Item
1.01 Entry into a Material Definitive Agreement.
Securities
Purchase Agreement with Labrys
On
May 10, 2021 (the “Effective Date”), RespireRx Pharmaceuticals Inc. (the “Company”) and LGH Investments,
LLC (the “Lender”) entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Lender
provided a sum of $135,000 (the “Consideration”) to the Company, in return for a convertible promissory note (the
“Note”) with a face amount of $150,000 (which difference in value as compared to the Consideration is due to an original
issue discount of $15,000), and a common stock purchase warrant (the “Warrant”) exercisable for five years at an exercise
price of $0.02 per share on a cash or cashless basis, to purchase up to 3,200,000 shares of the Company’s common stock,
par value $0.001 (“Common Stock”). In addition, and to induce the Lender to enter into the SPA, the Company and the
Lender entered into a Piggy-Back Registration Rights Agreement (the “Registration Rights Agreement”) under which the
Company has agreed to provide certain piggy-back registration rights under the Securities Act of 1933, as amended (the “1933
Act”) with respect to the Common Stock issuable pursuant to the SPA. The net proceeds of the Consideration, which were received
by the Company on May 10, 2021, will be used for general corporate purposes, and equaled $123,400 after payment of $3,500 in Lender’s
legal fees and $8,100 of broker fees paid to a broker-dealer that is a FINRA member firm.
The
Note obligates the Company to pay by May 10, 2022 (the “Maturity Date”) a principal amount of $150,000 together with
interest at a rate equal to 10% per annum, and the first twelve months of interest, equal to $15,000, is guaranteed and earned
in full as of the Effective Date. Any amount of principal or interest that is not paid by the Maturity Date would bear interest
at the rate of 24% from the Maturity Date to the date it is paid.
The
Lender has the right, in its discretion, at any time, to convert any outstanding and unpaid amount of the Note into shares of
Common Stock, provided that the conversion would not result in the Lender beneficially owning more than 4.99% of the Company’s
then outstanding Common Stock. The Lender may convert at a per share conversion price equal to $0.02, subject to equitable adjustments
for stock splits, stock dividends, combinations, recapitalizations, extraordinary distributions and similar events. Upon any conversion,
all rights with respect to the portion of the Note being so converted will terminate, except for the right to receive Common Stock
or other securities, cash or other assets as provided for in the Note.
The
Company may, in the absence of an Event of Default (as defined in the Note), and with prior written notice to the Lender, prepay
the outstanding principal amount under the Note during the initial 180 day period after the Effective Date by making a payment
to the Lender of an amount in cash equal to 100% of the outstanding principal, interest, default interest and other amounts owed.
Under certain circumstances, including the occurrence of an Event of Default, a sale, merger or other business combination where
the Company is not the survivor, or the conveyance or disposition of all or substantially all of the assets of the Company, the
Company may be required to prepay in cash an amount equal to 125% of the outstanding principal, interest, default interest and
other amounts owed. The Company’s wholly owned subsidiary, Pier Pharmaceuticals, Inc., provided an unlimited guarantee of
the Company’s obligations under the Note.
The
Note requires that the Company reserve the greater of (i) 12,375,000 shares of Common Stock or (ii) one and a half times the number
of shares into which the Note may convert. The Warrant requires that the Company reserve three times the number of shares into
which the Warrant is at any time exercisable.
The
SPA includes, among other things: (1) the grant of an option to the Lender to incorporate into the Note any terms applicable to
a subsequent issuance of a convertible note or security by the Company that are more beneficial to an investor than the terms
of the SPA and Note are to the Lender; and (2) certain registration rights by reference to the Registration Rights Agreement,
and the right to have any shares of Common Stock issued in connection with the conversion of the Note or exercise of the Warrant
included in any Regulation A offering statement that the Company files with the Securities and Exchange Commission.
The
Note, the Warrant, and the shares of Common Stock issuable upon conversion or exercise thereof, as applicable, were offered and
sold to the Lender in reliance upon specific exemptions from the registration requirements of United States federal and state
securities laws, which include Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule
506 of Regulation D promulgated thereunder. Pursuant to these exemptions, the Lender represented to the Company under the SPA,
among other representations, that it was an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D under the 1933 Act.
The
descriptions of the SPA, the Registration Rights Agreement, the Note, and the Warrant do not purport to be complete and are qualified
in their entirety by reference to the SPA, the Registration Rights Agreement, the Note, and the Warrant, which are included as
Exhibits 99.1, 99.2, 99.3, and 99.4, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
