RSPI RespireRx Pharmaceuticals Inc (PK)

Item 1.01 Entry into a Material Definitive Agreement.

On March 21, 2020, the Company entered into five separately negotiated Exchange Agreements (each an “Exchange Agreement” and collectively, the “Exchange Agreements”) with certain existing holders (the “Noteholders”) of Convertible Promissory Notes of the Company (the “Notes”). On March 22, 2020 (the “Closing Date”), each Noteholder exchanged his, her or its Note or Notes for shares of common stock of the Company (“Common Stock”) as contemplated by the respective Exchange Agreement. The Noteholders had purchased the Notes from the Company on one or more of the following dates: December 31, 2014, December 6, 2018, December 7, 2018, February 27, 2019, March 6, 2019 and March 14, 2019. Under the Exchange Agreements, an aggregate of $255,786.37 principal amount and accrued interest with respect to the Notes were exchanged and cancelled in return for an aggregate of 17,052,424 shares of Common Stock.

A description and form of each Note that was exchanged under the Exchange Agreements can be found in the Company’s Current Reports on Form 8-K filed on January 7, 2015, December 17, 2018, and March 5, 2019.

This description of the Exchange Agreements does not purport to be complete and is qualified in its entirety by reference to the form of Exchange Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 99.1. The information set forth in Item 3.02 herein is incorporated into this Item 1.01 by reference.

2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

Under the terms of certain other Convertible Promissory Notes of the Company issued in April, May, August, October and November of 2019 (the “Subsequent Notes”), as disclosed on the Company’s Current Reports on Form 8-K filed on April 30, 2019, May 23, 2019, August 27, 2019, October 28, 2019 and November 5, 2019, the Company is subject to covenants to maintain a number of reserved shares of Common Stock with respect to these Subsequent Notes. The reserve requirement is generally a multiple of the number of shares of Common Stock that would be issued if there were a conversion pursuant to the terms of the applicable Subsequent Note. A breach by the Company of these covenants is an event of default under the terms of the April, August and October Subsequent Notes that generally increases the applicable note’s principal amount and interest rate, and accelerates its maturity date, making the debt immediately due and payable. For the May Subsequent Note, the provisions are similar, but a notice of default is required before such increases and acceleration, which, as of the filing of this Current Report on Form 8-K, the Company had not received. For the November Subsequent Note, an event of default will only occur if the holder requests replenishment of the reserves, and that request is not met within three days or a subsequent five day cure period. The holder of the November Subsequent Note has not yet made such request. In addition, on March 26, 2020 the holders of the August and October Subsequent Notes agreed to waive the event of default until April 30, 2020, by which time the Company expects to have completed the filing with respect to the increase in authorized shares, as discussed under Item 8.01 below.

The issuances of Common Stock described in Item 1.01 and Item 5.02 herein reduced the number of shares of Common Stock to a level below what is required by the covenants in the Subsequent Notes, resulting in a breach and event of default, as described above, of the Subsequent Notes. The Company is currently seeking waivers with respect to the reserve requirements and the default provisions related thereto from the holders of the Subsequent Notes until the Amendment (as defined below) is effective. There can be no assurance that such holders will agree to such waivers.

On March 26, 2020, the holder of the April Subsequent Note converted the remaining outstanding principal under the note into shares, pursuant to the terms of the note. That note is now repaid in full and no ongoing default exists thereunder. Similarly, several of the holders of Subsequent Notes have been converting repeatedly over the past several days. These ongoing conversions make it difficult to calculate precisely the amounts currently outstanding under the Subsequent Notes, but the amounts outstanding as of the date hereof are approximately $375,000 in the aggregate.

As is disclosed in Item 8.01 below, the board of directors of Company approved, and the holders of a majority of the outstanding shares of the Company’s Common Stock executed written consents approving an Amendment (as defined below) to the Company’s Certificate of Incorporation. When filed with the Secretary of State of Delaware, the Amendment will increase the number of authorized shares of Common Stock, with the intention of reestablishing the Company’s compliance with the share reserve covenants contained in the Subsequent Notes. The Company has taken this action primarily to increase the number of authorized shares available and to bring it back into compliance with the covenants in the Subsequent Notes regarding the required number of reserved shares of Common Stock. The outstanding principal of certain of the Subsequent Notes has been reduced as the holders of these notes have converted a portion of the outstanding principal in exchange for Common Shares, pursuant to the term of the applicable Subsequent Note. With respect to those Subsequent Notes for which conversions have occurred, interest continues to accrue based upon the reduced principal amount of the relevant Subsequent Note. As noted above, the Company is in discussions with the holders of the Subsequent Notes with respect to this recent action, seeking waivers regarding the technical breach of the reserve provisions until such time as the increase in authorized shares is effective, which the Company currently expects will be in late April 2020, and the number of reserved shares is again in compliance with the applicable covenants.

The description of the Subsequent Notes does not purport to be complete and is qualified in its entirety by reference to the descriptions and forms thereof in the Company’s Current Reports on Form 8-K filed on April 30, 2019, May 23, 2019, August 27, 2019, October 28, 2019 and November 5, 2019.