Form 8-K for GBS ENTERPRISES INC
2-Nov-2012
Entry into a Material Definitive Agreement, Creation of a Direct Financial Ob
Item 1.01. Entry into a Material Definitive Agreement.
On October 26, 2012, GBS Enterprises Incorporated (the "Company") entered into a note purchase and security agreement (the "Loan Agreement") with Stephen D. Baksa (the "Lender"), a member of the board of directors of the Company. Pursuant to the Loan Agreement, the Company issued a secured promissory note, dated October 26, 2012 (the "Note"), to the Lender in the aggregate principal amount of $1,000,000, bearing an annual interest rate of 20% and maturing on the earlier of the first anniversary date of the date of issuance or such other time as described in more detail in the Note, without any penalty for prepayment. To secure the obligations of the Company under the Note, the Company granted the Lender a first priority security interest in all of the Company's right, title and interest in and to the shares of IDC Global, Inc. owned by the Company. The Note contains customary provisions upon an Event of Default, as more fully described in the full text of the document.
In connection with the execution of the Loan Agreement, on October 26, 2012, the Company issued the Lender a common stock purchase warrant (the "Warrant"), pursuant to which the Lender is entitled to purchase 500,000 shares of common stock at an exercise price of $0.20 until the third anniversary date of the date of issuance. The Warrant was issued in a private transaction between the Company and the Lender and was exempt from registration under the Securities and Exchange Act of 1933, as amended, pursuant to Section 4(2) thereof.
On October 29, 2012, the Company entered into a note purchase agreement (the "Intercompany Loan Agreement") with Group Business Software AG, a German public company and the Company's 50.1% owned subsidiary ("GROUP"). Pursuant to the Intercompany Loan Agreement, GROUP issued a promissory note, dated October 29, 2012 (the "GROUP Note"), to the Company in the aggregate principal amount of $145,000, bearing an annual interest rate of 20% and maturing on the first anniversary date of the date of issuance, without any penalty for prepayment. The Intercompany Loan Agreement contains restrictions that require GROUP to use the proceeds of the GROUP Note solely (i) to pay the payroll of GROUP Business Software Corp., due October 29, 2012, and (ii) for such other purposes as the parties to the Intercompany Loan Agreement may agree from time to time. The GROUP Note contains customary provisions upon an Event of Default, as more fully described in the full text of the document.
Each of the directors of the Company, including all four disinterested directors with respect to the transactions, has approved each of the transaction agreements discussed above and the transactions contemplated thereby.
The foregoing descriptions of the Loan Agreement, Note, Warrant, Intercompany Loan Agreement and GROUP Note do not purport to be complete and are subject to, and qualified in their entirety by, the full texts of the documents, which are filed as Exhibits 10.1 through 10.5 hereto and incorporated by reference herein.
Item 2.03. Creation of a Direct Financial Obligation.
The descriptions of the Loan Agreement and the Note under Item 1.01 above are hereby incorporated by reference into this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities.
The description of the Warrant under Item 1.01 is hereby incorporated by reference into this Item 3.02.
Item 9.01(d). Exhibits.
Exhibit
No. Description
10.1 Note Purchase and Security Agreement, dated October 26, 2012, by and
between GBS Enterprises Incorporated and Stephen D. Baksa
10.2 Secured Promissory Note, dated October 26,2012, by and between GBS
Enterprises Incorporated and Stephen D. Baksa
10.3 Common Stock Purchase Warrant, issued October 26, 2012, by GBS
Enterprises Incorporated to Stephen D. Baksa
10.4 Note Purchase Agreement, dated October 29, 2012, by and between Group
Business Software AG and GBS Enterprises Incorporated
10.5 Promissory Note, dated October 29, 2012, by and between GROUP Business
Software AG and GBS Enterprises Incorporated
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