| (a) | This Schedule 13D is filed by Steven and Ainslie Sugarman Living Trust, a revocable living trust for the benefit of Steven Sugarman and Ainslie Sugarman (the "Trust"), as the record holder of the shares of Common Stock reported herein, as well as Steven Sugarman and his spouse, Ainslie Sugarman, as trustees of the Trust (collectively, the "Reporting Persons" and each a "Reporting Person"), with respect to shares of Common Stock of the Issuer. |
| | On March 20, 2025, the Issuer completed its private placement of: (i) shares of the Issuer's Common Stock, at a purchase price of $0.75 per share, and (ii) shares of a new series of the Issuer's preferred stock, no par value per share, designated as Series A Non-Cumulative Perpetual Convertible Preferred Stock (the "Series A Preferred Stock"), with a liquidation preference of $60 per share (the "Private Placement"). The Trust purchased, as part of the Private Placement: (i) 7,019,978 shares of Common Stock and (ii) 19,167 shares of Series A Preferred Stock convertible into 1,533,333 shares of Common Stock at the pre-funded conversion price of $0.75 per share, subject to the limitation that no investor in the Private Placement has the right to become, directly or indirectly, the beneficial owner (as determined under Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of more than 9.99% of the number of shares of the Issuer's voting securities issued and outstanding, pursuant to the Securities Purchase Agreement, dated as of March 20, 2025, between the Trust and the Issuer (the "Securities Purchase Agreement").
In addition, pursuant to the Securities Purchase Agreement, the Trust was issued 5,833 shares of Series A Preferred Stock convertible into 466,667 shares of Common Stock at the pre-funded conversion price of $0.75 per share, as a reimbursement of Mr. Sugarman's legal fees and expenses relating to the Private Placement, subject to the limitation that the Reporting Person does not have the right to become, directly or indirectly, the beneficial owner (as determined under Rule 13d-3 under the Exchange Act) of more than 9.99% of the number of shares of the Issuer's voting securities issued and outstanding.
The Issuer and Mr. Sugarman also entered into an employment agreement, effective as of March 20, 2025 (the "Employment Agreement"). Restricted Stock Units ("RSUs") were granted to Mr. Sugarman pursuant to the Employment Agreement on March 20, 2025. RSUs vest in twelve equal monthly installments commencing on March 20, 2025 and have a restricted period of one year expiring on March 20, 2026. Vested RSUs represent the right to be settled on the date of the expiration of the restricted period, provided, however, that if: (i) the Issuer's 2025 Omnibus Equity Incentive Plan (the "Plan") has not been approved by the Issuer's shareholders, each vested RSU will be settled in cash equal to the fair market value of one share of Common Stock as of March 20, 2026; or (ii) the Plan has been approved by the Issuer's shareholders, each vested RSU will be settled in one share of Common Stock, up to 4,049,593 shares of Common Stock, in the aggregate, and there will be no cash settlement option, subject to the limitation that the Reporting Person does not have the right to become, directly or indirectly, the beneficial owner (as determined under Rule 13d-3 under the Exchange Act) of more than 9.99% of the number of shares of the Issuer's voting securities issued and outstanding.
The foregoing description of the Securities Purchase Agreement and the Employment Agreement does not purport to be complete and is qualified in its entirety by the full text of the Securities Purchase Agreement and the Employment Agreement, attached as Exhibits 1 and 2 to this Schedule 13D, and incorporated herein by reference.
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| | The Securities Purchase Agreement and the Employment Agreement are attached hereto as Exhibits 1 and 2, respectively, and incorporated by reference to Exhibits 10.1 and 10.5, respectively, to the Issuer's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2025. The Reporting Persons have entered into a Joint Filing Agreement, attached hereto as Exhibit 3, pursuant to which they have agreed to file this Schedule 13D jointly in accordance with the provisions of Rule 13d-1(k) under the Exchange Act. The responses to Items 2, 3, 4, and 5 of this Schedule 13D are incorporated herein by reference. Other than as reported in Schedule 13D or described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer. |
