Item 1.01 Entry into a Material Definitive Agreement
Convertible Note issued to Geneva Roth Remark Holdings, Inc.
On September 17, 2018, the Company issued a convertible Promissory Note in the principal amount of $128,000 to Geneva Roth Remark Holdings, Inc. (the “Holder”), pursuant to a Securities Purchase Agreement dated September 17, 2018 between the Company and the Holder. The Note is due September 17, 2019, and bears interest at the annual rate of ten percent (10%) per annum. In the Event of Default under the Note, additional interest will accrue from the Maturity Date or the date of the Event of Default at the rate equal to the lower of 24% per annum or the highest rate permitted by law. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred seventy (170) days following the date of the Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III of the Note), each in respect of the remaining outstanding principal amount of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock. The "Variable Conversion Price" shall mean 70% multiplied by the Market Price(as defined in the Note).
Under the Note, events of default include a default in payment of any amount due under the Note; a default in the timely issuance of underlying shares upon and in accordance with the terms of the Note; bankruptcy; failure by the Company to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended; an event resulting in the common stock of the Company no longer being listed or quoted on a trading market, or cross defaults on Other Agreements (as defined in the Note).
In the event of a Default, the Default Amount due is an amount equal to the greater of (i) 150%
times
the
sum
of (w) the then outstanding principal amount of the Note
plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”)
plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x)
plus
(z) any amounts owed to the Holder pursuant to Section 1.4(e) of the Note. If the Company fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Company remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Company, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Company equal to the Default Amount divided by the Conversion Price then in effect.
Convertible Note issued to Armada Investment Fund, LLC
On September 21, 2018, the Company issued a convertible Promissory Note in the principal amount of $52,000 to Armada Investment Fund, LLC (the “Holder”), pursuant to a Securities Purchase Agreement dated September 21, 2018 between the Company and the Holder. The Note is due September 21, 2019, and bears interest at the annual rate of eight percent (8%) per annum. In the Event of Default under the Note, additional interest will accrue from the Maturity Date or the date of the Event of Default at the rate equal to the lower of 24% per annum or the highest rate permitted by law. At any time after 31 days after the Closing Date, until the Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time at the Conversion Price. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price.
Under the Note, events of default include a default in payment of any amount due under the Note; a default in the timely issuance of underlying shares upon and in accordance with the terms of the Note; bankruptcy; failure by the Company to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended; an event resulting in the common stock of the Company no longer being listed or quoted on a trading market, or cross defaults on Other Agreements (as defined in the Note).
In the event of a default, the Mandatory Default Amount under the Note is the sum of (a) the greater of (i) the outstanding principal amount of this Note divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an Event of Default), (B) otherwise due, or (C) paid in full, whichever is lowest, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full, whichever is highest, or (ii) 120% of the outstanding principal amount of this Note, plus, (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.
Convertible Note issued to BHP Capital NY, Inc.
On September 21, 2018, the Company issued a convertible Promissory Note in the principal amount of $52,000 to BHP Capital NY, Inc. (the “Holder”), pursuant to a Securities Purchase Agreement dated September 21, 2018 between the Company and the Holder. The Note is due September 21, 2019, and bears interest at the annual rate of eight percent (8%) per annum. In the Event of Default under the Note, additional interest will accrue from the Maturity Date or the date of the Event of Default at the rate equal to the lower of 24% per annum or the highest rate permitted by law. At any time after 31 days after the Closing Date, until the Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time at the Conversion Price. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price.
Under the Note, events of default include a default in payment of any amount due under the Note; a default in the timely issuance of underlying shares upon and in accordance with the terms of the Note; bankruptcy; failure by the Company to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended; an event resulting in the common stock of the Company no longer being listed or quoted on a trading market, or cross defaults on Other Agreements (as defined in the Note).
In the event of a default, the Mandatory Default Amount under the Note is the sum of (a) the greater of (i) the outstanding principal amount of this Note divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an Event of Default), (B) otherwise due, or (C) paid in full, whichever is lowest, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full, whichever is highest, or (ii) 120% of the outstanding principal amount of this Note, plus, (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.
THE FOREGOING DESCRIPTIONS CONTAIN SUMMARIES OF CERTAIN TERMS OF THE CONVERTIBLE NOTES AND SECURITY PURCHASE AGREEMENTS, DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FORMS OF NOTES AND SECURITY PURCHASE AGREEMENTS THAT ARE FILED AS EXHIBITS 10.26 THROUGH 10.29, RESPECTIVELY, TO THIS CURRENT REPORT ON FORM 8-K AND ARE INCORPORATED HEREIN BY REFERENCE.
THE CONVERTIBLE NOTES AND SECURITIES PUCHASE AGREEMENTS ATTACHED HERETO, CONTAIN A SUBSTANTIAL NUMBER OF MATERIAL COVENANTS ON THE PART OF THE COMPANY, EVENTS OF DEFAULT AND OTHER AGREEMENTS OF WHICH DESCRIPTIONS ARE NOT INCLUDED IN THE ABOVE SUMMARIES. FOR A COMPLETE UNDERSTANDING OF THE POSSIBLE EFFECTS OF THE COMPANY’S HAVING ENTERED INTO THESE CONVERTIBLE NOTES AND SECURITIES PURCHASE AGREEMENTS, IT IS NECESSARY CAREFULLY TO READ EACH OF FOREGOING EXHIBITS TO THIS CURRENT REPORT.
DEFINED TERMS USED IN THE DESCRIPTIONS IN THIS CURRENT REPORT SHALL HAVE THE MEANINGS PROVIDED IN THE CONVERTIBLE NOTE OR SECURITY PURCHASE AGREEMENT, AS APPLICABLE, UNLESS SPECIFICALLY DEFINED ABOVE IN THIS REPORT.