BLACKSTAR ENTERPRISE GROUP, INC. Item 1.01 Entry into a Material Definitive Agreement
Quick Capital, LLC Convertible Promissory Note:
On
The Company executed a 10% convertible promissory note of the Company with
Holder, in the principal amount of
The Note, bearing an interest rate of 10%, dated
Prepayment. The Company may prepay the Note in whole or in part at any time, provided that an Event of Default has not occurred, up to 180 days after the Issue Date as set forth below:
a) At any time during the period beginning on the Issue Date and ending on the
date which is sixty (60) days following the Issue Date, the Company shall have
the right to prepay the outstanding Note (principal and accrued interest), in
full by making a payment to the Holder of an amount in cash equal to 20%,
multiplied by the sum of: (w) the then outstanding principal amount of the
Note plus (x) accrued and unpaid interest on the unpaid principal amount of
the Note plus(y) Default Interest, if any.
b) At any time during the period beginning the day which is sixty-one (61) days
following the Issue Date and ending on the date which is one hundred eighty
(180) days following the Issue Date, the Company shall have the right to
prepay the outstanding Note (principal and accrued interest), in full by
making a payment to the Holder of an amount in cash equal to 40%, multiplied
by the sum of: (w) the then outstanding principal amount of the Note plus
(x) accrued and unpaid interest on the unpaid principal amount of the Note
plus (y) Default Interest, if any.
After 180 days from the Issue Date, the Company may not prepay any amount.
No Beneficial Ownership. The Holder shall not be entitled to convert any portion of the Note in excess of that portion upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained in the Note) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of the Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended and Regulations 13D-G thereunder.
Conversion Price. The conversion price (the "Conversion Price") shall equal the lesser of: (i) 60% multiplied by the average of the two lowest closing trades during the twenty (20) Trading Day period preceding the Issue Date
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(representing a discount rate of 40%), or (ii) 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 60% multiplied by the Market
Price (as defined herein) (representing a discount rate of 40%). "Market Price"
means the average of the two (2) lowest closing trades for the Common Stock
during the twenty (20) Trading Day period preceding the conversion date.
"Trading Price" and "Trading Prices" means, for any security as of any date, the
lesser of: (i) the lowest trade price on the OTC Pink, OTCQB or applicable
trading market as reported by a reliable reporting service ("Reporting Service")
designated by the Holder or, if the OTC Pink is not the principal trading market
for such security, the trading price of such security on the principal
securities exchange or trading market where such security is listed or traded
or, if no trading price of such security is available in any of the foregoing
manners, the average of the trading prices of any market makers for such
security that are listed in the "pink sheets" by the
In the event the Company (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Company is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Company or (ii) any person, group or entity (including the Company) publicly announces a tender offer to purchase 50% or more of the Company's Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date, be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect.
Amounts Due in Events of Default:
Upon the failure to pay principal and interest, the Note shall become
immediately due and payable. Upon the failure to issue conversion shares when
Holder exercises said right, or other events of default outlined in the Note,
then two times (2x) the Default Amount of the Note will become due and payable
immediately. Any other form of default will entitle the Holder to (i) an
immediate payment of one hundred fifty percent (150%) of the Default Amount,
being the outstanding principal amount of the Note, plus accrued and unpaid
interest on the unpaid principal amount of the Note, plus any default interest
and any other amounts owed or (ii) at the option of the Holder, the "parity
value" of the Default Sum to be prepaid, where parity value means (a) the
highest number of shares of Common Stock issuable upon conversion of or
otherwise pursuant to such Default Sum in accordance with Article I of the Note,
treating the Trading Day immediately preceding the Mandatory Prepayment Date as
the "Conversion Date" for purposes of determining the lowest applicable
Conversion Price, unless the Default Event arises as a result of a breach in
respect of a specific Conversion Date in which case such Conversion Date shall
be the Conversion Date), multiplied by (b) the highest Trading Price for the
Common Stock during the period beginning on the date of first occurrence of the
Event of Default and ending one day prior to the Mandatory Prepayment Date (the
"Default Amount") and all other amounts payable hereunder shall immediately
become due and payable, all without demand, presentment or notice, all of which
hereby are expressly waived, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at law or in
equity. Further, if a breach of Sections 3.9, 3.10 and/or 3.19 of the Note
occurs or is continuing after the six (6) month anniversary of the Note, then
the principal amount of the Note shall increase by Ten Thousand and No/100
United States Dollars (
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
See the disclosures under Item 1.01 of this Current Report on Form 8-K, incorporated herein by this reference.
Item 3.02 Unregistered Sales of
The Company and the Holder executed the Securities Purchase Agreement ("SPA") in
accordance with and in reliance upon the exemption from securities registration
for offers and sales to accredited investors afforded, inter alia, by Rule 506
under Regulation D as promulgated by the
See the disclosures under Item 1.01 of this Current Report on Form 8-K, incorporated herein by this reference.
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