Item
1.01 Entry into a Material Definitive Agreement.
Convertible
Note Transaction
On
December 20, 2022, White River Energy Corp (the “Company”) entered into a Securities Purchase Agreement (“SPA”)
with an accredited investor (the “Purchaser”) whereby the Purchaser lent the Company an aggregate of $1,500,000 in gross
proceeds and the Company issued the Purchaser a 10% Original Issue Discount Senior Secured Convertible Promissory Note in the principal
amount of $1,666,666.67 (the “Note”). The proceeds will be used for working capital and growth capital.
Pursuant
to the SPA, the Company, its direct and indirect subsidiaries, and Jay Puchir and Randy May, executive officers of the Company, entered
into Guarantee Agreements (the “Guarantee”) with the Purchaser pursuant to which each subsidiary and Messrs. Puchir and May
personally guaranteed to the Purchaser the payment of the Note. In addition, Messrs. Puchir and May pledged the shares of common stock
they hold or have the right to acquire in the anticipated distribution of the Company’s common stock by Ecoark Holdings, Inc. as
collateral to secure the Company’s obligations under the Note, and each individual also executed affidavits of confession and lock-up
agreements to that effect. The affidavits of confession signed by Messrs. Puchir and May in connection with their Guarantees will permit
the Purchaser to obtain a judgment against them personally upon the occurrence of an event of default without having to file a lawsuit.
The
Note is due September 16, 2023. The Note bears interest at a rate of 12% per annum, payable monthly, subject to an increase to 18% per
annum in case of an event of default as provided for therein. In addition, all overdue accrued and unpaid principal and interest is subject
to a late fee at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law which if applicable
accrues daily from the date such principal and interest is due.
The
Note is convertible into shares of the Company’s common stock at any time following the issuance date at the Purchaser’s
option at a conversion price equal to the lesser of (i) $1.00 per share and (ii) the average of the five-closing prices of the common
stock immediately prior to the date of conversion, subject to certain adjustments (including based on the issuance of lower priced securities)
and beneficial ownership limitations. Upon an event of default, the Purchaser may convert the Note at a reduced conversion price equal
to 70% of the lowest closing price of the common stock for the 10 prior trading days.
Under
the Note, beginning on April 16, 2023 the Company is required to pay monthly redemption amounts equal to one-fourth of the original principal
amount at 120% of such principal amount, plus accrued but unpaid interest and any other amounts outstanding under the Note, with each
payment resulting in a reduction in the principal of the Note at 100% (as compared to 120%). Furthermore, at any time after the issuance
date of the Note, the Company may, after written notice to the Purchaser, prepay the Note in an amount equal to 120% of the then outstanding
principal amount, plus accrued but unpaid interest and any other amounts outstanding under the Note. The Company will also be required
to offer to pay the Note at 120% of the principal amount plus any unpaid accrued interest, upon the occurrence of certain events including
(i) a change of control or sale of assets, (ii) a sale by the Company of equity or debt securities for gross proceeds to the Company
of at least $5 million, and (iii) upon the maturity of the Note.
The
Note is secured by the assets of the Company and its subsidiaries. The Note provides for certain events of default, including failure
to pay amounts owing on the Note when due, failure to observe other covenants or obligations under the Note, default under any other
indebtedness or material contract, a bankruptcy event with respect to the Company or a significant subsidiary, failure to maintain listing
or quotation of the common stock on a trading market, failure to maintain the current public information requirement under Rule 144,
and a judgment or similar process against the Company or any of its subsidiaries or assets in excess of $100,000. Upon an event of default,
the Purchaser may cause the Note to become immediately due and payable and require the Company to pay 125% of the then outstanding principal
amount, plus accrued but unpaid interest and any other amounts outstanding under the Note.
Further,
pursuant to the Note the Company is subject to certain restrictive covenants, including covenants against incurring new indebtedness
or liens on its assets, paying cash dividends or distributions on any equity securities, or entering into transactions with affiliates,
subject to certain exceptions. In addition, under the Note the Company agreed to at all times reserve three times the number of shares
of common stock into which the Note is convertible.
In
addition, pursuant to the SPA, the Company entered into a Registration Rights Agreement with each Purchaser in which the Purchasers are
entitled to “piggyback” registration rights, pursuant to which the Company has agreed to include the underlying shares of
Common Stock from the conversion of the Note in a registration statement, if the Company files a registration statement for another purpose,
subject to certain terms and conditions.
The
offer and sale of the Note pursuant to the SPA was not registered under the Securities Act of 1933 and was exempt from registration pursuant
to Section 4(a)(2) thereof and Rule 506(b) promulgated thereunder.
The
foregoing description of the terms of the SPA, the Note, the Security Agreement, the Guaranty Agreement, the Registration Rights Agreement
and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the forms
of such documents which are filed or incorporated by reference as Exhibits 10.1, 10.2, 10.3, 10.4, and 10.5, respectively, to this
Current Report on Form 8-K.
This
Current Report on Form 8-K shall not constitute an offer to sell or the solicitation to buy nor shall there be any sale of the shares
in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under
the securities laws of any such state or jurisdiction.
Consulting
Agreement
On
December 20, 2022, the Company entered into a Consulting Agreement with an affiliate of the Purchaser (the “Consultant”),
pursuant to which the Company agreed to issue shares 1,666,667 shares of common stock, subject to upward adjustment to the extent the
closing price per share of the Company’s common stock is below $1.00 as of (i) the date a registration statement registering the
resale by the Consultant of its shares of common stock is declared effective by the Securities and Exchange Commission (the “Effective
Date”), and/or (ii) 90 days after the Effective Date. In such event, the number of shares will be increased to the quotient obtained
by dividing $1,666,666.67 by the closing price of the common stock. The Company also agreed to indemnify the Consultant pursuant to indemnification
provisions attached to the Consulting Agreement.
In
addition, the Company entered into a Registration Rights Agreement with the Consultant pursuant to which the Company agreed to register
the sale by the Consultant of the shares of common stock issuable to it pursuant to the Consulting Agreement.
The
Company’s agreement to issue shares of common stock to the Consultant was not registered under the Securities Act of 1933 and was
exempt from registration pursuant to Section 4(a)(2) thereof and Rule 506(b) promulgated thereunder.
The
foregoing description of the terms of the Consulting Agreement and the corresponding Registration Rights Agreement, and the transactions
contemplated thereby, does not purport to be complete and is qualified in its entirety by reference to the forms of such documents
which are filed or incorporated by reference as Exhibits 10.6 and 10.7, respectively, to this Current Report on Form 8-K.