UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 1.01. Entry Into a Material Definitive Agreement.
On March 22, 2024, Safe and Green Development Corporation (the "Company") closed the third tranche of the previously disclosed private placement offering (the “Offering”) pursuant to the Securities Purchase Agreement, dated November 30, 2023, as amended on February 15, 2024 (the “Purchase Agreement”) with Peak One Opportunity Fund, L.P. (“Peak One”)
In connection with the closing of the third tranche, the Company issued an 8% convertible debenture, dated as of March 21, 2024, in the principal amount of $250,000 (the “Third Debenture”) to Peak One and a warrant (the “Third Warrant”), dated as of March 21, 2024, to purchase up to 125,000 shares of the Company’s common stock to Peak One’s designee. The Third Debenture was sold to Peak One for a purchase price of $225,000, representing an original issue discount of ten percent (10%). In connection with the closing of the third tranche, the Company paid $6,500 as a non-accountable fee to Peak One to cover its accounting fees, legal fees and other transactional costs incurred in connection with the third tranche and issued to Peak One and its designee an aggregate total of 35,000 shares of the Company’s restricted common stock as commitment shares.
The Third Debenture matures twelve months from its date of issuance and bears interest at a rate of 8% per annum payable on the maturity date. The Third Debenture is convertible, at the option of the holder, at any time, into such number of shares of common stock of the Company equal to the principal amount of the Third Debenture plus all accrued and unpaid interest at a conversion price equal to $2.14, subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Third Debenture.
The Third Debenture is redeemable by the Company at a redemption price equal to 110% of the sum of the principal amount to be redeemed plus accrued interest, if any. While the Third Debenture is outstanding, if the Company receives cash proceeds of more than $1,500,000.00 (“Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, the Company shall, within two business days of Company’s receipt of such proceeds, inform the holder of such receipt, following which the holder shall have the right in its sole discretion to require the Company to immediately apply up to 50% of all proceeds received by the Company (from any source except with respect to proceeds from the issuance of equity or debt to officers and directors of the Company) after the Minimum Threshold is reached to repay the outstanding amounts owed under the Third Debenture.
The Third Debenture contains customary events of default. If an event of default occurs, until it is cured, Peak One may increase the interest rate applicable to the Third Debenture to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law and accelerate the full indebtedness under the Third Debenture, in an amount equal to 110% of the outstanding principal amount and accrued and unpaid interest. The Third Debenture prohibits the Company from entering into a Variable Rate Transaction (as defined in the Third Debenture) until the Third Debenture is paid in full.
The Third Warrant expires five years from its date of issuance. The Third Warrant is exercisable, at the option of the holder, at any time, for up to 125,000 shares of common stock of the Company at an exercise price equal to $2.53, subject to adjustment for any stock splits, stock dividends, recapitalizations, and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Third Warrant. The Third Warrant provides for cashless exercise under certain circumstances.
Maxim Group LLC (“Maxim”) acted as placement agent in connection with the Offering. In connection with the closing of the third tranche, the Company paid a placement fee of $13,500 to Maxim.
The foregoing descriptions of the Third Debenture and the Third Warrant are qualified in their entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 4.1 and 4.2, respectively, and each of which is incorporated herein in its entirety by reference.
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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.
The information set forth under Item 1.01 above of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 above of this Current Report on Form 8-K is incorporated by reference in this Item 3.02. The shares of the Company’s common stock issued, and the shares to be issued, under the Purchase Agreement, the Third Debenture and the Third Warrant were, and will be, sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The shares of common stock have not been registered under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit | ||
| Number | Exhibit Description | |
| 4.1 | Debenture, dated March 21, 2024 in the principal amount of $250,000 | |
| 4.2 | Warrant, dated March 21, 2024 | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within in the inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Safe and Green Development Corporation | ||
| Dated: March 25, 2024 | ||
| By: | /s/ Nicolai Brune | |
| Name: | Nicolai Brune | |
| Title: | Chief Financial Officer | |
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