Item 1.01. Entry into a Material Definitive Agreement.
Equity Purchase Agreement and Registration
Rights Agreement
On October 24, 2016 (the
“Closing Date”), Petrone Worldwide, Inc. (“we,” “us,” “our,” or “Company”)
entered into an equity purchase agreement (the “Purchase Agreement”) with Peak One Opportunity Fund, L.P. (“Buyer”),
whereby, upon the terms and subject to the conditions thereof, the Buyer is committed to purchase shares of our common stock (the
“Purchase Shares”) at an aggregate price of up to $5,000,000 (the “Total Commitment Amount”) over the course
of its 24-month term.
From
time to time over the 24-month term of the Purchase Agreement, commencing on the date on which a registration statement registering
the Purchase Shares (the “Registration Statement”) becomes effective, we may, in our sole discretion, provide the Buyer
with a put notice (each a “Put Notice”) to purchase a specified number of the Purchase Shares (each a “Put Amount
Requested”) subject to the limitations discussed below and contained in the Purchase Agreement. Upon delivery of a Put Notice,
we must deliver the Put Amount Requested as Deposit Withdrawal at Custodian (“DWAC”) shares to Buyer within two (2)
trading days.
The
actual amount of proceeds we receive pursuant to each Put Notice (each, the “Put Amount”) is to be determined by multiplying
the Put Amount Requested by the applicable purchase price. The purchase price for each of the Purchase Shares equals 90% of the
“Market Price,” which is defined as the lesser of the (i) lowest closing bid price of our common stock for any trading
day during the ten (10) trading days immediately preceding the date of the respective Put Notice, or (ii) lowest closing bid price
of the common stock for any trading day during the seven (7) trading days immediately following the clearing date associated with
the applicable Put Notice (the “Valuation Period”). Within three (3) trading days following the end of the Valuation
Period, the Buyer will deliver the Put Amount to us via wire transfer.
The
Put Amount Requested pursuant to any single Put Notice must have an aggregate value of at least $15,000, and cannot exceed the
lesser of (i) 200% of the average daily trading value of the common stock in the ten (10) trading days immediately preceding the
Put Notice or (ii) such number of shares of common stock that has an aggregate value of $100,000.
In
order to deliver a Put Notice, certain conditions set forth in the Purchase Agreement must be met, as provided therein. In addition,
we are prohibited from delivering a Put Notice if: (i) the sale of Purchase Shares pursuant to such Put Notice would cause us to
issue and sell to Buyer, or Buyer to acquire or purchase, a number of shares of our common stock that, when aggregated
with all shares of common stock purchased by Buyer pursuant to all prior Put Notices issued under the Purchase Agreement, would
exceed the Total Commitment Amount; or (ii) the sale of the Commitment Shares pursuant to the Put Notice would cause us to issue
and sell to Buyer, or Buyer to acquire or purchase, an aggregate number of shares of common stock that would result in Buyer beneficially
owning more than 4.99% of the issued and outstanding shares of our common stock.
Unless
earlier terminated, the Purchase Agreement will terminate automatically on the earlier to occur of: (i) 24 months after the initial
effectiveness of the Registration Statement, (ii) the date on which the Buyer has purchased or acquired all of the Purchase Shares,
or (iii) the date on which certain bankruptcy proceedings are initiated with respect to the Company. In connection with the execution
of the Purchase Agreement, we agreed to issue 650,000 shares of our common stock (the “Commitment Shares”) to Buyer
or Buyer’s designee as a commitment fee.
On
the Closing Date, and in connection with the Purchase Agreement, we also entered into a registration rights agreement (the “Registration
Rights Agreement”) with Buyer whereby we are obligated to file the Registration Statement to register the resale of the Commitment
Shares and Purchase Shares. Pursuant to the Registration Rights Agreement, we must (i) file the Registration Statement within thirty
(30) calendar days from the Closing Date, (ii) use reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act of 1933, as amended (the “Securities Act”), as promptly as possible after the filing thereof,
but in any event no later than the 90th calendar day following the Closing Date, and (iii) use its reasonable efforts to keep such
Registration Statement continuously effective under the Securities Act until all of the Commitment Shares and Purchase Shares have
been sold thereunder or pursuant to Rule 144.
The
foregoing descriptions of the Purchase Agreement and Registration Rights Agreement are qualified in their entirety by reference
to such Purchase Agreement and Registration Rights Agreement, which are filed hereto as Exhibits 10.1 and 10.2, respectively, and
are incorporated herein by reference.
Securities Purchase
Agreement and Debenture
On
October 24, 2016 (the “Issuance Date”), we entered into a securities purchase agreement (the “SPA”) with
Buyer, whereby Buyer agreed to invest up to $346,500.00 (the “Purchase Price”) in our Company in exchange for the convertible
debentures, upon the terms and subject to the conditions thereof. Pursuant to the SPA, we issued a convertible debenture to Buyer
on October 26, 2016, in the original principal amount of $85,000.00, which bears interest at 0% per annum (the “First Debenture”).
The Buyer paid the portion of the Purchase Price associated with the First Debenture, consisting of $76,500.00 (minus the applicable
fees under the SPA), to us in cash on October 26, 2016. Each convertible debenture issued pursuant to the SPA, coupled with the
accrued and unpaid interest relating to each convertible
debenture, is due and payable three years from the issuance date of the respective convertible debenture. Any amount of principal
or interest that is due under each convertible debenture, which is not paid by the respective maturity date, will bear interest
at the rate of 18% per annum until it is satisfied in full. Additionally, the Buyer has the right at any time to convert amounts
owed under each convertible debenture into shares of our common stock at the closing price of the Common Stock on September 8,
2015. Each debenture shall contain representations, warranties, events of default, beneficial ownership limitations, and other
provisions that are customary of similar instruments.
The
Buyer is entitled to, at any time or from time to time, convert each convertible debenture issued under the SPA into shares of
our common stock, at a conversion price per share (the “Conversion Price”) equal to either: (i) if no event of default
has occurred under the respective convertible debenture and the date of conversion is prior to the date that is one hundred eighty
(180) days after the issuance date of the respective convertible debenture, $0.25, or (ii) if an event of default has occurred
under the respective convertible debenture or the date of conversion is on or after the date that is one hundred eighty (180) days
after the issuance date of the respective convertible debenture, the lesser of (a) $0.25 or (b) sixty five percent (65%) of the
lowest closing bid price of the common stock for the twenty (20) trading days immediately preceding the date of the date of conversion
(provided, further, that if either the Company is not DWAC operational at the time of conversion or the common stock is traded
on the OTC Pink at the time of conversion, then sixty five percent (65%) shall automatically adjust to sixty percent (60%)), subject
in each case to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events.
We
may redeem each convertible debenture issued under the SPA, upon not more than two (2) days written notice, for an amount (the
“Redemption Price”) equal to: (i) if the Redemption Date (as defined below) is ninety (90) days or less from the date
of issuance of the respective convertible debenture, One Hundred Five percent (105%) of the sum of the Principal Amount so redeemed
plus accrued interest, if any; (ii) if the Redemption Date is greater than or equal to ninety one (91) days from the date of issuance
of the respective convertible debenture and less than or equal to one hundred twenty (120) days from the date of issuance of the
respective convertible debenture, One Hundred Ten percent (110%) of the sum of the Principal Amount so redeemed plus accrued interest,
if any; (iii) if the Redemption Date is greater than or equal to one hundred twenty one (121) days from the date of issuance of
the respective convertible debenture and less than or equal to one hundred fifty (150) days from the date of issuance of the respective
convertible debenture, One Hundred Twenty percent (120%) of the sum of the Principal Amount so redeemed plus accrued interest,
if any; (iv) if the Redemption Date is greater than or equal to one hundred fifty one (151) days from the date of issuance of the
respective convertible debenture and less than or equal to one hundred eighty (180) days from the date of issuance of the respective
convertible debenture, One Hundred Thirty percent (130%) of the sum of the Principal Amount so redeemed plus accrued interest,
if any; and (v) if either (1) the respective convertible debenture is in default but the Buyer consents to the redemption notwithstanding
such default or (2) the Redemption Date is greater than or equal to one hundred eighty one (181) days from the date of issuance
of the respective convertible debenture, One Hundred Forty percent (140%) of the sum of the Principal Amount so redeemed plus accrued
interest, if any. The date upon which the respective convertible debenture is redeemed and paid shall be referred to as the “Redemption
Date” (and, in the case of multiple redemptions of less than the entire outstanding Principal Amount, each such date shall
be a Redemption Date with respect to the corresponding redemption).
The
foregoing descriptions of the SPA and First Debenture are qualified in their entirety by reference to such SPA and First Debenture,
which are filed hereto as Exhibits 10.3 and 4.1, respectively, and are incorporated herein by reference