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MEDICAN ENTERPRISES, INC. FILES (8-K) Disclosing Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits

July 2, 2014



Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an

Off-Balance Sheet Arrangement of a Registrant

On June 25, 2014, Medican Enterprises, Inc. (the "Company") entered into a Securities Purchase Agreement (the "Agreement") with a single accredited investor (the "Investor") in a private placement pursuant to which the Investor purchased a 5% Convertible Note with a face amount of $1,500,000 for a purchase price of $1,000,000 (the "Note"). The Note bears interest at a rate of 5% per annum and is payable one year after the date of the issuance. The Company may pay interest due either in cash or, at its option, through freely tradable stock. The Note will be convertible at the option of the Investor at any time into shares of the Company's common stock, par value $0.001 per share (the "Common Stock") at a conversion price equal to the less of (i) $1.90 and (ii) 70% (60% in the event of default) of the average of the two lowest volume-weighted-average-price of the Common Stock during the 12 consecutive trading days immediately preceding the applicable conversion date. All or part of the then remaining principal amount of the Note may be prepaid at any time at a price equal to 125% of the sum of the remaining principal amount of the Note to be prepaid plus all accrued and unpaid interest thereon. The principal amount of the Note will be reduced by $500,000 if the shares of Common Stock underlying the Note are registered for public resale pursuant to an effective registration statement by August 24, 2014.

The Note contains certain customary negative covenants and events of default, including, but not limited to, the Company's failure to pay principal and interest, material defaults under the other transaction documents, bankruptcy, and the Company's failure to deliver Common Stock certificates after a conversion date.

In connection with the Agreement, the Investor received a warrant (the "Warrant") to purchase 297,832 shares of Common Stock (the "Warrant Shares"). The Warrant is exercisable for a period of 5 years from the date of issuance at exercise price of $2.15, subject to adjustment. If a registration statement is not effective for the resale by the Holder of all of the Warrant Shares, the Investor may exercise the Warrant on a "cashless" basis.

The conversion price of the Note and the exercise price of the Warrant are subject to "full ratchet" anti-dilution adjustment for subsequent lower price issuances by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.

Pursuant to a Registration Rights Agreement, dated June 25, 2014, between the Company and the Investor, the Company is obligated to file a registration statement with the Securities and Exchange Commission ("SEC") registering the shares underlying the Note and the Warrant Shares for public resale by July 25, 2014 and cause such registration statement to be effective by August 14, 2014 (or September 23, 2014 if such registration is subject to full review by the SEC). The Company is subject to certain liquidated damages in the event it does not satisfy such obligations and other obligations under such Registration Rights Agreement.

The securities sold to the Investor were not registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Investor is an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such shares contain a legend stating the same.

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The foregoing information is a summary of the agreements involved in the transaction described above, is not complete, and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached as exhibits to this Current Report on Form 8-K. Readers should review such agreements for a complete understanding of the terms and conditions associated with this transaction.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are filed with this report:

Exhibit No. Description of Exhibit 4.1 Note, dated June 25, 2014, in the aggregate principal amount of $1,500,000 4.2 Warrant, dated June 25, 2014, to purchase 297,832 shares of the Company's Common Stock 10.1 Securities Purchase Agreement, dated June 25, 2014 by and between the Company and the Investor signatory thereto 10.2 Registration Rights Agreement, dated June 25, 2014 by and between the Company and the Investor signatory thereto



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Source: Edgar Glimpses


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