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Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
As of July 11, 2014, and with a closing date of July 16, 2014, the Company entered into a Convertible Note Purchase Agreement with Eastmore Capital LLC ("Eastmore"), pursuant to which the Company sold to Eastmore an $80,000 face value 12% Convertible Note (the "Eastmore Note")with a maturity date of July 10, 2015 (the "Eastmore Maturity Date"). Interest accrues daily on the outstanding principal amount of the Eastmore Note at a rate per annum equal to 12% on the basis of a 365-day year. The principal amount of the Eastmore Note and interest is payable on the Eastmore Maturity Date. The Eastmore Note is convertible into common stock, subject to Rule 144, at any time after the issue date, at the lowerof (i) theclosing saleprice of thecommonstock on the onthe trading dayimmediatelypreceding the closingdate, and (ii)50% of the lowestsale price for thecommon stockduring the ten (10)consecutive trading days immediatelypreceding theconversion date. If the shares are not delivered to Eastmore within three business days of the Company's receipt of the conversion notice, the Company will pay Eastmore a penalty of $1,000 per day for each day that thethe Company fails todeliver suchcommon stock through willful actsdesigned to hinderthe deliveryof commonstock to Eastmore. Eastmore does not have the right to convert the note, to the extent that it would beneficially own in excess of 4.9% of our outstanding common stock. The Company shall have theright, exercisable onnot less thanfive (5)trading daysprior written notice toEastmore, to prepaythe outstandingbalance on this note for $120,000 plus any andall accruedand unpaid intereston the unpaid principalamount. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the Eastmore Note becomes immediately due and payable. In connection with the Eastmore Note, the Company paid Eastmore $2,500 for its legal fees and expenses and paid third party brokers a $10,000 fee.
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