1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 31, 2010, Gulfstream
International Group, Inc. (the “Company”) consummated
the first closing under a Series A Convertible Preferred Stock Purchase
Agreement (the “Purchase Agreement”)
with 17 accredited investors (the “Investors”) pursuant
to which the Company sold to the Investors (i) an aggregate of 118,500 shares of
Series A Convertible Preferred Stock, par value $0.001 and stated value $10.00
per share (the “Preferred Shares”),
convertible into 1,185,000 shares of common stock of the Company, par value
$0.01 per share (the “Common Stock”); and
(ii) 5-year warrants to purchase an aggregate of 592,500 shares of Common Stock
(the “Warrants”),
representing 50% of the number of shares of Common Stock issuable upon
conversion of the Preferred Shares, for aggregate gross proceeds of $1,043,000
(the “Offering”). The
Warrants expire on March 31, 2013 and are exercisable into shares of Common
Stock at an exercise price equal to $1.75 per share, subject to adjustment as
set forth in the Warrants.
Pursuant to the Certificate of
Designation, Preferences and Rights of the Series A Convertible Preferred Stock
of the Company which was filed with the State of Delaware on March 31, 2010 (the
“Certificate of
Designation”), each Preferred Share is convertible into 10 shares of
Common Stock. In addition, the Preferred Shares pay an annual dividend at the
rate of 12% per annum, payable quarterly, on the last business day of each
December, March, June and September (each a “Dividend Payment
Date”), payable on each Dividend Payment Date as follows: (i) 60% of each
quarterly dividend (based on an annual rate of 7% per annum) shall be payable in
cash, and (ii) 40% of each quarterly dividend (based on an annual rate of 5% per
annum) shall be payable either in cash, or at the sole option of the Company, in
additional shares of Common Stock, calculated for such purposes by dividing the
amount of the quarterly dividend then payable by 100% of the market price of the
Common Stock on such Dividend Payment Date. Unless previously
converted into Common Stock, all Preferred Shares outstanding on the earlier to
occur of (a) the date on which the average of the market prices of the Common
Stock for any 20 consecutive trading days shall be $2.00 or higher, or (b) 5
years from the Preferred Shares issuance date, shall be automatically converted
into Common Stock at the Conversion Price then in effect.
In addition, on March 31, 2010, 4 of
the 7 purchasers of the Company’s units consisting of one share of Common Stock
(the “Shares”),
and warrants to purchase three-quarters of a share of Common Stock (the “Prior Warrants”)
which was consummated on January 29, 2010 (the “Prior Offering”),
entered into a letter agreement with the Company (the “Exchange Agreement”)
pursuant to which such purchasers agreed to exchange their Shares and Prior
Warrants for Preferred Shares and Warrants, under the same terms and conditions
applicable to Investors in the Offering. Such purchasers also agreed
that the Company shall have no further obligations or liabilities in connection
with the transaction documents executed and delivered with respect to the Prior
Offering, including, without limitation, the Unit Purchase Agreement, the
Registration Rights Agreement and the Prior Warrant, each dated as of January
29, 2010, and each of which are terminated in any and all respects.
On March 31, 2010, the Company and the
Investors entered into a Registration Rights Agreement under which the Company
is obligated to file a registration statement (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) registering the
shares of Common Stock issuable upon conversion of the Preferred Shares and upon
exercise of the Warrants for resale by the Investors on or prior to April 30,
2010 (the “Filing
Date”). In addition, the Company agreed to use its best
efforts to cause the SEC to declare the Registration Statement effective by the
earlier of (i) 150 days following the Filing Date; and (ii) 180 days following
the Filing Date if the SEC conducts a full review of the Registration
Statement.
In
connection with the first closing of the Offering, the Company paid/issued the
placement agent (i) cash commissions in the amount of 9% of the total purchase
price received by the Company in the first closing; (ii) a non-accountable
expense allowance equal to 2% of the total purchase price received by the
Company in the first closing; and (iii) Warrants to purchase 114,730 shares of
Common Stock, which represents 11% of the total purchase price received by the
Company in the first closing.
The
foregoing is a summary of certain material terms and conditions of the Purchase
Agreement, the Certificate of Designation, the Warrants, the Registration Rights
Agreement and the Exchange Agreement, and not a complete discussion of such
agreements. Accordingly, the foregoing is qualified in its entirety
by reference to the full text of those agreements attached to this Current
Report on Form 8-K in Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, and incorporated herein by reference.
ITEM
3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The
disclosure set forth in Item 1.01 to this Current Report is incorporated into
this item by reference. The Company’s issuance of the Preferred
Shares and Warrants were made in reliance upon the exemption from registration
for non-public offerings under §4(2) of the Securities Act of 1933, as
amended.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of
businesses acquired.
Not applicable.
(b) Pro forma financial
information.
Not applicable.
(c)
Shell company
transactions.
Not applicable.
(d) Exhibits.
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Exhibit
Number
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Description
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10.1
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Form
of Series A Convertible Preferred Stock Purchase
Agreement.
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10.2
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Certificate
of Designation, Preferences and Rights of the Series A Convertible
Preferred Stock of Gulfstream International Group dated as of March 31,
2010.
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10.3
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Form
of Warrant.
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10.4
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Form
of Registration Rights Agreement.
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10.5
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Form
of Exchange Letter Agreement.
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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.
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GULFSTREAM
INTERNATIONAL GROUP, INC.
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Date: April
5, 2010
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By:
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/s/
David F. Hackett
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David F. Hackett
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Chief Executive
Officer
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