Item 1.01 Entry into a Material Definitive Agreement.
On January 4, 2022, Propanc Biopharma, Inc. (the "Company") entered into a
securities purchase agreement (the "Purchase Agreement") with Sixth Street
Lending, LLC ("Sixth Street"), pursuant to which Sixth Street purchased a
convertible promissory note (the "Note") from the Company in the aggregate
principal amount of $63,750, such principal and the interest thereon convertible
into shares of the Company's common stock at the option of Sixth Street. The
transaction contemplated by the Purchase Agreement closed on January 6, 2022.
The Company intends to use the net proceeds ($60,000) from the Note for general
working capital purposes.
The maturity date of the Note is October 21, 2022 (the "Maturity Date"). The
Note shall bear interest at a rate of 8% per annum, which interest may be paid
by the Company to Sixth Street in shares of common stock, but shall not be
payable until the Note becomes payable, whether at the Maturity Date or upon
acceleration or by prepayment, as described below. Sixth Street has the option
to convert all or any amount of the principal face amount of the Note, starting
on July 3, 2022, and ending on the later of the Maturity Date and the date of
payment of the Default Amount (as defined below) is paid if an event of default
occurs, for shares of the Company's common stock at the then-applicable
conversion price. The conversion price for the Note shall be equal to the
Variable Conversion Price (as defined herein) (subject to equitable adjustments
for stock splits, stock dividends or rights offerings by the Company relating to
the Company's securities or the securities of any subsidiary of the Company,
combinations, recapitalization, reclassifications, extraordinary distributions
and similar events). The "Variable Conversion Price" shall mean 65% multiplied
by the Market Price (as defined herein) (representing a discount rate of 35%).
"Market Price" means the average of the lowest three (3) Trading Prices (as
defined below) for the Common Stock during the ten (10) Trading Day period
ending on the latest complete Trading Day prior to the Conversion Date. "Trading
Price" means, for any security as of any date, the closing bid price on the
OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading
market (the "OTC") as reported by a reliable reporting service designated by
Sixth Street (i.e. Bloomberg) or, if the OTC is not the principal trading market
for such security, the closing bid price of such security on the principal
securities exchange or trading market where such security is listed or traded
or, if no closing bid price of such security is available in any of the
foregoing manners, the average of the closing bid prices of any market makers
for such security that are listed in the "pink sheets". Notwithstanding the
foregoing, Sixth Street shall be restricted from effecting a conversion if such
conversion, along with other shares of the Company's common stock beneficially
owned by Sixth Street and its affiliates, exceeds 4.99% of the outstanding
shares of the Company's common stock.
The Note may be prepaid until 180 days from the issuance date. If the Note is
prepaid within 60 days of the issuance date, then the prepayment premium shall
be 110% of the face amount plus any accrued interest, if prepaid after 60 days
from the issuance date, but less than 91 days from the issuance date, then the
prepayment premium shall be 115% of the face amount plus any accrued interest,
if prepaid after 90 days from the issuance date, but less than 121 days from the
issuance date, then the prepayment premium shall be 120% of the face amount plus
any accrued interest, if prepaid after 120 days from the issuance date, but less
than 151 days from the issuance date, then the prepayment premium shall be 125%
of the face amount plus any accrued interest, and if prepaid after 150 days from
the issuance date, but less than 181 days from the issuance date, then the
prepayment premium shall be 129% of the face amount plus any accrued interest.
So long as the Note is outstanding, the Company covenants not to, without prior
written consent from Sixth Street, sell, lease or otherwise dispose of all or
substantially all of its assets outside the ordinary course of business which
would render the Company a "shell company" as such term is defined in Rule 144.
Pursuant to the terms of the Purchase Agreement, the Company paid Sixth Street's
fees and expenses in the aggregate amount of $3,750.
Other than as described above, the Note contains certain events of default,
including failure to timely issue shares upon receipt of a notice of conversion,
as well as certain customary events of default, including, among others, breach
of covenants, representations or warranties, insolvency, bankruptcy, liquidation
and failure by the Company to pay the principal and interest due under the Note.
Additional events of default shall include, among others: (i) failure to reserve
at least five times the number of shares issuable upon full conversion of the
Note; (ii) bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings, voluntary or involuntary, for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Company or any subsidiary of the Company; provided, that in the event such event
is triggered without the Company's consent, the Company shall have sixty (60)
days after such event is triggered to discharge such event, (iii) the Company's
failure to maintain the listing of the common stock on at least one of the OTC
markets (which specifically includes the quotation platforms maintained by the
OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National
Market, the Nasdaq Small Cap Market, the New York Stock Exchange, or the
American Stock Exchange, (iv) The restatement of any financial statements filed
by the Company with the SEC at any time after 180 days after the issuance date
for any date or period until this note is no longer outstanding, if the result
of such restatement would, by comparison to the un-restated financial statement,
have reasonably constituted a material adverse effect on the rights of Sixth
Street with respect to this note or the Purchase Agreement, and (v) the
Company's failure to comply with its reporting requirements of the Securities
and Exchange Act of 1934 (the "Exchange Act"), and/or the Company ceases to be
subject to the reporting requirements of the Exchange Act.
In the event that the Company fails to deliver to Sixth Street shares of common
stock issuable upon conversion of principal or interest under the Note within
three business days of a notice of conversion by Sixth Street, the Company shall
incur a penalty of $1,000 per day, provided, however, that such fee shall not be
due if the failure to deliver the shares is a result of a third party such as
the transfer agent.
Upon the occurrence and during the continuation of certain events of default,
the Note will become immediately due and payable and the Company will pay Sixth
Street, in full satisfaction of its obligations in the Note an amount equal to
150% or 200% of an amount equal to the then outstanding principal amount of the
. . .
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement by a Registrant.
The information set forth in Item 1.01 above is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. Description
4.1* 8% Convertible Promissory Note, January 3, 2022
10.1* Securities Purchase Agreement, dated January 3, 2022, by and
between the Company and Sixth Street Lending LLC
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Filed herewith
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