Item
1.01 Entry into a Material Definitive Agreement.
On
January 12, 2021 (the “Issue Date”), Home Bistro, Inc., a Nevada corporation (the “Company”),
entered into, and closed the transactions contemplated by, that certain Securities Purchase Agreement (the “SPA”),
by and between the Company and GS Capital Partners, LLC, a New York limited liability company (“GS Capital”).
Pursuant to the SPA, among other things, (i) the Company issued to GS Capital a 10% self-amortization promissory note (the “Note”,
and together with the SPA, the “Agreements”) in the aggregate principal amount of $120,000, and (ii) issued
to GS Capital a total of 102,654 shares (the “Issued Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), of which 73,269 shares (the “Second Commitment Shares”)
were issued as a returnable commitment fee for the Note.
The
Note bears interest at a rate of 10% per annum on the unpaid principal amount and matures on January 12, 2022 (the “Maturity
Date”) or upon earlier acceleration or prepayment as provided therein. The default
interest rate is the lesser of 16% per annum and the maximum amount permitted by law. The per share conversion price into
which the Note shall be convertible into shares of Common Stock (the “Conversion Price”) shall equal the lesser
of (i) 105% multiplied by the closing bid price of the Common Stock on the trading day immediately preceding the Issue Date or
(ii) the closing bid price of the Common Stock on the trading day immediately preceding the date of the respective conversion.
The
Note provides that the Second Commitment Shares must be returned to the Company’s treasury if the Note is fully repaid and
satisfied on or prior to the Maturity Date. Upon the occurrence and during the continuation
of any Event of Default (as defined in the Note), GS Capital is no longer required to return the Second Commitment Shares
to the Company, the Note becomes immediately due and payable and the Company will pay to GS Capital in full satisfaction of its
obligations thereunder an amount equal to the principal amount then outstanding plus accrued interest (including any default interest)
through the date of full repayment multiplied by 125%.
The
obligations of the Company under the Note rank senior with respect to any and all unsecured indebtedness incurred following the
Issue Date except with respect to the Company’s current and future indebtedness with Shopify and any further loans that
may be received pursuant to the CARES Act and the SBA’s Economic Injury Disaster loan program. Further, the Note contains
standard anti-dilution provisions and price protections provisions in the event that the Company issues securities for a price
per share less than the Conversion Price. GS Capital is also entitled to acquire securities in any future offerings conducted
by the Company while the Note remains outstanding.
GS
Capital has the right, upon the occurrence of an Event of Default, to convert all or any portion of the then outstanding and unpaid
principal amount and interest thereon (including any default interest) into fully paid and non-assessable shares of Common Stock,
or any shares of capital stock or other securities of the Company into which such Common Stock shall thereafter be changed or
reclassified, at the Conversion Price determined as provided in the Note, subject to certain GS Capital ownership limitations.
The
Agreements contain other provisions, covenants and restrictions common with this type of debt transaction. Furthermore, the Company
is subject to certain negative covenants under the Agreements, which the Company also believes are also customary for transactions
of this type. The SPA also provides GS Capital with certain “piggyback” registration rights, permitting
them to request that the Company include the Issued Shares for sale in certain registration statements filed by the Company under
the Securities Act of 1934, as amended (the “Securities Act”).
The
preceding summaries of the SPA and the Note do not purport to be complete and are qualified in their entirety by reference to
the full text of the SPA and Note, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K
and incorporated herein by reference.
The
Agreements have been included as exhibits to this Current Report on Form 8-K to provide investors and securityholders with information
regarding certain of its terms. This information is not intended to provide any financial or other information about the parties
to the Agreements or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the
Agreements are made only for purposes of the Agreements and as of the date of the Agreements, are solely for the benefit of the
parties to the Agreements, may be subject to limitations agreed upon by the parties, and may be subject to standards of materiality
applicable to the parties that differ from those applicable to investors. Investors should not rely on the representations, warranties
and covenants or any description thereof as characterizations of the actual state of facts or condition of the parties to the
Agreements or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations,
warranties and covenants may change after the date of the Agreements, and such subsequent information may not be fully reflected
in public disclosures by the parties to the Agreements. The information in the Agreements should be considered in conjunction
with the entirety of the factual disclosure about the Company in the Company’s public reports filed with the Securities
and Exchange Commission (the “SEC”).