SCHEDULE 13D
This Amendment No. 1 to Schedule 13D (this Amendment) relates to the Voting Common Stock, $0.001 par value per share (the
Common Stock) of Midwest Holding Inc., a Nebraska corporation (the Issuer or Midwest). This Amendment amends the Schedule 13D filed with the Securities and Exchange Commission (SEC) by Xenith Holdings
LLC, a Delaware limited liability company, Vespoint LLC, a Delaware limited liability company, A. Michael Salem and Michael W. Minnich, by furnishing the information set forth below. Except as otherwise specified in this Amendment, all previous
Items are unchanged. Capitalized terms used herein which are not defined herein have the meanings given to them in the Schedule 13D, as previously amended, filed with the SEC.
ITEM 3.
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SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
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Item 3 is hereby amended and restated in its entirety as follows:
On May 9, 2018, Midwest entered into a Loan, Convertible Preferred Stock and Convertible Senior Secured Note Purchase Agreement (the
Agreement) with Xenith, a
non-affiliated
third party. All conditions to consummation of the Agreement, including approval of the transactions contemplated therein by the State of Nebraska
Department of Insurance, were subsequently met and a closing was held pursuant to the Agreement on June 28, 2018 (the Closing).
At Closing, Xenith loaned a total of $600,000 to Midwest, repayable upon maturity in 10 years with cash interest of 4% per annum payable
quarterly and accrued interest of another 4% per annum payable upon maturity. The loans were made under two notes of $500,000 and $100,000, respectively. The first $500,000 note is convertible, at Xeniths election, into 24,284,825 shares of
Midwests Common Stock which equates to approximately $0.02 per share. The remaining $100,000 note will also be convertible at the same rate into 4,856,965 shares of Midwests Common Stock if Midwest has adequate authorized Common Stock
available which will require an amendment to its Articles of Incorporation under a proxy statement to be filed with Securities and Exchange Commission (SEC). The Agreement further provides that Xenith, in its sole discretion, may loan up
to an additional $22,900,000 to Midwest. Any loans made by Xenith under this election (Subsequent Loans) will also be convertible into Midwests Common Stock at the rate of approximately $0.02 per share. The conversion of Subsequent
Loans assumes that Midwests Articles of Incorporation are appropriately amended. This amendment will require approval of Midwests shareholders. The notes are secured under a Security Agreement which is collateralized by all of the issued
and outstanding shares of Midwests wholly owned insurance subsidiary, American Life and Security Corp. (American Life). Xenith has the right to foreclose on the collateral if Midwest commits an event of default under the notes.
Defaults include Midwests failure to pay interest or principal on the notes when due, failure to observe any material provision of the Agreement, misrepresentations under the Agreement or bankruptcy or insolvency proceedings involving Midwest.
At the Closing, Midwest sold 1,500,000 shares of newly created Class C Preferred Stock to Xenith for $1,500,000. The Class C
Preferred Stock is convertible, at Xeniths election, into 72,854,474 shares of Midwests Common Stock at approximately $0.02 per share.
In connection with the Closing, Midwests Board of Directors adopted an amendment to Midwests Amended and Restated Articles of
Incorporation to authorize the issuance of the 1,500,000 shares of Class C Preferred Stock issued and sold to Xenith as described in Item 3. The newly issued Class C Preferred Stock has the following characteristics and effects on holders
of Midwests currently outstanding shares of Common Stock:
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(a)
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Number: 1,500,000 shares.
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(b)
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Rank: Senior to the Common Stock on liquidation with a liquidation preference of $1.00 per share or $1,500,000
in the aggregate. Holders of Common Stock would share in the assets of Midwest on liquidation only after the liquidation preference of the Class C Preferred Stock is satisfied.
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(c)
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Dividends: Subject to the availability of funds, dividends at the annual rate of 8% of the liquidation
preference of $1,500,000 are payable to Xenith; if not paid the dividends accrue. Holders of Common Stock receive dividends only if declared by Midwests Board of Directors and then only if funds are legally available therefore.
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