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): February 18, 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
Not Applicable
(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))
ITEM 1.01 ENTRY INTO MATERIAL DEFINITIVE AGREEMENT
EQUITY ENHANCEMENT PROGRAM WITH HANOVER HOLDINGS I, LLC
COMMON STOCK PURCHASE AGREEMENT
On February 18, 2014 (the "Closing Date"), Tungsten Corp., a Nevada corporation
(the "Company"), entered into a common stock purchase agreement dated as of the
Closing Date (the "Purchase Agreement") with Hanover Holdings I, LLC, a New York
limited liability company (the "Investor"). The Purchase Agreement provides
that, upon the terms and subject to the conditions set forth therein, the
Investor is committed to purchase up to $3,000,000 (the "Total Commitment")
worth of the Company's common stock, $0.0001 par value (the "Shares"), over the
24-month term of the Purchase Agreement.
From time to time over the term of the Purchase Agreement, commencing on the
trading day immediately following the date on which the initial registration
statement is declared effective by the Securities and Exchange Commission (the
"Commission"), as further discussed below, the Company may, in its sole
discretion, provide the Investor with either "regular" draw down notices or, if
certain conditions are satisfied, "fixed" draw down notices (each, a "Draw Down
Notice"), in each case to purchase a specified amount of Shares (the "Draw Down
Amount"), with each draw down subject to the limitations discussed below. The
maximum amount of Shares requested to be purchased pursuant to any single
Regular Draw Down Notice (defined below) cannot exceed 350% of the average daily
trading volume of the Company's common stock for the 10 trading days immediately
preceding the date of the Regular Draw Down Notice (the "Maximum Regular Draw
Down Amount"). The maximum amount of Shares requested to be purchased pursuant
to any single Fixed Draw Down Notice (defined below) cannot exceed the lesser of
(i) $250,000 worth of the Company's common stock and (ii) 250% of the average
daily trading volume of the Company's common stock for the 10 trading days
immediately preceding the date of the Fixed Draw Down Notice (the "Maximum Fixed
Draw Down Amount"). Each purchase pursuant to a draw down shall reduce, on a
dollar-for-dollar basis, the Total Commitment under the Purchase Agreement.
The Company may, in its sole discretion, provide the Investor with "regular"
draw down notices (each, a "Regular Draw Down Notice") to purchase a specified
Draw Down Amount, up to the Maximum Regular Draw Down Amount, over a 10
consecutive trading day period commencing on the trading day specified in the
applicable Regular Draw Down Notice (the "Pricing Period"). Once presented with
a Regular Draw Down Notice, the Investor is required to purchase a pro rata
portion of the applicable Draw Down Amount on each trading day during the
applicable Pricing Period on which the daily volume weighted average price for
the Company's common stock (the "VWAP") equals or exceeds an applicable floor
price equal to the product of (i) 0.70 and (ii) the VWAP over the 10 trading
days immediately preceding the date the Regular Draw Down Notice is delivered,
subject to adjustment (the "Floor Price"). If the VWAP falls below the
applicable Floor Price on any trading day during the applicable Pricing Period,
the Purchase Agreement provides that the Investor will not be required to
purchase the pro rata portion of the applicable Draw Down Amount allocated to
that trading day. The per share purchase price for the Shares subject to a
Regular Draw Down Notice shall be equal to 95.0% of the arithmetic average of
the three lowest VWAPs that equal or exceed the applicable Floor Price during
the applicable Pricing Period; provided, however, that if the VWAP does not
equal or exceed the applicable Floor Price for at least three trading days
during the applicable Pricing Period, then the per share purchase price shall be
equal to 95.0% of the arithmetic average of all VWAPs that equal or exceed the
applicable Floor Price during such Pricing Period.
The Company may, in its sole discretion, on any trading day on which both of the
equity conditions (described below) are satisfied, provide the Investor with a
"fixed" draw down notice (a "Fixed Draw Down Notice") to purchase a specified
Draw Down Amount, up to the Maximum Fixed Draw Down Amount, on the applicable
settlement date, which will occur within one trading day following the date the
Fixed Draw Down Notice is delivered. The per share purchase price for the Shares
subject to a Fixed Draw Down Notice (the "Fixed Purchase Price") shall be equal
to 90.0% of the lower of (i) the lowest trade price of a share of the Company's
common stock on the date the Fixed Draw Down Notice is delivered (the "Draw Down
Exercise Date") and (ii) the arithmetic average of the three lowest daily VWAPs
during the 10 consecutive trading days ending on the trading day immediately
preceding the applicable Draw Down Exercise Date. The Company may deliver a
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Fixed Draw Down Notice only if both of the following equity conditions shall
have been satisfied as of the applicable Draw Down Exercise Date: (i) on each
trading day during the period beginning 30 trading days prior to the applicable
Draw Down Exercise Date and ending on and including the applicable Draw Down
Exercise Date, the lowest trade price of a share of the Company's common stock
shall have been greater than $0.20, subject to adjustment; and (ii) on each
trading day during the period beginning 30 trading days prior to the applicable
Draw Down Exercise Date and ending on and including the applicable Draw Down
Exercise Date, the trade price of a share of the Company's common stock shall
not have declined more than 7.0% from an intraday high to an intraday low during
such trading day.
The Company is prohibited from issuing a Draw Down Notice if (i) the amount
requested in such Draw Down Notice exceeds the Maximum Regular Draw Down Amount,
in the case of a Regular Draw Down Notice, or exceeds the Maximum Fixed Draw
Down Amount, in the case of a Fixed Draw Down Notice, (ii) the sale of Shares
pursuant to such Draw Down Notice would cause the Company to issue or sell or
the Investor to acquire or purchase an aggregate dollar value of Shares that
would exceed the Total Commitment, or (iii) the sale of Shares pursuant to the
Draw Down Notice would cause the Company to sell or the Investor to purchase an
aggregate number of shares of the Company's common stock which would result in
beneficial ownership by the Investor of more than 9.99% of the Company's common
stock (as calculated pursuant to Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder). With respect to a
draw down pursuant to a Regular Draw Down Notice, the Company cannot make more
than one draw down (whether pursuant to a Fixed Draw Down Notice or a Regular
Draw Down Notice) in any Pricing Period and must allow at least 24 hours to
elapse between the completion of the settlement of any one draw down pursuant to
a Regular Draw Down Notice and the delivery of any Fixed Draw Down Notice or
Regular Draw Down Notice for any other draw down. With respect to a draw down
pursuant to a Fixed Draw Down Notice, the Company must allow at least 11 trading
days to elapse betweenthe completion of the settlement of any one draw down
pursuant to a Fixed Draw Down Notice and the delivery of any Fixed Draw Down
Notice or Regular Draw Down Notice for any other draw down.
The Investor has agreed that during the term of the Purchase Agreement, neither
the Investor nor any of its affiliates will, directly or indirectly, engage in
any short sales involving the Company's securities or grant any option to
purchase, or acquire any right to dispose of or otherwise dispose for value of,
any shares of the Company's common stock or any securities convertible into or
exercisable or exchangeable for any shares of the Company's common stock, or
enter into any swap, hedge or other similar agreement that transfers, in whole
or in part, the economic risk of ownership of any shares of the Company's common
stock. The Investor will not be prohibited from selling any of the shares of the
Company's common stock that it owns or that it is obligated to purchase under a
pending Draw Down Notice.
The Purchase Agreement contains customary representations, warranties and
covenants by, among and for the benefit of the parties. The Purchase Agreement
may be terminated at any time by the mutual written consent of the parties.
Unless earlier terminated, the Purchase Agreement will terminate automatically
on the earliest to occur of (i) the first day of the month next following the
24-month anniversary of the date on which the initial registration statement is
declared effective by the Commission, (ii) the date on which the Investor
purchases the Total Commitment worth of common stock under the Purchase
Agreement and (iii) the date on which the Company's common stockceases to be
listed or quoted on a Trading Market (as defined in the Purchase Agreement).
Under certain circumstances set forth in the Purchase Agreement, the Company and
the Investor each may terminate the Purchase Agreement on one trading day's
prior written notice to the other, without fee, penalty or cost.
The Company paid to the Investor a commitment fee for entering into the Purchase
Agreement equal to $150,000 (or 5.0% of the Total Commitment under the Purchase
Agreement) in the form of 2,065,177 restricted shares of the Company's common
stock, calculated using a per share price of $0.072633, representing the
arithmetic average of the three lowest VWAPs during the 10-trading day period
immediately preceding the Closing Date (the "Initial Commitment Shares"). In
addition, promptly following the effective date of the initial Registration
Statement (defined below), the Company is required to issue to the Investor
additional shares of common stock (the "Additional Commitment Shares" and,
collectively with the Initial Commitment Shares, the "Commitment Shares") equal
to the greater of (i) zero and (ii) the difference of (a) the quotient of (x)
$150,000 divided by (y) the greater of (1) the lowest trade price of a share of
the Company's common stock during the 10-trading day period immediately
preceding the effective date of the initial Registration Statement and ending on
such effective date and (2) $0.04, less (ii) 2,065,177, provided that in no
event will the Company issue more than an aggregate of 3,750,000 shares of
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common stock, subject to adjustment, as Additional Commitment Shares. The
Commitment Shares will be registered for resale in the Registration Statement,
as discussed below.
The Company also agreed to pay an initial fee of $4,250 to Garden State
Securities upon execution of the transaction documents, and an amount equal to
2.5% of the proceeds of each draw down for its services in acting as placement
agent in connection with the transaction. If the Company issues a Draw Down
Notice and fails to deliver the shares to the Investor on the applicable
settlement date, the Company agreed to pay the Investor, in addition to all
other remedies available to the Investor under the Purchase Agreement, an amount
in cash equal to 2.0% of the purchase price of such shares for each 30-day
period the shares are not delivered, plus accrued interest.
The Purchase Agreement also provides for indemnification of the Investor and its
affiliates in the event that the Investor incurs losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses related to a
breach by the Company of any of its representations and warranties under the
Purchase Agreement or the other related transaction documents or any action
instituted against the Investor or its affiliates due to the transactions
contemplated by the Purchase Agreement or other transaction documents, subject
to certain limitations.
REGISTRATION RIGHTS AGREEMENT
In connection with the execution of the Purchase Agreement, on the Closing Date,
the Company and the Investor 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 Commission to
register an agreed upon number of Shares, which shall not exceed 1/3 of the
number of shares of the Company's common stock held by non-affiliates of the
Company, on or prior to March 28, 2014 (the "Filing Deadline") and have it
declared effective at the earlier of (A) the 90th calendar day after the earlier
of (1) the Filing Deadline and (2) the date on which the initial Registration
Statement is filed with the Commission and (B) the fifth business day after the
date the Company is notified by the Commission 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 Registrable Securities (as
defined in the Registration Rights Agreement) are not covered by the initial
Registration Statement, the Company has agreed to file with the Commission one
or more additional Registration Statements so as to cover all of the Registrable
Securities 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 the Investor from
certain liabilities and fees and expenses of the Investor incident to the
Company's obligations under the Registration Rights Agreement, including certain
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The Investor 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 the Investor
to the Company for inclusion in a registration statement pursuant to the
Registration Rights Agreement, including certain liabilities under the
Securities Act.
The foregoing descriptions of the Purchase Agreement and Registration Rights
Agreement are qualified in their entirety by reference to the provisions of the
Purchase Agreement and Registration Rights Agreement filed as exhibits 10.1 and
10.2 to this Current Report on the Form 8-K (this "Report"), respectively, which
are incorporated herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
Reference is made to the disclosure set forth under Item 1.01 of this Report,
which disclosure is incorporated herein by reference.
The issuance of the Initial Commitment Shares and the Additional Commitment
Shares, if any, and the sale of the Shares to the Investor under the Purchase
Agreement are exempt from the registration requirements of the Securities Act
pursuant to the exemption for transactions by an issuer not involving any public
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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 the Investor that the Investor 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.
ITEM 8.01 OTHER EVENTS
On February 20, 2014, the Company issued a press release announcing it had
entered into the Purchase Agreement and Registration Rights Agreement, a copy of
which is attached to this Report as Exhibit 99.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
10.1 Common Stock Purchase Agreement, dated as of February 18, 2014, by and
between Hanover Holdings I, LLC and Tungsten Corp.
10.2 Registration Rights Agreement, dated as of February 18, 2014, by and
between Hanover Holdings I, LLC and Tungsten Corp.
99.1 Press Release dated February 21, 2014.
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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. (Registrant)
Date: February 21, 2014 By: /s/ Guy Martin
-------------------------------------
Guy Martin
President and Chief Executive Officer
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