Freight Technologies, Inc 6-K, filed Mar 16, 2026
Freight Technologies, Inc. (FRGT)
About this 6-K
Freight Technologies, Inc filed this 6-K on March 16, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of, March 2026
Commission File Number 001-38172
FREIGHT TECHNOLOGIES, INC.
(Translation of registrant’s name into English)
Mr. Javier Selgas, Chief Executive Officer
2001 Timberloch Place, Suite 500
The Woodlands, TX 77380
Telephone: (773) 905-5076
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F
On March 12, 2026, Freight Technologies, Inc., a company organized in the British Virgin Islands (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the investor named therein (the “Buyer”), pursuant to which the Company agreed to sell to the Buyer 1,000,000 Series C preferred shares, par value $0.0001 per share of the Company (each, a “Series C Preferred Share” and collectively, the “Series C Preferred Shares”), which have the rights, preferences and privileges set forth in the Amended and Restated Memorandum and Articles of Association, filed with the Registrar of Corporate Affairs of the British Virgin Islands on March 12, 2026 (the “A&R M&A”) for an aggregate purchase price of $1,000,000 in a private placement (the “Offering”). The Offering raised net cash proceeds of approximately $975,000 (after deducting the transfer agent and legal fees and expenses of the Offering). The Company intends to use the net cash proceeds from the Offering for working capital and corporate purposes. Pursuant to the A&R M&A, each Series C Preferred Share is immediately convertible on the date of issuance, at the option of the Buyer, at any time and from time to time, and without the payment of additional consideration by the Buyer, into such number of fully paid and non-assessable ordinary shares, with no par value per share, of the Company (the “Ordinary Shares” and such shares issuable upon conversion of the Series C Preferred Shares, the “Conversion Shares”). The material terms of the Securities Purchase Agreement and the Series C Preferred Shares under the A&R M&A are summarized below.
Securities Purchase Agreement
The Securities Purchase Agreement contains customary representations and warranties. Pursuant to the Securities Purchase Agreement, the Buyer may request that the Conversion Shares are registered on a registration statement that the Company determines to prepare and file with the U.S. Securities and Exchange Commission relating to an offering of its equity securities under the Securities Act of 1933, as amended (the “Securities Act”). These “piggy-back” rights do not apply to registration statements filed on Form S-4 or Form S-8 (or their then equivalents) relating to equity securities to be issued solely in connection with any acquisition of any entity or business, or equity securities issuable in connection with the Company’s stock option or other employee benefit plans subject to the conditions set forth in the Securities Purchase Agreement.
In addition, the Company has agreed, pursuant to the Securities Purchase Agreement, that, until such time as the Buyer no longer hold any Series C Preferred Shares, the Company will not issue, grant or sell, or enter into an agreement to issue, grant or sell, any Ordinary Shares at a price per share less than the conversion price of the Series C Preferred Shares in effect immediately prior to such granting, issuance or sale.
Series C Preferred Shares
Additionally, in connection with the Securities Purchase Agreement, on March 11, 2026, the Company’s board of directors approved the form of and the filing of A&R M&A, which the Company filed on March 12, 2026. The A&R M&A amends several provisions with respect to the Series C Preferred Shares. The amended material terms of the Series C Preferred Shares are as follows:
Conversion: Each Series C Preferred Share is immediately convertible on the date of issuance, by dividing the Series C stated value, $1.00 per share (the “Series C Stated Value”), by the applicable conversion price (the “Conversion Price”) at the option of the shareholder thereof, at any time and from time to time, and without the payment of additional consideration by the shareholder thereof, into such number of fully paid and non-assessable Ordinary Shares. Pursuant to the A&R M&A, the Conversion Price will be the quotient of: the lower of (A) $3.012 with respect to the Series C Preferred Shares issued to DIP SPV I, L.P. in December 2025 and, with respect to any other issuance, 120% of the closing price per Ordinary Share on the trading date immediately preceding the date of a definitive agreement to issue any Series C Preferred Shares and (B) the lowest daily Volume-Weighted Average Price (the “VWAP”) of the Ordinary Shares in the seven (7) consecutive trading day period immediately preceding the date of the conversion of the applicable Series C Preferred Shares; in each case subject to the terms and conditions set forth in the Amended and Restated M&A.
Waiver: Any rights, powers, preferences and other terms of the Series C Preferred Shares in the Schedule of the A&R M&A, may be waived on behalf of all holders of Series C Preferred Shares by the written consent or affirmative vote of the Series C Requisite Holders. The “Series C Requisite Holder(s)” means the written consent or affirmative vote of the holders of at least a majority of the outstanding Series C Preferred Shares voting together as a single class, which majority must include the consent or affirmative vote of DIP SPV I, L.P. and Freight Opportunities LLC.
Right of Redemption: The Company may redeem all or any portion of the issued and outstanding Series C Preferred Shares at the Series C Preferred Redemption Price by providing written notice to the holders of not less than a majority of the then-outstanding Series C Preferred Shares (the “Series C Redemption Notice”) twenty (20) trading days prior to the requested date of redemption (the “Series C Redemption Date”). On the Series C Redemption Date, the Company shall deliver to each holder its applicable amount in cash. “Series C Preferred Redemption Price” means the greater of (i) the Series C Stated Value of the Series C Preferred Shares being redeemed and (ii) an amount equal to the product of (A) the number of Conversion Shares underlying the Series C Preferred Shares being redeemed multiplied by (B) the greater of (1) the VWAP on date of the Series C Redemption Notice and (2) the VWAP on the trading day immediately prior to the Series C Redemption Date. The holders of the Series C Preferred Shares may convert Series C Preferred Shares subject to a Series C Redemption Notice on or after the date of a Series C Redemption Notice received by such holder, through the trading day immediately prior to the Series C Redemption Date, which shall reduce the number of Series C Preferred Shares redeemed pursuant to such Series C Redemption Notice on the Series C Redemption Date.
The foregoing descriptions of the Securities Purchase Agreement and the A&R M&A do not purport to be complete and are qualified in their entirety by reference to the full texts of the Securities Purchase Agreement and A&R M&A, copies of which are filed as Exhibits 10.1 and 3.1 hereto, respectively, and incorporated herein by reference.
Unregistered Sales of Securities
The issuance and sale of the Series C Preferred Shares and the issuance of any Conversion Shares will be exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Each of the Buyers represented that it is an accredited investor within the meaning of Rule 501(a) of Regulation D and was acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by the Company or its representatives.
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: March 16 , 2026 | FREIGHT TECHNOLOGIES, INC. | |
| By: | /s/ Javier Selgas | |
| Name: | Javier Selgas | |
| Title: | Chief Executive Officer | |
Exhibit 3.1
BVI Co. No.: 1891111
TERRITORY OF THE BRITISH VIRGIN ISLANDS
BVI BUSINESS COMPANIES ACT (AS REVISED)
FREIGHT TECHNOLOGIES, INC.
A Company Limited By Shares
MEMORANDUM AND ARTICLES OF ASSOCIATION
Incorporated on the 28th day of September 2015
Amended and Restated on the 20th day of March 2017, 26th day of October 2020, 20th day of December 2021, 14th day of February 2022, 26th day of May 2022, 13th day of July 2022, 23rd day of March 2023, 30th day of June 2023, 2nd day of February 2024, 12th day of June 2024, 24th day of January 2024, 31st day of January 2025, 27th day of June 2025, 18th day of December 2025, and 30th day of December 2025 and 12th day of March 2026
TERRITORY OF THE BRITISH VIRGIN ISLANDS
BVI BUSINESS COMPANIES ACT (AS REVISED)
AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION OF FREIGHT TECHNOLOGIES, INC.
A Company Limited By Shares
| 1 | NAME |
The name of the Company is Freight Technologies, Inc.
| 2 | STATUS |
The Company is a company limited by shares.
| 3 | REGISTERED OFFICE AND REGISTERED AGENT |
| 3.1 | The first registered office of the Company was at Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands. |
| 3.2 | The current registered office of the Company is at Maples Corporate Services (BVI) Limited, Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands. |
| 3.3 | The first registered agent of the Company was Start Incorp Services Limited of Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands. |
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| 3.4 | The current registered agent of the Company is Maples Corporate Services (BVI) Limited of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands. |
| 3.5 | The Company may, by Resolution of Shareholders or by Resolution of Directors, change the location of its registered office or change its registered agent. |
| 3.6 | If at any time the Company does not have a registered agent it may, by Resolution of Shareholders or Resolution of Directors, appoint a registered agent. |
| 4 | CAPACITY AND POWERS |
| 4.1 | Subject to the Act and any other British Virgin Islands legislation, the Company has, irrespective of corporate benefit: |
| (a) | full capacity to carry on or undertake any business or activity, do any act or enter into any transaction; and |
| (b) | for the purposes of paragraph (a), full rights, powers and privileges. |
| 4.2 | For the purposes of section 9(4) of the Act, there are no limitations on the business that the Company may carry on. |
| 5 | NUMBER AND CLASSES OF SHARES |
| 5.1 | The Company is authorised to issue an unlimited number of Shares divided as follows: |
| (a) | an unlimited number of ordinary shares with no par value each (each such share being an “Ordinary Share”); |
| (b) | an unlimited number of series A preferred shares (each such share being a “Series A Preferred Share”), designated as follows: |
| i. | a maximum of 25,000 series seed preferred shares with a par value of US$0.0001 each (the “Series Seed Preferred Shares”); |
| ii. | a maximum of 10,000,000 series A1-A preferred Shares with par value of US$0.0001 each (the “Series A1-A Preferred Shares” or the “Series A1 Preferred Shares”); |
| iii. | a maximum of 3,000,000 series A2 preferred shares with par value of US$0.0001 each (the “Series A2 Preferred Shares”); |
| iv. | an unlimited number of series A4 preferred shares with par value of US$0.0001 each, (the “Series A4 Preferred Shares”); |
| (c) | a maximum of 21,000,000 series B preferred shares with a par value of US$0.0001 each (each such share being a “Series B Preferred Shares”); |
| (d) | a maximum of 12,000,000 series C preferred shares with a par value of US$0.0001 each (each such share being a “Series C Preferred Shares”); |
| (e) | an unlimited number of blank check preferred shares with no par value (each such share being a “Blank Check Preferred Share”). |
| 5.2 | Subject to the Memorandum, the Company may issue fractional Shares and a fractional Share shall have the corresponding fractional rights, obligations and liabilities of a whole Share of the same class or series of Shares. |
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| 5.3 | The Company may issue a class of Shares in one or more series. The division of a class of Shares into one or more series and the designation to be made to each series shall be determined by the directors from time to time. |
| 6 | RIGHTS OF SHARES |
| 6.1 | Each Ordinary Share in the Company confers upon the Shareholder: |
| (a) | the right to one vote on any Resolution of Shareholders; |
| (b) | subject to the rights of the Shareholders of Series A Preferred Shares as set out in the Schedule, the right to an equal share in any dividend paid by the Company; and |
| (c) | subject to the rights of the Shareholders of Series A Preferred Shares as set out in the Schedule, the right to an equal share in the distribution of the surplus assets of the Company. |
| 6.2 | Each Series A Preferred Share in the Company confers upon the Shareholder: |
| (a) | the rights in respect of voting (if any) as are set out at Section 3 of the Schedule; |
| (b) | the right to convert such Series A Preferred Shares as set out at Section 3 of the Schedule; |
| (c) | the right in respect of any dividend paid by the Company as set out at Section 3 of the Schedule; and |
| (d) | the right in respect of a share in the distribution of the surplus assets of the Company as set out at Section 3 of the Schedule. |
| 6.3 | Each Series B Preferred Share in the Company confers upon the Shareholder: |
| (a) | the rights in respect of voting (if any) as are set out at Section 4 of the Schedule; |
| (b) | the right to convert such Series B Preferred Shares as set out at Section 4 of the Schedule; |
| (c) | the right in respect of any dividend paid by the Company as set out at Section 4 of the Schedule; and |
| (d) | the right in respect of a share in the distribution of the surplus assets of the Company as set out at Section 4 of the Schedule. |
| 6.4 | Each Series C Preferred Share in the Company confers upon the Shareholder: |
| (a) | the rights in respect of voting (if any) as are set out at Section 5 of the Schedule; |
| (b) | the right to convert such Series C Preferred Shares as set out at Section 5 of the Schedule; |
| (c) | the right in respect of any dividend paid by the Company as set out at Section 5 of the Schedule; and |
| (d) | the right in respect of a share in the distribution of the surplus assets of the Company as set out at Section 5 of the Schedule. |
| 6.5 | The Blank Check Preferred Shares shall have such rights as specified by the board of Directors pursuant to the Resolution of Directors approving the issue of such Blank Check Preferred Shares, and in any such Resolution of Directors the board of Directors shall agree to amend and restate the Memorandum and Articles to fully set out such rights and instruct the registered agent of the Company to file the amended Memorandum and Articles with the Registrar. |
| 7. | REGISTERED SHARES |
The Company shall issue registered Shares only. The Company is not authorised to issue bearer Shares, convert registered Shares to bearer Shares or exchange registered Shares for bearer Shares.
| 8. | AMENDMENT OF THE MEMORANDUM AND THE ARTICLES |
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| 8.1 | Subject to Sections 3.1 and 4.1 of the Schedule, the Company may amend this Memorandum or the Articles by Resolution of Shareholders or by Resolution of Directors, save that no amendment may be made by Resolution of Directors: |
| (a) | to restrict the rights or powers of the Shareholders to amend this Memorandum or the Articles; |
| (b) | to change the percentage of Shareholders required to pass a Resolution of Shareholders to amend this Memorandum or the Articles; |
| (c) | in circumstances where this Memorandum or the Articles cannot be amended by the Shareholders; |
| (d) | to this Clause 8; or |
| (e) | to Regulation 22 of the Articles. |
| 8.2 | Any amendment of this Memorandum or the Articles will take effect from the date that the notice of amendment, or restated Memorandum and Articles incorporating the amendment, is registered by the Registrar or from such other date as determined pursuant to the Act. |
| 8.3 | The rights conferred upon the holders of the Shares of any class may only be varied, whether or not the Company is in liquidation, with the consent in writing of the holders of a majority of the issued Shares of that class or by a resolution approved at a duly convened and constituted meeting of the Shares of that class by the affirmative vote of a majority of the votes of the Shares of that class which were present at the meeting and were voted. |
| 8.4 | The rights conferred upon the holders of the Shares of any class shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking equally with or senior to such existing Shares. |
| 9 | DEFINITIONS AND INTERPRETATION |
| 9.1 | In this Memorandum of Association and the attached Articles of Association, if not inconsistent with the subject or context: |
Act means the BVI Business Companies Act (As Revised), as amended from time to time, and includes the BVI Business Companies Regulations (As Revised) and any other regulations made under the Act.
Affiliate means, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by, or is under common Control with, the specified Person.
Alternate Consideration has the meaning given to it in Section 4.5.6(d) of the Schedule.
Articles means the attached Articles of Association of the Company.
Attribution Parties means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the original issuance date of such Preferred Shares, directly or indirectly managed or advised by the investment manager of a Shareholder of Series A Preferred Shares or Series B Preferred Shares (as appropriate) or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of such Shareholder of Series A Preferred Shares or Series B Preferred Shares (as appropriate) or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group (as defined by the Exchange Act) together with such Shareholder of Series A Preferred Shares or Series B Preferred Shares (as appropriate) or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Ordinary Shares would or could be aggregated with such Shareholder’s and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively such Shareholder of Series A Preferred Shares or Series B Preferred Shares (as appropriate) and all other Attribution Parties to the Maximum Percentage.
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August 2025 Amendment Date means 6 August 2025.
Blank Check Preferred Shares has the meaning given to it in Clause 5.1(e) of the Memorandum.
business day means a weekday on which banks are generally open for business in New York City, New York.
Buy-In has the meaning given to it in Section 4.5.3(d) of the Schedule.
Commission means the United States Securities and Exchange Commission.
Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting securities, by contract, or otherwise.
Conversion Amount means the sum of the Stated Value at issue.
Conversion Date has the meaning given to it in Section 4.5.1 of the Schedule.
Conversion Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Conversion Shares means, collectively, the Ordinary Shares issuable upon conversion of the Series B Preferred Shares or the Series C Preferred Shares (as applicable) in accordance with the terms of the Schedule.
Deemed Liquidation Event has the meaning given to it in Section 3.4.2 of the Schedule.
electronic means actuated by electric, magnetic, electro-magnetic or electro-mechanical energy and ‘by electronic means’ means by any manner capable of being so actuated and shall include email and/or other data transmission service.
Excess Shares has the meaning given to it in Section 3.5.9 of the Schedule.
Exchange Act means the Securities Exchange Act of 1934 Act of the United States.
executed includes any mode of execution.
Fundamental Transaction has the meaning given to it in Section 4.5.6(d) of the Schedule.
July 2022 Amendment Date means July 13, 2022.
Liquidation has the meaning given to it in Section 4.4. of the Schedule.
Liquidity Date means the earliest of the date that (a) a Registration Statement(s) registering for resale all of the Conversion Shares (unless partially waived by a Series B Preferred Shareholder) has been declared effective by the Commission and (b) all of the underlying Ordinary Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions
Management has the meaning given to it in Section 22 of the Articles.
Maximum Percentage has the meaning given to it in Section 3.5.9 of the Schedule.
Memorandum means this Memorandum of Association of the Company (including, for the avoidance of doubt, the Schedule) as originally registered or as from time to time amended or restated.
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Merger Agreement has the meaning given to it in Section 3.4.3 of the Schedule.
Notice of Conversion has the meaning given to it in Section 4.5.1 of the Schedule.
Ordinary Share Equivalents means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Ordinary Shares, including, without limitation, any debt, preferred shares, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares.
Original Issue Price has the meaning given to it in Section 3.3 of the Schedule.
Outstanding Share Number has the meaning given to it in Section 3.5.9 of the Schedule.
Payment Distribution has the meaning given to it in Section 4.5.6(c) of the Schedule.
Person or person includes, without limitation, an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, unincorporated association, trusts, the estates of deceased individuals or any other entity or organization.
present in person means, in the case of an individual, that individual or his lawfully appointed attorney being present and, in the case of corporation, being present by duly authorised representative or lawfully appointed attorney and, in relation to meetings, ‘in person’ shall be construed accordingly.
Preferred Shares means, collectively, the Series A Preferred Shares, the Series B Preferred Shares, the Series C Preferred Shares and the Blank Check Preferred Shares.
Proscribed Powers means the powers to: (a) amend this Memorandum or the Articles; (b) designate committees of directors; (c) delegate powers to a committee of directors; (d) appoint or remove directors; (e) appoint or remove an agent; (f) approve a plan of merger, consolidation or arrangement; (g) make a declaration of solvency or to approve a liquidation plan; or (h) make a determination that immediately after a proposed distribution the value of the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they fall due.
Purchase Rights has the meaning given to it in Section 4.5.6 of the Schedule.
Reference Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Registrar means the Registrar of Corporate Affairs appointed under section 229 of the Act.
Registration Statement means a registration statement filed with the Commission covering the resale of the Conversion Shares by the Series B Preferred Shareholders.
Requisite Holder means the written consent or affirmative vote of the holders of at least a majority of the outstanding Series A Preferred Shares voting together as a single class, which must include Freight Opportunities LLC.
Resolution of Directors means either:
| (a) | a resolution approved at a duly convened and constituted meeting of directors of the Company or of a committee of directors of the Company by the affirmative vote of a majority of the directors present at the meeting who voted except that where a director is given more than one vote, he shall be counted by the number of votes he casts for the purpose of establishing a majority; or | |
| (b) | a resolution consented to in writing by all directors or by all members of a committee of directors of the Company, as the case may be. |
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Resolution of Shareholders means either:
| (a) | a resolution approved at a duly convened and constituted meeting of the Shareholders by the affirmative vote of a majority of the votes of the Shares entitled to vote thereon which were present at the meeting and were voted; or | |
| (b) | a resolution consented to in writing by a majority of the votes of the Shares entitled to vote on such resolution. |
Schedule means the schedule to the Memorandum which forms a part of the same as provided for therein.
Seal means any seal which has been duly adopted as the common seal of the Company.
Securities means shares and debt obligations of every kind of the Company, and including without limitation options, warrants and rights to acquire shares or debt obligations.
Series A Conversion Price means the Series A1-A Conversion Price, Series A2 Conversion Price and/or Series A4 Conversion Price (as applicable) in accordance with Section 3.5.1(a) of the Schedule.
Series A1-A Conversion Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Series A1-A Original Issue Price has the meaning given to it in Section 3.3 of the Schedule.
Series A2 Conversion Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Series A2 Original Issue Price has the meaning given to it in Section 3.3 of the Schedule.
Series A4 Conversion Price has the meaning given to it in Section 3.5.1(c) of the Schedule.
Series A4 Conversion Price Floor has the meaning given to it in Section 3.5.1(c) of the Schedule.
Series A4 Original Issue Price has the meaning given to it in Section 3.3 of the Schedule.
Series A Original Issue Date means the date of the first issuance of any Series A Preferred Shares regardless of the number of transfers of any particular Series A Preferred Shares thereafter, and regardless of the number of certificates which may be issued to evidence such Series A Preferred Shares.
Series A Reference Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Series A1-A Reference Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Series A2 Reference Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Series A4 Reference Price has the meaning given to it in Section 3.5.1(a) of the Schedule.
Series A Preferred Shares has the meaning given to it in Clause 5.1(b) of the Memorandum.
Series B Conversion Price means, as initially in effect, US$1.40, and as previously adjusted and as in effect on the August 2025 Amendment Date, US$14,000.00 subject to further adjustment in accordance with the terms of the Schedule.
Series B Original Issue Date means the date of the first issuance of any Series B Preferred Shares regardless of the number of transfers of any particular Series B Preferred Shares thereafter, and regardless of the number of certificates which may be issued to evidence such Series B Preferred Shares.
Series B Preferred Shares has the meaning given to it in Clause 5.1(c) of the Memorandum.
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Series C Preferred Shares has the meaning given to it in Clause 5.1(d) of the Memorandum.
Series C Conversion Price means, the lower of (A) the Series C Fixed Price and (B) the Series C Market Price.
Series C Fixed Price means (i) US$3.012 with respect to the Series C Preferred Shares issued to DIP SPV I, L.P. in December 2025 and (ii) with respect to any other issuance, 120% of the closing price of the Ordinary Shares on the Trading Market on the Trading Day immediately preceding the date of a definitive agreement to issue Series C Preferred Shares or such other price per Ordinary Share as agreed in writing by the Company and the original recipient of such Series C Preferred Shares; provided, however, that the Company may reduce (but not increase) the Series C Fixed Price of any Series C Preferred Shares by providing written notice to the Shareholder thereof.
Series C Market Price means, the lowest daily VWAP of the Ordinary Shares in the seven (7) consecutive Trading Day period immediately preceding the date of the conversion of the applicable Series C Preferred Shares.
Series C Redemption Date has the meaning given to it in Section 5.7 of the Schedule.
Series C Redemption Payment has the meaning given to it in Section 5.7 of the Schedule.
Series C Redemption Price has the meaning given to it in Section 5.7 of the Schedule.
Series C Redemption Notice has the meaning given to it in Section 5.7 of the Schedule.
Series C Requisite Holder(s) has the meaning given to it in Section 5.1 of the Schedule.
Series C Stated Value means, US$1.00 per share.
Series Seed Conversion Price has the meaning given to it in Section 3.5.1(c) of the Schedule.
Series Seed Original Issue Price has the meaning given to it in Section 3.3 of the Schedule.
Share means a share issued or to be issued by the Company, including without limitation, Ordinary Shares, Series A Preferred Shares, Series B Preferred Shares and Blank Check Preferred Shares.
Share Delivery Date has the meaning given to it in Section 4.5.3(a) of the Schedule.
Shareholder means a person whose name is entered in the register of members of the Company as the holder of one or more Shares or fractional Shares.
Standard Settlement Date has the meaning given to it in Section 4.5.3(a) of the Schedule.
Stated Value means (i) with respect to the Series B Preferred Shares, as initially in effect as of the July 2022 Amendment Date equal to $6.60, and as previously adjusted and as in effect on the August 2025 Amendment Date, equal to US$14,000.00, subject to further adjustment in accordance with the terms of the Schedule, and (ii) with respect to the Series C Preferred Shares, the Series C Stated Value.
Stock Exchange means the stock exchange(s) on which Shares are listed from time to time.
Subsidiary means any subsidiary of the Company including any direct or indirect subsidiary of the Company.
Successor Entity has the meaning given to it in Section 4.5.6(d) of the Schedule.
Trading Day means a day on which the principal Trading Market is open for trading.
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Trading Market means any of the following markets or exchanges on which the Ordinary Shares are listed for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).
Transfer Agent means Transhare Securities Transfer & Registrar, the current transfer agent of the Corporation with a mailing address of 15500 Roosevelt Blvd., Suite 302, Clearwater, FL 33760, and any successor transfer agent of the Company.
VWAP means, for any date, the price determined by the first of the following clauses that applies: (a) if the Ordinary Shares is then listed or quoted on a Trading Market, the daily volume weighted average price of the Ordinary Shares for such date (or the nearest preceding date) on the Trading Market on which the Ordinary Shares is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Ordinary Shares is then quoted on OTCQB or OTCQX and neither are a Trading Market at such time, the volume weighted average price of the Ordinary Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Ordinary Shares is not then quoted for trading on OTCQB or OTCQX and if prices for the Ordinary Shares are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Ordinary Share so reported, or (d) in all other cases, the fair market value of an Ordinary Share as determined by an independent appraiser selected in good faith by the Shareholders of a majority in interest of the Preferred Shares then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
written or any term of like import includes information generated, sent, received or stored by electronic, electrical, digital, magnetic, optical, electromagnetic, biometric or photonic means, including electronic data interchange, electronic mail, telegram, telex or telecopy, and in writing shall be construed accordingly.
| 9.2 | In this Memorandum and the Articles, unless the context otherwise requires, a reference to: |
| (a) | a Regulation is a reference to a regulation of the Articles; |
| (b) | a Clause is a reference to a clause of this Memorandum; |
| (c) | voting by Shareholders is a reference to the casting of the votes attached to the Shares held by the Shareholder voting; |
| (d) | the Act, this Memorandum or the Articles is a reference to the Act or those documents as amended or, in the case of the Act any re-enactment thereof; and |
| (e) | the singular includes the plural and vice versa. |
| 9.3 | Where a period of time is expressed as a number of days, the days on which the period begins and ends are not included in the computation of the number of days. |
| 9.4 | Any reference to a month shall be construed as a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month and a reference to a period of several months shall be construed accordingly. |
| 9.5 | Any words or expressions defined in the Act bear the same meaning in this Memorandum and the Articles unless the context otherwise requires or they are otherwise defined in this Memorandum or the Articles. |
| 9.6 | Headings are inserted for convenience only and shall be disregarded in interpreting this Memorandum and the Articles. |
Signed for Start Incorp Services Limited of Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands for the purpose of incorporating a BVI Business Company under the laws of the British Virgin Islands on the 28th day of September 2015.
| Incorporator | |
| Sgd.Miles Walton | |
| Miles Walton | |
| Authorised Signatory | |
| Start Incorp Services Limited |
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Schedule
| 1. | SCHEDULE |
This Schedule forms a part of the Memorandum such that all rights, privileges, restrictions and conditions attaching to the Ordinary Shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares and contained herein are deemed to be set out in full in the Memorandum.
| 2. | CONFLICT |
In the event of any conflict between the provisions of the Memorandum and the Articles, the provisions of the Memorandum and, in particular, this Schedule shall prevail.
| 3. | SERIES A PREFERRED SHARES |
| 3.1. | Waiver |
| 3.1.1. | [Intentionally Omitted] |
| 3.1.2. | Business Opportunities Regulation |
Any amendment to Regulation 22 of the Articles shall require the written consent or affirmative vote of the Requisite Holders given in writing or by vote at a meeting.
| 3.1.3. | Waiver |
Any rights, powers, preferences and other terms of the Series A Preferred Shares in this Schedule, the Memorandum or the Articles, may be waived on behalf of all holders of Series A Preferred Shares by the written consent or affirmative vote of the Requisite Holders.
| 3.2. | Voting Rights |
The Series A Preferred Shares shall not be entitled to vote on any Resolution of Shareholders, except as expressly provided to the contrary in the provisions of the Act or the Schedule.
| 3.3. | Dividend Rights |
The Company shall not declare, pay or set aside any dividends on shares of any other class or series of shares of the Company (other than dividends on Ordinary Shares payable in Ordinary Shares by way of a bonus share issuance or otherwise) unless (in addition to the obtaining of any consents required elsewhere in this Memorandum and Articles) the holders of the Series A Preferred Shares then outstanding shall simultaneously receive with the Shareholders of Ordinary Shares, a dividend on each outstanding Series A Preferred Shares in an amount at least equal to (i) in the case of a dividend on Ordinary Shares or any class or series that is convertible into Ordinary Shares, that dividend per shares of Series A Preferred Share as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Ordinary Shares and (B) the number of Ordinary Shares issuable upon conversion of a Series A Preferred Share, in each case calculated on the record date for determination of Shareholders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Ordinary Shares, at a rate per share of Series A Preferred Share determined by (A) dividing the amount of the dividend payable on each share of such class or series of shares by the original issuance price of such class or series of shares (subject to appropriate adjustment in the event of any share dividend, share split, division, combination or other similar share reorganization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the applicable Original Issue Price (as defined below); provided; that, if the Company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of shares of the Company, the dividend payable to the Shareholders of Series A Preferred Shares pursuant to this Section 3.3 shall be calculated based upon the dividend on the class or series of shares that would result in the highest Series A2 Preferred Shares dividend.
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The “Series A1-A Original Issue Price” shall mean US$0.47, subject to appropriate further adjustment in the event of any share dividend, share split, division, combination or other similar share reorganization with respect to the Series A1-A Preferred Shares. The “Series A2 Original Issue Price” shall mean US$0.47, subject to appropriate further adjustment in the event of any share dividend, share split, division, combination or other similar recapitalization with respect to the Series A2 Preferred Shares. The “Series A4 Original Issue Price” shall mean $US1.77, subject to appropriate further adjustment in the event of any share dividend, share split, division, combination or other similar share reorganization with respect to the Series A4 Preferred Shares. The “Series Seed Original Issue Price shall mean US$ 16.3974, subject to appropriate further adjustment in the event of any share dividend, share split, division, combination or other similar share reorganization with respect to the Series Seed Preferred Shares (the Series A1-A Original Issue Price, the Series A2 Original Issue Price, the Series A4 Original Issue Price and the Series Seed Original Issue Price shall be collectively referred to herein as the “Original Issue Price”).
| 3.4. | Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales |
| 3.4.1. | Distribution of Remaining Assets |
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its Shareholders or, in the case of a Deemed Liquidation Event, the consideration or the Available Proceeds, as the case may be, shall be distributed to the Shareholders of Series A4 Preferred Shares, the Shareholders of Series A2 Preferred Shares, the Shareholders of Series A1 Preferred Shares, the Shareholders of the Series Seed Preferred Shares and the Shareholders of Ordinary Shares, pro rata based on the number of shares held by each Shareholder, treating for this purpose all such securities as if they had been converted to Ordinary Shares pursuant to the terms of this Memorandum and Articles of Association immediately prior to such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event.
| 3.4.2. | Deemed Liquidation Events |
Each of the following events shall be considered a “Deemed Liquidation Event” for the purposes of this Section 3 of the Schedule:
| (a) | a merger or consolidation in which: |
| (i) | the Company is a constituent party; or |
| (ii) | a subsidiary of the Company is a constituent party and the Company issues shares pursuant to such merger or consolidation, |
except any such merger or consolidation involving the Company or a subsidiary in which the shares of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the shares of (1) the surviving or resulting company; or (2) if the surviving or resulting company is a wholly owned subsidiary of another company immediately following such merger or consolidation, the parent company of such surviving or resulting company; or
| (b) | the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the business or assets of the Company and its subsidiaries taken as a whole, or (2) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company. |
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| 3.4.3. | Effecting a Deemed Liquidation Event |
The Company shall not have the power to effect a Deemed Liquidation Event unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the Shareholders of the Company in such Deemed Liquidation Event shall be paid to the Shareholders of the Company in accordance with this Section 3.4 of the Schedule.
| 3.4.4. | Amount Deemed Paid of Distributed |
The amount deemed paid or distributed to the Shareholders of the Company upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities to be paid or distributed to such holders pursuant to such Deemed Liquidation Event. The value of such property, rights or securities shall be determined in good faith by the directors of the Company.
| 3.4.5. | [Intentionally Omitted] |
| 3.5. | Conversion Rights |
The holders of the Series A Preferred Shares shall have conversion rights as follows (the “Conversion Rights”):
| 3.5.1. | Right to Convert |
| (a) | Conversion Ratio |
Subject to the provisions set out in Section 3.5.9, each Series A Preferred Share shall be convertible, at the option of the Shareholder thereof, at any time and from time to time, and without the payment of additional consideration by the Shareholder thereof, into such number of fully paid and non-assessable Ordinary Shares as is determined by dividing the applicable Reference Price (as defined below) by the applicable Conversion Price (as defined below) in effect at the time of conversion. The “Series A4 Conversion Price” shall be the price determined as set forth in Section 3.5.1(c), subject to adjustment as provided therein. The “Series A2 Conversion Price” was initially equal to US$1.40 and as previously adjusted and as in effect on the August 2025 Amendment Date is US$14,000.00. The “Series A1-A Conversion Price” was initially equal to US$1.40 and as previously adjusted and as in effect on the August 2025 Amendment Date is US$14,000.00. The “Series Seed Conversion Price” was initially equal to US$36.01 and as previously adjusted and as in effect on the August 2025 Amendment Date, is US$360,100.00 (the Series A4 Conversion Price, Series A2 Conversion Price and Series A1-A Conversion Price shall collectively be referred to herein as the “Series A Conversion Price” and together with the Series Seed Conversion Price, the “Conversion Price”). The “Series A4 Reference Price” shall be equal to US$3.894. The “Series A2 Reference Price” shall be equal to US$3.122. The “Series A1-A Reference Price” shall be equal to US$2.086. The “Series Seed Reference Price” shall be equal to US$36.01. The Series A4 Reference Price, Series A2 Reference Price and Series A1-A Reference Price shall collectively be referred to herein as the “Series A Reference Price” and together with the Series Seed Reference Price, the “Reference Price”.
Subject to the provisions set out in Section 3.5.9, the Company may by notice to the Shareholders holding Series A Preferred Shares, and without any further action being required by any Shareholders holding any such Series A Preferred Shares to accomplish the same, mandatorily convert all of the outstanding Series A Preferred Shares, at any time, and without the payment of additional consideration by the Shareholder thereof, into such number of fully paid and non-assessable Ordinary Shares (or, for any Excess Shares (as defined in Section 3.5.9), pre-funded warrants exercisable into such number of fully paid and non-assessable Ordinary Shares), as is determined by dividing 1.20 times the applicable Reference Price by the applicable Conversion Price in effect at the time of conversion, provided however, the Series A4 Preferred Shares shall be converted into such a number as shall be determined by dividing the applicable Reference Price by the applicable Conversion Price in effect at the time of conversion.
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| (b) | Termination of Conversion Rights |
In the event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the Shareholders of Series A Preferred Shares.
| (c) | Series A4 Conversion Price |
The “Series A4 Conversion Price” shall mean the greater of (i) the lowest daily VWAP of the Ordinary Shares in the seven (7) consecutive Trading Day period immediately preceding the date of the conversion of the applicable Series A Preferred Share and (ii) the Series A4 Conversion Price Floor. For purposes of this Section 3.5.1(c) the “Series A4 Conversion Price Floor” shall equal 20% of the closing price of the Ordinary Shares on the Trading Market on the Trading Day immediately preceding the date of the issuance of such applicable Series A4 Preferred Share. If the Company shall at any time or from time to time after the issuance of the applicable Series A4 Preferred Share effect a division of the outstanding Ordinary Shares, the applicable Series A4 Conversion Price Floor in effect immediately before that division shall be proportionately decreased so that the number of Ordinary Shares issuable on conversion of such Series A4 Preferred Shares, if a conversion were effected at the Series A4 Conversion Price Floor shall be increased in proportion to such increase in the aggregate number of Ordinary Shares outstanding. If the Company shall at any time or from time to time after the applicable Series A4 Preferred Shares combine the outstanding shares of Ordinary Shares, the applicable Series A4 Conversion Price Floor in effect immediately before the combination shall be proportionately increased so that the number of Ordinary Shares issuable on conversion of such Series A4 Preferred Share, if a conversion were effected at the Series A4 Conversion Price Floor, shall be decreased in proportion to such decrease in the aggregate number of Ordinary Shares outstanding. Any adjustment of the Series A4 Conversion Price Floor as a result of the division or combination of the Ordinary Shares under this Section 3.5.1(c) shall become effective at the close of business on the date such division or combination becomes effective.
| 3.5.2. | Fractional Shares |
No fractional Ordinary Shares shall be issued upon conversion of the Series A Preferred Shares, except in the case of the conversion of a Series A4 Preferred Share, in respect of which the Company may issue a fraction of an Ordinary Share. In lieu of any fractional shares to which the Shareholder would otherwise be entitled, the Company shall (subject to compliance with the Act) pay cash equal to such fraction multiplied by the fair market value of an Ordinary Share as determined in good faith by the directors of the Company. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of Series A Preferred Shares the Shareholder is at the time converting into Ordinary Shares and the aggregate number of Ordinary Shares issuable upon such conversion.
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| 3.5.3. | Mechanics of Conversion |
| (a) | Notice of Conversion |
In order for a Shareholder of Series A Preferred Shares to voluntarily convert Series A Preferred Shares into Ordinary Shares, such Shareholder shall (a) provide written notice to the Company’s transfer agent at the office of the transfer agent for the Series A Preferred Shares (or at the principal office of the Company if the Company serves as its own transfer agent) that such Shareholder elects to convert all or any number of such Shareholder’s Series A Preferred Shares and, if applicable, any event on which such conversion is contingent and (b), if such Shareholder’s shares are certificated, surrender the certificate or certificates for such Series A Preferred Shares (or, if such registered Shareholder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series A Preferred Shares (or at the principal office of the Company if the Company serves as its own transfer agent). Such notice shall state such Shareholder’s name or the names of the nominees in which such Shareholder wishes the Ordinary Shares to be issued. If required by the Company, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered Shareholder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Company if the Company serves as its own transfer agent) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”), and the Ordinary Shares issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Company shall, as soon as practicable after the Conversion Time (i) issue and deliver to such Shareholder of Preferred Shares, or to his, her or its nominees, a certificate or certificates for the number of full Ordinary Shares issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the Series A Preferred Shares represented by the surrendered certificate that were not converted into Ordinary Shares, and (ii) pay in cash such amount as provided in Section 3.5.2 above (Fractional Shares) in lieu of any fraction of a Ordinary Share otherwise issuable upon such conversion.
| (b) | Reservation of Shares |
The Company shall at all times when the Series A Preferred Shares shall be outstanding, reserve and keep available out of its authorized but unissued shares, for the purpose of effecting the conversion of the Series A Preferred Shares, such number of its duly authorized Ordinary Shares as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Shares; and if at any time the number of authorized but unissued Ordinary Shares shall not be sufficient to effect the conversion of all then outstanding Series A Preferred Shares, the Company shall take such corporate action as may be necessary to increase its authorized but unissued Ordinary Shares to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite Shareholder approval of any necessary amendment to this Memorandum and the Articles of Association. Before taking any action which would cause an adjustment reducing the applicable Conversion Price below the then par value of the Ordinary Shares issuable upon conversion of the Series A Preferred Shares, the Company will take any corporate action which may, in the opinion of its directors, be necessary in order that the Company may validly and legally issue fully paid and non-assessable Ordinary Shares at such adjusted Conversion Price.
| (c) | Effect of Conversion |
All Series A Preferred Shares which shall have been surrendered for conversion as herein provided (or mandatorily converted by the Company as provided herein) shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time (or, in connection with a mandatory conversion by the Company at the time the Company delivers such notice of mandatory conversion or at such other future time as the Company may specify in such notice of mandatory conversion), except only the right of the Shareholders thereof to receive Ordinary Shares in exchange therefor and to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Section 3.5.2 above (Fractional Shares). Any Series A Preferred Shares so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Company may thereafter take such appropriate action (without the need for Shareholder action) as may be necessary to reduce the authorized number of Series A Preferred Shares accordingly.
| (d) | No Further Adjustment |
Upon any such conversion, no adjustment to the applicable Conversion Price shall be made for any declared but unpaid dividends on the Series A Preferred Shares surrendered for conversion (or mandatorily converted by the Company as provided herein) or on the Ordinary Shares delivered upon conversion
| 3.5.4. | [Intentionally Omitted] |
| 3.5.5. | [Intentionally Omitted] |
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| 3.5.6. | [Intentionally omitted] |
| 3.5.7. | [Intentionally Omitted] |
| 3.5.8. | [Intentionally Omitted] |
| 3.5.9. | Limitation on Beneficial Ownership |
The Company shall not effect the conversion of any of the Series A Preferred Shares held by a Shareholder of the Company, and such Shareholder shall not have the right to convert any of the Series A Preferred Shares held by such holder pursuant to the terms and conditions of this Memorandum and Articles of Association, to the extent that after giving effect to such conversion, such Shareholder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (or upon the election by a Shareholder of Series A Preferred Shares prior to the issuance of any Preferred Shares, 9.99%) (the “Maximum Percentage”) of the Ordinary Shares outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of Ordinary Shares beneficially owned by such Shareholder of Series A Preferred Shares and the other Attribution Parties shall include the number of Ordinary Shares held by such Shareholder of Series A Preferred Shares and all other Attribution Parties plus the number of Ordinary Shares issuable upon conversion of the Series A Preferred Shares with respect to which the determination of such sentence is being made, but shall exclude Ordinary Shares which would be issuable upon (A) conversion of the remaining, nonconverted Series A Preferred Shares beneficially owned by such Shareholder of Series A Preferred Shares or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company beneficially owned by such Shareholder of Series A Preferred Shares or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 3.5.9. For purposes of this Section 3.5.9, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of determining the number of outstanding Ordinary Shares a Shareholder of Series A Preferred Shares may acquire upon the conversion of such Series A Preferred Shares without exceeding the Maximum Percentage, such Shareholder may rely upon the number of outstanding Ordinary Shares as provided by the Company upon request of the Shareholder of Series A Preferred Shares (the “Outstanding Share Number”). If the Company receives a notice of conversion from a Shareholder of Series A Preferred Shares at a time when the actual number of outstanding Ordinary Shares is less than the Outstanding Share Number, the Company shall notify such Shareholder of Preferred Shares in writing of the number of Ordinary Shares then outstanding and, to the extent that such Conversion Notice would otherwise cause the beneficial ownership of such Shareholder of Series A Preferred Shares, as determined pursuant to this Section 3.5.9, to exceed the Maximum Percentage, such Shareholder must notify the Company of a reduced number of Ordinary Shares to be purchased pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request of any Shareholder of Series A Preferred Shares, the Company shall within one (1) business day confirm orally and in writing or by electronic mail to such Shareholder of Preferred Shares the number of Ordinary Shares then outstanding. In any case, the number of outstanding Ordinary Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including such Series A Preferred Shares, by such Shareholder of Series A Preferred Shares and any other Attribution Party since the date as of which the Outstanding Share Number was reported. In the event that the issuance of Ordinary Shares to a Shareholder of Series A Preferred Shares upon conversion of such Series A Preferred Shares results in such Shareholder of Series A Preferred Shares and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding Ordinary Shares (as determined under Section 13(d) of the Exchange Act), the number of shares so issued by which such Shareholder of Series A Preferred Shares and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and such Shareholder of Series A Preferred Shares shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, any Shareholder of Series A Preferred Shares may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage of such Shareholder of Series A Preferred Shares to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to such Shareholder of Series A Preferred Shares and the other Attribution Parties and not to any other Shareholder of Series A Preferred Shares. For purposes of clarity, the Ordinary Shares issuable to a Shareholder of Series A Preferred Shares pursuant to the terms of this Memorandum and Articles of Association in excess of the Maximum Percentage shall not be deemed to be beneficially owned by such Shareholder of Series A Preferred Shares for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to convert such Series A Preferred Shares pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3.5.9 to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 3.5.9 or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor Shareholder of such Series A Preferred Shares.
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| 3.5.10. | Adjustment for Share Splits, Divisions and Combinations |
If the Company shall at any time or from time to time after the Series A Original Issue Date effect a division of the outstanding Ordinary Shares, the applicable Series A Conversion Price (except for the Series A4 Conversion Price) and Series Seed Conversion Price in effect immediately before that division shall be proportionately decreased so that the number of Ordinary Shares issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of Ordinary Shares outstanding. If the Company shall at any time or from time to time after the Series A Original Issue Date combine the outstanding shares of Ordinary Shares, the applicable Series A Conversion Price (except for the Series A4 Conversion Price) and Series Seed Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Ordinary Shares issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of Ordinary Shares outstanding. Any adjustment under this Section 3.5.10 shall become effective at the close of business on the date the division or combination becomes effective.
| 3.5.11. | Adjustment for Certain Dividends and Distributions |
In the event the Company at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of Shareholders of Ordinary Shares entitled to receive, a dividend or other distribution payable on the Ordinary Shares in additional Ordinary Shares, then and in each such event the applicable Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the applicable Conversion Price then in effect by a fraction:
| (a) | the numerator of which shall be the total number of Ordinary Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and | |
| (b) | the denominator of which shall be the total number of Ordinary Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Ordinary Shares issuable in payment of such dividend or distribution. |
Notwithstanding the foregoing (i) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the applicable Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the applicable Conversion Price shall be adjusted pursuant to this Section 3.5.11 as of the time of actual payment of such dividends or distributions; and (ii) that no such adjustment shall be made if the Shareholders of Series A Preferred Shares simultaneously receive a dividend or other distribution of Ordinary Shares in a number equal to the number of Ordinary Shares as they would have received if all outstanding Series A Preferred Shares had been converted into Ordinary Shares on the date of such event.
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| 3.5.12. | Adjustments for other Dividends and Distributions |
In the event the Company at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of Shareholders of Ordinary Shares entitled to receive, a dividend or other distribution payable in shares of the Company (other than a distribution of Ordinary Shares in respect of outstanding Ordinary Shares) or in other property and the provisions of Section 3.5.11 do not apply to such dividend or distribution, then and in each such event the Shareholders of Series A Preferred Shares shall receive, simultaneously with the distribution to the Shareholders of Ordinary Shares, a dividend or other distribution of such shares or other property in an amount equal to the amount of such shares or other property as they would have received if all outstanding Series A Preferred Shares had been converted into Ordinary Shares on the date of such event.
| 3.5.13. | Adjustment for Merger or Reorganization |
Subject to the provisions of Section 3.4.2, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Ordinary Shares (but not the Series A Preferred Shares) is converted into or exchanged for securities, cash or other property, then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each Series A Preferred Share shall thereafter be convertible in lieu of the Ordinary Shares into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a Shareholder of the number of Ordinary Shares of the Company issuable upon conversion of one Series A Preferred Shares immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the directors of the Company) shall be made in the application of the provisions in this Section 3.5 with respect to the rights and interests thereafter of the Shareholders of the Series A Preferred Shares, to the end that the provisions set forth in this Section 3.5 shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Shares.
| 3.5.14. | Certificate as to Adjustments |
Upon the occurrence of each adjustment or readjustment of the applicable Conversion Price pursuant to this Section 3.5, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Shareholder of Series A Preferred Shares a certificate executed by an authorized officer setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series A Preferred Shares is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. Notwithstanding the immediately preceding sentence, the Company will be deemed to have fully satisfied its obligations thereunder if in lieu of issuing the officer’s certificate contemplated by the immediately preceding sentence, the Company files with the Commission a Report of Foreign Private Issuer on Form 6-K (or Current Report on Form 8-K, as applicable) or other report in which the Company discloses the information that would otherwise be required to be included in the officer’s certificate contemplated by the immediately preceding sentence. The Company shall, as promptly as reasonably practicable after the written request at any time of any Shareholder of Series A Preferred Shares (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such Shareholder a certificate executed by an authorized officer setting forth (i) the applicable Conversion Price then in effect, and (ii) the number of Ordinary Shares and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series A Preferred Shares.
| 4. | SERIES B PREFERRED SHARES |
| 4.1. | [Intentionally Omitted] | |
| 4.1A | Waiver |
Any rights, powers, preferences and other terms of the Series B Preferred Shares in this Schedule, the Memorandum or the Articles, may be waived on behalf of all holders of Series B Preferred Shares by the written consent or affirmative vote of the holders of a majority of the then outstanding Series B Preferred Shares.
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| 4.2. | Voting Rights |
The Series B Preferred Shares shall not be entitled to vote on any Resolution of Shareholders, except as expressly provided to the contrary in the provisions of the Act or the Schedule or in relation to a variation of the rights of the Series B Preferred Shares pursuant to the Memorandum.
| 4.3. | Dividend Rights |
The holders of Series B Preferred Shares shall be entitled to receive, and the Company shall pay, dividends on Series B Preferred Shares equal (on an as-if-converted-to-Ordinary Shares basis) to and in the same form as dividends actually paid on Ordinary Shares when, as and if such dividends are paid on Ordinary Shares. No other dividends or other distributions shall be paid on Series B Preferred Shares.
| 4.4. | Liquidation, Dissolution or Winding Up |
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the Shareholders shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a Shareholder of Ordinary Shares would receive if the Series B Preferred Shares were fully converted (disregarding for such purposes any conversion limitations hereunder) to Ordinary Shares which amounts shall be paid pari passu with all Shareholders of Ordinary Shares. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each holder of Series B Preferred Shares.
| 4.5. | Conversion Rights |
| 4.5.1. | Conversions at Option of Series B Preferred Shareholder |
Each Series B Preferred Share shall be convertible, at any time and from time to time from and after the Series B Original Issue Date at the option of the Shareholder thereof, into that number of Ordinary Shares (subject to the limitation set forth in Section 4.5.4 below) determined by dividing the Stated Value of such share of Series B Preferred Shares by the Series B Conversion Price. Shareholders shall effect conversions by providing the Company with a conversion notice in the form satisfactory to the Company (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of Series B Preferred Shares to be converted, the number of Series B Preferred Shares owned prior to the conversion at issue, the number of Series B Preferred Shares owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Shareholder delivers by facsimile such Notice of Conversion to the Company (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Company is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of Series B Preferred Shares, a Shareholder shall not be required to surrender the certificate(s) representing the Series B Preferred Shares to the Company unless all of the Series B Preferred Shares represented thereby are so converted, in which case such Shareholder shall deliver the certificate representing such Series B Preferred Shares promptly following the Conversion Date at issue. Series B Preferred Shares converted into Ordinary Shares or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.
Subject to the provisions set out in Section 4.5.4, the Company may by notice to the Shareholders holding Series B Preferred Shares, and without any further action being required by the Shareholders holding Series B Preferred Shares to accomplish the same, mandatorily convert all of the outstanding Series B Preferred Shares, at any time, and without the payment of additional consideration by the Shareholder thereof, into such number of fully paid and non-assessable Ordinary Shares as is determined by dividing 1.20 times the Stated Value by the Series B Conversion Price. The “Conversion Date” for purposes of the Schedule in the case of the Company’s mandatory conversion of Series B Preferred Shares hereunder shall be the date on which the Company delivers such notice of mandatory conversion to the Shareholders or such other future date as the Company may specify in such notice of mandatory conversion.
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| 4.5.2. | Conversion Price |
The conversion price for the Series B Preferred Shares shall be the Series B Conversion Price.
| 4.5.3. | Mechanics of Conversion |
| (a) | Delivery of Conversion Shares Upon Conversion |
Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the converting Shareholder (A) the number of Conversion Shares being acquired upon the conversion of the Series B Preferred Shares, and (B) a bank check in the amount of accrued and unpaid dividends, if any. The Company shall use its best efforts to deliver the Conversion Shares in book entry form. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Ordinary Shares as in effect on the date of delivery of the Notice of Conversion.
| (b) | Failure to Deliver Conversion Shares |
If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable holder of the Conversion Shares by the Share Delivery Date, the Shareholder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such Conversion Shares, to rescind such conversion, in which event the Company shall promptly return to the Shareholder any original Series B Preferred Share certificate delivered to the Company and the Shareholder shall promptly return to the Company the Conversion Shares issued to such Shareholder pursuant to the rescinded Notice of Conversion.
| (c) | Obligation Absolute; Partial Liquidated Damages |
The Company’s obligation to issue and deliver the Conversion Shares upon conversion of Series B Preferred Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Shareholder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Shareholder or any other Person of any obligation to the Company or any violation or alleged violation of law by such Shareholder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to such Shareholder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action that the Company may have against such Shareholder. In the event a Shareholder shall elect to convert any or all of the Stated Value of its Series B Preferred Shares, the Company may not refuse conversion based on any claim that such Shareholder or any one associated or affiliated with such Shareholder has been engaged in any violation of law, or agreement or for any other reason, unless an injunction from a court, on notice to Shareholder, restraining and/or enjoining conversion of all or part of the Series B Preferred Shares of such Shareholder shall have been sought and obtained, and the Company posts a surety bond for the benefit of such Shareholder in the amount of 150% of the Stated Value of Series B Preferred Shares which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Shareholder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares upon a properly noticed conversion. If the Company fails to deliver to a Shareholder such Conversion Shares pursuant to Section 4.5.3(a) by the Share Delivery Date applicable to such conversion, the Company shall pay to such Shareholder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Series B Preferred Shares being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after the Share Delivery Date until such Conversion Shares are delivered or the Shareholder rescinds such conversion. Nothing herein shall limit a Shareholder’s right to pursue actual damages for the Company’s failure to deliver Conversion Shares within the period specified herein and such Shareholder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Shareholder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
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| (d) | Compensation for Buy-In on Failure and Timely Deliver Conversion Shares Upon Conversion |
In addition to any other rights available to the Shareholder, if the Company fails for any reason to deliver to a Shareholder the applicable Conversion Shares by the Share Delivery Date pursuant to Section 4.5.3(a), and if after such Share Delivery Date such Shareholder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Shareholder’s brokerage firm otherwise purchases, Ordinary Shares to deliver in satisfaction of a sale by such Shareholder of the Conversion Shares which such Shareholder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to such Shareholder (in addition to any other remedies available to or elected by such Shareholder) the amount, if any, by which (x) such Shareholder’s total purchase price (including any brokerage commissions) for the Ordinary Shares so purchased exceeds (y) the product of (1) the aggregate number of Ordinary Shares that such Shareholder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Shareholder, either reissue (if surrendered) the Series B Preferred Shares equal to the number of Series B Preferred Shares submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such Shareholder the number of Ordinary Shares that would have been issued if the Company had timely complied with its delivery requirements under Section 4.5.3(a). For example, if a Shareholder purchases Ordinary Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Series B Preferred Shares with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay such Shareholder $1,000. The Shareholder shall provide the Company written notice indicating the amounts payable to such Shareholder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Shareholder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Conversion Shares upon conversion of Series B Preferred Shares as required pursuant to the terms hereof.
| (e) | Reservation of Shares Issuable on Conversion |
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Ordinary Shares for the sole purpose of issuance upon conversion of the Series B Preferred Shares as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Shareholder (and the other Shareholders of the Series B Preferred Shares), not less than such aggregate number of the Ordinary Shares as shall be issuable (taking into account the adjustments and restrictions of Section 4.5.6) upon the conversion of the then outstanding Series B Preferred Shares. The Company covenants that all Ordinary Shares that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
| (f) | Fractional Shares |
No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series B Preferred Shares. As to any fraction of a share which the Shareholder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Series B Conversion Price or round up to the next whole share
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| (g) | Transfer Taxes and Expenses |
The issuance of Conversion Shares on conversion of the Series B Preferred Shares shall be made without charge to any Shareholder for any taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Shareholders of such Series B Preferred Shares and the Company shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.
| 4.5.4. | Beneficial Ownership Limitation |
The Company shall not effect any conversion of the Series B Preferred Shares, and a Shareholder shall not have the right to convert any portion of the Series B Preferred Shares, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Shareholder, together with such Shareholder’s Attribution Parties, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Ordinary Shares beneficially owned by such Shareholder and its Attribution Parties shall include the number of Ordinary Shares issuable upon conversion of the Series B Preferred Shares with respect to which such determination is being made, but shall exclude the number of Ordinary Shares which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Series B Preferred Shares beneficially owned by such Shareholder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Series B Preferred Shares) beneficially owned by such Shareholder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 4.5.6, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4.5.6 applies, the determination of whether the Series B Preferred Shares is convertible (in relation to other securities owned by such Shareholder together with any Affiliates and Attribution Parties) and of how many Series B Preferred Shares are convertible shall be in the sole discretion of such Shareholder, and the submission of a Notice of Conversion shall be deemed to be such Shareholder’s determination of whether the Series B Preferred Shares may be converted (in relation to other securities owned by such Shareholder together with any Affiliates and Attribution Parties) and how many of the Series B Preferred Shares are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Shareholder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4.5.6, in determining the number of outstanding Ordinary Shares, a Shareholder may rely on the number of outstanding Ordinary Shares as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the United States Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or the Transfer Agent setting forth the number of Ordinary Shares outstanding. Upon the written or oral request (which may be via email) of a Shareholder, the Company shall within one Trading Day confirm orally and in writing to such Shareholder the number of Ordinary Shares then outstanding. In any case, the number of outstanding of Ordinary Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Series B Preferred Shares, by such Shareholder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Ordinary Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Shareholder prior to the issuance of any Series B Preferred Shares, 9.99%) of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares issuable upon conversion of Series B Preferred Shares held by the applicable Shareholder. A Shareholder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4.5.6 applicable to its Series B Preferred Shares provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of the Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares upon conversion of the Series B Preferred Shares held by the Shareholder and the provisions of this Section 4.5.6 shall continue to apply. Any such increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Shareholder and no other Shareholder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4.5.6 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor Shareholder of Series B Preferred Shares.
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| 4.5.5. | [RESERVED] |
| 4.5.6. | Certain Adjustments |
| (a) | Share Dividends and Divisions or Combinations of Shares |
If the Company, at any time while the Series B Preferred Shares are outstanding: (i) pays a share dividend or issues bonus shares or otherwise makes a distribution or distributions payable in Ordinary Shares on Ordinary Shares or any other Ordinary Share Equivalents (which, for avoidance of doubt, shall not include any Ordinary Shares issued by the Company upon conversion of, or payment of a dividend on, the Series B Preferred Shares), (ii) subdivides outstanding Ordinary Shares into a larger number of shares, (iii) combines (including by way of a reverse share split or combination) outstanding Ordinary Shares into a smaller number of shares, or (iv) issues, in the event of a reclassification of the Ordinary Shares, any shares of the Company, then the Series B Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of Ordinary Shares outstanding immediately after such event. Any adjustment made pursuant to this Section 4.5.6 shall become effective immediately after the record date for the determination of Shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
| (b) | Subsequent Rights Offerings |
In addition to any adjustments pursuant to paragraph 4.5.6(a), if at any time the Company grants, issues or sells any Ordinary Share Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of Ordinary Shares (the “Purchase Rights”), then each Shareholder of Series B Preferred Shares will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Shareholder could have acquired if the Shareholder had held the number of Ordinary Shares acquirable upon complete conversion of such Shareholder’s Series B Preferred Shares (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record Shareholders of Ordinary Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Shareholder’s right to participate in any such Purchase Right would result in the Shareholder exceeding the Beneficial Ownership Limitation, then the Shareholder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Ordinary Shares as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Shareholder until such time, if ever, as its right thereto would not result in the Shareholder exceeding the Beneficial Ownership Limitation).
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| (c) | Pro Rata Distributions |
During such time as any Series B Preferred Share is outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to Shareholders of Ordinary Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Payment Distribution”), at any time after the issuance of the Series B Preferred Shares, then, in each such case, each holder of Series B Preferred Shares shall be entitled to participate in such Payment Distribution to the same extent that the Shareholder would have participated therein if the Shareholder had held the number of Ordinary Shares acquirable upon complete conversion of the Series B Preferred Shares (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Payment Distribution, or, if no such record is taken, the date as of which the record Shareholders of Ordinary Shares are to be determined for the participation in such Payment Distribution (provided, however, to the extent that the Shareholder’s right to participate in any such Payment Distribution would result in the Shareholder exceeding the Beneficial Ownership Limitation, then the Shareholder shall not be entitled to participate in such Payment Distribution to such extent (or in the beneficial ownership of any Ordinary Shares as a result of such Payment Distribution to such extent) and the portion of such Payment Distribution shall be held in abeyance for the benefit of the Shareholder until such time, if ever, as its right thereto would not result in the Shareholder exceeding the Beneficial Ownership Limitation).
| (d) | Fundamental Transaction |
If, at any time while the Series B Preferred Shares is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which Shareholders of Ordinary Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Ordinary Shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding Ordinary Shares (not including any Ordinary Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of the Series B Preferred Shares, the Shareholders of Series B Preferred Shares shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4.5.4 above, on the conversion of the Series B Preferred Shares), the number of Ordinary Shares of the successor or acquiring company or of the Company, if it is the surviving company, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Ordinary Shares for which the Shareholder’s Series B Preferred Shares is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4.5.4 on the conversion of the Series B Preferred Shares). For purposes of any such conversion, the determination of the Series B Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Ordinary Share in such Fundamental Transaction, and the Company shall apportion the Series B Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If Shareholders of Ordinary Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Shareholder converting his, her or its Series B Preferred Shares shall be given the same choice as to the Alternate Consideration it receives upon any conversion of the Series B Preferred Shares following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall file a new Memorandum and Articles of Association with the same terms and conditions and issue to the Shareholders holding Series B Preferred Shares new preferred shares consistent with the foregoing provisions and evidencing the Shareholders’ right to convert such preferred share into Alternate Consideration. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Memorandum and Articles of Association and the other associated transaction documents in respect of the Series B Preferred Shares in accordance with the provisions of this Section 4.5.6 pursuant to written agreements in form and substance reasonably satisfactory to the Shareholders holding a majority of the outstanding Series B Preferred Shares and approved by the Shareholders holding a Majority of the outstanding Series B Preferred Shares (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Shareholders holding a majority of the outstanding Series B Preferred Shares, deliver to the Shareholders holding Series B Preferred Shares in exchange for their Series B Preferred Shares a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Series B Preferred Shares which is convertible for a corresponding number of shares of such Successor Entity (or its parent entity) equivalent to the shares of Ordinary Shares acquirable and receivable upon conversion of the Series B Preferred Shares (without regard to any limitations on the conversion of the Series B Preferred Shares) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares (but taking into account the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and the value of such shares, such number of shares and such conversion price being for the purpose of protecting the economic value of the Series B Preferred Shares immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Shareholders holding a majority of the outstanding Series B Preferred Shares. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Memorandum and Articles of Association and the other associated transaction documents in respect of the Series B Preferred Shares referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Memorandum and Articles of Association and the other associated transaction documents in respect of the Series B Preferred Shares with the same effect as if such Successor Entity had been named as the Company herein.
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| (e) | Calculations |
All calculations under this Section 4.5 shall be made to the nearest cent or the nearest 1/100th of a Share, as the case may be. For purposes of this Section 4.5, the number of Ordinary Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Ordinary Shares (excluding any treasury shares of the Company) issued and outstanding.
| 4.6. | Notices to Series B Preferred Shareholders |
| 4.6.1. | Adjustment of Series B Conversion Price |
Whenever the Series B Conversion Price is adjusted pursuant to this Section 4, the Company shall promptly deliver to each holder of Series B Preferred Shares a notice setting forth the Series B Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Notwithstanding the immediately preceding sentence, the Company will be deemed to have fully satisfied its obligations thereunder if in lieu of issuing the notice contemplated by the immediately preceding sentence, the Company files with the Commission a Report of Foreign Private Issuer on Form 6-K (or Current Report on Form 8-K, as applicable) or other report in which the Company discloses the information that would otherwise be required to be included in the notice contemplated by the immediately preceding sentence.
| 4.6.2. | Notice to Allow Conversion by Series B Shareholder |
If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Ordinary Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Ordinary Shares, (C) the Company shall authorize the granting to all Shareholders of the Ordinary Shares of rights or warrants to subscribe for or purchase any shares of any class or of any rights, (D) the approval of any Shareholders of the Company shall be required in connection with any reclassification of the Ordinary Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Ordinary Shares are converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Series B Preferred Shares, and shall cause to be delivered to each Shareholder of Series A Preferred Shares at its last address as it shall appear upon the share register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the Shareholders of the Ordinary Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Ordinary Shares of record shall be entitled to exchange their Ordinary Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the United States Securities and Exchange Commission pursuant to a Current Report on Form 8-K or Report of Foreign Private Issuer on Form 6-K (as applicable). The Shareholders holding Series B Preferred Shares shall remain entitled to convert the Conversion Amount of the Series B Preferred Shares (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
| 5. | SERIES C PREFERRED SHARES |
| 5.1. | Waiver |
Any rights, powers, preferences and other terms of the Series C Preferred Shares in this Schedule, the Memorandum or the Articles, may be waived on behalf of all holders of Series C Preferred Shares by the written consent or affirmative vote of the Series C Requisite Holders. The “Series C Requisite Holder(s)” means the written consent or affirmative vote of the holders of at least a majority of the outstanding Series C Preferred Shares voting together as a single class, which majority must include the consent or affirmative vote of DIP SPV I, L.P, and Freight Opportunities LLC.
| 5.2. | Voting Rights |
The Series C Preferred Shares shall not be entitled to vote on any Resolution of Shareholders, except as expressly provided to the contrary in the provisions of the Act or the Schedule or in relation to the rights of the Series C Preferred Shares pursuant to the Memorandum.
| 5.3. | Dividend Rights |
The holders of Series C Preferred Shares shall be entitled to receive, and the Company shall pay, dividends on Series C Preferred Shares equal (on an as-if-converted-to-Ordinary Shares basis) to and in the same form as dividends actually paid on Ordinary Shares when, as and if such dividends are paid on Ordinary Shares. No other dividends or other distributions shall be paid on Series C Preferred Shares.
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| 5.4. | Liquidation, Dissolution or Winding Up |
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the Shareholders shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a Shareholder of Ordinary Shares would receive if the Series C Preferred Shares were fully converted (disregarding for such purposes any conversion limitations hereunder) to Ordinary Shares which amounts shall be paid pari passu with all Shareholders of Ordinary Shares. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each holder of Series C Preferred Shares.
| 5.5. | Conversion Rights |
| 5.5.1. | Conversions at Option of Series C Preferred Shareholder |
Each Series C Preferred Share shall be convertible, at any time and from time to time from and after the issuance date at the option of the Shareholder thereof, into that number of Ordinary Shares (subject to the limitation set forth in Section 5.5.4 below) determined by dividing the Stated Value of such share of Series C Preferred Shares by the Series C Conversion Price. Shareholders shall effect conversions by providing the Company with a conversion notice in the form satisfactory to the Company (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of Series C Preferred Shares to be converted, the number of Series C Preferred Shares owned prior to the conversion at issue, the number of Series C Preferred Shares owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Shareholder delivers by facsimile or email such Notice of Conversion to the Company (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Company is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of Series C Preferred Shares, a Shareholder shall not be required to surrender the certificate(s) representing the Series C Preferred Shares to the Company unless all of the Series C Preferred Shares represented thereby are so converted, in which case such Shareholder shall deliver the certificate representing such Series C Preferred Shares promptly following the Conversion Date at issue.
| 5.5.2. | Conversion Price |
The conversion price for the Series C Preferred Shares shall be the Series C Conversion Price.
| 5.5.3. | Mechanics of Conversion |
| (a) | Delivery of Conversion Shares Upon Conversion |
Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the converting Shareholder (A) the number of Conversion Shares being acquired upon the conversion of the Series C Preferred Shares, and (B) a bank check in the amount of accrued and unpaid dividends, if any. The Company shall use its best efforts to deliver the Conversion Shares in book entry form. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Ordinary Shares as in effect on the date of delivery of the Notice of Conversion.
| (b) | Failure to Deliver Conversion Shares |
If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable holder of the Conversion Shares by the Share Delivery Date, the Shareholder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such Conversion Shares, to rescind such conversion, in which event the Company shall promptly return to the Shareholder any original Series C Preferred Share certificate delivered to the Company and the Shareholder shall promptly return to the Company the Conversion Shares issued to such Shareholder pursuant to the rescinded Notice of Conversion.
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| (c) | Obligation Absolute; Partial Liquidated Damages |
The Company’s obligation to issue and deliver the Conversion Shares upon conversion of Series C Preferred Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Shareholder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Shareholder or any other Person of any obligation to the Company or any violation or alleged violation of law by such Shareholder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to such Shareholder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action that the Company may have against such Shareholder. In the event a Shareholder shall elect to convert any or all of the Stated Value of its Series C Preferred Shares, the Company may not refuse conversion based on any claim that such Shareholder or any one associated or affiliated with such Shareholder has been engaged in any violation of law, or agreement or for any other reason, unless an injunction from a court, on notice to Shareholder, restraining and/or enjoining conversion of all or part of the Series C Preferred Shares of such Shareholder shall have been sought and obtained, and the Company posts a surety bond for the benefit of such Shareholder in the amount of 150% of the Stated Value of Series C Preferred Shares which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Shareholder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares upon a properly noticed conversion. If the Company fails to deliver to a Shareholder such Conversion Shares pursuant to Section 4.5.3(a) by the Share Delivery Date applicable to such conversion, the Company shall pay to such Shareholder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Series C Preferred Shares being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after the Share Delivery Date until such Conversion Shares are delivered or the Shareholder rescinds such conversion. Nothing herein shall limit a Shareholder’s right to pursue actual damages for the Company’s failure to deliver Conversion Shares within the period specified herein and such Shareholder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Shareholder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
| (d) | Compensation for Buy-In on Failure and Timely Deliver Conversion Shares Upon Conversion |
In addition to any other rights available to the Shareholder, if the Company fails for any reason to deliver to a Shareholder the applicable Conversion Shares by the Share Delivery Date pursuant to Section 5.5.3(a), and if after such Share Delivery Date such Shareholder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Shareholder’s brokerage firm otherwise purchases, Ordinary Shares to deliver in satisfaction of a sale by such Shareholder of the Conversion Shares which such Shareholder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to such Shareholder (in addition to any other remedies available to or elected by such Shareholder) the amount, if any, by which (x) such Shareholder’s total purchase price (including any brokerage commissions) for the Ordinary Shares so purchased exceeds (y) the product of (1) the aggregate number of Ordinary Shares that such Shareholder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Shareholder, either reissue (if surrendered) the Series C Preferred Shares equal to the number of Series C Preferred Shares submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such Shareholder the number of Ordinary Shares that would have been issued if the Company had timely complied with its delivery requirements under Section 4.5.3(a). For example, if a Shareholder purchases Ordinary Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Series C Preferred Shares with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay such Shareholder $1,000. The Shareholder shall provide the Company written notice indicating the amounts payable to such Shareholder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Shareholder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Conversion Shares upon conversion of Series C Preferred Shares as required pursuant to the terms hereof.
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| (e) | Reservation of Shares Issuable on Conversion |
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Ordinary Shares for the sole purpose of issuance upon conversion of the Series C Preferred Shares as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Shareholder (and the other Shareholders of the Series C Preferred Shares), not less than such aggregate number of the Ordinary Shares as shall be issuable (taking into account the adjustments and restrictions of Section 5.5.6) upon the conversion of the then outstanding Series C Preferred Shares. The Company covenants that all Ordinary Shares that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.
| (f) | Fractional Shares |
No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series C Preferred Shares. As to any fraction of a share which the Shareholder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Series C Conversion Price or round up to the next whole share.
| (g) | Transfer Taxes and Expenses |
The issuance of Conversion Shares on conversion of the Series C Preferred Shares shall be made without charge to any Shareholder for any taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Shareholders of such Series C Preferred Shares and the Company shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.
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| 5.5.4. | Beneficial Ownership Limitation |
The Company shall not effect any conversion of the Series C Preferred Shares, and a Shareholder shall not have the right to convert any portion of the Series C Preferred Shares, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Shareholder, together with such Shareholder’s Attribution Parties, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Ordinary Shares beneficially owned by such Shareholder and its Attribution Parties shall include the number of Ordinary Shares issuable upon conversion of the Series C Preferred Shares with respect to which such determination is being made, but shall exclude the number of Ordinary Shares which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Series C Preferred Shares beneficially owned by such Shareholder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Series C Preferred Shares) beneficially owned by such Shareholder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 5.5.6, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 5.5.6 applies, the determination of whether the Series C Preferred Shares is convertible (in relation to other securities owned by such Shareholder together with any Affiliates and Attribution Parties) and of how many Series C Preferred Shares are convertible shall be in the sole discretion of such Shareholder, and the submission of a Notice of Conversion shall be deemed to be such Shareholder’s determination of whether the Series C Preferred Shares may be converted (in relation to other securities owned by such Shareholder together with any Affiliates and Attribution Parties) and how many of the Series C Preferred Shares are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Shareholder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 5.5.6, in determining the number of outstanding Ordinary Shares, a Shareholder may rely on the number of outstanding Ordinary Shares as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the United States Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or the Transfer Agent setting forth the number of Ordinary Shares outstanding. Upon the written or oral request (which may be via email) of a Shareholder, the Company shall within one Trading Day confirm orally and in writing to such Shareholder the number of Ordinary Shares then outstanding. In any case, the number of outstanding of Ordinary Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Series C Preferred Shares, by such Shareholder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Ordinary Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, (x) for DIP SPV I, L.P. and (y) upon election by a Shareholder prior to the issuance of any Series C Preferred Shares, 9.99%) of the number of Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares issuable upon conversion of Series C Preferred Shares held by the applicable Shareholder and after giving effect to the conversion or exercise of securities of the Company. A Shareholder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 5.5.6 applicable to its Series C Preferred Shares provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of the Ordinary Shares outstanding immediately after giving effect to the issuance of Ordinary Shares upon conversion of the Series C Preferred Shares held by the Shareholder and after giving effect to the conversion or exercise of securities of the Company and the provisions of this Section 5.5.6 shall continue to apply. Any such increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company and shall only apply to such Shareholder and no other Shareholder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 5.5.6 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor Shareholder of Series C Preferred Shares.
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| 5.5.5. | Certain Adjustments |
| (f) | Share Dividends and Divisions or Combinations of Shares |
If the Company, at any time while the Series C Preferred Shares are outstanding: (i) pays a share dividend or issues bonus shares or otherwise makes a distribution or distributions payable in Ordinary Shares on Ordinary Shares or any other Ordinary Share Equivalents (which, for avoidance of doubt, shall not include any Ordinary Shares issued by the Company upon conversion of, or payment of a dividend on, the Series C Preferred Shares), (ii) subdivides outstanding Ordinary Shares into a larger number of shares, (iii) combines (including by way of a reverse share split or combination) outstanding Ordinary Shares into a smaller number of shares, or (iv) issues, in the event of a reclassification of the Ordinary Shares, any shares of the Company, then the Series C Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of Ordinary Shares outstanding immediately after such event. Any adjustment made pursuant to this Section 5.5.6 shall become effective immediately after the record date for the determination of Shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
| (g) | [RESERVED] |
| (h) | Pro Rata Distributions |
During such time as any Series C Preferred Share is outstanding, if the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to Shareholders of Ordinary Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Payment Distribution”), at any time after the issuance of the Series C Preferred Shares, then, in each such case, each holder of Series C Preferred Shares shall be entitled to participate in such Payment Distribution to the same extent that the Shareholder would have participated therein if the Shareholder had held the number of Ordinary Shares acquirable upon complete conversion of the Series C Preferred Shares (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Payment Distribution, or, if no such record is taken, the date as of which the record Shareholders of Ordinary Shares are to be determined for the participation in such Payment Distribution (provided, however, to the extent that the Shareholder’s right to participate in any such Payment Distribution would result in the Shareholder exceeding the Beneficial Ownership Limitation, then the Shareholder shall not be entitled to participate in such Payment Distribution to such extent (or in the beneficial ownership of any Ordinary Shares as a result of such Payment Distribution to such extent) and the portion of such Payment Distribution shall be held in abeyance for the benefit of the Shareholder until such time, if ever, as its right thereto would not result in the Shareholder exceeding the Beneficial Ownership Limitation).
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| (i) | Fundamental Transaction |
If, at any time while the Series C Preferred Shares is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which Shareholders of Ordinary Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Ordinary Shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding Ordinary Shares (not including any Ordinary Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of the Series C Preferred Shares, the Shareholders of Series C Preferred Shares shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 5.5.4 above, on the conversion of the Series C Preferred Shares), the number of Ordinary Shares of the successor or acquiring company or of the Company, if it is the surviving company, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Ordinary Shares for which the Shareholder’s Series C Preferred Shares is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 5.5.4 on the conversion of the Series C Preferred Shares). For purposes of any such conversion, the determination of the Series C Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Ordinary Share in such Fundamental Transaction, and the Company shall apportion the Series C Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If Shareholders of Ordinary Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Shareholder converting his, her or its Series C Preferred Shares shall be given the same choice as to the Alternate Consideration it receives upon any conversion of the Series C Preferred Shares following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall file a new Memorandum and Articles of Association with the same terms and conditions and issue to the Shareholders holding Series C Preferred Shares new preferred shares consistent with the foregoing provisions and evidencing the Shareholders’ right to convert such preferred share into Alternate Consideration. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Memorandum and Articles of Association and the other associated transaction documents in respect of the Series C Preferred Shares in accordance with the provisions of this Section 5.5.6 pursuant to written agreements in form and substance reasonably satisfactory to the Shareholders holding a majority of the outstanding Series C Preferred Shares and approved by the Shareholders holding a Majority of the outstanding Series C Preferred Shares (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Shareholders holding a majority of the outstanding Series C Preferred Shares, deliver to the Shareholders holding Series C Preferred Shares in exchange for their Series C Preferred Shares a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Series C Preferred Shares which is convertible for a corresponding number of shares of such Successor Entity (or its parent entity) equivalent to the shares of Ordinary Shares acquirable and receivable upon conversion of the Series C Preferred Shares (without regard to any limitations on the conversion of the Series C Preferred Shares) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares (but taking into account the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and the value of such shares, such number of shares and such conversion price being for the purpose of protecting the economic value of the Series C Preferred Shares immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Shareholders holding a majority of the outstanding Series C Preferred Shares. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Memorandum and Articles of Association and the other associated transaction documents in respect of the Series C Preferred Shares referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Memorandum and Articles of Association and the other associated transaction documents in respect of the Series C Preferred Shares with the same effect as if such Successor Entity had been named as the Company herein.
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| (j) | Calculations |
All calculations under this Section 5.5 shall be made to the nearest cent or the nearest 1/100th of a Share, as the case may be. For purposes of this Section 5.5, the number of Ordinary Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Ordinary Shares (excluding any treasury shares of the Company) issued and outstanding.
| (k) | Subsequent Issuances of Series C Preferred Shares |
For so long as DIP SPV I, L.P. holds any Series C Preferred Shares, the Company shall not issue any Series C Preferred Shares or Blank Check Preferred Shares without DIP SPV I, L.P.’s prior written consent.
| 5.6. | Notices to Series C Preferred Shareholders |
| 5.6.1. | [RESERVED] |
| 5.6.2. | Notice to Allow Conversion by Series C Shareholder |
If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Ordinary Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Ordinary Shares, (C) the Company shall authorize the granting to all Shareholders of the Ordinary Shares of rights or warrants to subscribe for or purchase any shares of any class or of any rights, (D) the approval of any Shareholders of the Company shall be required in connection with any reclassification of the Ordinary Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Ordinary Shares are converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Series C Preferred Shares, and shall cause to be delivered to each Shareholder of Series A Preferred Shares at its last address as it shall appear upon the share register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the Shareholders of the Ordinary Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Ordinary Shares of record shall be entitled to exchange their Ordinary Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the United States Securities and Exchange Commission pursuant to a Report of Foreign Private Issuer on Form 6-K (or Current Report on Form 8-K, as applicable). The Shareholders holding Series C Preferred Shares shall remain entitled to convert the Conversion Amount of the Series C Preferred Shares (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
| 5.7. | Right of Redemption |
The Company may redeem all or any portion of the issued and outstanding Series C Preferred Shares at the Series C Preferred Redemption Price by providing written notice to the holders of not less than a majority of the then-outstanding Series C Preferred Shares (the “Series C Redemption Notice”) twenty (20) Trading Days prior to the requested date of redemption (the “Series C Redemption Date”). On the Series C Redemption Date, the Company shall deliver to each holder its applicable amount in cash pursuant to this Section 5.7 (the “Series C Redemption Payment”). “Series C Preferred Redemption Price” means the greater of (i) the Series C Stated Value of the Series C Preferred Shares being redeemed and (ii) an amount equal to the product of (A) the number of Conversion Shares underlying the Series C Preferred Shares being redeemed multiplied by (B) the greater of (1) the VWAP on date of the Series C Redemption Notice and (2) the VWAP on the Trading Day immediately prior to the Series C Redemption Date. The holders of the Series C Preferred Shares may convert Series C Preferred Shares subject to a Series C Redemption Notice on or after the date of a Series C Redemption Notice received by such holder, through the Trading Day immediately prior to the on the Series C Redemption Date, which shall reduce the number of Series C Preferred Shares redeemed pursuant to such Series C Redemption Notice on the Series C Redemption Date.
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TERRITORY OF THE BRITISH VIRGIN ISLANDS
BVI BUSINESS COMPANIES ACT (AS REVISED)
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
FREIGHT TECHNOLOGIES, INC.
A Company Limited By Shares
| 1 | DISAPPLICATION OF THE ACT |
The following sections of the Act shall not apply to the Company:
| (a) | section 46 (Pre-emptive rights); |
| (b) | section 60 (Process for acquisition of own shares); |
| (c) | section 61 (Offer to one or more shareholders); |
| (d) | section 62 (Shares redeemed otherwise than at the option of company); and |
| (e) | section 175 (Disposition of assets). |
| 2 | SHARES |
| 2.1 | Nothing in these Articles shall require title to any Shares or other Securities to be evidenced by a certificate if the Act and the rules of the Stock Exchange permit otherwise. |
| 2.2 | Where a certificate in respect of Shares or Securities is provided by the Company, then it shall be signed by a director or officer of the Company, or any other person authorised by Resolution of Directors, or under the Seal specifying the number of Shares or Securities held by him and the signature of the director, officer or authorised person and the Seal may be facsimiles. |
| 2.3 | Any Shareholder receiving a certificate shall indemnify and hold the Company and its directors and officers harmless from any loss or liability which it or they may incur by reason of any wrongful or fraudulent use or representation made by any person by virtue of the possession thereof. If a certificate for Shares is worn out or lost it may be renewed on production of the worn out certificate or on satisfactory proof of its loss together with such indemnity as may be required by Resolution of Directors. |
| 2.4 | If several persons are registered as joint holders of any Shares, any one of such persons may give an effectual receipt for any distribution. |
| 2.5 | Subject to the Memorandum and these Articles, Shares and other Securities may be issued at such times, to such persons, for such consideration and on such terms as the directors may by Resolution of Directors determine. |
| 2.6 | A Share may be issued for consideration in any form or a combination of forms, including money, a promissory note, or other written obligation to contribute money or property, real property, personal property (including goodwill and know-how), services rendered or a contract for future services. |
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| 2.7 | Before issuing Shares for a consideration which is, in whole or in part, other than money, a Resolution of Directors shall be passed stating: |
| (a) | the amount to be credited for the issue of the Shares; and | |
| (b) | that, in the opinion of the directors, the present cash value of the non-money consideration and money consideration, if any, is not less than the amount to be credited for the issue of the Shares. |
| 2.8 | The Company shall keep a register of members containing: |
| (a) | the names and addresses of the persons who hold Shares; | |
| (b) | the number of each class and series of Shares held by each Shareholder; | |
| (c) | the date on which the name of each Shareholder was entered in the register of members; and | |
| (d) | the date on which any person ceased to be a Shareholder. |
| 2.9 | The register of members may be in any such form as the directors may approve, but if it is in magnetic, electronic or other data storage form, the Company must be able to produce legible evidence of its contents. Until the directors otherwise determine, the magnetic, electronic or other data storage form shall be the original register of members. | |
| 2.10 | A Share is deemed to be issued when the name of the Shareholder is entered in the register of members. | |
| 2.11 | Subject to and in accordance with the Act, the Memorandum and the rules of the Stock Exchange, the directors, without further consultation with the holders of any Shares or Securities, may resolve that any class or series of Shares or other Securities from time to time in issue or to be issued (including Shares in issue at the date of the adoption of these Articles) may be issued, held, registered, converted to, transferred or otherwise dealt with in uncertificated form and no provision of these Articles will apply to any uncertificated Shares or other Securities to the extent that they are inconsistent with the holding of such Shares or Securities or the transfer of title to any such Shares or other Securities. | |
| 2.12 | Subject to the Memorandum, Conversion of Shares held in certificated form into Shares held in uncertificated form, and vice versa, may be made in such manner as the directors may, in their absolute discretion, think fit (subject always to the Act and the rules of the Stock Exchange). The Company shall enter on the register of members how many Shares are held by each Shareholder in uncertificated form and in certificated form and shall maintain the register of members in each case as is required. Notwithstanding any provision of these Articles, a class or series of Shares shall not be treated as two classes by virtue only of that class or series comprising both certificated Shares and uncertificated Shares or as a result of any provision of these Articles which apply only in respect of certificated or uncertificated Shares. | |
| 3 | REDEMPTION OF SHARES AND TREASURY SHARES | |
| 3.1 | Subject to the Memorandum, the Company may purchase, redeem or otherwise acquire and hold its own Shares save that the Company may not purchase, redeem or otherwise acquire its own Shares without the consent of Shareholders whose Shares are to be purchased, redeemed or otherwise acquired unless the Company is permitted by the Act or any other provision in the Memorandum or Articles to purchase, redeem or otherwise acquire the Shares without their consent. | |
| 3.2 | Subject to the Memorandum, the Company may acquire its own fully paid Shares for no consideration by way of surrender of the Shares to the Company by the person holding the Shares. Any such surrender shall be in writing and signed by the person holding the Shares. |
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| 3.3 | Subject to the Memorandum, the Company may only offer to purchase, redeem or otherwise acquire Shares if the Resolution of Directors authorising the purchase, redemption or other acquisition contains a statement that the directors are satisfied, on reasonable grounds, that immediately after the purchase, redemption or other acquisition the value of the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they fall due. | |
| 3.4 | Shares that the Company purchases, redeems or otherwise acquires may be cancelled or held as treasury shares provided that the number of Shares purchased, redeemed or otherwise acquired and held as treasury shares, when aggregated with Shares of the same class already held by the Company as treasury shares, may not exceed 50% of the Shares of that class previously issued by the Company excluding Shares that have been cancelled. Shares which have been cancelled shall be available for reissue. | |
| 3.5 | All rights and obligations attaching to a treasury share are suspended and shall not be exercised by the Company while it holds the Share as a treasury share. | |
| 3.6 | Treasury shares may be transferred by the Company on such terms and conditions (not otherwise inconsistent with the Memorandum and the Articles) as the Company may by Resolution of Directors determine. |
| 4 | MORTGAGES AND CHARGES OF SHARES | |
| 4.1 | Shareholders may mortgage or charge their Shares. | |
| 4.2 | There shall be entered in the register of members at the written request of the Shareholder: |
| (a) | a statement that the Shares held by him are mortgaged or charged; | |
| (b) | the name of the mortgagee or chargee; and | |
| (c) | the date on which the particulars specified in subparagraphs (a) and (b) are entered in the register of members. |
| 4.3 | Where particulars of a mortgage or charge are entered in the register of members, such particulars may be cancelled: |
| (a) | with the written consent of the named mortgagee or chargee or anyone authorised to act on his behalf; or | |
| (b) | upon evidence satisfactory to the directors of the discharge of the liability secured by the mortgage or charge and the issue of such indemnities as the directors shall consider necessary or desirable. |
| 4.4 | Whilst particulars of a mortgage or charge over Shares are entered in the register of members pursuant to this Regulation: |
| (a) | no transfer of any Share the subject of those particulars shall be effected; |
| (b) | the Company may not purchase, redeem or otherwise acquire any such Share; and |
| (c) | no replacement certificate shall be issued in respect of such Shares, without the written consent of the named mortgagee or chargee. |
| 4.5 | The directors may not resolve to refuse or delay the transfer of a Share pursuant to the enforcement of a valid security interest created over the Share. |
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| 5 | FORFEITURE |
| 5.1 | Shares that are not fully paid on issue are subject to the forfeiture provisions set forth in this Regulation and for this purpose Shares issued for a promissory note, other written obligation to contribute money or property or a contract for future services are deemed to be not fully paid. | |
| 5.2 | A written notice of call specifying the date for payment to be made shall be served on the Shareholder who defaults in making payment in respect of the Shares. | |
| 5.3 | The written notice of call referred to in Regulation 5.2 shall name a further date not earlier than the expiration of 14 days from the date of service of the notice on or before which the payment required by the notice is to be made and shall contain a statement that in the event of non- payment at or before the time named in the notice the Shares, or any of them, in respect of which payment is not made will be liable to be forfeited. | |
| 5.4 | Where a written notice of call has been issued pursuant to Regulation 5.2 and the requirements of the notice have not been complied with, the directors may, at any time before tender of payment, forfeit and cancel the Shares to which the notice relates. | |
| 5.5 | The Company is under no obligation to refund any moneys to the Shareholder whose Shares have been cancelled pursuant to Regulation 5.4 and that Shareholder shall be discharged from any further obligation to the Company. |
| 6 | TRANSFER OF SHARES |
| 6.1 | Shares may be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee, which shall be sent to the Company for registration. |
| 6.2 | The transfer of a Share is effective when the name of the transferee is entered on the register of members. |
| 6.3 | If the directors of the Company are satisfied that an instrument of transfer relating to Shares has been signed but that the instrument has been lost or destroyed, they may resolve by Resolution of Directors: |
| (a) | to accept such evidence of the transfer of Shares as they consider appropriate; and | |
| (b) | that the transferee’s name should be entered in the register of members notwithstanding the absence of the instrument of transfer. |
| 6.4 | The personal representative of a deceased Shareholder may transfer a Share even though the personal representative is not a Shareholder at the time of the transfer. | |
| 6.5 | The directors may not resolve to refuse or delay the transfer of a Share unless the Shareholder has failed to pay an amount due in respect of the Share. | |
| 6.6 | Where shares are listed on a Recognised Exchange, Regulation 6.1 to 6.4 shall not apply and the shares may be transferred without the need for a written instrument of transfer if the transfer is carried out in accordance with the law, rules, procedures and other requirements applicable to shares listed on the Recognised Exchange. |
| 7 | MEETINGS AND CONSENTS OF SHAREHOLDERS |
| 7.1 | Any director of the Company may convene meetings of the Shareholders at such times and in such manner and places within or outside the British Virgin Islands as the director considers necessary or desirable. |
| 7.2 | Upon the written request of Shareholders entitled to exercise 30% or more of the voting rights in respect of the matter for which the meeting is requested the directors shall convene a meeting of Shareholders. |
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| 7.3 | The director convening a meeting shall give not less than 7 days’ notice of a meeting of Shareholders to: |
| (a) | those Shareholders whose names on the date the notice is given appear as Shareholders in the register of members of the Company and are entitled to vote at the meeting; and | |
| (b) | the other directors. |
| 7.4 | The director convening a meeting of Shareholders may fix as the record date for determining those Shareholders that are entitled to vote at the meeting the date notice is given of the meeting, or such other date as may be specified in the notice, being a date not earlier than the date of the notice. |
| 7.5 | A meeting of Shareholders held in contravention of the requirement to give notice is valid if Shareholders holding at least 90% of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a Shareholder at the meeting shall constitute waiver in relation to all the Shares which that Shareholder holds. |
| 7.6 | The inadvertent failure of a director who convenes a meeting to give notice of a meeting to a Shareholder or another director, or the fact that a Shareholder or another director has not received notice, does not invalidate the meeting. |
| 7.7 | A Shareholder may be represented at a meeting of Shareholders by a proxy who may speak and vote on behalf of the Shareholder. |
| 7.8 | The instrument appointing a proxy shall be produced at the place designated for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. The notice of the meeting may specify an alternative or additional place or time at which the proxy shall be presented. |
| 7.9 | The instrument appointing a proxy shall be in substantially the following form or such other form as approved by the directors or as the chairman of the meeting shall accept as properly evidencing the wishes of the Shareholder appointing the proxy. |
[COMPANY NAME]
I/We being a Shareholder of the above Company HEREBY APPOINT
___________________of __________________or failing him ____________of
________________________ to be my/our proxy to vote for me/us at the
meeting of Shareholders to be held on the ________________day of______________,
20_______________ and at any adjournment thereof.
(Any restrictions on voting to be inserted here)
Signed this ______________day of , 20_________________
___________
Shareholder
| 7.10 | The following applies where Shares are jointly owned: |
| (a) | if two or more persons hold Shares jointly each of them may be present in person or by proxy at a meeting of Shareholders and may speak as a Shareholder; |
| (b) | if only one of the joint owners is present in person or by proxy he may vote on behalf of all joint owners; and |
| (c) | if two or more of the joint owners are present in person or by proxy they must vote as one. |
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| 7.11 | A Shareholder shall be deemed to be present at a meeting of Shareholders if he participates by telephone or other electronic means and all Shareholders or their authorised representatives participating in the meeting are able to hear each other. |
| 7.12 | A meeting of Shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than one-third of the votes of the Shares entitled to vote on Resolutions of Shareholders to be considered at the meeting. A quorum may comprise a single Shareholder or proxy and then such person may pass a Resolution of Shareholders and a certificate signed by such person accompanied where such person be a proxy by a copy of the proxy instrument shall constitute a valid Resolution of Shareholders. |
| 7.13 | If within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Shareholders, shall be dissolved; in any other case it shall stand adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the Shares or each class or series of Shares entitled to vote on the matters to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved. |
| 7.14 | At every meeting of Shareholders, the chairman of the board of directors shall preside as chairman of the meeting. If there is no chairman of the board of directors or if that chairman is not present at the meeting, the Shareholders present shall choose one of their number to be the chairman. If the Shareholders are unable to choose a chairman for any reason, then the person representing the greatest number of voting Shares present in person or by proxy at the meeting shall preside as chairman failing which the oldest individual Shareholder or representative of a Shareholder present shall take the chair. |
| 7.15 | The chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. |
| 7.16 | At any meeting of the Shareholders the chairman is responsible for deciding in such manner as he considers appropriate whether any resolution proposed has been carried or not and the result of his decision shall be announced to the meeting and recorded in the minutes of the meeting. If the chairman has any doubt as to the outcome of the vote on a proposed resolution, he shall cause a poll to be taken of all votes cast upon such resolution. If the chairman fails to take a poll then any Shareholder present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall cause a poll to be taken. If a poll is taken at any meeting, the result shall be announced to the meeting and recorded in the minutes of the meeting. |
| 7.17 | Subject to the specific provisions contained in this Regulation for the appointment of representatives of persons other than individuals the right of any individual to speak for or represent a Shareholder shall be determined by the law of the jurisdiction where, and by the documents by which, the person is constituted or derives its existence. In case of doubt, the directors may in good faith seek legal advice from any qualified person and unless and until a court of competent jurisdiction shall otherwise rule, the directors may rely and act upon such advice without incurring any liability to any Shareholder or the Company. |
| 7.18 | Any person other than an individual which is a Shareholder may by resolution of its directors or other governing body authorise such individual as it thinks fit to act as its representative at any meeting of Shareholders or of any class of Shareholders, and the individual so authorised shall be entitled to exercise the same rights on behalf of the Shareholder which he represents as that Shareholder could exercise if it were an individual. |
| 7.19 | The chairman of any meeting at which a vote is cast by proxy or on behalf of any person other than an individual may call for a notarially certified copy of such proxy or authority which shall be produced within 7 days of being so requested or the votes cast by such proxy or on behalf of such person shall be disregarded. |
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| 7.20 | Directors of the Company may attend and speak at any meeting of Shareholders and at any separate meeting of the holders of any class or series of Shares. |
| 7.21 | An action that may be taken by the Shareholders at a meeting may also be taken by a resolution consented to in writing, without the need for any notice, but if any Resolution of Shareholders is adopted otherwise than by the unanimous written consent of all Shareholders, a copy of such resolution shall forthwith be sent to all Shareholders not consenting to such resolution. The consent may be in the form of counterparts, each counterpart being signed by one or more Shareholders. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the earliest date upon which Shareholders holding a sufficient number of votes of Shares to constitute a Resolution of Shareholders have consented to the resolution by signed counterparts. |
| 8 | DIRECTORS |
| 8.1 | The first directors of the Company shall be appointed by the first registered agent within 6 months of the date of incorporation of the Company; and thereafter, the directors shall be elected by Resolution of Shareholders or by Resolution of Directors. If, before the Company has any members, all of the directors appointed by the registered agent resign or die or otherwise cease to exist, the registered agent may appoint one or more further persons as directors of the Company. |
| 8.2 | No person shall be appointed as a director or alternate director, or nominated as a reserve director, of the Company unless he has consented in writing to be a director or alternate director, or to be nominated as a reserve director. |
| 8.3 | Subject to Regulation 8.1, the minimum number of directors shall be one and there shall be no maximum number. |
| 8.4 | Each director holds office for the term, if any, fixed by the Resolution of Shareholders or the Resolution of Directors appointing him, or until his earlier death, resignation or removal. If no term is fixed on the appointment of a director, the director serves indefinitely until his earlier death, resignation or removal. |
| 8.5 | A director may be removed from office: |
| (a) | with or without cause, by Resolution of Shareholders passed at a meeting of Shareholders called for the purpose of removing the director or for purposes including the removal of the director or by a written resolution passed by at least 75% of the votes of the Shares of the Company entitled to vote; or |
| (b) | with cause, by Resolution of Directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the director. |
| 8.6 | A director may resign his office by giving written notice of his resignation to the Company and the resignation has effect from the date the notice is received by the Company or from such later date as may be specified in the notice. A director shall resign forthwith as a director if he is, or becomes, disqualified from acting as a director under the Act. |
| 8.7 | The directors may at any time appoint any person to be a director either to fill a vacancy or as an addition to the existing directors. Where the directors appoint a person as director to fill a vacancy, the term shall not exceed the term that remained when the person who has ceased to be a director ceased to hold office. |
| 8.8 | A vacancy in relation to directors occurs if a director dies or otherwise ceases to hold office prior to the expiration of his term of office. |
| 8.9 | Where the Company only has one Shareholder who is an individual and that Shareholder is also the sole director of the Company, the sole Shareholder/director may, by instrument in writing, nominate a person who is not disqualified from being a director of the Company as a reserve director of the Company to act in the place of the sole director in the event of his death. |
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| 8.10 | The nomination of a person as a reserve director of the Company ceases to have effect if: |
| (a) | before the death of the sole Shareholder/director who nominated him, |
| (i) | he resigns as reserve director, or | |
| (ii) | the sole Shareholder/director revokes the nomination in writing; or |
| (b) | the sole Shareholder/director who nominated him ceases to be able to be the sole Shareholder/director of the Company for any reason other than his death. |
| 8.11 | The Company shall keep a register of directors containing: |
| (a) | the names and addresses of the persons who are directors of the Company or who have been nominated as reserve directors of the Company; |
| (b) | the date on which each person whose name is entered in the register was appointed as a director, or nominated as a reserve director, of the Company; |
| (c) | the date on which each person named as a director ceased to be a director of the Company; |
| (d) | the date on which the nomination of any person nominated as a reserve director ceased to have effect; and |
| (e) | such other information as may be prescribed by the Act. |
| 8.12 | The register of directors may be kept in any such form as the directors may approve, but if it is in magnetic, electronic or other data storage form, the Company must be able to produce legible evidence of its contents. Until a Resolution of Directors determining otherwise is passed, the magnetic, electronic or other data storage shall be the original register of directors. |
| 8.13 | The directors may, by Resolution of Directors, fix the emoluments of directors with respect to services to be rendered in any capacity to the Company. |
| 8.14 | A director is not required to hold a Share as a qualification to office. |
| 9 | POWERS OF DIRECTORS |
| 9.1 | The business and affairs of the Company shall be managed by, or under the direction or supervision of, the directors of the Company. Subject to the provisions of the Memorandum, the directors of the Company have all the powers necessary for managing, and for directing and supervising, the business and affairs of the Company. The directors may exercise all such powers of the Company as are not by the Act or by the Memorandum (including, for the avoidance of doubt, the Schedule) or the Articles required to be exercised by the Shareholders. |
| 9.2 | Each director shall exercise his powers for a proper purpose and shall not act or agree to the Company acting in a manner that contravenes the Memorandum, the Articles or the Act. Each director, in exercising his powers or performing his duties, shall act honestly and in good faith in what the director believes to be the best interests of the Company. |
| 9.3 | If the Company is the wholly owned subsidiary of a parent, a director of the Company may, when exercising powers or performing duties as a director, act in a manner which he believes is in the best interests of the parent even though it may not be in the best interests of the Company. |
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| 9.4 | Any director which is a body corporate may appoint any individual as its duly authorised representative for the purpose of representing it at meetings of the directors, with respect to the signing of consents or otherwise. |
| 9.5 | The continuing directors may act notwithstanding any vacancy in their body. |
| 9.6 | Subject to the provisions of the Memorandum, the directors may by Resolution of Directors exercise all the powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party. |
| 9.7 | All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as shall from time to time be determined by Resolution of Directors. |
| 10 | PROCEEDINGS OF DIRECTORS |
| 10.1 | Any one director of the Company may call a meeting of the directors by sending a written notice to each other director. |
| 10.2 | The directors of the Company or any committee thereof may meet at such times and in such manner and places within or outside the British Virgin Islands as the directors may determine to be necessary or desirable. |
| 10.3 | A director is deemed to be present at a meeting of directors if he participates by telephone or other electronic means and all directors participating in the meeting are able to hear each other. |
| 10.4 | A director shall be given not less than 3 days’ notice of meetings of directors, but a meeting of directors held without 3 days’ notice having been given to all directors shall be valid if all the directors entitled to vote at the meeting who do not attend waive notice of the meeting, and for this purpose the presence of a director at a meeting shall constitute waiver by that director. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting. |
| 10.5 | A director of the company (the appointing director) may appoint any other director or any other eligible person as his alternate to exercise the appointing director’s powers and carry out the appointing director’s responsibilities in relation to the taking of decisions by the directors in the absence of the appointing director. |
| 10.6 | The appointment and termination of an alternate director must be in writing, and written notice of the appointment and termination must be given by the appointing director to the Company as soon as reasonably practicable. |
| 10.7 | An alternate director has the same rights as the appointing director in relation to any directors’ meeting and any written resolution circulated for written consent. An alternate director has no power to appoint a further alternate, whether of the appointing director or of the alternate director, and the alternate does not act as an agent of or for the appointing director. |
| 10.8 | The appointing director may, at any time, voluntarily terminate the alternate director’s appointment. The voluntary termination of the appointment of an alternate shall take effect from the time when written notice of the termination is given to the Company. The rights of an alternate shall automatically terminate if the appointing director dies or otherwise ceases to hold office. |
| 10.9 | A meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one-half of the total number of directors, subject to a minimum of 2. |
| 10.10 | If the Company has only one director the provisions herein contained for meetings of directors do not apply and such sole director has full power to represent and act for the Company in all matters as are not by the Act, the Memorandum or the Articles required to be exercised by the Shareholders. In lieu of minutes of a meeting the sole director shall record in writing and sign a note or memorandum of all matters requiring a Resolution of Directors. Such a note or memorandum constitutes sufficient evidence of such resolution for all purposes. |
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| 10.11 | The directors may appoint a director as chairman of the board of directors. At meetings of directors at which the chairman of the board of directors is present, he shall preside as chairman of the meeting. If there is no chairman of the board of directors or if the chairman of the board is not present, the directors present shall choose one of their number to be chairman of the meeting. |
| 10.12 | An action that may be taken by the directors or a committee of directors at a meeting may also be taken by a Resolution of Directors or a resolution of a committee of directors consented to in writing by all directors or by all members of the committee, as the case may be, without the need for any notice. The consent may be in the form of counterparts each counterpart being signed by one or more directors. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the date upon which the last director has consented to the resolution by signed counterparts. |
| 11 | COMMITTEES |
| 11.1 | The directors may, by Resolution of Directors, designate one or more committees, each consisting of one or more directors, and delegate one or more of their powers, including the power to affix the Seal, to the committee. |
| 11.2 | The directors have no power to delegate to a committee of directors any of the Proscribed Powers. |
| 11.3 | A committee of directors, where authorised by the Resolution of Directors appointing such committee or by a subsequent Resolution of Directors, may appoint a sub-committee and delegate powers exercisable by the committee to the sub-committee. |
| 11.4 | The meetings and proceedings of each committee of directors consisting of 2 or more directors shall be governed mutatis mutandis by the provisions of the Articles regulating the proceedings of directors so far as the same are not superseded by any provisions in the Resolution of Directors establishing the committee. |
| 11.5 | Where the directors delegate their powers to a committee of directors they remain responsible for the exercise of that power by the committee, unless they believed on reasonable grounds at all times before the exercise of the power that the committee would exercise the power in conformity with the duties imposed on directors of the Company under the Act. |
| 12 | OFFICERS AND AGENTS |
| 12.1 | The Company may by Resolution of Directors appoint officers of the Company at such times as may be considered necessary or expedient. The officers shall perform such duties as are prescribed at the time of their appointment subject to any modification in such duties as may be prescribed thereafter by Resolution of Directors. |
| 12.2 | The emoluments of all officers shall be fixed by Resolution of Directors. |
| 12.3 | The officers of the Company shall hold office until their successors are duly appointed, but any officer elected or appointed by the directors may be removed at any time, with or without cause, by Resolution of Directors. Any vacancy occurring in any office of the Company may be filled by Resolution of Directors. |
| 12.4 | The directors may, by Resolution of Directors, appoint any person, including a person who is a director, to be an agent of the Company. |
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| 12.5 | An agent of the Company shall have such powers and authority of the directors, including the power and authority to affix the Seal, as are set forth in the Articles or in the Resolution of Directors appointing the agent, except that no agent has any power or authority with respect to the following: |
| (a) | the Proscribed Powers; |
| (b) | to change the registered office or agent; |
| (c) | to fix emoluments of directors; or |
| (d) | to authorise the Company to continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands. |
| 12.6 | The Resolution of Directors appointing an agent may authorise the agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company. |
| 12.7 | The directors may remove an agent appointed by the Company and may revoke or vary a power conferred on him. |
| 13 | CONFLICT OF INTERESTS |
| 13.1 | A director of the Company shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose the interest to all other directors of the Company. |
| 13.2 | For the purposes of Regulation 13.1, a disclosure to all other directors to the effect that a director is a member, director or officer of another named entity or has a fiduciary relationship with respect to the entity or a named individual and is to be regarded as interested in any transaction which may, after the date of the entry into the transaction or disclosure of the interest, be entered into with that entity or individual, is a sufficient disclosure of interest in relation to that transaction. |
| 13.3 | A director of the Company who is interested in a transaction entered into or to be entered into by the Company may: |
| (a) | vote on a matter relating to the transaction; |
| (b) | attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and |
| (c) | sign a document on behalf of the Company, or do any other thing in his capacity as a director, that relates to the transaction, |
and, subject to compliance with the Act shall not, by reason of his office be accountable to the Company for any benefit which he derives from such transaction and no such transaction shall be liable to be avoided on the grounds of any such interest or benefit.
| 14 | INDEMNIFICATION |
| 14.1 | Subject to the limitations hereinafter provided the Company shall indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who: |
| (a) | is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director of the Company; or |
| (b) | is or was, at the request of the Company, serving as a director of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise. |
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| 14.2 | The indemnity in Regulation 14.1 only applies if the person acted honestly and in good faith with a view to the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that their conduct was unlawful. |
| 14.3 | For the purposes of Regulation 14.2 and without limitation, a director acts in the best interests of the Company if he acts in the best interests of the Company’s parent in the circumstances specified in Regulation 9.3. |
| 14.4 | The decision of the directors as to whether the person acted honestly and in good faith and with a view to the best interests of the Company and as to whether the person had no reasonable cause to believe that his conduct was unlawful is, in the absence of fraud, sufficient for the purposes of the Articles, unless a question of law is involved. |
| 14.5 | The termination of any proceedings by any judgment, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful. |
| 14.6 | Expenses, including legal fees, incurred by a director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the director is not entitled to be indemnified by the Company in accordance with Regulation 14.1. |
| 14.7 | Expenses, including legal fees, incurred by a former director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the former director to repay the amount if it shall ultimately be determined that the former director is not entitled to be indemnified by the Company in accordance with Regulation 14.1 and upon such terms and conditions, if any, as the Company deems appropriate. |
| 14.8 | The indemnification and advancement of expenses provided by, or granted pursuant to, this section is not exclusive of any other rights to which the person seeking indemnification or advancement of expenses may be entitled under any agreement, Resolution of Shareholders, resolution of disinterested directors or otherwise, both as to acting in the person’s official capacity and as to acting in another capacity while serving as a director of the Company. |
| 14.9 | If a person referred to in Regulation 14.1 has been successful in defence of any proceedings referred to in Regulation 14.1, the person is entitled to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the person in connection with the proceedings. |
| 14.10 | The Company may purchase and maintain insurance in relation to any person who is or was a director, officer or liquidator of the Company, or who at the request of the Company is or was serving as a director, officer or liquidator of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability as provided in the Articles. |
| 15 | CORPORATE RECORDS |
| 15.1 | The Company shall keep the following documents at the office of its registered agent: |
| (a) | the Memorandum and the Articles; |
| (b) | the register of members, or a copy of the register of members; |
| (c) | the register of directors, or a copy of the register of directors; and |
| (d) | copies of all notices and other documents filed by the Company with the Registrar in the previous 10 years. |
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| 15.2 | Until the directors determine otherwise by Resolution of Directors the Company shall keep the original register of members and original register of directors at the office of its registered agent. |
| 15.3 | If the Company maintains only a copy of the register of members or a copy of the register of directors at the office of its registered agent, it shall: |
| (a) | within 15 days of any change in either register, notify the registered agent in writing of the change; and |
| (b) | provide the registered agent with a written record of the physical address of the place or places at which the original register of members or the original register of directors is kept. |
| 15.4 | The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine: |
| (a) | minutes of meetings and Resolutions of Shareholders and classes of Shareholders; and |
| (b) | minutes of meetings and Resolutions of Directors and committees of directors. |
| 15.5 | Where any original records referred to in this Regulation are maintained other than at the office of the registered agent of the Company, and the place at which the original records is changed, the Company shall provide the registered agent with the physical address of the new location of the records of the Company within 14 days of the change of location. |
| 15.6 | The records kept by the Company under this Regulation shall be in written form or either wholly or partly as electronic records complying with the requirements of the Electronic Transactions Act 2001 as from time to time amended or re-enacted. |
| 16 | SEAL |
The Company shall have a Seal an impression of which shall be kept at the office of the registered agent of the Company. The Company may have more than one Seal and references herein to the Seal shall be references to every Seal which shall have been duly adopted by Resolution of Directors. The directors shall provide for the safe custody of the Seal and for an imprint thereof to be kept at the registered office. Except as otherwise expressly provided herein the Seal when affixed to any written instrument shall be witnessed and attested to by the signature of any one director or other person so authorised from time to time by Resolution of Directors. Such authorisation may be before or after the Seal is affixed, may be general or specific and may refer to any number of sealings. The directors may provide for a facsimile of the Seal and of the signature of any director or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the Seal had been affixed to such instrument and the same had been attested to as hereinbefore described.
| 17 | DISTRIBUTIONS BY WAY OF DIVIDEND |
| 17.1 | Subject to the provisions of the Memorandum, the directors of the Company may, by Resolution of Directors, authorise a distribution by way of dividend at a time and of an amount they think fit if they are satisfied, on reasonable grounds, that, immediately after the distribution, the value of the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they fall due. |
| 17.2 | Dividends may be paid in money, shares, or other property. |
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| 17.3 | Notice of any dividend that may have been declared shall be given to each Shareholder as specified in Regulation 19 and all dividends unclaimed for 3 years after having been declared may be forfeited by Resolution of Directors for the benefit of the Company. |
| 17.4 | No dividend shall bear interest as against the Company and no dividend shall be paid on treasury shares. |
| 18 | ACCOUNTS AND AUDIT |
| 18.1 | The Company shall keep records and underlying documentation that are sufficient to show and explain the Company’s transactions and that will, at any time, enable the financial position of the Company to be determined with reasonable accuracy. |
| 18.2 | The records and underlying documentation of the Company shall be kept at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine and if the records and underlying documentation are kept in a location other than the office of the registered agent, the Company shall provide the registered agent with a written record of: |
| (a) | the physical address of the place at which the records and underlying documentation are kept; and | |
| (b) | the name of the person who maintains and controls the Company’s records and underlying documentation. |
| 18.3 | If the location at which the records and underlying documentation are kept or the name of the person who maintains and controls the records and underlying documentation changes, the Company shall, within 14 days of the change provide its registered agent with: |
| (a) | the physical address of the new location at which the records and underlying documentation are kept; and |
| (b) | the name of the new person who maintains and controls the Company’s records and underlying documentation. |
| 18.4 | The Company may by Resolution of Shareholders call for the directors to prepare periodically and make available a profit and loss account and a balance sheet. The profit and loss account and balance sheet shall be drawn up so as to give respectively a true and fair view of the profit and loss of the Company for a financial period and a true and fair view of the assets and liabilities of the Company as at the end of a financial period. |
| 18.5 | The Company may by Resolution of Shareholders call for the accounts to be examined by auditors. |
| 18.6 | The first auditors shall be appointed by Resolution of Directors; subsequent auditors shall be appointed by Resolution of Shareholders or by Resolution of Directors. |
| 18.7 | The auditors may be Shareholders, but no director or other officer shall be eligible to be an auditor of the Company during their continuance in office. |
| 18.8 | The remuneration of the auditors of the Company may be fixed by Resolution of Directors. |
| 18.9 | The auditors shall examine each profit and loss account and balance sheet required to be laid before a meeting of the Shareholders or otherwise given to Shareholders and shall state in a written report whether or not: |
| (a) | in their opinion the profit and loss account and balance sheet give a true and fair view respectively of the profit and loss for the period covered by the accounts, and of the assets and liabilities of the Company at the end of that period; and |
| (b) | all the information and explanations required by the auditors have been obtained. |
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| 18.10 | The report of the auditors shall be annexed to the accounts and shall be read at the meeting of Shareholders at which the accounts are laid before the Company or shall be otherwise given to the Shareholders. |
| 18.11 | Every auditor of the Company shall have a right of access at all times to the books of account and vouchers of the Company, and shall be entitled to require from the directors and officers of the Company such information and explanations as he thinks necessary for the performance of the duties of the auditors. |
| 18.12 | The auditors of the Company shall be entitled to receive notice of, and to attend any meetings of Shareholders at which the Company’s profit and loss account and balance sheet are to be presented. |
| 19 | NOTICES |
| 19.1 | Any notice, information or written statement to be given by the Company to Shareholders shall be in writing and may be given by personal service, mail, courier, email, or fax to such Shareholder’s address as shown in the register of members or to such Shareholder’s email address or fax number as notified by the Shareholder to the Company in writing from time to time. |
| 19.2 | Any summons, notice, order, document, process, information or written statement to be served on the Company may be served by leaving it, or by sending it by registered mail addressed to the Company, at its registered office, or by leaving it with, or by sending it by registered mail addressed to the Company at the offices of the registered agent of the Company. |
| 19.3 | Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing notice, and shall be deemed to be received on the fifth business day following the day on which the notice was posted. Where a notice is sent by fax or email, notice shall be deemed to be effected by transmitting the email or fax to the address or number provided by the intended recipient and service of the notice shall be deemed to have been received on the same day that it was transmitted. |
| 20 | VOLUNTARY LIQUIDATION |
Subject to the Act and the provisions of the Memorandum, the Company may by Resolution of Shareholders or by Resolution of Directors appoint an eligible individual as voluntary liquidator alone or jointly with one or more other voluntary liquidators.
| 21 | CONTINUATION |
The Company may by Resolution of Shareholders or by a resolution passed unanimously by all directors of the Company continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.
| 22 | BUSINESS OPPORTUNITIES |
| 22.1 | To the fullest extent permitted by Applicable Law, no individual serving as a director or an officer of the Company (“Management”) shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Company. To the fullest extent permitted by applicable law, the Company renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for Management, on the one hand, and the Company, on the other. Except to the extent expressly assumed by contract, to the fullest extent permitted by applicable law, Management shall have no duty to communicate or offer any such corporate opportunity to the Company and shall not be liable to the Company or its Shareholders for breach of any fiduciary duty as a director and/or officer solely by reason of the fact that such party pursues or acquires such corporate opportunity for itself or themself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company. |
| 22.2 | Except as provided elsewhere in this Regulation, the Company hereby renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Company and Management, about which a Director and/or Officer who is also a member of Management acquires knowledge. |
| 22.3 | To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in this Regulation to be a breach of duty to the Company or its Members, the Company hereby waives, to the fullest extent permitted by applicable law, any and all claims and causes of action that the Company may have for such activities. To the fullest extent permitted by applicable law, the provisions of this Article apply equally to activities conducted in the future and that have been conducted in the past. |
Signed for Start Incorp Services Limited of Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands for the purpose of incorporating a BVI Business Company under the laws of the British Virgin Islands on the 28th day of September 2015.
| Incorporator | |
| /s/ Miles Walton | |
|
Miles Walton |
|
| Authorised Signatory | |
|
Start Incorp Services Limited |
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Exhibit 10.1
EXECUTION VERSION
FORM OF SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 12, 2026, is by and among Freight Technologies, Inc., a company organized in the British Virgin Islands with offices located at 2001 Timberloch Place, Suite 500, The Woodlands, Texas 77380 (the “Company”), and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B. The Company has designated a series of preferred shares, the Series C Preferred Shares, par value $0.0001 per share (the “Series C Preferred Shares”), which Series C Preferred Shares have the rights, preferences and privileges set forth in the Amended and Restated Memorandum and Articles of the Company (the “Articles”), including the right to convert such Series C Preferred Shares into Ordinary Shares (as defined below) (the “Conversion Shares”), in accordance with the terms of the Articles.
C. Each Buyer wishes to purchase, and the Company wishes to sell at the Closing (as defined below), upon the terms and conditions stated in this Agreement, the number of Series C Preferred Shares set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate number of Series C Preferred Shares shall not exceed a total stated value of $1,000,000).
D. The Series C Preferred Shares and the Conversion Shares are collectively referred to herein as the “Securities.”
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SHARES.
(a) Purchase of Shares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Closing Date (as defined below), a number of Series C Preferred Shares in the amount as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, with a Series C Fixed Price (as defined in the New Articles (as defined below)) as set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (the “Closing”).
(b) Closing. The Closing shall occur at the offices of Sullivan & Worcester LLP, 1251 Avenue of the Americas, New York, NY 10020 or such other location as the parties hereto shall mutually agree take place remotely by electronic transfer of the documentation required for the Closing. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day (as defined below) (and including the date hereof if a Business Day) on which the conditions to the Closing set forth in Sections 6(a) and 7(a) below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.
(c) Purchase Price. The aggregate purchase price for the Series C Preferred Shares to be purchased by each Buyer (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers.
(d) Form of Payment. On the Closing Date, (A) each Buyer shall pay its respective Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) to the Company for the Series C Preferred Shares to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below) and (B) the Company shall deliver to each Buyer a number of Series C Preferred Shares in the aggregate amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
2. BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date in which such Buyer purchases any Series C Preferred Shares hereunder:
(a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
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(b) No Public Sale or Distribution. Such Buyer (i) is acquiring the Series C Preferred Shares and (ii) upon conversion of its Series C Preferred Shares will acquire the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity (as defined below) or any department or agency thereof.
(c) Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(d) Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.
(e) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(f) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Transfer or Resale. Such Buyer understands that except as provided in Section 4(h) hereof: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).
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(h) Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder. Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the SEC Documents (as defined below), the Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:
(a) Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized or incorporated, as applicable, and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary (as defined below), individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below). Other than the Persons (as defined below) set forth in the SEC Documents, the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding share capital or holds any equity or similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”
(b) Authorization; Enforcement; Validity. Subject to the filing of the New Articles (as defined below), the Company has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its Subsidiaries, and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Series C Preferred Shares and the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Series C Preferred Shares) have been duly authorized by the Company’s board of directors and each of its Subsidiaries’ board of directors or other governing body, as applicable, and other than (i) the filing with the SEC of one or more registration statements registering for resale the Conversion Shares, (ii) a Form D with the SEC, (iii) with respect to the Closing and/or conversion of the Series C Preferred Shares, the filing of an Additional Listing Application with the Principal Market (as defined below), and (iv) any other filings as may be required by any state securities agencies, no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their shareholders or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. Prior to the Closing, the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by each such Subsidiary, and shall constitute the legal, valid and binding obligations of each such Subsidiary, enforceable against each such Subsidiary in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. The Company has the requisite authority to file of the Amended and Restated Memorandum and Articles, substantially in the form set forth in Exhibit A (the “New Articles”). “Transaction Documents” means, collectively, this Agreement, the New Articles, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
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(c) Issuance of Securities. The issuance of the Securities have been duly authorized and upon issuance in accordance with the terms of the Transaction Documents, the Series C Preferred Shares and the Conversion Shares shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing, the Company shall have reserved from its duly authorized share capital not less than the maximum number of Conversion Shares issuable upon conversion of the Series C Preferred Shares (assuming for purposes hereof that (i) the Series C Preferred Shares are convertible at a conversion price of $1.284, and (ii) any such conversion shall not take into account any limitations on the conversion of the Series C Preferred Shares set forth in the New Articles). Upon issuance or conversion in accordance with the terms of the Series C Preferred Shares, the Conversion Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Ordinary Shares. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries, the filing and effectiveness of the New Articles, and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Series C Preferred Shares and the reservation for issuance of the Conversion Shares) will not (i) result in a violation of the New Articles, as may be amended from time to time, of the Company, or the certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any share capital or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the Nasdaq Capital Market (the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations, including, without limitation, the laws, rules and regulations of the British Virgin Islands applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected).
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(e) Consents. Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the filing of a Listing of Additional Shares application with the Principal Market, a Form D and a registration statement registering the resale of the Conversion Shares, and any other filings as may be required by any state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the applicable Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Ordinary Shares in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
(f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the Ordinary Shares (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company, each Subsidiary and their respective representatives.
(g) No General Solicitation. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.
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(h) No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or caused this offering of the Securities to require approval of shareholders of the Company for purposes of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
(i) Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares will increase in certain circumstances. The Company further acknowledges that its obligation to issue (i) the Conversion Shares pursuant to the terms of the New Articles and in accordance with this Agreement and (ii) the Series C Preferred Shares in accordance with this Agreement is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
(j) Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including, without limitation, any distribution under a rights agreement), shareholder rights plan or other similar anti-takeover provision under the New Articles or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Ordinary Shares or a change in control of the Company or any of its Subsidiaries.
(k) SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(e) of this Agreement or in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
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(l) Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means, (i) with respect to the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary, individually, (A) the present fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(m) No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form F-1 filed with the SEC relating to an issuance and sale by the Company of its Ordinary Shares and which has not been publicly announced, (ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under the New Articles, any certificate of designation, preferences or rights of any other outstanding series of preferred shares of the Company or any of its Subsidiaries, or its organizational charter, certificate of formation, memorandum of association, articles of association, certificate of incorporation or bylaws, as applicable. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Ordinary Shares by the Principal Market in the foreseeable future. During the two years prior to the date hereof, (i) the Ordinary Shares has been listed or designated for quotation on the Principal Market, (ii) trading in the Ordinary Shares has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Ordinary Shares from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
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(o) Foreign Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of: (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p) Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q) Transactions With Affiliates. Except as disclosed in the SEC Documents, no current or former employee, partner, director, officer or shareholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or shareholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common equity of a company whose securities are traded on or quoted through an Eligible Market (as defined in Section 4(f))), nor does any such Person receive income from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. No employee, officer, shareholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including share option agreements outstanding under any share option plan approved by the Board of Directors of the Company).
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(r) Equity Capitalization.
(i) Definitions:
(A) “Ordinary Shares” means (i) the Company’s ordinary shares, no par value per share, and (ii) any capital stock into which such Ordinary Shares shall have been exchanged or any shares of capital stock resulting from a reclassification of such Ordinary Shares.
(ii) Authorized and Outstanding Share Capital.
As of the date hereof, the authorized share capital of the Company consists of an unlimited number of Ordinary Shares. As of the date hereof, the Company has (i) 2,860,627 Ordinary Shares issued and outstanding, (ii) 31,337,444 Ordinary Shares reserved for issuance pursuant to Convertible Securities (as defined below) exercisable or exchangeable for, or convertible into, Ordinary Shares, (iii) 5,643,453 shares of Series A preferred stock, par value $0.0001 per share (“Series A Preferred Shares”) issued and outstanding, which convert into 1,991,940 Ordinary Shares, (iv) 13,407,566 Series B preferred stock, par value $0.0001 per share (“Series B Preferred Shares”) issued and outstanding, which convert into 1,263 Ordinary Shares, (v) 7,020 Series seed preferred stock, par value $0.0001 per share (the “Series Seed Preferred Shares”) issued and outstanding, which are convertible into 1 Ordinary Share, (vi) 5,500,000 Series C Preferred Shares issued and outstanding, which are convertible into 5,330,806 Ordinary Shares, and (vii) warrants to purchase up to 26,039,975 Ordinary Shares outstanding. “Convertible Securities” means any share capital or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any share capital or other security of the Company (including, without limitation, Ordinary Shares) or any of its Subsidiaries.
(iii) Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. The SEC Documents sets forth the number of Ordinary Shares that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Ordinary Shares are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person owns 10% or more of the Company’s issued and outstanding Ordinary Shares (calculated based on the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% shareholder for purposes of federal securities laws).
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(iv) Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares, interests or share capital is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or share capital of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or share capital of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or share capital of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has any share appreciation rights or “phantom share” plans or agreements or any similar plan or agreement.
(v) Organizational Documents. The Company has furnished to the Buyers true, correct and complete copies of the Articles, as amended and as in effect on the date hereof, and the terms of all Convertible Securities and the material rights of the holders thereof in respect thereto.
(s) Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed in the SEC Documents, has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
(t) Title.
(i) Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”) owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.
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(ii) Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.
(u) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Internal Revenue Code of 1986, as amended (the “Code”). The net operating loss carryforwards (“NOLs”) for United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall not be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership change” within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
(v) Internal Accounting and Disclosure Controls. Except as otherwise disclosed in the SEC Documents, the Company and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
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(w) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
(x) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Ordinary Shares which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) each Buyer may rely on the Company’s obligation to timely deliver Ordinary Shares upon conversion, exercise or exchange, as applicable, of the Securities as and when required pursuant to the Transaction Documents for purposes of effecting trading in the Ordinary Shares of the Company. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents one or more Buyers may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable Ordinary Shares) at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Conversion Shares deliverable with respect to the Securities are being determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable Ordinary Shares), if any, can reduce the value of the existing shareholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement or any other Transaction Document or any of the documents executed in connection herewith or therewith.
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(z) Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
(aa) Transfer Taxes. On each Closing Date, all share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(bb) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(cc) Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
(dd) Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(ee) Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
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(ff) Management. During the past five-year period, no current or former officer or director or, to the knowledge of the Company, no current ten percent (10%) or greater shareholder of the Company or any of its Subsidiaries has been the subject of:
(i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);
(iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(2) Engaging in any particular type of business practice; or
(3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;
(v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
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(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(gg) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(hh) No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(ii) Other Covered Persons. The Company is not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.
(jj) No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
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(kk) Compliance with Data Privacy Laws. To the extent applicable, the Company and its Subsidiaries are, and at all prior times were, in compliance with all applicable state and federal data privacy and security laws and regulations and the Company and its Subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”) except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. To ensure compliance with the Privacy Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Company and its Subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. The Company further certifies that neither it nor any Subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(ll) Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company or any of its Subsidiaries and made available to you have been prepared in good faith based upon reasonable assumptions and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts and that the actual results during the period or periods covered by any such financial projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
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(mm) Placement Agent’s Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by the Buyers or their investment advisors) relating to or arising out of the transactions contemplated hereby in connection with the sale of the Securities. The Company shall pay, and hold the Buyers harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the offer or sale of the Securities.
4. COVENANTS.
(a) Best Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Form D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the applicable Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at such Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to such Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Buyers.
(c) Reporting Status. Until such date on which the Buyers shall have sold all of the Conversion Shares (the “Reporting Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
(d) [Reserved].
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(e) [Reserved].
(f) Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Conversion Shares upon each national securities exchange and automated quotation system, if any, upon which the Ordinary Shares are then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Conversion Shares from time to time issuable under the terms of the Transaction Documents on such national securities exchange or automated quotation system. The Company shall maintain the Ordinary Shares’ listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, or the Nasdaq Global Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Ordinary Shares on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).
(g) Fees. At each Closing, (x) the fees and expenses of Sullivan & Worcester LLP, and (y) for diligence expenses, in each case, for all costs and expenses incurred by the Lead Buyer or its affiliates in connection with the structuring, documentation, negotiation and applicable closing of the transactions contemplated by the Transaction Documents (including, without limitation, as applicable, all legal fees of outside counsel and disbursements of Sullivan & Worcester LLP, counsel to the Lead Buyer (as defined in the Schedule of Buyers), any other fees and expenses in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents and any amendments thereof or waivers with respect thereto and due diligence and regulatory filings in connection therewith) (the “Transaction Expenses”), and shall be withheld by the Lead Buyer from its Purchase Price at the Closing; provided, that the Company shall promptly reimburse Sullivan & Worcester LLP on demand for all Transaction Expenses applicable thereto in accordance hereto not so reimbursed through such withholding at such applicable Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.
(h) Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.
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(i) Disclosure of Transactions and Other Material Information.
(i) Disclosure of Transaction. On or before 9:30 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Report of Foreign Private Issuer on Form 6-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement) and the form of the New Articles (including all attachments, the “6-K Filing”). From and after the filing of the 6-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the 6-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. From and after the filing of the 6-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.
(ii) Limitations on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion) except as required by applicable law and regulations. In the event of a breach of any of the foregoing covenants, or any of the covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, shareholders or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 6-K Filings and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.
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(iii) Other Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this Section 4(i), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company, any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Buyer with material non-public information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”), the Company shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly disclose such Confidential Information on a Report of Foreign Private Issuer on Form 6-K or otherwise (each, a “Disclosure”). From and after such Disclosure, the Company shall have disclosed all Confidential Information provided to such Buyer by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon such Disclosure, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. In the event that the Company fails to effect such Disclosure on or prior to the Required Disclosure Date and such Buyer shall have possessed Confidential Information for at least ten (10) consecutive Trading Days (each, a “Disclosure Failure”), then, as partial relief for the damages to such Buyer by reason of any such delay in, or reduction of, its ability to buy or sell Ordinary Shares after such Required Disclosure Date (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to such Buyer an amount in cash equal to the greater of (I) two percent (2%) of the stated value of the Series C Preferred Stock purchased by such Buyer hereunder and (II) the applicable Disclosure Restitution Amount, on each of the following dates (each, a “Disclosure Delay Payment Date”): (i) on the date of such Disclosure Failure and (ii) on every thirty (30) day anniversary such Disclosure Failure until the earlier of (x) the date such Disclosure Failure is cured and (y) such time as all such non-public information provided to such Buyer shall cease to be Confidential Information (as evidenced by a certificate, duly executed by an authorized officer of the Company to the foregoing effect) (such earlier date, as applicable, a “Disclosure Cure Date”). Following the initial Disclosure Delay Payment for any particular Disclosure Failure, without limiting the foregoing, if a Disclosure Cure Date occurs prior to any thirty (30) day anniversary of such Disclosure Failure, then such Disclosure Delay Payment (prorated for such partial month) shall be made on the second (2nd) Business Day after such Disclosure Cure Date. The payments to which a Buyer shall be entitled pursuant to this Section 4(i)(iii) are referred to herein as “Disclosure Delay Payments.” In the event the Company fails to make Disclosure Delay Payments in a timely manner in accordance with the foregoing, such Disclosure Delay Payments shall bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full.
(iv) For the purpose of this Agreement the following definitions shall apply:
(1) “Disclosure Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the quotient of (I) the sum of the five (5) highest VWAPs (as defined below) of the Ordinary Shares during the applicable Disclosure Restitution Period (as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”). All such determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification or similar transaction that proportionately decreases or increases the Ordinary Shares during such Disclosure Failure Measuring Period.
(2) “Disclosure Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure Failure Market Price less (II) the lowest purchase price, per Ordinary Share, of any Ordinary Shares issued or issuable to such Buyer pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar trading volume (as reported on the Reporting Service (as defined below)) of the Ordinary Shares on the Principal Market for each Trading Day (as defined in the below) either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing on the applicable Required Disclosure Date through and including the Trading Day immediately prior to the initial Disclosure Delay Payment Date or (2) with respect to each other Disclosure Delay Payment Date, during the period commencing the immediately preceding Disclosure Delay Payment Date through and including the Trading Day immediately prior to such applicable Disclosure Delay Payment Date (such applicable period, the “Disclosure Restitution Period”).
(3) “Required Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information, either (I) if the Company and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential Information, such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such Buyer first received any Confidential Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the first (1st) Business Day after such Buyer’s receipt of such Confidential Information.
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(4) “Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the shares of Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which the Nasdaq Capital Market (or any successor thereto) is open for trading of securities.
(5) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by the Reporting Service through its “VAP” function (set to 09:30 start time and 16:00 end time) or FactSet or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by the Reporting Service, or, if no dollar volume-weighted average price is reported for such security by the Reporting Service for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations shall be appropriately adjusted for any share dividend, share split, share combination, recapitalization or other similar transaction during such period.
(j) Additional Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any registration statement is not effective or any prospectus contained therein is not available for use or any Current Public Information Failure (as defined below) exists, the Company shall not file a registration statement or an offering statement under the 1933 Act relating to securities that are not the Conversion Shares (other than a registration statement on Form S-8 or such supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement)). “Applicable Date” means the first date on which all of the Conversion Shares then outstanding are eligible to be resold by the Buyers pursuant to Rule 144 (or, if a Current Public Information Failure has occurred and is continuing, such later date after which the Company has cured such Current Public Information Failure). “Subsequent Placement” means any direct or indirect issuance, offer, sale, grant of any option or right to purchase, or other disposal of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities, any debt, any preferred shares or any purchase rights). “Current Public Information Failure” means any time in which, if a registration statement registering the resale of the Conversion Shares is not effective for any reason or the prospectus contained therein is not available for use for any reason, either (x) the Company fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2).
(k) Additional Issuance of Securities. During the period commencing on the date hereof and ending on the date no Buyers hold any Series C Preferred Shares issued hereunder (the “Covenant Period”), the Company will not, without the prior written consent of the Required Holders, issue any notes or convertible debt (other than to the Buyers as contemplated hereby).
(l) Reservation of Shares. During the Covenant Period, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of Ordinary Shares issuable upon conversion of all the Series C Preferred Shares then outstanding (assuming for purposes hereof that (i) the Series C Preferred Shares are convertible at a conversion price of $1.284, and (ii) any such conversion shall not take into account any limitations on the conversion of the Series C Preferred Shares set forth in the New Articles) (collectively, the “Required Reserve Amount”); provided that at no time shall the number of Ordinary Shares reserved pursuant to this Section 4(l) be reduced other than proportionally in connection with any conversion, exercise and/or redemption, as applicable of Series C Preferred Shares. If at any time the number of Ordinary Shares authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.
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(m) Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(n) [Reserved].
(o) [Reserved].
(p) Dilutive Issuances. During the Covenant Period, the Company shall not, in any manner, enter into or affect any Dilutive Issuance (as defined below) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Series C Preferred Shares any Ordinary Shares in excess of that number of Ordinary Shares which the Company may issue upon conversion of the Series C Preferred Shares without breaching the Company’s obligations under the rules or regulations of the Principal Market. A “Dilutive Issuance” is if, any time on or after the date hereof, the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or is deemed to have granted, issued or sold, any Ordinary Shares (including the granting, issuance or sale of Ordinary Shares owned or held by or for the account of the Company, issued or sold or deemed to have been granted, issued or sold) for a consideration per share less than a price equal to the Series C Conversion Price (as defined in the New Articles) in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale.
(q) Passive Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the Code.
(r) [Reserved].
(s) Corporate Existence. During the Covenant Period, the Company shall not be party to any Fundamental Transaction (as defined in the New Articles) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the New Articles.
(t) [Reserved]
(u) Conversion Procedures. Each Notice of Conversion (as defined in the New Articles) shall set forth the totality of the procedures required of the Buyers in order to convert the Series C Preferred Shares. Except as provided in Section 5(d), no additional legal opinion, other information or instructions shall be required of the Buyers to convert their Series C Preferred Shares. The Company shall honor conversions of the Series C Preferred Shares and shall deliver the Conversion Shares in accordance with the terms, conditions and time periods set forth in the New Articles.
(v) Piggy Back Registration Rights. If there is not an effective registration statement covering the resale of the Conversion Shares or the prospectus contained therein is not available for use and the Company shall determine to prepare and file with the SEC a registration statement or offering statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s share option or other employee benefit plans), then the Company shall deliver to each Buyer a written notice of such determination and, if within fifteen (15) days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement or offering statement all or any part of such Conversion Shares such Buyer requests to be registered; provided, however, the Company shall not be required to register any Conversion Shares (i) that are eligible for resale pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable), or (ii) that are the subject of a then-effective registration statement.
(w) [Reserved].
(x) Regulation M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.
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(y) General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(z) Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration of the Securities under the 1933 Act or require shareholder approval under the rules and regulations of the Principal Market and the Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of Securities contemplated hereby.
(aa) Notice of Disqualification Events. The Company will notify the Buyers in writing, prior to each Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person. [Reserved]. No Net Short Position. Each Buyer hereby agrees solely with the Company, severally and not jointly, and not with any other Buyer, for so long as such Buyer owns any Series C Preferred Shares, such Buyer shall not maintain a Net Short Position (as defined below). For purposes hereof, a “Net Short Position” by a person means a position whereby such person has executed one or more sales of Ordinary Shares that is marked as a short sale (but not including any sale marked “short exempt”) and that is executed at a time when such Buyer has no equivalent offsetting long position in the Ordinary Shares (or is deemed to have a long position hereunder or otherwise in accordance with Regulation SHO of the 1934 Act); provided, that, for purposes of such calculations, any short sales either (x) consummated at a price greater than or equal to (A) the Series C Conversion Price, (y) that is a result of a bona-fide trading error on behalf of such Buyer (or its affiliates) or (z) that would otherwise be marked as a “long” sale, but for the occurrence of a failure to convert the Series C Preferred Shares and/or any other breach by the Company (or its affiliates or agents, including, without limitation, the Transfer Agent) of any Transaction Document, in each case, shall be excluded from such calculations. For purposes of determining whether a Buyer has an equivalent offsetting “long” position in the Ordinary Shares, (A) all Ordinary Shares that are owned by such Buyer shall be deemed held “long” by such Buyer, (B) all Ordinary Shares that would be issuable upon conversion or exercise in full of all Securities issuable to such Buyer or then held by such Buyer, as applicable (assuming that such Securities were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any conversion or exercise price adjustments that would take effect given only the passage of time) shall be deemed to be held long by such Buyer, and (C) at any other time the Company is required (or has elected (or is deemed to have elected)) to issue Ordinary Shares to such Buyer pursuant to the terms of the New Articles, any Ordinary Shares issued or issuable to such Buyer (or its designee, if applicable) in connection therewith shall be deemed held “long” by such Buyer from and after the date that is one (1) Trading Day prior to the deadline for delivery of such Ordinary Shares to such Buyer, as set forth in the New Articles, until such time as such Buyer shall no longer beneficially own such Ordinary Shares. Closing Documents. On or prior to fourteen (14) calendar days after each Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Sullivan & Worcester LLP a complete closing set of the executed Transaction Documents, Securities and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise. Shareholder Approval. If required by the applicable rules of the Principal Market, the Company shall provide each shareholder entitled to vote at a meeting of shareholders of the Company (the “Shareholder Meeting”), which shall be promptly called and held not later than ninety (90) calendar days after the Closing Date (the “Shareholder Meeting Deadline”), a proxy statement, in each case, in a form reasonably acceptable to the Lead Buyer and Sullivan & Worcester LLP, at the expense of the Company, with the Company obligated to reimburse the expenses of Sullivan & Worcester LLP incurred in connection therewith. The proxy statement, if any, shall solicit each of the Company’s shareholders’ affirmative vote at the Shareholder Meeting for approval of resolutions (“Shareholder Resolutions”) providing for the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Principal Market (such affirmative approval being referred to herein as the “Shareholder Approval”, and the date such Shareholder Approval is obtained, the “Shareholder Approval Date”), and the Company shall use its reasonable best efforts to solicit its shareholders’ approval of such resolution and to cause the board of directors of the Company to recommend to the shareholder that they approve such resolutions. The Company shall be obligated to seek to obtain the Shareholder Approval by the Shareholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Shareholder Approval is not obtained by such Shareholder Approval Date, the Company shall adjourn and reconvene the Shareholder Meeting at least as often as every thirty (30) calendar days thereafter until such Shareholder Approval is obtained, but in no event later than the three hundred and sixty-fifth (365th) calendar day after the Closing Date.
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REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register. The Company shall engage the Transfer Agent to maintain a register for the Series C Preferred Shares in which the Transfer Agent shall record the name and address of the Person in whose name the Series C Preferred Shares have been issued (including the name and address of each transferee), and the number of Series C Preferred Shares and Conversion Shares issuable pursuant to the terms of the New Articles. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.
(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent (as applicable, the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Series C Preferred Shares. The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on each effective date of a registration statement registering for resale the Conversion Shares. Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne by the Company.
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(c) Legends. Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such share certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d) Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or any other legend (i) while a registration statement covering the resale of such Securities is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than one (1) Trading Day (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with share powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program (“FAST”) and such Securities are Conversion Shares, credit the aggregate number of Ordinary Shares to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in FAST, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit is so required to be made to the balance account of such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date such Ordinary Shares are actually delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
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(e) Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause to be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in FAST, a certificate for the number of Conversion Shares to which such Buyer is entitled and register such Conversion Shares on the Company’s share register or, if the Transfer Agent is participating in FAST, to credit the balance account of such Buyer or such Buyer’s designee with DTC for such number of Conversion Shares submitted for legend removal by such Buyer pursuant to Section 5(d) above or (II) if a registration statement covering the resale of the Conversion Shares submitted for legend removal by such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the Company fails to promptly (x) so notify such Buyer and (y) deliver the Conversion Shares, electronically without any restrictive legend by crediting such aggregate number of Conversion Shares submitted for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of Ordinary Shares not issued to such Buyer on or prior to the Required Delivery Date and to which such Buyer is entitled, and (B) any trading price of the Ordinary Shares selected by such Buyer in writing as in effect at any time during the period beginning on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver a certificate to a Buyer and register such Ordinary Shares on the Company’s share register or, if the Transfer Agent is participating in FAST, credit the balance account of such Buyer or such Buyer’s designee with DTC for the number of Ordinary Shares to which such Buyer submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs, and if on or after such Trading Day such Buyer purchases (in an open market transaction or otherwise) Ordinary Shares to deliver in satisfaction of a sale by such Buyer of Ordinary Shares submitted for legend removal by such Buyer pursuant to Section 5(d) above that such Buyer is entitled to receive from the Company (a “Buy-In”), then the Company shall, within one (1) Trading Days after such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the Ordinary Shares so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to such Buyer a certificate or certificates or credit the balance account of such Buyer or such Buyer’s designee with DTC representing such number of Ordinary Shares that would have been so delivered if the Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Conversion Shares that the Company was required to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined below) of the Ordinary Shares on any Trading Day during the period commencing on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyer’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Ordinary Shares (or to electronically deliver such Ordinary Shares) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure, as applicable, pursuant to the analogous sections of the Note held by such Buyer. “Closing Sale Price” and “Closing Bid Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by the Reporting Service, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York time, as reported by the Reporting Service, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by the Reporting Service, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by the Reporting Service, or, if no closing bid price or last trade price, respectively, is reported for such security by the Reporting Service, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.
(f) FAST Compliance. While any Series C Preferred Shares remain outstanding, the Company shall maintain a transfer agent that participates in FAST.
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6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
(a) The obligation of the Company hereunder to issue and sell the Series C Preferred Shares to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) for the Series C Preferred Shares being purchased by such Buyer at the Closing by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below).
(iii) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a) The obligation of each Buyer hereunder to purchase its Series C Preferred Shares at the Closing is subject to the satisfaction, at or before the Closing Date (unless otherwise agreed upon by the Lead Buyer in writing), of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer, on an expedited basis, evidence of the issuance of such Buyer’s Series C Preferred Shares hereunder as held in DRS book-entry form by the Transfer Agent and registered in the name of such Buyer, or, at the election of such Buyer, a certificate evidencing a number of Series C Preferred Shares in such amounts as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers as being purchased by such Buyer at the Closing pursuant to this Agreement, registered in the name of such Buyer.
(ii) The Company shall amend the Articles such that such Articles will reflect the New Articles and deliver to such Buyer a certified copy of the as filed New Articles.
(iii) Such Buyer shall have received the legal opinion with respect to the matters of (i) British Virgin Islands law of Walkers Global, the Company’s British Virgin Islands counsel, and (ii) United States law of Bevilacqua PLLC, the Company’s United States counsel, dated as of the Closing Date, in the form acceptable to such Buyer.
(iv) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
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(v) Each and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(vi) The Ordinary Shares (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) except as otherwise disclosed in the SEC Documents with respect to the Principal Market, shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(vii) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by the Principal Market, if any.
(viii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(ix) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.
(x) The Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Conversion Shares.
(xi) Such Buyer shall have received a letter on the letterhead of the Company (the “Flow of Funds Letter”) duly executed by the Chief Executive Officer or Chief Financial Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company.
(xii) The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
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8. TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Series C Preferred Shares shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby appoints Bevilacqua PLLC, as its agent for service of process in Delaware. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. The choice of the laws of the State of Delaware as the governing law of this Agreement is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in the British Virgin Islands except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the British Virgin Islands, as applicable. The choice of laws of the State of Delaware as the governing law of this Agreement will be honored by competent courts in the British Virgin Islands subject to compliance with relevant civil procedural requirements of the British Virgin Islands, as applicable. The Company or any of its properties, assets or revenues does not have any right of immunity, or to the extent that the Company or any of its properties, assets, or revenues may have or may hereafter become entitled to any such right of immunity the Company hereby waives such right to the extent permitted by law, under British Virgin Islands or Delaware law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of British Virgin Islands, Delaware or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Agreement and the other Transaction Documents.
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(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(c) Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(d) Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
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(e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any Buyer with respect to Ordinary Shares or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). Notwithstanding anything in any Transaction Document to the contrary, no waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision of this Agreement or any other Transaction Document, and any waiver of any provision of this Agreement or any other Transaction Document made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Series C Preferred Shares. From the date hereof and while any Series C Preferred Shares are outstanding, the Company shall not be permitted to receive any consideration from a Buyer or a holder of Series C Preferred Shares that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or holder of Series C Preferred Shares in a manner that is more favorable than to other similarly situated Buyers or holders of Series C Preferred Shares, or (ii) to treat any Buyer(s) or holder(s) of Series C Preferred Shares in a manner that is less favorable than the Buyer or holder of Series C Preferred Shares that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably than another Buyer shall disregard any securities of the Company purchased or sold by any Buyer. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document. “Required Holders” means (I) prior to the applicable Closing Date, each Buyer entitled to purchase Series C Preferred Shares at such Closing and (II) on or after the applicable Closing Date, holders of a majority of the Conversion Shares as of such time (excluding any Conversion Shares held by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Series C Preferred Shares; provided, that such majority must include the Lead Buyer.
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(f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Freight Technologies, Inc.
2001 Timberloch Place, Suite 500
The Woodlands, Texas 77380
Telephone: 773-905-5076
Attention: Javier Selgas, Chief Executive Officer
E-Mail: investors@fr8technologies.com
With a copy (for informational purposes only) to:
Bevilacqua PLLC
1050 Connectivut Avenue, NW, Suite 500
Washington, DC 20036
Telephone: 202-869-0888
Attention: Louis A Bevilacqua, Esq.
E-Mail: Lou@bevilacquapllc.com
If to the Transfer Agent:
Transhare Corporation
17755 North US Highway 19, Suite 140
Clearwater, Florida 33764
Telephone: 727-269-5616
Attention: Kimberly Whiteside
E-Mail: kwhiteside@transhare.com
If to a Buyer, to its mailing address and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
with a copy (for informational purposes only) to:
Sullivan & Worcester LLP
1251 Avenue of the Americas
New York, New York 10020
Telephone: (212) 660-3060
Attention: David E. Danovitch, Esq.
E-mail: ddanovitch@sullivanlaw.com
or to such other mailing address and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Sullivan & Worcester LLP shall only be provided copies of notices sent to the Lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
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(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Series C Preferred Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction (as defined in the New Articles) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the New Articles). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees referred to in Section 9(k).
(i) Survival. The representations, warranties, agreements and covenants shall survive each Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their shareholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the status of such Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
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(l) Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, Ordinary Shares and any other numbers in this Agreement that relate to the Ordinary Shares shall be automatically adjusted for any share splits, share dividends, share combinations, recapitalizations or other similar transactions that occur with respect to the Ordinary Shares after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Buyer (or its broker or other financial representative) to effect short sales or similar transactions in the future.
(m) Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy at law would inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).
(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(o) Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.
(p) Judgment Currency.
(i) If for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or
(2) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
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(ii) If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(q) Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers collectively and not between and among the Buyers.
[signature pages follow]
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| COMPANY: | ||
| FREIGHT TECHNOLOGIES, INC. | ||
| By: | ||
| Name: | Javier Selgas | |
| Title: | Chief Executive Officer | |
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| BUYER: | ||
FREIGHT OPPORTUNITIES LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
SCHEDULE OF BUYERS
| (1) | (2) | (3) | (4) | (5) | (6) | ||||||||||
Buyer | Buyer’s Address and Facsimile Number | Number of Series C Preferred Shares | Series C Fixed Price | Purchase Price of Series C Preferred Shares | Legal Representative’s Address and Facsimile Number | ||||||||||
| Freight Opportunities LLC (the “Lead Buyer”) | 1,000,000 | $ | 1.284 | $ | 1,000,000 | Sullivan & Worcester LLP 1251 Avenue of the Americas New York, New York 10020 Telephone: (212) 660-3060 Attention: David E. Danovitch, Esq. E-mail: ddanovitch@sullivanlaw.com | |||||||||
| TOTAL | 1,000,000 | $ | 1,000,000 |
EXHIBIT A
FORM OF NEW ARTICLES