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| BHIP > SEC Filings for BHIP > Form 8-K on 22-Oct-2007 | All Recent SEC Filings |
22-Oct-2007
Entry into a Material Definitive Agreement, Unregistered Sale of Equit
adjustments from time to time if the Company issues its common stock or
convertible securities at a purchase price below Conversion Price (a "Dilutive
Issuance") and (b) the Company has agreed not to make a Dilutive Issuance
without shareholder approval.
After one year, the Company can force conversion of the Debentures at the
Conversion Price if the daily volume weighted average price ("VWAP") of the
common stock for each of the 20 Trading Days prior to the forced conversion date
exceeds $7.50 per share, subject to adjustment, provided that a registration
statement covering the stock is then effective and certain trading volume
requirements and other conditions are met.
The Debentures bear interest at the greater of (i) LIBOR plus 4% and (ii) 10%
per annum. Interest is payable quarterly beginning on January 1, 2008. 50% of
the original principal amount of the Debentures is payable in 12 equal monthly
installments beginning on November 1, 2008, and the balance is payable on
October 19, 2009, unless extended by the holders to October 19, 2012 (the
extended maturity date). Payments of principal and interest may be made in cash
or, at the option of the Company if certain conditions are met, in shares of
registered common stock.
If interest is paid in shares of common stock, the conversion price per share
will be set at 90% of the VWAP for the 20 consecutive trading days immediately
prior to the applicable payment date or, if less, the average of the VWAPs for
the 20 consecutive trading days immediately prior to the date the applicable
shares are issued and delivered if such delivery is after the payment date.
If principal is paid in shares of common stock during a specified period
immediately prior to the extended maturity date, the conversion price shall be
equal to 90% of the average of the VWAPs for the 20 consecutive trading days
ending on the trading day that is immediately prior to the applicable payment
date.
The Debentures contain certain limitations on optional and mandatory conversion
and payment in shares of common stock, including that, absent shareholder
approval, (a) the Company may not issue shares of common stock in payment of
principal or interest on the Debentures that, when aggregated with prior such
payments (excluding payments of principal with shares not in excess of the
number issuable at the Conversion Price) exceed 5% of the Company's outstanding
shares on the trading day immediately preceding the date of Securities Purchase
Agreement and (b) the Company may not issue shares of common stock upon
conversion of or payment of interest or liquidated damages on the Debentures
that, in the aggregate, exceed 19.99% of the Company's outstanding shares on the
trading day immediately preceding the date of Securities Purchase Agreement.
Moreover, neither the Company nor the holders may effect any conversion of a
Debenture to the extent that it would result in the holder and its affiliates
owning more than 4.99% of the Company's outstanding common stock, unless this
limitation is increased or decreased by the holder (increased up to a maximum of
9.99%) of the Company's outstanding common stock upon not less than 61 days
prior notice.
The Company may, under certain circumstances, redeem the Debentures for cash
equal to 115% of the aggregate outstanding principal amount plus any accrued and
unpaid interest.
The Debentures contain certain negative covenants that, among other things, for
so long as any Debentures remain outstanding, prohibit the Company and its
subsidiaries from incurring indebtedness for borrowed money, creating or
suffering liens other than certain permitted liens, amending charter documents
to materially adversely harm the Debenture holders, repurchasing shares of its
common stock (with certain exceptions), repaying certain indebtedness before its
due date, paying cash dividends on stock other than the Company's Series A
Convertible Preferred Stock, and entering into certain transactions with
affiliates.
Events of default under the Debentures include, among others, payment defaults
not timely cured, failure to perform other covenants not timely cured,
cross-defaults not timely cured having a material adverse
effect on the Company, representations or warranties are untrue when made,
certain bankruptcy-type events involving the Company or any significant
subsidiary, acceleration of more than $150,000 in indebtedness for borrowed
money or under a long-term leasing or factoring agreement, the Company's common
stock is no longer listed on an eligible market, the Company is subject to
certain changes in control or sells or disposes of more than 40% of its assets a
single or series of related transactions, the Registration Statement is not
declared effective for more than 270 days after the Closing Date, the
effectiveness of the Registration Statement lapses beyond a specified period,
failure to timely deliver certificates for converted shares, and a judgment in
excess of $250,000 against the Company, any subsidiary or their respective
assets that is not timely vacated, bonded or stayed. Upon an event of default,
the holders may elect to require the Company to repurchase all or any portion of
the outstanding principal amount of the Debentures for a purchase price equal to
115% of such outstanding principal amount, plus all accrued but unpaid interest.
Warrants
The Seven Year Warrants have a seven-year term and the One Year Warrants have a
one-year term, each beginning six months and one day after their respective
issuance. Both the Seven Year Warrants and the One Year Warrants (collectively,
the "Warrants") have an exercise price of $3.52 per share and otherwise have
identical terms.
The exercise price and the number of shares underlying the Warrants are subject
to adjustment for stock dividends and splits, combinations, and
reclassifications, certain rights offerings and distributions to common
stockholders, and mergers, consolidations, sales of all or substantially all
assets, tender offers, exchange offers, reclassifications or compulsory share
exchanges. In addition, subject to certain exceptions, the exercise price and
number of shares underlying both types of warrants are subject to anti-dilution
adjustments from time to time if the Company issues its common stock or
equivalent securities at below the exercise price for the warrants; provided
that the exercise price cannot be adjusted lower than $3.52 prior to shareholder
approval.
If, at any time after the earlier of October 19, 2008 and the completion of the
then applicable holding period under Rule 144, there is no effective
registration statement for the underlying shares of common stock, the Warrants
may be exercised by means of a cashless exercise.
Registration Rights Agreement
The Company and the Purchasers also entered into a Registration Rights Agreement
pursuant to which the Company agreed to file an initial Registration Statement
with the U.S. Securities and Exchange Commission within 30 calendar days from
the Closing Date and use its best efforts to have such Registration Statement
declared effective with the Securities and Exchange Commission within 120
calendar days (or 150 day in the event of a full review). If all of the shares
underlying the Securities cannot be included in the Initial Registration
Statement, the Company must also timely file subsequent Registration Statements
or otherwise include such shares in other Registration Statements on a
piggy-back basis. If the Registration Statements are not timely filed or
declared effective, the Company is required to pay the Purchasers a cash fee of
2% per month of the purchase price for the unregistered securities until the
first anniversary of the Closing Date and 1% per month thereafter until the
second anniversary of the Closing Date.
The disclosure about the foregoing agreements and instruments, and the related
Private Placement, contained in this report does not constitute an offer to sell
or a solicitation of an offer to buy any securities of the Company, and is made
only as required under applicable rules for filing current reports with the
United States Securities and Exchange Commission, and as permitted under
Rule 135c under the Securities Act.
Exhibit Description
10.1 Securities Purchase Agreement dated October 19, 2007 between the Company
and certain Purchasers.
10.2 Form of Registration Rights Agreement to be signed by the Company and the
Purchasers named in the Securities Purchase Agreement dated October 19,
2007, between the Company and the Purchasers named therein.
10.3 Form of Variable Rate Convertible Debenture to be issued by the Company to
the Purchasers named in the Securities Purchase Agreement dated
October 19, 2007, between the Company and the Purchasers named therein.
10.4 Form of Seven Year and One Year Warrants to Purchase Shares of Common
Stock of the Company to be issued by the Company to the Purchasers named
in the Securities Purchase Agreement dated October 19, 2007, between the
Company and the Purchasers named therein
99.1 Press Release of the Company dated October 22, 2007.
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