| Item 1.01 |
Entry into a Material Definitive Agreement. |
On July
29, 2022 (the “Issue Date”), Diego Pellicer Worldwide, Inc. (the “Company”) entered into a securities purchase
agreement (the “Purchase Agreement”) with GS Capital Partners, LLC (“GS Capital”), pursuant to which GS Capital
purchased a promissory note (the “Note”) from the Company in the aggregate principal amount of $165,000. The transaction contemplated
by the Purchase Agreement closed on August 3, 2022. The Company intends to use the net proceeds ($160,000) from the Note for general working
capital purposes.
The
maturity date of the Note is July 29, 2023 (the “Maturity Date”). The Note shall bear interest at a rate of 8% per annum.
Principal payments shall be made in ten (10) installments each in the amount of US$17,800 commencing on the ninetieth (90th) day anniversary
following the Issue Date and continuing thereafter each thirty (30) days for ten (10) months. Notwithstanding the forgoing, the final
payment of principal and interest shall be due on the Maturity Date.
In the
event of a default, GS Capital has the option to convert all or any amount of the principal face amount of the Note at the then-applicable
conversion price. The conversion price for the Note shall be equal to the Variable Conversion Price (as defined herein) (subject to equitable
adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities
of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).
The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined herein) (representing a discount
rate of 35%). “Market Price” means the average of the lowest three (3) trading prices for the Common Stock during the fifteen
(15) trading day period ending on the latest complete trading day prior to the Conversion Date. Notwithstanding the foregoing, GS Capital
shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially
owned by GS Capital and its affiliates, exceeds 4.99% of the outstanding shares of the Company’s common stock. The Note may be prepaid
by the Company.
Pursuant
to the terms of the Purchase Agreement, the Company paid GS Capital’s legal fees in the aggregate amount of $5,000. The Note also
contains an original issue discount of $5,000. The Company will also issue 4,500,000 shares of the Company’s common stock to
GS Capital as additional consideration for the purchase of the Note.
The
Note contains certain events of default, as well as certain customary events of default, including, among others, breach of covenants,
representations or warranties, insolvency, bankruptcy, liquidation and failure by the Company to pay the principal and interest due under
the Note. Upon the occurrence and during the continuation of default, Company will be obligated for further payments/interest to GS Capital,
dependent on the nature of the default
The
Note was issued, and any shares to be issued pursuant to any conversion of the Note shall be issued, in a private placement in reliance
upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
The
foregoing description of the Note and the Purchase Agreement does not purport to be complete and is qualified in their entirety by reference
to the full text of the Purchase Agreement and the Note, which are filed as Exhibits 4.1 and 10.1, respectively, to this Current Report
on Form 8-K and are incorporated herein by reference.