Box Ships Inc (TEUFF)

[waterchaser]

$250,000 Convertible Note August 5, 2016

On August 5, 2016 (the “ Closing Date ”), Box Ships Inc. (the “ Company ”) entered into a securities purchase agreement (the “ Purchase Agreement ”) with Kyros Investments Ltd. (the “ Investor ”), an unrelated third party, pursuant to which, the Company sold a $250,000 principal amount convertible note (the “ Note ”) to the Investor for gross proceeds of $250,000.

The Note will mature on the one year anniversary of the Closing Date and will bear interest at the rate of 8% per annum, which will be payable on the maturity date or any redemption date and may be paid, in certain conditions, through the issuance of common shares, at the discretion of the Company.

The Note will be convertible into the Company’s common shares, par value $0.01 per share (“ Common Stock ”) at a conversion price equal to 65% of the lowest volume weighted average price of the Common Stock during the 21 trading days prior to the conversion date (the Common Stock, as converted, the “ Conversion Shares ”). At no time will the Investor be entitled to convert any portion of Convertible Note to the extent that after such conversion, the Investor (together with its affiliates) would beneficially own more than 4.99% of our outstanding Common Stock as of such date. The Note contains standard anti-dilution protection.

The Note includes customary event of default provisions, and provides for a default interest rate of 18%. Upon the occurrence of an event of default, the Investor may require the Company to redeem all or any portion of the Note (including all accrued and unpaid interest), in cash, at a price equal to the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 127.5% (or 100% if an insolvency related event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by (Y) the product of (1) 127.5% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price of the Company’s Common Stock on any trading day during the period commencing on the date immediately preceding such event of default and ending on the date the Company makes the entire redemption payment required to be made. The Company has the right at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Note in cash at a price equal to 127.5% of the total amount of the Note then outstanding.

The Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Purchase Agreement also provides for indemnification of the Investor and its affiliates in the event that the Investor incurs losses, liabilities, obligations, claims, contingencies, damages, costs and expenses related to a breach by us of any of our representations, warranties or covenants under the Purchase Agreement.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=11528698