| Item 1.01 | Entry into a Material Definitive Agreement |
Loan Agreement and Convertible Promissory Note
On April 10, 2023, iMedia Brands, Inc. (“we”,
“us”, “our”, or the “Company”) entered into a Loan Agreement (the “Loan Agreement”) with
certain individuals and entities (each an “Investor”), for the purchase and sale of unsecured convertible promissory notes
(the “Notes”) in the original aggregate principal amount of $3,500,000, convertible into shares of the Company’s common
stock, $0.01 par value (“Common Stock”) and warrants to purchase Common Stock (the “Warrants”), in a private
placement upon the terms and subject to the limitations and conditions set forth in the Note.
The terms of the Notes issued and sold at the
closing (the “Closing”) of the transactions contemplated by the Loan Agreement are set forth in the form of Note attached
as Exhibit 4.1 to this Current Report on Form 8-K. The original principal balance of the Note accrues interest at 7.75% per annum, increasing
to 15% per annum effective January 1, 2024 in the event the Notes remain outstanding. The maturity date of the Notes is December 31,
2023.
Upon the completion of (a)
the Company’s shareholders approving an increase to the Company’s authorized shares in order to provide sufficient authorized
but unissued and unreserved shares of Common Stock to permit conversion and any other required shareholder approvals and (b) either (i)
the Company’s entry into either a new or refinanced asset-based lending facility or (ii) the holders of a majority of the principal
amount of the Notes determining that the Company has made sufficient progress towards completion of this refinancing, the outstanding
principal and interest accrued (the “Conversion Amount”) will be convertible into shares of Common Stock and Warrants.
The holder shall receive a number of shares of
Common Stock (the “Shares”), together with a Warrant to purchase 0.85 shares of Common Stock, determined by dividing the
Conversion Amount by (a) $0.58625 for the Company’s officers and directors who purchased Notes and (b) $0.57475 for all other purchasers
of Notes. In lieu of receiving Shares, a Note holder may request pre-funded warrants to Shares which are identical in form to the Warrants,
except that they have no expiration date and have an exercise price of $0.0001 per share. The maximum number of shares of Common Stock
that may be issued in connection with a conversion of the Notes or upon exercise of any Warrants to any individual holder may not exceed
19.99% of the Company’s then-current outstanding shares without shareholder approval.
Under the terms of the Loan Agreement, we have
agreed to register the shares of Common Stock and the shares issuable upon exercise of Warrants for resale pursuant to the Securities
Act of 1933, as amended (the “Securities Act”) in accordance with the terms and conditions therein.
The foregoing summaries of the terms of the Loan
Agreement and the Notes are subject to, and qualified in their entirety by, such documents, which are included as exhibits hereto and
incorporated by reference herein.
The Notes, underlying shares of Common Stock,
and Warrants have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements. The Company is relying on the private placement exemption from registration
provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D promulgated under the Securities Act, and in reliance
on similar exemptions under applicable state laws. No form of general solicitation or general advertising was conducted in connection
with the issuance. The Note (and, if and to the extent issued, the underlying shares of Common Stock and Warrants), contain (or will
contain, where applicable) restrictive legends preventing the sale, transfer, or other disposition of such securities, unless registered
under the Securities Act, or pursuant to an exemption therefrom. The disclosure contained in this Current Report on Form 8-K does not
constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as required under applicable
rules for filing current reports with the Securities and Exchange Commission.
Credit Facility Amendment
On April 10, 2023, The Company entered into a
Forbearance Agreement, Tenth Amendment to Loan and Security Agreement and Amendment to Fee Letter (the “Amendment”), which
amends the Loan and Security Agreement dated July 30, 2021 (as amended, the “Loan and Security Agreement”), by and among
the Company, as the lead borrower, certain of its subsidiaries party thereto as borrowers, Siena Lending Group LLC and the other financial
institutions party thereto from time to time as lenders, Siena Lending Group LLC, as agent, and certain additional subsidiaries of the
Company, as guarantors thereunder. The Amendment, among other things, provides that the lenders are agreeing to forbear from exercising
rights and remedies available as a result of certain existing events of default for a specified period of time which is subject to extension
up to December 31, 2023, increases the interest rate and certain fees payable in connection with the revolving loan facility under the
Loan and Security Agreement, permits the use of funds to make a payment on obligations owing to the holders of a seller note guaranteed
by the Company, establishes milestones for the refinancing of the obligations under the Loan and Security Agreement and for certain actions
with respect to the Sale and Leaseback Transaction (as defined below), requires additional collateral security from foreign subsidiaries
of the Company, and further requires that the Company sign a Letter Agreement (the “Letter Agreement”) which requires us
to appoint additional independent directors to the Company’s board of directors, appoint a Chief Transformation Officer and engage
an investment banker.
This description of the Amendment and the Letter
Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment and the Letter Agreement, which
are attached as Exhibits 10.7 and 10.8, respectively, to this Current Report on Form 8-K and is incorporated herein by reference. The Loan
and Security Agreement, dated July 30, 2021, by and among the Company, as the lead borrower, certain of its subsidiaries party thereto
as borrowers, Siena Lending Group LLC and the other financial institutions party thereto from time to time as lenders, Siena
Lending Group LLC, as agent, and VVI Fulfillment Center, Inc., EP Properties, LLC and Portal Acquisition Company, as guarantors, is incorporated
by reference as Exhibit 10.2 into this Current Report on Form 8-K.
Master Lease Agreement
As previously disclosed, on December 20, 2022,
EP Properties, LLC, a Minnesota limited liability company (“EPP”), and VVI Fulfillment Center, Inc., a Minnesota corporation
(“VVIF”, and together with EPP, “Sellers” and individually a “Seller”), both wholly owned subsidiaries
of the Company, entered into a purchase and sale agreement (the “Purchase Agreement”) with Pontus Net Lease Advisors, LLC
, as assigned to Pontus IMB Portfolio, LLC (“Purchaser”), pursuant to which the parties agreed to consummate a sale and leaseback
transaction (the “Sale and Leaseback Transaction”) for the Company’s Eden Prairie, Minnesota (“Minnesota Property”)
and Bowling Green, Kentucky (“Kentucky Property”) properties ( collectively “Properties”). On April 10, 2023,
the Company consummated the Sale and Leaseback Transaction and entered into a Master Lease Agreement (“Lease”) with Purchaser
for the Properties, as well as other closing and post-closing documents and certificates as requested by Purchaser. As part of the consummation
of the Sale and Leaseback Transaction, on April 10, 2023 the Company and the Sellers repaid the Company’s Promissory Note Secured
by Mortgages between the Company and Sellers as borrowers and GreenLake Real Estate Finance LLC in full.
The initial term of the Lease commenced on April
10, 2023 and continues until April 30, 2048. The Company has two options to extend the initial term of the Lease for two additional 10-year
periods, for a total of 45 years of right to lease the Properties. The initial annual rent under the Lease is $4,536,000.00. Rent will
increase each year by 3% percent over the previous year’s rent. The Lease is a true triple net lease, and the Company is responsible
for all real estate taxes and assessments, insurance, and maintenance costs for the Properties, including all capital repairs and replacements.
The Company paid a security deposit of $4,536,000.00 upon signing the Lease. The Company is required to meet certain financial metrics
in the Lease to reduce the Security Deposit amount. The Company has the right to repurchase a portion of the Minnesota Property for $100
once the Minnesota Property is subdivided into two separate lots. The Company also agreed to terminate its repurchase right for the Minnesota
Property under certain conditions as set forth in the Lease. The Company also entered into a Post-Closing Agreement with the Purchaser
whereby the Company deposited $958,550 in escrow with Purchaser for certain repairs to the Properties.
