On September 21, 2022, Propanc Biopharma, Inc. (the "Company") reported that it entered into a securities purchase agreement (the "GS Capital Purchase Agreement") with GS Capital Partners, LLC ("GS Capital"), pursuant to which GS Capital purchased a convertible redeemable note (the "GS Capital Note") from the Company in the aggregate principal amount of $71,500, such principal and the interest thereon convertible into shares of the Company’s common stock at the option of GS Capital (Filing, 8-K, Propanc, SEP 21, 2022, View Source [SID1234621467]). The transaction contemplated by the GS Capital Purchase Agreement closed on September 26, 2022. The GS Capital Note contains a $4,000 original issue discount. The Company intends to use the net proceeds ($67,500) from the GS Capital Note for general working capital purposes.
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The maturity date of the GS Capital Note is March 21, 2023 (the "Maturity Date"). The GS Capital Note shall bear interest at a rate of 8% per annum, which interest may be paid by the Company to GS Capital in shares of common stock, but shall not be payable until the GS Capital Note becomes payable, whether at the Maturity Date or upon acceleration or by prepayment. The GS Capital Note is exchangeable for an equal aggregate principal amount of notes of different authorized denominations, as requested by GS Capital surrendering the same. GS Capital is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of the GS Capital Note then outstanding into shares of the Company’s common stock (the "Common Stock") at a price for each share of Common Stock ("Conversion Price") of $0.002 per share (the "Fixed Price"). However, in the event the Company’s Common Stock trades below $0.0014 per share for more than five (5) consecutive trading days, then the Fixed Price shall be equal to $0.0009 per share. In the event of default, the Conversion Price shall be equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets on which the Company’s shares are then traded or any exchange upon which the Common Stock may be traded in the future, for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company. GS Capital is restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by GS Capital, exceeds 4.99% of the outstanding shares of the Company’s Common Stock.
The GS Capital Note may be prepaid until 180 days from the issuance date. If the GS Capital 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 121 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, then the prepayment premium shall be 130% of the face amount plus any accrued interest. So long as the GS Capital Note is outstanding, the Company covenants not to, without prior written consent from GS Capital, 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 GS Capital Purchase Agreement, the Company paid GS Capital’s legal fees of $2,500.
Other than as described above, the GS Capital 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 GS Capital Note.
Upon the occurrence and during the continuation of certain events of default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
In the event that the Company fails to deliver to GS Capital shares of Common Stock issuable upon conversion of principal or interest under the GS Capital Note, the penalty shall be $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day.
The GS Capital Note was issued, and any shares to be issued pursuant to any conversion of the note shall be issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
The foregoing description of the GS Capital Note and GS Capital Purchase Agreement do not purport to be complete and is qualified in their entirety by reference to the full text of the documentss, which are filed as Exhibits 4.1 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.