Item 1.01 Entry into a Material Definitive
Agreement.
Private Placement Offering
On July 7, 2021, Sysorex,
Inc. (the “Company”) consummated the initial closing (the “Initial Closing”) of a private placement offering (the
“Offering”) pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of July 7, 2021 (the
“Purchase Agreement”), between the Company and forty (40) accredited investors (the “Purchasers”). At the Initial
Closing, the Company sold the Purchasers (i) 12.5% Original Issue Discount Senior Secured Convertible Debentures (the “Debentures”)
in an aggregate principal amount of $9,990,000.00 and (ii) warrants (the “Warrants” and together with the Debentures, the
“Underlying Securities”) to purchase up to 3,534,751 shares of common stock of the Company (the “Common Stock”),
subject to adjustments provided by the Warrants, or units of Common Stock and Common Stock purchase warrants, which represents 100% warrant
coverage. The Company received a total of $8,880,000 in gross proceeds at the Initial Offering, taking into account the 12.5% original
issue discount, before deducting offering expenses and commissions. The maximum number of shares of Common Stock that may be issued through
the conversion of the Debentures and the exercise of the Warrants as of July 7, 2021 (the “Original Issue Date”) is 7,069,502.
The Company may hold one or
more subsequent closings at any time prior to August 1, 2021, unless otherwise extended, to sell additional Underlying Securities in an
aggregate principal amount up to $5,197,500.00 (including the over-allotment option of $1,687,500).
The Purchase Agreement contains
customary representations, warranties, and covenants of the Company, including, among other things and subject to certain exceptions,
covenants that restrict the ability of the Company and its wholly-owned subsidiaries – TTM Digital Assets & Technologies, Inc.
and Sysorex Government Services, Inc. (collectively, the “Subsidiaries”) without the prior written consent of the Debenture
holders, to incur additional indebtedness, and repay outstanding indebtedness, create or permit liens on assets, redeem its Common Stock,
settle outstanding litigation, or enter into transactions with affiliates.
In connection with the Initial
Closing, the Company and Joseph Gunnar & Co. LLC, a U.S. registered broker-dealer (“Gunnar”), entered into a placement
agency agreement (the “Placement Agency Agreement”), pursuant to which Gunnar agreed to act as the placement agent for the
Offering. Pursuant to the terms of the Placement Agency Agreement, the Company agreed to pay Gunnar (i) a cash placement fee of 5% of
the gross cash proceeds raised in the Offering from certain friends and family investors agreed to by Gunnar and the Company (the “Friends
and Family Investors”), (ii) a cash placement fee of 10% of the gross cash proceeds raised in the Offering from investors other
than the Friends and Family Investors, and (iii) the issuance of warrants (the “PA Warrants”) on the terms identical to the
Warrants sold in the Offering in an amount equal to 5% of the Underlying Securities sold to Friends and Family Investors and 10% for sales
to the other investors.
As a result of the foregoing,
the Company paid the Placement Agent an aggregate commission of $888,000 in connection with the Initial Closing. The Company also reimbursed
the Placement Agent for $25,296.25 of expenses incurred in connection with the Offering.
Each investor in any subsequent
closing will be required to represent that, at the time of the applicable closing, it is an accredited investor as defined in Rule 501(a)
under the Securities Act and that there was no general solicitation or advertising in connection with the Offering.
Debentures
The Debentures mature on July
7, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. The Debentures bear interest at 8% per
annum payable quarterly on January 1, April 1, July 1, and October 1, beginning on the first such date after the Original Issue Date,
subject to certain exceptions provided therein. The Debentures are convertible into shares of Common Stock at any time following the date
of issuance and prior to Mandatory Conversion (as defined below) at the conversion price equal to the lesser of: (i) $18.00, subject to
adjustment herein and (ii) 80% of the average of the VWAP (as defined in the Debentures) of the Common Stock during the 5 Trading Day
(as defined in the Debentures) period immediately prior to the applicable Conversion Date (as defined in the Debentures); provided however,
that if at any time after the Original Issue Date there shall be an Event of Default (as defined in the Debentures), the conversion price
in effect on any Conversion Date shall be the lesser of: (i) the $18.00, subject to adjustment herein, and (ii) 50% of the average of
the VWAP of the Common Stock during the 5 Trading Day period immediately prior to the applicable Conversion Date. The Debentures are subject
to mandatory conversion (“Mandatory Conversion”) in the event the Company closes a registered public offering of its Common
Stock and receives gross proceeds of not less than $40,000,000 and at the completion of which the Company’s securities are traded
on a national exchange (“Qualified Offering”). The Debentures rank senior to all existing and future indebtedness of the Company
and the Subsidiaries, except for certain outstanding senior indebtedness. The Company shall covenant not to issue any securities ranking
higher or pari-passu to the Debentures. The Debentures also contain certain price protection provisions providing for adjustment
of the number of shares of Common Stock issuable upon conversion of the Debentures in case of certain future dilutive events or stock-splits
and dividends.
Warrants
The Warrants are exercisable
for five years from July 7, 2021, at an exercise price equal to (i) in the event that a Qualified Offering is consummated prior to the
exercise of the Warrant, the price per share or unit (if units are offered in the Qualified Offering) at which the Qualified Offering
is made (“Qualified Offering Price”), subject to adjustment thereunder, or (ii) in the event that no Qualified Offering has
been consummated, the lower of: (A) $18.00 and (B) an amount equal to eighty percent (80%) of the average of VWAP for the Common Stock
over the five (5) Trading Days preceding the date of the delivery of the applicable exercise notice. Notwithstanding the above, the “Exercise
Price” following the occurrence of an Event of Default shall mean the lower of: (A) $18.00 and (B) an amount equal to fifty percent
(50%) of the average of VWAP for the Common Stock over the five (5) Trading Days preceding the date of the delivery of the applicable
exercise notice or (C) the Qualified Offering Price. The Warrants have price protection and will be adjusted if the Qualified Offering
price is below the exercise price. If there is no effective registration statement covering the resale of the shares underlying the Investor
Warrants within six (6) months following the closing of the Qualified Offering: (i) exercise may be via cashless exercise, and (ii) 5%
additional Warrants will be issued by the Company to the holders for any portion of each month without such effective registration statement.
The Warrants also contain certain price protection provisions providing for adjustment of the amount of securities issuable upon exercise
of the Warrants in case of certain future dilutive events or stock-splits and dividends.
Security Agreement and Subsidiary Guarantee
The Company’s obligations
under the Purchase Agreement and the Debentures are secured by a first priority lien on all of the assets of the Company and the Subsidiaries
pursuant to a Security Agreement, dated July 7, 2021 (the “Security Agreement”) by and among the Company, the Subsidiaries,
and the Purchasers. The Company’s obligations under the Debentures are jointly and severally, unconditionally and irrevocably guaranteed
by the Subsidiaries having that executed a subsidiary guarantee (the “Guarantee”).
The
foregoing description of the terms of Placement Agency Agreement, the Debentures, the Warrants, the Purchase Agreement, the Security Agreement,
the Guarantee, and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference
to the Placement Agency Agreement, the form of Debenture, the form of Warrant, the form of Purchase Agreement, the form of Security Agreement,
and the Guarantee, which are included as Exhibits 1.1, 4.1, 4.2, 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K
and are incorporated herein by reference.
The Offering
Neither
the Debentures, the Warrants, the PA Warrants, nor equity securities issuable upon conversion of the Debentures or exercise of the Warrants
or the PA Warrants, if any, have been registered for sale under the Securities Act of 1933, as amended (the “Securities Act”),
and may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration
requirements. The issuance and sale of the Debentures, the Warrants, the PA Warrants was made in reliance upon the exemption provided
in Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder. No form of general solicitation or
general advertising was conducted in connection with the issuance. Each of the Debentures, the Warrants, the PA Warrants, and equity securities
resulting from their conversion or exercise, if any, 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.