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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 2, 2014
TUNGSTEN CORP.
(Exact name of registrant as specified in its charter)
Nevada 000-54342 98-0583175
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1671 Southwest 105 Lane, Davie, Florida 33324
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 476-4638
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO MATERIAL DEFINITIVE AGREEMENT
NOTE PURCHASE AGREEMENT AND CONVERTIBLE NOTE
On January 2, 2014 (the "Closing Date"), Tungsten Corp., a Nevada
corporation (the "Company"), entered into a note purchase agreement dated as of
the Closing Date (the "Purchase Agreement") with Hanover Holdings I, LLC, a New
York limited liability company ("Hanover"). The Purchase Agreement provides
that, upon the terms and subject to the conditions set forth therein, Hanover
shall purchase from the Company on the Closing Date a senior convertible note
with an initial principal amount of $127,500 (the "Convertible Note") for a
purchase price of $85,000 (a 33.33% original issue discount). Pursuant to the
Purchase Agreement, on the Closing Date, the Company issued the Convertible Note
to Hanover.
$20,000 of the outstanding principal amount of the Convertible Note
(together with any accrued and unpaid interest with respect to such portion of
the principal amount) shall be automatically extinguished (without any cash
payment by the Company) if (i) the Company has properly filed a registration
statement with the Securities and Exchange Commission ("SEC") on or prior to the
Filing Deadline (defined below) covering the resale by Hanover of all of the
shares of Common Stock issued or issuable upon conversion of the Convertible
Note and (ii) no event of default or an event that with the passage of time or
giving of notice would constitute an event of default has occurred on or prior
to such date. Moreover, $22,500 of the outstanding principal amount of the
Convertible Note (together with any accrued and unpaid interest with respect to
such portion of the principal amount) shall be automatically extinguished
(without any cash payment by the Company) if (i) the Company has filed a
registration statement with the SEC that has been declared effective by the SEC
on or prior to the Effectiveness Deadline (defined below) and the prospectus
contained therein is available for use by Hanover for the resale by Hanover of
all of the shares of Common Stock issued or issuable upon conversion of the
Convertible Note and (ii) no event of default or an event that with the passage
of time or giving of notice would constitute an event of default has occurred on
or prior to such date.
The Convertible Note matures on September 2, 2014 and, in addition to the
33.33% original issue discount, accrues interest at the rate of 12% per annum.
The Convertible Note is convertible at any time, in whole or in part, at
Hanover's option into shares of the Company's common stock, par value $0.0001
per share (the "Common Stock"), at a fixed conversion price of $0.0325 per share
(subject to adjustment). This conversion price represents a discount of 50% from
the closing price of the Common Stock of $0.0650 on December 31, 2013. At no
time will Hanover be entitled to convert any portion of the Convertible Note to
the extent that after such conversion, Hanover (together with its affiliates)
would beneficially own more than 9.99% of the outstanding shares of Common Stock
as of such date. The Convertible Note includes "full ratchet" and standard
anti-dilution protection.
The Convertible Note includes customary event of default provisions, and
provides for a default interest rate of 18%. Upon the occurrence of an event of
default, Hanover may require the Company to pay in cash the "Event of Default
Redemption Price" which is defined in the Convertible Note to mean the greater
of (i) the product of (A) the amount to be redeemed multiplied by (B) 125% (or
100% if an insolvency related event of default) and (ii) the product of (X) the
conversion price in effect at that time multiplied by (Y) the product of (1)
125% (or 100% if an insolvency related event of default) multiplied by (2) the
greatest closing sale price of the Common Stock on any trading day during the
period commencing on the date immediately preceding such event of default and
ending on the date the Company makes the entire payment required to be made
under this provision.
The Company has the right at any time to redeem all, but not less than all,
of the total outstanding amount then remaining under the Convertible Note in
cash at a price equal to 140% of the total amount of the Convertible Note then
outstanding.
The Purchase Agreement contains customary representations, warranties and
covenants by, among and for the benefit of the parties. The Company also agreed
to pay up to $27,500 of reasonable attorneys' fees and expenses incurred by
Hanover in connection with the transaction. The Company also agreed to pay a fee
of $4,250 to Garden State Securities for its services in acting as placement
agent in connection with the transaction. The Purchase Agreement also provides
for indemnification of Hanover and its affiliates in the event that Hanover
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incurs losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses related to a breach by the Company of any of its representations,
warranties or covenants under the Purchase Agreement.
REGISTRATION RIGHTS AGREEMENT
In connection with the execution of the Purchase Agreement, on the Closing
Date, the Company and Hanover also entered into a registration rights agreement
dated as of the Closing Date (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the Company has agreed to file an initial
registration statement ("Registration Statement") with the SEC to register the
resale of the Common Stock into which the Convertible Note may be converted, on
or prior to February 16, 2014 (the "Filing Deadline") and have it declared
effective at the earlier of (i) the 100th calendar day after the Closing Date
and (ii) the fifth business day after the date the Company is notified by the
SEC that such Registration Statement will not be reviewed or will not be subject
to further review (the "Effectiveness Deadline").
If at any time all of the shares of Common Stock underlying the Convertible
Note are not covered by the initial Registration Statement, the Company has
agreed to file with the SEC one or more additional Registration Statements so as
to cover all of the shares of Common Stock underlying the Convertible Note not
covered by such initial Registration Statement, in each case, as soon as
practicable, but in no event later than the applicable filing deadline for such
additional Registration Statements as provided in the Registration Rights
Agreement.
The Company also agreed, among other things, to indemnify Hanover from
certain liabilities and fees and expenses of Hanover incident to the Company's
obligations under the Registration Rights Agreement, including certain
liabilities under the Securities. Hanover has agreed to indemnify and hold
harmless the Company and each of its directors, officers and persons who control
the Company against certain liabilities that may be based upon written
information furnished by Hanover to the Company for inclusion in a registration
statement pursuant to the Registration Rights Agreement, including certain
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The foregoing descriptions of the Purchase Agreement, the Convertible Note
and the Registration Rights Agreement are qualified in their entirety by
reference to the provisions of the Convertible Note, the Purchase Agreement, and
the Registration Rights Agreement filed as exhibits 4.1, 10.1 and 10.2 to this
Current Report on Form 8-K (this "Report"), respectively, which are incorporated
herein by reference.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.03 CREATION OF DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The disclosure set forth under Item 1.01 of this Report is incorporated by
reference into this Item.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
The disclosure set forth under Item 1.01 of this Report is incorporated by
reference into this Item.
The issuance of the Convertible Note to Hanover under the Purchase
Agreement was exempt from the registration requirements of the Securities Act
pursuant to the exemption for transactions by an issuer not involving any public
offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation
D promulgated under the Securities Act ("Regulation D"). The Company made this
determination based on the representations of Hanover that Hanover is an
"accredited investor" within the meaning of Rule 501 of Regulation D and has
access to information about the Company and its investment.
This Report is neither an offer to sell nor the solicitation of an offer to
buy any securities. The securities have not been registered under the Securities
Act and may not be offered or sold in the United States of America absent
registration or an exemption from registration under the Securities Act.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
4.1 Senior Convertible Note dated January 2, 2014.
10.1 Note Purchase Agreement, dated as of January 2, 2014, by and between
Hanover Holdings I, LLC and Tungsten Corp.
10.2 Registration Rights Agreement, dated as of January 2, 2014, by and between
Hanover Holdings I, LLC and Tungsten Corp.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TUNGSTEN CORP.
/s/ Guy Martin
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Guy Martin
President, Chief Executive Officer, Treasurer,
Secretary, Chief Financial Officer and Director
Date: January 9, 2014