Item
1.01. Entry into a Material Definitive Agreement.
Convertible
Promissory Note
On August 24, 2016 (the “Effective Date”), High
Performance Beverages Company, a Nevada corporation (the “Company”), sold an Original a 12% Convertible Promissory
Note in the principal amount of $50,000 (the “Note”) for cash consideration of $40,227 with $9,773 being retained
by the purchase of the Note through an original issue discount for due diligence and legal fees related to the Note purchase.
The Note may be converted into common stock of the Company
at any time after the Maturity Date at a price equal to 60% of the lowest trading price of the Company’s common stock during
the 10 consecutive trading days prior to the date on which Holder elects to convert all or part of the Note. However, If the Company
is placed on “chilled” status with the Depository Trust Company (“DTC”), the discount shall be increased
by 10%,
i
.
e
., from 40% to 50%, until such chill is remedied. If the Company is not Deposits and Withdrawal at Custodian
(“DWAC”) eligible through their Transfer Agent and DTC’s Fast Automated Securities Transfer (“FAST”)
system, the discount will be increased by 5%,
i
.
e
., from 40% to 45%. In the case of both, the discount shall be
a cumulative increase of 15%,
i
.
e
., from 40% to 55%.
Any default of the Note (as set forth in the Note) not remedied
within the applicable cure period will result in a permanent additional 10% increase,
i
.
e
., from 40% to 50%, in
addition to any other discount, to the Conversion Price discount. Additionally, if an event of default occurs (as defined in the
Note), the outstanding principal amount of the Note shall become at the holder’s electing immediately due an amount equal
to 150% of the outstanding principal amount of the Note. Commencing 5 days after the occurrence of any event of default that results
in the eventual acceleration of the Note, the Note will accrue an additional interest, in addition to the Note’s guaranteed
interest at a rate equal to the lesser of 22% per annum or the maximum rate permitted by applicable law.
The
Note matures on August 16, 2017 (“Maturity Date”). The Company may prepay the Note as follows:
|
Days
Since Effective Date
|
|
Prepayment
Amount
|
|
Under
30
|
|
100%
of Principal Amount
|
|
31-60
|
|
110%
of Principal Amount
|
|
61-90
|
|
120%
of Principal Amount
|
|
91-120
|
|
130%
of Principal Amount
|
|
121-150
|
|
140%
of Principal Amount
|
|
151-180
|
|
150% of Principal Amount
|
After
180 days from the Effective Date the Note may not be prepaid without written consent from holder.
The
Note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates
to own more than 9.99% of the issued and outstanding shares of the Company’s common stock.
Exchange Agreement and Exchange Note
Effective as of August 24, 2016 the Company entered into an exchange
agreement (“Exchange Agreement”) with Iconic Holdings, LLC (“Holder’). On or before November 20, 2015,
the Company had previously issued to an investor (the “Original Investor”) a promissory note in the amount of $250,000
(“Note A”) and on or before February 5, 2016, the Company had issued a promissory note to the Original Investor in
the principal amount of $82,500 (“Note B” and collectively with Note A, the “Original Notes”). The Original
Notes were purchased by the Holder on February 5, 2016 and exchanged into a new note in the principal amount of $108,897.55 (the
“Exchange Note”).
In connection with the Exchange Agreement, the Holder entered into
a Debt Assignment wherein the Holder acquired $110,000 of the Original Notes ($110,000 in principal and $0 in accrued but unpaid
interest, together the “Note Portion”) from the Original Investor. Pursuant to the Exchange Agreement the Company issued
the Exchange Note to the Holder in the aggregate original principal amount of $108,897.55 in exchange for the surrender and cancellation
of the Note Portion. The Exchange Note is being issued in substitution and not in satisfaction of the Note Portion, however, upon
the issuance of the Exchange Note the Note Portion will be deemed cancelled.
The Exchange Note matures on August 16, 2017 and has an interest
rate of 12% per annum.
The Conversion Price of the Exchange Note
is be equal
to 60% of the lowest trading price of the Company’s common stock during the 10 consecutive trading days prior to the date
on which holder elects to convert all or part of the Note. If the Company is placed on “chilled” status with the Depository
Trust Company (“DTC”), the discount shall be increased by 10%,
i
.
e
., from 40% to 50%, until such chill
is remedied. If the Company is not Deposits and Withdrawal at Custodian (“DWAC”) eligible through their Transfer Agent
and DTC’s Fast Automated Securities Transfer (“FAST”) system, the discount will be increased by 5%,
i
.
e
.,
from 40% to 45%,. In the case of both, the discount shall be a cumulative increase of 15%,
i
.
e
., from 40% to 55%.
Any default of the Exchange Note not remedied within the applicable cure period will result in a permanent additional 10% increase,
i
.
e
., from 40% to 50%, in addition to any other discount to the Conversion Price discount.
Commencing 5 days after the occurrence of any event of default (as
defined in the Exchange Note), in addition to the Exchange Note’s guaranteed interest at a rate equal to the lesser of 20%
per annum or the maximum rate permitted under applicable law.
The foregoing descriptions of the Note and the Exchange Agreement,
and Exchange Note referred to above do not purport to be complete and are qualified in its entirety by reference to the Note and
Exchange Note, copies of which are attached to this Current Report on Form 8-K and incorporated into this Item by reference.
The Company claims an exemption from the registration requirements
of the Securities Act of 1933, as amended (the “Act’), for the private placement of the securities referenced herein
pursuant to Section 4(2) of the Act since, among other things, the transaction did not involve a public offering. The Exchange
Note was also issue in reliance on 3(a)(9) under the Act.
License
Agreement
On
August 1, 2016 the Company entered into a license Agreement (the “License Agreement”) with SC Company/ProProm Mexico
(“Licensee”) . Pursuant to the License Agreement the Company granted Licensee the exclusive, non-sublicenseable and
non-assignable right within Mexico, Central America and South America and any other areas granted in the future to use the Trademarks
and Other IP solely in connection with the development, manufacture, distribution, marketing and sale of one or more “Sports
Performance Drinks.
The
initial term of the License Agreement is three years and provided Licensee is not in default under the Agreement the term of the
Agreement shall be automatically extended for one additional three period upon mutually agreeable terms, unless either party notifies
the other party in writing at least ninety (90) days prior to the then-scheduled expiration of the Term that such party elects
not to extend the Term.
The
term the Licensee shall pay the Company royalties in the amount of $10 a case by all sales and other transfers of licensed products
and payments of $18,750 per quarter.
The
foregoing descriptions of the License Agreement referred to above do not purport to be complete and are qualified in its entirety
by reference to the Note, a copy of which are attached to this Current Report on Form 8-K and incorporated into this Item by reference.
