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Item
1.01
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Entry
into a Material Definitive Agreement.
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GS
Capital Financing
On
June 11, 2018, NanoFlex Power Corporation, a Florida corporation (the “Company”) entered into a Securities Purchase
Agreement (the “GS SPA”) with GS Capital Partners, LLC (“GS Capital”) pursuant to which GS Capital agreed
to purchase two convertible redeemable notes in the aggregate principal amount of $100,000.00 (comprised of a first note in the
amount of $50,000.00 (the “GS First Note”), and the remaining note in the amount of $50,000.00 (a “GS Back End
Note”) (each, a “GS Note”)). Each GS Note contains a $1,500.00 original issue discount, or OID, such that the
purchase price of each GS Note shall be $48,500.00. The GS First Note shall be paid for by GS Capital as set forth therein. The
GS Back End Note shall initially be paid for by the issuance of an offsetting $48,500.00 secured note issued to the Company by
GS Capital (a “GS Buyer Note”), provided that prior to conversion of a GS Back End Note, GS Capital must have paid
off that GS Buyer Note in cash such that the GS Back End Note may not be converted until it has been paid for in cash by GS Capital.
On
June 11, 2018, the Company issued the GS First Note. The GS First Note has an interest rate of 12% per annum and matures on June
11, 2019.
Under
the GS First Note, GS Capital may convert all or a portion of the outstanding principal of the GS First Note into shares of the
Company’s common stock, $0.0001 par value per share (the “Common Stock”) at a fixed conversion price of $0.25
per share. Starting on the six month anniversary of the date the GS First Note was issued, the conversion price shall be equal
to 55% of the lowest trading price of the Common Stock during the 20 prior trading days (including the day upon which a notice
of conversion is received). GS Capital may not convert the GS First Note to the extent that such conversion would result in beneficial
ownership by GS Capital and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock.
If
the Company prepays the GS First Note within 60 days of its issuance, the Company must pay the principal at a cash redemption
premium of 115%, in addition to accrued interest; if such prepayment is made from the 61st day to the 120th day after issuance,
then such redemption premium is 125%, in addition to accrued interest; and if such prepayment is made from the 121st day to the
180th day after issuance, then such redemption premium is 135%, in addition to accrued interest. After the 180th day following
the issuance of the GS First Note, there shall be no further right of prepayment.
On
June 11, 2018, the Company also issued the GS Back End Note. The GS Back End Note has an interest rate of 12% per annum and matures
on June 11, 2019.
Under
the GS Back End Note, at any time after six months and full cash payment, GS Capital may convert all or a portion of the outstanding
principal of the GS Back End Note into shares of the Company’s Common Stock at a fixed conversion price of $0.25 per share.
Starting on the six month anniversary of the date the GS Back End Note was issued, the conversion price shall be equal to 55%
of the lowest trading price of the Common Stock during the 20 prior trading days (including the day upon which a notice of conversion
is received). GS Capital may not convert the GS Back End Note to the extent that such conversion would result in beneficial ownership
by GS Capital and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock.
The
GS Back End Note may not be prepaid, except that if the GS Back End Note has not been cash paid, and if the GS First Note issued
by the Company of even date herewith is redeemed by the Company within six months of the issuance date of such note, all obligations
of the Company under the GS Back End Note and all obligations of GS Capital under the GS Back End Note will be automatically deemed
satisfied.
LG
Capital Financing
On
June 13, 2018, the Company entered into a Securities Purchase Agreement (the “LG SPA”) with LG Capital Funding LLC
(“LG Capital”) pursuant to which LG Capital agreed to purchase two convertible redeemable notes in the aggregate principal
amount of $160,500.00 (comprised of a first note in the amount of $80,250.00 (the “LG First Note”), and the remaining
note in the amount of $80,250.00 (a “LG Back End Note”) (each, a “LG Note”)). Each LG Note contains a
$5,250.00 OID such that the purchase price of each LG Note shall be $75,000.00. The LG First Note shall be paid for by LG Capital
as set forth therein. The LG Back End Note shall initially be paid for by the issuance of an offsetting $75,000.00 secured note
issued to the Company by LG Capital (a “LG Buyer Note”), provided that prior to conversion of a LG Back End Note,
LG Capital must have paid off that LG Buyer Note in cash such that the LG Back End Note may not be converted until it has been
paid for in cash by LG Capital.
On
June 13, 2018, the Company issued the LG First Note. The LG First Note has an interest rate of 12% per annum and matures on June
13, 2019.
During
the first six months the LG First Note is in effect, LG Capital may convert all or a portion of the outstanding principal of the
LG First Note into shares of the Company’s Common Stock at a fixed conversion price of $0.25 per share. Starting on the
six month anniversary, the conversion price shall be equal to 58% of the lowest trading price of the Common Stock during the 20
prior trading days (including the day upon which a notice of conversion is received). LG Capital may not convert the LG First
Note to the extent that such conversion would result in beneficial ownership by LG Capital and its affiliates of more than 9.9%
of the Company’s issued and outstanding Common Stock.
If
the Company prepays the LG First Note within 60 days of its issuance, the Company must pay the principal at a cash redemption
premium of 115%, in addition to accrued interest; if such prepayment is made from the 61st day to the 120th day after issuance,
then such redemption premium is 125%, in addition to accrued interest; and if such prepayment is made from the 121st day to the
180th day after issuance, then such redemption premium is 135%, in addition to accrued interest. After the 180th day following
the issuance of the LG First Note, there shall be no further right of prepayment.
On
June 13, 2018, the Company also issued the LG Back End Note. The LG Back End Note has an interest rate of 12% per annum and matures
on June 13, 2019.
During
the first six months the LG Back End Note is in effect, LG Capital may convert all or a portion of the outstanding principal of
the LG Back End Note into shares of the Company’s Common Stock at a fixed conversion price of $0.25 per share. Starting
on the six month anniversary, the conversion price shall be equal to 58% of the lowest trading price of the Common Stock during
the 20 prior trading days (including the day upon which a notice of conversion is received). LG Capital may not convert the LG
Back End Note to the extent that such conversion would result in beneficial ownership by LG Capital and its affiliates of more
than 9.9% of the Company’s issued and outstanding Common Stock.
The
LG Back End Note may not be prepaid, except that if the LG Back End Note has not been cash paid, and if the LG First Note issued
by the Company of even date herewith is redeemed by the Company within six month of the issuance date of such note, all obligations
of the Company under the LG Back End Note and all obligations of LG Capital under the LG Back End Note will be automatically deemed
satisfied.
Peak
One Financing
On
June 13, 2018, the Company entered into a Securities Purchase Agreement (the “Peak One SPA”) with Peak One Opportunity
Fund, L.P. (“Peak One”) pursuant to which Peak One purchased securities consisting of the Company’s convertible
debentures due three years from the respective dates of issuance (the “Debentures”), which will be convertible into
shares of the Company’s Common Stock, in the aggregate principal amount of up to $425,000.00 for an aggregate purchase price
of up to $382,500.00. On June 19, 2018, the Company issued Peak One a convertible debenture (the “Signing Debenture”)
in the principal amount of $75,000.00. The Signing Debenture matures on June 19, 2021. Any amount of principal or interest that
is due under each of the Debentures, which is not paid by the respective maturity date, will bear interest at the rate of 18%
per annum until it is satisfied in full.
Peak
One is entitled to, at any time or from time to time, convert the sum of all or any portion of the outstanding principal amount
of the Signing Debenture plus any interest that has accrued on the portion of the principal amount into shares of the Company’s
Common Stock at a conversion price equal to either: (i) $0.25, if no event of default under the Signing Debenture has occurred
and the date of conversion is prior to the date that is 180 days after the issuance date, or (ii) if an event of default under
the Signing Debenture has occurred or the date of conversion is on or after the date that is 180 days after the issuance date,
the lesser of (a) $0.25 or (b) 60% of the lowest trading price of the Common Stock for the 20 trading days immediately preceding
the date of conversion of the Debentures, subject in each case to equitable adjustments resulting from any stock splits, stock
dividends, recapitalizations or similar events. Unless Peak One delivers to the Company written notice at least 61 days prior
to the effective date of such notice that the provisions of this paragraph shall be adjusted to 9.99% with respect to Peak One,
in no event shall Peak One have the right to convert the Debentures into shares of Common Stock to the extent that such conversion
would result in Peak One and its affiliates together beneficially owning more than 4.99% of the Company’s then issued and
outstanding Common Stock.
If
at any time the conversion price as determined hereunder for any conversion would be less than the par value of Common Stock,
then at the sole discretion of Peak One, the conversion price hereunder may equal such par value for such conversion, and the
conversion amount for such conversion may be increased to include “additional principal,” where “additional
principal” means such additional amount to be added to the conversion amount to the extent necessary to cause the number
of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had
the conversion price not been adjusted by Peak One to the par value price.
The
Company may redeem each Debenture issued under the Peak One SPA, upon not more than two days written notice, for an amount equal
to: (i) if the redemption date is 90 days or less from the date of issuance, 110% of the sum of the principal amount so redeemed
plus accrued interest, if any; (ii) if the redemption date is greater than or equal to 91 days from the date of issuance and less
than or equal to 120 days from the date of issuance, 120% of the sum of the principal amount so redeemed plus accrued interest,
if any; (iii) if the redemption date is greater than or equal to 121 days from the date of issuance and less than or equal to
180 days from the date of issuance, 130% of the sum of the principal amount so redeemed plus accrued interest, if any; and (iv)
if either (1) the Debenture is in default but Peak One consents to the redemption notwithstanding such default or (2) the redemption
date is greater than or equal to 181 days from the date of issuance, 140% of the sum of the principal amount so redeemed plus
accrued interest, if any.
Pursuant
to the Peak One SPA, on June 13, 2018, the Company also issued to Peak One a warrant (the “Warrant”) to purchase 200,000
shares of the Company’s Common Stock at an exercise price of $0.10 per share, subject to certain anti-dilution adjustments.
The Warrant has a three-year term.
The
foregoing summaries of the terms of the GS First Note, the GS Back End Note, the GS Buyer Note, the LG First Note, the LG Back
End Note, the LG Buyer Note, the Signing Debenture, the Warrant, the GS SPA, the LG SPA and the Peak One SPA are subject to, and
qualified in their entirety by, the agreements and instruments attached hereto as Exhibits 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7,
4.8, 10.1, 10.2 and 10.3, respectively, which are incorporated by reference herein.