Financing and Issuance - The Company plans to issue Senior Convertible Promissory Notes with an aggregate original principal amount of up to US56,000,000 in serial transactions[5] - Each Note carries an original issue discount of 20% of the original principal amount[8] - The Company is authorized to issue a maximum of 5,000,000,000 shares with a par value of US70,000,000 under the Shelf registering Conversion Shares[26] Regulatory Compliance - The Ordinary Shares are registered under Section 12(b) of the Exchange Act and listed on Nasdaq[22] - The Registration Statement became effective on August 24, 2022, and no stop order has been issued by the SEC[20] - The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act[20] Transaction Terms - The Company has the requisite corporate power and authority to execute and deliver the Transaction Documents[14] - The Conversion Shares will be validly issued, fully paid, and non-assessable when issued in compliance with the Agreement[15] - The Purchaser must deliver a Purchase Notice specifying the principal amount of Notes to be purchased at Closing[25] - The Agreement may be terminated upon mutual written consent or if the Note is cancelled or forfeited[27] - Confidential Information must be kept confidential unless required by law or stock exchange rules[29] - The Company agrees to indemnify the Purchaser for any loss or damage arising from breaches of representations and warranties[40] - The Company and Purchaser must negotiate in good faith to resolve any disputes, with arbitration in Hong Kong if necessary[32] - The Agreement is governed by the internal laws of the State of New York[34] - The Company must execute and deliver the Note to the Purchaser at Closing[26] - The Agreement contains the entire understanding of the parties and supersedes any prior agreements[35] Note Details - The Note carries an Original Issue Discount (OID) of 20% of the principal amount as specified in the Securities Purchase Agreement[60] - Interest accrues at a simple rate of 8% per annum on the Outstanding Balance until fully repaid or converted[60] - The Maturity Date for the Outstanding Balance is set for 24 months following the Effective Date[61] - The Conversion Price is calculated with a discount of 25% of the lowest closing price of the last five trading days prior to the Conversion Notice[71] - The floor price for conversion is established at no lower than $0.30 per share[73] - A Prepayment Premium of 115% applies if the Borrower opts to prepay the Outstanding Balance[69] Default and Rights - Trigger Events include failure to pay amounts due, insolvency, and failure to deliver Conversion Shares[74] - The Borrower must maintain a Share Reserve as defined in the Securities Purchase Agreement[74] - The Note ranks senior in right of payment to any future indebtedness that is expressly subordinated[63] - The Lender has the right to convert the Outstanding Balance into Ordinary Shares at any time before full repayment[71] - The Outstanding Balance becomes immediately due and payable in cash upon the occurrence of any Event of Default, with Default Interest accruing at a rate of 22% per annum[9] - Borrower waives any rights of offset against Lender, acknowledging the Note as an unconditional obligation[10] - Borrower cannot convert the Note if it would cause Lender to own more than 4.99% of the outstanding shares[11] Dispute Resolution - Any disputes arising from this Agreement will be settled by arbitration at the Hong Kong International Arbitration Centre[14] - The Note will be deemed paid in full after the entire Outstanding Balance is repaid or converted[15] - Any amendments to the Note require prior written consent from both parties[16] - Borrower may not assign the Note without Lender's consent, while Lender can transfer shares without Borrower's consent[17] - Notices required under the Note must follow the procedures outlined in the Securities Purchase Agreement[18] - If any part of the Note is found to violate the law, it will be modified to achieve the intended objective while the rest remains effective[19] - The Note is governed by the internal laws of the State of New York[12]
MMTEC(MTC) - 2023 Q1 - Quarterly Report