Item
1.01
|
Entry
into a Material Definitive Agreement
|
GS
Capital Securities Purchase Agreement
Effective
December 19, 2018 MyDx, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”)
with GS Capital Partners LLC, (“GSC”), pursuant to which GSC purchased an 8% unsecured convertible promissory note
(the “Note”) from the Company in the aggregate principal amount of $82,000.00, such principal and the interest thereon
convertible into shares of the Company’s common stock at the option of GSC.
The
purchase price of $80,000.00 of the Note was paid in cash by GSC on December 20, 2018. After payment of transaction-related expenses,
net proceeds to the Company from the Note totaled $76,000.00.
The
maturity date of the Note is December 19, 2019 (the “Note Maturity Date”). The Note shall bear interest at a rate
of eight percent (8%) per annum (the “Note Interest Rate”), which interest shall be paid by the Company to GSC in
shares of common stock at any time GSC sends a notice of conversion to the Company. GSC is entitled to, at its option, convert
all or any amount of the principal face amount and any accrued but unpaid interest of the Note into shares of the Company’s
common stock, at any time, at the conversion price for each share of common stock equal to 67% of the average of the three lowest
closing bid prices of the common stock for the fifteen prior trading days including the day upon which a notice of conversion
is received by the Company or its transfer agent.
The
Note may be prepaid until 270 days from the issuance date with the following penalties: (i) if the Note is prepaid within thirty
(30) days of the issuance date, then the prepayment premium shall be 105% of the face amount plus any accrued interest; (ii) if
the Note is prepaid during the period beginning on the date which is thirty-one (31) days following the issuance date, and ending
on the date which is sixty (60) days following the issuance date, then the prepayment premium shall be 110% of the face amount
plus any accrued interest; (iii) if the Note is prepaid during the period beginning on the date which is sixty-one (61) days following
the issuance date, and ending on the date which is ninety (90) days following the issuance date, then the prepayment premium shall
be 115% of the face amount plus any accrued interest; (iv) if the Note is prepaid during the period beginning on the date which
is ninety-one (91) days following the issuance date, and ending on the date which is one hundred twenty (120) days following the
issuance date, then the prepayment premium shall be 120% of the face amount plus any accrued interest; (v) if the Note is prepaid
during the period beginning on the date which is one hundred twenty-one (121) days following the issuance date, and ending on
the date which is one hundred fifty (150) days following the issuance date, then the prepayment premium shall be 125% of the face
amount plus any accrued interest; and (vi) if the Note is prepaid during the period beginning on the date which is one hundred
fifty-one (151) days following the issuance date, and ending on the date which is two hundred seventy (270) days following the
issuance date, then the prepayment premium shall be 130% of the face amount plus any accrued interest; Such prepayment redemptions
must be closed and funded within three days of giving notice of redemption or the right to redeem shall be null and void.
The
Company shall reserve 245,000,000 of its authorized and unissued common stock (the “Reserved Amount”), free from preemptive
rights, to provide for the issuance of common stock upon the full conversion of the Note. Upon full conversion of the Note, any
shares remaining in such reserve shall be cancelled. The Company shall at all times reserve a minimum of four (4) times the number
of shares required if all outstanding principal under the Note would be fully converted and will from time to time increases the
Reserved Amount in accordance with the Company’s obligations under the Note.
Pursuant
to the terms of the Purchase Agreement, for so long as GSC owns any shares of common stock issued upon conversion of the Note
(the “Conversion Shares”), the Company covenants to secure and maintain the listing of such shares of common stock.
The Company is also subject to certain customary negative covenants under the Note and the Purchase Agreement, including but not
limited to the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any
offers or sales of any security under circumstances that would require registration of or stockholder approval for the Note or
the Conversion Shares.
The
Note is a long-term debt obligation that is material to the Company. The Note contains certain representations, warranties, covenants
and events of default including if the Company is delinquent in its periodic report filings with the Securities and Exchange Commission
and increases in the amount of the principal and interest rates under the Note in the event of such defaults. In the event of
default, at the option of GSC and in GSC’s sole discretion, GSC may consider the Note immediately due and payable.
Any
shares to be issued pursuant to any conversion of the Note shall be issued pursuant to an exemption from the registration requirement
of the Securities Act of 1933, provided in Section 4(a)(2) of the Securities Act.
The
Company intends to use the proceeds from the Note for general working capital purposes.
The
foregoing descriptions of the Purchase Agreement and the Note do not purport to be complete and are qualified in their entirety
by reference to the Purchase Agreement and the Note, copies of which are filed as, respectively, Exhibits 10.1 and 4.1 hereto.