Item 1.01
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Entry into a Material Definitive Agreement.
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Securities Purchase Agreement
On June 21, 2019 GulfSlope Energy, Inc. (the
“
Company
”), entered into a Securities Purchase Agreement (“
SPA
”) with one or more buyers
identified on the signature pages thereto (“
Buyers
”) attached hereto as Exhibit 10.1. Under the terms of the
SPA, the Company will issue and sell to Buyers up to an aggregate of $3,000,000 of convertible debentures (“
Convertible
Debentures
”), which shall be convertible (as converted, the “
Conversion Shares
”) into shares of the
Company’s common stock, par value $0.001 per share (the “
Common Stock
”), of which $2,100,000 shall be
purchased upon the signing of the SPA (the “
First Closing
”), $400,000 shall be purchased upon the filing of
a Registration Statement with the U.S. Securities and Exchange Commission (the “
SEC
”) registering the resale
of the Conversion Shares by the Buyers, and $500,000 shall be purchased on or about the date the Registration Statement has first
been declared effective by the SEC (collectively, the “
Offering
”). The SPA contains customary representations,
warranties and agreements by us and customary conditions to closing.
Additionally, the sale of the Convertible Debentures
is being made pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “
Securities
Act
”). See “Convertible Debentures” below.
The above description of the SPA does not purport
to be complete and is qualified in its entirety by the full text of such SPA, which is incorporated herein and attached hereto
as Exhibit 10.1.
A copy of the opinion of our Legal Counsel
relating to the legality of the issuance and sale of the Transaction Securities in the Offering is attached as Exhibit 5.1 hereto.
Convertible Debentures
Pursuant to the terms of the SPA, at the First
Closing (the “
Issuance Date
”), the Company sold to Buyer a Convertible Debenture. The principal amount of the
Convertible Debenture is $2,100,000 (as reduced pursuant to redemption, conversion or otherwise, the “
Principal
”),
it has an annual interest rate equal to 8% (the interest paid on the outstanding Principal at the applicable interest rate, the
“
Interest
”) and a maturity date of June 21, 2020 (the “
Maturity Date
”), and may be extended
at the option of Buyer. At the Maturity Date the Company shall pay to the Holder (as defined in the Convertible Debenture) an amount
in cash representing all outstanding Principal and accrued and unpaid Interest.
Subject to the terms of the Convertible Debenture,
at any time after the Issuance Date, the Holder is entitled to convert at the Conversion Rate (as defined below) any portion of
the outstanding and unpaid Principal and accrued Interest (the “
Conversion Amount
”) into fully paid and nonassessable
shares of Common Stock. The number of shares of Common Stock issuable upon conversion of any Conversion Amount is determined by
dividing (x) such Conversion Amount by (y) the Conversion Price (the “
Conversion Rate
”). The “
Conversion
Price
” is the lesser of (x) $0.05 per share or (y) 80% of the lowest daily VWAP price (as reported by Bloomberg, LP)
for the ten (10) consecutive trading days immediately preceding the date of determination.
The Convertible Debenture contains customary
representations, warranties and agreements typical in convertible debentures. The Offering was exempt from registration under Section
4(a)(2) of the Securities Act. The above description of the Convertible Debenture does not purport to be complete and is qualified
in its entirety by the full text of the Convertible Debenture, which is incorporated herein attached hereto as Exhibit 10.2.
Warrants
At the First Closing, the Company issued to
Buyer warrants (the “
Warrants
”) to purchase an aggregate of 50.0 million shares (the “
Warrant Shares
”)
of Common Stock at an exercise price of $0.04 per share. Such Warrants will expire on the fifth (5
th
) anniversary after
issuance.
The above description of the Warrants does
not purport to be complete and is qualified in its entirety by the full text of the Warrant, which is incorporated herein attached
hereto as Exhibit 10.3.
Registration Rights Agreement
In connection with the SPA, the Convertible
Debenture and the Warrants, and to induce Buyer to execute and deliver the SPA,the Company agreed to provide certain registration
rights under the Securities Act, and the rules and regulations thereunder. Pursuant to the terms of the Registration Rights Agreement,
dated as of June 21, 2019, by and among the Company and Buyer (the “
RRA
”), the Company will, on or prior to
the 30
th
calendar day following the date of the RRA, prepare and file with the SEC a Registration Statement (as defined
in the RRA) covering the resale by the Buyer of the securities underlying the Convertible Debenture and the Warrant Shares (collectively,
the “
Registerable Securities
”). The Registration Statement prepared pursuant the RRA shall register for resale
at least 156,000,000 shares of Common Stock issued or to be issued upon conversion of the Convertible Debentures and 50,000,000
shares of Common Stock issued or to be issued upon exercise of the Warrants. The Company’s registration obligations set forth
in the RRA, including its obligations to file Registration Statements, obtain effectiveness of Registration Statements, and maintain
the continuous effectiveness of Registration Statements that have been declared effective shall begin on the date of the RRA and
continue until all the Registrable Securities have been sold or may permanently be sold without any restrictions pursuant to Rule
144. The RRA contains customary representations, warranties and agreements typical of registration rights agreements.
The above description of the RRA does not purport
to be complete and is qualified in its entirety by the full text of the RRA, which is incorporated herein attached hereto as Exhibit
10.4.