Item 1.01 Entry into a Material Definitive Agreement.
On June 3, 2022 (the "Issue Date"), Diego Pellicer Worldwide, Inc. (the
"Company") entered into a securities purchase agreement (the "Purchase
Agreement") with GS Capital Partners, LLC ("GS Capital"), pursuant to which GS
Capital purchased a promissory note (the "Note") from the Company in the
aggregate principal amount of $165,000. The transaction contemplated by the
Purchase Agreement closed on June 6, 2022. The Company intends to use the net
proceeds ($160,000) from the Note for general working capital purposes.
The maturity date of the Note is June 3, 2023 (the "Maturity Date"). The Note
shall bear interest at a rate of 8% per annum. Principal payments shall be made
in ten (10) installments each in the amount of US$17,800 commencing on the
ninetieth (90th) day anniversary following the Issue Date and continuing
thereafter each thirty (30) days for ten (10) months. Notwithstanding the
forgoing, the final payment of principal and interest shall be due on the
Maturity Date.
In the event of a default, GS Capital has the option to convert all or any
amount of the principal face amount of the Note at the then-applicable
conversion price. The conversion price for the Note shall be equal to the
Variable Conversion Price (as defined herein) (subject to equitable adjustments
for stock splits, stock dividends or rights offerings by the Company relating to
the Company's securities or the securities of any subsidiary of the Company,
combinations, recapitalization, reclassifications, extraordinary distributions
and similar events). The "Variable Conversion Price" shall mean 65% multiplied
by the Market Price (as defined herein) (representing a discount rate of 35%).
"Market Price" means the average of the lowest three (3) trading prices for the
Common Stock during the fifteen (15) trading day period ending on the latest
complete trading day prior to the Conversion Date. Notwithstanding the
foregoing, GS Capital shall be restricted from effecting a conversion if such
conversion, along with other shares of the Company's common stock beneficially
owned by GS Capital and its affiliates, exceeds 4.99% of the outstanding shares
of the Company's common stock. The Note may be prepaid by the Company.
Pursuant to the terms of the Purchase Agreement, the Company paid GS Capital's
fees and expenses in the aggregate amount of $5,000. The Note also contains an
original issue discount of $5,000. The Company will also issue 2,500,000 shares
of the Company's common stock to GS Capital as additional consideration for the
purchase of the Note.
The Note contains certain events of default, as well as certain customary events
of default, including, among others, breach of covenants, representations or
warranties, insolvency, bankruptcy, liquidation and failure by the Company to
pay the principal and interest due under the Note. Upon the occurrence and
during the continuation of default, Company will be obligated for further
payments/interest to GS Capital, dependent on the nature of the default
The Note was issued, and any shares to be issued pursuant to any conversion of
the Note shall be issued, in a private placement in reliance upon an exemption
from registration provided by Section 4(a)(2) of the Securities Act and/or
Regulation D promulgated thereunder.
The foregoing description of the Note and the Purchase Agreement does not
purport to be complete and is qualified in their entirety by reference to the
full text of the Purchase Agreement and the Note, which are filed as Exhibits
4.1 and 10.1, respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement by a Registrant.
The information set forth in Item 1.01 above is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. Description
4.1* 8% Promissory Note, dated June 3, 2022, issued by the Company to
GS Capital Partners, LLC
10.1* Securities Purchase Agreement, dated June 3, 2022, by and between
the Company and GS Capital Partners, LLC
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Filed herewith
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