| Item 1.01. | Entry into a Material Definitive Agreement. |
Issuance of Commitment Shares, Note, and Warrant
On March 15, 2022,
SmartMetric, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”)
with Mast Hill Fund, L.P. (the “Investor”) with respect to the sale and issuance (the “Offering”) to the
Investor of: (i) a promissory note in the aggregate principal amount of $250,000 (the “Note”), (ii) a common stock
purchase warrant (the “Warrant”) to purchase up to an aggregate of 12,500,000 shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), and (iii) 12,500,000 shares of Common Stock (the
“Commitment Shares”). The Note and Warrant were issued on March 15, 2022 (the “Issuance Date”).
The Company issued the Note
in the principal amount of $250,000 for a purchase price of $225,000, resulting in an original issue discount of $25,000. The Company
issued the Warrant with an initial exercise price of $0.05 per share, subject to adjustment as described therein. The aggregate cash subscription
amount received by the Company from the Investor for the issuance of the Commitment Shares, Note and Warrant was $188,250, due to a reduction
in the $225,000 purchase price as a result of broker, legal, and transaction fees.
The Purchase Agreement limits
the Company’s ability to enter into any agreement involving a variable rate transaction and provides for Investor’s registration
rights (each, as more particularly described therein). The Purchase Agreement contains other representations and warranties, covenants
and conditions, customary for transactions of this type.
The foregoing
description of the Purchase Agreement does not purport to be a complete description of the rights and obligations of the parties
thereunder and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is attached
hereto as Exhibit 10.1 and is incorporated herein by reference.
Terms of the Note
The Note is scheduled to mature
on March 15, 2023, twelve (12) months after the Issuance Date, and provides for interest to accrue at an interest rate equal to 10% per
annum, or, upon an Event of Default (as defined in the Note) the lesser of (i) 10% per annum, and (ii) the maximum amount permitted under
law. The Investor has the right, only following an Event of Default, to convert all or any part of the outstanding and unpaid principal,
interest, penalties, and all other amounts under the Note into fully paid and non-assessable shares of Common Stock, as such Common Stock
exists on the date of issuance of the shares underlying the Note, or any shares of capital stock or other securities of the Company into
which such Common Stock shall hereafter be changed or reclassified. The initial conversion price, following and during an Event of Default,
for the principal and interest of the Note will be $0.008, subject to adjustment as provided therein. The Note is subject to adjustment
upon certain events such as distributions and mergers, and has anti-dilution protections for issuance of securities by the Company at
a price that is lower than the then-current conversion price except for certain exempt issuances. In addition, if, at any time while the
Note is issued and outstanding, the Company issues any convertible securities or rights to purchase stock, warrants, securities or other
property pro rata to the record holders of any class of Common Stock, then the Investor will be entitled to acquire, upon the terms applicable
to such sales, the aggregate number of shares could have acquired if the Note had been converted. The Note also imposes certain restrictions
and obligations on the Company with respect to the Company’s ability to incur other indebtedness, make distributions on capital
stock, stock repurchases and debt repayments.
The foregoing
description of the Note does not purport to be a complete description of the rights and obligations of the parties thereunder and is
qualified in its entirety by reference to the full text of the Note, a copy of which is attached hereto as Exhibit 4.1 and is
incorporated herein by reference.
Terms of the Warrant
As described above, the Investor
received the Warrant to purchase up to 12,500,000 shares of Common Stock. The initial exercise price for the Warrant is $0.05 per share,
subject to adjustment as described therein, and the Warrant is exercisable for a period of three years after the issuance date of the
Warrant. The Warrant is exercisable for shares of Common Stock upon the payment in cash of the exercise price, or if the Market Price
(as defined in the Warrant) of one share of Common Stock is greater than the exercise price, then the Investor may elect to receive shares
of Common Stock pursuant to a cashless exercise, in lieu of cash exercise, equal to the value of the Warrant as determined pursuant to
the terms therein.
The foregoing description of the
Warrant does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its
entirety by reference to the full text of the Warrant, a copy of which is attached hereto as Exhibit 4.2 and is incorporated herein by
reference.