UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER
PURSUANT
TO RULE 13a-16 OR 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For
the month of May 2024
Commission
File Number: 001-38851
X3
HOLDINGS CO., LTD.
Suite
412, Tower A, Tai Seng Exchange
One
Tai Seng Avenue
Singapore
536464
(Address
of Principal Executive Office)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒ Form 40-F ☐
CONTENTS
Entry
into a Material Definitive Agreement
On
May 16, 2024, X3 Holdings Co., Ltd. (the “Company”) entered into a standby equity purchase agreement (the “SEPA”)
with YA II PN, LTD. (the “Investor”), pursuant to which the Investor purchases convertible promissory notes (the “Notes”)
in the principal amount of US$8,000,000 (the “Principal”), which shall be convertible into the Company’s ordinary shares
(the “Ordinary Shares”) par value US$0.40 per share (the “Offering”), for a gross proceeds of approximately US$7,425,000.
The Notes have a conversion price (the “Conversion Price”) of the lower of (i) US$0.9856 per Ordinary Share (the “Fixed
Conversion Price”), or (ii) 93% of the lowest daily VWAP (as defined in the Notes) during the 10 consecutive trading days immediately
preceding the conversion date or other date of determination, but not lower than the floor price of US$0.1641 per Ordinary Share. The
Principal will become due and payable 12 months from the date of closing (the “Maturity Date”) and bears an annual interest
rate of 8% unless earlier converted or redeemed by the Company. At any time before the Maturity Date, the Investor may convert the Notes
at its option into Ordinary Shares at the Conversion Price. The Company has the right, but not the obligation, to redeem (“Optional
Redemption”) a portion or all amounts outstanding under the Notes prior to the Maturity Date at a cash redemption price equal to
the outstanding Principal balance to be redeemed, plus the redemption premium, plus accrued and unpaid interest; provided that the VWAP
of the Ordinary Shares is less than the Fixed Conversion Price and the Company provides Investor with at least 10 trading days’
prior written notice of its desire to exercise an Optional Redemption. The Investor may convert all or any part of the Notes after receiving
a redemption notice, in which case the redemption amount shall be reduced by the amount so converted. The Notes contain customary events
of default, indemnification obligations of the Company and other obligations and rights of the parties.
The
Offering will be conducted in four closings. The first closing consists of offer and sale of a Note in the principal amount of US$4,756,986.10.
The first closing occurred on May 16, 2024.
The
second closing consists of offer and sale of a Note in the principal amount of US$1,500,000. The second closing is expected to occur
on the second trading day after the filing of the initial Registration Statement (as defined in the Notes) and subject to various customary
closing conditions. The third closing consists of offer and sale of a Note in the principal amount of US$871,506.95. The third closing
is expected to occur on the second trading day after the initial Registration Statement is declared effective by the Securities and Exchange
Commission (the “SEC”) and subject to various customary closing conditions. The fourth closing consists of offer and sale
of a Note in the principal amount of US$871,506.95. The fourth closing is expected to occur on the sixtieth calendar day following the
date the initial Registration Statement is declared effective by the SEC and subject to various customary closing conditions.
The
Notes will be offered pursuant to an effective registration statement of the Company on Form F-3 to be filed with the SEC and the prospectus
supplements thereunder.
The
foregoing description of the SEPA and the Notes is qualified in its entirety by reference to the full text of the SEPA and the Notes,
a copy of which is filed herewith as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 6-K.
EXHIBIT
INDEX
SIGNATURE
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date:
May 30, 2024
| |
X3 HOLDINGS
CO., LTD. |
| |
|
|
| |
By: |
/s/ Stewart
Lor |
| |
|
Stewart Lor |
| |
|
Chief Executive Officer |
3
Exhibit 99.1
STANDBY EQUITY PURCHASE AGREEMENT
THIS STANDBY EQUITY PURCHASE
AGREEMENT (this “Agreement”) dated as of May 16, 2024 is made by and between YA II PN, LTD., a Cayman Islands
exempt limited partnership (the “Investor”), and X3 HOLDINGS CO., LTD., a company incorporated under the laws
of the Cayman Islands (the “Company”). The Investor and the Company may be referred to herein individually as a “Party”
and collectively as the “Parties.”
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 $30 million in aggregate gross
purchase price of newly issued fully paid shares of the Company’s Ordinary Shares, par value $0.4 per share (the “Ordinary
Shares”);
WHEREAS, the Ordinary
Shares are listed for trading on the Nasdaq Stock Market under the symbol “XTKG;”
WHEREAS, the offer
and sale of the Ordinary 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; and
WHEREAS, the Parties
are concurrently entering into a Registration Rights Agreement in the form attached as Exhibit A hereto (the “Registration
Rights Agreement”), pursuant to which the Company shall register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE,
the Parties hereto agree as follows:
Article I. Certain Definitions
Capitalized terms used in this
Agreement shall have the meanings ascribed to such terms in Annex I hereto, and hereby made a part hereof, or as otherwise set
forth in this Agreement.
Article II. Pre-Paid Advances
Section 2.01 Pre-Paid
Advances. Subject to the satisfaction of the conditions set forth in Annex II attached hereto, the Investor shall advance to
the Company the principal amount of $8,000,000 (the “Pre-Paid Advance”), which shall be evidenced by convertible promissory
notes in the form attached hereto as Exhibit B (each, a “Promissory Note”). The first Pre-Paid Advance shall
be in a principal amount of $4,756,986.10 and advanced on the second Trading Day after the Company filling its Form 20-F for the year
of 2023 (the “First Pre-Advance Closing”), (the “First Pre-Advance Closing”), the second Pre-Paid
Advance shall be in a principal amount of $1,500,000 and advanced on the second Trading Day after the filing of the initial Registration
Statement (the “Second Pre-Advance Closing”), the third Pre-Paid Advance shall be in a principal amount of $871,506.95
and advanced on the second Trading Day after the initial Registration Statement is declared effective by the SEC (the “Third
Pre-Advance Closing”) and the fourth Pre-Paid Advance shall be in a principal amount of $871,506.95 and advanced on the sixtieth
(60) calendar day following the date the initial Registration Statement is declared effective by the SEC (the “Fourth Pre-Advance
Closing”) (individually referred to as a “Pre-Advance Closing” and collectively referred to as the “Pre-Advance
Closings”).
Section 2.02 Pre-Advance
Closing. Each Pre-Advance Closing shall occur remotely by conference call and electronic delivery of documentation. The First Pre-Advance
Closing shall take place at 10: 00 a.m., New York time, on the second Trading Day after the Company filling its Form 20-F for the year
of 2023, provided that the conditions set forth on Annex II have been satisfied (or such other date as is mutually agreed to by the Company
and the Investor). The Second Pre-Advance Closing shall take place at 10: 00 a.m., New York time, on the second Trading Day after the
filing of the initial Registration Statement, provided that the conditions set forth on Annex II have been satisfied (or such other date
as is mutually agreed to by the Company and the Investor). The Third Pre-Advance Closing shall take place at 10: 00 a.m., New York
time, on the second Trading Day after the effectiveness of the initial Registration Statement, provided that the conditions set forth
on Annex II have been satisfied (or such other date as is mutually agreed to by the Company and the Investor). The Fourth Pre-Advance
Closing shall take place at 10: 00 a.m., New York time, on sixtieth (60) calendar day following the date the initial Registration Statement
is declared effective by the SEC provided, that the conditions set forth on Annex II have been satisfied (or such other date as is mutually
agreed to by the Company and the Investor). At each Pre-Advance Closing, the Investor shall advance to the Company the principal amount
of the Pre-Paid Advance, less a discount in the amount equal to 7% of the principal
amount of the Pre-Paid Advance netted from the purchase price due and structured as an original issue discount (the “Original
Issue Discount”), in immediately available funds to an account designated by the Company in writing, and the Company shall deliver
the Promissory Note with a principal amount equal to the full amount of the Pre-Paid Advance, duly executed on behalf of the Company.
The Company acknowledges and agrees that the Original Issue Discount (i) shall
not be funded but shall be deemed to be fully earned on at each Pre-Advance Closing, and (ii) shall not reduce the principal amount of
each Promissory Note.
Article III. Advances
Section 3.01 Advances;
Mechanics. Upon the terms and subject to the conditions of this Agreement, during the Commitment Period, (i) 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 subscribe for and
purchase from the Company, Advance Shares by the delivery to the Investor of Advance Notices, provided (x) no balance is outstanding under
a Promissory Note, or, (y) if there is a balance outstanding under a Promissory Note, an Amortization Event has occurred in accordance
with Section 3.01(a)(iii) hereof, and (ii) for as long as there is a balance outstanding under a Promissory Note, the Investor, at its
sole discretion shall have the right, but not the obligation, by the delivery to the Company of Investor Notices, to cause an Advance
Notice to be deemed delivered to the Investor and the issuance and sale of Shares to the Investor pursuant to an Advance, 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 Annex III, 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 (unless otherwise agreed to in writing by the Company and the Investor), it desires to issue and sell to the Investor in
each Advance Notice, the time it desires to deliver each Advance Notice, and the Pricing Period to be used. |
| (ii) | There shall be no mandatory minimum Advances and there shall be no non-usages fee for not utilizing the
Commitment Amount or any part thereof. |
| (iii) | For so long as any amount remains outstanding under a Promissory Note, without the prior written consent
of the Investor, (A) the Company may only (other than with respect to a deemed Advance Notice pursuant to an Investor Notice) submit an
Advance Notice if an Amortization Event has occurred and the obligation of the Company to make monthly prepayments under the Promissory
Note has not ceased, and (B) the Investor shall pay the aggregate purchase price owed to the Company from such Advances (“Advance
Proceeds”) by offsetting the amount of the Advance Proceeds against an equal amount outstanding under the subject Promissory
Note (first towards accrued and unpaid interest, and then towards outstanding principal and the corresponding payment premium (as set
forth in the subject Promissory Note) in respect of such principal amount, if applicable). |
| (b) | Investor Notice. At any time during the Commitment Period, provided that there is a balance remaining
outstanding under a Promissory Note, the Investor may, by delivering an Investor Notice to the Company, cause an Advance Notice to be
deemed delivered to the Investor and the issuance and sale of Shares to the Investor pursuant to an Advance, in accordance with the following
provisions: |
| (i) | The Investor shall, in its sole discretion, select the amount of the Advance up to the Maximum Advance
Amount applicable to the Investor, and the time it desires to deliver each Investor Notice; provided that the amount of the Advance selected
shall not exceed the balance owed under all Promissory Notes outstanding on the date of delivery of the Investor Notice. |
| (ii) | The Purchase Price of the Shares in respect of any Advance Notice deemed delivered pursuant to an Investor
Notice shall be equal to the Conversion Price (as defined in the Promissory Note) in effect on the date of delivery of the Investor Notice.
The Investor shall pay the Purchase Price for the Shares to be issued pursuant to the Investor Notice by offsetting the amount of the
Purchase Price to be paid by the Investor against an equal amount outstanding under a Promissory Note (first towards accrued and unpaid
interest, if any, then towards principal). |
| (iii) | Each Investor Notice shall set forth the amount of the Advance requested, the Purchase Price (which shall
be equal to the Conversions Price) along with a report by Bloomberg, L.P. indicating the relevant VWAP used in calculating the Conversion
Price, the number of Shares to be issued by the Company and purchased by the Investor, the aggregate amount of accrued and unpaid interest
under the subject Promissory Note (if any) that shall be offset by the issuance of Shares, the aggregate amount of principal of the Promissory
Note that shall be offset by the issuance of Shares, and the total amount of the Promissory Note that shall be outstanding following the
closing of the Advance, and each Investor Notice shall serve as the Settlement Document in respect of such Advance. |
| (iv) | Upon the delivery of an Investor Notice, a corresponding Advance Notice shall simultaneously and automatically
be deemed to have been delivered by the Company to the Investor requesting the amount of the Advance set forth in the Investor Notice,
and any conditions precedent to such Advance Notice under the terms of this Agreement that have not been satisfied shall be deemed to
have been waived by the Investor. |
| (c) | Date of Delivery of Advance Notice. Advance Notices shall be delivered in accordance with the instructions
set forth on the bottom of Exhibit C attached hereto. An Advance Notice selecting an Option 1 Pricing Period shall only be delivered
on a Trading Day and shall be deemed delivered on the day such notice is received by e-mail. An Advance Notice selecting an Option 2 Pricing
Period shall be deemed delivered on (i) the day it is received by the Investor if such notice is received by e-mail at or before 9: 00
a.m. New York City time (or at such later time if agreed to by the Investor in its sole discretion), or (ii) the immediately succeeding
day if it is received by e-mail after 9: 00 a.m. New York City time. An Advance Notice deemed delivered pursuant to an Investor Notice
shall be deemed delivered on the same date upon which the Investor Notice is received by the Company. Upon receipt of an Advance Notice,
the Investor shall promptly (and, with respect to an Advance Notice selecting an Option 1 Pricing Period, in no event more than one-half
hour after receipt) provide written confirmation (which may be by e-mail) of receipt of such Advance Notice, and which confirmation, in
the case of an Advance Notice selecting an Option 1 Pricing Period, shall specify the commencement time of the Option 1 Pricing Period. |
Section 3.02 Advance Limitations,
Regulatory. Regardless of the Advance requested in an Advance Notice, including an Advance Notice deemed delivered pursuant to an
Investor Notice, the final number of Shares to be issued and sold pursuant to such Advance Notice shall be reduced (if at all) in accordance
with each of the following limitations:
| (a) | Ownership Limitation; Commitment Amount. At the request of the Company, the Investor will inform
the Company in writing of the number of Ordinary Shares the Investor currently beneficially owns. At the request of the Investor, the
Company shall promptly confirm orally or in writing to the Investor the number of Ordinary Shares then outstanding. 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 Ordinary Shares under this Agreement which, when aggregated with all other Ordinary 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 Ordinary Shares (the “Ownership Limitation”). In connection with each Advance Notice, any portion of an
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 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. |
| (b) | Registration Limitation. In no event shall an Advance exceed the amount registered in respect of
the transactions contemplated hereby under the Registration Statement then in effect (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. |
| (c) | Compliance with Rules of Principal Market. Prior to the date hereof, the Company has taken all
actions required pursuant to Nasdaq Rule 5615(a)(3) to duly and validly rely on the exemption for foreign private issuers from applicable
rules and regulations of the Nasdaq by adopting the home country practice (the “Home Country Practice”) in connection
with the transactions contemplated hereunder (including an exemption from any Nasdaq rules that would otherwise require seeking shareholder
approval in respect of such transactions). The Company may issue the relevant Common Shares upon conversion of any outstanding Promissory
Note or upon any Advances hereunder without regard to the limitations imposed by Nasdaq Rule 5635(d) (the “Exchange Cap”).
So long as any Promissory Note are outstanding, the Company shall comply with the Home Country Practice rules and shall not take any action
to change its Home Country Practice or become subject to Nasdaq Rule 5635(d) with respect to transactions contemplated herein. The Company’s
practices in connection with the transactions contemplated hereunder are not prohibited by its home country’s laws. |
| (d) | Option 1 Volume Threshold. In connection with an Advance Notice where the Company selections an
Option 1 Pricing Period, if the total number of Ordinary Shares traded on the Principal Market during the applicable Pricing Period is
less than the Volume Threshold, then the number of Advance Shares issued and sold pursuant to such Advance Notice shall be reduced to
the greater of (a) 30% of the trading volume of the Ordinary Shares on the Principal Market during such Pricing Period as reported by
Bloomberg L.P., or (b) the number of Ordinary Shares sold by the Investor during such Pricing Period, but in each case not to exceed the
amount requested in the Advance Notice. |
Section 3.03 Advance Limitations,
Option 2 Minimum Acceptable Price.
| (a) | With respect to each Advance Notice the Company may notify the Investor of the Minimum Acceptable Price
with respect to such Advance by indicating a Minimum Acceptable Price on such Advance Notice. If no Minimum Acceptable Price is specified
in an Advance Notice, then no Minimum Acceptable Price 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 Minimum Acceptable Price, the VWAP of the Ordinary Shares is below the
Minimum Acceptable Price 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 33% (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. |
| (b) | The total Advance Shares in respect of each Advance (after reductions have been made to arrive at the
Adjusted Advance Amount, if any) shall be automatically increased by such number of Ordinary Shares (the “Additional Shares”)
equal to greater of (a) the number of Ordinary Shares sold by the Investor on such Excluded Day(s), if any, or (b) such number of Ordinary
Shares elected to be subscribed for by the Investor, and the subscription price per share for each Additional Share shall be equal to
the Minimum Acceptable Price in effect with respect to such Advance Notice multiplied by [97%], 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 3.02. |
Section 3.04 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 7.20, the Investor may sell Ordinary Shares after
receipt of an Advance Notice, including during a Pricing Period.
Section 3.05 Closings.
The closing of each Advance and each sale and purchase of Advance Shares (whether pursuant to an Advance Notice delivered by the Company
or in connection with an Advance Notice deemed delivered by the Company in connection with an Investor Notice) (each, a “Closing”)
shall take place as soon as practicable on each applicable Advance Date in accordance with the procedures set forth below. The Company
acknowledges that, other than in connection with an Investor Notice, the Purchase Price is not known at the time an Advance Notice is
delivered but shall be determined on each Closing based on the daily prices of the Ordinary Shares that are the inputs to the determination
of the Purchase Price. In connection with each Closing, the Company and the Investor shall fulfill each of its obligations as set forth
below:
| (a) | On or prior to each Advance Date, the Investor shall deliver to the Company a Settlement Document along
with a report by Bloomberg, L.P. (or, if not reported on Bloomberg, L.P., another reporting service reasonably agreed to by the parties)
indicating the VWAP for each of the Trading Days during the Pricing Period or period for determining the Conversion Price, in each case
in accordance with the terms and conditions of this Agreement. In connection with an Investor Notice, the Investor Notice shall serve
as the Settlement Document. |
| (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) either (i) in the case of an Advance Notice submitted other than after the occurrence
of an Amortization Event, 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, or (ii) in the case of an Investor Notice or an Advance Notice submitted after
the occurrence of an Amortization Event, as an offset of amounts owed under the Promissory Note as described in Section 3.01(b)(iii).
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 Ordinary Shares by the Investor, the Ordinary Shares will not bear any restrictive legends so long as there is an
effective Registration Statement covering the resale of such Ordinary Shares (it being understood and agreed by the Investor that notwithstanding
the lack of restrictive legends, the Investor may only sell such Ordinary 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, other than in respect of Advance Notices deemed
to be given pursuant to Investor Notices, 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 any 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 Ordinary 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 3.06 Hardship.
| (a) | In the event the Investor sells Ordinary Shares after receipt, or deemed receipt of an Advance Notice
and the Company fails to perform its obligations as mandated in this Agreement, the Company agrees that in addition to and in no way limiting
the rights and obligations set forth in Article VI 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. |
Article IV. 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 the date of each Pre-Advance Closing that:
Section 4.01 Organization
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 the Transaction Documents to which it
is a party and to purchase or acquire Shares in accordance with the terms hereof. The decision to invest and the execution and delivery
of the Transaction Documents to which it is a party 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 the Transaction Documents to which
it is a party and all other instruments on behalf of the Investor or its shareholders. This Agreement and the Transaction Documents to
which it is a party have 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 4.02 Evaluation
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 Ordinary 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 4.03 No Legal,
Investment or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review the Transaction Documents
and the transactions contemplated by the Transaction Documents 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 Ordinary 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 4.04 Investment
Purpose. The Investor is acquiring the Ordinary Shares and any Promissory Note 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 4.05 Accredited
Investor. The Investor is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D.
Section 4.06 Information.
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 4.07 Not 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 4.08 No 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 Ordinary Shares or (ii) hedging transaction, in either case which establishes a net short position with respect to the
Ordinary Shares that remains in effect as of the date of this Agreement.
Section 4.09 General 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 Ordinary
Shares by the Investor.
Article V. Representations
and Warranties of the Company
Except as set forth in the
disclosure schedule delivered by the Company to the Investor concurrently with this Agreement (which is hereby incorporated by reference
in, and constitutes an integral part of, this Agreement) (the “Disclosure Schedule”), or where specifically set forth
below with respect to certain specified representations and warranties, the SEC Documents, the Company hereby makes the following representations,
warranties and covenants to the Investor:
Section 5.01 Organization
and Qualification. The Company and each of its Subsidiaries are entities duly formed, validly existing and in good standing under
the laws of the jurisdiction in which they are formed and have the requisite power and authority to own their properties and to carry
on their business as now being conducted. The Company and each of its Subsidiaries is duly qualified to do business and is in good standing
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 5.02 Authorization,
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 Ordinary 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 or its board of directors except for the approval of the Company’s 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.
Section 5.03 Authorization
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. As of the date of each Pre-Advance Closing, and at all times thereafter, the Company shall have reserved
from its duly authorized capital stock not less than the number of shares of Ordinary Shares issuable upon conversion of all Promissory
Notes (assuming for purposes hereof that (x) such Promissory Note is convertible at a Conversion Price (as defined in each Promissory
Note) equal to the Floor Price as of the date of determination, and (y) any such conversion shall not take into account any limitations
on the conversion of the Promissory Note set forth therein).
Section 5.04 No 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 Ordinary 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 5.05 Issuance
of Ordinary Shares upon conversion of the Promissory Notes. The Company understands and acknowledges that the number of Ordinary Shares
issuable upon conversion of the Promissory Notes will increase in certain circumstances. The Company further acknowledges its obligation
to issue the Ordinary Shares upon conversion of the Promissory Notes in accordance with the terms thereof or upon delivery of an Advance
Notice (including upon receipt of an Investor Notice) is absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.
Section 5.06 SEC Documents;
Financial Statements. Since May 6, 2024, the Company has timely filed (giving effect to permissible extensions in accordance with
Rule 12b-25 under the Exchange Act) all 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 of the 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 5.07 Financial
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 SEC) 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 5.08 Registration
Statement and Prospectus. The Company and the transactions contemplated by this Agreement meet the requirements for and comply with
the conditions for the use of Form F-1 under the Securities Act. 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 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 Notice 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 and the Prospectus to which the Investor has consented.
Section 5.09 No Misstatement
or Omission. Each Registration Statement, when it became or becomes effective, and any Prospectus, on the date of such Prospectus
or amendment or supplement, conformed and will conform in all material respects with the requirements of the Securities Act. At each Advance
Notice 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 SEC, 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 5.10 Conformity
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 5.11 Equity Capitalization.
(a) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of 5,000,000,000 shares
of Ordinary Shares, $0.4 par value, of which 259,824,578 are issued and outstanding.
(b) Valid
Issuance; Available Shares. All of such outstanding shares are duly authorized and have been validly issued and are fully paid
and nonassessable.
(C) Existing Securities;
Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares, interests
or capital stock is subject to preemptive rights or any other similar rights or liens suffered or permitted by the Company or any Subsidiary;
(B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are
no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities
under the Securities Act (except pursuant to this Agreement); (D) there are no outstanding securities or instruments of the Company
or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (E) there are no securities or instruments containing antidilution or similar provisions that will be triggered by
the issuance of the Shares; and (G) neither the Company nor any Subsidiary has entered into any Variable Rate Transaction. There
are no agreements, arrangements, outstanding securities or instruments which will prevent the Company from or give to others any rights
to prevent the Company from satisfying its obligations, including but not limited to the payment of Principal, Interest, Payment Premium
or Redemption Premium (as these terms are defined in the Promissory Notes) under the Transaction Documents.
Section 5.12 Intellectual
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 5.13 Employee
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, is any such dispute threatened, in each case which is reasonably likely to cause a Material Adverse Effect.
Section 5.14 Environmental
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 5.15 Title.
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 5.16 Insurance.
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 5.17 Regulatory
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 5.18 Internal
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 5.19 Absence 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 Ordinary Shares or any of the Company’s Subsidiaries,
wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect.
Section 5.20 Absence of
Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 20-F, there has
been no Material Adverse Effect, nor any event or occurrence specifically affecting the Company or its Subsidiaries that would be reasonably
expected to result in a Material Adverse Effect. Since the date of the Company’s most recent audited financial statements contained
in a Form 20-F, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any material assets,
individually or in the aggregate, outside of the ordinary course of business, or (iii) made any material capital expenditures, individually
or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to
seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding
up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate
involuntary bankruptcy proceedings. The Company is Solvent.
Section 5.21 Subsidiaries.
Other than as set forth in the Disclosure Schedule, the Company does not own or control, directly or indirectly, any interest in any other
corporation, partnership, association or other business entity.
Section 5.22 Tax 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 5.23 Certain 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 5.24 Rights of
First Refusal. The Company is not obligated to offer the Ordinary 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 5.25 Dilution.
The Company is aware and acknowledges that issuance of Ordinary Shares hereunder could cause dilution to existing shareholders and could
significantly increase the outstanding number of Ordinary Shares.
Section 5.26 Acknowledgment
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
or the Promissory Note. The Company is aware and acknowledges that it shall not be able to request Advances under this Agreement if the
Registration Statement is not effective or if any issuances of Ordinary 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 5.27 Finder’s
Fee. 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 5.28 Relationship
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 5.29 Operations.
The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with the Applicable Laws 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 5.30 Forward-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 prepared pursuant to the terms of the Registration Rights Agreement will
be made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
Section 5.31 Compliance
with Laws. The Company and each of its Subsidiaries are in compliance in all material respects 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 5.32 Sanctions
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 any
Pre-Paid Advance, 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 VI. Indemnification
The Investor and the Company
represent to the other the following with respect to itself:
Section 6.01 Indemnification
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, 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(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 6.02 Indemnification
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, its Subsidiaries
and all of its and their 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 Company 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 (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 6.03 Notice 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 VI, 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 VI 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 VI 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 6.04 Remedies.
The remedies provided for in this Article VI 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 VI shall survive expiration
or termination of this Agreement.
Section 6.05 Limitation
of liability. Notwithstanding the foregoing, no party shall seek, nor shall any be entitled to recover from the other party be liable
for, special, incidental, indirect, consequential, punitive or exemplary damages.
Article VII.
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 7.01 Effective
Registration Statement. During the Commitment Period, the Company shall maintain the continuous effectiveness of each Registration
Statement filed with the SEC under the Securities Act pursuant to and in accordance with the Registration Rights Agreement; provided,
however, that in the event there are no Pre-Paid Advances outstanding, the Company shall only be required to use its commercially reasonable
efforts to maintain the continuous effectiveness of the Registration Statement and each subsequent Registration Statement filed with the
SEC under the Securities Act pursuant to and in accordance with the Registration Rights Agreement.
Section 7.02 Registration
and Listing. The Company shall cause the Ordinary Shares to continue to be registered as a class of securities under Section 12(b)
of the Exchange Act, and to comply with its reporting and filing obligations under the Exchange Act, and shall not take any action or
file any document (whether or not permitted by the Securities Act or the Exchange Act) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company
shall continue the listing and trading of its Ordinary Shares and the listing of the Shares purchased by the Investor hereunder on the
Principal Market and to comply with the Company’s reporting, filing and other obligations under the rules and regulations of the
Principal Market. If the Company receives any final and non-appealable notice that the listing or quotation of the Ordinary Shares on
the Principal Market shall be terminated on a date certain, the Company shall promptly (and in any case within 24 hours) notify the Investor
of such fact in writing and shall use its commercially reasonable efforts to cause the Ordinary Shares to be listed or quoted on another
Principal Market.
Section 7.03 Blue Sky.
The Company shall take such action, if any, as is necessary by the Company in order to obtain an exemption for or to qualify the Shares
for sale by the Company to the Investor pursuant to the Transaction Documents, and at the request of the Investor, the subsequent resale
of Registrable Securities by the Investor, in each case, under applicable state securities or “Blue Sky” laws and shall provide
evidence of any such action so taken to the Investor from time to time during the Commitment Period; provided, however,
that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify, (y) subject itself to general taxation in any such jurisdiction, or (z) file a general
consent to service of process in any such jurisdiction.
Section 7.04 Suspension
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 a 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 (A) delay the disclosure of material nonpublic information concerning the
Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or
(B) 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 Ordinary 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 30 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 7.05 Listing of
Ordinary Shares. As of each Advance Notice 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 7.06 Opinion of
Counsel. Prior to the date of the delivery by the Company of the first Advance Notice and the first Pre-Paid Advance, the Investor
shall have received an opinion letter from counsel to the Company in form and substance reasonably satisfactory to the Investor.
Section 7.07 Exchange
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, during the Commitment Period, 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 7.08 Transfer
Agent Instructions. For any time while there is a Registration Statement in effect for this transaction, the Company shall (if required
by the transfer agent for the Ordinary Shares) deliver to the transfer agent for the Ordinary Shares (with a copy to the Investor) instructions
to issue Ordinary Shares to the Investor free of restrictive legends upon each Advance if the delivery of such instructions are consistent
with Applicable Law, in each case supported as needed by an opinion from legal counsel for the Company.
Section 7.09 Corporate
Existence. The Company will use commercially reasonable efforts to preserve and continue the corporate existence of the Company during
the Commitment Period.
Section 7.10 Notice 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: (i) 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 Ordinary 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). 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 3.05(d)), during the continuation of any of the foregoing events (each of the events described in the immediately
preceding clauses (i) through (iv), inclusive, a “Material Outside Event”).
Section 7.11 Consolidation.
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 7.12 Issuance
of the Company’s Ordinary Shares. The issuance and sale of the Ordinary Shares to the Investor 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 7.13 Reservation
of Shares. As of the date of each Pre-Advance Closing, and at all times thereafter, the Company shall have reserved from its duly
authorized capital stock not less than the number of Ordinary Shares issuable upon conversion of all Promissory Notes (assuming for purposes
hereof that (x) such Promissory Note is convertible at a Conversion Price (as defined in each Promissory Note) equal to the Floor Price
as of the date of determination, and (y) any such conversion shall not take into account any limitations on the conversion of the Promissory
Note set forth therein). If at any time the number of Ordinary Shares that remain available for issuance have an aggregate market value
of less than two times the remaining (non-converted) principal balance of all Promissory Notes that are then outstanding (based on a price
per Common Share equal to the average VWAP over the prior thirty (30) Trading Day period), the Company will reserve such number of Ordinary
Shares issuable upon conversion of all Promissory Note as required herein, use commercially reasonable efforts to promptly call and hold
a special meeting of stockholders for the purpose of seeking the approval of its stockholders, as required by the applicable rules of
the Principal Market, for issuances of shares in excess of the Exchange Cap or for an increase in the number of Ordinary Shares for issuance
upon conversion of the Promissory Notes, as applicable.
Section 7.14 Expenses.
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 7.15 Current Report.
The Company shall, not later than 9: 00 a.m., New York City time, on the first business day after the date of this Agreement, file
with the SEC a current report on Form 6-K describing all the material terms of the transactions contemplated by the Transaction
Documents in the form required by the Exchange Act and attaching all the material Transaction Documents (including any exhibits thereto,
the “Current Report”). The Company shall provide the Investor and its legal counsel a reasonable opportunity to comment
on a draft of the Current Report prior to filing the Current Report with the SEC and shall give due consideration to all such comments.
Notwithstanding anything contained in this Agreement to the contrary, the Company expressly agrees that from and after the filing of the
Current Report with the SEC, the Company shall have publicly disclosed all material, nonpublic information provided 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 in connection with the transactions contemplated by the Transaction Documents. In addition,
effective upon the filing of the Current Report, the Company acknowledges and agrees that any and all confidentiality or similar obligations,
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 the Investor or any of its respective officers, directors, affiliates, employees or agents, on the other
hand shall terminate, which upon the Investor’s request the Company shall publicly disclose any and all such information. 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). The Company
understands and confirms that the Investor will rely on the foregoing representations in effecting resales of Shares.
Section 7.16 Use of Proceeds.
The proceeds from the funding of a Pre-Paid Advance and the sale of the Shares by the Company to Investor shall be used by the Company
for the full repayment of the notes issued to Streeterville Capital, LLC (“Streeterville”) and Atlas Sciences, LLC
(“Atlas”) (individually referred to as the “Streeterville Note” and the “Atlas Note”
and collectively the “Notes”) , which are outstanding as of the date hereof and 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. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions
contemplated herein (including any proceeds from the funding of a Pre-Paid Advance) to repay any advances or loans to any executives,
directors, or employees of the Company or any Subsidiary or to make any payments in respect of any related party obligations, including
without limitation any payables or notes payable to related parties of the Company or any Subsidiary whether or not such amounts are described
on the balance sheets of the Company in any SEC Documents and any Subsidiary or described in any “Related Party Transactions”
section of any SEC Documents. The Company shall not without the prior written consent of the Investor loan, invest, transfer or “downstream”
any cash proceeds, or assets or property acquired with cash proceeds from the issuance and sale of the Promissory Note to any Subsidiary,
unless the Investor and the Subsidiary enter into a subsidiary guaranty in a global guaranty agreement in a form acceptable to the Investor
in its sole discretion.
Section 7.17 Compliance
with Laws. The Company shall comply in all material respects with all Applicable Laws.
Section 7.18 Market 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 Ordinary Shares or
(ii) sell, bid for, or purchase Ordinary Shares in violation of Regulation M, or pay anyone any compensation for soliciting purchases
of the Shares.
Section 7.19 Trading Information.
On the first Trading Day of each week (provided the Investor sold any shares during the prior week) and otherwise upon the Company’s
reasonable request, the Investor agrees to provide the Company with trading reports setting forth the number and average sales prices
of shares of Ordinary Shares sold by the Investor during the prior trading week.
Section 7.20 Selling 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 affiliates, 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 Ordinary 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 Ordinary 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 7.21 Assignment.
Neither this Agreement nor any rights or obligations of the parties hereto may be assigned to any other Person.
Section 7.22 No Frustration;
No Variable Rate Transactions, Etc.
| (a) | No Frustration. The Company shall not enter into, announce or recommend to its stockholders any
agreement, plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair
the ability or right of the Company to perform its obligations under the Transaction Documents to which it is a party, including, without
limitation, the obligation of the Company to deliver the Shares to the Investor in respect of an Advance Notice. |
| (b) | No Variable Rate Transactions or Related Party Payments. From the date hereof until the date upon
which the Promissory Notes to be issued hereunder has been repaid in full, the Company shall not (A) repay any loans to any executives
or employees of the Company or to make any payments in respect of any related party debt, and (B) effect or enter into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Ordinary Shares or any security which entitles the holder to acquire
Ordinary Shares (or a combination of units thereof), including but not limited to, involving a Variable Rate Transaction, other than involving
a Variable Rate Transaction with the Investor or the Variable Rate Transactions existing prior to the date hereof listed on Schedule
7.22 (b) attached hereto. The Investor shall be entitled to seek injunctive relief against the Company and its Subsidiaries to preclude
any such issuance, which remedy shall be in addition to any right to collect damages, without the necessity of showing economic loss and
without any bond or other security being required. |
| (c) | During the period beginning on the date hereof and ending on the date upon which the Promissory Note to
be issued hereunder has been repaid in full, the Company shall not effect any reverse stock split or share consolidation except, with
the prior written notice and consent of the Investor, solely for reinstating compliance with NASDAQ regulations. Upon a reverse stock
split, the Fixed Price shall be adjusted accordingly. |
Article VIII.
Non-Exclusive Agreement
Subject to Section 7.22 hereof,
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 Ordinary
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
Section 9.01 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 10.01 Termination.
| (a) | Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earliest
of (i) the 24-month anniversary of the Effective Date, provided that if the Promissory Note is then outstanding, such termination
shall be delayed until such date that the Promissory Note that was outstanding has been repaid, or (ii) the date on which the Investor
shall have made payment of Advances pursuant to this Agreement for Ordinary 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 under which Ordinary Shares have yet to be issued, (ii) there
is not an outstanding Promissory Note, and (iii) 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 VI shall survive termination hereunder. |
Article XI. Notices
Other than with respect to
Advance Notices, which must be in writing 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
C hereof) shall be:
|
If to the Company, to: |
|
X3 Holdings Co., Ltd.
Suite 412, Tower A, Tai Seng Exchange
One Tai Seng Avenue, Singapore 536464
Attn: Kelvin Chan
E-mail: kelvinchan@x3holdings.com
|
|
With copies (which shall not constitute notice or delivery of
process) to: |
|
Attn: Yu Wang; Xinyue Yang
E-mail: yu.wang@hk.kwm.com; xinyue.yang@hk.kwm.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: |
|
David Gonzalez, Esq.
1012 Springfield Avenue
Mountainside, NJ 07092 |
| |
|
Telephone: |
(201) 985-8300 |
| |
|
Email: |
legal@yorkvilleadvisors.com |
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 delivery in accordance
with clause (i), (ii) or (iii) above, respectively.
Article XII. Miscellaneous
Section 12.01 Counterparts.
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 as originals and effective for all purposes of this Agreement.
Section 12.02 Entire 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 12.03 Reporting
Entity for Ordinary Shares. The reporting entity relied upon for the determination of the trading price or trading volume of the Ordinary
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 12.04 Commitment
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 the
Company shall pay to the Investor, a structuring fee in the amount of $15,000, which has been paid prior to the date hereof. The Company
shall pay to the Investor on the date the initial Registration Statement has been declared effective by the SEC a commitment fee in an
amount equal to 1% of the Commitment Amount (the “Commitment Fee”) either in cash or by the issuance to the Investor
such number of Ordinary Shares that is equal to the Commitment Fee divided by the closing price of the Ordinary Shares as of the Trading
Day immediately prior to the date hereof (the “Commitment Shares”). The Commitment Shares issuable hereunder shall
be included on the initial Registration Statement.
Section 12.05 Brokerage.
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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.
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COMPANY: |
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X3 HOLDINGS CO., LTD. |
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By: |
/s/ Stewart Lor |
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Name: |
Stewart Lor |
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Title: |
CEO |
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INVESTOR: |
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YA II PN, Ltd. |
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By: |
Yorkville Advisors Global, LP |
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Its: |
Investment Manager |
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By: |
Yorkville Advisors Global II, LLC |
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Its: |
General Partner |
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By: |
/s/ David Gonzalez |
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Name: |
David Gonzalez |
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Title: |
General Counsel |
ANNEX I TO THE
STANDBY EQUITY PURCHASE AGREEMENT
DEFINITIONS
“Additional Shares”
shall have the meaning set forth in Section 3.03.
“Adjusted Advance Amount”
shall have the meaning set forth in Section 3.03
“Advance”
shall mean any issuance and sale of Advance Shares by the Company to the Investor pursuant to this Agreement.
“Advance Date”
shall mean the first Trading Day after expiration of the applicable Pricing Period for each Advance, provided that, with respect to an
Advance pursuant to an Investor Notice, the Advance Date shall be the first Trading Day after the date of delivery of such Investor Notice.
“Advance Notice”
shall mean a written notice in the form of Exhibit C 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 3.01(c) of this Agreement) an Advance Notice
to the Investor, subject to the terms of this Agreement.
“Advance Shares”
shall mean the Ordinary 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 4.07.
“Agreement”
shall have the meaning set forth in the preamble of this Agreement.
“Amortization Event”
shall have the meaning set forth in the Promissory Note.
“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.
“Black Out Period”
shall have the meaning set forth in Section 7.01
“Closing”
shall have the meaning set forth in Section 3.05.
“Commitment Amount”
shall mean $30,000,000 of Ordinary Shares.
“Commitment Fee”
shall have the meaning set forth in Section 12.04.
“Commitment Shares”
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 Share Equivalents”
shall mean any securities of the Company or its Subsidiaries which entitle the holder thereof to acquire at any time Ordinary Shares,
including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares.
“Ordinary 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 6.02.
“Condition Satisfaction
Date” shall have the meaning set forth in Annex II.
“Conversion Price”
shall have the meaning set forth in the Promissory Note.
“Daily Traded Amount”
shall mean the daily trading volume of the Company’s Ordinary Shares on the Principal Market during regular trading hours as reported
by Bloomberg L.P.
“Disclosure Schedule”
shall have the meaning set forth in Article V.
“Effective Date”
shall mean the date hereof.
“Environmental Laws”
shall have the meaning set forth in Section 5.14.
“Event of Default”
shall have the meaning set forth in the Promissory Note.
“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 3.02(c).
“Excluded Day”
shall have the meaning set forth in Section 3.03.
“Fixed Price”
shall have the meaning set forth in the Promissory Note.
“Hazardous Materials”
shall have the meaning set forth in Section 5.14.
“Indemnified Liabilities”
shall have the meaning set forth in Section 6.01.
“Investor”
shall have the meaning set forth in the preamble of this Agreement.
“Investor Notice”
shall mean a written notice to the Company in the form set forth herein as Exhibit E attached hereto.
“Investor Indemnitees”
shall have the meaning set forth in Section 6.01.
“Market Price”
shall mean an Option 1 Market Price or Option 2 Market Price, as applicable.
“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 7.10.
“Maximum Advance Amount”
means (A) in respect of each Advance Notice delivered by the Company pursuant to Section 3.01(a) of this Agreement, an amount equal to
one hundred percent (100%) of the average of the Daily Traded Amount during the five consecutive Trading Day immediately preceding an
Advance Notice, and (B) in respect of each Advance Notice deemed delivered by the Company pursuant to an Investor Notice, the amount selected
by the Investor in such Investor Notice, which amount shall not exceed the limitations set forth in Section 3.02 of this Agreement.
“Option 2 Minimum Acceptable
Price” 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 5.32.
“Option 1 Market Price”
shall mean the VWAP of the Ordinary Shares during the Option 1 Pricing Period.
“Option 2 Market Price”
shall mean the lowest daily VWAP of the Ordinary Shares during the Option 2 Pricing Period.
“Option 1 Pricing Period”
shall mean the period on the applicable Advance Notice Date with respect to an Advance Notice selecting an Option 1 Pricing Period commencing
(i) if submitted to Investor prior to 9: 00 a.m. Eastern Time on a Trading Day, the open of trading on such day or (ii) if submitted
to Investor after 9: 00 a.m. Eastern Time on a Trading Day, upon receipt by the Company of written confirmation (which may be by e-mail)
of acceptance of such Advance Notice by the Investor (or the open of regular trading hours, if later), and which confirmation shall specify
such commencement time, and, in either case, ending on 4: 00 p.m. New York City time on the applicable Advance Notice Date.
“Option 2 Pricing Period”
shall mean the three consecutive Trading Days commencing on the Advance Notice Date.
“Option 1Volume Threshold”
shall mean a number of Ordinary Shares equal to the quotient of (a) the number of Advance Shares requested by the Company in an Advance
Notice divided by (b) 0.30.
“Original Issue Discount”
shall have the meaning set forth in Section 2.02.
“Ownership Limitation”
shall have the meaning set forth in Section 3.02(a).
“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.
“Pre-Advance
Closing” shall have the meaning set forth in Section 2.01.
“Pre-Paid
Advance” shall mean have the meaning set forth in Section 2.01.
“Pricing Period”
shall mean the three consecutive Trading Days commencing on the Advance Notice Date.
“Pricing Period”
shall mean the Option 1 Pricing Period or Option 2 Pricing Period, as applicable.
“Principal Market”
shall mean the Nasdaq Stock Market; provided however, that in the event the Ordinary Shares are ever listed or traded on the New York
Stock Exchange, or the NYSE American, then the “Principal Market” shall mean such other market or exchange on which the Ordinary
Shares are then listed or traded to the extent such other market or exchange is the principal trading market or exchange for the Ordinary
Shares.
“Promissory Note”
shall have the meaning set forth in Section 2.01.
“Prospectus”
shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with
a Registration Statement, including documents incorporated by reference therein.
“Prospectus Supplement”
shall mean any prospectus supplement to a Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act, including documents
incorporated by reference therein.
“Purchase Price”
shall mean the price per Advance Share obtained by multiplying the Market Price by (i) 93% in respect of an Advance Notice with an Option
1 Pricing Period, (ii) 97% in respect of an Advance Notice with an Option 2 Pricing Period, or (iii) in the case of any Advance Notice
delivered pursuant to an Investor Notice the Purchase Price set forth in Section 3.01(b)(ii)
“Registration Limitation”
shall have the meaning set forth in Section 3.02(b).
“Registration Statement”
shall have the meaning set forth in the Registration Rights Agreement.
“Registrable Securities”
shall have the meaning set forth in the Registration Rights Agreement.
“Regulation D”
shall mean the provisions of Regulation D promulgated under the Securities Act.
“Sanctions”
shall have the meaning set forth in Section 5.32.
“Sanctioned Countries”
shall have the meaning set forth in Section 5.32.
“SEC” shall
mean the U.S. Securities and Exchange Commission.
“SEC Documents”
shall mean (1) any registration statement on Form S-4 filed by the Company with the SEC, including the financial statements, schedules,
exhibits and all other documents filed as a part thereof or incorporated therein and all information deemed to be a part thereof as of
the effective date of such registration statement under the Securities Act, (2) any proxy statement or prospectus filed by the Company
with the SEC, including all documents incorporated or deemed incorporated therein by reference, whether or not included in a registration
statement on Form S-4, in the form in which such proxy statement or prospectus has most recently been filed with the SEC pursuant to Rule
424(b) under the Securities Act, (3) all reports, schedules, registrations, forms, statements, information and other documents filed with
or furnished to the SEC by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act during the two years prior to
the date hereof, including, without limitation, the Current Report, (4) each Registration Statement, as the same may be amended from time
to time, the Prospectus contained therein and each Prospectus Supplement thereto and (5) all information contained in such filings and
all documents and disclosures that have been and heretofore shall be incorporated by reference therein.
“Securities Act”
shall have the meaning set forth in the recitals of this Agreement.
“Settlement Document”
in respect of an Advance Notice delivered by the Company, shall mean a settlement document in the form set out on Exhibit D, and
in respect of an Advance Notice deemed delivered pursuant to an Investor Notice, shall mean the Investor Notice containing the information
set forth on Exhibit E.
“Shares”
shall mean the Commitment Shares and the Ordinary Shares to be issued from time to time hereunder pursuant to an Advance.
“Solvent”
shall mean, as to any Person as of any date of determination, that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of such Person
is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s
ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which such Person’s property would constitute an unreasonably small capital.
The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“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”
means, collectively, this Agreement, the Registration Rights Agreement, any Promissory Notes issued by the Company hereunder, 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.
“Variable Rate Transaction”
shall mean a transaction in which the Company (i) issues or sells any Ordinary Shares or Common Share Equivalents that are convertible
into, exchangeable or exercisable for, or include the right to receive additional Ordinary Shares either (A) at a conversion price, exercise
price, exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Ordinary Shares
at any time after the initial issuance of Ordinary Shares or Common Share Equivalents, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the initial issuance of such equity or debt security or upon the occurrence
of specified or contingent events directly or indirectly related to the business of the Company or the market for the Ordinary Shares
(including, without limitation, any “full ratchet,” “share ratchet,” “price ratchet,” or “weighted
average” anti-dilution provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction), (ii) enters into, or effects a transaction under, any agreement, including
but not limited to an “equity line of credit” or other continuous offering or similar offering of Ordinary Shares or Common
Share Equivalents, (iii) issues or sells any Ordinary Shares or Common Share Equivalents (or any combination thereof) at an implied discount
(taking into account all the securities issuable in such offering) to the market price of the Ordinary Shares at the time of the offering
in excess of 30% or (iv) enters into or effects any forward purchase agreement, equity pre-paid forward transaction or other similar offering
of securities where the purchaser of securities of the Company receives an upfront or periodic payment of all, or a portion of, the value
of the securities so purchased, and the Company receives proceeds from such purchaser based on a price or value that varies with the trading
prices of the Ordinary Shares.
“VWAP” shall
mean for any Trading Day or specified period, the daily volume weighted average price of the Ordinary Shares for such Trading Day on the
Principal Market during regular trading hours, or such specified period, as reported by Bloomberg L.P through its “AQR” function.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other
similar transaction during such period.
ANNEX II TO THE
STANDBY EQUITY PURCHASE AGREEMENT
CONDITIONS PRECEDENT TO THE INVESTOR’S
OBLIGATION TO FUND A PRE-PAID ADVANCE
The obligation of the Investor
to advance to the Company a Pre-Paid Advance hereunder at each Pre-Advance Closing is subject to the satisfaction, as of the date of such
Pre-Advance Closing, of each of the following conditions, provided that these conditions are for the Investor’s sole benefit and
may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:
| (a) | The Company shall have filed its Form 20-F for the year of 2023. |
| (b) | The Company shall have duly executed and delivered to the Investor each of the Transaction Documents to
which it is a party and the Company shall have duly executed and delivered to the Investor a Promissory Note with a principal amount corresponding
to the amount of the applicable Pre-Paid Advance (before any deductions made thereto). |
| (c) | The Company shall have delivered to the Investor a compliance certificate executed by the chief executive
officer of the Company certifying that Company has complied with all of the conditions precedent to the Pre-Advance Closing set forth
herein and which may be relied upon by the Investor as evidence of satisfaction of such conditions without any obligation to independently
verify. |
| (d) | The Investor shall have received an opinion of counsel to the Company, dated on or before the First Pre-Advance
Closing Date, in a form reasonably acceptable to the Investor. |
| (e) | The Investor shall have received a closing statement in a form to be agreed by the parties, duly executed
by an officer of the Company, setting forth wire transfer instructions of the Company for the payment of the amount of the Pre-Paid Advance,
the amount to be paid by the Investor, which shall be the full principal amount of the Pre-Paid Advance, less the Original Issue Discount,
and any other deductions that may be agreed by the parties. |
| (f) | The Company shall have delivered to the Investor a closing certificate executed by the chief executive
officer of the Company. |
| (g) | The Company shall have delivered to the Investor copies of its and each Subsidiaries certified copies
of its charter, as well as any shareholder or operating agreements by or among the shareholders or members of any of the Company’s
Subsidiaries. |
| (h) | The Company shall have delivered to the Investor a certificate evidencing the incorporation and good standing
of the Company as of a date within ten (10) days of the Pre-Advance Closing date. |
| (i) | 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 date hereof, 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. |
| (j) | The Company shall have delivered to the Investor written confirmation from Streeterville and Atlas, to
the satisfaction of the Investor, setting forth (i) the amounts owed and outstanding pursuant to Notes, (ii) acknowledging that Streeterville’s
and Atlas’s receipt of the amounts owed pursuant to the Notes from the proceeds of the First Pre-Advance shall satisfy all amounts
and obligations owed to Streeterville and Atlas pursuant to the Notes and (iii) that such Notes shall be deemed fully paid and that Streeterville
and Atlas shall have no further rights or recourse to which they would be entitled under the Notes and applicable transaction documents
pursuant to which such Notes were issued. |
| (k) | Each and every representation and warranty of the Company shall be true and correct in all material respects
(other than representations and warranties qualified by materiality, which shall be true and correct in all respects) as of the date when
made and as of the date of the Pre-Advance Closing as though originally made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied
and complied in all respects with the covenants, agreements and conditions set forth in each Transaction Document required to be performed,
satisfied or complied with by the Company at or prior to the Pre-Advance Closing date. |
| (l) | No Suspension of Trading in or Delisting of Ordinary Shares. Trading in the Ordinary 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 Ordinary Shares on the Principal Market shall be terminated on a date certain (unless, prior to such
date certain, the Ordinary Shares is 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 Ordinary Shares, electronic trading or book-entry services by DTC with respect
to the Ordinary 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 Ordinary Shares, electronic trading or book-entry services by DTC with respect
to the Ordinary 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). |
| (m) | The Company shall have obtained all governmental, regulatory or third-party consents and approvals, if
any, necessary for the sale of the Ordinary Shares. |
| (n) | No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental entity of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents. |
| (o) | Since the date of execution of this Agreement, no event or series of events shall have occurred that has
resulted in or would reasonably be expected to result in a Material Adverse Effect, or an Event of Default. |
| (p) | No material breach of this Agreement or any Transaction Document shall have occurred (with the passage
of time or the giving of notice, or both, would constitute a material breach of this Agreement or any Transaction Document) and no Event
of Default shall have occurred (assuming that the Promissory Note had been outstanding at of each Pre-Advance Closing (with the passage
of time or the giving of notice, of both, would constitute an Event of Default). |
| (q) | The Company shall have notified the Principal Market of the issuance of all of the Shares hereunder, the
Principal Market shall have completed its review of the related Listing of Additional Share form and the Company shall have obtained approval
of the Principal Market to list or designate for quotation (as the case may be) the maximum number of Ordinary Shares issuable pursuant
to the Promissory Note to be issued at the Pre-Advance Closing. |
| (r) | The Company and its Subsidiaries shall have delivered to the Investor such other documents, instruments
or certificates relating to the transactions contemplated by this Agreement as the Investor or its counsel may reasonably request. |
| (s) | Solely with respect to the Second Pre-Advance Closing, the Registration Statement shall have been filed
with the SEC in accordance with the provisions set forth in the Registration Rights Agreement, including the filing deadline set forth
therein. |
| (t) | Solely with respect to the Third Pre-Advance Closing, the Registration Statement shall be effective in
accordance with the provisions set forth in the Registration Rights Agreement, including the effectiveness deadline set froth therein. |
| (u) | Solely with respect to the Fourth Pre-Advance Closing, sixty (60) calendar days shall have elapsed from
the date the Registration Statement was declared effective in accordance with the provisions set forth in the Registration Rights Agreement. |
ANNEX III TO THE
STANDBY EQUITY PURCHASE AGREEMENT
CONDITIONS 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, except to the extend
such representations and warranties are as of another date, such representations and warranties shall be true and correct as of such other
date. |
| (b) | Issuance of Commitment Shares. The Company shall have paid the Commitment Fee or issued
the Commitment Shares to an account designated by the Investor on or prior to the date the initial Registration Statement was declared
effective by the SEC , in accordance with Section 12.04, all of which Commitment Fee shall be fully earned and non-refundable, regardless
of whether any Advance Notices are made or settled hereunder or any subsequent termination of this Agreement. |
| (c) | Registration of the Ordinary 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 Ordinary Shares issuable pursuant
to such Advance Notice. The Current Report shall have been filed with the SEC and 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. |
| (d) | Authority. The Company shall have obtained all permits and qualifications required by any applicable
state for the offer and sale of all the Ordinary Shares issuable pursuant to such Advance Notice, or shall have the availability of exemptions
therefrom. The sale and issuance of such Ordinary Shares shall be legally permitted by all laws and regulations to which the Company is
subject. |
| (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 date hereof,
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) | No Material Outside Event. No Material Outside Event shall have occurred and be continuing. |
| (g) | 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. |
| (h) | 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. |
| (i) | No Suspension of Trading in or Delisting of Ordinary Shares. Trading in the Ordinary 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 Ordinary Shares on the Principal Market shall be terminated on a date certain (unless, prior to such
date certain, the Ordinary Shares is 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 Ordinary Shares, electronic trading or book-entry services by DTC with respect
to the Ordinary 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 Ordinary Shares, electronic trading or book-entry services by DTC with respect
to the Ordinary 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). |
| (j) | Authorized. All of the Shares issuable pursuant to the applicable Advance Notice shall have been
duly authorized by all necessary corporate action of the Company. All Shares relating to all prior Advance Notices required to have been
received by the Investor under this Agreement shall have been delivered to the Investor in accordance with this Agreement. |
| (k) | 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. |
Schedule 7.22(b)
1. Equity Line, White Lion Capital LLC, a Nevada limited liability
company, on September 1, 2022
2. Equity Line, TBS CAPITAL LP, a UK limited partnership, on November
29, 2022
- 43 -
Exhibit
99.2
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
X3
HOLDINGS CO., LTD.
Convertible
Promissory Note
Original Principal Amount:
Issuance
Date:
Number:
FOR
VALUE RECEIVED, X3 HOLDINGS CO., LTD., an entity organized under the laws of the Cayman Islands (the “Company”),
hereby promises to pay to the order of YA II PN, LTD., or its registered assigns (the “Holder”), the amount set out
above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to repayment, redemption, conversion or otherwise,
the “Principal”) and Payment Premium or Redemption Premium, as applicable, in each case when due, and to pay interest
(“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set out
above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity
Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms
used herein are defined in Section (12). The Issuance Date is the date of the first issuance of this Convertible Promissory Note (the
“Note”) regardless of the number of transfers and regardless of the number of instruments, which may be issued to
evidence such Note. This Note was issued with a 7% original issue discount.
This
Note is being issued pursuant to Section 2.01 of the Standby Equity Purchase Agreement, dated May 16, 2024 (as may be amended, amended
and restated, extended, supplemented or otherwise modified in writing from time to time, the “SEPA”), between the
Company and the YA II PN, Ltd., as the Investor. This Note may be repaid in accordance with the terms of the SEPA, including, without
limitation, pursuant to Investor Notices and corresponding Advance Notices deemed given by the Company in connection with such Investor
Notices. The Holder also has the option of converting on one or more occasions all or part of the then outstanding balance under this
Note by delivering to the Company one or more Conversion Notices in accordance with Section 3 of this Note.
(1)
GENERAL TERMS
(a)
Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal,
accrued and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Note. The “Maturity Date”
shall be [*], as may be extended at the option of the Holder. Other than as specifically permitted by this Note, the Company may
not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest.
(b)
Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal
to 8% (“Interest Rate”), which Interest Rate shall increase to an annual rate of 18% upon the occurrence of an Event
of Default (for so long as such event remains uncured). Interest shall be calculated based on a 365-day year and the actual number of
days elapsed, to the extent permitted by applicable law.
(c)
Monthly Payments. If, any time after the Issuance Date set forth above, and from time to time thereafter, an Amortization Event
occurs, then the Company shall make monthly payments beginning on the 7th Trading Day after the Amortization Event Date and continuing
on the same day of each successive Calendar Month. Each monthly payment shall be in an amount equal to the sum of (i) $2,500,000 of the
outstanding Principal in the aggregate among this Note and all Other Notes (or the outstanding Principal if less than such amount) (the
“Amortization Principal Amount”), plus (ii) the Payment Premium (as defined below) in respect of such Amortization
Principal Amount, and (iii) accrued and unpaid interest hereunder as of each payment date. The obligation of the Company to make monthly
prepayments related to a Amortization Event shall cease (with respect to any payment that has not yet come due) if any time after the
Amortization Date (A) in the event of a Floor Price Event, on the date that is the 5th consecutive Trading Day that the daily VWAP is
greater than 110% of the Floor Price then in effect, or (B) in the event of an Exchange Cap Event, the date the Company has obtained
stockholder approval to increase the number of Ordinary Shares under the Exchange Cap and/ or the Exchange Cap no longer applies, (C)
in the event of a Registration Event, the condition or event causing the Registration Event has been cured or the Holder is able to resell
the Ordinary Shares issuable upon conversion of this Note in accordance with Rule 144 under the Securities Act, unless a subsequent Amortization
Event occurs.
(d)
Optional Redemption. The Company at its option shall have the right, but not the obligation, to redeem (“Optional Redemption”)
early a portion or all amounts outstanding under this Note as described in this Section; provided that (i) the Company provides
the Holder with at least 10 Trading Days’ prior written notice (each, a “Redemption Notice”) of its desire to
exercise an Optional Redemption, and (ii) on the date the Redemption Notice is issued, the VWAP of the Ordinary Shares is less than the
Fixed Price. Each Redemption Notice shall be irrevocable and shall specify the outstanding balance of the Note to be redeemed and the
Redemption Amount. The “Redemption Amount” shall be equal to the outstanding Principal balance being redeemed by the
Company, plus the Redemption Premium (as defined below), plus all accrued and unpaid interest. After receipt of the Redemption Notice,
the Holder shall have 10 Trading Days to elect to convert all or any portion of the Note. On the 11th Trading Day after the Redemption
Notice, the Company shall deliver to the Holder the Redemption Amount with respect to the Principal amount redeemed after giving effect
to conversions or other payments effected during the 10 Trading Day period.
(e)
Payment Dates. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(2)
EVENTS OF DEFAULT.
(a)
An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any
order, rule or regulation of any administrative or governmental body):
(i)
The Company’s failure to pay to the Holder any amount of Principal, Redemption Amount, Payment Premium, Interest, or other amounts when
and as due under this Note or any other Transaction Document within five (5) Trading Days after such payment is due;
(ii)
The Company or any Subsidiary of the Company shall commence, or there shall be commenced against the Company or any Subsidiary of the
Company any proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or
the Company or any Subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect relating
to the Company or any Subsidiary of the Company, any such bankruptcy, insolvency or other proceeding which remains undismissed for a
period of sixty one (61) days; or the Company or any Subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the Company or any Subsidiary of the Company suffers any appointment
of any custodian, private or court appointed receiver or the like for it or all or substantially all of its property which continues
undischarged or unstayed for a period of sixty one (61) days; or the Company or any Subsidiary of the Company makes a general assignment
of all or substantially all of its assets for the benefit of creditors; or the Company or any Subsidiary of the Company shall fail to
pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any
Subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of
its debts; or the Company or any Subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any Subsidiary of the Company
for the purpose of effecting any of the foregoing;
(iii)
The Company or any Subsidiary of the Company shall default, in any of its obligations under any debenture, mortgage, credit agreement
or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may
be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the
Company or any Subsidiary of the Company in an amount exceeding $500,000, whether such indebtedness now exists or shall hereafter be
created and such default is not cured within the time prescribed by the documents governing such indebtedness or if no time is prescribed,
within ten (10) Trading Days, and as a result, such indebtedness becomes or is declared due and payable;
(iv)
A final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or any
of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed
pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which
is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount set forth
above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company
or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance
of such judgment;
(v)
The Ordinary Shares shall cease to be quoted or listed for trading, as applicable, on any Primary Market for a period of ten (10) consecutive
Trading Days;
(vi)
The Company or any Subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section (12)) unless
in connection with such Change of Control Transaction this Note is retired;
(vii)
The Company’s (A) failure to deliver the required number of Ordinary Shares to the Holder within two (2) Trading Days after the
applicable Share Delivery Date or (B) notice, written or oral, to any holder of the Note, including by way of public announcement, at
any time, of its intention not to comply with a request for conversion of any Note into Ordinary Shares that is tendered in accordance
with the provisions of the Note;
(viii)
The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within five (5) Business
Days after such payment is due;
(ix)
The Company’s failure to timely file with the Commission any Periodic Report on or before the due date of such filing as established
by the Commission, it being understood, for the avoidance of doubt, that due date includes any permitted filing deadline extension under
Rule 12b-25 under the Exchange Act;
(x)
Any material representation or warranty made or deemed to be made by or on behalf of the Company in or in connection with any Transaction
Document, or any waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any such
representation or warranty already qualified by materiality, such representation or warranty shall prove to have been incorrect) when
made or deemed made;
(xi)
Any material provision of any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly
permitted hereunder or thereunder, ceases to be in full force and effect; or the Company or any other Person contests in writing the
validity or enforceability of any provision of any Transaction Document; or the Company denies in writing that it has any or further
liability or obligation under any Transaction Document, or purports in writing to revoke, terminate (other than in line with the relevant
termination provisions) or rescind any Transaction Document;
(xii)
The Company uses the proceeds of the issuance of this Note, whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulations T, U and X of the Federal Reserve Board,
as in effect from time to time and all official rulings and interpretations thereunder or thereof), or to extend credit to others for
the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose; or
(xiii)
Any Event of Default (as defined in the Other Notes or in any Transaction Document other than this Note) occurs with respect to any Other
Notes, or any breach of any material term of any other debenture, note, or instrument held by the Holder in the Company or any agreement
between or among the Company and the Holder; or
(xiv)
The Company shall fail to observe or perform any material covenant, agreement or warranty contained in, or otherwise commit any material
breach or default of any provision of this Note (except as may be covered by Section (2)(a)(i) through (2)(a)(xiii) hereof) or any other
Transaction Document, which is not cured or remedied within the time prescribed or if no time is prescribed within ten (10) Business
Days.
(b)
During the time that any portion of this Note is outstanding, if any Event of Default has occurred (other than an event with respect
to the Company described in Section (2)(a)(ii)), the full unpaid Principal amount of this Note, together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become at the Holder’s election given by notice pursuant to Section (5),
immediately due and payable in cash; provided that, in the case of any event with respect to the Company described in Section (2)(a)(ii),
the full unpaid Principal amount of this Note, together with interest and other amounts owing in respect thereof to the date of acceleration,
shall automatically become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation)
to convert, on one or more occasions all or part of the Note in accordance with Section (3) (and subject to the limitations set out in
Section (3)(c)(i) and Section (3)(c)(ii)) at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price.
The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required
notice of conversion) and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such declaration may be rescinded and annulled by the Holder in writing at any time prior to payment
hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
(3)
CONVERSION OF NOTE. This Note shall be convertible into shares of the Company’s Ordinary Shares, on the terms and conditions set
forth in this Section (3).
(a)
Conversion Right. Subject to the limitations of Section (3)(c), at any time or times on or after the Issuance Date, the Holder
shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable Ordinary Shares
in accordance with Section (3)(b), at the Conversion Price. The number of Ordinary Shares issuable upon conversion of any Conversion
Amount pursuant to this Section (3)(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price. The Company
shall not issue any fraction of a share of Ordinary Shares upon any conversion. All calculations under this Section (3) shall be rounded
to the nearest $0.0001. If the issuance would result in the issuance of a fraction of a share of Ordinary Shares, the Company shall round
such fraction of a share of Ordinary Shares up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar
taxes that may be payable with respect to the issuance and delivery of Ordinary Shares upon conversion of any Conversion Amount.
(b)
Mechanics of Conversion.
(i)
Optional Conversion. To convert any Conversion Amount into Ordinary Shares on any date (a “Conversion Date”),
the Holder shall (A) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a
copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to
the Company and (B) if required by Section (3)(b)(iii), surrender this Note to a nationally recognized overnight delivery service for
delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Note in the case
of its loss, theft or destruction). On or before the third (3rd) Trading Day following the date of receipt of a Conversion
Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be placed on certificates of
Ordinary Shares and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”) Fast
Automated Securities Transfer Program, credit such aggregate number of Ordinary Shares to which the Holder shall be entitled to the Holder’s
or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion
Notice, a certificate, registered in the name of the Holder or its designee, for the number of Ordinary Shares to which the Holder shall
be entitled which certificates shall not bear any restrictive legends unless required pursuant to rules and regulations of the Commission.
If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion
of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business
Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal
not converted. The Person or Persons entitled to receive the Ordinary Shares issuable upon a conversion of this Note shall be treated
for all purposes as the record holder or holders of such Ordinary Shares upon the transmission of a Conversion Notice.
(ii)
Company’s Failure to Timely Convert. If within five (5) Trading Days after the Company’s receipt of an email copy of a Conversion
Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the
number of Ordinary Shares to which the Holder is entitled upon such holder’s conversion of any Conversion Amount (a “Conversion
Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Ordinary Shares
to deliver in satisfaction of a sale by the Holder of Ordinary Shares issuable upon such conversion that the Holder anticipated receiving
from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s request and
in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage
commissions and other out of pocket expenses, if any) for the Ordinary Shares so purchased (the “Buy-In Price”), at
which point the Company’s obligation to deliver such certificate (and to issue such Ordinary Shares) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates representing such Ordinary Shares and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Ordinary Shares, times (B) the Closing
Price on the Conversion Date.
(iii)
Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion
Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice
may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company
shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.
(c)
Limitations on Conversions.
(i)
Beneficial Ownership. The Holder shall not have the right to convert any portion of this Note to the extent that after giving
effect to such conversion, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with
Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of Ordinary Shares outstanding
immediately after giving effect to such conversion or receipt of shares as payment of interest. Since the Holder will not be obligated
to report to the Company the number of Ordinary Shares it may hold at the time of a conversion hereunder, unless the conversion at issue
would result in the issuance of Ordinary Shares in excess of 4.99% of the then outstanding Ordinary Shares without regard to any other
shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine
whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of which portion of the Principal amount of this Note is convertible
shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a Principal amount of this
Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in
excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum
Principal amount permitted to be converted on such Conversion Date in accordance with Section (3)(a) and, any Principal amount tendered
for conversion in excess of the permitted amount hereunder shall remain outstanding under this Note. The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other
Holders shall be unaffected by any such waiver.
(ii)
Home Country Practice. Prior to the date hereof, the Company has taken all actions required pursuant to Nasdaq Rule 5615(a)(3)
to duly and validly rely on the exemption for foreign private issuers from applicable rules and regulations of the Nasdaq by adopting
the home country practice (the “Home Country Practice”) in connection with the transactions contemplated hereunder
(including an exemption from any Nasdaq rules that would otherwise require seeking shareholder approval in respect of such transactions).
The Company may issue the relevant Common Shares upon conversion of any outstanding Promissory Note or upon any Advances hereunder without
regard to the limitations imposed by Nasdaq Rule 5635(d) (the “Exchange Cap”). So long as any Promissory Note are
outstanding, the Company shall comply with the Home Country Practice rules and shall not take any action to change its Home Country Practice
or become subject to Nasdaq Rule 5635(d) with respect to transactions contemplated herein. The Company’s practices in connection
with the transactions contemplated hereunder are not prohibited by its home country’s laws.
(d)
Other Provisions.
(i)
All calculations under this Section (3) shall be rounded to the nearest $0.0001 or whole share.
(ii)
So long as this Note or any Other Notes remain outstanding, the Company shall have reserved from its duly authorized share capital, and
shall have instructed its transfer agent to irrevocably reserve, the maximum number of Ordinary Shares issuable upon conversion of this
Note and the Other Notes (assuming for purposes hereof that (x) this Note and such Other Notes are convertible at the Floor Price as
of the date of determination, (y) any such conversion shall not take into account any limitations on the conversion of the Note or Other
Notes set forth herein or therein (the “Required Reserve Amount”), provided that at no time shall the number of Ordinary
Shares reserved pursuant to this Section (3)(d)(ii) be reduced other than proportionally with respect to all Ordinary Shares in connection
with any conversion (other than pursuant to the conversion of this Note and the Other Notes in accordance with their terms) and/or cancellation,
or reverse stock split. If at any time the number of Ordinary Shares authorized but unissued and not otherwise reserved for issuance
(including (i) in relation to equity or debt securities convertible into or exchangeable or exercisable for or that can be settled in
Ordinary Shares (other than the Note and the Other Notes) and (ii) Ordinary Shares remaining available for issuance under the Company’s
equity incentive plans) is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary
to propose to its general meeting of shareholders an increase of its authorized share capital necessary to meet the Company’s obligations
pursuant to this Note, recommending that shareholders vote in favor of such an increase. If at any time the number of Ordinary Shares
that remain available for issuance under the Exchange Cap is less than 100% of the maximum number of shares issuable upon conversion
of all the Notes and Other Notes then outstanding (assuming for purposes hereof that (x) the Notes are convertible at the Conversion
Price then in effect, and (y) any such conversion shall not take into account any limitations on the conversion of the Note, other than
the Floor Price then in effect but solely with respect to the Variable Price), the Company will use commercially reasonable efforts to
promptly call and hold a shareholder meeting for the purpose of seeking the approval of its shareholders as required by the applicable
rules of the Principal Market, for issuances of shares in excess of the Exchange Cap or an increase of its Ordinary Shares, for issuance
upon conversion of the Promissory Note, as applicable. The Company covenants that, upon issuance in accordance with conversion of this
Note in accordance with its terms, the Ordinary Shares, when issued, will be validly issued, fully paid and nonassessable.
(iii)
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (2) herein for
the Company’s failure to deliver certificates representing Ordinary Shares upon conversion within the period specified herein and
such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of
any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.
(iv)
Legal Opinions. In the event no Registration Statement is in effect and the Holder is eligible to dispose of the Underlying Shares
in reliance of Rule 144 of the Securities Act, the Company is obligated to cause its legal counsel to deliver legal opinions to the Company’s
transfer agent in connection with any legend removal upon the expiration of any holding period or other requirement for which the Underlying
Shares may bear legends restricting the transfer thereof. To the extent that a legal opinion is not provided (either timely or at all),
then, in addition to being an Event of Default hereunder, the Company agrees to reimburse the Holder for all reasonable costs incurred
by the Holder in connection with any legal opinions paid for by the Holder in connection with sale or transfer of Underlying Ordinary
Shares. The Holder shall notify the Company of any such costs and expenses it incurs that are referred to in this section from time to
time and all amounts owed hereunder shall be paid by the Company with reasonable promptness.
(e)
Adjustment of Conversion Price upon Subdivision or Combination of Ordinary Shares. If the Company, at any time while this Note
is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Ordinary Shares
or any other equity or equity equivalent securities payable in Ordinary Shares, (b) subdivide outstanding Ordinary Shares into a larger
number of shares, (c) combine (including by way of reverse stock split) outstanding Ordinary Shares into a smaller number of shares,
or (d) issue by reclassification of Ordinary Shares any shares of capital stock of the Company, then each of the Fixed Price and the
Floor Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares (excluding treasury shares,
if any) outstanding before such event and of which the denominator shall be the number of Ordinary Shares outstanding after such event.
Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
(f)
Adjustment of Conversion Price upon Issuance of Ordinary Shares. If the Company, at any time while this Note is outstanding, issues
or sells any Ordinary Shares (other than in connection with the SEPA) or Convertible Securities, for a consideration per share (the “New
Issuance Price”) less than a price equal to the Fixed Price in effect immediately prior to such issue or sale (such price the
“Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance
the Fixed Price then in effect shall be reduced to an amount equal to the New Issuance Price. For the purposes hereof, if the Company
in any manner issues or sells any Convertible Securities and the lowest price per share for which one Ordinary Share is issuable upon
such conversion or exchange or exercise thereof is less than the Applicable Price, then such Ordinary Share shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per
share. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Ordinary Share upon conversion or
exchange or exercise of such Convertible Securities.
(g)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of Ordinary Shares are entitled to receive securities or other assets with respect
to or in exchange for Ordinary Shares (a “Corporate Event”), the Company shall make appropriate provision to ensure
that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option, (i) in addition to
the Ordinary Shares receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with
respect to such Ordinary Shares had such Ordinary Shares been held by the Holder upon the consummation of such Corporate Event (without
taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the Ordinary Shares otherwise
receivable upon such conversion, such securities or other assets received by the holders of Ordinary Shares in connection with the consummation
of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion
rights for the form of such consideration (as opposed to Ordinary Shares) at a conversion rate for such consideration commensurate with
the Conversion Price. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required
Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without
regard to any limitations on the conversion or redemption of this Note.
(h)
Whenever the Conversion Price is adjusted pursuant to Section (3) hereof, the Company shall promptly provide the Holder with a written
notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(i)
In case of any (1) merger or consolidation of the Company or any Subsidiary of the Company with or into another Person, or (2) sale by
the Company or any Subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions,
a Holder shall have the right to (A) exercise any rights under Section (2)(a)(xiii), (B) convert the aggregate amount of this Note then
outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Ordinary
Shares following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to
receive such amount of securities, cash and property as the Ordinary Shares into which such aggregate Principal amount of this Note could
have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger
or consolidation, require the surviving entity to issue to the Holder a convertible Note with a Principal amount equal to the aggregate
Principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such
newly issued convertible Note shall have terms identical (including with respect to conversion) to the terms of this Note, and shall
be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this
Note was issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock
or convertible debentures shall be based upon the amount of securities, cash and property that each Ordinary Shares would receive in
such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The
terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the
securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall
similarly apply to successive such events.
(4)
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with Section (4)(d)), registered in the name of the registered
transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest
thereof) and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Section (4)(d)) to the
Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge
and agree that, by reason of the provisions of Section (3)(b)(iii) following conversion or redemption of any portion of this Note, the
outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute
and deliver to the Holder a new Note (in accordance with Section (4)(d)) representing the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section (4)(d)) representing in the aggregate the outstanding Principal
of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the
time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms hereof, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 5(4)(a) or Section 5(4)(c), the Principal designated by the Holder which,
when added to the Principal represented by the other new Note issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Note), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as
this Note, and (v) shall represent accrued and unpaid Interest from the Issuance Date.
(5)
NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must
be in writing by letter and email and will be deemed to have been delivered: upon the later of (A) either (i) receipt, when delivered
personally or (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case,
properly addressed to the party to receive the same and (B) receipt, when sent by electronic mail. The addresses and e-mail addresses
for such communications shall be:
| If to the Company, to: |
|
X3 Holdings Co., Ltd |
| |
|
Suite
412, Tower A, Tai Seng Exchange
One
Tai Seng Avenue, Singapore 536464 |
| |
|
Attn: Kelvin Chan |
| |
|
Telephone: +86-13229776627 |
| |
|
Email: kelvinchan@x3holdings.com |
| |
|
|
with
a copy (which shall not constitute notice) to: |
|
|
| |
|
|
|
|
E-mail:
holicleung@x3holdings.com, sandyhe@x3holdings.com |
| |
|
|
| If to the Holder: |
|
YA II PN, Ltd |
| |
|
c/o
Yorkville Advisors Global, LLC
1012
Springfield Avenue |
| |
|
Mountainside, NJ 07092 |
| |
|
Attention: Mark Angelo |
| |
|
Telephone: 201-985-8300 |
| |
|
Email: Legal@yorkvilleadvisors.com |
or
at such other address and/or email and/or to the attention of such other person as the recipient party has specified by written notice
given to each other party three (3) 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, receipt by facsimile or receipt from a nationally recognized overnight delivery service
in accordance with clause (i), (ii) or (iii) above, respectively.
(6)
Except as expressly provided herein, no provision of this Note shall alter or impair the obligations of the Company, which are absolute
and unconditional, to pay the Principal of, interest and other charges (if any) on, this Note at the time, place, and rate, and in the
currency, herein prescribed. This Note is a direct obligation of the Company. As long as this Note is outstanding, the Company shall
not and shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws
or other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase or
otherwise acquire shares of its Ordinary Shares or other equity securities; (iii) enter into any agreement with respect to any of the
foregoing, or (iv) enter into any agreement, arrangement or transaction in or of which the terms thereof would restrict, materially delay,
conflict with or impair the ability of the Company to perform its obligations under the this Note, including, without limitation, the
obligation of the Company to make cash payments hereunder.
(7)
This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right
to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other
proceedings of the Company, unless and to the extent converted into Ordinary Shares in accordance with the terms hereof.
(8)
CHOICE OF LAW; VENUE; WAIVER OF JURY TRIAL
(a)
Governing Law. This Note and the rights and obligations of the Parties hereunder shall, in all respects, be governed by, and construed
in accordance with, the laws (excluding the principles of conflict of laws) of the State of New York (the “Governing Jurisdiction”)
(including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), including all matters of construction,
validity and performance.
(b)
Jurisdiction; Venue; Service.
(i)
The Company hereby irrevocably consents to the non-exclusive personal jurisdiction of the state courts of the Governing Jurisdiction
and, if a basis for federal jurisdiction exists, the non-exclusive personal jurisdiction of any United States District Court for the
Governing Jurisdiction.
(ii)
The Company agrees that venue shall be proper in any court of the Governing Jurisdiction selected by the Holder or, if a basis for federal
jurisdiction exists, in any United States District Court in the Governing Jurisdiction. The Company waives any right to object to the
maintenance of any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract
or in tort or otherwise, in any of the state or federal courts of the Governing Jurisdiction on the basis of improper venue or inconvenience
of forum.
(iii)
Any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or
otherwise, brought by the Company against the Holder arising out of or based upon this Note or any matter relating to this Note, or any
other Transaction Document, or any contemplated transaction, shall be brought in a court only in the Governing Jurisdiction. The Company
shall not file any counterclaim against the Holder in any suit, claim, action, litigation or proceeding brought by the Holder against
the Company in a jurisdiction outside of the Governing Jurisdiction unless under the rules of the court in which the Holder brought such
suit, claim, action, litigation or proceeding the counterclaim is mandatory, and not permissive, and would be considered waived unless
filed as a counterclaim in the suit, claim, action, litigation or proceeding instituted by the Holder against the Company. The Company
agrees that any forum outside the Governing Jurisdiction is an inconvenient forum and that any suit, claim, action, litigation or proceeding
brought by the Company against the Holder in any court outside the Governing Jurisdiction should be dismissed or transferred to a court
located in the Governing Jurisdiction. Furthermore, the Company irrevocably and unconditionally agrees that it will not bring or commence
any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort
or otherwise, against the Holder arising out of or based upon this Note or any matter relating to this Note, or any other Transaction
Document, or any contemplated transaction, in any forum other than the courts of the State of New York sitting in New York County, and
the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties
hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such suit,
claim, action, litigation or proceeding may be heard and determined in such New York State Court or, to the fullest extent permitted
by applicable law, in such federal court. The Company and the Holder agree that a final judgment in any such suit, claim, action, litigation
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by law.
(iv)
The Company and the Holder irrevocably consent to the service of process out of any of the aforementioned courts in any such suit, claim,
action, litigation or proceeding by the mailing of copies thereof by registered or certified mail postage prepaid, to it at the address
provided for notices in this Note, such service to become effective thirty (30) days after the date of mailing.
(v)
Nothing herein shall affect the right of the Holder to serve process in any other manner permitted by law or to commence legal proceedings
or to otherwise proceed against the Company or any other Person in the Governing Jurisdiction or in any other jurisdiction.
(c)
THE PARTIES MUTUALLY WAIVE ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS OF ANY KIND ARISING OUT OF OR BASED UPON THIS NOTE OR ANY MATTER
RELATING TO THIS NOTE, OR ANY OTHER TRANSACTION DOCUMENT, OR ANY CONTEMPLATED TRANSACTION. THE PARTIES ACKNOWLEDGE THAT THIS IS A WAIVER
OF A LEGAL RIGHT AND THAT THE PARTIES EACH MAKE THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH COUNSEL OF THEIR RESPECTIVE
CHOICE. THE PARTIES AGREE THAT ALL SUCH CLAIMS SHALL BE TRIED BEFORE A JUDGE OF A COURT HAVING JURISDICTION, WITHOUT A JURY.
(9)
If the Company fails to strictly comply with the terms of this Note, then the Company shall reimburse the Holder promptly for all fees,
costs and expenses, including, without limitation, attorneys’ fees and expenses reasonably incurred by the Holder in any action
in connection with this Note, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection
with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due
to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection,
preservation or enforcement of any rights or remedies of the Holder.
(10)
Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach
of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to
any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.
(11)
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision
is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it
shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all
or any portion of the Principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so)
hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though
no such law has been enacted.
(12)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
Amortization Event” shall mean (i) the daily VWAP is less than the Floor Price then in effect for five Trading Days during
a period of seven consecutive Trading Days (a “Floor Price Event”), (ii) unless the Company has obtained the approval
from its stockholders in accordance with the rules of the Principal Market for the issuance of Shares pursuant to the transactions contemplated
in this Note and the SEPA in excess of the Exchange Cap, the Company has issued in excess of 99% of the Ordinary Shares available under
the Exchange Cap (an “Exchange Cap Event”), or (iii) the Company is in material breach of the Registration Rights
Agreement, and such breach remains uncured for a period of 10 Trading Days, or the occurrence of an Event (as defined in the Registration
Rights Agreement) (a “Registration Event”) (the last such day of each such occurrence, a “Amortization Event
Date”)
(b)
“Amortization Principal Amount” shall have the meaning set forth in Section (1)(c).
(c)
“Applicable Price” shall have the meaning set forth in Section (3)(f).
(d)
“Bloomberg” means Bloomberg Financial Markets.
(e)
“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United
States or a day on which banking institutions are authorized or required by law or other government action to close.
(f)
“Buy-In” shall have the meaning set forth in Section (3)(b)(ii).
(g)
“Buy-In Price” shall have the meaning set forth in Section (3)(b)(ii).
(h)
“Calendar Month” means one of the months as named in the calendar.
(i)
“Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%)
of the voting power of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible
securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time of
more than one-half of the members of the board of directors of the Company (other than as due to the death or disability of a member
of the board of directors) which is not approved by a majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of
directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation
or sale of fifty percent (50%) or more of the assets of the Company or any Subsidiary of the Company in one or a series of related transactions
with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (a), (b) or (c). No transfer to a wholly-owned Subsidiary shall be deemed a Change
of Control Transaction under this provision.
(j)
“Closing Price” means the price per share in the last reported trade of the Ordinary Shares on a Primary Market or
on the exchange which the Ordinary Shares are then listed as quoted by Bloomberg.
(k)
“Commission” means the Securities and Exchange Commission.
(l)
“Ordinary Shares” means the shares of Ordinary Shares, par value $.04, of the Company and stock of any other class
into which such shares may hereafter be changed or reclassified.
(m)
“Conversion Amount” means the portion of the Principal, Interest, or other amounts outstanding under this Note to
be converted, redeemed or otherwise with respect to which this determination is being made.
(n)
“Conversion Date” shall have the meaning set forth in Section (3)(b)(i).
(o)
“Conversion Failure” shall have the meaning set forth in Section (3)(b)(ii).
(p)
“Conversion Notice” shall have the meaning set forth in Section (3)(b)(i).
(q)
“Conversion Price” means, as of any Conversion Date or other date of determination the lower of (i) $0.9856 per Ordinary
Share (the “Fixed Price”), or (ii) 93% of the lowest daily VWAP during the 10 consecutive Trading Days immediately
preceding the Conversion Date or other date of determination (the “Variable Price”), but which Variable Price shall
not be lower than the Floor Price. On the later to occur of May 27, 2024 or the effectiveness of the initial Registration Statement (the
“Fixed Price Reset Date”), the Fixed Price shall be adjusted (downwards only) to equal the average VWAP for the five
(5) Trading Days immediately prior to the Fixed Price Reset Date. The Conversion Price shall be adjusted from time to time pursuant to
the other terms and conditions of this Note.
(r)
“Convertible Securities” means any stock or securities directly or indirectly convertible into or exercisable or exchangeable
for Ordinary Shares.
(s)
“Dilutive Issuance” shall have the meaning set forth in Section (3)(f).
(t)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(u)
“Floor Price” solely with respect to the Variable Price, shall mean $0.1641per Ordinary Share. Notwithstanding the
foregoing, the Company may reduce the Floor Price to any amounts set forth in a written notice to the Holder; provided that such reduction
shall be irrevocable and shall not be subject to increase thereafter.
(v)
“Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation of
the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly
owned Subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially
all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Ordinary Shares are permitted to tender or exchange their shares for other securities,
cash or property, or (4) the Company effects any reclassification of the Ordinary Shares or any compulsory share exchange pursuant to
which the Ordinary Shares is effectively converted into or exchanged for other securities, cash or property.
(w)
“New Issuance Price” shall have the meaning set forth in Section (3)(f).
(x)
“Other Notes” means any other notes issued pursuant to the SEPA and any other debentures, notes, or other instruments
issued in exchange, replacement, or modification of the foregoing.
(y)
“Payment Premium” means 10% of the Principal amount being paid.
(z)
“Periodic Reports” shall mean all of the Company’s reports required to be filed by the Company with the Commission
under applicable laws and regulations (including, without limitation, Regulation S-K), including annual reports (on Form 20-F), for so
long as any amounts are outstanding under this Note or any Other Note; provided that all such Periodic Reports shall include,
when filed, all information, financial statements, audit reports (when applicable) and other information required to be included in such
Periodic Reports in compliance with all applicable laws and regulations.
(aa)
“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government
or political subdivision thereof or a governmental agency.
(bb)
“Primary Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq
Global Market or the Nasdaq Global Select Market, and any successor to any of the foregoing markets or exchanges.
(cc)
“Redemption Premium” means 10% of the Principal amount being redeemed.
(dd)
“Registration Rights Agreement” means the registration rights agreement entered into between the Company and the Holder
on the date hereof.
(ee)
“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights
Agreement, covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder”
thereunder.
(ff)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(gg)
“Share Delivery Date” shall have the meaning set forth in Section (3)(b)(i).
(hh)
“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity
of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such
Person; or (iii) one or more Subsidiaries of such Person.
(ii)
“Trading Day” means a day on which the Ordinary Shares are quoted or traded on a Primary Market on which the Ordinary
Shares are then quoted or listed; provided, that in the event that the Ordinary Shares are not listed or quoted, then Trading Day shall
mean a Business Day.
(jj)
“Transaction Document” means, each of, the Other Notes, the SEPA, the Registration Rights Agreement and any and all
documents, agreements, instruments or other items executed or delivered in connection with any of the foregoing.
(kk)
“Underlying Shares” means the Ordinary Shares issuable upon conversion of this Note or as payment of interest in accordance
with the terms hereof.
(ll)
“VWAP” means, for any security as of any date, the daily dollar volume-weighted average price for such security on the
Primary Market during regular trading hours as reported by Bloomberg through its “Historical Prices – Px Table with Average
Daily Volume” functions.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be duly executed by a duly authorized officer as of the
date set forth above.
| |
COMPANY: |
| |
|
| |
X3 HOLDINGS CO., LTD. |
| |
|
| |
By: |
/s/
Stewart Lor |
| |
Name: |
Stewart Lor |
| |
Title: |
CEO |
EXHIBIT
I
CONVERSION NOTICE
(To
be executed by the Holder in order to Convert the Note)
TO:
X3 HOLDINGS CO., LTD.
Via
Email:
The
undersigned hereby irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Note No. [*] into
Ordinary Shares of X3 HOLDINGS CO., LTD., according to the conditions stated therein, as of the Conversion Date written below.
| Conversion Date: |
| |
| Principal Amount to
be Converted: |
| |
| Accrued Interest to
be Converted: |
| |
| Total Conversion Amount
to be converted: |
| |
| Fixed Price: |
| |
| Variable Price: |
| |
| Applicable Conversion
Price: |
| |
| Number of Ordinary Shares
to be issued: |
| |
| Please issue the Ordinary Shares in the following
name and deliver them to the following account: |
| |
| Issue to: |
| |
| Broker DTC Participant
Code: |
| |
| Account Number: |
| Authorized Signature: |
|
|
| |
|
|
| Name: |
|
|
| |
|
|
| Title: |
|
|
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