Item
1.01 Entry into a Material Definitive Agreement.
RespireRx
Pharmaceuticals Inc. (the “Company”) and Power Up Lending Group Ltd. (the “Lender”) entered into a Securities
Purchase Agreement (the “SPA”), dated as of April 15, 2020, by which the Lender loaned $53,000 to the Company in return
for a convertible promissory note (the “Note”), the Limited Guaranty (as defined below), and the delivery into escrow
of a confession of judgment in favor of the Lender for the amount of the Note plus fees and costs to be filed by the Lender upon
the occurrence of an Event of Default (as defined in the Note) and other transaction-related documents. The proceeds of
the loan, which equal $50,000 after payment of $2,500 in legal fees and $500 in due diligence fees, will be used for general corporate
purposes.
The
Note will be payable on April 15, 2021 (the “Maturity Date”), and bear interest at a rate equal to 12% per annum,
with any amount of principal or interest which is not paid when due bearing interest at the rate of 22% per annum.
The
Lender has the right, at any time during the period beginning on the date that is 180 days following the date of the Note and
ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in the Note), to convert
any outstanding and unpaid amount of the Note into shares of the Company’s common stock or securities convertible into the
Company’s common stock (“Conversion Shares”), provided that such conversion would not result in the Lender beneficially
owning more than 4.99% of the Company’s common stock. Subject to certain limitations and adjustments as described in the
Note, the Lender may convert at a per share conversion price equal to 61% of the lowest trading price of the common stock as reported
by the exchange on which the Company’s shares are traded, for the twenty trading days prior to, but excluding, the day upon
which a notice of conversion is received by the Company. Upon the conversion of all amounts due under the Note, the Note would
be deemed repaid and terminated.
The
Company may prepay the outstanding principal amount under the Note by paying a certain percentage of the sum of the outstanding
principal, interest, default interest and other amounts owed. Such percentage varies from 120% to 145% depending on the period
in which the prepayment occurs, as set forth in the Note. During the period in which the Note is outstanding, subject to certain
limited exceptions, the Company must notify the Lender in advance of closing of any financing transactions with third party investors.
At the Lender’s discretion, the Company must amend and restate the Note, including its conversion terms, and the Conversion
Shares to be identical to the instruments evidencing such financing transaction.
In
consideration of and to induce the Lender to consummate the transaction referenced herein, Jeff E. Margolis, the Chief Financial
Officer of the Company (the “CFO”), on April 15, 2020 issued a limited guaranty in favor of the Lender (the “Limited
Guaranty”) whereby the CFO guaranteed to the Lender the prompt and full performance and observance by the Company of its
obligation to promptly cooperate in processing all notices of conversions issued pursuant to the Note.
The
Note and the shares of common stock issuable upon conversion thereof were offered and sold to the Lender in reliance upon specific
exemptions from the registration requirements of United States federal and state securities laws, which include Section 4(a)(2)
of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 promulgated by the SEC under the 1933 Act.
Pursuant to these exemptions, the Lender represented to the Company under the SPA, among other representations, that it was an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D under the 1933 Act.
The
descriptions of the SPA and the Note do not purport to be complete and are qualified in their entirety by reference to the SPA
and the Note, which are included as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated
herein by reference.