Item
1.01 Entry Into A Material Definitive Agreement.
Convertible
Promissory Note – GS Capital Partners
On
April 1, 2021, Clubhouse Media Group, Inc. (the “Company”) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with GS Capital Partners, LLC (“GS Capital”), pursuant to which, on same date, the Company
issued a convertible promissory note to GS Capital in the aggregate principal amount of $550,000 for a purchase price of $500,000,
reflecting a $50,000 original issue discount (the “April 2021 GS Capital Note”) and,
in connection therewith, sold to GS Capital 45,000 shares of the Company’s common stock, par value $0.001 per share
(the “Company Common Stock”) at a purchase price of $45, representing a per
share price of $0.001 per share. In addition, at the closing of this sale, the Company reimbursed GS Capital the sum of $10,000
for GS Capital’s costs in completing the transaction, which amount GS Capital withheld from the total purchase price paid
to the Company.
The
April 2021 GS Capital Note has a maturity date of April 1, 2022 and bears interest at 10% per year. No payments of the principal
amount or interest are due prior to the maturity date other than as specifically set forth in the April 2021 GS Capital Note,
and the Company may prepay all or any portion of the principal amount and any accrued and unpaid interest at any time without
penalty.
The
April 2021 GS Capital Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company’s
common stock, par value $0.001 per share (the “Company Common Stock”) at GS Capital’s election at any time following
the time that the SEC qualifies the Company’s offering statement related to the Company’s planned offering of Company
Common Stock pursuant to Regulation A under the Securities Act of 1933, as amended (the “Regulation A Offering”).
At such time, The April 2021 GS Capital Note (and the principal amount and any accrued and unpaid interest) will be convertible
at a conversion price equal to 70% of the initial offering price of the Company Common Stock in the Regulation A Offering, subject
to a customary beneficial ownership limitation of 9.99%, which may be waived by GS Capital on 61 days’ notice to the Company.
The conversion price is subject to customary adjustments for any stock splits, etc. which occur following the determination of
the conversion price.
The
April 2021 GS Capital Note contains customary events of default, including, but not limited to:
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if
the Company fails to pay the then-outstanding principal amount and accrued interest on the April 2021 GS Capital Note on any
date any such amounts become due and payable, and any such failure is not cured within three business days of written notice
thereof by GS Capital; or
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the
Company fails to remain compliant with the Depository Trust Company (“DTC”), thus incurring a “chilled”
status with DTC; or
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any
trading suspension is imposed by the SEC under Section 12(j) of the Exchange Act or Section 12(k) of the Exchange Act; or
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the
occurrence of any delisting of the Company Common Stock from any securities exchange on which the Company Common Stock is
listed or suspension of trading of the Company Common Stock on the OTC Markets.
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If
an event of default has occurred and is continuing, GS Capital may declare all or any portion of the then-outstanding principal
amount of The April 2021 GS Capital Note, together with all accrued and unpaid interest thereon, due and payable, and The April
2021 GS Capital Note shall thereupon become immediately due and payable in cash and GS Capital will also have the right to pursue
any other remedies that GS Capital may have under applicable law. In the event that any amount due under The April 2021 GS Capital
Note is not paid as and when due, such amounts shall accrue interest at the rate of 18% per year, simple interest, non-compounding,
until paid.
The
foregoing description of the Securities Purchase Agreement and GS Capital Note does not purport to be complete and is qualified
in its entirety by reference to the full texts of the Securities Purchase Agreement and the April 2021 GS Capital Note, copies
of which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein
by reference.