Item
1.01 Entry Into A Material Definitive Agreement.
Rui
Wu – Note Purchase Agreement, Convertible Promissory Note, Warrant, and Security Agreement
On
August 27, 2021 Clubhouse Media Group, Inc. (the “Company”) entered into a note purchase agreement (the “Rui Wu Note
Purchase Agreement”) with Rui Wu, an individual (“Rui Wu”), with an effective date of August 26, 2021, pursuant to
which, on same date, the Company issued a convertible promissory note to Rui Wu in the aggregate principal amount of $550,000 for a purchase
price of $500,000, reflecting a $50,000 original issue discount (the “Rui Wu Note”) and,
in connection therewith, issued to Rui Wu a Warrant to purchase 37,500 shares of the Company’s common stock, par value $0.001
per share (the “Company Common Stock”) at an exercise price of $2.00 per share, subject
to adjustment (the “Rui Wu Warrant”). In addition, in connection with the Rui Wu Note Purchase Agreement, the Company entered
into a Security Agreement on same date with Rui Wu, pursuant to which the Company’s obligations under the Rui Wu Note were secured
by a first priority lien and security interest on all of the assets of the Company (the “Rui Wui Security Agreement”). While
each of the Rui Wu Warrant, Security Agreement, Note, and Note Purchase Agreement have an effective date and/or effective issue date
of August 26, 2021, each was entered into and/or issued on August 27, 2021.
The
Rui Wu Note has a maturity date of August 26, 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 Rui Wu 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
Rui Wu Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of Company Common Stock at any
time following August 26, 2021 until the note is repaid. The conversion price per share of Common Stock shall initially mean the lesser
of (i) $1.00 or (ii) 75% of the lowest daily volume weighted average price of the Common Stock during the twenty (20) Trading Days (as
defined in the Rui Wu Note) immediately preceding the date of the respective conversion. The conversion price is subject to customary
adjustments for any stock splits, etc. which occur following the determination of the conversion price.
The
Rui Wu 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 Rui Wu 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 Rui Wu; 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, Rui Wu may declare all or any portion of the then-outstanding principal amount of
the Rui Wu Note, together with all accrued and unpaid interest thereon, due and payable, and the Rui Wu Note shall thereupon become immediately
due and payable in cash and Rui Wu will also have the right to pursue any other remedies that Rui Wu may have under applicable law. In
the event that any amount due under the Rui Wu 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 Rui Wu Note Purchase Agreement, Rui Wu Note, Rui Wu Warrant, and Rui Wu Security Agreement does not purport
to be complete and is qualified in its entirety by reference to the full texts of these documents, copies of which are filed as Exhibit
10.1, 10.2, 10.3, and 10.4 respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Chris
Etherington – Note Purchase Agreement, Convertible Promissory Note, Warrant, and Security Agreement
On
August 27, 2021, the Company entered into a note purchase agreement (the “Chris Etherington Note Purchase Agreement”) with
Chris Etherington, an individual (“Chris Etherington”), with an effective date of August 26, 2021, pursuant to which, on
same date, the Company issued a convertible promissory note to Chris Etherington in the aggregate principal amount of $165,000 for a
purchase price of $150,000, reflecting a $15,000 original issue discount (the “Chris Etherington Note”) and,
in connection therewith, issued to Chris Etherington a Warrant to purchase 37,500 shares of the Company’s common stock,
par value $0.001 per share (the “Company Common Stock”) at an exercise price of $2.00
per share, subject to adjustment (the “Chris Etherington Warrant”). In addition, in connection with the Chris Etherington
Note Purchase Agreement, the Company entered into a Security Agreement on same date with Chris Etherington, pursuant to which the Company’s
obligations under the Chris Etherington Note were secured by a first priority lien and security interest on all of the assets of the
Company (the “Chris Etherington Security Agreement”). While each of the Chris Etherington Warrant, Security Agreement, Note,
and Note Purchase Agreement have an effective date and/or effective issue date of August 26, 2021, each was entered into and/or issued
on August 27, 2021.
The
Chris Etherington Note has a maturity date of August 26, 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 Chris Etherington 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
Chris Etherington Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of Company Common Stock
at any time following August 26, 2021 until the note is repaid. The conversion price per share of Common Stock shall initially mean the
lesser of (i) $1.00 or (ii) 75% of the lowest daily volume weighted average price of the Common Stock during the twenty (20) Trading
Days (as defined in the Chris Etherington Note) immediately preceding the date of the respective conversion. The conversion price is
subject to customary adjustments for any stock splits, etc. which occur following the determination of the conversion price.
The
Chris Etherington 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 Chris Etherington 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 Chris
Etherington; 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, Chris Etherington may declare all or any portion of the then-outstanding principal
amount of the Chris Etherington Note, together with all accrued and unpaid interest thereon, due and payable, and the Chris Etherington
Note shall thereupon become immediately due and payable in cash and Chris Etherington will also have the right to pursue any other remedies
that Chris Etherington may have under applicable law. In the event that any amount due under the Chris Etherington 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 Chris Etherington Note Purchase Agreement, Chris Etherington Note, Chris Etherington Warrant, and Chris
Etherington Security Agreement does not purport to be complete and is qualified in its entirety by reference to the full texts of these
documents, copies of which are filed as Exhibit 10.1, 10.2, 10.3, and 10.4 respectively, to this Current Report on Form 8-K and are incorporated
herein by reference.