Item 1.01. Entry Into a Material Definitive Agreement
Debenture Closing, July, 2011
On July 13, 2011, NeoMedia Technologies, Inc., a Delaware corporation (the “Company”), issued and sold a secured convertible debenture in the amount of $450,000 (the “July Debenture”) to YA Global Investments, L.P. (the “Buyer”), a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein. The July Debenture was issued in accordance with the provisions of that certain Agreement (the “Agreement”) between the Company and the Buyer dated June 28, 2011, which is incorporated by reference herein and attached by reference hereto as Exhibit 10.2. Pursuant to the Agreement, the Company agreed to issue and sell to the Buyer three secured convertible debentures (collectively, the “Debentures”) that, combined, will have an aggregate principal amount of $1,050,000 upon their issuance. Regarding each of the individual Debentures, the Company agreed to issue and sell (i) a secured convertible debenture in the amount of $250,000 (the “June Debenture”) which the Buyer purchased and the Company issued on June 28, 2011, which is incorporated by reference herein and attached by reference hereto as Exhibit 10.3, (ii) the July Debenture, and (iii) a secured convertible debenture in the amount of $350,000 which the Company agreed to issue, subject to the Buyer’s sole discretion to purchase and subject to the satisfaction of certain closing conditions, on or before August 15, 2011.
The July Debenture shall mature on July 29, 2012 (the “Maturity Date”) and shall accrue interest at a rate equal to fourteen percent (14%) per annum and such interest shall be paid on the Maturity Date (or sooner as provided in the July Debenture) in cash or, provided that certain Equity Conditions are satisfied (as such term is defined in the July Debenture), in shares of Common Stock at the applicable Conversion Price (as defined in the July Debenture). At any time, the Buyer shall be entitled to convert any portion of the outstanding and unpaid principal and accrued interest thereon into fully paid and non-assessable shares of Common Stock at a price equal to the lesser of $0.10 and ninety-five percent (95%) of the lowest volume weighted average price of the Common Stock during the sixty (60) trading days immediately preceding each conversion date.
The Company shall not affect any conversion, and the Buyer shall not have the right to convert any portion of the July Debenture to the extent that after giving effect to such conversion, the Buyer (together with the Buyer’s affiliates) would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion, except for not less than sixty-five (65) days prior written notice from the Buyer.
The Company shall have the right to redeem a portion or all amounts outstanding (subject to certain conditions) in the July Debenture via Optional Redemption (as defined in the July Debenture) by paying the amount equal to the principal amount being redeemed plus a redemption premium equal to ten percent (10%) of the principal amount being redeemed, and accrued interest.
The July Debenture is secured by certain pledges made with respect to the assets of the Company and its subsidiaries as set forth in the Eleventh Ratification Agreement, dated June 28, 2011 (the “Ratification Agreement”), and that certain Security Agreement (the “Security Agreement”) and Patent Security Agreement (the “Patent Security Agreement”) both dated July 29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto, and the Buyer. Copies of the Ratification Agreement, Security Agreement and the Patent Security Agreement are incorporated by reference herein and attached by reference hereto as Exhibits 10.4, 10.5 and 10.6, respectively.
In connection with the Agreement, the Company also entered into those certain Irrevocable Transfer Agent Instructions (the “ITAI”) with the Buyer, an escrow agent and WorldWide Stock Transfer, LLC, the Company’s transfer agent, incorporated by reference herein and attached by reference hereto as Exhibit 10.7.
The foregoing descriptions of the July Debenture, Agreement, June Debenture, Ratification Agreement, Security Agreement, Patent Security Agreement and ITAI do not purport to be complete and are qualified in their entirety by reference to such documents, which are attached as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, and 10.7, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities
See Item 1.01 herein above.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
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Exhibit 10.1
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Secured Convertible Debenture, No. NEOM-11-7, dated July 13, 2011, issued by the Company to YA Global Investments, L.P.
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Provided Herewith
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Exhibit 10.2
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Agreement, dated June 28, 2011, by and between the Company and YA Global Investments, L.P.
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Incorporated by reference to Exhibit 10.1 in the Company’s Current Report on Form 8-K as filed with the SEC on July 1, 2011
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Exhibit 10.3
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Secured Convertible Debenture, No. NEOM-11-6, dated June 28, 2011, issued by the Company to YA Global Investments, L.P.
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Incorporated by reference to Exhibit 10.2 in the Company’s Current Report on Form 8-K as filed with the SEC on July 1, 2011
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Exhibit 10.4
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Eleventh Ratification Agreement, dated June 28, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.
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Incorporated by reference to Exhibit 10.6 in the Company’s Current Report on Form 8-K as filed with the SEC on July 1, 2011
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Exhibit 10.5
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Security Agreement, dated July 29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P.
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Incorporated by reference to Exhibit 10.3 in the Company’s Current Report on Form 8-K as filed with the SEC on August 4, 2008
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Exhibit 10.6
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Patent Security Agreement, dated July 29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P.
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Incorporated by reference to Exhibit 10.4 in the Company’s Current Report on Form 8-K as filed with the SEC on August 4, 2008
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Exhibit 10.7
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Irrevocable Transfer Agent Instructions, dated June 28, 2011, by and among the Company, YA Global Investments, L.P., David Gonzalez, Esq. and WorldWide Stock Transfer, LLC
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Incorporated by reference to Exhibit 10.7 in the Company’s Current Report on Form 8-K as filed with the SEC on July 1, 2011
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: July 19, 2011
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NEOMEDIA TECHNOLGIES, INC.
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By:
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/s/ Michael W. Zima
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Name:
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Michael W. Zima
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Its:
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Chief Financial Officer
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