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Convertible Note Receivable
9 Months Ended
Dec. 31, 2014
Convertible Note Receivable  
Convertible Note Receivable

Note 4 – Convertible Note Receivable

 

Entry into Note Purchase Agreement

 

On April 2, 2014 the Company entered into a note purchase agreement with YOPCP, LLC, a Colorado limited liability company ("YOPCP"). YOPCP is a manufacturer of ready to eat organic gourmet soups. The Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company shall purchase from YOPCP a senior secured convertible promissory note with an initial principal amount of $250,000 (the "Note") for a purchase price of $250,000.

 

The Note bears interest at fifteen percent (15%) per annum with principal and interest due on the earlier of (i) the twelve (12) month anniversary of the issuance of the Note, or (ii) the next date of sale of equity of YOPCP (a " YOPCP Financing") following the Closing Date. The Company has the right to convert the Note at a conversion price equal to the price per unit of YOPCP's membership units ("Units") in YOPCP Financing (the "Conversion Price"). Upon full repayment or conversion of the Note, the Company has the additional right to receive an amount of Units equal to the initial principal amount of the Note divided by the Conversion Price.

 

The Company has a right of participation with respect to any future financing of YOPCP. Pursuant to the terms of the Purchase Agreement, the Company may elect to participate in an amount equal to 50% of any proposed future financing of YOPCP until the expiration of the maturity date of the Note. The Company also has a right of first refusal with respect to the management rights for distribution of YOPCP's products in Asia for a five year period.

 

The Company also entered into a security agreement (the "Security Agreement") with YOPCP which YOPCP granted a lien on all of its assets (the "Collateral") in favor of the Company to secure YOPCP's obligations under the Note. The Security Agreement includes certain customary representations, warranties and covenants regarding the perfection and maintenance of the Company's security interests in the Collateral. The lien on the Collateral will be released upon full payment or full conversion of the Note.