Item 1.01. Entry into a Material Definitive Agreement.

On July 11, 2022, Clubhouse Media Group, Inc. (the "Company") entered into a securities purchase agreement (the "Securities Purchase Agreement"), dated as of July 8, 2022, with 1800 Diagonal Lending LLC ("Diagonal Lending"), pursuant to which the Company issued, on July 11, 2022, a convertible promissory note to Diagonal Lending in the aggregate principal amount of $61,812.50 for a purchase price of $56,437.50 (the "Purchase Price"), reflecting a $5,375.00 original issue discount (the "Note").

The Note has a maturity date of July 8, 2023 (the "Maturity Date") and bears interest at 10% per annum. No payments of the principal amount or interest are due prior to the Maturity Date, other than as specifically set forth in the Note. The Company may not prepay the Note prior to the Maturity Date, other than by way of a conversion initiated by Diagonal Lending.

The Note provides Diagonal Lending with conversion rights to convert all or any part of the outstanding and unpaid principal amount of the Note at any time, from time to time, and at any time during the period beginning on the date which 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). Notwithstanding the foregoing, Diagonal Lending shall not be entitled to a conversion under the Note upon which the sum of (1) the number of shares of the Company's common stock beneficially owned by Diagonal Lending and its affiliates (other than shares of common stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of the Company subject to a similar limitation on conversion or exercise) and (2) the number of shares of common stock issuable upon the conversion would result in beneficial ownership by Diagonal Lending and its affiliates of more than 4.99% of the outstanding shares of common stock.

The conversion price ("Conversion Price") is equal to the lesser of the Variable Conversion Price (as defined in the Note) and Fixed Conversion Price (as defined in the Note), which is $1.00. The "Variable Conversion Price" is defined in the Note as 75% multiplied by the lowest VWAP for shares of Common Stock during the 20 trading days immediately preceding the Conversion Date (as defined in the Note).

During the period conversion rights exist, the Company is required to reserve from its authorized and unissued common stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of common stock upon the full conversion of the Note multiplied by 4.5 (the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance with the Company's obligations contained in the Note. If, at any time, the Company does not maintain the Reserved Amount, it shall constitute an Event of Default (as defined in the Note).

Other Events of Default under the Note include, but are not limited to: (1) failure to pay principal or interest on the Note when due; (2) failure to issue and transfer Common Stock upon exercise by Diagonal Lending of its conversion rights; (3) the breach by the Company of any material covenant or other material term or condition of the Note which remains uncured after 20 days' notice by Diagonal Lending; (4) a breach of representations or warranties contained in the Note by the Company; (5) certain bankruptcy or insolvency related events; (6) delisting of the Common Stock resulting in the shares no longer being listed OTC or on any U.S. securities exchange; (7) failure to timely file a Securities and Exchange Commission ("SEC") report required by the Securities Exchange Act of 1934, as amended, remaining uncured 10 days after due; (8) a restatement of any financial statements by the Company with the SEC any time after 180 days from July 8, 2022 until the Note is no longer outstanding, if such restatement would result in a material adverse effect on the rights of Diagonal Lending under the Note or Securities Purchase Agreement; (9) failure to comply with certain requirements relating to the replacement of the Company's transfer agent; and (10) a cross default under any agreement or instrument between, among or by the Company and, or for the benefit of, Diagonal Lending and any affiliate of Diagonal Lending, including other promissory notes, but excluding documents relating or ancillary to the Note.

If an Event of Default has occurred and continues uncured, the Note shall become immediately due and payable. If an Event of Default occurs because the Company fails to issue shares of Common Stock to Diagonal Lending within three business days of receiving a notice of conversion from Diagonal Lending, the Company shall pay an amount equal to the Default Amount (defined below) multiplied by two (2) in full satisfaction of the Company's obligations under the Note. If an Event of Default occurs for any other reason that continues uncured (or in the case of an appointment of a receiver, bankruptcy, liquidation, or a similar default that may not be cured), the Company shall pay an amount equal to 150% of the Default Amount (defined below) in full satisfaction of the Company's obligations under the Note.

The "Default Amount" is equal to the sum of (a) accrued and unpaid interest on the principal amount of the Note to the date of payment plus (b) default interest, which is calculated based on a rate of 22% per year (inclusive of the 10% interest per year that would be due absent an event of default), plus (c) certain other amounts that may be owed under the Note.

On July 12, 2022, the Company issued to Amir Ben-Yohanan, the Company's Chief . . .

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As disclosed in Item 1.01 of this Current Report on Form 8-K, the Company issued the Note to Diagonal Lending, and issued the Ben-Yohanan Note to Mr. Ben-Yohanan. The disclosure in Item 1.01 hereof concerning the Note and the Ben-Yohanan Note is incorporated by reference into this Item 2.03 to the extent applicable.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 11, 2022, the Board of Directors of the Company and stockholders holding a majority of the voting power of the Company approved and adopted the Clubhouse Media Group, Inc. 2023 Equity Incentive Plan (the "2023 Plan"). The material terms of the 2023 Plan are set forth below. The description below of the 2023 Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the 2023 Plan, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.





Overview


The 2023 Plan authorizes the issuance of up to an aggregate maximum of 75,000,000 shares of the common stock, subject to adjustment as described in the 2023 Plan. The 2023 Plan shall be administered by the Board or one or more committees appointed by the Board or another committee ("Administrator"). The Administrator, has the power to all determinations deemed necessary or advisable for administering the 2023 Plan, including the power to select the service providers to whom awards may be granted, determine the number of shares covered by each award. The 2023 Plan authorizes the Company to grant stock options, stock appreciation rights, restricted shares, restricted share unit, cash awards, other awards, and performance-based awards. Awards may be granted to the Company's officers, employees, directors and consultants.

The purpose of 2023 Plan is to (i) to attract and retain the best available personnel for positions of substantial responsibility, (ii) to provide additional incentive to Employees, Directors and Consultants, and (ii) to promote the success of the Company's business. The Administrator has the authority to amend, suspend or terminate the 2023 Plan provided such action does not impair the existing rights of any participant. The 2023 Plan automatically will terminate on July 11, 2032, unless it is terminated sooner.

The Company plans to file a Registration Statement on Form S-8 with the SEC to register 75,000,000 shares of the Company's common stock, issuable pursuant to the 2023 Plan in the near future.





Authorized Shares


A total of 75,000,000 shares of the Company's common stock are authorized for issuance pursuant to the 2023 Plan.

Additionally, if any award issued pursuant to the 2023 Plan expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program, as provided in the 2023 Plan, or, with respect to restricted stock, restricted stock units ("RSUs"), performance units or performance shares, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased shares (or for awards other than stock options or stock appreciation rights the forfeited or repurchased shares) which were subject thereto will become available for future grant or sale under the 2023 Plan (unless the 2023 Plan has terminated). With respect to stock appreciation rights, only shares actually issued pursuant to a stock appreciation right will cease to be available under the 2023 Plan; all remaining shares under stock appreciation rights will remain available for future grant or sale under the 2023 Plan (unless the 2023 Plan has terminated). Shares that have actually been issued under the 2023 Plan under any award will not be returned to the 2023 Plan and will not become available for future distribution under the 2023 Plan; provided, however, that if shares issued pursuant to awards of restricted stock, restricted stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such shares will become available for future grant under the 2023 Plan. Shares used to pay the exercise price of an award or to satisfy the tax withholdings related to an award will become available for future grant or sale under the 2023 Plan. To the extent an award under the 2023 Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the 2023 Plan.

Notwithstanding the foregoing and, subject to adjustment as provided in the 2023 Plan, the maximum number of shares that may be issued upon the exercise of incentive stock options will equal the aggregate share number stated above, plus, to the extent allowable under Section 422 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, any shares that become available for issuance under the 2023 Plan in accordance with the foregoing.

Plan Administration

The Board or one or more committees appointed by the Board will administer the 2023 Plan. In addition, if the Company determines it is desirable to qualify transactions under the 2023 Plan as exempt under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, such transactions will be structured with the intent that they satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of the 2023 Plan, the Administrator has the power to administer the 2023 Plan and make all determinations deemed necessary or advisable for administering the 2023 Plan, including the power to determine the fair market value of the Company's common stock, select the service providers to whom awards may be granted, determine the number of shares covered by each award, approve forms of award agreements for use under the 2023 Plan, determine the terms and conditions of awards (including the exercise price, the time or times at which the awards may be exercised, any vesting acceleration or waiver or forfeiture restrictions and any restriction or limitation regarding any award or the shares relating thereto), construe and interpret the terms of the 2023 Plan and awards granted under it, prescribe, amend and rescind rules relating to the 2023 Plan, including creating sub-plans and modify or amend each award, including the discretionary authority to extend the post-termination exercisability period of awards (provided that no option or stock appreciation right will be extended past its original maximum term), and to allow a participant to defer the receipt of payment of cash or the delivery of shares that would otherwise be due to such participant under an award. The Administrator also has the authority to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the Administrator and to institute an exchange program by which outstanding awards may be surrendered or cancelled in exchange for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type or cash, or by which the exercise price of an outstanding award is increased or reduced. The Administrator's decisions, interpretations and other actions are final and binding on all participants.





Eligibility


Awards under the 2023 Plan, other than incentive stock options, may be granted to employees (including officers) of the Company or a subsidiary, members of the Company's Board, or consultants engaged to render bona fide services to the Company or a subsidiary. Incentive stock options may be granted only to employees of the Company or a subsidiary.





Stock Options


Stock options may be granted under the 2023 Plan. The exercise price of options granted under the 2023 Plan generally must at least be equal to the fair market value of the Company's common stock on the date of grant. The term of each . . .

Item 5.07. Submission of Matters to a Vote of Security Holders.

On July 11, 2022, the holders of an aggregate of 65,726,585 shares of the Company's common stock and one share of Series X preferred stock, representing approximately 57.6% of the overall voting power of the Company, approved and adopted the 2023 Plan.

Item 9.01 Financial Statements and Exhibits.





(d) Exhibits



Exhibit
Number    Description

10.1        Securities Purchase Agreement, entered into on July 11, 2022 and dated
          as of July 8, 2022, between the registrant and 1800 Diagonal Lending,
          LLC.
10.2        Convertible Promissory Note issued on July 11, 2022 and dated as of
          July 8, 2022, by the registrant in favor of 1800 Diagonal Lending,
          LLC.
10.3        Promissory Note issued on July 12, 2022 by the registrant in favor of
          Amir Ben-Yohanan.
10.4        Clubhouse Media Group, Inc. 2023 Equity Incentive Plan, adopted on
          July 11, 2022.
104       Cover Page Interactive Data File (embedded within the Inline XBRL
          document).

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