Item 1.01 Entry into a Material Definitive
Agreement.
Next Level Equity Purchase Agreement
On February 4, 2022, Digerati
Technologies, Inc. (the “Company”), T3 Communications, Inc., a controlled subsidiary of the Company (“T3”) and
the two owners of Next Level Internet, Inc. (the “Sellers”), entered into and closed on an Equity Purchase Agreement (the
“Purchase Agreement”). Pursuant to the Purchase Agreement, T3 bought all of the equity interests in Next Level Internet, Inc.
(“Next Level”) from the Sellers. Next Level is engaged in the business of providing cloud based Unified Communications as
a Service, collaboration, contact center, managed connectivity and other voice and data services to small, medium, and large enterprises.
The total purchase price is
up to $12.90 million consisting of: (i) $8.9 million in cash which includes payoff of certain indebtedness held at closing by Next Level
and certain transaction expenses; (ii) unsecured promissory notes in the aggregate principal amount of $2 million issued by T3 to the
Sellers (the “Unsecured Notes”) with such notes payable in eight equal quarterly installments in the aggregate amount of $250,000.00
each starting on June 4, 2022 through and including March 7, 2024. The amount owed is subject to change based on certain revenue milestones
needing to be met by Next Level; and (iii) unsecured convertible promissory notes (the “Convertible Notes”) in the aggregate
principal amount of $2 million issued by T3 to the Sellers with such notes payable in eight equal quarterly installments in the aggregate
amount of $250,000.00 each starting on April 30, 2022 through and including January 31, 2024. The Sellers have a onetime right to convert
all or a portion of the Convertible Notes commencing on the six-month anniversary of the notes being issued and ending 30 days after such
six-month anniversary. The conversion price is the volume weighted average price per share for the ten (10) consecutive trading days immediately
preceding the date on which a conversion notice is received by T3.
T3 paid $8.9 million in cash
to the Sellers on the closing date of February 4, 2022.
In addition, 120 days after the
closing of the transaction, T3 will pay the Sellers the amount by which net working capital deficit is better than $2.16 million or the
Sellers will pay T3 the amount by which net working capital deficit is worse than $2.36 million.
Details regarding Next Level’s
balance sheet, including its liabilities, will be disclosed in the Next Level financial statements and notes thereto to be filed as exhibits
to an amendment to this Current Report on Form 8-K.
The foregoing summary of the
Purchase Agreement, Unsecured Notes, and the Convertible Notes contains only a brief description of the material terms of the Purchase
Agreement, Unsecured Notes, and the Convertible Notes and such descriptions are qualified in their entirety by reference to the full text
of the Purchase Agreement, Unsecured Notes, and the Convertible Notes, filed herewith as Exhibits 10.1, 4.1, and 4.2, respectively, and
incorporated by reference herein.
PRG Term Loan C Note
As
disclosed in a Current Report on Form 8-K filed in November 2020, on November 17, 2020, T3 and the Company’s other subsidiaries
entered into a credit agreement (the “Credit Agreement”) with Post Road Administrative LLC (the “Agent”) and its
affiliate Post Road Special Opportunity Fund II LLP (collectively, “Post Road”). The Company is a party to certain sections
of the Credit Agreement. Pursuant to the Credit Agreement, Post Road was to provide T3 Nevada with a secured loan of up to $20,000,000
(the “Loan”).
As
disclosed in a Current Report on Form 8-K filed in December 2021, on December 20, 2021, the parties to the Credit Agreement entered into
an amendment to the Credit Agreement.
On
February 4, 2022, the parties to the Credit Agreement agreed that Post Road would lend a further $10 million to T3 pursuant to a Term
Loan C Note (the “Loan C Note”). T3 received net proceeds of $9.75 million pursuant to the Loan C Note and used such loan
proceeds for the payment to the Sellers.
In
connection with the issuance of the Term Loan C Note, the parties to the Credit Agreement and Next Level entered into a Joinder and Second
Amendment to Credit Agreement (the “Joinder and Second Amendment”) whereby, among other terms, Next Level became a guarantor
of T3’s obligations pursuant to the Credit Agreement and notes issued pursuant thereto.
The foregoing summary of the
Loan C Note and Joinder and Second Amendment contains only a brief description of the material terms of the Loan C Note and Joinder and
Second Amendment, and such descriptions are qualified in their entirety by reference to the full text of the Loan C Note and Joinder and
Second Amendment, filed herewith as Exhibits 4.3 and 10.2 and incorporated by reference herein.