Item
1.01.
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Entry
into a Material Definitive Agreement.
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Brikor
Note
On February 15, 2019, VPR Brands, LP (the
“Company”) issued a senior convertible promissory note in the principal amount of $200,000 (the “Brikor
Note”) to Brikor LLC (“Brikor”). The principal amount due under the Brikor Note bears interest
at the rate of 18% per annum. The principal amount and accrued but unpaid interest (to the extent not converted in accordance
with the terms of the Brikor Note) is due and payable on the third anniversary of the issue date. The Brikor Note
and the amounts payable thereunder are unsecured obligations of the Company and shall be senior in right of payment and otherwise
to all indebtedness, as provided in the Brikor Note.
At any time after the first anniversary of
the issue date, the holder may require the Company, upon at least 30 business days’ written notice, to redeem all or any
portion of the Brikor Note. The portion of the Brikor Note subject to redemption will be redeemed by the Company
in cash.
The Brikor Note is convertible into
common units of the Company. Pursuant to the terms of the Brikor Note, Brikor has the right, at its option, to convert
any portion of the outstanding and unpaid Conversion Amount (as hereinafter defined) into common units in accordance with the
provisions of the Brikor Note at the Conversion Rate (as hereinafter defined). The number of common units issuable upon
conversion of any Conversion Amount will be determined by dividing (x) such Conversion Amount by (y) $0.10 (subject to adjustment
as set forth in the Brikor Note) (such result, the “Conversion Rate”). “Conversion Amount” means
the sum of (A) the portion of the principal balance of the Brikor Note to be converted with respect to which the determination
is being made, (B) accrued and unpaid interest with respect to such principal balance, if any, and (C) the Default Balance (other
than any amount thereof within the purview of foregoing clauses (A) or (B)), if any.
If any Event of Default (as defined in the
Brikor Note) occurs, upon such occurrence, in addition to all rights and remedies of Brikor under the Brikor
Note, applicable law or otherwise, Brikor may, at its option, declare due any or all of the Company’s obligations,
liabilities and indebtedness owing to Brikor under the Brikor Note whereupon the then unpaid aggregate balance thereof
together with all accrued but unpaid interest thereon as of such date shall immediately be due and payable, together will all
expenses of collection thereof. If the foregoing unpaid aggregate balance, accrued interest, expenses and collection costs are
not paid upon demand upon the occurrence of an Event of Default (collectively, the “Default Balance”), such Default
Balance will bear interest until paid in full at the stated rate plus 8% per annum or the maximum interest rate then permitted
under applicable law (whichever is less). From and after maturity, the Default Balance will bear interest until paid in full at
the Default Rate.
Daiagi
and Daiagi Note
On
February 15, 2019, the Company issued a senior convertible promissory note in the principal amount of $200,000 (the “Daiagi
and Daiagi Note”) to Mike Daiagi and Mathew Daiagi jointly (the “Daiagis”). The principal amount due under the
Daiagi and Daiagi Note bears interest at the rate of 18% per annum. The principal amount and accrued but unpaid interest (to the
extent not converted in accordance with the terms of the Daiagi and Daiagi Note) is due and payable on the third anniversary of
the issue date. The Daiagi and Daiagi Note and the amounts payable thereunder are unsecured obligations of the Company and shall
be senior in right of payment and otherwise to all indebtedness, as provided in the Daiagi and Daiagi Note.
At
any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’
written notice, to redeem all or any portion of the Daiagi and Daiagi Note. The portion of the Daiagi and Daiagi Note subject
to redemption will be redeemed by the Company in cash.
The
Daiagi and Daiagi Note is convertible into common units of the Company. Pursuant to the terms of the Daiagi and Daiagi Note, the
Daiagis have the right, at their option, to convert any portion of the outstanding and unpaid Conversion Amount into common units
in accordance with the provisions of the Daiagi and Daiagi Note at the Conversion Rate. The number of common units issuable upon
conversion of any Conversion Amount will be determined by dividing (x) such Conversion Amount by (y) $0.10 (subject to adjustment
as set forth in the Daiagi and Daiagi Note).
If
any Event of Default (as defined in the Daiagi and Daiagi Note) occurs, upon such occurrence, in addition to all rights and remedies
of the Daiagis under the Daiagi and Daiagi Note, applicable law or otherwise, the Daiagis may, at their option, declare due any
or all of the Company’s obligations, liabilities and indebtedness owing to the Daiagis under the Daiagi and Daiagi Note
whereupon the then unpaid aggregate balance thereof together with all accrued but unpaid interest thereon as of such date shall
immediately be due and payable, together will all expenses of collection thereof. If the foregoing unpaid aggregate balance, accrued
interest, expenses and collection costs are not paid upon demand upon the occurrence of an Event of Default, such Default Balance
will bear interest until paid in full at the stated rate plus 8% per annum or the maximum interest rate then permitted under applicable
law (whichever is less). From and after maturity, the Default Balance will bear interest until paid in full at the Default Rate.
Amber
Investments Note
On
February 15, 2019, the Company issued a senior convertible promissory note in the principal amount of $200,000 (the “Amber
Investments Note”) to Amber Investments LLC (“Amber Investments”). The principal amount due under the Amber
Investments Note bears interest at the rate of 18% per annum. The principal amount and accrued but unpaid interest (to the extent
not converted in accordance with the terms of the Amber Investments Note) is due and payable on the third anniversary of the issue
date. The Amber Investments Note and the amounts payable thereunder are unsecured obligations of the Company and shall be senior
in right of payment and otherwise to all indebtedness, as provided in the Amber Investments Note.
At
any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’
written notice, to redeem all or any portion of the Amber Investments Note. The portion of the Amber Investments Note subject
to redemption will be redeemed by the Company in cash.
The
Amber Investments Note is convertible into common units of the Company. Pursuant to the terms of the Amber Investments Note, Amber
Investments has the right, at its option, to convert any portion of the outstanding and unpaid Conversion Amount into common units
in accordance with the provisions of the Amber Investments Note at the Conversion Rate. The number of common units issuable upon
conversion of any Conversion Amount will be determined by dividing (x) such Conversion Amount by (y) $0.10 (subject to adjustment
as set forth in the Amber Investments Note).
If
any Event of Default (as defined in the Amber Investments Note) occurs, upon such occurrence, in addition to all rights and remedies
of Amber Investments under the Amber Investments Note, applicable law or otherwise, Amber Investments may, at its option, declare
due any or all of the Company’s obligations, liabilities and indebtedness owing to Amber Investments under the Amber Investments
Note whereupon the then unpaid aggregate balance thereof together with all accrued but unpaid interest thereon as of such date
shall immediately be due and payable, together will all expenses of collection thereof. If the foregoing unpaid aggregate balance,
accrued interest, expenses and collection costs are not paid upon demand upon the occurrence of an Event of Default, such Default
Balance will bear interest until paid in full at the stated rate plus 8% per annum or the maximum interest rate then permitted
under applicable law (whichever is less). From and after maturity, the Default Balance will bear interest until paid in full at
the Default Rate.
K
& S Pride Note
On
February 19, 2019, the Company issued a senior convertible promissory note in the principal amount of $200,000 (the “K &
S Pride Note”) to K & S Pride Inc. (“K & S Pride”). The principal amount due under the K & S Pride
Note bears interest at the rate of 18% per annum. The principal amount and accrued but unpaid interest (to the extent not converted
in accordance with the terms of the K & S Pride Note) is due and payable on the third anniversary of the issue date. The K
& S Pride Note and the amounts payable thereunder are unsecured obligations of the Company and shall be senior in right of
payment and otherwise to all indebtedness, as provided in the K & S Pride Note.
At
any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’
written notice, to redeem all or any portion of the K & S Pride Note. The portion of the K & S Pride Note subject to redemption
will be redeemed by the Company in cash.
The
K & S Pride Note is convertible into common units of the Company. Pursuant to the terms of the K & S Pride Note, K &
S Pride has the right, at its option, to convert any portion of the outstanding and unpaid Conversion Amount into common units
in accordance with the provisions of the K & S Pride Note at the Conversion Rate. The number of common units issuable upon
conversion of any Conversion Amount will be determined by dividing (x) such Conversion Amount by (y) $0.10 (subject to adjustment
as set forth in the K & S Pride Note).
If
any Event of Default (as defined in the K & S Pride Note) occurs, upon such occurrence, in addition to all rights and remedies
of K & S Pride under the K & S Pride Note, applicable law or otherwise, K & S Pride may, at its option, declare due
any or all of the Company’s obligations, liabilities and indebtedness owing to K & S Pride under the K & S Pride
Note whereupon the then unpaid aggregate balance thereof together with all accrued but unpaid interest thereon as of such date
shall immediately be due and payable, together will all expenses of collection thereof. If the foregoing unpaid aggregate balance,
accrued interest, expenses and collection costs are not paid upon demand upon the occurrence of an Event of Default, such Default
Balance will bear interest until paid in full at the stated rate plus 8% per annum or the maximum interest rate then permitted
under applicable law (whichever is less). From and after maturity, the Default Balance will bear interest until paid in full at
the Default Rate.
Surplus
Depot Note
On
February 20, 2019, the Company issued a senior convertible promissory note in the principal amount of $200,000 (the “Surplus
Depot Note”) to Surplus Depot Inc. (“Surplus Depot”). The principal amount due under the K & S Pride Note
bears interest at the rate of 18% per annum. The principal amount and accrued but unpaid interest (to the extent not converted
in accordance with the terms of the Surplus Depot Note) is due and payable on the third anniversary of the issue date. The Surplus
Depot Note and the amounts payable thereunder are unsecured obligations of the Company and shall be senior in right of payment
and otherwise to all indebtedness, as provided in the Surplus Depot Note.
At
any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’
written notice, to redeem all or any portion of the Surplus Depot Note. The portion of the Surplus Depot Note subject to redemption
will be redeemed by the Company in cash.
The
Surplus Depot Note is convertible into common units of the Company. Pursuant to the terms of the Surplus Depot Note, Surplus Depot
has the right, at its option, to convert any portion of the outstanding and unpaid Conversion Amount into common units in accordance
with the provisions of the Surplus Depot Note at the Conversion Rate. The number of common units issuable upon conversion of any
Conversion Amount will be determined by dividing (x) such Conversion Amount by (y) $0.10 (subject to adjustment as set forth in
the Surplus Depot Note).
If
any Event of Default (as defined in the Surplus Depot Note) occurs, upon such occurrence, in addition to all rights and remedies
of Surplus Depot under the Surplus Depot Note, applicable law or otherwise, Surplus Depot may, at its option, declare due any
or all of the Company’s obligations, liabilities and indebtedness owing to Surplus Depot under the Surplus Depot Note whereupon
the then unpaid aggregate balance thereof together with all accrued but unpaid interest thereon as of such date shall immediately
be due and payable, together will all expenses of collection thereof. If the foregoing unpaid aggregate balance, accrued interest,
expenses and collection costs are not paid upon demand upon the occurrence of an Event of Default, such Default Balance will bear
interest until paid in full at the stated rate plus 8% per annum or the maximum interest rate then permitted under applicable
law (whichever is less). From and after maturity, the Default Balance will bear interest until paid in full at the Default Rate.
The
foregoing description of the Brikor Note, the Daiagi and Daiagi Note, the Amber Investments Note, the K & S Pride Note,
and the Surplus Depot Note is not a complete description of all of the rights and obligations of the parties thereto under the
respective documents, and is qualified in its entirety by reference to each of the documents, copies of which is filed as Exhibits
10.1, 10.2, 10.3, 10.4 and 10.5, respectively, to this Current Report on Form 8-K and which are incorporated herein by reference.