has agreed to invest no less than $398,810 (in total) pursuant to the terms of a Promissory Note dated as of October 6, 2022 (the “October 7 Promissory Note”) and into the Uplisting Offering; and
WHEREAS, the exchange provided for hereby is being made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Exchange. Effective as of the date of the Uplisting (but immediately prior to the Uplisting), the Fund shall exchange all its Series C Shares and Series D Shares and the amounts owing under the October 7 Promissory Note for a number of Series E Shares equal to the applicable Series E Exchange Value. The Fund shall exchange the Series C Shares and the Series D Shares owned by it by surrendering to the Company such Series C Shares and Series D Shares (and the corresponding certificates, if any, evidencing the same) and by surrendering the October 7 Promissory Note (the “Holder Deliveries”). Upon such surrender, the Company shall issue to the Fund a number of Series E Shares equal to the Series E Exchange Value. In connection with such exchange, the Company and the Fund agree that the Fund shall execute the Series E SPA, as a purchaser thereunder, and that the Fund’s surrender of the Fund Deliveries shall constitute the Fund’s payment of its Subscription Amount (as defined in the Series E SPA) under the Series E SPA. Upon the Uplisting and issuance of the Series E Shares to the Fund, the Series C Shares, Series D Shares and the October 7 Promissory Note owned by the Fund shall be canceled on the
books of the Company and all of the Fund’s rights with respect thereto shall automatically cease and terminate, and the Fund, by executing and becoming a party to this Agreement, shall be deemed to have consented to the cancellation of the Fund’s Series C Shares, Series D Shares and the October 7 Promissory Note. For purposes of this Agreement, the “Series E Exchange Value” shall be an amount of Series E Shares equal to 150% of the Principal Amount (as defined in the October 7 Promissory Note) plus 150% of the Stated Value of the Series C Shares and Series D Shares (including accrued dividends on the preferred). By way of example, if the Uplisting were to have occurred as of October 3, 2022, the Fund would have received $1,819,791 of Series E Shares (rounded up) as detailed on Schedule I.
2. Representations and Warranties of the Company. The Company hereby represents and warrants to the Fund that:
(a) the Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware;
(b) all corporate action on the part of the Company necessary for the authorization, execution and delivery of this Agreement, and the performance of all obligations hereunder, have been taken on or prior to the date hereof. This Agreement has been validly authorized, executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against them in accordance with their terms, except as such enforceability may be limited by general principles of equity or by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies; and
(c) the Series E Shares issued in accordance herewith and under the Series E SPA have been duly authorized and validly issued and are fully paid and non-assessable.
3. Representations and Warranties of the Fund. The Fund hereby represents and warrants to the Company that:
(a) the Fund is a limited liability partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of Delaware;
(b) all actions on the part of the Fund necessary for the authorization, execution and delivery of this Agreement, and the performance of all obligations hereunder, have been taken on or prior to the date hereof; this Agreement is validly authorized, executed and delivered by the Fund and constitutes the legal, valid and binding obligations of the Fund, enforceable against the Fund in accordance with its terms, except as such enforcement may be limited by general principles of equity or by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies;
(c) the Fund is acquiring the Series E Shares for its own account only and not with view towards, or for sale in connection with, the public sale or distribution thereof;
(d) the Fund is an “accredited investor” as that term is defined in Rule 501 of Regulation D, as promulgated under the Securities Act;
(e) the Fund understands that the Series E Shares are being issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Fund’s compliance with, the representations, warranties, acknowledgements, and understandings of the Fund set forth herein in order to determine the availability of such exemptions and the eligibility of the Fund to acquire the Series E Shares;
(f) the Fund and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and issuance of the Series E Shares; the Fund has had the opportunity to review the Company’s filings with the Securities and Exchange Commission; the Fund and its advisors, if any, have been afforded the opportunity to ask questions of the Company; neither such inquiries nor any other due diligence investigations conducted by the Fund or its advisors, if any, or its representatives shall modify, amend or affect the Fund’s right to rely on the Company’s representations and warranties contained herein; the Fund has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Series E Shares; the Fund is relying solely on its own accounting, legal and tax advisors, and not on any statements of the Company or any of its agents or representatives, for such accounting, legal and tax advice with respect to its acquisition of the Series E Shares and the transactions contemplated by this Agreement;
(g) the Fund understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Series E Shares or the fairness or suitability of the investment nor have such authorities passed upon or endorsed the merits of the offering of the Series E Shares; and
(h) the Fund understands and acknowledges that, upon its execution of this Agreement, any and all Series C Shares and Series D Shares and the October 7 Promissory Note owned by it will be automatically cancelled, in each instance without further action on the part of the Company or the Fund except as otherwise set forth herein, and the Fund releases the Company from any and all obligations of the Company to the Fund under the Series C Shares and the Series D Shares owned by it; without limiting the generality of the preceding sentence, the Fund hereby surrenders and waives all rights that it has in respect of all of its Series C Shares, Series D Shares and the October 7 Promissory Note.
4. Miscellaneous.
(a) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Florida without giving effect to principles of conflicts of law.
(b) Entire Agreement. This Agreement and the Series E SPA contain the entire agreement between the parties regarding the subject matter hereof and supersedes all prior agreements or understandings between the parties with respect thereto.
(c) Successors. This Agreement will inure to the benefit of any successor in interest to a party or any person that after the date hereof may acquire any subsidiary or division of a party.
(d) Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which will constitute the same agreement.
[Signature Page(s) Follow this Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.
MITESCO, INC.
By:
Name:
Title:
Mercer Street Capital Partners, LLC
On behalf of:
Mercer Street Global Opportunity Fund, LLC
By:
Name: Jonathan Juchno
Title: Authorized Signatory
[Signature Page to Mitesco- Exchange Agreement]
EXHIBIT A
Form of Serie E Certificate of Designations
Schedule I
|
Series D |
||
|
Shares |
750,000 |
|
|
1.05 |
||
|
Stated Value |
$787,500 |
|
|
Dividend |
$45,308 |
Through 10/3/2022 |
|
$832,808 |
||
|
50% Premium |
416,404 |
|
|
$1,249,212 |
||
|
Series C |
||
|
Shares |
47,619 |
|
|
1.05 |
||
|
Stated Value |
$50,000 |
|
|
Dividend |
$30,386 |
Through 10/3/2022 |
|
$80,386 |
||
|
50% Premium |
40,193 |
|
|
$120,579 |
||
|
Note |
300,000 |
|
|
50% Premium |
150,000 |
|
|
$450,000 |