PARTS ID, INC. : Entering into a material definitive agreement, creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant, unrecorded sale of equity securities, other events, financial statements and exhibits (Form 8-K)

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Section 1.01 Entering into a Material Definitive Agreement.


Loan and Security Agreement


On October 21, 2022 (the “Closing Date”), ID PARTS, Inc.a Delaware company (the “Company”) and its subsidiary, parts identifierLLC, a Delaware with limited liability (together with the Company, the “Borrower”), entered into a Loan and Guarantee Agreement (the “Loan Agreement”) with JGB, LLC Warrantya Delaware
Limited, in its capacity as collateral agent and the various financial institutions or entities that become parties to the Loan Agreement from time to time as lenders (collectively, the “Lender”).

The loan agreement provides for term loans in an aggregate principal amount of up to $11.0 million in two slices. The tranches consist of (i) a first tranche consisting of term loans in an aggregate principal amount of $5.5 million, the entire amount of which was financed by the Company on the Closing Date (the “Initial Advance on Term Loan”); and (ii) a second tranche consisting of term loans for an aggregate principal amount of $5.5 million, which may be financed for the Company by the Lender in its sole and absolute discretion (subject to the terms and conditions of the Loan Agreement) until the date falling six months after the Closing Date (the “Second Advance Term Loan” and with the Initial Term Loan Advance, the “Term Loan Advances”). Each of the term loan advances will be issued with an initial issue discount of
$500,000.

The outstanding principal balance of term loan advances bears interest at the rate of 8.0% per annum. Accrued interest is payable monthly after each term loan advance is funded. The Company is obligated to repay the aggregate principal balance of the term loan advances in monthly installments of
$183,000as well as the monthly payment of interest, starting on April 30, 2023and continuing on the last Business Day (as defined in the Loan Agreement) of each month thereafter, until October 31, 2025 (the due date ” ); however, if the Second Term Advance is advanced by the Lender to the Company, the amount of the monthly payments will automatically be increased to $366,000. On the maturity date, the entire principal balance of the term loan advances, plus any accrued but unpaid interest thereon, will be due and payable.

The Company may, at its option, prepay the term loan advances in whole or in part with each prepayment subject to an aggregate minimum amount of $1.0 million and integer multiples of $100,000 greater than this (or, if less, the total principal amount of the outstanding term loan advances).

The loan agreement contains customary representations, warranties and covenants, including the company’s covenants limiting additional indebtedness, liens, mergers and consolidations, substantial asset sales, investments and loans, certain changes in business and distributions. In addition, the Loan Agreement contains financial covenants, including but not limited to maintaining a certain quarterly EBITDA (as defined in the Loan Agreement) and a minimum unrestricted liquidity requirement. of $2.0 million (for the advance on the initial term loan) and
$4.0 million (for the second term loan advance), subject to certain adjustments as set out in the loan agreement.

The Loan Agreement provides for customary events of default for term loans of this type, including, but not limited to, non-payment, breach or default in performance of covenants, insolvency, bankruptcy and the occurrence of a material adverse effect on the Company.

As security for the obligations, the Company has granted to the Lender a first ranking security interest in all rights, titles and interests of the Company in, on and under all of the Company’s property (including intellectual property), to the exception of the excluded Guarantee (as defined in the Loan Agreement).

The foregoing description of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, a copy of which is filed herewith as Schedule 10.1, and is incorporated herein by reference.


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Warrant


In connection with entering into the Loan Agreement, with respect to the Initial Term Loan Advance, the Company issued to the Lender a warrant (the “Warrant”) for the purchase of 1,000 000 shares (the “Warrant Shares”) of the Company’s Class A common stock share, par value $0.0001 per share (the “Common Shares”). The warrant may be exercised for a period of five years from the date of issue at an exercise price per share equal to $2.00which was the highest $2.00 and 130% of the closing price of the common shares of the Company on the trading day preceding the closing date, subject to certain adjustments specified in the warrant. If the Company seeks and obtains the second term loan advance in accordance with the terms of the loan agreement, the Company will issue another warrant to the lender to purchase 1,000,000 common shares of the Company on the same terms as the warrant issued with respect to the advance on the original term loan. The Warrant also provides customary standby and piggyback rights with respect to the Warranted Shares.

The issuance of the warrant by the company to the lender was made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

The foregoing description of the Warrant does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant, a copy of which is filed herewith as Schedule 10.2, and is incorporated herein by dismissal.

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Section 1.01 of this Current Report on Form 8-K regarding the Loan Agreement is incorporated by reference into this Section 2.03.

Item 3.02 Unrecorded Sales of Equity securities.

The information provided in Section 1.01 of this Current Report on Form 8-K regarding the Warrant is incorporated by reference into this Section 3.02.

Item 8.01 Other Events.


On October 26, 2022, the Company issued a press release announcing the signing of the Loan Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits. The following documents are filed as part of this report:


Exhibit No.                                 Description
10.1            Loan and Security Agreement, by and among PARTS iD, Inc., the Lenders
              party thereto and JGB Collateral, LLC, in its capacity as collateral
              agent for the Lenders, dated as of October 21, 2022.
10.2            Form of Common Stock Purchase Warrant, dated as of October 21, 2022.
10.3            Intellectual Property Security Agreement, by and among PARTS iD, Inc.,
              PARTS iD, LLC, the Lenders party thereto and JGB Collateral, LLC, in its
              capacity as collateral agent for the Lenders, dated as of October 21,
              2022.
99.1            PARTS iD, Inc. News Release dated October 26, 2022.
104           Cover Page Interactive Data File (embedded within the Inline XBRL
              document)




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