Document:

* 

Exhibit 10.9

 

HANOVER BANCORP, INC.

 

and

 

U.S. Bank National Association

 

as Trustee, Paying Agent and Registrar

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as of October 7, 2020

 

to

 

INDENTURE

 

Dated as of October 7, 2020

 

5.00% Fixed-to-Floating Rate Subordinated
Notes due 2030

 

FIRST SUPPLEMENTAL
INDENTURE (this “First Supplemental Indenture”), dated as of October 7, 2020, between HANOVER BANCORP, INC.,
a New York corporation (the “Company”), and U.S. Bank National Association,
a national banking association, organized and existing under the laws of the United States of America, as trustee (the “Trustee”),
Registrar and Paying Agent.

 

RECITALS

 

WHEREAS, the Company
and the Trustee have heretofore executed and delivered the Indenture, dated as of even date herewith (the “Base Indenture”
and, as hereby supplemented and amended, the “Indenture”), providing for the establishment from time to time
of series of the Company’s unsecured debt securities, which may be debentures, notes, bonds or other evidences of indebtedness
(hereinafter called the “Securities”) and the issuance from time to time of Securities under the Indenture;
and

 

WHEREAS, Section 9.01(g)
of the Base Indenture provides that the Company and the Trustee may enter into a supplemental indenture to the Base Indenture to
establish the form or terms of Securities of a series thereunder as permitted by Article II and Article III of the Base Indenture;
and

 

WHEREAS, pursuant to
Section 3.01 of the Base Indenture, the Company desires to establish a new series of Securities under the Indenture to be known
as its “5.00% Fixed-to-Floating Rate Subordinated Notes due 2030” (the “Notes”), to establish
the form and terms and conditions of the Notes, as provided in this First Supplemental Indenture, and to provide for the initial
issuance of Notes in the aggregate principal amount of TWENTY FIVE Million and No/100
($25,000,000.00) dollars; and

 

    	 	1	 

     

    

 

WHEREAS, the Company
has requested that the Trustee execute and deliver this First Supplemental Indenture; and all requirements necessary to make (i)
this First Supplemental Indenture a valid, binding and enforceable instrument in accordance with its terms, and (ii) the Notes,
when executed by the Company and authenticated and delivered by the Trustee in accordance with the Indenture, the valid, binding
and enforceable obligations of the Company, have been satisfied; and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects; and

 

WHEREAS, this First
Supplemental Indenture shall not result in a material modification of the Notes for purposes of compliance with the Foreign Account
Tax Compliance Act.

 

NOW, THEREFORE, in
consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

 

Article
I.     DEFINITIONS

 

Section 1.01       Relation to Base Indenture. This First Supplemental Indenture constitutes an integral part of the Base Indenture.

 

Section 1.02       Definition of Terms. For all purposes of this First Supplemental Indenture:

 

(a)          Capitalized terms used herein without definition shall have the meanings set forth in the Base Indenture, provided that,
if the definition of a capitalized term defined in this First Supplemental Indenture conflicts with the definition of that capitalized
term in the Base Indenture, the definition of that capitalized term in this First Supplemental Indenture shall control for purposes
of this First Supplemental Indenture and the Notes and (in respect of the Notes but not any other series of Securities) the Base
Indenture;

 

(b)          a term defined anywhere in this First Supplemental Indenture has the same meaning throughout;

 

(c)          the singular includes the plural and vice versa;

 

(d)          headings are for convenience of reference only and do not affect interpretation;

 

(e)          unless otherwise specified or unless the context requires otherwise, (i) all references in this First Supplemental Indenture
to Sections refer to the corresponding Sections of this First Supplemental Indenture, and (ii) the terms “herein,”
 “hereof,” “hereunder” and any other word of similar import refer to this First Supplemental Indenture;
and

 

(f)           for purposes of this First Supplemental Indenture and the Notes, the following terms have the meanings given to them in
this Section 1.02(f):

 

“1940 Act Event”
means an event requiring the Company to register as an investment company pursuant to the Investment Company Act of 1940, as amended.

 

    	 	2	 

     

    

 

“Benchmark” means,
initially, Three-Month Term SOFR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have
occurred on or prior to the Reference Time with respect to Three-Month Term SOFR or the then-current Benchmark, then “Benchmark”
means the applicable Benchmark Replacement.

 

“Benchmark Replacement”
means the Interpolated Benchmark with respect to the then-current Benchmark, plus the Benchmark Replacement Adjustment for such
Benchmark; provided that if (a) the Calculation Agent cannot determine the Interpolated Benchmark as of the Benchmark Replacement
Date or (b) the then-current Benchmark is Three-Month Term SOFR and a Benchmark Transition Event and its related Benchmark Replacement
Date have occurred with respect to Three-Month Term SOFR (in which event no Interpolated Benchmark with respect to Three-Month
Term SOFR shall be determined), then “Benchmark Replacement” means the first alternative set forth in the order below
that can be calculated by the Calculation Agent as of the Benchmark Replacement Date:

 

(1)      Compounded
SOFR;

 

(2)      the
sum of (a) the alternate rate that has been selected or recommended by the Relevant Governmental Body as the replacement for the
then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment;

 

(3)      the
sum of (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; and

 

(4)      the
sum of (a) the alternate rate that has been selected by the Company, and communicated thereby in writing to the Calculation Agent
(if other than the Company), as the replacement for the then-current Benchmark for the applicable Corresponding Tenor, giving due
consideration to any industry-accepted rate as a replacement for the then-current Benchmark for U.S. dollar-denominated floating
rate securities at such time, and (b) the Benchmark Replacement Adjustment.

 

“Benchmark Replacement Adjustment”
means the first alternative set forth in the order below that can be calculated by the Calculation Agent as of the Benchmark Replacement
Date:

 

(1)      the
spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or
zero), that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;

 

    	 	3	 

     

    

 

(2)     if
the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment; and

 

(3)     the
spread adjustment (which may be a positive or negative value or zero) that has been selected by the Company, and communicated thereby
in writing to the Calculation Agent (if other than the Company), giving due consideration to any industry-accepted spread adjustment
or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable
Unadjusted Benchmark Replacement for U.S. dollar-denominated floating rate securities at such time.

 

“Benchmark Replacement Conforming
Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including
changes to the definition of “Interest Period”, timing and frequency of determining rates with respect to each Interest
Period and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the Company determines
may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice
(or, if the Company determines that adoption of any portion of such market practice is not administratively feasible or if the
Company determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Company determines
is reasonably necessary). The Company shall promptly notify the Calculation Agent (if other than the Company) in writing of any
such determination.

 

“Benchmark Replacement Date”
means the earliest to occur of the following events with respect to the then-current Benchmark:

 

(1)     in
the case of clause (1) of the definition of “Benchmark Transition Event,” the relevant Reference Time in respect of
any determination;

 

(2)     in
the case of clause (2) or (3) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public
statement or publication of information referenced therein and (b) the date on which the administrator of the Benchmark permanently
or indefinitely ceases to provide the Benchmark; or

 

(3)     in
the case of clause (4) of the definition of “Benchmark Transition Event,” the date of the public statement or publication
of information referenced therein.

 

For the avoidance of doubt, for
purposes of the definitions of Benchmark Replacement Date and Benchmark Transition Event, references to the Benchmark also include
any reference rate underlying the Benchmark (for example, if the Benchmark becomes Compounded SOFR, references to the Benchmark
would include SOFR).

 

For the avoidance of doubt, if
the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect
of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination.

 

    	 	4	 

     

    

 

“Benchmark Transition Event”
means the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(1)    if
the Benchmark is Three-Month Term SOFR, (a) the Relevant Governmental Body has not selected or recommended a forward-looking term
rate for a tenor of three months based on SOFR, (b) the development of a forward-looking term rate for a tenor of three months
based on SOFR that has been recommended or selected by the Relevant Governmental Body is not complete or (c) the Company determines
that the use of a forward-looking rate for a tenor of three months based on SOFR is not administratively feasible;

 

(2)    a
public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that such administrator
has ceased or will cease to provide the Benchmark, permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide the Benchmark;

 

(3)    a
public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the central
bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark, a resolution
authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency or resolution
authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased or will cease
to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no
successor administrator that will continue to provide the Benchmark; or

 

(4)    a
public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that
the Benchmark is no longer representative.

 

“Business Day”
means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which the Trustee or banking institutions
in the City of New York are authorized or required by law, regulation or executive order to close.

 

“Calculation Agent”
means the agent appointed by the Company prior to the commencement of the Floating Rate Period (which may include the Company or
any of its Affiliates) to act in accordance with this First Supplemental Indenture. The Company shall initially act as the Calculation
Agent.

 

    	 	5	 

     

    

 

“Compounded SOFR”
means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and
conventions for this rate being established by the Company and communicated thereby in writing to the Calculation Agent (if other
than the Company) in accordance with:

 

(1)      the
rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for
determining compounded SOFR; provided that:

 

(2)      if,
and to the extent that, the Company determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then
the rate, or methodology for this rate, and conventions for this rate that have been selected by the Company and communicated thereby
in writing to the Calculation Agent (if other than the Company) giving due consideration to any industry-accepted market practice
for U.S. dollar-denominated floating rate securities at such time.

 

For the avoidance of doubt, the
calculation of Compounded SOFR shall exclude the Benchmark Replacement Adjustment and the spread specified in Section 2.05(b)(ii).

 

“Corresponding Tenor”
with respect to a Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding
business day adjustment) as the applicable tenor for the then-current Benchmark.

 

“DTC” has the
meaning set forth in Section 2.03 hereof.

 

“Federal Reserve Board”
means the Board of Governors of the Federal Reserve System or any successor regulatory authority with jurisdiction over bank holding
companies.

 

“Fixed Rate Interest Payment
Date” has the meaning set forth in Section 2.05(b)(i) hereof.

 

“Fixed Rate Interest Record
Date” has the meaning set forth in Section 2.05(b)(i).

 

“Fixed Rate Period”
has the meaning set forth in Section 2.05(b)(i) hereof.

 

“Floating Rate Interest
Payment Date” has the meaning set forth in Section 2.05(b)(ii) hereof.

 

“Floating Rate Interest
Record Date” has the meaning set forth in Section 2.05(b)(ii).

 

“Floating Rate Period”
has the meaning set forth in Section 2.05(b)(ii)hereof.

 

“FRBNY” means
the Federal Reserve Bank of New York.

 

“Federal Reserve Bank
of New York’s Website” means the website of the FRBNY at http://www.newyorkfed.org, or any successor source.

 

“Foreign Account Tax Compliance
Act” means mean Sections 1471 through 1474 of the Internal Revenue Code of 1986 (as amended from time to time) as of
the date hereof (or any amended or successor version to the extent such version is substantively comparable and not materially
more onerous to comply with), any current or future regulations or other official governmental interpretations thereof and any
intergovernmental agreements or any “FFI agreements” entered into pursuant to the foregoing.

 

    	 	6	 

     

    

 

“Global Note”
has the meaning set forth in Section 2.04 hereof.

 

“Independent Bank Regulatory
Counsel” means a law firm, a member of a law firm or an independent practitioner that is experienced in matters of federal
bank holding company and banking regulatory law, including the laws, rules and the guidelines of the Federal Reserve Board relating
to regulatory capital, and shall include any Person who, under the standards of professional conduct then prevailing and applicable
to such counsel, would not have a conflict of interest in representing the Company or the Trustee in connection with providing
the legal opinion contemplated by the definition of the term “Tier 2 Capital Event.”

 

“Independent Tax Counsel”
means a law firm, a member of a law firm or an independent practitioner that is experienced in matters of federal income taxation
law, including the deductibility of interest payments made with respect to corporate debt instruments, and shall include any Person
who, under the standards of professional conduct then prevailing and applicable to such counsel, would not have a conflict of interest
in representing the Company or the Trustee in connection with providing the legal opinion contemplated by the definition of the
term “Tax Event.”

 

“Interest Period”
means the period from and including the immediately preceding Interest Payment Date in respect of which interest has been paid
or duly provided for or, if no interest has been paid or duly provided for, from and including the issue date to, but excluding,
the applicable Interest Payment Date for such period (or the Stated Maturity Date or earlier Redemption Date, if applicable).

 

“Interest Payment Date”
has the meaning set forth in Section 2.05(b)(ii) hereof.

 

“Interpolated Benchmark”
with respect to the Benchmark means the rate calculated by the Calculation Agent for the Corresponding Tenor by interpolating on
a linear basis between: (1) the Benchmark for the longest period (for which the Benchmark is available) that is shorter than the
Corresponding Tenor and (2) the Benchmark for the shortest period (for which the Benchmark is available) that is longer than the
Corresponding Tenor.

 

“ISDA Definitions”
means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto,
as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from
time to time.

 

“ISDA Fallback Adjustment”
means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing
the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable
tenor.

 

    	 	7	 

     

    

 

“ISDA Fallback Rate”
means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence
of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.

 

“Reference Time”
with respect to any determination of the Benchmark means (1) if the Benchmark is Three-Month Term SOFR, the time determined by
the Company, and communicated in writing thereby to the Calculation Agent (if other than the Company) after giving effect to the
Three-Month Term SOFR Conventions, or (2) if the Benchmark is not Three-Month Term SOFR, the time determined by the Company, and
communicated in writing thereby to the Calculation Agent (if other than the Company) after giving effect to the Benchmark Replacement
Conforming Changes.

 

“Relevant Governmental
Body” means the Federal Reserve and/or the FRBNY, or a committee officially endorsed or convened by the Federal Reserve
and/or the FRBNY or any successor thereto.

 

“Representative”
means the indenture trustee or other trustee, agent or representative for an issue of Senior Indebtedness.

 

“Senior Indebtedness”
means:

 

(a)      any
of the Company’s indebtedness (including the principal of and premium, if any, and unpaid interest on such indebtedness)
for borrowed or purchased money including overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection
agreements, and any loans or advances from banks, whether or not evidenced by bonds, debentures, notes, or other written instruments,
including any obligations of the Company to general creditors, depositors or trade creditors;

 

(b)      the
Company’s obligations under letters of credit, bank guarantees or bankers’ acceptances;

 

(c)      any
of the Company’s indebtedness or other obligations with respect to commodity contracts, interest rate and currency swap agreements,
cap, floor, and collar agreements, currency spot and forward contracts, and other similar agreements or arrangements designed to
protect against fluctuations in currency exchange or interest rates;

 

(d)      any
guarantees, endorsements (other than by endorsement of negotiable instruments for collection in the ordinary course of business),
or other similar contingent obligations in respect of obligations of others of a type described in clauses (a), (b), and (c), whether
or not such obligation is classified as a liability on a balance sheet prepared in accordance with accounting principles generally
accepted in the United States;

 

    	 	8	 

     

    

 

(e)       all
obligations and liabilities in respect of leases required in conformity with generally accepted accounting principles to be accounted
for as capitalized lease obligations on the Company’s balance sheet;

 

(f)       all
obligations and other liabilities under any lease or related document in connection with the lease of real property which provides
that we are contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a
minimum residual value of the leased property to the lessor and the Company’s obligations under the lease or related document
to purchase or to cause a third party to purchase the leased property;

 

(g)       all
direct or indirect guarantees or similar agreements in respect of, and the Company’s obligations or liabilities to purchase,
acquire or otherwise assure a creditor against loss in respect of, indebtedness, obligations or liabilities of others of the type
described in clauses (a) through (f) above; and

 

(h)       any
and all refinancings, replacements, deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements
to, any indebtedness, obligation or liability of the kind described in clauses (a) through (g) above, other than obligations ranking
on a parity with the Notes or ranking junior to the Notes.

 

Notwithstanding the foregoing,
if the Federal Reserve Board (or other competent regulatory agency or authority) promulgates any rule or issues any interpretation
that defines general creditor(s), the main purpose of which is to establish a criteria for determining whether the subordinated
debt of a bank holding company is to be included in its capital, then the term “general creditors” as used herein the
definition of Senior Indebtedness will have the meaning as described in that rule or interpretation.

 

The term “Senior Indebtedness”
does not include: (i) any indebtedness of the Company which when incurred, and without respect to any election under Section 1111(b)
of the Federal Bankruptcy Code, was without recourse to the Company; (ii) any indebtedness of the Company to any of its Subsidiaries;
(iii) indebtedness to any employee of the Company; (iv) any liability for taxes; (v) any indebtedness of the Company which is expressly
subordinate in right of payment to any other indebtedness of the Company; or (vi) renewals, extensions, modifications and refundings
of any such indebtedness.

 

“SOFR” means the secured
overnight financing rate published by the Federal Reserve Bank of New York, as the administrator of the Benchmark (or any successor
administrator), on the Federal Reserve Bank of New York’s Website.

 

“Stated Maturity Date”
has the meaning set forth in Section 2.02 hereof.

 

    	 	9	 

     

    

 

“Tax Event”
means the receipt by the Company of an opinion of Independent Tax Counsel to the effect that, as a result of:

 

(a)      an
amendment to or change (including any announced prospective amendment or change) in any law or treaty, or any regulation thereunder,
of the United States or any of its political subdivisions or taxing authorities;

 

(b)      a
judicial decision, administrative action, official administrative pronouncement, ruling, regulatory procedure, regulation, notice
or announcement, including any notice or announcement of intent to adopt or promulgate any ruling, regulatory procedure or regulation
(any of the foregoing, an “administrative or judicial action”);

 

(c)      an
amendment to or change in any official position with respect to, or any interpretation of, an administrative or judicial action
or a law or regulation of the United States that differs from the previously generally accepted position or interpretation; or

 

(d)      a
threatened challenge asserted in writing in connection with an audit of the Company’s federal income tax returns or positions
or a similar audit of any of its Subsidiaries, or a publicly known threatened challenge asserted in writing against any other taxpayer
that has raised capital through the issuance of securities that are substantially similar to the Notes, in each case, occurring
or becoming publicly known on or after the original issue date of the Notes, there is more than an insubstantial risk that interest
payable by the Company on the Notes is not, or, within 90 days of the date of such opinion, will not be, deductible by the Company,
in whole or in part, for United States federal income tax purposes.

 

“Term SOFR”
means the forward-looking term rate for the applicable Corresponding Tenor based on SOFR that has been selected or recommended
by the Relevant Governmental Body.

 

“Term SOFR Administrator”
means any entity designated by the Relevant Governmental Body as the administrator of Term SOFR.

 

“Three-Month Term SOFR”
means Term SOFR for a tenor of three months that is published by the Term SOFR Administrator at the Reference Time for any Interest
Period, as determined by the Company and communicated in writing thereby to the Calculation Agent (if other than the Company),
after giving effect to the Three-Month Term SOFR Conventions. All percentages used in or resulting from any calculation of Three-Month
Term SOFR shall be rounded, if necessary, to the nearest one-hundred-thousandth of a percentage point, with 0.000005% rounded up
to 0.00001%.

 

    	 	10	 

     

    

 

“Three-Month Term SOFR
Conventions” means any determination, decision or election with respect to any technical, administrative or operational
matter (including with respect to the manner and timing of the publication of Three-Month Term SOFR, or changes to the definition
of “Interest Period”, timing and frequency of determining Three-Month Term SOFR with respect to each Interest Period
and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the Company determines may
be appropriate to reflect the use of Three-Month Term SOFR as the Benchmark in a manner substantially consistent with market practice
(or, if the Company determines that adoption of any portion of such market practice is not administratively feasible or if the
Company determines that no market practice for the use of Three-Month Term SOFR exists, in such other manner as the Company determines
is reasonably necessary). The Company shall promptly notify the Calculation Agent (if other than the Company) in writing of any
such determination.

 

“Tier 2 Capital Event”
shall mean the receipt by the Company of an opinion of Independent Bank Regulatory Counsel to the effect that, as a result of:

 

(a)       any
amendment to, or change (including any announced prospective amendment or change) in, the laws or any regulations thereunder of
the United States or any rules, guidelines or policies of an applicable regulatory authority for the Company; or

 

(b)       any
official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement or decision is announced on or after the original issue date of the Notes, the Notes
do not constitute, or within 90 days of the date of such opinion will not constitute, Tier 2 capital (or its then-equivalent if
the Company were subject to such capital requirement) for purposes of capital adequacy guidelines of the Federal Reserve Board,
as then in effect and applicable to the Company.

 

“Unadjusted Benchmark Replacement” means
the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

 

The terms “Company,”
 “Trustee,” “Base Indenture,” “First Supplemental Indenture,” “Indenture,”
 “Securities” and “Notes” shall have the respective meanings set forth in the recitals to
this First Supplemental Indenture and the paragraph preceding such recitals.

 

Article
II.      ESTABLISHMENT OF THE NOTES AND GENERAL TERMS AND CONDITIONS OF THE
NOTES

 

Section 2.01        Establishment of the Series of the Notes and Designation. There is hereby authorized and established a series of Securities
designated as the “5.00% Fixed to Floating Rate Subordinated Notes due 2030.” The Securities that are a part
of such series shall be in the form and have the terms, provisions and conditions as set forth in the Base Indenture, this First
Supplemental Indenture and the Notes in the form attached hereto as Exhibit A.

 

Section 2.02        Payment of Principal; Issue Price. Except as earlier redeemed in accordance with this First Supplemental Indenture,
the date upon which the entire principal amount of the Notes shall become due and payable, together with any accrued and unpaid
interest then owing, shall be October 15, 2030 (the “Stated Maturity Date”). The Notes issued on the date hereof
will be issued at a price equal to 100% of the principal amount thereof.

 

    	 	11	 

     

    

 

Section 2.03       Form, Payment and Appointment. Except as provided in Section 3.05 of the Base Indenture, the Notes will be issued
only in book-entry form, will be represented by one or more Global Notes registered in the name of or held by The Depository Trust
Company or any successor thereto (“DTC”) or its nominee as the Depositary therefor. So long as DTC or its nominee
is the registered owner of Global Notes, DTC or its nominee, as the case may be, will be considered the Holder of the Notes represented
by such Global Notes for all purposes under the Indenture. The Company will make payments of principal of, and premium, if any,
and interest on the Global Notes to DTC or its nominee, as the case may be, as the registered Holder of the Notes. The principal
of any Notes in the form of Individual Securities will be payable at the place of payment set forth below.

 

The terms and conditions
contained in the Notes shall constitute, and are hereby expressly made, a part of the Indenture, and the Company and the Trustee,
by their execution and delivery of this First Supplemental Indenture, expressly agree to such terms and conditions and to be bound
thereby.

 

The Security Registrar
and Paying Agent for the Notes shall initially be the Trustee.

 

The Place of Payment
for the Notes shall be an office or agency of the Company maintained for such purpose, which shall initially be the Corporate Trust
Office of the Trustee at 333 Thornall Street, 4th Floor, Edison, New Jersey 08837.

 

The Notes will be issuable
and may be transferred only in minimum denominations of $2,000 and any integral multiples of $1,000 in excess thereof that is an
integral multiple of $1,000. The amounts payable with respect to the Notes shall be payable in U.S. Dollars.

 

Section 2.04       Global Note. The Notes shall be issued initially in the form of one or more fully registered Global Securities (each
such Global Security, a “Global Note”) registered in the name of DTC or its nominee and deposited with DTC or
its designated custodian or such other Depositary as any officer of the
Company may from time to time designate. Unless and until a Global Note is exchanged for Notes in certificated form, such Global
Note may be transferred, in whole but not in part, and any payments on the Notes shall be made, only to DTC or a nominee
of DTC, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary as provided
in the Indenture.

 

Section 2.05       Interest.

 

(a)          Interest payable on any Interest Payment Date, the Stated Maturity Date or the Redemption Date, if any, with respect to
the Notes shall be the amount of interest accrued from, and including, the immediately preceding Interest Payment Date in respect
of which interest has been paid or duly provided for (or from and including the original issue date of Notes if no interest has
previously been paid or duly provided for with respect to the Notes) to, but excluding, such Interest Payment Date, Stated Maturity
Date or the Redemption Date, if any, as the case may be.

 

    	 	12	 

     

    

 

(b)        

 

		(i)	The Notes will bear interest at the annual rate of 5.00% from, and including, the original issue
date of the Notes to, but excluding, October 15, 2025 or earlier Redemption Date (the “Fixed Rate Period”). During
the Fixed Rate Period, interest on the Notes will be payable semi-annually in arrears on each April 15 and October 15, beginning
on April 15, 2021 and ending on October 15, 2025 or earlier redemption date (each such payment date, a “Fixed Rate Interest
Payment Date”). The interest payable during the Fixed Rate Period will be paid to each Holder in whose name a Note is
registered at the close of business on the fifteenth day (whether or not a Business Day) immediately preceding the applicable Fixed
Rate Interest Payment Date (each such date, a “Fixed Rate Regular Record Date”).

 

		(ii)	The Notes will bear a floating interest rate from and including October 15, 2025, to but excluding
the Stated Maturity Date or earlier Redemption Date (the “Floating Rate Period”). The floating interest rate will be
reset for each Interest Period in the Floating Rate Period, and the interest rate for each such Interest Period shall be equal
to the then-current Three-Month Term SOFR for such Interest Period plus 487.4 basis points, provided that if Three-Month Term SOFR
(or other applicable Benchmark) is less than zero for any Interest Period during the Floating Rate Period, then Three-Month Term
SOFR (or other such Benchmark) shall be deemed to be zero for such Interest Period. During the Floating Rate Period, interest on
the Notes will be payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, commencing on January
15 2026 (each such date, a “Floating Rate Interest Payment Date” and, together with each Fixed Rate Interest Payment
Date, each an “Interest Payment Date”). The last Floating Rate Interest Payment Date shall be October 15, 2030, unless
the Notes are earlier redeemed. The interest payable during the Floating Rate Period will be paid to each Holder in whose name
a Note is registered at the close of business on the fifteenth day (whether or not a Business Day) immediately preceding the applicable
Floating Rate Interest Payment Date (each such date, a “Floating Rate Regular Record Date”). The Calculation
Agent will provide the Company and the Trustee with the interest rate in effect for each Interest Period during the Floating Rate
Period promptly after the Reference Time therefor (or other date of determination for the applicable Benchmark).
	 	 	 
	 	(iii)	The Company shall take such actions as are necessary to ensure that from the commencement of the Floating Rate Period for so long
as any of the Notes remain outstanding there will at all times be a Calculation Agent appointed to calculate Three-Month Term
SOFR in respect of each Floating Rate Period. The calculation of Three-Month Term SOFR for each applicable Floating Rate Period
by the Calculation Agent will (in the absence of manifest error) be final and binding. The Calculation Agent’s calculation
of any interest rate and interest payments for any period will be maintained on file at the Calculation Agent’s principal
offices, will be made available to any Holder of the Notes upon request and will be provided to the Trustee. The Calculation Agent
shall have all the rights, protections and indemnities afforded to the Trustee under the Base Indenture and hereunder. The Calculation
Agent may be removed by the Company at any time. If the Calculation Agent is unable or unwilling to act as Calculation Agent or
is removed by the Company, the Company will promptly appoint a replacement Calculation Agent, which shall not be the Trustee without
the Trustee’s express written consent. The Calculation Agent may resign from such role at any time in its sole discretion
upon written notice to the Company. Upon receiving such notice of resignation, the Company shall promptly appoint a successor
calculation agent, and if a successor Calculation Agent has not been appointed by the Company and such successor accepted such
position within 30 days after the giving of notice of resignation by the Calculation Agent, then the resigning Calculation Agent
may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Calculation
Agent with respect to such series. For the avoidance of doubt, if at any time there is no Calculation Agent appointed by the Company,
then the Company shall be the Calculation Agent. The Company may appoint itself or any of its Affiliates to be the Calculation
Agent.

 

    	 	13	 

     

    

 

(c)          Effect of Benchmark Transition Event and Benchmark Replacement Date.

 

(i)    If
the Company determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred on or prior
to the Reference Time in respect of any determination of the Benchmark on any date, then upon written notice by the Company to
the Calculation Agent (if other than the Company), the Benchmark Replacement will replace the then-current Benchmark for all purposes
relating to the Floating Rate Period in respect of such determination on such date and all determinations on all subsequent dates.
In connection with the implementation of a Benchmark Replacement, the Company will have the right to make Benchmark Replacement
Conforming Changes from time to time.

 

(ii)  Notwithstanding anything set forth in clause (b)(ii) above, if the Company determines that a Benchmark Transition Event
and its related Benchmark Replacement Date have occurred on or prior to the relevant Reference Time with respect to Three-Month
Term SOFR, then upon written notice by the Company to the Calculation Agent (if other than the Company), the provisions set forth
in this clause (c) will thereafter apply to all determinations of the rate or interest payable on the Notes during the Floating
Rate Period. After a Benchmark Transition Event and its related Benchmark Replacement Date have occurred, the interest rate on
the Notes for each Interest Period during the Floating Rate Period will be an annual rate equal to the Benchmark Replacement plus
the spread specified in clause (b)(ii) above.

 

(iii) The Company and the Calculation Agent are expressly authorized to make certain determinations, decisions and elections as
contemplated by the terms of the Notes, including with respect to the use of any Benchmark Replacement for the Floating Rate Period
and under this clause (c). Any determination, decision or election that may be made by the Company or by the Calculation Agent
under the terms of the Notes, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence
of an event, circumstance or date and any decision to take or refrain from taking any action or selection (A) will be conclusive
and binding on the Holders and the Trustee absent manifest error, (B) if made by the Company, will be made in the Company’s
sole discretion, (C) if made by the Calculation Agent, will be made after consultation with the Company, and the Calculation Agent
will not make any such determination, decision or election to which the Company reasonably objects, and (D) notwithstanding anything
to the contrary herein or in the Base Indenture, shall become effective without consent from the Holders or the Trustee. If the
Calculation Agent fails to make any determination, decision or election that it is required to make under the terms of the Notes,
then the Company will make such determination, decision or election on the same basis as described above.

 

    	 	14	 

     

    

 

(d)          The Company (or its Calculation Agent) shall notify the Trustee in writing (1) upon the occurrence of the Benchmark Transition
Event or the Benchmark Replacement Date, and (2) of any Benchmark Replacements, Benchmark Replacement Conforming Changes and other
items affecting the interest rate on the Notes after a Benchmark Transition Event.

 

(e)          The Trustee (acting in its capacity hereunder) shall have no (1) responsibility or liability for (A) Three-Month Term SOFR
Conventions, (B) selection of an alternative reference rate to Three-Month Term SOFR (including whether the conditions for the
designation of such rate have been satisfied or whether such rate is a Benchmark Replacement or an Unadjusted Benchmark Replacement),
(C) determination or calculation of a Benchmark Replacement, (D) determination of whether a Benchmark Transition Event or Benchmark
Replacement Date has occurred, or (E) any information used in any calculation or determination hereunder or in connection herewith,
and in each such case under clauses (A) through (D) above shall be entitled to conclusively rely upon the selection, determination,
and/or calculation thereof as provided by the Company or its Calculation Agent, as applicable, or (2) liability for any failure
or delay in performing its duties hereunder as a result of the unavailability of a Benchmark as described in the definition thereof,
including as a result of the Company’s or Calculation Agent’s failure to select a Benchmark Replacement or the Calculation
Agent’s failure to calculate a Benchmark. The Trustee shall be entitled to rely conclusively on all notices from the Company
or its Calculation Agent regarding any Benchmark or Benchmark Replacement, including in regards to Three-Month Term SOFR Conventions,
a Benchmark Transition Event, Benchmark Replacement Date, and Benchmark Replacement Conforming Changes and any related information.

 

(f)           If the then-current Benchmark is Three-Month Term SOFR and any of the foregoing provisions concerning the calculation of
the interest rate and the payment of interest during the Floating Rate Period are inconsistent with any of the Three-Month Term
SOFR Conventions determined by the Company, then the relevant Three-Month Term SOFR Conventions will apply.

 

(g)          Interest due on the Stated Maturity Date (whether or not an Interest Payment Date) of the Notes will be paid to the Person
to whom principal of the Notes is payable, subject to DTC’s applicable procedures.

 

    	 	15	 

     

    

 

(h)          The amount of interest payable on any Fixed Rate Interest Payment Date during the Fixed Rate Period will be computed on
the basis of a 360-day year consisting of twelve 30-day months to, but excluding, October 15, 2025, and, the amount of interest
payable on any Floating Rate Interest Payment Date during the Floating Rate Period will be computed on the basis of a 360-day year
on the basis of the actual number of days elapsed. The Company or the Calculation Agent, as applicable, shall calculate the amount
of interest payable on any Interest Payment Date and the Trustee shall have no duty to confirm or verify any such calculation.
In the event that any scheduled Fixed Rate Interest Payment Date falls on a day that is not a Business Day, then payment of interest
payable on such Fixed Rate Interest Payment Date will be postponed to the next succeeding day which is a Business Day (any payment
made on such date will be treated as being made on the date that the payment was first due and no interest on such payment will
accrue for the period from and after such scheduled Fixed Rate Interest Payment Date). In the event that any scheduled Floating
Rate Interest Payment Date falls on a day that is not a Business Day, then payment of interest payable on such Floating Rate Interest
Payment Date will be postponed to the next succeeding day that is a Business Day, unless such day falls in the next succeeding
calendar month, in which case such Floating Rate Interest Payment Date will be accelerated to the immediately preceding day that
is a Business Day, and, in each such case, the amounts payable on such Business Day will include interest accrued to, but excluding,
such Business Day. If the Stated Maturity Date of the Notes falls on a date that is not a Business Day, the payment of interest
and principal of the Notes may be made on the next succeeding Business Day, and no interest on such payment shall accrue for the
period from and after the Stated Maturity Date. Dollar amounts resulting from interest calculations will be rounded to the nearest
cent, with one half cent being rounded upward.

 

Section 2.06       
Subordination.

 

(a)          Except as otherwise specified, the Company agrees, and each Holder of the Notes by accepting the Notes agrees, that the
indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Section
2.06, to the prior payment in full of all Senior Indebtedness and that the subordination is for the benefit of the holders of Senior
Indebtedness.

 

(b)          In the event of (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith, relative to the Company or to its creditors, as such, or to its assets,
or (b) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or any other marshalling of assets and liabilities
of the Company:

 

(i)   holders of Senior Indebtedness shall be entitled to receive payment in full in cash of the principal thereof, premium, if
any, additional amounts owing in respect thereof, if any, and interest (including interest accruing after the commencement of any
such proceeding) to the date of payment on the Senior Indebtedness before Holders shall be entitled to receive any payment of principal
of or interest on Notes;

 

(ii)  until the Senior Indebtedness is paid in full in cash, any indebtedness to which Holders of the Notes or the Trustee would
be entitled but for this Section 2.06 shall be made to holders of Senior Indebtedness as their interests may appear for the application
to the payment thereof, except that Holders of the Notes may receive securities that are subordinated to Senior Indebtedness to
at least the same extent as the Notes; and

 

    	 	16	 

     

    

 

(iii) the Trustee is entitled to conclusively rely upon an order or decree of a court of competent jurisdiction or a certificate
of a bankruptcy trustee or other similar official for the purpose of ascertaining the persons entitled to participate in such distribution,
the holders of Senior Indebtedness and other Company debt, the amount thereof or payable thereon and all other pertinent facts
relating to the Trustee’s obligations under this Section 2.06.

 

In the event that,
notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any of the Notes shall have received any
payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including by
way of set-off or any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Notes, before all Senior Indebtedness is paid in full or payment thereof
provided for, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to a Responsible
Officer of the Trustee in writing or, as the case may be, such Holder of the Notes, then and in such event such payment or distribution
shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent
or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness. Any taxes that have been withheld or deducted from any payment or
distribution in respect of the Notes, or any taxes that ought to have been withheld or deducted from any such payment or distribution
that have been remitted to the relevant taxing authority, shall not be considered to be an amount that the Trustee or the Holder
of any of the Notes receives for purposes of this Section.

 

(c)          The Company may not pay principal, premium, interest or additional amounts owing with respect to the Notes and may not acquire
any Notes for cash or property other than capital stock of the Company if:

 

(i)   (A) in the event and during the continuation of any default in the payment of principal, premium, if any, or interest on
any Senior Indebtedness beyond any applicable grace period with respect thereto or (B) a default on Senior Indebtedness occurs
and is continuing that permits holders of such Senior Indebtedness (or a trustee on their behalf) to accelerate its maturity, or

 

(ii)  the default is the subject of judicial proceedings or the Company receives a notice of the default from a person who may
give it pursuant to Section 2.06(l) hereof.

 

The Company may resume payments on the Notes
and may acquire them when:

 

(iii) the default is cured or waiver; or

 

(iv) if this Section 2.06 otherwise permits the payments or acquisition at that time.

 

    	 	17	 

     

    

 

(d)          In the event that any Notes are declared due and payable before their Stated Maturity Date, then and in such event the holders
of Senior Indebtedness shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness or provision shall be made for such payment in cash, before the Holders of the Notes are entitled to receive
any payment (including any payment which may be payable by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Notes) by the Company on account of the principal of, premium, if any, additional amounts owing
in respect thereof, if any or interest on the Notes or on account of the purchase or other acquisition of Notes; provided, that
any money deposited pursuant to Article IV of the Base Indenture not in violation of the Indenture shall not be subject to the
claims of holders of Senior Indebtedness.

 

In the event that,
notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Note prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to a Responsible
Officer of the Trustee in writing or, as the case may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.

 

(e)          If payment or distribution on account of the Notes of any character or security, whether in cash, securities or other property,
is received by Holder, including any applicable Trustee, in contravention of any of the terms of this Section 2.06 and before all
Senior Indebtedness has been paid in full, such payment or distribution or security will be received in trust for the benefit of,
and must be paid over or delivered and transferred to, holders of Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among those holders of Senior Indebtedness for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in full.

 

(f)           The Company shall promptly notify the Trustee, in writing, and any Paying Agent of any facts known to the Company that would
cause a payment on the Notes to violate this Section 2.06.

 

(g)          After all Senior Indebtedness is paid in full and until the Notes are paid in full, Holders shall be subrogated to the rights
of holders of Senior Indebtedness to receive payments or distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holders have been applied to the payment of Senior Indebtedness. A payment or distribution made under
this Section 2.06 to holders of Senior Indebtedness which otherwise would have been made to Holders is not, as among the Company,
its creditors other than the holders of Senior Indebtedness and Holders, a payment or distribution by the Company on account of
the Senior Indebtedness.

 

(h)          This Section 2.06 is intended solely to define the relative rights of Holders on the one hand and the holders of Senior
Indebtedness on the other hand. Nothing in the Indenture or in the Notes shall:

 

	 	(i)	impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Notes the principal of, premium, if
any, additional amounts in respect thereof, if any, and interest on the Notes as and when the same shall become due and payable
in accordance with their terms;

 

    	 	18	 

     

    

 

	 	(ii)	affect the relative rights of Holders and creditors of the Company other than holders of Senior Indebtedness; or

	 	 	 
	 	(iii)	prevent the Trustee or any Holder from exercising its available remedies upon an Event of Default, subject to the rights
of holders of Senior Indebtedness to receive payments or distributions otherwise payable to Holders or the Trustee.

 

If the Company fails
because of this Section 2.06 to pay principal, premium, if any, additional amounts in respect thereof, if any, or interest on any
of the Notes on the due date, such failure shall constitute a default hereunder.

 

(i)           No right of any holder of Senior Indebtedness to enforce the subordination of the indebtedness evidenced by the Notes shall
be impaired by any act or failure to act by the Company or by its failure to comply with the Indenture.

 

(j)           Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made
and the notice given to their Representative.

 

(k)          The Trustee or any Paying Agent may continue to make payments on the Notes until it receives written notice of facts that
would cause a payment of principal of or interest on the Notes to violate this Section 2.06. Only the Company, a Representative
or a holder of an issue of Senior Indebtedness that has no Representative may give the written notice.

 

The Trustee has no
fiduciary duty to the holders of Senior Indebtedness other than as created under this Indenture. The Trustee in its individual
or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee.

 

Notwithstanding anything
herein to the contrary, the Company’s obligation to pay, and the Company’s payment of, the amounts required by Section
6.07 of the Base Indenture are excluded from the operation of this Section 2.06. For the sake of clarity, such payments are not
subordinated to the Company’s Senior Indebtedness.

 

(l)           Nothing contained in this Section 2.06 or elsewhere in the Indenture or in any of the Notes shall prevent (a) the Company,
at any time except during the pendency of any case, proceeding, dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and liabilities of the Company referred to in Section 2.06(b) hereof or under
the conditions described in Section 2.06(c) or Section 2.06(d) hereof, from making payments at any time of or on account of the
principal of, premium, if any, additional amounts owing in respect thereof, if any or interest on the Notes or on account of the
purchase or other acquisition of the Notes, or (b) the application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of, premium, if any, additional amounts owing in respect thereof, if any, or interest
on the Notes or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have
knowledge (in accordance with Section 2.06(f) hereof) that such payment would have been prohibited by the provisions of this Section
2.06

 

    	 	19	 

     

    

 

(m)         Each Holder of a Note by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as
may be necessary or appropriate to effectuate the subordination provided in this Section 2.06 and appoints the Trustee his attorney-in-fact
for any and all such purposes.

 

(n)          Upon any payment or distribution of assets of the Company referred to in this Section 2.06, the Trustee, subject to the
provisions of Section 6.02 of the Base Indenture, and the Holders of the Notes shall be entitled to conclusively rely upon any
order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of the Notes, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 2.06.

 

(o)          In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting
hereunder, the term “Trustee” as used in Section 2.06 shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Section 2.06 in addition to or in place of the Trustee.

 

Section 2.07      Events of Default; Acceleration. Neither the Trustee nor the Holders of the Notes shall have the right to accelerate
the maturity of the Notes unless there is an Event of Default specified under clause (e) or (f) of Section 5.01 of the Base Indenture.
If an Event of Default specified in clause (e) or (f) of Section 5.01 of the Base Indenture occurs, then the principal amount of
all of the Outstanding Notes, including any accrued and unpaid interest on the Notes and premium, if any, shall become and be immediately
due and payable without any declaration or other act on the part of the Trustee or the Holders of the Notes in accordance with
the provisions of Section 5.02 of the Base Indenture.

 

Section 2.08       No Sinking Fund. The Notes are not entitled to the benefit of any sinking fund.

 

Section 2.09       No Conversion or Exchange Rights. The Notes shall not be convertible into or exchangeable for any other securities
or property of the Company or any Subsidiary of the Company.

 

Section 2.10       Defeasance; No Covenant Defeasance. Section 4.02 of the Base Indenture shall be applicable to the Notes. Section
4.03 of the Base Indenture shall not be applicable to the Notes.

 

Article
III.    
REDEMPTION OF THE NOTES

 

Section 3.01       Optional Redemption. The Company may, at its option, redeem the Notes, in whole or in part, on any Interest Payment
Date on or after October 15, 2025, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed, plus
accrued and unpaid interest to, but excluding, the Redemption Date fixed by the Company; provided that, for the avoidance
of doubt, the payment of such accrued and unpaid interest paid as a part of the Redemption Price shall satisfy in full the obligation
of the Company to pay accrued and unpaid interest on the Notes redeemed from and including the most recent Interest Payment Date
on which all accrued and unpaid interest on the Notes was paid or provided for to, but excluding, the Redemption Date. Any partial
redemption will be made in accordance with the Base Indenture. The Company’s election to redeem any Notes shall be provided
to the Trustee in the form of an Officers’ Certificate at least 60 days prior to the Redemption Date, or such shorter notice
as may be acceptable to the Trustee.

 

    	 	20	 

     

    

 

 

Section 3.02       
Redemption Upon Special Events. The Company may also, at its option, redeem the Notes before the Stated Maturity
Date in whole, but not in part, at any time, upon the occurrence of a Tier 2 Capital Event, a Tax Event or a 1940 Act Event. Any
such redemption will be at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the Redemption Date fixed by the Company; provided that, for the avoidance of doubt,
the payment of such accrued and unpaid interest paid as a part of the Redemption Price shall satisfy in full the obligation of
the Company to pay accrued and unpaid interest on the Notes redeemed from and including the most recent Interest Payment Date on
which all accrued and unpaid interest on the Notes was paid or provided for through, but excluding, the Redemption Date. The Company’s
election to redeem any Notes shall be provided to the Trustee in the form of an Officers’ Certificate at least 60 days prior
to the Redemption Date, or such shorter notice as may be acceptable to the Trustee. If any conditions precedent to such optional
redemption have not been satisfied, the Company shall provide written notice to the Trustee and each Holder of the Notes prior
to the close of business prior to the Redemption Date fixed by the Company in the same manner in which the notice of redemption
was given. Upon receipt of such notice, the notice of redemption shall be rescinded or delayed as provided in such notice. In no
event shall the Trustee be responsible to satisfy any such conditions precedent, including making a deposit of money required to
effectuate the redemption.

 

Section 3.03       
Redemption Approval. No redemption of the Notes by the Company prior to the Stated Maturity Date pursuant to this
Article 3 shall be made without the prior approval of the Federal Reserve Board if such prior approval is or will be required at
the scheduled Redemption Date. To the extent that the approval of the Federal Reserve Board is required for the Company’s
redemption of the Notes pursuant to this Article 3, the Trustee shall not have any duty or obligation to determine whether such
approval is required or any duty or obligation to obtain such approval. Prior to the delivery of the notice of redemption to the
Holders of the Notes, the Company shall deliver to the Trustee an Officers’ Certificate stating (i) whether or not the approval
of the Federal Reserve Board is required for the Company’s redemption of the Notes and (ii) if such approval is required,
whether or not such approval has been obtained by the Company.

 

Section 3.04       
Redemption Procedures. Notice of redemption must be provided to the Holders of the Notes to be redeemed not less
than 30 nor more than 60 days prior to the applicable Redemption Date. The provisions of Article XI of the Base Indenture shall
apply to any redemption of the Notes pursuant to this Article III.

 

    21

     

    

  

Article
IV.     FORM OF NOTES

 

The Notes and the
Trustee’s certificate of authentication thereon are to be substantially in the form attached as Exhibit A hereto,
with such changes therein as the officers of the Company executing the Notes (by manual or facsimile signature) may approve, such
approval to be conclusively evidenced by their execution thereof. 

 

Article
V.     
ISSUE OF NOTES

 

Section
5.01        Additional Issues of Notes. The Company
may, from time to time, without notice to or the consent of the Holders of the Notes, issue an unlimited amount of additional
subordinated Securities of the same series as the Notes, which Securities will rank pari passu with the Notes and be identical
in all respects to the Notes previously issued except for their issuance date, the offering price, the interest commencement date
and the first payment of interest following the issue date of such additional subordinated Securities in order that such additional
subordinated Securities may be consolidated and form a single series with the Notes outstanding immediately prior to the issuance
of such additional subordinated Securities and have the same terms as to status, redemption or otherwise as the Notes; provided
that, if any additional subordinated Securities are not fungible with the initial Notes for U.S. income tax purposes, such
additional subordinated Securities will have a separate CUSIP number. 

 

Article
VI.    
IMMUNITY OF STOCKHOLDERS, EMPLOYEES, AGENTS, 

OFFICERS AND DIRECTORS

 

No director, officer,
employee or shareholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes or
this First Supplemental Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.
By accepting the Notes, each Holder waives and releases all such liability.

 

Article
VII.    
MISCELLANEOUS

 

Section
7.01        Ratification of Base Indenture. The Base Indenture, as supplemented by this
First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed
part of the Base Indenture in the manner and to the extent herein and therein provided; provided that the provisions of
this First Supplemental Indenture apply solely with respect to the Notes.

 

Section
7.02        Trustee Not Responsible for Recitals. The recitals contained herein and
in the Notes, except the Trustee’s certificates of authentication, shall be taken as statements of the Company and not those
of the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as
to the validity or sufficiency of this First Supplemental Indenture or of the Notes. The Trustee shall not be accountable for
the use or application by the Company of the Notes or of the proceeds thereof.

 

    22

     

    

 

Section 7.03       
Governing Law; Waiver of Jury Trial. THIS FIRST SUPPLEMENTAL INDENTURE AND EACH NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE ISSUER, THE TRUSTEE AND THE HOLDERS HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS FIRST SUPPLEMENTAL INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.04       
Separability Clause. In case any provision in this First Supplemental Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby

 

Section 7.05       
Counterparts Originals. This First Supplemental Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile transmission or by transmission
as a PDF e-mail attachment shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties
hereto and may be used in lieu of the original First Supplemental Indenture for all purposes. Signatures of the parties hereto
transmitted by facsimile or PDF e-mail attachment shall be deemed to be their original signatures for all purposes.

 

Section 7.06       
Benefits of First Supplemental Indenture. Nothing in this First Supplemental Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties to this First Supplemental Indenture and their successors under this
First Supplemental Indenture and the Persons in whose names the Notes are registered from time to time, any benefit or any legal
or equitable right, remedy or claim under this First Supplemental Indenture.

 

Section 7.07       
Conflict with Base Indenture. To the extent that any provision of this First Supplemental Indenture relating to the
Notes is inconsistent with any provision of the Base Indenture, such provision of this First Supplemental Indenture shall control
with respect to the Notes.

 

Section 7.08       
Trust Indenture Act Controls. This First Supplemental Indenture is subject to the provisions of the Trust Indenture
Act that are required to be part of the Indenture and shall, to the extent applicable, be governed by such provisions. If any provision
of this First Supplemental Indenture limits, qualifies or conflicts with another provision that is required or deemed to be included
in this First Supplemental Indenture by the Trust Indenture Act, such required or deemed provision shall control.

 

Section 7.09       
Rights, Protections and Immunities of the Trustee. All of the rights, protections, benefits, immunities and indemnities
afforded or given to the Trustee, the Security Registrar and the Paying Agent pursuant to the Base Indenture shall apply to and
be enforceable by the Trustee, the Security Registrar and the Paying Agent acting in their respective capacities relating to the
Notes and pursuant to this First Supplemental Indenture mutatis mutandi as if set forth and incorporated herein. The Trustee,
the Security Registrar and the Paying Agent is acting hereunder, not in its individual capacity, but solely in its capacity as
Trustee, Security Registrar or Paying Agent, as applicable, for the Notes under the Indenture.

 

    23

     

    

 

Section 7.10       
Electronic Signatures. All notices, approvals, consents, requests and any communications hereunder must be in writing
(provided that any communication sent to Trustee hereunder must be in the form of a document that is signed manually or by way
of a digital signature provided by DocuSign or Smart Sign (or such other digital signature provider as specified in writing to
Trustee by the authorized representative), in English. Company agrees to assume all risks arising out of the use of using digital
signatures and electronic methods to submit communications to Trustee, including without limitation the risk of Trustee acting
on unauthorized instructions, and the risk of interception and misuse by third parties.

 

Section 7.11       
Force Majeure. In no event shall the Trustee (acting in any capacity hereunder) be responsible or liable for any
failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond
its control, including, without limitation, strikes, work stoppages, epidemics, pandemics, accidents, acts of war or terrorism,
civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts
which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 7.12       
USA PATRIOT Act. The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the
Trustee, like all financial institutions and in order to help the government fight the funding of terrorism and money laundering,
are required to obtain, verify and record information that identifies each person or legal entity that establishes a relationship
or opens an account. The parties to this agreement agree that they will provide the Trustee with such information as it may request
to satisfy the requirements of the USA PATRIOT Act. 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 

 

    24

     

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this First Supplemental Indenture to be duly executed as of the day and year first written above.

  

	 	HANOVER BANCORP, INC.
	 
	 	 	

	 	By:	/s/ Michael P. Puorro
	 	Name:
      Michael P. Puorro
	 	Title:
     Chairman & Chief Executive Officer

  

	 	U.S, BANK NATIONAL ASSOCIATION, as
	 	Trustee, Registrar and Paying Agent
	 
	 	 	

	 	By:	/s/
    Annette Marsula
	 	Name:
      Annette Marsula
	 	Title:
       Vice President

   

[Signature Page
to First Supplemental Indenture]

 

    25

     

    

 

EXHIBIT A

 

THIS SECURITY AND THE OBLIGATIONS OF
THE COMPANY (AS DEFINED HEREIN) AS EVIDENCED HEREBY (1) ARE NOT DEPOSITS WITH OR HELD BY THE COMPANY AND ARE NOT INSURED OR GUARANTEED
BY ANY FEDERAL AGENCY OR INSTRUMENTALITY, INCLUDING, WITHOUT LIMITATION, THE FEDERAL DEPOSIT INSURANCE CORPORATION AND (2) ARE
SUBORDINATE IN THE RIGHT OF PAYMENT TO THE SENIOR INDEBTEDNESS (AS DEFINED IN THE INDENTURE IDENTIFIED HEREIN).

 

GLOBAL NOTE

 

THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR
A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS
SECURITY FOR ALL PURPOSES.

 

UNLESS AND UNTIL IT
IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE (I) BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR (II) BY A NOMINEE OF THE DEPOSITARY OR THE DEPOSITARY
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE
OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

 

    26

     

    

  

HANOVER BANCORP, INC.

 

5.00% Fixed-to-Floating Rate Subordinated
Notes due 2030 

 

	No. 1	 CUSIP:
	$	ISIN: 

 

 

Hanover Bancorp Inc.,
a New York corporation (hereinafter called the “Company,” which term includes any successor corporation under
the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or its registered assigns,
the principal sum of $[ ] (or such other amount as set forth in the Schedule of Increases or Decreases in Note attached hereto)
on October 15, 2030 (such date is hereinafter referred to as the “Stated Maturity Date”), unless redeemed prior
to such date, and to pay interest thereon (i) from, and including, October 7, 2020, to, but excluding, October 15, 2025 or any
early redemption date (the “Fixed Rate Period”), at a rate of 5.00% per annum, semi-annually in arrears on April
15 and October 15 of each year, commencing April 15, 2021 (each such date, a “Fixed Rate Interest Payment Date”)
and (ii) from, and including, October 15, 2025, to, but excluding, the Stated Maturity Date or any early redemption date, at a
rate equal to Three-Month Term SOFR, reset quarterly, plus 487.4 basis points (4.874%), or such other rate as may be determined
pursuant to the Supplemental Indenture hereinafter referred to, payable quarterly in arrears on January 15, April 15, July 15 and
October 15 of each year, commencing January 15, 2026 through the Stated Maturity Date or earlier redemption date (each, a “Floating
Rate Interest Payment Date,” and together with the Fixed Rate Interest Payment Dates, the “Interest Payment Dates,”
with the period from, and including, October 15, 2025 to, but excluding, the first Floating Rate Interest Payment Date and each
successive period from, and including a Floating Rate Interest Payment Date to, but excluding, the next Floating Rate Interest
Payment Date being a “Floating Rate Period”).

 

Interest payable on
this Note during the Fixed Rate Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. In
the event that any scheduled Fixed Rate Interest Payment date on this Note falls on a day that is not a Business Day (as defined
in the Indenture), then payment of interest payable on such Fixed Rate Interest Payment Date will be postponed to the next succeeding
day that is a Business Day and no additional interest shall accrue. Interest payable on this Note during any Floating Rate Period
shall be computed on the basis of a 360-day year and the actual number of days in such Floating Rate Period. All percentages used
in or resulting from any calculation of Three-Month Term SOFR shall be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with 0.000005% rounded up to 0.00001%. In the event that any scheduled Floating Rate Interest Payment Date
on this Note falls on a day that is not a Business Day, then payment of interest payable on such Floating Rate Interest Payment
Date will be postponed to the next succeeding day that is a Business Day, unless such day falls in the next succeeding calendar
month, in which case such Floating Rate Interest Payment Date will be accelerated to the immediately preceding day that is a Business
Day, and, in each case, the amounts payable on such Business Day will include interest accrued to, but excluding, such Business
Day.

 

Any principal and premium,
and any such installment of interest, which is overdue shall bear interest at the applicable rate set forth in the previous paragraph
(to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment, and such interest shall be payable on demand. The interest so payable, and punctually paid
or duly provided for, on any Fixed Rate Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Note is registered at the close of business on the Fixed Rate Interest Record Date for such interest, which shall be
the close of business on the April 15 or October 15 (whether or not a Business Day) immediately preceding such Fixed Rate Interest
Payment Date, through October 15, 2025, and thereafter, on any Floating Rate Interest Payment Date, on the Floating Rate Interest
Record Date for such interest, which shall be the close of business on January 15, April 15, July 15 and October 15 (whether or
not a Business Day) immediately preceding such Floating Rate Interest Payment Date.

 

Payment of the principal
of and interest on this Note will be made at the office or agency of the Company maintained for that purpose, which shall initially
be the Corporate Trust Office of the Trustee, in such currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

 

Reference is hereby
made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.

 

Unless the certificate
of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

 

[SIGNATURE PAGE FOLLOWS]

 

    27

     

    

 

IN WITNESS WHEREOF, the Company has caused
this Note to be signed manually or by facsimile by its duly authorized officer.

  

	 	HANOVER
    BANCORP, INC. 
	 	 
	 	By:	                 
	 	Name:
      Michael P. Puorro
	 	Title:
       Chairman & Chief Executive Officer

  

ATTEST UNDER THE CORPORATE

SEAL:

 

	By:	                    	 
	Name:   Michelle Mihas
	Title:    Corporate Secretary

  

    28

     

    

  

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes of the series designated
therein referred to in the within-mentioned Indenture.

 

Date of authentication: October 7, 2020 

 

	 	U.S.
    BANK NATIONAL ASSOCIATION, as
	 	Trustee 
	 	 
	 	By	 
	 	 	Annette
    Marsula, Vice President
	 	 	Authorized
    Signatory

  

    29

     

    

 

REVERSE OF NOTE

 

HANOVER BANCORP, INC.

 

5.00% Fixed-to-Floating Rate Subordinated
Notes due 2030

 

This Note is one of
a duly authorized issue of Securities of the Company of a series designated as the “5.00% Fixed-to-Floating Rate Subordinated
Notes due 2030” (herein called the “Notes”) initially issued in an aggregate principal amount of $[ ]
on October 7, 2020. Such series of Securities has been established pursuant to, and is one of an indefinite number of series of
subordinated debt securities of the Company issued or issuable under and pursuant to the Indenture, dated as of October 7, 2020
(the “Base Indenture”), between the Company and U.S. Bank National Association, as Trustee (herein called the
 “Trustee,” which term includes any successor trustee), as supplemented and amended by the First Supplemental
Indenture between the Company and the Trustee, dated as of October 7, 2020 (the “First Supplemental Indenture,”
and the Base Indenture as supplemented and amended by the First Supplemental Indenture, the “Indenture”), to
which Indenture and any other indentures supplemental thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Persons in whose names Notes are registered
from time to time and of the terms upon which the Notes are, and are to be, authenticated and delivered. The terms, conditions
and provisions of the Notes are those stated in the Indenture, those made part of the Indenture by reference to the Trust Indenture
Act of 1939, as amended (the “Trust Indenture Act”), and those set forth in this Note. To the extent that the
terms, conditions and provisions of this Note modify, supplement or are inconsistent with those of the Indenture, then the terms,
conditions and other provisions of this Note shall govern to the extent that such terms, conditions and other provisions of this
Note are not inconsistent with the terms, conditions and provisions made part of the Indenture by reference to the Trust Indenture
Act.

 

All capitalized terms
used in this Note and not defined herein that are defined in the Indenture shall have the meanings assigned to them in the Indenture.
To the extent that any capitalized term used in this Note and defined herein is also defined in the Indenture but conflicts with
the definition provided in the Indenture, the definition of the capitalized term in this Note shall control.

 

The indebtedness of
the Company evidenced by the Notes, including the principal thereof, premium, if any, and interest thereon, is, to the extent and
in the manner set forth in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date hereof or hereafter incurred, and on the terms and subject to the terms and conditions
set forth in the Indenture, and shall rank pari passu in right of payment with all other Securities and with all other unsecured
subordinated indebtedness of the Company and not by its terms subordinate and subject in right of payment to the prior payment
in full of debentures, notes, bonds or other evidences of indebtedness of types that include the Notes. Each Holder of this Note,
by the acceptance hereof, agrees to and shall be bound by such provisions of the Indenture and authorizes and directs the Trustee
on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided.

 

The Notes are intended
to be treated as Tier 2 capital (or its then-equivalent if the Company were subject to such capital requirement) for purposes of
capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or any successor regulatory authority with
jurisdiction over bank holding companies) (the “Federal Reserve Board”) as then in effect and applicable to the Company.
If an Event of Default with respect to Notes shall occur and be continuing, the principal and interest owed on the Notes shall
only become due and payable in accordance with the terms and conditions set forth in Sections 5.01(e) and (f) of the Base Indenture
and Section 2.07 of the First Supplemental Indenture. Accordingly, the Holder of this Note has no right to accelerate the maturity
of this Note in the event that the Company fails to pay interest on any of the Notes, or fails to perform any other obligations
under the Notes or in the Indenture that are applicable to the Notes.

 

The Company may, at
its option, redeem the Notes, in whole or in part, on any Interest Payment Date on or after October 15, 2025. The Company may also,
at its option, redeem the Notes before the Stated Maturity Date, in whole, but not in part, at any time, upon the occurrence of
a Tier 2 Capital Event, a Tax Event or a 1940 Act Event. Any such redemption will be at a redemption price equal to 100% of the
principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the Redemption Date fixed by
the Company. No redemption of the Notes by the Company prior to the Stated Maturity Date shall be made without the prior approval
of the Federal Reserve Board if such prior approval is or will be required at the scheduled Redemption Date. The provisions of
Article XI of the Base Indenture and Article 3 of the First Supplemental Indenture shall apply to the redemption of any Notes by
the Company.

 

    30

     

    

 

The Notes are not entitled
to the benefit of any sinking fund. The Notes are not convertible into or exchangeable for any other securities or property of
the Company or any Subsidiary of the Company.

 

The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company
and the rights of the Holders of the Notes at any time by the Company and the Trustee with the consent of the Holders of at least
a majority in principal amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive certain past
defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register
described in Section 3.05 of the Base Indenture, upon surrender of this Note for registration of transfer at the office or agency
of the Company in any place where the principal of and interest on this Note are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

 

The Notes are issuable
only in registered form without coupons in minimum denominations of $2,000 and any integral multiples of $1,000 in excess thereof
that is an integral multiple of $1,000.

 

    31

     

    

 

The Company and the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected
by notice to the contrary.

 

This Security is
a global note, represented by one or more permanent global certificates registered in the name of the nominee of The Depository
Trust Company (each a “Global Note” and collectively, the “Global Notes”). Accordingly, unless and until
it is exchanged for individual certificates, this Note may not be transferred except as a whole by The Depository Trust Company
(the “Depositary”) to a nominee of such Depositary or by a nominee of such Depositary or by the Depositary or any nominee
to a successor Depositary or any nominee of such successor. Ownership of beneficial interests in this Security will be shown on,
and the transfer of that ownership will be effected only through, records maintained by the applicable Depositary or its nominee
(with respect to interest of persons that have accounts with the Depositary (“Participants”)) and the records of Participants
(with respect to interests of persons other than Participants). Beneficial interests in Notes owned by persons that hold through
Participants will be evidenced only by, and transfers of such beneficial interests with such Participants will be effected only
through, records maintained by such Participants. Except as provided below, owners of beneficial interests in this Note will not
be entitled to have any individual certificates and will not be considered the owners or Holders thereof under the Indenture.

 

Except in the limited
circumstances set forth in the Base Indenture, Participants and owners of beneficial interests in the Global Notes will not be
entitled to receive Notes in the form of Individual Securities and will not be considered Holders of Notes. None of the Company,
the Trustee, the Security Registrar, the Paying Agent or any of their respective agents will be liable for any delay by the Depositary,
its nominee or any direct or indirect Participant in identifying the beneficial owners of the related Notes. The Company, the Trustee,
the Security Registrar, the Paying Agent and each of their respective agents may conclusively rely on, and will be protected in
relying on, instructions from the Depositary or its nominee for all purposes, including with respect to the registration and delivery,
and the respective principal amounts, of the Notes to be issued.

 

Except as provided
in Section 3.05 of the Base Indenture, beneficial owners of Global Notes will not be entitled to receive physical delivery of Notes
in the form of Individual Securities, and no Global Note will be exchangeable except for another Global Note of like denomination
and tenor to be registered in the name of the Depositary or its nominee. Accordingly, each person owning a beneficial interest
in a Global Note must rely on the procedures of the Depositary and, if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any rights of a Holder under the Notes.

 

    32

     

    

 

The laws of some
jurisdictions may require that certain purchasers of securities take physical delivery of those securities in definitive form.
Accordingly, the ability to transfer interests in the Notes represented by a Global Note to those persons may be limited. In addition,
because the Depositary can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through
Participants, the ability of a person having an interest in Notes represented by a Global Note to pledge or transfer such interest
to persons or entities that do not participate in the Depositary’s system, or otherwise to take actions in respect of such
interest, may be affected by the lack of a physical definitive security in respect of such interest. None of the Company, the Trustee,
the Paying Agent and the Security Registrar will have any responsibility or liability for any aspect of the records relating to
or payments made on account of Notes by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary
relating to the Notes.

 

U.S. Bank National
Association will act as the Company’s Paying Agent with respect to the Notes through its Corporate Trust Office presently
located at 333 Thornall Street, 4th Floor, Edison, New Jersey 07960. The Company may at any time rescind the designation
of a Paying Agent, appoint a successor Paying Agent, or approve a change in the office through which any Paying Agent acts.

 

Notices to the Holders
of registered Notes in the form of Individual Securities will be given to such Holders at their respective addresses in the Security
Register, or in the case of Global Notes, electronic delivery in accordance with DTC’s applicable procedures. The Indenture
contains provisions setting forth certain conditions to the institution of proceedings by the Holders of Notes with respect to
the Indenture or for any remedy under the Indenture.

 

THIS NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK.

  

    33

     

    

 

ASSIGNMENT FORM

 

To assign the within
Security, fill in the form below: I or we assign and transfer the within Security to:

 

	 	 

(Insert assignee’s legal name)

 

	 	 

(Insert assignee’s social security
or tax I.D. no.)

 

	 	 

(Print or type assignee’s name, address
and zip code)

  

and irrevocably appoint ___________________
as agent to transfer this Security on the books of _____________. The agent may substitute another to act for it. 

 

	Your Signature:	 	 
	 	(Sign exactly as your name appears on
the other side of this Security)	 

 

	Your Name:	  	 

 

	Date: 	 	 

 

	Signature Guarantee: 	 	 

 

    34

     

    

 

SIGNATURE GUARANTEE

 

Signatures must be
guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other
 “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
NOTE

 

The initial principal
amount of this Global Note is $[ ]. The following increases or decreases in the principal amount of this Global Note have been
made:

 

	Date	Amount of

 increase in

 principal

 amount of this

 Global Note	Amount of

 decrease in

 principal

 amount of this

 Global Note	Principal 

amount of this

 Global Note

 following such

 increase of

 decrease	Signature of authorized

 signatory of Trustee
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

    35SECURITIES PURCHASE AGREEMENT

EXHIBIT 4.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of January 20, 2021, between China Natural Resources, Inc., a British Virgin Islands business company (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to (i) an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) as to the Shares (as defined below) and (ii) an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulation D thereunder as to the Warrants (as defined below), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1

 Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.  

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar 

 

orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the second (2nd) Trading Day following the date hereof.

“Commission” means the United States Securities and Exchange Commission.

“Common Shares” means the common shares of the Company, without par value, and any other class of securities into which such securities may hereafter be reclassified or changed. 

“Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred share, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.

“Company Counsel” means Morgan, Lewis & Bockius LLP, with regards to matters of US federal securities law, and Maples and Calder (Hong Kong) LLP with regards to matters of British Virgin Islands law. 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York City time) on the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent.

 

“Escrow Agent” means Continental Stock Transfer & Trust Corporation.

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(s). 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) Common Shares or options to employees, officers or directors of the Company pursuant to any share or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company; (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into Common Shares issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities; and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Company at such time and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“IFRS” shall have the meaning ascribed to such term in Section 3.1(h).

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).

 

“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(n).

“Per Share Purchase Price” equals $1.85, subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of the Common Shares that occur after the date of this Agreement but prior to the Closing Date.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Placement Agent” means FT Global Capital, Inc.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the final prospectus filed for the Registration Statement.

“Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and has been delivered by the Company along with the Prospectus to each Purchaser at the Closing.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

“Registration Statement” means the effective registration statement with Commission file No. 333-233852, which became effective on November 11, 2020, which registers the sale of the Shares to the Purchasers.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities” means the Shares, the Warrants and the Warrant Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Shares” means the Common Shares issued or issuable to each Purchaser pursuant to this Agreement.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include locating and/or borrowing Common Shares). 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

“Subsequent Placement” shall have the meaning ascribed to such term in Section 4.11(a).

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the 

 

Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Transaction Documents” means this Agreement, the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means Pacific Stock Transfer Company, the current transfer agent of the Company, with a mailing address of 6725 Via Austi Parkway, Suite 300, Las Vegas, Nevada 89119 and an email address of info@pacificstocktransfer.com, and any successor transfer agent of the Company.

“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.11(b).

“Warrants” means, collectively, the Common Share purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2 hereof, in the form of Exhibit A attached hereto.

“Warrant Shares” means the Common Shares issuable upon exercise of the Warrants.

ARTICLE II.

PURCHASE AND SALE

2.1

Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $7,326,000 of Shares and Warrants. On the Closing Date, (i) each Purchaser shall pay its respective Subscription Amount as set forth on the signature page hereto executed by such Purchaser for the Shares and the Warrants to be issued and sold to such Purchaser at Closing, by wire transfer of immediately available funds to the Escrow Agent for distribution in accordance with the written wire instructions provided by the Company as set forth in Section 2.2(iii), and (ii) the Company shall (A) cause the Transfer Agent via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) to deliver Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, (B) deliver to each Purchaser the Warrant such Purchaser is purchasing at such Closing, in each case, duly executed on behalf of the Company and registered in the name of such Purchaser or its designee and (C) deliver to each such Purchaser the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Placement Agent’s counsel, such other location, or remotely, as the parties shall mutually agree.Notwithstanding anything herein to the contrary, if at any time on or after the time of execution of this Agreement by the Company and an 

 

applicable Purchaser, through, and including the time immediately prior to the Closing (the “Pre-Settlement Period”), if such Purchaser sells to any Person all, or any portion, of any Common Shares to be issued hereunder to such Purchaser at the Closing (collectively, the “Pre-Settlement Shares”), such Purchaser shall, automatically hereunder (without any additional required actions by such Purchaser or the Company), be deemed to be unconditionally bound to purchase, and the Company shall be deemed unconditionally bound to sell, such Pre-Settlement Shares to such Purchaser at the Closing; provided, that the Company shall not be required to deliver any Pre-Settlement Shares to such Purchaser prior to the Company’s receipt of the Subscription Amount for such Pre-Settlement Shares hereunder; provided, further, that the Company hereby acknowledges and agrees that the forgoing shall not constitute a representation or covenant by such Purchaser as to whether or not such Purchaser will elect to sell any Pre-Settlement Shares during the Pre-Settlement Period.  The decision to sell any Common Shares will be made in the sole discretion of such Purchaser from time to time, including during the Pre-Settlement Period.

2.2

Deliveries.

(a)

On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i)

this Agreement duly executed by the Company;

(ii)

a legal opinion of Company Counsel, in form and substance reasonably satisfactory to the Placement Agent and the Purchasers addressed to the Placement Agent and the Purchasers;

(iii)

the Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer;

(iv)

a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

(v)

a Warrant registered in the name of such Purchaser to purchase up to a number of Common Shares equal to 40% of such Purchaser’s Shares, with an exercise price equal to $2.35, subject to adjustment therein; 

(vi)

the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act); and

 

(vii)

the wire instructions for the escrow account maintained by the Escrow Agent on behalf of the Company relating to the transactions contemplated by this Agreement.

(b)

On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

(i)

this Agreement duly executed by such Purchaser; and

(ii)

such Purchaser’s Subscription Amount.

2.3

Closing Conditions. 

(a)

The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date); 

(ii)

all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii)

the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b)

The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate in all material respects as of such date);

(ii)

all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; 

(iii)

the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv)

the Registration Statement shall be effective and available for the issuance and sale of the Shares hereunder and the Company shall have delivered to such Purchaser the Prospectus and the Prospectus Supplement as required thereunder;

(v)

there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

(vi)

from the date hereof to the Closing Date, trading in the Common Shares shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity not currently existing as of the date hereof of such magnitude in its effect on, or any material adverse change in, Trading Market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of the Company.  Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:

(a)

Subsidiaries.  All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).  The Company owns, directly or indirectly, all of the share capital or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding share capital of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities, other than as indicated on Schedule 3.1(a).  If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

(b)

Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or 

 

organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the 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 any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c)

Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals.  This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d)

No Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with 

 

or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e)

Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to each applicable Trading Market for the listing of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, (iv) the filing of a Form D with the Commission and (v) the Board of Directors of the terms and conditions of this Agreement and the transactions contemplated herein; and (vi) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

(f)

Issuance of the Securities; Registration.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized share capital the maximum number of Common Shares currently issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act,  including the Prospectus, and such amendments and supplements thereto as may 

 

have been required to the date of this Agreement.  The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.  The Company, if required by the rules and regulations of the Commission, shall file the Prospectus Supplement with the Commission pursuant to Rule 424(b).  At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and 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 the Prospectus, Prospectus Supplement and any amendments or supplements thereto, at the time the Prospectus, Prospectus Supplement or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company was at the time of the filing of the Registration Statement eligible to use Form F-3. The Company is eligible to use Form F-3 under the Securities Act and it meets the transaction requirements with respect to the aggregate market value of securities being sold pursuant to this offering and during the twelve (12) months prior to this offering, as set forth in General Instruction I.B.5 of Form F-3.

(g)

Capitalization.  The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of Common Shares owned beneficially, and of record, by Affiliates of the Company as of the date hereof.  The Company has not issued any of its share capital since its most recently filed Form 20-F, other than (i) pursuant to the exercise of employee share options under the Company’s share option plans disclosed in the SEC Reports, (ii) pursuant to the issuance of Common Shares to employees pursuant to the Company’s employee share purchase plans disclosed in the SEC Reports, and (iii) pursuant to the conversion and/or exercise of Common Share Equivalents outstanding as of the date of the most recently filed Form 20-F, other than as set forth on Schedule 3.1(g).  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as set forth on Schedule 3.1(g) and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any 

 

Person any right to subscribe for or acquire, any Common Shares or the share capital of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional Common Shares or Common Share Equivalents or share capital of any Subsidiary.  The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue Common Shares or other securities to any Person (other than the Purchasers). There are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary.  There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any share appreciation rights or “phantom share” plans or agreements or any similar plan or agreement. All of the outstanding share capital of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any shareholder, the Board of Directors, or others is required for the issuance and sale of the Securities.  There are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s share capital to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

(h)

SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company is not, and has not been for at least one year prior to the date hereof, an issuer identified in Rule 144(i)(1) of 

 

the 1933 Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by IFRS, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i)

Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as set forth on Schedule 3.1(i), (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to IFRS or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any of its share capital and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company share option plans.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation is made.

(j)

Litigation.  Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, 

 

county, local or foreign) (collectively, an “Action”). None of the Actions set forth on Schedule 3.1(j) (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated or threatened, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.  

(k)

Labor Relations.  No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement other than as stated on Schedule 3.1(k), and the Company and its Subsidiaries believe that their relationships with their employees are good.  To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(l)

Compliance.  Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has 

 

been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(m)

Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all applicable federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including 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 (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

(n)

Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

(o)

Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them (and with respect to any real property in the People’s Republic of China, as permitted under the laws thereof) and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with IFRS and, the payment of 

 

which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(p)

Intellectual Property.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(q)

Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.  Neither the Company nor any Subsidiary has any 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 without a significant increase in cost.

(r)

Transactions With Affiliates and Employees.  None of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (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, providing for the borrowing of 

 

money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including share option agreements under any share option plan of the Company, or otherwise as set forth on Schedule 3.1(r).

(s)

Sarbanes-Oxley; Internal Accounting Controls.  The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date.  The Company and the Subsidiaries maintain a system of internal control over financial reporting 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 IFRS 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. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed annual report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed annual report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

(t)

Certain Fees.  Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company 

 

or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions contemplated by the Transaction Documents.

(u)

Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company,” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”), other than a transient investment company as contemplated by Rule 3a-2 of the Investment Company Act, or otherwise as set forth on Schedule 3.1(u).  The Company shall conduct its business in a manner so that it will not become subject to registration under the Investment Company Act of 1940, as amended.

(v)

Registration Rights.  No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

(w)

Listing and Maintenance Requirements.  The Common Shares are registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Shares are or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market which has not been cured as of the date hereof. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Shares are currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

(x)

Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) 

 

or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

(y)

Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus Supplement or disclosed pursuant to Section 4.4.  The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made and when made, not misleading.  The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

(z)

No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of the Warrants or Warrant Shares under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

(aa)

Solvency.  Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair 

 

saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  The Prospectus Supplement sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with IFRS.  Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

(bb)

Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has 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 and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

(cc)

Foreign Corrupt Practices.  Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.

(dd)

Accountants.  The Company’s accounting firm is set forth on Schedule 3.1(dd) of the Disclosure Schedules.  To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act, and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2020.  

(ee)

 Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(ff)

Acknowledgment Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively 

 

impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Shares, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing shareholders' equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

(gg)

Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement of the Securities.

(hh)

Share Equity Plans. Each share option or equity award granted by the Company under the Company’s equity award plans was granted (i) in accordance with the terms of the Company’s shareholder approved equity award plan(s) and (ii) with an exercise price at least equal to the fair market value of the Common Shares on the date such option or equity award would be considered granted under IFRS and applicable law. No share option or equity award granted under the Company’s or equity award plan(s) has been backdated.  The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, options prior to, or otherwise knowingly coordinate the grant of share options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

(ii)

Office of Foreign Assets Control.  Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(jj)

U.S. Real Property Holding Corporation.  The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon any Purchaser’s request.

(kk)

Bank Holding Company Act.  Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).  Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.  Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

(ll)

Money Laundering.  The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

(mm)

Private Placement.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Warrants or the Warrant Shares by the Company to the Purchasers as contemplated hereby.

(nn)

No General Solicitation.  Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Warrants or Warrant Shares by any form of general solicitation or general advertising.  The Company has offered the Warrants and  Warrant Shares for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

(oo)

No Disqualification Events.  With respect to the Warrants and Warrant Shares to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected 

 

with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.

(pp)

Other Covered Persons.  Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.

(qq)

Notice of Disqualification Events.  The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, reasonably be expected to become a Disqualification Event relating to any Issuer Covered Person, in each case of which it is aware.

3.2

Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):

(a)

Organization; Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies 

 

and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)

Understandings or Arrangements.  Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.  Such Purchaser understands that the Warrants and the Warrant Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring such Securities as principal for his, her or its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell such Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws).

(c)

Purchaser Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be, an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.  

(d)

Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e)

Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Prospectus, Prospectus Supplement, Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the 

 

Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.  Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired.  Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it.  In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

(f)

Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future. 

The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and 

 

warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby.  Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1

Removal of Legends.

(a)

The Warrants and Warrant Shares may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Warrants or Warrant Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Warrant under the Securities Act. 

(b)

 The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Warrants or Warrant Shares in the following form:

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Warrants or Warrant Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Warrants or Warrant Shares to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Warrants and Warrant Shares may reasonably request in connection with a pledge or transfer of the Warrants or Warrant Shares.

(c)

Certificates evidencing the Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Warrant Shares pursuant to Rule 144 (assuming cashless exercise of the Warrants), or (iii) if such Warrant Shares are eligible for sale under Rule 144 without any further conditions (assuming cashless exercise of the Warrants), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). In respect of (i) in the foregoing sentence, the Purchaser agrees not to sell any Warrant Shares during such as period as it has been notified by the Company that no such registration statement is effective, unless eligible for sale under Rule 144. The Company shall cause its counsel to issue a legal opinion to the Transfer Agent or the Purchaser promptly if required by the Transfer Agent to effect the removal of the legend hereunder, or if requested by a Purchaser, respectively.  If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant Shares, or if such Warrant Shares may be sold under Rule 144 (assuming cashless exercise of the Warrants) or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Warrant Shares shall be issued free of all legends.  The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), the Company will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Warrant Shares, as applicable, issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the 

 

Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  Warrant Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.  As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of a certificate representing Warrant Shares issued with a restrictive legend. 

(d)

In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated damages and not as a penalty, for each $1,000 of Warrant Shares (based on the VWAP (as defined in the Warrants) of the Common Shares on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue and deliver (or cause to be delivered) to a Purchaser by the Legend Removal Date a certificate representing the Securities so delivered to the Company by such Purchaser that is free from all restrictive and other legends and (b) if after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of Common Shares, or a sale of a number of Common Shares equal to all or any portion of the number of Common Shares, that such Purchaser anticipated receiving from the Company without any restrictive legend, then an amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the Common Shares so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (A) such number of Warrant Shares that the Company was required to deliver to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Shares on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company of the applicable Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this Section 4.1(d).  

(e)

The Shares shall be issued free of legends. 

4.2

Furnishing of Information. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4.4 hereof and to the provisions of Section 4.1 hereof,

 

(a)

Until the time that no Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. 

(b)

At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Warrant Shares (assuming cashless exercise) may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Warrant Shares, an amount in cash equal to two percent (2.0%) of the aggregate Exercise Price of such Purchaser’s Warrants on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required  for the Purchasers to transfer the Warrant Shares pursuant to Rule 144.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser 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. 

4.3

Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Warrants or Warrant Shares or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it 

 

would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 

4.4

Securities Laws Disclosure; Publicity.  The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 6-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act.  From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.  In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, with respect to the transaction contemplated hereby shall terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

4.5

Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.6

Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented in writing to the receipt of such information and agreed with the Company to keep such information confidential.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.  To the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

4.7

Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder as set forth in the Prospectus Supplement and shall not use such proceeds in violation of FCPA or OFAC regulations.

4.8

Indemnification of Purchasers.  Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any shareholder of the 

 

Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such shareholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct) or (c) in connection with any registration statement of the Company providing for the resale by the Purchasers of the Warrant Shares issued and issuable upon exercise of the Warrants, the Company will indemnify each Purchaser Party, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in connection therewith.  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such Purchaser Party’s counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and 

 

when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law; provided, however, that no Purchaser shall be entitled to any double recovery of damages as a result of the exercise of any other such right.

4.9

Reservation of Shares. So long as any of the Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved from its duly authorized share capital, no less than the maximum number of Warrant Shares then issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants) not yet issued.

4.10

Listing of Common Shares. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Shares on the Trading Market on which it is currently listed, and prior to the Closing, the Company shall apply to list or quote all of the Shares and Warrant Shares on such Trading Market and use best efforts to promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Shares traded on any other Trading Market, it will then include in such application all of the Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will then take all action reasonably necessary to continue the listing and trading of its Common Shares on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.  The Company agrees to maintain the eligibility of the Common Shares for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

4.11

Subsequent Equity Sales.  

(a)

From the date hereof until 90 days after the Closing Date, neither the Company nor any Subsidiary shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Common Shares or Common Share Equivalents (each, a “Subsequent Placement”) or (ii) file any registration statement or any amendment or supplement thereto, other than the Prospectus Supplement or as contemplated pursuant to Section 4.18 herein.

(b)

From the date hereof until the first anniversary of the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Shares or Common Share Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.  “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are 

 

convertible into, exchangeable or exercisable for, or include the right to receive additional Common Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Shares at any time after the initial issuance of such debt or equity securities, 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 debt or equity 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 Common Shares or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price.  Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. For the avoidance of doubt, the issuance of a warrant or other convertible security with anti-dilution provisions similar to the anti-dilution provisions in the Warrants shall not be deemed to be a Variable Rate Transaction solely due to such provisions.

(c)

Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

4.12

Participation Right.  Until the first anniversary of the Closing Date, neither the Company nor any of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4.12.  The Company acknowledges and agrees that the right set forth in this Section 4.12 is a right granted by the Company, separately, to each Purchaser. 

(a)

At least three (3) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Purchaser a written notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation, material, non-public information) other than:  (A) if the proposed Offer Notice (as defined below) constitutes or contains material, non-public information, a statement asking whether such Purchaser is willing to accept material non-public information or (B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement that the Company proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute material, non-public information and (z) a statement informing such Purchaser that it is entitled to receive an Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request.  Upon the written request of a Purchaser within one (1) Trading Day after the Company's delivery to such Purchaser of such Pre-Notice, and only upon a written request by such Purchaser, the Company shall promptly, but no later than three (3) Trading Days after such 

 

request, deliver to such Purchaser an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (D) offer to issue and sell to or exchange with such Purchaser in accordance with the terms of the Offer such Purchaser's pro rata portion of 35% of the Offered Securities, provided that the number of Offered Securities which such Purchaser shall have the right to subscribe for under this Section 4.12 shall be (x) based on such Purchaser’s pro rata portion of the aggregate number of Shares purchased hereunder by all Purchasers (the “Basic Amount”), and (y) with respect to each Purchaser that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Purchasers as such Purchaser shall indicate it will purchase or acquire should the other Purchasers subscribe for less than their Basic Amounts (the “Undersubscription Amount”), which process shall be repeated until each Purchaser shall have an opportunity to subscribe for any remaining Undersubscription Amount. 

(b)

To accept an Offer, in whole or in part, such Purchaser must deliver a written notice to the Company prior to the end of the first (1st) Business Day after such Purchaser's receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Purchaser's Basic Amount that such Purchaser elects to purchase and, if such Purchaser shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Purchaser elects to purchase (in either case, the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all Purchasers are less than the total of all of the Basic Amounts, then each Purchaser who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Purchaser who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Purchaser bears to the total Basic Amounts of all Purchasers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably necessary.  Notwithstanding the foregoing, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to each Purchaser a new Offer Notice and the Offer Period shall expire on the first (1st) Business Day after such Purchaser's receipt of such new Offer Notice. 

 

(c)

The Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Purchaser (the “Refused Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer Notice and (B) to publicly announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 6-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto. 

(d)

In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4.12(c) above), then each Purchaser may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Purchaser elected to purchase pursuant to Section 4.12(b) above multiplied by a fraction, (A) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Purchasers pursuant to this Section 4.12 prior to such reduction) and (B) the denominator of which shall be the original amount of the Offered Securities.  In the event that any Purchaser so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Purchasers in accordance with Section 4.12(a) above. 

(e)

Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Purchaser shall acquire from the Company, and the Company shall issue to such Purchaser, the number or amount of Offered Securities specified in its Notice of Acceptance, as reduced pursuant to Section 4.12(d) above if such Purchaser has so elected, upon the terms and conditions specified in the Offer.  The purchase by such Purchaser of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and such Purchaser of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to such Purchaser and its counsel.

 

(f)

So long as the period specified in the first sentence of this Section 4.12 has not yet elapsed, any Offered Securities not acquired by a Purchaser or other Persons in accordance with this Section 4.12 may not be issued, sold or exchanged until they are again offered to such Purchaser under the procedures specified in this Agreement. 

(g)

The Company and each Purchaser agree that if any Purchaser elects to participate in an Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”) shall include any term or provision whereby such Purchaser shall be required to agree to any restrictions on trading as to any securities of the Company (other than as required by law) or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, any agreement previously entered into with the Company or any instrument received from the Company. 

(h)

Notwithstanding anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing to such Purchaser that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case, in such a manner such that such Purchaser will not be in possession of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice.  If by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.  Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company shall provide such Purchaser with another Offer Notice and such Purchaser will again have the right of participation set forth in this Section 4.12.  The Company shall not be permitted to deliver more than one such Offer Notice to such Purchaser in any sixty (60) day period, except as expressly contemplated by the last sentence of Section 4.12(b). 

(i)

The restrictions contained in this Section 4.12 shall not apply in connection with an Exempt Issuance. 

4.13

Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each 

 

Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

4.14

Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules and herein.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

4.15

Capital Changes.  Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward share split or reclassification of the Common Shares without the prior written consent of the Purchasers holding a majority in interest of the Shares.

4.16

Exercise Procedures.  The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants.  No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants.  Without limiting the 

 

preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrants.  The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

4.17

Form D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the Warrants and Warrant Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Warrants and Warrant Shares for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

4.18

Registration Statement.  As soon as practicable (and in any event within 25 calendar days of the date of this Agreement), the Company shall file a registration statement on Form F-3 (or other appropriate form if the Company is not then F-3 eligible) providing for the resale by the Purchasers of the Warrant Shares issued and issuable upon exercise of the Warrants.  The Company shall use commercially reasonable efforts to cause such registration statement to become effective within 181 days following the Closing Date and to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares issuable upon exercise thereof.

ARTICLE V.

MISCELLANEOUS

5.1

Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however, that no such termination will affect the right of any party to sue for any breach by any other party (or parties).

5.2

Fees and Expenses.  At the Closing, the Company has agreed to reimburse Kelley Drye & Warren LLP (“Kelley Drye”) the non-accountable sum of $50,000 for its legal fees and expenses, $15,000 of which has been paid prior to the Closing.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3

Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4

Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email attachment at the email address as set forth on the signature pages attached hereto, on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K.

5.5

Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on the initial Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.

 

5.6

Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

5.8

No Third-Party Beneficiaries.  The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.

5.9

Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to 

 

the obligations of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.  Prior to Closing, the Company will appoint its agent for service of process in New York and inform the Purchasers of the same in writing.  The choice of the laws of the State of New York as the governing law of this Agreement is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in the British Virgin Islands, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the British Virgin Islands.  The choice of laws of the State of New York as the governing law of this Agreement will be honored by competent courts in the People’s Republic of China, subject to compliance with relevant People’s Republic of China civil procedural and other requirements.  None of the Company nor any of its properties, assets or revenues has any right of immunity under British Virgin Islands, the People’s Republic of China or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any British Virgin Islands and the People’s Republic of China, New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Agreement and the other Transaction Documents.

5.10

Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

5.11

Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by email delivery of a “.pdf” format data file or other electronic medium recognized as an electronic signature under applicable law, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile, “.pdf” signature page or other electronic signature were an original thereof.

 

5.12

Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13

Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any Common Shares subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

5.14

Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

5.15

Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.16

Payment Set Aside.  To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser 

 

enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.17

Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.  For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through Schiff Hardin LLP.  Schiff Hardin LLP does not represent any of the Purchasers and only represents the Placement Agent.  The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.  It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

5.18

Liquidated Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

5.19

Saturdays, Sundays, Holidays, etc.

If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a 

 

Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.20

Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and Common Shares in any Transaction Document shall be subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of the Common Shares that occur after the date of this Agreement.

5.21

WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 

(Signature Pages Follow)

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

		
	CHINA NATURAL RESOURCES, INC.

 

	Address for Notice:

	By:__________________________________________

     Name:

     Title:

With a copy to (which shall not constitute notice):

	

Email:

Facsimile:

	

	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

[PURCHASER SIGNATURE PAGES TO CHINA NATURAL RESOURCES, INC. SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: ________________________________________________________

Signature of Authorized Signatory of Purchaser: _________________________________

Name of Authorized Signatory: _______________________________________________

Title of Authorized Signatory: ________________________________________________

Email Address of Authorized Signatory:_________________________________________

Facsimile Number of Authorized Signatory: __________________________________________

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount: $_________________

Shares: _________________

Warrant Shares: __________________

EIN Number: _______________________

[SIGNATURE PAGES CONTINUE]

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