Section 1.01 Entering into a Material Definitive Agreement.

At March 3, 2022, Panacea Life Sciences Holdings, Inc. (the “Company”) has entered into an exchange agreement (the “Agreement”) with an institutional investor (the “Investor”) pursuant to which the Company has agreed to issue a senior convertible promissory note to initial discount of 10% of a principal amount of $385,000
(the “Note”) and five-year warrants to purchase 275,000 common shares of the Company, par value $0.0001 per share at an exercise price of $1.40 per share (the “Warrants”) in exchange for 350 Series A 0% Convertible Preferred Shares of the Company (“Series A”). The agreement was entered into after the investor exercised the most-favoured-nation rights contained in Section 7(b) of the Company’s Series A Preferences, Rights and Limitations Designation Certificate under the completion of a private placement with an institutional investor (the “Purchaser”) on November 18, 2021.

The note will be due March 3, 2023, i.e. one year from the date of issue. The note initially bears no interest, but in the event of default by the company, the note will bear interest at a rate of 18% per annum. Events of default include suspension of trading or listing of the common stock of the Company on the OTCQB or a national securities exchange, and failure to reserve a sufficient number of shares for conversion or exercise of all securities issued under the Agreement. In addition, in the event of default, the holder will be entitled to cause the Company to repay the principal amount outstanding and interest accrued on the note at a premium of 125%.

Principal and accrued interest on the note are convertible into common shares at a conversion price of $1.40 per share, subject to certain adjustments summarized as follows: (i) if an event of default has occurred prior to the maturity date, a reduction to 80% of the conversion price then in effect, (iii) an anti -dilution on certain issuances of common stock or derivative securities at a price per share below the conversion price, (iii) customary adjustments for stock splits, stock dividends and similar corporate events, and ( iv) adjustments during a public offering by the Company meeting certain defined criteria, summarized below.

Under the terms of the Note, upon a public offering by the Company of common stock, either alone, in units, or together with other securities pursuant to an effective registration statement, generating gross proceeds for the Company at least $10,000,000, and in connection with which the ordinary shares are approved for listing on a national stock exchange (a “Qualified Offer”), the conversion price will be reduced to 90% of the offer price per share in the Offer Qualified, if that price is less than the then-current conversion price. In addition, immediately prior to a Qualified Bid, the Company may redeem all or part of the unpaid principal and accrued interest on the note at a premium of 115%.

The note also contains customary negative clauses prohibiting the company from taking certain actions while the note remains outstanding.

The subscription warrants may be exercised for a period of five years from the May 18, 2022at an exercise price of $1.40 per share, subject to certain adjustments which are substantially similar to those contained in the note, including the qualifying bid adjustment.

Each of the Notes and Warrants contains a beneficial ownership limit of 4.99% pursuant to which neither may be converted or exercised, as the case may be, if and to the extent that, at Following such conversion or exercise, the holder would be the beneficial owner of more than 4.99% of the shares of the Company. outstanding common shares, which may increase to 9.99% upon 61 days written notice by the holder.

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Pursuant to the agreement, the company has entered into a registration rights agreement dated March 3, 2022by and between the Company and the Investor, in which the Company has agreed to file a registration statement on Form S-1 with the Securities Exchange Commission (the “SEC”) at Buyer’s request within the November 2021 private placement and include the Investor’s registrable securities. The Investor has agreed that its rights and remedies under the Registration Rights Agreement are subordinate to the rights and remedies of the Buyer under its Registration Rights Agreement.

The Company has obtained Buyer’s consent to the foregoing.

The terms of the Notes, Warrants and Registration Rights Agreement are substantially similar to the Notes and Warrants issued to the purchaser and the Registration Rights Agreement between the Company and the buyer entered into November 2021. The foregoing description of the terms of the Note, Warrants, Agreement and Registration Rights Agreement, and the transactions contemplated therein, does not purport to be complete and is qualified in its entirety by reference. in the form of agreement, the form of ticket, the form of mandate and the form of registration rights contract, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, of this current report on Form 8-K and are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information contained above in Section 1.01 is incorporated by reference in this Section 2.03.

Item 3.02 Unregistered Sale of Equity securities.

The information contained above in Section 1.01 is incorporated by reference in this Section 3.02.

The offer and sale of the Note and Warrants pursuant to the Agreement has not been or will not be registered under the Securities Act of 1933 and is exempt from registration pursuant to Section 4(a)( 2) thereof and Rule 506(b) enacted thereunder.

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Item 9.01 Financial statements and supporting documents

(d) Exhibits.



                                                                                           Filed or
Exhibit                                                    Incorporated by Reference       Furnished
   #                  Exhibit Description                Form       Date        Number     Herewith
 10.1       Form of Exchange Agreement*                                                      Filed
 10.2       Form of Original Issue Discount Senior                                           Filed
          Convertible Promissory Note
 10.3       Form of Warrant                                                                  Filed
 10.4       Form of Registration Rights Agreement*                                           Filed
  104     Cover Page Interactive Data File (embedded
          within the Inline XBRL document)

* Parts and/or times have been omitted. The Company hereby agrees to provide the SECOND upon request any omitted information.

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