Exhibit 10.3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): March 24, 2017 (March 24, 2017)
| Blue Sphere Corporation |
(Exact name of registrant as specified in its charter)
| Nevada | 000-55127 | 98-0550257 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 301 McCullough Drive, 4th Floor, Charlotte, North Carolina 28262 |
(Address of principal executive offices) (Zip Code)
| 704-909-2806 |
(Registrant’s telephone number, including area code)
| (Former Name or Former Address, if Changed since Last Report) |
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 (see General Instruction A.2. below):
☐ 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))
As used in this Current Report, all references to the terms “we”, “us”, “our”, “Blue Sphere” or the “Company” refer to Blue Sphere Corporation and its wholly-owned subsidiaries, unless the context clearly requires otherwise.
Unless otherwise indicated in this Current Report, all the Company’s common stock, par value $0.001 per share (“Common Stock”), share and per share information, including price per share information, in this Current Report gives effect to the Reverse Stock Split (as defined below).
Item 1.01
Entry Into a Material Definitive Agreement
As reported by the Company on our Current Report on Form 8-K filed on December 28, 2015, on December 23, 2015, the Company completed an offering with six investors, thereby issuing USD $3,000,000 of our two-year 11% Senior Debentures (the “Debentures”) and warrants to purchase up to 61,544 shares of Common Stock, with 50% of such shares exercisable at a price per share of $6.50 and the other 50% of such shares exercisable at price per share of $9.75.
On March 24, 2017, the Company and five of the six holders of the Debentures, representing an aggregate principal balance of $2,000,000, entered into a First Amendment to Senior Debenture (the “Debenture Amendment”, and all such amended Debentures, the “Convertible Debentures”), thereby amending the Debentures to provide that some or all of the principal balance, and accrued but unpaid interest thereon, is convertible into shares of Common Stock at the holders’ election, with such right to convert beginning on the six-month anniversary of the effective date of the Debenture Amendment, September 24, 2017, and ending ten days prior to the date the Convertible Debentures mature, December 12, 2017.
The number of shares of Common Stock issuable upon any conversion of the Convertible Debentures shall equal the number derived by dividing the amount of the principal amount and accrued but unpaid interest that the holder elects to convert divided by the conversion price. The conversion price shall be (a) equal to 80% of the average reported closing price of the Common Stock on The NASDAQ Capital Market, calculated using the five trading days immediately following the up-list to The NASDAQ Capital Market, or (b) if the up-list has not occurred prior to the date of the conversion notice, equal to 80% of the average reported closing price of the Common Stock on the OTCQB Venture Marketplace, calculated using the five trading days immediately preceding the date of the conversion notice. Immediately upon issuance of shares of Common Stock pursuant to a conversion notice, the principal amount of a holder’s Convertible Debenture shall be automatically amended to subtract the principal amount converted. If a timely conversion notice is not received by the Company, the Convertible Debenture shall be subject to repayment of the principal amount in full no later than the maturity date, December 22, 2017.
The foregoing descriptions of the Debentures and the Debenture Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the forms of Debenture and Debenture Amendment filed as Exhibits 10.1 and 10.2 to this Current Report, respectively, and are incorporated herein by reference.
The Company is providing this report in accordance with Rule 135c under the Securities Act of 1933, as amended (the “Securities Act”), and the notice contained herein does not constitute an offer to sell the Company’s securities, and is not a solicitation for an offer to purchase the Company’s securities. The securities offered have not been registered under the Securities Act, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Reference is made to the disclosure set forth under Item 1.01 above, which disclosure is incorporated herein by reference.
Item 5.03
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
As reported by the Company on our Definitive Schedule 14C Information Statement filed with the SEC on December 9, 2016, our shareholders authorized the Company to effect a reverse split of our Common Stock at a ratio reasonably necessary to satisfy the minimum requirements for listing on The NASDAQ Capital Market.
On March 24, 2017 at 12:01 a.m. EST (the “Effective Time”), pursuant to filing with the Secretary of State of the State of Nevada a Certificate of Amendment to our Articles of Incorporation (the “Amendment”), we effectuated a reverse split of our Common Stock at a ratio of 130-to-1 (the “Reverse Stock Split”). The Amendment provides that at the Effective Time, each 130 shares of Common Stock issued and outstanding immediately prior to the Effective Time will automatically combine into one validly issued, fully paid and non-assessable share of Common Stock without any further action by the Company or the holder thereof. No fractional shares of Common Stock will be issued as a result of the Reverse Stock Split. Shareholders who otherwise would be entitled to a fractional share shall receive the next higher number of whole shares. As a result of the Reverse Stock Split, proportionate adjustments will be made to the per share exercise price of any options, warrants or other securities convertible or exercisable into Common Stock.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.3 to this Current Report, and is incorporated herein by reference.
Item 9.01
Financial Statements and Exhibits.
The following exhibits are furnished as part of this Current Report on Form 8-K:
(d) Exhibits.
| 10.1 | Form of Senior Debenture. (1) |
| 10.2 | Form of First Amendment to Senior Debenture.* |
| 10.3 | Certificate of Amendment to Articles of Incorporation as filed with the Secretary of State of the State of Nevada effective as of March 24, 2017.* |
*Filed herewith.
(1) Incorporated by reference to our Current Report on Form 8-K filed on December 28, 2015.
SIGNATURES
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.
| Blue Sphere Corporation | ||
| Dated: March 24, 2017 | By: | /s/ Shlomi Palas |
| Name: | Shlomi Palas | |
| Title: | President and Chief Executive Officer | |
Exhibit 10.2
FIRST AMENDMENT TO SENIOR DEBENTURE
THIS FIRST AMENDMENT TO SENIOR DEBENTURE (this “ Amendment ”) is made as of [ ], 2017 (the “ Effective Date ”) by and between Blue Sphere Corporation, a Nevada corporation (the “ Company ”), and the undersigned (the “ Holder ”).
WHEREAS , the Company issued to Holder a Senior Debenture, dated December 23, 2015, numbered and in the principal amount as set forth on the signature page hereto (the “ Debenture ”), which bears interest at a rate of 11% per annum, and matures on December 22, 2017;
WHEREAS , the Company and the Holder desire to amend the Warrant on the terms and subject to the conditions set forth herein; and
WHEREAS , pursuant to Section 11 of the Debenture, the amendment contemplated by the Company and the Holder must be contained in an instrument in writing, signed by the parties.
NOW, THEREFORE , in consideration of the premises contained herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the Company and the Holder hereby agree as follows:
| 1. | Definitions . Capitalized terms used but not defined in this Amendment shall have the meaning ascribed to such terms in the Debenture. |
| 2. | Amendments to the Debenture . |
2.1 The title of the Debenture appearing as “Senior Debenture” at the beginning of such instrument shall hereinafter be replaced with “Convertible Senior Debenture.” Any reference in the Debenture or the Subscription Agreement to the “Senior Debenture”, shall hereinafter be a reference to the “Convertible Senior Debenture”.
2.2 The first paragraph of the Debenture which is in boldfaced and capitalized style shall be deleted and replaced in its entirety with the following:
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
1
2.3 The title of Section 1 of the Debenture shall be deleted and replaced in its entirety with the following:
“1. Principal Repayment; Interest Repayment; Optional Conversion. ”
2.4 A new subsection (e) shall inserted into Section 1 of the Debenture, as follows:
“(e) Optional Conversion .
(i) On or after the six (6) month anniversary of the Effective Date of this Amendment, Holder may, at any time that is not less than ten (10) days prior to the Maturity Date, deliver a dated and signed notice to the Company (a “ Conversion Notice ”), a copy of which is attached to this Amendment as Exhibit A, of its election to convert some or all of the outstanding Principal Amount and accrued but unpaid interest into shares of the Company’s common stock, $0.001 par value per share (“ Common Stock ”). The Holder shall have the right to deliver one (1) or more Conversion Notices to the Company in accordance with this Section 1(e).
(ii) The number of shares of Common Stock that shall be issuable upon any conversion pursuant to a Conversion Notice shall equal the number derived by dividing the amount of the Principal Amount and accrued but unpaid interest that the Holder elects to convert to Common Stock (the “ Conversion Amount ”) by the Conversion Price. The Conversion Price shall be determined as follows:
[(1) If the Company has completed the listing of its Common Stock on The NASDAQ Capital Market (the “Uplist”) prior to the date of the Conversion Notice, the Conversion Price shall be an amount that is equal to 80% of the average reported closing price of the Common Stock on The NASDAQ Capital Market, calculated using the (5) trading days immediately following the Uplist.
(2) If the Uplist has not occurred prior to the date of the Conversion Notice, the Conversion Price shall be an amount that is equal to 80% of the average reported closing price of the Common Stock on the OTCQB Venture Marketplace, calculated using the (5) trading days immediately preceding the date of the Conversion Notice.
(iii) The Conversion Notice shall be deemed delivered to the Company on a date based on the form of delivery, in each case in accordance with Section 7.
(iv) The issuance of shares Common Stock and delivery of certificates representing such shares shall be made promptly following the Company’s receipt of the Conversion Notice, and without charge to the Holder. Immediately upon the issuance of shares of Common Stock pursuant to a Conversion Notice, the Principal Amount of the Debenture shall be automatically amended to subtract the Principal Amount of the Debenture converted, as set forth on such Conversion Notice.
(v) If a timely Conversion Notice is not received by the Company, the Debenture shall be subject to repayment as set forth in Section 1(a). If a Conversion Notice is received by the Company after the deadline for such notice, the Company may, in its sole discretion, waive the deadline for such notice, or deem the Debenture to be subject to repayment as set forth in Section 1(a).
2
(vi) Immediately upon the satisfaction of the Principal Amount and all interest due under the Debenture, whether such satisfaction is by conversion, repayment, or a combination of both, the Debenture and any and all obligations of the Company thereunder, including the Pledge Agreement, shall be automatically terminated.”
3. Date of Effectiveness; Limited Effect . This Amendment will be deemed effective as on the Effective Date. Except as expressly provided in this Amendment, all of the terms and provisions of the Debenture are and will remain in full force and effect and are hereby ratified and confirmed by the Company and the Holder. On and after the Effective Date, each reference in the Debenture to “this Debenture,” “the Debenture,” “hereunder,” “hereof,” “herein” or words of like import, and each reference to the Debenture in any other agreements, documents or instruments executed and delivered pursuant to, or in connection with, the Debenture, will mean and be a reference to the Debenture as amended by this Amendment.
4. Representations and Warranties . Each party hereby represents and warrants to the other party that: (a) it has the full right, power and authority to enter into this Amendment and to perform its obligations hereunder and under the Debenture, as amended by this Amendment; (ii) the execution of this Amendment by the individual whose signature is set forth at the end of this Amendment on behalf of such party, and the delivery of this Amendment by such party, have been duly authorized by all necessary action on the part of such party; and (c) this Amendment has been executed and delivered by such party and (assuming due authorization, execution and delivery by the other party hereto) constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms.
5. Miscellaneous . This Amendment (a) constitutes the sole and entire agreement of the parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter; (b) may be amended only by a writing signed by each of the parties; (c) may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument; (d) shall be governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without giving effect to any conflict of law rules; and (d) shall be binding upon, and inure to the benefit of, the parties and their respective successors and permitted assigns.
[remainder of page left intentionally blank]
3
IN WITNESS WHEREOF , the parties hereto have executed this Amendment as of the Effective Date.
COMPANY:
BLUE SPHERE CORPORATION
| By: | ||
| Name: | Shlomi Palas | |
| Title: | Chief Executive Officer |
HOLDER:
| (entity name, if applicable) | ||
| By: | ||
| Name: | ||
| Title: |
DEBENTURE:
| Debenture Number: | D-DEC-2015- _______________ |
| Principal Amount: | USD $ _____________________ |
4
EXHIBIT A
NOTICE OF CONVERSION
(To Be Signed Only Upon Conversion of the Debenture)
The undersigned, the holder of the foregoing Debenture, as amended pursuant to that certain First Amendment to Senior Debenture, dated March __, 2017, hereby surrenders such Debenture for conversion into shares of Common Stock of Blue Sphere Corporation to the extent of the Conversion Amount of $ _______________, representing unpaid Principal Amount and accrued but unpaid interest of such Debenture, and requests that the certificates for such Common Stock be issued in the name of, and delivered to _________________ whose address is _________________.
Calculation:
Principal Amount of Debenture to be Converted __________
+ Unpaid and Accrued Interest on Principal Amount of Debenture to be Converted __________
= Conversion Amount __________
÷ Conversion Price __________
= Number of Shares of the Company’s Common Stock to be Issued __________
The date of this Conversion Notice is: ____________________________
| (Signature must conform in all respects to name of holder as specified on the face of the Debenture) | |
(Address)
5
Exhibit 10.3