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Vertical Branding amends registration rights for $5 million of convertibles
By Laura Lutz
Des Moines, Aug. 30 - Vertical Branding, Inc. amended about $5 million principal amount of its 10% senior secured convertible notes, according to an 8-K filing with the Securities and Exchange Commission.
The notes were amended after a registration statement for the underlying shares was not declared effective by June 15.
After June 15, the exercise price of associated warrants for 3,000,000 shares was subject to periodic reductions until the registration statement was declared effective, under the original terms of the placement. On the date of the amendment, the exercise price of the warrants was $0.50.
Under the amended agreement, Vertical Branding may withdraw the pending registration statement and refile it by Oct. 31. That registration would be required to be declared effective within 90 days of Oct. 31.
If the company does not meet that deadline, it will be required to issue additional warrants for a number of shares equal to 1% of the outstanding principal amount on the notes divided by the market price of the company's stock, with a floor of $0.37 and a ceiling of $1.00 on the market price.
Under the amended terms, Vertical Branding also has the right to redeem the notes for 110% of par on or before Sept. 30. If the notes are not redeemed by Sept. 30 - or by Oct. 25 under certain circumstances - the exercise price of the warrants will be reduced to $0.37 from $0.50.
Under the original terms, the company had the right to redeem the notes for the greater of 125% of par and the value of the notes on a converted basis.
Vertical Branding is a consumer products company based in Encino, Calif.
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