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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 16, 2024
IDEANOMICS, INC.
(Exact name of registrant as specified in its charter)
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| Nevada | 001-35561 | 20-1778374 |
(State or other jurisdiction
of incorporation) | (Commission
File Number) | (I.R.S Employer
Identification No.) |
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114 Broadway, Suite 5116 | |
New York, NY | 10018 |
(Address of Principal Executive Offices) | (Zip Code) |
212-206-1216
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Common Stock, $0.001 par value per share | | IDEX | | The Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01. Entry into a Material Definitive Agreement.
Standby Equity Purchase Agreement
On January 10, 2024 (the “Effective Date), Ideanomics, Inc., a Nevada corporation (“the Company”), entered into a standby equity purchase agreement (the “SEPA) with YA II PN, LTD, a Cayman Islands exempt limited partnership managed by Yorkville Advisors Global, LP (“YA II”). Pursuant to the SEPA, subject to certain conditions, the Company shall have the option, but not the obligation, to sell to YA II, and YA II shall purchase, an aggregate amount of up to 2,500,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at the Company’s request any time during the commitment period commencing on the Effective Date and expiring upon the earlier of (i) the first day of the month next following the 24-month anniversary of the Effective Date or (ii) the date on which YA II shall have made payment of Advances (as defined below) for Common Stock equal to 2,500,000 shares.
Each advance (each, an “Advance”) the Company requests (notice of such request, an “Advance Notice”) shall not exceed an amount equal to 100% of the daily trading volume of the five trading days immediately preceding an Advance Notice, unless, subject to certain other limitations, both the Company and YA II mutually agree to an increased amount. The shares will be purchased at a purchase price equal to the lowest of the daily VWAPs of the Common Stock during the three consecutive trading days commencing on the date of the Advance Notice (the “Pricing Period”), multiplied by 94%.
Pursuant to the SEPA, the Company is required to register all shares which YA II may acquire. The Company agreed to file with the Securities and Exchange Commission (the “SEC”) a Registration Statement registering all of the shares of common stock that are to be offered and sold to YA II pursuant to the SEPA. The Company is required to have a Registration Statement declared effective by the SEC before it can raise any funds using the SEPA.
When providing an Advance Notice, the Company may indicate on such Advance Notice a minimum acceptable price (“MAP”). If no MAP is specified, then there will not be a MAP in effect in connection with the Advance. Each trading day during a Pricing Period for which (A) with respect to each Advance Notice with a MAP, the VWAP of the Common Stock is below the MAP in effect with respect to such Advance Notice, or (B) there is no VWAP (each such day, an “Excluded Day”), shall result in an automatic reduction to the number of Advance Shares set forth in such Advance Notice by one third (the resulting amount of each Advance being the “Adjusted Advance Amount”), and each Excluded Day shall be excluded from the Pricing Period for purposes of determining the market price.
The total Advance Shares in respect of each Advance with any Excluded Day(s) (after reductions have been made to arrive at the Adjusted Advance Amount) shall be automatically increased by such number of Common Stock (the “Additional Shares”) equal to the greater of (a) the number of Common Stock sold by YA II on such Excluded Day(s), if any, or (b) such number of Common Stock elected to be subscribed for by YA II, and the subscription price per share for each Additional Share shall be equal to the MAP in effect with respect to such Advance Notice (without any further discount), provided that the increase will not cause the total Advance Shares to exceed the amount set forth in the original Advance Notice or any limitations provided in the SEPA.
Any purchase under an Advance will be subject to certain limitations, including that YA II will not purchase or acquire any shares that would result in it and its affiliates beneficially owning more than 4.99% of the then outstanding voting power or number Common Stock that, aggregated with shares issued under all other earlier Advances, would exceed 19.99% of the Common Stock outstanding on the date of the SEPA, unless Company shareholder approval was obtained allowing for issuances in excess of such amount (the “Exchange Cap”) or the average price of all applicable sales of Common Stock thereunder (including any sales covered by an Advance Notice that had been delivered prior to the determination of whether this clause applies) equals or exceed $1.97 per share (which represents the lower of (i) the official closing price immediately preceding the Effective Date; or (ii) the average official closing price for the five trading days immediately preceding the Effective Date). In connection with each Advance Notice, any portion of an Advance that would exceed the Exchange Cap will automatically be withdrawn with no further action required by the Company and such Advance Notice will be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion in
respect of each Advance Notice. No Advance shall exceed the amount of Common Stock registered under a registration statement then in effect, which the Company will need to file, or the Exchange Cap.
In connection with the execution of the SEPA, the Company paid a structuring fee (in cash) to YA II in the amount of $350,000 (the “Commitment Fee”) . So long as any portion of the Commitment Fee remains outstanding, 25% of the proceeds to be received by the Company in connection with the submission of any Advance Notice shall be applied to the outstanding balance of the Commitment Fee with the remaining 75% of such proceeds to be remitted to the Company; provided, however, that if after four (4) months from the Effective Date any portion of the Commitment Fee remains outstanding, then all of the proceeds to be received by the Company in connection with the submission of any Advance Notice shall be applied to the balance of the Commitment Fee until paid in full.
Securities Purchase Agreement
As previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, our business component, US Hybrid Corporation ("US Hybrid"), met the criteria for classification as discontinued operations and was no longer presented as continuing operations.
On November 7, 2023, the Company received a deposit of $0.5 million earnest payment to enter into exclusive discussions for the sale of US Hybrid; with a second $0.65 million earnest payment received on November 30, 2023. On January 12, 2024, the Company concluded the sale of US Hybrid for $5.0 million through a share purchase agreement, dated December 22, 2023 , ("SPA") by and between the Company and J.P.L Holding Company (“JPL”).
Pursuant to the SPA, JPL agreed to purchase all the issued and outstanding shares of US Hybrid from the Company at a net purchase price of $5,000,000. On January 12, 2024, date of Closing, JPL delivered $3,850,000 to YA II PN, Ltd and the Company delivered to JPL the shares of US Hybrid along with the resignations of the directors and officers of US Hybrid along with YA II’s release of its senior secured interests in US Hybrid.
The foregoing descriptions of the SEPA and the SPA are not complete and are qualified in their entirety by reference to the full texts of the SEPA and SPA, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Share Sale Agreement
In the second quarter of 2023, the Company decided to wind down Tree Technology SDN BHD business. Accordingly the Company recorded employee termination cost of $0.4 million related to Tree Technology wind-down as of September 30, 2023. As of September 30, 2023 Tree Technology had completed all expected run-off activities and consequently was classified as a discontinued operation. For further details, please refer to Note 1 in the unaudited condensed consolidated financial statements previous filed by the Company in its Quarterly Report filed on November 21, 2023.
As part and end of the Tree Technology wind down process, on January 2, 2024, the Company and TIZA GLOBAL SDN BHD, a company incorporated in Malaysia, executed a Share Sale Agreement (“SSA”) for the approximately 65.50% shares of Tree Technology, representing the entirely of the Company’s holdings in Tree Technology. On January 12, 2024, the earnest deposit of approximately $400,000 minus taxes, fees, and costs was received by YA II PN, LTD in the amount of $98,174.56 in accordance to 4.2.1 of the SSA. Remainder of the SSA Consideration is expected to be paid by the Company in accordance to the SSA in late January or February of 2024.
The foregoing descriptions of the SSA are not complete and are qualified in their entirety by reference to the full texts of the SEPA and SPA, which are filed as Exhibits 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
EMC
As of January 12, 2024, Ideanomics is continuing in conversations with multiple parties regarding divesting its majority ownership interests in Energica Motor Company, SpA. Those conversations includes an offer, contingent on obtaining financing, from the founders of Energica who retain a minority ownership in the Modena, Italy-based electric motorcycle manufacturer.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-balance Sheet Arrangement of a Registrant.
The disclosure contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
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| Exhibit No. | Description |
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| 104 | Cover page Interactive Data File (embedded within the Inline XBRL document). |
__________________* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | IDEANOMICS, INC. |
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| | By: | /s/ Alfred P. Poor |
Date: January 16, 2024 | Name: Alfred P. Poor |
| | Title: Chief Executive Officer |
Exhibit 10.1
STANDBY EQUITY PURCHASE AGREEMENT
THIS STANDBY EQUITY PURCHASE AGREEMENT (this “Agreement”) dated as of January 10, 2024 is made by and between YA II PN, LTD., a Cayman Islands exempted company (the “Investor”), and IDEANOMICS, INC., a company incorporated under the laws of the State of Nevada (the “Company”).
WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall have the right to issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to 2,500,000 of the Company’s shares of common stock, par value $0.001 per share (the “Common Shares”); and
WHEREAS, the Common Shares are listed for trading on the Nasdaq Stock Market under the symbol “IDEX;” and
WHEREAS, the offer and sale of the Common Shares issuable hereunder will be made in reliance upon Section 4(a)(2) under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the transactions to be made hereunder.
WHEREAS, in consideration of the Investor’s execution and delivery of this Agreement, the Company shall pay to the Investor the Commitment Fee pursuant to and in accordance with Section 12.04.
NOW, THEREFORE, the parties hereto agree as follows:
Article I.Certain Definitions
“Additional Shares” shall have the meaning set forth in Section 2.01(d)(ii).
“Adjusted Advance Amount” shall have the meaning set forth in Section 2.01(d)(i).
“Advance” shall mean any issuance and sale of Advance Shares by the Company to the Investor pursuant to Article II hereof.
“Advance Date” shall mean the first Trading Day after expiration of the applicable Pricing Period for each Advance.
“Advance Notice” shall mean a written notice in the form of Exhibit A attached hereto to the Investor executed by an officer of the Company and setting forth the number of Advance Shares that the Company desires to issue and sell to the Investor.
“Advance Notice Date” shall mean each date the Company is deemed to have delivered (in accordance with Section 2.01(b) of this Agreement) an Advance Notice to the Investor, subject to the terms of this Agreement.
“Advance Shares” shall mean the Common Shares that the Company shall issue and sell to the Investor pursuant to the terms of this Agreement.
“Affiliate” shall have the meaning set forth in Section 3.07.
“Agreement” shall have the meaning set forth in the preamble of this Agreement.
“Applicable Laws” shall mean all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines and codes having the force of law, whether local, national, or international, as amended from time to time, including without limitation (i) all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt Practices Act of 1977, and (iii) any Sanctions laws.
“Average Price” shall mean a price per Share equal to the quotient obtained by dividing (i) the aggregate gross purchase price paid by the Investor for all Shares purchased pursuant to this Agreement, by (ii) the aggregate number of Shares issued pursuant to this Agreement.
“Black Out Period” shall have the meaning set forth in Section 6.01(e)
“Closing” shall have the meaning set forth in Section 2.02.
“Commitment Amount” shall mean 2,500,000 of Common Shares.
“Commitment Fee” shall have the meaning set forth in Section 12.04.
“Commitment Period” shall mean the period commencing on the Effective Date and expiring upon the date of termination of this Agreement in accordance with Section 10.01.
“Common Shares” shall have the meaning set forth in the recitals of this Agreement.
“Company” shall have the meaning set forth in the preamble of this Agreement.
“Company Indemnitees” shall have the meaning set forth in Section 5.02.
“Condition Satisfaction Date” shall have the meaning set forth in Section 7.01.
“Current Report” shall have the meaning set forth in Section 6.12.
“Daily Traded Amount” shall mean the daily trading volume of the Company’s Common Shares on the Principal Market during regular trading hours as reported by Bloomberg L.P.
“Effective Date” shall mean the date hereof.
“Environmental Laws” shall have the meaning set forth in Section 4.13.
“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Cap” shall have the meaning set forth in Section 2.01(c)(iii).
“Excluded Day” shall have the meaning set forth in Section 2.01(d)(i).
“GAAP” shall have the meaning set forth in Section 4.06.
“Hazardous Materials” shall have the meaning set forth in Section 4.13.
“Indemnified Liabilities” shall have the meaning set forth in Section 5.01.
“Investor” shall have the meaning set forth in the preamble of this Agreement.
“Investor Indemnitees” shall have the meaning set forth in Section 5.01.
“Market Price” shall mean the lowest of the daily VWAPs of the Common Shares during the relevant Pricing Period, other than the daily VWAP on any Excluded Days
“Material Adverse Effect” shall mean any event, occurrence or condition that has had or would reasonably be expected to have (i) a material adverse effect on the legality, validity or enforceability of this Agreement or the transactions contemplated herein, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement.
“Material Outside Event” shall have the meaning set forth in Section 6.08.
“Maximum Advance Amount” in respect of each Advance Notice means an amount equal to one hundred percent (100%) of the Daily Traded Amount of the five (5) Trading Day immediately preceding an Advance Notice; provided, however, that such amount may be increased at the mutual consent of the Company and the Investor.
“Minimum Acceptable Price” or “MAP” shall mean the minimum price notified by the Company to the Investor in each Advance Notice, if applicable.
“OFAC” shall have the meaning set forth in Section 4.30.
“Ownership Limitation” shall have the meaning set forth in Section 2.01(c)(i).
“Person” shall mean an individual, a corporation, a partnership, a limited liability company, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Plan of Distribution” shall mean the section of a Registration Statement disclosing the plan of distribution of the Shares.
“Pricing Period” shall mean the three (3) consecutive Trading Days commencing on the Advance Notice Date.
“Principal Market” shall mean the Nasdaq Global Select Market; provided however, that in the event the Common Shares are ever listed or traded on the New York Stock Exchange, the NYSE American, the Nasdaq Global Market, or the Nasdaq Capital Market, then the “Principal Market” shall mean such other market or exchange on which the Common Shares are then listed or traded.
“Prospectus” shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with a Registration Statement.
“Prospectus Supplement” shall mean any prospectus supplement to a Prospectus filed with the SEC from time to time pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein, including, without limitation, any prospectus supplement to be filed in accordance with Section 6.01 hereof.
“Purchase Price” shall mean the price per Advance Share obtained by multiplying the Market Price by 94%.
“Registrable Securities” shall mean (i) the Shares, and (ii) any securities issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.
“Registration Limitation” shall have the meaning set forth in Section 2.01(c)(ii).
“Registration Statement” shall mean a registration statement on Form S-1 or Form S-3 or on such other form promulgated by the SEC for which the Company then qualifies and which counsel for the Company shall deem appropriate, and which form shall be available for the registration of the resale by the Investor of the Registrable Securities under the Securities Act, which registration statement provides for the resale from time to time of the Shares as provided herein.
“Regulation D” shall mean the provisions of Regulation D promulgated under the Securities Act.
“Sanctions” shall have the meaning set forth in Section 4.30.
“Sanctioned Countries” shall have the meaning set forth in Section 4.30.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“SEC Documents” shall have the meaning set forth in Section 4.05.
“Securities Act” shall have the meaning set forth in the recitals of this Agreement.
“Settlement Document” shall have the meaning set forth in Section 2.02(a).
“Shares” shall mean the Common Shares to be issued from time to time hereunder pursuant to an Advance.
“Subsidiaries” shall mean any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
“Trading Day” shall mean any day during which the Principal Market shall be open for business.
“Transaction Documents” shall have the meaning set forth in Section 4.02.
“VWAP” shall mean for any Trading Day, the daily volume weighted average price of the Common Shares for such Trading Day on the Principal Market during regular trading hours as reported by Bloomberg L.P.
Article II.Advances
Section 1.01Advances; Mechanics. Upon the terms and subject to the conditions of this Agreement, during the Commitment Period, the Company, at its sole discretion, shall have the right, but not the obligation, to issue and sell to the Investor, and the Investor shall purchase from the Company, Advance Shares by the delivery to the Investor of Advance Notices on the following terms:
(a)Advance Notice. At any time during the Commitment Period the Company may require the Investor to purchase Shares by delivering an Advance Notice to the Investor, subject to the satisfaction or waiver by the Investor of the conditions set forth in Section 7.01, and in accordance with the following provisions:
(i)The Company shall, in its sole discretion, select the number of Advance Shares, not to exceed the Maximum Advance Amount, it desires to issue and sell to the Investor in each Advance Notice and the time it desires to deliver each Advance Notice.
(ii)There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment Amount or any part thereof.
(b)Date of Delivery of Advance Notice. Advance Notices shall be delivered in accordance with the instructions set forth on the bottom of Exhibit A attached hereto. An Advance Notice shall be deemed delivered on (i) the day it is received by the Investor if such notice is received by email at or before 8:30 a.m. Eastern Time (or later if waived by the Investor in its sole discretion), or (ii) the immediately succeeding day if it is received by email after 8:30 a.m. Eastern Time, in each case, in accordance with the instructions set forth on the bottom of Exhibit A attached hereto.
(c)Advance Limitations. Regardless of the number of Advance Shares requested by the Company in the Advance Notice, the final number of Shares to be issued and sold pursuant to an Advance Notice shall be reduced (if at all) in accordance with each of the following limitations:
(i)Ownership Limitation; Commitment Amount. At the request of the Company, the Investor shall inform the Company of the number of shares the Investor beneficially owns. Notwithstanding anything to the contrary contained in this Agreement, the Investor shall not be obligated to purchase or acquire, and shall not purchase or acquire, any Common Shares under this Agreement which, when aggregated with all other Common Shares beneficially owned by the Investor and its Affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor and its Affiliates (on an aggregated basis) to exceed 4.99% of the then outstanding voting power or number of Common Shares (the “Ownership Limitation”). Upon the written request of the Investor, the Company shall promptly (but no later than the next business day on which the transfer agent for the Common Shares is open for business) confirm orally or in writing to the Investor the number of Common Shares then outstanding. In connection with each Advance Notice delivered by the Company, any portion of the Advance that would (i) cause the Investor to exceed the Ownership Limitation or (ii) cause the aggregate number of Shares issued and sold to the Investor hereunder to exceed the Commitment Amount shall automatically be withdrawn with no further action required by the Company, and such Advance Notice shall be deemed automatically modified to reduce the number of Advance Shares requested by an amount equal to such withdrawn portion; provided that
in the event of any such automatic withdrawal and automatic modification, the Investor will promptly notify the Company of such event.
(ii)Registration Limitation. In no event shall an Advance exceed the amount of Common Shares registered in respect of the transactions contemplated hereby under the Registration Statement then in effect, or the Exchange Cap, to the extent applicable (the “Registration Limitation”). In connection with each Advance Notice, any portion of an Advance that would exceed the Registration Limitation shall automatically be withdrawn with no further action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion; provided that in the event of any such automatic withdrawal and automatic modification, the Investor will promptly notify the Company of such event.
(iii)Compliance with Rules of Principal Market. Notwithstanding anything to the contrary herein, the Company shall not effect any sales under this Agreement and the Investor shall not have the obligation to purchase Common Shares under this Agreement to the extent (but only to the extent) that after giving effect to such purchase and sale the aggregate number of Common Shares issued under this Agreement would exceed 2,398,111 (representing 19.99% of the aggregate amount of Common Shares issued and outstanding as of the date of this Agreement), calculated in accordance with the rules of the Principal Market, which number shall be reduced, on a share-for-share basis, by the number of Common Shares issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by this Agreement under the applicable rules of the Principal Market (such maximum number of shares, the “Exchange Cap”) provided that, the Exchange Cap will not apply if (a) the Company’s stockholders have approved issuances in excess of the Exchange Cap in accordance with the rules of the Principal Market, or (b) the Average Price of all applicable sales of Common Shares hereunder (including any sales covered by an Advance Notice that has been delivered prior to the determination of whether this clause (b) applies) equals or exceed $1.97 per share (which represents the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the Effective Date; or (ii) the average Nasdaq Official Closing Price for the five Trading Days immediately preceding the Effective Date). In connection with each Advance Notice, any portion of an Advance that would exceed the Exchange Cap shall automatically be withdrawn with no further action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion in respect of each Advance Notice.
(d) Minimum Acceptable Price.
(i)With respect to each Advance Notice, the Company may notify the Investor of the MAP with respect to such Advance by indicating a MAP on such Advance Notice. If no MAP is specified in an Advance Notice, then no MAP shall be in effect in connection with such Advance. Each Trading Day during a Pricing Period for which (A) with respect to each Advance Notice with a MAP, the VWAP of the Common Shares is below the MAP in effect with respect to such Advance Notice, or (B) there is no VWAP (each such day, an “Excluded Day”), shall result in an automatic reduction to the number of Advance Shares set forth in such Advance Notice by one third (the resulting amount of each Advance being the “Adjusted Advance Amount”), and each Excluded Day shall be excluded from the Pricing Period for purposes of determining the Market Price.
(ii)The total Advance Shares in respect of each Advance with any Excluded Day(s) (after reductions have been made to arrive at the Adjusted Advance Amount) shall be automatically increased by such number of Common Shares (the “Additional Shares”) equal to the greater of (a) the number of Common Shares sold by the Investor on such Excluded Day(s), if any, or (b) such number of Common Shares elected to be subscribed for by the Investor, and the subscription price per share for each Additional Share shall be equal to the MAP in effect with respect to such Advance Notice (without any further discount), provided that this increase shall not cause the total Advance Shares to exceed the amount set forth in the original Advance Notice or any limitations set forth in Section 2.01(c).
(e)Unconditional Contract. Notwithstanding any other provision in this Agreement, the Company and the Investor acknowledge and agree that upon the Investor’s receipt of a valid Advance Notice from the Company the parties shall be deemed to have entered into an unconditional contract binding on both parties for the purchase and sale of Advance Shares pursuant to such Advance Notice in accordance with the terms of this Agreement and (i) subject to Applicable Laws and (ii) subject to Section 3.08, the Investor may sell Common Shares during the Pricing Period.
Section 1.02Closings. The closing of each Advance and each sale and purchase of Advance Shares (each, a “Closing”) shall take place as soon as practicable on or after each Advance Date in accordance with the procedures set forth below. The parties acknowledge that the Purchase Price is not known at the time the Advance Notice is delivered (at which time the Investor is irrevocably bound) but shall be determined on each Closing based on the daily prices of the Common Shares that are the inputs to the determination of the Purchase Price as set forth further below. In connection with each Closing, the Company and the Investor shall fulfill each of its obligations as set forth below:
(a)On each Advance Date, the Investor shall deliver to the Company a written document, in the form attached hereto as Exhibit B (each a “Settlement Document”), setting forth the final number of Shares to be purchased by the Investor (taking into account any adjustments pursuant to Section 2.01), the Market Price, the Purchase Price, the aggregate proceeds to be paid by the Investor to the Company, and a report by Bloomberg, L.P. indicating the VWAP for each of the Trading Days during the Pricing Period (or, if not reported on Bloomberg, L.P., another reporting service reasonably agreed to by the parties), in each case in accordance with the terms and conditions of this Agreement.
(b)Promptly after receipt of the Settlement Document with respect to each Advance (and, in any event, not later than one Trading Day after such receipt), the Company will, or will cause its transfer agent to, electronically transfer such number of Advance Shares to be purchased by the Investor (as set forth in the Settlement Document) by crediting the Investor’s account or its designee’s account at the Depository Trust Company through its Deposit Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto, and transmit notification to the Investor that such share transfer has been requested. Promptly upon receipt of such notification, the Investor shall pay to the Company the aggregate purchase price of the Shares (as set forth in the Settlement Document) in cash in immediately available funds to an account designated by the Company in writing and transmit notification to the Company that such funds transfer has been requested. No fractional shares shall be issued, and any fractional amounts shall be rounded to the next higher whole number of shares. To facilitate the transfer of the Common Shares by the Investor, the Common Shares will not bear any restrictive legends so long as there is an effective Registration Statement covering the resale of such Common Shares (it being understood and agreed by the Investor that notwithstanding the lack of restrictive legends, the Investor may only sell such Common Shares pursuant to the Plan of Distribution set forth in the Prospectus included in the Registration Statement and otherwise in compliance with the requirements of the Securities Act (including any applicable prospectus delivery requirements) or pursuant to an available exemption).
(c)On or prior to the Advance Date, each of the Company and the Investor shall deliver to the other all documents, instruments and writings expressly required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein.
(d)Notwithstanding anything to the contrary in this Agreement, if on any day during the Pricing Period (i) the Company notifies Investor that a Material Outside Event has occurred, or (ii) the Company notifies the Investor of a Black Out Period, the parties agree that the pending Advance shall end and the final number of Advance Shares to be purchased by the Investor at the Closing for such Advance shall be equal to the number of Common Shares sold by the Investor during the applicable Pricing Period prior to the notification from the Company of a Material Outside Event or Black Out Period.
Section 1.03Hardship.
(a)In the event the Investor sells Common Shares after receipt of an Advance Notice and the Company fails to perform its obligations as mandated in Section 2.02, the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Article V hereto and in addition to any other remedy to which the Investor is entitled at law or in equity, including, without limitation, specific performance, it will hold the Investor harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Investor shall be entitled to an injunction or injunctions to prevent such breaches of this
Agreement and to specifically enforce (subject to Applicable Laws and the rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement.
(b)In the event the Company provides an Advance Notice and the Investor fails to perform its obligations as mandated in Section 2.02, the Investor agrees that in addition to and in no way limiting the rights and obligations set forth in Article V hereto and in addition to any other remedy to which the Company is entitled at law or in equity, including, without limitation, specific performance, it will hold the Company harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Investor and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Company shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to the Securities Act and other rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement.
Section 1.04Completion of Resale Pursuant to the Registration Statement. After the Investor has purchased the full Commitment Amount and has completed the subsequent resale of the full Commitment Amount pursuant to the Registration Statement, Investor will notify the Company in writing (which may be by e-mail) that all subsequent resales are completed and the Company will be under no further obligation to maintain the effectiveness of the Registration Statement.
Article III.Representations and Warranties of the Investor
The Investor represents and warrants to the Company, as of the date hereof, as of each Advance Notice Date and as of each Advance Date that:
Section 1.01Organization and Authorization. The Investor is duly organized, validly existing and in good standing under the laws of the Cayman Islands and has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to purchase or acquire Shares in accordance with the terms hereof. The decision to invest and the execution and delivery of this Agreement by the Investor, the performance by the Investor of its obligations hereunder and the consummation by the Investor of the transactions contemplated hereby have been duly authorized and require no other proceedings on the part of the Investor. The undersigned has the right, power and authority to execute and deliver this Agreement and all other instruments on behalf of the Investor or its shareholders. This Agreement has been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its terms.
Section 1.02Evaluation of Risks. The Investor has such knowledge and experience in financial, tax and business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Common Shares of the Company and of protecting its interests in connection with the transactions contemplated hereby. The Investor acknowledges and agrees that its investment in the Company involves a high degree of risk, and that the Investor may lose all or a part of its investment.
Section 1.03No Legal, Investment or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of the Company’s representatives or agents for legal, tax, investment or other advice with respect to the Investor’s acquisition of Common Shares hereunder, the transactions contemplated by this Agreement or the laws of any jurisdiction, and the Investor acknowledges that the Investor may lose all or a part of its investment.
Section 1.04Investment Purpose. The Investor is acquiring the Common Shares for its own account, for investment purposes and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration requirements of the Securities Act; provided, however, that by making the representations herein, the Investor does not agree, or make any representation or warranty, to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with, or pursuant to, a Registration Statement filed pursuant to this Agreement or an applicable exemption under the Securities Act. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to sell or distribute any of the Shares. The Investor acknowledges that it will be disclosed as an “underwriter” and a “selling stockholder” in each Registration Statement and in any prospectus contained therein to the extent required by applicable law and to the extent the prospectus is related to the resale of Registrable Securities.
Section 1.05Accredited Investor. The Investor is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D.
Section 1.06Information. The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and operations of the Company and information the Investor deemed material to making an informed investment decision. The Investor and its advisors (and its counsel), if any, have been afforded the opportunity to ask questions of the Company and its management and have received answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors (and its counsel), if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor acknowledges and agrees that the Company has not made to the Investor, and the Investor acknowledges and agrees it has not relied upon, any representations and warranties of the Company, its employees or any third party other than the representations and warranties of the Company contained in this Agreement. The Investor understands that its investment involves a high degree of risk. The Investor has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to the transactions contemplated hereby.
Section 1.07Not an Affiliate. The Investor is not an officer, director or a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the Company or any “Affiliate” of the Company (as that term is defined in Rule 405 promulgated under the Securities Act).
Section 1.08No Prior Short Sales. At no time prior to the date of this Agreement has the Investor, its sole member, any of their respective officers, or any entity managed or controlled by the Investor or its sole member, engaged in or effected, in any manner whatsoever, directly or indirectly, for its own principal account, any (i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Shares or (ii) hedging transaction, in either case which establishes a net short position with respect to the Common Shares that remains in effect as of the date of this Agreement.
Section 1.09General Solicitation. Neither the Investor, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Common Shares by the Investor.
Article IV.Representations and Warranties of the Company
Except as set forth in the SEC Documents, the Company represents and warrants to the Investor that, as of the date hereof, each Advance Notice Date and each Advance Date (other than representations and warranties which address matters only as of a certain date, which shall be true and correct as written as of such certain date):
Section 1.01Organization and Qualification. Each of the Company and its Subsidiaries is an entity duly organized and validly existing under the laws of their respective jurisdiction of organization, and has the requisite power and authority to own its properties and to carry on its business as now being conducted. Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing (to the extent applicable) in every jurisdiction in which 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 have a Material Adverse Effect.
Section 1.02Authorization, Enforcement, Compliance with Other Instruments. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Shares in accordance with the terms hereof and thereof. The execution and delivery by the Company of this Agreement and the other Transaction Documents, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) have been or (with respect to consummation) will be duly authorized by the Company’s board of directors and no further consent or authorization will be required by the Company, its board of directors or its shareholders. This Agreement and the other Transaction Documents to which the Company is a party have been (or, when executed and delivered, will be) duly executed and delivered by the Company and, assuming the execution and delivery thereof and acceptance by the Investor, constitute (or, when duly executed and delivered, will be) the legal, valid and binding obligations of the Company, enforceable against the Company 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 other 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. “Transaction Documents” means, collectively, this Agreement 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.
Section 1.03Authorization of the Shares. The Shares to be issued under this Agreement have been, or with respect to Shares to be purchased by the Investor pursuant to an Advance Notice, will be, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a duly authorized committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other claim, including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights, and will be registered pursuant to Section 12 of the Exchange Act. The Shares, when issued, will conform to the description thereof set forth in or incorporated into the Prospectus.
Section 1.04No Conflict. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) will not (i) result in a violation of the articles of incorporation or other organizational documents of the Company or its Subsidiaries (with respect to consummation, as the same may be amended prior to the date on which any of the transactions contemplated hereby are consummated), (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 the Company or its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or its Subsidiaries or by which any property or asset of the Company or its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that would not reasonably be expected to have a Material Adverse Effect.
Section 1.05SEC Documents; Financial Statements. The Company has timely filed (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the Exchange Act including, without limitation, the Current Report, each Registration Statement, as the same may be amended from time to time, the Prospectus contained therein and each Prospectus Supplement thereto, and all information contained in such filings and all documents and disclosures that have been or may in the future be incorporated by reference therein (all such documents hereinafter referred to as the “SEC Documents”). The Company has delivered or made available to the Investor through the SEC’s website at http://www.sec.gov, true and complete copies of the SEC Documents, as applicable. Except as disclosed in amendments or subsequent filings to the SEC Documents, as of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such amended or superseded filing), each SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and did not contain 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 the light of the circumstances under which they were made, not misleading.
Section 1.06Financial Statements. The consolidated financial statements of the Company included or incorporated by reference in the SEC Documents, together with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company for the periods specified and have been prepared in compliance with the requirements of the Securities Act and Exchange Act and in conformity with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis (except for (i) such adjustments to accounting standards and practices as are noted therein, (ii) in the case of unaudited interim financial statements, to the extent such financial statements may not include footnotes required by GAAP or may be condensed or summary statements and (iii) such adjustments which are not material, either individually or in the aggregate) during the periods involved; the other financial and statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the SEC Documents are accurately and fairly presented and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the SEC Documents that are not included or incorporated by reference as required; the Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the SEC Documents (excluding the exhibits thereto); and all disclosures contained or incorporated by reference in the SEC Documents regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the SEC Documents fairly presents the information called for in all material respects and has been prepared in accordance with the SEC’s rules and guidelines applicable thereto.
Section 1.07Registration Statement and Prospectus. Each Registration Statement and the offer and sale of Shares as contemplated hereby, if and when filed, will meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said Rule. Any statutes, regulations, contracts or other documents that are
required to be described in a Registration Statement or a Prospectus, or any amendment or supplement thereto, or to be filed as exhibits to a Registration Statement have been so described or filed. Copies of each Registration Statement, any Prospectus, and any such amendments or supplements thereto and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to the Investor and its counsel. The Company has not distributed and, prior to the later to occur of each Advance Date and completion of the distribution of the Shares, will not distribute any offering material in connection with the offering or sale of the Shares other than a Registration Statement, Prospectus contained therein, and each other prospectus supplement.
Section 1.08No Misstatement or Omission. Each Registration Statement, when it became or becomes effective, and any Prospectus, on the date of such Prospectus or any amendment or supplement thereto, conformed and will conform in all material respects with the requirements of the Securities Act. At each Advance Date, the Registration Statement, and the Prospectus, as of such date, will conform in all material respects with the requirements of the Securities Act. Each Registration Statement, when it became or becomes effective, did not, and will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Each Prospectus did not, or will not, include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The documents incorporated by reference in a Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not, when filed with the Commission, contain an untrue statement of a material fact or omit to state a material fact required to be stated in such document or necessary to make the statements in such document, in light of the circumstances under which they were made, not misleading. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information furnished to the Company by the Investor specifically for use in the preparation thereof.
Section 1.09Conformity with Securities Act and Exchange Act. Each Registration Statement, each Prospectus, or any amendment or supplement thereto, and the documents incorporated by reference in each Registration Statement, Prospectus or any amendment or supplement thereto, when such documents were or are filed with the SEC under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable.
Section 1.10Equity Capitalization. As of the date hereof, the authorized capital of the Company consists of 1,560,000,000 shares of capital stock, of which 1,500,000,000 shares are designated common stock, par value $0.001 per share, and 60,000,000 shares are undesignated preferred stock. As of the date hereof, the Company had 11,996,553 shares of common stock outstanding and 9,350,000 shares of preferred stock outstanding.
The Common Shares are registered pursuant to Section 12(b) of the Exchange Act and are currently listed on a Principal Market under the trading symbol “IDEX.” The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act, delisting the Common Shares from the Principal Market, nor has the Company received any notification that the Commission or the Principal Market is contemplating terminating such registration or listing. To the Company’s knowledge, it is in compliance with all applicable listing requirements of the Principal Market.
Section 1.11Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights, if any, necessary to conduct their respective businesses as now conducted, except as would not cause a Material Adverse Effect. The Company and its Subsidiaries have not received written notice of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, or trade secrets, except as would not cause a Material Adverse Effect. To the knowledge of the Company, there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and, except as would not cause a Material Adverse Effect, the Company is not aware of any facts or circumstances which might give rise to any of the foregoing.
Section 1.12Employee Relations. Neither the Company nor any of its Subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, has any such dispute threatened, in each case which is reasonably likely to cause a Material Adverse Effect.
Section 1.13Environmental Laws. The Company and its Subsidiaries (i) have not received written notice alleging any failure to comply in all material respects with all Environmental Laws (as defined below), (ii) have
received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) have not received written notice alleging any failure to comply with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all applicable federal, state and local laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
Section 1.14Title. Except as would not cause a Material Adverse Effect, the Company (or its Subsidiaries) has indefeasible fee simple or leasehold title to its properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest other than such as are not material to the business of the Company. Any real property and facilities held under lease by the Company and 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 and its Subsidiaries.
Section 1.15Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
Section 1.16Regulatory Permits. Except as would not cause a Material Adverse Effect, the Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to own their respective businesses, and neither the Company nor any such Subsidiary has received any written notice of proceedings relating to the revocation or modification of any such certificate, authorization or permits.
Section 1.17Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance 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 generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, and management is not aware of any material weaknesses that are not disclosed in the SEC Documents as and when required.
Section 1.18Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common Shares or any of the Company’s Subsidiaries, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect.
Section 1.19Subsidiaries. The Company does not presently own or control, directly or indirectly, any interest in any other corporation, partnership, association or other business entity.
Section 1.20Tax Status. Each of the Company and 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. The Company has not received written notification of any 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 where failure to pay would cause a Material Adverse Effect.
Section 1.21Certain Transactions. Except as not required to be disclosed pursuant to Applicable Laws, none of the officers or directors of the Company is presently a party to any transaction with the Company (other than for
services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer or director, or to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer or director has a substantial interest or is an officer, director, trustee or partner.
Section 1.22Rights of First Refusal. The Company is not obligated to offer the Common Shares offered hereunder on a right of first refusal basis to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties.
Section 1.23Dilution. The Company is aware and acknowledges that issuance of Common Shares hereunder could cause dilution to existing shareholders and could significantly increase the outstanding number of Common Shares.
Section 1.24Acknowledgment Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length investor with respect to this Agreement and the transactions contemplated hereunder. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereunder and any advice given by the Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereunder is merely incidental to the Investor’s purchase of the Shares hereunder. The Company is aware and acknowledges that it shall not be able to request Advances under this Agreement if a the Registration Statement is not effective or if any issuances of Common Shares pursuant to any Advances would violate any rules of the Principal Market. The Company acknowledges and agrees that it is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement.
Section 1.25Finder’s Fees. Neither the Company nor any of the Subsidiaries has incurred any liability for any finder’s fees, brokerage commissions or similar payments in connection with the transactions herein contemplated.
Section 1.26Relationship of the Parties. Neither the Company, nor any of its Subsidiaries, affiliates, nor any person acting on its or their behalf is a client or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates has provided, or will provide, any services to the Company or any of its affiliates, its subsidiaries, or any person acting on its or their behalf. The Investor’s relationship to Company is solely as investor as provided for in the Transaction Documents.
Section 1.27Operations. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with and neither the Company nor the Subsidiaries, nor any director, officer, or employee of the Company or any Subsidiary nor, to the Company’s knowledge, any agent, affiliate or other person acting on behalf of the Company or any Subsidiary has, not complied with Applicable Law; and no action, suit or proceeding by or before any governmental authority involving the Company or any of its Subsidiaries with respect to Applicable Laws is pending or, to the knowledge of the Company, threatened.
Section 1.28Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration Statement or a Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
Section 1.29Compliance with Laws. The Company and each of its Subsidiaries are in compliance with Applicable Laws; the Company has not received a notice of non-compliance, nor knows of, nor has reasonable grounds to know of, any facts that any director, officer, or employee of the Company or any Subsidiary nor, to the Company’s knowledge, any agent, Affiliate or other person acting on behalf of the Company or any Subsidiary has, has not complied with Applicable Laws, or could give rise to a notice of non-compliance with Applicable Laws, and is not aware of any pending change or contemplated change to any applicable law or regulation or governmental position; in each case that would have a Material Adverse Effect.
Section 1.30Sanctions Matters. Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, any director, officer or controlled Affiliate of the Company or any director or officer of any Subsidiary, is a Person that is, or is owned or controlled by a Person that is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”), the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authorities, including, without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List or OFAC’s Foreign Sanctions Evaders List or other relevant sanctions authority (collectively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is the subject of Sanctions that broadly prohibit dealings with that country or territory (including, without limitation, the Crimea, Zaporizhzhia and Kherson regions, the Donetsk People’s Republic and Luhansk People’s Republic in Ukraine, Cuba, Iran, North Korea, Russia, Sudan and Syria
(the “Sanctioned Countries”)). Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds from the sale of Advance Shares, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (a) for the purpose of funding or facilitating any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country, or (b) in any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise). For the past five years, neither the Company nor any of its Subsidiaries has engaged in, and is now not engaged in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions or was a Sanctioned Country. Neither the Company nor any of its Subsidiaries nor any director, officer or controlled Affiliate of the Company or any of its Subsidiaries, has ever had funds blocked by a United States bank or financial institution, temporarily or otherwise, as a result of OFAC concerns.
Article V. Indemnification
The Investor and the Company represent to the other the following with respect to itself:
Section 1.01Indemnification by the Company. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Shares hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Investor and its investment manager, Yorkville Advisors Global, LP, and each of their respective officers, directors, managers, members, partners, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable and documented expenses in connection therewith (irrespective of whether any such Investor 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 the Investor Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Investor specifically for inclusion therein; (b) any material misrepresentation or breach of any material representation or material warranty made by the Company in this Agreement or any other certificate, instrument or document contemplated hereby or thereby; or (c) any material breach of any material covenant, material agreement or material obligation of the Company contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby. To the extent that the foregoing undertaking by the Company may be unenforceable under Applicable Law, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Law.
Section 1.02Indemnification by the Investor. In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Investor’s other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, shareholders, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Investor will only be liable for written information relating to the Investor furnished to the Company by or on behalf of the Investor specifically for inclusion in the documents referred to in the foregoing indemnity, and will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written information furnished to the Investor by or on behalf of the Company specifically for inclusion therein; (b) any misrepresentation or breach of any representation or warranty made by the Investor in this Agreement or any instrument or document contemplated hereby or thereby executed by the Investor; or (c) any breach of any covenant, agreement or obligation of the Investor contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby executed by the Investor. To the extent that the foregoing undertaking by the Investor may be unenforceable under Applicable Laws, the Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Laws.
Section 1.03Notice of Claim. Promptly after receipt by an Investor Indemnitee or Company Indemnitee of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Investor Indemnitee or Company Indemnitee, as applicable, shall, if a claim for an Indemnified Liability in respect thereof is to be made against any indemnifying party under this Article V, deliver to the indemnifying party a written notice of the commencement thereof; but the failure to so notify the indemnifying party will not relieve it of liability under this Article V except to the extent the indemnifying party is prejudiced by such failure. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually reasonably satisfactory to the indemnifying party and the Investor Indemnitee or Company Indemnitee, as the case may be; provided, however, that an Investor Indemnitee or Company Indemnitee shall have the right to retain its own counsel with the actual and reasonable third party fees and expenses of not more than one counsel for such Investor Indemnitee or Company Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Investor Indemnitee or Company Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Investor Indemnitee or Company Indemnitee and any other party represented by such counsel in such proceeding. The Investor Indemnitee or Company Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Investor Indemnitee or Company Indemnitee which relates to such action or claim. The indemnifying party shall keep the Investor Indemnitee or Company Indemnitee reasonably apprised as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Investor Indemnitee or Company Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Investor Indemnitee or Company Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The indemnification required by this Article V shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received and payment therefor is due.
Section 1.04Remedies. The remedies provided for in this Article V are not exclusive and shall not limit any right or remedy which may be available to any indemnified person at law or equity. The obligations of the parties to indemnify or make contribution under this Article V shall survive expiration or termination of this Agreement.
Section 1.05Limitation of liability. Notwithstanding the foregoing, no party shall be entitled to recover from the other party for punitive, indirect, incidental or consequential damages.
Article VI.Covenants
The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Commitment Period:
Section 1.01Registration Statement.
(a)Filing of a Registration Statement. The Company shall prepare and file with the SEC a Registration Statement, or multiple Registration Statements for the resale by the Investor of the Registrable Securities. The Company in its sole discretion may choose when to file such Registration Statements; provided, however, that the Company shall not have the ability to request any Advances until the effectiveness of a Registration Statement.
(b)Maintaining a Registration Statement. The Company shall maintain the effectiveness of any Registration Statement that has been declared effective at all times during the Commitment Period, provided, however,
that if the Company has received notification pursuant to Section 2.04 that the Investor has completed resales pursuant to the Registration Statement for the full Commitment Amount, then the Company shall be under no further obligation to maintain the effectiveness of the Registration Statement. Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading. During the Commitment Period, the Company shall notify the Investor promptly if (i) the Registration Statement shall cease to be effective under the Securities Act, (ii) the Common Shares shall cease to be authorized for listing on the Principal Market, (iii) the Common Shares cease to be registered under Section 12(b) or Section 12(g) of the Exchange Act or (iv) the Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act.
(c)Filing Procedures. The Company shall (A) permit counsel to the Investor an opportunity to review and comment upon (i) each Registration Statement at least three (3) Trading Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (including, without limitation, the Prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports or Prospectus Supplements the contents of which is limited to that set forth in such reports) within a reasonable number of days prior to their filing with the SEC, and (B) shall reasonably consider any comments of the Investor and its counsel on any such Registration Statement or amendment or supplement thereto or to any Prospectus contained therein. The Company shall promptly furnish to the Investor, without charge, (i) electronic copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to each Registration Statement (which correspondence shall be redacted to exclude any material, non-public information regarding the Company or any of its Subsidiaries), (ii) after the same is prepared and filed with the SEC, one (1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by the Investor, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto; provided, however, the Company shall not be required to furnish any document to the extent such document is available on EDGAR).
(d)Amendments and Other Filings. The Company shall (i) prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the related prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Commitment Period, and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related prospectus to be amended or supplemented by any required prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424 promulgated under the Securities Act; (iii) provide the Investor copies of all correspondence from and to the SEC relating to a Registration Statement (provided that the Company may excise any information contained therein which would constitute material non-public information), and (iv) comply with the provisions of the Securities Act with respect to the Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 6.01(d) by reason of the Company’s filing a report on Form 10-K, Form 10-Q, or Form 8-K or any analogous report under the Exchange Act, the Company shall file such report in a prospectus supplement filed pursuant to Rule 424 promulgated under the Securities Act to incorporate such filing into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC either on the day on which the Exchange Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement, if feasible, or otherwise promptly thereafter.
(e)Blue-Sky. The Company shall use its commercially reasonable efforts to, if required by Applicable Laws, (i) register and qualify the Common Shares covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Commitment Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Commitment Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Common Shares for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its Certificate of Incorporation or Bylaws or any other organizational documents of the Company or any of its Subsidiaries, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 6.01(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Common Shares for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
Section 1.02Suspension of Registration Statement.
(a)Establishment of a Black Out Period. During the Commitment Period, the Company from time to time may suspend the use of the Registration Statement by written notice to the Investor in the event that the Company determines in its sole discretion in good faith that such suspension is necessary to amend or supplement the Registration Statement or Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (a “Black Out Period”).
(b)No Sales by Investor During the Black Out Period. During such Black Out Period, the Investor agrees not to sell any Common Shares of the Company pursuant to such Registration Statement, but may sell shares pursuant to an exemption from registration, if available, subject to the Investor’s compliance with Applicable Laws.
(c)Limitations on the Black Out Period. The Company shall not impose any Black Out Period that is longer than 20 days or in a manner that is more restrictive (including, without limitation, as to duration) than the comparable restrictions that the Company may impose on transfers of the Company’s equity securities by its directors and senior executive officers. In addition, the Company shall not deliver any Advance Notice during any Black Out Period. If the public announcement of such material, nonpublic information is made during a Black Out Period, the Black Out Period shall terminate immediately after such announcement, and the Company shall immediately notify the Investor of the termination of the Black Out Period.
Section 1.03Listing of Common Shares. As of each Advance Date, the Shares to be sold by the Company from time to time hereunder will have been registered under Section 12(b) of the Exchange Act and approved for listing on the Principal Market, subject to official notice of issuance.
Section 1.04Opinion of Counsel. Prior to the date of the delivery by the Company of the first Advance Notice, the Investor shall have received an opinion letter from counsel to the Company in form and substance reasonably satisfactory to the Investor.
Section 1.05Exchange Act Registration. The Company will file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act and will not take any action or file any document (whether or not permitted by Exchange Act or the rules thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act.
Section 1.06Transfer Agent Instructions. During the Commitment Period (or such shorter time as permitted by Section 2.04 of this Agreement) and subject to Applicable Laws, the Company shall cause (including, if necessary, by causing legal counsel for the Company to deliver an opinion) the transfer agent for the Common Shares to remove restrictive legends from Common Shares purchased by the Investor pursuant to this Agreement, provided that counsel for the Company shall have been furnished with such documents as they may require for the purpose of enabling them to render the opinions or make the statements requested by the transfer agent, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the covenants, obligations or conditions, contained herein.
Section 1.07Corporate Existence. The Company will use commercially reasonable efforts to preserve and continue the corporate existence of the Company during the Commitment Period.
Section 1.08Notice of Certain Events Affecting Registration; Suspension of Right to Make an Advance. The Company will promptly notify the Investor, and confirm in writing, upon its becoming aware of the occurrence of any of the following events in respect of a Registration Statement or related Prospectus (in each of which cases the information provided to Investor will be kept strictly confidential): (i) except for requests made in connection with SEC investigations disclosed in the SEC Documents, receipt of any request for additional information by the SEC or
any other Federal or state governmental authority during the period of effectiveness of the Registration Statement or any request for amendments or supplements to the Registration Statement or related Prospectus; (ii) the issuance by the SEC or any other Federal governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Common Shares for sale in any jurisdiction or the initiation or written threat of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in the Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or of the necessity to amend the Registration Statement or supplement a related Prospectus to comply with the Securities Act or any other law (and the Company will promptly make available to the Investor any such supplement or amendment to the related Prospectus); (v) the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be required under Applicable Law; (vi) the Common Shares shall cease to be authorized for listing on the Principal Market; or (vii) the Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act. The Company shall not deliver to the Investor any Advance Notice, and the Company shall not sell any Shares pursuant to any pending Advance Notice (other than as required pursuant to Section 2.02(d)), during the continuation of any of the foregoing events (each of the events described in the immediately preceding clauses (i) through (vii), inclusive, a “Material Outside Event”).
Section 1.09Consolidation. If an Advance Notice has been delivered to the Investor, then the Company shall not effect any consolidation of the Company with or into, or a transfer of all or substantially all the assets of the Company to another entity before the transaction contemplated in such Advance Notice has been closed in accordance with Section 2.02 hereof, and all Shares in connection with such Advance have been received by the Investor.
Section 1.10Issuance of the Company’s Common Shares. The issuance and sale of the Common Shares hereunder shall be made in accordance with the provisions and requirements of Section 4(a)(2) of the Securities Act and any applicable state securities law.
Section 1.11Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay all expenses incident to the performance of its obligations hereunder, including but not limited to (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each prospectus and of each amendment and supplement thereto; (ii) the preparation, issuance and delivery of any Shares issued pursuant to this Agreement, (iii) all fees and disbursements of the Company’s counsel, accountants and other advisors (but not, for the avoidance doubt, the fees and disbursements of Investor’s counsel, accountants and other advisors), (iv) the qualification of the Shares under securities laws in accordance with the provisions of this Agreement, including filing fees in connection therewith, (v) the printing and delivery of copies of any prospectus and any amendments or supplements thereto requested by the Investor, (vi) the fees and expenses incurred in connection with the listing or qualification of the Shares for trading on the Principal Market, or (vii) filing fees of the SEC and the Principal Market.
Section 1.12Current Report. The Company shall, not later than 5:30 p.m., New York City time, on the fourth business day after the date of this Agreement, file with the SEC a current report on Form 8-K disclosing the execution of this Agreement by the Company and the Investor (including any exhibits thereto, the “Current Report”). The Company shall provide the Investor and its legal counsel a reasonable opportunity to comment on any description of this Agreement contained in a draft of the Current Report, including any exhibit to be filed related thereto, as applicable, prior to filing the Current Report with the SEC and shall give due consideration to all such comments. From and after the filing of the Current Report with the SEC, the Company shall have publicly disclosed all material, non-public information delivered to the Investor (or the Investor’s representatives or agents) by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees, agents or representatives (if any) in connection with the transactions contemplated by the Transaction Documents. 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 the Investor with any material, non-public information regarding the Company or any of its Subsidiaries without the express prior written consent of the Investor (which may be granted or withheld in the Investor’s sole discretion); it being understood that the mere notification of Investor required pursuant to clause (iv) of Section 6.08 shall not in and of itself be deemed to be material, non-public information. Notwithstanding anything contained in this Agreement to the contrary, the Company expressly agrees that it shall publicly disclose in the Current Report or otherwise make publicly available any information communicated to the Investor by or, to the knowledge of the Company, on behalf of the Company in connection
with the transactions contemplated herein, which, following the Effective Date hereof would, if not so disclosed, constitute material, non-public information regarding the Company or its Subsidiaries. The Company understands and confirms that the Investor will rely on the foregoing representations in effecting resales of Shares under a Registration Statement. In addition, effective upon the filing of the Current Report, the Company acknowledges and agrees that any and all confidentiality or similar obligations with respect to the transactions contemplated by the Transaction Documents 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 Investor or any of its respective officers, directors, Affiliates, employees or agents, on the other hand shall terminate.
Section 1.13Advance Notice Limitation. The Company shall not deliver an Advance Notice if a shareholder meeting or corporate action date, or the record date for any shareholder meeting or any corporate action, would fall during the period beginning two Trading Days prior to the date of delivery of such Advance Notice and ending two Trading Days following the Closing of such Advance.
Section 1.14Use of Proceeds. The proceeds from the sale of the Shares by the Company to Investor shall be used by the Company in the manner as will be set forth in the Prospectus included in any Registration Statement (and any post-effective amendment thereto) and any Prospectus Supplement thereto filed pursuant to this Agreement.
Section 1.15Compliance with Laws. The Company shall comply in all material respects with all Applicable Laws.
Section 1.16Market Activities. Neither the Company, nor any Subsidiary, nor any of their respective officers, directors or controlling persons will, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of Common Shares or (ii) sell, bid for, or purchase Common Shares in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Shares.
Section 1.17Trading Information. Upon the Company’s request, the Investor agrees to provide the Company with trading reports setting forth the number and average sales prices of shares of Common Stock sold by the Investor during the prior trading week.
Section 1.18Selling Restrictions. (i) Except as expressly set forth below, the Investor covenants that from and after the date hereof through and including the Trading Day next following the expiration or termination of this Agreement as provided in Section 10.01 (the “Restricted Period”), none of the Investor any of its officers, or any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall, directly or indirectly, engage in any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Shares, either for its own principal account or for the principal account of any other Restricted Person. Notwithstanding the foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the Shares; or (2) selling a number of Common Shares equal to the number of Advance Shares that such Restricted Person is unconditionally obligated to purchase under a pending Advance Notice but has not yet received from the Company or the transfer agent pursuant to this Agreement.
Section 1.19Assignment. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall have any power or any right to assign or transfer, in whole or in part, this Agreement, or any of its rights or any of its obligations hereunder, including, without limitation, any right to pursue any claim for damages pursuant to this Agreement or the transactions contemplated herein, or to pursue any claim for any breach or default of this Agreement, or any right arising from the purported assignor’s due performance of its obligations hereunder, without the prior written consent of the other Party and any such purported assignment in contravention of the provisions herein shall be null and void and of no force or effect. Without the consent of the Investor, the Company shall not have the right to assign or transfer any of its rights, or provide any third party the right to bind or obligate the Company, to deliver Advance Notices or effect Advances hereunder.
Article VII.Conditions for Delivery of Advance Notice
Section 1.01Conditions Precedent to the Right of the Company to Deliver an Advance Notice. The right of the Company to deliver an Advance Notice and the obligations of the Investor hereunder with respect to an Advance are subject to the satisfaction or waiver, on each Advance Notice Date (a “Condition Satisfaction Date”), of each of the following conditions:
(a)Accuracy of the Company’s Representations and Warranties. The representations and warranties of the Company in this Agreement shall be true and correct in all material respects as of the Advance Notice Date (other than representations and warranties which address matters only as of a certain date, which shall be true and correct as written as of such certain date.
(b)Registration of the Common Shares with the SEC. There is an effective Registration Statement pursuant to which the Investor is permitted to utilize the prospectus thereunder to resell all of the Common Shares issuable pursuant to such Advance Notice. The Company shall have filed with the SEC in a timely manner all reports, notices and other documents required under the Exchange Act and applicable SEC regulations during the twelve-month period immediately preceding the applicable Condition Satisfaction Date.
(c)Authority. The Company shall have obtained all permits and qualifications required by any applicable state for the offer and sale of all the Common Shares issuable pursuant to such Advance Notice, or shall have the availability of exemptions therefrom. The sale and issuance of such Common Shares shall be legally permitted by all laws and regulations to which the Company is subject.
(d)No Material Outside Event. No Material Outside Event shall have occurred and be continuing.
(e)Board. The board of directors of the Company has approved the transactions contemplated by the Transaction Documents; said approval has not been amended, rescinded or modified and remains in full force and effect as of the Effective Date, and a true, correct and complete copy of such resolutions duly adopted by the board of directors of the Company shall have been provided to the Investor.
(f)Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior the applicable Condition Satisfaction Date.
(g)No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly, materially and adversely affects any of the transactions contemplated by this Agreement.
(h)No Suspension of Trading in or Delisting of Common Shares. Trading in the Common Shares shall not have been suspended by the SEC, the Principal Market or FINRA, the Company shall not have received any final and non-appealable notice that the listing or quotation of the Common Shares on the Principal Market shall be terminated on a date certain (unless, prior to such date certain, the Common Shares are listed or quoted on any subsequent Principal Market), nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares that is continuing, the Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated (unless, prior to such suspension or restriction, DTC shall have notified the Company in writing that DTC has determined not to impose any such suspension or restriction).
(i)Authorized. There shall be a sufficient number of authorized but unissued and otherwise unreserved Common Shares for the issuance of all of the Shares issuable pursuant to such Advance Notice.
(j)Executed Advance Notice. The representations contained in the applicable Advance Notice shall be true and correct in all material respects as of the applicable Condition Satisfaction Date.
(k)Consecutive Advance Notices. Except with respect to the first Advance Notice, the Company shall have delivered all Shares relating to all prior Advances.
Article VIII.Non Exclusive Agreement
Notwithstanding anything contained herein, this Agreement and the rights awarded to the Investor hereunder are non-exclusive, and the Company may, at any time throughout the term of this Agreement and thereafter, issue and allot, or undertake to issue and allot, any shares and/or securities and/or convertible notes, bonds, debentures, options to acquire shares or other securities and/or other facilities which may be converted into or replaced by Common Shares or other securities of the Company, and to extend, renew and/or recycle any bonds and/or debentures, and/or grant any rights with respect to its existing and/or future share capital.
Article IX.Choice of Law/Jurisdiction
This Agreement, and any and all claims, proceedings or causes of action relating to this Agreement or arising from this Agreement or the transactions contemplated herein, including, without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and enforced under and solely in accordance with the substantive and procedural laws of the State of New York, in each case as in effect from time to time and as the same may be amended from time to time, and as applied to agreements performed wholly within the State of New York. The Parties further agree that any action between them shall be heard in New York County, New York, and expressly consent to the jurisdiction and venue of the Supreme Court of New York, sitting in New York County, New York and the United States District Court of the Southern District of New York, sitting in New York, New York, for the adjudication of any civil action asserted pursuant to this Agreement.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN, THE PERFORMANCE THEREOF OR THE FINANCINGS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
Article X.Termination
Section 1.01Termination.
(a)Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earliest of (i) the first day of the month next following the 24-month anniversary of the Effective Date or (ii) the date on which the Investor shall have made payment of Advances pursuant to this Agreement for Common Shares equal to the Commitment Amount.
(b)The Company may terminate this Agreement effective upon five Trading Days’ prior written notice to the Investor; provided that (i) there are no outstanding Advance Notices, the Common Shares under which have yet to be issued, and (ii) the Company has paid all amounts owed to the Investor pursuant to this Agreement. This Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent.
(c)Nothing in this Section 10.01 shall be deemed to release the Company or the Investor from any liability for any breach under this Agreement, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement. The indemnification provisions contained in Article V shall survive termination hereunder.
Article XI.Notices
Other than with respect to Advance Notices, which must be in writing delivered in accordance with Section 2.01(b) and will be deemed delivered on the day set forth in Section 2.01(b), 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 e-mail if sent on a Trading Day, or, if not sent on a Trading Day, on the immediately following Trading Day; (iii) 5 days after being sent by U.S. certified mail, return receipt requested, (iv) 1 day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications (except for Advance Notices which shall be delivered in accordance with Exhibit A hereof) shall be:
| | | | | |
If to the Company, to: | Ideanomics, Inc. 1441 Broadway, Suite #5116 New York, NY 10018 |
| Attention: Ben Wu, General Counsel |
| Telephone: 332-259-8182 Email: bwu@ideanomics.com |
With a copy to (which shall not constitute notice or delivery of process) to: | |
|
Attention: Alf Poor, CEO Telephone: Email: apoor@ideanomics.com |
| |
| If to the Investor(s): | YA II PN, Ltd. |
| 1012 Springfield Avenue |
| Mountainside, NJ 07092 |
| Attention: Mark Angelo |
| Portfolio Manager |
| Telephone: (201) 985-8300 |
| Email: mangelo@yorkvilleadvisors.com |
| |
With a Copy (which shall not constitute notice or delivery of process) to: | Legal Department 1012 Springfield Avenue Mountainside, NJ 07092 |
| Telephone: (201) 985-8300 |
| Email: legal@yorkvilleadvisors.com |
| |
| |
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or at such other address and/or e-mail and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s email service provider containing the time, date, recipient email address or (iii) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service in accordance with clause (i), (ii) or (iii) above, respectively.
Article XII.Miscellaneous
Section 1.01Counterparts. This Agreement may be executed in identical counterparts, both 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. Facsimile or other electronically scanned and delivered signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed to have been duly and validly delivered and be valid and effective for all purposes of this Agreement.
Section 1.02Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their respective Affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing signed by the parties to this Agreement.
Section 1.03Reporting Entity for the Common Shares. The reporting entity relied upon for the determination of the trading price or trading volume of the Common Shares on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of the Investor and the Company shall be required to employ any other reporting entity.
Section 1.04Commitment and Structuring Fee. Each of the parties shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby, except that (i) the Investor shall pay for expenses incurred by the Company in connection with the filing of the Registration Statement; provided, however, that the aggregate amount to be paid by the Investor towards such expenses shall under no circumstances exceed $100,000.00; and (ii) the Company shall pay to the Investor a commitment fee in an amount equal to $350,000.00 (the “Commitment Fee”). So long as any portion of the Commitment Fee remains outstanding, 25% of the proceeds to be received by the Company in connection with the submission of any Advance Notice shall be applied to the outstanding balance of the Commitment Fee with the remaining 75% of such proceeds to be remitted to the Company; provided, however, that if after four (4) months from the Effective Date any portion of the Commitment Fee remains outstanding, then all of the proceeds to be received by the Company in connection with the submission of any Advance Notice shall be applied to the balance of the Commitment Fee until paid in full.
Section 1.05Brokerage. Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and the Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities to any person claiming brokerage commissions or finder’s fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity Purchase Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above.
| | | | | |
| COMPANY: |
| IDEANOMICS, INC. |
| |
| By: |
| Name: Alf Poor |
| Title: CEO |
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| |
| |
| INVESTOR: |
| YA II PN, LTD. |
| |
| By: Yorkville Advisors Global, LP |
| Its: Investment Manager |
|
By: Yorkville Advisors Global II, LLC Its: General Partner |
| By: |
| Name: Troy Rillo |
| Title: Member |
| |
EXHIBIT A
ADVANCE NOTICE
IDEANOMICS
Dated: ______________ Advance Notice Number: ____
The undersigned, _______________________, hereby certifies, with respect to the sale of Common Shares of Ideanomics, Inc. (the “Company”) issuable in connection with this Advance Notice, delivered pursuant to that certain Standby Equity Purchase Agreement, dated as of [____________] (the “Agreement”), as follows (with capitalized terms used herein without definition having the same meanings as given to them in the Agreement):
1. The undersigned is the duly elected ______________ of the Company.
2. There are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a post-effective amendment to the Registration Statement.
3. The Company has performed in all material respects all covenants and agreements to be performed by the Company contained in the Agreement on or prior to the Advance Notice Date. All conditions to the delivery of this Advance Notice are satisfied as of the date hereof.
4. The number of Advance Shares the Company is requesting is _____________________.
5. The Minimum Acceptable Price with respect to this Advance Notice is____________ (if left blank then no Minimum Acceptable Price will be applicable to this Advance).
6. The number of Common Shares of the Company outstanding as of the date hereof is ___________.
The undersigned has executed this Advance Notice as of the date first set forth above.
IDEANOMICS, INC.
By:
EXHIBIT B
FORM OF SETTLEMENT DOCUMENT
VIA EMAIL
Ideanomics, Inc.
Attn:
Email:
| | | | | | | | |
| | Below please find the settlement information with respect to the Advance Notice Date of: | |
| 1. | Number of Common Shares requested in the Advance Notice | |
| 1.b. | Number of Common Shares traded during Pricing Period | |
| 2. | Minimum Acceptable Price for this Advance (if any) | |
| 3. | Number of Excluded Days (if any) | |
| 4. | Adjusted Advance Amount (if applicable) | |
| 5. | Market Price (Low VWAP during the Pricing Period) | |
| 6. | Purchase Price (Market Price x 94%) per share | |
| 7. | Number of Advance Shares due to the Investor | |
| 8. | Total Purchase Price due to Company (row 6 x row 7) | |
If there were any Excluded Days then add the following
| | | | | | | | |
| 9. | Number of Additional Shares to be issued to the Investor | |
| 10. | Additional amount to be paid to the Company by the Investor (Additional Shares in row 9 x Minimum Acceptable Price x 94%) | |
| 11. | Total Amount to be paid to the Company (Purchase Price in row 8 + additional amount in row 10) | |
| 12. | Total Advance Shares to be issued to the Investor (Advance Shares due to the Investor in row 7 + Additional Shares in row 9) | |
Please issue the number of Advance Shares due to the Investor to the account of the Investor as follows:
INVESTOR’S DTC PARTICIPANT #:
DTC # 9132
Clear Street, LLC
A/C #: 102950
A/C Name: YA II PN, Ltd.
Please issue the Amount to be paid to the Company to the account of the Company as follows:
WIRE INSTRUCTIONS:
BANK NAME:
ABA:
SWIFT:
FEDWIRE NUMBER:
FOR CREDIT TO:
ACCOUNT #:
Sincerely,
YA II PN, LTD.
Agreed and approved by Ideanomics, Inc.:
__________________________________
Name:
Title:
Wiring Instructions
AMENDMENT NO. 1 TO STANDBY EQUITY PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 (the “Amendment”), dated as of January 12, 2024 to the Standby Equity Purchase Agreement (the “SEPA”), dated as of January 10, 2024, by and between YA II PN, Ltd., a Cayman Islands exempted company (the “Investor”), and Ideanomics, Inc., a company incorporated under the laws of the State of Nevada (the “Company”, and together with the Investor, the “Parties”), is being executed at the direction of the Parties.
WHEREAS, Section 12.02 of the SEPA permits the Parties to amend the SEPA through an instrument in writing signed by the Parties.
NOW, THEREFORE, in consideration of the foregoing and the agreements, provisions and covenants herein contained, the Parties agree as follows:
1. The first paragraph in the recitals of the SEPA is hereby deleted in its entirety and replaced with the following:
WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall have the right to issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to 2,500,000 of the Company’s shares of common stock, par value $0.001 per share (the “Common Shares”); and
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SHARE PURCHASE AGREEMENT
between
IDEANOMICS, INC.
and
J.P.L HOLDING COMPANY LTD.
dated as of
December 22, 2023
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement"), dated as of December 22, 2023, is entered into between Ideanomics, Inc., a corporation incorporated under the laws of Nevada ("Seller") and J.P.L Holding Company, a corporation incorporated under the laws of Alberta ("Purchaser"). Capitalized terms used in this Agreement have the meanings given to such terms herein, as such definitions are identified by the cross-references set forth in Exhibit A attached hereto. Recitals
WHEREAS, Seller owns all the issued and outstanding shares (the "Shares") in the capital of US Hybrid Corporation, a corporation incorporated under the laws of Delaware (the "Corporation"); and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to purchase from Seller, the Shares, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Purchase and sale
Section 1.01Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing (as defined in Section 1.05 of this Agreement), Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, the Shares, free and clear of any, and all, pledges, liens, security interests, adverse claims or other encumbrances (each, an "Encumbrance").
Section 1.02Purchase Price. The aggregate purchase price for the Shares shall be equal to the sum of five million dollars (USD$ 5,000,000.00) (the "Purchase Price"). Prior to the execution of this Agreement, the Purchaser has paid an initial deposit of one million five hundred thousand dollars (USD$ 1,500,000.00) of the Purchase Price to the Seller (the “Deposit”).
Section 1.03Transactions to be Effected at the Closing
(a) At the Closing:
(i)the Purchaser shall deliver the three million eight hundred fifty thousand dollars (USD$ 3,850,000.00) to to Seller at Closing.,
(ii)all other agreements, documents, instruments or certificates required to be delivered by Purchaser under this Agreement.
(b) At the closing, Seller shall deliver to Purchaser:
(i)share certificates representing the Shares, free and clear of all Encumbrances, duly endorsed in blank or accompanied by share transfers or other instruments of transfer duly executed in blank; and
(ii)resignations of [all directors and officers of the Corporation/those directors and officers listed in Section 1.03(b)(ii) of the Disclosure Schedules].
Section 1.04[LEFT INTENTIONALLY BLANK [ADJUSTMENTS]]
Section 1.05Closing. The purchase and sale of the Shares contemplated by this Agreement (the "Closing") shall take place simultaneously with the execution of this Agreement on December 29, 2023 (the "Closing Date") at a closing at the offices of Loopstra Nixon LLP or remotely by exchange of documents and signatures (or their electronic counterparts). The consummation of the transactions contemplated by this Agreement shall be deemed to occur at 12:01 a.m. on the Closing Date. In the event the Closing has not occurred on the Closing Date, the Deposit shall be refunded to the Purchaser by the Seller on the Closing Date.
ARTICLE II
Representations and Warranties of Seller
Seller represents and warrants to Purchaser that the statements contained in this ARTICLE II are true and correct as of the date hereof. For purposes of this ARTICLE II, "Seller's Knowledge, "Knowledge of Seller" and any similar phrases shall mean the actual or constructive knowledge of any director or officer of the Seller, after due inquiry.
Section 1.01Corporate Status; Authorization; Enforceability. The Seller is a corporation incorporated and existing under the laws of Nevada, the Corporation is a corporation incorporated and existing under the laws of Delaware, and both the Seller and Corporation have not been discontinued or dissolved under such laws. No steps or proceedings have been taken to authorize or require such discontinuance or dissolution. Seller has the corporate power and capacity to enter into this Agreement and the documents to be delivered hereunder and to consummate the transactions contemplated hereby. The Corporation has the corporate power and capacity to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. Section 2.01 of the Disclosure Schedules sets forth each jurisdiction in which the Corporation is licensed or registered to carry on business, and the Corporation is duly licensed or registered to carry on business and has submitted all notices or returns of corporate information and other filings required by law to be submitted by it to any governmental authority in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or registration necessary.
The execution, delivery and performance by Seller of this Agreement and the documents to be delivered hereunder and the consummation by Seller of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Purchaser), this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms.
Section 1.02Capitalization
(a)The authorized capital of the Corporation consists of 3,000 common shares, of which 3,000 Shares are issued and outstanding and constitute the Shares. All the Shares have been duly authorized and are validly issued, fully paid and non-assessable, and Seller is the registered and beneficial owner of the Shares, free and clear of all Encumbrances. Upon consummation of the transactions contemplated by this Agreement, Purchaser shall own all the Shares, free and clear of all Encumbrances.
(b)There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to any shares in the capital of the Corporation or obligating Seller or the Corporation to issue or sell any shares of, or any other interest in, the Corporation. There are no voting trusts or agreements, pooling agreements, unanimous shareholder agreements, other shareholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares. The Corporation does not own or have any interest in any shares or have securities, or another ownership interest, in any other person or entity.
Section 1.03No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not:
(a)violate or conflict with the articles of incorporation, by-laws or unanimous shareholder agreement of Seller or the Corporation;
(b)violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller or the Corporation;
(c)conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which the Corporation is a party; or
(d)result in the creation or imposition of any Encumbrance on any properties or assets of the Corporation.
No consent, approval, waiver or authorization is required to be obtained by Seller or the Corporation from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby.
Section 1.04Financial Statements. Complete copies of the Corporation's audited consolidated financial statements consisting of the balance sheet of the Corporation as at December 31 in each of the years 2021[ 2022 (the "Balance Sheet") and the related statement of profit and loss, statement of retained earnings and deficit and statement of changes in financial position for the years then ended (the "Annual Financial Statements"), and unaudited reviewed interim financial statements consisting of the balance sheet of the Corporation as at September 30, 2023 and the related statement of profit and loss, statement of retained earnings and deficit and statement of changes in financial position for the three-month period then ended (the "Interim Financial Statements" and together with the Annual Financial Statements, the "Financial Statements") have been delivered to Purchaser. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Annual Financial Statements). The Financial Statements are based on the books and records of the Corporation, and fairly present the financial condition of the Corporation as of the respective dates they were prepared and the results of the operations of the Corporation for the periods indicated.
Section 1.05Undisclosed Liabilities. To the best of the knowledge of the Corporation’s Officers, the Corporation has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (collectively, the "Liabilities"), except those that:
(a)are adequately reflected or reserved against in the Balance Sheet; and
(b)have been incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet and that are not, individually or in the aggregate, material in amount.
Section 1.06Absence of Certain Changes, Events and Conditions. Since the date of the Balance Sheet and other than in the ordinary course of business consistent with past practice, there has not been, with respect to the Corporation, any:
(a)event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Corporation;
(b)amendment of the articles, by-laws, unanimous shareholder agreement or other constating documents of the Corporation;
(c)declaration or payment of any dividends or distributions on or in respect of any shares in the Corporation or redemption, retraction, purchase or acquisition of its shares;
(d)material change in any method of accounting or accounting practice of the Corporation, except as required by GAAP or as disclosed in the notes to the Financial Statements;
(e) entry into any contract that would constitute a Material Contract;
(f)incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice;
(g)transfer, assignment, sale or other disposition of any assets shown or reflected in the Balance Sheet or cancellation of any debts or entitlements;
(h)transfer, assignment or grant of any licence or sublicence of any material rights under or with respect to any Corporate IP;
(i)material damage, destruction or loss (whether or not covered by insurance) to its property;
(j)any capital investment in, or any loan to, any other person or entity;
(k)acceleration, termination, material modification to or cancellation of any Material Contract to which the Corporation is a party or by which it is bound;
(l) any material capital expenditures;
(m)imposition of any Encumbrance upon any of the Corporation's properties, shares or assets, tangible or intangible;
(n)(i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable law; (ii) change in the terms of employment for any employee or any termination of any employees; or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;
(o) adoption, modification or termination of any:
(i)employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant;
(ii) Benefit Plan; or
(iii)collective agreement or other agreement with a union, in each case whether written or oral;
(p)any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its shareholders or current or former directors, officers and employees;
(q)entry into a new line of business or abandonment or discontinuance of existing lines of business;
(r)adoption of any amalgamation, arrangement, reorganization, liquidation or dissolution or the commencement of any proceedings in which the Corporation would acquire the status of a bankrupt or insolvent person;
(s)purchase, lease or other acquisition of the right to own, use or lease any property or assets, except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;
(t)acquisition by amalgamation or arrangement with, or by purchase of a substantial portion of the assets or shares of, or by any other manner, any business or any person or entity;
(u)action by the Corporation to make, change or rescind any tax election, amend any tax return or take any position on any tax return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the tax liability or reducing any tax asset or attribute of the Corporation; or
(v)any contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.
Section 1.07Material Contracts
(a)Section 2.07(a) of the Disclosure Schedules lists each of the following contracts of the Corporation (such contracts being "Material Contracts"):
(i)each contract of the Corporation involving aggregate consideration in excess of $100,000 and that, in each case, cannot be cancelled by the Corporation without penalty or without more than 90 days' notice;
(ii)all contracts that provide for the indemnification by the Corporation of any person or entity or the assumption of any tax, environmental or other Liability of any person or entity;
(iii)all contracts that relate to the acquisition or disposition of any business, a material number of shares, or amount of assets, of any other person or entity or any real property (whether by amalgamation, sale or issue of shares, sale of assets or otherwise);
(iv)all broker, distributor, dealer, manufacturer's representative, franchise, agency, sales promotion, market research, marketing, consulting and advertising contracts to which the Corporation is a party;
(v)all employment agreements and contracts with independent contractors or consultants (or similar arrangements) to which the Corporation is a party and that are not cancellable without material penalty or without more than 90 days' notice;
(vi)all contracts relating to indebtedness (including guarantees) of the Corporation;
(vii)all contracts that limit or purport to limit the ability of the Corporation to compete in any line of business or with any person or entity or in any geographic area or during any period of time;
(viii)any contracts to which the Corporation is a party that provide for any joint venture, partnership or similar arrangement by the Corporation;
(ix)all shareholder agreements, pooling agreements, voting trusts or similar agreements with respect to the ownership or voting of any of the shares of the Corporation or restriction of the power of the directors of the Corporation to manage, or supervise the management of, the business and affairs of the Corporation;
(x)all contracts between or among the Corporation and Seller or any affiliate of Seller;
(xi)all collective agreements or contracts with any union to which the Corporation is a party; and
(xii)any other contract that is material to the Corporations.
(b)Each Material Contract is valid and binding on the Corporation in accordance with its terms and is in full force and effect. None of the Corporation or, to Seller's Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract have been made available to Purchaser.
Section 1.08Title to Assets
(a)The Corporation has a valid leasehold interest in all real property and good title to the personal property and other assets reflected in the Annual Financial Statements or acquired after the date of the Balance Sheet, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the date of the Balance Sheet. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for those items set forth in Section 2.08(a) of the Disclosure Schedules (collectively, the "Permitted Encumbrances");
(b)Section 2.08(b) of the Disclosure Schedules lists the civic address of each parcel of real property that is leased or subleased by the Corporation, the landlord under the lease, the rental amount currently being paid, the expiration of the term of such lease or sublease for each leased or subleased property and any renewals or extensions. Seller has delivered or made available to Purchaser true, complete and correct copies of any leases (including all renewals, extensions, amendments, modifications and supplements) affecting real property. The Corporation is not a sublessor or grantor under any sublease or other instrument granting to any other person or entity any right to the possession, lease, occupancy or enjoyment of any leased real property. The use and operation of the real property in the conduct of the Corporation's business do not violate in any material respect any law (including zoning and building by-laws, ordinances, regulations, covenants and official plans), covenant, condition, restriction, easement, licence, permit or agreement.
(c)The Corporation does not own legally or beneficially, and at no time has owned legally or beneficially, any real property.
Section 1.09Condition of Assets. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Corporation are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost.
Section 1.10Intellectual Property
(a)"Intellectual Property " means any, and all, the following in any jurisdiction throughout the world:
(i)trademarks, including all applications and registrations and the goodwill connected with the use and symbolized by the foregoing;
(ii)copyrights and industrial designs, including all applications and registrations relating to the foregoing;
(iii)trade secrets and confidential know-how;
(iv)patents and patent applications;
(v)websites and internet domain name registrations; and
(vi)other intellectual property and related proprietary rights, interests and protections.
(b)Section 2.10(b) of the Disclosure Schedules lists all Intellectual Property that is owned by, or licensed to, the Corporation and material to the Corporation's business or operations (the "Corporate IP"). The Corporation owns or has adequate, valid and enforceable rights to use all Corporate IP, free and clear of all Encumbrances. The Corporation is not bound by any outstanding judgment, injunction, order or decree restricting the use of the Corporate IP or restricting the licensing thereof to any person or entity. With respect to the registered Corporate IP listed in Section 2.10(b) of the Disclosure Schedules:
(i)all such Corporate IP is valid, subsisting and in full force and effect; and
(ii)the Corporation has paid all maintenance fees and made all filings required to maintain the Corporation's ownership thereof.
For all such registered Corporate IP, Section 2.10(b) of the Disclosure Schedules lists (A) the jurisdiction where the application or registration is located; (B) the application or registration number; and (C) the application or registration date.
(c)The Corporation's prior and current use of the Corporate IP has not and does not infringe, violate, dilute or misappropriate the Intellectual Property of any person or entity and there are no claims pending or threatened by any person or entity with respect to ownership, validity, enforceability, effectiveness or use of the Corporate IP. No person or entity is infringing, misappropriating, diluting or otherwise violating any of the Corporate IP, and neither the Corporation nor any affiliate of the Corporation has made or asserted any claim, demand or notice against any person or entity alleging any such infringement, misappropriation, dilution or other violation.
Section 1.11Inventory. All inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories of the Corporation consist of a quality and quantity usable and salable in the ordinary course of business.
Section 1.12Accounts Receivable. The accounts receivable reflected on the Balance Sheet and the accounts receivable arising after the date thereof:
(a)constitute only valid, undisputed claims of the Corporation not subject to claims of set-off or other defenses or counter-claims other than normal cash discounts accrued in the ordinary course of business consistent with past practice; and
(b)are subject to a reserve for bad debts shown on the Balance Sheet or, with respect to accounts receivable arising after the date of the Balance Sheet, are collectible in full within 90 days after billing.
The reserve for bad debts shown on the Balance Sheet or, with respect to accounts receivable arising after the date of the Balance Sheet, have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments.
Section 1.13Customers and Suppliers
(a) Section 2.13(a) of the Disclosure Schedules sets forth:
(i)each customer who has paid aggregate consideration to the Corporation for goods or services rendered in an amount greater than or equal to $100,000 in the most recent financial year (collectively, the "Material Customers"); and
(ii)the amount of consideration paid by each Material Customer during such period.
The Corporation has not received any notice, and has no reason to believe, that any of its Material Customers has ceased, or intends to cease after the Closing, to use its goods or services or to otherwise terminate or materially reduce its relationship with the Corporation.
(b) Section 2.13(b) of the Disclosure Schedules sets forth:
(i)each supplier to whom the Corporation has paid consideration for goods or services rendered in an amount greater than or equal to $100,000 for the most recent financial year (collectively, the "Material Suppliers"); and
(ii)the amount of purchases from each Material Supplier during such period.
The Corporation has not received any notice, and has no reason to believe, that any of its Material Suppliers has ceased, or intends to cease, to supply goods or services to the Corporation or to otherwise terminate or materially reduce its relationship with the Corporation.
Section 1.14Insurance. Section 2.14 of the Disclosure Schedules sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workplace safety and insurance, workers' compensation, vehicle, fiduciary liability and other casualty and property insurance maintained by the Corporation and relating to the assets, business, operations and employees of the Corporation (collectively, the "Insurance Policies") and true and complete copies of each of the Insurance Policies have been made available to Purchaser. The Insurance Policies are in full force and effect and shall remain in full force and effect following the Closing Date. The Corporation has not received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under any of the Insurance Policies. All premiums due on the Insurance Policies have been paid in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of the Corporation. All such Insurance Policies:
(a) are valid and binding in accordance with their terms; and
(b) have not been subject to any lapse in coverage.
There are no claims related to the business of the Corporation pending under any Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. The Corporation is not in default under, and has not otherwise failed to comply with, in any material respect, any provision contained in any Insurance Policy. The Insurance Policies are sufficient for compliance with all applicable laws and contracts to which the Corporation is a party or by which it is bound.
Section 1.15Legal Proceedings; Governmental Orders
(a)There is no claim, action, suit, proceeding or governmental investigation (each, an "Action") of any nature pending or, to Seller's Knowledge, threatened against or by:
(i)the Corporation affecting any of its properties or assets (or by or against Seller and relating to the Corporation); or
(ii)the Corporation or Seller that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
No event has occurred, or circumstances exist that may give rise to, or serve as a basis for, any such Action.
(b)There are no outstanding governmental orders and no unsatisfied judgments, penalties or awards against or affecting the Corporation or any of its properties or assets.
Section 1.16Compliance with Laws; Permits
(a)The Corporation has complied, and is now complying, with all federal, state, territorial and local laws applicable to it or its business, properties or assets.
(b)Section 2.16(b) of the Disclosure Schedules lists all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights from governmental authorities required by the Corporation to conduct its business (collectively, the "Permits"). The Permits are valid and in full force and effect. All fees and charges with respect to the Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit.
Section 1.17Environmental Matters
(a)The Corporation is currently and has been in compliance with all environmental laws.
(b)There has been no release, spillage, leaking, emitting, discharging, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate of any hazardous product, waste, toxic substance, contaminant, pollutant or deleterious substance in contravention of environmental law with respect to the business or assets of the Corporation or any real property currently or formerly owned, operated, controlled or leased by the Corporation.
Section 1.18Benefit Plans
(a)Section 2.18(a) of the Disclosure Schedules contains a true and complete list of each employee benefit plan, agreement, program, policy, practice, material undertaking or arrangement (whether oral or written, formal or informal, funded or unfunded) maintained for, available to or otherwise relating to any employees, directors or officers or former employees, directors or officers of the Corporation, or any spouses, dependents or survivors of any employee or former employee of the Corporation, or under which the Corporation has or may have any liability including bonus, deferred compensation, incentive compensation, share purchase,
share appreciation, share option, severance and termination pay, hospitalization, health and other medical benefits including medical or dental treatment or expenses, life and other insurance including accident insurance, vision, legal, long-term and short-term disability, salary continuation, vacation, supplemental unemployment benefits, education assistance, equity or equity-based compensation, change of control benefits, profit-sharing, mortgage assistance, employee loan, employee assistance and pension, retirement and supplemental retirement plans (including any defined benefit or defined contribution pension plan and any group registered retirement savings plan) and supplemental pension as listed in Section 2.18(a) of the Disclosure Schedules, each, a "Benefit Plan".
(b)With respect to each Benefit Plan, Seller has made available to Purchaser accurate, current and complete copies of each of the following:
(i)where the Benefit Plan has been reduced to writing, the plan document together with all amendments; and
(ii)where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms.
Section 1.19Employment Matters
(a)Section 2.19(a) of the Disclosure Schedules sets forth the list of employees, which indicates: (i) the titles of all employees together with the location of their employment; (ii) the date each employee was hired; (iii) which employees are subject to a written employment agreement with the Corporation; (iv) the annual wage of each employee at the date of such list, any bonuses paid to each employee since the end of the Corporation's last completed financial year and before the date of such list and all other bonuses, incentive schemes, benefits, commissions and other compensation to which each employee is entitled; (v) the vacation days to which each employee is entitled on the date of such list; and (vi) the employees that are not actively working on the date of this Agreement due to leave of absence, illness, injury, accident or other disabling condition. As of the date hereof, all compensation, including wages, commissions, bonuses and vacation pay, payable to all employees, independent contractors or consultants of the Corporation for services performed on or before the date hereof have been paid in full, and there are no outstanding agreements, understandings or commitments of the Corporation with respect to any compensation, commissions, bonuses or vacation pay.
(b)The Corporation is not currently, and has not been, a party to any collective agreement, letter of understanding, letter of intent or other written communication or contract with any trade union, association that may qualify as a trade union, council of trade unions, employee bargaining agent or affiliated bargaining agent (each, a "Union") which would cover any of the employees (each, a "Collective Agreement"); and (ii) no Union holds bargaining rights with respect to any of the employees including by way of certification, interim certification, voluntary recognition, related employer or successor employer rights, or has applied or threatened to apply to be certified as the bargaining agent of any of the Employees.
(c)The Corporation is and has been in compliance with all applicable laws pertaining to employment and employment practices, including all laws relating to labour relations, unfair labour practices, employment discrimination, harassment, pay
equity, retaliation, duty to accommodate, disability rights or benefits, immigration, wages, hours, overtime compensation, child labour, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workplace safety and insurance, leaves of absence, unemployment insurance and employment standards. All individuals characterized and treated by the Corporation as independent contractors or consultants are properly treated as independent contractors under all applicable laws. There are no Actions against the Corporation pending, or to Seller's Knowledge, threatened to be brought or filed, by or with any governmental authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Corporation, including any claim relating to unfair labour practices, employment discrimination, harassment, retaliation, pay equity, wages and hours or any other employment related matter arising under applicable laws.
Section 1.20Taxes. Except as set forth in Section 2.20 of the Disclosure Schedules:
(a)The Corporation has duly and timely filed all its tax returns with all appropriate taxing authorities. Each such tax return was true, correct and complete in all respects. All taxes due and payable by the Corporation for periods (or portions thereof) ending on or before the Closing Date (whether or not shown due on any tax returns and whether or not assessed or reassessed by the appropriate taxing authority) have been paid.
(b)The Corporation has duly and timely withheld or collected the proper amount of taxes that are required by law to be withheld or collected (including taxes and other amounts required to be withheld by it in respect of any person, including any employee, officer or director and has duly and timely remitted to the appropriate taxing authority such taxes and other amounts required to be remitted by the Corporation.
(c)No taxing authority of a jurisdiction in which the Corporation has not filed a tax return has made any claim that the Corporation is or may be subject to tax or required to file tax returns by such a taxing authority in such jurisdiction. There is no basis for a claim that the Corporation is subject to Tax in a jurisdiction in which the Corporation does not file tax returns.
(d)The Corporation has not waived any statute of limitation in respect of taxes or agreed to any extension of time within which: (i) to file any tax return covering any taxes for which the Corporation is or may be liable; (ii) the Corporation is required to pay or remit amounts on account of taxes; or (iii) any taxing authority may assess or collect taxes for which the Corporation may be liable.
(e)Adequate provision has been made in accordance with GAAP in the books and records of the Corporation for all taxes payable in respect of the Corporation's business or its assets.
(f) Section 2.20(f) of the Disclosure Schedules sets forth:
(i)the taxation years of the Corporation as to which the applicable limitation periods on the assessment and collection of taxes have not expired;
(ii)those years for which examinations by the federal, state and territorial taxing authorities have been completed; and
(iii)those taxation years for which examinations by federal, state and territorial taxing authorities are presently being conducted.
(g)All deficiencies asserted, or assessments made, against the Corporation as a result of any examinations by any taxing authority have been fully paid.
(h)The Corporation has not received any notice from any taxing authority that it is taking steps to assess any additional taxes against the Corporation for any period for which tax returns have been filed and, to Seller's Knowledge, there are no actual or pending audit investigations or other Actions of or against the Corporation by any taxing authority relating to taxes. No taxing authority has given notice of any intention to assert any deficiency or claim for additional taxes against the Corporation.
(i)True copies of all tax returns prepared and filed by the Corporation during the past three years, together with any notices of assessment of the Corporation during the past three years, have been made available to Purchaser on or before the date of this Agreement.
(j)The Corporation is not a party to, or bound by, any tax indemnity, tax sharing or tax allocation agreement.
(k)No tax rulings have been requested or issued by any taxation authority with respect to the Corporation.
(l)The Corporation will not be required to include any item of income in, or exclude any item or deduction from, taxable income for any taxation year or portion thereof ending after the Closing Date as a result of use of an improper method of accounting, for a taxation year ending before the Closing Date.
(m)No section of the Internal Revenue Code (United States), or any equivalent provision of the tax law of any state, territory or any other jurisdiction, has applied or will apply to the Corporation at any time up to and including the Closing Date in a manner that would give rise to incremental tax liabilities or reduction in tax attributes.
(n)The Corporation has not acquired property or services from, or disposed of property to, a non-arm's length person (within the meaning of the Internal Revenue Code (United States)) for consideration the value of which is less than the fair market value of the property or services, as the case may be.
Section 1.21Books and Records. The minute books, securities registers, shareholders' ledgers, register of transfers and share certificate books of the Corporation, all of which have been made available to Purchaser, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Corporation contain accurate and complete records of all meetings, and resolutions in writing of, the shareholders, the board of directors and any committees of the board of directors of the Corporation, and no meeting, or resolution in writing, of any such shareholders, board of directors or committee has been held for which minutes or resolutions in writing have not been prepared and are not contained in such minute books.
Section 1.22Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller or the Corporation.
Section 1.23Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Purchaser under this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.
ARTICLE III
Representations and Warranties of Purchaser
Purchaser represents and warrants to Seller that the statements contained in this Article III are true and correct as of the date hereof. For purposes of this ARTICLE III, "Purchaser's Knowledge", "Knowledge of Purchaser" or any similar phrase shall mean the actual or constructive knowledge of any director or officer of Purchaser, after due inquiry.
Section 1.01Corporate Status; Authorization; Enforceability. Purchaser is a corporation incorporated and existing under the laws of Alberta and has not been discontinued or dissolved under such laws. No steps or proceedings have been taken to authorize or require such discontinuance or dissolution. Purchaser has the corporate power and capacity to enter into this Agreement and the documents to be delivered hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Purchaser of this Agreement and the documents to be delivered hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser, and (assuming due authorization, execution and delivery by Seller) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their respective terms.
Section 1.02No Conflicts; Consents. The execution, delivery and performance by Purchaser of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not violate or conflict with:
(a)the articles of incorporation, by-laws, unanimous shareholder agreements or other organizational documents of Purchaser; or
(b)any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Purchaser.
No consent, approval, waiver or authorization is required to be obtained by Purchaser from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Purchaser of this Agreement and the consummation of the transactions contemplated hereby.
Section 1.03Legal Proceedings. There is no Action of any nature pending or, to Purchaser's Knowledge, threatened against or by Purchaser that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
Section 1.04Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Purchaser.
ARTICLE IV
Covenants
Section 1.01Confidentiality. From and after the Closing, Seller shall hold, and shall use its reasonable best efforts to cause its directors and officers to hold, in confidence any, and all, information, whether written or oral, concerning the Corporation, except to the extent that Seller can show that such information is:
(a)generally available to and known by the public through no fault of Seller or its directors or officers; or
(b)lawfully acquired by Seller from and after the Closing from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation.
Section 1.02Books and Records
(a)To facilitate the resolution of any claims made against or incurred by Seller before the Closing, or for any other reasonable purpose, for a period of two (2) years after the Closing, Purchaser shall:
(i)retain the books and records (including personnel files) of the Corporation relating to periods before the Closing in a manner reasonably consistent with the prior practices of the Corporation; and
(ii)upon reasonable notice, afford representatives of Seller reasonable access (including the right to make, at Seller's expense, photocopies), during normal business hours, to such books and records.
(b)To facilitate the resolution of any claims made by or against or incurred by Corporation after the Closing, or for any other reasonable purpose, for a period of two (2) years after the Closing, Seller shall:
(i)retain the books and records (including personnel files) of Seller which relate to the Corporation and its operations for periods before the Closing; and
(ii)upon reasonable notice, afford representatives of Purchaser or the Corporation reasonable access (including the right to make, at Purchaser's expense, photocopies), during normal business hours, to such books and records.
(c)Neither Purchaser nor Seller shall be obligated to provide the other party with access to any books or records (including personnel files) under this Section 4.02 where such access would violate any law.
Section 1.03Public Announcements. Unless otherwise required by applicable law or stock exchange requirements, neither party shall make any public announcements regarding this Agreement or the transactions contemplated hereby without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed).
Section 1.04Further Assurances. Following the Closing, each of the parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and
give effect to the transactions contemplated by this Agreement and the documents to be delivered hereunder.
Section 1.05Personal Information Privacy. "Personal Information" means any factual or subjective information, recorded or not, about an employee, independent contractor, contractor, agent, consultant, officer, director, executive, client, customer or supplier of the Corporation who is a natural person or a natural person who is a shareholder of Seller, or about any other identifiable individual, including any record that can be manipulated, linked or matched by a reasonably foreseeable method to identify an individual, but does not include the name, title or business address or telephone number of an employee of the Corporation. Purchaser shall, at all times, comply with all Laws governing the protection of personal information with respect to Personal Information disclosed or otherwise provided to Purchaser by Seller or the Corporation under this Agreement. Purchaser shall only collect, use or disclose such Personal Information for the purposes of investigating the Corporation and the Business as contemplated in this Agreement and completing the transactions contemplated in this Agreement. Purchaser shall safeguard all Personal Information collected from Seller or the Corporation in a manner consistent with the degree of sensitivity of the Personal Information and maintain, at all times, the security and integrity of the Personal Information. Purchaser shall not make copies of the Personal Information or any excerpts thereof or in any way recreate the substance or contents of the Personal Information if the purchase is not completed for any reason and shall return all Personal Information to Seller or, at Seller's request, destroy such Personal Information at Seller's sole cost.
ARTICLE V
Indemnification
Section 1.01Survival. All representations, warranties, covenants and agreements contained herein and all related rights to indemnification shall survive the Closing.
Section 1.02Indemnification by Seller. Seller shall defend, indemnify and hold harmless Purchaser, its affiliates and their respective shareholders, directors, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including legal fees, disbursements and charges, arising from or relating to any:
(a)inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or in any document to be delivered hereunder; or
(b)breach or non-fulfilment of any covenant, agreement or obligation to be performed by Seller under this Agreement or any document to be delivered hereunder.
Section 1.03Indemnification by Purchaser. Subject to the other terms and conditions of this ARTICLE V, Purchaser shall defend, indemnify and hold harmless Seller, its affiliates and their respective shareholders, directors, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including legal fees, disbursements and charges, arising from or relating to any:
(a)inaccuracy in or breach of any of the representations or warranties of Purchaser contained in this Agreement or in any document to be delivered hereunder; or
(b)breach or non-fulfilment of any covenant, agreement or obligation to be performed by Purchaser under this Agreement or any document to be delivered hereunder.
Section 1.04Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "Indemnified Party") shall promptly provide written notice of such claim to the other party (the "Indemnifying Party"). In connection with any claim giving rise to indemnify hereunder resulting from or arising out of any Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defence of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defence of any such Action with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defence of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate, and no action taken by the Indemnified Party in accordance with such defence and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to damages resulting therefrom. The Indemnifying Party shall not settle an Action without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld or delayed).
Section 1.05Right to Setoff. Notwithstanding anything in this Agreement to the contrary, the Purchaser may set off any amount to which it may be entitled under this Agreement against amounts otherwise payable under this Agreement. The exercise of such right of setoff by the Purchaser, whether ultimately determined to be justified, will not constitute an event of default under the this Agreement and will not constitute an election of remedies or limit the Purchaser in any manner in the enforcement of any other remedies that may be available to it in connection with this Agreement.
Section 1.06Tax Treatment of Indemnification Payments. All indemnification payments made by Seller under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by law.
Section 1.07Effect of Investigation. Purchaser's right to indemnification or other remedy based on the representations, warranties, covenants and agreements of Seller set out herein will not be affected by any investigation conducted by Purchaser, or any knowledge acquired by Purchaser at any time, with respect to the accuracy of, or compliance with, any such representation, warranty, covenant or agreement.
Section 1.08Cumulative Remedies. The rights and remedies provided in this ARTICLE V are cumulative and are in addition to, and not in substitution for, any other rights and remedies available at law or in equity or otherwise.
ARTICLE VI
Miscellaneous
Section 1.01Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid and borne by the party incurring such costs and expenses.
Section 1.02Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given:
(a) when delivered by hand (with written confirmation of receipt);
(b)when received by the addressee if sent by a nationally recognized overnight courier (receipt requested);
(c)on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or
(d)on the third (3) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.02):
| | | | | | | | |
| If to SellerSeller: | [SELLER ADDRESS] |
| Email: | bwu@ideanomics.com |
| Attention: | Benjamin Wu, General Counsel |
| If to Purchaser: | [PURCHASER ADDRESS] |
| Email: | jason.lucas@jpl.holdings |
| Attention: | Jason Lucas, Director |
| with a copy (which shall not constitute notice) to: | [PURCHASER'S LAW FIRM] |
| Email: | Robert.Hladun@hladun.com |
| Attention: | Robert Hladun |
Section 1.03Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 1.04Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
Section 1.05Entire Agreement. This Agreement and documents to be delivered hereunder constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and the documents to be delivered hereunder, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
Section 1.06Successors and Assigns. This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
Section 1.07No Third-Party Beneficiaries. Except as provided in ARTICLE V, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 1.08Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
Section 1.09Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York and the federal laws of United States of America applicable therein.
Section 1.10Forum Selection. Any action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be brought in the courts of the province of Alberta, and each party irrevocably submits and agrees to attorn to the exclusive jurisdiction of such courts in any such action or proceeding.
Section 1.11Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
Section 1.12Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| | | | | |
| Ideanomics, Inc. |
| By_____________________ Name: Alfred Poor Title: Chief Executive Officer |
| | | | | |
| J.P.L. Holdings Company LTD |
| By_____________________ Name: Title: |
EXHIBIT A
DEFINITIONS CROSS-REFERENCE TABLE
The following terms have the meanings set forth in the location in this Agreement referenced below:
| | | | | |
| Term | Section |
| Action | Section 2.15(a) |
| Annual Financial Statements | Section 2.04 |
| Agreement | Preamble |
| Balance Sheet | Section 3.06 |
| Benefit Plan | Section 2.18(a) |
| Closing | Section 1.05 |
| Closing Amount | Section 1.02 |
| Closing Date | Section 1.05 |
| Collective Agreement | Section 2.19(b) |
| Corporation | Recitals |
| Corporate IP | Section 2.10(b) |
| Encumbrance | Section 1.01 |
| Financial Statements | Section 2.04 |
| Indemnified Party | Section 5.04 |
| Indemnifying Party | Section 5.04 |
| Insurance Policies | Section 2.14 |
| Interim Financial Statements | Section 2.04 |
| Intellectual Property | Section 2.10(a) |
| Knowledge of Purchaser | ARTICLE III |
| Knowledge of Seller | ARTICLE II |
| Liabilities | Section 2.05 |
| Material Contracts | Section 2.07(a) |
| Material Customers | Section 2.13(a) |
| Material Suppliers | Section 2.13(b)(i) |
| Permits | Section 2.16(b) |
| Permitted Encumbrance | Section 2.08(a) |
| | | | | |
| Personal Information | Section 4.05 |
| Purchase Price | Section 1.02 |
| Purchaser | Preamble |
| Purchaser's Knowledge | ARTICLE III |
| Shares | Recitals |
| Union | Section 2.19(b) |
| Seller | Preamble |
| Seller's Knowledge | ARTICLE II |
DATED THIS 2 JANUARY 2024
BETWEEN
IDEANOMICS INC
(REGISTRATION NO.: NV20041629114)
(“Vendor”)
AND
TIZA GLOBAL SDN BHD
(REGISTRATION NO.: 200201026267 (593930-T))
(“Purchaser”)
SHARE SALE AGREEMENT
IN RESPECT OF
APPROXIMATELY 65.50% OF THE CURRENT ENTIRE ISSUED SHARE CAPITAL OF
| | |
TREE TECHNOLOGIES SDN BHD (REGISTRATION NO.: 201801032824 (1294851-M)) |
THIS AGREEMENT (“Agreement”) is made on 2 January 2024
BETWEEN
(1)IDEANOMICS INC (Registration No.: NV20041629114), a company incorporated in Nevada, United States having its address at 1441 Broadway, Suite 5116, New York, NY 10018, United States of America (“Vendor”);
AND
(2)TIZA GLOBAL SDN BHD (Registration No.: 200201026267 (593930-T)), a company incorporated in Malaysia having its registered address at 20-A5, Suite A, Jalan SS 6/3, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia and business address at Lot 7.02A, Level 7, Menara BRDB 285, Jalan Maarof, Bukit Bandaraya, Bangsar, 59000 Wilayah Persekutuan Kuala Lumpur (“Purchaser”).
(The Vendor and the Purchaser are collectively referred to as the “Parties” and where the context permits or requires, “Party” shall mean any one of them.)
RECITALS
A.TREE TECHNOLOGIES SDN BHD (Registration No.: 201801032824 (1294851-M)) (“Company”) is a company duly incorporated under the laws of Malaysia. As at the date of this Agreement, the Company has an issued share capital of RM43,669,231.00 consisting of 43,669,231 ordinary shares (collectively, the “Shares” and each, a “Share”). The Company is principally engaged in (i) manufacturers, assemblers, importers, exporters, marketing, sales, service and maintenance of electric vehicles and accessories or parts required for the equipment and operations of the vehicles; and (ii) financing or assisting in obtaining financing the sale of electric vehicles by way of hire purchase (“Business”).
B.As at the date of this Agreement, the legal and registered owners of the Shares (“Existing Shareholders”) are as follows:
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| No. | Name and Identity Card No./Registration No. | No. of Shares | Approximate Percentage (%) |
(a) | Ideanomics Inc (Registration No.: NV20041629114) | 28,604,919 | 65.50 |
(a) | Tree Movement Malaysia Sdn Bhd (Registration No.: 201501034832 (1160152-X)) | 10,452,788 | 23.94 |
(a) | Gading Sari Holdings Sdn Bhd (Registration No.: 199001015138 (206808-H)) | 3,074,349 | 7.04 |
(a) | Dato’ Majid Manjit Bin Abdullah (NRIC No. 590806-01-5109) | 1,537,175 | 3.52 |
| Total | 43,669,231 | 100.00 |
Further details of the Company are set out in Schedule 1.
C.Subject to the fulfilment of the Conditions Precedent (as defined in Clause 3), the Vendor is desirous to sell and the Purchaser is desirous to purchase the Sale Shares (as defined in Clause 1.1) upon the terms and subject to the conditions of this Agreement.
IT IS AGREED as follows:
1.DEFINITIONS AND INTERPRETATION
1.1Definitions
In this Agreement (including the Recitals and Schedules), unless the context otherwise requires, the following expressions have the respective meanings assigned to them below:
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“Accounting Bases” | (a): | means in relation to the Company, the methods developed by the Company for applying fundamental accounting concepts to financial transactions and items contained within the Audited Accounts; |
“Accounting Practice” | : | means in relation to the Company, the practice of preparing accounts in compliance with all applicable laws and accounting conventions, principles and practices generally accepted in the place of incorporation of the Company as at the Accounts Date; |
“Accounts Date” | : | means 31 December 2022; |
“Audited Accounts” | : | means the audited balance sheet, audited profit and loss account and cash flow statement of the Company for the financial period ended on the Accounts Date, together with the notes and directors report and auditors report and all other documents or statements annexed thereto or incorporated therein, a copy of which is attached to Schedule 5 of this Agreement; |
“Business” | : | has the meaning prescribed to it in Recital A; |
“Business Day” | : | means a day (other than a public holiday, Saturday and Sunday) on which commercial banks in Selangor and Kuala Lumpur, Malaysia are open for the transaction of normal banking business; |
“CGT” | : | has the meaning prescribed to it in Clause 24.1; |
“Claim” | : | has the meaning prescribed to it in Paragraph 9.1.10 of Schedule 4; |
“Companies Act” | : | means the Companies Act 2016 of Malaysia as amended from time to time and any re-enactment thereof; |
“Commitments” | : | means all the payment obligations, compensation, expenses, claims, debt, rental and/or liabilities accrued and mutually agreed by the Parties as the Existing Shareholders’ and the Company’s payment obligations as appended in Schedule 8B of this Agreement; |
“Company” | : | has the meaning prescribed to it in Recital A; |
“Completion” | : | means the completion of the sale and purchase of the Sale Shares under this Agreement as set out in Clause 6; |
“Completion Date” | : | means seven (7) Business Days from the Unconditional Date; |
“Conditional Period” | : | means the period of seven (7) days commencing on the day immediately after the date of this Agreement with an automatic extension of additional seven (7) days immediately after the preceding seven (7) days or any further extended period as mutually agreed in writing; |
“Conditions Precedent” | : | means the matters, acts or transactions set out in Schedule 2 (Conditions Precedent) which are required to be fulfilled or performed or waived, as the case may be, before this Agreement may be completed; |
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“Confidential Information” | : | means all information not in the public domain and which is used in or which otherwise relates to the Company’s business, its financial or other affairs, including, without limitation, information relating to:
(a)the marketing of educational programme products or services including, without limitation, financial information, targets, statistics, market share statistics, prices, market research reports and surveys, and advertising or other promotional materials;
(b)future projects, business development or planning, commercial relationships and negotiations; or
(c)all know-how which is owned by the Company and/or used or required to be used by the Company in or in connection with its business existing in any form (including, but not limited to that comprised in or derived from data, specifications, formulae, experience, drawings, manuals, component lists, instructions, designs and circuit diagrams, brochures, catalogues and other descriptions),
existing in whatever form; |
“Consideration” | : | has the meaning prescribed to it in Clause 4.1; |
“Damages” | : | has the meaning prescribed to it in Clause 8.1.1; |
“Due Diligence” | : | means the process of examination and verification of the financial, legal, business and other affairs of the Company by accountants, auditors, valuers and solicitors, or such other professionals appointed by the Purchaser for the purposes of this agreement; |
“Earnest Deposit” | : | has the meaning prescribed to it in Clause 4.2.1(a); |
“Existing Shareholders” | : | has the meaning prescribed to it in Recital B; |
“Extended Conditional Period” | : | has the meaning prescribed to it in Clause 3.1.5; |
“Funds Flow” | : | means the breakdown of payments in respect of the Consideration made by the Purchaser to the Vendor and the Company to be utilised for purposes of payment by the Company of the Commitments mutually agreed by the Parties, details of which are described in Schedule 8A of this Agreement; |
“Governmental Authority” | : | means any legislative body, ministry or department or any judicial or civil authority (including any court) or any regulatory body or agency of any nature whatsoever at any level (whether international, national, federal, provincial, county, district, municipal or local) in any jurisdiction; |
“Income Tax Act” | : | means the Income Tax Act 1967 of Malaysia as amended from time to time and any re-enactment thereof; |
“Land” | : | means a piece of 99 years leasehold industrial land expiring on 9 October 2118 measuring 999,521 square metres held under title HSD 61190, PT 25082, Mukim Sungai Karang, Kawasan Perindustrian Gebeng, Daerah Kuantan, Negeri Pahang, of which the copy of the issue document of title for the land is attached to Schedule 7 of this Agreement; |
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“Management Accounts” | : | means the balance sheet, profit and loss account and cash flow statement of the Company for the financial period ended on the Management Accounts Date, together with the notes and all other documents or statements annexed thereto or incorporated therein, a copy of which is attached to the Schedule 6 of this Agreement; |
“Management Accounts Date” | : | means 30 November 2023; |
“Outstanding Creditors” | : | has the meaning prescribed to it in Clause 6.5.1; |
“Original Land Title” | : | has the meaning prescribed to it in Paragraph 1 of Schedule 2; |
“Purchaser’s Solicitors” | : | means HALIM HONG & QUEK of Office Suite 19-21-1, Level 21, Wisma UOA Centre, 19, Jalan Pinang, 50450 Kuala Lumpur; |
“Purchaser’s Warranties” | : | means the representations and warranties on the part of the Purchaser under this Agreement set out in Clause 7.7; |
“Registrar” | : | means the Registrar designated under subsection 20A(1) of the Companies Commission of Malaysia Act 2001 of Malaysia as amended from time to time and any re-enactment thereof; |
“Representatives” | : | has the meaning prescribed to it in Clause 10.2.4; |
“Retained CGT” | : | has the meaning prescribed to it in Clause 4.2.1(b); |
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“Sale Shares” | : | means 28,604,919 ordinary shares in the Company held by the Vendor, representing approximately 65.50% of the entire issued share capital of the Company and “Sale Share” means any one of them; |
“Security Interest” | : | means any form of legal or equitable security interest or other encumbrance, including but not limited to any mortgage, assignment of receivables, debenture, lien, charge, pledge, title retention, right to acquire, hypothecation, option, pre-emptive or other similar right, right of first refusal, restriction, third-party right or interest, right of set off or counterclaim, equities trust or arrangement or any other type of preferential arrangement (including title transfers and retention arrangements or otherwise) or any other encumbrance whatsoever having similar effect, or an agreement, arrangement or obligation to create any of the foregoing; |
“Shares” | : | means issued shares in the capital of the Company and “Share” means each or any of them; |
“Survival Provisions” | : | means Clauses 10, 11, 12 and 23; |
“Tax” or “Taxation” | : | means all forms of taxation and statutory, governmental, state, federal, provincial, local, government or municipal charges, duties, imposts, contributions, levies, withholdings or liabilities wherever chargeable that is withheld or assessed by any governmental taxation, revenue or like authority in any jurisdiction, and any penalty, fine, surcharge, interest, charges or costs relating thereto; |
“Tax Agent” | : | has the meaning prescribed to it in Clause 24.2; |
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“Tax Authorities” | : | means any taxing, revenue or other authority competent to impose any liability in respect of Taxation or responsible for the administration and/or collection of Taxation or enforcement of any law in relation to Taxation; |
“Unconditional Date” | : | Means the date this Agreement becomes unconditional in accordance with Clause 3.2; and |
“Vendor’s Warranties” | : | means the representations, warranties and undertakings on the part of the Vendor under this Agreement set out in Clause 7.1 and Schedule 4 (Vendor’s Warranties). |
1.2 Interpretation
In this Agreement, unless the context requires otherwise:
1.2.1Any reference to:
(a)a person includes an individual, firm, partnership, joint venture, unincorporated association, corporation or other body corporate;
(b)a person includes the legal personal representatives, successors and permitted assigns of that person;
(c)any body which no longer exists or has been reconstituted, renamed, replaced or whose powers or functions have been removed or transferred to another body or agency is a reference to the body which most closely serves the purpose or objects of the first mentioned body;
(d)a statute includes rules, regulations and any other subordinate legislation under it and consolidations, amendments, re-enactments or replacements of any of them;
(e)this Agreement and any other document or instrument referred to in this Agreement includes this Agreement and any such other document or instrument as amended, supplemented, modified or novated from time to time;
(f)a “Recital”, “Clause”, “Schedule”, “Appendix” or “Annexure” is a reference to a recital and clause of, and schedule, appendix or annexure to, this Agreement, all of which form an integral part of this Agreement;
(g)a “Paragraph” is a reference to a paragraph of the Clause or Schedule in which such reference appears;
(h)“employee” is a reference to the persons who, as at the Completion Date, are employed by the Company for the purposes of the Business;
(i)writing includes all modes of representing or reproducing words in a legible, permanent and visible form;
(j)“RM” or “Ringgit Malaysia” is a reference to Malaysian Ringgit;
(k)the singular includes the plural and vice versa;
(l)a gender includes all genders; and
(m)a date or time of day is a reference to Malaysian date or time.
1.2.2Headings and sub-headings are inserted for ease of reference only and do not affect the interpretation of this Agreement.
1.2.3Anything or obligation to be done under this Agreement which requires or falls to be done on a stipulated day, shall be done on the next succeeding Business Day, if the day upon which that thing or obligation is required or falls to be done falls on a day which is not a Business Day.
1.2.4Any information, fact or matter which is capable of influencing the decision of purchaser of shares or which is necessary for a purchaser to know to enable it to come to a considered judgment is to be regarded as material and unless otherwise provided, the materiality of any inaccuracy, discrepancy, commission or omission, alteration and liability in respect of any relevant subject matter will be construed accordingly.
1.2.5Any statement which refers to the knowledge or knowledge and belief of the Vendor or is expressed to be "so far as the Vendor is aware" or any similar expression shall be deemed to include an additional statement that it has been made after due and careful enquiry of directors, officer or employees of the Company and those third parties of whom the Vendor may reasonably be expected to make enquiries given the subject matter of the relevant provision and the knowledge, belief and awareness of the Vendor shall be deemed to include the knowledge of the directors, officer or employees of the Company.
1.2.6No rule of construction applies to the disadvantage of a Party because the Party is responsible for the preparation of this Agreement or any part of it.
2.SALE AND PURCHASE OF SALE SHARES
2.1Sale and Purchase of Sale Shares
The Vendor agrees to sell and the Purchaser agrees to purchase the Sale Shares, on a willing buyer willing seller basis, free from any Security Interest and with all rights, benefits and entitlements attaching to the Sale Shares (including all dividends and distributions, whether declared or undeclared, in respect thereof) and with full legal and beneficial title and accruing as at and from the Completion Date on the terms and subject to the conditions contained in this Agreement. The Purchaser shall not be obliged to complete the purchase of any of the Sale Shares unless the purchase of all the Sale Shares is completed simultaneously.
2.2Waiver of Rights
2.2.1The Vendor waives any right of pre-emption or other restriction on transfer in respect of the Sale Shares or any other similar rights over any of the Sale Shares in favour of any third party, under the Companies Act, the constitutional documents of the Company, shareholders’ agreement, if any or in any other way and shall before or at the Completion, procure the irrevocable waiver of any such right or restriction conferred on any other person who is not a party to this Agreement including the Existing Shareholders.
2.2.2The Vendor waives any existing entitlement to subscribe for equity in the Company under any warrants, options or otherwise and undertake to procure the irrevocable waiver of any such entitlement conferred on any other person who is not a party to this Agreement including the Existing Shareholders.
2.3Basis of Sale and Purchase
The Parties expressly declare, acknowledge and agree that the sale and purchase of the Sale Shares pursuant to this Agreement is on the basis that as at the Completion Date:
2.3.1the Company has ceased carrying out the Business;
2.3.2the Company is the sole registered and beneficial proprietor of the Land;
2.3.3the Sale Shares and the Land are free from any Security Interest; and
2.3.4the Vendor’s Warranties and the Purchaser’s Warranties are true, accurate and complete.
2.4Due Diligence
2.4.1The Purchaser shall within the Conditional Period, complete the Due Diligence at its own cost and expense whereby the Purchaser shall examine and verify the financial and legal affairs, accounts, share capital and structure, commitments, contracts, business and other affairs of the Company as may be reasonably required by the Purchaser.
2.4.2The Vendor shall extend all reasonable assistance to cooperate with and assist the Purchaser in carrying out the Due Diligence (including making available to the Purchaser any due diligence information relating to the Company or the shareholders of the Company as may be reasonably required by the Purchaser).
3.CONDITIONS PRECEDENT
3.1Conditions Precedent
3.1.1The Completion is subject to the Conditions Precedent set out in Schedule 2 (“Conditions Precedent”) being fulfilled or waived (as applicable) within the Conditional Period.
3.1.2The Parties shall each use their reasonable endeavours to procure the fulfilment of the Conditions Precedent as soon as possible and in any event, within the Conditional Period.
3.1.3The Parties shall notify each other promptly and in any event not later than three (3) Business Days, upon it becoming aware that any of the Conditions Precedent has been fulfilled and such notice shall be accompanied by documents evidencing the fulfilment of such Conditions Precedent.
3.1.4If any Party becomes aware of any matter, circumstances or thing that might prevent a Condition Precedent being satisfied, it shall immediately inform the other Party and the Parties shall use their best endeavour to assist each other to fulfil the Condition Precedent.
3.1.5If any Conditions Precedent has not been satisfied on or before the last day of the Conditional Period, the Purchaser may, by written notice to the Vendor:
(a)extend the Conditional Period for a further period of seven (7) days to fulfil the Conditions Precedent (“Extended Conditional Period”); or
(b)terminate this Agreement after the automatic seven (7) days extension (Extended Conditional Period) and the Purchaser’s Solicitors shall return the Original Land Title to the Vendor whereas the Vendor shall refund all the payment and all moneys paid towards account of the Consideration, if any, free of interest, to the Purchaser within seven (7) Business Days from the date of receipt of the written notification from the Purchaser of such termination and this Agreement will cease to be of any effect except for the Survival Provisions, which shall remain in force and save in respect of claims arising out of any antecedent breach of this Agreement.
3.1.6Subject to Clause 3.1.5, in the event any of the Conditions Precedent is not satisfied by the expiration of the Extended Conditional Period, either Party may terminate this Agreement and the Purchaser’s Solicitors shall return the Original Land Title to the Vendor whereas the Vendor shall refund all the payment and all moneys paid towards account of the Consideration including the Earnest Deposit, free of interest, to the Purchaser within seven (7) Business Days from the date of receipt of the written notification from the Purchaser of such termination. Thereafter, this Agreement shall be of no effect except for the Survival Provisions, which shall remain in force and save in respect of claims arising out of any antecedent breach of this Agreement.
3.2Agreement Becoming Unconditional
This Agreement will become unconditional upon the Vendor’s receipt of the written confirmation from the Purchaser’s Solicitors that all Conditions Precedent have been fulfilled and satisfied or waived (“Unconditional Date”). The Purchaser may waive any of the Conditions Precedent save and except for any Conditions Precedent that is for the Purchaser to fulfil. Any Condition Precedent agreed to be waived by the Purchaser will be deemed as a satisfaction or fulfilment of that Condition Precedent solely for the purpose to facilitate the Completion provided always that Vendor is required to satisfy the conditions after the Completion within such period of time as required by the Purchaser.
4.CONSIDERATION AND PAYMENT
4.1Consideration
The aggregate consideration for the purchase of the Sale Shares shall be in an aggregate sum of United States Dollar Four Million (USD4,000,000.00) or Ringgit Malaysia Eighteen Million and Four Hundred Thousand (RM18,400,000.00) only based on the agreed exchange rate of USD1.00 for RM4.60 (“Consideration”) payable in accordance with Clause 4.2.
4.2Manner of Payment of the Consideration
4.2.1The Consideration shall be payable by the Purchaser to the Vendor in accordance with the manner as follows:
(a)part payment denominated in Ringgit Malaysia, the sum of Ringgit Malaysia One Million Eight Hundred and Forty Thousand (RM1,840,000.00) only, which is equivalent to United States Dollar Four Hundred Thousand (USD400,000.00) only, based on the agreed exchange rate of USD1.00 for RM4.60, equivalent to ten per cent (10%) of the Consideration towards part payment of the Consideration (“Earnest Deposit”) which shall be paid by the Purchaser to the Vendor directly or account nominated by the Vendor in writing to receive the payment within five (5) Business Days from the date of this Agreement;
(b)part payment denominated in Ringgit Malaysia, the sum of Ringgit Malaysia Three Hundred and Sixty Eight Thousand (RM368,000.00) only, which is equivalent to United States Dollar Eighty Thousand (USD80,000.00) only, based on the agreed exchange rate of USD1.00 for RM4.60, equivalent to two per cent (2%) of the Consideration towards part payment of the Consideration pursuant to Section 65E(3) of the Income Tax Act (“Retained CGT”) which shall be paid by the Purchaser to the Tax Agent or the Purchaser’s Solicitors directly for the purposes stipulated in Clause 24 within five (5) Business Days from the Unconditional Date;
(c)part payment denominated in Ringgit Malaysia, the sum of Ringgit Malaysia One Million Four Hundred and Seventy Two Thousand (RM1,472,000.00) only, which is equivalent to United States Dollar Three Hundred and Twenty Thousand (USD320,000.00) only, based on the agreed exchange rate of USD1.00 for RM4.60, equivalent to eight per cent (8%) of the Consideration towards part payment of the Consideration which shall be paid by the Purchaser to the Vendor directly or account nominated by the Vendor in writing to receive the payment within five (5) Business Days from the Unconditional Date; and
(d)part payment denominated in Ringgit Malaysia, the sum of Ringgit Malaysia Fourteen Million Seven Hundred and Twenty Thousand (RM14,720,000.00) only, which is equivalent to United States Dollar Three Million and Two Hundred Thousand (USD3,200,000.00) only, based on the agreed exchange rate of USD1.00 for RM4.60, equivalent to eighty per cent (80%) of the Consideration being the final balance consideration towards part payment of the Consideration which shall be paid by the Purchaser to the Vendor directly or account nominated by the Vendor in writing to receive the payment within five (5) Business Days from the Completion Date.
4.2.2For the avoidance of doubts, the Parties agree that the payment of the Consideration shall be in Ringgit Malaysia and any request for remittance in United States Dollar equivalent shall be based on the prevailing exchange rate at the time of remittance. All costs of remittance in United States Dollar shall be solely borne by the recipient.
4.3Funds Flow and Commitments
The Vendor and the Existing Shareholders agree and undertake the following:
4.3.1that part of the Earnest Deposit shall prioritise and be utilised for the purpose of payment by the Company to the authorities of the Land’s outstanding quit rent for the re-issuance of the Land’s individual title; and
4.3.2thereafter, part of the balance Consideration shall prioritise and be utilised by the Company for payment of all the Commitments in accordance with the arrangements stipulated in the Funds Flow and the Commitments, provided that the Consideration is received by the Vendor and the Company.
5.PENDING COMPLETION
5.1During the period commencing on the date of this Agreement up to and including the Completion Date:
5.1.1the Vendor shall consult the Purchaser in advance on all material decisions taken in relation to the Company;
5.1.2the Vendor agrees and undertakes with the Purchaser, that save with the prior written consent of the Purchaser of which the consent will not be unreasonably withheld, the Vendor will cause and procure the Company to comply with the provisions in Schedule 3 (Position Pending Completion), where applicable; and
5.1.3the Vendor agrees and undertakes with the Purchaser that the Vendor shall keep the Purchaser reasonably informed of all significant and material matters relating to the Company, its liabilities, assets and prospects.
5.2If the Vendor breaches any provision of Clause 5 or Schedule 3 (Position Pending Completion), the provisions of Clause 9.1 shall be applicable, as the case may be.
6.COMPLETION
6.1Date and Place
Subject to the fulfilment of the Vendor’s Obligations and the Purchaser’s Obligations in Clause 6.2 and Clause 6.3 respectively, the Completion of this Agreement shall take place on the Completion Date.
6.2Vendor’s Obligations
No later than the Completion Date, the Vendor shall deliver or cause to be delivered to the Purchaser or the Purchaser’s Solicitors the following:
6.2.1the original share certificates of the Sale Shares;
6.2.2undated form of transfer of securities in respect of the Sale Shares duly executed by the Vendor in favour of the Purchaser;
6.2.3undated resignation letters of all the directors of the Company (other than those directors that the Purchaser notifies the Vendor or the Company that the Purchaser wishes to retain, if any), and company secretary and auditor of the Company (unless otherwise required by the Purchaser) from their respective offices with the Company with immediate effect from the Completion Date (save and except for the company secretary and auditor of the Company where the effective date will be determined separately by the Purchaser), together with a written acknowledgement from each of them that they have no claim against the Company in respect of any breach of contract, compensation for loss of office, redundancy or unfair dismissal or on any other grounds whatsoever; and
6.2.4such other documents as may be required to give the Purchaser good title to the Sale Shares and to enable the Purchaser to become the registered owner of the Sale Shares
6.3Purchaser’s Obligations
No later than the Completion Date, the Purchaser shall deliver or cause to be delivered to the Vendor or his solicitors the undated but signed forms in respect of the declaration by a person before appointment as director pursuant to Section 201 of the Companies Act by the nominee directors of the Purchaser in connection with the appointments of the nominee directors of the Purchaser as the new directors of the Company with effect from the Completion Date.
6.4Post Completion
The Vendor hereby agrees that on the Completion Date and upon completion of full payment of the total Consideration by the Purchaser, the Purchaser shall be the legal and beneficial owner of all the Sale Shares and shall have the full rights and benefits to the Sale Shares. In the event the Sale Shares are pending registration of the Purchaser as the holders of the Sale Shares on or after the Completion Date, the Vendor shall hold the Sale Shares, on trust for
the Purchaser until the Sale Shares are registered in the name of the Purchaser, and the Vendor shall not do or omit to do anything which will affect the Purchaser as the beneficial owner of the Sale Shares, and the Vendor shall exercise all voting and other rights in relation to the Sale Shares in accordance with the instructions of the Purchaser.
6.5Covenants Post Completion
The Vendor hereby undertakes to deliver the following:
6.5.1documents evidencing the payment advices or receipts of all the outstanding liabilities to the creditors of the Company, including the payment in respect of the outstanding lease, tenancy, retrenchment settlement relating to employment matters and quit rent of the Land for the complete year 2023 of RM769,632.00 (“Outstanding Creditors”), and written confirmation or undertaking that all payments payable to the Outstanding Creditors have been fully settled to the Purchaser within ten (10) Business Days from the date that the Consideration is received by the Vendor or such extended period as may be agreed upon between the Parties in writing and the Purchaser being satisfied at its discretion with the contents of such documents.
6.5.2copies of the receipt to evidence payment of the Retained CGT and all relevant return forms which have been submitted by the Vendor and the Tax Agent to the Director General of Inland Revenue pursuant to Section 65E(3) and Section 77A(1B) of the Income Tax Act within ten (10) Business Days from the date that the Consideration is received by the Vendor or such extended period as may be agreed upon between the Parties in writing.
7.WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
7.1Vendor’s Warranties
7.1.1The Vendor represents, warrants and undertakes to the Purchaser (with the intent that the provisions of this Clause 7.1 shall continue to have full force and effect on the Completion Date) in the terms set out in Schedule 4 (Vendor’s Warranties) and that each of the statements set out in Schedule 4 (Vendor’s Warranties) is now true, complete and accurate in all respects and not misleading in any respect as of the date of this Agreement.
7.1.2The Vendor undertakes that it has taken all reasonable steps to ensure the truthfulness, completion and accuracy of information provided and disclosed to the Purchaser in the form of the Vendor’s Warranties.
7.2Reliance by the Purchaser
Each Party acknowledges that the other Party is entering into this Agreement in reliance on the Vendor’s Warranties and the Purchaser’s Warranties (as the case may be) and other undertakings made by the other Parties contained in this Agreement. No information of which the Purchaser has knowledge (actual, constructive or imputed) shall prejudice any claim being made by the Purchaser under any of the Vendor’s Warranties nor shall it affect the amount recoverable under any such claim. Neither the rights and remedies of the Purchaser nor the Vendor’s liability in respect of the Vendor’s Warranties shall be affected by any investigation made by or on behalf of the Purchaser into the Company. It shall not be a defence to any claim against the Vendor that the Purchaser knew or ought to have known or had constructive knowledge of any information relating to the circumstances giving rise to such claim.
7.3Vendor’s Warranties to be Separate and Independent
The Vendor’s Warranties shall be separate and independent and save as expressly otherwise provided, shall not be limited by reference to any other paragraphs of Schedule 4 (Vendor’s Warranties) or by anything in this Agreement.
7.4Notification
7.4.1If after the signing of this Agreement:
(a)either Party shall become aware that any of its representations, warranties or undertakings, as the case may be, was untrue, inaccurate or misleading as of the signing of this Agreement; or
(b)any event shall occur or matter shall arise of which either Party becomes aware which results or is likely to result in any of the Vendor’s Warranties or the Purchaser’s Warranties being untrue, inaccurate or misleading at the Completion, had the Vendor’s Warranties or the Purchaser’s Warranties, as the case may be, been repeated on the Completion Date,
such Party shall notify the other Party as soon as practicable and in any event prior to the Completion Date, setting out such details as are available and such Party shall make any investigation concerning the event or matter and take such action, at its own cost, as the other Party may reasonably require.
7.4.2Each Party undertakes after the Completion Date to notify the other Party in writing as soon as practicable of any event, matter or circumstance which comes to its knowledge which is, or may constitute, a breach of, or which is, or may be, inconsistent with any of the Vendor’s Warranties, or the Purchaser’s Warranties, as the case may be.
7.5Updating to the Completion
Each of the Parties represents, warrants and undertakes with the other Party that its respective representations, warranties and undertakings (Vendor’s Warranties or Purchaser’s Warranties, as the case may be) unless disclosed, will continue to be true, complete and accurate in all respects and not misleading on each day from the date of this Agreement up to and including the Completion Date as if they had been entered into afresh at the Completion Date and with reference to the circumstances then existing at the Completion Date.
7.6Effect of Completion
The Vendor’s Warranties or the Purchaser’s Warranties (as the case may be) and all other provisions of this Agreement insofar as the same shall not have been performed at the Completion Date shall not in any respect be extinguished or affected by the Completion Date, or by any other event or matter whatsoever, except by a specific and duly authorised written waiver or release by the Purchaser or the Vendor (as the case may be), and shall continue in force and effect so far as they are capable of being performed or observed.
7.7Purchaser’s Warranties
7.7.1The Purchaser represents and warrants to the Vendor (with the intent that the provisions of this Clause 7.7 shall continue to have full force and effect notwithstanding the Completion Date) in terms set out in Clause 7.7 are now true, complete and accurate in all respects and not misleading in any respect as of the date of this Agreement.
7.7.2The Purchaser warrants and undertakes to the Vendor that:
(a)it is a company duly incorporated and validly existing under the laws of Malaysia;
(b)it has full power and authority to purchase the Sale Shares;
(c)it has taken or will take all necessary action to authorise the execution, delivery and performance of this Agreement and the arrangements set out in and arising from this Agreement;
(d)this Agreement which when executed will constitute valid and binding obligations on the Purchaser;
(e)no order has been made, no resolution has been passed, no petition has been presented and no meeting has been convened for the purpose of the winding up or liquidation of the Purchaser; and
(f)no liquidator, receiver or receiver and manager has been appointed in respect of the Purchaser.
8.INDEMNITY
8.1Indemnity
8.1.1Upon the terms and subject to the conditions of this Clause 8, from and after the Completion Date, the Vendor undertakes and agrees to pay and to indemnify fully, hold harmless and defend the Purchaser or the Company (as the Purchaser may choose) from and against any and all the loss, cost, expense, damage, consequence and third party claim for damages (“Damages”) suffered directly or indirectly by the Purchaser or the Company in connection with:
(a)any fine and liabilities imposed on Company due to the late notification of particulars and changes in the register of members pursuant to section 51(4) of the Companies Act;
(b)any losses, liabilities and/or contingent liabilities which the causes of action are accrued on or before the Completion Date;
(c)any inaccuracy or breach of any of the Vendor’s Warranties or undertakings set out in this Agreement;
(d)any proceedings taken by the Purchaser claiming that any of the Vendor’s Warranties or undertakings whether contained in this Agreement or in any agreement, certificate or other document delivered pursuant to this Agreement is inaccurate, untrue or misleading in any material respects or has been breached in any material respects and in which judgment is given for the Purchaser; and
(e)the enforcement of any such settlement or judgment specified in Clause 8.1.1(d).
8.2Indemnities Separate
Each of the indemnities in this Agreement constitutes a separate and independent obligation from the other obligations in this Agreement, shall give rise to a separate and independent cause of action and shall apply irrespective of any indulgence granted by the other Party to the defaulting Party.
8.3No Knowledge Imputed
8.3.1The Purchaser shall not be imputed with knowledge or notice of the content of any document or other information pertaining to the Company and shall be entitled to rely exclusively on the accuracy of Vendor’s Warranties.
8.3.2The obligations of the Vendor under this Clause 8 shall not be affected, in any manner whatsoever, by the conduct of any investigation of the Company by the Purchaser or on its behalf after the Completion.
9.DEFAULT AND TERMINATION OF AGREEMENT
9.1If, before or on the Completion Date:
9.1.1it shall be found that any of the Vendor’s Warranties was, when given, or will be or would be, on the Completion Date (as if they had been given again at Completion) not complied with or otherwise untrue or misleading in any material respect;
9.1.2there is a breach of any material terms or conditions of this Agreement or a failure to perform or observe any material undertaking, obligation or agreement in this Agreement by the Vendor;
9.1.3a petition for winding up is presented against the Company and/or the Vendor;
9.1.4an order is made or a member’s resolution is passed for the winding up of the Company and/or the Vendor;
9.1.5an administrator, a receiver and/or manager is appointed by the court or pursuant to any statute or regulation or by any creditor pursuant to a debenture or any other
security document in favour of such creditor over the undertaking, assets and properties of the Company or any part of its assets and properties; or
9.1.6an event analogous to any of the Clauses 9.1.3, 9.1.4 or 9.1.5 above has occurred in any jurisdiction,
then provided where the default is capable of being remedied, is not remedied within fourteen (14) days commencing on the day immediately after the date the Purchaser gives written notice to the Vendor or any period provided for under this Agreement, the Purchaser shall be entitled at the Purchaser’s absolute discretion to either:
9.1.7seek specific performance of this Agreement in which case the Purchaser shall be entitled to take such action as may be available to the Purchaser at law to enforce specific performance of this Agreement against the Vendor and all other legal remedies available to the Purchaser as may be determined by the court;
9.1.8proceed to Completion so far as practicable having regard to the defaults which have occurred without prejudice to all other rights and remedies available to it, including the right to claim damages; or
9.1.9terminate this Agreement and in such event, the Vendor shall refund all monies paid by the Purchaser towards the account of the Consideration including the Earnest Deposit, free of interest, to the Purchaser within seven (7) Business Days from the date of receipt of the written notification from the Purchasers of such termination and indemnify the Purchaser and keep the Purchaser indemnified against all fees and costs (including, without limitation, professional, accounting and legal costs) incurred by the Purchaser in the negotiation, preparation, execution and termination of this Agreement and the fulfilment of any of the Conditions Precedent.
9.2If, before or on the Completion Date:
9.2.1it shall be found that the Purchaser’s Warranties were, when given, or will be or would be, on the Completion Date (as if they had been given again at the Completion Date) not complied with or otherwise untrue or misleading in any material respect; or
9.2.2there is a breach of any material terms or conditions of this Agreement or a failure to perform or observe any material undertaking, obligation or agreement in this Agreement by the Purchaser,
then provided where the default is capable of being remedied, is not remedied within fourteen (14) days commencing on the day immediately after the date the Vendor gives written notice to the Purchaser, the Vendor shall be entitled at the Vendor’s absolute discretion to either:
9.2.3seek specific performance of this Agreement in which case the Vendor shall be entitled to take such action as may be available to the Vendor at law to enforce specific performance of this Agreement against the Purchaser and all other legal remedies available to the Vendor as may be determined by the court;
9.2.4proceed to Completion so far as practicable having regard to the defaults which have occurred without prejudice to all other rights and remedies available to it, including the right to claim damages; or
9.2.5terminate this Agreement and in such event the Purchaser shall indemnify the Vendor and keep the Vendor indemnified against all fees and costs (including, without limitation, professional, accounting and legal costs) incurred by the Vendor in the negotiation, preparation, execution and termination of this Agreement and the fulfilment of any of the Conditions Precedent.
9.3Any failure by either Party entitled to exercise the right to terminate this Agreement under any provisions of this Agreement shall not, following the Completion, constitutes a waiver of any other rights of the Party arising out of any breach of any Vendor’s Warranties or the Purchaser’s Warranties (as the case may be), or any undertakings of any Vendor or the Purchaser (as the case may be) under this Agreement.
9.4Notwithstanding the rights of termination set out in Clauses 9.1 and 9.2 above, the Parties shall, prior to termination of this Agreement, use their best endeavours and take such actions as may be necessary and equitable to negotiate on such terms with the principle of good faith with fairness and without detriment to the interests of any of them.
10.CONFIDENTIALITY
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10.1Subject to Clauses 10.2 and 10.3, the Parties will:
10.1.1treat as strictly confidential and not disclose or use any information received or obtained as a result of entering into this Agreement (or any agreements entered into pursuant to this Agreement) which relates to:
(a) the existence, the provisions or the subject matter of this Agreement or any agreements entered into pursuant to this Agreement or any document referred to in such agreements; or
(b) the negotiations relating to this Agreement or any agreements entered into pursuant to this Agreement;
10.1.2not copy, make use of or disclose to any person Confidential Information; and
10.1.3take all reasonable steps to prevent the copy, use or disclosure of any such Confidential Information.
10.2Any Party may disclose information which would otherwise be confidential if and to the extent:
10.2.1reasonably required to give effect to the terms of this Agreement;
10.2.2required by law of any relevant jurisdiction;
10.2.3required by any securities exchange or regulatory or governmental body to which that Party is subject or submits wherever situated whether or not the requirement for information has the force of law;
10.2.4disclosed on a confidential basis to the directors, officers, employees, professional advisers or other representatives (“Representatives”) of that Party shall ensure such Representatives comply with the provisions of this Clause 10 in respect of such information;
10.2.5the information has come into the public domain through no fault of that Party;
10.2.6required to enable that Party to enforce its rights under this Agreement; or
10.2.7prior written approval has been given by the other Party,
provided that any such information disclosed pursuant to Clauses 10.2.1 or 10.2.2 or 10.2.3 will (unless otherwise required by law) be disclosed only after notice to the Vendor in the case of the Purchaser, or the Purchaser in the case of the Vendor.
10.3The restrictions contained in this Clause will continue to apply after the termination of this Agreement.
11.NOTICE
11.1Service of Notice
11.1.1Any notices, demands or other communications required or permitted, under this Agreement shall be in writing and delivered personally or sent by prepaid registered post to the address of the relevant Party set out in Clause 11.1.2, or to such other address as a Party may from time to time duly notify the other in writing.
11.1.2The addresses of the Parties for the purpose of this Agreement are specified below:
The Vendor
| | | | | | | | |
Attention | : | Ben Wu |
Address | : | 1441 Broadway, Suite 5116 New York, NY 10018, United States of America. |
Email address | : | bwu@ideanomics.com |
The Purchaser
| | | | | | | | |
Attention | : | Tan Sri Dato’ Sri (Dr.) Mohamad Norza bin Zakaria |
Address | : | Lot 7.02A, Level 7, Menara BRDB 285, Jalan Maarof, Bukit Bandaraya, Bangsar, 59000 Wilayah Persekutuan Kuala Lumpur, Malaysia. |
Email address | : | norza.zakaria@gmail.com |
11.2Time of Service
11.2.1Any notices, demands or other communications shall be deemed to have been served:
(a) if delivered personally, when left at the addressed referred to in Clause 11.1.2;
(b) if posted within the same country, three (3) Business Days after posting and in any other case, seven (7) Business Days after posting; or
(c) if sent by email, when the email is sent.
11.2.2In proving service of notices, demands or other communications, it shall be sufficient to show that personal delivery was made or that the envelope containing such notice was properly addressed, and duly stamped and posted.
12.TIME
Time is of the essence as regards to all dates, periods of time and times specified in this Agreement.
13.WAIVER AND EXERCISE OF RIGHTS
13.1A single or partial exercise or waiver of a right relating to this Agreement does not prevent any other exercise of that right or the exercise of any other rights.
13.2No Party will be liable for any loss or expenses incurred by another Party caused or contributed to by the waiver, exercise, attempted exercise, failure to exercise or delay in the exercise of a right.
14.SEVERABILITY
14.1If a provision in this Agreement is held to be illegal, invalid, void, voidable or unenforceable, that provision must be read down to the extent necessary to ensure that it is not illegal, invalid, void, voidable or unenforceable.
14.2If it is not possible to read down a provision as required in Clause 14.1, that provision is severable without affecting the validity or enforceability of the remaining part of that provision or the other provisions in this Agreement.
15.COSTS
Each Party shall bear its own legal, professional and other costs and expenses incurred by it in connection with the negotiation, preparation or completion of this Agreement, and the sale and purchase of the Sale Shares. The Purchaser shall bear all stamp duties payable in connection with the transfer of the Sale Shares. Any action to be taken by the Purchaser or the Vendor in performing its obligations under this Agreement must be taken at its respective cost and expense unless otherwise provided in this Agreement.
16.SET OFF
All sums payable by or on behalf of any Party shall be paid free and clear of all deductions or withholdings whatsoever, save only as may be required to be made by the paying party by law.
17.SUCCESSORS-IN-TITLE AND ASSIGNEES
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17.1This Agreement is binding on the Parties and their respective successors-in-title and permitted assigns, as the case may be. Any reference in this Agreement to any of the Parties shall be construed accordingly.
17.2None of the Parties may assign or transfer any of its rights, privileges, liabilities or obligations under this Agreement in whole or in part to any other party or parties without the prior written consent of the other.
17.3This Agreement will continue to be valid and binding notwithstanding any change, by amalgamation, liquidation, reconstruction or otherwise, in the constitution of any of the Parties and it is expressly declared that no change of any sort in relation to or affecting any of the Parties will in any way affect the liabilities and/or obligations created under this Agreement in relation to any transaction whether past, present or future.
18.FURTHER ASSURANCE
Each of the Parties shall use its reasonable endeavours to procure that any necessary third party shall, from time to time following the Completion execute such documents and perform such acts (including, in the case of the Vendor, exercising the voting rights over the Sale Shares) and things as the other Parties may reasonably require to transfer the Sale Shares to the Purchaser and to give each Party the full benefit of this Agreement.
19.AGREEMENT TO SUBSIST
The Completion does not prevent either Party from claiming against the other in respect of any of the warranties, covenants and undertakings contained in this Agreement.
20.COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which taken together constitute one instrument.
21.WHOLE AGREEMENT
21.1This Agreement constitutes the whole agreement between the Parties. This Agreement supersedes and extinguishes any previous agreements between the Parties, whether orally or in writing, in respect of the transaction contemplated by this Agreement which shall cease to have any further force or effect.
21.2No variation of this Agreement shall be effective unless made in writing and signed by or on behalf of the Purchaser and the Vendor.
22.SPECIFIC PERFORMANCE
Any Party will be entitled to the rights of specific performance against the others under the provisions of this Agreement and it is mutually agreed that in the event of any Party exercising its right to specific performance of this Agreement, an alternative remedy of monetary compensation will not be regarded as compensation or sufficient compensation for the other Party's default in the performance of the terms and conditions of this Agreement.
23.GOVERNING LAW
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23.1This Agreement is governed by and is to be construed in accordance with the laws of Malaysia. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of Malaysia and waives any right to object to proceedings being brought in those courts.
23.2The Parties agree that any legal proceedings may be served on them by delivering a copy of such proceedings to them at their respective addresses for service set out in Clause 11.1.2 or as notified in accordance with Clause 11.1.1.
24.CAPITAL GAINS TAX
24.1The Vendor shall be responsible for paying and settling all capital gains tax (“CGT”) payable on the disposal of the Sale Shares pursuant to this Agreement in accordance with Chapter 9 of Part III of the Income Tax Act.
24.2The Vendor shall appoint an independent professional tax adviser, consultant or agent mutually agreed by the Parties in writing (“Tax Agent”), who is responsible for carrying out and taking charge of all matters in relation to the CGT on the disposal of the Sales Shares pursuant to this Agreement.
24.3The Vendor shall procure that the Tax Agent shall within sixty (60) days from the date of this Agreement, comply with Section 77A(1B) of the Income Tax Act by paying the Retained CGT and furnishing all relevant return forms to the Director General of Inland Revenue and will forward a copy thereof to the Parties and comply with all necessary directions that may be issued by him in respect thereto.
24.4If the Retained CGT is insufficient to pay for the CGT payable on the disposal of the Sale Shares of the Company pursuant to this Agreement, the Vendor shall upon being notified thereof immediately pay the difference to the Director General of Inland Revenue.
24.5The Vendor shall procure that the Tax Agent shall upon payment of the Retained CGT to the Director General of Inland Revenue, deliver to the Parties the receipt to evidence payment of the Retained CGT to the Director General of Inland Revenue.
24.6The Vendor hereby agrees, covenants and undertakes with the Purchaser to keep the Purchaser fully indemnified against all claims, costs, damages, fines or penalties which may be brought suffered or levied against the Purchaser as a result of the Vendor’s non-compliance and/or default with any of the provisions of the Income Tax Act relating to the required payment of the CGT by the Vendor under this Agreement.
24.7All costs and expenses incurred in connection with the appointment of the Tax Agent and compliance with the Income Tax Act and any laws in relation to the CGT shall be borne by the Vendor.
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IN WITNESS WHEREOF the Parties have hereunto caused this Agreement to be duly executed as at the day and year first above written.
VENDOR
SIGNED by )
POOR ALFRED PHILLIP )
(Passport No.: 665368154) )
for and on behalf of )
IDEANOMICS INC )
(Registration No.: NV20041629114) )
in the presence of: )
…………………………………………………
Witness’ signature
Name:
IN WITNESS WHEREOF the Parties have hereunto caused this Agreement to be duly executed as at the day and year first above written.
PURCHASER
SIGNED by )
TAN SRI DATO’ SRI (DR.) MOHAMAD NORZA BIN ZAKARIA )
(NRIC No. 660829-04-5029) )
for and on behalf of )
TIZA GLOBAL SDN BHD )
(Registration No.: 200201026267 (593930-T)) )
in the presence of: )
…………………………………………………
Witness’ signature
Name:
Schedule 1
Particulars of the Company
| | | | | | | | | | | |
1. | Company Name | : | Tree Technologies Sdn Bhd |
1. | Registration No. | : | 201801032824 (1294851-M) |
1. | Place of Incorporation | : | Malaysia |
1. | Date of Incorporation | : | 12 September 2018 |
1. | Registered Address | : | Ho Hup Tower - Aurora Place, 2-07-01 - Level 7, Plaza Bukit Jalil, No. 1, Persiaran Jalil, Bandar Bukit Jalil, 57000 Wilayah Persekutuan Kuala Lumpur, Malaysia. |
1. | Business Address | : | No.11A, Jalan Astana 1D, Bandar Bukit Raja, 41050 Klang, Selangor Darul Ehsan, Malaysia. |
1. | Issued Share Capital | : | RM43,669,231.00 comprising of 43,669,231 ordinary shares |
1. | Existing Shareholders | : | (a)Dato' Majid Manjit Bin Abdullah (NRIC No.: 590806-01-5109), holding 1,537,175 ordinary shares; (b)Gading Sari Holdings Sdn Bhd (Registration No.: 199001015138 (206808-H)), holding 3,074,349 ordinary shares; (c)Ideanomics Inc (Registration No.: NV20041629114), holding 28,604,919 ordinary shares; and (d)Tree Movement Malaysia Sdn Bhd (Registration No.: 201501034832 (1160152-X)), holding 10,452,788 ordinary shares. |
1. | Directors | : | (a)Dato' Majid Manjit Bin Abdullah (NRIC No.: 590806-01-5109); (b)Thor Chin Keong (NRIC No.: 591029-07-5805); (c)Poor Alfred Phillip (Passport No.: 665368154); (d)Colvin Andrew Lombard (Passport No.: 557958849); (e)Yang Amat Mulia Tengku Arif Bendahara Tengku Muhammad Iskandar Ri'ayatuddin Shah Ibni Alsultan Abdullah Ri'ayatuddin Almustafa Billah Shah (NRIC No.: 970803-06-5391); and (f)Robin James Dermott Mackie (Passport No.: 124473367) |
1. | Secretary | : | Lim Shook Nyee (NRIC No.: 680923-08-5404) |
1. | Auditor | : | BDO PLT (LLP0018825-LCA) (AF0206) |
1. | Auditor Address | : | Level 8, BDO @ Menara Centara, 360 Jalan Tuanku Abdul Rahman, 50100 Wilayah Persekutuan Kuala Lumpur, Malaysia. |
Schedule 2
Conditions Precedent
1.The Vendor shall procure and deliver to the Purchaser’s Solicitors the original issue document of title for the Land (“Original Land Title”).
2.The Vendor shall procure and deliver to the Purchaser or Purchaser’s Solicitors the written confirmation and undertaking issued by the Company that the Company has ceased carrying out the Business.
3.The Vendor shall procure and deliver to the Purchaser or Purchaser’s Solicitors the written letter issued by each of the shareholders of the Company (other than the Vendor) that the shareholder does not have rights of pre-emption, rights of first refusal and any other similar rights over the Sale Shares in favour of them, whether conferred by the constitution of the Company or by virtue of any other document, covenant or undertaking.
4.The Vendor shall procure and deliver to the Purchaser or Purchaser’s Solicitors the certified true copy of the board of directors’ resolutions of the Company approving:
(a)the transfer and registration of the Sale Shares in favour of the Purchaser;
(b)the cancellation of the old share certificate(s) issued in the name of the Vendor and the issuance of the new share certificate in respect of the Sale Shares in favour of the Purchaser;
(c)the entering into the register of members of the Company, the name of the Purchaser, as the holder of the Sale Shares;
(d)the resignations of the existing directors of the Company (in accordance with the written instruction received from the Purchaser), company secretary of the Company and auditor of the Company; and
(e)the appointment of nominees nominated by the Purchaser as directors, company secretary and auditor of the Company in accordance with the written instruction received from the Purchaser with effect from the Completion Date.
5.The Vendor shall procure and deliver to the Purchaser or Purchaser’s Solicitors the certified true copy of the board of directors’ and shareholder’s resolution, as the case may be, of the Vendor approving:
(a)the entry of this Agreement by the Vendor in accordance with the terms and subject to the conditions of this Agreements; and
(b)the disposal of the Sale Shares to the Purchaser pursuant to this Agreement.
6.The Purchaser shall procure and deliver to the Vendor the certified true copy of the board of directors’ and shareholder’s resolution, as the case may be, of the Purchaser approving:
(a)the entry of this Agreement by the Purchaser in accordance with the terms and subject to the conditions of this Agreements; and
(b)the acquisition of the Sale Shares from the Vendor pursuant to this Agreement.
7.Such other additional Conditions Precedent as may be mutually agreed in writing between the Parties from time to time.
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Schedule 3
Position Pending Completion
1.The Vendor shall procure that the Company shall from the date of this Agreement until the Completion Date, save to the extent expressly required or permitted by this Agreement or save with the prior written approval of the Purchaser:
1.1not to sell, lease, assign, license, transfer or otherwise deal with the Land;
1.2not to create, extend, grant or issue or agree to create, extend, grant or issue any Security Interest over the assets or undertaking of the Company or agree to redeem, an existing Security Interest over an asset;
1.3not to alter, increase or reduce the share capital or issue new shares in the Company or in any way, change the capital structure and shareholding structure of the Company or enter into any agreement or commitment to do any of the foregoing;
1.4not to alter any of the rights attaching to any of the Sale Shares or the shares of the Company;
1.5not to create, allot, issue, repay, redeem or grant any options over any share or loan capital of the Company or agree to do any of those things save for repayment of shareholder/director’s or promoter’s loan;
1.6not to do or suffer anything whereby the financial position and prospects of the Company, in aggregate, will be rendered materially unfavourable save for repayment of shareholder/director’s or promoter’s loan;
1.7not to enter into any material agreement or arrangement or obligation whatsoever which is long-term, onerous, or entered into other than in the ordinary and usual course of business or which may result in any material change in the nature or scope of the operations of the Company;
1.8not to enter into any agreement or other arrangement which is not capable of being terminated without compensation at any time with six (6) months’ notice or less and which is outside the ordinary and usual course of business;
1.9not to appoint any other new directors into the Company;
1.10not to appoint any new members into the management team of the Company;
1.11not to amend the terms of employment of any directors, officers or employees of the Company (including pension commitments and share options) or provide or agree to provide a gratuitous payment or benefit to any directors, officers or employees of the Company (or any of their dependants) or offer to engage any new employee or consultant at an annual salary or fee (on the basis of full time engagement) in excess of RM10,000.00 or dismiss any employee or consultant, save and except for any dismissal for cause in accordance with the provisions of the relevant employment agreement or consultancy agreement;
1.12not to vary or amend the constitution or Accounting Practice or policies of the Company nor pass any resolutions inconsistent with the provisions of this Agreement;
1.13not to acquire or agree to acquire any share or other interest in, or merge or consolidate with, any company, partnership, business trust, body corporate or other venture or any other person or enter into any demerger transaction or participate in any other type of corporate reconstruction;
1.14not to commit or allow or procure any act or omission which would constitute or give rise to a breach of any of the Vendor’s Warranties if the Vendor’s Warranties were to be repeated on or at any time before Completion by reference to the facts and circumstances then existing;
1.15immediately notify the Purchaser of any fact or matter (whether existing on or before the date of this Agreement, or arising afterwards) which constitutes a breach, or potential breach of a Vendor’s Warranties if the Vendor’s Warranties were to be repeated on or at any time before Completion by reference to the facts and circumstances then existing of which the Vendor or the Company become(s) aware;
1.16not to lend any moneys (otherwise than by way of deposit with a bank or other institution the normal business of which includes the acceptance of deposit), grant any credit or give any guarantee or indemnity;
1.17not to make, declare or pay any dividend or distribution;
1.18not to incur or authorise any capital expenditure exceeding an aggregate of RM100,000.00 per item (whether by way of purchase, lease, hire purchase or otherwise);
1.19not to pay any management charge to the Vendor or agree to pay such charge or incur any other liability to the Vendor;
1.20not to make, revise, revoke, vary or amend any claims, election or surrender relating to or affecting the Taxation of the Company, otherwise than an election made in the ordinary and usual course of business;
1.21not to make any loans or grant any credit (other than given in the ordinary course of trading and advances made to employees against expenses incurred by them on behalf of the Company);
1.22not to give, or agree to give, a guarantee, indemnity or other agreement to secure, or incur or agree to incur financial or other obligations other than in the ordinary and usual course of business;
1.23not prematurely repay any loans, borrowings or other form of funding;
1.24not to enter into any leasing, hire purchase agreement or any agreement or arrangements for payment on deferred terms, exceeding an aggregate of RM10,000.00 per item;
1.25not to commence or threaten to commence any legal or arbitration proceedings (other than the commencement of claims involving the recovery of debts in the ordinary and usual course of business);
1.26not to enter into an agreement in which the Vendor, (any company in which the Vendor is a director or a shareholder) a director or former director of the Company or a connected person, is interested;
1.27not to do or omit to do anything which materially prejudices any right of the Company to the intellectual property rights;
1.28to give the Purchaser reasonable advance notice of all meetings of the board of directors (or committees of the board of directors) of the Company and permit the Purchaser to send up to two representatives to attend and speak at such meetings; and
1.29not to assume liability beyond the ordinary course of business of the Company.
2.No action will be taken by the Vendor or the Company which is inconsistent with the provisions of this Agreement or the consummation of the transactions contemplated under this Agreement.
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Schedule 4
Vendor’s Warranties
1.CAPACITY OF VENDOR AND OWNERSHIP OF THE SALE SHARES
1.1 Capacity of the Vendor
The Vendor has legal right and full power, authority and capacity, and no further action, approval or consent is required to be taken or obtained for it, to enter into and perform this Agreement which when executed will constitute valid and binding obligations on the Vendor, in accordance with their respective terms.
1.2 Ownership of the Sale Shares
The Vendor represents and warrants that:
1.2.1there is no existing nor is there any binding agreement or obligation to create any Security Interest on or affecting the Sale Shares;
1.2.2the Vendor shall on the Completion be beneficially entitled to or is otherwise able to sell and transfer to the Purchaser the full legal and beneficial ownership of the Sale Shares on the terms of this Agreement without the consent of any third party;
1.2.3the issued share capital of the Company are as set out in Recital A of this Agreement;
1.2.4the Sale Shares shall on Completion be free from all and any Security Interest;
1.2.5the Sale Shares are and shall have been authorised, properly and validly issued in compliance with Malaysian law, allotted and fully paid-up or credited as fully paid;
1.2.6the Sale Shares of the Vendor shall on Completion Date represent approximately sixty-five point five per cent (65.50%) of the issued and paid-up share capital of the Company;
1.2.7all consents for the transfer of the Sale Shares have been obtained or will be obtained on or before the Completion Date, if required; and
1.2.8the Purchaser shall on the Completion Date be entitled to exercise all rights attached or accruing to the Sale Shares including, without limitation, the right to receive all dividends or other distributions or any return of capital declared, made or paid by the Company on or after the Completion Date.
2.INFORMATION AND RECORDS
2.1 Accuracy and Adequacy of Information
2.1.1All information contained in this Agreement and all other information provided or given in writing by or on behalf of the Company or the Vendor was when given, and remains true, complete and accurate in all material respects. There is no fact or matter or circumstance not disclosed in writing to the Purchaser which renders or would render any such information untrue, inaccurate or misleading in any material respect.
2.1.2Any information that might reasonably affect the willingness of a buyer to purchase the Sale Shares for the price and on the terms of this Agreement has been so disclosed to the Purchaser in writing.
2.1.3True and complete copies of all licences, concessions, agencies, agreements are delivered by the Vendor to the Purchaser at Completion.
2.2 Copies of Accounts and Constitution, etc.
The copies of the Audited Accounts, certificates of incorporation and all other documents made available to the Purchaser are true, complete and accurate copies and up to date, includes copies of all resolutions or agreements required by law to be annexed to it and each register, minute book and other book required to be kept by the Companies Act has been properly kept, is up-to-date and contains a true, accurate and complete record of the matters
which should be dealt with in those books and no notice or allegation that any of them is incorrect or should be rectified has been received.
3.THE COMPANY
3.1 Incorporation
3.1.1The Company has been duly incorporated and is validly existing under the laws of Malaysia, and the Company has all power and authority (corporate and otherwise) to own its assets at the date of this Agreement.
3.1.2All governmental approvals, licences and authorisations which were required in connection with the incorporation of the Company, the allotment or transfer of shares in the Company to the present and former holders thereof and the activation of the Company (including the appointment of directors) were duly obtained and such approvals, licences and authorisations (and of all amendments and supplements thereto) have been disclosed to the Purchaser.
3.2 Subsidiaries, Associated Companies, Branches etc.
3.2.1The Company has only one (1) subsidiary (has the meaning given to it in the Companies Act) which is incorporated in Indonesia, namely PT Tree Technologies Indonesia (Business No.: 1247303) (“Indonesia Subsidiary”) where the Company holds 10,040 shares, consisting of approximately 99.90% of the current entire issued share capital of the Indonesia Subsidiary.
3.2.2Save and except for the Indonesia Subsidiary, the Company is not the holder or beneficial owner of, or has not agreed to acquire, any share or loan capital or securities of any other company (whether incorporated in Malaysia or elsewhere); and
3.2.3Save and except for the Indonesia Subsidiary, the Company does not have outside the jurisdiction of its incorporation, any branch, agency, division, place of business, or any permanent establishment (as that expression is defined in the relevant double Taxation relief orders at the date of this Agreement), nor carried on any trading activities outside such jurisdiction.
3.3 Shares of the Company
3.3.1All Shares and interests of the Company have been properly and validly, authorised, allotted and/or issued and are each fully paid-up and rank pari passu in all respects with each other. The Company is not subject to any actual or contingent obligation to issue or convert securities.
3.3.2Apart from this Agreement, there are no binding agreements in force which provide for the issue, allotment, conversion, redemption, sale or transfer of, or grant a right (whether exercisable now or in the future; whether contingent or not and whether conditional or otherwise) to call for the issue, allotment, conversion, redemption, sale or transfer of shares, debentures, loan capital or other securities of the Company.
3.3.3There is no Security Interest affecting un-issued shares, debentures or other securities of the Company.
3.3.4There is no existing nor is there any binding agreement or obligation to create any Security Interest on or affecting shares of the Company.
3.3.5The Company will not declare or pay any dividend or make any distribution (in cash or in kind) to its shareholders, except to pay any dividend which has been declared or which it is under a contractual obligation to pay but has not been paid prior to this Agreement.
4.ACCOUNTS AND RECORDS
4.1Audited Accounts and Management Accounts
The Vendor has delivered to the Purchaser the Company’s latest financial statements, the Audited Accounts, balance sheets and statement of operations which are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles of Malaysia applied on a consistent basis throughout the
periods indicated and which accurately set out and describe the financial condition and operating results of the Company as of the dates, and during the periods, indicated therein.
The bases and policies of accounting adopted for the purpose of preparing the Audited Accounts are the same as those adopted in preparing the Audited Accounts in respect of the three last preceding accounting periods.
The Audited Accounts and Management Accounts:
4.1.1give a true and fair view of the state of the Company's affairs and of the assets and liabilities and profits and losses of the Company for the financial period ended on the Accounts Date and Management Accounts Date respectively;
4.1.2have been prepared in accordance with Accounting Practice;
4.1.3have been prepared in accordance with all applicable laws and audited by a certified auditor; and
4.1.4have been prepared on a consistent basis and using consistent Accounting Practice and consistent application of Accounting Bases for the previous financial years ended on the Accounts Date and Management Accounts Date.
4.2 Contents of Audited Accounts and Management Accounts
The Audited Accounts and Management Accounts:
4.1
4.2
1.
2.
3.
4.
4.1.
4.2.
4.2.1include full provision for all bad and doubtful debts, obsolete, damaged or slow-moving stocks/inventory and for depreciation on fixed assets;
4.2.2include full provision for and/or disclosure of all potential contingent, disputed and/or unquantified liabilities and all capital commitments of the Company in accordance with Accounting Practice;
4.2.3are not affected by any extraordinary or exceptional event, circumstance or item; and
4.2.4include full provision for all actual liabilities.
4.1 Completeness of Audited Accounts and Management Accounts
4.3.1 Any other assets and liabilities included in the Audited Accounts and Management Accounts are detailed in full either in the notes to the Audited Accounts and Management Accounts respectively, together with the relevant accounting policies and bases adopted.
4.3.2 The Company has not been a party to any transaction or arrangement of which one of the main purposes is the removal or exclusion of an asset or liability (including a contingent liability) from the Audited Accounts and Management Accounts.
4.2 Taxation
4.
4.1
4.2
4.3
4.4
4.4.1Full provision or reserve has been made in the Audited Accounts and Management Accounts for all Taxation liable to be assessed, charged or imposed on the Company or for which it is or may become accountable in respect of:
(a)profits, gains or income (as computed for Taxation purposes) arising or accruing or deemed to arise or accrue on or before the Accounts Date and Management Accounts Date (as the case may be);
(b)any transactions effected or deemed to be effected on or before the Accounts Date and Management Accounts Date (as the case may be), or provided for in the Audited Accounts and Management Accounts respectively; and
(c)distributions made or deemed to be made on or before the Accounts Date and Management Accounts Date (as the case may be) or provided for in the Audited Accounts and Management Accounts respectively.
4.4.2Proper provision or reserve for deferred taxation in accordance with accounting principles and standards generally accepted at the date of this Agreement in Malaysia has been made in the Audited Accounts and Management Accounts.
4.3 Accounting and Other Records
4.5
4.5.1The registers, books of account and other statutory records of the Company are up-to-date and maintained in accordance with the Accounting Practice and all applicable legal requirements on a proper and consistent basis and contain complete and accurate records of all matters required to be dealt with in such books in all material respects and all such books and records and all other documents (including documents of title and copies of all subsisting agreements to which the Company is a party) which are the property of the Company or ought to be in its possession are in its possession or under its control and no notice or allegation that any is incorrect in any material respects or should be rectified has been received. All accounts, documents and returns required by law to be delivered or made to the Registrar or any other authority have been duly and correctly delivered or made in all material respects.
4.5.2All the books and records of whatsoever kind including all returns, particulars, minutes, resolutions and other documents required to be filed by the Company (where applicable) with the Companies Commission of Malaysia or any other authority in respect of the Company which are to be delivered to the Purchaser in accordance with this agreement:
4.6
(a)have been fully, properly and accurately kept and completed and where required duly filed with the Companies Commission of Malaysia and/or any other authority;
(b)have been prepared, kept and completed in compliance with all applicable statutory or regulatory requirements in Malaysia, being the country of incorporation of the Company, including but not limited to the provisions of the Companies Act or any other applicable law or legislation in force in Malaysia or elsewhere;
(c)do not contain any material inaccuracies or discrepancies of any kind; and
(d)give and reflect a true and fair view of the financial, contractual and trading position of the Company and of its machinery, fixed and current assets and liabilities (actual and contingent), debtors and creditors and all other matters which would normally be expected to appear in them.
4.6.1All Tax returns of the Company on or prior to Completion have at all times been on a proper basis and are not the subject of any back duty, claim or other dispute with the revenue authorities.
4.4 Absence of Undisclosed Liabilities
There are no liabilities (including disputed or contingent liabilities) which are outstanding on the part of the Company, other than:
1.
2.
3.
4.
4.1.
4.2.
4.3.
4.4.
4.5.
4.6.
4.6.1liabilities disclosed or provided for in the Audited Accounts and Management Accounts; or
4.6.2which have arisen in the ordinary course of business since the date(s) to which such accounts were prepared, none of which has a material adverse effect on the financial or trading position of the Company.
4.1 Events since the Accounts Date and Management Accounts Date
Since the Accounts Date and Management Accounts Date, save and except for the liabilities payable to the Outstanding Creditors:
(a)the Company has ceased carrying out its Business;
(b)no share or loan capital of the Company has been, or agreed to be, issued, allotted, redeemed, purchased or repaid by the Company or any option or right granted nor has the Company become bound or liable to be called upon to repay prematurely any loan capital or borrowed monies;
(c)no debtor/receivable has been released by the Company on terms that he pays less than the face value of his debt and no debt has been subordinated, written down or written off, provided against (in whole or in part), factored or assigned, and the Company has not and has not agreed to do any of the foregoing and no debt has proved to any extent irrecoverable;
(d)the Company has not borrowed any money or raised any money in the nature of borrowings except for borrowings on overdraft in the ordinary course of business or issued any guarantee or created any Security Interest over any assets, other than as disclosed in the Audited Accounts and Management Accounts or those to be repaid, terminated, discharged and/or released by Completion;
(e)no contract, arrangement or transaction has been entered into and no payment has been made by the Company otherwise than in the ordinary and usual course of carrying on its business and on entirely arm's length terms and the Company has not assumed or incurred or agreed to assume or incur any liability (actual or contingent) otherwise than in the ordinary and usual course of carrying on its business;
(f)no provision or reserve included in the Audited Accounts and Management Accounts has proved to be inadequate in the light of subsequent circumstances and there are no circumstances which indicate that any such provision or reserve may prove to be inadequate;
(g)no resolution of the shareholders of the Company has been passed and nothing has been done in the conduct or management of the affairs of the Company which would be likely materially to reduce the net asset value of the Company;
(h)the profits of the Company have not been materially affected by changes or inconsistencies in accounting treatment, by any non-recurring items of income or expenditure or, by transactions of an abnormal or unusual nature;
(i)no sum or benefit has been paid, applied or voted to any executive, director or employee of the Company by way of remuneration, bonus, incentive or otherwise in excess of the amounts paid or distributed to them by the Company at the Accounts Date so as to increase their total remuneration and no new service agreements have been made or entered into by the Company since the Accounts Date and the Company is not under contractual or other obligation to change the terms of service of any director, executive or employee and the Company has not and will not change the terms of service of any executive, director or employee prior to the Completion, save and except where the Purchaser has been notified of the same vide written email which are mutually agreed upon by the Parties;
(j)the Company has not made any change in any method of accounting or Accounting Practice and it has not changed its accounting reference period; and
(k)no insurance claims have been refused or settled below the amount claimed by or on behalf of the Company.
5.BANKING AND FINANCE
5.1Bank Accounts
Details of all bank accounts of the Company as of the Completion Date will be provided to the Purchaser on or prior to the Completion. Statements of all the bank accounts of the Company, showing their balances as at Accounts Date and Management Accounts Date, have been provided to the Purchaser.
5.2Borrowings and Credit Facilities
5.2.1The Company does not have any bank borrowings which exceed applicable overdraft limits (and has not had any that have done so during the last twelve (12) months).
5.2.2The amounts borrowed by the Company do not exceed any limitation on its borrowing contained in its articles of association or constitution or in any debenture or other deed or document binding upon it.
5.2.3Except as set out in the Audited Accounts and Management Accounts and the loans or advances extended to directors, shareholders, related parties or persons connected with the Company which would be settled prior to the Completion, the Company has not incurred any liabilities in the nature of borrowings or in respect of debentures or negotiable instruments, or is a party to any loan agreement, facility letter or other agreement for the provision of credit or financing facilities to the Company or any agreement for the sale, factoring or discounting of debts.
5.2.4The Company has not received notice from any lenders of any money requiring repayment or relating to loan facilities becoming on demand or that the existing facility will be withdrawn or reduced or not renewed or altering to the disadvantage of the Company the terms of any such facility or intimating the enforcement by any such lender of any security which it may hold over any assets of the Company. There are no circumstances which would now (or which could with the giving of notice or lapse of time or both) give rise to any such notice.
5.2.5The Company has not factored any of its debts or engaged in any financing or borrowing of a type which would not be required to be shown or reflected in the Audited Accounts and Management Accounts.
5.3Securities and Guarantees and Indemnities
5.3.1Save as disclosed in the Audited Accounts and Management Accounts, neither the Company nor any of its directors or officers or any other person has given or undertaken to give nor is there outstanding, any security or guarantee, indemnity, suretyship or similar agreement for any liability, borrowings or other obligations of the Company.
5.3.2Save as disclosed in the Audited Accounts and Management Accounts, the Company has not created or agreed to create any Security Interest, given or undertaken to give, and there is no outstanding, any security or guarantee, indemnity, suretyship or similar agreement (including agreement for postponement of debt) for any liability, borrowings or other obligations of any person.
6.TRADING AND CONTRACTUAL AGREEMENTS
6.1Capital Commitments
The Company does not have any outstanding material capital commitments as at the Management Accounts Date, and since then, the Company has not made, or agreed to make any material capital expenditure or incurred or agreed to incur any material capital commitments. For these purposes, a material capital commitment or material capital expenditure is one involving capital expenditure of over RM100,000.00 per item, exclusive of Tax.
6.2Contracts
6.2.1 Save and except for the liabilities payable to the Outstanding Creditors, the Company is not and has not been, a party to or subject to any contract, transaction, arrangement, understanding, obligation or liability with any person which:
(a)not wholly on an arm's length basis in the ordinary and usual course of business;
(b)is onerous; or
(c)that can be terminated in the event of any material change in the shareholding or underlying ownership or control of the Company or would be materially affected by such change.
6.2.2The Company has not given any guarantee or indemnity under which any liability or contingent liability is outstanding, or given any warranties, or made any representations, in respect of goods or services supplied or contracted to be supplied by it or accepted any liability or obligation that would apply after any such goods or services had been supplied by it.
6.2.3The Company is not a party to any material agreement or arrangement or under any obligation under which it is or may become liable to make any investment with, or to deposit any money with, or to provide any loan or financial accommodation or credit (other than normal trade credit) to any person, or to subscribe, convert, acquire, dispose of or underwrite any investment.
6.2.4No event or omission has occurred or been permitted to arise which would entitle any third party to call in money or enforce any obligation before the date on which payment or performance would normally be due.
6.2.5Neither entering into nor completing this Agreement will or is likely to cause the Company to lose the benefit of any right or privilege it presently enjoys or any person who normally does business with or gives credit to the Company not to continue to do so on the same basis or any employee of the Company to leave its employment, and the attitudes or actions of customers, suppliers, employees and other persons with regard to the Company will not be prejudicially affected thereby.
6.2.6No written approval or consent in connection with the transaction contemplated by or referred to in this Agreement is required from any third party of the contracts or all the necessary approvals or consents for the transaction contemplated by or referred to in this Agreement required to be obtained from any third party of the contracts entered into by the Company shall have been obtained.
6.3Debts, Contracts and Arrangements with Connected Persons Etc.
6.3.1There are:
(a)no loans made by the Company to the Vendor, former shareholders, directors or former directors of the Company and any person connected with any of them;
(b)no debts owing by the Company to the Vendor, former shareholders, directors or former directors of the Company and any person connected with any of them;
(c)no securities or guarantees given by or to the Company for any such loans or debts as aforesaid; and
(d)there are no circumstances which may give rise to a claim or an entitlement to claim against the Company by the Vendor, former shareholders, directors or former directors of the Company and any person connected with any of them.
6.3.2There are no existing contracts or binding arrangements to which the Company is a party and in which the Vendor, former shareholders, directors or former directors of the Company and any person connected with the Vendor is interested whether directly or indirectly.
6.3.3Save for the businesses that have been disclosed, the Vendor nor any person connected with the Vendor has any right or interest, direct or indirect, in any business
(other than those now carried on by the Company) which is of a similar nature to or is, or is reasonably likely to be, competitive with any of the Businesses of the Company was involved in.
6.4Effect of Sale of the Sale Shares
The execution and delivery of, and the performance by the Vendor of his obligations under this Agreement does not and will not:
6.4.1result in a breach of any applicable law or regulations or any provision of the memorandum or articles of association or the constitutional documents of the Company;
6.4.2conflict with or result in the breach of or constitute a default under any agreement or instrument to which the Company is now a party or any banking facility or loan to or mortgage created by the Company;
6.4.3relieve any other party to an agreement or arrangement with the Company of its obligations under such agreement or arrangement or entitle such party to terminate or modify such agreement or arrangement, whether summarily or by notice;
6.4.4result in the creation, imposition, crystallisation or enforcement of any Security Interest any of the assets of the Company;
6.4.5result in a breach of any order, judgment or decree of any court, governmental agency or regulatory body to which the Company is a party or by which the Company or any of its assets is bound;
6.4.6give rise to, or cause to become exercisable, any right of pre-emption over the Sale Shares;
6.4.7violate or result in a breach of any order, undertaking, judgment, injunction or decree of any court, governmental agency or regulatory body or ordinance or regulation or any other restriction of any kind or character to which the Vendor is party or by which the Vendor is bound;
6.4.8result in a breach of a licence; and
6.4.9result in the Company losing the benefit of a licence,
and where in the event of the occurrence of any of the scenario in Paragraphs 6.4.1 to 6.4.9 of Schedule 4 (Vendor’s Warranties) above, such occurrence will not have a material adverse effect upon the Business as presently conducted.
6.5Joint Ventures, Partnerships etc.
6.5.1The Company is not and has not agreed to become, a member of any joint venture, consortium, partnership or other unincorporated association, save and except where the Purchaser has been notified of the same vide written email which are mutually agreed upon by the Parties.
6.5.2The Company is not and has not agreed to become, a party to any agreement or arrangement for participating with others in any business sharing commissions or other income.
6.6Agency Agreements and Agreements Restricting Business
The Company is not a party to any agency, distributorship, marketing, purchasing, manufacturing or licensing agreement or arrangement or any agreement or arrangement which restricts its freedom to carry on its Business in any part of the world in such manner as it thinks fit.
6.7Outstanding Offers
There is no outstanding offer, tender or bid which is capable of being converted by acceptance into an obligation of the Company.
6.8Outstanding Creditors
All payments payable to the Outstanding Creditors will be fully settled by the Vendor within ten (10) Business Days from the date that the Consideration is received by the Vendor or such extended period as may be agreed upon between the Parties in writing.
7.LEGAL MATTERS
7.1Compliance with Laws
7.1.1The Company has complied with its memorandum and articles of association or constitution in all respects and none of the activities, agreements, commitments or rights of the Company is ultra vires or unauthorised.
7.1.2There is no order, decree or judgment of, any court or any investigation or enquiry by any Governmental Authority or regulatory body in any jurisdiction outstanding against the Company which may have a material adverse effect upon its assets or Business as presently conducted.
7.1.3The Company has carried on its Business in accordance with applicable laws, regulations and by-laws of any jurisdiction in which it carries on business.
7.1.4There is and has been no governmental, regulatory or other investigation, enquiry or disciplinary action regarding the Company and none is pending or threatened and there are no circumstances which could give rise to such an investigation, enquiry or action.
7.1.5Save and except for the 2,499,900 Shares Allotment, due compliance has been made with the provisions of the Companies Act and other legal requirements in connection with the formation of the Company, the allotment and issue, purchase and redemption of shares, debentures or other securities, the payment of dividends, any reduction of share capital and the conduct of its business and no notice or allegation has been received that any of the foregoing is incorrect or should be rectified.
7.2Litigation
Save and except for the liabilities payable to the Outstanding Creditors:
4.1.1no claim sounding in damages has been made and/or remains currently outstanding against the Company;
4.1.2the company (or any person for whose acts or defaults the company may be vicariously liable) is not involved whether as plaintiff or defendant or otherwise in any claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration (other than as claimant in the collection of debts arising in the ordinary and usual course of its business), and no such claim, legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration is pending or threatened by or against the Company (or any person for whose acts or defaults the Company may be vicariously liable);
4.1.3there are no facts or circumstances likely to lead to any such claim or legal action, proceeding, suit, litigation, prosecution, investigation, enquiry or arbitration involving the Company;
7.2.1neither the company nor any of its property or assets are subject to any outstanding injunction, judgment, order or decree of court, tribunal or regulatory or Governmental Authority or any undertaking to any court, judicial authority or regulatory or government body or any outstanding arbitration award or any undertaking to any third party arising out of any legal proceedings;
7.2.2 the company has not and none of its directors, officers, agents, or employees has for the purposes of securing any contract for the Company given or offered any bribe or any corrupt, unlawful or immoral payment, gift or other inducement; and
7.2.3 the company has not been convicted of any offence. no employee, officer, director or agent or former employee, officer, director or agent of the Company has been convicted of any offences in relation to the Company and any offence (save for any traffic offence) which reflects upon his suitability to hold his position or upon the reputation of the Company.
7.3Insolvency
Save and except for the liabilities payable to the Outstanding Creditors:
7.3.1no order has been made, petition presented, resolution passed (or meeting convened with a view to any resolution, and no written resolution has been circulated) or meeting convened for the winding-up, judicial management or dissolution of the Company;
7.3.2no person has been appointed as a receiver (including an administrative receiver), liquidator, provisional liquidator, judicial manager, administrator, or similar officer in respect of the whole or any part of the Business as presently conducted or the assets of the Company nor has any such appointment been requested or ordered or any steps taken towards such appointment;
7.3.3no security Interest has been enforced in relation to the Company;
7.3.4no event has occurred causing, or which upon intervention or notice by any third party may cause, any floating charge created by the Company to crystallise or any charge created by it to become enforceable, nor has any such crystallisation occurred or is such enforcement in process;
7.3.5no procedure has been commenced, with a view to striking off the Company under the Companies Act;
7.3.6 no composition in satisfaction of the debts of the Company, or scheme of arrangement of its affairs, or compromise or arrangement between it and its creditors and/or members or any class of its creditors and/or members, has been proposed, sanctioned or approved;
7.3.7no distress order, execution or other process has been levied or applied for in respect of the whole or any part of the assets of the Company, nor has any person threatened any such distress, execution or other process;
7.3.8the company has not ceased trading or stopped payment to its creditors and there are no grounds on which the Company could be found to be insolvent or unable to pay its debts as they fall due;
7.3.9in relation to any property or assets held by the Company under any hire purchase, conditional sale, chattel leasing or retention of title agreement or otherwise belonging to a third party, no event has occurred which entitles, or which upon intervention or notice by the third party may entitle, the third party to repossess the property or assets concerned or terminate the agreement or any licence in respect of the same;
7.3.10 the Company has not been party to any transaction with any third party or parties which, in the event of any such third party going into liquidation or a bankruptcy order being made in relation to such third party, would constitute (in whole or in part) a transaction at an undervalue, a preference, an invalid floating charge or an extortionate credit transaction or part of a general assignment of debts;
7.3.11there is no unsatisfied judgment or order of any court or tribunal, or award of any arbitrator, outstanding against the Company;
7.3.12there is no meeting of creditors of the company, or any class of them, has been held or summoned and no proposal has been made for a moratorium, composition or arrangement in relation to any of debts of the Company, or for a voluntary arrangement under the Companies Act; and
7.3.13in relation to the Vendor:
(a)no statutory demand has been issued against them nor are there are any reasonable grounds for believing that they are unable to pay any debts as and when they fall due;
(b)no petition has been presented and no order made for his bankruptcy or for the appointment of a receiver over any of their assets;
(c)no Security Interest has been enforced and no distress, execution or other process has been levied, on or over any of the Sale Shares or any assets held by them; and
(d)no event analogous to any of the above has occurred in any jurisdiction.
7.4Powers of Attorney
The Company has not given a power of attorney which is still outstanding or effective to any person to enter into any contract or commitment or do anything on its behalf, other than any authority to employees to enter into routine trading contracts in the normal course of their duties.
7.5Due Filing
7.5.1All charges by or in favour of the Company have (if appropriate) been registered in accordance with the Companies Act or comply with the necessary formalities as to registration or otherwise in any other relevant jurisdiction. The registered particulars of charges over assets of the Company are complete and accurate in all respects.
7.5.2All returns, particulars, resolutions and other documents required to be delivered to the Registrar by the Company have been properly prepared and delivered and in the case of the constitution of the Company, have attached to them copies of all such resolutions and agreements as are required by law to be delivered to the Registrar.
8.EMPLOYEES
8.1Employees and Terms of Employment
8.1.1There are not in existence any contracts of service with employees of the Company, nor any consultancy agreements with the Company, which cannot be terminated by three (3) months’ notice or less without giving rise to any claim for damages or compensation.
8.1.2No material changes to the contracts or agreements with the directors of the Company or contracts or agreements have been made or proposed whether by the Company or employee or consultant since the Accounts Date.
8.1.3No employee will be entitled as a result of or in connection with any change of shareholding or control of the Company or as a result of this Agreement:
(a)to terminate his employment with the Company;
(b)to receive any payment, reward or benefit of any kind;
(c)to receive any enhancement in or improvement to his remuneration, benefits or terms and conditions of service;
(d)to treat himself as redundant or dismissed or released from any obligation to the Company; and
(e)to treat the change of shareholding or control of the Company or execution or performance of this Agreement as amounting to a breach of his employment contract.
8.2Accrued and Potential Liabilities
8.2.1Save and except for the liabilities payable to the Outstanding Creditors, there are no amounts owing to any present or former directors or employees or worker of the Company other than remuneration accrued due or for the reimbursement of business expenses and no employees of the Company have given or been given notice terminating their contracts of employment.
8.2.2Save to the extent (if any) to which provision or allowance has been made in the Audited Accounts and Management Accounts and the liabilities payable to the Outstanding Creditors:
(a)the Company has not made and has not agreed to make any payment to or provided or agreed to provide any benefit for any present or former employee which is not allowable as a deduction for the purposes of Taxation.
(b)the Company does not have any outstanding liability to pay compensation for loss of office or employment or redundancy payment or for wrongful dismissal or for failure to comply with any order for the reinstatement or re-engagement of any employee as a result of dismissal or retrenchment; and
(c)no gratuitous payment has been made or promised by the Company in connection with the actual or proposed termination or suspension of employment or variation of any contract of employment or consultancy agreement of any present or former employee or consultant.
8.2.3There are no claims pending or threatened against the Company:
(a) by an employee or worker or third party, in respect of an accident or injury which is not fully covered by insurance or for which provision has not been made in the Audited Accounts; or
(b) by an employee or director in relation to his terms and conditions of employment or appointment, as the case may be.
8.2.4None of the employees, officers or directors is in breach of his contract of employment or any other obligation or duty he owes to the Company.
8.2.5No employee has any current disciplinary sanction in force against him or is the subject of any current disciplinary investigation or procedure (whether under the Company's disciplinary policy or otherwise), and no employee has brought a grievance or otherwise raised a complaint against the Company or any of its employees, officers or workers since its incorporation (whether under the Company’s grievance policy or otherwise).
8.2.6The Company is not or has not been engaged in any dispute, claim or legal proceedings whether arising under common law, contract, statute or otherwise in relation to any present or former employee, officer, director or worker and there is no fact or matter in existence which can reasonably be foreseen as likely to give rise to any such dispute, claim or legal proceedings.
8.3Compliance
8.3.1The Company has, in relation to each of its employees and workers (and so far as relevant to each of its former employees and workers):
(a)complied and continues to comply in all material respects including the accommodation standards for foreign workers with all obligations, awards, orders and recommendations imposed on it by all applicable statutes and regulations relevant to the relations between the Company and its employees, workers or any trade union, statutory instrument, common law, contract, any collective agreement, the terms and conditions of employment, staff handbook, company policy, any customs and practice and any codes of conduct and practice; and
(b)maintained and continues to maintain current, adequate and suitable records regarding the service of each of its employees.
8.3.2All employees have leave to enter and remain in the jurisdiction in which they are employed and are entitled under the laws of such jurisdiction to work therein.
8.4Trade Unions etc.
None of the employees of the Company is represented by any trade union or other similar organisation, and the Company is not a party to any collective agreement.
8.5Share Incentive, Bonus Schemes etc.
The Company has not, in existence or is proposing to introduce any share incentive scheme, share option scheme or profit-sharing scheme for all or any of its directors or employees.
8.6Pensions, Grants and Employment Schemes
8.6.1There are not in existence nor has any proposal been announced to establish any pension, lump sum, retirement, death, ill-health, accident or disability schemes for
directors or employees nor are there any obligations (whether or not legally binding) to or in respect of present or former directors or employees with regard to pension, lump sum, retirement, death, ill-health, accident or disability pursuant to which the Company is or may become liable to make payments and no person or retirement or sickness gratuity is currently being paid or has been promised by the Company to or in respect of any former director or former employee.
8.6.2 No grants, subsidies and allowances have been applied for or received by the Company from any government body and there are no grounds upon which any such grant, subsidy or allowance or any part thereof could be liable to be repaid or recovered whether by reason of the Completion or otherwise.
8.7All Employees Provident Funds Contributions Made
All statutory deductions and payments required to be made by the Company in respect of, among others, the Employees Provident Fund contributions (including employer’s contributions) in relation to the remuneration of its employees to any relevant Governmental Authority have been so made and in order.
9.TAXATION MATTERS
9.1Returns, Information and Clearances
9.1.1All returns, computations, notices, accounts or other information which are or have been required to be made, given or submitted by the Company to any Tax Authorities for any Taxation purpose:
(a)have been made or given within the requisite periods or within permitted extensions of such periods and on a proper basis and are complete, up-to-date and correct; and
(b)none of them is, or are likely to be, the subject of any dispute with the relevant Tax Authorities.
9.1.2The Company has maintained and is in possession of all records required for Tax purposes and all such records remain true, complete and accurate. In particular, without limitation, the Company is in possession of sufficient information to enable it to compute its liability to Taxation insofar as it depends on any transaction occurring on or before the Completion or its entitlement to any deduction, relief or repayment of Tax and any claims and elections it has made relating to Tax.
9.1.3All claims, elections and disclaimers assumed for the purposes of the Audited Accounts and Management Accounts or the returns have within the relevant time limits been correctly made and submitted to the Tax Authority, and remain valid in all respects.
9.1.4No Transaction has been effected in respect of which any consent or clearance from the relevant Tax Authorities was required or was or could have been sought:
(a)without such consent or clearance having been validly obtained before the Transaction was effected;
(b)otherwise than in accordance with the terms of and so as to satisfy any conditions attached to such consent or clearance; and
(c)otherwise than at a time when and in circumstances in which such consent or clearance was valid and effective.
9.1.5All particulars furnished to the relevant Tax Authorities, in connection with the application for any consent or clearance by the Company fully and accurately disclosed all facts and circumstances material to the decision of the relevant Tax Authorities.
9.1.6There are no circumstances that have arisen since any application for any such consent or clearance was made which might reasonably be expected to cause such consent or clearance to be or become invalid or to be withdrawn by the relevant Tax Authorities.
9.1.7The Company does not have any agreement or arrangement with a Tax Authority whereby it is assessed to or accounts for Tax other than in accordance with the strict terms of relevant legislation or published practice of the relevant Tax Authority.
9.1.8The Company has been resident for tax purposes in Malaysia and nowhere else at all times since its incorporation and will be so resident at the Completion Date.
9.1.9The Company is not carrying on and has never carried on any trade or otherwise been liable to Tax other than in the jurisdiction of its incorporation, and is not acting and has never acted as the branch, agent, factor, or tax representative of any person resident outside the jurisdiction of its incorporation for Tax purposes and no such person carries on any trade or business through the Company.
9.1.10Without prejudice to any other provision of this Agreement, there is no liability to Taxation in respect of, as a result of or in consequence of any Claim for Taxation which has been made or may hereafter be made:
(a)in respect of or arising from any transaction effected or deemed to have been effected on or before the Completion; or
(b)by reference to any income, profits or gains earned, accrued or received on or before the Completion,
except:
(a)to the extent that provision or reserve specifically in respect thereof was made in the Audited Accounts, as the case may be;
(b)in respect of Taxation attributable to transactions arising out of the ordinary course of the normal trading of the Company since the Accounts Date, as the case may be; and
(c)to the extent that such Claim arises as a result only of any provision or reserve in respect thereof being insufficient by reason of any increase in rates of Taxation made after the date hereof with retrospective effect,
and there are no circumstances likely to give rise to such a liability.
For the purposes of this Paragraph, “Claim” means any notice, demand, assessment, letter or other document issued or action taken by any Tax Authority or other statutory or Governmental Authority, body or official in countries where the business of the Company is conducted whereby the Company is or may be placed or sought to be under a liability to make a payment or deprived of any relief, allowance, credit or repayment otherwise available.
9.2Penalties and Interest
9.2.1The Company is not and has not within the last seven (7) years been, liable to pay any fine, interest, surcharge or penalty in relation to Tax, nor involved in any dispute with, or the subject of an enquiry or investigation by, a Tax Authority and there are no facts which are likely to cause it to become liable to pay any fine, interest, surcharge or penalty nor to give rise to any such dispute, enquiry or investigation.
9.2.2No enquiry which has been made into a Tax return of the Company remains outstanding.
9.2.3No Tax has been or may be assessed on or required to be paid by the Company where the amount in question is the primary liability of another person, and where such assessment or requirement arises or arose by reason of the failure by any other person to satisfy a Tax liability.
9.3Taxation Claims, Liabilities and Reliefs
9.3.1The Company is not and will not become, liable to pay, or make reimbursement or indemnity in respect of, any Taxation (or amounts corresponding thereto) in consequence of the failure by any other person to discharge that Taxation within any specified period or otherwise, where such Taxation relates to a profit, income or gain, transaction, event, omission or circumstance arising, occurring or deemed to arise or occur (whether wholly or partly) prior to the Completion.
9.3.2No relief (whether by way of deduction, reduction, set-off, exemption, postponement, roll-over, repayment or allowance, or otherwise) from, against or in respect of any Taxation has been claimed and/or given to the Company which could or might be effectively withdrawn, postponed, restricted, clawed back or otherwise lost as a result of any act, omission, event or circumstance arising or occurring at or at any time after the Completion.
9.3.3The Company does not own and has not agreed to acquire, any asset, nor has received or agreed to receive any services or facilities (including, without limitation, the benefit of any licences or agreements), the consideration for the acquisition or provision of which was or will be in excess of its market value, or otherwise than on an arm’s length basis.
9.3.4The Company has not disposed and has not agreed to dispose of any assets, and has not provided and has not agreed to provide any services or facilities (including, without limitation, the benefit of any licences) which was or will be less than its market value, or otherwise than on an arm’s length basis.
9.4Payment of Taxes
9.4.1All taxes assessed or imposed by any government or governmental or statutory body which have been assessed upon the Company and which are due and payable on or before the Completion have been paid and were paid on or before the relevant due date for payment.
9.4.2There is no further liability or contingent liability for Taxation otherwise than as a result of trading activities in the ordinary course of its business since the Accounts Date and Management Accounts Date.
9.5Deductions from Payments
The Company has made all deductions and withholdings in respect or on account of Taxation which it is required or entitled by any relevant legislation to make from any payments made by it (including, but not limited to, interest, annuities or other annual payments, royalties, rents and remuneration payable to employees or sub-contractors or payments to non-residents) and the Company has accounted in full to the relevant fiscal authority for any Taxation so deducted or withheld. Proper records have been maintained in respect of all such deductions and withholdings and all regulations applicable thereto have been complied with.
9.6Anti-avoidance Provision
9.6.1The Company has not since its incorporation engaged in, or been a party to, any transaction or series of transactions or scheme or arrangement of which the main purpose, or one of the main purposes, was or could be said to be the avoidance of Taxation.
9.6.2The Company has not been the subject of an investigation by or involving any Tax Authority and there are no circumstances existing which make it likely that an investigation will be made. No audits, examinations, investigations, claims, requests for information, ruling requests, or other proceedings with respect to Taxes or returns of the Company are currently in process, or pending or threatened (either in writing or orally, formally or informally). No issue has been raised by any Tax Authority (either in writing or orally, formally or informally) with respect to Taxes of the Company in any prior proceeding which, by application of the same or similar principles, could reasonably be expected to result in the assertion of any claim for Taxes against the Company for any other taxable period.
9.6.3The Company has not been a party to any transaction in respect of which a different amount or value than the amount or value of the actual consideration given or received by the Company should or could be substituted for Tax purposes.
9.7Stamp Duty
9.7.1All documents to which the Company is a party or which form part of the Company’s title to any asset owned or possessed by it or which it may need to enforce or produce in evidence in the courts of the relevant jurisdictions have been duly stamped and (where appropriate) adjudicated and no document belonging to the Company now or at the Completion which is subject to stamp duty is or will be unstamped or insufficiently stamped.
9.7.2All stamp duty payable upon any transfer of shares in the Company before the Completion has been duly paid.
9.7.3The Company has not executed outside the jurisdiction of its incorporation any instrument relating to any property situated or to any matter or thing done, or to be done, in any part of the jurisdiction of its incorporation.
10.LAND AND ASSETS
10.1Title to the Land and Assets
10.1.1The Company is the legal owner of, beneficially entitled to, the whole of the proceeds of sale of, and has good and valid title to the Land and all of the assets which it purports to own as reflected in the Audited Accounts and Management Accounts.
10.1.2The Company is able to prove title to the Land and all the assets owned by it.
10.1.3There are no Security Interest (excepting only liens arising by operation of law in the normal course of trading) on, over or affecting the whole or any part of the Land, undertakings or assets of the Company and there are no agreements or commitments to give or create any Security Interest.
10.1.4The Company is entitled to take possession or exclusive control of the Land and the assets.
10.1.5To the extent applicable or relevant, the Land and all assets owned or used by the Company which are subject to a requirement of licensing or registration of ownership, possession or use are duly licensed or registered in the sole name of the Company and all registration documents relating thereto are in the possession of the Company.
10.1.6The Land and the assets registers of the Company comprise a complete and accurate record of all plant, machineries, equipment, vehicles and other assets owned by it and are capable of being reconciled in respect of each item with the book values of such assets in its accounting records.
10.1.7Neither the construction, positioning or use of the Land and the Company’s assets, nor the Land and the assets themselves, contravenes any relevant provision of any legislation, regulation or other requirement having the force of law.
10.2Leased Assets
The Company is not a party to or liable under a lease or hire, hire purchase, credit sale or conditional sale agreement.
10.3Retention of Title
The Company has not purchased any stock, goods or materials on terms that title in it does not pass until full payment is made or all indebtedness discharged or any other condition is met.
11.LAND AND PROPERTIES
11.1Title
11.1.1All the particulars of the Land and the properties are true, accurate and complete in all respects.
11.1.2The Company is the legal and beneficial owner of the Land and the properties free from all encumbrances, and the Company have good title to the Land and the properties.
11.2Rights, Conditions and Restrictions
11.2.1All rights, conditions and restrictions in respect of the use of the Land and the properties have been disclosed and furnished by the Vendor to the Purchaser.
11.2.2There are no covenants, restrictions, burdens, stipulations, conditions, terms or outgoings affecting the Land and the properties which are of an unusual or onerous nature or which affect the use or intended use of the Land and the properties.
11.3Disputes
11.3.1There are no pending or anticipated disputes concerning boundaries, easements, covenants or other matters relating to the Land and the properties or their use and occupation.
11.3.2There are no outstanding actions, disputes, claims or demands between the Company and any third party affecting the Land and the properties.
11.3.3The Land and the properties are not affected by any order or notice of or proceedings involving any governmental or local authority or other body or entity or any agreement with any of the same or by any notices served on the Company by such authority or body or entity.
11.4Performance
11.4.1The Company has duly performed and observed all covenants, restrictions, reservations, conditions, agreements, statutory requirements, by-laws, orders, building regulations and other stipulations and regulations affecting the Land and the properties and the use of the properties and no outstanding complaint alleging breach or non- observance has been received in respect of them.
11.4.2Without prejudice to the generality of Paragraph 11.2 above, the Company has duly performed and observed all covenants which the Land and the properties are held and all outgoings have been paid to date including but not limited to rent, service charge and insurance and no notice of any alleged breach has been served on the Company.
11.4.3There is no agreement to sell, assign, subdivide, lease, let, licence, charge, mortgage, partition, share, grant any easement, right of way or option over or otherwise dispose of any interest in or part with possession of or occupation of the Land and the properties or any part thereof or otherwise encumber the Land and the properties.
11.5Use and Planning
11.5.1The Land is vacant and there is no occupant within the Land (including proprietor, lessee, tenant, licensee, assignee, squatter or any other permitted occupier).
11.5.2The Company has not made, erected or constructed, and is aware of, any unauthorised or illegal structure or alteration in the Land and the properties or any part thereof.
11.5.3No claim or liability (contingent or otherwise) under the town and country planning legislation in respect of the Land and the properties, or any statutory agreement affecting the Land and the properties, are outstanding, nor are the Land and the properties the subject of a notice to treat or a notice of entry and the Vendor is not aware of any matter or circumstances which would lead to any such notice, order, resolution or proposal.
11.6Liabilities
Save and except for the liabilities payable to the Outstanding Creditors:
11.6.1the Company is not a tenant, licensee, assignee or guarantor of any lease, licence or tenancy agreement other than in relation to the Land and the properties;
11.6.2the Company has never acquired, assigned or otherwise disposed of any freehold or leasehold property in such a way that it retains any residual liability in respect of it;
11.6.3since the Audited Accounts Date, the Company has not acquired or disposed of, or agreed to acquire or dispose of, or granted any option in respect of, any interest in any land or premises nor will it do so before Completion without the prior written consent of the Purchaser; and
11.6.4there is no outstanding of any monetary claim or liability (contingent or otherwise) affecting the properties nor is there any material expense likely in respect of the repair of the Land and the properties in the next one (1) year.
[The rest of this page is intentionally left blank]
Schedule 5
Audited Accounts
[Audited Accounts]
Schedule 6
Management Accounts
[Management Accounts]
Schedule 7
Issue Document of Title for the Land
[Issue Document of Title for the Land]
Schedule 8A
Funds Flow
[Funds Flow]
Schedule 8B
Commitments
[Commitments]
v3.23.4
Cover
|
Jan. 16, 2024 |
| Cover [Abstract] |
|
| Document Type |
8-K
|
| Document Period End Date |
Jan. 16, 2024
|
| Entity Registrant Name |
IDEANOMICS, INC.
|
| Entity Incorporation, State or Country Code |
NV
|
| Entity File Number |
001-35561
|
| Entity Tax Identification Number |
20-1778374
|
| Entity Address, Address Line One |
114 Broadway
|
| Entity Address, Address Line Two |
Suite 5116
|
| Entity Address, City or Town |
New York
|
| Entity Address, State or Province |
NY
|
| Entity Address, Postal Zip Code |
10018
|
| City Area Code |
212
|
| Local Phone Number |
206-1216
|
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false
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|
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false
|
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false
|
| Title of 12(b) Security |
Common Stock, $0.001 par value per share
|
| Trading Symbol |
IDEX
|
| Security Exchange Name |
NASDAQ
|
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