PROVECTUS BIOPHARMACEUTICALS, INC. (OTCMKTS:PVCT) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On March 19, 2017, Provectus Biopharmaceuticals, Inc. (the
Company) entered into an exclusive Definitive Financing
Commitment Term Sheet with a group of the Companys stockholders
(the PRH Group), which was amended and restated effective as of
March 19, 2017 (the Term Sheet), which sets forth the terms on
which the PRH Group will provide equity financing to the Company.
The PRH Group is comprised of Edward Pershing (exclusively in an
advisory capacity only), Dominic Rodrigues, Bruce Horowitz, and
additional members as the PRH Group may determine in their sole
discretion. The PRH Group specifically disclaims that it is a
group as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended.
The Financing
Subject to the terms and conditions of the Term Sheet, the PRH
Group will use its best efforts to arrange for a financing of a
minimum of $10,000,000 and maximum of $20,000,000 (the
Financing), which amounts will be provided in several tranches.
The proceeds from the Financing are to be used to fund the
completion of the Companys clinical development program as
currently constituted and envisioned and to fund the Companys
general and administrative expenses, subject to the approval of
the PRH Group.
Structure of the Financing
The Financing will be in the form of a secured convertible loan
(the Loan) from the PRH Group, Eric Wachter, and from other
investors (collectively, the Investors). The Loan will be
evidenced by secured convertible promissory notes (each, a Note)
from the Company to the Investors. In addition to the customary
provisions, the Note shall contain the following provisions:
(i)It will be secured by a first priority security interest on
the Companys intellectual property (the IP);
(ii)The Loan will bear interest at the rate of eight percent (8%)
per annum on the outstanding principal amount of the Loan that
has been funded to the Company;
(iii)The Loan proceeds will be held in one or more accounts (the
Escrow) pending the funding of the tranches of the Financing to
borrowing requests made by the Company;
(iv) In the event there is a change of control of the Companys
board of directors (Board) as proposed by any person or group
other than the Investors, the term of the Note will be
accelerated and all amounts due under the Note will be
immediately due and payable, plus interest at the rate of eight
percent (8%) per annum, plus a penalty in the amount equal to ten
times (10x) the outstanding principal amount of the Loan that has
been funded to the Company;
(v)The outstanding principal amount and interest payable under
the Loan will be convertible at the sole discretion of the
Investors into shares of the Companys Series D Preferred Stock, a
new series of preferred stock to be designated by the Board, at a
price per share equal to $0.2862; and
(vi)Notwithstanding (v)above, the principal amount of the Note
and the interest payable under the Loan will automatically
convert into shares of the Companys Series D Preferred Stock at a
price per share equal to $0.2862 effective on the 18 month
anniversary of the funding of the final tranche of the Financing
subject to certain exceptions.
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Upon conversion of the Loan, the Investors shall release their
first lien on the IP.
First Tranche of Financing
The first tranche of the Financing to be arranged by the PRH
Group shall be $2,500,000 (the First Tranche). As conditions
precedent to the funding of the First Tranche, among other
things, (i)Alfred E. Smith, IV, Timothy C. Scott and Kelly M.
McMasters, MD, will resign from the Board, (ii)Dominic Rodrigues,
Bruce Horowitz and a third candidate nominated by the PRH Group
will all be approved and appointed to the Board, (iii)Dominic
Rodrigues will be appointed as Chairman of the Board and (iv) the
parties shall execute the Notes and related loan documents. The
PRH Group shall use its best efforts to have the First Tranche
available for funding into Escrow within thirty (30)days from the
date of the execution of the Note and related loan documents.
Upon the PRH Groups funding of the First Tranche into Escrow,
Eric Wachter will immediately fund the balance of his $2,500,000
loan to the Company and convert his entire financing thereof into
a secured convertible promissory note that has the same terms and
conditions as the Note issued to the other Investors.
Second and Subsequent Tranches
The PRH Group shall use its best efforts to arrange the Second
Tranche of Financing in the amount of $5,000,000 on or before
June30, 2017 (the Second Tranche). Simultaneously with the
Investors securing the Second Tranche, (i)Jan Koe and Eric
Wachter shall resign from the Board as soon as practicable but no
later than twelve (12)months from the closing of the First
Tranche, (ii)Edward Pershing and a second candidate nominated by
the PRH Group shall be approved and appointed to the Board and
(iii)Edward Pershing, or his stead, shall be appointed as
Chairman of the Board of Directors and Dominic Rodrigues shall be
appointed as Vice-Chairman of the Board. The funding of the
Second Tranche and subsequent tranches shall be subject to the
following conditions:
(i) the election of the Companys slate of directors to the Board
at the Companys 2017 annual meeting of stockholders; and
(ii)the PRH Groups receipt of satisfactory evidence that the lien
on the IP in favor of the PRH Group has been properly recorded.
Rights and Preferences of the Series D Convertible
Preferred Stock
The Series D Preferred Stock shall have a first priority right to
receive proceeds from the sale, liquidation or dissolution of the
Company or any of the Companys assets (each, a Company Event).
If a Company Event occurs within two (2)years of the date of
issuance of the Series D Preferred Stock (the Date of Issuance),
the holders of Series D Preferred Stock shall receive a
preference of four times (4x) their respective investment amount.
If a Company Event occurs after the second (2nd) anniversary of
the Date of Issuance, the holders of the Series D Preferred Stock
shall receive a preference of six times (6x) their respective
investment amount.
The Series D Preferred Stock shall be convertible at the option
of the holders thereof into shares of the Companys common stock
based on a formula to achieve a one-for-one conversion ratio. The
Series D Preferred Stock shall automatically convert into shares
of Common Stock upon the fifth (5th) anniversary of the Date of
Issuance.
On an as-converted basis, the Series D Preferred Stock shall
carry the right to one (1)vote per share. The Series D Preferred
Stock shall not have any dividend preference but shall be
entitled to receive, on a pari passu basis, dividends,
if any, that are declared and paid on any other class of the
Companys capital stock. The holders of Series D Preferred Stock
shall not have anti-dilution protection.
2
The foregoing summary of the Term Sheet does not purport to be
complete and is qualified in its entirety by reference to the
full text of the Term Sheet that will be filed with the
Securities and Exchange Commission as an exhibit to the Companys
Quarterly Report on Form 10-Q for the quarter ending March31,
2017.
| Item7.01. | Regulation FD Disclosure. |
On March23, 2017, the Company issued a press release (the Press
Release) announcing the disclosure of the terms and conditions of
the Term Sheet. A copy of the Press Release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
to the rules and regulations of the Commission, the information
in this Item 7.01 disclosure, including Exhibit 99.1 and
information set forth therein, is deemed to have been furnished
and shall not be deemed to be filed under the Securities Exchange
Act of 1934, as amended.
| Item9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit Number |
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Description |
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| 99.1 | Press Release, dated March23, 2017 |
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About PROVECTUS BIOPHARMACEUTICALS, INC. (OTCMKTS:PVCT)
Provectus Biopharmaceuticals, Inc. is a development-stage biopharmaceutical company. The Company is engaged in developing pharmaceuticals for oncology and dermatology indications. The Company is focused on developing its prescription drug candidates, PV-10 and PH-10. It is developing PV-10 for treatment of several life threatening cancers, including metastatic melanoma, liver cancer and breast cancer. It is developing PH-10 to provide minimally invasive treatment of chronic severe skin afflictions, such as psoriasis and atopic dermatitis, a type of eczema. In addition to clinical trials, patients enrolled in the expanded access or compassionate use program for PV-10 are also receiving PV-10 treatments for cutaneous and subcutaneous cancer indications. The Company also focuses on over-the-counter (OTC) products and various other non-core technologies. PV-10 is a sterile injectable form of rose bengal disodium (Rose Bengal), for direct injection into tumors. PROVECTUS BIOPHARMACEUTICALS, INC. (OTCMKTS:PVCT) Recent Trading Information
PROVECTUS BIOPHARMACEUTICALS, INC. (OTCMKTS:PVCT) closed its last trading session up +0.0001 at 0.0381 with 1,573,841 shares trading hands.